Umhlabuyalingana.gov.za



FINANCIAL REPORT FOR THE FOURTH QUARTER (Q4)30 JUNE 2019Table of contentsPage NoPart 1Part 2ANNEXURE AANNEXURE BANNEXURE CIn Year ReportExecutive SummaryIn-Year Budget Statement TablesMunicipal Manager’s quality certificateSupporting DocumentationDebtors age analysis summaryInvestment registerGrants register2-67-32331. EXECUTIVE SUMMARY This in-year report is prepared in terms of the municipal budget and reporting regulations that were promulgated in the Government Gazette No. 32141 of April 2009 as well as S52 (d) of the MFMAOperating revenueOperating grantsCapital grantsThe above table reflects the actual receipts (July to June) versus the total adjustment budget.Revenue by Source: (Table C4)The actual revenue recognized from July to June is R184 408 which is 12% less than the projected budget of 208 729 as per table C4 – Statement of financial performance above.Below are the explanations of the variances greater than 10% versus the year to date budget.1.1 Rental of facilities and equipment: the variance of R 50 502 which is 12% less than the budget estimate because other stalls are not occupied which then resulted to revenue loss because they are not used because they are not in good condition to be used or occupied.1.3 Interest earned – external investments: the variance of R431 139 is 33% less than the year to date budget estimates because grant funds or excess cash were not deposited or invested to short term deposits accounts because of challenges management were faced with during that period.1.4 Interest earned - outstanding debtors: the variance is R102 825 which is 14% less than the year to date budget estimates. In October 2018 council took a resolution to waive interest for 8 months starting from October 2018 to June 2019 on Property Rates debts for Business and Commercial debtors. 1.5 Fines: the variance of R812 623 in this line item is 45% less than the year to date budget estimates due to that there is a backlog in capturing traffic fines issued to the system. Traffic fines issued from April 2019 till June 2019 are not yet captured to the system, this happened because there was a problem in the traffic system not being able to integrate with the financial system.1.6 Licenses and permits: the variance is R308 370 which is 11% more than year to date budget estimates due to that the budget was understated.1.7 Transfers and subsidies – operational: the variance R25 019 074 which is 14% less than the projected budget because of few grants that were not fully spent by 30 June 2019 which are Corridor Development Grant for Skhemelele Nodal Plans project, Tourism Grant for Kosi Bay Boarder Development project and Sports & Recreational Grant. Adjustment budget in the above statement reflect more budget because it includes Electrification Grant funds from DOE which we do not recognize revenue on it because of the Agent relationship we have with the grant funder.1.8 Other income: the variance is R1 583 218 which is 53% more than the year to date budget estimate. Other revenue includes revenue from interest from current accounts, tender monies, insurance refunds, building plans, library income and commission received. The reason for recognizing more revenue than the projected budget is because we received more interest on the main bank account than what was anticipated during the adjustment budget because excess funds were not invested to short term deposits accounts.OPERATING EXPENDITUREExpenditure by Type: (Table C4) The actual expenditure of R161 043 015 is 27% less than the year to date budget amount of R220 884 028 as per table C4- Statement of financial performance Below are the explanations of the variances greater than 10% versus the budget as per C Schedule-M121.9 Employee related costs: The variance is R13 812 626 which is 18% less than the year to date budget estimates because of other positions that were not filled in by 30 June 2019.1.10 Depreciation: the variance is R25 778 357 which is 100% less than the year to date budget estimates. The reason for this variance is because depreciation for the whole financial year has been reversed because the financial system has been calculating depreciation incorrectly and there were omissions as well. At this point in time depreciation is being calculated manually and it will be processed to the financial system by journal entries, due to that prior year audit report depreciation 1.12 Other material: the variance is R1 233 785 which is 80% less than the year to date budget estimates. The reason for this is because inventory consumed has not been reconciled properly.1.13 Contracted services: the variance is R19 316 571 which is 37% less than the year to date budget estimates, because other programs were not implemented.1.14 Transfers and subsidies: the variance is R539 512 which is 54% more than the year to date budget estimates. Capital expenditure:The table above reflects the actual capital expenditure versus the total capital budget which reflects that the total percentage of capital expenditure is 94% Capital expenditure by municipal vote (Table C5)Below are the variances of the actual year to date actuals versus the year to date budget (July - June) The actual expenditure of R38 171 860 excluding expenditure on electrification projects is 6% less than the year to date budget amount of R40 600 863. 1.15 Governance and administration: the variance is R157 771 or 45% less than the year to date budget. 1.16 Community and public safety: the variance is R1 741 176 which is 11% less than the year to date budget estimate. 