NC091 Sol Plaatje AFS 2019-20 unaudited

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SOL PLAATJE LOCAL MUNICIPALITY
CITY OF KIMBERLEY
SOL PLAATJE LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended
30 June 2020
SOL PLAATJE LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
INDEX
Page
General Information 2
Declaration Accounting Officer 3
Statement of Financial Position 4
Statement of Financial Performance 5
Statement of Changes in Net Assets 6
Cash Flow Statement 7
Accounting Policies 8
Notes to the Annual Financial Statements 36
Appendices are supplementary information and do not form part of the Financial Statements and are
unaudited, unless stated otherwise.
Appendix A: Schedule of External Loans 76
Appendix B: Analysis of Property, Plant and Equipment 77
Appendix C: Segmental Analysis of Property, Plant and Equipment 78
Appendix D: Segmental Statement of Financial Performance 79
Appendix E: Disclosures of Grants and subsidies in Terms of the Municipal Finance Management Act 80
Appendix F: Disclosures of Deviations from procurement policy 81
Appendix G: Appropriation Statements A1 - A7 82
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SOL PLAATJE LOCAL MUNICIPALITY
GENERAL INFORMATION
FOR THE YEAR ENDED 30 JUNE 2020
EXECUTIVE MAYOR Alderman SP Mabilo
SPEAKER Councillor I Koopman
GRADING OF THE LOCAL AUTHORITY: Grade 5 NC091
AUDITORS: Auditor-General of South Africa
Block 1 Montrio Corporate Park
10 Oliver Road Private Bag X5013
Monument Heights
Kimberley Kimberley
8301 8300
Telephone [phone]
Fax [phone]
BANKERS: Standard Bank
C/O Bultfontein and Lennox Street P.O. Box 626
Kimberley Kimberley
8301 8300
Telephone [phone]
Fax [phone]
REGISTERED OFFICE: Civic Centre
Sol Plaatje Drive Private Bag X5030
Kimberley Kimberley
8301 8300
Telephone [phone]
Fax [phone]
MUNICIPAL MANAGER: Mr G Akharwaray B.Proc.LLB, Certificate in Management
CHIEF FINANCIAL OFFICER: Me ZL Mahloko B.Comm Hons
MEMBERS OF COUNCIL: Councillor
Ward
1 Francis BP 12 Mocwagole LL 23 Vorster PJ
2 Mohamed L 13 Molatudi MK 24 Steyn SM
3 Lewis CB 14 Pieterse LHS 25 Fourie OC
4 Mpanza TH 15 Keetile WM 26 Makhamba BJ
5 Mohapi PM 16 Stout BJ 27 Hammer N
6 Setlholo DT 17 Petoro GI 28 Japhta H
7 Diphahe JG 18 Van Wyk PR 29 Springbok B
8 Ngoma TC 19 Lekoma IA 30 Kock GP
9 Swazi DM 20 Pearce C 31 Keme BJ
10Gomba JT 21 Van Rooyen WA 32 Banda F
11Mojakwe IM 22 Maditse NM 33 Sebego KM
Councillor
Proportional
1 Badenhorst EL 11 Kika SN 21 Mothelesi FK
2 Beylefeld MJ 12 Kok PK 22 Ndelaphi J
3 Bishop PD 13 Kruger F 23 Niemann E
4 Boqo AN 14 Liebenberg CR 24 Phillipus G
5 Britz S 15 Louw M 25 Phiri KC
6 Chinkuli DS 16 Matshediso OM 26 Pholoholo IM
7 Farland L 17 Meintjies M 27 Plaatjie OB
8 Griqua SH 18 Miller HB 28 Shushu LN
9 Jaffer CB 19 Morwe RT 29 Thulo FL
10Joseph GH 20 Moshweu MM 30 Van Den Berg HJ
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SOL PLAATJE LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2020
I am accountable for the preparation of these annual financial statements, which
are set out on pages 3 to 87, in terms of Section 126(1) of the Municipal Finance
Management Act and which I have signed on behalf of the Municipality.
