Table Of ContentAUDITED ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2016
I am responsible for the preparation of these Annual Financial Statements, which
are set out on pages 2 to 82, in terms of Section 126(1) of the Municipal Finance
Management Act No. 56 of 2003 and which I have signed on behalf of the
Municipality.
I certify that the salaries, allowances and benefits of Councillors as disclosed in note
23 of these Annual Financial Statements are within the upper limits of the framework
envisaged in Section 219 of the Constitution of South Africa Act No.108 of 1996,
save for disclosure in said note read with the Remuneration of Public Officer
Bearers Act No. 20 of 1998 and the Minister of Provincial and Local Government’s
determination in accordance with this Act.
N J MDAKANE Date
MUNICIPAL MANAGER
Annual Financial Statements
for
KWADUKUZA MUNICIPALITY
for the year ended 30 June 2016
Province: KwaZulu Natal
AFS rounding: R (i.e. only cents)
Contact Information:
Name of Municipal Manager: MR N J Mdakane
Name of Chief Financial Officer: MR S M Rajcoomar
Contact telephone number: 032 - 4375500
Contact e-mail address: [email protected]
Name of contact at Provincial
Sandeep Gobind
Treasury:
Contact telephone number: 033 - 897 4354
Contact e-mail address: [email protected]
Name of relevant Auditor: The Auditor General
Contact telephone number: 033 - 264 7603
Contact e-mail address: [email protected]
Name of contact at National
Elsabe Rossouw
Treasury:
Contact telephone number: 012 - 315 5534
Contact e-mail address: [email protected]
KWADUKUZA MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2016
General information
Members of the Council
N R Mthembu Mayor
G Govender Deputy Mayor
T Khuluse Speaker
C R Marsh Member of the Executive Committee
M S Sing Member of the Executive Committee
S P C Mdletshe Member of the Executive Committee
S Oudhram Member of the Executive Committee
J L T Sibiya Member of the Executive Committee
S S Gumede Member of the Executive Committee
J M Banda Member of the Executive Committee
M S Mhlongo Member of the Executive Committee
D W Ndimande Chief Whip
O L Nhaca Chair: MPAC
B B Sing Member
D Singh Member
C N Xulu Member
M E Zungu Member
N P Dube Member
N Sewraj Member
E B Majola Member
L R Makhathini Member
T E Msweli Member
A M Baardman Member
T V Ntuli Member
M S C M Motala Member
G N Mbonambi Member
N G Mthethwa Member
R N Pakkies Member
G J Van Whye Member
N M Hlatshwayo Member
V M W Mdluli Member
A L Sahadaw Member
J A Vallan Member
W M Lutuli Member
R Singh Member
S Anamalay Member
B Dlavana Member
A Gopaul Member
T K Gumede Member
T N Khumalo Member
E M Kolia Member
S P Luthuli Member
S L Magubane Member
S M R Mfeka Member
S D Mashiya Member
G Z Mngomezulu Member
C Ndlovu Member
D M Ngcobo Member
T Ntuli Member
S A Ngwane Member
I T Nxumalo Member
J S Phahla Member
M W Hubner Member
V Mathonsi Traditional Leader
D Z Gumede Traditional Leader
A M Zulu Traditional Leader
B M Cele Traditional Leader
H K Dube Traditional Leader
KWADUKUZA MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2016
General information (continued)
Municipal Manager
Mr N J Mdakane
Chief Financial Officer
Mr S M Rajcoomar
Grading of Local Authority
Category 4
Auditors
Auditor General South Africa (AGSA)
Bankers
First National Bank
Registered Office: KwaDukuza Municipality
Physical address:
14 Chief Albert Luthuli Street
