MUNICIPALITY OF HENTIES BAY FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2000. m:\report\1999-00\municipalities\24_hentiesbay_1999-00.

MUNICIPALITY OF HENTIES BAY FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2000 m:\report\1999-00\municipalities\24_hentiesbay_1999-00.doc 03/10/05

TO THE HONOURABLAE SPEAKER OF THE NATIONAL ASSEMBLY I have the honour to submit herewith my report on the accounts of the Town Council of Henties Bay for the financial year ended 30 June 2000 in terms of Article 127(2) of the Namibian Constitution. My report is transmitted to the Honourable Minister of Finance Act, 1991, (Act 31 of 1991) to be laid upon the Table of the National Assembly in terms of Section 27(4) of the Act. WINDHOEK, August 2000 DR FANUEL TJINGAETE AUDITOR GENERAL

REPORT OF THE AUDITOR GENERAL ON THE ACCOUNTS OF THE MUNICIPALITY OF HENTIES BAY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2000 1. INTRODUCTION The accounts of the Municipality of Henties Bay for the year ended 30 June 2000 are being reported on the accordance with the provisions set out in the State Finance Act, 1991 (Act 31 of 1991) and the Local Authorities Act, 1992 (Act 23 of 1992). I appointed the firm N C TROMP & CO of Windhoek in terms of Section 26(2) of the State Finance Act, 1991, to audit the accounts of the Municipality on my behalf and under my supervision. Figures in the report are rounded off to the nearest Namibian dollar. 2. FINANCIAL STATEMENTS The Council's financial statements were submitted to me by the Accounting Officer in compliance with Section 87 (1) of the Local Authorities Act, 1992. The audited financial statements are in agreement with the general ledger and are filed in my Office. The abridged balance sheet per Annexure A, is a true reflection of the original. The following annexures are also attached to this report: Annexure B: Annexure C: Annexure D: Abridged income statement Cash flow statement Notes to the financial statements 3. SCOPE OF THE AUDIT The Accounting Officer of the Council is responsible for the preparation of the financial statements and for ensuring the regularity of the financial transactions. It is my responsibility to form an independent opinion based on the audit, on those statements and on the regularity of the financial transactions included in them and to report my opinion to the National Assembly. The audit as carried out by the said firm, included: (a) (b) ( c ) examination on a test basis of the evidence relevant to the amounts, disclosure and regularity of financial transactions included in the financial statements, assessment of the significant estimates and judgements made by the Accounting Officer of the Municipality in preparation of the financial statements and of whether the accounting policies are appropriate to the Council's circumstances, consistently applied and adequately disclosed, and evaluation of the overall adequacy of the presentation of information in the financial statements.

The audit was planned and performed so as to obtain all the information and explanations considered necessary to provide sufficient evidence to give reasonable assurance that : the financial statements are free from material misstatement, whether caused by error, fraud or other irregularity; in all material respect, the expenditure and income have been applied to the purposes intended; and the financial transactions conform to the authorities which govern them. 4. AUDIT OBSERVATIONS AND COMMENTS It was previously reported that the Municipality's accounting systems and controls in respect of consumer debtors were not functioning efficiently. There are still problems regarding the payments in advance but the necessary software was acquired during the year to address the problem. An amount of N$ 90 155.75 had to be adjusted against the previous year's surplus to balance the debtors control. 5. ACKNOWLEDGEMENT I thank the staff of the Council for the assistance and co-operation given to my representatives during the audit. 6. FINANCIAL RESULTS The results of the operations of, and transactions on the Revenue Account for the year were as follows: Surplus/ Revenue Expenditure (deficit) Balance Accumulated surplus: 01/07/1999 1,288,639 General accounts Non-profitable services 3,898,662 6,093,704 (2,195,042) Self-supporting services 663,188 832,860 (169,672) Trade accounts Electricity 4,125,668 2,953,487 1,172,181 Water 1,455,986 1,246,885 209,101 10,143,504 11,126,936 (983,432) (Loss) for the year (983,432) Adjustments and utilisations detailed in note 11 of the financial statements 105,040 Accumulated surplus: 30/06/2000 410,247 7. CURRENT BANK ACCOUNT The favourable cash-book balance at 30 June 2000 amounted to N$ 37 019 (1999 : N$ 489 799 -