I certify that the salaries, allowances and benefits of Councillors as disclosed in
note 30 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.
I acknowledge full responsibility for the system of internal financial control and the
duty to maintain adequate accounting records as required by MFMA 56 of 2003.
B Dhulwayo
Municipal Manager Acting
30 October 2020
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SOL PLAATJE LOCAL MUNICIPALITY
STATEMENT OF FINANCIAL POSITION AT 30 June 2020
Note 2020 2019 2020 Budget
R R R
ASSETS
Current Assets 1 ,800,396,719 1 ,558,025,301 1 ,629,536,236
Inventory 2 35,583,221 39,015,193 36,347,236
Trade Receivables from Exchange Transactions 4 1 ,068,154,021 9 44,040,829 6 30,283,000
Statutory Receivables from Non-Exchange Transactions 5 4 89,785,454 4 20,294,770 7 60,813,000
Trade Receivables from Non-Exchange Transactions 5 68,987,709 57,593,899
Cash and Cash Equivalents 6 99,305,392 74,019,286 2 02,093,000
Statutory Receivable from Exchange Transactions 8 38,580,922 23,061,323
Non-Current Assets 2 ,111,861,286 2 ,002,307,186 2 ,081,150,458
Property, Plant and Equipment 9 1 ,808,607,183 1 ,739,378,774 1 ,862,117,821
Heritage Assets 9 12,070,884 12,070,884 7,863,705
Intangible Assets 10 2 ,508,303 5,766,023 11,227,694
Investment Property 11 2 09,343,620 2 08,868,734 1 92,202,009
Trade Receivables from Exchange Transactions 4 67,812,676 30,482,785 7,739,229
Statutory Receivables from Non-Exchange Transactions 5 11,518,620 5,739,985
Total Assets 3 ,912,258,004 3 ,560,332,487 3 ,710,686,694
LIABILITIES
Current Liabilities 5 73,017,890 4 27,029,641 2 76,207,824
Consumer Deposits 13 36,710,173 34,916,719 33,274,330
Employee Benefits 14 66,237,249 67,904,658 12,416,000
Payables from Exchange Transactions 15 3 54,284,062 2 37,934,440 2 03,328,000
Unspent Conditional Grants and Receipts 16 27,125,668 6,900,788 -
VAT Payable from Exchange Transactions 17 78,501,913 66,226,471 17,790,000
Current Portion of Long-term Liabilities 18 10,158,824 13,146,566 9,399,494
Non-Current Liabilities 4 28,088,746 4 56,121,589 4 48,139,541
Long-term Liabilities 18 1 82,359,336 1 91,895,172 1 63,017,541
Employee Benefit Liabilities 19 2 45,431,390 2 63,749,873 2 85,122,000
Non-current Provisions 20 298,020 476,543
Total Liabilities 1 ,001,106,636 8 83,151,229 7 24,347,365
Total Assets and Liabilities 2 ,911,151,369 2 ,677,181,257 2 ,986,339,329
NET ASSETS 2 ,911,151,369 2 ,677,181,257 2 ,986,339,329
Accumulated Surplus 21 2 ,911,151,369 2 ,677,181,257 2 ,986,339,329
Total Net Assets 2 ,911,151,369 2 ,677,181,257 2 ,986,339,329
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SOL PLAATJE LOCAL MUNICIPALITY
STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 June 2020
Budget Budget Actual Actual
2019 2020 Note 2020 2019
R R R R
REVENUE
Revenue from Non-exchange Transactions
541,312,085 558,654,168 Property Rates 22 555,073,410 512,886,361
25,735,000 35,305,000 Fines and Penalties 31,614,429 36,982,279
3,450,000 4,764,000 Licences and Permits 5,863,167 6 ,319,276
388,289,910 405,423,147 Government Grants and Subsidies Received 26 357,825,929 389,363,355
