MAN Mangaung AFS 2019-20 unaudited

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Mangaung Metropolitan Municipality
Annual Financial Statements
for the year ended 30 June 2020
Mangaung Metropolitan Municipality
Annual Financial Statements for the year ended 30 June 2020
General Information
Legal form of entity Municipality
Nature of business and principal activities Providing municipal services and maintaining the best interest of the local
community, mainly in the Mangaung area
Grading of local authority Metropolitan
Executive Mayor LA Masoetsa - Acting as at 31 October 2020
SM Mlamleli - as at 30 June 2020
Deputy Executive Mayor LA Masoetsa
Speaker MA Siyonzana
Mayoral Committee Members VE Jonas
MM Mahase
NP Monyakoana
NA Morake
J Nothnagel
M Nkhabu
XD Pongolo
G Thipenyane
LM Titi-Odili
Accounting Officer Adv TB Mea
Chief Financial Officer S Mofokeng
Registered office Bram Fischer Building
Cnr Nelson Mandela Drive and Markgraaff Street
Bloemfontein
9301
Postal address PO Box 3704
Bloemfontein
9301
Bankers Nedbank
ABSA
Development Bank of South Africa
First National Bank
Standard Bank
Auditors Auditor General of South Africa
Enabling legislation Municipal Finance Management Act, (Act 56 of 2003)
Municipal Systems Act, (Act 32 of 2000)
Municipal Structures Act, (Act 117 of 1998)
Municipal Property Rates Act, (Act 3 of 2017)
Division of Revenue Act (Act 16 of 2019)
Municipal Demarcation Act, (Act 27 of 1998)
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Mangaung Metropolitan Municipality
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 council and the provincial legislature:
Page
Abbreviations 3
Accounting Officer's Responsibilities and Approval 4
Accounting Officer's Report 5
Statement of Financial Position 6
Statement of Financial Performance 7
Statement of Changes in Net Assets 8
Cash Flow Statement 9
Statement of Comparison of Budget and Actual Amounts 10 - 12
Accounting Policies 13 - 48
Notes to the Annual Financial Statements 49 - 109
Appendixes:
Appendix A: Schedule of External loans - Unaudited 110
Appendix B: Councillors' arrear consumer accounts (over 90 days) - Audited 111
Appendix C: Disclosure of Grants and Subsidies in terms of the Municipal Finance Management Act - 115
Unaudited
Appendix D(1): Budgeted Financial Performance (revenue and expenditure) - Unaudited 116
Appendix D(2): Budgeted Financial Performance (revenue and expenditure by municipal vote) - Audited 118
Appendix D(3): Budgeted Financial Performance (revenue and expenditure by functional classification) - 119
Unaudited
Appendix D(4): Budgeted Capital Expenditure by vote - Audited 121
Appendix D(5): Budgeted Capital Expenditure by functional classification and funding - Unaudited 122
Appendix D(6): Budgeted Cash Flows - Unaudited 123
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Mangaung Metropolitan Municipality
Annual Financial Statements for the year ended 30 June 2020
Abbreviations
1. Abbreviations used within the annual financial statements
ACT Actual
BAL Balance
COID Compensation for Occupational Injuries and Diseases
CPI Consumer Price Index
DBSA Development Bank of South Africa
GRAP Generally Recognised Accounting Practice
HOD Head of Directorate
IGRAP Interpretation of the Standards of Generally Recognised Accounting Practice
MFMA Municipal Finance Management Act, (Act 56 of 2003)
PAYE Pay As You Earn
PPE Property, Plant and Equipment
SALGA South African Local Government Association
SARS South African Revenue Service
SOC State Owned Company
UIF Unemployment Insurance Fund
VAT Value Added Tax
WIP Work-in-Progress
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Mangaung Metropolitan Municipality
Annual Financial Statements for the year ended 30 June 2020
Accounting Officer's Report
The accounting officersubmitshis report for the year ended 30 June 2020.
1. Review of activities
Main business and operations
The entity is engaged in providing municipal services and maintaining the best interest of the local community, mainly in the Mangaung
area and operates principally in South Africa.
The operating results and state of affairs of the entity are fully set out in the attached annual financial statements and do not in my opinion
require any further comment.
Net deficit of the entity was R145,677,595 (2019: deficitR42,397,934).
2. Going concern
I draw attention to the fact that at 30 June 2020, the entity had an accumulated surplus of R12,413,922,329 and that the entity's total assets
exceed its liabilities by R13,351,308,479.
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. Refer to note 60 for further details.
