Emnambithi / Ladysmith
Municipality
Annual Financial Statements
30 June 2013
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
General Information
Legal form of entity
Members of the Council
Mayor
Deputy Mayor
Speaker
Chief Whip
Member of the Executive Committee
Accounting Officer
Chief Financial Officer
Grading of local authority
Registered office
Postal address
Bankers
Auditors
Local Municipality
Mr M V Madlala
Ms S R Mfusi
Ms Z B Rasool
MrT WNgubane
Ms T Hadebe
Mr P J Hurter
Mr T P Makhaza
Mr M J Buthelezi
Ms M N Mlotshwa
MrT Msomi
Mr S J Sithebe
Mr M P Khathide
Mr R A Jhetam (Acting)
4
221 Murchison Street
Lister Clarence Building
Ladysmith
Tel: 036-6372231
Fax: 036-6311400
E-mail: mm@ladvsmith.co.za
PO Box 29
Ladysmith
Kwazulu-Natal
3370
ABSA - Public Sector Banking
Auditor-General
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Index
The reports and statements set out below comprise the annual financial statements presented to the councillors :
Index Page
Accounting Officer's Responsibilities and Approval 1
Statement of Financial Position 2
Statement of Financial Performance 3
Statement of Changes in Net Assets 4
Cash Flow Statement 5
Accounting Policies 6-19
Notes to the Annual Financial Statements 20- 51
Appendices:
Appendix A: Schedule of External Loans 52
Appendix B: Analysis of Property, Plant and Equipment 53
Appendix C: Statement of Budget and Actual Information 54
Appendix D: Disclosures of Grants and Subsidies 55
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Accounting Officer's Responsibilities and Approval
The Accounting Officer is 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.
The annual financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable
and prudent judgements and estimates.
The Accounting Officer acknowledges that he is ultimately responsible for the system of internal financial control established by the
municipality and places considerable importance on maintaining a strong control environment. To enable the Accounting Officer to
meet these responsibilities, the Accounting Officer 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 Officer is 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 Officer has reviewed the municipality's cash flow forecast for the year to 30 June 2013 and, in the light of this review
and the current financial position, he is 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 the income from services, rates and grants for continued funding of operations. The annual
financial statements are prepared on the basis that the municipality is a going concern and that the Emnambithi / Ladysmith
Municipality has neither the intention nor the need to liquidate or curtail materially the scale of the municipality.
The external auditors are responsible for independently reviewing and reporting on the municipality's annual financial statements.
The annual financial statements set out on pages 1 to 55, which have been prepared on the going concern basis, were approved by
the Accounting Officer on 30 August 201 3 and were signed on its behalf by :
I certify that the salaries, allowances and benefits of Councillors as disclosed in note 24 of these annual financial statements are
within the upper limits of the framework envisaged in Section 219 of the Constitution, read with the Remuneration of Public Officer
Bearers Act and the Minister of Provincial and Local Government’s determination in accordance with this Act.
30 August 2013
Page 1
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Statement of Financial Position
Note(s)
2013
R
2012
Restated
R
Assets
Current Assets
Inventories
15
32,296,944
13,041,943
Trade and Other Receivables from Exchange Transactions
16
22,366,249
20,905,918
Other Receivables from Non-Exchange Transactions
17
36,622,768
27,780,732
VAT Receivable
9
14,478,867
2,524,923
Current Portion of Non-Current Receivables
14
2,233
4,095
Short-Term Investments
13
80,955,967
70,739,034
Call Investment Deposits
18
95,301,130
282,024,158
117,044,589
252,041,235
Non-Current Assets
Property, Plant and Equipment
10
803,921,386
752,867,276
intangible Assets
11
242,760
158,238
Investment Property
12
63,543,469
58,158,103
Non-Current Receivables from Exchange Transactions
14
19,186
867,726,800
21,418
811,205,036
Total Assets
-
1,149,750,958
1,063,246,271
Current Liabilities
Consumer Deposits
4
8,045,469
7,919,239
Provisions
5
21,460,673
19,276,296
Trade and Other Payables from Exchange Transactions
7
71,152,032
73,871,403
Unspent Conditional Grants and Receipts
8
35,869,358
56,321,412
Cash and Cash Equivalents
19
29,314,433
4,616,678
Current Portion of Finance Lease Obligation
3
18,901
74,246
Current Portion of Long-term Loans
2
228,970
166,089,836
1,410,178
163,489,451
Non-Current Liabilities
Long-term Loans
2
4,961,135
5,190,105
Finance Lease Obligation
3
26,139
73,200
Retirement Benefit Obligations
6
34,592,500
39,579,775
32,932,000
38,195,305
Total Liabilities
205,669,611
201,684,757
Net Assets
944,081,347
861,561,514
Net Assets
Housing Development Fund
1
26,333,857
25,033,273
Accumulated Surplus
917,747,490
836,528,241
Total Net Assets
944,081,347
861,561,514
Page 2
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Statement of Financial Performance
Actual
Approved
Final
Difference
Restated
Actual
Budget
Adjustments
Budget
between Final
2012
2013
2013
2013
2013
Budget and
Actual
R
Note(s)
R
R
R
R
R
Revenue
Revenue from non-exchange transactions
99,278,609
Property Rates
20
112,765,228
113,545,733
-
113,545,733
(780,505)
9,171,484
Property Rates - Penalties & Collection Charges
4,106,159
10,501,970
-
10,501,970
(6,395,811)
3,386,165
Fines
5,980,091
6,463,670
-
6,463,670
(483,579)
6,150,917
Licences and Permits
6,572,089
6,484,260
-
6,484,260
87,829
148,125,131
Government Grants and Subsidies
22
194,784,702
182,811,000
7,065,000
189,876,000
4,908,702
9,550,335
Government Grants - Low Cost Housing
22
11,759,115
-
-
■
11,759,115
Revenue from exchange transactions
208,586,770
Service Charges
21
232,535,667
240,145,674
(12,157,844)
227,987,830
4,547,837
7,409,732
Interest Earned - External Investments
8,631,950
3,399,300
3,600,700
7,000,000
1,631,950
628,385
Interest Earned - Outstanding Receivables
882,852
1,932,428
-
1,932,428
(1 ,049,576)
38,703,274
Other Income
34
26,095,010
61,751,090
(26,583,447)
35,167,643
(9,072,633)
530,990,801
Total Revenue
604,112,862
627,035,125
(28,075,591)
598,959,534
5,153,328
Expenditure
122,725,971
Employee Related Costs
23
132,108,363
135,094,735
18,808,126
153,902,861
(21,794,498)
12,164,110
Remuneration of Councillors
24
13,131,617
13,584,699
-
13,584,699
(453,082)
15,324,891
Bad Debts
9,816,435
8,666,143
-
8,666,143
1,150,292
13,613,089
Indigency
21,008,689
19,576,950
(4,480,000)
15,096,950
5,911,739
69,066,939
Depreciation and Amortisation Expense
57,656,139
95,535,277
(1,410,178)
94,125,099
(36,468,960)
31,968,690
Repairs and Maintenance
36,807,966
42,820,443
(1,804,685)
41,015,758
(4,207,792)
681,942
Finance Costs
25
555,517
544,661
-
544,661
10,856
141,131,571
Bulk Purchases
26
154,749,980
167,753,000
(16,065,924)
151,687,076
3,062,904
4,906,147
Grants / Subsidies and Rebates Paid
27
1,272,856
6,308,000
748,048
7,056,048
(5,783,192)
4,913,427
Grant Expenses
9,450,229
3,991 ,000
5,192,000
9,183,000
267,229
9,550,335
Grants Expenses - Low Cost Housing
22
11,759,115
-
-
-
11,759,115
88,415,217
General Expenses
28
101 ,125,937
158,753,983
(44,814,03 5)
113,939,948
(12,814,011)
514,462,329
Total Expenditure
549,442,842
652,628,891
(43,826,648)
608,802,243
(59,359,401)
Other Gains / Losses
(3,520,698)
Gain / (Loss) on sale/disposal of assets
(2,376,407)
-
-
*
3,462,188
Gain / (Loss) on fair value adjustment
28,203,866
-
-
-
-
Gain / (Loss) on revaluation of assets
-
-
*
-
Inventories : Write-down to net realisable value
*
-
-
-
(88,686)
Impairment Loss / Reversal of impairment loss
(1,915,495)
16,381,277
Surplus / (Deficit) for the year
78,581,983
(25,593,766)
15,751,057
(9,842,709)
64,512,729
Page 3
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Statement of Changes in Net Assets
Housing
Development
Fund
R
Accumulated
Surplus
R
Total Net
Assets
R
Opening balance as previously reported
20,333,587
781,679,913
802,013,500
Surplus for the year
-
8,497,130
8,497,130
Correction of Error: Reversal of Interest Raised on Trade Receivables
-
-5,545,050
-5,545,050
Prior Year Adjustment: Unidentified Bank Deposits up to 30 June 2010
-
4,684,294
4,684,294
Prior Year Adjustment: Unclaimed Payments to Employees / Creditors
-
21,249
21,249
Prior Year Adjustment: PPE (Movables) - Cost
-
12,803,552
12,803,552
Prior Year Adjustment: PPE (Movables) - Accumulated Depreciation
-
4,508,584
4,508,584
Prior Year Adjustment: Assets Held for Sale Cancelled
-
1,120,000
1,120,000
Prior Year Adjustment: PPE (Infrastructure Assets)
-
14,361,404
14,361,404
Prior Year Adjustment: Long Service Awards
-
-5,948,840
-5,948,840
Other Transfers to Internal Funds
-
790,459
790,459
Transfer to Self-Insurance Fund
-
1,519,263
1,519,263
Transfer to Housing Operating Account
2,458,671
-
2,458,671
Balance at 1 July 2011 as restated
22,792,257
818,491,959
841,284,216
Surplus for the year
-
16,381,277
16,381,277
Prior Year Adjustment: Unidentified Deposits Appropriated
-
347,892
347,892
Prior Year Adjustment: Unclaimed Payments to Employees / Creditors
-
52,305
52,305
Other Transfers to Internal Funds
-
-75,333
-75,333
Transfer to Self-Insurance Fund
-
1,330,142
1,330,142
Transfer to Housing Development Fund
2,241,015
-
2,241,015
Balance at 1 July 2012
25,033,273
836,528,241
861,561,514
Surplus for the year
-
78,581,983
78,581,983
Prior Year Adjustment: Unclaimed Payments to Employees / Creditors
-
299,437
299,437
Other Transfers to Internal Funds
-
-81,522
-81,522
Transfer to Self-Insurance Fund
-
2,419,351
2,419,351
T ransfer to Housing Development Fund
1,300,584
-
1,300,584
Balance at 30 June 2013
26,333,856
917,747,490
944,081,347
Page 4
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Cash Flow Statement
