Sedibeng District Municipality	
Annual Financial statements	
for the year ended 30 June, 2018	

General Information	

Nature of business and principal activities	
District Municipality – DC42	
Capacity of Municipality	Medium capacity municipality			
Accounting Officer	Mr. S. Khanyile 
	
Chief Financial Officer	Mrs. KZ Wiese (Acting)
	
Registered office	Municipal Offices	
	Civic Centre	
	Cnr. Beaconsfield & Leslie street	
	Vereeniging	
	1930	
Business address	Municipal Offices	
	Civic Centre	
	Cnr. Beaconsfield & Leslie street	
	Vereeniging	
	1930	
Postal address	PO Box 471	
	Vereeniging	
	1930
	
Bankers	Nedbank (Primary Account)
Standard Bank (previous primary banker)	
Auditors	Auditor-General of South Africa	
Executive Mayor	Councillor BJ Modisakeng	
Speaker	Councillor MM Gomba	
Chief Whip	Councillor SA Mshudulu	
Members of Mayoral Committee	Councillor PB Tsotetsi
Councillor MD Raikane
Councillor TS Maphalla
Councillor LSA Gamede 
Councillor NG Hlongwane 
Councillor ML Khomoeasera
Councillor YJ Mahommed
Councillor JM Dlangamandla	

	
Index	

The reports and statements set out below comprise the financial statements presented to council:
Index	Page	
Accounting Officer's Responsibilities and Approval	3	
Accounting Officer's Report	4	
Statement of Financial Position	5	
Statement of Financial Performance	6	
Statement of Changes in Net Assets	7	
Cash Flow Statement	8	
Statement of Comparison of Budget and Actual Amounts	9 - 11	
Appropriation Statement	12 – 13	
Accounting Policies	14 - 26	
Notes to the Financial Statements	27 - 52	
Abbreviations			
DBSA 	Development Bank of South Africa	
GRAP 	Generally Recognised Accounting Practice	
IAS 	International Accounting Standards	
IMFO 	Institute of Municipal Finance Officers	
IPSAS 	International Public Sector Accounting Standards	
MMC 	Member of the Mayoral Committee	
MFMA Act	Municipal Finance Management Act	
MIG 	Municipal Infrastructure Grant 	
GAMAP 	Generally Accepted Municipal Accounting Practice	
PPE 	Property Plant and Equipment	
SCM 	Supply Chain Management	

	
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 financial statements and related financial information included in this report. It is the responsibility of the Accounting Officer to ensure that the 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 financial statements and was given unrestricted access to all financial records and related data.
The financial statements have been prepared in accordance with South African Statements of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.
The financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates.
The Accounting Officer acknowledges that he is 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 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 endeavors to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behavior 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 loss.
Although the Accounting Officer is primarily responsible for the financial affairs of the municipality, he is supported by the municipality's external auditors.
Every effort has been made to implement the austerity measures which has resulted in restriction of expenditure in certain areas in the financial statements. 
We realized that it cannot be business as usual, the District Municipality will have to reduce the list of operations especially the employee cost.
The financial statements set out on pages 4 to 52, which have been prepared on the going concern basis, were approved by the Accounting Officer on 31 August, 2018 and were signed on its behalf by:

			
Mr. S. Khanyile			
Municipal Manager			

Accounting Officer's Report	

The accounting officer submits his report for the year ended 30 June 2018
1.	Incorporation	
The municipality was incorporated on 1 January 1988 and obtained its certificate to commence business on the same day.
2.	Going concern	
We draw attention to the fact that at 30 June 2018, the municipality had accumulated deficit of R 57,415,538 [R31,503,099 in 2017] and that the municipality’s total liabilities exceed its assets by R 57,415,538.
The ability of the municipality to continue as a going concern is dependent on a number of factors. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business
The financial statements have been prepared on the basis of accounting policies applicable to a going concern and in line with South African Statements of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

3.	Accounting policies
	
The annual financial statements are prepared in accordance with the prescribed Standards of Generally Recognised Accounting Practices (GRAP) issued by the Accounting Standards Board as the prescribed framework by National Treasury.
4.	Accounting Officer	
The accounting officer of the municipality during the year and to the date of this report is as follows:
				
Name	Nationality			
Mr Stanley Khanyile							RSA			
5.	Bankers 
Nedbank Ltd is the newly appointed Municipality’s banker while Standard Bank was the previous primary banker.	
6.	Auditors	
Auditor-General of South Africa will continue in office for the next financial period.

	
Statement of Financial Position as at 30 June, 2018	
						
Figures in Rand		Note(s)			2018		2017 as restated	

Assets								
Current Assets								
Inventories		6			157,811				355,001			
Receivables from exchange transactions		7			4,475,416				37,232,632			
VAT receivable		8			446,690				-			
Construction of assets in progress		5			-				561,118			
Cash and cash equivalents		9			16,827,972				21,873,671			
							
					21,907,889				60,022,422			
							
Non‑Current Assets								
Property, plant and equipment		2			103,671,407				125,915,536			
Intangible assets		3			2,392,782				2,962,329			
Heritage assets	4			4,894,941				4,462,880			
							
					110,959,130				133,340,745			
							
Total Assets					132,867,019				193,363,167			
							
Liabilities								
Current Liabilities								
Unspent conditional grants and receipts		10			15,274,264				13,470,653			
Payables from exchange transactions		11			175,008,293				146,369,071			
VAT payable		12							2,020,344			
Total Current Liabilities					190,282,557				161,860,068			
							
Total Liabilities					190,282,557				161,628,221			
							
Net Assets					(57,415,538)				31,503,099			
							
Net Assets							
Accumulated (deficit) /surplus					(57,415,538)			31,503,099				

	
Statement of Financial Performance	
						
Figures in Rand		Note(s)			2018		2017 as restated	

Revenue
Revenue from exchange transactions								
Sale of goods					3,534,163				3,241,227				
Rental of facilities and equipment		15			570,958				799,915				
Agency services		16			71,182,541				69,514,567				
Other income		18			986,341				8,923,205				
Interest received ‑ investment		20			2,835,809				2,137,929				
Commission received	18			6,810,435				6,748,376			
Gain on disposal of assets and liabilities					13,857				-			
							
Total revenue from exchange transactions			85,934,104				91,365,219			
Revenue from non-exchange transactions
Non-exchange revenue							
Recoveries	19			489,076				-			
Licenses and permits		17			2,255,000				517,000			
Government grants & subsidies		22			269,415,374				267,281,891			
Total revenue from non- exchange transactions				272,159,450				267,798,891			
Total revenue		14			358,093,554				359,164,110			
							
Expenditure							
Employee related costs		23			(255,310,057)			(245,454,976)			
Remuneration of councillors		24			(12,826,039)			(11,499,651)			
Depreciation and amortisation		25			(13,586,459)			(16,230,445)			
Impairment loss			(12,279,296)		-		
Lease rentals on operating lease		26			(7,954,734)				(7,741,861)				
Debt Impairment		27			(44,584,162)				(2,187,194)				
Contracted services		28			(53,493,873)				(53,441,090)				
Transfers and Subsidies		21			(10,238,715)				(12,370,265)				
Loss on disposal of assets and liabilities					-				(177,522)				
Sale of goods/Inventory		30			(3,373,952)				(2,792,045)				
General Expenses		31			(33,796,965)				(40,091,738)				
							
Total expenditure					(447,444,252)				(391,916,362)			
							
Operating deficit for the year					(89,350,698)				(32,752,252)			

	Statement of Changes in Net Assets	
						
Figures in Rand		Note		Accumulated surplus		Total net assets	

						
Opening balance as previously reported					47,657,080				47,657,080		
Adjustments (Change in accounting policy)		36.2		-		-	
Correction of errors		36.1			16,598,271			16,598,271	
						
Balance at 1 July, 2016 as restated*					64,255,351				64,255,351		
Changes in net assets							
Surplus (Deficit) for the year					(32,752,252)				(32,752,252)		
						
Total recognised income and expenses for the year					(32,752,252)				(32,752,252)		

						
Opening balance as previously reported					16,423,373				16,423,373		
Adjustments (Change in accounting policy)		36.2		-		-	
Correction of errors		36.1			15,079,726				15,079,726		
						
Balance at 1 July, 2017 as restated*					31,503,099				31,503,099		
Changes in net assets							
Revalued on Heritage assets			432,061		432,061	
Surplus (Deficit) for the year					(89,350,698)				(89,350,698)		
						
Total recognised income and expenses for the year					(88,918,637)				(88,918,637)		
						
Balance at 30 June, 2018					(57,415,538)				(57,415,538)		

						

	
Cash Flow Statement	
						
Figures in Rand		Note(s)			2018		2017 as restated	

Cash flows from operating activities	
							
Receipts								
Grants & subsidies					271,806,985				264,250,405				
Interest income					2,835,809				2,137,929				
Other receipts					18,193,631				42,702,189				
License Receipts					246,458,670				241,589,199				
							
					539,295,095			550,679,722		

Payments								
Employee costs					(268,036,696)				(256,954,627)				
Suppliers					(113,334,011)				(152,209,620)				
Licensing Authority					(159,931,866)				(123,207,760)				
							
					(541,302,573)				(532,372,007)			
							
Net cash flows from operating activities		32			(2,007,478)			18,307,715		
							
Cash flows from investing activities	
							
Purchase of property, plant and equipment		2			(2,808,538)				(4,444,487)				
Proceeds from sale of property, plant and equipment					87,741				311,345				
Purchase of other intangible assets		3			(317,424)				(1,203,609)				
							
Net cash flows from investing activities					(3,038,221)				(5,336,751)			

							
Net increase/(decrease) in cash and cash equivalents					(5,045,699)				12,970,963				
Cash and cash equivalents at the beginning of the year					21,873,671				8,902,708				
							
Cash and cash equivalents at the end of the year		9			16,827,972				21,873,671			

	
Statement of Comparison of Budget and Actual Amounts	
							
Budget on Accrual Basis								
							
Figures in Rand		Approved budget	Adjustments	Final Budget	Actual amounts on comparable basis	Difference between final budget and actual		

Statement of Financial Performance	
Revenue								
Revenue from exchange transactions								
Sale of goods			3,000,000			600,000			3,600,000			3,534,163			(65,837)			
Rental of facilities and equipment			619,800			66,573			686,373			570,958			(115,415)			
Agency services			7,953,306			72,048,149			80,001,455			71,182,541			(8,818,914)			
Commissions received			8,000,000			(1,194,416)			6,805,584			6,810,435			4,851			
Other income ‑ (rollup)			624,143			98,615			722,758			986,341			263,583			
Interest received ‑ investment			1,680,000			-			1,680,000			2,835,809			1,155,809			
Gain on disposal of assets and liabilities			100,000			-			100,000			13,857			(86,143)			
							
Total revenue from exchange transactions			21,977,249			71,618,921			93,596,170			85,934,104			(7,662,066)			
							
Revenue from non‑exchange transactions								
								
Licenses or Permits (Non‑exchange)			73,919,504			(73,919,504)			-			-			-			
Recoveries			-			489,076			489,076			489,076			-			
Licenses and permits			-			860,000			860,000			2,255,000			1,395,000			
Government grants & subsidies			268,290,000			3,426,984			271,716,984			269,415,374			(2,301,610)			
Total revenue from non‑exchange transactions			342,209,504			(69,143,444)			273,066,060			272,159,450			(906,610)			
							
Total revenue			364,186,753			2,475,477			366,662,230			358,093,554		(8,568,676)			
							
