CITY OF JOHANNESBURG METROPOLITAN MUNICIPALITY GROUP ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2015 General Information MAYORAL COMMITTEE Executive Mayor Mpho Franklin "Parks" Tau (Chairperson) (1 JUNE 2011 - 30 JUNE 2016) Councillors (1 JUNE 2011 - 30 JUNE 2016) Constance Bapela (Speaker of Council) Geoff Makhubo (Finance) Ruby Mathang (Economic Development) Rosslyn Greeff (Development Planning and Urban Management) Christine Walters (Transportation) Matshidiso Mfikoe (Environment and Infrastructure Services) Nonceba Molwele (Health and Social Development) Mally Mokoena (Corporate and Shared Services) Sello Lemao (Public Safety) Chris Vondo (Community Development) Daniel Bovu (Housing) Prema Naidoo (Chief Whip) 1 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2015 General Information GRADING OF LOCAL AUTHORITY The City of Johannesburg Metropolitan Municipality is a Grade Six Local Authority in terms of Item IV of Government Notice R999 of 2 October 2001, published in terms of the Remuneration of Public Office Bearers Act, 1998. CITY MANAGER Trevor Fowler CHIEF FINANCIAL OFFICER Reggie Boqo REGISTERED OFFICE Metropolitan Centre, Loveday Street, Johannesburg 2001 Telephone: +27 (0)11 407 - 6111 Facsimile: +27 (0)11 339 - 5704 POSTAL ADDRESS P O Box 1049 Johannesburg 2000 PRIMARY BANKER Standard Bank AUDITORS The Office of the Auditor-General : Gauteng Registered Auditors 61 Central Street Houghton 2198 PO Box 91081 Auckland Park 2006 2 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2015 Index The reports and statements set out below comprise the Group Annual Financial Statements: INDEX PAGE Municipal Manager's approval of the Group Annual Financial Statements 5 Statement of Financial Position 6 - 7 Statement of Financial Performance 8 Statement of Changes in Net Assets 9 - 10 Cash Flow Statement 11 Statement of Comparison of Budget and Actual Amounts 12 - 14 Appropriation Statement 15 - 19 Accounting Policies 20 - 42 Notes to the Group Annual Financial Statements 43 - 170 3 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2015 Index ABBREVIATIONS AARTO Administrative Adjudication of Road Traffic Offences AUC Assets Under Construction BESA Bond Exchange South Africa CJMM City of Johannesburg Metropolitan Municipality CMP Corporate Media Platforms COID Compensation for Occupational Injuries and Diseases CRR Capital Replacement Reserve DBSA Development Bank of Southern Africa DMTN Domestic Medium Term Note EPWP Expanded Public Works Program GRAP Generally Recognised Accounting Practice IAS International Accounting Standards IMFO Institute of Municipal Finance Officers IPSAS International Public Sector Accounting Standards JSE Johannesburg Stock Exchange MEC Member of the Executive Council ME's Municipal Entities MFMA Municipal Finance Management Act USDG Urban Settlement Development Grant NDR Non-distributable Reserve PAYE Pay As You Earn PPE Property, plant and equipment RMB Rand Merchant Bank SARS South Africa Revenue Services SCA Supreme Court of Appeal SPTN Single Public Transport Network STD Standard Bank TCTA Trans-Caledon Tunnel Authority UIF Unemployment Insurance Fund IFRS International Financial Reporting Standards VAT Value Added Taxation 4 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2015 Municipal Manager's approval of the Group Annual Financial Statements I am responsible for the preparation of the Group Annual Financial Statements in terms of Section 126(1) of the Municipal Finance Management Act and which I have signed on behalf of the Municipality. The Group Annual Financial Statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. Accounting Officer City