DC43 Harry Gwala Consolidated AFS 2019-20 unaudited

2.6 MB·

Harry Gwala District Municipality and its Municipal Entity
(Registration number DC 43)
Annual financial statements
for the year ended 30 June 2020
Harry Gwala District Municipality and its Municipal Entity
(Registration number DC 43)
Annual Financial Statements for the year ended 30 June 2020
General Information
Legal form of entity Municipality in terms of section 1 of the Local Government: Municipal
Structures Act (Act 117 of 1998) read with section 155 (1) of the
Constitution of the republic of South Africa (Act 108 of 1996)
Nature of business and principal activities The provision of services (water and sanitation) to communities in a
sustainable manner, to promote social and economic development;
and to promote a safe and healthy environment.
Council
Executive Mayor ZD Nxumalo
Deputy Mayor NH Maphasa-Duma
Speaker TN Jojozi
Member of the Executive Committee BP Nzimande
Member of the Executive Committee N Mavuka
Member of the Executive Committee LA Zondi
Chief Whip WB Dlamini
Councillors NW Dladla
SS Mavuma
NW Dladla
TG Soni
V Xotongo
VW Zaza
ZS Nyide
ZC Khumalo
ZR Tshazi
SJ Phakathi
SN Madziba
BC Mncwabe
SV Zulu
B Sibeni
BZ Magaqa
BL Marnce
ZP Gcume
BC Mncwabe
L Nzimande
MSD Mdunge
KM Mkhize
Grading of local authority Grade 4
Chief Finance Officer (CFO) Mr M Mkatu
Accounting Officer Mrs AN Dlamini
Registered office Harry Gwala District Municipality Main office
40 Main street
Ixopo
3276
Business address 40 Main street
Ixopo
3276
1
Harry Gwala District Municipality and its Municipal Entity
(Registration number DC 43)
Annual Financial Statements for the year ended 30 June 2020
General Information
Postal address Private Bag X501
Ixopo
3276
Controlling entity Harry Gwala District Municipaity
Bankers First National Bank
Auditors Auditor General
Level of assurance These annual financial statements have been audited in compliance
with the applicable requirements of the Companies Act 71 of 2008.
Preparer The annual financial statements were internally compiled by:
Deputy Chief Financial Officer
Telephone number 039 834 8700
Website http://www.harrygwaladm.gov.za/
Harry Gwala Development Agency board members Mr P Dittrich - Chairperson
Mr DE Sithole
Mr N Khanyile
Ms CS Nqoko
Ms K Chiba - resigned in June 2020
2
Harry Gwala District Municipality and its Municipal Entity
(Registration number DC 43)
Annual Financial Statements for the year ended 30 June 2020
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 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 - 12
Accounting Policies 13 - 37
Notes to the Annual Financial Statements 38 - 82
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
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)
3
Harry Gwala District Municipality and its Municipal Entity
(Registration number DC 43)
Annual Financial Statements for the year ended 30 June 2020
Accounting Officer's Responsibilities and Approval
The accounting officeris required by the Municipal Finance Management Act (Act 56 of 2003), to maintain adequate
accounting records and is responsible for the content and integrity of the annual financial statements and related financial
information included in this report. It is the responsibility of the accounting officer to ensure that the annual financial statements
fairly present the state of affairs of the municipality as at the end of the financial year and the results of its operations and cash
flows for the period then ended. The external auditors are engaged to express an independent opinion on the annual financial
statements and was given unrestricted access to all financial records and related data.
The annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting
Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.
The annual financial statements are based upon appropriate accounting policies consistently applied and supported by
reasonable and prudent judgements and estimates.
The accounting officeracknowledges that sheis ultimately responsible for the system of internal financial control established
by the economic entity and place considerable importance on maintaining a strong control environment. To enable the
accounting officer to meet these responsibilities, the accounting officer sets standards for internal control aimed at reducing the
risk of error or deficit in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly
defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk.
These controls are monitored throughout the economic entity and all employees are required to maintain the highest ethical
standards in ensuring the economic entity’s business is conducted in a manner that in all reasonable circumstances is above
reproach. The focus of risk management in the economic entity is on identifying, assessing, managing and monitoring all
known forms of risk across the economic entity. While operating risk cannot be fully eliminated, the economic entity
endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and
managed within predetermined procedures and constraints.