The entity still has the power to levy rates and taxes and it will continue to receive funding from government as evident from the equitable share
allocation in terms of the Division of Revenue Act, (Act 4 of 2020).
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
None.
5. Accounting Officer
The accounting officer of the entity during the year and to the date of this report is as follows:
Name Nationality
Adv TB Mea South African
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Mangaung Metropolitan Municipality
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Position as at 30 June 2020
Figures in Rand Note(s) 2020 2019
Restated*
Assets
Current Assets
Inventories 3 540,345,863 532,072,166
Consumer receivables from non-exchange transactions 4 888,265,777 685,266,358
Consumer receivables from exchange transactions 5 945,009,079 805,892,723
Other receivables from non-exchange transactions 6 400,270 606,414
Other receivables from exchange transactions 7 69,931,091 56,083,407
VAT receivable 8 150,017,030 85,985,330
Centlec intercompany loan 9 776,203,042 507,497,129
Current portion of Centlec receivables 10 6,697,009 274,566,798
Cash and cash equivalents 11 395,231,159 114,430,316
3,772,100,320 3,062,400,641
Non-Current Assets
Investment property 12 1,571,238,441 1,570,113,653
Property, plant and equipment 13 12,086,875,185 12,516,311,741
Intangible assets 14 5,950,537 6,456,679
Heritage assets 15 279,968,687 279,968,687
Investments in controlled entities 16 100 100
Centlec receivables 10 864,613,015 871,310,024
Non-current receivables 17 156,891 155,558
14,808,802,856 15,244,316,442
Total Assets 18,580,903,176 18,306,717,083
Liabilities
Current Liabilities
Payables from exchange transactions 18 1,738,337,703 1,172,031,714
Payables from non-exchange transactions 19 266,325,253 286,291,274
Consumer deposits 20 33,599,273 33,349,144
Unspent conditional grants and receipts 21 436,229,060 459,078,487
Current portion of finance lease obligation 22 74,194,252 28,654,747
Current portion of borrowings 23 190,591,008 158,581,540
Current portion of provisions 24 465,924,182 457,873,356
3,205,200,731 2,595,860,262
Non-Current Liabilities
Finance lease obligation 22 81,660,306 41,660,603
Borrowings 23 706,254,111 868,583,041
Provisions 24 178,043,636 178,043,636
Employee benefit obligation 25 502,525,629 538,815,163
FRESHCO Liability 26 177,776,030 191,903,926
Land availability liability 27 378,134,254 394,864,380
2,024,393,966 2,213,870,749
Total Liabilities 5,229,594,697 4,809,731,011
Net Assets 13,351,308,479 13,496,986,072
Reserves
Revaluation reserve 28 905,098,875 925,449,343
Self insurance reserve 29 10,000,000 10,000,000
COID reserve 30 22,287,275 20,922,250
Accumulated surplus 12,413,922,329 12,540,614,479
Total Net Assets 13,351,308,479 13,496,986,072
* See Note 55 & 57
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Mangaung Metropolitan Municipality
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Performance
Figures in Rand Note(s) 2020 2019
Restated*
Revenue
Revenue from exchange transactions
Service charges 32 1,326,373,449 1,242,813,818
Rental of facilities and equipment 33 46,527,415 45,993,141
Other income from exchange transactions 34 66,295,289 71,524,369
Interest received from exchange transactions 35 427,920,120 431,107,315
Gain on derecognition of assets and liabilities - 1,000
Fair value adjustments 36 1,124,715 3,777,387
Actuarial gains 82,858,877 265,930,035
Dividends received 35 2,849 1,420
Total revenue from exchange transactions 1,951,102,714 2,061,148,485
Revenue from non-exchange transactions
Taxation revenue
Property rates 37 1,334,854,287 1,209,977,460
Interest received from non-exchange transactions 35 62,804,076 69,751,900
Transfer revenue
Government grants & subsidies 38 1,556,357,427 1,871,199,842
Public contributions and donations 39 223,400 1,397,194
Fines, penalties and forfeits 40 16,770,072 60,802,042
Total revenue from non-exchange transactions 2,971,009,262 3,213,128,438
Total revenue 31 4,922,111,976 5,274,276,923
Expenditure
Employee related costs 41 (1,696,664,462) (1,689,897,209)
Remuneration of councillors 42 (67,201,568) (64,434,209)
Depreciation and amortisation 43 (780,084,869) (818,680,994)