Manager 5 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2015 Statement of Financial Position as at 30 June 2015 GROUP CJMM Figures in Rand thousand Note(s) 2015 2014 2015 2014 Restated Restated ASSETS Current Assets Inventories 3 315 359 302 912 59 326 113 073 Loans to Municipal Entities 4 - - 1 009 887 980 592 Other financial assets 5 - 186 361 - 186 361 Current tax receivable 15 556 14 667 - - Finance lease receivables 6 - - 81 179 80 984 Trade and other receivables 7 1 292 972 1 093 898 4 033 761 3 404 349 Receivables from non-exchange transactions 8 137 798 190 517 112 487 171 787 VAT receivable 9 346 725 470 777 284 336 428 071 Consumer debtors 10 4 951 238 4 866 574 716 651 687 147 Financial assets at fair value - Sinking fund 11 4 190 880 2 483 151 4 190 880 2 483 151 Cash and cash equivalents 12 4 879 554 5 313 656 4 179 988 5 144 077 16 130 082 14 922 513 14 668 495 13 679 592 Non-Current Assets Zoo animals 13 23 741 15 246 - - Investment property 14 1 015 414 1 013 179 1 014 946 1 012 688 Property, plant and equipment 15 55 010 183 47 399 971 33 233 412 28 645 466 Intangible assets 16 882 912 622 068 500 913 331 031 Heritage assets 17 583 154 578 173 581 561 576 580 Investments in Municipal Owned Entities 18 - - 465 046 407 441 Investment in joint venture 19 49 769 43 820 - - Investment in associates 20 20 046 18 108 - - Loans to Municipal Entities 4 - - 5 648 642 4 997 925 Other financial assets 5 63 375 65 849 63 375 65 849 Finance lease receivables 6 - - 256 058 193 949 Financial assets at fair value - Sinking fund 11 4 588 635 2 245 558 4 588 635 2 245 558 62 237 229 52 001 972 46 352 588 38 476 487 Total Assets 78 367 311 66 924 485 61 021 083 52 156 079 6 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2015 Statement of Financial Position as at 30 June 2015 GROUP CJMM Figures in Rand thousand Note(s) 2015 2014 2015 2014 Restated Restated LIABILITIES Current Liabilities Loans and borrowings 23 1 574 094 971 179 1 573 418 970 551 Current tax payable - 2 822 - - Finance lease obligations 24 127 470 87 253 102 830 76 193 Financial liabilities at fair value - Sinking fund 30 137 930 1 081 896 137 930 1 081 896 Trade and other payables 25 12 417 170 10 331 302 11 619 272 10 294 890 VAT payable 9 352 342 396 036 - - Obligations arising from conditional grants and receipts 26 253 054 870 173 210 894 814 381 Provisions 27 29 163 94 226 - 25 537 Deferred income 29 8 966 10 909 - - Other financial liabilities at fair value - Swap 31 6 856 7 816 6 856 7 816 14 907 045 13 853 612 13 651 200 13 271 264 Non-Current Liabilities Liabilities from municipal entities 33 - - 411 802 411 113 Loans and borrowings 23 14 109 897 12 398 911 14 093 244 12 381 580 Finance lease obligations 24 242 284 281 489 237 899 267 866 Financial liabilities at fair value - Sinking fund 30 4 881 893 413 553 4 881 893 413 553 Employee benefits obligations 28 1 764 455 1 842 379 1 404 610 1 431 948 Obligations arising from conditional grants and receipts 26 41 206 39 440 - - Deferred tax 21 1 669 783 1 450 598 - - Provisions 27 659 630 665 770 99 987 96 084 Deferred income 29 45 637 53 581 45 637 48 879 Other financial liabilities at fair value - Swap 31 38 361 46 297 38 361 46 297 Consumer deposits 32 722 678 506 862 17 288 25 320 24 175 824 17 698 880 21 230 721 15 122 640 Total Liabilities 39 082 869 31 552 492 34 881 921 28 393 904 Net Assets 39 284 442 35 371 993 26 139 162 23 762 175 NET ASSETS Reserves Hedging reserve (19 570) (37 721) (19 570) (37 721) Accumulated surplus 39 304 012 35 409 714 26 158 732 23 799 896 Total Net Assets 39 284 442 35 371 993 26 139 162 23 762 175 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2015 