Table Of ContentLekwa Teemane Local Municipality
(Registration number NW396)
Annual Financial Statements
for the year ended 30 June 2020
Lekwa Teemane Local Municipality
(Registration number NW396)
Annual Financial Statements for the year ended 30 June 2020
General Information
Legal form of entity Local Municipality
Mayoral committee
Mayor Councillor M Pilane
Councillor L.M Segola (Portfolio Committe Chairperson - Finance)
Councillor M. Majikela (Portfolio Committee Chairperson -
Infrastructure & LED)
Councillor K. L. Duiker (MPAC Chairperson)
Councillor L. D. Legabe (Portfolio Committee Chairperson -
Community Services)
Councillors Councillor L. W. Tshweu
Councillor K.G Palagangwe
Councillor J. Joseph
Councillor Kwena
Councillor T. Gerber
Councillor E. van Biljon
Councillor S. Fortuin
Councillor M. R. Mabote (Terminated 01 December 2019)
Councillor M. W. Moseswa
Councillor J. M. Dabampe
Councillor S. K Majahe
Councillor L. L Lephoi (Appointed 01 December 2019)
Grading of local authority Grade 3
Chief Finance Officer (CFO) M.A. Thokoane
Acting Accounting Officer Mrs. N Mbonani
Registered office Cnr Robyn & Dirkie Uys Street
Christiana
2680
Business address Cnr Robyn & Dirkie Uys Street
Christiana
2680
Postal address P. O. Box 13
Christiana
2680
Bankers ABSA
NEDBANK
Auditors Auditor General of South Africa (AGSA)
Registered Auditors
Attorneys Lizel Venter Attorneys
De Swartdt Vegel
Kgomo Attorneys Inc.
KNT Attorneys
Modiboa Attorneys
Russia Langa Attorneys
1
Lekwa Teemane Local Municipality
(Registration number NW396)
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 - 10
Accounting Policies 11 - 45
Notes to the Annual Financial Statements 46 - 96
FMG Finance Management Grant
DBSA Development Bank of South Africa
GRAP Generally Recognised Accounting Practice
EEDSM Energy Efficiency Demand Service Management
EPWP Expanded Public Works Programme
IAS International Accounting Standards
ME's Municipal Entities
MEC Member of the Executive Council
MFMA Municipal Finance Management Act
MIG Municipal Infrastructure Grant
2
Lekwa Teemane Local Municipality
(Registration number NW396)
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 sheis 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 officers 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, sheis satisfied that the municipality has or has access to adequate resources to
continue in operational existence for the foreseeable future.
The municipality is wholly dependent on five core services that generate revenue, namely rates, water, electricity, refuse and
sanitation. It also get equitable share from the government, which constitutes about 12% (2019:13%) of its total income. The
annual financial statements are prepared on the basis that the municipality is a going concern and that the municipality has
neither the intention nor the need to liquidate or curtail materially the scale of the municipality.
Although the accounting officer is primarily responsible for the financial affairs of the municipality, the annual financial
statements 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 have been examined by the municipality's external auditors.
