2007 08 Annual Report

JOHANNESBURG CITY PARKS (An association incorporated under Section 21) Registration No: 2000/028782/08

(In terms of Section 121 of the Municipal Finance Management Act, 2003 and Section 46 of the Municipal Systems Act, 2000)

JOHANNESBURG CITY PARKS AN ASSOCIATION INCORPORATED UNDER SECTION 21 OF THE COMPANIES ACT COMPANY INFORMATION: Registration number

:

2000/028782/08

Registered Address

:

Johannesburg City Parks City Parks House 40 De Korte Street Braamfontein 2017

Postal Address

:

P O Box 2824 Johannesburg 2000

Telephone number

:

(011) 712-6600

Fax number

:

(011) 712-6796

Website

:

www.jhbcityparks.com

Bankers

:

ABSA Bank of SA Limited

Auditors

:

Auditor-General Vision

To be the leading African green environment And cemetery management company. Mission To develop, maintain and conserve the green environment and cemeteries for present and future generations.

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TABLE OF CONTENTS CHAPTER ONE: INTRODUCTION AND CORPORATE PROFILE Section 1: Corporate Profile and Overview of the entity

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Section 2: Strategic Objectives

7

Section 3: Foreword by Member of the Mayoral Committee

9

Section 4: Chairperson’s Report

10

Section 5: Managing Director’s Report

14

Section 6: Statement of Responsibility

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CHAPTER TWO: PERFORMANCE HIGHLIGHTS Section 1: Highlights and Achievements

25

Section 2: Financial Performance

28

Section 3: Capital Projects

31

Section 4: Performance against IDP and City Scorecard

38

Section 5: Assessment of Arrears on municipal taxes and service charges

42

Section 6: Statement on amounts owed by Government Departments and public entities 44 Section 7: Recommendations and Plans for the next financial year.

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CHAPTER THREE: DIRECTOR’S REPORT AND GOVERNANCE Section 1: Corporate Governance Statement

46

Section 2: Board of Directors

46

Section 3: Board Committees

50

Section 4: Director’s Remuneration

52

Section 5: Company Secretarial Function

54

Section 6: Risk Management and Internal controls

55

Section 7: Internal Audit Function

58

Section 8: Response to the Auditor-General Report

59

Section 9: Corporate Ethics and Organisational Integrity

60

Section 10: Sustainability Report

61

Section 11: Corporate Social Responsibility Report

62

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CHAPTER FOUR: HUMAN RESOURCES AND ORGANISATIONAL MANAGEMENT Section 1: Human Resource Management

64

Section 2: Employment Equity

66

Section 3: Skills Development and Training

68

Section 4: Performance Management

69

Section 5: HIV/AIDS on the Workplace

70

Section 6: Employee Benefits

73

Section 7: Supply Chain Management and Black Economic Empowerment

74

CHAPTER FIVE: AUDITED STATEMENTS AND RELATED FINANCIAL INFORMATION Report of the Auditor-General

76

General Information

81

Directors’ Responsibilities and Approval of Statement

83

Directors’ Report

85

Report of the Company Secretary

87

Statement of Financial Position

88

Statement of Financial Performance

89

Statement of Changes in Net Assets

90

Cash Flow Statement

91

Notes to the Annual Financial Statements

92

Detailed Statement of Financial Performance

140

Annexure E

142

CHAPTER SIX: FUNCTIONAL AREA SERVICE DELIVERY REPORT

141

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CHAPTER ONE: INTRODUCTION AND CORPORATE PROFILE Section 1: Corporate Profile and Overview of the entity Johannesburg City Parks (JCP) is the greening, conservation and cemetery management entity for the City of Johannesburg (CoJ). It was incorporated under the seal of the Registrar of Companies on 15 November 2000 as a Section 21 (non-profit) Company and business commenced on 1 January 2001. Johannesburg City Parks’ mandate is to provide and manage the parks, designated open spaces, environmental conservation services and cemeteries for and on behalf of the City of Johannesburg. Accordingly Johannesburg City Parks manages the following assets: Area of Management

Quantity

Number of Parks and Arterials

2 328

Area of Developed Parks and Arterials

6 587,5 hectares

Area of Undeveloped Parks

3 576,5 hectares

Nature Reserves

1 569 hectares

Street Verges

5 500 hectares

Street Trees

1,3 – 1,6 million

Number of Cemeteries

35

Area of Cemeteries

904 hectares

Number of Crematoria

2

Number of Nurseries

2

Water surfaces

174 hectares

Bird sanctuaries

24,6 hectares

Trails and River Trails

107km

Environmental & Education Centres

6

Size of fleet

321 Vehicles; 136 Trailers

Total number of employees as at 30 June 2008: 1 799

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Johannesburg City Parks is committed to the principles of the Jo’burg 2030 Vision as encapsulated in the strategy of the City of Johannesburg. The Company aligned its Business Plan with the Integrated Development Plan and Environmental Sector Plan of the CoJ via its programmes and projects. Functional areas Parks, Designated Public Open Space, Nature Conservation Areas and Cemetery Maintenance -

Horticultural Services

-

Arboriculture Maintenance

-

Infrastructure Maintenance

-

Nursery Operations

Cemeteries Management -

Burials

-

Cremations

-

Archival Records

Environmental Conservation -

Biodiversity management

-

Environmental awareness

-

Environmental training, empowerment and capacity building

-

Bio-aquatic management

-

Botanic research, monitoring & information sharing

-

Conservation, Rehabilitation, Enhancement of ecosystems

-

Invader species control

-

Open space impact management and provisioning

-

Environmental Compliance and Open Space Impact Management

-

Ecotourism and conservation business development

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Project Management -

Planning

-

Design

-

Landscaping

Marketing -

Marketing and Market Research

-

Stakeholder Liaison

-

Communication

-

Media Liaison

-

Business Development

Training and Education -

Horticultural and other job related training

-

Training of temporary workers through EPWP, with regard to the required safety standards and task related skills

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Section 2: Strategic Objectives JCP has aligned its strategic objectives with the City of Johannesburg’s Mayoral Priorities, strategic plans and five-year programmes as follows: Improve Service Delivery JCP’s service delivery mainly consists of development, maintenance and conservation of public open space and the natural environment, greening of the City (i.e. planting of trees), and securing of burial space for the future. This strategic objective has been successfully achieved and exceeded in many ways. Effective Financial Management JCP addressed the Mayoral Priority of a “Well Governed and Managed City” with the strategic objectives of Sound Financial Management, Capex Implementation and the Management of Risks. Corporate Governance and MFMA assessments were also done as well as regular internal audits. The unqualified audit results proved that JCP has been well governed and managed. A Safe, Clean and Green City By its very nature JCP contributes to the greening of the City with special emphasis on those areas requiring attention in this regard. To safeguard conservation areas JCP initiated areas to be re-proclaimed as nature areas. Also, areas to be rezoned as parks have been identified and advised to the CoJ. Occupational Health, Safety and Security The design and layout of facilities have been done with safety in mind, and the safety in our facilities has been improved through our Park Warden monitoring system and the involvement of other MOE’s such as Metro Police. Through compliance to the Occupational Health and Safety Act, and the SMME safety programmes, safety in the workplace and at our facilities has been enhanced.

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HIV and AIDS JCP continues to combat HIV and AIDS through the development and education of staff as well as wellness programmes to ensure staff performance. JCP complies with the City’s and its own HIV and AIDS policies. Customer Satisfaction and Responsiveness Through improved service delivery JCP has improved customer satisfaction. JCP’s employee satisfaction, sustainability of our service delivery and service delivery excellence also played a valuable role towards community development. Economic Development and Job Creation JCP continues to contribute to economic development and job creation through the implementation of the Expanded Public Works Programme. New jobs were created, people were trained and the extent of SMME procurement contributed to achieving this Mayoral Priority.

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Section 3: Foreword by Councillor P. Naidoo, Environmental Portfolio member of the Mayoral Committee City Parks has and continues to play a significant role in protecting, maintaining and expanding the City Of Joburg’s green and open spaces. The Honourable Mayor, Cllr Amos Masondo, set City Parks the ambitious task of planting 200 000 trees by the year 2010. It is with a great sense of pride that I can categorically state that City Parks is comfortably on track to achieving this difficult task. City Parks has aggressively pursued the objective of developing open spaces in previously disadvantaged townships. They have launched and continuously service parks to the highest quality standards in townships throughout the city. City Parks in partnership with Township TV have turned our parks into spaces of learning and community gatherings. Central to the many achievements by City Parks, is their valued participation in the Klipriver/ Klipspruit Rehabilitation Project.

Once again the quality of the development of the

environmental nodes along these waterways can be judged by the number of people utilising the facilities City Parks has developed and maintains in the areas along these rivers. Under the leadership of Mr Luther Williamson and it’s hard working employees, City Parks will leave a legacy of green spaces that will be appreciated by many generations to come.

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Section 4: Chairperson’s Report Introduction 2007/2008 started with a challenge for JCP as our Managing Director was seconded to Pikitup and a number of our Board members were serving their first term. In spite of these challenges, I am pleased to report that JCP continued to set high standards and pursued high levels of service delivery. The 96% overall achievement in the scorecard by our Executive Management bears testimony to this. Our Executive management team experienced some changes with the replacement of the Company Secretary and the HR Executive in the third quarter of the year. In spite of these changes at the Executive Management levels, staff have continued to demonstrate their commitment, enthusiasm and innovation in fulfilling JCP’s mandate and the CoJ’s Service Level Agreements with JCP. Mandate The mandate of JCP is to develop, maintain and conserve open spaces. In this financial year, JCP continued to align its business plan to the Mayoral Priorities and to the Environmental Sector Plan in order to meet the expectations of its customers and stakeholders. It is in this context that the performance of JCP must be viewed. Performance Review A key focus of our activities, in addition to the maintenance of our portfolio, has been the 200 000 tree planting campaign. We are pleased that this campaign is gaining ground and trees are now visible, especially in the underserved areas of our population. These areas, through this campaign and the beautification of our side walks and road islands have made our city to look vibrant, green and fresh. Management has championed this project with vigour and aplomb and we want to express our greatest appreciation to the Companies and individuals that have supported this initiative financially and through their donation of trees. Our flagship program, the Extreme Park Makeover, where a park is developed in 24 hours, benefitted the community of Diepkloof in this financial year where 2 hectares of land was converted to one of the most aesthetically pleasing parks in the City of Johannesburg. We are proud to yet again announce another first, the development of a Park for People with Disabilities. This was achieved through a combination of JCP allocations, contributions by Standard Bank and the prize money of £10 000 Pound Sterling that JCP won as part of the LivCom awards.

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On behalf of the Board we wish to congratulate management on benchmarking our work with international norms and winning 8 awards of the International LivCom awards that were held in London. This continues to demonstrate the continued emphasis on innovation and sound business processes that JCP always aspires towards. We are in the process of establishing a cemetery in the South in anticipation of the near full capacity of Avalon cemetery. Approximately 260 hectares of land have been acquired and fenced and the EIA processes are in progress. This initiative will have to be capitalised to the tune of +/-R9m in the financial year 2008/2009 if the City were to be ready to replace the fast filling Avalon Cemetery. Financial Performance The Financial performance of the Company is detailed and outlined in the report of the Chief Financial Officer. Management and the Audit Committee of the Board have worked hard in ensuring that JCP remains accountable for the resources that are allocated to it by the City. In spite of revenue growth and cost containment efforts and strategic cash flow management, we unfortunately have to report a slight deficit in operational expenditure. This was occasioned largely by an increased level of activities that had to be concluded and many of the unfunded mandates that we found ourselves having to perform in an effort to maintain high service delivery standards across the City. The reasons and the extent of the deficit are fully disclosed in the report of the Chief Financial Officer. Corporate Governance The Board is responsible for oversight of the organisation. Management is responsible for running the organisation.

In our oversight roles, the Board has done this through the

establishment of various committees. These committees include the Committee of Chairs which reviews the strategic inputs of each committee, the Remuneration Committee which reviews the performance of the Executives and considered a number of remuneration matters, the Internal Risk and Audit Committee which provided strategic insight and risk containment measures for the organisation, the Human Resource Committee which reviews on an ongoing basis our human capital requirements and challenges, the Finance and Operations Committee which supports and reviews operational and financial requirements of the organisation and the SHEQ Committee which focuses on Health and Safety issues in the organisation. In this financial year the activities of the board were heightened and a number of policies and mandates were revised. Key amongst these was the SHEQ policy, the Remuneration Policy, Sexual Harassment, Smoking and Acting policies. The board also dedicated its time by reviewing the Company’s strategy and formulated a new strategic plan. Scorecards were

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revised for the period 2009-2011, in line with the dictates of the CoJ Integrated Development Plan and the Environmental Sector Plan. To attest to the work of the Board, the Board Assessment results published by Price Waterhouse Coopers under contract with the Share Holder Unit have indicated positive results of the JCP Board. The Internal Audit function performed to expectation and provided assurance to the Board on the effectiveness of internal controls, risk management and governance processes within the Organisation. The safety, health and environmental issues were reviewed and monitored quarterly and reported on as part of risk management. Employment Equity and Black Economic Empowerment. JCP is committed to correcting past imbalances in terms of employment equity. We are however clear that affirmative action is not a recipe for the replacement of skilled labour but an instrument to increase representation of the previously disadvantaged in critical job categories of the organisation. In the current financial year, almost all new appointments were from the previously disadvantaged groups, of which 78% were African Females. In addition management successfully implemented a vigorous Women’s Development Program where 12 women were identified and mentored for management advancement in the organisation. The targets set in terms of the equity plan were continuously monitored and managed by the HR committee in a manner that resulted in the set targets being met. The company has continued to ensure that Black owned companies are provided opportunities by exercising the Preferential Procurement Act of 2000. This is illustrated in the amount of work that was allocated to BEE companies including women owned and controlled companies. The target of 85% set for procurement from BEE suppliers was exceeded.

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JCP looking into the future The company is committed to the mandate of the City as well as to the alignment of its business to the Mayoral priorities and the Environmental Sector Plan and will in the next financial year focus on the following areas: The 2010 Soccer World Cup, the Greening of Soweto, the planting of the balance of the 200 000 trees, the rehabilitation of the Kliprivier / Klipspruit Project, the Beautification of the City, Road Island beautification, the development of more water features and the finalisation of a Landscaping Master Plan. It will also place emphasis on regular Park and Cemetery development and review initiatives to enhance Park safety as well as increase its service portfolio and provide added value in Capital projects. Women empowerment, and the Expanded Public Works Programme will continue to be our focus. Acknowledgements My heartfelt congratulations and thanks go to the Management and Employees of JCP whose commitment, loyalty and drive continue to be the cornerstone of these excellent results. Thanks to all our Stakeholders, Customers and Suppliers. The support and encouragement of the Member of the Mayoral Committee (MMC), Councillor Prema Naidoo, the Executive Director for Environment, Ms. Flora Mokgohloa and her staff as well as the City is acknowledged. I am proud to have been part of all the achievements and would like to thank all the Board Members for their contribution yet again.

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Section 5: Managing Director’s Report Overview The Global economic turmoil brought on many challenges for our operations, but in spite of these challenges, City Parks produced favourable results. We remained focused on our Key Performance Areas and all objectives that contributed to customer and stakeholder value add were met. The focus for the year under review was to ensure that we provide a service to our communities that is globally competitive, through increased productivity and quality services. There were a number of unique initiatives and innovations that drew a significant amount of interest both globally and nationally and one such example is our Xtreme Park Make Over. Specific attention was placed on ensuring that our customers are part of the number of our Capital projects and programmes that were implemented; this has fundamentally contributed to our sound corporate reputation and increased customer satisfaction rating. The Sound IDP performance scorecard results were influenced by a carefully planned strategy that ensured that we back our operations by effective systems and controls. This is evident under the section: Performance against IDP scorecard. Examples of these areas of performance or initiatives are: the development of another 24 hour Xtreme Park Makeover, planting in excess of 49 000 trees, receiving a number of International Awards for specific projects and the partnering with Township TV to provide educational as well as recreational programmes into the previously disadvantaged areas. Talent management and skills development were some of the critical aspects that contributed to the added investment in our people resources. Human Capital management, training and development, the Expanded Public Works Programme and our Employment Equity Programme was on track with the transformation objectives that were set. The strategic objectives were effectively achieved because of the passion and tenacity of our employees to remain focused on the collectively developed goals and objectives that were set. The Performance Highlights serve to qualify and support the placed emphasis on getting all our people to do extraordinary things. Performance Highlights 

In this reporting year (2007/8), 49 245 trees were planted compared to 21 653 trees planted in the previous year.



The survival level of newly planted trees was maintained at 95%.

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Street trees enquiries for the year 2007/8 totalled to 8 109, bringing a 10% reduction when compared to the amount of enquiries that was received for the period 2006/7, being 8 920.

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3 New developments in parks were completed including 4 New developments in cemeteries.

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The customer satisfaction index was 78%.

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Stakeholder visits increased to 1 668 vs. the previous year’s 344.

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External Services’ revenue increased by 148% to R38 m.

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BEE Procurement increased from 84% to 87%.

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1 049 Employees were trained in the period 2007/8.

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100% of Capital projects were completed.

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19 684 learners were reached through environmental training programmes. 49 684 Primary Beneficiaries were reached by our Environmental Education awareness programmes.

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Emphasis was placed on job creation in that 1 133 jobs were created in 2007/8. In the previous year 963 jobs were created.

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93% of appointments effected were from PDI, 59% of that was female, with 84% of that being African Black.

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Development of the first Xtreme Park Make-Over in Soweto at Immink Road, Diepkloof

Financial Performance This was a challenging year for City Parks due to fuel price increases and the absorption of prior year Capital Projects and projects that were completed during the year that were added to our maintenance portfolio. The increase in sales revenue and the resultant surplus from External Services assisted operations in some degree to maintain and provide services to those areas that were beyond the scope of budgeted activities. The financial results were relatively close to budget and the results are to be read bearing in mind the portfolio growth and the efficiencies that we applied to ensure that the deficit is conservative and is in-keeping with a non profit organisation. Our balance-sheet reflects a very positive cash position and all liabilities are adequately provided for, resulting in a reasonable liquidity position. The performance during the financial year presents a positive outlook for the years to come with an added degree of financial prudency.

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Financial headlines Revenue excluding interest increased in relation to the prior year by R57,1 m and concluded at R425.3 m and the complimentary department to the significant increase in revenue was external services which experienced revenue growth to the tune of R27 m. External Services revenue book concluded at R42 m. Cemeteries revenue (R15.5 m) equally influenced the increase in total revenue in that cemeteries revenue exceeded budget by R1.1 m. Events revenue was slightly under budget in that income realised was R1.2 m against a budget of R1. 5 m Expenditure was budgeted at R429.8 m and closed at an actual of R449.6 m, the increase in expenditure being influenced by the cost of sales relating to the increased order book. The year- end cash position (Share-member sweeping cash debtor balance due to City Parks) R181.2 m. BEE The Broad- based Black Economic Empowerment codes of Good Practice, legislated in 2007, has enabled us to engage with a number of stakeholders who have enabled a number of the Small Medium Enterprises on our database to grow from strength to strength. Black Economic Empowerment increased from 84% in the last financial year to 87% this year. A great emphasis was placed on developing SMME’s and our supplier chain database of black service providers has increased in number, in order to generate a more competitive procurement environment. The EPWP programme works in conjunction with our empowerment programme and SMME’s are enabled to render service by drawing on people who were trained through the EPWP programme. Operations Our flexibility in the face of external and internal challenges contributed to successful service delivery but we have now placed emphasis on improving standards of our facilities so to meet new customer expectations. Operations are mindful of the fact that yesterday’s greatness can be tomorrow’s mediocrity when considering new and divergent customer aspirations and expectations. The emphasis over the past financial year has been on the development of qualitative maintenance standards rather than focusing on the traditional quantitative-based measures. There was a reduction in customer complaints considering the increase in the utilisation of our facilities as a result of the role out of new products in our park like Township TV. 19 684 Learners attended the various environmental programmes and this was complimented by National Arbor Week and the Greening of Soweto.

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Street Trees With the Mayor stretching our tree planting targets from 20 000 to 50 000 per annum in December 2007, Johannesburg City Parks planted a total of 49 245 for the financial year. Collectively 90 738 trees have been planted and we are on course to meet the challenge of 200 000 trees by 2010/11. Cemetery Operations The implementation of the resource planning strategy and qualitative maintenance at cemeteries has resulted in the desired maintenance standards being achieved. Burials and cremation records over a five year period have shown a marginal decrease from the number of 21 575 for 2005/06, The total burials and cremations for 2006/07 amounted to 21 173, and 2007/8 saw a total of 21 030. The impact of migrant labourers in urban areas directly contributes to the fluctuation in the number of burials as most return to their areas of family birth. Strategically the burial rate has directed the development of regional cemeteries within areas of need and provided time lines for future roll-out plans. Total Burials- Quarterly Comparison

Burials for this financial year totalled at 17 739, whereas when compared against the 2006/7 period having 18 847 burials there has been a decrease of 6,3% in the total no of burials.

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Cremations per Facility

The graph above highlights the distribution of cremations within our 3 facilities. A total of 2521 cremations for 2007/08 have been recorded. When compared with a total of 2226 in 2006/07, there has been as increase of 13,2%. Pauper and Indigent Burials

Indigent burials have shown a steady increase since the introduction of the Social Policy but have shown a conservative increase. Pauper burials continue to be unpredictable and have increased by 7% when compared to last year. The total for 2007/08 is 916, whereas in 2006/07 it was 856. This could be attributed to cell phones, ID documents, drivers licenses as well as banking details that people carry on them that enhances the likelihood of identification.

