ACFI 2011/12.indd - Gauteng Provincial Treasury

AcronymsAFSCAFSGRAPGDFGPGPFMANTGPTCFIACFIHODMECAGSAPRFAnnual Financial StatementsCombined Annual Financial StatementsGenerally Recognised Accounting PracticeGauteng Department of FinanceGauteng Provincial GovernmentPublic Finance Management Act, Act 1 of 1999 (as ammended)National TreasuryGauteng Provincial TreasuryCombined Financial InformationAnnual Combined Financial InformationHead of DepartmentMember of Executive CouncilAuditor-General of South AfricaProvincial Revenue Fund2 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

SECTION A:APPROVAL AND REVIEW OF COMBINEDFINANCIAL INFORMATION

Statement of the MEC for Financefor the year ended 31 March 2012Mr. Mandla NkomfeThe Combined Annual Financial Information for the fi nancial year ended 31 March 2012 has been prepared in accordance with the requirements ofSection 19 of the Public Finance Management Act (Act No. 1 of 1999).These statements fairly present the Financial Performance, Position, Cash Flows, and Net Assets of the Departments and Entities within theGauteng Provincial Government (GPG).Section 19(3) of the Public Finance Management Act (Act No. 1 of 1999) clearly requires the MEC for Finance in the province to submit theConsolidated Financial Statements and the Audit Report, within one month of receiving the Report from the Auditor-General of South Africa, to theProvincial Legislature for tabling in the Legislature.______________________Mr. Mandla NkomfeMEC: Department of Finance4 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

Foreword by the MEC for Financefor the year ended 31 March 2012It gives us great pleasure to present the 2011/12 Combined Annual Financial Information (CFI) for the Gauteng Provincial Government.The presentation of this information marks an important milestone in our ongoing effort to implement best practices in the management of andaccounting for public funds.The presentation of this information is in line with the Public Finance Management Act and most importantly gives practical meaning to our ongoingcommitment to good governance as well as transparency and effi cient management of public funds.It is also an indication that as a province we are continuing to break new ground in ensuring that we account fully to our people with regard to theuse and management of public funds.This information will allow our stakeholders to have a detailed picture of the fi nancial position and performance of the Gauteng Provincial Governmentas it details the assets, liabilities, revenue and expenditure of the Province as a whole. This 2011/12 CFI is indeed an important instrument that wewill use to account to the citizens of Gauteng. The preparation of this information has not been an easy task. It required a lot of hard work from allGauteng Provincial Departments and Entities. That we are able to present this information is a tribute to the hard work of all those involved in puttingit together.I wish to take this opportunity to thank the Gauteng Department of Finance: Treasury Division and all the Gauteng Provincial Departments andEntities for the work they have done to put together this information togetherLet me also extend a word of gratitude to the Auditor General of South Africa for working tirelessly with us to ensure that the audit was completedsuccessfully.The Gauteng Department of Finance: Treasury Division will continue to play a leading and guiding role in the management fi nances in the provinceand guiding fi nancial management reforms within the Gauteng Provincial Government. We are confi dent that our fi nancial reporting will continueto improve, allowing us to account more effectively to the citizens of Gauteng on how funds are being used to improve the living conditions of ourpeople.______________________Mr. Mandla NkomfeMEC: Department of FinanceCombined Financial Information Annual Report 2011/12 | Gauteng Provincial Government 5

Report of the Head of Departmentfor the year ended 31 March 2012(2) The Auditor-General of South Africa must audit the consolidatedfinancial statements and submit an audit report on the statementsto the provincial treasury of the province concerned within threemonths after receipt of the statements.(3) The MEC for Finance in a province must submit the consolidatedfinancial statements and the audit report, within one month ofreceiving the report from the Auditor-General of South Africa, tothe provincial legislature for tabling in the legislature.(4) The consolidated fi nancial statements must be made public whensubmitted to the provincial legislature.3. PROCESS FOR COMPILING THE COMBINED FINANCIAL STATEMENTS1. INTRODUCTIONThe Annual Combined Financial Statements for the 2011/12 fi nancialyear were compiled by the Gauteng Provincial Treasury in respect of theprovincial departments and legislature as well as for the provincial publicand trading entities as required by the Public Finance Management Act(Act No. 1 of 1999)Besides being mandated by legislation, the combined fi nancialstatements are meant to provide a summary of provincial government’sfi nancial resources and their application for the benefi t of the peopleof the Republic of South Africa. These set out the fi nancial position ofthe province, detailing assets and liabilities, as well as the fi nancialperformance, detailing the revenue and expenditure. Due to a differentaccounting basis that is being applied for provincial departmentsand entities, two seperate sets of combined fi nancial statements areprepared to ensure credible and meaningful presentation of fi nancialinformation.2. LEGISLATIVE MANDATEHOD: Mr. Stewart LumkaSection 19 (1) of the Public Finance Management Act (Act No.1 of1999) requires that a provincial treasury must -a) Prepare consolidated fi nancial statements, in accordance withgenerally recognised accounting practice, for each fi nancial year inrespect of -i. Provincial departments in the provinceii. Public entities under the ownership control of the provincialexecutive of the province; andiii. The provincial legislature in the province; andDue to a different basis of accounting that is being applied for provincialdepartments and entities, two seperate sets of combined fi nancialstatements are prepared. Provincial departments report on modifi edcash basis of accounting whereas public and trading entities in theprovince report on accrual basis. Under the modifi ed cash basis ofaccounting, transactions and events are recognised when cash isreceived or paid, while disclosure notes, which are recognised onaccrual basis, are provided for in the annual fi nancial statements (AFS)such as provisions, accruals, property, plant and equipment (PPE),lease commitments, contingent liabilities and assets, and so on. Underthe accrual basis of accounting, transactions and other events arerecognised when incurred and not when cash is received or paid.Normally, consolidated fi nancial statements are prepared for a groupof entities under the control of a parent entitiy. Control is the powerto govern the fi nancial and operating policies of an enterprise so asto obtain benefi ts from its activities. A parent entity is an enterprisethat has one or more subsidiaries. Due to the latter, entities that arecombined do not necessarily obtain benefi ts from each other’s activities.Departments however meet the criterion.The Provincial Legislature reported on the accrual basis of acountingbut was converted to modifi ed cash basis of accounting and thereforewas combined with the provincial departments.For the departmental combined fi nancial statements, the provincialdepartments, the provincial legislature as well as the provincialrevenue fund are aggregated on a line by line basis. Inter departmentaltransactions and balances are subsequently eliminated betweendepartments and between departments and the provincial revenuefund to present the combined fi nancial statements of a single entity. Thedepartmental combined fi nancial statements are compiled in accordancewith the National Treasury combination model and guidelines.For the entity combined fi nancial statements, all entities in the provinceare aggregated on a line by line basis. Inter entity transactions andbalances are then eliminated in full to present a set of fi nancialstatements of a single entity. The entity combined fi nancial statementsare compiled in accordance with the National Treasury combinationmodel and guidelines.The combined fi nancial statements for departments and entities areprepared on a going concern basis and apply uniform accountingpolicies consistently.b) Submit those statements to the Auditor-General of South Africawithin three months after the end of that fi nancial year.6 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

Report of the Head of Departmentfor the year ended 31 March 2012The following departments and entities are included in the combination:DepartmentsVote 1 - Office of the PremierVote 2 - Gauteng Provincial LegislatureVote 3 - Gauteng Economic DevelopmentVote 4 - Gauteng Health and Social DevelopmentVote 5 - Gauteng EducationVote 6 - Gauteng Local Government and HousingVote 7 - Gauteng Roads and TrasnportVote 8 - Gauteng Community SafetyVote 9 - Gauteng Agriculture and Rural DevelopmentVote 10 - Gauteng Sport, Arts, Culture and RecreationVote 11 - Gauteng FinanceVote 12 - Gauteng Infrastructure DevelopmentGauteng Provincial Revenue FundEntitiesPublic EntitiesGauteng Enterprise PropellerGauteng Tourism AuthorityGauteng Gambling BoardGauteng Economic Development AgencyGauteng Film ComissionBlue IQ Investments Holding Pty (Ltd)Gautrain Management AgencyGauteng Partnership FundTrading EntitiesGauteng Project Fund Offi ceGauteng Liquor BoardCradle of Humankind World Heritage SiteDinokengG-Fleet ManagementCost RecoveryGauteng Medical Supplies DepotGauteng Housing FundCombined Financial Information Annual Report 2011/12 | Gauteng Provincial Government 7