2013 2012
Note(s) R R
Cash flows from operating activities
Receipts
Sale of goods and services
Grants
Interest received
Other receipts
314,932,304
183,428,925
9,514,801
38,647,189
546,523,220
304,639,561
168,973,968
8,038,117
68,585,176
550,236,822
Payments
Employee costs
Suppliers
Interest paid
Other payments
Net cash flows from operating activities
-172,579,971
-268,620,209
-555,517
-30,512,549
-1 53,599,466
-235,227,431
-681 ,942
-43,927,322
-472,268,246
-433,436,161
29
74,254,974
116,800,661
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of investment property
Purchase of intangible assets
Proceeds on sale of assets
Net cash flows from investing activities
-113,694,463 -75,899,024
-352,047 -19,930
5,079,838 1,530,446
-108,966,672 -74,388,508
Cash flows from financing activities
New loans raised/(repaid)
-1,410,178
-1,283,771
Finance lease raised/(repaid)
-102,406
“
Net cash flows from financing activities
-1,512,583
-1,283,771
Net increase / (decrease) in cash and cash equivalents
-36,224,281
41,128,382
Cash and cash equivalents at the beginning of the year
- Short-Term Investments
70,739,034
53,955,064
- Call Investment Deposits
117,044,589
82,997,183
- Cash and cash equivalents
-4,616,678
5,086,316
—
183,166,946
142,038,563
Cash and cash equivalents at the end of the year
- Short-Term Investments
13
80,955,967
70,739,034
- Call Investment Deposits
18
95,301,130
117,044,589
- Cash and Cash Equivalents
19
-29,314,433
-4,616,678
146,942,664
183,166,946
Page 5
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Acco unting Policies
1 . BASIS OF PREPARATION
1 .1 BASIS OF PRESENTATION
The annual financial statements have been prepared on an accrual basis of accounting
and are in accordance with historical cost conventions as the basis of measurement,
except where specified otherwise.
These annual financial statements have been prepared in accordance with Generally
Recognised Accounting Practice (GRAP), issued by the Accounting Standards Board in
accordance with Section 1 22(3) of the Municipal Finance Management Act, (Act No 56 of
2003).
The principle accounting policies adopted in the preparation of these annual financial
statements are set out below.
Assets, liabilities, revenues and expenses have not been offset except when offsetting is
required or permitted by a Standard of GRAP.
The accounting policies applied are consistent with those used to present the previous
year’s financial statements, unless explicitly stated. The details of any changes in
accounting policies are explained in the relevant policy.
1.2 PRESENTATION CURRENCY
These annual financial statements are presented in South African Rand, which is the
functional currency of the municipality.
1 .3 GOING CONCERN ASSUMPTION
These annual financial statements have been prepared on the assumption that the
municipality will continue to operate as a going concern for at least the next 12 months.
1.4 COMPARATIVE INFORMATION
Budget information in accordance with GRAP 1 and 24, has been provided in a separate
disclosure note and annexure to these financial statements and forms part of the audited
annual financial statements.
When the presentation or classification of items in the annual financial statements is
amended, prior period comparative amounts are restated. The nature and reason for the
reclassification is disclosed. Where accounting errors have been identified in the current
year, the correction is made retrospectively as far as is practicable, and the prior year
comparatives are restated accordingly. Where there has been a change in accounting
policy in the current year, the adjustment is made retrospectively as far as is practicable,
and the prior year comparatives are restated accordingly.
1.5 STANDARDS, AMENDMENTS TO STANDARDS AND INTERPRETATIONS ISSUED
BUT NOT YET EFFECTIVE
The following GRAP standards have been issued but are not yet effective and have not
been early adopted by the municipality :
GRAP 18: Segment Reporting - issued March 2005:
Compliance with this standard would have had an effect on the presentation only.
Financial information would have been reported by segments. The disclosure of this
information will assist users of the financial statements to better understand the entity's
past performance and to identify the resources allocated to support the major activities of
the entity.
Page 6
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
A cc ounting Policies
GRAP 25: Employee Benefits - issued December 2009:
Compliance with this standard would not have a significant impact on the financial
position, financial performance or cash flows of the municipality.
GRAP 26: Impairment of Non-Cash Generating Assets - issued March 2009:
Compliance with this standard would not have a significant impact on the financial
position, financial performance or cash flows of the municipality.
2. HOUSING DEVELOPMENT FUND
The Housing Development Fund was established in terms of the Housing Act, (Act No. 107 of
1997). Loans from national and provincial government used to finance housing selling schemes
undertaken by the Municipality were extinguished on 1 April 1998 and transferred to a Housing
Development Fund. Housing selling schemes, both complete and in progress as at 1 April 1998,
were also transferred to the Housing Development Fund. In terms of the Housing Act, all
proceeds from housing developments, which include rental income and sales of houses, must be
paid into the Housing Development Fund. Monies standing to the credit of the Housing
Development Fund can be used only to finance housing developments within the municipal area
subject to the approval of the Provincial MEC responsible for housing.
3. INTERNAL RESERVES
3.1 Self insurance reserve
The municipality has a Self-Insurance Reserve to set aside amounts to offset potential
losses or claims that cannot be insured externally (excess payments). Premiums are
charged to the respective services taking into account claims history and replacement
values of the insured assets. The balance of the self-insurance fund is ring-fenced within
the accumulated surplus/(deficit).
The Council determines annually the amount to contribute to the Self Insurance Reserve.
Claims not fully covered by external insurance are financed from the insurance reserve
by transferring a corresponding amount from the self-insurance reserve to the
accumulated surplus.
The municipality operates a self-insurance scheme under the Self-Insurance Reserve,
which has a policy that is aligned with the practice in the Insurance Industry. The balance
of the Self-Insurance Reserve is determined based on surpluses accumulated since
inception.
These surpluses arise from the differences between premiums charged against claims
paid and various administrative expenditure incurred.
At the end of each financial year the surplus as computed per above is transferred from
accumulated surplus to Self-Insurance Reserve.
The balance of the self-insurance fund is fully cash backed and is invested in a separate
call account.
Page 7
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Accounting Policies _ _
4. PROPERTY, PLANT AND EQUIPMENT
4.1 INITIAL RECOGNITION
Property, plant and equipment are tangible non-current assets (including infrastructure
assets) that are held for use in the production or supply of goods or services, rental to
others, or for administrative purposes, and are expected to be used during more than one
year. Items of property, plant and equipment are initially recognised as assets on
acquisition date and are initially recorded at cost. The cost of an item of property, plant
and equipment is the purchase price and other costs attributable to bring the asset to the
location and condition necessary for it to be capable of operating in the manner intended
by the municipality. Trade discounts and rebates are deducted in arriving at the cost. The
cost includes the necessary costs of dismantling and removing the asset and restoring
the site on which it is located.
When significant components of an item of property, plant and equipment have different
useful lives, they are accounted for as separate items (major components) of property,
plant and equipment.
Where an asset is acquired by the municipality for no or nominal consideration (i.e. a
non-exchange transaction), the cost is deemed to be equal to the fair value of that asset
on the date acquired.
Where an item of property, plant and equipment is acquired in exchange for a non-
monetary asset or monetary assets, or a combination of monetary and non-monetary
assets, the asset acquired is initially measured at fair value (the cost).
If the acquired item’s fair value was not determinable, it's deemed cost is the carrying
amount of the asset(s) given up.
Major spare parts and servicing equipment qualify as property, plant and equipment
when the municipality expects to use them during more than one period. Similarly, if the
major spare parts and servicing equipment can be used only in connection with an item
of property, plant and equipment, they are accounted for as property, plant and
equipment.
4.2 SUBSEQUENT MEASUREMENT - COST MODEL
Subsequent to initial recognition, items of property, plant and equipment are measured at
cost less accumulated depreciation and impairment losses. Land is not depreciated as it
is deemed to have an indefinite useful life.
Where the municipality replaces parts of an asset, it derecognises the part of the asset
being replaced and capitalises the new component. Subsequent expenditure incurred on
an asset is capitalised when it increases the capacity or future economic benefits
associated with the asset.
4.3 DEPRECIATION AND IMPAIRMENT
Depreciation is calculated on cost less residual value, using the straight-line method over
the estimated useful lives of the assets. Components of assets that are significant in
relation to the whole asset and that have different useful lives are depreciated separately.