Expenditure								
Personnel			(250,028,612)			645,643			(249,382,969)			(255,310,057)			(5,927,088)			
Remuneration of councillors			(12,638,928)			(448,374)			(13,087,302)			(12,826,039)			96,093			
Depreciation and amortisation			(16,896,075)			2,025,027			(14,871,048)			(13,586,459)			1,284,589			
Impairment loss	-	-	-	(12,279,296)	(12,279,296)		
Lease rentals on operating lease			(7,852,080)			(622,417)			(8,474,497)			(7,954,734)			519,763			
Contracted Services			(45,148,108)			(9,914,996)			(55,063,104)			(53,493,873)			1,569,231			
Debt impairment	-	-	-	(44,584,162)	(44,584,162)		
Transfers and Subsidies			(10,280,000)			23,016			(10,256,984)			(10,238,715)			18,269			
Sale of goods/Inventory			-			(2,914,269)			(2,914,269)			(3,373,952)			(459,6837)			
General Expenses			(42,599,075)			8,090,672			(34,508,403)			(33,796,965)			876,608			
							
Total expenditure			(385,442,878)			(3,115,698)			(388,558,576)			(447,444,252)			(58,885,676)			
							
Operating deficit			(21,256,125)			(640,221)			(21,896,346)			(89,350,698)			(67,454,352)			
Actual Amount on Comparable Basis as Presented in the Budget and Actual Comparative Statement			(21,256,125)			(640,221)			(21,896,346)			(89,350,698)			(67,454,352)			

							

Statement of Comparison of Budget and Actual Amounts	

	

	

Budget on Accrual Basis		

	

	

	

	

Figures in Rand		
Approved budget	
Adjustments	
Final Budget	
Actual amounts on comparable basis	
Difference between final budget and actual	

	
Statement of Financial Position	
Assets								
Current Assets								
Inventories			-			-			-			157,811			157,811			
Receivables from exchange transactions			35,892,998			-			35,892,998			4,475,416			(31,417,582)			
VAT receivable			-			-			-			446,690			446,690			
Cash and cash equivalents			19,256,874			-			19,256,874			16,827,972			(2,428,902)			
							
			55,149,872			-			55,149,872			21,907,889			(33,241,983)			
							
Non‑Current Assets								
Property, plant and equipment			115,657,775			(650,283)			115,007,492			103,671,407			(11,336,085)			
Intangible assets			3,200,000			-			3,200,000			2,392,782			(807,218)			
Heritage assets		-			-			-			4,894,941			4,894,491			
							
			118,857,775			(650,283)			118,207,492			110,959,130			(7,248,362)			
							
Total Assets			174,007,647			(650,283)			173,357,364			132,867,019			(40,490,346)			
							
Liabilities								
Current Liabilities								
Payables from exchange transactions			132,121,407			-			132,121,407			175,008,293			42,886,8866			
Unspent conditional grants and receipts			-			-			-			15,274,264			15,274,264			
							
			132,121,407			-			132,121,407			190,282,557			58,161,150			
							
Total Liabilities			132,121,407			-			132,121,407			190,282,557			58,161,150			
							
Net Assets			41,886,240			(650,283)			41,235,957			(57,415,538)			(98,651,495)			
							
Net Assets								
Net Assets Attributable to Owners of Controlling Entity								
Reserves								
Accumulated surplus			41,886,240			(650,283)			41,235,957			(57,415,538)			(98,651,495)			
							
Total Net Assets			41,886,240			(650,283)			41,235,957			(57,415,538)			(98,651,495)			

Budget on Accrual Basis							
						
Figures in Rand		Approved budget	Adjustments	Final Budget	Actual amounts on comparable basis	Difference between final budget and actual	
Cash Flow Statement	
Cash flows from operating activities	
Receipts							
Grants			268,290,000			3,426,984			271,716,984			271,806,985			90,001		
Other receipts			95,896,753			(951,507)			94,945,246			21,029,440			(73,915,806)		
License Receipts			-			-			-			246,458,670			246,458,670		
						
			359,259,635			2,739,136			361,998,771			539,295,095			172,632,865		
						
Payments							
Employee costs			(262,667,540)			197,269			(262,470,271)			(268,036,696)			(5,566,425)		
Suppliers			(105,879,213)			(5,338,044)			(111,217,257)			(113,334,011)			(2,116,754)		
Licensing Authority			-			-			-			(159,931,866)			(159,931,866)		
						
			(368,546,753)			(5,140,775)			(373,687,528)			(541,302,573)			(167,615,045)		
						
Net cash flows from operating activities			(4,360,000)			(2,665,298)			(7,025,298)			(2,007,478)			5,017,820		
						
Cash flows from investing activities					
Purchase of property, plant and equipment			(2,800,000)			650,283			(2,149,717)			(2,808,538)			(658,821)		
Proceeds from sale of property, plant and equipment			-			-			-			87,741			87,741		
Purchase of other intangible assets			(3,200,000)			-			(3,200,000)			(317,424)			2,882,576		
Net cash flows from investing activities			(6,000,000)			650,283			(5,349,717)			(3,038,221)			2,311,496		
Net increase/(decrease) in cash and cash equivalents			(10,360,000)			(2,015,015)			(12,375,015)			(5,045,699)			7,329,316		
Cash and cash equivalents at the beginning of the year			9,755,018			12,121,853			21,876,871			21,873,671			(3,200)		
						
Cash and cash equivalents at the end of the year			(604,982)			10,106,838			9,501,856			16,827,972			7,326,116		

	
Appropriation Statement
Figures in Rand	Original budget	Budget adjustments (i.t.o. s28 and s31 of the MFMA)	Final adjustments budget	Final budget	Actual outcome	Variance	Actual outcome as % of final budget	Actual outcome as % of original budget	

Financial Performance								
Investment revenue			1,680,000			-			1,680,000			1,680,000			2,835,809			1,155,809			169%			169%		
Transfers recognised ‑ operational			268,290,000			3,426,984			271,716,984			271,716,984			269,415,374			(2,301,610)			99%			100%		
Other own revenue			94,216,753			(951,507)			93,265,246			93,265,246			85,842,371			(7,422,875)			92%			91%		
									
Total revenue (excluding capital transfers and contributions)			364,186,753			2,475,477			366,662,230			366,662,230			358,093,554			(8,568,676)			98%			98%		
									
Employee costs			(250,028,612)			645,643			(249,382,969)			(249,382,969)			(255,310,057)			(5,927,088)			102%			102%		
Remuneration of councillors			(12,638,928)			(448,374)			(13,087,302)			(13,087,302)			(12,826,039)			261			99%			103%		
Debt impairment	-	-	-	-	(44,584,162)	(44,584,162)	-	-	
Depreciation and asset impairment			(16,896,075)			2,025,027			(14,871,048)			(14,871,048)			(25,865,755)			(10,994,707)			174%			153%		
Transfers and grants			(10,280,000)			23,016			(10,256,984)			(10,256,984)			(10,238,715)			18,269			100%			100%		
Other expenditure			(95,599,263)			(5,361,010)			(100,960,273)			(100,960,273)			(98,619,524)			2,340,749		98%			103%		
									
Total expenditure			(385,442,878)			(3,115,698)			(388,558,576)			(388,558,576)			(447,625,052)			(58,885,676)			115%			118%		

Surplus/(Deficit) for the year			(21,256,125)			(640,221)			(21,896,346)			(21,896,346)			(89,350,698)			(67,454,352)			408%			420%		

	

Appropriation Statement
							
Figures in Rand	
Original budget	
Budget adjustments (i.t.o. s28 and s31 of the MFMA)	
Final adjustments budget	
Final budget	
Actual outcome	
Variance	
Actual outcome as % of final budget	
Actual outcome as % of original budget	

	Original budget	Budget adjustments (i.t.o. s28 and s31 of the MFMA)	Final adjustments budget	Final budget	Actual outcome	Variance	Actual outcome as % of final budget	Actual outcome as % of original budget	
									
Capital Expenditure and funds sources							
Total capital expenditure			6,000,000			(650,283)			5,349,717			5,349,717			3,125,963			(2,223,754)			58%			52%		
Sources of capital funds										
Internally generated funds			6,000,000			(650,283)			5,349,717			5,349,717			3,125,963			(2,223,754)			58%			52%		
									
Total sources of capital funds			6,000,000			(650,283)			5,349,717			5,349,717			3,125,963			(2,223,754)			58%			52%		

Cash Flows									
Net cash from (used) operating			(4,460,050)			(2,665,248)			(7,125,298)			(7,125,298)			(2,007,478)			5,117,820			28%			45%		
Net cash from (used) investing			(5,900,000)			650,283			(5,249,717)			(5,249,717)			(3,038,221)			2,211,496			58%			51%		
									
Net increase/(decrease) in cash and cash equivalents			(10,360,050)			(2,014,965)			(12,375,015)			(12,375,015)			(5,045,699)			7,329,316			41%			49%		
									
Cash and cash equivalents at the beginning of the year			9,755,018			12,121,853			21,876,871			21,876,871			21,873,671			(3,200)			100%			224%		
									
Cash and cash equivalents at year end			(605,032)			10,106,888			9,501,856			9,501,856			16,827,972			(7,326,116)			177%			(2,781)%		

Accounting Policies	

1.	
SIGNIFICANT ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS

1.1    BASIS OF PRESENTATION	

The Annual Financial Statements have been prepared on an accrual basis of accounting and are in accordance with the historical cost basis unless otherwise stated.  Under this basis the effects of transactions and other events are recognised when they occur and are recorded in the financial statements within the period to which they relate.	

The annual financial statements have been prepared in accordance with the effective Standards of Generally Recognised Accounting Practices (GRAP) prescribed by the Minister of Finance in terms of General Notices 991 of 2005 and General Notice 516 of 2008, including any interpretations and directives issued by the Accounting Standards Board 	

Accounting policies for material transactions, events or conditions not covered by the above GRAP have been developed in accordance with paragraphs 7, 11 and 12 of GRAP 3.  	

The Minister of Finance has, in terms of General Notice 1290 of 2008 exempted compliance with certain of the above-mentioned standards and aspects or parts of these standards.  Details of the exemptions applicable to the municipality have been provided in the notes to the annual statements.	

These accounting policies are consistent with those of the previous financial year.

The following GRAP standards have been approved and are effective:	

GRAP 1 -	
Presentation of financial statements	

GRAP 2 -	
Cash flow statements	

GRAP 3 -	
Accounting policies, changes in accounting estimates and errors	

GRAP 4 -	
The effects of changes in foreign exchange rates	

GRAP 5 -	
Borrowing costs	

GRAP 6 -	
Consolidated and separate financial statements	

GRAP 7 -	
Investments in associates	

GRAP 8 -	
Interest in joint ventures	

GRAP 9 -	
Revenue from exchange transactions	

GRAP 10 -	
Financial reporting in hyperinflationary economies	

GRAP 11 -	
Construction contracts	

GRAP 12 -	
Inventories	

GRAP 13 -	
Leases	

GRAP 14 -	
Events after the reporting date	

GRAP 16 -	
Investment property	

GRAP 17 -	
Property, plant and equipment	

GRAP 19 -	
Provisions, contingent liabilities and contingent assets	

GRAP 21 -	
Impairment of non-cash generating assets	

GRAP 23 -	
Revenue from non-exchange transactions	

GRAP 24 -	
Presentation of budget information	

GRAP 25 -	
Employee Benefits	

GRAP 26 -	
Impairment of cash generating assets	

GRAP 31 -	
Intangible assets	

GRAP 103 -	
Heritage assets	

GRAP 104 -	
Financial instruments	

GRAP 100 -	
Discontinued operations	

GRAP 27 -	
Agriculture	

The following GRAP statements have been approved but are not yet effective:	

GRAP 18 -	
Segment reporting	

GRAP 20 - 	
Related party disclosure	

GRAP 105 -	
Transfer of functions between entities under common control	

GRAP 106 -	
Transfer of functions between entities not under common control	

GRAP 107 –
GRAP 108 -
GRAP 32 –
iGRAP 17 –

Directive 11 -	
Mergers
Statutory Receivables
Service Concession Arrangements: Grantor
Service concession arrangements where a grantor controls a significant residual interest in an 
asset
Changes in measurement bases following the initial adoption of standards of GRAP

	

Offsets	

Assets, liabilities, revenues and expenses have not been offset except when offsetting is required or permitted by a Standard of GRAP. 	

