CITY OF JOHANNESBURG METROPOLITAN MUNICIPALITY GROUP ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2014 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 Human 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 2014 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 BANKERS 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 2014 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 - 17 Notes to the Controlling Entity 22 - 41 Notes to the Group Annual Financial Statements 42 - 185 3 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2014 Index Abbreviations AARTO Administrative Adjudication of Road Traffice 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 MOE's Municipal Owned Entities 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 USDG Urban Settlements Development Grant VAT Value Added Taxation 4 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2014 Statement of Financial Position as at 30 June 2014 GROUP CJMM Figures in Rand thousand Note(s) 2014 2013 2014 2013 ASSETS Current Assets Inventories 3 310,373 355,782 113,073 119,852 Loans to Municipal Entities 4 - - 980,592 906,089 Other financial assets 5 186,361 38,851 186,361 38,851 Current tax receivable 9,354 9,187 - - Finance lease receivables 6 - - 80,984 34,485 Trade and other receivables 7 1,074,800 735,678 3,348,658 1,599,848 Receivables from non-exchange transactions 8 24,277 10,843 - - VAT receivable 9 438,872 151,448 429,077 143,845 Consumer debtors 10 4,961,568 3,959,691 649,517 401,461 Other financial assets at fair value 11 2,348,387 2,578,265 1,401,255 619,364 Cash and cash equivalents 12 5,327,242 5,400,846 5,144,077 5,193,519 14,681,234 13,240,591 12,333,594 9,057,314 Non-Current Assets Zoo animals 13 15,247 12,124 - - Investment property 14 1,262,350 1,290,713 1,261,859 1,290,199 Property, plant and equipment 15 47,130,847 42,083,163 28,339,489 26,304,564 Intangible assets 16 529,507 492,508 234,260 197,117 Heritage assets 17 592,066 591,801 590,473 590,208 Investments in Municipal Owned Entities 18 - - 407,442 181,985 Investment in joint venture 19 25,431 25,946 - - Investment in associates 20 18,108 15,847 - - Loans to Municipal Entities 4 - - 4,997,925 5,256,976 Other financial assets 5 104,332 284,317 104,332 284,317 Deferred tax 21 35,343 24,091 - - Finance lease receivables 6 - - 193,949 114,116 Consumer debtors 10 - 36,483 - 36,483 Other financial assets at fair value 11 2,245,539 2,436,147 1,832,005 1,972,106 51,958,770 47,293,140 37,961,734 36,228,071 Total Assets 66,640,004 60,533,731 50,295,328 45,285,385 6 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2014 Statement of Financial Position as at 30 June 2014 GROUP CJMM Figures in Rand thousand Note(s) 2014 2013 2014 2013 LIABILITIES Current Liabilities Loans and borrowings 23 987,342 625,164 970,551 624,610 Current tax payable 2,822 3,131 - - Finance lease obligations 24 90,611 83,752 76,595 82,884 Trade and other payables 25 10,376,135 8,743,052 10,311,298 8,598,755 VAT payable 9 427,036 528,221 - - Obligations arising from conditional grants and receipts 26 858,308 1,367,983 835,072 1,356,139 Provisions 27 73,387 63 25,537 - Deferred income 29 13,101 11,384 - - Financial liabilities at fair value 11&30 969,183 1,968,096 7,816 9,609 13,797,925 13,330,846 12,226,869 10,671,997 Non-Current Liabilities Project Funds payable 32 11,427 5,640 - - Loans and borrowings 23 12,420,643 11,399,462 12,419,473 11,381,478 Finance lease obligations 24 327,638 390,494 316,964 379,237 Employee benefit obligation 28 1,840,111 1,865,790 1,843,061 1,863,909 Obligations arising from conditional grants and receipts 26 46,404 42,186 - - Deferred tax 21 1,484,280 1,118,049 - - Provisions 27 589,686 548,890 20,000 20,000 Deferred income 29 78,259 88,462 48,879 51,804 Financial liabilities at fair value 11&30 459,830 531,061 46,297 67,020 Consumer deposits 31 498,510 465,108 25,320 26,402 17,756,788 16,455,142 14,719,994 13,789,850 Total Liabilities 31,554,713 29,785,988 26,946,863 24,461,847 Net Assets 35,085,291 30,747,743 23,348,465 20,823,538 NET ASSETS Reserves Hedging reserve (37,721) (54,928) (37,721) (54,928) Accumulated surplus 35,123,012 30,802,671 23,386,186 20,878,466 Total Net Assets 35,085,291 30,747,743 23,348,465 20,823,538 7 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2014 Statement of Financial Performance GROUP CJMM Figures in Rand thousand Note(s) 2014 2013 2014 2013 Revenue Revenue from exchange transactions Income from agency services 193,643 199,813 193,643 199,813 Interest received 585,861 583,919 1,150,706 1,087,639 Licences and permits 1,170 958 1,170 958 Other income 34 1,428,989 1,502,232 717,857 783,702 Rental facilities and equipment 201,807 197,779 82,749 84,985 Reversal of impairment 35 - - 190,927 - Sale of housing stock - 6,973 - 6,973 Service charges 36 20,355,557 19,312,527 255,674 1,022,146 Rendering of services 9,534 3,021 - - Total revenue from exchange transactions 22,776,561 21,807,222 2,592,726 3,186,216 Revenue from non-exchange transactions Taxation revenue Property rates 37 7,549,458 5,976,351 7,549,458 5,990,230 Transfer revenue Fines 190,184 320,336 190,184 320,336 Government grants and subsidies 38 7,765,829 6,808,732 7,680,513 6,724,543 Public contributions, Donated and contributed property, 14,923 2,961 14,923 2,961 plant and equipment Total revenue from non-exchange transactions 15,520,394 13,108,380 15,435,078 13,038,070 Total revenue 38,296,955 34,915,602 18,027,804 16,224,286 Expenditure Employee related costs 39 (7,892,502) (7,447,294) (4,468,941) (4,270,844) Remuneration of councillors 40 (120,639) (110,411) (120,639) (110,411) Provision 27 (25,537) - (25,537) - Depreciation and amortisation 41 (2,023,811) (2,058,628) (1,435,240) (1,430,115) Impairment losses 42 (3,650) (20,858) (58,579) (51,501) Finance costs (1,443,643) (1,459,552) (1,526,624) (1,494,858) Allowance for impairment of current receivables 43 (2,178,739) (2,879,653) (831,285) (1,227,499) Repairs and maintenance (1,002,455) (691,370) (286,705) (138,639) Bulk purchases 44 (11,878,941) (11,211,211) - - Contracted services 45 (2,073,164) (1,831,627) (1,314,406) (1,134,224) Grants and subsidies paid 46 (309,839) (153,955) (2,548,017) (2,776,211) Cost of housing sold - (9,856) - (9,856) General Expenses 47 (4,627,060) (3,709,250) (2,813,504) (2,575,500) Total expenditure (33,579,980) (31,583,665) (15,429,477) (15,219,658) Operating surplus 4,716,975 3,331,937 2,598,327 1,004,628 (Loss)/gain on disposal assets (523,500) (6,664) (522,911) 38,777 Fair value adjustments 48 159,383 162,584 111,973 162,699 Gain on biological assets and agricultural produce 2,922 - - - Share of surplus of associate 2,296 2,226 - - (358,899) 158,146 (410,938) 201,476 Surplus before taxation 4,358,076 3,490,083 2,187,389 1,206,104 Taxation