Statement of Financial Performance GROUP CJMM Figures in Rand thousand Note(s) 2015 2014 2015 2014 Restated Restated Revenue Revenue from exchange transactions Income from agency services 204 111 193 643 204 111 193 643 Interest received 595 753 527 708 1 077 784 1 116 503 Licences and permits 1 121 1 170 1 121 1 170 Other income 35 1 401 211 1 328 634 822 896 665 994 Rental facilities and equipment 226 735 208 237 96 195 94 647 Service charges 37 21 772 609 20 115 991 380 840 315 255 Total revenue from exchange transactions 24 201 540 22 375 383 2 582 947 2 387 212 Revenue from non-exchange transactions Taxation revenue Property rates 38 7 622 758 7 215 938 7 622 800 7 320 954 Transfer revenue Fines 585 951 1 008 530 585 951 1 008 530 Government grants and subsidies 39 8 914 005 7 789 582 8 815 763 7 701 203 Public contributions, donated and contributed property, 323 563 36 981 322 379 36 981 plant and equipment Total revenue from non-exchange transactions 17 446 277 16 051 031 17 346 893 16 067 668 Total revenue 41 647 817 38 426 414 19 929 840 18 454 880 Expenditure Employee related costs 40 (8 582 979) (7 942 566) (4 883 914) (4 546 470) Remuneration of councillors 41 (127 499) (120 639) (127 499) (120 639) Depreciation and amortisation 42 (2 410 979) (2 115 700) (1 667 941) (1 487 480) Impairment losses 43 (2 382) (8 647) (142 664) (58 579) Finance costs (1 580 486) (1 440 800) (1 647 786) (1 562 106) Allowance for impairment of current receivables 44 (3 819 051) (2 977 382) (1 323 689) (1 513 857) Repairs and maintenance (1 024 782) (1 011 046) (312 122) (286 682) Bulk purchases 45 (12 562 745) (11 792 735) - - Contracted services 46 (2 601 371) (2 051 565) (1 877 017) (1 298 187) Grants and subsidies paid 47 (569 071) (309 839) (3 083 614) (2 548 017) General expenses 48 (4 547 881) (4 051 215) (2 753 394) (2 750 036) Total expenditure (37 829 226) (33 822 134) (17 819 640) (16 172 053) Operating surplus 3 818 591 4 604 280 2 110 200 2 282 827 (Loss)/gain on disposal assets (22 065) (615 208) (11 129) (610 070) Reversal of impairment - - - 190 927 Fair value adjustments 49 325 124 157 113 259 765 111 973 Gain as a result of donated animals and new births 5 901 2 922 - - Income from equity accounted investments 8 436 11 032 - - 317 396 (444 141) 248 636 (307 170) Surplus before taxation 4 135 987 4 160 139 2 358 836 1 975 657 Taxation 241 689 391 248 - - Surplus for the year 3 894 298 3 768 891 2 358 836 1 975 657 8 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2015 Statement of Changes in Net Assets Note(s) Cashflow Accumulated Total equity hedge surplus Figures in Rand thousand reserve GROUP Balance at 01 July 2013 (54 928)31 208 93231 154 004 Changes in net assets Net income recognised directly in net assets 17 207 6 934 24 141 Land Recognition - 424 957 424 957 Net revenue (expenditure) recognised directly in equity 17 207 431 891 449 098 Surplus for the year - 3 768 891 3 768 891 Total recognised revenue and expenditure for the year 17 207 4 200 782 4 217 989 Total changes 17 207 4 200 782 4 217 989 Opening balance as previously reported (37 721)35 676 71035 638 989 Adjustments Prior period restatement 53 - (266 996) (266 996) Balance at 01 July 2014 as restated (37 721)35 409 71435 371 993 Changes in net assets Net income recognised directly in net assets 18 151 - 18 151 Net revenue (expenditure) recognised directly in equity 18 151 - 18 151 Surplus for the year - 3 894 298 3 894 298 Total recognised revenue and expenditure for the year 18 151 3 894 298 3 912 449 Total changes 18 151 3 894 298 3 912 449 Balance at 30 June 2015 (19 570)39 304 01239 284 442 9