NC092 Dikgatlong AFS 2018-19 audited

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Dikgatlong Local Municipality
Annual Financial Statements
for the year ended June 30, 2019
Dikgatlong Local Municipality
(Registration number NC092)
Annual Financial Statements for the year ended June 30, 2019
General Information
Nature of business and principal activities Local municipality performing the functions as set out in the
Constitution, Act no. 105 of 1996
Mayoral committee
Executive Mayor DD Mbizeni
Councillors MP Chupologo
AJ Mafofololo
MA Mahutie
E Makoko
T Saul
Councillors MM Bezuindenhout
PS Combrink
ME Kleinjan
MK Konote
DM Macinga
KE Motshabi
DP Papers
Accounting Officer AK Modise
Chief Financial Officer (CFO) LS Itumeleng
Acting Chief Finance Officer (CFO) C Mokeng
Registered office 33 Campbell Street
Barkly West
8375
Business address 33 Campbell Street
Barkly West
8375
Postal address Private Bag X5
Barkly West
8375
Bankers First National Bank
Auditors The Auditor-General of South Africa
Attorneys Matthews and Partners
Members of the audit commitee Mr WMS Calitz (Chairperson)
Mr GR Botha
Mr T Mogoli
Enabling legislation Municipal FinanceManagement Act (Act no.56 of 2003)
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Dikgatlong Local Municipality
(Registration number NC092)
Annual Financial Statements for the year ended June 30, 2019
Index
The reports and statements set out below comprise the annual financial statements presented to the provincial legislature:
Page
Accounting Officer's Responsibilities and Approval 3
Accounting Officer's Report 4
Statement of Financial Position 5
Statement of Financial Performance 6
Statement of Changes in Net Assets 7
Cash Flow Statement 8
Statement of Comparison of Budget and Actual Amounts 9 - 14
Accounting Policies 15 - 41
Notes to the Annual Financial Statements 42 - 79
COID Compensation for Occupational Injuries and Diseases
CRR Capital Replacement Reserve
DBSA Development Bank of South Africa
SA GAAP South African Statements of Generally Accepted Accounting Practice
GRAP Generally Recognised Accounting Practice
GAMAP Generally Accepted Municipal Accounting Practice
HDF Housing Development Fund
IAS International Accounting Standards
IMFO Institute of Municipal Finance Officers
IPSAS International Public Sector Accounting Standards
ME's Municipal Entities
MEC Member of the Executive Council
MFMA Municipal Finance Management Act
MIG Municipal Infrastructure Grant (Previously CMIP)
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Dikgatlong Local Municipality
(Registration number NC092)
Annual Financial Statements for the year ended June 30, 2019
Accounting Officer's Report
The accounting officersubmitshis report for the year ended June 30, 2019.
1. Review of activities
Main business and operations
The municipality's mandate is delivery of services to the community in line with section 152 of the constitution of Republic of
South Africa. The services must or are rendered within governance and legislation framework provided for local government.
2. Going concern
We draw attention to the fact that at June 30, 2019, the municipality had an accumulated surplus (deficit) of R653,725,272 and
that the municipality's total assets exceed its liabilities by R653,725,272.
The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This
basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of
liabilities, contingent obligations and commitments will occur in the ordinary course of business.
The ability of the municipality to continue as a going concern is dependent on a number of factors. The most significant of these
is that the accounting officer continue to procure funding for the ongoing operations for the municipality.
Furthermore management has reviewed the municipality's cash flow forecast for the year ended 30 June 2019 and, in the light
of this review and the current financial position, management is satisfied that the municipality has, or has access to, adequate
resources to continue it's operation existing for the foreseeable future.
The municipality still has the ability to levy services, rates and taxes and will continue to receive funding from government as
evident from the Equitable Share allocations as published in terms of the Division of Revenue Act (Act 1 of 2016).
For details of managements assumptions with respect to the applicability of the going concern assumption refer to note.
3. Subsequent events
The accounting officeris not aware of any matter or circumstance arising since the end of the financial year.
4. Accounting Officer's interest in contracts
No matters to report.
5. Accounting policies
The annual financial statements prepared in accordance with the prescribed Standards of Generally Recognised Accounting
Practices (GRAP), including any directives and interpretations of such Standards issued by the Accounting Standards Board as
the prescribed framework by National Treasury, and in accordance with Section 122(3) of the Municipal Finance Management
Act (Act No.56 of 2003).
6. Accounting Officer
The accounting officer of the municipality during the year and to the date of this report is as follows:
Name Nationality
AK Modise South African
7. Auditors
The Auditor-General of South Africa will continue in office for the next financial period.
