DC8 Z F Mgcawu AFS 2019-20 unaudited

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ZF MGCAWU DISTRICT
MUNICIPALITY
2019 / 2020
[These financial statements have not been audited]
ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2020
ZF MGCAWU DISTRICT MUNICIPALITY
Annual Financial Statements for the year ended 30 June 2020
INDEX
NO CONTENTS PAGE
1 General Information 1 - 2
2 Members of Council 3
3 Foreword 4
4 Report of the Auditor General 5 - 12
5 Report of the Chief Financial Officer 13 - 18
6 Statement of Financial Position 19
7 Statement of Financial Performance 20
8 Statement of Changes In Net Assets 21
9 Cash Flow Statement 22
10 Statement of comparison of Budget and Actual Amounts 23 - 37
11 Accounting Policies 38 - 50
12 Notes to the Financial Statements 51 - 110
APPENDIXES - Unaudited
13 A Schedule of External Loans 111
14 B Analysis of Property, Plant and Equipment 112
15 C Segmental Analysis of Capital Assets 113
16 D Segmental Statement of Financial Performance 114
17 E (1) Reconciliation of Budgeted Financial Performance by Standard Classification 115
18 E (2) Reconciliation of Budgeted Financial Performance by Municipal Vote 116 - 117
19 E (3) Reconciliation of Budgeted Financial Performance 118
20 E (4) Reconciliation of Budgeted Cash Flow 119
21 F Disclosure Of Grants And Subsidies In Terms of Section 123 of MFMA 120
21 G Statement of Remuneration of Management 121 - 124
22 H Ratio Analysis Schedule 125 - 129
23 I Segmental Analysis of Financial Performance 130 - 131
ZF MGCAWU DISTRICT MUNICIPALITY
Annual Financial Statements for the year ended 30 June 2020
GENERAL INFORMATION
EXECUTIVE MAYOR
P.M Mgcera
SPEAKER
M. Moalosi
MEMBERS OF THE MAYORAL COMMITTEE
Executive Mayor: P.M Mgcera
Councillors: M.C Basson
A. Matshimo
M. Bosman
M. Daniels
GRADING OF THE LOCAL AUTHORITY
Grade 3
AUDITORS
External: Auditor General: Kimberley
Internal: ZFM DM Internal Audit Unit
PRIMARY BANKER
ABSA

REGISTERED OFFICE
c/o Upington 26 Avenue & Dr Nelson Mandela Drive
Upington
8801
Private Bag X6039
Upington
8800
Telephone: [phone] E-Mail: [email protected]
Fax: [phone] Website: www.zfm-dm.co.za
MUNICIPAL MANAGER
Mr. J.G. Lategan
CHIEF FINANCIAL OFFICER
Mr. P. Beukes
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ZF MGCAWU DISTRICT MUNICIPALITY
Annual Financial Statements for the year ended 30 June 2020
REPORT OF THE CHIEF FINANCIAL OFFICER
1. INTRODUCTION
It gives me great pleasure to present the Annual Financial Statements of ZF Mgcawu District Municipality ending 30 June 2020.
These AnnualFinancialStatements havebeenpreparedinaccordancewithGenerallyRecognisedAccountingPractice (GRAP),issuedbythe
AccountingStandards Board (ASB) inaccordance withSection122(3) of the MunicipalFinance ManagementAct, (ActNo 56of 2003). The
standardsandpronouncementsthatformtheGRAPReportingFrameworkforthe2019/20financialperiodissetoutinDirective5issuedbythe
ASB on 11 March 2009, as amended.
The Statement of Financial Position at 30 June 2020 indicates a decrease in Non-current Assets, an increase in Current Assets, an increase in
Non-current Liabilities and a decrease in Current Liabilities.
The decrease in Non-Current Assets is primarily as a result of the decrease in the Property, Plant and Equipment. The increase in Current
Assets is primarily as a result of the increase in Cash and Cash Equivalents.
The increase in Non-Current Liabilities is primarily as a result of the increase in the Employee Benefit Liabilities. The decrease in Current
Liabilities is primarily as a result of the decrease in Payables from Exchange Transactions and the decrease in Unspent Conditional Grants and
Receipts.