The principal accounting policies adopted in the preparation of these annual financial statements are set out below.	

1.2    PRESENTATION CURRENCY	

These annual financial statements are presented in South African Rand and are rounded to the nearest Rand.	

	

1.3    SIGNIFICANT ESTIMATES, JUDGMENTS AND ASSUMPTIONS	

1.3.1 Going Concern
The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

1.3.2 Significant Estimates, Judgments and Assumptions	

In preparing the annual financial statements to conform with the Standards of GRAP, management is required to make estimates, judgments and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgment are inherent in the formation of estimates. Actual results in the future may differ from these estimates.  	

All significant estimates, judgments and underlying assumptions are reviewed on constant basis.  All necessary revisions of significant estimates are recognised in the period during such revisions as well as in any future affected periods.	

Specific areas where these significant estimation uncertainties as well as critical judgments and assumptions were made in the application of accounting policies with the most significant effect in the annual financial statements are included in the following notes:	

Note 2, 3 & 4:  PPE, Intangible assets and Heritage assets useful lives estimates	

Note 12:  Provisions 	

Note 28: Contingencies	

Note 10:  Lease classification	

Note 24:  Debt Impairment	

1.4    GOVERNMENT GRANT	

Grants, transfers and donations received or receivable are recognised when the resources that have been transferred meet the criteria for recognition as an asset. A corresponding liability is raised to the extent that the grant, transfer or donation is conditional. The liability is transferred to revenue as and when the conditions attached to the grant are met. Grants without any conditions attached are recognised as revenue when the asset is recognised. 	

1.5    PROPERTY, PLANT & EQUIPMENT	

1.5.1 Recognition and Subsequent Measurement
An item of property, plant and equipment which qualifies for recognition as an asset has been initially measured at cost less subsequent depreciation. 	

The cost of an item of property, plant and equipment comprises of its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to working condition for its intended use. 	

Where an asset is acquired through a non-exchange transaction, its cost shall be measured at its fair value as at date of acquisition.	

The cost of an item of property, plant and equipment acquired in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets was measured at its fair value.  If the acquired item could not be measured at its fair value, its cost was measured at the carrying amount of the asset given up.  	

Subsequent expenditure is capitalised when the recognition and measurement criteria of an asset are met.  If expenditure only restores the originally best estimate of the expected useful life of the asset, then it is regarded as repairs and maintenance and is expensed.	

Incomplete construction work is stated at historical cost. Depreciation only commences when the assets is available for use.	

Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Municipality’s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are available for their intended use. 	

Subsequently property, plant and equipment, are stated at cost, less accumulated depreciation and accumulated impairment losses. 	

Land is not depreciated as it is regarded as having an infinite life.	

1.5.2 De-recognition, Sale & Disposal
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 proceeds of disposal and the carrying value and is recognised in the Statement of Financial Performance. 	

1.5.3 Depreciation
Depreciation is calculated on the asset’s depreciable amount, using the straight-line method over the useful life of the asset. The depreciable amount is determined after deducting the residual value of the asset from its cost. The depreciation charge is recognised as an expense unless it is included in the carrying amount of another asset under construction. Assets will be depreciated according to their annual depreciation rates based on the following estimated useful life:	

Community Assets                                                                                                   	
Years	

	
Community halls                                                                                                           	
30	

	
Recreation facilities                                                                                                	
20 – 30	

	

	
Other Assets                                                                                                             	
Years	

	
Motor vehicles                                                                                                               	
5	

	
Plant and equipment                                                                                                    	
5	

	
Security measures                                                                                                  	
5	

	
Buildings                                                                                                                    	
30	

	
IT equipment                                                                                                           	
5	

	
Office equipment                                                                                                         	
7	

	
Specialised vehicles                                                                                                  	
10	

	

The residual value and the useful life and depreciation method of each asset are reviewed at the end of each reporting date. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate. Reviewing the useful life of an asset on an annual basis does not require the entity to amend the previous estimates unless expectations differ from the previous estimate.

1.6    INTANGIBLE ASSETS	

Intangible assets acquired separately or internally generated are reported at cost less accumulated amortisation and accumulated impairment losses.  Refer to impairment of assets accounting policy 1.7	

Where an intangible asset has been acquired at no or for a nominal cost, its cost is its fair value on the date of acquisition.	

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.  All other expenditure, including expenditure on internally generated goodwill and brands are recognised in the Statement of Financial Performance as incurred.	

Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Costs that are directly associated with the development of identifiable and unique software products controlled by the Municipality and that will probably generate economic benefits exceeding costs beyond one year are recognised as intangible assets. Costs include the employee costs incurred as a result of developing software and an appropriate portion of relevant overheads.	

1.6.1 Research and Development	

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the Statement of Financial Performance when incurred.	

Development activities involve a plan or design for the production of new or substantially new improved products and processes.	

Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the municipality intends to and has sufficient resources to complete development and to use or sell the asset.	

The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use.	

Other development expenditure is recognised in the statement of financial performance as incurred.	

1.6.2 Amortisation	

Amortisation is recognised in the statement of financial performance on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.  The estimated useful lives for current and comparative periods are as follows:	

Item	
Useful Life	

	
Computer software	
3 Years	

	

Each item of intangible asset is amortised separately.	

Intangible assets that have an indefinite useful life are tested for impairment annually.  	

The estimated useful life, the amortisation method and the residual values are reviewed annually at the end of the financial year.  Any adjustments arising from the annual review are applied prospectively.	

1.7    IMPAIRMENT OF FINANCIAL ASSETS	

Impairment of Non-financial assets	

Non-Financial assets, excluding investment property and inventories, are assessed at each reporting date to determine whether there is an indication that the carrying amount of the asset may be impaired.  If such an indication exists, the recoverable amount of the asset is determined.  Irrespective of whether an indication of impairment exists, the recoverable amount of goodwill, indefinite-life intangible assets and intangible assets not available for use are determined annually.	

The recoverable amount of an asset is the higher of its fair value less costs to sale and its value in use.  In determining the value in use, the estimated future cash flows of the asset is discounted to their present value based on pre-tax discount rates that reflects current market assessments of the time value of money and the risks that are specific to the asset.  If the value in use of an asset for which there is an indication of impairment cannot be determined, the recoverable amount of the cash-generating unit to which the asset belongs is determined.  An asset’s cash generating unit is the smallest group of identifiable assets that includes the asset and that generates cash inflows from continuing use that are largely independent from cash inflows from other assets.	

An impairment loss is recognised in the statement of financial performance when the carrying amount of an individual asset or of a cash-generating unit is less than its recoverable amount.  If the loss relates to the reversal of a previous revaluation surplus, it is recognised in equity.  Impairment losses recognised on cash-generating units are allocated on a pro rata basis, to the assets in the cash-generating unit.	

Impairment losses are reversed if there has been a change in the estimates used to determine the recoverable amount of the asset or cash-generating unit.  Impairment losses are reversed only to the extent that the carrying amount of the asset does not exceed the carrying amount that would have been recognised in the past.  Reversals of impairment losses are recognised directly in the statement of financial performance.	

Impairment of Monetary assets	

A provision for impairment is created when there is objective evidence that the municipality will not be able to collect all amounts due according to the original terms of the receivables.  The carrying value is reduced through the use of a provision and is recognised as a charge to the statement of financial performance.  When a receivable is uncollectible, it is written off against the provision.  Any subsequent recoveries of amounts previously written off are credited directly in the statement of financial performance. 	

A financial asset is impaired when there is a significant or prolonged decline in the fair value of the asset below its cost price or amortised cost.  At such a point, a cumulative gains or losses that have been accumulated in net assets are removed from net assets as a reclassification adjustment and are recognised in the statement of financial performance.  Any subsequent impairment losses are recognised directly in the statement of financial performance.	

Where investments have been impaired, the carrying value is adjusted by the impairment loss and this is recognised as an expense in the period that the impairment is identified.	

1.8    LEASES	

Leases that transfer substantially all the risks and rewards of ownership are classified as finance leases.  All other leases are classified as operating leases.	

Operating leases are those leases that do not fall within the scope of the above definition.  Operating lease payments are recognised as an expense on a straight-line basis over the lease period.	

	

The Municipality as Lessee	

Assets leased in terms of finance lease agreements are capitalised at amounts equal at the inception of the lease to the fair value of the leased property, or lower, at the present value of the minimum lease payments.  Capitalised leased assets are depreciated in accordance with the accounting policy applicable to property, plant and equipment; refer to property, plant and equipment policy 1.5.  The corresponding rental obligations, net of finance charges, are included in long-term borrowings.  Lease finance charges are amortised to the statement of financial performance (unless they are directly attributable to qualifying assets) over the duration of the leases so as to achieve a constant rate of interest on their remaining balance of the liability.	

Obligations incurred under operating leases are charged to the statement of financial performance in equal installments over the period of the lease, except when an alternative method is more representative of the time pattern from which benefits are derived.	

1.9    FINANCIAL INSTRUMENTS	

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or a residual interest of another entity.
The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or un-collectability.
A concessionary loan is a loan granted to or received by an entity on terms that are not market related.
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
De-recognition is the removal of a previously recognised financial asset or financial liability from an entity’s statement of financial position.
A derivative is a financial instrument or other contract with all three of the following characteristics:
•	Its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract (sometimes called the ‘underlying’).
•	It requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors.
•	It is settled at a future date.

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, an entity shall estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment, call and similar options) but shall not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate (see the Standard of GRAP on Revenue from Exchange Transactions), transaction costs, and all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group of similar financial instruments can be estimated reliably. However, in those rare cases when it is not possible to reliably estimate the cash flows or the expected life of a financial instrument (or group of financial instruments), the entity shall use the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments).
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction.

A financial asset is:
•	cash;
•	a residual interest of another entity; or
•	a contractual right to:
o	receive cash or another financial asset from another entity; or
o	exchange financial assets or financial liabilities with another entity under conditions that are potentially favorable to the entity.

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.
A financial liability is any liability that is a contractual obligation to:
•	deliver cash or another financial asset to another entity; or
•	exchange financial assets or financial liabilities under conditions that are potentially unfavorable to the entity.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
Liquidity risk is the risk encountered by an entity in the event of difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
Loan commitment is a firm commitment to provide credit under pre specified terms and conditions.
Loans payable are financial liabilities, other than short term payables on normal credit terms.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.
A financial asset is past due when a counterparty has failed to make a payment when contractually due.
A residual interest is any contract that manifests an interest in the assets of an entity after deducting all of its liabilities. A residual interest includes contributions from owners, which may be shown as:
•	equity instruments or similar forms of unitised capital;
•	a formal designation of a transfer of resources (or a class of such transfers) by the parties to the transaction as forming part of an entity’s net assets, either before the contribution occurs or at the time of the contribution; or
•	a formal agreement, in relation to the contribution, establishing or increasing an existing financial interest in the net assets of an entity.

Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial liability. An incremental cost is one that would not have been incurred if the entity had not acquired, issued or disposed of the financial instrument.
Financial instruments at amortised cost are non-derivative financial assets or non-derivative financial liabilities that have fixed or determinable payments, excluding those instruments that:
•	the entity designates at fair value at initial recognition; or
•	are held for trading.

Financial instruments at cost are investments in residual interests that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured.
Financial instruments at fair value comprise financial assets or financial liabilities that are:
•	derivatives; 
•	combined instruments that are designated at fair value;
•	instruments held for trading. A financial instrument is held for trading if:
o	it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term; or
o	on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short term profit taking;
o	non derivative financial assets or financial liabilities with fixed or determinable payments that are designated at fair value at initial recognition; and
o	financial instruments that do not meet the definition of financial instruments at amortised cost or financial instruments at cost.	

 1.10    INVENTORIES	

Inventories are initially measured at cost, where cost of inventories comprises of all costs of purchase and other costs incurred in bringing the inventories to their present location and condition.	