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Dikgatlong Local Municipality
(Registration number NC092)
Annual Financial Statements for the year ended June 30, 2019
Statement of Financial Position as at June 30, 2019
Figures in Rand Note(s) 2019 2018
Restated*
Assets
Current Assets
Inventories 9 1,800,529 1,610,577
Operating lease asset 7 16,813 27,005
Receivables from non-exchange transactions 10&13 26,699,882 14,752,236
VAT receivable 11 39,169,613 38,384,938
Consumer debtors 12 119,823,943 53,450,723
Cash and cash equivalents 14 - 8,469,806
187,510,780 116,695,285
Non-Current Assets
Investment property 2 49,708,829 49,969,004
Property, plant and equipment 3 625,769,030 618,018,939
Intangible assets 4 44,096 35,794
Heritage assets 5 12,183,752 12,183,752
Other financial assets 6 9,509 9,509
687,715,216 680,216,998
Total Assets 875,225,996 796,912,283
Liabilities
Current Liabilities
Other financial liabilities 17 131,113 125,594
Finance lease obligation 15 28,621 23,815
Payables from exchange transactions 19 195,622,953 139,206,567
Consumer deposits 20 572,737 555,779
Employee benefit obligation 8 370,000 404,000
Unspent conditional grants and receipts 16 3,933,587 403,058
Bank overdraft 14 82,509 -
200,741,520 140,718,813
Non-Current Liabilities
Other financial liabilities 17 1,032,508 1,149,264
Finance lease obligation 15 7,055 35,676
Employee benefit obligation 8 4,349,000 3,869,000
Provisions 18 15,370,641 15,370,640
20,759,204 20,424,580
Total Liabilities 221,500,724 161,143,393
Net Assets 653,725,272 635,768,890
Accumulated surplus 653,725,272 635,768,890
* See Note 45
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Dikgatlong Local Municipality
(Registration number NC092)
Annual Financial Statements for the year ended June 30, 2019
Statement of Financial Performance
Figures in Rand Note(s) 2019 2018
Restated*
Revenue
Revenue from exchange transactions
Service charges 22 45,655,551 37,617,785
Interest received (trading) 31,972,760 29,223,157
Licences and permits - 87,348
Commissions received 128,914 117,557
Rental income 327,014 132,707
Other income 24 367,372 618,707
Interest received - investment 25 774,497 448,881
Dividends received 25 724 724
Total revenue from exchange transactions 79,226,832 68,246,866
Revenue from non-exchange transactions
Taxation revenue
Property rates 26 8,900,387 10,123,937
Transfer revenue
Government grants & subsidies 27 116,519,966 107,356,674
Public contributions and donations 28 - 6,266,306
Fines, Penalties and Forfeits 10,100 24,934
Total revenue from non-exchange transactions 125,430,453 123,771,851
Total revenue 21 204,657,285 192,018,717
Expenditure
Employee related costs 29 (77,650,886) (57,395,631)
Remuneration of councillors 30 (4,191,603) (3,831,871)
Depreciation and amortisation 31 (21,277,475) (21,830,157)
Impairment loss/ Reversal of impairments 32 - (6,409,837)
Finance costs 33 (8,188,539) (6,781,310)
Lease rentals on operating lease (840,763) (817,877)
Debt Impairment 34 5,881,446 (46,302,230)
Bulk purchases 35 (41,863,491) (33,749,312)
General Expenses 37 (38,012,078) (30,755,688)
Total expenditure (186,143,389) (207,873,913)
Operating surplus (deficit) 18,513,896 (15,855,196)
Loss on disposal of assets and liabilities (557,524) (6,192,229)
Actuarial gains/losses 8 - 1,120,536
(557,524) (5,071,693)
Surplus (deficit) for the year 17,956,372 (20,926,889)
* See Note 45
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Dikgatlong Local Municipality
(Registration number NC092)
Annual Financial Statements for the year ended June 30, 2019
Statement of Changes in Net Assets
Accumulated Total net
Figures in Rand surplus assets
Opening balance as previously reported 656,018,046 656,018,046
Adjustments
Correction of errors 677,733 677,733
Balance at July 1, 2017 as restated* 656,695,779 656,695,779
Changes in net assets
Surplus for the year (20,926,889) (20,926,889)
Total changes (20,926,889) (20,926,889)
Restated* Balance at July 1, 2018 635,768,900 635,768,900
Changes in net assets
Surplus for the year 17,956,372 17,956,372
Total changes 17,956,372 17,956,372
Balance at June 30, 2019 653,725,272 653,725,272