unfavourable). Outstanding cheques at 30 June 2000 amounted to N$ 559 803 (1999 : N$ 459 034). 8. INVESTMENTS AND INTEREST PROCEEDS On 30 June 2000 there was N$ 3 905 531 (1999: N$ 6 746 549) invested at approved institutions as follows: Call account 4,000,000 Money markets 3,081,027 2,000,000 Swabou: Fixed deposits 746,549 3,081,027 6,746,549 Investment Interest Investment Interest Fixed Property Fund 725,749 3,481,454 - Betterment Fund 865,627 737,649 - Reserve Fund 634,550 536,440 - Renewals Fund 956,767 956,767 - Capital Development Fund 747,838 1,034,239 - Revenue Fund - 722,002-1,369,406 3,930,531 722,002 6,746,549 1,369,406 9. AVAILABLE FUNDS AND ACCOUNTS The position of the Fund Accounts at the end of the year is shown in Note 2 of Annexure D. 10. TRADE ACCOUNTS 10.1 Operating results The results for the financial year under review and the previous year were as follows: Electricity Water 1999/2000 1998/1999 1999/2000 1998/1999 Sales 3,960,280 3,543,977 1,421,716 1,353,986 Cost of sales 2,187,403 1,975,264 735,777 837,835 Gross income 1,772,877 1,568,713 685,939 516,151 Net expenditure (600,696) (746,219) (476,838) (406,308) Net income 1,172,181 822,494 209,101 109,843 Gross profit on cost of sales 81.0% 79,4% 93.2% 61,6% Net profit on cost of sales 53.6% 41,6% 28.4% 13,1% Net profit on total net expenditure 42.0% 30,2% 17.2% 8,8% 13. SUSPENSE ACCOUNTS

All suspense accounts are cleared on a timely basis. 14. IRREGULARITIES AND LOSSES No such items were revealed.

15. CAPITAL PROJECTS Expenditure on additions and improvements amounted to N$ 3 555 792 (1999: N$ 1 525 236), and were as follows: Infrastructure 1,011,864 1,409,710 Plant & equipment - 81,863 Land & buildings 1,870,872 17,454 Motor vehicles 487,740 - Office equipment 185,316 16,209 Expenditure was financed as follows: 3,555,792 1,525,236 Revenue Account 257,518 16,141 External loans - - Internal loans 2,998,274 1,482,695 General Capital 300,000 26,400 3,555,792 1,525,236 16. BURSARIES Number of busaries Amount paid out Summary of conditions of agreement 1 N$ 2 540 Granted to a staff member for study of B.Com degree at UNISA 17. CONTRIBUTIONS, GRANTS AND FINANCIAL AID Nature of contribution/grant Value Beneficiary Approval N$ Donation 1,500 Private School Budgeted Donation 1,500 Henties Bay Sports Club Budgeted Donation 1,500 International Jukskei Budgeted Donation 3,000 Henties Bay Angling Club Budgeted 7,500 18. COMPENSATION PAYMENTS No compensation payments were made during the year. 19. VISITS TO FOREIGN COUNTRIES No visits to foreign countries were undertaken during the year.

20. CLAIMS AGAINST THE LOCAL AUTHORITY No claims were made against the Municipality during the current year. 21. GIFTS AND DONATIONS BY THE LOCAL AUTHORITY There were not any gifts or donations other than those mentioned at paragraph 17 during the year. 22. TRANSFER OF PROPERTY TO/FROM THE GOVERNMENT No property was transferred to or from the Government. 23. DEBTORS/CREDITORS 23.1 Debtors on 30 June comprise the following: Services to consumers 2,581,356 2,186,947 Subsidies receivable 2,030,887 1,517,899 Interest on investments 83,415 129,624 General and other 98,845 156,067 4,794,503 3,990,537 Less: Provision for doubtful debts (430,214) (525,287) 4,364,289 3,465,250 Analysis of services and general debtors: Average monthly levy 693,642 561,028 Debtors 2,581,356 2,186,947 Average credit terms in days 112 117 days Consumer deposits 215,496 171,760 Percentage of deposits in relation to debtors 8.35% 7.85% The provision for doubtful debts is adequate.

23.2 Creditors on 30 June comprise the following: Trade creditors 22,134 50,736 Sundry 59,874 15,407 Provision for audit fees 108,166 81,588 Provision for leave 185,213 190,618 Current portion of long-term liabilities 266,218 171,214 641,605 509,563 Creditors are reconciled and paid on a regular basis. 24. ASSESSMENT RATES Net proceeds from assessment rates were N$ 2 083 249 (1999: N$ 1 691 777). The tariffs for private and business properties are N$ 0,0306 (1999: N$ 0,0256) per dollar per year on the site valuations plus N$ 0,0045 (1999: N$ 0,0035) per dollar per year on the valuation of improvements. 25. LOANS 25.1 External loans Capital accounts 634,974 899,188 The balances shown in the main ledger agree with actuarial tables. Redemption payments are up to date. Loan assets were capitalized and no loan assets have been disposed of before the loan was redeemed. Loan monies were used for the purposes they were obtained for. 25.2 Internal loans Internal loans 7,773,431 6,666,694 The necessary approval was obtained for all internal loans advanced during the year. Loan assets were correctly capitalised, interest calculations were done correctly and the necessary redemption journals were passed.