Report of the Head of Departmentfor the year ended 31 March 20124. REVIEW OF THE OPERATING RESULTS4.1 Gauteng Provincial Departments, including the Provincial Revenue FundThe total operating income received by GPG departments for the fi nancial year 2012 amounted to R70 billion (2011: R64 billion) and the totalexpenditure increased by 5% to R68 billion (2011: R65 billion).Below is the graphical presentation in the form of a pie chart for the GPG revenue for 2011/12. As illustrated below revenue is made up of transfersfrom National Government which comprise, equitable shares, conditional grants and own revenue.REVENUEEquitable ShareConditional GrantsDepartmental revenueOther Revenue8 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

Report of the Head of Departmentfor the year ended 31 March 2012REVIEW OF OPERATING RESULTS CONT.Gauteng Provincial Departments, including the Provincial Revenue Fund cont.Provincial equitable share in the current year increased by 11% in 2012 to R51 billion (2011: R45.9 billion) and conditional grants increased by 3%in the current year to R14.7 billion (2011: R14.2 billion).EQUITABLE SHARE AND CONDITIONAL GRANTSEquitable ShareConditional GrantsCombined Financial Information Annual Report 2011/12 | Gauteng Provincial Government 9

Report of the Head of Departmentfor the year ended 31 March 2012REVIEW OF OPERATING RESULTS CONT.Gauteng Provincial Departments, including the Provincial Revenue Fund cont.OWN REVENUEOwn revenue amounts to R3,6 billion and comprises mainly provincial sourced revenue which includes, non-operating income and revenue interms of section 12(3)of the PFMA. The chart below illustrates the breakdown of this revenue.OWN REVENUETax revenueAllocated to extra-ordinary receiptsSales of goods and other services otherthan capital assetsInterest, dividends and rent on landTransactions in financial assets andliabilities10 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

Report of the Head of Departmentfor the year ended 31 March 2012REVIEW OF OPERATING RESULTS CONT.Gauteng Provincial Departments, including the Provincial Revenue Fund cont.SURPLUS FOR THE YEARThe net surplus for the year amounts to R1.6 billion (2011: R0.8 billion).SURPLUS FOR THE YEARSurplus for the yearUNAUTHORISED, FRUITLESS AND WASTEFUL AND IRREGULAR EXPENDITUREThe unauthorised expenditure discovered in the current year has decreased to R1,050,780,000 in 2012 from (2011: R1,435,432,000). Fruitlessand wasteful expenditure discovered during the year has decreased to (2012: R 377,343,000 from (2011: R391,463,000)). Irregular expenditurediscovered during the year has decreased to (2012: R4,164,594,000) from (2011: R5,590,062,000).Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government 11

Report of the Head of Departmentfor the year ended 31 March 2012REVIEW OF OPERATING RESULTS CONT.Gauteng Provincial Departments, including the Provincial Revenue Fund cont.CASH AND CASH EQUIVALENTSThe net increase or (decrease) in cash and cash equivalents for the province amounts to R1.6 billion (2011: R2.8 billion) and the province has anet cash of R1.9 billion (2011: R371 million).CASH AND CASH EQUIVALENTSNet increase in cash andcash equivalentsCash and cash equivalent atend of period12 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

Report of the Head of Departmentfor the year ended 31 March 2012REVIEW OF OPERATING RESULTS CONT.Gauteng Provincial Departments, including the Provincial Revenue Fund cont.NET ASSETSThe net assets during this fi nancial year decreased to R6.2 million from R191 million in 2011.NET ASSETSNet assetsCombined Financial Information Annual Report 2011/12 | Gauteng Provincial Government 13

Report of the Head of Departmentfor the year ended 31 March 2012REVIEW OF OPERATING RESULTS CONT.4.2 Events Subsequent to Balance SheetGauteng Department of Finance has split into two Departments, namely Gauteng Provincial Treasury and Gauteng Department of Finance at theend of the fi nancial year. We are not aware of any matters or circumstances arising since the end of the fi nancial year, not otherwise dealt with in thecombined fi nancial information, which signifi cantly affect the fi nancial position of the Provincial Government or the results of its operations.4.3 Gauteng Provincial Public and Trading EntitiesREVENUEThe total income comprises of all the categories of revenue such as Transfers and subsidies, Fines, penalties and forfeits, Sale of goods andrendering of services, Interest, dividends and rent on land and other operating revenue. For the current fi nancial year total amounts to R4.7 billion(2011: R4.9 billion). This constitutes a decrease of 4%.The following categories were the main contributors to revenue of R4.7 billion:• Sale of goods and services rendered – R 3.6 billion• Transfers and subsidies – R850 millionREVENUETransferes and subsidies - SPRSale of goods and rendering ofservices - SPRInterest, dividends and rent onland - SPROther operating revenue - SPR14 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

Report of the Head of Departmentfor the year ended 31 March 2012REVIEW OF OPERATING RESULTS CONT.Gauteng Provincial Public and Trading Entities cont.EXPENDITUREThe total expenditure incurred for the fi nancial year amounts to R4.6 billion(2011: R4.5 billion). This constitutes an increase of 2%.The following categories were the main contributors to expenditure:• Goods and Services– R3.9 billion• Compensation of employees – R496 millionEXPENDITURECompensation of employeesGoods and servicesDepreciation/amortization andimpairmentCombined Financial Information Annual Report 2011/12 | Gauteng Provincial Government 15

Report of the Head of Departmentfor the year ended 31 March 2012REVIEW OF OPERATING RESULTS CONT.Gauteng Provincial Public and Trading Entities cont.SURPLUS FOR THE YEARThe net surplus for the year amounted to R64 million (2011: Surplus: R426 million). This constitutes a decrease of 85% as a result of decrease inTransfers and subsidies and defi cit incurred by entities.CASH AND CASH EQUIVALENTThe net increase in cash and cash equivalents for the province relating to the Public Entities amounts to R 742 million (2011: R883 million) and thenet cash position of R3 billion (2011: R2.3 billion).CASH AND CASH EQUIVALENTSNet increase in cash, cash equivalentsCash, cash equivalents at the endof the yearNET ASSETSThe net assets decreased by 2% to R3.6 billion (2011: R3.7 billion)16 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

Report of the Head of Departmentfor the year ended 31 March 20125. APPROVALThe attached sets of the combined fi nancial statements of the GPG departments and entities have been approved by the HOD of Gauteng Departmentof Finance.________________________Mr S. LumkaHOD: Gauteng Department of FinanceCombined Financial Information Annual Report 2011/12 | Gauteng Provincial Government 17