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Gender

The average gender ratio throughout South Africa according to Statistics South Africa is 93 males to 100 females whilst the ratio for the CoJ is recorded as close to being equal. During the year, the ratio reflects a 51% female and 49% male burial rate which is line with the CoJ statistics. Natural versus Unnatural Deaths

The above figures are in line with the 6% national average of unnatural deaths.

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Environment The Company aims to protect, manage and restore the integrity of the Sharemembers ecological systems with special concern for biodiversity and natural processes within open spaces. In order to achieve the abovementioned, the Company aligned its Business Plan in terms of the Environmental Sector Plan. The following are examples of projects which have been dealt with in terms of the Environment Sector Plan: A Bio-Aquatics Management Plan has been developed (Zoo lake, Bruma lake, Westdene Dam, Moroka Dam, Dorothy Nyembe Dam, Blue Dam and Florida Lake were maintained). Manage and control of reeds taking into account ecological and social consideration: Dorothy Nyembe wetland, Mofolo South, Dlamini & Lenasia nodes reed control was undertaken. Wetlands were rehabilitated (Mapetla wetland, Baileyspruit SANBI intervention, Florance Bloom & Bosmontspruit wetland). Five (5) Ecological Management Plans were developed for the following areas: KNR, Kloofendaal, Cosmo City, Melville Koppies, Rietfontein and The Wilds.

Expanded Public Works Programme The main objective of the Expanded Public Works Programme (EPWP) is to create jobs, to train and develop workers/contractors with the result of improved service delivery and economic growth. The plan was to create 350 jobs (60 000 man days) and to facilitate 2000 training days of skills development for 2007/08. For the year 2007/2008, 1 133 new jobs were created and 2 152 jobs have been sustained through Opex/ Capex projects. 433 People (2 824 training days) were trained in General horticulture, occupational health & safety, brush cutting & chainsaw handling, pesticide & herbicide application and fire fighting accredited courses. On site on- the- job training related to an additional 714 training days.

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Security in facilities The Company was more visible in terms of the Park Rangers at the various facilities under our control than in the previous year. The total number of facility visits by JCP Park Rangers for the current financial year amounted to 21 252 compared to the 12 710 facility visits of the previous financial year. This contributed significantly to a reduction in incidents at our facilities. The increase in patrols resulted in various positive results such as increased visibility of teams and utilisation of facilities, and a decrease in incidents in cemeteries. During the year, the Park Rangers also participated in 20 special operations in conjunction with the SAPS and JMPD. During the year 339 arrests were made, 76 spot fines were issued and 3 346 vagrants were removed with the assistance of JMPD and SAPS. Risk Management The Board approved the Risk Management framework and also assessed the Companies risk management appetite. Management were tasked with ensuring that the reporting of risks, monitoring, measurement and management cuts across all spheres of operations. At the beginning of the 2007/08 financial year, Risk Assessment workshops were facilitated throughout the Organisation in line with the City of Johannesburg’s Risk Framework. This resulted in the compilation and development of Corporate and Operational Risk Registers. Risk interventions and timelines and Risk owners were agreed upon in the respective areas. The implementation of risks identified in both the Corporate and Operational risk registers, were closely monitored during the year. The implementation of the risk interventions resulted in substantial movement on the residual risk exposure of some risks. We are comfortable that the risks identified were managed to the desired level. The emerging risks were also identified and closely monitored for both the Corporate and Operational Risk Registers during the current financial year. The Company’s top five risks are being closely monitored in order to bring the residual risks to the desired level.

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Internal Audit The key role of the Internal Audit is to assist the Board and/or its Audit and Risk Committee in discharging its oversight role through the review of systems and processes i.e. to evaluate the adequacy and effectiveness of the internal controls within the Company. Internal Audit and Risk Management Quarterly Reports were presented to the Audit and Risk Committee on a quarterly basis. This enabled the Audit and Risk Committee to form an opinion on the adequacy and effectiveness of the system of internal controls within the Organisation. There were no significantly material internal control issues which came to the attention of Internal Audit during the 2007/2008 financial year. Internal Control weaknesses or areas that require improvement were discussed with management and appropriate recommendations were suggested to mitigate any possible exposures or risks. Human Resources Human resources are a critical ingredient of our operational objectives and a significant emphasis was placed on ensuring that we fully achieve on the skills plan objectives, provide unique training programmes with emphasis being placed on succession planning and retention. Our employment equity targets are on track, training that was planned was achieved and contributed to increased operational performance. The performance management system which applies incorporates all facets of the strategic objectives and these were packaged into the scorecards of all relevant employees. There are various recognition programmes outside of the remuneration option which serve to encourage and motivate employees. Women development was a priority. A number of women were part of a mentorship programme which enabled them to develop under the mentorship of Executive and Senior Management. All training, planned and delivered, for the reporting period was derived from the Workplace Skills plan submitted to the AgriSETA at the beginning of the year. Corporate Wellness phased in an Incapacity Management process to help Managers manage sick leave, abuse thereof and absenteeism. New programmes were identified for Corporate Wellness and the phasing in of the Quality of Work Life strategy will be implemented to ensure organisational effectiveness for the new financial year. The absenteeism management programme was successfully implemented throughout the Organisation. The managers and supervisors were trained across all disciplines in the

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Company. The training assisted managers to understand, interpret and implement the Absenteeism management reporting tool on a monthly basis. Prospects Our emphasis on trying to understand our stakeholders and customers better has enabled us to pay more attention to their dreams and their realities, this is now clearly evident in how we design all our new Parks and Cemeteries. Operating conditions will going forward create more risks but we see an even greater opportunity to work together with our customers and attempt more importantly to deliver on the 200 000 trees Mayoral Priority. In the years ahead we will passionately attempt to pioneer the landscaping master-plan so to demonstrate to the world that the City of Johannesburg has fully embraced it and will be catalytic in its approach to environmental and greening matters. Emphasis will be placed on ensuring that our ecotourism products are re-designed, re-packaged and promoted to an extent that they could significantly influence revenue. Appreciation A special thanks to the Board, Executive team and our Employees for their tireless commitment and all their efforts of related and unrelated parties, who have contributed to the excellent performance achieved in the last year. The skills that we have developed over time will assist us to face the many challenges and create more opportunities in a global and competitive environment. Our customers, who have continuously shown interest in our products and services, can expect an even greater commitment to service delivery, with the approach of the 2010 World Cup and beyond. A heartfelt thanks to our Sharemember for their continuous support to the environmental projects and programmes.

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Section 6: Statement of Responsibility The directors are responsible for the preparation, integrity and fair presentation of the financial statements of JCP. The financial statements presented in Section 5 of this report has been prepared in accordance with SA GAAP and includes amounts based on judgement and estimates made by management. The directors are responsible for the preparation of the other information in the annual report and are responsible for both its accuracy and its consistency with the financial statements. The going concern basis has been adopted in preparing the financial statements and based on the forecast and available cash resources the directors have no reason to believe that the entity will not be a going concern in the foreseeable future. The Auditor-General, who was given unrestricted access to all financial records and related data, including minutes of all meetings of shareholders, the Board of Directors and committees of the Board, has audited the financial statements.

The directors believe that all

representations made to the Auditor-General during their audit are valid and appropriate. The Auditor-General’s unqualified audit report is presented on page 76 to 79.

The financial

statements were approved by the Audit and Risk Committee on 27 August 2008 and signed by the Managing Director Mr L.L. Williamson and the Chairperson of the Audit and Risk Committee Mr T.B. Nzimakwe.

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CHAPTER TWO: PERFOMANCE HIGHLIGHTS Section 1: Highlights and Achievements 

LivCom awards 8 Awards were won in the International greening LivCom (Living Communities) competition, of which 4 were gold.



Trees planted The focus this year was on tree planting in order to achieve the Mayor’s target of 200 000 trees to be planted by 2010. This year 49 245 trees were planted vs the initial annual plan of 20 000 per annum. In December 2007 the Mayor raised the target for annual trees to be planted from 20 000 to 50 000. The number of trees planted during Arbor Week in the next financial year, will contribute towards the attainment of the annual target. Collectively 90 738 trees have been planted vs the 2010 target of 200 000. The survival rate of newly planted trees is 95%.

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“My Dream Park” competition Three “My Dream Park” facilities were handed over to schools.

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External Services An order book of R38 m was achieved vs an annual plan of R18 m.

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Customer Complaints 89% Of customer complaints were resolved vs a target of 72%.

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EPWP and job creation 1 133 EPWP jobs were created for the year vs an annual plan of 350 jobs.

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Xtreme Park in previously disadvantaged areas. Development of the first Xtreme Park Makeover in Soweto at Immink Road, Diepkloof.

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Water fountains There are now 68 functional water features in the City of Johannesburg, which exceeds the annual target of 40.

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Beautification projects The target of 30 Beautification Projects was exceeded by 9.

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Plant availability Plant availability was 100% vs a plan of 95%.

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Fleet availability Fleet availability was 99% vs a plan of 95%.



Beneficiaries reached through environmental education For the period under review, 19 684 beneficiaries attended various environmental programmes, which exceeded the IDP target of 10 000 by 96%. An additional 30 214 households were reached during the tree survey as part of the greening of Soweto project.

26

Environmental Highlights 

Water Week Celebrations City Parks, Paulshof Residents and Ratepayers Association and Toyota jointly conducted clean up campaign sections of the Sandspruit and Braamfontein Spruit as part of the Water Week celebrations Environment and Conservation Development and the Marketing Department received an invitation to exhibit and conduct interactive learners' activities during the Joburg Water Festival held at Elka Stadium Soweto.



Tree planting Tree planting took place in Meadowlands as part of the Mayoral Legacy Project for 2010.



Environmental theme days Environmental theme days such as Water Week, Bird Week and National Environmental Week were celebrated.



Tree planting survey, and tree education The Braamfischerville and Dobsonville Tree Planting Survey Report was completed, as well as the Tree Education & Awareness Programme and draft After Care Programme.



Greening of the workforce programme The Greening the Workforce Programme was implemented with the theme “Alien Invasive in our Facilities”.

27

Section 2: Financial Performance The South African economic environment entered a year of instability with inflation breaching the Reserve Bank’s range of 3-6% for much of the year and interest rates rising steadily throughout the year. This was compounded by dramatic increases in fuel prices. The Company was resilient and able to deliver an improved level of service to the community. 2.1.1

REVENUE

The Company posted revenue excluding interest of R426 m (2007: R368 m) for the year, an increase of 15,8% over the previous year. The grant from the sharemember, the City of Johannesburg Metropolitan Municipality, made up 85% (2007:91%) of total revenue received, with an increase of 8,5% over the previous year. Revenue from cemeteries remain stable at R15.5 m. External Services revenue resulting from grass cutting and tree pruning activities with related parties grew by 179% to R42.3 m. 2.1.2

RESULTS OF OPERATIONS

Operational costs increased for the year by 16,8% to R415 m for the period (2007: R356 m). The key contributing factor to this was the positive impact of the increased revenue streams from External Services supporting the Mayoral 2010 Greening project of 200 000 trees. The Company posted a deficit of R4.1 m for the period under review, against a surplus of R9.6 m (restated) for the previous year. The contributing factors to the current deficit are as reflected in the table on the following page.

28

Contributing factors to the current deficit: R’000 Income: External

15,692 Services

and Increased sales activities

14,865

cemeteries Other Income

Increased income

Cost of Sales

Increased sales activities

Expenditure:

827

( 10,027)

( 7,389)

Payroll

Prior year adjustments

( 1,810)

Fleet

Increased interest rates and fuel prices

( 2,606)

Consulting Fees

Increased activities

General Expenses

Tree Planting

Depreciation and Amortisation

FV

Repairs and maintenance

Increased activity

Investment Income

Interest FV and Interest Paid

(275) ( 3,043) 345 ( 2,321) ( 81) ( 4,126)

2.1.3

CASH FLOW

The Company ended the year in a favourable cash position and through effective cash flow management and the previous year surplus, ended the year with cash on hand of R181 m (2007 = R189 m). The decrease over the previous year was due to an investment of R11.3 m in a new Head Office in Braamfontein.

29

2.1.4

STATEMENT OF FINANCIAL POSITION

Property, Plant and Equipment increased by a net R21.8 m to R59.2 m at cost. The increase is due to the replacement of aging and obsolete operational equipment, and the refurbishment of the Head Office. The ability of the Company to meet its financial obligations remains stable with the current ratio test remaining steady at 1, 51: 1 (2007 = 1, 67: 1).The decrease is largely due to the investment in property, plant and equipment. During the year, actuarial valuation of all employee benefits was undertaken. A company specific valuation was done on some of the employee benefits, and the liability taken to the Statement of Financial Position. The City of Johannesburg Metropolitan Municipality in the Sale of Business Agreement agreed to accept all liabilities relating to these employee benefits prior to January 2001. The value of this asset has been accounted for in the Statement of Financial Position. The valuation of the defined benefit pension funds was undertaken at member level and the City of Johannesburg Metropolitan Municipality has accepted liability for all funding deficits up to and including 30 June 2007. The Company will be liable for any further deficits that may arise post 30 June 2008 when a company specific valuation is undertaken.

30

Section 3: Capital Projects The Capex budget for 2007/8 is made up of R12.5 m CoJ Capex, R10 m MIG, R6 m Bulk Contribution, R12.5 m Bulk Contribution for Beautification and R11.6 m for 2010.

This

resulted in a R52.5 m Capex allocation for this financial year. All the projects for 2007/08 have reached practical completion. Reflected expenditure is inclusive of Retention and maintenance fees. Job opportunities of about 667 (Capex only) have been created through the EPWP Programme that forms part of the projects execution. Summary of the key areas of expenditure and funding source Details

Original Budget

Revised Budget

Actual Expenditure

R’000

R’000

R’000

Capex

10 200

12 500

12 288

MIG

10 000

10 000

10 000

0

11 600

11 930

Bulk Contributions

6 000

6 000

6 562

Beautification (Bulk Contribution)

4 084

12 584

12 056

30 284

52 684

52 836

2010-KK

TOTAL

The table above reflects total Capex expenditure.

31

PROJECT/ INFRASTRUCTURE REPORT Analysis of the Master Capital Programmes PROGRAMME

PROJECT

COMPLETION DATE

PROJECT PERIOD Start Date

Duration

Capex

Community

Yrs

R'000

Region No

Cemeteries and Crematoria Avalon

July-07

1

2 000

D

June 2008

Avalon 2

July-07

1

2 300

D

June 2008

Diepsloot Lenasia

July-07 July-07

1 1

2 000 2 000

A G

June 2008 June 2008

July-07

1

2 000

D

June 2008

July-07

1

1 500

D

June 2008

July-07

1

700 12 500

D

June 2008

New Park Developments Diepkloof Memorial Diepkloof Extension Chiawelo TOTAL

The above table indicates the Capex Masterplan as agreed with the COJ in the business plan.UAC programmes shows alignment with the overall City’s Capital Investment Programmes and it has been ensured that City Park’s programmes are aligned. This excludes 2010 projects.

32

NUMBER OF PROJECTS APPROVED PER AREA OF DEVELOPMENT Project Category

Approved

Cancelled / Deferred

Balance

New Park Development

4

0

4

Park Upgrades

4

0

4

Cemetery Upgrades

3

0

3

KK Programme

5

0

5

Bulk Contributions

7

0

7

TOTAL

23

0

23

The table above emphasises the number of projects to be executed in this financial year as per the Business Plan.

JCP CAPEX 2007/8 SUMMARY Project Name

Project Description

Original Budget R’000

Revised Budget R’000

Actual Exp. R’000

Project Status

Zone

Jobs Created

Cemeteries and Crematoria Avalon

Cemetery Upgrade

2000

2000

1 997

Complete

3

20

Avalon 2

Cemetery Upgrade Cemetery Upgrade

2300

2300

2 197

Complete

3

0

2000

2000

1 933

Complete

4

16

2000

2000

1 957

Complete

3

15

Diepsloot Lenasia

Cemetery Upgrade

Park Upgrades Diepkloof Memorial Park Diepkloof Park 1284

Park Upgrade

2000

2000

1 999

Maintenance Phase

3

29

Park Upgrade

750

*1500

1 506

Construction Phase

3

29

Chiawelo Park

Park Upgrade

700

700

699

Maintenance Phase

3

39

Mapetla Park

Park Upgrade

5000

5000

5000

Maintenance Phase

3

217

Pioneer Park

Park Upgrade

2550

2550

2550

Complete

4

86

33

Project Name

Project Description

Original Budget R’000

Revised Budget R’000

Actual Exp. R’000

Project Status

Zone

Jobs Created

Maintenance Phase

2

19

New Park Developments Cosmo City Parks

New Park Development

2450

2450

2450

2010- KK Programme Open Space Dev. Spatial Layout and Studies Dorothy Nyembe Nursery TOTAL

Mofolo & Mapetla Parks Rehabilitation EIA & Designs

0

7300

7 320

Practical completion

3

191

0

3500

3 613

Complete

Various

0

Construction of a Nursery in Soweto

0

800

997

Practical completion

3

6

21 750

34 100

The table above summarises the Capex for 2007/8.

34

34 218

667

BULK CONTRIBUTIONS PROJECTS PROJECT NAME

WARD

BUDGET R’000

COMMITTED FUNDS R’000

AMOUNT PAID R’000

Weltevreden Park

89

500

Landscaping

Complete

499

473

Midrand Cemetery

94

1000

Entrance gate & admin block Refurbishment of office building & building of multi purpose hall Park development

Practical completion Complete

979

979

Rietfontein NR

94

2270

2 270

2 269

Witkoppen Park

94

1000

Practical completion

1000

1000

Innisfree Park

103

1000

Park development

Practical completion

572

572

Botanical Gardens

88

1191

Construction of the Entrance

Complete

1 259

1 115

Panorama Cemetery

97

155

Building structure for ashes

Practical completion

154

154

6 733

6 562

TOTAL

SCOPE

7 116

STATUS

This table shows the projects funded by Bulk Contributions that have been implemented in the current fiscal year 2007/ 08.

35

Beautification and road island development projects NO

Project Name

Region

Zone

Completion Date 2007-8

Size of Project

Work Description

Project Cost (Rands)

Funding Source

Development of tee box, putting green & target greens Planting of 300 trees

136 000

JCP

1st Prize My Dream Park Competition- water feature, paving, grass, trees, playground equipment & landscaping 2nd Prize My Dream Park Competitionpaving, grass, trees, playground equipment & landscaping 3rd Prize My Dream Park Competitionplayground equipment & lanscaping Planting of lawn, roses & general infrastructure & horticultural development Planting of 500 trees- Greening of Soweto

250 000

Total SA

150 000

Total SA

100 000

Total SA

161 000

JCP

1

Golf Driving Range at Alexandra

E

1

1st Quarter

300m

2

Planting of trees at Alex Driving Range Makhoarane Primary School

E

1

1st Quarter

300 trees

3

D

3

1st Quarter

2500m2

4

Skeen Primary School

E

4

1st Quarter

1000m2

5

Ikaneng Primary School

D

3

1st Quarter

1000m2

6

Rose Ave Park, Lenasia

G

3

1st Quarter

10000m2

7

Planting of trees in Noordgesig

C

2

1st Quarter

500 trees

8

Christiaan de Wet development of road island at Clearwater Mall

C

2

2nd Quarter

850m

Landscaping, trees, ornamental pots, lawn, pebbles, jumbo rocks & irrigation

832 998

BULK

9

Development of Olievenhout street, Randpark Ridge Development of intersectionChristiaan de Wet/ Ontdekkers Development of Linksfield Town Entrance

C

2

2nd Quarter

1100m

BULK

2

2nd Quarter

120m2

Water Feature, lawn, roses, ground covers, palm trees, bollards, irrigation Planting of aloes & installing jumbo rocks

709 103

C

71 994

BULK

E

1

2nd Quarter

7500m2

Development of water feature, landscaping, planting of lawn, palm trees & plants.

520 363

JCP

Development of Katherine Street, Sandton Planting of trees, Marie Street Parkmore Kliprivier Road Pruning of Trees between Booysens & Rifle Range Road Development of Glenvista Town Entrance Development of Road Islands on Bellairs Drive, Glenvista Extreme Park MakeoverDiepkloof

B

4

2nd Quarter

570m

170 000

BULK

E

4

2nd Quarter

60 trees

Planting of roses, repairs to irrigation system, cover with bark chips Planting of 60 trees on road islands

F

1

3rd Quarter

3km

F

3

3rd Quarter

1500m2

F

3

3rd Quarter

2.5km

D

3

4th Quarter

19000m2

10 11

12 13 14

15 16 17

18

Cedar Road - Fourways

C

2

4th Quarter

250 m

19

Cedar Road - Witkoppen

C

2

4th Quarter

350 m

20

New Road - Midrand

A

4

4th Quarter

1044 m

21

Rivonia Road

B

4

4th Quarter

450 m

22

Katherine Street

B

4

4th Quarter

300 m

23

William Nicol Road

C

4

4th Quarter

500 m

24

Sandton CBD Area, Rivonia Road

B

4

4th Quarter

330 m

25

Main Road

B

4

4th Quarter

300 m

26

South Road, Wendywood

A

4

4th Quarter

1200 m2

27

Six Street, Midrand

A

4

4th Quarter

200 m

28

Church Str, Midrand

A

4

4th Quarter

420 m

29

Old Pta Road, Midrand

A

4

4th Quarter

3 km

30

Midrand Court

A

4

4th Quarter

500 m2

31

Bungalore Park, Lenasia

G

3

4th Quarter

32

Devland Park, Soweto

D

3

4th Quarter

33

Naledi Park, Soweto

D

3

34

Meadowlands Park, Soweto

D

3

35

Bram Fischer Park, Soweto

C

36

Traffic Circle, Main Reef Road

37

Krugersdorp / JHB Town Entrance Road Island, Main Reef / Corlett Road Road Island, Main Reef / Highgate

38 39

Street Trees

JCP

JCP

Pruning of trees

Horticultural development, water feature Planting of trees on road islands and basic horticultural development Full Park Development- hard and soft landscaping, water feature, TV screen, etc.