Land is not depreciated as it is deemed to have an indefinite useful life.
Page 8
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Acc oun ting P olicies
The annual depreciation rates are based on the following estimated average asset lives:-
DETAILS
YEARS
DETAILS
YEARS
Infrastructure
Other
Roads and Paving
5-100
Buildings
10-50
Pedestrian Malls
20
Specialised Vehicles
3-20
Electricity
10-50
Other Vehicles
3-20
Water
10-100
Office Equipment
5-7
Sanitation
10-100
Furniture and Fittings
10
Housing
30
Watercraft
15
Stormwater
25 - 120
Bins and Containers
5-10
Community
Specialised Plant and Equipment
5-15
Buildings ^
10-50
Other Items of Plant and
Equipment
5-15
Recreational Facilities
10-100
Landfill sites
15
Security
3-5
The residual value, the useful life of an asset and the depreciation method is reviewed
annually and any changes are recognised as a change in accounting estimate in the
Statement of Financial Performance.
The municipality tests for impairment where there is an indication that an asset may be
impaired. An assessment of whether there is an indication of possible impairment is done
at each reporting date. Where the carrying amount of an item of property, plant and
equipment is greater than the estimated recoverable amount (or recoverable service
amount), it is written down immediately to its recoverable amount (or recoverable service
amount) and an impairment loss is charged to the Statement of Financial Performance.
4.4 DERECOGNITION
Items of property, plant and equipment are derecognised when the asset is disposed of
or when there are no further economic benefits or service potential expected from the use
of the asset. The gain or loss arising on the disposal or retirement of an item of property,
plant and equipment is determined as the difference between the sales proceeds and the
carrying value and is recognised in the Statement of Financial Performance.
4.5 INCOMPLETE CONSTRUCTION WORK
Incomplete construction work is stated at historical cost. Depreciation only commences
when the asset is available for use.
5. INVESTMENT PROPERTY
Investment property is property (land or a building - or part of a building - or both) held to earn
rentals or for capital appreciation or both, rather than for:
• use in the production or supply of goods or services or for
• administrative purposes, or
• sale in the ordinary course of operations.
Owner-occupied property is property held for use in the production or supply of goods or services
or for administrative purposes.
Page 9
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
A ccoun tin g Polic ies
Investment property is recognised as an asset when, it is probable that the future economic
benefits or service potential that are associated with the investment property will flow to the
municipality, and the cost or fair value of the investment property can be measured reliably.
Investment property is initially recognised at cost. Transaction costs are included in the initial
measurement.
Where investment property is acquired at no cost or for a nominal cost, its cost is its fair value as
at the date of acquisition.
Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a
part of, or service a property. If a replacement part is recognised in the carrying amount of the
investment property, the carrying amount of the replaced part is derecognised.
5.1 FAIR VALUE
Subsequent to initial measurement investment property is measured at fair value.
The fair value of investment property reflects market conditions at the reporting date.
A gain or loss arising from a change in fair value is included in net surplus or deficit for
the period in which it arises.
If the fair value of investment property under construction is not determinable, it is
measured at cost until the earlier of the date it becomes determinable or construction is
complete.
6. INTANGIBLE ASSETS
An asset is identified as an intangible asset when it:
• is capable of being separated or divided from an entity and sold, transferred,
licensed, rented or exchanged, either individually or together with a related
contract, assets or liability; or
• arises from contractual rights or other legal rights, regardless whether those
rights are transferable or separate from the municipality or from other rights and
obligations.
An intangible asset is recognised when:
• it is probable that the expected future economic benefits or service potential that
are attributable to the asset will flow to the municipality; and
• the cost or fair value of the asset can be measured reliably.
Intangible assets are initially recognised at cost.
An intangible asset acquired at no or nominal cost, the cost shall be its fair value as at
the date of acquisition.
Expenditure on research (or on the research phase of an internal project) is recognised
as an expense when it is incurred.
An intangible asset arising from development (or from the development phase of an
internal project) is recognised when:
• it is technically feasible to complete the asset so that it will be available for use or
sale.
• there is an intention to complete and use or sell it.
• there is an ability to use or sell it.
• it will generate probable future economic benefits or service potential.
• there are available technical, financial and other resources to complete the
development and to use or sell the asset.
Page 10
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Accounting Policies
• the expenditure attributable to the asset during its development can be measured
reliably.
Intangible assets are carried at cost less any accumulated amortisation and any
impairment losses.
An intangible asset is regarded as having an indefinite useful life when, based on all
relevant factors, there is no foreseeable limit to the period over which the asset is
expected to generate net cash inflows or service potential. Amortisation is not provided
for these intangible assets, but they are tested for impairment annually and whenever
there is an indication that the asset may be impaired. For all other intangible assets
amortisation is provided on a straight line basis over their useful life.
The amortisation period and the amortisation method for intangible assets are reviewed
at each reporting date.
Reassessing the useful life of an intangible asset with a finite useful life after it was
classified as indefinite is an indicator that the asset may be impaired. As a result the
asset is tested for impairment and the remaining carrying amount is amortised over its
useful life.
Internally generated brands, mastheads, publishing titles, customer lists and items similar
in substance are not recognised as intangible assets.
Amortisation is provided to write down the intangible assets, on a straight line basis, to
their residual values as follows:
Item Useful life
Servitudes indefinite
Software 3 years
7. IMPAIRMENT OF ASSETS
7.1 CASH GENERATING ASSETS
The municipality assesses at each reporting date whether there is any indication that an
asset may be impaired. If any such indication exists, the municipality estimates the
recoverable amount of the asset.
If there is any indication that an asset may be impaired, the recoverable amount is
estimated for the individual asset. If it is not possible to estimate the recoverable amount
of the individual asset, the recoverable amount of the cash-generating unit to which the
asset belongs is determined.
The recoverable amount of an asset or a cash-generating unit is the higher of its fair
value less costs to sell and its value in use.
If the recoverable amount of an asset is less than its carrying amount, the carrying
amount of the asset is reduced to its recoverable amount. That reduction is an
impairment loss.
An impairment loss of assets carried at cost less any accumulated depreciation or
amortization is recognized immediately in surplus or deficit.
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Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Acco untin g Policie s
An impairment loss is recognized for cash-generating units if the recoverable amount of
the unit is less than the carrying amount of the unit. The impairment loss is allocated to
reduce the carrying amount of the assets of the unit as follows:
To the assets of the unit, pro-rata on the basis of the carrying
amount of each asset in the unit.
The municipality assesses at each reporting date whether there is any indication that an
impairment loss recognized in prior periods for assets may no longer exist or may have
decreased. If any such indication exists, the recoverable amounts of those assets are
estimated.
The increased carrying amount of an asset attributable to a reversal of an impairment
loss does not exceed the carrying amount that would have been determined had no
impairment loss been recognized for the asset in prior periods.
A reversal of an impairment loss of assets carried at cost less accumulated depreciation
or amortization is recognized immediately in surplus or deficit.
7.2 NON-CASH GENERATING ASSETS
The municipality assesses at each reporting date whether there is any indication that an
asset may be impaired. If any such indication exists, the municipality estimates the
recoverable service amount of the asset.
If there is any indication that an asset may be impaired, the recoverable service amount
is estimated for the individual asset. If it is not possible to estimate the recoverable
service amount of the individual asset, the recoverable service amount of the cash-
generating unit to which the asset belongs is determined.
The recoverable service amount of an asset or a cash-generating unit is the higher of its
fair value less costs to sell and its value in use.
If the recoverable service amount of an asset is less than its carrying amount, the
carrying amount of the asset is reduced to its recoverable service amount. That reduction
is an impairment loss.
An impairment loss of assets carried at cost less any accumulated depreciation or
amortization is recognized immediately in surplus or deficit.
An impairment loss is recognized for non-cash generating units if the recoverable service
amount of the unit is less than the carrying amount of the unit. The impairment loss is
allocated to reduce the carrying amount of the assets of the unit as follows:
To the assets of the unit, pro-rata on the basis of the carrying
amount of each asset in the unit.
The municipality assesses at each reporting date whether there is any indication that an
impairment loss recognized in prior periods for assets may no longer exist or may have
decreased. If any such indication exists, the recoverable service amounts of those assets
are estimated.
The increased carrying amount of an asset attributable to a reversal of an impairment
loss does not exceed the carrying amount that would have been determined had no
impairment loss been recognized for the asset in prior periods.
Page 12
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Accounting Policies
A reversal of an impairment loss of assets carried at cost less accumulated depreciation
or amortization is recognized immediately in surplus or deficit.
8. INVENTORIES
8.1 INITIAL RECOGNITION
Inventories comprise current assets held for sale, consumption or distribution during the
ordinary course of business. Inventories are initially recognised at cost. Cost generally
refers to the purchase price, plus taxes, transport costs and any other costs in bringing
the inventories to their current location and condition. Where inventory is manufactured,
constructed or produced, the cost includes the cost of labour, materials and overheads
used during the manufacturing process.
Where inventory is acquired by the municipality for no or nominal consideration (i.e. a
non-exchange transaction), the cost is deemed to be equal to the fair value of the item on
the date acquired.
8.2 SUBSEQUENT MEASUREMENT
Inventories, consisting of consumable stores, raw materials, work-in-progress and
finished goods, are valued at the lower of cost and net realisable value unless they are to
be distributed at no or nominal charge, in which case they are measured at the lower of
cost and current replacement cost. Redundant and slow-moving inventories are identified
and written down in this way. Differences arising on the valuation of inventory are
recognised in the Statement of Financial Performance in the year in which they arose.
