JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration Number 2000/028782/08
ANNUAL FINANCIAL STATEMENTS
For the year ended 30 June 2006
JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration No. 2000/028782/08
ANNUAL FINANCIAL STATEMENTS
For the year ended 30 June 2006
The reports and statements set out below comprise the Annual Financial Statements presented to the member:
Index Page
Report of the Independent Auditors 3
General Information 5
Directors’ Responsibility and Approval Statement 7
Directors’ Report 9
Report of the Company Secretary11
Statement of Financial Position12
Statement of Financial Performance13
Statement of Changes in Net Assets14
Cash Flow Statement15
Notes to the Annual Financial Statements16
Detailed Statement of Financial Performance53
Appendix A – Variance Report
Appendix B – Fixed Asset Additions
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JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration No. 2000/028782/08
REPORT OF THE AUDITOR-GENERAL TO THE MEMBER ON THE FINANCIAL STATEMENTS
For the year ended 30 June 2006
- AUDIT ASSIGNMENT
The financial Statements as set out on pages 12 to 52, for the year ended 30 June 2006, have been audited in terms of section 188 of the Constitution of the Republic of South Africa, 1996 (Act No. 108 of 1996), read with sections 4 and 20 of the Public Audit Act, 2004 (Act No. 25 of 2004) and sections 92 and section 126(3) of the Municipal Finance Management Act, 2003 (Act No. 56 of 2003). These financial statements are the responsibility of the accounting authority. My responsibility is to express an opinion on these financial statements, based on the audit.
- NATURE AND SCOPE
The audit was conducted in accordance with the International Standards on Auditing read with General Notice 1512 of 2006 issued in Government Gazette No. 2932 b of 26 October 2006. These standards require that I plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement.
An audit includes:
- examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements
- assessing the accounting principles used and significant estimates made by management
- evaluating the overall financial statement presentation.
I believe that the audit provides a reasonable basis for my opinion.
- BASIS OF ACCOUNTING
The entity’s policy is to prepare financial statements on the basis determined by the National Treasury, as described in note 1 to the financial statements.
- AUDIT OPINION
In my opinion, the financial statements fairly present, in all material respects, the financial position of Johannesburg City Parks at 30 June 2006 and the results of its operations and cash flows for the year then ended, in accordance with the basis of accounting determined by the National Treasury of South Africa, as described in note 1 to the financial statements and in the manner required by Municipal Finance Management Act,2003 (Act No.56 of 2003) and the Companies Act, 1973 (No.61 of 1973),as amended.
- EMPHASIS OF MATTER
Without qualifying the audit opinion, attention is drawn to the following matters:
5.1.Remuneration packages
Section 89(a) of the MFMA provides for the City of Johannesburg Metropolitan Municipality (CJMM) to determine the upper limits of remuneration for the chief executive officer and the senior managers of the entity. Such limits were not determined for the year under review.
JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration No. 2000/028782/08
REPORT OF THE AUDITOR-GENERAL TO THE MEMBER ON THE FINANCIAL STATEMENTS (continued)
5.EMPHASIS OF MATTER (continued)
5.2.Post – retirement benefits
Staff members (both current and ex) were entitled to various post-retirement benefits which were detailed in the notes to the financial statements. Where details existed, the company provided for the liabilities. In the case of pension benefits, the actuaries and management of the CJMM were not able to determine the portion of pension obligations and pension assets attributable to the staff of each municipal entity. Accordingly, the CJMM has undertaken to carry all pension obligations up to 30 June 2005. Provision was not made in the books of the Johannesburg City Parks for any further obligations which might arise once the surplus or deficit per entity is determined.
5.3.Non-compliance with the Municipal Supply Chain Management Regulation (GNR 868 of 30 May 2005)
Regulation 45 of the Municipal Supply Chain Management Regulation states that “The annual financial statements must disclose all particulars of any award of more than R 2000 to a person who is a spouse, child or parent in the service of the state in the previous twelve months.”
The company did not have a system in place to identify such related-party transactions. Therefore the disclosure of related parties in the annual financial statements may be incomplete.
5.4.Late completion of audit
The annual financial statements were submitted on 31 August 2006 as required by section 126(2) of the Municipal Finance Management Act 2003 (Act No. 56 of 2003). Due to significant audit adjustments, the annual financial statements were rectified and a final adjusted set was presented to audit on 27 November 2006.