Unsold aviation fuel are valued at the lower of cost and net realisable value on a specific identification cost basis. Fuel are recognized as inventory when purchased, and then charged to expense when sold. Aviation fuel are sold in line with the applicable tariff as promulgated.	

1.11    CASH AND CASH EQUIVALENTS	

Cash includes cash on hand and cash with banks.  	

For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and cash with banks.  Short term investments are included. Bank overdrafts are recorded on the facility utilised.  Finance charges on bank overdrafts are expensed as incurred.	

1.12   PROVISIONS AND CONTINGENCIES	

Provisions are recognised when the municipality has a present or constructive obligation, as a result of past events, that is probable to cause an outflow of resources embodying economic benefits required to settle the obligation and a reliable estimate of the provision can be made.	

Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation.  The discount rate used in calculating the present value is the interest rate implicit in the transaction. Where this is impractical to determine the average interest rate cost of borrowing rate of the Municipality is used.	

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation, the provision is reversed.	

The municipality on initial adoption of the Standard of GRAP on Provisions, Contingent Liabilities and Contingent Assets has done so retrospectively according to the Standard of GRAP on Accounting Policies, Changes in Accounting Estimates and Errors.	

The necessary disclosures have been made for non-recognition of provisions that form part of the cost of an asset.	

1.13    EMPLOYEE BENEFITS	

1.13.1 Short-term employee benefits	

The cost of short-term employee benefits, which include salaries and wages and bonus plans, are expensed in the Statement of Financial Performance in the financial year during which the payment is made.	

Liabilities for short-term employee benefits that are unpaid at year-end are measured at the undiscounted amount that the municipality expected to pay in exchange for that service that had accumulated at the reporting date.	

	

1.13.2 Termination Benefits	

Termination benefits are recognised when actions have been taken that indicate that the municipality is demonstrably committed to either terminate the employment of an employee or group of employees before the normal retirement date; or provide termination benefits as a result of an offer made in order to encourage voluntary redundancy. 	

1.13.3 Retirement benefits	

The municipality provides retirement benefits for its employees and councilors. 	

Contributions to defined contribution retirement benefit plans are recognised as an expense when employees and councilors have rendered the employment service or served office entitling them to the contributions.	

1.13.4 Defined contribution plans	

A defined contribution plan is a post-employment benefit plan under which the municipality pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts.  Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in the statement of financial performance when they are due.  Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.	

1.13.5 Post employment medical care benefits	

The municipality provides post-employment medical care benefits to its employees and their legitimate spouses.  The entitlement to post–retirement medical benefits is based on employees remaining in service up to retirement age and the completion of a minimum service period.  
The municipal post-employment medical care is also on the defined contribution plan is a post-employment benefit plan under which the municipality pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts.	

 1.14    REVENUE RECOGNITION	

Revenue shall be measured at the fair value of the consideration received or receivable.  Revenue is reduced for estimated customer returns, rebates, VAT and other similar allowances.	

1.14.1 Revenue from exchange transactions	

Rendering of services	

Flat rate service charges relating to rental of facilities and the reporting date shall be recognised when:	

•	It is probable that the economic benefits or service potential associated with the transaction will flow to the municipality;  and 	

•	The amount of the revenue can be measured reliably.	

Agency Services	

Income for agency services is recognised on a monthly basis once the income collected on behalf of the principal has been quantified.  	

The income recognised is in terms of the agency agreement.	

Collection charges are recognised when such amounts are incurred.	

Sale of Goods
Revenue from the sale of goods is recognised when all the following conditions have been satisfied:
•	The municipality has transferred to the purchaser the significant risks and rewards of ownership of goods;
•	The municipality retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over goods sold;
•	The amount of revenue can be measured reliably;
•	It is probable that the economic benefits or service potential associated with the transaction will flow to the municipality; and
•	The costs incurred or to be incurred in respect of the transaction can be measured reliable.

1.14.2 Revenue from non-exchange transactions	

Grants and donations received	

Government Grants can be in the form of grants to acquire or construct fixed assets (capital grants), grants for the furtherance of national and provincial government policy objectives and general grants to subsidise the cost incurred by municipalities rendering services.  	

Capital grants and general grants for the furtherance of government policy objectives are usually restricted revenue in that stipulations are imposed in their use.	

Conditional grants, donations and funding were recognised as revenue in the Statement of Financial Performance to the extent that the Municipality has complied with any criteria, conditions or obligations embodied in the agreement/arrangement.  To the extent that the criteria, conditions and obligations have not been met a liability is raised in the Statement of Financial Position.  Unconditional grants, donations and funding are recognised as revenue in the Statement of Financial Performance at the earlier of the date of receipt or when the amount is receivable.	

Contributed assets are recognised at fair value when the risks and rewards associated with such assets are transferred to the Municipality. 	

1.14.3 Transfer revenue	

Assets and revenue recognised as a consequence of a transfer at no or nominal cost is measured at the fair value of the assets recognised as at the date of recognition. Non-monetary assets are measured at their fair value, which is determined by reference to observable market values or by independent appraisal by a member of the valuation profession.	

1.14.4 Other	

Revenue from the recovery of unauthorised, irregular, fruitless and wasteful expenditure is based on legislated procedures, including those set out in the Municipal Finance Management Act (Act No.56 of 2003) and is recognised when the recovery thereof from the responsible councilors or officials is virtually certain.	

Revenue from the recovery of unauthorised irregular, fruitless and wasteful expenditure is based on legislated procedures.	

1.15	  VALUE ADDED TAX	

The municipality accounts for Value Added Tax on the cash basis.	

	

1.16  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 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.	

1.17    IRREGULAR EXPENDITURE	

Irregular expenditure is expenditure that is contrary to the Municipal Finance Act (Act 56 of 2003), the Municipal Systems Act (Act 32 of 2000), and the Public Office Bearers Act (Act 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.	

1.18     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.	

1.19    COMPARATIVE INFORMATION	

When the presentation or classification of items in the annual financial statements is amended, prior period comparative amounts are reclassified.  The nature and reason for the reclassification is disclosed.	

1.20    CONSTRUCTION OF ASSETS IN PROGRESS	

Construction of assets in progress is capital projects done on behalf of the Local Municipalities from the proceeds of conditional grants received and internal contributions. These projects are only handed over after full completion of the project and therefore all those uncompleted capital projects will be shown as Construction of assets in progress until date of transfer.	

1.21    RELATED PARTIES	

Related parties are identified and disclosed in terms of GRAP 20. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions or if the related party and another entity are subject to common control.
Related parties include:
•	Entities that directly, or indirectly through one or more intermediaries, control, or are controlled by the reporting entity;
•	Associates (as per GRAP 7 - Investments in Associates);
•	Joint ventures (as per GRAP 8 - Interests in Joint Ventures)
•	Individuals owning, directly or indirectly, an interest in the reporting entity that gives them significant influence over the entity, and close members of the family of any such individual;
•	Management, and close members of the family of management; and
•	Entities in which a substantial ownership interest is held, directly or indirectly, by any person described in the two bullets above, or over which such a person is able to exercise significant influence.

Each municipality and its own municipal entities are related parties. A municipality is not related to another municipality as they are not under common control.

The national government does not control provinces or municipalities for accounting purposes, although funding may be received from the national government.
The Municipality does not have and associates nor any joint ventures or any other form of association that may be defined as related party relation.	

1.22    HERITAGE ASSETS	

A heritage asset is as an asset that has a cultural, environmental, historical, natural, scientific, technological or artistic significance, and is held indefinitely for the benefit of present and future generations. The entity recognises a heritage asset as an asset if it is probable that future economic benefits or service potential associated with the asset will flow to the entity, and the cost or fair value of the asset can be measured reliably. Heritage assets are measured at cost. Where a heritage asset is acquired through a non-exchange transaction, its cost is measured at its fair value as at the date of acquisition. The cost of a purchased heritage asset comprises:

•	Heritage assets are subsequently measured at cost, less accumulated impairment losses. Where a heritage asset is acquired through a non exchange transaction, its cost is deemed to be its fair value as at the date of acquisition.
•	Transfers to heritage assets are made only when the asset meets the definition of a heritage asset and transfers from heritage assets are made only when the asset no longer meets the definition of a heritage asset. Transfers to and from heritage assets are done at the carrying amount of the assets transferred at the date of transfer.
•	Most heritage assets have an indefinite useful life as they are to be preserved for current and future generations and might appreciate in value over time due to their cultural, environmental, historical, natural, scientific, technological and/or artistic significance. Based on this analysis, there is no finite limit to the period over which a heritage asset is expected to be held by the entity. The useful life of the heritage asset is therefore likely to be indefinite or the annual depreciation is likely to be immaterial.
•	The entity derecognises heritage asset on disposal, or when no service potential are expected from its use or disposal. 
•	The gain or loss arising from derecognition of a heritage asset is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the heritage asset. Such difference is recognised in surplus or deficit when the heritage asset is derecognised.

1.23   BUDGET INFORMATION
The municipality are typically subject to budgetary limits in the form of appropriations or budget authorisations (or equivalent), which is given effect through authorising legislation, appropriation or similar.
General purpose financial reporting by the municipality shall provide information on whether resources were obtained and used in accordance with the legally adopted budget.
The approved budget is prepared on an accrual basis and presented by economic classification linked to performance outcome objectives.
The approved budget covers the fiscal period from 01 Jul 2017 to 30 Jun 2018.
The financial statements and the budget are on the same basis of accounting therefore a comparison with the budgeted amounts for the reporting period have been included in the Statement of comparison of budget and actual amounts (see page 9 - 11)	

						

						
2.	Property, plant and equipment	

		2018			2017		
							
	Cost 	Accumulated depreciation and accumulated impairment	Carrying value	Cost 	Accumulated depreciation and accumulated impairment	Carrying value	
							
Land			41,299,080			(12,279,296)			29,019,784			41,299,080			-			41,299,080		
Buildings			76,948,439			(25,414,022)			51,534,417			76,948,438			(22,789,895)			54,158,543		
Plant and machinery			11,426,314			(9,235,304)			2,191,010			10,845,871			(8,632,851)			2,213,020		
Furniture and fixtures			18,310,740			(16,100,878)			2,209,862			18,020,961			(15,455,552)			2,565,409		
Motor vehicles			7,458,432			(5,857,296)			1,601,136			7,569,632			(5,893,462)			1,676,170		
Electronic equipment			77,055,727			(65,527,109)			11,528,618			75,281,207			(57,761,713)			17,519,494		
Infrastructure			67,418,202			(61,831,622)			5,586,580			67,418,203			(60,934,383)			6,483,820		
							
Total			299,916,934			(196,245,527)			103,671,407			297,383,392			(171,467,856)			125,915,536		
							
Reconciliation of property, plant and equipment – 2018	
							
	Opening balance	Additions	Disposals	Depreciation	Impairment loss	Total	
Land			41,299,080			-			-			-			(12,279,296)			29,019,784		
Buildings			54,158,543			-			-			(2,624,126)			-			51,534,417		
Plant and machinery			2,213,020			630,837			(21,725)			(631,122)			-			2,191,010		
Furniture and fixtures			2,565,409			296,536			(800)			(651,283)			-			2,209,862		
Motor vehicles			1,676,170			-			(11,120)			(63,914)			-			1,601,136		
Electronic equipment			17,519,494			1,881,165			(40,239)			(7,831,802)			-			11,528,618		
Infrastructure			6,483,820			-			-			(897,240)			-			5,586,580		
							
			125,915,536			2,808,538			(73,884)			(12,699,487)			(12,279,296)			103,671,407		
							
Reconciliation of property, plant and equipment – 2017	
							
	Opening balance	Additions	Disposals	Depreciation	Total		
Land			41,299,080			-			-			-			41,299,080				
Buildings			56,553,873			-			-			(2,395,330)			54,158,543				
Plant and machinery			1,840,664			914,677			(16,539)			(525,782)			2,213,020				
Furniture and fixtures			3,092,084			368,064			(1,003)			(893,736)			2,565,409				
Motor vehicles			2,165,117			-			(425,037)			(63,910)			1,676,170				
Electronic equipment			25,052,273			2,475,068			(46,288)			(9,961,559)			17,519,494				
Infrastructure			7,296,230			686,678			-			(1,499,088)			6,483,820				
							
			137,299,321			4,444,487			(488,867)			(15,339,405)			125,915,536			

A register containing the information required by section 63 of the Municipal Finance Management Act is available for inspection at the registered office of the municipality.
Note must be taken that the impairment on land related to the Vereeniging Aerodrome is due to the valuation roll of Emfuleni which indicate a lower value and therefore the impairment. A revaluation of the land will be performed in the 2018/2019 financial year in order to obtain a correct value.
The municipality also incurred repair and maintenance on the assets as outlined below.

