NW403 City of Matlosana AFS 2019-20 unaudited

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City of Matlosana
Annual Financial Statements
for the year ended 30 June 2020
City of Matlosana
Annual Financial Statements for the year ended 30 June 2020
General Information
Nature of business and principal activities To within its financial and administrative capacity :
-provide democratic and accountable government for the community of
Matlosana;
-to ensure the provision of services to the community in a sustainable
manner;-to promote social and economic development;
-to promote a safe and healthy environment; and
-to encourage the involvement of the community and community
organisations in the matters of the municipality.
Legislation governing the operations of the municipality includes but
are not limited to the following:-
Municipal Structures Act 117 of 1998-Local Government:
Municipal Systems Act 32 of 2000-Local Government:
Municipal Finance Management Act 56 of 2003
Mayoral committee
Executive Mayor Maetu Kgaile.
Speaker Washington Ntozini.
Councillors M.V Chinga. (Chief Whip)
M.F Nthaba.
T.O Vilakazi.
T.G Khoza.
F.I Tagaree.
M.L Mojaki.
S.D Montoedi.
N.S Mendela.
N.A Matetoane.
P.F Mabeli.
S.J Daemane.
S.P.J Bogatsu
Chief Finance Officer (CFO) NM Grond
Accounting Officer T.S.R Nkhumise.
Registered office Bram Fischer Street
Klerksdorp
2571
Business address Bram Fischer Street
Klerksdorp
2571
Postal address P.O. Box 99
Klerksdorp
2570
Bankers ABSA Bank Limited
Investec Bank Limited
First National Bank
Nedbank Limited
Auditors Auditor General of South Africa
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City of Matlosana
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 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 - 9
Accounting Policies 10 - 28
Notes to the Annual Financial Statements 29 - 71
Appendixes:
Appendix A: Schedule of External loans 72
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)
DWAF Department of Water Affairs
EPWP Expanded Public Works Programme
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City of Matlosana
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 heis ultimately responsible for the system of internal financial control established
by the municipality 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 municipality and all employees are required to maintain the highest
ethical standards in ensuring the municipality’s business is conducted in a manner that in all reasonable circumstances is
above reproach. The focus of risk management in the municipality is on identifying, assessing, managing and monitoring all
known forms of risk across the municipality. While operating risk cannot be fully eliminated, the municipality 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 municipality’s cash flow forecast for the year to 30 June 2021 and, in the light of this
review and the current financial position, heis satisfied that the municipality has or has access to adequate resources to
continue in operational existence for the foreseeable future.
Although the accounting officer are primarily responsible for the financial affairs of the municipality, they are supported by the
municipality's external auditors.
The external auditorsare responsible for independently reviewing and reporting on the municipality's annual financial
statements. The annual financial statements are still to be examined by the municipality's external auditors.
Due to the impact of COVID-19 the deadline for submission of the annual financial statements was extended by a period of
two months as per Government Gazette 43582 published on the 05th of August 2020. The Gazette invokes the provisions
of section 177 (1)(b) of the MFMA 2003 (Act No.56 of 2003).
The annual financial statements set out on pages 4 to 71, which have been prepared on the going concern basis, were
approved by the accounting officer on 06 November 2020 and were signed on its behalf by:
T.S.R Nkhumise.