The amount of any reversal of any write-down of inventories arising from an increase in
net realisable value or current replacement cost is recognised as a reduction in the
amount of inventories recognised as an expense in the period in which the reversal
occurs.
The carrying amount of inventories is recognised as an expense in the period that the
inventory was sold, distributed, written off or consumed, unless that cost qualifies for
capitalisation to the cost of another asset.
In general, the basis of allocating cost to inventory items is the weighted average method.
9. FINANCIAL INSTRUMENTS
9.1 INITIAL RECOGNITION
Financial instruments are initially recognised at fair value.
9.2 SUBSEQUENT MEASUREMENT
Financial Assets are categorised according to their nature as either financial assets affair
value through profit or loss, held-to maturity, loans and receivables, or available for sale.
Financial liabilities are categorised as either at fair value through profit or loss or financial
liabilities carried at amortised cost ("other"). The subsequent measurement of financial
assets and liabilities depends on this categorisation and, in the absence of an approved
GRAP Standard on Financial Instruments, is in accordance with IAS 39.
9.2.1 INVESTMENTS
Investments, which include listed government bonds, unlisted municipal bonds,
fixed deposits and short-term deposits invested in registered commercial banks,
are categorised as either held-to-maturity where the criteria for that
Page 13
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Acco untin g Polic ies
categorisation are met, or as loans and receivables, and are measured at
amortised cost.
Where investments have been impaired, the carrying value is adjusted by the
impairment loss, which is recognised as an expense in the period that the
impairment is identified. Impairments are calculated as being the difference
between the carrying amount and the present value of the expected future cash
flows flowing from the instrument. On disposal of an investment, the difference
between the net disposal proceeds and the carrying amount is charged or
credited to the Statement of Financial Performance.
9.2.2 TRADE AND OTHER RECEIVABLES
Trade and other receivables are categorised as financial assets: loans and
receivables and are initially recognised at fair value and subsequently carried at
amortised cost. Amortised cost refers to the initial carrying amount, plus interest,
less repayments and impairments. An estimate is made for doubtful receivables
based on a review of all outstanding amounts at year-end. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or
financial reorganisation, and default or delinquency in payments (more than 30
days overdue) are considered indicators that the trade receivable is impaired.
Impairments are determined by discounting expected future cash flows to their
present value. Amounts that are receivable within 12 months from the reporting
date are classified as current.
An impairment of trade receivables is accounted for by reducing the carrying
amount of trade receivables through the use of an allowance account, and the
amount of the loss is recognised in the Statement of Financial Performance
within operating expenses. When a trade receivable is uncollectible, it is written
off. Subsequent recoveries of amounts previously written off are credited against
operating expenses in the Statement of Financial Performance.
9.2.3 TRADE PAYABLES AND BORROWINGS
Financial liabilities consist of trade payables and borrowings. They are
categorised as financial liabilities held at amortised cost, are initially recognised
at fair value and subsequently measured at amortised cost which is the initial
carrying amount, less repayments, plus interest.
9.2.4 CASH AND CASH EQUIVALENTS
Cash includes cash on hand (including petty cash) and cash with banks
(including call deposits). Cash equivalents are short-term highly liquid
investments, readily convertible into known amounts of cash, that are held with
registered banking institutions with maturities of four months or less and are
subject to an insignificant risk of change in value. For the purposes of the cash
flow statement, cash and cash equivalents comprise cash on hand, deposits held
on call with banks, net of bank overdrafts. The municipality categorises cash and
cash equivalents as financial assets: loans and receivables.
10. UNAUTHORISED EXPENDITURE
Unauthorised expenditure is expenditure that has not been budgeted, expenditure that is not in
terms of the conditions of an allocation received from another sphere of government, municipality
or organ of state and expenditure in the form of a grant that is not permitted in terms of the
Municipal Finance Management Act (Act No.56 of 2003). Unauthorised expenditure is accounted
for as an expense in the Statement of Financial Performance and where recovered, it is
subsequently accounted for as revenue in the Statement of Financial Performance.
Page 14
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Accoun ting Policies
1 1 . IRREGULAR EXPENDITURE
Irregular expenditure is expenditure that is contrary to the Municipal Finance Management Act
(Act No. 56 of 2003), the Municipal Systems Act (Act No.32 of 2000), the Public Office Bearers
Act (Act No. 20 of 1998) or is in contravention of the Municipality’s supply chain management
policy. Irregular expenditure excludes unauthorised expenditure. Irregular expenditure is
accounted for as expenditure in the Statement of Financial Performance and where recovered, it
is subsequently accounted for as revenue in the Statement of Financial Performance.
12. FRUITLESS AND WASTEFUL EXPENDITURE
Fruitless and wasteful expenditure is expenditure that was made in vain and would have been
avoided had reasonable care been exercised. Fruitless and wasteful expenditure is accounted for
as expenditure in the Statement of Financial Performance and where recovered, it is
subsequently accounted for as revenue in the Statement of Financial Performance.
13. PROVISIONS
Provisions are recognised when the municipality has a present or constructive obligation as a
result of past events, it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation and a reliable estimate of the provision can be made.
Provisions are reviewed at reporting date and adjusted to reflect the current best estimate. Where
the effect is material, non-current provisions are discounted to their present value using a pre-tax
discount rate that reflects the market's current assessment of the time value of money, adjusted
for risks specific to the liability (for example in the case of obligations for the rehabilitation of
land).
The municipality does not recognise a contingent liability or contingent asset. A contingent liability
is disclosed unless the possibility of an outflow of resources embodying economic benefits is
remote. A contingent asset is disclosed where an inflow of economic benefits is probable.
Future events that may affect the amount required to settle an obligation are reflected in the
amount of a provision where there is sufficient objective evidence that they will occur. Gains from
the expected disposal of assets are not taken into account in measuring a provision. Provisions
are not recognised for future operating losses. The present obligation under an onerous contract
is recognised and measured as a provision.
14. LEASES
14.1 MUNICIPALITY AS LESSEE
Leases are classified as finance leases where substantially all the risks and rewards
associated with ownership of an asset are transferred to the municipality. Property, plant
and equipment or intangible assets subject to finance lease agreements are initially
recognised at the lower of the asset's fair value and the present value of the minimum
lease payments. The corresponding liabilities are initially recognised at the inception of
the lease and are measured as the sum of the minimum lease payments due in terms of
the lease agreement, discounted for the effect of interest. In discounting the lease
payments, the municipality uses the interest rate that exactly discounts the lease
payments and unguaranteed residual value to the fair value of the asset plus any direct
costs incurred.
Subsequent to initial recognition, the leased assets are accounted for in accordance with
the stated accounting policies applicable to property, plant, equipment or intangibles. The
Page 1 5
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013
2012
Restated
R
17. Other Receivables from Non-Exchange Transactions
As at 30 June 2013
Gross
Balances
Provision for
Bad Debts
Net Balance
Rates
79,791,768
(63,510,662)
16,281,106
Vat Service Debtors
5,306,316
-
5,306,316
Service Debtors - Conversion Debt
4,683
(4,683)
(0)
Legal Fees - Debtors
2,230,764
(2,201,140)
29,624
Credit Control Costs - Debtors
93,282
(58,050)
35,232
Sundry Debtors
19,593,021
(4,622,532)
14,970,490
—
107,019,834
(70,397,066)
36,622,768
As at 30 June 2012
Rates
75,572,384
(63,674,617)
11,897,766
Vat Service Debtors
4,636,135
-
4,636,135
Service Debtors - Conversion Debt
6,320
(6,320)
-
Legal Fees - Debtors
2,705,303
(2,672,454)
32,849
Credit Control Costs - Debtors
90,565
(32,657)
57,908
Sundry Debtors
14,427,792
(3,271 ,717)
11,156,075
—
97,438,498
(69,657,766)
27,780,732
Rates : Aqeinq
Current (0 - 30 days)
82,484
653,720
31 - 60 Days
2,806,204
2,036,006
61 - 90 Days
1,573,507
1,168,335
91 - 120 Days
1,325,553
1,275,358
121+ Days
74,004,021
70,438,965
—
79,791,768
75,572,384
Reconciliation of the doubtful debt provision
Balance at beginning of the year
69,657,766
58,842,560
Contributions to provision
4,822,005
10,815,206
Additional provision for impairment
-
-
Doubtful debts written off against provision
(4,082,704)
-
Reversal of provision
-
-
—
70,397,066
69,657,766
Trade and other receivables from non-exchanae transactions impaired
As of 30 June 2013, trade and other receivables of R86 595 688 (2012: R 80 901 812) were impaired and provided for.
The amount of the provision was R70 397 066 as of 30 June 2013 (2012: R69 657 766).
The ageing of these receivables is as follows:
31 - 60 Days
2,235,924
1,730,435
61 - 90 Days
1,253,737
992,988
91 - 120 Days
1,056,172
1,083,948
121+ Days
65,851,234
65,850,395
70,397,066
69,657,766
The fair value of trade and other receivables from non-exchange transactions approximates their carrying amounts.
All Debtors with the exclusion of Vat Service Debtors are individually evaluated annually at balance sheet date for impairment.
A report on the various categories of debtors is drafted to substantiate such evaluation and subsequent impairment, where
applicable. Evaluation of impairment includes all debt passed 30 days, and considers past and current payment patterns.