	

	

Buildings, Fences and Sites	

	2,104,248		
	
	2,727,440		

Plant and Equipment	

1,035,499	
	
995,773	

Infrastructure	

2,664,912	
	
912,100	

Vehicle	

361,399	
	
625,727	

	

	

Total repair and maintenance		

	6,166,058		
	
	5,261,040		

3.	Intangible assets	

		2018			2017		
							
	Cost / Valuation	Accumulated amortisation and accumulated impairment	Carrying value	Cost / Valuation	Accumulated amortisation and accumulated impairment	Carrying value	
							
Computer software, other			12,514,575			(10,121,793)			2,392,782			12,197,151			(9,234,822)			2,962,329		
							
Reconciliation of intangible assets – 2018	
						
	Opening balance	Additions	Amortisation	Total		
Computer software, other			2,962,329			317,424			(886,971)			2,392,782				
						
Reconciliation of intangible assets ‑ 2017	
						
	Opening balance	Additions	Amortisation	Total		
Computer software, other			2,649,759			1,203,609			(891,039)			2,962,329				
						
4.	Heritage assets 	

2018	

2017	

	

	

	

Cost / Valuation	
Accumulated impairment losses	
Carrying value	
Cost / Valuation	
Accumulated impairment losses	
Carrying value	

	

	

Art Collections, antiquities and exhibits		
	1,527,941		
	(19,000)		
	1,508,941		
	1,076,880		
	-		
	1,076,880		

Historical monuments		
	3,386,000		
	-		
	3,386,000		
	3,386,000		
	-		
	3,386,000		

	

	

Total		
	4,913,941		
	(19,000)		
	4,894,941		
	4,462,880		
	-		
	4,462,880		

	

	

Reconciliation of heritage assets 2018	

	

	

Opening balance	
Transfer received	
Impairment losses recognized	
Total	

Art Collections, antiquities and exhibits		
	1,076,880		
	451,061		
	(19,000)		
	1,508,941		

Historical monuments		
	3,386,000		
	-		
	-		
	3,386,000		

	

	

	4,462,880		
	451,061		
	(19,000)		
	4,894,941		

	

	

Reconciliation of heritage assets 2017	

	

	
Opening balance	
Total	

Art Collections, antiquities and exhibits		
	1,076,880		
	1,076,880		

Historical monuments		
	3,386,000		
	3,386,000		

	

		
	4,462,880		
	4,462,880		

.
5.	Construction of assets in progress

	

Sharpeville police station	
- 	
561,118 	

- 	
561,118	

	
6.	Inventories	
							
Fuel – Airport
Both AVGAS and JET A1 are sold at the Vereeniging Aerodrome							
		
Aviation Fuel			157,811		355,001		
				157,8118				355,001			
							
7.	Receivables from exchange transactions	
							
Trade Debtors			-		-		
Employee costs in advance					605,570				821,213				
Prepayments					13,857				3,063			
VAT on Accruals 					1,225,798				1,347,098				
SETA Refunds					89,391				52,622				
Insurance debtor					70,364				236,300			
Recoverable fruitless and wasteful expenditure					41,098				54,497				
Bank Error					49,291				-				
Interest Receivable on bank account					149,185				144,731				
Related parties ‑ Agency services					2,068,629				34,573,108			
EPWP Bridging Finance					162,229				-				
Gross amount					4,475,416				37,232,632			

Trade debtors							
Current (0 – 30 days)			-		-		
31 – 60 days			-		-		
61 – 90 days			-		-		
>91			2,079,498		2,079,498		
Less: Provision for Debt Impairment (opening balance)			(2,079,498)		(2,079,498)		
Total Trade Debtors			-		-		
							
Employee cost recoverable							
Current (0 – 30 days)			10,030		272,040	
	
>91			595,540		549,173		
Total Employee cost recoverable			605,570		821,213		
							
Pre payments							
Current (0 – 30 days)			10,794				
>91			3.063		3,063		
Total Pre payments			13,857		3,063		

VAT on Accruals							
Current (0 – 30 days)				466,017				587,317			
>91 days			759,781		759,781		
Total VAT on Accruals			1,225,798		1,347,098		
							
SETA Refunds							
Current(0-30 days)			89,391		52,622		
>120 days			-		-		
Total SETA Refunds			89,391		52,622		
							
Insurance claims							
Current (0-30days)			70,364		236,300		

							
Recoverable fruitless and wasteful expenditure							
Current (0 – 30 days)			41,098		54,497		
Bank Error							
Current (0 – 30 days)			49,291		-		
							
Interest receivable							
Current (0 – 30 days)				149,185				144,731			
							
Agency services							
Current (0 – 30 days)			1,625,707		2,933,840		
31 – 60 days			1,566,171		5,341,883		
61 – 90 days			941,573		1,494,353		
91 – 120  days			896,142		1,527,571		
>120 days			41,623,198		23,275,461		
Less: Provision for Debt Impairment (current year)			(44,584,162)		-		
Total Local Municipalities Agency services			2,068,629		34,573,108		

A provision for bad debt was raised for the outstanding debt arising from agency services rendered to Emfuleni Local Municipality. 		
							
EPWP Bridging Finance							
Current (0 – 30 days)			162,229		-		
							
8.	VAT receivable	
							
VAT
Council is registered on the cash basis for VAT, This amount is due from SARS based on submitted returns				456,622			-				
							
9.	Cash and cash equivalents	
Cash and cash equivalents consist of:
							
Cash on hand					39,125				39,125				
Cash book balances					16,788,847				21,575,850				
Investment deposits					-				258,696				
							
					16,827,972				21,873,671			
							
The municipality had the following bank accounts	
`							
Account number / description		Bank statement balances	Cash book balances	
	30 June, 2018	30 June, 2017	30 June, 2016	30 June, 2018	30 June, 2017	30 June, 2016	
ABSA BANK ‑  Previous Primary Account 0480863380			-			350,236			949,950			-			350,236			944,694		
ABSA BANK ‑ Licensing Function 4057956448			-			927,213			501,621			-			927,213			501,621		
STANDARD BANK ‑ Primary Account 21777667			372,735			1,868,560			1,481,914			372,735			1,705,707			1,472,194		
STANDARD BANK ‑ Licensing Account 21781494			443,565			18,592,694			5,695,647			443,565			18,592,694			5,695,647		
NEDBANK – Primary Account 1152944835	1,926,317	-		1,761,552	-	-	
NEDBANK – Licensing Account 1152944606	14,210,995	-		14,210,995	-	-	
							
Total			16,953,612			21,738,703			8,629,132			16,788,847			21,575,850			8,614,156		
							
10.	Unspent conditional grants and receipts	
Unspent conditional grants and receipts comprises of:	
							
Unspent conditional grants and receipts								
Provincial Grants					15,067,804				13,264,193				
National Grants					-				-				
DLG Grants					206,460				206,460				
							
					15,274,264				13,470,653			
							
Movement during the year	
							
Balance at the beginning of the year					13,470,653				16,502,439				
Additions during the year					16,937,985				13,368,105				
Income recognition during the year					(14,703,239)				(16,399,891)				
Grant Reversal / forfeit					(431,135)								
							
					15,274,264			13,470,653		
							
The nature and extent of government grants recognised in the financial statements and an indication of other forms of government assistance from which the municipality has directly benefited; and
Unfulfilled conditions and other contingencies attaching to government assistance that has been recognised.
See note 22 for reconciliation of grants from National/Provincial Government.
					
11.	Payables from exchange transactions	
							
Trade payables					5,536,340				21,958,838				
Payments received in advanced					2,378,000				-				
Accrued leave pay					22,852,190				20,597,316			
Operating lease liability			77,781		231,847		
Department of Transport (License fees)					96,520,790				69,120,411				
Local Municipalities Accounts					40,210,938				29,222,174				
Vat Accrued on Debtors			5,466,537			4,059,289				
Retention on Capital Projects					72,125				287,500				
Compensation Commissioner					1,522,065				-				
Mayoral Event					41,928				41,928				
Refundable town hall rental deposits					215,388				176,879				
Unclaimed Salaries					21,799				11,112				
Salaries in arrears					-				8,247				
Unknown deposits					92,412				92,412				
Deferred Asset Transfer to Locals					-				561,118				
							
					175,008,293				146,369,071		
13.	VAT payable	
							
Tax refunds payables					-				2,020,344				
							
14.	Revenue	
							
Sale of goods					3,534,163				3,241,227				
Rental of facilities and equipment					570,958				799,915				
Agency services					71,182,541				69,514,567				
Licenses and permits					2,255,000				517,000				
Commissions received					6,810,435				6,748,376				
Recoveries					489,076				-				
Other income					986,341				8,923,205				
Interest received ‑ investment					2,835,809				2,137,929			
Gain on disposal of assets and liabilities			13,857				
Government grants & subsidies					269,415,374				267,281,891			
							
					358,093,554				359,164,110			

The amount included in revenue arising from exchanges of goods or services are as follows:								
Sale of goods					3,534,163				3,241,227				
Rental of facilities and equipment					570,958				799,915				
Agency services					71,182,541				69,514,567				
Commissions received					6,810,435				6,748,376				
Other income 					986,341				8,923,205			
Gain on disposal of assets and liabilities			13,857				
Interest received ‑ investment					2,835,809				2,137,929			
					85,934,104				91,882,219			

The amount included in revenue arising from non‑exchange transactions is as follows:								
Taxation revenue								
Licenses and permits					2,255,000				517,000			
Recoveries					489,076				-			
Transfer revenue								
Government grants & subsidies					269,415,374				267,281,891				
					272,159,450				267,798,891			
							
15.	Rental of facilities and equipment	

	

	

Facilities and equipment		

	

Facilities & equipment		

	361,099		
	
	586,288		

Garages and parking		

	

Parking		

	209,859		
	
	213,627		

	
	
570,958	
	
799,915	

16.	Agency services	

	

	

Information Technology services		

	10,455,732		
	
	8,810,807		

Department of Transport		

	60,726,809		
	
	60,703,760		

	

	

		

	71,182,541		
	
	69,514,567		

17.	Licenses and permits (from non-exchange transactions)	

	

	

Health Certificates		

	2,255,000		
	
	517,000		

	

	

		

	2,255,000		
	
	517,000		

18.	Other Revenue	

	

	

Commissions received		

	6,810,435		
	
	6,748,376		

Other income ‑ (consolidated)		

	986,341		
	
	8,923,205		

	

	

		

	7,796,776		
	
	15,671,581		

18.1	Other income – (consolidated)	

	

	

Communication Centre fees recovered		

	-		
	
	2,608,946		

Ad‑hoc Income		

	-		
	
	5,658,949		

Skills Levy Income		

	425,295		
	
	411,303		

Incidental income		

	92,956		
	
	75		

Tender Income		

	14,322		
	
	68,798		

Commission on Salaries		

	200,467		
	
	156,133		

Staff recoveries		

	253,301		
	
	19,001		

	
	
	986,341		
	
	8,923,205		

	

19.	Recoveries from non-exchange transactions	

	

	

Fraud recovery		

	

recoveries		

	489,076		
	
	-		

Progress on recoveries from cyber hacking theft which occurred in March 2016.	