2. MSCOA IMPLEMENTATION PLAN
TheDistrictMunicipalityimplementedtheMunicipalStandardChartof Accounts (mSCOA) duringtheyear ended30June 2018as requiredin
terms of theMunicipalRegulations onStandardChartof Accounts,announcedbyGovernmentGazette No37577of 22April2014,insection
168 of the Local Government: Municipal Finance Management Act (Act 56 of 2003) and through directives and guidelines from National
Treasury.
2. KEY FINANCIAL INDICATORS
The following indicators are self-explanatory. The percentages of expenditure categories are wellwithinacceptable norms andindicategood
governance of the funds of the District Municipality.
Financial Statement Ratios:
INDICATOR 2020 2019
R R
Surplus / (Deficit) before Appropriations 1 89 749 12 287 765
Surplus / (Deficit) at the end of the Year (21 940 302) (22 130 051)
Expenditure Categories as a percentage of Total Expenses:
Employee Related Costs 70.41% 64.80%
Remuneration of Councillors 4.86% 5.33%
Depreciation and Amortisation 1.16% 1.21%
Impairment Losses 0.47% 0.52%
Interest and Rent on Land 0.15% 0.22%
Contracted Services 6.37% 9.07%
Inventory Consumed 0.41% 0.43%
Transfers and Subsidies Paid 0.58% 1.20%
Operating Leases 1.24% 1.19%
Operational Costs 13.37% 15.96%
Loss on Disposal of Capital Assets 0.96% 0.07%
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ZF MGCAWU DISTRICT MUNICIPALITY
Annual Financial Statements for the year ended 30 June 2020
REPORT OF THE CHIEF FINANCIAL OFFICER
3. OPERATING RESULTS
DetailsoftheoperatingresultspersegmentalclassificationofexpenditureareincludedinAppendix"D",whilstoperationalresultsareincludedin
Appendices "E (1), E (2) and E (3)".
4. FINANCING OF CAPITAL EXPENDITURE
TheexpenditureonAssetsduringtheyearamountedtoR166783(2018/19:R1883700). FulldetailsofAssetsaredisclosedinNotes6,7and
Appendices "B and C" to the Annual Financial Statements.
The capital expenditure of R166 783 was financed as follows:
Actual Actual Percentage Budgeted Variance actual/
DETAILS 2019/20 2018/19 Variance 2019/20 budgeted
R R % R %
Finance Leases - 7 83 000 (100.00) - -
Grants and Subsidies - 4 94 126 (100.00) - -
Own Funds (Accumulated Surplus) 1 66 783 6 06 575 ( 72.50) 1 80 000 (7.34)
1 66 783 1 883 700 ( 91.15) 1 80 000 (7.34)
0.01 - -
Source of funding as a percentage of Total Capital Expenditure:
DETAILS 2020 2019
% %
Finance Leases - 41.57%
Grants and Subsidies - 26.23%
Own Funds (Accumulated Surplus) 100.00% 32.20%
100.00% 100.00%
5. RECONCILIATION OF BUDGET TO ACTUAL
5.1 Operating Budget:
DETAILS 2020 2019
R R
Variance per Category:
Budgeted surplus before appropriations 1 201 504 (873 663)
Revenue variances (308 158) 1 771 803
Expenditure variances:
Employee Related Costs (1 160 796) 9 025 310
Remuneration of Councillors 318 8 746
Depreciation and Amortisation 8 532 58 303
Impairment Losses 1 000 2 208
Interest and Rent on Land 1 858 781
Contracted Services 49 398 39 573
Inventory Consumed 2 50 098 1 80 611
Transfers and Subsidies Paid 2 027 13 454
Operating Leases 15 127 5 35 787
Operational Costs 1 27 890 1 523 763
Loss on Disposal of Capital Assets 952 1 089
Actual surplus before appropriations 1 89 749 12 287 765
0 -
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ZF MGCAWU DISTRICT MUNICIPALITY
Annual Financial Statements for the year ended 30 June 2020
REPORT OF THE CHIEF FINANCIAL OFFICER
DETAILS 2020 2019
R R
Variance per Service Segment:
Budgeted surplus before appropriations 1 201 504 (873 663)
Executive and Council (100 777) 9 30 893
Finance and Administration (incl Bad Debt) (984 070) 9 216 573
Internal Audit 14 853 1 074 029
Public Safety 954 2 18 391
Health 8 529 1 197
Planning and Development 2 33 327 1 527 612
Other 15 828 26 950
Add: Gains and Losses (200 400) 1 65 784
Actual surplus before appropriations 1 89 749 12 287 765
- -
DetailsoftheoperatingresultspersegmentalclassificationofexpenditureareincludedinAppendix"D",whilstoperationalresultsareincludedin
Appendices "E (1), E (2) and E (3)".