SECTION B:GAUTENG PROVINCIAL DEPARTMENTSCOMBINED FINANCIAL INFORMATION

GAUTENG PROVINCIAL DEPARTMENTSReport of the Auditor-General : Departmentsfor the year ended 31 March 2012REPORT OF THE AUDITOR-GENERAL TO THE GAUTENG PROVINCIAL LEGISLATURE ON THE COMBINED FINANCIAL STATEMENTSOF THE GAUTENG PROVINCIAL DEPARTMENTSREPORT ON THE COMBINED FINANCIAL STATEMENTSIntroduction1.I have audited the combined fi nancial statements of the Gauteng Provincial Departments set out on pages 21 to 49, which comprise theappropriation statement, the combined statement of fi nancial position as at 31 March 2012, the combined statement of fi nancial performance,combined statement of changes in net assets and the combined cash fl ow statement for the year then ended, and the notes, comprising asummary of signifi cant accounting policies and other explanatory information.Accounting officer’s responsibility for the combined financial statements2.The accounting offi cer is responsible for the preparation of these combined fi nancial statements in accordance with the DepartmentalFinancial Reporting Framework prescribed by the National Treasury and the requirements of the Public Finance Management Act, 1999 (ActNo.1 of 1999) (PFMA) and for such internal control as the accounting offi cer determines is necessary to enable the preparation of combinedfi nancial statements that are free from material misstatement, whether due to fraud or error.Auditor-General’s responsibility3.4.5.My responsibility is to express an opinion on these combined fi nancial statements based on my audit. I conducted my audit in accordance withthe Public Audit Act of South Africa, 2004 (Act No.25 of 2004) (PAA), the General Notice issued in terms thereof and International Standardson Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether the combined and fi nancial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosure in the combined fi nancial statements.The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the combinedfi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity’s preparation of the combined fi nancial statements in order to design audit procedures that are appropriate in the circumstances, butnot for the purpose of expressing an opinion on the effectiveness of accounting entity’s internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluatingthe overall presentation of the combined fi nancial statements.I believe that the audit evidence I have obtained is suffi cient and appropriate to provide a basis for my qualifi ed audit opinion.Basis for qualified opinionDepartmental revenue6.Note 2 of the Gauteng departments combined fi nancial statements included departmental revenue of R453 505 000 from the Departmentof Health. I could not obtain suffi cient appropriate evidence to confi rm completeness, classifi cation, accuracy, and occurrence and cut off ofthe departmental revenue due to lack of systems internal controls in place. The departmental records did not permit application of alternativeaudit procedures.Receivables for departmental revenue and provision for doubtful debt7.Note 27 of the Gauteng departments combined fi nancial statements included receivables for departmental revenue and provision for baddebts amounting to R2 025 279 000 (2010-11: R1 535 700 000) and R932 951 000 (2010-2011: R648 353 000) from the Department ofHealth. I could not obtain suffi cient appropriate evidence to confi rm existence, completeness, valuation, cut off, classifi cation and rightsand ownership of receivables for departmental revenue and provision for bad debts. The departmental records did not permit application ofalternative audit procedures.Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government 19

Report of the Auditor-General : Departmentsfor the year ended 31 March 2012Leave entitlement and capped leave commitment8.Note 25 of the Gauteng departments combined fi nancial statements included leave entitlement and capped leave commitments amountingto R 1 032 722 000 (2010-2011: R1 049 987 000) from the Department of Health. I was unable to confi rm the leave entitlement and cappedleave commitment by alternative means. Consequently, I could not obtain suffi cient appropriate evidence to confi rm completeness, valuation,existence, cut off, classifi cation and rights and obligations of leave entitlement and capped leave commitments.Irregular expenditure9.Note 28 of the Gauteng departments combined fi nancial statements included irregular expenditure of R1 115 884 000 from the Departmentof Health. The department did not have an adequate system of internal controls in place for the identifi cation and recognition of irregularexpenditure. I was unable to obtain suffi cient appropriate evidence by alternative means. Consequently I could not obtain suffi cient appropriateevidence to confi rm completeness of irregular expenditure.Qualified opinion10.In my opinion, except for the effects of the matters described in the Basis for qualifi ed opinion paragraph, the combined fi nancial statementspresent fairly, in all material respects, the combined fi nancial position of the Gauteng Provincial Departments as at 31 March 2012 and theircombined fi nancial performance and combined cash fl ows for the year then ended, in accordance with Departmental Financial ReportingFramework as prescribed by National Treasury and the requirements of the PFMA.Emphasis of matters11.I draw attention to the matters below. My opinion is not further modifi ed in respect of these matters.Restatement of corresponding figures12.As discussed in note 37 to the fi nancial statements, the corresponding fi gures for 31 March 2011 have been restated as a result of adjustmentsmade during the 2011-12 fi nancial year in the fi nancial statements of Gauteng Provincial Departments as at 31 March 2011.Unauthorised, irregular and fruitless and wasteful expenditure13.14.15.As disclosed in note 28 the Gauteng provincial departments incurred irregular expenditure of R4 164 594 000 as reported in the individualdepartments’ annual reports.As disclosed in note 29 the Gauteng provincial departments incurred fruitless and wasteful expenditure of R377 343 000 as reported in theindividual departments’ annual reports.As disclosed in note 10 the Gauteng provincial departments incurred unauthorised expenditure of R1 050 780 00 due to funds expended forpurpose which were not in accordance with the vote and/or main division within the vote.Additional matter16.I draw attention to the matter below. My opinion is not modifi ed in respect of this matter.Financial reporting framework17.The fi nancial reporting framework prescribed by the National Treasury and applied by the Gauteng Provincial Departments is a complianceframework. The wording of my opinion on a compliance framework should refl ect that the fi nancial statements have been prepared inaccordance with this framework and not that they “present fairly”. Section 20(2)(a) of the PAA however, requires me to express an opinion onthe fair presentation of the fi nancial statements. The wording of my opinion therefore refl ects this requirementREPORTING ON OTHER LEGAL AND REGULATORY REQUIREMENTS18. In accordance with the PAA and the General Notice issued in terms thereof, I report the following fi ndings relevant to compliance with lawsand regulations and internal control, but not for the purpose of expressing an opinion.20 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

Report of the Auditor-General : Departmentsfor the year ended 31 March 2012Compliance with laws and regulations19.I performed procedures to obtain evidence that the entity has complied with applicable laws and regulations regarding fi nancial matters,fi nancial management and other related matters. My fi ndings on material non-compliance with specifi c matters in key applicable laws andregulations as set out in the General Notice issued in terms of the PAA are as follows:Annual financial statements20.21.The combined fi nancial statements submitted for auditing were prepared in accordance the Departmental Financial Reporting Frameworkprescribed by National Treasury, however material misstatements were identifi ed by the auditors in the submitted combined fi nancialstatements which is in the conversation of section 40(1)(a) of the PFMA. Some of the material misstatements were corrected and theuncorrected material misstatements resulted in the fi nancial statements receiving qualifi ed audit opinion.Section 19(1)(a) of the PFMA requires that the Provincial Treasury prepare consolidated fi nancial statements in respect of the provincialdepartments in the province; public entities under the ownership control of the provincial executive of the province and the provincial legislaturein the province. The Gauteng Department of Finance Treasury did not prepare such consolidation as envisaged in the PFMA. Two separatecombinations were prepared due to a signifi cantly different basis of accounting being applied.Internal control22.I considered internal control relevant to my audit of the fi nancial statements, and compliance with laws and regulations. The matters reportedbelow under the fundamentals of internal control are limited to the signifi cant defi ciencies that resulted in the basis for qualifi ed opinion andthe fi ndings on compliance with laws and regulations included in this report.Leadership23.24.The accounting offi cer did not exercise adequate oversight responsibility regarding fi nancial reporting and compliance and related internalcontrols of fi nancial statements preparation resulting in material misstatements as identifi ed by the auditors.The department did not adequately plan and provide training on preparation of consolidated fi nancial statements.Financial management25.Insuffi cient group wide controls were implemented to ensure that the consolidation process addresses the requirements for combination andinsuffi cient group wide instructions issued to the departments regarding the required combination packs for the provincial combination. Thefi nancial statements to be included on the annual report were not adequately reviewed prior to submission for audit purposes.Johannesburg28 May 2013Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government 21