The annual financial statements set out on page 4 to 96, which have been prepared on the going concern basis, were
approved by the acting accounting officer on 31 October 2020 and were signed on its behalf by:
Acting Accounting Officer
Mrs. N Mbonani
3
Lekwa Teemane Local Municipality
(Registration number NW396)
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Position as at 30 June 2020
Figures in Rand 2020 2019
Restated*
Assets
Current Assets
Inventories 673,796 682,624
Investments 46,445 61,590
Receivables from exchange transactions 9,882,506 4,200,034
Receivables from non-exchange transactions 24,744,364 12,382,419
Consumer debtors 109,486,177 89,465,516
Cash and cash equivalents 6,148,610 1,717,054
150,981,898 108,509,237
Non-Current Assets
Investment property 144,268,680 139,668,889
Property, plant and equipment 357,972,740 378,895,862
Intangible assets 644,995 809,122
Heritage assets 170,000 170,000
Investments in controlled entities 20,100 20,100
Long term receivables 6,317,958 7,547,700
509,394,473 527,111,673
Total Assets 660,376,371 635,620,910
Liabilities
Current Liabilities
Other Financial Liabilities 3,000,000 3,000,000
Financial liabilities 13,326,169 12,776,322
Finance lease obligation 570,827 2,096,213
Payables from exchange transactions 435,672,364 349,259,261
VAT payable 23,334,962 10,350,739
Consumer deposits 1,582,998 1,564,929
Employee benefit obligation 1,765,427 1,121,445
Unspent conditional grants and receipts 3,486,197 4,707,019
Provisions 2,251,465 1,707,686
484,990,409 386,583,614
Non-Current Liabilities
Financial liabilities 4,573,729 9,764,193
Finance lease obligation - 592,161
Employee benefit obligation 23,182,811 25,428,312
Provisions 9,494,228 8,620,219
37,250,768 44,404,885
Total Liabilities 522,241,177 430,988,499
138,135,194 204,632,411
Accumulated surplus 138,135,194 204,632,411
* See Note 2 & 43
4
Lekwa Teemane Local Municipality
(Registration number NW396)
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Performance
Figures in Rand 2020 2019
Restated*
Revenue
Revenue from exchange transactions
Sale of goods 64,515 346,655
Service charges 24 185,267,178 130,760,179
Rendering of services 18,230 253,014
Rental of facilities and equipment 25 189,632 203,399
Agency services 2,343,075 2,578,211
Other income 70,673 -
Interest received 26 90,346,019 70,047,178
Total revenue from exchange transactions 278,299,322 204,188,636
Revenue from non-exchange transactions
Taxation revenue
Property rates 27 26,741,889 25,104,894
Transfer revenue and Other revenue
Government grants & subsidies 28 81,148,823 67,700,568
Social Benefit (Concessionary Loan) 1,574,424 540,514
Traffic fines 29 1,785,604 590,820
Actuarial gains 4,241,713 1,315,847
Fair Value adjustments 4,599,790 5,552,714
Total revenue from non-exchange transactions 120,092,243 100,805,357
Total revenue 398,391,565 304,993,993
Expenditure
Employee related costs 30 (69,500,784) (65,850,487)
Remuneration of councillors 31 (5,964,326) (6,214,087)
Depreciation and amortisation 32 (21,145,696) (22,887,968)
Impairment losses on assets - (462,694)
Finance costs 33 (12,705,402) (9,218,839)
Debt impairment 34 (199,897,219) (76,207,047)
Bulk purchases 35 (75,963,541) (71,623,515)
Contracted services 36 (27,479,564) (28,287,579)
Loss on disposal of assets (28,176,007) (2,675,323)
Loss on fair value adjustment - Sanlam Shares (15,145) (6,375)
Consumables (6,599,511) (2,777,248)
General expenses 37 (17,441,587) (32,672,399)
Total expenditure (464,888,782) (318,883,561)
Deficit for the year (66,497,217) (13,889,568)
* See Note 2 & 43
5
Lekwa Teemane Local Municipality