26. SALE OF ERVEN During the year 24 erven were sold for N$ 413 345 (1999: N$ 388 884). The amounts were allocated to the Fixed Property Fund. 27. PROPERTY SOLD ON AN INSTALMENT BASIS Balance 01/07/2000 393,572 781,121 Adjustments (9,909) (262,657) Sales during the year 413,345 358,819 Instalments received during the year (413,517) (483,711) 383,491 393,572 28. TARIFF ADJUSTMENTS The tariff adjustments were all applied in accordance with the relevant Official Government Notices and the Council resolutions. 29. APPROVALS The necessary approvals were obtained. 30. STOCK AND EQUIPMENT 30.1 Motor vehicles Passenger vehicles Heavy vehicles LDV's and Combi's (Lorries & busses) Number Value Number Value On hand 01/07/1999 6 141,376 10 1,430,893 Acquisitions 3 177,026 1 310,714 Subtotal 9 318,402 11 1,741,607 Depreciation (27,811) (50,403) On hand 30/06/2000 9 290,591 11 1,691,204 30.2 Stock During the year the Municipality implemented a stock control system. All consumables and stocks are now listed and controlled by the system.

31. SPECIAL INVESTIGATIONS There were no special investigations carried out during the year under review. 32. GENERAL I am satisfied that the accounting and internal controls applied by the Council are sufficient. 33. FORMAL AND INFORMAL QUERIES 33.1 Formal queries are embodied in this report. 33.2 Minor informal queries were addressed to the Town Clerk and dealt with locally. 34. AUDIT OPINION The accounts of the Municipality of Henties Bay for the financial year ended 30 June 2000, summarized in Annexures A to D, were audited by me in terms of the provisions of Section 85 of the Local Authorities Act, 1992, read with Section 25(1)(b) of the State Finance Act, 1991 (Act 31 of 1991). I certify that, in my opinion, the financial statements fairly present the financial position of the Municipality at 30 June 2000 and the results of its operations and cash flow for the year then ended. WINDHOEK, February 2001 DR F. TJINGAETE AUDITOR GENERAL

MUNICIPALITY OF HENTIES BAY ANNEXURE A BALANCE SHEET AT 30 JUNE 2000 Notes CAPITAL EMPLOYED Funds and accounts 2 28,834,920 26,515,693 Long-term liabilities 3 584,252 899,734 29,419,172 27,415,427 EMPLOYMENT OF CAPITAL Fixed assets 4 21,210,843 17,808,318 Investments 5 3,930,531 6,746,549 Loans 6 383,491 393,572 Net current assets/(liabilities) 3,894,307 2,466,988 Current assets 4,535,912 3,466,350 Accounts receivable 7 4,364,289 3,465,250 Stock on hand 133,504 - Bank and cash 8 38,119 1,100 Current liabilities 641,605 999,362 Accounts payable 9 641,605 509,563 Bank overdraft - 489,799 29,419,172 27,415,427 MUNICIPALITY OF HENTIES BAY ANNEXURE B

INCOME STATEMENT FOR THE FINANCIAL YEAR ENDING 30 JUNE 2000 Notes Income 11,602,918 9,001,934 Expenditure 11,126,936 9,380,971 Net operating surplus/(loss) 475,982 (379,037) Interest on investments 722,002 1,369,406 Net income for the year 1,197,984 990,369 Adjustments 11 105,041 (14,004) Transfer (to)/from Funds 10 (2,181,417) (1,384,002) Income for the year (878,392) (407,637) Accumulated income/(deficit) - at the beginning of the year 1,288,639 1,696,276 - at the end of the year 410,247 1,288,639

MUNICIPALITY OF HENTIES BAY ANNEXURE C CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDING 30 JUNE 2000 Notes Cash generated by operations A 1,750,492 96,138 Operations effect on working capital B (900,501) (1,200,591) Cash generated from operating activities 849,991 (1,104,453) Other cash flows 732,083 1,756,955 Interest earned 722,002 1,369,406 Loans, decrease/(increase) 10,081 387,549 Cash available for investment 1,582,074 652,502 Investment in future operations (3,871,274) (1,740,681) Fixed assets purchased (3,555,792) (1,525,236) (Decrease)/increase in long-term liabilities (315,482) (215,445) (2,289,200) (1,088,179) Cash effect of financing activities: Cash and bank (increase)/decrease (526,818) 722,048 Investments - decrease 2,816,018 366,131 2,289,200 1,088,179

NOTES TO THE CASH FLOW STATEMENT A. Cash generated by operations: Net operating income/(loss) 475,982 (379,037) Adjustments 105,041 (14,004) Depreciation 153,267 422,001 Loans redeemed 611,950 446,639 Assets financed ex revenue & general capital 404,252 (379,461) 1,750,492 96,138 B. Decrease in working capital: Accounts receivable (899,039) (927,668) Stock on hand (133,504) - Accounts payable 132,042 (272,923) (900,501) (1,200,591)