GAUTENG PROVINCIAL DEPARTMENTSCombined Statement of Financial Performanceas at 31 March 2012OPERATING INCOME2011/2012Notes R’00069,530,4712010/2011R’00064,412,492Equitable ShareConditional GrantsProvincial Taxes & Revenue in terms of Section 12(3) of the PFMADepartmental revenueOther Revenue2350,967,61514,673,913103,615,240273,69345,869,09014,186,70610,0372,838,9311,507,728NON-OPERATING INCOME-1,016,099Non-Operating Income4-1,016,099Aid assistance5.14,1605,344TOTAL REVENUE69,534,63165,433,935REVENUE FUND EXPENDITURE180,2933,109,591Expenditure in terms of Schedule 5 of PFMA, Act 1 of 1999Expenditure in terms of an Act of ParliamentUnspent conditional grants to be surrendered to the National departmentNon-operating ExpenditureOther----180,2932,6451,415,093361,73442,4951,287,624DEPARTMENTAL EXPENDITURECurrent expenditureCompensation of employeesGoods & ServicesInterest & Rent on LandAid assistanceExpenditure approved without fundingTotal current expenditure6785.237,079,47713,933,84244,540-2,63851,060,49732,791,24412,344,28937,5892,637-45,175,759Transfers and subsidiesTransfers and subsidiesAid assistanceTotal transfers and subsidies115.313,964,173-13,964,17314,228,6082,54214,231,150Expenditure for capital assetsTangible capital assetsSoftware and other intangible assetsTotal expenditure for capital assets9.19.22,653,62922,2172,675,8462,021,83913,4702,035,309Payments for financial assets12102,91374,603TOTAL EXPENDITURE67,983,72264,626,412SURPLUS/(DEFICIT)1,550,909807,52322 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCIAL DEPARTMENTSCombined Statement of Financial Positionas at 31 March 2012Notes2011/2012R’0002010/2011R’000ASSETSCurrent AssetsUnauthorized expenditureFruitless and wasteful expenditureCash and cash equivalentsPrepayments and advancesReceivablesNon-current assetsInvestmentsTOTAL ASSETS10131415161710,809,4085,221,3073,5765,057,791493526,24154,00454,00410,863,4129,870,0695,225,6993,5763,407,9932,0321,230,769109,004109,0049,979,073LIABILITIESCurrent liabilitiesBank overdraftPayablesBorrowingsAid assistance repayableAid assistance unutilized181920.15.45,845,9583,117,4702,614,036113,776-6765,588,5293,036,9561,572,670978,800103-Non-current liabilitiesBorrowings20.25,011,2415,011,2414,200,0004,200,000TOTAL LIABILITIES10,857,1999,788,529NET ASSETS6,213190,545Represented by:Capitalisation reserveRecoverable revenueRetained funds54,004731(48,522)109,00426181,280TOTAL6,213190,545Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government23

GAUTENG PROVINCIAL DEPARTMENTSCombined Statement of Changes in Net Assetsas at 31 March 2012Notes2011/2012R’0002010/2011R’000Capitalisation ReservesOpening BalanceTransfers:Movement in EquityClosing Balance109,004(55,000)(55,000)54,004109,004--109,004Recoverable revenueOpening balanceTransfers:Debts revisedDebts recovered (included in departmental receipts)Debts raisedClosing balance261470(774)2131,031731-261(577)10828261Retained fundsOpening balanceTransferred from voted funds to be surrendered (Parliament/Legislatures ONLY)Utilised during the yearOtherClosing balance81,280(1,598,574)1,467,4081,364(48,522)226,58017,740(728,048)565,00881,280TOTAL6,213190,54524 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCIAL DEPARTMENTSCombined Cash Flow Statementas at 31 March 2012CASH FLOWS FROM OPERATING ACTIVITIESRECEIPTS DISCLOSED BY THE PROVINCIAL REVENUE FUNDEquitable ShareConditional GrantsProvincial Taxes & Revenue in terms of Section 12(3) of the PFMADepartmental Revenue collectedNon-operating incomeSurrenders from departmentsOther Income2011/2012Notes R’00070,802,20450,967,61514,680,170103,610,458-1,534,2219,7302010/2011R’00065,658,57545,869,09013,596,54110,0372,887,7651,016,0992,271,8117,232RECEIPTS DISCLOSED BY PROVINCIAL DEPARTMENTSAnnual appropriated funds receivedStatutory appropriated funds receivedDepartmental revenue receivedAid assistance received5.172,558,35668,876,82758,8863,618,4834,16065,503,87662,602,91555,4872,840,2585,216PAYMENTS DISCLOSED BY THE PROVINCIAL REVENUE FUNDAnnual appropriationStatutory appropriationConditional GrantsOwn Funds AppropriatedExpenditure in terms of an Act of ParliamentNon-operating expenditureOther69,459,94850,907,69158,88615,133,5522,835,584--524,23565,174,28945,813,60555,48513,596,5412,963,4461,415,09342,4951,287,624Net (increase)/decrease in working capitalSurrendered to Revenue FundSurrendered to RDP Fund/DonorCurrent paymentsPayments for fi nancial assetsTransfers and subsidies paidNet cash flow available from operating activities21(612,683)(4,908,853)(3,484)(50,010,086)(102,913)(13,964,173)4,298,42032,627(4,057,669)(3,477)(45,061,616)(74,603)(12,961,808)3,861,616CASH FLOWS FROM INVESTING ACTIVITIESPayments for capital assetsProceeds from sale of capital assets(Increase)/decrease in investmentsNet cash flows from investing activities(2,675,846)15255,000(2,620,694)(2,034,945)62-(2,034,883)CASH FLOWS FROM FINANCING ACTIVITIESIncrease/(decrease) in net assetsIncrease/(decrease) in borrowingsNet cash flows from financing activities(54,530)(53,784)(108,314)(9,805)978,800968,995Net increase/(decrease) in cash and cash equivalents1,569,4122,795,728Cash and cash equivalents at beginning of period370,909(2,424,819)Cash and cash equivalent at end of period21.11,940,321370,909Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government25