Impairment loss / Reversal of impairments 44 (11,234,773) (933,592)
Finance costs 45 (169,594,986) (193,795,389)
Debt impairment and bad debt write off 46 (677,101,344) (819,053,371)
Bulk purchases 47 (762,209,048) (818,335,854)
Contracted services 48 (477,841,308) (489,565,158)
Grants and subsidies paid 49 (26,002,000) (22,109,800)
Loss on derecognition of assets and liabilities (13,263,030) (18,573,791)
General expenses 50 (386,592,183) (381,295,490)
Total expenditure (5,067,789,571) (5,316,674,857)
Deficit for the year (145,677,595) (42,397,934)
* See Note 55 & 57
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Mangaung Metropolitan Municipality
Annual Financial Statements for the year ended 30 June 2020
Statement of Changes in Net Assets
Revaluation Self insurance COID reserve Total reserves Accumulated Total net assets
Figures in Rand reserve reserve surplus
Opening balance as previously reported 948,965,140 5,000,000 16,690,714 970,655,854 12,812,269,650 13,782,925,504
Adjustments
Prior year adjustments - - - - (243,807,889) (243,807,889)
Balance at 01 July 2018 as restated* 948,965,140 5,000,000 16,690,714 970,655,854 12,568,461,761 13,539,117,615
Changes in net assets
Surplus for the year - - - - (42,397,934) (42,397,934)
Contributions received - 5,094,475 5,450,081 10,544,556 (10,544,556) -
Insurance claims processed - (94,475) (1,218,545) (1,313,020) 1,313,020 -
Revaluation of assets 289,355 - - 289,355 - 289,355
Realisation of the revaluation reserve through depreciation (23,782,188) - - (23,782,188) 23,782,188 -
Realisation of the revaluation reserve through disposal (22,964) - - (22,964) - (22,964)
Total changes (23,515,797) 5,000,000 4,231,536 (14,284,261) (27,847,282) (42,131,543)
Opening balance as previously reported 925,449,343 10,000,000 20,922,250 956,371,593 12,523,216,902 13,479,588,495
Adjustments
Prior year adjustments - - - - 17,397,579 17,397,579
Restated* Balance at 01 July 2019 as restated* 925,449,343 10,000,000 20,922,250 956,371,593 12,540,614,481 13,496,986,074
Changes in net assets
Surplus for the year - - - - (145,677,595) (145,677,595)
Contributions received - 416,673 2,718,755 3,135,428 (3,135,428) -
Insurance claims processed - (416,673) (1,353,730) (1,770,403) 1,770,403 -
Realisation of the revaluation reserve through depreciation (20,350,468) - - (20,350,468) 20,350,468 -
Total changes (20,350,468) - 1,365,025 (18,985,443) (126,692,152) (145,677,595)
Balance at 30 June 2020 905,098,875 10,000,000 22,287,275 937,386,150 12,413,922,329 13,351,308,479
Note(s) 28 29 30
* See Note 55 & 57
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Mangaung Metropolitan Municipality
Annual Financial Statements for the year ended 30 June 2020
Cash Flow Statement
Figures in Rand Note(s) 2020 2019
Restated*
Cash flows from operating activities
Receipts
Sale of goods and services 1,726,911,495 1,584,188,871
Grants 1,533,508,000 2,000,543,002
Interest income 248,431,386 276,228,498
Dividends received 2,849 1,420
3,508,853,730 3,860,961,791
Payments
Employee costs (1,742,735,628) (1,717,619,951)
Suppliers (958,255,844) (1,353,771,654)
Finance costs (6,031,378) (5,488,610)
Grants paid (2,000) (6,659,800)
(2,707,024,850) (3,083,540,015)
Net cash flows from operating activities 51 801,828,880 777,421,776
Cash flows from investing activities
Purchase of property, plant and equipment 13 (245,565,815) (585,799,814)
Purchase of other intangible assets 14 (242,820) -
Proceeds from sale of financial assets (1,406) 86,938
Finance costs 507,257 619,296
Net cash flows from investing activities (245,302,784) (585,093,580)
Cash flows from financing activities
Repayment of borrowings (130,319,462) (97,115,670)
Finance lease payments (30,570,905) (19,277,551)
Consumer deposits 250,129 (591,601)
Finance cost (115,085,015) (115,346,981)
Net cash flows from financing activities (275,725,253) (232,331,803)
Net increase/(decrease) in cash and cash equivalents 280,800,843 (40,003,607)
Cash and cash equivalents at the beginning of the year 114,430,316 154,433,923
Cash and cash equivalents at the end of the year 11 395,231,159 114,430,316
* See Note 55 & 57
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