	

	

20.	Investment revenue	
							
Interest revenue								
Bank					2,835,809				2,137,929				
							
21.	Grants and subsidies paid	
							
Other subsidies								
Grants paid to Local Municipalities					-				2,161,972			
Grant allocation payments			10,238,715		10,208,293		
			10,238,715		12,370,265		
							
22	Government grants and subsidies received	
							
Operating grants								
Equitable share					254,779,000				250,882,000				
HIV and AIDS Grants					7,750,649				7,392,865				
EPWP Grant					2,490,000				665,769			
Rural Roads Grant					2,431,000				2,276,000			
Agriculture Grant					714,725				2,815,428			
National Grants					1,250,000				1,285,887			
Licensing revitalization grant			-		1,305,000		
Precinct and deed transfer grants			-		658,942		
							
					269,415,374				267,281,891			
							
Equitable Share	
							
Current‑year receipts					(254,779,000)				(250,882,000)				
Conditions met ‑ transferred to revenue					254,779,000				250,882,000				
							
					-				-			
							
Provincial Grants	
							
Balance unspent at beginning of year					13,264,193				16,260,091				
Current‑year receipts					15,687,985				12,118,106				
Conditions met ‑ transferred to revenue					(13,453,239)				(15,114,004)				
Grants forfeited			(431,135)				
							
					15,067,804				13,264,193			
							
Conditions still to be met ‑ remain liabilities (see note 10).
Reconciliation of Unspent Conditional Grants
	Opening Balance July 2017	Grants Received 2017/18	Grants Spent/ forfeit 2017/18	Unspent Grants  June 2018	
LED Project	119,378 			119.378 	
HIV/AIDS	23,135 	7,766,985	(7,750,649)	39,471 	
Establishment of Shared Services	350,000	-	-	350,000	
Agriculture	3,024	3,000,000	(714,725)	2,288,299	
Transfer of Informal Settlements	12,360,425	-	(90,000)	12,270,425	
EPWP Grant	334,231	2,490,000	(2,824,231)	-	
Rural Roads	74,000	2,431,000	(2,504,769)	231	
	13,264,193	15,687,985 	(13,884,374)	15,067,804	
National Grants	
			2018		2017 as restated		
Balance unspent at beginning of year					-				35,887				
Current‑year receipts					1,250,000				1,250,000				
Conditions met ‑ transferred to revenue					(1,250,000)				(1,285,887)				
Grant Reversal / Forfeit					-				-				
							
					-			-		
							
Conditions still to be met ‑ remain liabilities (see note 10).
Reconciliation of Unspent Conditional Grants
	Opening Balance July 2017	Grants Received 2017/18	Grants Spent/Forfeit 2017/18	Unspent Grants  June 2018	
Municipal Finance Management Grant	-	1,250,000	(1,250,000)	-	
	-	1,250,000	(1,250,000)	-	

COGTA Grants	
			2018		2017 as restated		
Balance unspent at beginning of year					206,460				206,460				
Conditions met ‑ transferred to revenue				-		-			
							
					206,460				206,460			
							
Conditions still to be met ‑ remain liabilities (see note 10).
Reconciliation of Unspent Conditional Grants
	Opening Balance July 2017	Grants Received 2017/18	Grants Spent/ forfeit  2017/18	Unspent Grants  June 2018	
Sharpeville Public Library	206,460 		-	206,460 	
	206,460 		- 	206,460 	
Changes in level of government grants. 
Based on the allocations set out in the Division of Revenue Act, no significant changes in the level of government grant funding are expected over the forthcoming 3 financial years.	

23.	Employee related costs	
							
Employee related cost exclusive of Section 57 employees					159,874,479				153,475,450				
Bonus					12,786,887				10,578,079				
Medical aid ‑ company contributions					15,028,280				13,833,896				
UIF					1,059,734				1,046,188				
Other payroll levies					3,090,284				2,703,190				
Leave pay provision charge					4,482,827				5,535,936				
Defined contribution plans					32,291,281				28,770,301				
Overtime payments					7,050,336				7,778,101				
Car allowance					10,372,857				9,690,504				
Housing benefits and allowances					1,455,836				1,379,607				
Telephone Allowances					12,600				28,020				
Standby Allowance					775,451				637,732				
Termination benefits					1,554,137				1,290,259				
							
					249,834,989				236,747,263			

							
Remuneration of Municipal Manager	
							
Annual Remuneration					1,618,108				1,585,202				
Car Allowance					180,000				15,000				
Performance Bonuses					-				-				
Contributions to UIF, Medical and Pension Funds					1,785				63,088				
Other					794				-				
							
					1,800,687				1,663,290			
							
The Municipal Manager was appointed on the 1st of June 2017
Remuneration of Chief Financial Officer	
							
Annual Remuneration					115,050				875,100				
Car Allowance					12,000				117,968				
Contributions to UIF, Medical and Pension Funds					18,516				-				
Other					400				168,581				
							
					145,966				1,161,649			
							
The Chief Financial Officer contract ended the end July 2017 and the position is currently vacant where an acting CFO is currently in the position and therefore the figures reflect the CFO’s figures for July 2017 only.
Remuneration of Chief Operations Officer 	
							
Annual Remuneration					106,442			1,092,939			
Car Allowance					-				-			
Contributions to UIF, Medical and Pension Funds					5,172				172,056			
Other					-				-		
					111,614				1,264,995			

The Chief Operations Officer position was abolished in July 2017 whereby remuneration was only paid for July 2017.		
							
Remuneration of Executive Director – Corporate services
				
Annual Remuneration					731,281				866,283				
Car Allowance					161,131				150,000				
Contributions to UIF, Medical and Pension Funds					27,997				81,947				
Other					8,966				45,268				
							
					929,375				1,143,498			
							
Remuneration of Executive Director – Community services
						
Annual Remuneration					686,762				738,242			
Car Allowance					135,000				95,000			
Contributions to UIF, Medical and Pension Funds					1,570				81,433			
Other					-				138,398			
					823,332				1,053,072			
							
Remuneration of Executive Director – Strategic Planning and Economic development
				
Annual Remuneration					614,891				779,376			
Car Allowance					117,967				178,357			
Contributions to UIF, Medical and Pension Funds					90,474				201,353			
Other					-				58,186			
					823,332				1,217,272			
							
Remuneration of Executive Director – Transport, Infrastructure and Environment
				
Annual Remuneration					673,252				1,111,280			
Car Allowance					142,500				90,000			
Contributions to UIF, Medical and Pension Funds					25,010				2,657			
Other								-			
					840,762				1,203,937			
							
Total personnel cost			255,310,057		245,454,976		
							
The executive directors were all newly appointed in 2017 and are being remunerated in accordance with the upper limit gazette number 40118 of 4 July 2016.
24.	Remuneration of councillors	
							
Executive Major					1,066,135				877,282				
Mayoral Committee Members					6,216,843				5,530,692				
Speaker					844,126				743,907				
Councillors 					4,698,935				4,277,345				
							
				12,826,0398				11,429,226			

In‑kind benefits	
The Executive Mayor, Deputy Executive Mayor, Speaker and Mayoral Committee Members are full‑time. Each is provided with an office and secretarial support at the cost of the Council.
The Executive Mayor and Speaker have use of a Council owned vehicle for official duties.
The Executive Mayor and Speaker have full-time bodyguards

25.	Depreciation and amortisation	
							
Property, plant and equipment					12,699,488				15,527,875				
Intangible assets					886,971				702,570				
							
					13,586,459				16,230,445			

26.	Lease rentals on operating lease	

	

	

Premises		

	

Contractual amounts	

	5,617,609		
	
	5,791,729		

Motor vehicles		

	

Contractual amounts	

	1,653,067		
	
	1,578,911		

Plant and equipment		

	

Contractual amounts	

	110,925		
	
	105,585		

Contingent amounts	

	573,133		
	
	265,636		

	

	

		

	7,954,734		
	
	7,741,861		

27.	Debt impairment	
							
Inventory 				-			187,194				
Debtors			44,584,182		2,000,000		
					44,584,182				2,187,194			

28.	Contracted services
Presented previously	
							
Consulting & professional services					-				3,473,318				
General Expenses on Grants					-				5,245,583				
Specialist Services					-				17,453,021			
Other Contractors					-				4,329,222			
							
Outsourced Services								
							
Administrative and Support Staff					17,981,491				-		
Fire Services					41,227				-		
Hygiene Services					198,515				-		
Internal Auditors					834,048				-		
Professional Staff					1,489,294				-		
Security Services					14,003,690				17,190,770		
Transport Services					24,459				-		

Consultants and Professional Services							
						
Business and Advisory					8,682,493				-		
Infrastructure and Planning					621,500				-		
Legal Cost					1,276,624				-		
						
Contractors							
						
Artists and Performers					147,373				-		
Audio‑visual Services					17,000				-		
Catering Services					816,159				488,136		
Event Promoters					979,056				-		
Fire Services					23,878				-		
Inspection Fees					68,981				-		
Maintenance of Buildings and Facilities					2,104,248				2,727,440		
Maintenance of Equipment					3,700,410				2,533,600		
Medical Services					2,213				-		
Pest Control and Fumigation					87,330				-		
Plants, Flowers and Other Decorations					32,219				-		
Transportation					361,399				-		
					53,493,873				53,441,090		

29.	General expenses	
							
Advertising					188,970				616,732				
Assessment rates & municipal charges					1,435,160				1,654,809				
Auditors remuneration					2,895,785				2,569,351				
Bank charges					3,114,867				3,430,034				
Computer expenses					726,179				1,003,126				
Consumables					3,527,242				3,463,307				
Entertainment					1,498				9,496				
Insurance					2,105,066				2,210,005				
IT expenses					2,922,102				2,500,686				
Levies					2,126,476				2,056,515				
Postage and courier					2,598				2,376				
Printing and Publications					893,229				742,506				
Protective clothing					140,497				417,312				
Royalties and license fees					27,740				3,158				
Staff welfare					-				189,000				
Subscriptions and membership fees					2,517,857				2,370,212				
Telephone and fax					5,017,175				5,124,407				
Training					592,398				1,446,223				
Subsistence & Travel 					908,480				1,314,046				
Campaigns					2,567,127				6,649,467				
Congresses & Meetings					87,746				181,007				
External Bursaries					241,745				525,540			
Donations & Grants					145,000				136,139				
WCA Contribution					1,522,065				1,405,860				
							
					33,796,965				40,091,738			
							
The municipality incurred R450,170 in expenditure related to Political Party Caucus funding in accordance with Council Caucus Funding Policy. Such expenditure is classified in accordance with the nature of the expense.
30.	Sale of Goods	
							
Sale of goods								
Cost of Aviation fuel 					3,373,952				2,792,045				
Aviation fuel (JET A1 and AVGAS) are sold at the Vereeniging Aerodrome. 		
							
31.	Auditors' remuneration	
							
Fees					2,895,785				2,569,351				

32.	Cash generated from operations	
							
Deficit					(89,350,698)				(32,752,252)			
Adjustments for:								
Depreciation					13,586,459				16,230,445				
Loss / (Gain) on sale of assets and liabilities					(13,857)				177,522				
Impairment deficit			12,279,296				
Debt impairment					44,584,162				2,187,194				
Changes in working capital:									
Inventories					197,190				(105,675)				
Receivables from exchange transactions					32,757,216				(19,934,543)			
Assets under construction					561,118				5,179,158				
Debt Impairment					(44,584,162)				(2,187,194)				
Payables from exchange transactions					28,639,221				50,342,513				
VAT					(2,467,034)				2,123,054				
Unspent conditional grants and receipts					1,803,611				(3,031,786)				
				(2,007,478)				18,307,715			
							
33.	Risk management
Financial risk management	

Liquidity risk	

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.
Interest rate risk	

Credit risk	

Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and trade receivables. 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 the board. 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.	