GAUTENG PROVINCIAL DEPARTMENTSStatement of Accounting Policies & Related Mattersfor the year ended 31 March 20121. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe fi nancial statements have been prepared in accordance with thefollowing policies, which have been applied consistently in all materialrespects, unless otherwise indicated. However, where appropriate andmeaningful, additional information has been disclosed to enhance theusefulness of the combined fi nancial statements and to comply with thestatutory requirements of the Public Finance Management Act, Act 1 Of1999 (as amended by Act 29 of 1999) the Treasury Regulations issuedin terms of the Act and Division of Revenue Act, Act 1 of 2010.1.1 Presentation of the Financial Statements1.1.1 Basis of preparationThe Financial Statements have been prepared on a modifi ed cash basisof accounting, except where stated otherwise. The modifi ed cash basisconstitutes the cash basis of accounting supplemented with additionaldisclosure items. Under the cash basis of accounting transactions andother events are recognised when cash is received or paid.1.1.2 Basis of combinationThe combined accounts have been prepared in accordance withsection 19 (1) of the PFMA in terms of generally recognised accountingpractice. The combined annual fi nancial statements consist of theaggregation of all the provincial votes, Provincial Legislature and as theProvincial Revenue Fund, with journals to eliminate interdepartmentaltransactions. Normally combined fi nancial statements are prepared fora group of enterprises under the control of a parent. Control is the powerto govern the fi nancial and operating policies of an enterprise. Thefi nancial statements of each entity within the group must be combinedon a line by line by adding like items of assets, liabilities, net assets,revenue and expenses together unless otherwise mentioned in theaccounting policies and in the Preparation Guide for the Combination.1.1.3 Presentation currencyAll amounts have been presented in the currency of the South AfricanRand (R).1.1.4 RoundingUnless otherwise stated all fi nancial fi gures have been rounded to thenearest one thousand Rand (R’000).1.1.5 Comparative figuresPrior period comparative information has been presented in the currentyear’s fi nancial statements. Where necessary fi gures included in theprior period fi nancial statements have been reclassifi ed to ensure thatthe format in which the information is presented is consistent with theformat of the current year’s fi nancial statements.1.2 Revenue1.2.1 Appropriated fundsAppropriated funds comprises of departmental allocations as well asdirect charges against revenue fund (i.e. statutory appropriation).Appropriated funds are recognised in the fi nancial records on the datethe appropriation becomes effective. Adjustments made in terms of theadjustments budget process are recognised in the fi nancial records onthe date the adjustments become effective.1.2.2 Departmental revenueAll departmental revenue is recognised in the statement of fi nancialperformance when received and is subsequently paid by all provincialdepartments into the Provincial Revenue Fund, unless stated otherwise.The main sources of own revenue comprises of motor vehicle licensefees, gambling taxes, interest income and patient fees.1.2.3 Direct Exchequer receiptsAll direct exchequer receipts are recognised in the statement of fi nancialperformance when the cash is received and is subsequently paid intothe Provincial Revenue Fund, unless stated otherwise.1.2.4 Direct Exchequer paymentsAll direct exchequer payments are recognised in the statement offi nancial performance when fi nal authorisation for payment is effectedon the system (by no later than 31 March of each year).1.2.5 Aid assistanceAids assistance is recognised as revenue when receivedThe cash payments made during the year relating to aid assistanceprojects are recognised as expenditure in the statement of fi nancialperformance when fi nal authorisation for payments is effected on thesystem (by no later than 31 March of each year)The value of the assistance expensed prior to the receipt of funds isrecognised as a receivable in the statement of fi nancial position.Inappropriately expensed amounts using aid assistance and anyunutilised amounts are recognised as payables in the statement offi nancial position.CARA funds assistance comprise of accounts specifi cally appropriatedfrom the Criminal Asset Recovery Account (CARA).All CARA funds received must be recorded as revenue when funds arereceived. The cash payments made during the year relating to CARAearmarked projects are recognised as expenditure in the statement offi nancial performance when fi nal authorisation for payments effected onthe system (by no later than 31 March of each year)1.3 Expenditure1.3.1 Compensation of employees1.3.1.1 Salaries and wagesSalaries and wages are expensed in the statement of fi nancial26 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC DEPARTMENTSStatement of Accounting Policies & Related Mattersfor the year ended 31 March 2012performance when the fi nal authorisation for payment is effected on thesystem (by no later than 31 March of each year).Other employee benefi ts that give rise to a present legal or constructiveobligation are disclosed in the disclosure notes to the fi nancialstatements at its face value and are not recognised in the statement offi nancial performance or position.Employee costs are capitalised to the cost of a capital project when anemployee spends more than 50% of his/her time on the project. Thesepayments form part of expenditure for capital assets in the statement offi nancial performance.1.3.1.2 Social contributionsEmployer contributions to post employment benefi t plans in respectof current employees are expensed in the statement of fi nancialperformance when the fi nal authorisation for payment is effected on thesystem (by no later than 31 March of each year).No provision is made for retirement benefi ts in the fi nancial statementsof the department. Any potential liabilities are disclosed in the fi nancialstatements of the National Revenue Fund and not in the fi nancialstatements of the employer department.Employer contributions made by the department for certain of its exemployees(such as medical benefi ts) are classifi ed as transfers tohouseholds in the statement of fi nancial performance.1.3.2 Goods and servicesPayments made during the year for goods and/or services arerecognised as an expense in the statement of fi nancial performancewhen the fi nal authorisation for payment is effected on the system (byno later than 31 March of each year).The expense is classifi ed as capital if the goods and/or services wereacquired for a capital project or if the total purchase price exceeds thecapitalisation threshold (currently R5, 000). All other expenditures areclassifi ed as current.Rental paid for the use of buildings or other fi xed structures is classifi edas goods and services and not as rent on land.1.3.3 Interest and rent on landInterest and rental payments are recognised as an expense in thestatement of fi nancial performance when the fi nal authorisation forpayment is effected on the system (by no later than 31 March of eachyear). This item excludes rental for the use of buildings or other fi xedstructures. If it is not possible to distinguish between payment for theuse of land and the fi xed structures on it, the whole amount should berecorded under goods and services.1.3.4 Payments for financial assetsDebts are written off when identifi ed as irrecoverable. Debts writtenoffare limited to the amount of savings and/or under spending ofappropriated funds. The write off occurs at year-end or when fundsare available. No provision is made for irrecoverable amounts but anestimate is included in the disclosure notes to the fi nancial statementsamounts.All other losses are recognised when authorisation has been grantedfor the recognition .1.3.5 Transfers and subsidiesTransfers and subsidies are recognised as an expense when the fi nalauthorisation for payment is effected on the system (by no later than 31March of each year).1.3.6 Unauthorised expenditureWhen confi rmed unauthorised expenditure is recognised as an assetin the statement of fi nancial position until such time as the expenditureis either approved by the relevant authority, recovered from theresponsible person or written off as irrecoverable in the statement offi nancial performance.Unauthorised expenditure approved with funding is derecognised fromthe statement of fi nancial position when the unauthorised expenditureis approved and the related funds are received.Where the amount is approved without funding it is recognised asexpenditure in the statement of fi nancial performance on the date ofapproval.1.3.7 Fruitless and wasteful expenditureFruitless and wasteful expenditure is recognised as expenditure inthe statement of fi nancial performance according to the nature of thepayment and not as a separate line item on the face of the statement.If the expenditure is recoverable it is treated as an asset until it isrecovered from the responsible person or written off as irrecoverable inthe statement of fi nancial performance.1.3.8 Irregular expenditureIrregular expenditure is recognised as expenditure in the statementof fi nancial performance. If the expenditure is not condoned by therelevant authority it is treated as an asset until it is recovered or writtenoff as irrecoverable.1.4 Assets1.4.1 Cash and cash equivalentsCash and cash equivalents are carried in the statement of fi nancialposition at cost.Bank overdrafts are shown separately on the face of the statement offi nancial position.Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government27

