NW373 Rustenburg AFS 2019-20 unaudited

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Rustenburg Local Municipality
Annual Financial Statements
for the year ended 30/06/2020
Rustenburg Local Municipality
Annual Financial Statements for the year ended 30/06/2020
General Information
Legal form of entity Municipality (MFMA) : Category B
Mayoral committee
Executive Mayor Khunou, M (Executive Mayor)
Mabale-Huma, S (Speaker)
Mataboge, A (Single-Whip)
Councillors Xatasi, M (MMC: Community Development)
Mashishi-Ntsime, J (MMC: Corporate Support Services)
Kombe, O (MMC: Local Economic Development)
Mhlungu, M (MMC: Technical and Infrastructure Services)
Molubi, J (MMC: Planning and Human Settlement)
Wolmarans, S (MMC: Integrated Development Planning)
Babe, N (MMC: Special Projects)
Kgaladi, L (MMC: Roads and Transport)
Makhaula, V (MMC: Public Safety)
Lekoro, B (MMC: Budget and Treasury)
Capacity High Capacity
Accounting Officer Makona, V
Chief Financial Officer Ditsele, G
Registered office Missionary Mpheni House
Cnr, Nelson Mandela & Beyers Naude Drives
Rustenburg
0299
Postal address P O Box 16
Rustenburg
0300
Bankers ABSA BANK (Primary Bank)
Auditors Auditor-General of South Africa (AGSA)
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Rustenburg Local Municipality
Annual Financial Statements for the year ended 30/06/2020
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 3
Statement of Financial Position 4
Statement of Financial Performance 5
Statement of Changes in Net Assets 6
Cash Flow Statement 7
Statement of Comparison of Budget and Actual Amounts 8
Accounting Policies 9 - 39
Notes to the Annual Financial Statements 40 - 96
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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Rustenburg Local Municipality
Annual Financial Statements for the year ended 30/06/2020
Statement of Financial Position as at 30/06/2020
Figures in Rand Thousand Note(s) 2020 2019
Restated*
Assets
Current Assets
Inventories 12 30 395 42 538
Finance lease receivables 8 251 206
Operating lease asset 9 65 78
Receivables from exchange transactions 13&15 481 106 89 529
Receivables from non-exchange transactions 14&15 31 029 7 995
Cash and cash equivalents 16 415 339 72 380
958 185 212 726
Non-Current Assets
Investment property 3 157 437 166 517
Property, plant and equipment 4 8 483 882 8 265 820
Intangible assets 5 26 34
Heritage assets 6 1 369 1 369
Investments 7 776 1 038
Finance lease receivables 8 1 593 1 844
8 645 083 8 436 622
Total Assets 9 603 268 8 649 348
Liabilities
Current Liabilities
Other financial liabilities 19 37 547 33 805
Finance lease obligation 17 4 871 7 719
Payables from exchange transactions 21 1 153 215 881 022
VAT payable 22 189 236 85 652
Consumer deposits 23 51 103 49 364
Employee benefit obligation 10 5 855 6 071
Unspent conditional grants and receipts 18 332 856 296 055
Provisions 20 127 428 125 133
1 902 111 1 484 821
Non-Current Liabilities
Other financial liabilities 19 348 253 385 782
Finance lease obligation 17 - 4 871
Employee benefit obligation 10 136 780 90 640
Provisions 20 77 192 31 259
562 225 512 552
Total Liabilities 2 464 336 1 997 373
Net Assets 7 138 932 6 651 975
Accumulated surplus 7 138 932 6 651 975
* See Note 46
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Rustenburg Local Municipality
Annual Financial Statements for the year ended 30/06/2020
Statement of Financial Performance
Figures in Rand thousand Note(s) 2020 2019
Restated*
Revenue
Revenue from exchange transactions
Service charges 24 2 776 898 2 877 891
Rental of facilities and equipment 25 8 927 20 137
Interest received (trading) 389 582 282 389
Agency services 15 568 1 037
Licences and permits 6 678 16 772
Other income 26 14 100 9 959
Interest received - investment 27 24 495 16 444
Total revenue from exchange transactions 3 236 248 3 224 629
Revenue from non-exchange transactions
Taxation revenue
Property rates 28 378 141 353 910
Transfer revenue
Government grants & subsidies 30 1 218 705 1 158 869
Public contributions and donations 188 413 -
Fines, Penalties and Forfeits 11 303 8 046
Total revenue from non-exchange transactions 1 796 562 1 520 825
Total revenue 5 032 810 4 745 454
Expenditure
Employee related costs 31 (762 142) (720 419)