Accounting Officer
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City of Matlosana
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
Assets
Current Assets
Inventories 10 45 764 513 50 279 282
Other financial assets 7 643 828 25 606 047
Receivables from exchange transactions 11 4 781 713 6 789 561
VAT receivable 13 245 477 712 138 693 678
Consumer debtors 14 564 433 322 465 447 696
Other receivables 9 29 274 28 139
Cash and cash equivalents 15 300 578 049 289 021 364
1 161 708 411 975 865 767
Non-Current Assets
Investment property 3 257 100 275 256 452 695
Property, plant and equipment 4 4 688 577 046 5 002 513 135
Intangible assets 5 1 297 383 657 949
Heritage assets 6 9 941 212 10 652 211
Other financial assets 7 9 636 897 9 068 846
Eskom Deposit 32 023 810 17 572 207
Other receivables 9 32 755 56 276
Nature reserve wildstock 1 995 400 2 274 800
5 000 604 778 5 299 248 119
Total Assets 6 162 313 189 6 275 113 886
Liabilities
Current Liabilities
Other financial liabilities 17 2 838 624 4 452 438
Payables from exchange transactions 19 1 827 734 744 1 314 732 253
Consumer deposits 20 36 633 558 33 345 165
Unspent conditional grants and receipts 16 43 668 378 99 517 072
Provisions 18 19 947 000 20 872 268
1 930 822 304 1 472 919 196
Non-Current Liabilities
Other financial liabilities 17 82 049 249 98 975 503
Provisions 18 414 771 284 441 486 708
496 820 533 540 462 211
Total Liabilities 2 427 642 837 2 013 381 407
Net Assets 3 734 670 352 4 261 732 479
Accumulated surplus 3 734 670 355 4 261 732 476
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City of Matlosana
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Performance
Figures in Rand Note(s) 2020 2019
Revenue
Revenue from exchange transactions
Market Dues 18 548 049 17 486 076
Service charges 21 1 626 428 016 1 577 773 369
Rendering of services 1 572 2 096
Rental of facilities and equipment 4 437 462 5 215 527
Licence fees 6 146 370 7 675 366
Agency Fees 10 505 057 12 459 649
Connections and Reconnections 9 618 438 16 325 153
Rental income 1 918 996 1 465 315
Insurance Fees - 929 939
Other income 8 641 193 14 784 552
Interest received 23 369 020 706 305 480 397
Total revenue from exchange transactions 2 055 265 859 1 959 597 439
Revenue from non-exchange transactions
Property rates 24 334 342 738 325 127 764
Donations received 6 726 274 102 062 838
Transfer revenue
Government grants & subsidies 25 567 153 692 567 076 288
Fines, Penalties and Forfeits 9 104 000 9 469 950
Total revenue from non-exchange transactions 917 326 704 1 003 736 840
Total revenue 2 972 592 563 2 963 334 279
Expenditure
Employee related costs 26 (643 219 203) (635 360 612)
Remuneration of councillors 27 (34 588 007) (34 472 923)
Depreciation and amortisation 28 (411 945 633) (402 457 410)
Finance costs 29 (79 008 903) (72 736 371)
Lease rentals on operating lease (61 359 119) (60 993 533)
Debt Impairment 30 (820 983 091) (722 372 071)
Repairs and maintenance (135 693 451) (92 597 460)
Bulk purchases 31 (1 030 160 444) (994 210 619)
Contracted services 32 (49 469 589) (46 004 790)
General Expenses 33 (221 654 220) (207 116 699)
Total expenditure (3 488 081 660)(3 268 322 488)
Operating deficit (515 489 097) (304 988 209)
Revenue Loss 34 (11 573 029) (11 692 207)
Deficit for the year (527 062 126) (316 680 416)
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City of Matlosana
Annual Financial Statements for the year ended 30 June 2020
Statement of Changes in Net Assets
Accumulated Total net
Figures in Rand surplus assets
Opening balance as previously reported 4 585 640 415 4 585 640 415
Adjustments
Correction of errors (7 227 523) (7 227 523)
Balance at July 1, 2018 as previously reported 4 578 412 892 4 578 412 892
Changes in net assets
Deficit for the year (316 680 416) (316 680 416)
Total changes (316 680 416) (316 680 416)
Balance at 01 July 2019 4 261 732 481 4 261 732 481
Changes in net assets
Deficit for the year (527 062 126) (527 062 126)
Total changes (527 062 126) (527 062 126)
Balance at 30 June 2020 3 734 670 355 3 734 670 355
Note
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City of Matlosana
Annual Financial Statements for the year ended 30 June 2020
Cash Flow Statement
Figures in Rand Note(s) 2020 2019
Cash flows from operating activities
Receipts
Sale of goods and services 1 052 000 356 1 081 671 522
Grants 511 304 998 655 907 434
Interest income 369 020 706 305 480 397
Other receipts 63 168 025 76 599 179