(Registration number NW396)
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 69,869,017 69,869,017
Adjustments
Prior year adjustments 9,429,765 9,429,765
Balance at 01 July 2018 as restated* 79,298,782 79,298,782
Changes in net assets
Surplus for the year (64,414,341) (64,414,341)
Total changes (64,414,341) (64,414,341)
Opening balance as previously reported as at 30 June 2019 14,884,441 14,884,441
Adjustments
Prior period errors adjustments 189,747,970 189,747,970
Restated* Balance at 01 July 2019 as restated* 204,632,411 204,632,411
Changes in net assets
Surplus for the year (66,497,217) (66,497,217)
Total changes (66,497,217) (66,497,217)
Balance as at 30 June 2020 138,135,194 138,135,194
Note(s)
* See Note 2 & 43
6
Lekwa Teemane Local Municipality
(Registration number NW396)
Annual Financial Statements for the year ended 30 June 2020
Cash Flow Statement
Figures in Rand 2020 2019
Restated*
Cash flows from operating activities
Receipts
Receipts from customers 166,428,765 148,622,612
Grants 79,928,000 71,449,328
Interest income 205,373 40,976
Other receipts 2,128,654 1,393,888
248,690,792 221,506,804
Payments
Employee costs & Councillor remuneration (75,465,110) (72,064,575)
Suppliers (120,836,024) (139,849,280)
Finance costs (12,705,402) (9,218,839)
(209,006,536) (221,132,694)
Net cash flows from operating activities 39,684,256 374,110
Cash flows from investing activities
Purchase of property, plant and equipment (27,812,211) (20,647,350)
Purchase of other intangible assets (132,478) (134,795)
Net cash flows from investing activities (27,944,689) (20,782,145)
Cash flows from financing activities
Proceeds from financial liabilities (5,190,464) 22,000,000
Finance lease payments (2,117,547) (1,582,631)
Net cash flows from financing activities (7,308,011) 20,417,369
Net increase/(decrease) in cash and cash equivalents 4,431,556 9,334
Cash and cash equivalents at the beginning of the year 1,717,054 1,707,720
Cash and cash equivalents at the end of the year 6,148,610 1,717,054
* See Note 2 & 43
7
Lekwa Teemane Local Municipality
(Registration number NW396)
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
budget on comparable between final
basis budget and
Figures in Rand actual
Statement of Financial Performance
Revenue
Revenue from exchange transactions
Sale of goods 916,636 (100,694) 815,942 64,515 (751,427)
Service charges 164,664,739 20,952,253 185,616,992 185,267,178 (349,814)
Rendering of services - - - 18,230 18,230
Rental of facilities and equipment 1,032,000 (313,141) 718,859 189,632 (529,227)
Fair Value Adjustments 10,500,000 - 10,500,000 - (10,500,000)
Agency services 2,760,641 5,000 2,765,641 2,343,075 (422,566)
Other income 61,316 185,767 247,083 70,673 (176,410)
Interest received 52,572,905 8,000,000 60,572,905 90,346,019 29,773,114
Total revenue from exchange transactions 232,508,237 28,729,185 261,237,422 278,299,322 17,061,900
Revenue from non-exchange transactions
Taxation revenue
Property rates 30,089,583 12,358,767 42,448,350 26,741,889 (15,706,461)
Transfer revenue
Government grants & subsidies 73,208,000 10,000,000 83,208,000 81,148,823 (2,059,177)
Social Benefit (Concessionary Loan) - - - 1,574,424 1,574,424
Traffic Fines 2,324,116 154,999 2,479,115 1,785,604 (693,511)
Other transfer revenue 1 - - - 4,241,713 4,241,713
Other transfer revenue 2 - - - 4,599,790 4,599,790
Total revenue from non-exchange 105,621,699 22,513,766 128,135,465 120,092,243 (8,043,222)
transactions
Total revenue 338,129,936 51,242,951 389,372,887 398,391,565 9,018,678
Expenditure
Personnel (60,181,895) (7,835,641) (68,017,536) (69,500,784) (1,483,248)