KwaDukuza
4450
Postal address:
PO BOX 72
KwaDukuza
4450
Telephone number: (032) 437 5000
Fax number: (032) 437 5098
E-mail address: [email protected]
KWADUKUZA MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
INDEX
DETAILS Page
Number
Report of the Auditor-General 1
Statement of Financial Position 2
Statement of Financial Performance 3
Statement of Changes in Net Assets 4
Cash Flow Statement 5
Statement of Comparison of Budget & Actual Amounts 6
Accounting Policies 7
Notes to the Annual Financial Statements 35
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(1): Actual versus Budget (Revenue and Expenditure) 80
Appendix E(2): Actual versus Budget (Acquisition of Property, Plant and
81
Equipment)
Appendix F: Disclosure of Grants and Subsidies in terms of Section 123 of
82
the Municipal Finance Management Act, 56 Of 2003
KWADUKUZA MUNICIPALITY
STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2016
Note 2016 Restated 2015
R R
ASSETS
Non-current assets 1 841 927 784 1 600 878 389
Property, plant and equipment 10 1 741 761 801 1 501 751 701
Intangible assets 11 9 507 701 10 789 991
Investment properties 12 89 470 000 87 175 000
Heritage Assets 13 105 386 105 386
Long-term receivables 14 1 082 896 1 056 311
Current assets 617 093 962 668 831 065
Inventories 15 6 849 078 6 208 730
Receivables from exchange transactions 16 60 488 594 62 072 592
Receivables from non-exchange transactions 17 83 251 505 55 347 335
Value added taxation receivable 9 14 326 616 4 798 580
Current portion of long-term receivables 14 5 076 12 854
Cash and cash equivalents 18 452 173 094 540 390 976
Total Assets 2 459 021 747 2 269 709 454
LIABILITIES
Non-current liabilities 345 494 338 298 896 971
Long-term liabilities 2 240 233 811 212 368 130
Non-current provisions 3 8 134 130 7 139 841
Employee benefits 4.2 84 223 031 66 818 000
Long service awards and retirement gifts 4.3 12 899 267 12 571 000
Non-current lease liability 40 4 098 -
Current liabilities 282 473 016 259 018 879
Deposits 5 30 167 576 26 160 144
Current Portion of Provisions 6 17 598 999 1 319 908
Trade and other payables 7 201 344 602 179 671 279
Unspent conditional grants and receipts 8 19 918 799 39 225 938
Current portion of long-term liabilities 2 13 396 358 12 628 140
Current portion of lease liability 40 46 683 13 470
Total Liabilities 627 967 354 557 915 850
Net Assets 1 831 054 392 1 711 793 604
NET ASSETS
Housing operating account 1 8 728 156 8 728 156
Revaluation Reserve 9 813 137 9 813 137
Accumulated surplus 1 ,812,513,098 1,693,252,311
Total Net Assets 1 831 054 392 1 711 793 604
Page 2
KWADUKUZA MUNICIPALITY
STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2016
Note 2016 Restated 2015
R R
REVENUE
Revenue from non-exchange transactions
Property rates 19 314 623 456 275 604 771
Property rates - penalties imposed and collection charges 7 391 326 8 829 843
Fines 28.2 16 076 516 20 476 864
Government grants and subsidies 21 208 855 308 193 738 328
Licences and permits 8 598 205 8 622 880
Public donations - Property, plant and equipment 10 3 663 174 15 195 302
Revenue from exchange transactions
Service charges 20 679 428 767 597 882 727
Rental of facilities and equipment 1 016 506 1 065 346
Interest earned investments 18 30 409 852 30 490 667
Interest earned outstanding debtors 5 564 056 5 673 326
Other income 28.1 52 743 759 57 423 828
Gain on disposal of property, plant and equipment 50 000 53 500