- APPRECIATION
The assistance rendered by the staff of Johannesburg City Parks during the audit is sincerely appreciated.
M.A Masemola for Auditor-General
Johannesburg
14 December 2006
JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration No. 2000/028782/08
GENERAL INFORMATION
For the year ended 30 June 2006
Country of Incorporation
Republic of South Africa
Nature of Business
The Company is a municipal entity and has been appointed as the greening, conservation and cemetery management agency for the City of Johannesburg Metropolitan Municipality. The Company’s mandate is to provide and manage parks, open spaces, environmental conservation services and cemeteries. The Company operates solely within the municipal boundaries of the City of Johannesburg Metropolitan Municipality, South Africa. The following is included in the scope of operation within the City of Johannesburg Metropolitan area:
Number of Parks and arterials:2 328
Area of developed parks and arterials:6 564 hectares
Area of undeveloped parks:3 600 hectares
Nature Reserves:1 569 hectares
Street verges:5 500 hectares
Area of cemeteries:1 088 hectares
Water Surfaces:174 hectares
Street Trees:1,3 to 1,6 million
Cemeteries:35
Crematoria:2
Nurseries:1
Bird Sanctuaries:24,6 hectares
Trails and River Trails:107 kilometres
Environmental and Educational Centres:4
Size of fleet: Vehicles322
Trailers119
Number of Employees:2 067
Directors
The following directors held office during the year under review:
P.F. Radebe* - Chairperson
L.L. Williamson – Managing Director
A. Carolissen*
D.W. Kirkby*
N Mabaso*
M.K.E. Nkeli*Resigned (4 October 2005)
S.M.B. Nyalunga*
T.B. Nzimakwe*
H.A.B. Sutherland*
G. Zabala*
*Non-executive
JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration No. 2000/028782/08
GENERAL INFORMATION (continued)
For the year ended 30 June 2006
Registered Office and Business Address
6th Floor
209 Smit Street
Braamfontein
2017
Postal Address
P.O. Box 2824
Johannesburg
2000
Holding Company (Sole Member)
City of Johannesburg Metropolitan Municipality
Bankers
Amalgamated Bank of South Africa Limited
Auditors
Office of the Auditor-General
Company Secretary
H.G. Nel
Attorneys
Moodie and Robertson
Company Registration Number
2000/028782/08
JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration No. 2000/028782/08
DIRECTORS’ RESPONSIBILITIES AND APPROVAL STATEMENT
For the year ended 30 June 2006
The Directors are required by the Municipal Finance Management Act No. 56 of 2003 and the South African Companies Act No. 61 of 1973, to maintain adequate accounting records and are responsible for the content and integrity of the financial statements and the related financial information included in this report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the company as at the end of the financial year and the results of its operations and cash flows for the year then ended, in conformity with South African Statements of Generally Accepted Accounting Practice (SA GAAP) and the prescribed Standards of Generally Recognised Accounting Standards (GRAP). The external auditors are engaged to express an independent opinion on the annual financial statements.
The annual financial statements have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice (SA GAAP) including any interpretations of such Statements issued by the Accounting Practices Board, the Municipal Finance Management Act No 56. of 2003 and the Companies Act No. 61 of 1973, with the prescribed Standards of Generally Recognised Accounting Practices (GRAP) issued by the Accounting Standards Board replacing the equivalent SA GAAP Statements as follows:
Standard of GRAP / Replaced Statement of SA GAAPGRAP 1: Presentation of Financial Statements / IAS 1: Presentation of Financial Statements
GRAP 2: Cash Flow Statements / IAS 7: Cash Flow Statements
GRAP 3: Accounting Policies, Changes in
Accounting Estimates and Errors / IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors
The Directors are of the opinion that the company is in material compliance with all aspects of the Municipal Finance Management Act. The Directors wish however to draw the following to the attention of the reader: In terms of Section 166 of the Municipal Finance Management Act, the City of Johannesburg, as a parent municipality, must appoint members of the Audit Committee. Notwithstanding that non-executive directors appointed by the parent municipality constituted the municipal entities’ Audit Committee, National Treasury policy requires that parent municipalities should appoint further members of the entity’s audit committees who are not directors of the municipal entity onto the audit committee. Due to the March 2006 Local Government Elections, the City of Johannesburg was unable to appoint the independent members as required by the National Treasury during the year under review. Despite the latter, the City of Johannesburg as a parent municipality and the Board of directors of the entity are satisfied that the current Audit Committee of the entity, constituted by the non-executive directors is properly constituted to fulfill its role and advise the Board of its responsibilities as provided in Section 166 of the Municipal Finance Management Act.