1.17 Economic and environmental services: the variance is R4478 026 which is 2% less than the year to date budget estimate. 1.18 Trading services: the variance is R48 890 which is 24% less than the year to date budget estimates. Cash Flow Projections: (Table C7)1.19 Cash flow from operating activities – Receipts: Actual cash received of R364 966 600 is more than the year to date budget estimate of R237 397 216. The variance is a result of funds received from Department of Human Settlement for the construction of houses in Mashabane, Bhekabantu and Mbazwana as well as funds received from National Treasury and KZN Cogta for all operational and capital grants.1.20 Cash flow from operating activities – Payments: Actual payments of R159 975 949 is less than the year to date budget estimates of R R179 951 903.2. IN YEAR BUDGET STATEMENTS TABLESThe above table is the summary of the actual performance of the 4th quarterThe above table shows the summary of financial performance per function of the 4th quarterThe above table shows the financial performance by vote for the 4th quarter.The above table shows the financial performance by source for the 4th quarter.Revenue By SourceProperty rates:Revenue recognized from property rates as from July to June is R19 966 685 or 2% above the year to date budget estimate. Property rates are billed monthly on the 1st of each month to all customers. The municipality has the following categories for property rates debtors which are as follows: Business and Commercial debtors, State Owned debtors and Residential debtors.Service charges – refuse revenue:Revenue recognized from refuse revenue as from July to June is R583 201 or 13% below the year to date budget estimates. This is a result of contracts or agreements with customers for refuse removal service that are not yet finalized, of which the budget estimates used in the budget included those customers since there was an indication that refuse removal service will be rendered to them as well. Currently refuse removal is done to business customers and few government properties.Rental of facilities and equipment:Revenue recognized from rental of facilities from July to June is R362 551 and it is only for Manguzi market stalls rental and office space rental by IEC and department of Public Works. Interest earned – external investments:Revenue recognized from interest earned on external investments from July to June is R858 924 thousands which is 33% below the year to date budget estimates. The reason for the low performance of this line item is because grant funds received or excess funds from July to June were not deposited to the existing short term deposit accounts of the municipality. Interest earned – outstanding debtors:Revenue generated from interest on outstanding debtors is R618 079 thousands which is 14% below the year to date budget estimates. Council of umhlabuyalingana municipality took a resolution to wave interest from property rates debtors from October to June 2019Fines, penalties and forfeits:Revenue recognized from traffic fines is R1 013 437 which is 45% below the year to date budget estimates. Licenses and permits:Revenue recognized for licensing from traffic is 3 148 518 which is 11% above the year to date budget estimates.Transfers and subsidies:Revenue recognized from operational grants is R153 976 926 for operational grants which excludes R22 000 000 for electrification grant as per the conditions of the grant of which the municipality has an agent relationship with the grant funder. Recognition of revenue is 2% below the budget estimates because of other grant funds that were not fully spent, those grants were received from Provincial KZN-COGTA.Other revenue:Revenue recognized from other revenue of R4 585 179 include funds received from Department of Human Settlement for the implementation of housing projects around uMhlabuyalingana Municipality.Expenditure by TypeEmployee related costs:Expenditure recognized employee related costs is R63 662 808 which is 18% less than the year to date budget estimates because there were vacancies not yet filled in.Remuneration of councilors allowances:Expenditure for remuneration of councilors is R12 471 999 which is 3% less than the projected year to date budget Debt impairment:Debt impairment is 11 392 678 which is 2% above the year to date budget estimates because the council took a resolution to write off 60% of long outstanding debts for business and commercial debtors category in October 2018.Depreciation and asset impairment:Depreciation for this quarter is R0 which is 100% less than the estimated budget projections for this quarter. The reason for not having depreciation is because it has been discovered that the depreciation calculations generated by the system are incorrect and there are omission and it has been resolved that the depreciation must be reversed and re-calculated manually and brought in the system through journal entries.Other materials:Expenditure for other materials for this quarter is R304 195 which is 80% less than the projected budget estimates, the reason for this variance is because inventory items have not yet been fully expensed.Contracted services:Expenditure for contracted services for this quarter is R32 975 289 which is 37% less than the projected budget estimates. Transfers and subsidies:Expenditure for transfers and subsidies is R1 546 512 which is 54% more than the projected budget estimates because it has been misallocated from contracted