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CITY OF JOHANNESBURG METROPOLITAN MUNICIPALITY GROUP ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2019 General Information MAYORAL COMMITTEE Executive Mayor Herman Mashaba (Resigned-30 November 2019) Geoff Makhubo Councillors Vasco da Gama (Speaker of Council) Richard Ngobeni (Finance) Leah Ruth Knott (Economic Development) Reuben Mlungisi Masango (Development Planning and Urban Management) Nonhlanhla Helen Makhuba (Transport) Nico De Jager (Environment and Infrastructure Services) Dr Mpho Phalatse (Health and Social Development) Dr Valencia Ntombi Khumalo (Corporate and Shared Services) Michael Sun (Public Safety) Nonhlanhla Sifumba (Community Development) Meshack Van Wyk (Housing) Dr Kevin Wax (Chief Whip) Alex Christians (Chair of Chairpersons) 1 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2019 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 Dr Ndivhoniswani Lukhwareni CHIEF FINANCIAL OFFICER Manenzhe Manenzhe REGISTERED OFFICE Metropolitan Centre, 158 Loveday Street Braamfontein 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 39 Scott Street Braamley 2090 PO Box 91081 Auckland Park 2006 2 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2019 Index The reports and statements set out below comprise the Group Annual Financial Statements: INDEX PAGE City Manager's approval of the Group Annual Financial Statements 6 Statement of Financial Position 7 - 8 Statement of Financial Performance 9 Statement of Changes in Net Assets 10 - 11 Cash Flow Statement 12 Statement of Comparison of Budget and Actual Amounts 13 - 16 Appropriation Statement 17 - 20 Accounting Policies 21 - 41 Notes to the Group Annual Financial Statements 42 - 138 3 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2019 Index ABBREVIATIONS AARTO Administrative Adjudication of Road Traffic Offences AUC Assets Under Construction CJMM City of Johannesburg Metropolitan Municipality (CORE) COID Compensation for Occupational Injuries and Diseases CRR Capital Replacement Reserve DBSA Development Bank of Southern Africa EPWP Expanded Public Works Program FRA Forward Rate Agreement FRN Floating Rate Note GRAP Generally Recognised Accounting Practice IAS International Accounting Standards IFRS International Financial Reporting Standards IPSAS International Public Sector Accounting Standards IRS Interest Rate Swap JDA Johannesburg Development Agency JIBAR Johannesburg Interbank Average Rate JRA Johannesburg Roads Agency JSE Johannesburg Stock Exchange MBUS Metrobus ME's Municipal Entities MFMA Municipal Finance Management Act MTC Metropolitan Trading Company NCD Negotiable Certificate of Deposit NPV Net Present Value PAYE Pay As You Earn PN Promissory Note PPE Property, Plant and Equipment RMB Rand Merchant Bank SANAS South African National Accreditation System SARS South Africa Revenue Services SCM Supply Chain Management SOC State Owned Company 4 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2019 Index SPTN Single Public Transport Network STD Standard Bank TCTA Trans-Caledon Tunnel Authority UIF Unemployment Insurance Fund USDG Urban Settlement Development Grant VAT Value Added Taxation 5 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2019 City 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 Dr. Ndivhoniswani Lukhwareni Date 6 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2019 Statement of Financial Position as at 30 June 2019 GROUP CJMM Figures in Rand thousand Note(s) 2019 2018 2019 2018 Restated* Restated* Assets Current Assets Inventories 3 265 436 303 474 78 504 78 040 Loans to Municipal entities 4 - - 1 087 460 841 658 Other financial assets 5 33 310 16 101 33 310 16 101 Current tax receivable 14 152 24 395 - - Finance lease receivables 6 - - 141 756 105 200 Receivables from exchange transactions 7 1 426 287 1 236 300 8 866 788 6 797 785 Receivables from non-exchange transactions 8 723 386 401 259 696 532 352 529 VAT receivable 9 402 725 592 881 213 169 420 702 Consumer debtors 10 6 303 388 5 615 024 990 161 932 524 Financial assets at fair value - Sinking fund 11 1 292 512 784 006 1 292 512 784 006 Cash and cash equivalents 12 5 339 214 2 239 860 4 673 485 1 821 807 15 800 410 11 213 300 18 073 677 12 150 352 Non-Current Assets Zoo animals 13 25 822 26 860 - - Investment property 14 998 481 1 006 275 993 350 1 000 144 Property, plant and equipment 15 73 377 912 69 060 662 44 799 519 41 900 071 Intangible assets 16 1 563 366 1 353 458 1 067 351 767 487 Heritage assets 17 597 893 597 783 596 185 596 190 Investments in Municipal