The Directors acknowledge that they are ultimately responsible for the systems of internal financial controls established by the company and places considerable importance on maintaining a strong control environment. To enable the Directors to meet their responsibilities, the Board of Directors sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the company and all employees are required to maintain the highest ethical standards in ensuring the company’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the company is on identifying, assessing, managing and monitoring all known forms of risk across the company. While operating risk cannot be fully eliminated, the company endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The internal auditors independently evaluate the internal controls and implementation of policies.
JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration No. 2000/028782/08
DIRECTORS’ RESPONSIBILITIES AND APPROVAL STATEMENT (continued)
For the year ended 30 June 2006
The Directors are of the opinion, based on the information and explanation given by management that the systems of internal controls provides reasonable assurance that the financial reports may be relied on for the preparation of the financial statements. However, any system of internal control can provide only reasonable, and not absolute, assurance against material misstatement or loss.
The Directors have reviewed the Company’s cash flow statement for the year to 30 June 2006 and, in the light of this review and the current financial position, they are satisfied that the Company has access to adequate resources to continue in operational existence for the foreseeable future. The Company is wholly dependent on the City of Johannesburg Metropolitan Municipality for continued funding of operations. The financial statements are prepared on the basis that the Company is a going concern and that the City of Johannesburg Metropolitan Municipality has neither the intention nor the need to liquidate or curtail materially the scale of the Company’s operations.
Although the Board of Directors is primarily responsible for the financial affairs of the Company, they are supported by the Company’s internal auditors.
The external auditors are responsible for independently reviewing and reporting on the Company’s financial statements.
The financial statements set out on pages 10 to 50 which have been prepared on the going concern basis, were reviewed by the Board of Directors on 27 November 2006.
JOHANNESBURG
27 November 2006
JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration No. 2000/028782/08
DIRECTORS’ REPORT
For the year ended 30 June 2006
The Directors have pleasure in submitting their report for the year ended 30 June 2006.
Incorporation
The company was incorporated in the Republic of South Africa on 15 November 2000, and commenced business on 1 January 2001.
Review of Activities
The Company is a municipal entity and has been appointed as the greening, conservation and cemetery management agency for the City of Johannesburg Metropolitan Municipality. The Company’s mandate is to provide and manage parks, open spaces, environmental conservation services and cemeteries. During the year under review, there were no changes to this mandate. The operating results and state of affairs of the company are fully set out in the attached financial statements.
Plant and Equipment
The Company acquired plant and equipment at a cost of R 4,2m (2005 – R 4,0m) during the financial year under review. There was no change in the nature of the assets or in respect of the use thereof.
Going Concern
The Company is wholly dependent on the City of Johannesburg Metropolitan Municipality for continued funding of its operations. The financial statements are prepared on the basis that the Company is a going concern and that the City of Johannesburg Metropolitan Municipality has neither the intention nor the need to liquidate or curtail materially the scale of the Company’s operations.
Subsequent Events
The Directors are not aware of any matters or circumstances arising since the end of the financial year.
Directors
The following directors held office during the year and to the date of this report:
P.F. Radebe* - Chairperson
L.L. Williamson – Managing Director
A. Carolissen*
D.W. Kirkby*
N Mabaso*
M.K.E. Nkeli*Resigned (4 October 2005)
S.M.B. Nyalunga*
T.B. Nzimakwe*
H.A.B. Sutherland*
G. Zabala*
*Non-executive
All directors’ are of South African nationality
No directors had any interest in any contracts entered into by the Company during the year under review.
JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration No. 2000/028782/08
DIRECTORS’ REPORT (continued)
For the year ended 30 June 2006
Holding Company (Sole Member)
City of Johannesburg Metropolitan Municipality
Bankers
Amalgamated Bank of South Africa Limited
The management of the treasury function within the Company is managed under the auspices of the City of Johannesburg Municipality Assets and Liabilities Committee and Treasury department.
Auditors
In accordance with Section 92 of the Municipal Finance Management Act No 56 of 2003, the Office of the Auditor-General will continue as the Company’s external auditors.