Fair Value Adjustment of investment properties 12 2 295 000 5 145 000
Total Revenue 1 330 715 924 1 220 202 381
EXPENDITURE
Employee related costs 22 282 807 345 251 403 648
Remuneration of councillors 23 18 544 424 17 612 038
Collection costs 4 453 262 4 165 459
Ammortisation 11 2 416 761 2 753 355
Depreciation 10 50 093 250 44 057 501
Repairs and maintenance 35 63 326 287 53 685 996
Finance costs 24 24 880 004 19 848 255
Bulk purchases 25 488 650 902 427 861 024
Employee and long services benefits 4.3 17 733 298 2 043 000
General expenses 26 156 972 518 172 472 090
Contracted services 27.1 30 462 775 25 744 920
Transfer made: MIG funding paid to Ilembe District Municipality 27.2 6 100 223 20 751 542
Adjustments to allowance for impairment 16 16 006 685 17 078 712
Adjustments to non-current provisions 3 1 030 037 197 354
Adjustments to current provision 6 16 243 342 -
Bad debts written off 16 4 372 271 6 696 576
Loss on disposal of assets 10 671 088 1 759 166
Impairment loss on assets 10 16 690 665 12 966 736
Total Expenditure 1 211 455 137 1 081 097 372
SURPLUS FOR THE YEAR 119 260 786 139 105 009
Page 3
KWADUKUZA MUNICIPALITY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED 30 JUNE 2016
Housing
Operating Revaluation Accumulated
Account Reserve Surplus Total
R R R
Restated Opening Balance at 30 June 2013 8 728 156 9 813 137 1 442 688 572 1 461 229 865
2014
Surplus for the year - - 131 568 574 131 568 574
Adjustment to assets prior 2014/2015 ( 20 779 004) ( 20 779 004)
Adjustment to rates revenue prior 2014/2015 - 2 278 312 2 278 312
Adjustment to traffic fine debtor prior 2014/2015 ( 1 609 151) ( 1 609 151)
Restated Balance at 30 June 2014 8 728 156 9 813 137 1 554 147 302 1 572 688 595
2015
Surplus for the year - - 139 105 009 139 105 009
- - - -
Restated Balance at 30 June 2015 8 728 156 9 813 137 1 693 252 311 1 711 793 604
2016
Surplus for the year 119 260 786 119 260 786
Balance at 30 June 2016 -
8 728 156 9 813 137 1 812 513 098 1 831 054 392
Note 36 provides further details of adjustments pertaining to the 2014/2015 financial year.
Page 4
KWADUKUZA MUNICIPALITY
CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2016
Note 2016 Restated 2015
R R
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 30 188 478 834 114 585 619
Interest received 30 409 852 30 490 667
Finance costs 24 ( 24 880 004) ( 19 848 255)
NET CASH FLOWS FROM OPERATING ACTIVITIES 194 008 682 125 228 031
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property, Plant & Equipment ( 313 851 927) ( 191 502 263)
Purchase of intangible assets ( 1 134 470) ( 1 479 348)
Decrease/(Increase) in non-current receivables ( 18 808) ( 75 718)
Proceeds on Sale of Property, Plant & Equipment 100 000 53 500
NET CASH FLOWS FROM INVESTING ACTIVITIES ( 314 905 205) ( 193 003 828)
CASH FLOWS FROM FINANCING ACTIVITIES
New loans raised 44 599 318 80 876 185
Loans repaid ( 15 965 419) ( 16 796 732)
Lease repayments 37 311 ( 205 728)
Increase in consumer deposits 4 007 432 1 922 361
NET CASH FLOWS FROM FINANCING ACTIVITIES 32 678 642 65 796 080
NET INCREASE IN CASH AND CASH EQUIVALENTS ( 88 217 882) ( 1 979 717)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF
THE YEAR 540 390 976 542 370 693
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 31 452 173 094 540 390 976
Page 5
KWADUKUZA MUNICIPALITY
STATEMENT OF COMPARISON OF BUDGET & ACTUAL AMOUNTS