GAUTENG PROVINCE PUBLIC DEPARTMENTSStatement of Accounting Policies & Related Mattersfor the year ended 31 March 2012For the purposes of the cash fl ow statement, cash and cash equivalentscomprise cash on hand, deposits held, other short-term highly liquidinvestments and bank overdrafts.1.4.2 Other financial assetsOther fi nancial assets are carried in the statement of fi nancial positionat cost.1.4.3 Prepayments and advancesAmounts prepaid or advanced are recognised in the statement offi nancial position when the payments are made and are derecognisedas and when the goods/services are received or the funds are utilised.Prepayments and advances outstanding at the end of the year arecarried in the statement of fi nancial position at cost.1.4.4 ReceivablesReceivables included in the statement of fi nancial position arise fromcash payments made that are recoverable from another party (includingdepartmental employees) and are derecognised upon recovery or writeoff.Receivables outstanding at year-end are carried in the statement offi nancial position at cost plus any accrued interest. Amounts that arepotentially irrecoverable are included in the disclosure notes.1.4.5 InvestmentsCapitalised investments are shown at cost in the statement of fi nancialposition.Investments are tested for an impairment loss whenever events orchanges in circumstances indicate that the investment may be impaired.Any impairment loss is included in the disclosure notes.1.4.6 LoansLoans are recognised in the statement of fi nancial position when thecash is paid to the benefi ciary. Loans that are outstanding at year-endare carried in the statement of fi nancial position at cost plus accruedinterest.Amounts that are potentially irrecoverable are included in the disclosurenotes.1.4.7 InventoryInventories that qualify for recognition must be initially refl ected at cost.Where inventories are acquired at no cost, or for nominal consideration,their cost shall be their fair value at the date of acquisition.All inventory items at year-end are refl ected using the weighted averagecost or FIFO cost formula.1.5 Capital assets1.5.1 Movable assetsInitial recognitionA capital asset is recorded in the asset register on receipt of the item atcost. Cost of an asset is defi ned as the total cost of acquisition. Wherethe cost cannot be determined accurately, the movable capital asset isstated at fair value. Where fair value cannot be determined, the capitalasset is included in the asset register at R1.All assets acquired prior to 1 April 2002 are included in the register atR1.Subsequent recognitionSubsequent expenditure of a capital nature is recorded in the statementof fi nancial performance as “expenditure for capital assets” and iscapitalised in the asset register of the department on completion of theproject.Repairs and maintenance is expensed as current “goods and services”in the statement of fi nancial performance.1.5.2 Immovable assetsInitial recognitionA capital asset is recorded on receipt of the item at cost. Cost of anasset is defi ned as the total cost of acquisition. Where the cost cannotbe determined accurately, the immovable capital asset is stated at R1unless the fair value for the asset has been reliably estimated.Subsequent recognitionWork-in-progress of a capital nature is recorded in the statementof fi nancial performance as “expenditure for capital assets”. Oncompletion, the total cost of the project is included in the asset registerof the department that is accountable for the asset.Repairs and maintenance is expensed as current “goods and services”in the statement of fi nancial performance.1.5.3 Intangible assetsInitial recognitionAn intangible asset is recorded in the asset register on receipt of theitem at cost. Cost of an intangible asset is defi ned as the total costof acquisition. Where the cost cannot be determined accurately, theintangible asset is stated at fair value. Where fair value cannot bedetermined, the intangible asset is included in the asset register at R1.All intangible assets acquired prior to 1 April 2002 can be included in theasset register at R1.Subsequent expenditureSubsequent expenditure of a capital nature is recorded in the statementof fi nancial performance as “expenditure for capital asset” and iscapitalised in the asset register of the department.Maintenance is expensed as current “goods and services” in thestatement of fi nancial performance.28 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC DEPARTMENTSStatement of Accounting Policies & Related Mattersfor the year ended 31 March 20121.6 Liabilities1.6.1 PayablesRecognised payables mainly comprise of amounts owing to othergovernmental entities. These payables are carried at cost in thestatement of fi nancial position.1.6.2 Contingent liabilitiesContingent liabilities are included in the disclosure notes to the fi nancialstatements when it is possible that economic benefi ts will fl ow fromthe department, or when an outfl ow of economic benefi ts or servicepotential is probable but cannot be measured reliably.1.7 Contingent assetsContingent assets are included in the disclosure notes to the fi nancialstatements when it is probable that an infl ow of economic benefi ts willfl ow to the entity.1.8 CommitmentsCommitments are not recognised in the statement of fi nancial positionas a liability or as expenditure in the statement of fi nancial performancebut are included in the disclosure notes.1.9 AccrualsAccruals are not recognised in the statement of fi nancial position as aliability or as expenditure in the statement of fi nancial performance butare included in the disclosure notes.1.10 Employee benefitsShort-term employee benefi ts that give rise to a present legal orconstructive obligation are disclosed in the disclosure notes to thefi nancial statements. These amounts are not recognised in the statementof fi nancial performance or the statement of fi nancial position.1.11 Lease commitmentsFinance leaseFinance leases are not recognised as assets and liabilities in thestatement of fi nancial position. Finance lease payments are recognisedas an expense in the statement of fi nancial performance and areapportioned between the capital and interest portions. The fi nance leaseliability is disclosed in the disclosure notes to the fi nancial statements.Operating leaseOperating lease payments are recognised as an expense in thestatement of fi nancial performance. The operating lease commitmentsare disclosed in the discloser notes to the fi nancial statement.1.12 Impairmenta receivable, loan or investment may be impaired. An assessment ofwhether there is an indication of possible impairment is done at eachreporting date. An estimate is made for doubtful loans and receivablesbased on a review of all outstanding amounts at year-end. Impairmentson investments are calculated as being the difference between thecarrying amount and the present value of the expected future cashfl ows / service potential fl owing from the instrument.1.13 ProvisionsProvisions are disclosed when there is a present legal or constructiveobligation to forfeit economic benefi ts as a result of events in the pastand it is probable that an outfl ow of resources embodying economicbenefi ts will be required to settle the obligation and a reliable estimateof the obligation can be made.1.14 Receivables for departmental revenueReceivables for departmental revenue are disclosed in the disclosurenotes to the annual fi nancial statements.1.15 Net Assets1.15.1 Capitalisation reserveThe capitalisation reserve comprises of fi nancial assets and/or liabilitiesoriginating in a prior reporting period but which are recognised in thestatement of fi nancial position for the fi rst time in the current reportingperiod. Amounts are recognised in the capitalisation reserves whenidentifi ed in the current period and are transferred to the ProvincialRevenue Fund when the underlying asset is disposed and the relatedfunds are received.1.16 Recoverable revenueAmounts are recognised as recoverable revenue when a payment madein a previous fi nancial year becomes recoverable from a debtor in thecurrent fi nancial year. Amounts are either transferred to the ProvincialRevenue Fund when recovered or are transferred to the statement offi nancial performance when written-off.1.17 Related party transactionsSpecifi c information with regards to related party transactions is includedin the disclosure notes.1.18 Key management personnelCompensation paid to key management personnel including their familymembers where relevant, is included in the disclosure notes.1.19 Public private partnershipsA description of the PPP arrangement, the contract fees and currentand capital expenditure relating to the PPP arrangement is included inthe disclosure notes.The department tests for impairment where there is an indication thatCombined Financial Information Annual Report 2011/12 | Gauteng Provincial Government29

GAUTENG PROVINCIAL DEPARTMENTSNotes to the Combined Financial Statementsas at 31 March 20122. Departmental Revenue2011/2012Notes R’0002010/2011R’000Tax revenueAllocated to extra-ordinary receiptsSales of goods and services other than capital assetsFines, penalties and forfeitsInterest, dividends and rent on landSales of capital assetsTransactions in fi nancial assets and liabilitiesTotal revenue collected2,886,980(731,655)890,28514,166343,342304211,8183,615,2402,322,450(517,870)871,77116,92494,15912451,3732,838,9313. Other RevenueSurrendersOther - surrenders to the PRFTotal-273,693273,6931,146,886360,8421,507,7284. Non-Operating IncomeVarious - (CPD Interest; Gautrain Interest; Investment interest,interbank transfers, reversals and settlements )Total--1,016,0991,016,0995. Aid AssistanceOpening BalanceRevenueExpenditureCurrentTransfersPrepaymentsSurrendered / Transferred to retained fundsClosing Balance5.15.25.3-4,160----(3,484)6763,5435,344(5,179)(2,637)(2,542)(103)(3,605)-Analysis of BalanceAid assistance unutilisedClosing Balance5.4676676--30 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE DEPARTMENTSNotes to the Combined Financial Statementsas at 31 March 20126. Compensation of Employees2011/2012Notes R’0002010/2011R’000Salaries and WagesBasic SalaryPerformance AwardService BasedCompensative/circumstantialPeriodic PaymentsOther non-pensionable allowancesTotalSocial ContributionsEmployer contributionsPensionMedicalUIFBargaining CouncilOffi cial unions and associationsInsuranceTotalTotal Compensation of employeesAverage number of employees25,902,563318,172870,7311,133,227202,5213,693,01532,120,2293,226,9571,719,9568463,8583,6873,9444,959,24837,079,477160,50223,257,694100,1511,278,9711,105,113180,7382,457,58228,380,2492,902,1721,499,1766465,2813,649714,410,99532,791,244157,1227. Goods and servicesAdministrative feesAdvertisingAssets less than R5,000Bursaries (employees)CateringCommunicationComputer servicesConsultants, contractors and agency/outsourced servicesEntertainmentAudit cost – externalFleet servicesInventoryHousingOperating leasesOwned and leasehold property expenditureTransport provided as part of the departmental activitiesTravel and subsistenceVenues and facilitiesTraining and staff developmentOther operating expenditureTotal7.17.27.37.47.57.67.77.817,714101,42657,90930,43448,146255,141324,6364,601,8121,24373,08865,9794,954,2783,081443,1601,662,099319,502331,39478,035318,485246,28013,933,84236,504128,16172,13028,71846,552237,418198,0874,144,6861,60275,59216,9644,836,4702,244446,1311,072,234241,203252,57945,708292,627168,67912,344,289Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government31