JCP

198 098

BULK

4 600 000

Capex/ Sponsor

BULK

Beautification of road islands-planting of trees and flower beds, paving and hardscape work Beautification of road islands-planting of trees and flower beds, paving and hardscape work Beautification of road islands- planting of trees and flower beds, paving and hardscape work Beautification of road islands-planting of trees and flower beds, paving and hardscape work Extension of road island development, planting of roses Beautification of road islands-planting of trees and flower beds, paving and hardscape work Beautification of road islands- development of flowerbeds Beautification of road islands-development of flowerbeds Beautification of road islands-planting of trees and flower beds, paving and hardscape work Another venue to be identified by Zone Manager, Coubrough Road is not suitable for development Development new Road Islands and planting additional plants in existing Islands

299 484

Bulk Contribution

388 878

Bulk Contribution

725 704

Bulk Contribution

500 000

Bulk Contribution

151 000

Bulk Contribution Bulk Contribution

892 466

317 935 236 386 163 536

Bulk Contribution Bulk Contribution Bulk Contribution

434 960

Bulk Contribution

172 927

Region A

Refurbishment of the Middle Road Islands, planting of additional plants Development of Garden Outside the Court, including the installation of a Waterfeature

156 604

Region A

169 814

Region A

7000 m2

Development of a Park with a Waterfeature

200 000

Hort. Dev

7500 m2

Development of a Park with a Waterfeature

600 000

Region D

4th Quarter

2000 m2

Development of a Park with a Waterfeature

500 000

Region D

4th Quarter

9000 m2

Development of a Park with a Waterfeature

700 000

Region D

3

4th Quarter

1 ha

Development of a Park with a Waterfeature

277 707

Region C

C

2

4th Quarter

300 m2

Developoment of circle plus a Waterfeature

40 000

Bulk

C

2

4th Quarter

200 m2

Bulk

2

4th Quarter

100 m2

45 000

Bulk

C

2

4th Quarter

200 m2

Developoment of Town Entrance with a Waterfeature Development of Road Island plus a Waterfeature Development of Road Island plus a Waterfeature

20 000

C

25 000

Bulk

36

The table on the previous page indicates a total of R15 m was spent in this financial year on beautification projects with funding from various sources, including Bulk Contributions, Sponsors, Regions and JCP Capex. Included in the list of projects completed were 24 road island beautification projects and 11 park developments, including the very successful 24-hour Extreme Park Makeover in Diepkloof. Water Features reinstatement and development 2007-8 A total of 40 water features were reinstated / developed during 2007-8 resulting in a total of 68 operational water features in the City of Johannesburg for which the Company is responsible. City Parks is therefore well on track towards achieving the target of 100 water features by 2010, as displayed in the figure below.

JCP Water Features Development & ReinstatementProgress against plan 80 70 60 50 40 30 20 10 0

68 47 28 10

68

54

33

13

2004-5 2005-6 2006-7 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10

YTD 07-08

Target

0

0

15

5

8

13

14

Actual

10

3

15

5

14

7

14

40

Cumulative

10

13

28

33

47

54

68

68

5

37

5

5

5

5

5

5

5

Section 4: Performance against IDP and City Scorecard Johannesburg City Parks had a very successful year in terms of performance and achievement. Set out below, is an analysis of JCP’s performance against its KPI’s for the 2007/08 financial year as set out in the City’s IDP scorecard.

The report analyses the

performance of JCP in terms of the IDP scorecard, measuring performance in terms of both JCP’s impact and its financial and resource management. Targets exceeded Key Performance Area: Service Delivery JCP exceeded the following service delivery targets: 1) The target of 10 000 for the number of mature, indigenous trees to be planted, was exceeded by 39 245 trees. 2) The following two targets for maintenance cycles were exceeded due to increased maintenance in specific areas as a result of a special effort to increase service delivery: 

Road island maintenance cycles were improved from 60 days to 40 days on average; a variance of +33%.



Side walk’ maintenance cycles were improved from a target of every 120 days to an average of 100 days; a variance of +16.6%.

3)

The target of 3 developments in cemeteries were exceeded, as 4 developments were done.

Key Performance Area: Occupational Health, Safety and Security 1)

The target of 10 for the number of security interventions by the Park Rangers was exceeded by 21 interventions.

38

Key Performance Area: Economic Development and Job Creation 1)

In terms of BEE procurement, the Company exceeded both its total expenditure as well as Operating targets: the total BEE expenditure target of 70% was exceeded with an actual of 87% having been achieved and the Capex target of 70% was exceeded with an actual of 84%.

2)

JCPs’ EPWP programme performed well and the annual target of 350 for job creation was exceeded with 1 133 jobs being created.

Key Performance Area: Customer Satisfaction and responsiveness 1) The annual customer satisfaction index rating’s target of 70% was well exceeded with an actual rating of 78%. 2)

The target of 10 000 beneficiaries reached through environmental education programmes was exceeded with 9 684 beneficiaries being reached.

Key Performance Area: Safe, Clean and Green City 1)

A target of 2 was set in terms of the number of Conservation Areas initiated for re-proclamation as Nature Reserves. This was well exceeded as a number of 16 applications were initiated.

2)

The target of 5 for areas in Regions to be initiated in which parks and open spaces can be appropriately rezoned to reserve the land, was exceeded as 18 areas were initiated.

3)

Compliance to OHASA checklist. The percentage compliance with the OHASA checklist: the target of 85% compliance was exceeded with 90% having been achieved.

39

Targets achieved JCP achieved the following IDP targets: Key Performance Area: Service delivery 

Maintenance cycles of 7 days for flagship parks were achieved



Maintenance cycles of 21 days for developed parks were achieved



Maintenance cycles of 60 days for undeveloped parks were achieved



Maintenance cycles of 14 days for selected main arterials were achieved



Target for 3 developments in parks were achieved

Key Performance Area: Occupational Health, Safety and Security 

Percentage Compliance with Environmental Management System: the target of 90% compliance was achieved.

Key Performance Area: Effective Financial Management 

Fully SA GAAP compliant asset register: the target of 100% compliance was achieved.



Reconciliation of inter-company balances with the CoJ: the target of 100% compliance was achieved and maintained.



Reconciliation of intra-company balances with other Metropolitan Entities: the target of 100% compliance was achieved.



Percentage attainment of clean Audit Report attained by JCP: the target of 100% was achieved.

Key Performance Area: Customer Responsiveness 

Number of monitoring reports on maintenance of parks: the target of 1 per quarter was achieved.

40

Key Performance Area: HIV and AIDS 

100% of the workforce had been exposed to HIV and AIDS awareness programmes.

Key Performance Area: Staff Development 

Percentage Skills training as a percentage of payroll budget: the 1 % target was achieved.

Targets partially achieved Key Performance Area: Effective Financial Management 

Percentage of ME’s Capital budget spent: JCP spent 100,1% of its Capital budget against a target of 100%.



Variance against ME’s operating budget 2,3% versus a target of 0% variance. This was due to extra revenue received that resulted in high input costs and increased service delivery.

41

Section 5: Assessment of Arrears on municipal taxes and service charges 5.1

Amounts owed by JCP for service charges

Name of entity City of Johannesburg City Power Jo’burg Water

Piki Tup Propcom Jo’burg Zoo Civic Theatre

Amount Owed R’000 2,177 686 4,364

137 5 16 2

Status Amount provided for in JCP’s books Amount provided for in JCP’s books Amount provided for in JCP’s books Amount provided for in JCP’s books Amount provided for in JCP’s books Amount provided for in JCP’s books Amount provided for in JCP’s books

Comments Current Current Current plus accounts under dispute relating to transactions from prior years Current Current Current Current

All accounts are current as at 30 June 2008 payable in July 2008, except for Jo’burg Water, where certain billings are investigated.

42

5.2: Assessment of Director’s and senior managers’ municipal accounts Name of Director/ Senior Manager G Zabala

Designation

Name of Municipality

Chairperson of the Board Managing Director Non-Executive Director Non-Executive Director

Johannesburg

Non-Executive Director Non-Executive Director

Midvaal

A C Carolissen

Non-Executive Director

Tshwane

N Mabaso

Non-Executive Director Non-Executive Director Non-Executive Director Operations Executive Marketing & Communications GM: Assurance Services

Johannesburg

Chief Financial Officer Company Secretary Operations Executive: Environment and Infrastructure Human Resources Executive

Johannesburg

L L Williamson HC Kasan K Venier

V Ramsing M Bahula

S M B Nyalunga T B Nzimakwe G Cooke H H Fouche L Radzuma

K J van Eck M Sayed Hassan P Meyer

A BuzoGqoboka

Johannesburg Johannesburg Johannesburg

Johannesburg

Tshwane Johannesburg Johannesburg Johannesburg Johannesburg

Johannesburg Johannesburg

City of Ekhuruleni

43

Municipal Account Name & Account Number G Zabala 900706021 LL Williamson 900104563 Kasan HC 500065574 No personal municipal account

Account Status

Comments

In order In order In order In order

VB & GH Ramsing 40000786 M Bahula G063

In order

Carolissen AC & AL 2068458900 2028316835 Mabaso TM & NN 400764321 Nyalunga SMB 2079410101 Nzimakwe 206922545 Cooke G &VW 206747903 Fouche BN 502444401 No personal municipal account

In order

K J van Eck 202029210 M Sayed Hassan 504120480 Meyer PS & MD 302336913

In order

No personal municipal account

In order

In order

The Property Managers Body Imbali Lodge Body Corporate BS Ritchken Ref. nr. 52701 Glenvista Village Complex

In order In order In order In order In order In order

Sectional Title Pipers Brook Body Corporate NL Radzuma 4210/0019

In order In order

Sectional Title

Section 6: Statement on amounts owed by Government Departments and public entities

Name of entity

Amount Owed

Status

Comments

NIL

NIL

R’000 NIL

NIL

44

Section 7: Recommendations and Plans for the next financial year. Recommendations and plans for 2008/9 Tree planting plan for 2010 The planting of 200 000 trees by 2010 remains a challenge in terms of financial resources and the availability of trees in the market. Johannesburg City Parks is trying to collaborate with the private sector in an effort to obtain financial resources for trees. Delivery Agenda 2008 The planting of 62 000 trees in 2008/9 as well as the beautification projects for 2010 will take high priority. Environmental Sector Plan As for the Environmental Sector Plan, the management of wetlands, dams and other water bodies inter alia will comprise of the following projects: 

Removal of aquatic invasive plants from water bodies (mainly hyacinth)



Maintenance and control of reeds



Maintenance of bird sanctuaries, river trails and corridors.

With regard to the biodiversity protection programme, projects will inter alia include the following: 

Development and implementation of ecological master plans for selected nature areas



Zoning of selected priority open spaces



Implementation of open space biodiversity education programmes.

Challenges for 2008/9 A challenge for 2008/9 is the provision of burial space in the South and financial resources for the Klipriver/ Klipspruit Corridor Legacy projects. Also, new Capex developments without Opex for the maintenance thereof remain a challenge.

45

CHAPTER THREE: DIRECTOR’S REPORT AND GOVERNANCE Section 1: Corporate Governance Statement The Board of Directors and Executives recognise and are committed to the principles of openness, integrity and accountability advocated by the King Committee’s Code of Corporate Practices and Conduct. Corporate Governance within Johannesburg City Parks is managed and monitored by a unitary Board of Directors, several Board committees and the Executives. The Board is of the opinion that the Company currently complies with the principles incorporated and enunciated in the Code of Corporate Practices and Conduct, as set out in the King Report ll.

Section 2: Board of Directors The Board is chaired by a non-executive director, Mr G Zabala, and consists of nine nonexecutives and one executive director, the Managing Director, Mr L L Williamson. There were no changes in the directorship of Johannesburg City Parks during the period under review. The Board remains responsible to the CoJ, the sole member, in the exercise of its duties. Johannesburg JCP is accountable to its stakeholders, the Johannesburg Citizens and its parent municipality. A Service Delivery Agreement (SDA) concluded in accordance with the provisions of the Municipal Systems Act governs JCP’s relationship with the CoJ. The Board provides Monthly, Quarterly, Bi-Annually and Annual Reports on its performance and service delivery to the parent municipality as prescribed in the SDA, the MFMA and the MSA. Non-executive Directors contribute an independent view to matters under consideration and add to the depth of experience of the Board. The roles of Chairperson and Managing Director are separate, with responsibilities divided between them. The Chairperson has no executive functions. Board meetings are held at least quarterly, with additional meetings called where circumstances necessitate. Members have unlimited access to the Company Secretary, who acts as an advisor to the Board and its committees on matters including compliance with Company Rules and Procedures, statutory regulations and sound corporate governance.

46

The Board or any of its members may, in appropriate circumstances and at the expense of the Company, obtain the advice of independent professionals. During the course of the financial year, the Directorship and skills base was used to determine the appropriate committees of the Board and the membership thereof. These changes to the committees of the Board resulted in more diligent monitoring of performance and guided the company strategy. To this end, the Corporate Strategy was reviewed early in 2008 and a new corporate strategy was developed. All the Operational areas reviewed their Key Performance Areas and were aligned to the Corporate Scorecard which was geared towards accountable service delivery. The Audit & Risk Committee which meets regularly and has there Independent Non-Executive Directors over and above the two non-executive directors who sit on the board continued to emphasize the balance of the portfolio.

In addition, specific attention was drawn to

performance as envisaged in the Municipal Finance Management Act of 2003. The Committee of Chair’s, chaired by the Chairperson of the Board reviewed matters considered by the committees and advised the Board Agenda. The Committee’s membership comprises of the chairpersons of the various committees of the Board who present on all matters considered and deliberations which took place at committee level. This provides an opportunity for members of the Board to be better advised of company matters prior to Board. The following committees had existed at the beginning of the year, each of which is chaired by a non-executive director: 

Audit and Risk Committee



Remuneration Committee



Committee of Chairs



Marketing Committee



Human Resources Committee



Finance and Operations Committee



SHEQ Committee

At the end of the Year, the Finance and Operations Committee and the SHEQ Committees had been restructured to Finance and SHERQ Committee and Operations Committee.

47

Attendance at meetings held during the year was as follows: Attendance at meetings held during the year was as follows:

AGM

Board

Audit and Risk

Remune -ration

Committee of Chairs

Finance and Operations

Human Resource s

Marketing

SHEQ

No. of meetings held G Zabala# (MA) L Williamson (MC) Managing Director A Carolissen (MC) N Mabaso (FA) SMB Nyalunga (FA) TB Nzimakwe (MA) VB Ramsingh (MI) K Venier (FW) H Kasan (MI) M Bahula (MA)

1

6

6

4

4

4

6

4

4

1

6

4

4

1

5

6

4

4

1

5

1

1

1

6

1

4

3

5

4

4

1

1

5

1

3

3

1

6

4

2

1

1

5

3

4

1

5

1

1

1

5

1

6

F Female M Male # Chairperson

A African C Coloured

6

4

1

4 5

4

6 6

4

3 4

4 3

W White I Indian

For details, refer to the previous pages.

48

3

The Board of Directors has adopted the Board Charter, which encapsulates the City of Johannesburg’s Governance Protocol and includes matters of ethics, procedure and the conduct of committee members. Registers are kept and updated on the disclosure and declaration of interests of directors and senior management. The Board and Senior Management ensure that there is full material compliance to all relevant legislation. The Company Secretary has certified that all statutory returns have been submitted to the Registrar of Companies

49

Section 3: Board Committees The following committees have been formed, each of which is chaired by a non-executive director. 

Audit and Risk Committee The Audit Committee was chaired by Mr T Nzimakwe who is an independent nonexecutive director of the Company. The Committee has been established, in line with the King reports recommendations on Corporate Governance, with the goal of deliberating and taking decisions on matters relating to the Company’s Finances, Strategy and policies.



Remuneration Committee The Remuneration Committee was chaired by Mr G Zabala, the Chairperson of the Board of Directors and comprises of the Chairpersons of the Committees of the Board, who are all independent non-executive directors of the Company. The Committee has been established, in line with the King reports recommendations on Corporate Governance, with the goal of considering and recommending to the Board of Directors on matters pertaining to the remuneration packages of executives and employees.



Committee of Chairs The Committee of Chairs was chaired by Mr G Zabala, the Chairperson of the Board of Directors. The Committee has been established with the goal of maintaining and guiding the strategic direction of the company of reviewing the reports and matters considered by the committees of the Board. To this end, the committee is attended by the Chairpersons of the various committees.

50



Finance and SHERQ Committee The SHEQ Committee was chaired by Mr A Carolissen who is an independent nonexecutive director of the Company. The Committee has been established with the goal of considering matters relating to the Financial affairs of the company as well as the Occupational Health and Safety and Environmental impact of JCP’s operational activities.



Human Resources Committee The Human Resources Committee was chaired by Mr V Ramsingh who is an independent non-executive director of the Company. The Committee has been established with the goal of considering matters relating to the conditions of service and employer-employee relationship.



Marketing Committee The Marketing Committee was chaired by Ms N Mabaso who is an independent nonexecutive director of the Company. The Committee has been established to develop and manage the company’s reputation and exposure through policy development and marketing initiatives.



Operations Committee The Operations Committee was chaired by Ms S.M.B Nyalunga who is an independent non-executive director of the Company. The Committee has been established with the goal of considering ad recommending to the Board on matters relating to the Company’s operational activities, policies, service delivery and Information Technology solutions.

51

Section 4: Directors’ Remuneration Executive Director

LL Williamson

Position Managing Director

R’000

R’000

R’000

2008 R’000

2007 R’000

Salary 1 247

Travel 32

Bonus 255

Total 1 534

Total 981

Non- Executive Directors Name

Directors Fees

G Zabala A Carolissen M Bahula N Mabaso SMB Nyalunga TB Nzimakwe V Ramsingh K Venier H Kasan

R’000 231 109 85 106 81 158 129 91 89

Total

1 079

52

Senior Management

Position

R’000

R’000

R’000

2008 R’000

2007 R’000

Position

Salary

Travel

Bonus

Total

Total

G Cooke

Operations Executive

875

80

191

1 146

1 112

HH Fouche

Marketing and Communications Executive

795

91

177

1 063

999 999

HG Nel

Company Secretary (resigned 31 May 2007)

-

-

-

-

DT Nkosi

Human Resources Executive (resigned 30 April 2007)

-

-

-

-

L Radzuma

861

General Manager: Assurance Services (appointed June 2006)

KJ van Eck

Chief Financial Officer

B Andrews

Acting Human Resources Executive (July to November 2007)

A Buzo-Gqoboka

Human Resources Executive (Appointed 1 December 2007)

M Sayed-Hassan

Acting Company Secretary (appointed 1 September 2007)

P Meyer

Operations Executive:Infrastructure (appointed 1 June 2008)

53

591

55

64

710

561

835

120

191

1 146

1 076

228

20

51

299

118

454

42

99

595

-

378

54

90

552

55

65

7

172

244

298

4 221

469

1 035

5 725

6 079

Section 5: Company Secretarial Function The Company Secretary is responsible for the following areas of Johannesburg City Parks’ business: 

Corporate Governance



Legislative & Statutory Compliance



Secretarial



Legal Advice



Safety, Health, Environment and Quality (SHEQ)

In terms of protocol arrangements, the MoE’s (including Johannesburg City Parks) liaise with the Office of the City Manager through the SHU on governance and compliance issues and service delivery matters. The Company has complied, and is in compliance, with the Companies Act and all other applicable legislation. The Company simultaneously strives to comply with the King Reports on Corporate Governance and the new amendments to the Municipal Finance Management Act (MFMA) and the Municipal Systems Amendments Act. The Company Secretary has in addition ensured that the Directors of the Company were advised of their roles, duties and responsibilities. The Company registers and related statutory requirements have all been maintained as required by the Company’s Act and best practice.

54

Section 6: Risk Management and Internal controls Risk Management within Johannesburg City Parks is a process, effected by the Board of directors, management and other personnel, applied in a strategy setting and across the company, designed to identify potential events that may affect the company, and manage risk to be within its risk appetite and to provide reasonable assurance regarding the achievement of the company’s objectives. Risk Management Unit The key risks facing Johannesburg City Parks have been classified according to the following nine broad risk categories: strategic, financial, human capital, mayoral priorities, environment, regulatory, reputation, technology and labour. The following risk management activities were undertaken during the year under review: RISK ASSESSMENT Corporate and Operational risk assessments have been completed for all areas within Johannesburg City Parks. Risk registers have been prepared for all departments and are updated on a quarterly basis in terms of any changes and progress made on actions taken to improve management of identified risks.

The status of the risk registers are

communicated to The Audit and Risk Committee and Operations Committee on a quarterly basis. DISASTER MANAGEMENT AND BUSINESS CONTINUITY Disaster Management Plan The current year has noted a significant improvement on the implementation of the disaster management within the organization. The disaster management plan was reviewed and approved by the Board during the second quarter.

