NC073 Emthanjeni AFS 2015-16 audited

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EMTHANJENI LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2016
EMTHANJENI LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2016
INDEX
Description Page no.
General Information 3
Approval of the Annual Financial Statements 4
Report of the Chief Financial Officer 5
Statement of Financial Position 12
Statement of Financial Performance 13
Statement of Changes in Net Assets 14
Cash Flow Statement 15
Statement of Comparison of Budget and Actual Amounts 16
Accounting Policies 27
Notes to the Financial Statements 44
The following appendices do not form part of the Annual Financial Statements
and are unaudited:
Appendix A 95
Appendix B 96
Appendix C 99
Appendix D 100
Appendix E 101
Appendix F 106
Appendix G 107
EMTHANJENI LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2016
GENERAL INFORMATION
Members of the Council:
ST Sthonga Mayor
MM Freddie Speaker
B Swanepoel Chairperson of Section 79 Committee
AF Jaftha Member of Executive Committee
GL Nyl Member of Executive Committee
WJ du Plessis Member
VG Jonas Member
J Jood Member
MC Kivedo Member
M Malherbe Member
GL Nkumbi Member
HJ Rust Member
F Swanepoel Member
NS Thomas Member
Municipal Manager: I Visser
Chief Financial Officer: MF Manuel
Grading of Local Authority: Grade 2
Auditors: Auditor-General
Bankers: ABSA Bank Limited
Registered Office: 45 Dr. Pixley-ka-Seme Drive
De Aar
7000
Physical address: 45 Dr. Pixley-ka-Seme Drive
De Aar
7000
Postal address: P.O. Box 42
De Aar
7000
Telephone number: [phone]
Fax number: [phone]
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EMTHANJENI LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2016
APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS
Iam responsible for the preparation of these annual financial statements,which are setouton pages 5 to111,
in terms of Section 126(1) of the Municipal Finance Management Act, 2003 (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, loans made to Councillors, if any, and
payments made to Councillors for loss of office, if any, as disclosed in Note 33 of these Annual Financial
Statementsare withinthe upperlimits ofthe framework envisaged inSection 219of theConstitution,readwith
the Remuneration of Public Officer Bearers Act and the Minister of Provincial and Local Government’s

Municipal Manager: I Visser
31 August 2016
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EMTHANJENI LOCAL MUNIC
ANNUAL FINANCIAL STATEM
for the year ended 30 June
REPORT OF THE CHIEF FINANCIA
1. INTRODUCTION
It gives me great pleasure to present the Annual Financial Statements of Emthanje
These Annual Financial Statements have been prepared in accordance with Gen
bytheAccountingStandardsBoard(ASB)inaccordancewithSection122(3)ofth
of 2003). The standards and pronouncements that form the GRAP Reporting Fra
Directive 5 issued by the ASB on 11 March 2009.
The Statement of Financial Position at 30 June 2016 indicates an increase in N
increase in Current Liabilities.
The increase in Net Assets is ascribed primarily to the increase in Accumulate
operating account. The increase in Non-current Liabilities is primarily as a result of
service Benefits. The increase in Current Liabilities is primarily as a result of the in
2. KEY FINANCIAL INDICATORS
The following indicators are self-explanatory. The percentages of expenditure ca
good governance of the funds of the Municipality.
2.1 Financial Statement Ratios:
Indicator
Surplus / (Deficit) before Appropriations
Surplus / (Deficit) at the end of the Year
Expenditure Categories as a percentage of Total Expenses:
Employee Related Costs
Remuneration of Councillors
Collection Costs
Depreciation and Amortisation
Impairment Losses
Repairs and Maintenance
Interest Paid
Bulk Purchases
Contracted Services
Grants and Subsidies Paid
General Expenses
Loss on Disposal of Property, Plant and Equipment
Inventory Wrtten-off
Loss on Sale of Land
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EMTHANJENI LOCAL MUNIC
ANNUAL FINANCIAL STATEM
for the year ended 30 June
REPORT OF THE CHIEF FINANCIA
Current Ratio:
Trade Creditors Days
Debtors from Exchange Transactions Days
TheratioforDebtorsDays,calculatedonnetDebtors,remainedconsistentwithth
impairment made for the year under review.
2.2 Performance Indicators:
Indicator
Financial Position
Debtors Management:
Outstanding Debtors to Revenue
Outstanding Service Debtors to Revenue
Liquidity Management:
Liquidity Ratio
Liability Management:
Capital Cost as percentage of Own Revenue
Borrowed Funding as percentage of Own Capital Expenditure
Borrowing as percentage of Total Capital Assets
Safety of Capital:
Gearing
Financial Viability:
Debt Coverage
Cost Coverage
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EMTHANJENI LOCAL MUNIC
ANNUAL FINANCIAL STATEM
for the year ended 30 June
REPORT OF THE CHIEF FINANCIA
2. KEY FINANCIAL INDICATORS (continued)
Indicator
Financial Performance
Expenditure Management:
Creditors to Cash and Investments
Capital Expenditure on Infrastructure to Total Capital Expenditure
A detailed ratio analysis, together with explanantions, is included in Appendix "H".