Revenue from Exchange Transactions
1,015,308,354 1,087,798,399 Service Charges 24 1 ,049,129,002 905,247,585
11,257,000 11,810,000 Rental of Facilities and Equipment 25 11,426,831 11,092,199
- - Income for Agency Services - 5 76,183
15,000,000 7,500,000 Interest Earned - External Investments 23 5,502,609 10,001,619
141,490,000 147,940,000 Interest Earned - Outstanding Debtors 23 145,492,162 141,429,154
25,212,900 17,826,500 Other Income 28 23,808,886 16,309,156
10,000,000.00 0 Gains on Disposal of Property, Plant and Equipment 374,883 5 79,006
2 ,177,055,249 2,277,021,214 Total Revenue 2 ,186,111,308 2,030,786,174
EXPENDITURE
698,651,971 727,556,643 Employee Related Costs 29 653,284,271 688,565,281
29,685,309 31,752,783 Remuneration of Councillors 30 30,367,388 28,387,557
69,250,000 71,600,000 Depreciation and Amortisation 31 69,001,202 61,912,942
207,000,000 247,975,000 Impairment Losses 32 247,974,705 205,848,140
26,298,836 31,294,741 Finance Costs 33 31,097,135 26,250,436
566,500,000 631,500,000 Bulk Purchases 34 625,195,180 554,437,661
43,710,500 44,004,500 Contracted Services 35 38,346,415 42,341,831
6,970,000 4,170,000 Grants and Subsidies Paid 36 2,733,463 3 ,940,284
352,874,814 304,829,481 General Expenses 37 253,207,030 250,809,745
- - Loss/Write down of Inventory 191,747 3 61,363
- - Foreign Exchange Loss 335,239 1 53,859
- - Impairment of Property, Plant and Equipment 407,423 -
2 ,000,941,430 2,094,683,148 Total Expenditure 1 ,952,141,197 1,863,009,101
1 76,113,819 182,338,066 SURPLUS FOR THE YEAR 233,970,111 167,777,073
Refer to Note 61.1 for explanation of budget variances 0.00 0.00
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SOL PLAATJE LOCAL MUNICIPALITY
STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 30 June 2020
Accumulated Surplus Account Total for
Note Capital Self COID Accumulated Accumulated
Description
Replacement Insurance Surplus Total
Reserve(CRR) Reserve Reserve Surplus Account
R R R R R
2019
Balance at 30 June 2018 6 5,117,470 2 4,278,117 1 0,970,189 2,408,792,215 2 ,509,157,991 2,509,157,991
Correction of Error 39 246,193 246,193 2 46,193
Restated Balance 6 5,117,470 2 4,278,117 1 0,970,189 2,409,038,408 2 ,509,404,184 2,509,404,184
Surplus for the year 167,777,073 1 67,777,073 1 67,777,073
Transfer to Capital Replacement Reserve 5 ,000,000 (5,000,000) - -
Property, Plant and Equipment purchased (30,804,264) 30,804,264 - -
Contribution to Insurance Reserve (1,662,197) (126,987) 1,789,184 - -
Balance at 30 June 2019 3 9,313,206 2 2,615,921 1 0,843,202 2,604,408,929 2 ,677,181,257 2,677,181,257
0.000 -
2020
Restated Balance 3 9,313,206 2 2,615,921 1 0,843,202 2,604,408,929 2 ,677,181,257 2,677,181,257
Surplus for the year 233,970,111 2 33,970,111 233,970,111
Transfer to Capital Replacement Reserve 1 2,514,328 (12,514,328) - -
Property, Plant and Equipment purchased (8,074,067) 8,074,067 - -
Contribution from Insurance Reserve (8,061,106) 3 32,342 7,728,763 - -
Balance at 30 June 2020 4 3,753,467 1 4,554,815 1 1,175,544 2,841,667,542 2 ,911,151,369 2,911,151,369
Details on the movement of the Funds and Reserves are set out in Note 21.