55

Business Continuity Plans A highlight for the financial year under review has been the development of business continuity plans for the business functions identified as critical to the continuity of Johannesburg City Parks Operations. The process entailed identifying mission critical activities, conducting risk assessments and selecting the suitable strategies. Possible business disruptions in each department were identified and appropriate continuity plans were also developed. The finalized continuity plans have been submitted to the Executive Committee for consideration and will further be tabled before the Audit and Risk Committee for recommendation to the Board for approval. This process is expected to be finalized in the first quarter of the new financial year. Training The disaster management team members were formally appointed and trained. Training still needs to be conducted at a lower level. Disaster Management and Emergency management Forums Disaster and Emergency Management Forums were formally established. This is line with the Disaster Management Framework. These forums will be used as a platform to deliberate on all Disaster and Emergency Management issues of the Company and to make appropriate recommendations, where necessary. The Disaster Management forum is mainly represented by General Managers and Managers from Operations and other departments, while the Emergency Management Forum comprise of Specialists, Zone managers and SHERQ co-ordinators. The focus in 2008/09 financial year will be on training the Emergency Management Committees in the depots and to roll out the Operational Emergency Management Manual. Disaster Risk Assessments Disaster risk assessments for twenty five (25) sites were conducted and the Emergency Management Manual was developed for the Operations department.

56

Risk Control Standards The City Of Johannesburg’s Risk Control department introduced Risk Control Standards for all municipal entities. The standards are considered vital in the prevention or minimisation of the daily threats faced by our Operations environment. The standards mainly focus on the following areas: Risk Management, Security, Motor fleet, Legal liability in terms of OHSACT, Fire defence and Emergency planning. A minimum level of 85% compliance is required in each Municipal Entity. The CoJ Risk Control department also conducted site assessments in the selected facilities, with the aim of identifying levels of compliance to the Risk Control Standards in our organization. According to the reports obtained, the safety and risk standards for the three depots (namely, depot 406 & Springfield – Facilities Management, Cemeteries & Crematoria) assessed were found to be fairly managed. The CoJ Risk Control department also conducted presentations on the Risk Control standards to the Specialists and SHERQ coordinators. RISK FINANCING There has been a reasonable reduction in losses for the current year based on a quarter per quarter analysis except for the second quarter. The huge variance in the second quarter relates to major event claims resulting from hail storms as well as the theft of cables within various facilities. Majority of the claims were assets claims as a result of damaged and stolen fence, theft of computer equipment, etc. Management is continuously developing and enhancing its risk and control procedures to improve the mechanisms for identifying, evaluating and monitoring risks.

57

Section 7: Internal Audit Function The Board has the overall responsibility for the Company’s system of internal control. The responsibility has been delegated to the Audit and Risk Committee. The Audit and Risk Committee exercises this oversight role on internal controls through the review of quarterly audit and risk reports. Internal Audit is an integral part of Johannesburg City Parks. It is an independent appraisal function to examine and evaluate the Company’s activities. The primary objective of the Internal Audit is to provide assurance on the adequacy and effectiveness of systems of internal controls, risk management and governance processes. In terms of section 165 (1) of the Municipal Finance Management Act (MFMA), each Municipal Entity must have an internal audit unit. It is functionally responsible to the Audit and Risk Committee and reports administratively to the Managing Director in providing reasonable assurance of the effectiveness of the Company’s corporate governance, risk management processes and the system of internal control. The Company’s internal controls and systems are designed to provide cost effective, reasonable, but not absolute assurance as to the integrity and the reliability of the annual financial statements and that assets are adequately safeguarded against material losses or unauthorized losses and transactions are properly authorized and recorded. Management ensures that internal controls are embedded as part of the daily operational activities. Areas of improvement identified in some of the audits conducted during the course of the year. Management has committed to implement recommendations agreed upon and in our opinion; this will contribute to an improvement of the internal control environment and effective governance processes. Section 165 (2) (a) of the Municipal Finance Management Act (MFMA) specifically states that each municipal entity must prepare a risk-based audit plan for each financial year. Therefore, key risks identified by management during the corporate risk assessment, which could be detrimental to the attainment of strategic objectives were considered in the development of the plan. The plan was approved by the Audit and Risk Committee and successfully implemented.

The plan enabled the unit to evaluate the effectiveness of

internal controls, risk management and governance processes.

58

Section 8: Response to the Auditor-General Report The Auditor General raised the following issues for the year-ended 30 June 2007. The following is the status report as at 30 June 2008. 1. Recognising revenue and or expenses based on the stage of completion of the

project The nature of JCP’s business is to provide the parks, cemeteries and environmental conservation services for and on behalf of the City of Johannesburg and other Municipal Owned Entities (“MOE”). Many of these services are rendered on a project basis, as well as contracting in external service providers where JCP has a shortfall in recourses. Thus revenue is earned and project costs incurred on various projects. We have noted that the revenue generated from MOE’s, as well as the expenses incurred for external contractor services procured, were not recorded on a stage of completion basis as required by IAS 18: Revenue (refer paragraph 20(c)). This standard requires management to record all revenue earned, as well as the matching expenses incurred on a time basis, reflecting the stage of completion of the project, and not only when amounts are invoiced to the relevant MOE, or when invoices are received from the external contractor. Current Status: This matter has been resolved. 2. Long duration of vacancies When we inspected the vacancy listing for the period 1 July 2006 to 30 June 2007, we identified vacancies that were not filled for longer than the norm of 3 months (65 working days). The following vacancies were open for longer than 65 days (in order: department; position):  

Finance: Fixed Assets Officer; and Project management: Project Coordinator

Current Status: This matter has been resolved. 3. Fix asset labels The following asset selected for physical verification was found not to have a label: Asset ID

Description

Acquisition Cost

509-000003

DIGITAL COPIER 1018 AFICIO

R 22 869.00

Acquisition date 19/08/2001

It must be noted that we did not perform a full review of the fixed asset register to identify any other such unlabelled assets. Current Status: This matter has been resolved.

59

Section 9: Corporate Ethics and Organisational Integrity JCP places a high premium on sound ethical behaviour and integrity, which should be beyond reproach. To achieve this, the Board adopted a Code of Conduct and a Charter encapsulating sound governance and an ethical approach to the way its directors, officers and employees conduct business internally and externally. This Charter subscribes to the principles set out in the King Reports ll. In addition to the above, the organisation is structured in a manner that sees clear and material observance of the Municipal Structures Act, Municipal Systems Act and Municipal Financial Management Act, as well as other pertinent legislation including the Companies Act, Labour Relations Act, Occupational Health and Safety Act and financial/tax legislation. The Audit and Risk Committee, consisting of independent non-executive directors as members as well as three additional independent members appointed by the member, oversees and considers audit matters and risk management issues. From the outset of the Company’s existence, there has been a clear system of delegated authority in place, which has a set framework for the organisational structure and executive implementation supported by the appropriate committee structures. All the above support the regular assessments of governance and legislative compliance reflecting a positive status in relation to ethics and organisational integrity.

60

Section 10: Sustainability Report Johannesburg City Parks trades in a solvent position and it is not anticipated that this will change. As is required by the MFMA, JCP has an approved budget and receives regular subsidy payments from the CoJ. The Board of Directors, and specifically the Audit and Risk Committee, consider the aspect of trading as a going concern and consider the Financial Reports. Human development receives high priority with training a special focus aimed at not only enhancing productivity and service delivery, but also the empowerment and skilling of employees and through the EPWP, community members.

The employees of JCP are

regarded as an extremely valuable asset and are treated in a caring manner. By its very nature, JCP is focused on the social and environmental issues, which are paramount for the development of a large metropolis and the approval of its inhabitants’ wellbeing.

The development of parks and nature areas, especially in the previously

disadvantaged areas, receives specific priority. It is acknowledged that the taking care of ancestors and ensuring a suitable final resting place for them, is especially important to many of the cultures represented in the community and JCP has ensured that sufficient burial space is provided both in the immediate and long term.

61

Section 11: Corporate Social Responsibility Projects 

Ernest W. Hobbs Primary School Tree Planting Johannesburg City Parks donated 6 trees to Ernest W. Hobbs Primary School in Eldorado Park, Extension 2. Learners planted trees in celebration of and highlighting the importance of Arbor Week.



My Dream Park Prize Competition The competition is aimed at educating, inspiring and instilling in learners the importance and value of nurturing our public open spaces, while acting as a catalyst to build civic pride.



International Day of the Disabled Person Christmas in the Park, the theme of the party held to mark International Day of the Disabled Person and to highlight the plight of disabled people. Johannesburg City Parks and Cell C adopted the initiative as part of a strategic vision to ensure that all outdoor recreation facilities cater for the disabled. Johannesburg City Parks and its private sector partner, Cell C, held an early Christmas party for more than a thousand disabled children. Zola 7 and Lesego Motsepe from Isidingo joined the festivities.



World Wetlands Day World Wetlands Day is marked each year around the world on 2 February. The aim of the day is to spread the message of the importance of preserving wetlands and serves to emphasize the value of wetlands on the biodiversity and human wellbeing. 2008's theme focused on the importance of well-functioning wetlands in ensuring human health and wellbeing by managing diseases, creating space for recreation, providing clean water, food and medicine.



Diepkloof Xtreme Park The countdown for the Diepkloof Xtreme Park, which poised to become the leading outdoor recreation hub in the Southern quadrant of Johannesburg, began on Thursday, 8 May 2008 at 18:00. The project was designed to act as a catalyst and to ready Joburg’s communities for the 2010 FIFA World Cup. In just 24 hours, the inviting green park with a big screen television, sports field and other exciting outdoor facilities was ceremonially opened by the Executive Mayor of Johannesburg.

62



Take a Girl Child To Work Day Johannesburg City Parks Head Office and Various Depots A partnership project between Johannesburg City Parks and Cell C with the sole aim of exposing girl children to various areas of their aspired or desired career choices, and thus allowing them to ensure that career selection enhances their personality, their ability to endure challenges and can therefore survive in such an environment in future.



Environmental Youth Summit – KNR Kibler Park The 2008 theme was “ALL HANDS ON DECK: TOWARDS LOW CARBON ECONOMY” and our key messages were: 1. Waste Management 2. Climate Change 3. Bio-diversity 4. Energy Efficiency

63

CHAPTER FOUR: HUMAN RESOURCES AND ORGANISATIONAL MANAGEMENT Section 1: Human Resource Management The human resources strategy in JCP focuses on attracting and retraining staff with key skills and competencies which will assist the company in achieving its objectives. To this end it seeks to create a sound industrial relations environment and sustainable employee wellbeing. The focus is also on dynamic training and development programs aimed at succession planning, retention and increased skills and productivity. Management encourages employees to think innovatively which is evidenced by the entries submitted to local and international awards programmes which focus on environmental management and the creation of liveable communities. In both instances JCP employees have been nominated for outstanding contributions made with regards to the implementation of projects in local communities. The company participates in the annual salary surveys run by reputable external remuneration consultants to ensure that it remains competitive in its remuneration policies and practices and that our pay scales are in line with market rates. We remain cognisant of the requirements of the relevant legislation such as the MFMA and also the CoJ’s policies. The table below indicates expenditure on salaries over the last 3 years: 2007/8

2006/7

2005/6

Total expenditure

R’000 415 453

R’000 355 660

R’000 316 607

Total payroll expenditure

273 040

240 943

212 494

The table below indicates the total payroll expenditure over the last 3 years as a % of the total budget:

Payroll expenditure as a % of total budget

2007/8

2006/7

66%

68%

64

2005/6 67%

Age analysis AGE

61-70 51-60 41-50 31-40 21-30 15-20 TOTAL

NUMBER OF EMPLOYEES OPERATIONS

OPERATIONS

NUMBER OF EMPLOYEES SUPPORT SERVICES

SUPPORT SERVICES %

75

4.57%

2

1.27%

78

4.3%

671

40.86%

35

22.29%

708

39.2%

656

39.95%

42

26.75%

701

38.8%

209

12.73%

51

32.48%

262

14.5%

31

1.89%

27

17.20%

58

3.2%

0

0%

0

0.00%

0.00

0.00%

1642

91,2%

157

8,8%

1799

100.00%

%

COMPANY TOTALS

COMPANY %

The majority of the company’s workforce is in the age categories 51-60 and 41–50. These two categories represent approximately 77% of the company’s workforce. The company is cognisant of the possible implications of the age profile on productivity and service delivery challenges, and has investigated alternatives to mitigate this. NO OF STAFF PER FUNCTION (30.06.2008) DEPARTMENT Parks Street Trees Project Management Unit Cemeteries External Services Technical Training Facilities Management Environmental Conservation Marketing & Communication Human Resources Finance Office of the MD Company Secretariat Company Totals

COMPLEMENT FILLED VACANT 995 987 8 199 196 3 13 11 2 195 156 3 11 11 0 6 5 1 147 158 11 120 118 2 57 56 1 27 26 1 48 46 2 21 21 0 8 8 2 1847 1799 35

The table above indicates number of employees per function.

65

Section 2: Employment Equity The following Employment Equity Targets were set in 2003 for a period of 5 years, based on the economically active population for Gauteng. Employment Equity targets as set in 2003 Categories

Target - Male

Target - Female

Total

PDI Total

PDI %

A

C

I

W

A

C

I

W

Executives

1

1

0

2

1

0

1

0

6

4

66

General

4

0

0

1

1

1

0

1

8

7

87

14

6

2

14

5

4

2

4

51

37

72

Professionals

17

1

1

8

8

0

1

3

40

31

77

Technicians

6

1

0

8

5

0

1

2

23

15

65

Target - Female

Total

PDI Total

PDI %

Managers Middle Management

Employment equity as at 30 June 2008 Categories

Target - Male A

C

I

W

A

C

I

W

Executives

1

2

1

2

1

0

0

0

7

5

71

General

2

1

0

3

3

1

0

0

10

7

70

12

5

0

8

6

2

1

3

37

29

78

Professionals

15

1

0

7

22

0

1

3

49

36

85

Technicians

13

2

0

8

5

0

1

1

30

22

73

Managers Middle Management

As can be seen from the above table, our performance is still on track based on our 2008 targets. Our focus then was based on redressing the situation at management levels, i.e. levels 2 – 4, which were predominantly white male at the time. Significant progress has been made in all of the above levels but increasing the female ratio at management level remains a priority for the organisation. In addition, the company will be reviewing its targets in the new year as we have completed the current 5 year cycle. 93% of all appointments during this financial year were from designated persons in previously disadvantaged groups, of which 59% was female and 78.2% African.

66

Employment Equity breakdown by Category (as at 30 June 2008)

MALE

FEMALE

WHITE MALE

FOREIGN NATIONALS Male Female

OCCUPATIONAL LEVELS

A

C

I

A

C

I

W

W

Top Management

0

1

0

0

0

0

0

0

0

0

1

Senior Management

3

1

1

2

0

0

0

4

0

0

11

6

0

9

3

1

1

10

0

0

41

8

2

34

7

7

11

21

0

0

136

13

4

69

4

0

6

12

0

0

611

5

1

51

0

0

0

0

0

0

999

Professionally qualified and experienced 11 specialists and midmanagement Skilled technical and academically qualified workers, junior management, 46 supervisors, foremen and superintendents Semi-skilled and discretionary 503 decision making Unskilled and defined decision 940 making Total Permanent Non-permanent Employees

1503

34

8

165

14

8

18

47

0

0

1797

1

0

0

1

0

0

0

0

0

0

2

GRAND TOTAL

1504

34

8

166

14

8

18

47

0

0

1799

67

Section 3: Skills Development and Training Training planned and delivered during the period under review was aligned to the company’s overall objectives of improved service delivery and stakeholder satisfaction. Training needs were identified through the departmental training needs analysis exercise and implemented according to the Workplace Skills Plan submitted to the SETA. The focus for the period under review was on management training which included project management, corporate governance, management of absenteeism, supervisory skills and disciplinary management. Customer Care, Safety, Adults Basic Education and HIV Aids awareness continues to feature high on the list of priorities for the company. Other training initiatives were aimed at improving technical skills such as horticulture, computer training, Environmental and waste Management systems, artisans, administrative and communication skills. Twelve women were identified for Mentorship Programme and were exposed to the following training interventions, Business English, Time Management, Business Presentation Skills. They were also exposed to on-the-job training at the level higher than their current levels, under experienced mentors. JCP complied with the requirements of Skills Development Act and as such received Mandatory Levy Grants in terms of the Act. In addition to the Mandatory grant received JCP also received Discretionary grants for Apprenticeship, Internship and Learnership Programmes. Through our Environmental and Conservation Development Unit, JCP partnered with the Department of Environmental Affairs and Tourism (DEA&T) by serving as a host employer and offered practical aspect of DEA&T Learnership Programme in Environmental Education, Training and Development Practices to DEA&T 28 learners. The duration of the Learnership Programme was 12 months. The financial investment in employee training and development over the last three years is as follows: Financial investment in employees TOTAL

2007/08

2006/07

2005/06

R’ 000

R’ 000

R’ 000

9 40 548

3 006

2 876

68

Section 4: Performance Management This system is in place for level 1 to 5 appointees and other strategic positions. It was introduced to motive, improve organizational performance and reward employees who consistently meet and exceed corporate goals and objectives. Johannesburg City Parks performance management model is based on the balanced scorecard and is in line with CoJ model/ policy. The balanced score card is aimed at ensuring that the organization is aligned and focuses on critical performance measures that enhance individual and organizational performance. The strategic review of the JCP business includes an annual review of the imperatives that drive JCP. These include but not limited to the JCP business plan, the environment in which JCP operates the CoJ Integrated Development Plan (IDP) Development of Scorecard Based on the processes here outlined, strategic performance objectives are set for each perspective of the balanced score card and are weighted. Key Performance Area (KPA) support each strategic performance objective are identified and Key Performance Indicator (KPI) for each KPA as well as means to verify are identified and articulated. This process is cascaded from the MD to the Executive in charge of each department who further cascades this to the relevant direct reports. This is to ensure proper alignment from the MD to individual levels. An appropriate incentive scheme is currently being explored for those employees who fall outside the levels indicated above.

The focus will again be on improving service delivery and meeting

stakeholder requirements and needs. There is quarterly review template as well as the performance management deviation memorandum; this forms the basis of managing performance to ensure continuous improvement and furthermore enhances the personal development areas of the individuals which is service delivery based. The latter templates also ensures that there is accountability and commitment attached to the individual on areas where deviation is sought due to non-achievement of the set goals based on the timeframes.

69

Section 5: HIV AND AIDS MANAGEMENT Johannesburg City Parks has an HIV and AIDS Policy approved by the Board. The policy is strategically implemented to ensure compliance to the legislation. In the implementation of the policy matters that are kept closely in mind mentioned in the policy are: 

Comprehensive health care



Confidentiality and disclosures



Non discrimination



Education and awareness

Comprehensive Health Care Employees are assisted to know their HIV status through accessing voluntary counselling and testing (VCT). Johannesburg City Parks has embarked on the VCT campaigns since 2006/2006 financial years. The 2007/2008 VCT Campaign took place from 15 May to 18 July 2008. There was a marked decline in the 2007/8 financial year as compared to 2005/6 financial. This may be attributed by the fact that most employees know their status and are on treatment. The figures below give the comparative analysis by financial years as follows: GRAND TOTALS VCT 2005/6 1132

1. Number of Employees accessed VCT 2. Positive

149

3. Negative

980

GRAND TOTALS VCT 2006/7 830

1. Number of Employees accessed VCT 2. Positive

79

3. Negative

751

GRAND TOTALS VCT 2007/8 716

1. Number of Employees accessed VCT 2. Positive

43

3. Negative

667

70

Confidentiality and Disclosures Employees have come forward to disclose their status gradually mostly after VCT Campaigns, the number have risen to 60. Most of these ones are on treatment through Right to Care and through Faranani Disease Management. Others disclose their HIV status after diagnosed with incurable “Multiple / Extreme Drug Resistant TB” those ones are under ongoing treatment and the one’s diagnosed with XDR opt to take medical boarding since the recuperation is slow.

Education and Awareness Education and awareness is ongoing at Johannesburg City Parks, this education take place on Health and Wellness days, the recent Wellness Day was held on the 24 July 2008. The level of awareness can only be measured and or tested against the participation levels of the employees as that demonstrate a level of maturity to deal with the disease management. World AIDS Days are also used to educate employees broadly about lifestyle and coping with HIV, the Company thus dedicate times for commemoration as means of entrenching positive HIV and AIDS messages. Peer Educators are actively involved in day to day conscientisation of their peers at depots regarding the spread of HIV and AIDS and prevention thereof. They are receiving ongoing training on HIV and other related diseases, treatment programmes and prevention programmes. Right to Care, Faranani Doctors and the Company Doctor are involved in reducing the impact of HIV in the workplace by suggesting treatment and disease management programmes. Through Employee Assistance Programmes and counselling employees are helped to stay productive for longer and are advised regarding lifestyle management and healthy living. Programmes such as retirement and substance abuse are used to mainstream HIV education to help employees who are affected and infected to cope with the disease if its affecting them or significant others. Currently the Company is sourcing primary health care services that will be onsite to manage Tuberculosis effectively and to reduce absenteeism and sick leave. The objective is to ensure that employees are kept productive and effective for longer by ensuring that they access TB treatment onsite regularly to the point of recuperation.