5.2 Capital Budget:
Actual Actual Variance actual Budgeted Variance actual/
DETAILS 2019/20 2018/19 2016/17 2019/20 budgeted
R R R R R
Executive and Council 13 217 - 13 217 14 000 (783)
Finance and Administration 1 41 632 1 856 632 (1 715 000) 1 54 000 (12 368)
Health - 27 068 (27 068) - -
Planning and Development 9 957 - 9 957 10 000 (43)
1 66 783 1 883 700 (1 716 917) 1 80 000 (13 217)
- - - -
Details of the results per segmental classification of capital expenditure are included in Appendix "C".
2020 2019
R R
6. ACCUMULATED SURPLUS
The balance of the Accumulated Surplus as at 30 June 2020 amounted to R21 940 302 (30 June 2019:
R22 130 051) and is made up as follows:
Accumulated Surplus (21 940 302) (22 130 051)
(21 940 302) (22 130 051)
Refer to Note 14 and the Statement of Change in Net Assets for more detail.
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ZF MGCAWU DISTRICT MUNICIPALITY
Annual Financial Statements for the year ended 30 June 2020
REPORT OF THE CHIEF FINANCIAL OFFICER
2020 2019
R R
7. LONG-TERM LIABILITIES
The outstanding amount of Long-term Liabilities as at 30 June 2020 was R160 902 (30 June 2019: R420
779) and is made up as follows:.
Finance Lease Liability 82 592 3 75 902
1 60 902 4 20 779
Loans to the amount of R0 (2018/19: R783 000) were taken up during the financial year to enable the
District Municipality to finance part of its capital requirements for the year.
Finance Lease Liabilities relate to Copier Machines with a lease term of 3 years with a fair value of R783
000 as at 1 October 2018. The effective interest rate on Finance Leases is 19.4%.
Refer to Note 12 and Appendix "A" for more detail.
8. EMPLOYEE BENEFIT LIABILITIES
Emplyee Benefit Liabilities amounted R30 492 000 as at 30 June 2020 (30 June 2019: R29 649 297)
and is made up as follows:
Post-retirement Health Care Benefits Liability Note 13 23 957 000 23 462 716
Long Service Awards Liability Note 13 6 535 000 6 186 580
30 492 000 29 649 297
The Post-retirement Health Care Benefits Liability is in respect of continued Health Care Benefits for
employees of the District Municipality after retirement being members of schemes providing for such
benefits. This liability is unfunded.
The Long-term Service Liability is an estimate of the long-service based on historical staff turnover. No
other long-term service benefits are provided to employees. This liability is unfunded.
Refer to Note 13 for more detail.
9. CURRENT LIABILITIES
Current Liabilities amounted R13 751 469 as at 30 June 2020 (30 June 2019: R15 836 004) and is
made up as follows:
Provisions Note 9 2 807 546 2 520 113
Payables from Exchange Transactions Note 10 10 367 080 11 387 994
Unspent Conditional Grants and Receipts Note 11 2 83 533 4 62 289
VAT Payable Note N/A - 1 223 887
Current Portion of Long-term Liabilities Note 12 2 93 310 2 41 720
13 751 469 15 836 004
Current Liabilities are those liabilities of the District Municipality due and payable in the short-term (less
than 12 months). There is no known reason as to why the District Municipality will not be able to meet its
obligations.
Refer to the indicated Notes for more detail.
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