NC081 Mier AFS 2011-12 audited

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ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE
2012

MIER LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2012
General information
Members of the Council:
MA Eiman Mayor
NB Joseph Councillor
KW Dodds Councillor
PJJ Smith Councillor
PP Farao Councillor
AM Titus Councillor
S Masikani Councillor
Acting Municipal Manager: M Makibi
Chief Financial Officer: E Mouton
Grading of Local Authority: Grade 2
Auditors: Auditor-General
Bankers: Standard Bank of South Africa Limited
Registered Office: 63 Loubos Road
Rietfontein
MIER
8811
Physical address: 63 Loubos Road
Rietfontein
MIER
8811
Postal address: PO Box 178
Rietfontein
MIER
8811
Telephone number: [phone]
Fax number: [phone]
MIER LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2012
Approval of annual financial statements
Iamresponsibleforthepreparationof theseannualfinancialstatements,whicharesetoutonpagesXtoXX,
intermsofSection126(1)oftheMunicipalFinanceManagementActandwhichIhavesignedonbehalf ofthe
Municipality.
I certify that the salaries, allowances and benefits of Councillors, loans made to Councillors, if any, and
payments made to Councillors for loss of office, if any, as disclosed in note 25 of these annual financial
statements are within the upper limits of the framework envisaged in Section 219 of the Constitution, read with
the Remuneration of Public Officer Bearers Act and the Minister of Provincial and Local Government’s
determination in accordance with this Act.
Acting Municipal Manager: M Makibi
30 December 2012
MIER LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2012
INDEX
Description Page no.
Statement of Financial Position 9 - 9
Statement of Financial Performance 10 - 10
Statement of Changes in Net Assets 11 - 11
Cash Flow Statement 12 - 12
Notes to the Financial Statements 13 - 95
The following appendices do not form part of the Annual Financial Statments and
are unaudited:
Appendix A 96 - 96
Appendix B 97 - 99
Appendix C 100 - 100
Appendix D 101 - 101
Appendix E (1) 102 - 103
Appendix F 104 - 104
MIER LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2012
REPORT OF THE CHIEF FINANCIAL OFFICER
1. INTRODUCTION
ItgivesmegreatpleasuretopresentthefinancialpositionofMierLocalMunicipalityat30June2012andtheresultsofitsoperationsand
cash flows for the year then ended.
TheseAnnualFinancialStatementshavebeenpreparedinaccordancewithGenerallyRecognisedAccountingPractice(GRAP),issued
bytheAccounting StandardsBoard (ASB)in accordancewith Section122(3)ofthe MunicipalFinance ManagementAct,(ActNo 56of
2003). The standards and pronouncements that form the GRAP Reporting Framework for the 2010/11 financial period is set out in
Directive 5 issued by the ASB on 11 March 2009.
TheStatementofFinancialPositionat30June2012indicatesanincreaseinNetAssets,andanincreaseinbothNon-currentLiabilities
and Current Liabilities.
The increase in Net Assets is ascribed primarily to the increase in Accumulated Surplus as a result of the surplus generated on the
operatingaccount. TheincreaseinNon-currentLiabilitiesisprimarilyasaresultoftheincreaseinNon-currentProvisions. Theincrease
in Current Liabilities is primarily as a result of the increase in Payables.
2. KEY FINANCIAL INDICATORS
Thefollowingindicatorsareself-explanatory. Thepercentagesofexpenditurecategoriesarewellwithinacceptablenormsandindicate
good governance of the funds of the municipality.
Financial Statement Ratios:
INDICATOR 2012 2011
Surplus / (Deficit) before Appropriations 1,603,342 (3,972,674)
Surplus / (Deficit) at the end of the Year 316,775,605 315,034,982
Expenditure Categories as a percentage of Total Expenses:
Employee Related Costs 23.89% 27.53%
Remuneration of Councillors 5.48% 5.88%
Depreciation and Amortisation 10.04% 12.11%
Impairment Losses 11.62% 3.26%
Repairs and Maintenance 13.16% 16.93%
Interest Paid 1.05% 0.39%
Bulk Purchases 0.00% 0.00%
Contracted Services 0.93% 2.16%
Grants and Subsidies Paid 0.00% 0.00%
General Expenses 33.84% 31.74%
Current Ratio:
Creditors Days 110 81
Debtors Days 36 243
TheextremelygoodratioforDebtorsDays,calculatedonnetDebtors, isbecauseofbaddebtsintheamountofR14907188(2010/11:
R11 122 677) written-off during the year under review and a substantial increase in the Provision for Impairment, which renders a
favourable ratio for the year.