Remuneration of councillors 32 (55 957) (53 751)
Depreciation and amortisation 33 (347 298) (415 390)
Finance costs 35 (76 030) (63 616)
Lease rentals on operating lease (12 298) (7 462)
Bulk purchases 36 (2 172 395) (2 548 211)
Contracted services 37 (271 311) (286 746)
Transfers and Subsidies 29 (20 256) (25 085)
General Expenses 38 (249 556) (268 315)
Total expenditure (3 967 243) (4 388 995)
Operating surplus 1 065 567 356 459
Gain on disposal of assets and liabilities - 953
Fair value adjustments 39 43 24
Actuarial gains/losses 10 (88 297) 24 447
Impairment loss 34 (490 356) (904 282)
(578 610) (878 858)
Surplus (deficit) for the year 486 957 (522 399)
* See Note 46
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Rustenburg Local Municipality
Annual Financial Statements for the year ended 30/06/2020
Statement of Changes in Net Assets
Accumulated Total net
Figures in Rand Thousand surplus assets
Opening balance as previously reported 7 051 435 7 051 435
Adjustments
Correction of errors 122 940 122 940
Balance at 01 July 2018 restated* 7 174 375 7 174 375
Changes in net assets
Deficit for the year - Previously reported (497 516) (497 516)
Total changes (497 516) (497 516)
Restated balance before adjustments 6 676 859 6 676 859
Adjustments
Correction of errors (24 884) (24 884)
Balance at 01 July 2019 as restated* 6 651 975 6 651 975
Changes in net assets
Surplus / (Deficit) for the year 486 957 486 957
Total changes 486 957 486 957
Balance at 30/06/2020 7 138 932 7 138 932
Note(s)
* See Note 46
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Rustenburg Local Municipality
Annual Financial Statements for the year ended 30/06/2020
Cash Flow Statement
Figures in Rand Thousand Note(s) 2020 2019
Restated*
Cash flows from operating activities
Receipts
Sale of goods and services 2 274 743 2 636 324
Grants 1 218 705 1 158 869
Interest income 414 077 298 833
Other receipts 120 378 9 377
4 027 903 4 103 403
Payments
Employee costs (822 522) (762 809)
Suppliers (2 266 802) (2 678 815)
Other payments (138 039) (3 752)
(3 227 363) (3 445 376)
Net cash flows from operating activities 41 800 540 658 027
Cash flows from investing activities
Purchase of property, plant and equipment (357 836) (622 860)
Proceeds from sale of property, plant and equipment 1 679 6 711
Net cash flows from investing activities (356 157) (616 149)
Cash flows from financing activities
Repayment of other financial liabilities (93 099) (78 424)
Finance lease payments (8 631) (8 631)
Realisation of financial assets 306 185
Net cash flows from financing activities (101 424) (86 870)
Net increase in cash and cash equivalents 342 959 (44 992)
Cash and cash equivalents at the beginning of the year 72 380 117 372
Cash and cash equivalents at the end of the year 16 415 339 72 380
* See Note 46
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Rustenburg Local Municipality
Annual Financial Statements for the year ended 30/06/2020
Statement of Comparison of Budget and Actual Amounts
Final Budget Actual amounts Difference Reference
on comparable between final
basis budget and
Figures in Rand Thousand actual
Statement of Financial Performance
Revenue
Revenue from exchange transactions
Service charges 2 933 082 2 776 898 (156 184) 56
Rental of facilities and equipment 10 036 8 927 (1 109) 56
Interest received from trading activities 415 054 389 582 (25 472) 56
Agency services 99 249 15 568 (83 681) 56
Licences and permits 289 6 678 6 389 56
Other income 14 763 14 100 (663) 56
Interest received (other) 20 284 24 495 4 211 56
Total revenue from exchange transactions 3 492 757 3 236 248 (256 509)
Revenue from non-exchange transactions
Taxation revenue
Property rates 377 122 378 141 1 019 56
Transfer revenue
Government grants & subsidies 1 384 959 1 218 705 (166 254) 56
Public contributions and donations - 188 413 188 413
Fines, Penalties and Forfeits 29 11 303 11 274 56
Total revenue from non-exchange transactions 1 762 110 1 796 562 34 452
Total revenue 5 254 867 5 032 810 (222 057)
Expenditure
Employee related costs (745 820) (762 142) (16 322) 56
Remuneration of councillors (60 893) (55 957) 4 936 56
Depreciation and amortisation (372 193) (347 298) 24 895 56
Impairment loss (723 638) (490 356) 233 282 56
Finance costs (23 301) (76 030) (52 729) 56