The accounting officeris of the opinion, based on the information and explanations given by management, that the system of
internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual
financial statements. However, any system of internal financial control can provide only reasonable, and not absolute,
assurance against material misstatement or deficit.
The accounting officerhas reviewed the economic entity’s cash flow forecast for the year to 30 June 2021 and, in the light of
this review and the current financial position, sheis satisfied that the economic entity has or has access to adequate resources
to continue in operational existence for the foreseeable future.
The municipality is wholly dependent on the municipality for continued funding of operations. The annual financial statements
are prepared on the basis that the municipality is a going concern and that the municipality has neither the intention nor the
need to liquidate or curtail materially the scale of the municipality.
Although the accounting officer are primarily responsible for the financial affairs of the municipality, they are supported by the
economic entity's external auditors.
The annual financial statements set out on page 5, which have been prepared on the going concern basis, were approved by
the accounting officer on 30 November 2020 and were signed on its behalf by:
Mrs AN Dlamini
Municipal Manager
4
Harry Gwala District Municipality and its Municipal Entity
(Registration number DC 43)
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Position as at 30 June 2020
Economic entity Controlling entity
Figures in Rand Note(s) 2020 2019 2020 2019
Restated* Restated*
Assets
Current Assets
Inventories 3 267 013 247 710 267 013 247 710
Receivables from exchange transactions 4 - 5 052 115 - -
Receivables from non-exchange transactions 5 3 878 721 6 658 497 3 878 721 6 658 497
VAT receivable 6 6 764 717 11 698 132 6 757 009 11 145 580
Consumer debtors 7 31 028 737 26 933 367 31 028 737 26 933 367
Cash and cash equivalents 8 48 731 048 71 586 809 40 670 866 58 362 814
90 670 236 122 176 630 82 602 346 103 347 968
Non-Current Assets
Property, plant and equipment 9 2 361 553 463 2 196 723 297 2 340 494 072 2 174 636 590
Intangible assets 10 2 154 177 2 435 173 875 303 1 197 027
Investments in controlled entities 11 - - 100 100
2 363 707 640 2 199 158 470 2 341 369 475 2 175 833 717
Total Assets 2 454 377 876 2 321 335 100 2 423 971 821 2 279 181 685
Liabilities
Current Liabilities
Borrowings 12 4 555 057 4 101 623 4 555 057 4 101 623
Finance lease obligation 13 5 455 092 8 540 813 5 348 935 8 426 135
Payables from exchange transactions 14 101 503 238 96 932 236 100 899 482 95 871 418
Consumer deposits 15 1 863 257 1 768 018 1 863 257 1 768 018
Employee benefit obligation 16 770 000 318 714 770 000 318 714
Unspent conditional grants and receipts 17 20 251 021 56 694 251 15 486 481 44 396 884
134 397 665 168 355 655 128 923 212 154 882 792
Non-Current Liabilities
Borrowings 12 - 4 555 057 - 4 555 057
Finance lease obligation 13 4 980 676 9 056 912 4 904 225 8 985 901
Employee benefit obligation 16 17 708 999 18 621 498 17 708 999 18 621 498
Long term payable from non exchange transactions 18 11 661 265 11 661 265 11 661 265 11 661 265
Other financial liability 19 5 074 131 5 317 297 - -
39 425 071 49 212 029 34 274 489 43 823 721
Total Liabilities 173 822 736 217 567 684 163 197 701 198 706 513
Net Assets 2 280 555 140 2 103 767 416 2 260 774 120 2 080 475 172
Accumulated surplus 2 280 555 140 2 103 767 416 2 260 774 120 2 080 475 172
* See Note 43
5
Harry Gwala District Municipality and its Municipal Entity
(Registration number DC 43)
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Performance
Economic entity Controlling entity