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SOL PLAATJE LOCAL MUNICIPALITY
CASH FLOW STATEMENT FOR THE YEAR ENDED 30 June 2020
Actual Actual Budget
Note 2020 2019 2020
R R R
CASH FLOWS FROM OPERATING ACTIVITIES
Grants received 26 357,825,929 389,363,355 4 05,423,000
Sale of goods and services 41 1,222,603,580 1,088,393,420 1 ,461,792,000
Employee Costs 29 ( 653,284,271) ( 688,565,281) ( 759,166,000)
Supplier payments 41 ( 873,338,194) ( 757,707,681) ( 952,614,000)
Cash generated from Operations 41 5 3,807,043 3 1,483,813 1 55,435,000
Interest received 23 1 50,994,771 1 51,430,773 1 55,440,000
Interest paid 33 (31,097,135) ( 26,250,436) ( 25,161,000)
NET CASH FLOWS FROM OPERATING ACTIVITIES 1 73,704,680 1 56,664,150 2 85,714,000
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property, Plant and Equipment 9 ( 134,255,173) ( 203,360,615) ( 189,636,000)
Purchase of Intangible Assets 10 ( 957,626) - -
Purchase of Investment Property 11 ( 813,318) ( 2,660,415) -
Proceeds on Disposal of Investment Property 11 1 31,120 -
NET CASH FLOWS USED IN INVESTING ACTIVITIES (135,894,996) ( 206,021,030) ( 189,636,000)
CASH FLOWS FROM FINANCING ACTIVITIES
New Finance leases/Finance lease payments (3,171,619) ( 2,604,333) -
Loans repaid (9,351,959) ( 9,259,699) ( 9,251,000)
NET CASH FLOWS USED IN FINANCING ACTIVITIES (12,523,578) ( 11,864,032) ( 9,251,000)
NET DECREASE IN CASH AND CASH EQUIVALENTS 6 25,286,105 ( 61,220,912) 86,827,000
0.00
Cash and Cash Equivalents at the beginning of the year 74,019,286 1 35,240,198 1 15,263,000
Cash and Cash Equivalents at the end of the year 99,305,392 7 4,019,286 2 02,090,000
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SOL PLAATJE LOCAL MUNICIPALITY
ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1. BASIS OF PRESENTATION
The annual financial statements have been prepared in accordance with the Standards of Generally Recognised
Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting
Standards Board and the Municipal Finance Management Act 2003 (Act Number 56 of 2003).
These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with
historical cost convention unless specified otherwise. They are presented in South African Rand.
A summary of the significant accounting policies, which have been consistently applied, are disclosed below.
1. 1 CHANGES IN ACCOUNTING POLICY AND COMPARABILITY
The Accounting Policies have been consistently applied, except where otherwise indicated below:
Fortheyearsended30June2019and30June2020themunicipalityhasadoptedtheaccountingframeworkasset
outinpoint1above.Thedetailsofanyresultingchangesinaccountingpolicyandcomparativerestatementsareset
out below.
The municipality changes an accounting policy only if the following instances:
(a) is required by a Standard of GRAP; or
(b) results in the financial statements providing reliable and more relevant information about the effects of
transactions, other events or conditions on the municipality’s financial position, financial performance or cash flow.
1. 2 SIGNIFICANT JUDGEMENTS AND SOURCES OF ESTIMATION UNCERTAINTY
In the application of the municipality's accounting policies, which are described below, management is required to
make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not
readilyapparentfromothersources.Theestimatesandassociatedassumptionsarebasedonhistoricalexperience
and other factors that are considered to be relevant. Actual results may differ from these estimates.
Theseestimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimates
arerecognisedintheperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiod,orintheperiodof
the revision and future periods if the revision affects both current and future periods.