GAUTENG PROVINCE PUBLIC DEPARTMENTSNotes to the Combined Financial Statementsas at 31 March 20127.1 Assets less than R50002011/2012Notes R’0002010/2011R’000Tangible assetsMachinery and equipmentIntangible assetsTotal57,89257,8921757,90972,12072,1201072,1307.2 Computer servicesSITA computer servicesExternal computer service providersTotal35,004289,632324,63673,601124,486198,0877.3 Consultants, contractors and agency/outsourced servicesBusiness and advisory servicesInfrastructure and planningLaboratory servicesLegal costsContractorsAgency and support/outsourced servicesTotal1,016,221170,2611,210,037139,6331,015,2261,050,4344,601,812819,989329,904935,60953,8201,137,211868,1534,144,6867.4 Audit cost – externalRegularity auditsPerformance auditsInvestigationsOther auditsTotal64,8395,6752,4839173,08863,5926,1935,09171675,59232 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC DEPARTMENTSNotes to the Combined Financial Statementsas at 31 March 20127.5 Inventory2011/2012Notes R’0002010/2011R’000Learning and teaching support materialFood and food suppliesFuel, oil and gasOther consumable materialsMaintenance materialStationery and printingMedical suppliesMedicineMilitary storesTotal369,973380,697174,285392,73921,726200,3162,069,0611,345,47384,954,278287,669511,325133,510287,39913,336212,1523,391,0001784,836,4707.6 Owned and leasehold property expenditureMunicipal servicesProperty management feesProperty maintenance and repairsOtherTotal489,586480849,242322,7911,662,099395,901649427,603248,0811,072,2347.7 Travel and subsistenceLocalForeignTotal301,60129,793331,394223,45529,124252,5797.8 Other operating expenditureLearnershipsProfessional bodies, membership and subscription feesResettlement costsOther – Departments of Health, Infrastructure andAgriculture and Rural DevelopmentTotal189,7233,1446,85346,560246,280125,2802,7993,17637,424168,679Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government33

GAUTENG PROVINCE PUBLIC DEPARTMENTSNotes to the Combined Financial Statementsas at 31 March 20128. Interest and Rent on Land2011/2012Notes R’0002010/2011R’000Interest expenseTotal interest and rent on land44,54044,54037,58937,5899. Expenditure on capital assetsTangible assetsBuildings and other fi xed structuresMachinery and equipmentLand and subsoil assets9.12,653,6291,951,608676,46825,5532,021,8391,449,849512,45359,537Intangible assetsSoftware and other intangible assetsComputer softwareTotal9.222,21722,2172,675,84613,47013,4702,035,309Compensation for capital expenditureGoods and servicesTotal1,531,9751,531,975638,500638,500Analysis of funds utilised to acquire capital assetsTangible assetsVoted FundsBuildings and other fi xed structuresMachinery and equipmentLand and subsoil assets2,655,4901,951,408678,52925,5532,021,8391,449,849512,45359,537Software and other intangible assetsVoted FundsComputer software20,35620,35613,47013,47034 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC DEPARTMENTSNotes to the Combined Financial Statementsas at 31 March 201210. Unauthorised expenditure2011/2012Notes R’0002010/2011R’000Reconciliation of unauthorized expenditureOpening balanceUnauthorized expenditure - discovered in the current yearLess: Amounts approved by Parliament/Legislature with fundingLess: Amounts approved by Parliament/Legislature without funding andwritten off in the Statement of Financial PerformanceCurrentCapitalUnauthorised expenditure awaiting authorisation / written off5,225,699-(1,754)(2,638)(2,638)-5,221,3076,014,882616,170(1,405,353)---5,225,699Analysis of unauthorised expenditure awaiting authorisation pereconomic classificationCurrentCapitalTotal4,943,721277,5865,221,3074,947,778277,9215,225,69911. Transfers and subsidiesProvinces and MunicipalitiesDepartmental agencies and accountsUniversities and technikonsPublic coporations and private enterprisesNon-profi t institutionsHouseholdsGifts, donations and sponsorships madeTotal1,014,5512,807,85315,7271,905,9554,412,7153,807,370213,964,173548,2074,503,84613,5841,530,4773,584,2794,048,07414114,228,60812. Payments for financial assetsMaterial losses through criminal conductExtension of loans for policy purposesOther material losses written offDebts written offTotal--86,43716,476102,91323815,7099,20149,45574,603Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government35

GAUTENG PROVINCE PUBLIC DEPARTMENTSNotes to the Combined Financial Statementsas at 31 March 201213. Fruitless and wasteful expenditure2011/2012Notes R’0002010/2011R’000Reconcilation of fruitless and wasteful expenditureOpening BalanceLess: Amounts condonedCurrentLess: Amounts transferred to receivables for recoveryFruitless and wasteful expenditure awaiting condonement3,576---3,57619,285(15,709)(15,709)-3,576Analysis of awaiting condonement per economic classificationsCurrentCapitalTotal3,576-3,5763,576-3,57614. Cash and cash equivalentsCombined Paymaster General AccountCash receiptsDisbursementsCash on handCash with Commercial BanksTotal Cash and cash equivalents590,29992112,2984,455,1015,057,791240,08537141,2283,166,6293,407,99315. Prepayments and AdvancesTravel and subsistencePrepaymentsAdvances paid to other entities outside GautengTotal186254534934971,535-2,03216. ReceivablesClaims recoverableTrade receivablesRecoverable expenditureStaff debtOther debtorsOtherTotal64,60188516,482174,755269,518-526,241109,43964913,191161,553381,495564,4431,230,77036 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC DEPARTMENTSNotes to the Combined Financial Statementsas at 31 March 201217. Investments2011/2012Notes R’0002010/2011R’000Non-currentCapital investment in Medical Supplies DepotAcquisition of Blue IQ Shares at Par ValueTotal non-current54,000454,00454,00055,004109,004The investment of R54 000 000 represents the initial capital to establish the Medical Depot by the Department of Health and SocialDevelopment.The R4 000 represents the initial investment in Blue IQ Investments by the Department of Economic Development. The change fromthe prior year resulted from an adjustment to refl ect the correct treatment in terms of chapter 6 of the Departmental Financial ReportingFramework which has been disclosed in the Department of Economic Development (DED)The Investment of R55 million is for shares in Wakegem (Pty) Ltd, trading as African Romance, which was acquired in 2008/2009fi nancial year and has been transferred to Gauteng Enterprise Propeller (GEP) as part of the DED’s strategy on local benefi ciation ofmineral resources.18. Bank overdraftCombined Paymaster General AccountTotal3,117,4703,117,4703,036,9563,036,956Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government37

GAUTENG PROVINCE PUBLIC DEPARTMENTSNotes to the Combined Financial Statementsas at 31 March 201219. Payables-Current2011/2012Notes R’0002010/2011R’000Amounts owing to other entitiesAdvances receivedClearing accountsOther payablesVoted funds to be transferredConditional grants to be transferredOtherUnauthorised Expenditure not funded by Revenue FundUnused conditional grant to be transferred back to National GovernmentTotal1,102,15423,75113,64484,2735,34188,33856,285174,0891,066,1612,614,036758,31119,76711,880142,0505,34111,160-174,089450,0721,572,67020. BorrowingsCurrentDomesticTotal Current BorrowingsNon-currentLong TermDomesticTotal Long Term Borrowings20.120.2113,776113,7765,011,2415,011,241978,800978,8004,200,0004,200,000The current borrowings with DBSA were acquired in March 2011 and payable within 6 months with interest on the basis of the 6 monthJIBAR plus 60 points. The fi nal rate will be determined and fi xed based on the close-out rate two days prior to the disbursement of theloan.The long term borrowing relates to the loan from National Treasury for the construction of the Gautrain Project. The loan will berepayable from 01 April 2013 in 5 equal installments until 01 April 2017, the interest rate is based on the R203 Government Bond aspublished by the Bond Exchange of South Africa from the date the loan was acquired.38 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC DEPARTMENTSNotes to the Combined Financial Statementsas at 31 March 201221. Net cash flow available from operating activities2011/2012Notes R’0002010/2011R’000Net surplus/(defi cit) as per Statement of Financial PerformanceAdd back non cash/cash movements not deemed operating activities(Increase)/decrease in receivables – current(Increase)/decrease in prepayments and advances(Increase)/decrease in other current assetsIncrease/(decrease) in payables – currentProceeds from sale of capital assetsExpenditure on capital assetsSurrenders to Revenue FundSurrenders to RDP Fund/DonorVoted funds not requested/not receivedApproved Statutory OverdrawnOther non-cash itemsNet cash flow generated by operating activities6,534,515(2,246,095)275,2041,5394,392(210,608)(152)2,675,846(4,635,029)-(353,803)-(3,484)4,288,420807,5233,054,093(327,741)2,2411,944,761591,997(62)2,035,309(1,789,743)594,812(126)2,645-3,861,616Reconciliation of cash and cash equivalents for cash flow purposesCombined Paymaster General AccountCash receiptsDisbursementsCash on handCash with commercial banks-LocalTotal CashLess: Bank overdraftCash and cash equivalents for cash flow purposes21.12,968,31092112,2982,077,0905,057,791(3,117,470)1,940,3212,828,29537141,228578,2913,407,865(3,036,956)370,909Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government39