FOR THE YEAR ENDED 30 JUNE 2016
Description 2015/16
Percentage
Percentage Variance (2)
Variance (1) Variance (2)
Budget Variance (1) Note on between Final Note on variances
R (000) thousands Original Budget Final Budget Actual outcome b e tween Original between Final
Adjustments between Original variances (1) B udget and Actual (2)
and Final Budget Budget and Actual
and Final Budget outcome
outcome
Financial Performance
Property rates (Including Penalties and Collection Charges) 3 17,976,590 (7,055,636) 3 10,920,954 3 22,014,783 (7,055,636) -2% ( 11 093 828) -4%
Services charges 7 08,412,187 (1,258,501) 7 07,153,686 6 79,428,767 (1,258,501) 0% 27 724 919 4%
Investment revenue 2 4,384,903 2 0,000 2 4,404,903 3 0,409,852 2 0,000 0% ( 6 004 949) -25% 38.4
Transfers recognised - operational 1 19,022,200 4 ,261,223 1 23,283,423 1 22,592,534 4 ,261,223 4% 690 889 1%
Other own revenue 9 3,410,514 1 3,917,511 1 07,328,025 9 0,007,215 1 3,917,511 15% 38.1 17 320 810 16% 38.5
Total Revenue ( excluding capital transfers and contributions) 1 ,263,206,394 9 ,884,598 1 ,273,090,991 1 ,244,453,150 9 ,884,598 28 637 841
Employee Related Costs 3 06,084,429 (11,590,000) 2 94,494,429 2 82,807,345 (11,590,000) -4% 11 687 083 4%
Remuneration of Councillors 2 0,188,837 (60,000) 2 0,128,837 1 8,544,424 (60,000) 0% 1 584 414 8%
Allowance for impairment 1 1,371,788 2 4,000,000 3 5,371,788 1 6,006,685 2 4,000,000 211% 38.2 19 365 104 55% 38.6
Depreciation and asset impairment 7 1,081,515 2 ,830,684 7 3,912,199 6 9,200,675 2 ,830,684 4% 4 711 523 6%
Finance charges 2 6,032,510 - 2 6,032,510 2 4,880,004 - 0% 1 152 507 4%
Bulk Purchases 4 96,944,000 (6,944,000) 4 90,000,000 4 88,650,902 (6,944,000) -1% 1 349 098 0%
Other Expenditure 3 31,473,829 1 ,645,548 3 33,119,377 3 11,365,103 1 ,645,548 0% 21 754 275 7%
Total Expenditure 1 ,263,176,909 9 ,882,232 1 ,273,059,140 1 ,211,455,137 9 ,882,232 61 604 004
-
Surplus 2 9,485 2 ,366 3 1,851 3 2,998,013 2 ,366 32 966 162
Transfers recognised - capital 8 3,316,800 - 7,562,000 7 5,754,800 8 6,262,774 - 7,562,000 -9% 38.3 ( 10 507 974) -14% 38.7
Contributions recognised - capital and contributed assets 1 4,500,000 - 12,000,000 2 ,500,000 - - 12,000,000 2 500 000
Surplus after capital transfers & contributions 9 7,846,285 - 19,559,634 7 8,286,651 1 19,260,786 - 19,559,634 ( 40 974 136)
Capital Expenditure & funds sources
Capital Expenditure
Transfers recognised - capital 8 3,316,800 (7,562,223) 7 5,754,577 8 6,262,774 (7,562,223) ( 10 508 197)
Public Contributions and Donations 1 4,500,000 (12,000,000) 2 ,500,000 - (12,000,000) 2 500 000
Borrowing 1 7,294,645 1 ,073,677 1 8,368,322 4 4,599,318 1 ,073,677 ( 26 230 996)
Internally generated funds 2 60,232,494 2 ,514,981 2 62,747,475 1 82,989,874 2 ,514,981 79 757 600
Total Sources of capital funds 3 75,343,939 (15,973,566) 3 59,370,373 3 13,851,966 (15,973,566) 45 518 407
Cash Flows
Net cash from (used) operating 222 622 925 ( 65 049 591) 157 573 335 194 008 682 (65,049,591) ( 36 435 347)
Net cash from (used) investing ( 364 843 940) 2 174 469 ( 362 669 471) ( 314 905 205) 2 ,174,469 ( 47 764 266)
Net cash from (used) financing 2 947 115 25 043 629 27 990 743 32 678 642 2 5,043,629 ( 4 687 898)
Cash/cash equivalents at the year end 280 890 261 82 395 321 363 285 582 452 173 094 8 2,395,321 ( 88 887 512)
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