services.Other expenditure:Expenditure for other expenditure is R38 689 534 which is 1% more than the projected budget estimate.Capital expenditure – Functional ClassificationGovernance and administration:Expenditure on governance and administration category is R192 229 which is 45% less than the budget munity and public safety:Expenditure on community and social services is R14 030 936 which is 11% less than the budget estimates.Economic and environmental services:Expenditure on economic and environmental services is R23 700 725 which is 2% less than the budget estimates Trading services:Expenditure on trading services is R151 110 which is 24% less than the budget estimatesDebtors analysisThe above table shows the total debt by income source and by customer group.Property rates:The municipality is owed R37 420 851 for property rates. Property rates are billed to government properties, Business and commercial properties and residential properties. One of the mechanisms used by the municipality in implementing its debt collection policy In the month of October 2018 the council took a resolution to write off 60% of debts amounting to R11 381 826 for property rates in the business and commercial debtors category with the intention of encouraging business and commercial debtors to pay or settle their accounts. Further to that the council also took a resolution to waive interest charges to their accounts from October till end of the financial year with a condition that they will pay or settle their accounts within that grace period.Refuse removal:The municipality is owed R514 868 for refuse removal. Refuse removal is billed to business and commercial customers and few government properties at this stage in time.Rental of facilities:The municipality is owed R197 863 thousands for rentals. Rentals are billed for the rental of markets stalls and office spaces which is rented out by IEC.Interest:Interest is being charged on outstanding property rates accounts only. As at 30 June the municipality is owed R1,876 075 for interest on outstanding property rates.In terms of customer groups the aging of debts per customer group is as follows:Organs of state:This group is owing a total of R29 433 432, as at 30 June mercial and Business:This group is owing a total of R10 326 065 as at 30 June 2019. There is a huge reduction of debt in this category which is a result of the debt write off that was approved by council in October 2018 to a total of R11 392 678 Households:This group of debtors is owing R249 665 as at 30 June 2019Creditors analysisInvestment analysisShort term investment deposits The municipality does not have investments but have short term deposits of which most of them are money market deposits accounts and 32 days’ notice accounts.Transfers and grants receiptsThe above table shows the conditional and non-conditional grants receive by the municipality as from July 2018 to June 2019 The municipality has received R145 676 000 for Equitable Share which is a non-conditional grant, R1 900 million for the Financial Management Grant which is a conditional grant, R3 047 000 for Expanded Public Works Program Grant which is a conditional grant and R2 000 million for the Town Planning Grant which is a conditional grant from Provincial Cogta, R22 000 000 for Integrated National Electrification Programe grant, R50 000 for Sports and Recreational Grant from KZN Sports & Recreation, R1 200 000 for Tourism Grant from EDTA, R1 676 000 for Provincialisation of Libraries from Department of Arts and Culture and R197 000 for Community Library Grant from Department of Arts and Culture.For Capital grants we received R34 265 000 for Municipal Infrastructure Grant and R6 000 000 for Small Town Rehabilitation grants from KZN Cogta. Transfers and grant expenditure The above table shows the grant expenditure. The above table shows the expenditure on grant roll oversThere has not been any expenditure yet to the grant that was approved as a roll over by the Department of Economic Development, Tourism and Environmental Affairs.The above table shows the employee related costs expenditure for this quarter for councilors, senior managers and other staff membersThe above table shows the actual receipts by source and actual payments by type from July to June. This table also reflects the cash position of the municipality as at 30 June 2019The municipality does not have entitiesThe municipality does not have entities.Capital expenditureThe above table shows the capital expenditure performance per month as from July to JuneThe above table shows capital expenditure by asset class as from July to JuneRepairs and MaintenanceThe table above shows the expenditure on repairs and maintenance per asset class as from July to June 2019Municipal Manager’s quality certificateI, NP Gamede the Municipal Manager of uMhlabuyalingana Municipality hereby certify that-1619251016000The monthly budget statement18097510160X00XQuarterly report on the implementation of the budget and financial state affairs of the municipality190500698500Mid-year budget and performance assessmentFor the month of June 2019 has been prepared in accordance with the MunicipalFinance Management Act and regulations made under that Act.Print Name:Nonhlanhla P GamedeMunicipal Manager of uMhlabuyalingana Municipality KZ271Signature:______________________Date:______________________ANNEXURES Annexure A: Debtors age analysis summaryAnnexure B: Investment registerAnnexure C: Grants register ................
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