MUNICIPALITY OF HENTIES BAY ANNEXURE D NOTES TO THE FINANCIAL STATEMENTS AT 30 JUNE 2000 1. ACCOUNTING POLICIES The financial statements set out in Annexures A and B are prepared on the historical cost basis and incorporate the following principal accounting policies, which are consistent with those applied in the previous year: 1.1 Fixed assets Fixed assets are stated at cost or at valuation where assets have been acquired by grant or donation, less depreciation written off over the expected useful lives as determined by the Council from time to time. Fixed assets acquired with loan funds are not depreciated untill the loan is repaid unless the expected lifetime of the asset is less than the repayment period of the loan in which case depreciation is calculated on the shortfall. 1.2 Funds Revenue account All moneys received by and accrued to and expenses paid, for allocations to other Funds, are reflected in this account, and are kept in compliance with Section 86(1)(b) of the Act. Reserve Fund The purpose of this Fund is to provide for replacement of movable assets. Capital Development Fund The purpose of the Fund is to finance electrical reticulation network projects. Revenue is derived from interest on investments, internal loans and contributions from revenue. Betterment Fund The purpose of this Fund is to provide for future improvement of Council's assets. Fixed Property Fund Proceeds on the sale of developed property accumulate in this Fund, which is used to develop properties. Renewal Fund Its purpose is to provide for replacement of assets and for additional depreciation on assets which abnormally decreased in value. Income is obtained from the Revenue Account.

MUNICIPALITY OF HENTIES BAY ANNEXURE D NOTES TO THE FINANCIAL STATEMENTS AT 30 JUNE 2000 (continued) 2. OWN FUNDS AND RESERVES 2.1 Unappropriated surpluses/(deficits) Accumulated Fund : Revenue section 410,247 1,288,639 2.2 Internal Funds 410,247 1,288,639 Betterment Fund 1,962,211 1,989,616 Capital Development Fund 2,534,239 1,034,239 Renewal Fund 956,767 956,767 Reserve Fund 860,601 834,395 Fixed Property Fund 11,094,818 10,412,202 2.3 Capital section 17,408,636 15,227,219 Loans redeemed 2,316,925 1,704,975 Contribution from General Capital 7,151,741 6,885,506 Contributions from Revenue 1,547,371 1,409,354 11,016,037 9,999,835 28,834,920 26,515,693 3. LONG-TERM LIABILITIES 3.1 Loans 634,974 899,188 The Government of Namibia 76,608 78,463 Suspensive Sale Agreements 558,366 820,725

3.2 Deposits 215,496 171,760 3.3 Less: Current portion included under current liabilities (266,218) (171,214) 584,252 899,734

MUNICIPALITY OF HENTIES BAY ANNEXURE D NOTES TO THE FINANCIAL STATEMENTS AT 30 JUNE 2000 (continued) 4. FIXED ASSETS Infrastructure 14,306,870 13,299,521 Land and buildings 4,168,373 2,299,200 Vehicles 1,981,795 1,572,269 Plant and equipment 306,811 362,977 Office equipment 446,994 274,351 5. INVESTMENTS 21,210,843 17,808,318 Fixed deposits and money on call 3,930,531 6,746,549 6. LOANS Loans given against first mortgage bonds over fixed property 383,491 393,572 7. ACCOUNTS RECEIVABLE Debtors 2,581,356 2,110,855 Less: Provision for doubtful debts (430,214) (525,287) 2,151,142 1,585,568 Subsidies 2,030,887 1,517,899 Interest receivable 83,415 129,624 General 98,845 232,159 8. BANK AND CASH 4,364,289 3,465,250 Current bank account 37,019 - Petty cash 1,100 1,100 38,119 1,100

MUNICIPALITY OF HENTIES BAY ANNEXURE D NOTES TO THE FINANCIAL STATEMENTS AT 30 JUNE 2000 (continued) 9. ACCOUNTS PAYABLE Trade creditors 22,134 50,736 Provision for audit fees 108,166 81,588 Provision for leave 185,213 190,618 Current portion of long-term liabilities 266,218 171,214 Other 59,874 15,407 641,605 509,563 10. TRANSFERS FROM/(TO) FUNDS The following amounts were transferred from/(to) Funds: Betterment Fund 27,404 (29,385) Capital Development Fund (1,500,000) (450,000) Reserve Fund (26,206) (32,190) Fixed Property Fund (682,615) (872,427) (2,181,417) (1,384,002) 11. ADJUSTMENTS AND UTILIZATIONS - REVENUE Previous year adjustments 90,702 - Redemption external loans previous year not provided - 27,235 Bad debts written off 95,073 - Adjustment of debtors/provisions (54,577) (12,237) Other (26,157) (994) 105,041 14,004