71

Incapacity Management Managers are trained in incapacity management. This process is meant to help managers identify incapacity problems timeously. Employees found to be incapacitated are confronted by their managers through processes of counselling letters and explanation of Company procedures. This then helps incapacitated employees to evaluate themselves in terms of their inputs to the Company most of them would then acknowledge their problem and may seek to be relieved of their duties through medical boarding and other means. The programme is assisting Johannesburg City Parks reduce absenteeism and thus remain effective as an organisation

Future Plans Health and Wellness days to be conducted by zones in 2008/9 financial year, to ensure that all employees access all available health screening services, namely, hypertension, diabetes, HIV and AIDS, cholesterol, and BMI tests etc. That would reduce the stigma of HIV if all employees know their health status, also would encourage balanced healthy lifestyles.

72

Section 6: Employee Benefits JCP currently operates six pension funds and five medical aid schemes for employees. Employees on cost to company packages exercise their choices in medical aid membership and retirement funding. PENSION FUNDS

MEDICAL AID

Municipal Employee Pension Fund (60)

Bonitas (232)

Municipal Gratuity Pension Fund (252)

Keyhealth (ex Munimed) (70)

City of Johannesburg Pension Fund (550)

L A Health (28)

Johannesburg Municipal Pension Fund (53)

SAMWUMed (34)

eJoburg (769)

Hosmed (1)

Joint Municipal Pension Fund (13)

Day One Health (1302)

The Day One Health insurance scheme was introduced for all employees without medical aid. This scheme provides basic benefits, and most importantly, HIV cover with full hospitalisation benefits. The subscription cost is borne by the company and covers the principal member only. Employees can enrol family members at a small additional cost which is for their own account.

73

Section 7: Supply Chain Management and Black Economic Empowerment The Procurement Policy for the Company was approved and implemented in 2004. Its pillars are the various pieces of legislation, such as the Preferential Procurement Policy Framework Act of 2000, the Preferential Procurement Regulations of 2001, the Broad-Based Black Economic Empowerment Act of 2003 and the accompanying Strategy and Draft Codes of Practice, and the Municipal Finance and Management Act (MFMA). A Board Supply Chain Management Framework has been approved by the Executive Committee which incorporates the provisions of Section 111 of the MFMA, the National Treasury: Municipal Supply Chain Management Regulations of 2005, and the Construction Industry Development Act. The Company has set a target of 75% BEE procurement for the financial year. The target has been divided into various sections: Woman owned-companies (+25% woman shareholding)

=

25%

BEE (+50% black shareholding)

=

50%

Joint Venture (50%+ black shareholding)

=

3% 78%

The Company has actively focused on the level of woman-owned companies and, this resulted in expenditure in woman-owned companies of 30%. With the company’s focus on planting of trees, watering services created an opportunity for women to get involved in the operation aspects of a business.

The company continued to leverage off the

foundation of women-owned companies created in previous years. The following table is a summary of the BEE spend for the year. Item Description Opex

BEE R’000

Traditional R’000

BEE %

21 358

Total BEE R’000 200 069

178 711

60 332

12 274

72 606

83

239 043

33 632

272 675

87

89

Committed Expenditure Capex Committed Expenditure Total

74

CHAPTER FIVE: AUDITED STATEMENTS AND RELATED FINANCIAL INFORMATION

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 (Registration Number 2000/028782/08)

ANNUAL FINANCIAL STATEMENTS For the year ended 30 June 2008

75

76

77

78

79

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 ANNUAL FINANCIAL STATEMENTS For the year ended 30 June 2008

The reports and statements set out below comprise the Annual Financial Statements presented to the member:

Index

Page

General Information

81

Directors’ Responsibilities and Approval of Statement

83

Directors’ Report

85

Report of the Company Secretary

87

Statement of Financial Position

88

Statement of Financial Performance

89

Statement of Changes in Net Assets

90

Cash Flow Statement

91

Notes to the Annual Financial Statements

92

Detailed Statement of Financial Performance

140

80

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 GENERAL INFORMATION For the year ended 30 June 2008 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: Area of developed parks and arterials: Area of undeveloped parks: Nature reserves: Street verges: Area of cemeteries: Water surfaces: Street trees: Cemeteries: Crematoria: Nurseries: Bird sanctuaries: Trails and river trails: Environmental and educational centres: Size of fleet: vehicles trailers Number of employees:

2 328 6 588 hectares 3 577 hectares 1 569 hectares 5 500 hectares 904 hectares 174 hectares 1,3 to 1,6 million 35 2 2 24,6 hectares 107 kilometres 6 321 136 1 799

Directors The following directors held office during the year under review: G. Zabala* - Chairperson L.L. Williamson – Managing Director B. Bahula* A. Carolissen* H. Kasan* N. Mabaso* S.M.B. Nyalunga* T.B. Nzimakwe* V. Ramsingh* K. Venier* *Non-executive

81

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 GENERAL INFORMATION For the year ended 30 June 2008

Registered Office and Business Address 40 De Korte Street Braamfontein 2017 Postal Address P.O. Box 2824 Johannesburg 2000 Parent Municipality (Sole Member) City of Johannesburg Metropolitan Municipality

Bankers ABSA Limited Auditors The Auditor-General Company Secretary M Sayed Hassan Attorneys Sim and Botsi Attorneys Company Registration Number 2000/028782/08

82

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 DIRECTORS’ RESPONSIBILITIES AND APPROVAL STATEMENT For the year ended 30 June 2008

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 period 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 Practises 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 Practises (GRAP) issued by the Accounting Standards Board replacing the equivalent SA GAAP Statement as follows: Standard of GRAP

Replaced Statement of SA GAAP

GRAP 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

IAS 8: Accounting policies, changes in accounting

Accounting estimates and errors

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 acknowledge that they are ultimately responsible for the system of internal financial control 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. The Directors are of the opinion, based on the information and explanation given by management that the system of internal control 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.

83

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 2008

The Directors have reviewed the Company’s cash flow statement for the year to 30 June 2008 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. The budget for the financial year ended 30 June 2008 has been approved by the Mayoral Committee of the City of Johannesburg Metropolitan Municipality. The Directors are primarily responsible for the financial affairs of the Company. The external auditors are responsible for independently reviewing and reporting on the Company’s financial statements. The financial statements are set out on pages 88 to 141 which have been prepared on the going th concern basis, were approved by the Audit Committee of the Board on the 27 August 2008.

JOHANNESBURG 27 August 2008

84

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 DIRECTORS’ REPORT For the year ended 30 June 2008 The Directors have pleasure in submitting the report for the year ended 30 June 2008. 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 period 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. Property, plant and equipment The Company acquired plant and equipment at a cost of R 11,5m (2007 – R 5,6m) during the financial year under review. There was no change in the nature of the assets or in respect of the use thereof. During the previous financial year, the company acquired a property to be utilised as its administrative Head Office. The cost of the property was R 11,3m and refurbishment costs of R 12,7m have been incurred to date. The property is located at 40 De Korte Street, Braamfontein. Further capital expenditure of R 0,075 m has been committed at year end. Going concern 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. 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: G. Zabala* - Chairperson L.L. Williamson – Managing Director B. Bahula* A. Carolissen* H. Kasan* N Mabaso* S.M.B. Nyalunga* T.B. Nzimakwe* V. Ramsingh* K. Venier* *Non-executive All directors’ are of South African nationality

85

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 2008

Parent municipality (sole member) City of Johannesburg Metropolitan Municipality Bankers ABSA 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 AuditorGeneral will continue as the Company’s external auditor. Company secretary M Sayed Hassan Registered office and business address 40 De Korte Street Braamfontein 2017 Postal address P.O. Box 2824 Johannesburg 2000 Company registration number 2000/028782/08

86

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 REPORT OF THE COMPANY SECRETARY For the year ended 30 June 2008

CERTIFICATE BY COMPANY SECRETARY FOR THE YEAR ENDED 30 June 2008.

In terms of section 268G(d) of the South African Companies Act, No. 61 of 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.

M Sayed Hassan Company Secretary

87

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 STATEMENT OF FINANCIAL POSITION As at 30 June 2008

2008

Restated 2007

R’000

R’000

239 348

240 610

49 585 4 823 32 3 712 181 196

47 899 2 356 21 586 189 748

116 288

104 291

43 870 3 843 68 575

25 641 4 640 74 010

355 636

344 901

158 030

143 977

147 750 183 10 097

133 697 170 10 110

88 687

87 879

88 655 32

87 706 173

Total liabilities

246 717

231 856

Net Assets

108 919

113 045

28 098 80 821

28 098 84 947

108 919

113 045

Notes ASSETS Current assets Trade and other receivables VAT Cash and cash equivalents Inventory Loans to share-member

6 6 7.2 8 9

Non-current assets Property, plant and equipment Intangible Assets Employee benefit investment

3 4 5

Total assets LIABILITIES Current liabilities Trade and other payables Short-term portion of finance lease liability Provisions

10 18.3 11

Non-current liabilities Employee benefit obligations Long-term portion of finance lease liability

5 18.3

NET ASSETS Loans from share-member Accumulated surplus

9

Total Net Assets

88

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 STATEMENT OF FINANCIAL PERFORMANCE For the year ended 30 June 2008

2008 R’000

Restated 2007 R’000

Notes Revenue – exchange Cost of sales

12

Gross surplus Other income Operating expenses Operating deficit Investment income Finance costs

13 14 15

(Deficit)/Surplus for the year

89

425 314 (34 113) _______

368 211 (14 935) _______

391 201 712 (415 446) _______

353 276 (355 661) _______

(23 533) 26 559 (7 152) _______

(2 385) 19 771 (7 732) _______

(4 126)

9 654

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 2008

Accumulated Surplus R’000 Note Balance at 1 July, 2006 – restated Surplus for the year ended 30 June 2007 - restated

2 2

75 293 9 654 ______

Balance as at 1 July 2007 - restated Deficit for the year ended 30 June 2008

84 947 (4 126) ______

Balance as at 30 June 2008

80 821

90

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 CASH FLOW STATEMENT For the year ended 30 June 2008

2008 R’000

Restated 2007 R’000

421 873 (432 624) (10 751) 26 559 (7 152)

356 145 (364 774) (8 629) 19 771 (7 686)

Notes Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Cash utilised by operations Investment income Finance costs

7.1

Net cash from operating activities

8 656

3 456

Cash flows from investing activities Expenditure to maintain operating capacity Property, plant and equipment acquired Intangible assets acquired Plant and equipment disposed Intangible assets disposed Employee benefit investment

(17 069) (22 898) (642) 1 036 5 435

(17 348) (18 343) (2 418) 1 218 193 2 001

8 424 8 552 (128) _______

13 892 13 683 209 _______

Cash flows from financing activities Share-member loans Finance lease liability Increase in cash and cash equivalents 11 Cash and cash equivalents at beginning of the year Cash and cash equivalents at the end of the year

7.2

91

-

21 _______

21 _______

32

21

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS For the year ended 30 June 2008 1.

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS

1. 1

PRINCIPAL ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of the annual financial statements of the company are set out below: 1.1.1

Presentation of Financial Statements The financial statements have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice including any interpretations of such Statements issued by the Accounting Practices Board, the prescribed Standards of Generally Recognised Accounting Practices, 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 Statement as follows: Standard of GRAP GRAP1: Presentation of Financial Statements GRAP2: Cash Flow Statements GRAP3: Accounting policies, changes in accounting estimates and errors

Replaced Statement of SA GAAP IAS1: Presentation of Financial Statements IAS7: Cash Flow Statements IAS8: Accounting policies, changes in accounting estimates and errors

The recognition and measurement principles in the above GRAP and GAAP Statements do not differ or result in material differences in items presented and disclosed in the financial statements. The implementation of GRAP 1,2 & 3 has resulted in the following significant changes in the presentation of the financial statements: 1. Terminology differences: Standard of GRAP Statement of financial performance Statement of financial position Statement of changes in net assets Net assets Surplus/deficit for the period Accumulated surplus/deficit Contributions from owners Distribution to owners Reporting date

Replaced Statement of SA GAAP Income Statement Balance Sheet Statement of changes in equity Equity Profit/loss for the period Retained Earnings Share capital Dividends Balance sheet date

2. The cash flow statement can only be prepared in accordance with the direct method. 3. Specific information such as: (a) receivables from non-exchange transactions, including taxes and transfers; (b) taxes and transfers payables; (c) trade and other payables from non-exchange transactions; must be presented separately on the statement of financial position. 4. The amount and nature of any restrictions on cash balances is required to be disclosed. 5. Paragraph 11-15 of GRAP 1 has not been implemented as the budget reporting standard is in the process of being developed by the international and local standard setters. Although the inclusion of budget information would enhance the usefulness of the financial statements, non-disclosure will not affect fair presentation.

92

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 1. 1. 1

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued) PRINCIPAL ACCOUNTING POLICIES (continued)

1.1.2

Underlying concepts

The financial statements are prepared on the going concern basis using accrual accounting. Assets and liabilities, and income and expenses are not offset unless specifically permitted by an accounting standard. Financial assets and financial liabilities are offset and the net amount reported only when a legally enforceable right to set off exists and the intention is either to settle on a net basis or to realise the asset and settle the liability simultaneously. Changes in accounting policies are accounted for in accordance with the transitional provisions in the accounting standards and interpretations. If no such guidance is given, they are applied retrospectively unless it is impracticable to do so, in which case they are applied prospectively. Changes in accounting estimates are recognised in the Statement of Financial Performance. 1.1.3

Recognition of assets and liabilities

Assets are only recognised if they meet the definition of an asset, in that it is probable that future economic benefits associated with the asset are within the control of the company, the economic benefits will flow to the company and the cost or fair value can be measured reliably. Liabilities are only recognised if they meet the definition of a liability, in that it is probable that future economic benefits associated with the liability will flow from the company and the cost or fair value can be measured reliably. Financial instruments are recognised when the company becomes party to the contractual provisions of the instrument. 1.1.4

Derecognition of assets and liabilities

Assets are derecognised on disposal or when no future benefits are expected from their use. Liabilities are derecognised when the relevant obligation has been discharged or cancelled or expired. 1.1.5

Post Statement of Financial Position events Where events arise after the Statement of Financial Position date that existed at that date, these are recognised in the financial statements. Where events arise after the Statement of Financial Position date that existed after that date, these are recognised in the financial statements by way of a note.

1.1.6

Comparative figures Comparative figures are restated in the event of change in accounting policy or prior year error where practicable.

93

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 1. 1. 1

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued) PRINCIPAL ACCOUNTING POLICIES (continued)

1.1.7

Property, plant & equipment

Property, plant & equipment represent tangible assets that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes. Such assets are expected to have a useful life of more than one year. The cost of an item of property, plant and equipment is recognised as an asset when: o It is probable that future economic benefits associated with the item will flow to the company; and o The cost of the item can be reliably measured. Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included on the cost of property, plant and equipment. Plant & equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Land and buildings are shown at fair value, based on periodic valuations by external independent valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. Increases in the carrying amount arising on revaluation of land and buildings are credited to other reserves. Decreases that offset previous increases of the same asset are charged against other reserves; all other decreases are charged to the statement of financial performance. Land is not depreciated. Depreciation is charged on a straight-line basis over their estimated useful lives to estimated residual values. Where significant parts of an asset have different useful lives to the asset itself, these parts are accounted for as separate assets and depreciated over their respective estimated useful life. The useful life and residual values are reviewed on an annual basis. Assets held under finance leases are depreciated over the lower of their expected useful lives or the term of the lease. Gains or losses on disposal or scrapping is recognised in the Statement of Financial Performance. Subsequent costs, which can be reliably measured, are included in the assets carrying amount only when it is probable that such expenditure increases the future economic benefits associated with the asset by either increasing output capacity or the useful life of the asset. All other repairs and maintenance are charged to the Statement of Financial Performance during the period in which they are incurred.

94

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 1. 1. 1

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued) PRINCIPAL ACCOUNTING POLICIES (continued)

1.1.8

Intangible assets An intangible asset is recognised when: o It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and o The cost of the asset can be measured reliably. Intangible assets are initially recognised at cost. Intangible assets are carried at cost less any accumulated amortisation and any impairment losses. Amortisation is provided on a straight line basis over their estimated useful life. The amortisation period and the amortisation method for intangible assets are reviewed every year-end.

1.1.9

Inventories The cost of inventories is assigned using the weighed average formula. The same cost formula is used for all inventories having a similar nature and use to the entity. Technical stores comprise of items used in the day-to-day maintenance of park facilities and depot buildings.

1.1.10 Financial instruments Initial recognition The company classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial assets and financial liabilities are recognised on the company’s Statement of Financial Position when the company becomes party to the contractual provision of the instrument. 1.1.10.1

Financial assets

A financial asset is an asset and is recognised as such when a contractual right to receive an economic benefit exists and are derecognised when these rights or obligations no longer exist.

Financial assets are initially measured at fair value plus transaction costs.

Derivatives that are assets are measured at fair value, with changes in fair value being recognised in the Statement of Financial Performance. Derivatives embedded in non-financial host contracts are treated as separate derivatives when their risk and characteristics are not closely related to those of the host contract and the host contract is not classified as at fair value through the Statement of Financial Performance.

95

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS For the year ended 30 June 2008 1. 1. 1

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued) PRINCIPAL ACCOUNTING POLICIES (continued)

1.1.10 Financial instruments (continued) 1.1.10.2

Financial liabilities A financial liability is a liability and is recognised as such when a contractual obligation exists to pay an economic benefit and is derecognised when these rights or obligations no longer exist. Financial liabilities are initially measured at fair value plus transaction costs. Derivatives that are liabilities are measured at fair value, with changes in fair value being recognised in the Statement of Financial Performance. Derivatives embedded in non-financial host contracts are treated as separate derivatives when their risk and characteristics are not closely related to those of the host contract and the host contract is not classified as at fair value through the Statement of Financial Performance.

1.1.10.3

Trade and other receivables Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in surplus or deficit when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated cash flows discounted at the effective interest rate computed at initial recognition.

1.1.10.4

Trade and other payables Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

1.1.10.5

Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value.

1.1.11 Post-retirement employee benefit obligations 1.1.11.1

Pension Plans The company participates in a number of defined benefit and defined contribution retirement plans consisting primarily of active members (current employees of the company, the City of Johannesburg Metropolitan Municipality and its subsidiaries) and pensioners. Defined Benefit Plans: For defined benefit plans the cost of providing the benefits is determined using the projected credit method. Actuarial valuations are conducted on an annual basis by independent actuaries separately for each plan.

96

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS For the year ended 30 June 2008 1. 1. 1

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued) PRINCIPAL ACCOUNTING POLICIES (continued)

1.1.11 Post-retirement employee benefit obligations (continued) 1.1.11.1 Pension plans (continued) Consideration is given to any event that could impact the funds up to Statement of Financial Position date where the interim valuation is performed at an earlier date. Past service costs are recognised immediately to the extent that the benefits are already vested, and are otherwise amortised on a straight line basis over the average period until the amended benefits become vested. To the extent that, at the beginning of the financial year, any cumulative unrecognised actuarial gain or loss exceeds ten percent of the greater of the present value of the projected credit obligation and the fair value of the plan assets (the corridor), that the portion is recognised in the Statement of Financial Performance over the expected average remaining service lives of the participating employees. Actuarial gains and losses within the corridor are not recognised. Gains or losses on the curtailment or settlement of a defined benefit plan are recognised when the company is demonstrably committed to curtailment or settlement. The amount recognised in the Statement of Financial Position represents the present value of the defined benefit obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service costs, and reduces by the fair value of plan assets. Any asset is limited to unrecognised actuarial losses, plus the present value of available refunds and reduction in future contributions to the plan. Defined Contribution Plans: Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contribution plans where the company’s obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan. 1.1.11.2

Other Post-Retirement Medical Aid: The Company provides post-retirement health care benefits for certain retirees. The entitlement is based on the employee remaining in the service of the company until retirement age and the completion of a minimum of 15 years of service. The expected cost of these benefits is accrued over the period of employment, using the present value methodology. Independent qualified actuaries carry out valuations of these obligations. Valuations for company accounting purposes are carried out annually. Actuarial gains and losses are recognised immediately in the profit and loss. Post-Retirement Housing: The Company provides housing subsidies in respect of certain retirees. The subsidy may continue to a maximum of 10 years after retirement. The expected cost of these benefits is accrued over the period of employment, using the present value methodology. Independent qualified actuaries carry out valuations of these obligations. Valuations for company accounting purposes are carried out annually. Actuarial gains and losses are recognised immediately in the profit and loss.

97

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS For the year ended 30 June 2008 1. 1. 1

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued) PRINCIPAL ACCOUNTING POLICIES (continued)

1.1.11 Post-retirement employee benefit obligations (continued) 1.1.11.2 Other (continued) Gratuities: The Company provides gratuities on retirement or prior death (i.e. for those members that have died prior to retirement date) in respect of certain qualifying employees who have service with the City of Johannesburg Metropolitan Municipality or the Company when they were not members of one of the retirement benefit plans. The expected cost of these benefits is accrued over the period of employment, using the present value methodology. Independent qualified actuaries carry out valuations of these obligations. Valuations for company accounting purposes are carried out annually. Actuarial gains and losses are recognised immediately in the profit and loss.

1.1.12 Provisions Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of past events, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

The amount of the provision is the present value of the expenditure expected to be required to settle the obligation. When some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement shall not exceed the amount of the provision. Provisions are not expected for future operating deficits. If an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision. A constructive obligation to restructure arises only when an entity: o Has a detailed formal plan for the restructuring, identifying at least:  The business or part of a business concerned;  The principal locations affected;  The location, function, and approximate number of employees who will be compensated for terminating their services;  The expenditures that will be undertaken; and  When the plan will be implemented; and o Has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it. Contingent assets and liabilities are not recognised. Disclosure is provided explaining the contingencies.

