Table Of ContentMSUKALIGWA MUNICIPALITY
FINANCIAL STATEMENTS
FINANSIëLE STATE
2009/2010
Msukaligwa Municipality
Annual Financial Statements for the year ended 30 June 2010
General Information
Grading of local authority
Msukaligwa Local Municipality is a Grade 6 local authority as per the
Government Gazette, published in terms of the Remuneration of
Public Office Bearers Act,1998
Nature of business and principal activities Local Municipality
Mayoral committee
Executive Mayor BM Vilakazi
Councillors MS Nkosi
PA Zulu
MMI Zikhali
S Marsh
JS Bongwe
Accounting Officer TBW Dlamini
Chief Finance Officer (CFO)
HM Boers
Registered office Civic Centre
C/o Church and Taute streets
Postal address P.O. Box 48
Ermelo
2350
Bankers Standard Bank
Auditors Auditor-General
Attorneys Nolte Attorneys
Ward councillors Ward 1 FTW Yende
Ward 2 NS Xaba
Ward 3 ZS Zwane
Ward 4 BC Sibeko
Ward 5 MJ Mkhonza
Ward 6 TT Malaza
Ward 7 HF Swart
Ward 8 GS Greyling
Ward 9 KJ Makhubu
Ward 10 MJ Blose
Ward 11 BA Maseko
Ward 12 DR Mkomo
Ward 13 S Marsh
Ward 14 BE Nkosi
Ward 15 N Shongwe
Ward 16 BJ Nkosi
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Msukaligwa Municipality
Annual Financial Statements for the year ended 30 June 2010
General Information
Councillors: Proportional JS Bongwe
L Butter
NL Gininda
NG Mashinini
MJ Mndebele
ZPG Mthimunye
MP Nkosi
MS Nkosi
Z Nkosi
GB Prinsloo
WE Ritson
BM Vilakazi
GA Vilakazi
MS Vilakazi
MM Zikhali
PA Zulu
Speaker Councillor NS Xaba
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Msukaligwa Municipality
Annual Financial Statements for the year ended 30 June 2010
Index
The reports and statements set out below comprise the annual financial statements presented to the council:
Index Page
Accounting Officer's Responsibilities and Approval 4
Accounting Officer's Report 5
Statement of Financial Position 6
Statement of Financial Performance 7
Statement of Changes in Net Assets 8
Cash Flow Statement 9
Accounting Policies 10 - 23
Notes to the Annual Financial Statements 24 - 55
The following supplementary information does not form part of the annual financial statements and is unaudited:
Detailed Statement of Financial Performance 56
Appendixes:
Appendix A: Schedule of External loans 57
Appendix B: Analysis of Property, Plant and Equipment 59
Appendix C: Segmental analysis of Property, Plant and Equipment 61
Appendix D: Segmental Statement of Financial Performance 63
Appendix E(1): Actual versus Budget (Revenue and Expenditure) 64
Appendix E(2): Actual versus Budget (Acquisition of Property, Plant and Equipment) 66
Appendix F: Disclosure of Grants and Subsidies in terms of the Municipal Finance 68
Management Act
Abbreviations
COID Compensation for Occupational Injuries and Diseases
DBSA Development Bank of South Africa
GRAP Generally Recognised Accounting Practice
HDF Housing Development Fund
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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Msukaligwa Municipality
Annual Financial Statements for the year ended 30 June 2010
Accounting Officer's Report
The accounting officer submits his report for the year ended 30 June 2010.
1. Review of activities
Main business and operations
Msukaligwa Municipality is a low capacity municipality and delivers basic services such as water, electricity and refuse
removal services to the Ermelo, Breyten, Wesselton, Lake Chrissie, Davel, Lothair, Sheepmoor and Warburton region.
The operating results and state of affairs of the municipality are fully set out in the attached annual financial statements and
do not in our opinion require any further comment.
Net surplus of the municipality was R 16,495,279 (2009: deficit R 1,268,503).
2. Going concern
The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This
basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of
liabilities, contingent obligations and commitments will occur in the ordinary course of business.
3. Subsequent events
The accounting officer is not aware of any matter or circumstance arising since the end of the financial year.
4. Accounting policies
The implementation of Generally Recognised Accounting Practice (GRAP) standards were applied in the current year and prior
year figures were restated.
The impact on the results of the municipality in adopting the above policies is reflected in note 38 to the annual financial
statements.
The annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting
Practice (GRAP) issued by the Accounting Standards Board in accordance with the Municipal Finance Management Act (Act 56
of 2003).
5. Non-current assets
Details of major changes in the nature of the non-current assets of the municipality during the year were as follows:
Fixed Assets as previously reported were measured using the depreciable replacement cost method in order to adopt GRAP
17: Property, Plant and Equipment. Assets were also classified in relevant asset classes under Property, Plant and Equipment,
Investment property and Intangible assets.
6. Auditors
The Auditor-General of South Africa will continue in office for the next financial period.