Company Secretary
H.G. Nel
Registered Office and Business Address
6th Floor
209 Smit Street
Braamfontein
2017
Postal Address
P.O. Box 2824
Johannesburg
2000
Company Registration Number
2000/028782/08
JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration No. 2000/028782/08
REPORT OF THE COMPANY SECRETARY
For the year ended 30 June 2006
CERTIFICATE BY COMPANY SECRETARY FOR THE YEAR ENDED 30 JUNE 2006.
In terms of section 268G(d) of the South African Companies Act, 1973 as amended, I certify that the Company has lodged with the Registrar all such returns as are required by the Companies Act and that all such returns are true, correct and up to date.
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JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration No. 2000/028782/08
STATEMENT OF FINANCIAL POSITION
For the year ended 30 June 2006
Restated
2006 2005
R’000 R’000
Notes
ASSETS
Non-current assets / 91 669 / 86 723Property, plant and equipment / 3 / 11 238 / 10 803
Intangible assets / 4 / 4 420 / 1 497
Employee benefit investment / 5 / 76 011 / 74 423
Current assets / 240 626 / 188 989
Trade and other receivables / 6 / 240 605 / 188 969
Cash and cash equivalents / 7.2 / 21 / 20
Total assets / 332 295 / 275 712
NET ASSETS AND LIABILITIES
Net Assets
Accumulated surplus / 74 617 / 46 511
Non-current liabilities
Employee benefit obligations / 5 / 87 966 / 87 523
Current liabilities / 169 712 / 141 678
Loan from share-member / 8 / 25 907 / 22 858
Trade and other payables / 9 / 125 212 / 98 362
Provisions / 10 / 18 593 / 20 458
Total net assets and liabilities / 332 295 / 275 712
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JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration No. 2000/028782/08
STATEMENT OF FINANCIAL PERFORMANCE
For the year ended 30 June 2006
Restated
2006 2005
R’000 R’000
Notes
Revenue / 11 / 337 682 / 314 073Cost of sales / (3 606) / (2 342)
______/ ______
Gross surplus / 334 076 / 311 731
Operating expenses / (318 087) / (312 978)
______/ ______
Operating surplus/(deficit) / 12 / 15 989 / (1 247)
Investment income / 13 / 19 332 / 22 213
Finance costs / 14 / (7 215) / (7 303)
______/ ______
Surplus for the year / 28 106 / 13 663
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JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration No. 2000/028782/08
STATEMENT OF CHANGES IN NET ASSETS
For the year ended 30 June 2006
Accumulated
Surplus
R’000
Note
Balance at 1 July, 2004 – restated / 32 848Balance at 1 July, 2004 – as previously reported / 24 412
Prior period error / 2 / 3 722
First time adoption of new accounting standards / 2 / 4 714
Surplus for the year ended 30 June 2005 – restated / 13 663
Surplus as previously reported / 3 762
Prior period error / 2 / 9 857
First time adoption of new accounting standards / 2 / 44
______
Balance at 1 July, 2005 / 46 511
Surplus for the year ended 30 June 2006 / 28 106
______
Balance as at 30 June 2006 / 74 617
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JOHANNESBURG CITY PARKS
Association Incorporated under Section 21
Registration No. 2000/028782/08
CASH FLOW STATEMENT
For the year ended 30 June 2006
Restated
2006 2005
R’000 R’000
Notes
Cash flows from operating activitiesCash receipts from customers / 359 185 / 224 196
Cash paid to suppliers and employees / (365 301) / (346 980)
Cash utilised in operations / 7.1 / (6 116) / (122 784)
Investment income / 19 332 / 22 213
Finance costs / (7 215) / (7 303)
Net cash generated from/ (utilised in) operating activities / 6 001 / (107 874)
Cash flows from investing activities
Expenditure to maintain operating capacity / (9 492) / (4 106)
Plant and equipment acquired / (4 194) / (4 042)
Intangible assets acquired / (3 859) / (333)
Proceeds from sale of plant and equipment / 149 / 192
Employee benefit investment / (1 588) / 77
Cash flows from financing activities
3 492 / 16 179
Share-member loan raised / 8 / 3 049 / 2 956
Employee benefit obligations / 443 / 13 223
______/ ______
Increase / (Decrease) in cash and cash equivalents / 1 / (95 801)
Cash and cash equivalents at beginning
of the year / 20 / 95 821
______/ ______
Cash and cash equivalents at the end
of the year / 7.2 / 21 / 20
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