Page 31
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013 2012
Restated
R R
18. Call Investment Deposits
The Municipality has the following call investment bank accounts
General Call Account
ABSA Bank - Public Sector Banking
Account Number 9207051716
Bank statement balance at end of period
Department of Housing Grants Call Accoun t
ABSA Bank - Public Sector Banking
Account Number 9207052314
Bank statement balance at end of period
Grant Funds Cali Account
ABSA Bank - Public Sector Banking
Account Number 9207054081
Bank statement balance at end of period
Aloe and Bern Tea Call Accoun t
ABSA Bank - Public Sector Banking
Account Number 9207054934
Bank statement balance at end of period
Valuations Call Account
ABSA Bank - Public Sector Banking
Account Number 9216278503
Bank statement balance at end of period
Depreciation Call Account
ABSA Bank - Public Sector Banking
Account Number 9216278799
Bank statement balance at end of period
Small Town Rehabilitation Grant Call Accoun t
ABSA Bank - Public Sector Banking
Account Number 9236394943
Bank statement balance at end of period
Ladysmith Black Mambazo Call Account
ABSA Bank - Public Sector Banking
Account Number 236410696
Bank statement balance at end of period
Self-Insurance Fund Call Accoun t
ABSA Bank - Public Sector Banking
Account Number 9251267674
Bank statement balance at end of period
Neighbourhood Development Partnership Grant Call Accoun t
ABSA Bank - Public Sector Banking
Account Number 9265577031
Bank statement balance at end of period
Housing Operating Call Accoun t
ABSA Bank - Public Sector Banking
Account Number 9274469611
Bank statement balance at end of period
Housing Capacity Fund Call Accoun t
ABSA Bank - Public Sector Banking
Account Number 9285122301
Bank statement balance at end of period
16,898,742 20,084,812
19,654,690 40,195,077
13,985,151 24,610,811
173,615 210,174
11,389 10,880
7,860,827 7,509,413
2,157,287 10,874,131
1,972,581 1,806,312
6,389,805 4,353,041
8,953,544 7,389,939
17,242,498
1,000
95,301,130 117,044,589
Page 32
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
~ " 2013 2012
Restated
R R
19. Cash and Cash Equivalents
The Municipality has the following bank account :-
Current Account (Primary Bank Account )
ABSA Bank - Public Sector Banking
Account Number 4071756088
Cash book balance at beginning of year
Cash book balance at end of period
Bank statement balance at beginning of year
Bank statement balance at end of period
20. Property Rates
Actual
Residential
Commercial
State
Total Assessment Rates
Valuations
Residential
Commercial
State
Total Property Valuations
(4,616,678)
5,086,316
(29,314,433)
(4,616,678)
12,127,770
10,294,546
13,278,136
12,127,770
56,279,337
50,456,335
35,670,083
31,545,533
20,815,808
17,276,742
112,765,228
99,278,609
R'000
R'000
6,386,222
6,233,230
1,561,674
1,712,522
884,690
884,690
8,832,586
8,830,442
Valuation on land and buildings is performed every five years. The last valuation came into effect on 1 July 2008. Supplementary
valuations are processed on a ad-hoc basis to take into account changes in individual property values due to change in use,
alterations, consolidations and subdivisions.
The following property allocation factors are applied to the various categories of property to determine assessment rates less the
impermissible valuation allowed :
Category
Rate
Impermissible
Valuation
Residential Property
R 0.0129
R 15 000
Industrial/Commercial/Business
R 0.0231
R 15 000
Agricultural
R 0.0032
R 15 000
Vacant Land
R 0.0535
R 0
Game Hunting / Eco-Tourism
R 0.0097
R 15 000
State
R 0.0238
R 15 000
Industrial Estate
R 0.0179
R 15 000
Rates are levied on a monthly basis on property owners with the final date of payment being 30 June 2013 (2012: 30 June 2012).
Interest at 18% per annum (2012: 18%) is levied on outstanding rates as well as a 10% (2012: 10%) collection charge two months
after final date of payment.
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Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013
R
2012
Restated
R
21. Service Charges
Sale of electricity
216,813,018
193,945,782
Refuse removal
15,722,649
14,640,988
232,535,667
208,586,770
22. Government Grants and Subsidies
Equitable share
103,921 ,090
93,368,000
Municipal Infrastructure Grant (MIG)
32,199,649
19,218,611
Dept of Housing
11,759,115
9,550,335
Museum Subsidy
134,000
125,000
Financial Management Grant
1,500,000
1,450,000
Municipal Systems Improvement Grant
800,000
790,000
Department of Mineral & Energy (DME)
-
3,529,940
Integrated National Electricity Programme (INEP)
10,425,677
3,003,158
Neighbourhood Development Programme (NDPG)
22,444,538
15,777,237
Small Town Rehabilitation (STR)
15,130,272
9,966,423
Other Grants
8,229,475
896,761
206,543,817
157,675,466
22.1 Equitable Share
In terms of the Constitution, this grant is used to subsidise the provision of basic services to indigent community members. All
registered indigents and automatic indigents, whose Property Valuation is R 80 000 and less, receive a 100% credit for their
Property Rates and their monthly services account.
22.2 Municipal Infrastructure Grant (MIG)
Balance unspent at beginning of year
Balance overspent at beginning of year (Debtor Raised)
Transfer amount from Other Grants Incorrectly Disclosed
Current year receipts
Conditions met - transferred to revenue (Other)
Funds not yet received - spending in advance (Debtor Raised)
Conditions still to be met - transferred to liabilities
(2,647,920)
(881,139)
30,758,000
(32,199,649)
4,955,196
(15,513)
(8,785,309)
25,356,000
(19,218,611)
2,647,920
This grant was used to construct roads and bridges, sportsfields and streetlighting as part of the upgrading of informal settlement
areas (included in the votes in Appendix B). No funds have been withheld.
22.3 Department of Housing
23,211,525 27,313,863
6,136,766 5,447,997
(11,759,115) (9,550,335)
17,589,176 23,211,525
This grant was used to construct houses as part of the upgrading of informal settlement areas.
Balance unspent at beginning of year
Current year receipts
Conditions met - transferred to revenue
Conditions still to be met - transferred to liabilities
22.4 Museum subsidy
Balance unspent at beginning of year
Current year receipts 134,000 125,000
Conditions met - transferred to revenue (134,000) (125,000)
Conditions still to be met - transferred to liabilities 2 I-
This grant was used to subsidise expenses incurred solely for the museums.
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Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013 2012
Restated
R R
22.5 Financial Management Grant (FMG)
Balance unspent at beginning of year
Current year receipts 1 ,500,000 1 ,450,000
Conditions met - transferred to revenue (1,500,000) (1,450,000)
Conditions still to be met - transferred to liabilities - -
This grant was used for Interns' salaries to advance the implementation of the MFMA, training of officials to meet the minimum
competency requirements, and Asset Management.
22.6 Municipal Systems Improvement Grant (MSIG)
Balance unspent at beginning of year
Current year receipts
Conditions met - transferred to revenue
Conditions still to be met - transferred to liabilities
This grant was used for systems to comply with the MPRA and Audit Outcomes i.t.o. GRAP.
22.7 Department of Minerals and Energy (DME) Grant
Balance unspent at beginning of year
Balance overspent at beginning of year (Debtor Raised)
Current year receipts
Conditions met - transferred to revenue
Funds not yet received - spending in advance (Debtor Raised)
Conditions still to be met - transferred to liabilities
This grant was used for electricity connections to households in various areas.
22.8 Integrated National Electricity Programme Grant (INEP)
Balance unspent at beginning of year
Current year receipts
Conditions met - transferred to revenue
Conditions still to be met - transferred to liabilities
This grant was used for electricity connections to households in various areas.
22.9 Neighbourhood Development Partnership Grant (NDPG)
Balance unspent at beginning of year
Current year receipts
Conditions met - transferred to revenue
Conditions still to be met - transferred to liabilities
7,602,003 8,729,241
15,000,000 14,650,000
(22,444,538) (15,777,237)
157,465 7,602,003
10,472,362 5,475,520
8 , 000,000
(10,425,677) (3,003,158)
46,684 10,472,362
(46,684)
3,483,256
(3,529,940)
46,684
(46,684)
800,000 790,000
(800,000) (790,000)
This grant is used for the upgrading of rural areas in terms of infrastructure development which includes streetlighting, pavements,
taxi ranks, bridges, etc.
Page 35
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013 2012
Restated
R R
22.10 Small Town Rehabilitation Programme Grant (STRP)
Balance unspent at beginning of year 7,728,025 1,694,449
Current year receipts 7,000,000 1 6,000,000
Conditions met - transferred to revenue (15,130,272) (9,966,423)
Funds not yet received - spending in advance (Debtor Raised) 402,247
Conditions still to be met - transferred to liabilities - 7,728,025
This grant was used for the upgrading of the CBD roads, town beautification, sidewalks, parks and informal trader shelters.
22.11 Other Grants
Balance unspent at beginning of year
7,307,496
4,417,286
Transfer amount to MIG incorrectly disclosed
881,139
-
Current year receipts
18,179,069
3,786,971
Conditions met - transferred to revenue (Other)
(8,229,475)
(896,761)
Conditions still to be met - transferred to liabilities
18,138,229
7,307,496
22.12 Changes in levels of government grants
Based on the allocations set out in the Division of Revenue Act, (Act 1 of 2005), no significant changes in the level of government
grant funding are expected over the forthcoming 3 financial years.
Page 36
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013 2012
Restated
R R
23. Employee Related Costs
Employee related costs - Salaries and Allowances
95,791,765
86,427,028
Employee related costs - Contributions for UIF, pensions, medical aids and group life
20,374,742
18,147,302
Travel allowances
6,712,532
5,914,874
Housing benefits and allowances
604,253
596,691
Overtime & standby payments
8,312,417
8,725,375
Performance bonus
300,660
136,598
Job Creation
27,351,985
21,487,488
Less : Employee costs to Property, Plant and Equipment and other expenses
There were no advances or loans to employees.
