66 | P a g e
67 | P a g e 5.1 STATEMENTS OF FINANCIAL PERFORMANCE
Table 5.1
Summary Statement of Financial Performance
R R R R
Description
2013/14 Revised Budget
2013/14 Actuals
2012/13
Actuals Variance
2013/14 Budget
%
Total Revenue by Source (Excluding capital Transfers) 132 061 293 130 740 866 119 117 987 11 622 897 8.9 % Total Operating Expenditure -129 686 291 -136 913 087 -103 025 456 - 33 887 631 25 %
Surplus/deficit 2 375 082 - 6 172 221 16 092 531 -22 264 734
The table above reflects the financial performance of uPhongolo local Municipality. Year to year revenue grew by 8.9% from R119million to R130million for the reporting year excluding capital transfers. This growth is closely linked to inflationary adjustments.
On a similar note the municipality operating expenditure increased from 103million to 136million which represents a 25% year to
year increase in expenditure.
68 | P a g e 5.2 CAPITAL EXPENDITURE PERFORMANCE
Table 5.2
Vote Description R thousands
Ref 1
2012/13 Budget Year 2013/14
Audited Outcome
Original Budget
Adjusted Budget
Monthly actual
YearTD actual
YearTD budget
YTD variance
YTD variance
%
Full Year Forecast
Total Capital Expenditure - Standard Classification 3 19 323 57 697 65 735 42 570 42 570 65 735 (23 165) -35% 65 735 Funded by:
National Gov ernment Prov incial Gov ernment District Municipality Other transfers and grants Transfers recognised - capital Public contributions & donations Borrowing
Internally generated funds
(18 267)
– –
-33%
18 616 36 500 56 081 37 814 37 814 56 081 56 081
– – –
– –
– – -
– –
– –
– –
– –
5 6
18 616 36 500 56 081 37 814 37 814 56 081 (18 267)
– (3 162) (1 738)
-33%
-43%
-73%
32 596 –
– 616
17 542
3 853
– 7 279 2 375
– 4 117 637
– 4 117 637
– 7 279 2 375
– 7 279 2 375
Total Capital Funding 19 323 57 697 65 735 42 570 42 570 65 735 (23 165) -35% 65 735
Table 5.2 reflect the Year to date (YDT) capital expenditure of R42 million of the Total Capital Budget of R65 million. In comparison 2012/13 Audited outcome was R19 million. This means that even though the municipality only managed to get 75% of the budgeted capital they actually spent more than double the amount spent the year prior in capex terms. This was mainly achieved through a more robust focus on the vision and its implementation supported mainly by the addition of staff especially in the critical component of the technical department.
69 | P a g e 5.3 CASH FLOW
Table 5.3
R R R R
Budget 2013/14 Actual 2013/14 2 2 2 0 j 8 8 u i u 2 0 1 3 2 0 1 3 2013/14
Actual 2012/13 Variance %
Cash From Operating activities
Receipts 184 642 646 148 219 190 137 902 907 10 316 283 6.96%
Payments -113 136 633 -118 270 917 -106 657 366 -11 613 551 9.82%
Net cash flow from operating activities 71 506 013 29 948273 31 245 541 -1 297 268 -4.33%
Cash Flow from Investing activities
Net cash from investing activities -65 735 750 -41 784 302 -20 404 998 21 379 304 51.2%
Cash Flow from Financing activities
Net cash from financing activities 5 692 179 2 037 146 -3 614 113 -1 576 967 -
Cash and cash equivalents at the end of the year 34 864 170 13 602 845 23 401 728 -9 798 883 -
Table 5.3 shows the Municipality collected R148 million compared to past year result of R137 million. This effectively represents a 6.9% increase in cash raised from operating activities which shows that the municipality is growing its own capacity to generate funds. The variance can be attributed to an increase in estimates for the financial year 2013/14 and effective collection methods. The total net cash from operating activities reflects a total decrease of 34% which the Municipality incurred in the prior year. The table also reflect that net cash from investing activities increased by R21 million or 51%
compared to last year results were a decrease of over R15 million was incurred. Net cash from financing activities show a positive balance of 2 million which is a great improvement from the negative R3million incurred the year prior. Cash and cash equivalents however decreased by over 9million% compared to past year results.