1 995 494 085 2 119 658 532
Payments
Employee costs (692 470 398) (646 547 625)
Suppliers (982 144 521) (985 639 618)
Finance costs (79 008 903) (72 736 371)
VAT paid (117 548 560) (37 678 111)
(1 871 172 382)(1 742 601 725)
Undefined difference compared to the cash generated from operations note 624 958 (22 646 149)
Net cash flows from operating activities 36 124 946 661 354 410 658
Cash flows from investing activities
Purchase of property, plant and equipment 4 (106 731 509) (223 335 520)
Purchase of other intangible assets 5 (639 434) (9 295)
Movement in financial assets 24 394 168 (2 508 595)
Security Deposit paid to Eskom movement (14 451 603) (2 572 205)
Net cash flows from investing activities (97 428 378) (228 425 615)
Cash flows from financing activities
Repayment of other financial liabilities (18 540 068) 17 964 731
Movement in consumer deposits 3 288 393 3 403 779
Net cash flows from financing activities (15 251 675) 21 368 510
Net increase/(decrease) in cash and cash equivalents 12 266 608 147 353 553
Cash and cash equivalents at the beginning of the year 289 021 364 136 037 145
Cash and cash equivalents at the end of the year 15 301 287 972 283 390 698
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City of Matlosana
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
basis budget and
Figures in Rand actual
Statement of Financial Performance
Revenue
Revenue from exchange
transactions
Market Dues 18 204 478 (5 820 000) 12 384 478 18 548 049 6 163 571
Service charges 1 770 599 071 3 839 806 1 774 438 877 1 626 428 016 (148 010 861)
Rendering of services 60 000 102 000 162 000 1 572 (160 428)
Rental of facilities and equipment 5 780 580 90 000 5 870 580 4 437 462 (1 433 118)
Licences and permits 5 885 620 3 900 000 9 785 620 6 146 370 (3 639 250)
Commissions received 5 000 000 7 000 000 12 000 000 10 505 057 (1 494 943)
Royalties received 5 843 322 895 972 6 739 294 9 618 438 2 879 144
Rental income 2 331 309 (1 195 619) 1 135 690 1 918 996 783 306
Other income 3 843 093 81 892 000 85 735 093 8 641 193 (77 093 900)
Interest received - investment 58 172 067 205 893 884 264 065 951 369 020 706 104 954 755
Total revenue from exchange 1 875 719 540 296 598 043 2 172 317 583 2 055 265 859 (117 051 724)
transactions
Revenue from non-exchange
transactions
Taxation revenue
Property rates 400 836 191 (47 802 219) 353 033 972 334 342 738 (18 691 234)
Donations received 262 773 - 262 773 6 726 274 6 463 501
Transfer revenue
Government grants & subsidies 589 853 000 (17 987 002) 571 865 998 567 153 692 (4 712 306)
Fines, Penalties and Forfeits 2 184 330 3 000 000 5 184 330 9 104 000 3 919 670
Total revenue from non- 993 136 294 (62 789 221) 930 347 073 917 326 704 (13 020 369)
exchange transactions
Total revenue 2 868 855 834 233 808 822 3 102 664 656 2 972 592 563 (130 072 093)
Expenditure
Personnel (667 171 301) 35 692 841 (631 478 460) (643 219 203) (11 740 743)
Remuneration of councillors (36 438 387) (13 180) (36 451 567) (34 588 007) 1 863 560
Depreciation and amortisation (434 145 379) 5 000 000 (429 145 379) (411 945 633) 17 199 746
Finance costs (6 322 533) 1 936 444 (4 386 089) (79 008 903) (74 622 814)
Lease rentals on operating lease (66 477 003) 18 302 401 (48 174 602) (61 359 119) (13 184 517)
Debt Impairment (530 000 000) (212 729 977) (742 729 977) (820 983 091) (78 253 114)
Bulk purchases (899 216 000) 20 000 000 (879 216 000)(1 030 160 444) (150 944 444)
Contracted Services (64 886 729) 20 214 925 (44 671 804) (49 469 589) (4 797 785)
General Expenses (512 154 387) 205 210 913 (306 943 474) (357 347 671) (50 404 197)
Total expenditure (3 216 811 719) 93 614 367(3 123 197 352)(3 488 081 660) (364 884 308)
Operating deficit (347 955 885) 327 423 189 (20 532 696) (515 489 097) (494 956 401)
Loss on disposal of assets and - - - (11 573 029) (11 573 029)
liabilities
Deficit before taxation (347 955 885) 327 423 189 (20 532 696) (527 062 126) (506 529 430)
Actual Amount on Comparable (347 955 885) 327 423 189 (20 532 696) (527 062 126) (506 529 430)
Basis as Presented in the
Budget and Actual
Comparative Statement
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City of Matlosana
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
basis budget and
Figures in Rand actual
The accounting policies on pages 10 to 28 and the notes on pages 29 to 71 form an integral part of the annual financial
statements.
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