(27,339,991)
132 , 108,363
(17,630,101)
123 , 805,255
Remuneration of Municipal Manager : Mr M P Khathide
Annual Remuneration
1,067,583
412,254
Performance Bonus
1 , 067,583
412,254
Mr M P Khathide was appointed in the post of Municipal Manager on 1 September 2012, and acted in the post for the period
1 February 201 2 to 31 August 2013
Remuneration of Municipal Manager : Mr N J Mdakane
Annual Remuneration
Performance Bonus
Mr N J Mdakane resigned on 31 January 2012
Remuneration of the Chief Financial Officer : Mr R A Jhetam (Acting)
Annual Remuneration
Performance Bonus
Mr R A Jhetam was appointed to act in the post of Chief Financial Officer on 1 December 2012
Remuneration of the Chief Financial Officer : Ms A R Ngwenya
Annual Remuneration
Performance Bonus
Ms A R Ngwenya resigned on 30 November 2012
Remuneration of the Executive Manager: Corporate Services : MrS N Kunene
Annual Remuneration
Performance Bonus
Mr S N Kunene was appointed in the post of Executive Manager: Corporate Services on 1 March 2013
Remuneration of the Executive Manager: Corporate Services : Mr H A van Zyl (Acting)
Annual Remuneration 569,729 203,772
Performance Bonus ; ^
569,729 203,772
Mr H A van Zyl was appointed to act in the post of Executive Manager: Corporate Services from 1 April 201 2 to 28 February 201 3
283,928
283,928
372,686 848,640
110,323 64,000
483,009 912,640
543,164
543/164
562,448
44,924 72,598
44,924 635,046
Page 37
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013 2012
Restated
R R
Remuneration of the Executive Manager: Corporate Services : Ms PS Mntaka (Acting)
Annual Remuneration
Performance Bonus
67,573
67,573
Ms P S Mntaka was appointed to act in the post of Executive Manager: Corporate Services from 1 March 2012 to 31 March 2012
Remuneration of the Executive Manager: Governance & Transformation : Mr R G Reddy
Annual Remuneration
Performance Bonus
43,577
43,577
545,865
61,619
607,484
Mr R G Reddy's contract ended on 28 February 2012 (This post was since changed to Executive Manager: Corporate Services)
Remuneration of the Executive Manager: Community Services : Mr P B B Simelane
Annual Remuneration 283,928
Performance Bonus l
283,928
Mr P B B Simelane was appointed in the post of Executive Manager: Community Services on 1 March 2013
Remuneration of the Executive Manager: Community Services : Mr P S Mkhize (Acting)
Annual Remuneration
Performance Bonus _
526,591
526,591
Mr P S Mkhize was appointed to act in the post of Executive Manager: Community Services - 1 August 2012 to 28 February 2013
Remuneration of the Executive Manager: Development, Planning & Human Settlement : Mr P S Mkhize
Annual Remuneration 283,928
Performance Bonus
283,928
Mr P S Mkhize was appointed in the post of Executive Manager: Development, Planning & Human Settlement on 1 March 2013
Remuneration of the Executive Manager: Development, Planning & Human Settlement : Ms P S Mntaka (Acting)
Annual Remuneration 493,532
Performance Bonus :
493,532
Ms P S Mntaka was appointed to act in the post of Executive Manager: Economic Development for the period 1 August 2012
to 28 February 2013
Remuneration of the Executive Manager:
Annual Remuneration
Performance Bonus
infrastructure & Services : Mr A Sompersadh (Acting)
755,419
755,419
Mr A Sompersadh was appointed to act in the post of Executive Manager: Infrastructure & Services on 1 September 2012
Remuneration of the Executive Manager: Infrastructure & Services : Mr S Mathew
Annual Remuneration
Performance Bonus
150,634 850,187
101,837 L
252,470 850,187
Mr S Mathew's contract ended on 31 August 2012
Page 38
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
Remuneration of the Chief Operations Officer : Mr S E Hlomuka
Annual Remuneration
Other Alowances
Mr S E Hlomuka was appointed in the post of Chief Operations Officer on 1 June 2013
24. Remuneration of Councillors
Mayor
Deputy Mayor
Speaker
Chief Whip
EXCO Committee Members
Councillors
In-kind Benefits
cost of the Council.
The Mayor and the Deputy Mayor each have two full-time bodyguards.
25. Finance Costs
Long-term liabilities
Finance Lease Obligations
Other interest paid
2013
R
2012
Restated
R
37,486
20,909
-
58,395
-
680,847
652,710
552,987
527,386
550,942
525,946
519,647
-
1,814,100
1,642,962
9,013,094
8,815,106
13,131,617
12,164,110
office and secretarial support at the
jfficial duties.
544,661
671 ,068
5,239
-
5,617
10,873
555,517
681,942
Page 39
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013 2012
Restated
R R
26. Bulk Purchases
Electricity
154,749,980
141,131,571
154,749,980
141,131,571
Distribution Losses : Electricity
2013
Kwh
2012
Kwh
Value of Purchases at Purchase Price
Less : Sales at Purchase Price
253,237,927
(226,334,076)
259,253,693
(232,435,814)
109,806,112
(98,140,374)
106,294,014
(95,298,684)
Total Losses
26,903,851
26,817,879
11,665,738
10,995,330
Technical Losses
Non-Technical Losses
12,661,896
14,241,955
12,962,685
13,855,195
5,490,305
6,175,432
5,314,701
5,680,630
Total Losses
26,903,851
26,817,880
11,665,738
10,995,331
Percentage of Total Loss
10.62%
10.34%
The value of loss is calculated using the bulk purchase price.
27. Grants / Subsidies and Rebates Paid
Grants paid to students
Grants paid to other
Rates Rebates
289,600
6,192
977,064
191,394
6,000
4,708,753
1,272,856
4,906,147
Page 40
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013
R
2012
Restated
R
28. General Expenses
Included in general expenses are the following:
Advertising
1 ,503,030
814,463
Aloe & Berg Tea Project
-
172,648
Asset Management
705,464
2,677,604
Audit Fees
2,089,375
2,333,755
Bank Charges
438,132
357,894
Bulk Discounts
437,035
358,154
COID - Workmen's Compensation
1,220,545
963,800
Commercialisation of Agricultural Projects
458,327
215,105
Conferences & Delegations
1 ,776,566
2,060,288
Connections for KWh Meters
21,717
782,203
Consultants
5,308,738
-
Co-operative Development
46,334
82,538
Development Plans
175,259
735,338
Disconnections & Reconnections
1 ,678,058
455,678
Electricity
3,384,012
2,620,154
Electricity - Streetlighting
1,250,570
1,495,532
Emergency Relief Fund
2,198,130
822,784
Entertainment Expenses
174,051
113,199
Events / Programmes
2,086,531
2,339,804
Free Basic Alternative Energy
909,954
908,078
Insurance
3,138,242
2,481,735
Leave Provision
5,023,170
3,320,718
Legal Expenses
425,060
604,779
Licence Fees
408,621
240,710
Local Economic Development
420,672
369,486
Long Service Awards Provision
2,064,136
1,298,001
Materials & Sundries
987,788
628,764
Pauper Burials
87,217
101,000
Performance Management
41,500
103,749
Post Retirement Medical Aid Provision
3,402,706
4,033,432
Postage
985,357
924,843
Printing & Stationery
1,874,255
1,560,401
Project Development
325,978
337,019
Protective Clothing
846,326
818,509
Public Meetings
209,496
213,584
Rates
264,559
231,343
Refurbishment - NER Requirements
9,661 ,068
353,018
Rent - Buildings / Offices
93,686
147,600
SARS - Skills Development Levy
1,540,408
1,346,385
Security Services
3,637,742
2,680,454
Siyazenzela Project
2,583,734
2,268,434
Software Database
679,025
535,000
Sport & Recreation
925,021
1,127,179
Subscriptions & Membership
1,405,448
806,425
Swimming Pool Costs
216,468
488,587
Tampered Meters
68,645
104,529
Telephone / Cellphone Cost
3,316,274
3,090,834
Third Party Payments
462,190
430,419
Trade Mission
7,766
102,652
Training Staff
1,658,537
1,083,055
Valuation Costs
4,120,152
314,093
Vehicle / Transport Costs
12,923,800
25,622,891
Ward Committees
1 ,891 ,406
551 ,857
Water / Sanitation
1,094,121
1,205,849
Youth Development Programme
193,263
529,636
Zibambele EPW Pilot Project
990,153
799,448
Other
7,290,124
7,249,783
101,125,937 88,415,217
Page 41
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013 2012
Restated
R R
29. Cash Generated By Operations
Surplus/(Deficit) for the year
78,581 ,983
16,381,277
Adjustment for:-
Adjustments in Respect of Previous Years & Appropriations
2,777,923
14,299,583
Depreciation / Amortisation
57,656,139
69,066,939
Loss on disposal of assets
(2,376,407)
(3,520,698)
Contribution to doubtful debt provision
9,816,435
8,666,143
Contribution to long service sawards provision
2,064,136
1,298,001
Contribution to landfill site rehabilitation
825,826
7,460,039
Contribution to retirement benefit obligation
1,660,500
(4,756,249)
Gain on fair value adjustment and impairment
(26,288,371)
(3,373,502)
Operating surplus before working capital changes:
124,718,164
105,521,533
(lncrease)/decrease in inventories
(19,255,000)
(1,116,962)
(lncrease)/decrease in exchange debtors
(11,276,766)
(13,634,503)
(lncrease)/decrease in non-exchange debtors
(8,842,036)
11,586,818
(lncrease)/decrease in non-current receivables
1,862
14,879
(Decrease)/increase in unspent conditional grants and receipts
(20,452,053)
5,207,797
(Decrease)/increase in creditors
(2,719,370)
10,568,172
(Decrease)/increase in deposits
126,230
454,286
(lncrease)/decrease in VAT Receivable
11,953,944
(1,801,360)
74,254,974
116,800,661
Page 42
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013 2012
Restated
R R
30. Correction of Error
During the year the Municipality conducted a verification and condition assessment on Property, Plant and Equipment,
Investment Property, and inventory - Held For Sale.