Remuneration of councillors (6,171,016) - (6,171,016) (5,964,326) 206,690
Depreciation and amortisation (23,185,000) - (23,185,000) (21,145,696) 2,039,304
Finance costs (4,167,957) 150,000 (4,017,957) (12,705,402) (8,687,445)
Debt Impairment (80,592,777) (16,860,000) (97,452,777) (199,897,219) (102,444,442)
Bulk purchases (54,896,000) - (54,896,000) (75,963,541) (21,067,541)
Contracted Services (13,379,106) (176,863) (13,555,969) (27,479,564) (13,923,595)
Transfers and Subsidies (350,000) - (350,000) - 350,000
Consumables (7,652,829) (40,000) (7,692,829) (6,599,511) 1,093,318
General Expenses (13,070,337) (2,172,840) (15,243,177) (17,441,587) (2,198,410)
Total expenditure (263,646,917) (26,935,344) (290,582,261) (436,697,630) (146,115,369)
Operating deficit 74,483,019 24,307,607 98,790,626 (38,306,065) (137,096,691)
Loss on disposal of assets and liabilities - - - (28,176,007) (28,176,007)
Loss on foreign exchange - - - (15,145) (15,145)
- - - (28,191,152) (28,191,152)
Surplus for the year 74,483,019 24,307,607 98,790,626 (66,497,217) (165,287,843)
Actual Amount on Comparable Basis as 74,483,019 24,307,607 98,790,626 (66,497,217) (165,287,843)
Presented in the Budget and Actual
Comparative Statement
8
Lekwa Teemane Local Municipality
(Registration number NW396)
Annual Financial Statements for the year ended 30 June 2020
Statement of Comparison of Budget and Actual Amounts
Budget on Cash Basis
Approved Adjustments Final Budget Actual amounts Difference
budget on comparable between final
basis budget and
Figures in Rand actual
Statement of Financial Position
Assets
Current Assets
Inventories - - - 673,796 673,796
Investments 690,000 - 690,000 46,445 (643,555)
Receivables from exchange transactions - - - 9,882,506 9,882,506
Receivables from non-exchange transactions - - - 24,744,364 24,744,364
Consumer debtors 34,527,292 - 34,527,292 109,486,177 74,958,885
Short-term portion of long term receivables 2,500,000 - 2,500,000 - (2,500,000)
Cash and cash equivalents - - - 6,148,610 6,148,610
37,717,292 - 37,717,292 150,981,898 113,264,606
Non-Current Assets
Investment property 50,080,000 - 50,080,000 144,268,680 94,188,680
Property, plant and equipment 351,914,501 - 351,914,501 357,972,740 6,058,239
Intangible assets 61,455 - 61,455 644,995 583,540
Heritage assets 170,000 - 170,000 170,000 -
Investments in controlled entities 20,000 - 20,000 20,100 100
Investments 586,418 - 586,418 - (586,418)
Long term receivables 7,229,969 - 7,229,969 6,317,958 (912,011)
410,062,343 - 410,062,343 509,394,473 99,332,130
Total Assets 447,779,635 - 447,779,635 660,376,371 212,596,736
Liabilities
Current Liabilities
Other Financial Liabilities 3,000,000 - 3,000,000 3,000,000 -
Financial liabilities - - - 13,326,169 13,326,169
Finance lease obligation - - - 570,827 570,827
Payables from exchange transactions 301,633,809 - 301,633,809 435,672,364 134,038,555
VAT payable - - - 23,334,962 23,334,962
Consumer deposits 1,206,735 - 1,206,735 1,582,998 376,263
Employee benefit obligation - - - 1,765,427 1,765,427
Unspent conditional grants and receipts - - - 3,486,197 3,486,197
Provisions 2,652,473 - 2,652,473 2,251,465 (401,008)
Bank overdraft 62,375,000 - 62,375,000 - (62,375,000)
370,868,017 - 370,868,017 484,990,409 114,122,392
Non-Current Liabilities
Financial liabilities - - - 4,573,729 4,573,729
Employee benefit obligation - - - 23,182,811 23,182,811
Provisions 57,324,692 - 57,324,692 9,494,228 (47,830,464)
57,324,692 - 57,324,692 37,250,768 (20,073,924)
Total Liabilities 428,192,709 - 428,192,709 522,241,177 94,048,468
19,586,926 - 19,586,926 138,135,194 118,548,268
9