Lease rentals on operating lease - (12 298) (12 298) 56
Repairs and maintenance (212 200) (107 962) 104 238 56
Bulk purchases (2 120 386) (2 172 395) (52 009) 56
Contracted Services (227 951) (271 311) (43 360) 56
Transfers and Subsidies (17 892) (20 256) (2 364) 56
General Expenses (268 002) (141 594) 126 408 56
Total expenditure (4 772 276) (4 457 599) 314 677
Operating surplus 482 591 575 211 92 620
Gain on disposal of assets 1 052 - (1 052) 56
Fair value adjustments - 43 43 56
Actuarial losses - (88 297) (88 297) 56
1 052 (88 254) (89 306)
Surplus / (Deficit) before taxation 483 643 486 957 3 314
Actual Amount on Comparable Basis as Presented in the 483 643 486 957 3 314
Budget and Actual Comparative Statement
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Rustenburg Local Municipality
Annual Financial Statements for the year ended 30/06/2020
Accounting Policies
1. Presentation of Annual Financial Statements
The annual financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting
Practice (GRAP) and section 122(3) of the Municipal Finance Management Act (Act 56 of 2003) , including any interpretations,
guidelines and directives issued by the Accounting Standards Board.
These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical
cost convention as the basis of measurement, unless specified otherwise.
Assets, liabilities, revenues and expenses were not offset, except where offsetting is either required or permitted by a Standard
of GRAP.
A summary of the significant accounting policies, which have been consistently applied in the preparation of these annual
financial statements, are disclosed below.
These accounting policies are consistent with the previous period.
1.1 Presentation currency
These annual financial statements are presented in South African Rand, rounded off to the nearest thousand Rand, which is
the municipality's functional currency.
1.2 Going concern assumption
These annual financial statements have been prepared based on the expectation that the municipality will continue to
operate as a going concern for at least the next 12 months.
1.3 Significant judgements and sources of estimation uncertainty
In preparing the annual financial statements, management is required to make estimates and assumptions that affect the
amounts represented in the annual financial statements and related disclosures. Use of available information and the
application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates
which may be material to the annual financial statements. Significant judgements include:
Trade Receivables
The municipality assesses its trade receivables for impairment at the end of each reporting period. In determining whether an
impairment loss should be recorded in surplus or deficit, the surplus makes judgements as to whether there is observable data
indicating a measurable decrease in the estimated future cash flows from a financial asset.
The impairment for trade receivables is calculated based on an assessment of the extent to which trade receivables have
defaulted on payments already due, and an assessment of their ability to make payments based on the history of payments
made for municipal services over the last twelve months. This was performed per significant trade receivables (balances of R1
million and above) first, then for municipal owned accounts and the remaining balances are assessed per surbub. Trade
receivables that are owing for more than 90 days are impaired in full unless there is objective evidence that the payment trend
of specific receivables is likely to improve.
Allowance for slow moving, damaged and obsolete stock
An allowance / provision to write down stock to the lower of cost or net realisable value is made. Management have made
estimates of the selling price and direct cost to sell on certain inventory items. The write down is included in the statement of
financial performance.
Provisions
Provisions were raised and management determined an estimate based on the information available. Additional disclosure of
these estimates of provisions are included in note 20 - Provisions. Provisions are discounted where the effect of discounting is
material using actuarial valuations.
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