Figures in Rand Note(s) 2020 2019 2020 2019
Restated* Restated*
Revenue
Revenue from exchange transactions
Sale of goods - 5 052 115 - -
Service charges 20 70 462 645 58 420 643 70 462 645 58 420 643
Other income 21 1 353 425 784 865 1 353 425 743 465
Interest received 22 18 987 942 19 965 337 18 828 904 19 757 937
Total revenue from exchange transactions 90 804 012 84 222 960 90 644 974 78 922 045
Revenue from non-exchange transactions
Transfer revenue
Government grants & subsidies 23 643 187 263 661 444 867 643 187 263 658 444 867
Public contributions and donations 24 5 863 241 13 424 405 5 863 241 13 424 405
Total revenue from non-exchange transactions 649 050 504 674 869 272 649 050 504 671 869 272
Total revenue 25 739 854 516 759 092 232 739 695 478 750 791 317
Expenditure
Bulk purchases 26 (22 832 763) (17 975 968) (22 832 763) (17 975 968)
Contracted services 27 (143 243 657) (143 387 613) (142 268 801) (142 729 733)
Debt Impairment 28 (43 060 458) (19 110 917) (43 060 458) (19 110 917)
Depreciation and amortisation 29 (72 144 451) (68 089 575) (70 918 931) (66 993 428)
Employee related costs 30 (204 113 467) (190 694 567) (194 229 571) (181 161 151)
Finance costs 31 (4 296 800) (3 765 200) (4 283 737) (3 752 248)
Inventory consumed 32 (5 399 724) (31 005 899) (5 399 724) (31 005 899)
Lease rentals on operating lease 33 (57 613) (46 628) - -
Operational costs 34 (61 309 691) (60 962 305) (55 850 240) (50 004 083)
Remuneration of councillors 35 (7 701 853) (6 952 424) (7 701 853) (6 952 424)
Transfer payments 36 - - (14 000 000) (14 000 000)
Total expenditure (564 160 477) (541 991 096) (560 546 078) (533 685 851)
Operating surplus 175 694 039 217 101 136 179 149 400 217 105 466
Loss on disposal of assets (1 708 544) (8 948 027) (1 652 682) (8 948 027)
Actuarial gains/losses 16 3 828 225 7 466 339 3 828 225 7 466 339
Impairment loss 37 (1 025 548) (2 750 050) (1 025 548) (2 750 050)
1 094 133 (4 231 738) 1 149 995 (4 231 738)
Surplus for the year 176 788 172 212 869 398 180 299 395 212 873 728
* See Note 43
6
Harry Gwala District Municipality and its Municipal Entity
(Registration number DC 43)
Annual Financial Statements for the year ended 30 June 2020
Statement of Changes in Net Assets
Accumulated Total net
Figures in Rand surplus assets
Economic entity
Balance at 01 July 2018 1 890 898 018 1 890 898 018
Changes in net assets
Surplus for the year 212 869 398 212 869 398
Total changes 212 869 398 212 869 398
Restated* Balance at 01 July 2019 2 103 766 968 2 103 766 968
Changes in net assets
Surplus for the year 176 788 172 176 788 172
Total changes 176 788 172 176 788 172
Balance at 30 June 2020 2 280 555 140 2 280 555 140
Controlling entity
Balance at 01 July 2018 1 867 601 444 1 867 601 444
Changes in net assets
Surplus for the year 212 873 728 212 873 728
Total changes 212 873 728 212 873 728
Restated* Balance at 01 July 2019 2 080 474 725 2 080 474 725
Changes in net assets
Surplus for the year 180 299 395 180 299 395
Total changes 180 299 395 180 299 395
Balance at 30 June 2020 2 260 774 120 2 260 774 120
* See Note 43
7
Harry Gwala District Municipality and its Municipal Entity
(Registration number DC 43)
Annual Financial Statements for the year ended 30 June 2020
Cash Flow Statement
Economic entity Controlling entity
Figures in Rand Note(s) 2020 2019 2020 2019
Restated* Restated*
Cash flows from operating activities
Receipts
Water, sanitation and other receipts 45 124 580 44 726 641 40 072 465 44 595 527
Grants 606 744 033 642 320 964 614 276 860 641 826 131
Interest income 6 355 495 10 046 428 6 196 457 9 839 028
658 224 108 697 094 033 660 545 782 696 260 686
Payments
Employee costs (208 448 308) (192 280 918) (198 564 412) (182 497 514)
Suppliers (223 255 440) (273 686 735) (230 851 300) (280 824 161)