Note(s)
* See Note 45
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Dikgatlong Local Municipality
(Registration number NC092)
Annual Financial Statements for the year ended June 30, 2019
Cash Flow Statement
Figures in Rand Note(s) 2019 2018
Restated*
Cash flows from operating activities
Receipts
Sale of goods and services 14,923,402 44,142,255
Grants 120,050,495 107,410,362
Interest income 774,497 448,881
135,748,394 152,001,498
Payments
Employee costs (81,514,489) (60,640,966)
Suppliers (25,139,615) (40,444,639)
Finance costs (8,188,539) (6,781,310)
(114,842,643) (107,866,915)
Net cash flows from operating activities 40 20,905,751 44,134,583
Cash flows from investing activities
Purchase of property, plant and equipment 3 (29,300,756) (32,731,901)
Purchase of investment property 2 - (4,889,039)
Purchase of other intangible assets 4 (32,461) (4,701)
Net cash flows from investing activities (29,333,217) (37,625,641)
Cash flows from financing activities
Repayment of other financial liabilities (111,237) (91,503)
Finance lease payments (13,612) 55,067
Net cash flows from financing activities (124,849) (36,436)
Net increase/(decrease) in cash and cash equivalents (8,552,315) 6,472,506
Cash and cash equivalents at the beginning of the year 8,469,806 1,997,300
Cash and cash equivalents at the end of the year 14 (82,509) 8,469,806
* See Note 45
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Dikgatlong Local Municipality
(Registration number NC092)
Annual Financial Statements for the year ended June 30, 2019
Statement of Comparison of Budget and Actual Amounts
Budget on Accrual Basis
Approved Adjustments Final Budget Actual amounts Difference Reference
budget on comparable between final
basis budget and
Figures in Rand actual
Statement of Financial Performance
Revenue
Revenue from exchange
transactions
Service charges 59,208,478 (8,704,832) 50,503,646 45,655,551 (4,848,095) 1
Interest received (trading) 28,958,741 1,405,000 30,363,741 31,972,760 1,609,019 3
Commissions received 117,000 183,308 300,308 128,914 (171,394) 5
Rental income 380,085 - 380,085 327,014 (53,071) 6
Other income - (rollup) 113,000 176,692 289,692 367,372 77,680 7
Interest received - investment 202,593 (148,000) 54,593 774,497 719,904 8
Dividends received - - - 724 724 9
Total revenue from exchange 88,979,897 (7,087,832) 81,892,065 79,226,832 (2,665,233)
transactions
Revenue from non-exchange
transactions
Taxation revenue
Property rates 7,533,000 1,198,767 8,731,767 8,900,387 168,620 10
Dividends - 754,000 754,000 - (754,000)
Transfer revenue
Government grants & subsidies 80,176,000 - 80,176,000 116,519,966 36,343,966 11
Fines, Penalties and Forfeits 143,942 - 143,942 10,100 (133,842) 13
Total revenue from non- 87,852,942 1,952,767 89,805,709 125,430,453 35,624,744
exchange transactions
Total revenue 176,832,839 (5,135,065) 171,697,774 204,657,285 32,959,511
Expenditure
Personnel (59,782,435) 1,226,000 (58,556,435) (77,650,886) (19,094,451) 14
Remuneration of councillors (4,183,000) - (4,183,000) (4,191,603) (8,603) 15
Depreciation and amortisation (28,834,110) 3,815,623 (25,018,487) (21,277,475) 3,741,012 16
Finance costs (6,231,100) - (6,231,100) (8,188,539) (1,957,439) 18
Lease rentals on operating lease (452,459) - (452,459) (840,763) (388,304) 19
Debt Impairment (14,665,023) (31,757,935) (46,422,958) 5,881,446 52,304,404 20
Repairs and maintenance (5,418,000) (3,100,000) (8,518,000) (11,076,636) (2,558,636) 21
Bulk purchases (46,337,000) 6,450,063 (39,886,937) (41,863,491) (1,976,554) 22
Contracted Services (7,748,590) (1,848,651) (9,597,241) - 9,597,241 23
General Expenses (18,733,102) 2,985,148 (15,747,954) (26,935,442) (11,187,488) 24
Total expenditure (192,384,819) (22,229,752) (214,614,571) (186,143,389) 28,471,182
Operating surplus (15,551,980) (27,364,817) (42,916,797) 18,513,896 61,430,693
Loss on disposal of assets and - - - (557,524) (557,524) 25
liabilities
Transfers and subsidies - capital 20,210,000 - 20,210,000 - (20,210,000)
(monetary allocations)
(National/Provincial and District)
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