98

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS For the year ended 30 June 2008 1. 1. 1

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued) PRINCIPAL ACCOUNTING POLICIES (continued)

1.1.13 Revenue Revenue from the sale of goods is recognised when all the following conditions have been satisfied: o the company has transferred to the buyer the significant risks and rewards of ownership of the goods; o the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; o the amount of revenue can be measured reliably; o it is probable that the economic benefits associated with the transaction will flow to the company; and o the costs incurred or to be incurred in respect of the transaction can be measured reliably.

99

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS For the year ended 30 June 2008 1. 1. 1

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued) PRINCIPAL ACCOUNTING POLICIES (continued)

1.1.13 Revenue (continued) When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the Statement of Financial Position date. The outcome of the transaction can be estimated reliably when all of the following conditions are satisfied: o the amount of revenue can be measured reliably; o it is probable that the economic benefits associated with the transaction will flow to the company; o the stage of completion of the transaction at the Statement of Financial Position date can be measured reliably; and o the costs incurred for the transaction and the costs to complete the transaction can be measured reliably. When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be recognised to the extent of the expenses recognised that are recoverable. Stage of completion is determined by surveys of work performed or services performed to date as a percentage of total services to be performed or the proportion of costs incurred to date bear to the total estimated costs of the transaction. Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business. 1.1.14 Cost of sales When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs. The related cost of providing services recognised as revenue in the current period is included in cost of sales. Contract costs comprise: o Costs that relate directly to a specific contract. o Costs that are attributable to contract activity in general and can be allocated to the contract; and o Such other costs as are specifically chargeable to the customer under the terms of the contract. 1.1.15 Impairment of assets Assets that are depreciated are reviewed annually for impairment whenever events or changes in circumstances indicate that the carrying amount of such asset exceeds the asset’s fair value less cost to sell or its value in use.

100

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS For the year ended 30 June 2008 1. 1. 1

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued) PRINCIPAL ACCOUNTING POLICIES (continued)

1.1.15 Impairment of assets (continued) The company assesses at each Statement of Financial Position date whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset. If there is any indication that an asset may be impaired, the recoverable amount is determined for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined. The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its value in use. If the recoverable amount is less than the carrying amount, the carrying amount of the asset is reduced to the recoverable amount. That reduction is an impairment loss. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in surplus or deficit. Any impairment loss of a revalued asset is treated as a revaluation decrease. A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in surplus or deficit. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase. 1.1.16 Leases Financial leases: Leases where the company assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalised under property, plant & equipment at the lower of fair value or the present value of the minimum lease payments at the inception of the lease with an equivalent amount being stated as a finance lease liability. The capitalised amount is depreciated over the useful life of the asset. Lease payments are allocated between capital repayments and borrowing costs using the effective interest rate method. Finance charges are charged to surplus or deficit, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the company’s general policy on borrowing costs. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease or the incremental borrowing rate. Operating leases: Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability. This liability is not discounted. Any contingent rents are expensed in the period they are incurred.

101

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS For the year ended 30 June 2008 1. 1. 1

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued) PRINCIPAL ACCOUNTING POLICIES (continued)

1.1.17 Government grants and assistance Government grants are recognised when there is reasonable assurance that: o The company will comply with the conditions attaching to them; and o The grants will be received Government grants related to assets: Such are government grants whose primary condition is that the company should purchase, construct or otherwise acquire long-term assets. Other conditions may also be attached restricting the type or location of the assets or the periods during which they are to be acquired or held. On completion of the conditions, the company transfers the assets to the City of Johannesburg Metropolitan Municipality. Government grants related to assets, including non-monetary grants at fair value are presented in the Statement of Financial Position by deducting the grant in arriving at the carrying amount of the asset. The above-mentioned grants are not recognised as income in the company’s Statement of Financial Performance.

Government grants related to income: Such grants are recognised as income over the periods necessary to match them with the related costs that they are intended to compensate.

1.1.18 Judgements made by management In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts represented in the financial statements and related disclosure. Use of the available information and the application of judgement are inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the financial statements.

The following subjective judgements or assessments have been identified:

Assets useful life and residual values: Property, plant and equipment is depreciated over its entire useful life taking into account residual values, if applicable. The useful life and residual values are assessed annually and are dependent on numerous factors such as advances in technology, life cycle of the assets, repairs and maintenance, future market conditions, the remaining life of the asset and projected disposal values.

102

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS For the year ended 30 June 2008 1. 1. 1

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued) PRINCIPAL ACCOUNTING POLICIES (continued)

1.1.18 Judgements made by management (continued) The following estimated useful lives are used to depreciate property, plant & equipment to estimated residual values: Property 20 years Plant & equipment: -Small plant (brushcutters, chainsaws, small lawnmowers, etc.) 2 – 3 years -Medium plant (slashers, ride-on lawnmowers, chippers, etc) 5 – 7 years Office equipment 5 – 10 years Computer equipment 3 – 5 years Spares for maintenance of plant and equipment 0 years Leasehold improvements The lower of the balance of lease or 5 years The following estimated useful lives are used to amortise intangible assets to estimated residual values: Application software

3 – 5 years

Impairment: Property, plant and equipment, and intangible assets are considered for impairment if there is reason to believe that an impairment may be necessary. Factors such as the economic viability of the asset are considered.

Post-retirement benefit plan obligations: These are provided for certain existing and former employees. Actuarial valuations are based on assumptions, that are largely prescribed, which include employee turnover, mortality rates, the interest rates (based on the yield to redemption of appropriate government or corporate securities, the terms of which are reasonable in relation to those of the pension funds), the discount rate, the expected long-term rate of return of retirement plan assets, healthcare inflation costs and rates of increase in compensation costs. Actuarial gains and losses comprise experience adjustments (the effects of differences between the previous actuarial assumptions and what has actually occurred), and the effect of changes in actuarial assumptions. These may be spread forward over the remaining service years of the employees

1.1.19 Financial risk management Liquidity risk The company’s risk to liquidity is a result of the funds available to cover future commitments. The company manages liquidity risk through an ongoing review of future commitments and credit facilities. Interest rate risk Deposits attract interest at a rate that varies with prime. The parent treasury policy is to manage interest rate risk so that fluctuations in variable rates do not have a material impact on surplus or deficit.

103

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS For the year ended 30 June 2008 1. 1. 1

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued) PRINCIPAL ACCOUNTING POLICIES (continued)

1.1.20 Financial risk management (continued) Credit risk Credit risk consists mainly of cash deposits, cash equivalents and capital debtors. All cash deposits are managed by the parent treasury department.

1.1.21 Borrowing costs Borrowing costs are recognised as an expense in the period in which they are incurred. Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying asset are capitalised as part of the cost of that asset until such time as the asset is ready for its intended use. The amount of borrowing costs eligible for capitalisation is determined as follows:  Actual borrowing costs on funds specifically borrowed for the purpose of obtaining a qualifying asset less any temporary investment of these borrowings.  Weighted average of the borrowing costs applicable to the entity on funds generally borrowed for the purpose of obtaining a qualifying asset. The borrowing costs capitalised do not exceed the total borrowing costs incurred. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. The capitalisation of borrowing costs commences when:  Expenditures for the asset have occurred;  Borrowing costs have been incurred, and  Activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation is suspended during extended periods in which active development is interrupted. Capitalisation ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. All other borrowing costs are recognised as an expense in the period in which they are incurred.

104

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 1.

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued)

1. 1

PRINCIPAL ACCOUNTING POLICIES (continued)

1.1.22 Unauthorised, irregular, fruitless and wasteful expenditure All expenditure relating to unauthorised, irregular or fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance. 1.2

GLOSSARY OF FINANCIAL REPORTING TERMS The glossary of financial reporting terms is provided to ensure clarity of meaning as certain terms may not always have the same meaning or interpretation. Accrual accounting

The effects of transactions and other events are recognised when they occur rather than when the cash is received.

Actuarial gains and losses

The effects of differences between the previous actuarial assumptions and what has actually occurred as well as changes in actuarial assumptions.

Asset

A resource in control of the company as a result of a past event from which future economic benefits are expected to flow.

Carrying amount

The amount at which an asset is recognised after deducting any accumulated depreciation and accumulated impairment losses.

Cash and cash equivalents

Comprise cash on hand and balances with banks and other financial institutions.

Change in accounting An adjustment to the carrying amount of an asset, liability or the estimate amount of the periodic consumption of an asset that results from new information or new developments. Constructive obligation

An obligation that derives from an established pattern of past practice, published policies or a sufficiently specific current statement such that it creates a valid expectation on the part of other parties that the obligation will be met.

Contingent liability

A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company, or a present obligation that arises from past events but is recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.

Depreciation

The systematic allocation of the depreciable amount of an asset over its useful life. The depreciable amount of an asset is the cost of an asset, or other amount substituted for cost, less its residual value.

105

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2006 1.

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued) 1. 2 GLOSSARY OF FINANCIAL REPORTING TERMS (continued) Derecognition

The removal of a previously recognised asset or liability from the Statement of Financial Position.

Derivative instrument A financial instrument - whose value changes in response to movements in interest rates or similar variable; and - whose terms require or permit net settlement at a future date. Discount rate

The rate used for purpose of determining discounted cash flows defined as the yield at which the company receives on its sweepings bank account from the City of Johannesburg Metropolitan Municipality Treasury. Risks specific to the relevant asset or liability are not factored in determining the discount rate.

Employee benefits

All forms of consideration given in exchange for services rendered by employees.

Fair value

The value for which an asset could be exchanged or a liability settled in a market related transaction.

Financial lease

A lease that transfers substantially all the risks and rewards incidental to ownership of an asset. Title may or may not eventually be transferred.

Financial instrument

A contract that gives rise to a financial asset of one company and a financial liability or equity instrument of another company.

Financial results

These comprise the financial position (assets, liabilities and equity), results of operations (revenue and expenses) and cash flows of the Company.

Going concern basis

The assumption that the company will continue in operation for at least twelve months from the Statement of Financial Position date.

Immaterial

An amount which, if individually or collectively, would not influence the economic decisions of the readers of the financial statements.

Impairment loss

The amount by which the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount.

Liability

A present obligation of the company arising from a past event, the settlement of which is expected to result in the outflow of resources embodying economic benefits.

Long-term

A period longer than twelve months from Statement of Financial Position date.

Net assets

Net operating assets plus cash and cash equivalents.

Net operating assets Current and non-current assets less current and non-current liabilities. Operating lease

A lease other than a financial lease.

106

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2006 1.

ACCOUNTING POLICIES AND GLOSSARY OF FINANCIAL TERMS (continued) 1. 2 GLOSSARY OF FINANCIAL REPORTING TERMS (continued) Post – Retirement benefits

Employee benefits (other than termination benefits) that are payable after the completion of employment.

Post – Retirement benefit plans

Formal arrangements under which the company provides post-retirement benefits to employees. Defined contribution benefit plans are where there are no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. Defined benefit plans are postretirement benefit plans other than defined contribution plans.

Prior period errors

An omission from or misstatement in the financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that was available when the financial statements for those periods were approved and one could have reasonably expected to have been obtained and taken into account in the preparation of those financial statements.

Recoverable amount The amount that reflects the greater of the net selling price and value in use that can be attributed to an asset as a result of its ongoing use by the Company. In determining the value in use, expected cash flows are discounted to their present values using the discount rate. Related party

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions.

Residual value

The estimated amount which the company would currently receive on disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

Retrospective application

Applying a new accounting policy to transactions, other events and conditions as if that policy had always been applied.

Retrospective restatement

Correcting the recognition, measurement and disclosure of amounts if a prior period error had never occurred.

Revenue

Revenue comprises turnover and interest received.

Turnover

Turnover comprises revenue generated by the operating activities and includes sale of gravesites, crematoria services, hire of park facilities, sale of trees, services rendered and municipal subsidy.

Useful life

The period over which an asset is expected to be available for use from which future economic benefits are expected to flow.

107

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008

2.

PRIOR PERIOD ERRORS AND RESTATEMENTS The statements have been prepared as noted above in note 1. During the 2004 financial year, un-reconciled items within salaries and wages totaling R 410 775 were ringfenced for a prescriptive period of three years. No claims were made against these funds and were thus written back to the opening retained income as at 1 July 2006. An adjustment in the timing of withdrawals during the previous financial year from the Gratuity Notional account held was made during the current financial year. The impact on the retained earnings for the year ended 30 June 2007 was an increase in investment income of R 172 098. During the previous financial year, the company re-registered for VAT in terms of the Small Business Tax Amnesty and Amendment of Taxation Laws Act, 2006 (Act No. 9 of 2006). During the implementation of the above, an error in the calculation of the investment by the share-member occurred. The adjustment of R 141 519 did not impact the retained earnings. The following reconciliation highlights the restatement of prior year errors: Reconciliation of net assets 30 June 2007 R’000 Net Assets previously reported under SA GAAP Adjustment for prior period errors and restatements

84 364 583

Net Assets reported

84 947

Net Asset Adjustment Retained Earnings: - Salaries and allowances - Investment Income

411 172 583

Assets and Liabilities Adjustment Trade and other receivables Trade and other payables Loans from share-member

30 411 142 583

108

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 2.

PRIOR PERIOD ERRORS AND RESTATEMENTS (continued) 2.2

Reconciliation of Surplus for period ended 30 June 2007 Previously reported R’000 Revenue

Restated R’000

368 211

-

368 211

353 276 (355 661)

-

353 276 (355 661)

Operating deficit

(2 385)

-

(2 385)

Investment income Finance costs

19 599 (7 732)

172 -

19 771 (7 732)

Surplus for the period

9 482

172

9 654

Gross surplus Operating expenses

3.

Prior Period errors R’000

PROPERTY, PLANT AND EQUIPMENT 2007 COST

2008

ACCUMULATED DEPRECIATION

R’000

CARRYING VALUE R’000

COST R’000

R’000 Land and buildings Leasehold improvements Plant and equipment Park facilities Office equipment Computer equipment Spare parts Total

ACCUMULATED DEPRECIATION

CARRYING VALUE R’000

R’000

12 679

-

12 679

24 058

-

24 058

849

(487)

362

849

(594)

255

12 836 591

(6 221) (372)

6 615 219

18 177 591

(7 525) (416)

10 652 175

4 205

(2 424)

1 781

6 366

(2 881)

3 485

4 809

(2 093)

2 716

7 361

(3 555)

3 806

964 36 933

(11 597)

964 25 336

1 252 58 654

(14 971)

1 252 43 683

109

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 3.

PROPERTY, PLANT AND EQUIPMENT (continued)

RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT 2007 Carrying value at beginning of year R’000 Land and buildings Leasehold improvements Plant and equipment Park facilities Office equipment Computer equipment Spare parts Total

Additions

Disposals

Carrying value at end of year

Depreciation R’000 R’000

R’000

R’000

-

12 679

-

-

12 679

151

459

-

(248)

362

5 109 325 1 421

2 605 788

(365) (5)

(734) (106) (423)

6 615 219 1 781

2 680

1 407

(494)

(877)

2 716

1 552

-

(588)

-

964

11 238

17 938

(1 452)

(2 388)

25 336

2008 Carrying value at beginning of year R’000 Land and buildings Leasehold improvements Plant and equipment Park facilities Office equipment Computer equipment Spare parts Total

Additions

Disposals

Carrying value at end of year

Depreciation R’000 R’000

R’000

R’000

12 679

11 379

-

-

24 058

362

-

-

(107)

255

6 615 219 1 781

6 415 2 281

(229) (78)

(2 149) (44) (499)

10 652 175 3 485

2 716

2 480

(17)

(1 373)

3 806

964

288

-

-

1 252

25 336

22 843

(324)

(4 172)

43 683

110

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008

3.

PROPERTY, PLANT AND EQUIPMENT (continued)

FINANCE LEASED ASSETS 2007 COST

2008

ACCUMULATED DEPRECIATION

R’000

CARRYING VALUE R’000

COST

ACCUMULATED DEPRECIATION

R’000

R’000

CARRYING VALUE R’000

R’000

Office equipment

510

(205)

305

565

(378)

187

Total

510

(205)

305

565

(378)

187

RECONCILIATION OF FINANCE LEASED ASSETS 2007 Carrying value at beginning of year R’000

Additions

Disposals Depreciation R’000

R’000 Office equipment Total

88 88

Carrying value at end of year

R’000

R’000

405

-

(188)

305

405

-

(188)

305

2008 Carrying value at beginning of year R’000

Additions

Disposals Depreciation

Carrying value at end of year

R’000 R’000

R’000

R’000

Office equipment

305

55

-

(173)

187

Total

305

55

-

(173)

187

111

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008

4.

INTANGIBLE ASSETS

2007 COST

2008

ACCUMULATED AMORTISATION

R’000

CARRYING VALUE R’000

COST

ACCUMULATED AMORTISATION

R’000

R’000

CARRYING VALUE R’000

R’000

IT Software

7 600

(2 960)

4 640

8 242

(4 399)

3 843

Total

7 600

(2 960)

4 640

8 242

(4 399)

3 843

RECONCILIATION OF INTANGIBLE ASSETS 2007 Carrying value at beginning of year R’000

Additions

Disposals Amortisation R’000

R’000 IT software Total

4 420 4 420

Carrying value at end of year

R’000

R’000

2 419

(193)

(2 006)

4 640

2 419

(193)

(2 006)

4 640

2008 Carrying value at beginning of year R’000

Additions

Disposals Amortisation

Carrying value at end of year

R’000 R’000

R’000

R’000

IT software

4 640

642

-

(1 439)

3 843

Total

4 640

642

-

(1 439)

3 843

112

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 5.

EMPLOYEE BENEFITS Post-Employment Benefit Funds: The City of Johannesburg Metropolitan Municipality and its associated Municipal Entities (ME’s) provide post-employment benefits to all their permanent employees through eight defined contribution funds, five defined benefit funds and two hybrid funds. The following funds provide benefits for the group employees: Defined Contribution Funds:  E-Joburg Retirement Fund  City Power Retirement Fund  Municipal Employees Gratuity Fund  Municipal Gratuity Fund  National Fund for Municipal Workers  Meshawu National Local Authorities Retirement Fund  Municipal Councillors Pension Fund  South African Municipal Workers Union National Provident Fund In the case of these defined contribution funds, the contributions paid have been expensed as required in terms of IAS 19. Defined Benefit Funds:  Johannesburg Municipal Pension Fund  City of Johannesburg Pension Fund  Soweto City Council Pension Fund  South African Local Authorities Pension Funds  Diepmeadow Pension Fund Hybrid Funds:  Municipal Employees Pension Fund  Joint Municipal Pension Fund Management, as a result of insufficient information of the multi-employer plans being available, could not determine the proportionate share of the obligation, plan assets and associated costs for any of the defined benefit funds. Accordingly, all funds have been accounted for using a defined-contribution basis at the ME level. However, full-defined benefit accounting has been applied at the Group level in the accounts of the Group for the City of Johannesburg Pension Fund, Johannesburg Municipal Pension Fund, South African Local Authorities Pension Fund and Soweto City Council Pension Fund. The City of Johannesburg Metropolitan Municipality has undertaken to carry all pension obligations up to the 30 June 2008. Contributions to the Diepmeadow Pension Fund were ceased for the Group with effect from 31 July 2003. Benefits have been made paid up and will accumulate for members on a defined contribution basis.

113

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008

5.

EMPLOYEE BENEFITS (continued) Other Employee Benefits o

Post Retirement Medical Aid Liabilities

The Company has obligations to subsidise medical aid contributions in respect of certain qualifying staff and pensioners and their surviving spouses. Only pensioners and employees who were aged 50 or over and were members of LA Health and Key Health medical schemes on 1 July 2003 are eligible for benefits. The amount of the subsidy is 60% for pensioners and members older than 55 on 1 July 2003 and 60% for other qualifying employees and is subject to a maximum of R 1 953 per month. The subsidy maximum increases annually on 1 July in accordance with the general ‘cost of living’ salary increase in the City of Johannesburg Metropolitan Municipality. The above liability is unfunded. However, the City of Johannesburg Metropolitan Municipality has undertaken to cover such portion of the liability for staff of the Company who are entitled to benefits that relate to their service with the City of Johannesburg Metropolitan Municipality before the Company was established. This amount was determined as at 1 July 2003 and has been crystallised in the form of notional loan accounts which earn interest and against which the Company may claim benefit payments made. This loan account does not constitute a plan asset and in terms of IAS 19 cannot be offset against the liability. It has however been included in the Statement of Financial Position of the Company as an asset. 2008

2007

R’000

R’000

Post Retirement Medical Obligation

Amounts recognised in the Statement of Financial Position Present value of unfunded obligation

21 989

22 778

Amounts recognised in the Statement of Financial Performance Finance Cost Net Current Year Service Cost Actuarial (Gain)/Loss Total included in costs

2 000 791 (3 344) (553)

2 000 810 (1 969) 841

Movements in amount recognised in the Statement of Financial Position Liability at start of the year Net expense recognised in the Statement of Financial Performance Benefit payments Liability at end of the year

22 778 (553) (236) 21 989

22 172 841 (235) 22 778

Notional Loan Account with the City of Johannesburg Metropolitan Municipality Amounts recognised in the Statement of Financial Position Face value of loan account

15 638

14 281

1 357

1 058

Amounts recognised in the Statement of Financial Performance Investment Income in respect of the account Movements in amount recognised in the Statement of Financial Position

114

Face value at start of the year Investment Income Payments claimed against the account Face value at end of the year Key Assumptions Discount Rate Expected return on assets Rate of increase in employer post retirement medical aid contributions

14 281 1 357 15 638

13 223 1 058 14 281

9.5% 9.5% 7.5%

8.00% 8.00% 5.75%

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 5.