Entities 18 - - 643 484 628 500 Investment in Joint Ventures 19 25 447 24 044 - - Investment in Associate 20 - 16 240 - - Loans to Municipal entities 4 - - 6 069 088 6 387 712 Other financial assets 5 60 596 68 454 60 596 68 454 Deferred tax 21 1 595 365 1 309 288 - - Finance lease receivables 6 - - 93 801 132 362 Financial assets at fair value - Sinking fund 11 1 384 772 2 052 797 1 384 772 2 052 797 79 629 654 75 515 861 55 708 146 53 533 717 Total Assets 95 430 064 86 729 161 73 781 823 65 684 069 7 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2019 Statement of Financial Position as at 30 June 2019 GROUP CJMM Figures in Rand thousand Note(s) 2019 2018 2019 2018 Restated* Restated* Liabilities Current Liabilities Loans and borrowings 22 948 987 761 803 948 039 760 928 Current tax payable 181 028 289 543 - - Finance lease obligations 23 67 392 34 522 59 991 38 274 Financial liabilities at fair value - Sinking fund 29 - 156 219 - 156 219 Payables from exchange transactions 24 12 538 177 12 470 559 12 797 645 11 025 362 VAT payable 9 287 954 444 564 - - Unspent conditional grants and receipts 25 348 355 232 492 314 983 201 572 Provisions 26 322 703 299 256 - - Deferred income 28 5 410 1 459 - - Consumer deposits 31 16 958 15 445 - - 14 716 964 14 705 862 14 120 658 12 182 355 Non-Current Liabilities Loans from Municipal entities 32 - - 438 146 426 338 Loans and borrowings 22 21 097 960 19 144 526 21 084 678 19 130 295 Finance lease obligations 23 115 982 129 451 109 889 113 039 Financial liabilities at fair value - Sinking fund 29 - 450 398 - 450 398 Employee benefits obligations 27 1 303 578 1 377 240 1 021 491 1 076 024 Unspent conditional grants and receipts 25 64 360 32 684 - - Deferred tax 21 3 289 319 3 090 970 - - Provisions 26 876 849 760 311 135 061 123 695 Deferred income 28 78 147 64 332 78 147 64 332 Consumer deposits 31 986 778 946 817 17 240 16 748 27 812 973 25 996 729 22 884 652 21 400 869 Total Liabilities 42 529 937 40 702 591 37 005 310 33 583 224 Net Assets 52 900 127 46 026 570 36 776 513 32 100 845 Accumulated surplus 52 900 127 46 026 570 36 776 013 32 100 859 8 City of Johannesburg Metropolitan Municipality Group Annual Financial Statements for the year ended 30 June 2019 Statement of Financial Performance GROUP CJMM Figures in Rand thousand Note(s) 2019 2018 2019 2018 Restated* Restated* Revenue Revenue from exchange transactions Rendering of services 34 27 466 609 24 824 006 351 879 289 992 Rental of facilities and equipment 334 591 307 506 140 318 130 083 Agency services 673 046 660 312 265 108 242 068 Other revenue 33 743 770 741 037 956 899 874 185 Finance Income 839 864 682 079 1 640 342 1 506 203 Reversal of impairment - 165 30 847 29 007 Fair value adjustments 447 098 210 257 447 098 210 257 Share of surpluses or deficits from associates or joint 19 1 403 1 144 - - ventures accounted for using the equity method Total revenue from exchange transactions 30 506 381 27 426 506 3 832 491 3 281 795 Revenue from non-exchange transactions Taxation revenue Property rates 35 12 372 032 9 110 560 12 372 032 9 110 560 Surcharges and taxes 224 819 233 245 224 819 233 245 Transfer revenue Government grants and subsidies 36 10 743 565 9 782 283 10 294 887 9 206 115 Levies 543 562 296 363 - - Public contributions, donated and contributed property, 359 720 421 792 2 288 3 612 plant and equipment Fines, Penalties and Forfeits 560 309 211 547 560 309 211 547 Total revenue from non-exchange transactions 24 804 007 20 055 790 23 454 335 18 765 079 Total revenue 55 310 388 47 482 296 27 286 826 22 046 874 Expenditure Employee related costs 37 (12 667 744) (10 684 522) (7 677 036) (6 146 100) Remuneration of councillors 38 (162 088) (156 206) (162 088) (156 206) Depreciation and amortisation 39 (3 186 446) (3 132 794) (1 987 335) (2 045 073) Impairment losses 40 (72 553) (103 318) (378 115) (136 555) Finance costs (2 434 266) (2 525 423) (2 544 645) (2 631 348) Debt impairment 41 (4 578 189) (3 379 992) (1 616 568) (866 965) Bulk purchases 42 (16 535 145) (15 173 013) - - Lease rentals on operating lease (1 188 515) (1 123 140) (309 892) (253 872) Grants and subsidies paid 43 (180 269) (289 336) (4 094 638) (3 684 590) Loss on disposal of assets and liabilities (37 564) (313 623) (24 910) (292 851) General expenses 44 (7 395 132) (7 918 515) (3 816 382) (4 371 854) Total expenditure (48 437 911) (44 799 882) (22 611 609) (20 585 414) Surplus before taxation 6 872 477 2 682 414 4 675 217 1 461 460 Taxation 60 10 198 (67 962) - - Surplus for the year 6 882 675 2 614 452 4 675 217 1 461 460 9