3. OPERATING RESULTS
Details of the operating results per segmental classification of expenditure are
included in Appendices E (1), E (2) and E (3).
The services offered byEmthanjeni Local Municipality can generally be classified
and are discussed in more detail below.
The overall operating results for the year ended 30 June 2016 are as follows:
Actual Actual
Details 2016 2015
R R
Income:
Opening surplus / (deficit) 920 242 753 958 633 391
Operating income for the year 208 402 845 210 432 770
1 128 645 598 1 169 066 161
Expenditure:
Operating expenditure for the year 265 839 510 258 544 359
Sundry transfers - (9 720 952)
Closing surplus / (deficit) 862 806 088 920 242 753
1 128 645 598 1 169 066 161
- -
3.1 Rates and General Services:
RatesandGeneralServicesarealltypesofservicesrenderedbytheMunicipality,
are Assessment Rates and Sundry Fees levied.
Actual Actual
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EMTHANJENI LOCAL MUNIC
ANNUAL FINANCIAL STATEM
for the year ended 30 June
REPORT OF THE CHIEF FINANCIA
Details 2016 2015
R R
Income 76 088 890 79 097 832
Expenditure (122 695 940) (151 045 395)
Surplus / (Deficit) (46 607 051) (71 947 563)
Surplus / (Deficit) as % of total income (61.25)% (90.96)%
Variance from 2016 budget:
The significant fluctuation in respect to the Income reported is the result of Other I
Variance from 2015 actual:
ThedecreaseinIncomeisattributabletothedecreaseintheGovernmentGrants
in the previous year from the Hospital Electricity Line, which did not re-occur in
controloverexpenditureitems,resultinginasignificantdecreaseintheExpenditu
that reported in the previous financial year.
3.2 Housing Services:
Housing Services are services rendered bythe Municipalityto supplyhousing to t
the municipality to public and staff. The main income source is the levying of Hous
Actual Actual
Details 2016 2015
R R
Income 57 314 677 719
Expenditure (10 853 597) (4 452 101)
Surplus / (Deficit) (10 796 284) (3 774 382)
Surplus / (Deficit) as % of total income (18837.24)% (556.92)%
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EMTHANJENI LOCAL MUNIC
ANNUAL FINANCIAL STATEM
for the year ended 30 June
REPORT OF THE CHIEF FINANCIA
3. OPERATING RESULTS (continued)
Variance from 2016 budget:
The material fluctuation in respect to Expenditure is the result of the Depreci
significantportionthereofisduetobacklogdepreciationrecognisedintermsofGR
%, the Rand-value attached is not.
Variance from 2015 actual:
In the previous year the Municipality received a Housing Accreditation Grant, whic
3.3 Waste Management Services:
Waste Management Services are services rendered by the Municipality for the col
Actual Actual
Details 2016 2015
R R
Income 39 575 020 43 653 254
Expenditure (46 798 278) (30 080 081)
Surplus / (Deficit) (7 223 258) 13 573 173
Surplus / (Deficit) as % of total income (18.25)% 31.09%
Variance from 2016 budget:
The material fluctuation in respect to Expenditure is the result of the Depreci
significant portion thereof is due to backlog depreciation recognised in terms of GR
Variance from 2015 actual:
The fluctuation is due to completed projects in the previous financial year, which h
3.4 Electricity Services:
Electricity is bought in bulk from Eskom and distributed to the consumers by
Municipality was R52 295 143 (2015: R45 222 232). Tariffs levied for electricity ar
Actual Actual
Details 2016 2015
R R
Income 72 861 560 67 029 700
Expenditure (67 874 439) (80 275 166)
Surplus / (Deficit) 4 987 122 (13 245 466)
Surplus / (Deficit) as % of total income 6.84% (19.76)%
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EMTHANJENI LOCAL MUNIC
ANNUAL FINANCIAL STATEM
for the year ended 30 June
REPORT OF THE CHIEF FINANCIA
Variance from 2016 budget:
No material fluctuations have been reported.
Variance from 2015 actual:
The Municipality was able to generate more Electricity Revenue during the cu
implemented more strict control over expenditure items, resulting in a significa
overall deficit in comparison to that reported in the previous financial year.
3.5 Water Services:
Water is bought in bulk from various sources and distributed to the consumers
Municipality was R2 125 081 (2015: R1 826 423). Tariffs levied for water are subje
Actual Actual
Details 2016 2015
R R
Income 29 827 017 27 325 462
Expenditure (27 624 210) (30 122 894)
Surplus / (Deficit) 2 202 807 (2 797 432)
Surplus / (Deficit) as % of total income 7.39% (10.24)%
Variance from 2016 budget:
The material fluctuation in respect to Expenditure is the result of the Depreci
significant portion thereof is due to backlog depreciation recognised in terms of GR
Variance from 2015 actual:
No material fluctuations have been reported.
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