EMPLOYEE BENEFITS (continued)

o

Post Retirement Medical Aid Liabilities (continued)

A sensitivity analysis was undertaken on the impact of medical aid contribution increases. The liability is sensitive to the real rate of return earned (i.e. the difference between the rate of discount and the rate at which medical aid contributions increase). The sensitivity analysis undertaken utilised alternative real rates by varying the assumed rate of discount in order to demonstrate the impact on the accrued liability. The sensitivity analysis yields very similar results if, instead of varying the assumed rate of discount, the assumed rate of increase in medical scheme contributions is increased and decreased by 1%. The valuation accounted for was based on 9,5%, as shown in bold. Rate of discount (real rate of discount) 8.5% 9.5% 10.5%

Active members (R’000) 15,322 18,022 21,445

115

Pensioners

Total

(R’000) 3,583 3,967 4,426

(R’000) 18,905 21,989 25,871

Percentage change -14,03% 0% 17,65%

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 5.

EMPLOYEE BENEFITS (continued) o

Post Retirement Housing Subsidy

The Company provides housing subsidies in respect of certain qualifying staff. In the event that the housing loan that the subsidy relates to is not fully paid at retirement date the subsidy will continue in the member’s retirement. The subsidy amount is based on the subsidy being received at the date of the valuation. It is assumed to remain constant and to continue for a period of 10 years after retirement. The above liability is unfunded. However, the City of Johannesburg Metropolitan Municipality has undertaken to cover such portion of the liability for staff of the Company who are entitled to benefits that relate to their service with the City of Johannesburg Metropolitan Municipality before the Company was established. This amount was determined as at 1 July 2003 and has been crystallised in the form of notional loan accounts which earn interest and against which the Company may claim benefit payments made. This loan account does not constitute a plan asset and in terms of IAS 19 cannot be offset against the liability. It has however been included in the Statement of Financial Position of the Company as an asset. 2008 R’000

2007 R’000

Post Retirement Housing Subsidy Amounts recognised in the Statement of Financial Position Present value of unfunded obligation

15

15

Amounts recognised in the Statement of Financial Performance Finance cost Net current year service cost Actuarial gain Total included in costs

1 1 (2) -

6 1 (55) (48)

Movements in amount recognised in the Statement of Financial Position Liability at start of the year Net expense recognised in the Statement of Financial Performance Liability at end of the year

15 15

63 (48) 15

113

103

10

7

103 10 113

96 7 103

9.5% 9.5% 0.0%

8.0% 8.0% 0.0%

Notional Loan Account with the City of Johannesburg Metropolitan Municipality Amounts recognised in the Statement of Financial Position Face value of loan account Amounts recognised in the Statement of Financial Performance Investment Income in respect of the account Movements in amount recognised in the Statement of Financial Position Face value at start of the year Investment income Face value at end of the year Key Assumptions Discount Rate Expected return on assets Rate of increase in housing subsidy payments

116

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 5.

EMPLOYEE BENEFITS (continued) o

Gratuity Liabilities

The Company provides gratuities on retirement or prior death (i.e. for those members that have died prior to retirement date) in respect of employees who have service with the City of Johannesburg Metropolitan Municipality or the Company when they were not members of one of the retirement funds and who meet certain service requirements in terms of the City of Johannesburg Metropolitan Municipality’s conditions of employment. The gratuity amount is based on 1 (one) month’s salary per year of non-retirement funding service and a bonus of 1 (one) month’s salary for every 5 (five) completed years of non-retirement funding service. The above liability is unfunded. However, the City of Johannesburg Metropolitan Municipality has undertaken to cover such portion of the liability for staff of the Company who are entitled to benefits that relate to their service with the City of Johannesburg Metropolitan Municipality before the Company was established. This amount was determined as at 1 July 2003 and has been crystallised in the form of notional loan accounts which earn interest and against which the Company may claim benefit payments made. This loan account does not constitute a plan asset and in terms of IAS 19 cannot be offset against the liability. It has however been included in the Statement of Financial Position of the Company as an asset. 2008 R’000

2007 R’000

66 651

64 913

5 078 1 706 6 784

5 680 (1 267) 4 413

Movements in amount recognised in the Statement of Financial Position Liability at start of the year Net expense recognised in the Statement of Financial Performance Benefit payments Liability at end of the year

64 913 6 784 (5 046) 66 651

65 731 4 413 (5 231) 64 913

Notional Loan Account with the City of Johannesburg Metropolitan Municipality Amounts recognised in the Balance Statement of Financial Position Face value of loan account

52 824

51 999

4 820

2 165

51 999 171 4 820 (4 166) 52 824

55 065 2 165 (5 231) 51 999

9.5% 9.5% 7.0%

8.0% 8.0% 5.5%

Gratuity Liability Amounts recognised in the Statement of Financial Position Present value of unfunded obligation Amounts recognised in the Statement of Financial Performance Finance cost Actuarial loss/(gain) Total included in costs

Amounts recognised in the Statement of Financial Performance Investment income in respect of the account Movements in amount recognised in the Statement of Financial Position Face value at start of the year Adjustment to opening balance Investment income Payments claimed against the account Face value at end of the year Key Assumptions Discount rate Expected return on assets Rate of increase in salaries

117

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 5.

EMPLOYEE BENEFITS (continued) o

Annual Leave Liabilities

The liability is calculated as the full value of accrued annual leave as if paid out with immediate effect to all employees, based entirely on the ‘package remuneration’ at the valuation date. The above liability is unfunded. However, the City of Johannesburg Metropolitan Municipality has undertaken to cover such portion of the liability for staff of the Company who are entitled to benefits that relate to their service with the City of Johannesburg Metropolitan Municipality before the Company was established. This amount was determined as at 1 July 2003 and has been crystallised in the form of notional loan accounts which earn interest and against which the Company may claim benefit payments made. This loan account does not constitute a plan asset and in terms of IAS 19 cannot be offset against the liability. The City of Johannesburg Metropolitan Municipality paid out the balance of the notional account during the year. 2008 R’000

2007 R’000

Annual Leave Liability Amounts recognised in the Statement of Financial Position Present value of unfunded obligation

-

9 739

Amounts recognised in the Statement of Financial Performance Net current year charge Total included in employee remuneration costs

-

(2 326) (2 326)

9 789 9 789

12 115 (2 326) 9 789

Notional Loan Account with the City of Johannesburg Metropolitan Municipality Amounts recognised in the Statement of Financial Position Face value of loan account

-

7 627

Amounts recognised in the Statement of Financial Performance Investment income in respect of the account

-

-

7 627 (7 627) -

7 627 7 627

Movements in amount recognised in the Statement of Financial Position Liability at start of the year Net expense recognised in the Statement of Financial Performance Liability at end of the year (see note 11-Provisions)

Movements in amount recognised in the Statement of Financial Position Face value at start of the year Benefit payments Investment income Payment of notional loan account asset Face value at end of the year

118

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 5.

EMPLOYEE BENEFITS (continued) o

Summary

Employee Benefit Investment 2008 R’000 Post retirement medical aid Post retirement housing subsidy Gratuity Annual leave

15 638 113 52 824 _____ 68 575

Total

2007 R’000 14 281 103 51 999 7 627 _____ 74 010

Employee Benefit Obligation 2008 R’000 Post retirement medical aid Post retirement housing subsidy Gratuity

21 989 15 66 651 _____ 88 655

Total

119

2007 R’000 22 778 15 64 913 _____ 87 706

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 6.

TRADE AND OTHER RECEIVABLES 2008 R’000 Trade receivables VAT 1 Group companies receivables - City of Joburg Property Company (Proprietary) Limited - City Power Johannesburg (Proprietary) Limited - Piki Tup Johannesburg (Proprietary) Limited - Johannesburg Roads Agency (Proprietary) Limited - Johannesburg Tourism Company (Proprietary) Limited - Johannesburg Fresh Produce Market (Proprietary) Limited - Johannesburg Civic Theatre (Proprietary) Limited - Johannesburg Zoo - Johannesburg Development Agency (Proprietary) Limited - Metropolitan Trading Company (Proprietary) Limited - Johannesburg Water (Proprietary) Limited - Johannesburg Social Housing (Proprietary) Limited - Johannesburg Metropolitan Bus Services (Proprietary) Limited - Roodepoort City Theatre - City Housing Company (Proprietary) Limited 2 Member’s receivables - Capital projects - Employee Benefits - Development Contributions - Other Subsequent fair value measurement of trade receivables at year end Total

9 545 4 823 4 574 64 3 510 60 208 14

Restated 2007 R’000

718 35 802 27 916 3 912 3 974

2 034 2 356 11 123 119 10 160 560 280 4 34 872 13 750 172 18 425 2 526

(336) _____ 54 408

(130) _____ 50 255

Credit Quality of Trade and Other Receivables Trade receivables compromise two main categories: government (including group companies) and corporate. Management evaluates credit risk relating to customers on an ongoing basis. The assessment takes into account the financial position, past experiences and other factors. Revenue within the cemetery fee environment is considered cash, as the economic benefit of the service only passes when funds have been banked. Returned cheques within this environment result in the blacklisting of the undertaker concerned. Revenue within the External Services environment is exclusively with government, including group companies. Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. 1

This relates to monies owing from other Municipal Owned Entities within the City of Johannesburg Metropolitan Municipality 2 This represents monies owing for capital projects, movable assets, external services and current employee benefits from the City of Johannesburg Metropolitan Municipality

120

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 6.

TRADE AND OTHER RECEIVABLES (continued) Trade and Other Receivables past due but not impaired Trade and Other Receivables which are past due are not considered to be impaired. The aging of amounts past due but not impaired is as follows: R’000

Government Corporate Total

30 days 2 320 5 331 7 651

R’000

R’000

R’000

60 days 1 356 173 1 529

90 days 1 668 583 2 251

+90 days 4 335 4 4 339

2008 R’000

2007 R’000

Total

Total

9 679 6 091 15 770

6 247 549 6 796

During the year, the company wrote off R 6 682 in bad debts.

7.

NOTES TO THE CASH FLOW STATEMENT

7.1

Cash generated from operations is calculated as follows: 2008 R’000 Operating (Deficit)/Surplus

Restated 2007 R’000

(4 126)

9 654

Adjustments: - Depreciation and Amortisation - Investment Income - Finance Cost - (Profit)/Deficit on sale of assets - Movement on retirement benefit assets and liabilities - Movement in provisions - Other non-cash items due to prior period errors

5 784 (26 559) 7 152 (712) 949 (13) -

4 581 (19 771) 7 732 234 (260) (2 005) 413

Operating cash flows before movements in working capital

(17 525)

578

Increase in trade and other payables Increase in inventory Increase in trade and other receivables

14 053 (3 126) (4 153) ____ __ (10 751)

Cash utilised in operations

121

3 477 (586) (12 098) ____ __ (8 629)

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 7. 7.2

NOTES TO THE CASH FLOW STATEMENT (continued) Cash and cash equivalents The company operates a current account with ABSA Ltd. This account is swept every evening via the City of Johannesburg Metropolitan Municipality’s Treasury department. Thus the current account balance is shown as a Loan to the Sharemember and at 30 June 2008 the balance on the account was R 181 196 040. (2007 – R 189 747 862) Cash and cash equivalents consist of cash on hand. Cash and cash equivalents included in the cash flow statement comprise the following Statement of Financial Position amounts: 2008 R’000 Cash and cash equivalents

8.

32

21

INVENTORY 2008 R’000 Trees Consumable Stores Total Inventory

9.

2007 R’000

3 262 450 3 712

2007 R’000 586 586

LOANS TO/(FROM) SHARE-MEMBER

Current Assets 2008 R’000 181 196

Sweeping Account

2007 R’000 189 748

The above loan represents a treasury loan account. The loan is unsecured and accrues interest daily. Loans to Share-member The loans to the share-member are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Loans to Share-member past due but not impaired Loans to the share-member are not considered to be impaired.

122

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 9.

LOANS TO/(FROM) SHARE-MEMBER (continued)

Current Liabilities R’000 Balance at 1 July, 2006 4 Investment by member

(25 907) (2 333)

Balance at 1 July, 2007 Prior period error

(28 240) 142

Balance at 30 June 2008

(28 098)

The above loan is unsecured, finance cost free, and has no fixed repayment terms. The above loan is at amortised cost. Loans from Share-member The loans from the share-member are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Loans from Share-member past due but not impaired Loans from the share-member are not considered to be impaired.

3

This relates to investment by the sole member, the City of Johannesburg Metropolitan Municipality, in the acquisition of movable assets.

123

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008

10.

TRADE AND OTHER PAYABLES Restated 2007 R’000

2008 R’000 Trade payables Accruals - Accrued operating expenses - Performance bonus+ - Annual bonus+ - Leave pay* - Personnel costs Trade payables: inter-company - City of Johannesburg Metropolitan Municipality - City Power Johannesburg (Proprietary) Limited - Johannesburg Water (Proprietary) Limited - Pikitup Johannesburg (Proprietary) Limited - Johannesburg Roads Agency (Proprietary) Ltd - Johannesburg Zoo - Johannesburg Development Agency (Proprietary) Limited - Metropolitan Trading Company (Proprietary) Limited - Johannesburg Social Housing (Proprietary) Limited - Roodepoort City Theatre - City Housing Company (Proprietary) Limited - Johannesburg Tourism Company (Proprietary) Limited - City of Joburg Property Company (Proprietary) Limited - Johannesburg Fresh Produce Market (Proprietary) Limited - Johannesburg Metropolitan Bus Services (Proprietary) Limited - Johannesburg Civic Theatre (Proprietary) Limited 5 Pre-payment on CMIP project 6 Monies held in trust Learnership Grant Pre-payment on capital developments Subsequent fair value measurement of trade payables at year end Total

60 959 18 577 8 443 9 789 345 7 387 2 177 686 4 364 137 16

47 501 16 675 5 661 3 651 6 382 981 10 026 2 647 1 031 5 684 379 222 43

-

-

-

-

5

-

-

-

2 18 58 701 133 1 991

6 14 135 59 393 -

(16) ______ 147 750

(33) ______ 133 697

* Annual and Performance Bonus transferred to Provisions + Leave Pay transferred from Provisions

Trade and other payables are at amortised cost.

5

These funds are Municipal Infrastructure Grant funds for the continued development of Dorothy Nyembe Park in Soweto, for which purpose they are retained. 6 These funds consist of development contributions towards engineering/development of bulk services, e.g. parks in terms of the Township and Town Planning Ordinance 1986, and are accordingly to be utilised for capital projects, for which purpose they are retained.

124

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 11.

PROVISION Opening Balance At Beginning of Year Restated R’000 Legal Proceedings Annual leave* Performance Bonus+ Annual Bonus+ Total

Provision utilised during the Year

Additional Provision

Closing Balance at End of Year R’000

371 9 739 10 110

R’000

R’000

(371) (9 739) (10 110)

4 629 5 468 10 097

4 629 5 468 10 097

*Annual leave transferred to Trade and Other Payables: Accruals +Annual and Performance Bonus transferred from Trade and Other Payables: Accruals

12.

REVENUE Revenue comprise government grants related to income received from the City of Johannesburg Metropolitan Municipality for fulfilling the Company’s mandate, and from hiring of venues, the sale of cemetery plots and the provision of grass cutting services to related parties. All revenue is of exchange in nature. Major classes of exchange revenue comprise: 2008 R’000 Government grants related to income External services Admission fees (Hiring of facilities) Cemetery fees Project admin fees Sundry revenue Subsequent fair value measurement of trade receivables at year end Total

125

2007 R’000

364 145 42 344 1 217 15 475 895 1 561

335 679 15 311 992 14 143 432 1 785

(323) _______ 425 314

(130) _______ 368 211

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008

13.

OPERATING (DEFICIT)/SURPLUS Operating (deficit)/surplus is stated after: 2008 R’000 Expenditure Auditor’s remuneration - Audit Fee: Current year Depreciation and amortisation - Property, plant and equipment - Intangible assets Employee costs Legal costs Lease rentals - Premises - Equipment - Fleet: Lease

2007 R’000

682

641

4 345 1 439 273 038 336 34 590 2 416 213 31 961

2 575 2 006 240 943 310 25 992 2 580 238 23 174

Included in depreciation and amortisation is a change in estimate of R 812 804, arising from the review of the residual values and useful lives of property, plant & equipment. The initial impact on future periods will result in the above amount being recognised as an expense in future periods. The impact per specific period will be assessed when the residual values and useful lives are reviewed on an annual basis. 14.

INVESTMENT INCOME

Interest on trade and receivables sweeping account Interest on notional employee loan account Interest on subsequent fair value measurement of trade receivables at year end Total investment income 15.

2008 R’000

Restated 2007 R’000

20 256 6 187

16 323 3 402

116 26 559

46 19 771

2008 R’000

2007 R’000

( 7 079) (35) (5)

(7 686) (46) (-)

(33) (7 152)

(-) (7 732)

FINANCE COSTS

Interest on employee liabilities Interest on finance lease Interest on late payment of creditors Interest on subsequent fair value measurement of trade payables at year end Total finance costs

126

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008

16.

EMOLUMENTS

16.1

Executive Directors

LL Williamson

16.2

R’000

R’000

Salary 1 247

Travel 32

R’000 Bonus 255

2008 R’000

2007 R’000

Total 1 534

Total 981

2008 R’000

2007 R’000

Directors Fees 231 109 85 106 91 81 158 129 89 1 079

Directors Fees 121 71 94 41 32 85 21 64 99 45 41 38 517 1 269

Non- Executive Directors

G Zabala PF Radebe (resigned 31 January 2007) A Carolissen M Bahula DW Kirkby (resigned 31 January 2007) N Mabaso K Venier (appointed 31 January 2007) SMB Nyalunga TB Nzimakwe HAB Sutherland (resigned 31 January 2007) V Ramsingh (appointed 31 January 2007) H Kasan (appointed 31 January 2007) L Williamson ( 1 March 2007 to 30 June 2008) Total

127

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 16.

EMOLUMENTS (continued)

16.3

Senior Management

G Cooke HH Fouche HG Nel DT Nkosi L Radzuma KJ van Eck B Andrews A BuzoGqoboka M Sayed Hassan P Meyer

17.

Position Operations Executive: Marketing and Communications Executive Company Secretary (resigned 31 May 2007) Human Resources Executive (resigned 30 April 2007) General Manager: Assurance Services Chief Financial Officer Acting Human Resources Executive (July to November 2008) Human Resources Executive (appointed 1 December 2007) Company Secretary (appointed 1 September 2007) Operations Executive: Infrastructure (appointed 1 June 2008)

2008 R’000

2007 R’000

R’000

R’000

R’000

Salary 875

Travel 80

Bonus 191

Total 1 146

Total 1 112

795

91

177

1 063

999

-

-

-

-

999

-

-

-

-

861

591 835

55 120

64 191

710 1 146

561 1076

228

20

51

299

118

454

42

99

595

-

378

54

90

522

55

65 4 221

7 469

172 1 035

244 5 725

298 6 079

TAXATION The City of Johannesburg Metropolitan Municipality enjoys tax-exempt status in terms of section 10(1)(b) of the Income Tax Act, 1962 (Act No. 58 of 1962) (‘the Income Tax Act’). The Company was incorporated on 9 November 2000 in order to undertake nature conservation as envisaged in section 10 (1)(cB)(i)(cc) of the Income Tax Act, as well as certain designated municipal functions of a public nature previously performed by the City of Johannesburg Metropolitan Municipality. In terms of the provisions of section 21 (2)(a) of the Amended Income Tax Act No. 30 of 2000, the Company would continue to enjoy tax-exempt status in terms of section 10(1)(cB) until the Commissioner approves the exempt status in terms of section 30 of the Act. During December 2003, the Company made application as a Public Benefit Organisation, and in January 2006 was awarded such status in terms of section 30 of the Income Tax Act No.30 of 2000 and section 10(1)(cN) of the Income Tax Act No.58 of 1962.

128

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008

18.

COMMITMENTS

18.1

Authorised Capital Expenditure

Already contracted for but not provided for

Land and buildings Plant and equipment Intangible assets Total

2008 R’000

2007 R’000

75 75

8 000 4 041 12 041

This committed expenditure relates to the improvements to the administrative Head Office at 40 De Korte Street Braamfontein.

18.2

Operating Leases – as lessee (expense)

Minimum lease payments due 2008 R’000 Within one year In second to fifth year Thereafter Total

23 281 43 131 4 753 71 165

2007 R’000 14 973 36 835 4 786 56 594

Operating lease payments represent rentals payable by the company for the fleet and the Waterval Cemetery. The fleet lease ends in January 2011 and the Waterval Cemetery in June 2103. The company has entered into a 99 year lease on a portion of land designated as a public cemetery. 18.3

Finance Lease Obligations

Minimum lease payments due 2008 R’000 Within one year In second to fifth year Less: future finance charges Present value of minimum lease payments due

129

197 36 233 18 215

2007 R’000 198 178 376 33 343

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 Present Value of minimum lease payments due 2008 R’000 Within one year In second to fifth year Total

183 32 215

2007 R’000 170 173 343

It is company policy to lease certain office equipment under finance leases. The average lease term is 3 years and the average effective borrowing rate was 12,75%. Interest rates fluctuate with the prime lending rate.

19.