During this exercise the munclpality found assets that were not on the current register or had been captured incorrectly.
Long service awards were recognised due to the materiality, and the valuation was conducted by actuarial
consultants.
The Municipality rectified this retrospectively.
The cumulative effect on the 2012 Opening Balances are as follows :
Statement of Financial Position
PPE - Infrastructure Assets (14,361 ,404)
PPE - Other Assets (17,312,136)
Inventory - Held For Sale Assets (1,120,000)
Provisions 5,948,840
Accumulated Surplus 26,844,701
The cumulative effect on the comparative amounts for 2012 are as follows :
Statement of Financial Position
PPE - Other Assets (10,224,492)
Investment Property (1,222,103)
Provisions (218,717)
Statement of Financial Performance
Depreciation 1 0,224,492
General Expenses 1,298,001
Employee Related Costs (1,079,284)
Other Income 1,222,103
31. Unauthorised, Irregular, Fruitless and Wasteful Expenditure
31.1 Unauthorised Expenditure
Opening balance
-
18,623,733
Unauthorised expenditure current year
-
-
Approved by council or condoned
-
(18,623,733)
Transfer to receivables for recovery - not condoned
-
-
Unauthorised expenditure awaiting authorisation
-
■
Unauthorised expenditure is related to the actual expenditure exceeding budgeted expenditure on the Statement of Financial
Performance.
31.2 Irregular Expenditure
Opening balance
11,888,759
286,651
Irregular expenditure current year
26,437,841
18,449,191
Approved / Condoned
(30,603,705)
(6,847,083)
Transfer to receivables for recovery - not condoned
-
-
Irregular expenditure awaiting authorisation
7,722,895
H, 888,755"
Irregular expenditure is related to the non-adherence of Supply Chain Management procedures.
- Non-compliance with the PPPFA Regulation
3,465,381
11,704,497
- Persons in the service of the state
28,050
184,262
- Non-compliance with the SCM Regulations
4,229,464
7,722,895
^,888,759
The amount of R 7 722 895 for irregular expenditure was submitted to Council in July 2013.
Page 43
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013 2012
Restated
R R
31.3 Fruitless and Wasteful Expenditure
Opening balance
Fruitless and Wasteful expenditure current year
Approved by council or condoned
Transfer to receivables for recovery - not condoned
Fruitless and Wasteful expenditure awaiting authorisation
118,153 107,280
19,938 10,873
(48,616)
89,475 118,153"
Fruitless and Wasteful expenditure is related to expenditure that was made in vain and would have been avoided had reasonable
care been exercised.
32. Additional Disclosures in Terms of Municipal Finance Management Act
32.1 Contributions to organised local government
Opening balance
Council subscriptions 1 ,388,248 804,425
Amount paid - current year (1 ,388,248) (804,425)
Amount paid - previous years : l-
Balance unpaid (included in creditors) ; L
32.2 Audit Fees
Opening balance
Current year audit fee
Amount paid - current year
Amount paid - previous years
Balance unpaid (Included In creditors)
2,543,143 2,534,771
(2,543,143) (2,534,771)
32.3 VAT
All VAT returns have been submitted by the due date thoughout the year.
32.4 PAYE. SDL and UIF
Opening balance
Current year payroll deductions
Amount paid - current year
Amount paid - previous years
Balance unpaid (included In creditors)
19,127,147 17,700,755
(19,127,147) (17,700,755)
32.5 Pension and Medicai Aid Deductions
Opening balance
Current year payroll deductions and Council Contributions
Amount paid - current year
Amount paid - previous years
Balance unpaid (included in creditors)
29,860,233 26,857,120
(29,860,233) (26,857,120)
Page 44
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
‘ ' 2013 2012
Restated
R R
33. Capital Commitments
33.1 Commitments in respect of capital expenditure:
- Approved but not yet contracted for
Infrastructure
Community
Other
- Approved and contracted for
Infrastructure
Community
Other
This expenditure will be financed from:
- External Loans
- Government Grants
- Own Resources
-
27,591,000
-
2,000,000
11,198,944
12,400,000
66,111,326
21,156,002
17,960,318
30,142,479
7,179,411
6,024,867
102,450,000
99,314,347
37,900,000
57,049,000
64,550,000
42,265,347
102,450,000
99,314,347
33.2 Operating leases
At the reporting date, outstanding commitments under
operating leases fall due as follows:
Operating leases - as lessee
Within one year
In the second to fifth year inclusive
After five years
178,103 144,000
178,103 144,000
Operating Leases consists of the following:
Operating lease payments represent rentals payable by the municipality for certain of its office properties.
Leases are negotiated for an average term of five years and rentals have an escalation per annum. No contingent rent is payable.
Operating leases - as lessor
Minimum lease payments due
Within one year
In the second to fifth year inclusive
After five years
287,624 328,388
1,281,627 1,480,677
611,981 553,704
2,181,232 2,362,768
Operating Leases consists of the following:
Certain of the municipality’s property is held to provide a service to the community to assist with local economic and social
development. Lease agreements are cancellable if agreed by both parties. Most leases have an indefinite term.
Page 45
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013 2012
Restated
R R
34. Other Income
Included in other income are the following:
Actuarial Gain - Post Retirement Benefits
Discounts Received
Fees : Brigade Service
Fees : Building Plans
Fees : Burial
Fees : Camping
Fees : Hiring
Fees : Sewerage Plans
Hire : Agra Crescent Hall
Hire : Town Hall
Legal Fees
Notice Processing Cost
Rates Clearance Certificates
Reconnection Fees : Non Payment
Refund Skills Development Levy
Rental Income - Housing
Rental Income - Sundries
Revenue - Third Party Payments
Sundries
Vehicle Income
Other
35. Self-Insurance Fund
Opening balance
Contributions / Interest
Insurance Claims processed
223,915
456,955
103,439
142,551
49,003
383,324
183,371
106,133
68,416
(307,163)
929.044
157,653
3,153
732,969
277.045
765,229
533,563
935,877
3,903,702
16,446,831
26,095,010
7,168,000
135,628
287,997
114,390
131,083
55,789
284,568
187,869
100,439
79,969
189,453
793,307
189,361
41,709
775,165
416,523
751,531
476,504
734,538
20,167,770
5,621 ,681
38,703,274
4,209,198 2,879,056
3,593,766 1,912,326
(1,174,416) (582,185)
6,628,548 4,209,198
The Municipality has a Self-Insurance Fund to set aside amounts to offset potential losses or claims, which fall under a stop loss
determined and calculated by Council's insurance broker based on the insurance risk carried by the Municipality. The funds are
kept in a separate call account, and interest earned is credited to the fund.
Page 46
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013 2012
Restated
R R
36. Retirement Benefit Information
Defined Contribution Plan
The following are defined contribution plans. These are not treated as defined benefit plans as defined by IAS 19, but are
accounted for as defined contribution plans. This is in line with the exemption in IAS 1 9 par.30 which states that where information
required for proper defined benefit plan accounting is not available in respect of multi-employer and state plans, these should be
accounted for as defined contribution plans. This municipality has been unsuccessful in obtaining the necessary information to
support proper defined benefit plan accounting due to restrictions imposed by the multi-employer plan. It is therefore deemed
impracticable to obtain this information at a suitable level of detail.
Natal Joint Municipal Pension Fund (Superannuation)
The latest interim actuarial valuation of the NJMP Superannuation Fund as at 31 March 2012 disclosed that the Fund's financial
position has improved from the previous statutory valuation. The fund disclosed a surplus of R 134,9 million.
The total rate of contribution by the municipality, including the surcharge, is 31 ,13% (21 ,63% plus the surcharge of 9,5%) of
pensionable salaries payable for a period of 8 years with effect from 1 July 2012.
Natal Joint Municipal Pension Fund (Retirement)
The latest statutory actuarial valuation of the NJMP Retirement Fund (defined benefit) as at 31 March 2012 disclosed a deficit in
the fund of R 83,6 million.
The total rate of contribution by the municipality, including the surcharge, is 34,22% (18,37% plus the surcharge of 17,5% less
1 ,65%) of pensionable salaries payable with effect from 1 July 2012. The repayment period has been extended from 5 - 8 years
from 2010.
Natal Joint Municipal Provident Fund
The latest statutory actuarial valuation of the NJMP Provident Fund (defined contribution) as at 31 March 2012 disclosed a deficit
in the fund of R 83,5 million.
37. Councillor's Arrear Consumer Accounts
The following Councillor(s) had arrear accounts over 90 days during the financial
year as follows:
B B Biyela 16,317
38. Related Parties
38.1 Transactions with Related Parties
S Mahraj - Chief Internal Auditor 28,050
The above employee is related to the owner of Maharaj's Driving school, of which the municipality conducted business with during
the financial year.