3. OPERATING RESULTS
Details of the operating results per segmental classification of expenditure are included in Appendix "D".
Details of the operating results per segmental classification of expenditure are included in Appendix"D", whilst operational results per
categoryofexpenditure,togetherwithanexplanationofsignificantvariancesofmorethan10%frombudget,areincludedinAppendix"E
(1)".
TheservicesofferedbyMierLocal Municipalitycan generallybe classifiedasRatesand General,EconomicandTrading Servicesand
are discussed in more detail below.
MIER LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2012
REPORT OF THE CHIEF FINANCIAL OFFICER
3. OPERATING RESULTS (Continued)
The overall operating results for the year ended 30 June 2012 are as follows:
Actual Actual Percentage Budgeted Variance actual/
DETAILS 2011/12 2010/11 Variance 2011/12 budgeted
R R % R %
Income:
Opening surplus / (deficit) 315,034,982 144,025,132 119% - 100%
Operating income for the year 30,173,238 17,409,404 73% 37,460,964 -19%
Appropriations for the year 137,281 - 100% - 100%
345,345,500 161,434,535 37,460,964
Expenditure:
Operating expenditure for the year 28,569,896 21,382,077 34% 37,491,801 -24%
Sundry transfers - (174,982,523) -100% - 0%
Closing surplus / (deficit) 316,775,605 315,034,982 1% (30,837) -1027356%
345,345,500 161,434,536 37,460,964
-
3.1 Rates and General Services:
Rates and General Services are all types of services rendered by the municipality, excluding those listed below. The main income
sources are Assessment Rates and Sundry Fees levied.
Actual Actual Percentage Budgeted Variance actual/
DETAILS 2011/12 2010/11 Variance 2011/12 budgeted
R R % R %
Income 22,670,832 12,281,974 85% 30,076,039 -25%
Expenditure (16,041,938) (10,665,434) 50% (12,968,485) 24%
Surplus / (Deficit) 6,628,893 1,616,539 17,107,555
Surplus / (Deficit) as % of total income 29.24% 13.16% 56.88%
3.2 Public Works:
PublicWorksareservicesrenderedbythemunicipalitytosupplyhousingtothecommunityandincludestherentalofunitsownedbythe
municipality to public and staff.
Actual Actual Percentage Budgeted Variance actual/
DETAILS 2011/12 2010/11 Variance 2011/12 budgeted
R R % R %
Income 4,274,365 1,683,843 154% 3,262,816 31%
Expenditure (8,274,360) (6,336,333) 31% (15,523,056) -47%
Surplus / (Deficit) (3,999,995) (4,652,490) 18,785,872
Surplus / (Deficit) as % of total income (93.58)% (276.30)% 575.76%
MIER LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2012
REPORT OF THE CHIEF FINANCIAL OFFICER
3. OPERATING RESULTS (Continued)
3.3 Sewerage Services:
Sewerage Servicesare servicesrendered bythe municipalityforthe collection,disposal and purifying of waste (refuse and sewerage).
Income is mainly generated from the levying of fees and tariffs determined by the council.
Actual Actual Percentage Budgeted Variance actual/
DETAILS 2011/12 2010/11 Variance 2011/12 budgeted
R R % R %
Income 2,047,302 2,227,701 -8% 2,362,702 -13%
Expenditure (2,561,751) (2,441,035) 5% (6,416,584) -60%
Surplus / (Deficit) (514,449) (213,334) (4,053,882)
Surplus / (Deficit) as % of total income (25.13)% (9.58)% (171.58)%
3.4 Water Services:
Waterispumpedfromboreholesanddistributedtotheconsumersbythemunicipality.Tariffsleviedforwateraresubjecttoadministered
adjustments.
Actual Actual Percentage Budgeted Variance actual/
DETAILS 2011/12 2010/11 Variance 2011/12 budgeted
R R % R %
Income 1,180,740 1,215,886 -3% 1,759,406 -33%
Expenditure (1,691,847) (1,939,275) -13% (2,583,676) -35%
Surplus / (Deficit) (511,107) (723,389) 4,343,082
Surplus / (Deficit) as % of total income (43.29)% (59.49)% 246.85%
4. ACCUMULATED SURPLUS
The balance of the Accumulated Surplus as at 30 June 2012 amounted to R316,775,605 (30 June 2011: R315,034,982) and is made up
Accumulated Surplus 316,775,605
3 16,775,605
The municipality, in conjunction with its own capital requirements and external funds (external loans and grants) is able to finance its
annual infrastructure capital programme.