Categories of Financial Instruments
Financial Assets	

2018	
	
2017 as restated	

Cash and cash equivalents		

	16,827,972		
	
	21,873,671		

Inventories		

	157,8118		
	
	355,001		

Trade and other receivables from exchange transactions		

	4,475,416		
	
	37,232,632		

VAT Receivable	

446,690 	
 	
- 	

	
	
	21,907,889		
	
	60,022,422		

Financial Liabilities		

	

Unspent conditional grants and receipts		

	15,274,264		
	
	13,470,653		

VAT Payable	

-	
	
2,020,344	

Trade and other payables from exchange transactions		

	175,008,293		
	
	146,369,071		

Total Liabilities		

	190,282,557		
	
	161,860,068		

If the interest rates received on investments increase or decrease by 100 basis points, the effect on the Statement of Financial performance would be as follows:

2018	
2017	

Floating Rate Financial Assets	
Rate %	
Effect on Surplus	
Rate %	
Effect on Surplus	

Cash and cash equivalents		
1%	
	168,280	
1%	
	218,737	

Inventories		
1%	
	1,578	
1%	
	3,550	

Trade and other receivables from exchange transactions		
1%	
	44,754		
1%	
	372,326		

	

	

Floating Rate Financial Liabilities		

	

Unspent conditional grants and receipts		
1%	
	(152,743)	
1%	
	(134,707)	

Trade and other payables from exchange transactions		
1%	
	(1,750,083)		
1%	
	(1,463,691)		

	
	
34.	Commitments	
34.1 Contracted capital and operating expenditure	

	

	

	

Unspent conditional grants and receipts		

	

	

Provincial Grants		

	14,598,426		
	
	13,264,193		
	
	10,322,119	

	
	
	14,598,426		
	
	13,470,653		

The current unspent conditional grants are all committed funds which still need to be utilized in order to meet the conditions as stipulated in the various government gazettes.	

34.2 Operating leases ‑ as lessee (expense)	
						
Minimum lease payments due							
 Within one year					7,984,362				7,142,800		
						
Operating lease payments represent rentals payable by the municipality for certain of its office properties.
34.3 Operational expenses
 
Security contract							
Within one year					15,890,852				
Later than one year but not later than five years			15,890,852			
The previous contract for security services had ended in 2017.
35.	Contingencies	
The Municipality may be liable for claims instituted against the Municipality by employees who have disputes against the Municipality. The amount is uncertain as an arbitration award has not yet being issued against those claims.
There is a discrepancy between the Department of Transport claim (TAS9) reports received and the actual collection which differ and has accumulated over the years to the amount of R 4,963,663.46. Further investigation is currently conducted in order to identify the discrepancy.
The rates and taxes account with Emfuleni is currently under dispute where the Vereeniging Aerodrome is registered at the deeds office as one whereby rates accounts is currently being subdivided into different stands. Charge out of fees to a separate account was also done whereby certain accounts are not payable by Sedibeng District Municipality. The amount currently in dispute amounts to R 18,037,030
36.	Prior year amendments
36.1 Prior period errors	
See below detail of corrections. The major correction was the overstatement of the Department of Transport as a creditor with an amount of R19,095,958 whereby the VAT accrued amount was R2,345,118 related to the Department of Transport. Security services rendered was also in dispute which resulted in a correction of R1,384,385.
 
The correction of the error(s) and change in accounting policy results in adjustments are as follow:
Statement of changes in net assets		
Closing balance 1 July 2017	47,467,455	
Government grant reserve reversal	189,625	
Department of transport (creditor) overstated	19,095,958	
Debtors understated (shown as Debtor instead of a Creditor)	17 025	
Creditor understated (Creditor shown incorrectly as a Debtor)	(17 025)	
Yearend VAT on creditor overstated	(2,345,118)	
Operating lease liability understated	(152,569)	
Restated Closing balance 1 July 2017	64,255,351	
Surplus (Deficit) for the year 2017	(31,044,078)	
Expenditure 	(1,696,875)	
Market Income overstated Commission received)	(300)	
Grants & subsidies	75,742	
Loss on sale of assets	(7,463)	
Operating lease 	(79,278)	
Restated Surplus (Deficit) for the year 2017	(32,752,252)	

Revenue 	
2017 Restated	
2017 Previous Year Stated	
Variance	

Commission received 	
6,748,376	
6,748,676	
(300)	

Expenditure 	

 	

Insurance excess 	
(320,614)	
(311,478)	
(9,136)	

Contracted security services 	
(17,190,770)	
(15,806,385)	
(1,384,385)	

Legal fees 	
(3,374,090)	
(3,299,043)	
(75,047)	

Depreciation 	
(16,230,445)	
(16,002,138)	
(228,307)	

Transfers and Subsidies Paid 	
(12,370,265)	
(12,446,007)	
75,742	

Loss or gain on sale of assets 	
(177,522)	
(170,059)	
(7,463)	

Operating leases	
(7,741,861)	
(7,662,583)	
(79,278)	

 	

Deficit for the year 	
(32,752,252)	
(31,044,078)	
(1,708,174)	

2016/17 Corrections	

16,787,900	

Total Corrections	

15,079,726	

36.2 Change in accounting policy (Adjustments)
None
37.	Going concern	
We draw attention to the fact that at 30 June, 2018, the municipality had accumulated deficit of R57,415,538 and that the municipality's total liabilities exceed its assets by R 57,415,538.
The financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
As a District Municipality based on our powers and functions we are completely grant dependent. No other main revenue source is obtainable. Over the last 7 years, as a result of the global financial economy constraints, National Treasury downscaled and implemented austerity measures which resulted in the reduction of our main source of revenue, the Equitable share. It is as a result of the global financial constraint that the equitable share over the last 7 years were reduced far lessor than the CPI for each financial period. In addition the South African Local Bargaining Council was implementing salary increases at a higher rate than the equitable share growth allocated to municipalities over the last 6 years – Uncontrollable to municipalities. The reduction has been reported to National Treasury as our revenue source diminished. It was based on this reason that the District Municipality implemented austerity measures over the last 6 years which is still in place. The municipality performs daily, weekly and monthly cash flow reconciliations with projections to ensure that we are able to meet our obligations. The municipality adopted a pro-poor budgeting approach and followed National Treasury budget guide as a principle for provision on depreciation and employee cost.
We draw further attention to the fact that at 30 June, 2018, the municipality's current liabilities exceed its current assets with R168,374,668. The municipality also had operating loss in the current financial year of R89,350,698 (previous financial year loss of R32,752,252) which resulted in a decline in the net asset value.
The Municipality is busy with a process of aligning the current powers and functions assigned to the District and the Locals in order to regain sustainability within the District. Drastic cost saving measures will be implemented starting with a process of restructuring the organization based on the assigned powers and functions. The Council has recently approved that it (Sedibeng District Municipality) should perform the section 84(1) powers and functions of the Municipal Structures Act 117 of 1998.
The municipality does not have any fixed-term borrowing or short term loans and therefore does not put reliance on borrowings.
The municipality does have comprehensive insurance on its assets as set out in the asset register. 
38.	Events after the reporting date	
It has been identified that land is incorrectly registered at the Deeds Office in the name of Sedibeng District Municipality. These properties still need to be transferred to their rightful owner, Emfuleni Local Municipality. 
Council received a report from MPAC in October 2018 whereby the irregular expenditure of R 3,566,122 from the prior years was investigated and recommended for write off as irrecoverable.
39.	Unauthorised expenditure
The municipality is having an operating deficit resulting from overspending on the operating budget during the financial year to the amount of R 5,927,088 related to salary cost. This is inclusive of over expenditure amounts to R 1,271,793 related to VIP overtime. 

40.	Fruitless and wasteful expenditure
Possible fruitless and Wasteful expenditure are investigated and where applicable recovered from the Employee / Councillor concern. An amount of R 41,098 is currently being recovered from employees related to training cost. See annual report for details on all recoveries during the year.
	
Opening balance			603,670			723,768		
Paid off during the year			(78,656)			(139,623)		
-Fruitless and wasteful expenditure identified during the year			63,257			19,525		
			588,271			603,670		
41.	Irregular expenditure
Irregular expenditure was incurred in the previous financial year based on an appointment made in deviating from the SCM legislation. The tender specifications were amended during the adjudication stage to accommodate an additional service. For all the expenditure incurred goods or services were received.
Irregular expenditure was incurred in the financial year based on appointments made in deviating from SCM legislation where the Bid adjudication committee was not composed in accordance with the SCM regulation 29(2) in the 2017/18 financial year. Irregular expenditure was also incurred on employee-related costs during the 2017/18 financial year.
				-		
Opening Balance	3,566,122	375,366		
Paid off during the year			-		-		-		
Irregular expenditure identified during the year			9,411,475		3,190,756			-		
			12,977,597		3,566,122		-		

42.	Additional disclosure in terms of Municipal Finance Management Act	
42.1 PAYE and UIF & Skills levy	
Current year subscription / fee					42,054,592				41,522,244				
Amount paid ‑ current year					(42,054,592)				(41,522,244)				
							
					-				-			

42.2 Pension and Medical Aid Deductions	
							
Current year subscription / fee					73,622,263				66,695,652				
Amount paid ‑ current year					(73,622,263)				(66,695,652)				
							
					-				-			
							
42.3 VAT	
							
VAT receivable					456,622				-				
VAT payable					-				2,020,344				
							
					456,622				2,020,344			
							
All VAT returns have been submitted by the due date throughout the year.

42.4 Television sets in terms of the Television License Regulations under the Broadcasting act no 4 of 1999, as amended	

Description	
Number of sets	
Period that sets were in entity’s possession	

	
Owned television sets	
51	
51 sets were used for the full year;	

	
Rented or leased television sets	
-	

	
Number of sets donated/ alienated	
-	

	
TOTAL	
51	

42.5	Related party transactions
Councillors and specifically the Executive Mayor and Speaker remuneration in terms of the government gazette are shown separately in note 24.

Section 56 employees’ (Key Management) remuneration packages are shown separately in note 23. Section 57 employees are required to enter into an annual performance contract where pre-determined objectives are linked to the integrated development Plan. Councillors and all officials must annually declare their interests and the interest of close family members to Council.

The Council is in the process of establishing a State Owned Company (SOC), “The Vaal River City Tourism Promotion Company SOC” which will operate as a municipal entity to render the local tourism function. The CIPC Commissioner has registered the entity taking effect as from 30 August 2013, however, the establishment of the entity as per section 84(2) MFMA have as yet not been concluded and operations were not undertaken in terms of sections 85 through to 104 MFMA and hence there are no further disclosures to be made in terms of section 92 MFMA for the year ended 30 June 2018.

	

42.6 Declaration of business conducted to close family members of persons in the service of the state
The below table list the awards to close family members of persons in the service of the state and awards to persons in the service of the state. 