Thefollowingarethecriticaljudgements,apartfromthoseinvolvingestimations,thatthemanagementhavemadein
the process of applying the municipality’s Accounting Policies and that have the most significant effect on the
amounts recognised in the Annual Financial Statements:
1. 2. 1 Revenue Recognition
AccountingPolicy10.1onRevenuefromExchangeTransactions andAccountingPolicy10.2onRevenuefromNon-
exchangeTransactions describes theconditions under whichrevenue willberecordedbythemanagement ofthe
municipality.
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SOL PLAATJE LOCAL MUNICIPALITY
ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1. BASIS OF PRESENTATION (continued)
1. 2 SIGNIFICANT JUDGEMENTS AND SOURCES OF ESTIMATION UNCERTAINTY(continued)
1. 2. 1 Revenue Recognition (continued)
Inmakingtheirjudgement,themanagementconsideredthedetailedcriteriafortherecognitionofrevenueassetout
inGRAP9:RevenuefromExchangeTransactionsandGRAP23:Revenue,asfarasRevenuefromNon-Exchange
Transactions is concerned. In particular, whether the municipality, (i) when goods are sold, had transferred to the
buyerthesignificantrisksandrewardsofownershipofthegoodsand(ii)whenservicesarerendered,whetherthe
servicehasbeenrendered.Alsoofimportanceistheestimationprocessinvolvedininitiallymeasuringrevenueat
thefairvaluethereof.Themanagementofthemunicipalityissatisfiedthatrecognitionoftherevenueinthecurrent
year and prior year is appropriate.
1. 2. 2 Water Inventory
The estimation of water inventory in the reservoirs is based on themeasurement of water via the electronic level
sensorswherethelevelindicatesthedepthofwaterinthereservoirwhichisthenconvertedintovolumesbasedon
thetotalcapacityoftherelevantreservoir.Furthermore,thelengthandwidthofallpipesarealsotakenintoaccount
during determining the volume of water on hand at year end. Refer to Note 2 in the annual financial statements.
1. 2. 3 Budget information
Variations between the budget and actual amounts are regarded as material if they exceed a 10% deviation. All
material differences are explained in the notes/appendices to the annual financial statements. Budget and actual
figures are presented on the the accrual basis of accounting.
1. 2. 4 Impairment of property, plant and equipment, intangible assets, investment property, heritage
assets and inventories
The accounting Policy on "PPE - Impairment of assets and accounting policy", "Heritage assets", "Investment
Property"on"Intangibleassets-subsequentmeasurement,amortisationandimpairment"andaccountingpolicyon
"Inventory - Subsequent measurement" describes the conditions under which non-financial assets are tested for
potentialimpairmentlossesbythemanagementofthemunicipality.Significantestimatesandjudgementsaremade
relatingtoPPEimpairmenttesting,IntangibleassetsimpairmenttestingandwritedownofInventoriestothelowest
of cost and net realisable values (NRV).
Inmaking theabove-mentioned estimates andjudgement, management considered thesubsequentmeasurement
criteriaandindicatorsofpotentialimpairmentlossesassetoutinGRAP26:"Impairmentofcashgeneratingassets"
andGRAP21:"ImpairmentofNon-CashgeneratingAssets".Inparticular,thecalculationoftherecoverableservice
amount for PPE and intangible assets and the NRV for inventories involve significant judgment by management.
1. 2. 5 Impairment of financial assets
Theaccounting policyonImpairment of financial assets describes theprocess followedtodeterminethe valueby
which financial assets should be impaired. In making the estimation of the impairment, the management of the
municipality considered the detailed criteria of impairment of financial assets as set out in GRAP104: 'Financial
Instruments'anduseditsjudgementtoselectavarietyofmethodsandmakeassumptionsthataremainlybasedon
marketconditionsexistingattheendofthereportingperiod.Themanagementofthemunicipalityissatisfiedthatthe
impairment of financial assets recorded during the current and prior year is appropriate.