Refer to Note 17 and the Statement of Change in Net Assets for more detail.
5. LONG-TERM LIABILITIES
The outstanding amount of Long-term Liabilities as at 30 June 2012 was R953,611 (30 June 2011: R1,059,046).
Refer to Note 15 and Appendix "A" for more detail.
MIER LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2012
REPORT OF THE CHIEF FINANCIAL OFFICER
6. NON-CURRENT PROVISIONS
Non-current Provisions amounted R36,153,326 as at 30 June 2012 (30 June 2011: R32,941,142) and is made up as follows:
Provision for Long-term Service 110,465
Provision for Rehabilitation of Land-fill Sites 3 6,042,861
3 6,153,326
Theseprovisionsaremadeinordertoenablethemunicipalitytobeinapositiontofulfillitsknownlegalobligationswhentheybecome
due and payable.
Refer to Note 16 for more detail.
7. CURRENT LIABILITIES
Current Liabilities amounted R13,029,292 as at 30 June 2012 (30 June 2011: R12,456,548) and is made up as follows:
Payables Note 13 8,576,720
Unspent Conditional Grants and Receipts Note 14 4,396,845
Current Portion of Long-term Liabilities Note 15 55,727
1 3,029,292
Current Liabilities are those liabilities of the municipalitydue and payable in the short-term (less than 12 months). There is no known
reason as to why the municipality will not be able to meet its obligations.
Refer to the indicated Notes for more detail.
8. PROPERTY, PLANT AND EQUIPMENT
The net value of Property, Plant and Equipment was R303,754,454 as at 30 June 2012 (30 June 2011: R296,438,847).
Refer to Note 9 and Appendices "B, C and E (2)" for more detail.
9. INTANGIBLE ASSETS
The net value of Intangible Assets were R817,278 as at 30 June 2012 (30 June 2011: R1,260,000).
Theseareassetswhichcannotphysicallybeidentifiedandverifiedandareinrespectofcomputersoftwareobtainedbythemunicipality
in order to be able to fulfil its duties as far as service delivery is concerned.
Refer to Note 10 and Appendix "B" for more detail.
10. INVESTMENT PROPERTIES
The net value of Investment Properties were R53,815,393 as at 30 June 2012 (30 June 2011: R53,815,393).
Refer to Note 11 and Appendix "B" for more detail.
11. BIOLOGICAL ASSETS
The net value of Intangible Assets were R3,216,382 as at 30 June 2012 (30 June 2011: R2,843,833).
The biological assets consists of game (springbuck, gemsbuck, eland and ostriches).
The assets are counted annually and income is derived through the sale thereof. These assets are carried in the accounting records of
the municiplaity at their fair value less cost to sale, as prescribed by the applicable GRAP standards.
MIER LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2012
REPORT OF THE CHIEF FINANCIAL OFFICER
14. CURRENT ASSETS
Current Assets amounted R5,308,327 as at 30 June 2012 (30 June 2011: R7,133,645) and is made up as follows:
Inventories Note 3 686,455
Receivables from Exchange Transactions Note 4 357,670
Receivables from Non-exchange Transactions Note 5 1,592,994
VAT Receivable Note 6 2,608,677
Cash and Cash Equivalents Note 7 12,208
Operating Lease Assets Note 8 50,323
5,308,327
The increase in the amount for Current Assets is mainly due to the increased amount held in Bank and Cash Equivalents.
Refer to the indicated Notes for more detail.
15. INTER-GOVERNMENTAL GRANTS
Themunicipalityisdependentonfinancialaidfromothergovernmentspherestofinanceitsannualcapitalprogramme. Operatinggrants
are utilised to finance indigent assistance and provision of free basic services.
Refer to Notes 14 and 19, and Appendix "F" for more detail.
16. EVENTS AFTER THE REPORTING DATE
Full details of all known events, if any, after the reporting date are disclosed in Note 48.
17. EXPRESSION OF APPRECIATION
WearegratefultotheMayor,membersoftheExecutiveCommittee,Councillors,theMunicipalManagerandHeadsofDepartmentsfor
the support extended during the financial year. A special word of thanks to all staff in the Finance Department, for without their
assistance these Annual Financial Statements would not have been possible.
CHIEF FINANCIAL OFFICER
30 December 2012