Finance costs (4 296 800) (3 765 200) (4 283 737) (3 752 248)
(436 000 548) (469 732 853) (433 699 449) (467 073 923)
Net cash flows from operating activities 39 222 223 560 227 361 180 226 846 333 229 186 763
Cash flows from investing activities
Purchase of property, plant and equipment 9 (233 162 114) (256 894 466) (233 043 490) (256 582 632)
Proceeds from sale of property, plant and equipment 9 1 061 620 - 1 061 620 -
Purchase of other intangible assets 10 (176 169) (193 140) - -
Net cash flows from investing activities (232 276 663) (257 087 606) (231 981 870) (256 582 632)
Cash flows from financing activities
Repayment of borrowings (4 101 623) (6 159 439) (4 101 623) (6 159 439)
Movement in long term payable from non exchange - 731 037 - 731 037
transactions
Movement in other financial liability (243 166) - - -
Finance lease payments (8 457 869) (5 594 033) (8 454 788) (5 774 946)
Net cash flows from financing activities (12 802 658) (11 022 435) (12 556 411) (11 203 348)
Net increase/(decrease) in cash and cash (22 855 761) (40 748 861) (17 691 948) (38 599 217)
equivalents
Cash and cash equivalents at the beginning of the year 71 586 809 112 335 670 58 362 814 96 962 031
Cash and cash equivalents at the end of the year 8 48 731 048 71 586 809 40 670 866 58 362 814
* See Note 43
8
Harry Gwala District Municipality and its Municipal Entity
(Registration number DC 43)
Annual Financial Statements for the year ended 30 June 2020
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 Note
basis budget and
Figures in Rand actual
Economic entity
Statement of Financial Performance
Revenue
Revenue from exchange
transactions
Service charges 88 392 069 (21 326 819) 67 065 250 70 462 645 3 397 395 55
Other income 781 415 7 713 426 8 494 841 1 353 425 (7 141 416) 55
Interest received 20 819 511 (3 904 251) 16 915 260 18 987 942 2 072 682 55
Total revenue from exchange 109 992 995 (17 517 644) 92 475 351 90 804 012 (1 671 339)
transactions
Revenue from non-exchange
transactions
Transfer revenue
Government grants & subsidies 642 242 000 29 597 000 671 839 000 643 187 263 (28 651 737) 55
Public contributions and - - - 5 863 241 5 863 241 55
donations
Total revenue from non- 642 242 000 29 597 000 671 839 000 649 050 504 (22 788 496)
exchange transactions
Total revenue 752 234 995 12 079 356 764 314 351 739 854 516 (24 459 835)
Expenditure
Employee related costs (205 725 807) (433 782) (206 159 589) (204 113 467) 2 046 122 55
Remuneration of councillors (7 574 057) - (7 574 057) (7 701 853) (127 796) 55
Depreciation and amortisation (38 192 494) (42 094 129) (80 286 623) (72 144 451) 8 142 172 55
Impairment loss - - - (1 025 548) (1 025 548) 55
Finance costs (3 522 082) (658 266) (4 180 348) (4 296 800) (116 452) 55
Lease rentals on operating lease - - - (57 613) (57 613) 55
Debt Impairment (25 315 400) - (25 315 400) (43 060 458) (17 745 058) 55
Bulk purchases (15 000 000) (8 134 419) (23 134 419) (22 832 763) 301 656 55
Contracted Services (101 501 547) (60 340 451) (161 841 998) (143 243 657) 18 598 341 55
Inventory consumed (15 443 359) 6 868 481 (8 574 878) (5 399 724) 3 175 154 55
Operational costs (57 324 206) (2 756 782) (60 080 988) (61 309 691) (1 228 703) 55
Total expenditure (469 598 952) (107 549 348) (577 148 300) (565 186 025) 11 962 275
Operating surplus 282 636 043 (95 469 992) 187 166 051 174 668 491 (12 497 560)
Loss on disposal of assets and - - - (1 708 544) (1 708 544) 55
liabilities
Actuarial gains/losses - - - 3 828 225 3 828 225 55
- - - 2 119 681 2 119 681
Surplus before taxation 282 636 043 (95 469 992) 187 166 051 176 788 172 (10 377 879)
Actual Amount on Comparable 282 636 043 (95 469 992) 187 166 051 176 788 172 (10 377 879)
Basis as Presented in the
Budget and Actual
Comparative Statement
9