1.	Awards to close family members of persons in the service of the state

Company Name	Initials	Surname	Designation and
Employee NO.	Relationship with the company	Amount Paid
	
Panorama Bloemiste CC	CS	Heunes	Senior Accountant Expenditure
(17530)	Spouse to the Director/Shareholder	R 29,640	
Kopano Inhlangano General Trading	PR	Maccamel	Admin Officer Taxi Tanks (00381)	Spouse	R 29 800	
Sebokeng Multi media	NG	Hlongwane	MMC Strategic Planning	Business Partner	R 76 850	
TOTAL					R 136 290	

2.	Awards to persons in the service of the state
Name of person	State institution where employed	Supplier name	Expenditure (Payments) – 
current year   (R)	
MM KUBHEKA	GP: EDUCATION	BONGANI MAKHUNGA TRADING ENTERPRISE	 59 087.00 	
GERTRUIDA MATHILDA LANDMAN	South African Broadcasting Corporation	MEDIA 24	31 600.80 	
TP MUSHUNGWA	NAT: PUBLIC SERVICE & ADMINISTRATION	ENTERPRISES UNIVERSITY OF PRETORIA	45 970.00 	
TOTAL	 	 	136 657.80 	

43.	Deviation from supply chain management regulations	
In terms of section 36 of the Municipal Supply Chain Management Regulations any deviation from the Supply Chain Management Policy needs to be approved/condoned by the Municipal Manager and noted by Council. The expenses incurred as listed hereunder have been condoned. 
Paragraph 12(1)(d)(i) of Government gazette No. 27636 issued on 30 May 2005 states that a supply chain management policy must provide for the procurement of goods and services by way of a competitive bidding process.
Paragraph 36 of the same gazette states that the accounting officer may dispense with the official procurement process in certain circumstances, provided that he records the reasons for any deviations and reports them to the next meeting of the accounting officer and includes a note to the financial statements.
DEVIATIONS APPROVED FOR THE FINANCIAL YEAR 2017/2018	
Applicable paragraph in SCM Policy
 	Name of Supplier	Date of
the order	Goods and Services Procured	Nature of Deviation	Approved by:	Cluster	Amount	ELE	
Any exceptional cases where
it is impractical or impossible
to follow the official procurement
processes	TL Appliances and Lawnmowers	15-Aug-17	Service and repair of equipment	It was impractical for a strip and quote assessment of repairs and then to proceed with a separate request to repair.	MM	Corporate Service	R 6,077.00	39075	
Any exceptional cases where
it is impractical or impossible
to follow the official procurement
processes	Amtronics/Diamond Corner	11-Oct-17	Public Participation Meeting at Vanderbijlpark Regarding shooting incident between SAPS and the foreign Nationals	It was an emergency meeting and the urgency of this matter prompted SCM to source three quotations	MM	Corporate Service	R 180,450.00	39417	
Any exceptional cases where
it is impractical or impossible
to follow the official procurement
processes	Amtronics/Diamond Corner	01-Nov-17	Sedibeng Mayoral Strategic Session.	The dates of the Retreat were changed leaving too little time to follow a 7-day Request for Formal Written Quotations process	MM	Office of the Municipal Manager	R 57,000.00	39504	
Any exceptional cases where
it is impractical or impossible
to follow the official procurement
processes	Khaya Ibhubesi Conference Centre	01-Nov-17	Sedibeng Mayoral Strategic Session.	The dates of the Retreat were changed leaving too little time to follow a 7-day Request for Formal Written Quotations process	MM	Corporate	R 97,202.10	39456	
Any exceptional cases where
it is impractical or impossible
to follow the official procurement
processes	TM Bophelo Holding	13-Feb-18	Business Cards for Councillors Welfare and Support Section.	It was impractical to follow SCM process as the user department had already issued an instruction to proceed with the work despite the purchase order not being issued	MM	Speakers Office	R 2,739.00	40018	
Any exceptional cases where
it is impractical or impossible
to follow the official procurement
processes	Saint George Hotel CC	21-Jun-18	Conference for Sedibeng Districtwide Whippery Lekgotla	It was impractical to follow SCM process due to the short notice given for following competitive bidding	MM	Office of the Municipal Manager	R 227,710.00	40675	
				Total	 	 	R 571,178.10		

44.	Budget differences 
Actual versus Budget (revenue and Expenditure) for the year ended 30 June 2018	
Figures in Rand 	Final Budget	Actual amounts on comparable basis	Difference between final budget and actual	% Variance	Explanation of Significant Variances greater than 10% versus Budget	

Revenue 						
		
Sale of goods			3,600,000			3,534,163			65,837			1.9	%	Less fuel sold than budget based on demand of fuel at the Vereeniging Aerodrome	
Rental of facilities and equipment			686,373			570,958			115,415			20.2%		Decrease in rental income based on utilization of facilities	
Agency services			80,001,455			71,182,542			8,818,913			12.4	%	Decrease in licensing fees as a result of increase in collection agencies instituted by Department of Transport	
Commissions received			6,805,584			6,810,435			(4,851)			(0.1%)		
Other income ‑ (rollup)			722,758			986,341			(263,583)			(26.7%)		Higher than anticipated income based on increase in commission and staff recoveries	
Interest received ‑ investment			1,680,000			2,835,809			(1,155,809)			(40.8)		Interest higher than anticipated based on investments made	
Gains on disposal of PPE			100,000		13,857	86,143	621.7%	More losses on assets than anticipated during the financial year	
Total revenue from exchange transactions		93,596,170			85,934,105			7,662,065	8.92%		

Non-exchange revenue 						
Licenses and permits			860,000			2,255,000			(1,395,000)			(61%)	Increase in licensing fees as a result of implementation of the Air quality management act	
Recoveries			489,076			489,076			-			-			
Government grants & subsidies 	271,716,984	269,415,374	2,301,610	0.9%		
Total revenue from non-exchange transactions		273,066,060			272,159,450			906,610	0.3%		
Total revenue 	366,662,230	358,093,554	8,568,676	 2.39%	 	
						
Expenditure 						
Personnel			(249,382,969)			(255,310,057)		5,927,088		(2.3%)		
Remuneration of councillors			(12,922,132)			(12,826,039)			(96,093)		2.0%		
Depreciation			(14,871,048)			(12,699,488)			(2,171,560)		17.1%	No split between Amortisation and depreciation made	
Amortisation			-			(886,971)			886,971		(100.0%)	No budget provision made	
Impairments		(12,279,296)	12,279,296	(100.0%)	No budget provision made	
Debt impairment		(44,584,162)	44,584,162	(100.0%)	No budget provision made	
Contracted Services			(55,063,104)			(53,493,876)			(1,569,228)		2.9%		
Transfers and Subsidies			(10,256,984)			(10,238,715)			(18,269)		0.2%		
General Expenses			(46,062,339)			(45,125,648)			(936,690)		2.0%		
Total expenditure		(388,558,576)	(447,444,252)	58,885,676	(0.5)	Refer to note 39	
						
Operating deficit		(21,896,346)		(89,350,698)		(67,454,352)				

45.	 Reclassification to MSCOA implementation

Reclassification was done on amounts from the previous year with the implementation of MSCOA. The movements within the various categories are outlined below:

		2017 Reported	2017 reclassified amount	Variance	move to/ from	
45.1	Employee related costs 				
	Employee related costs 	-248,917,351	-245,454,976	-3,462,375	To General expenses	
	Levies 	2,056,515		2,056,515	From Employee related cost	
	WCA Contribution 	1,405,860		1,405,860	From Employee related cost	
	 	-245,454,976	-245,454,976	0		
						
45.2	Public Participation					
	Public participation 	-332,061	-	-332,061	To Campaigns (General expenses)	
						
45.3	Repairs and maintenance 				
	Repairs and maintenance 	-5,261,040	-	-5,261,040	To Contracted services	
						
45.4	Contracted services 					
	Contracted services 	-40,353,424	-53,441,090	13,087,666		
	Repairs and maintenance 	-5,261,040		-5,261,040	From Repair and Maintenance	
	Consulting and professional fees 	-3,473,318		-3,473,318	From General expenses	
	Bank merchant charges 	1,380,411		1,380,411	To General expenses	
	General Expenses on Grants	-5,245,583		-5,245,583	From General expenses	
	Catering Expenses 	-301,687		-301,687	From General expenses	
	Office refreshments 	-186,449		-186,449	From General expenses	
	 	-53,441,090	-53,441,090	0		
						
45.5	Transfers and Subsidies 				
	Transfers and Subsidies 	-2,161,972	-12,370,265	10,208,293		
	General Expenses from Grants 	-10,208,293		-10,208,293	From General expenses	
	 	-12,370,265	-12,370,265	0		

45.6	General Expenses 					
						
45.6.1	Bank charges 					
	Bank charges 	-2,049,623	-3,430,034	1,380,411		
	Bank merchant charges	-1,380,411		-1,380,411	From Contracted services	
	 	-3,430,034	-3,430,034	0		

						
45.6.2	Consumables 					
	Consumables 	-785,570	-3,463,307	2,677,737		
	Fuel and oil 	-1,380,899		-1,380,899	Within general expenses	
	Printing and stationery 	-1,296,838		-1,296,838	Within general expenses	
	 	-3,463,307	-3,463,307	0		
						
45.6.3	Printing and Publications 				
	Printing and Publications 	-739,842	-742,506	2,664		
	Magazines, books and periodicals 	-2,664		-2,664	Within general expenses	
	 	-742,506	-742,506	0		
						
45.6.4	Royalties and license fees 				
	Royalties and license fees 	-2,503,844	-3,158	-2,500,686		
	IT expenses 	2,500,686		2,500,686	Within general expenses	
	 	-3,158	-3,158	0		
						
45.6.5	IT expenses 					
	IT expenses 	-	-2,500,686	2,500,686		
	Royalties and license fees 	-2,500,686		-2,500,686	Within general expenses	
	 	-2,500,686	-2,500,686	0		
						
45.6.6	Campaigns 					
	Campaigns 	-	-6,649,467	6,649,467		
	Workshops 	-5,778,235		-5,778,235	Within general expenses	
	Promotions 	-539,171		-539,171	Within general expenses	
	Public participation 	-332,061		-332,061	From Public participation	
	 	-6,649,467	-6,649,467	0		
						
45.6.7	Levies					
	Levies	-	-2,056,515	2,056,515		
	Employee related cost	-2,056,515		-2,056,515	From employee related cost	
	 	-2,056,515	-2,056,515	0		

45.6.7	WCA contribution				
	WCA contribution	-	-1,405,860	1,405,860		
	Employee related cost	-1,405,860		-1,405,860	From employee related cost	
	 	-1,405,860	-1,405,860	0		

45.6.8	

Property Plant & Equipment (Note 2)				
	Buildings	53,472,492	54,158,543	686,051	From Infrastructure	
	Infrastructure	8,676,033	6,483,820	-2,192,213	To Buildings & Intangible 	
	Motor Vehicles	1,279,679	1,676,170	396,491	From Specialized vehicles	
	Specialized Vehicles	396,491	-	-396,491	To Motor Vehicles	
	 	63,824,695	62,316,533	-1,506,161		
45.6.9	

Intangible Assets (Note 3)				
	Computer Software, other	1,456,168	2,962,329	1,506,161	From Infrastructure	
	 	1,456,168	2,962,329	1,506,161		
45.6.10	

Rental of facilities and equipment (note15)	
	Rental of facilities and equipment	7,548,591	799,915	-6,748,676	To commission received	
	Commission received	-	6,748,676	6,748,676	From rental of facilities and equipment	
	 	7,548,591	7,548,591	0		
45.6.11	

Agency services (note16)	
	Agency Services	8,810,807	69,514,567	60,703,760	From license and permits	
	License and permits	60,703,760	517,000	-60,186,760	To agency fees	
	Other income	9,440,206	8,923,205	-517,000	To license and permits	
	 	78,954,772	78,954,772	0	See 45.6.14&12	
45.6.12	
Other Income (note18.1)	
	Other income	9,440,206	8,923,205	-517,000	To license and permits	
	License and permits	60,703,760	517,000	-60,186,760	To Agency fees	
	Agency Services	8,810,807	69,514,567	60,703,760	From license and permits	
	 	78,954,772	78,954,772	0	See 45.6.11&14	
45.6.13	

Commission received (note18)	
	Commission received	-	6,748,676	6,748,676	From rental of facilities and equipment	
	Rental of Facilities and Equipment	7,548,591	799,915	-6,748,676	To commission received	
	 	7,548,591	7,548,591	0		
45.6.14	

License and permits (note17)	
	License and permits	60,703,760	517,000	-60,186,760	To Agency fees	
	Agency Services	8,810,807	69,514,567	60,703,760	From license and permits	
	Other income	9,440,206	8,923,205	-517,000	To license and permits	
	 	7,548,591	7,548,591	0	See 45.6.11&12