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Availability of the Annual Financial Statements for the year ended 30 June 2018 - CTMM
THE CITY OF TSHWANE METROPOLITAN MUNICIPALITY
(A municipality as described in section 2 of the Local Government Municipal Systems Act, 2000, duly
established in terms of Notice No. 6770, promulgated in the Provincial Gazette Extraordinary of 1
October 2000 in terms of section 12(1) read with section 14(2) of the Local Government : Municipal
Structures Act, 1998, as amended)
(Issuer code: CTMM)
(“City of Tshwane” or the “Issuer”)
AVAILABILITY OF THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE
2018
The availability announcement on Friday the 1st of February 2019 was cancelled in error. Therefore note
holders are hereby advised that the Issuer’s Annual Financial Statements for the year ended 30 June 2018
are available on The City of Tshwane’s website.
The document can be viewed or downloaded through the below link:
http://www.tshwane.gov.za/sites/Departments/Financial-
Services/AnnualFinancialStatements/CONSOL%20AFS%202018_for%20website.pdf
The annual financial statements of the issuer have been audited by The Auditor General, who have issued
an unqualified audit opinion.
Noteholders are advised of the following restatements and reasons thereof to the published annual
financial statements.
Prior period restatements
Change in accounting policy
No change in accounting policy occurred during the year under review.
Reclassification
The undermentioned reclassifications were done to prepare for alignment with mSCOA as well as to
align the financial statements with categories of the budget. The reclassification on the cash flow
statement was done in terms of a frequently asked question (FAQ) issued by the Accounting
Standards Board on the correct composition of cash and cash equivalents.
Statement of financial performance
For the Municipality, a reclassification was done from collection cost (R98 993 624), contracted
services (R28 133 747) to general expenses (R127 127 371) to align with the classification of the
budget. For the group, a reclassification was done from collection cost (R99 100 624), contracted
services (R29 337 821) to general expenses (R128 438 445).
A reclassification was done from other income (R29 375 083) to service charges to align with the
classification of the budget.
Statement of financial position
A reclassification was done between employee benefit obligation current liability and non-current
liability to the value of R305 258 081.
For the Municipality, a reclassification was done between receivables from exchange and non-
exchange transactions – consumer receivables to the value of R689 804 129 and other receivables to
the value of R74 472 926. This was done to reflect receivables from exchange and non-exchange
transactions on the statement of financial position.
Cash flow statement
A reclassification was done between cash and cash equivalents and short-term investments of R1
078 920 990 to only include highly liquid investments in cash and cash equivalents.
Correction of errors
The correction of errors has been done in terms of GRAP 3, paragraph 44, and subject to paragraph
45, whereby material prior period errors have been corrected retrospectively in the first set of financial
statements authorised for issue after the discovery of the errors, by restating the comparative
amounts for the prior period(s) presented in which the error occurred, or if the error occurred before
the earliest prior period presented, restating the opening balances of assets, liabilities and net assets
for the earliest prior period presented.
The financial statements presented in 2017/18 were restated in detail as per GRAP 3; however to split
the impact of the restatement on the 2015/16 financial year is impractical (GRAP 3 paragraph 51 (b)),
as it will result in a duplication as the nature of the error has already been addressed in full in the
2015/16 period.
The following material restatements are discussed below:
Revenue
Fines (AARTO) were increased with an amount of R5 077 225 due to late capturing of fines relating to
the 2016/17 financial year.
Other income was increased with an amount of R48 359 725 (group = R348 539 725 due to errors
picked up on the useful live review calculations.
Public contributions were decreased with an amount of R8 012 204 as a result of the errors picked up
in the allocation of amounts received in the bank account.
Rental of facilities and equipment was decreased with an amount of R21 527 for the group as the
municipal entities restated revenue due to errors picked up during the 2017/18 financial year.
Remuneration was increased with a net amount of R5 426 859 due to correction of errors in the
previous financial years on employee benefit obligation (pension fund) as calculated by the actuaries
and an adjustment on the accumulated leave accrual.
Depreciation and amortisation were increased with an amount of R42 512 329 (group = R42 519 230)
as a result of the purification of the fixed asset register as well as formula errors picked up in the
finance lease calculations.
Finance cost was decreased with an amount of R18 536 717 due to the correction of errors in the
calculation of leases.
General expense was decreased with an amount of R49 508 673 (group = R49 995 695) due to the
purification of the fixed asset register.
Contracted services was increased with an amount of R48 437 856 (group = R41 303 031) due to
invoices not accrued to the 2016/17 financial year with regard to waste and rudimentary services.