38.2 Key Management Personnel Compensation
Compensation of Key Management Personnel and Councillors is set out in Notes 23 and 24 respectively to the Annual Financial
Statements.
Page 47
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013 2012
Restated
R R
39. Risk Management
Financial Risk Management
The municipality 's activities exposes it to a variety of financial risks: market risk (including currency risk, fair value interest rate
risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.
The municipality's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects of the municipality's financial performance.
Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through
an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the
underlying businesses, municipality treasury maintains flexibility in funding by maintaining availability under committed credit lines.
The municipality’s risk to liquidity is a result of the funds available to cover future commitments. The municipality manages liquidity
risk through an ongoing review of future commitments and credit facilities. Cash Flow forecasts are prepared and utilised borrowing
facilities are monitored.
Interest Rate Risk
The municipality’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the municipality
to cash flow interest rate risk.
Credit risk
Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and trade debtors. The municipality
only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party.
Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers on an ongoing
basis. If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control
assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual
risk limits are set based on internal or external ratings in accordance with limits set by management. The utilisation of credit limits
is regularly monitored. Sales to retail customers are settled in cash or using major credit cards.
Credit guarantee insurance is purchased when deemed appropriate.
Page 48
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013 2012
Restated
R R
40. Contingent Liabilities
The Municipality identified the following contingent liabilities:
40.1 Claim for Damages
The municipality is being sued for breach of contract. The municipality is contesting the
claim.
The amount does not include legal fees.
Case No. 424/2011
42,294
42,294
The municipality is being sued for damages. The municipality is contesting the claim.
The amount does not include legal fees.
Letter of Demand
■
18,970
The municipality is being sued for damages. The municipality is contesting the claim.
The amount does not include legal fees.
Case No. 207/2012
~
28,916
The municipality is being sued for damages. The municipality is contesting the claim.
The amount does not include legal fees.
Case No. 591/2012
■
14,576
The municipality is being sued for damages. The municipality is contesting the claim.
The amount does not include legal fees.
Case No. 173/2012
~
100,000
The municipality is being sued for damages. The amount does not include legal fees.
The suit relates to the appointment of a service provider for a 3 year period for a Parking
Management System in the Ladysmith CBD. The municipality is contesting the claim.
Case No. 5386/2012
15,820,976
15,820,976
The municipality is being sued for a restitution claim alternatively damages for the sale of
-
313,400
property. The municipality is contesting the claim. The amount does not include legal fees.
Case No. 7241/2011
15,863,270 16,339,132
Page 49
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
” 2013 2012
Restated
R R
40.2 Other Claims
Reported for the Financial Year Ending 30 June 2013
All claims reported in the previous financial year have either been dismissed / withdrawn or settled. There are no other claims
against the Municipality as at 30 June 2013.
Reported for the Financial Year Ending 30 June 2012
The municipality has a notice of motion to demolish a water pressure tower structure on a ratepayer's property.
The municipality is contesting the motion. The cost is unknown at the reporting date.
Case No. 5728/2009
The municipality is being sued for the release of an impounded bus. The municipality is contesting the suit.
The cost is unknown at the reporting date.
Case No. 1200/2011
The municipality is being sued for damages for the disconnection of electricity. The municipality is contesting the claim.
The amount is unknown at the reporting date.
Letter of Demand
The municipality has a notice of motion which is being contested in the High Court in Pietermaritzburg for outstanding payment.
The amount is unknown at the reporting date.
Case No. 1008/2012
The municipality has been served a notice of eviction. The municipality is contesting the notice.
The amount is unknown at the reporting date.
Case No. 1787/2009
The municipality is being sued in the High Court for a valuation of property dispute. The municipality is contesting the suit.
The amount is unknown at the reporting date.
Case No. 6047/2011
41. Budget Information
The budget is approved on an accrual basis by nature and vote classification. The approved budget covers the period from 1 July
201 2 to 30 June 2013.
The budget and accounting bases are the same, both are on the accrual basis. The financial statements are prepared using a
classification on the nature of income and expenses in the statement of financial performance.
Refer to Appendix C for more detail on budget and actual information with an explanation of material differences between the final
budget and actual amounts by nature classification.
42. Impairment of Assets
Impairment Losses Recognised
Property, Plant and Equipment
Intangible Assets
Investment Property
Impairment losses on property, plant and equipment exist predominantly due to technological obsolescence of information
technology equipment. The remainder of impaired items of property, plant and equipment have been physically damaged, stolen or
have become redundant and idle.
1,915,495 88,686
1,915)495 88,686
Page 50
Emnambithi / Ladysmith Municipality
Annual Financial Statements for the year ended 30 June 2013
Notes to the Annual Financial Statements
2013 2012
Restated
R R
43. Change in Estimate
The remaining useful life of the infrastructure and immovable assets were reviewed during the current year.
During the review certain assets had the remaining useful life revised. The effect of this revision has decreased the depreciation
charges for the current and future periods.
44. Key Sources of Estimation Uncertainty and Judgements
The following areas involve a significant degree of estimation uncertainty:
Useful lives and residual values of property, plant, and equipment
Recoverable amounts of property, plant and equipment
Provision for rehabilitation of landfill site (discount rate, no. of years, amount of cash flows)
Present value of post retirement benefit obligation
Present value of long service awards
Provision for doubtful debts
Impairment of assets
752,867,276
13.934.566
34,592,500
7,526,107
82.505.567
1,915,495
721,120,625
13,108,739
32,932,000
6,167,557
78,798,654
88,686
The following areas involved judgements, apart from those involving estimations disclosed above, that management has made in the
process of applying the municipality's accounting policies and that have the most significant effect on the amounts recognised in
the financial statements.
Impairment of assets 1,915,495
Provisions 96,440,133
88,686
91,907,393
Page 51
Emnambithi / Ladysmith Municipality
Carrying
Value
183,542,769
311,911,627
5,855,106
14,853,628
86,549,202
602.712.332
26,954,954
37,626,679
64.581.632
15,277,000
10,874
15.287.874
23,547,711
-1,410,922
8,532,952
46,856,951
19,242,257
96.768.948
248.600
248.600
10.017.000
14.305.000
24.322.000
803,921,386
Closing
in 05 1 1 1 co
r- to a
a, ^ «
is- a
5 't to cJ
« w
ED
74.190
74.190
1 1 1
602,400
19,534
9,982
631.916
1 1
2,944,409
Impairment
Additions
1,811,789
1. All. 789
74,190
7A 190
1 1 1
19,534
9,982
29.616
1,915,495
Opening
Balance
426,515
A9K KIR
i i
602,400
kh 2 ann
1
1,028,915
Emnambithi / Ladysmith Municipality
APPENDIX B
ANALYSIS OF PROPERTY, PLANT AND EQUIPMENT AS AT 30 JUNE 2013
Closing
Balance
114,383,406
485,581,000
3,659,387
436,709
90,742,238
coji ono 7to
T- O T
- M CO II
ftfi
s' s' s
> T
14,638
1 A KM
78,993,408
11,195,288
4,930,334
22,171,471
6,997,221
<IOA 2R7 7 99
in u
o c
T- 7
to" u
T- 7
T- 7
ll' to
5
i
i
Depreciation
Disposals / 1
Write-Off
-563,722
-63,927
07 ccn
>
4
?
-236,424
-138,262
-2,683,070
-63,416
7 'CO't 470
■
ill CM
CM
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Accumulated
Additions
6,485,881
27,662,364
628,622
3,733,712
2 £ $ $
9 in CD 7
5 CD ■<-' r
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2,160,307
1,478,203
3,678,911
2,400,313
9 co e
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s'
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Opening
Balance
108,461,247
457,918,635
3,094,692
436,709
87,008,526
3 (D CO C
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Closing
Balance
298,352,689
799,304,416
9,514,493
15,290,337
177,291,440
1,193,
110,185,167
104,133,267
15,277,000
25,512
S88SS ■
in cd cm
m co" co" CO oo" cd'
a 7 o S CM CO
0 1- CO 7 O CM
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AA1 ,000,000
364,705
0 OOOt-
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7*
Disposals / 1
Write-Off
-911,854
-156,423
^ i i
N
I
7
1 1 1
-539,948
-254,851
-5,098,101
-123,889
D '
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3
4
-7,085,067
Cost
Under 1
Construction
11,247,609
10,164,450
-695,951
-3,486
20,712,621
-12,184,762
-1,311,418
s
i—
n"
9
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7
1,572,512
N '
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n
N
n
r-
8,788,953
Additions 1
10,065,846
37,588,650
353,532
1,690,742
4,328,083
54,026,852
30,997,665
6.655,794
37,653,458
3,856,294
798,744
840,307
4,138,667
3,591,187
13,225,200
104.905,510
o
c
c
s
o
Balance
277,951,088
751,551,316
9,317,384
14,295,546
172,966,843
1,226,082,178
91,372,264
98.788,891
190,161,156
15,277,000
25,512
15,302*512
97,714,713
9,545,105
12,887,812
69,987,856
22,772,180
212.907,665
364,705
364,705
10.017.000
14.305.000
24.322.000
1,669,140,215
Infrastructure
Electricity
Roads
Public Safety
Solid Waste
Stormwater
Community Assets
Land & Buildings
Recreation Facilities
Heritage Assets
Buildings
Other
Other Assets
Land & Buildings
Office Equipment
Furniture & Fittings
Motor Vehicles
Plant & Equipment
Other
Leased Assets
Office Equipment
Land Assets
Land with Buildings
Vacant Land
Total
Page 53
Emnambithi / Ladysmith Municipality
APPENDIX C
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Page 55