70 | P a g e 5.4 GRANTS
Table 5.4
Name of Grant
Unspent portion 2012113 financial statement
s
R
Adjustments and Transfers
R
Receipts during the year
R
Expenditure during the year
R
Unspent portion 2013/14 financial statements
R
Grants and Subsidies
delayed / withheld
Reason for delay withholding
of funds
Did your municipality comply with the grant conditions in terms of grant framework in the latest Division
of Revenue Act
Reason for non- compliance
Flea Market Grant
Municipal Infrastructure Grant
Integrated National Electrification Programme Gra Municipal Systems Improvement Grant
Finance Management Grant Pound Grant
Prov1nciahsation of libraries Grant L1brary Community Serv1ces Grant Sub-Rank Facility Grant
Cultural V1llage Grant Street Lights Grant
Thusong Centre Operational Grant Sports Facility Grant
Sports Facility Maintenance Grant Expanded Public Works Programme Grant IDP Grant
Development Administration Grant Integrated Electrification
Tourism Grant Candover Strategic Support Grant Synergistic Partnership Grant Housing Community Gardens Grant Planning and Development Grant Municipal Development Grant
3 660 024 3 680 788 (13 477 233)
. .
490 490
.
.
3 000 000 3 000 000 3 000 000 308 923 525 000
.
822 604
.
205 686 98 000 290 862 93 848 123 104 72864 47 621 100000
15 514 000 14 000 000 890 000 1650 000
886 000 19 000 3000 000
1200 000 150 000 1000 000 200 000
(2 874 993) (19 513 339) (7 539 239) (890 000) (1 650 000)
(886 000) {19 000) (3 702 308) (1 507 473) (2 340 861) (308 923) (1 694 464) (74 465) (1 822 604) (200 000)
785 031 (318551) (7 016472)
. - 490 490
. - 2 297 692 1492 527 659139
.
30 536 75 535
. .
205 686 98 000 290 862 93 848 123 104 72 864 47 621 100 000
No Yes No No No No No No No No No No No No No No No No No No No No
N/a N/a N/a N/a N/a Nla N/a N/a Nla N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a
Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a N/a Nla N/a N/a N/a N/a N/a N/a Nla N/a N/a N/a N/a
6 042 581 . 38 509 000 (45 023 669 (472 088)
The table above shows that the Municipality performed better than the prior year as they managed to finish the allocated
budget which is a new experience for the municipality. From not spending 6million the municipality managed to spend 45million which is 7million over the allocated budget. The variance can be explained in terms of funds allocated but not realized from the Department of Energy.
71 | P a g e 5.5 ASSET MANAGEMENT
The uPhongolo local Municipality has always had challenges with regard to the fixed asset register resulting in the register being GRAP non-compliant. The challenges experienced resulted in the property, plant and equipment being a qualification item in the 2012/13 financial year by Auditor General. The municipality has ensured that all previous year fixed asset errors are addressed, fixed asset reconciliation are compiled monthly and KPMG was also appointed to assist the Municipality to prepare a GRAP compliant fixed asset register. The table below shows the asset situation in perspective.
Table 5.5
Asset Register at June 2014
R R R
Details Opening Balance 2013 Closing balance 2014 % change
Land 17 695 918 17 649 423 (0.26%)
Buildings 12 853 302 14 005 552 8.96%
Plant and machinery 6 149 531 4 913 275 (20.1%)
Furniture and fixtures 2 421 178 2 340 242 (3.34%)
Motor vehicles 2 172 829 6 169 388 183.9%
IT equipment 844 986 1 135 839 34.4%
Infrastructure 63 119 524 82 649 720 30.9%
Capital work in progress 23 892 312 23 892 312 -
Investment property 88 450 091 88 546 477 0.12%
217 599 671 241 302 228______ 10.9%
As the table shows the asset register grew by 10.9% between 31 July 2013 and 30 June 2014. Notable increases occurred in the motor vehicles section at 183.9% owing to new vehicles that were purchased for use by the municipality. This was a desirable move as it also put a stop on the high costs associated with vehicle hire and employee travel claims related costs. IT equipment also incurred a major surge at 34%
as the municipality finally moved away from old computers and welcomed windows 8.
72 | P a g e DESCRIPTION
ORIGINAL BUDGET
ADJUSTMENT
BUDGET ACTUAL
BUDGET VARIENCE REPAIRS AND MAINTENANCE EXPENDITURE 8 241 564 8 241 564 7 554 413 687 151 Table 5.6
REPAIRS AND MAINTENANCE EXPENDITURE: FY
2013/14 R R R R
The table 5.7 above shows a budget variance of R687 151 in repairs and maintenance expenditure. This variance is attributable to maintenance projects which were not implemented especially with regard to road potholes repairs.
73 | P a g e FINANCIAL RATIOS BASED ON KEY PERFORMANCE INDICATORS