Contribution to debt impairment was increased with an amount of R527 443 241. This restatement
was necessary as an error was identified in the calculation method.
Loss on disposal of property, plant and equipment was increased with an amount of R8 604 769 due
to purification of the fixed asset register.
Statement of financial position:
Cash and cash equivalents were decreased with an amount of R9 248 336 due to corrections of
repayment in respect of bulk contributions.
Other receivables were increased with an amount of R5 077 225 as a result of late capturing of fines
relating to the 2016/17 financial year and R151 646 385 (group = R151 632 373) due to the change in
the method of the calculation of debt impairment.
Consumer receivables were increased with an amount of R642 403 908 due to a correction in the
provision for impairment.
Investment property increased with an amount of R60 594 060 due to retirement of properties that
were transferred to a third party, newly identified assets that were brought into the asset register, and
in general an attempt to correct entries in the asset register ie where land was accounted for as
improvements and vice versa.
Property, plant and equipment increased with an amount of R230 698 356 (group = R237 978 168)
mainly due to operational cost paid out of a capital project which were expensed, capitalisation of
assets acquired to the correct accounting period, retirement of assets accounted for in the correct
period, newly identified assets that were brought into the asset register, and in general an attempt to
correct entries in the asset register, ie removal of consumable items from the register.
Intangible assets were increased with an amount of R27 465 869 mainly due to two reasons, namely
newly identified assets that were brought into the asset register and capitalisation of assets acquired
to the correct accounting period.
Leased assets were increased with an amount of R41 096 690 due to formula errors picked up in the
calculation of the asset values and depreciation.
Heritage assets were increased with an amount of R1 200 due to newly identified heritage assets that
were brought into the asset register.
Long-term receivables were decreased with an amount of R10 538 424 due to correction of levies and
the adjustment on debt impairment due to change in methodology.
Trade payables were increased with an amount of R120 692 343 (group = R120 678 330) due to the
correction of the accrual of expenditure due to the late receipt of invoices.
Lease liability was increased with a net amount of R37 216 201 due to errors picked up in the
calculations.
VAT payable was decreased with an amount of R166 173 237due to the VAT audit and the VAT on
debt impairment..
Employee benefit obligation was decreased with an amount of R285 233 383 due to errors picked up
in the actuarial valuations for the 2016/17, 2015/16 and 2014/15 financial years.
Service concession arrangement liability was increased with an amount of R218 661 127 due to
errors picked up in the amortization calculations of Tshwane House in 2016/17 as well as the
accounting for Denneboom Station.
For the Municipality, the accumulated surplus was decreased with a net amount of R54 774 278
consisting of a decrease in the surplus of 2016/17 of R617 792 262, an increase in the surplus of
2015/16 of R452 257 623 and an increase in the surplus of 2014/15 and prior of R110 760 362.
For the group, the accumulated surplus was decreased with a net amount of R48 166 558 consisting
of a decrease in the surplus of 2016/17 of R611 184 5438, an increase in the surplus of 2015/16 of
R452 257 623 and an increase in the surplus 2014/15 of R110 760 362 as Housing Company
Tshwane restated 2016/17 with an amount of R7 286 710: TEDA with an amount of R3 139 and
Sandspruit restated 2016/17 with an amount of R682 130.
Restatement on disclosure notes:
Note 42 - Commitments
The total commitments of 2016/17 were restated from R26 811 797 065 to R4 052 421 931 (R22 759
365 134 decrease) due to a total recalculation and re-evaluation of the commitments during 2017/18.
This total restatement occurred on approved and contracted for capital expenditure (R2 550 121 108
decrease) and on approved but not yet contracted for capital expenditure (R119 797 824 increase).
Approved and contracted for operational commitments were restated (R14 840 614 612 decrease)
and approved but not yet contracted for (R5 488 427 239 decrease)
Note 44 - Employee benefit obligations
The post employee benefit disclosure of the Tshwane Pension Fund was restated with an amount of
R285 233 383 due to the fact that no all plan assets were included in the prior year valuations.
Note 59 - Distribution losses: Electricity
The value of the distribution losses was restated from R1 578 013 852 to R1 563 710 200 due to a
change in the tariff used to determine the rand value of the distribution loss. The previous tariff used
was 77,52 c/kWh but it should have been 76,82 c/kWh.
The supporting financial statements are available in note 46 of the 2018 Consolidated Annual Financial
Statements.
Johannesburg
04 February 2019
Debt Sponsor
Absa Bank Limited (acting through its Corporate and Investment Bank division)
Date: 04/02/2019 05:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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