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Msukaligwa Municipality
Annual Financial Statements for the year ended 30 June 2010
Statement of Financial Position
Figures in Rand Note(s) 2010 2009
Assets
Current Assets
Inventories 8 11,517,726 11,135,004
Other financial assets 5 98,104 3,006,230
Other receivables from non-exchange transactions 9 11,796,920 6,858,592
VAT receivable 10 2,506,478 -
Consumer debtors 11 52,092,155 44,559,298
Cash and cash equivalents 12 969,327 21,420
78,980,710 65,580,544
Non-Current Assets
Investment property 3 1,080,967 8,402,641
Property, plant and equipment 4 216,670,243 195,672,462
Other financial assets 5 32,575 130,679
217,783,785 204,205,782
Total Assets 296,764,495 269,786,326
Liabilities
Current Liabilities
Other financial liabilities 14 14,921 28,004
Finance lease obligation 15 1,997,256 1,869,720
Trade and other payables from exchange transactions 18 27,852,095 21,224,402
VAT payable 19 - 464,484
Consumer deposits 20 5,684,994 5,084,377
Unspent conditional grants and receipts 16 7,792,500 8,761,395
Provisions 17 8,471,911 7,761,961
Bank overdraft 12 - 531,178
51,813,677 45,725,521
Non-Current Liabilities
Other financial liabilities 14 58,977 59,070
Finance lease obligation 15 3,317,418 3,778,258
Retirement benefit obligation 7 16,520,682 11,797,477
19,897,077 15,634,805
Total Liabilities 71,710,754 61,360,326
Net Assets 225,053,741 208,426,000
Net Assets
Accumulated surplus 13 225,053,741 208,426,000
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Msukaligwa Municipality
Annual Financial Statements for the year ended 30 June 2010
Statement of Financial Performance
Figures in Rand Note(s) 2010 2009
Revenue 22 276,591,537 216,365,577
Other income 26 6,190,612 4,374,787
Operating expenses (Refer to notes 27, 29, 30, 31, 33, 35 & 36) (272,078,403) (229,492,028)
Operating surplus/(deficit) 28 10,703,746 (8,751,664)
Investment revenue 32 7,666,075 8,313,426
Finance costs 34 (1,874,542) (830,265)
Surplus/(deficit) for the period 16,495,279 (1,268,503)
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Msukaligwa Municipality
Annual Financial Statements for the year ended 30 June 2010
Statement of Changes in Net Assets
Capital Capitalisation Government Total reserves Accumulated Total net
replacement reserve grant reserve surplus assets
Figures in Rand reserve
Balance at 01 July 2008 1,780,540 58,446,868 135,246,275 195,473,683 14,505,994 209,979,677
Changes in net assets
Transfers to Accumulated Surplus (1,780,540) (58,446,868) (135,246,275) (195,473,683) 195,473,683 -
Net income (losses) recognised directly in net assets (1,780,540) (58,446,868) (135,246,275) (195,473,683) 195,473,683 -
Deficit for the period - - - - (1,268,503) (1,268,503)
Total recognised income and expenses for the year (1,780,540) (58,446,868) (135,246,275) (195,473,683) 194,205,180 (1,268,503)
Previous year appropriation - - - - (437,806) (437,806)
Transfer from accumulated surplus to Inventory - Unsold water reserves - - - - 105,239 105,239
Changes due to implementation of GRAP - - - - 47,393 47,393
Total changes (1,780,540) (58,446,868) (135,246,275) (195,473,683) 193,920,006 (1,553,677)
Opening balance as previously reported - - - - 208,426,001 208,426,001
Adjustments
Prior year error - - - - (124,996) (124,996)
Balance at 01 July 2009 as restated - - - - 208,301,005 208,301,005
Changes in net assets
Surplus for the period - - - - 16,495,279 16,495,279
Changes due to implementation of GRAP - - - - 257,457 257,457
Total changes - - - - 16,752,736 16,752,736
Balance at 30 June 2010 - - - - 225,053,741 225,053,741
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Msukaligwa Municipality
Annual Financial Statements for the year ended 30 June 2010
Cash Flow Statement
Figures in Rand Note(s) 2010 2009
Cash flows from operating activities
Receipts
Sale of goods and services 159,759,862 130,456,862
Grants 105,962,146 78,125,304
Interest income 7,666,075 8,313,426
Other receipts 1,252,284 5,491,354
Other cash item - 653,543
274,640,367 223,040,489
Payments
Employee costs (90,984,539) (85,040,187)
Suppliers (125,232,658) (106,996,884)
Finance costs (11,476) (13,015)
Other payments (7,041,928) (6,531,765)
Other cash item (4,537,656) -
(227,808,257) (198,581,851)
Net cash flows from operating activities 37 46,832,110 24,458,638
Cash flows from investing activities
Purchase of property, plant and equipment 4 (41,596,605) (28,757,443)
Loss from sale of property, plant and equipment 4 (141,173) -
Loss from sale of investment property 3 (7,321,674) -
Decrease in fixed deposits 3,006,230 2,505,840
Proceeds from call investment deposits 2,621,964 982,101
Net cash flows from investing activities (43,431,258) (25,269,502)
Cash flows from financing activities
New loans raised / (repaid) (13,176) (11,556)
Increase in consumer deposits 600,617 624,359
Finance lease payments (1,988,678) (1,781,109)
Finance costs (520,530) (817,250)
Net cash flows from financing activities (1,921,767) (2,700,559)
Net increase/(decrease) in cash and cash equivalents 1,479,085 (3,511,423)
Cash and cash equivalents at the beginning of the period (509,758) 3,001,665
Cash and cash equivalents at the end of the period 12 969,327 (509,758)
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