CONTINGENT LIABILITY 2008 R’000 Legal costs – ex employees South African Local Government Bargaining Council (“SALGBC”)

371 137 508

2007 R’000 72 72

This represents the company’s portion of levies imposed by SALGBC to all employees within a municipality and its entities. However SALGBC does not recognise the company as an employer, and thus the company has no right of representation. Certain grievances were adjudicated by the SALGBC on behalf on previous employees. As the company is not recognised by such a body, these awards were made in abstentia. 20.

NEW ACCOUNTING STANDARD PRONOUNCEMENTS Accounting pronouncements not adopted at 30 June 2008 In the current year, the company has noted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (“IASB”) and the International Financial Reporting Interpretations Committee of the IASB that are relevant to its operations. Where applicable, the adoption of these new and revised Standards and Interpretations has had minimal impact on the company.


IAS 23 Borrowing costs

The option of immediately recognising as an expense borrowing costs that relate to assets that take a substantial period of time to get ready for use or sale, has been removed. An entity is therefore required to capitalise borrowing costs as part of the cost of such assets. The only exceptions are the capitalisation of borrowing costs relating to assets measured at fair value, and inventories that are manufactured or produced in large quantities on a repetitive basis, even if they take a substantial period of time to get ready for use or sale. The revised Standard applies to borrowing costs relating to qualifying assets for which the commencement date for capitalisation is on or after 1 January 2009. However, early adoption is permitted and encouraged. The company does not believe that the adoption of the interpretation will have any effect.

130

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008

20.

NEW ACCOUNTING STANDARD PRONOUNCEMENTS (continued) Accounting pronouncements not adopted at 30 June 2008 (continued)


IFRS 8 Operating Segments

This Standard required an entity to report financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The amount reported for each segment item is the measure reported to the chief operating decision maker for these purposes. The Standard applies to annual periods beginning on or after 1 January 2009. However, early adoption Is permitted and encouraged. The company does not believe that the adoption of the interpretation will have any effect. In addition, the company noted the following revised accounting Standards and Interpretations which had no material impact on the results:















IAS 19 Employee benefits – Option to recognise actuarial gains and losses in full, outside profit or loss, in a statement of changes in equity; IAS 39 Financial Instruments Recognition and Measurement – Amendment for hedges of forecast intra-group transactions; IAS 39 Financial Instruments Recognition and Measurement – Amendment for fair value option; IAS 39 Financial Instruments Recognition and Measurement – Amendment for financial guarantee contracts; IFRIC 4 Determining whether an arrangement contains a Lease; IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds; IFRIC 6 Liabilities arising from participating in a Specific Market – Waste Electrical and Electronic Equipment; IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies: IFRIC 8 Scope of IFRS 2 – Shared Based Payments IFRIC 9 Reassessment of Embedded Derivatives IFRIC 10 Interim Financial Reporting and Impairment IFRIC 11 IFRS 2: Group and Treasury Share Transactions; IFRIC 12 Service Concession Arrangements; and IFRIC 13 Customer Loyalty Programmes.

131

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008

20.

NEW ACCOUNTING STANDARD PRONOUNCEMENTS (continued) At the date of authorisation of these financial statements, the following new Standards and Interpretations were in issue but not yet effective:




IFRIC 14 IAS 19: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction – effective for periods starting on/after 1 January 2008 IFRIC 15: Agreements for the Construction of Real Estate – effective for periods starting on/after 1 January 2009 IFRIC 16: Hedges of a Net Investment in a Foreign Operation – effective for periods starting on/after 1 October 2008

At the date of authorisation of these financial statements, the following revised Standards and Interpretations were in issue but not yet effective:



IFRS 2: Share Based Payments – effective for periods starting on/after 1 January 2009 IFRS 3: Business Combinations – effective for business combinations in annual periods beginning on or after 1 July 2009, which consequently amended IAS 27: Consolidated and Separate Financial Statements, IAS 28: Investments in Associates and IAS 31: Interest in Joint Ventures.

The company anticipates that the adoption of this Standard and Interpretations in future periods will have no material financial impact on the financial statements of the group. Accounting pronouncements adopted at 30 June 2008


IFRS 7 Financial Instruments: Disclosures (including amendments to IAS 1 Presentation of Financial Statements)

The company has adopted IFRS 7 and the amendments to IAS 1 with effect from 1 July 2007. This has resulted in increased disclosure relating to financial instruments, but has had no impact on the reported profits or financial position of the company. In accordance with the transitional requirements of the standards, the company has provided full comparative information. In addition to the notes to the annual financial statements, disclosures under IFRS 7 relating to the nature and extent of risks may be found in the risk management section.

132

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 21.

RELATED PARTIES Identity of related parties The Company’s sole member is the City of Johannesburg Metropolitan Municipality. The Directors are listed in the Directors’ Report. 2008 R’000

2007 R’000

Purchase of goods and services Purchase of services: City of Johannesburg Metropolitan Municipality - Water and Electricity City of Johannesburg Metropolitan Municipality - Hostel Charges City of Johannesburg Metropolitan Municipality – Insurance City of Johannesburg Metropolitan Municipality – Other City Power (Proprietary) Limited– Electricity & other Johannesburg Water (Proprietary) Limited– Water & other Piki Tup Johannesburg (Proprietary) Limited- Refuse removal Johannesburg Metropolitan Bus Services (Proprietary) Limited – Bus Hire Johannesburg Civic Theatre (Proprietary) Ltd – Water Johannesburg Roads Agency (Proprietary) Ltd Johannesburg Zoo Johannesburg Development Agency (Proprietary) Limited Metropolitan Trading Company (Proprietary) Limited Johannesburg Social Housing (Proprietary) Limited Roodepoort City Theatre City Housing Company (Proprietary) Limited Johannesburg Tourism Company (Proprietary) Limited City of Joburg Property Company (Proprietary) Limited Johannesburg Fresh Produce Market (Proprietary) Limited TOTAL

7 848 878 4 508 314 665 1 280 923

6 969 3 401 3 729 132 958 3 989 890

7 30 2 420 2 _____ 18 875

64 82 _____ 20 214

The services were supplied by related parties within the City of Johannesburg Metropolitan Municipality. No transactions were entered into with the Directors of the company, either directly or indirectly.

133

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 21.

RELATED PARTIES (continued) 2008 R’000

2007 R’000

364 145

335 679

8 266

2 586

26 443

19 553

325

433

2 151

779

66

558

16 526 671

13 476 427

29 483 2 _____ 432 094

9 207 _____ 369 711

Sales of goods and service Revenue: City of Johannesburg Metropolitan Municipality – Government Grants related to Income City of Johannesburg Metropolitan Municipality – Grass cutting, tree maintenance and plants City of Johannesburg Metropolitan Municipality - Investment Income City of Johannesburg Metropolitan Municipality - Project Admin Fees City of Johannesburg Metropolitan Municipality - Sundry Revenue Piki Tup Johannesburg (Proprietary) Limited- Grass cutting, compost and consultancy Johannesburg Tourism Company (Proprietary) Limited – Grass cutting City of Joburg Property Company (Proprietary) Limited – Rental Johannesburg Roads Agency (Proprietary) Ltd – Grass cutting City Power (Proprietary) Limited– Grass cutting, tree maintenance Johannesburg Water (Proprietary) Limited Johannesburg Metropolitan Bus Services (Proprietary) Limited Johannesburg Civic Theatre (Proprietary) Limited Johannesburg Zoo Johannesburg Development Agency (Proprietary) Limited Metropolitan Trading Company (Proprietary) Limited Johannesburg Social Housing (Proprietary) Limited Roodepoort City Theatre City Housing Company (Proprietary) Limited Johannesburg Fresh Produce Market (Proprietary) Limited TOTAL

All the income was generated from the City of Johannesburg Metropolitan Municipality and related parties. No transactions were entered into with the Directors of the company, either directly or indirectly. All compensation to Non-Executive Directors, Executive Directors and Senior Management are shortterm employee benefits. These parties do not receive any post-employment benefits or any other longterm employee benefits. (Refer note 16)

134

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008 21.

RELATED PARTIES (continued)

In terms of Regulation 45 of the Municipal Supply Chain Management Regulation of 2005, the company must disclose any awards of more than R 2000 – 00 to a person who is a spouse, child or parent in the service of the state. The following suppliers have declared their related parties as follows:

22.

Supplier

Name of Family Member

Capacity of Employment

AA van Duuren Maawu Radebe Contractors Makwenzeke Grass Cutting Merafe Business Enterprise Midnight Moon Trading

M van Duuren LY Maawu P Sibiya K Ngobeni V Leballo

N&H Demolishing & Earthworks Phuti Trading Supply Site Office & Stationery Supplies

R Maharaj

Office Manager Teacher Human Resources Process Engineer Community Developer Traffic Officer

PA Mobure J Masitenyane

Teacher Education Department

2008 Amount of Award R’000 22 887 1 409 -

2007 Amount of Award R’000 10 1 135 313 37

16

26

2 443 997

1 378 993

24

5

RISK MANAGEMENT Capital Risk Management The company’s prime objectives when managing capital are to safeguard the company’s ability to continue as a going concern. This allows the company to maintain an optimal capital structure from which to leverage and increase service delivery to stakeholders. The company has set a goal of maintaining a minimum debt-to-equity ratio of 60:40. Debt is considered to be Current and Non-current liabilities, and equity as Net Assets as noted in the Statement of Financial Position. 2008 R’000 Debt Equity Debt-to-Equity Ratio

246 717 110 346 69:31

135

Restated 2007 R’000 231 856 113 045 67:33

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008

22.

RISK MANAGEMENT (continued) Financial Risk Management The company’s overall risk management strategy is done in conjunction with the central treasury department within the City of Johannesburg Metropolitan Municipality. The treasury department identifies, evaluates and hedges financial risks in co-operation with the company. Liquidity Risk Management The company’s liquidity risk focuses on ensuring that funds are available to cover current and future commitments. The following is a summary of the contractual maturity of the company’s financial liabilities. The amounts reflected are the contractual undiscounted cash flows. 30 June 2008

Less than 1 year R’000

Share-members loan Trade and other payables: government Trade and other payables: corporates Trade and other payables: other

7 387 60 959 35 719 _______ 104 065

Total

30 June 2007

Less than 1 year R’000

Share-members loan Trade and other payables: government Trade and other payables: corporates Trade and other payables: other

10 026 47 501 31 810 _______ 89 337

Total

136

Between 1 and 2 years R’000

Between 2 and 5 years R’000

15 000 _______ 15 000

28 701 _______ 28 701

Between 1 and 2 years

Between 2 and 5 years

R’000 15 000 _______ 15 000

R’000 29 393 _______ 29 393

Over 5 years R’000 28 098 _______ 28 098

Over 5 years R’000 28 240 _______ 28 240

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008

22.

RISK MANAGEMENT (continued)

Interest Rate Risk Management The company has significant interest-bearing assets subject to interest rate fluctuations. This has a direct bearing on the company’s income and operating cash flows. The asset subject to the above is the sweepings account with the City of Johannesburg Metropolitan Municipality. The following table highlights the likely cash flow risk to the company in the event of an interest rate fluctuation. The current interest rate is 11,24% 2008 2007 R’000 R’000 Interest Rate Sweeping Sweeping account account 10,24% 11,24% 12,24%

(1 812) 1 812

(1 897) 1 897

The company has significant interest-bearing liabilities subject to interest rate fluctuations. This has a direct bearing on the company’s expenditure and operating cash flows. The liability subject to the above is the operating lease held with Fleet Africa for the vehicle fleet. The following table highlights the likely cash flow risk to the company in the event of an interest rate fluctuation. The current interest rate is 10,40% 2008 2007 R’000 R’000 Interest Rate Fleet lease Fleet lease 11,40% 10,40% 9,40%

(258) 258

(205) 205

Price Risk Management The company is exposed to international commodity price risk relating to oil/price of fuel. The impact of fuel price changes on the operating costs of the company is highlighted in the following sensitivity analysis:

Fuel price per litre

2008 R’000 Fuel cost

2007 R’000 Fuel cost

+R 0,50 Current -R0,50

(1 344) 1 344

(1 331) 1 331

137

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008

22.

RISK MANAGEMENT (continued)

Credit Risk Management Credit risk management consists mainly of cash equivalents and trade receivables. The cash resources are swept on a daily basis via the City of Johannesburg Metropolitan Municipality treasury department. Trade receivables compromise two main categories: government (including group companies) and corporate. Management evaluates credit risk relating to customers on an ongoing basis. The assessment takes into account the financial position, past experiences and other factors. Financial assets exposed to credit risk at year end were as follows: 2008 R’000 181 196 49 921

Loans to Share-member Trade and other receivables

23.

Restated 2007 R’000 189 748 47 999

IRREGULAR, FRUITLESS AND WASTEFUL EXPENDITURE

2008 R’000 5

Interest on late payment to creditors

138

2007 R’000 -

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) For the year ended 30 June 2008

24.

STATEMENT OF FINANCIAL PERFORMANCE AGAINST BUDGET Restated 2008

2008

2007

2007

R’000

R’000

R’000

R’000

ACTUAL

BUDGET

ACTUAL

BUDGET

364 145 59 036 2 845 _______ 426 026

364 145 44 171 2 018 _______ 410 334

335 679 30 316 2 216 _______ 368 211

335 679 22 205 1 715 _______ 359 599

34 113

24 086

14 935

9 216

391 913

386 248

353 276

350 383

Employee Related Costs-Wages & Salaries Contracted Services Consulting Fees General Expenses –Other Repairs and maintenance Depreciation and Amortisation

273 038 43 500 1 079 74 995 17 050 5 784 _______

271 228 40 894 804 71 952 14 729 6 129 _______

240 943 34 622 775 59 434 15 306 4 581 _______

253 840 38 986 510 53 595 13 146 5 306 _______

OPERATING SURPLUS/(DEFICIT) BEFORE INTEREST

(23 533)

(19 488)

(2 385)

(15 000)

Net Investment Income

19 407 _______

19 488 _______

12 039 _______

15 000 _______

NET (DEFICIT)/SURPLUS

(4 126)

0

9 654

0

REVENUE

Government Grants related to Income Consumer Service Charges Other Income

COST OF SALES GROSS OPERATING SURPLUS EXPENDITURE

139

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 DETAILED STATEMENT OF FINANCIAL PERFORMANCE For the year ended 30 June 2008

REVENUE Government Grants related to Income External Services Admission Fees (Hiring of Facilities) Cemetery Fees Project Admin Fees Sundry Revenue

COST OF SALES External Services Cemeteries Project Admin

EXPENDITURE Advertising Animal husbandry and feeds Audit fees Bad Debts Bank charges Books and publications Chemical control Cleaning materials Conferences and seminars Consulting fees Consumables Depreciation and amortization First aid Employee costs Exhibits and promotions Entertainment and refreshments Fleet Fuel and oil Hire of buses and equipment Horticulture development Insurance Information Technology Legal expenses Loss on disposal of plant and equipment Balance carried forward

140

2008

2007

R’000

R’000

364 145 42 344 1 217 15 475 895 1 950 _______ 426 026

335 679 15 181 992 14 143 432 1 785 _______ 368 211

30 970 2 573 570 _______ 34 113

12 446 2 489 _______ 14 935

608 7 682 7 138 79 101 496 711 1 079 958 5 784 1 273 038 214 546 43 500 2 499 634 28 739 1 313 1 457 336 362 969

475 4 641 51 160 54 274 515 404 775 1 486 4 581 4 240 943 107 348 34 622 1 797 874 16 032 1 132 1 222 310 232 307 044

JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08 DETAILED STATEMENT OF FINANCIAL PERFORMANCE (continued) For the year ended 30 June 2008

2008

2007

R’000

R’000

Balance brought forward

362 969

307 044

Marketing Membership fees Other sundry operating expenses Postage Printing and stationery Protective clothing and uniforms Recruitment costs Rental paid Repairs and maintenance Security Telecommunications Training and development Utilities

3 303 300 1 341 10 1 952 2 174 460 2 628 17 050 7 983 3 333 941 11 043 _______ 415 446

2 546 141 532 7 1 714 1 787 290 2 834 15 306 7 114 2 956 948 12 443 _______ 355 661

141

Annexure E JOHANNESBURG CITY PARKS Association Incorporated under Section 21 Registration No. 2000/028782/08

STATEMENT OF FINANCIAL PERFORMANCE AGAINST BUDGET FOR THE YEAR ENDED 30 JUNE 2008 2008 R'000 ACTUAL

2008 R'000 BUDGET

2008 R'000 VARIANCE

364,145 59,036 2,845

364,145 44,171 2,018

14,865 827

426,026

410,334

15,692

34,113

24,086

10,027

GROSS OPERATING SURPLUS

391,913

386,248

5,665

EXPENDITURE Employee Related Costs - Wages & Salaries Contracted Services Consulting Fees General Expenses - Other Repairs and Maintenance Depreciation and Amortisation

273,038 43,500 1,079 74,995 17,050 5,784

271,228 40,894 804 71,952 14,729 6,129

( 23,533)

( 19,488)

19,407

19,488

( 4,126)

-

1,810 2,606 275 3,043 2,321 ( 345) ( 4,045) ( 81) ( 4,126)

REVENUE Government Grants related to income Consumer Service Charges Other Income

COST OF SALES

OPERATING SURPLUS/(DEFICIT) BEFORE INTEREST Net Investment Income NET (DEFICIT)/SURPLUS

142

Explanation of Significant Variances

Increased External Services Sales Activities Proceeds on Disposal of Fixed Assets

Increased External Services Sales Activities

Payroll Prior Year Adjustments Fleet Increased Premium and Fuel Prices Increased Activities Increased Tree Planting Acitivities Increased Activity FV of Assets

Interest FV and Interest Paid

CHAPTER SIX: FUNCTIONAL AREA SERVICE DELIVERY REPORT

The table following this page provides information on the functional area provided by Johannesburg City Parks incorporated as a section 21 Company to maintain and develop parks, cemeteries and conservation areas. Function:

Community and Social Services

Sub Function:

Johannesburg City Parks

Reporting Level

Detail

Overview: Description of the Activity:

Analysis of the Function:

Total

Johannesburg City Parks (JCP) is the greening, conservation and cemetery management agency for the City of Johannesburg (CoJ).) JCP is a Section 21 (non-profit) Company that manages and maintains the parks, open spaces, environmental services and cemeteries for and on behalf of the CoJ. These services extend to include Municipal parks, environmental, conservation and cemetery services and exclude similar services on Provincial and National government levels. The strategic objectives of this function are: Service delivery; Customer satisfaction and responsiveness; Occupational Health, Safety and Security; Economic development and Job creation; HIV and AIDS; Safe Clean and Green City; Effective Financial Management The Key issues for 2007/8: - Security requirements have increased - New Capex developments without Opex funding for the maintenance thereof - Greening of Soweto, address the tree planting backlog - HIV and AIDS Statistical information of JCP Number of facilities: Number of users: Nature and extent of facilities provided:

143

Function:

Community and Social Services

Sub Function:

Johannesburg City Parks Parks, cemeteries, nature conservation areas, public open space

Parks and arterials: 2328 Area of developed parks and arterials: 6 587.5 hectares Area of undeveloped parks: 3 576.5 hectares

The communities and residents within the boundaries of the City of Johannesburg

Nature Reserves: 1 569 hectares Street verges: 5 500 hectares Area of cemeteries: 904 hectares Water Surfaces: 174 hectares Street Trees: 1,3 to 1,6 million Cemeteries: 35 Crematoria: 2 Nurseries:

2

Bird Sanctuaries: 24,6 hectares Trails and River Trails: 107 km Environmental and Educational Centres: 6 Size of fleet: Vehicles: 321 Trailers: 136 Note: the facilities figure should agree with the assets register Number and cost to employer of personnel associated with JCP: Total operating cost of community and social services function

144

1 799

R 273 038 000 R 448 132 000 (the assumption is that all expenditure is

Function:

Community and Social Services

Sub Function:

Johannesburg City Parks community and social) Performance During the Year, Performance Targets Against Actual Achieved and Plans to Improve Performance

Actual

Target

Key Performance Area Service Delivery Maintenance cycles: Number of maintenance cycles (days) undertaken in Parks per category:

Road

14 Flagship Parks’ (main parks) Maintenance Developed Parks’ maintenance

Target achieved

7 Days Average

7 Days Average

Target achieved

21 Days Average

21Days Average

Undeveloped Parks’ maintenance

Target achieved

60 Days Average

60 Days Average

Sidewalks’ maintenance Road Islands’

Target exceeded

100 Days Average 40 Days Average

120 Days Average 60 Days Average

Target achieved

90%

90%

Target achieved

3

3

% Compliance with Environmental Management System Number of new developments in Parks

Target exceeded

145

Function:

Community and Social Services

Sub Function:

Johannesburg City Parks

Actual

Target

Target exceeded

4

3

Target exceeded

49 245

10 000

78%

70%

1 133

350

Number of developments in Cemeteries Number of mature indigenous trees planted (>2 meters high)

Customer satisfaction % Increase in customer satisfaction index

Target exceeded

Expanded Public Works Programme (EPWP) Number of jobs created, disregarding duration (EPWP)

Target exceeded

Key programmes planned for the 2008/9 Integrated Development Plan: (a) New developments in Parks (b) Park refurbishments (c) Planting of 62 000 trees (d) Greening of the City (primarily previously disadvantaged areas (the South)); (e) Education of the workforce on HIV/AIDS to counteract the impact thereof. (f) Job creation through Expanded Public Works Programme (g )Kliprivier/Klipspruit Corridor Legacy Project

146