GAUTENG PROVINCIAL DEPARTMENTSDisclosure Notes to the Combined Financial Statementsas at 31 March 201222. Contingent liabilities and Contingent assets2011/2012Notes R’0002010/2011R’000Contingent LiabilitiesMotor vehicle guaranteesHousing loan guaranteesClaims against the departmentOther departments (interdepartmental unconfi rmed balances)OtherTotal616,7883,504,16364,6821,817,5155,393,20914811,6131,907,584522,4761,814,1304,255,951The amounts included as other contingent liabilities relate primarily to the premature terminations of workers contracts and occupationdispensation compensation for health workers and engineers. Legal claims against the Department of Health have also been included.Contingent AssetsTotal433,632433,632416,789416,789The contingent assets relates to claims against suppliers primarily by the Department of Health and other civil claims by departments.23. CommitmentsCurrent ExpenditureApproved and contractedApproved but not yet contractedTotalCapital Expenditure (including transfers)Approved and contractedApproved but not yet contractedTotalTotal Commitments2,283,654610,5612,894,21510,630,1772,979,43013,609,60716,503,8221,324,078982,8232,306,9018,715,6244,656,35313,371,97715,678,878The commitments include multiyear construction projects managed by the Department of Infrastructure on behalf of client departmentssuch as Health and Education and other service projects by various departments.24. AccrualsBy economic classificationGoods and servicesInterest and rent on landTransfers and subsidiesCapital assetsOther – Departments of Health and InfrastructureTotal3,361,758511,006,278595,39351,7595,015,2393,428,753157444,749506,99469,6204,450,27340 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC DEPARTMENTSDisclosure Notes to the Combined Financial Statementsas at 31 March 201225. Employee benefits2011/2012Notes R’0002010/2011R’000Leave entitlementService bonus (Thirteenth cheque)Performance awardsCapped leave commitmentsOther - Department of HealthTotal881,318965,898285,2472,646,29437,8944,816,651893,982973,372232,7412,604,22822,7144,727,03726. Lease commitmentsOperating lease expenditureBuildings and other fixed structuresNot later than 1 yearLater than 1 year and not later than 5 yearsLater than 5 yearsTotal408,3331,486,022879,8672,774,223352,7181,466,020873,1152,691,853Machinery and equipmentNot later than 1 yearLater than 1 year and not later than 5 yearsTotal present value660,55811,918672,476429,402692,3331,121,735Total present valueNot later than 1 yearLater than 1 year and not later than 5 yearsLater than 5 yearsTotal present value1,068,8911,497,940879,8673,446,699782,1202,158,353873,1153,813,588Finance lease expenditureMachinery and equipmentNot later than 1 yearLater than 1 year and not later than 5 yearsLater than 5 yearsLESS: fi nance costsTotal present value105,68979,365113(14,887)170,280172,161108,844139(17,686)263,458The fi nance and operating leases relate to mobile phone contracts, government garage vehicles and various machinery and equipment.Buildings and other fixed structuresNot later than 1 yearLater than 1 year and not later than 5 yearsTotal1,5111551,666---Escalation clauses related to the above contracts by the Department of Infrastructure.Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government41

GAUTENG PROVINCE PUBLIC DEPARTMENTSDisclosure Notes to the Combined Financial Statementsas at 31 March 201227. Receivables for departmental revenue2011/2012Notes R’0002010/2011R’000Tax revenueSales of goods and services other than capital assetsFines, penalties and forfeitsInterest, dividends and rent on landTransactions in fi nancial assets and liabilitiesOtherTotal269,7261,206,45857,1152819,324174,4141,727,065201,751888,88335,6897,925861341,8461,476,955The other relates to leave without pay taken and trade discounted receivables accounted for by the Department of Education.Analysis of receivables for departmental revenueOpening balanceLess: Amounts receivedAdd: Amounts recognisedLess: Amounts written-offClosing balance1,789,789(2,847,089)2,917,694(133,329)1,727,0651,409,501(2,244,952)2,442,205(129,799)1,476,95528. Reconciliation of irregular expenditureOpening balanceAdd: Irregular expenditure - relating to prior yearAdd: Irregular expenditure - relating to current yearLess: Amounts condonedLess: Amounts not recoverable (not condoned)Irregular expenditure awaiting condonation5,979,36911,4424,153,152(2,645,600)(2,945)7,495,4182,098,808797,6944,792,368(1,709,501)-5,979,369Analysis of awaiting condonation per age classificationCurrent YearPrior YearsTotal1,490,3266,005,0927,495,4184,410,9011,568,4685,979,369The above relates to various instances of non-compliance by departments to supply chain management regulations and procurementprocedures.42 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC DEPARTMENTSDisclosure Notes to the Combined Financial Statementsas at 31 March 201229. Fruitless and wasteful expenditure2011/2012Notes R’0002010/2011R’000Reconciliation of fruitless and wasteful expenditureOpening balanceFruitless and wasteful expenditure – relating to prior yearFruitless and wasteful expenditure – relating to current yearLess: Amounts condonedFruitless and wasteful expenditure awaiting condonement359,580113,424263,919(72,830)664,093112,595-391,463(144,478)359,580Analysis of awaiting condonement per economic classificationCurrent YearPrior YearsTotal90,879573,214664,09360,762298,818359,580The amount above relates to various departments and is raised due to interest on overdue accounts, payments for buildings not usedand other various other infringements.30. Related party transactionsRevenue received (paid)Sales of goods and services other than capital assetsFines, penalties and forfeitsTotal10,5062,06512,5715,6103,1838,793Payments madeGoods and servicesInterest and rent of landPurchases of capital assetsTransfersTotal2,609,11514,85310,206802,7273,436,9013,008,105--482,8373,490,942Year end balances arising from revenue/paymentsReceivables from related partiesPayables to related partiesTotal5,8211,376,6661,382,487991,234,3101,234,409Types of related party relationship:The above stated related parties information represent transactions and balances between departments and their respective reportingentities and other related parties that do not form part of the group. They are as follows:Department of Health- Medical Supplies DepotDepartment of Education- Sci Bono Discovery Centre and Matthew Goniwe School of Leadership and GovernanceDepartment of Housing- Gauteng Partnership Fund and Housing FundDepartment of Agriculture- Dacel Cost RecoveryDepartment of Finance- Gauteng Project Fund Offi ceDepartment of Economic Development- Gauteng Liquor BoardCombined Financial Information Annual Report 2011/12 | Gauteng Provincial Government43

GAUTENG PROVINCE PUBLIC DEPARTMENTSDisclosure Notes to the Combined Financial Statementsas at 31 March 201231. Key management personnel2011/2012Notes R’0002010/2011R’000Key management personnel for departmentsDescriptionPolitical offi ce bearers (provide detail below)Offi cials:Level 15 to 16Level 14 (incl CFO if at a lower level)Family members of key management personnelTotal13,8573,17984,340125,7205,779232,87515,0384,16271,913129,3408,066228,519Key management personnel for the LegislatureDescriptionSpeaker to Parliament/the LegislatureSecretary to Parliament/ the LegislatureDeputy SecretaryChief Financial Offi cerLegal Advisors1,5061,4261,3481,27811,89717,4551,4201,2641,2001,1301,0116,02532. Impairment and other provisionsImpairmentDebtorsOther - Department of Health (Patient fees)ProvisionsRelates to staff, interest and irrecoverable amounts by Department of Financeand the Legislature.Total154,225932,9511,087,17614,51214,512134,701648,628783,32921,99721,99744 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC DEPARTMENTSDisclosure Notes to the Combined Financial Statementsas at 31 March 201233. Movable Tangible Capital Assets2011/2012Notes R’0002010/2011R’000MOVEMENT IN MOVABLE TANGIBLE CAPITAL ASSETS PER ASSETREGISTER FOR THE YEAR ENDED 31 MARCH 2012Opening BalanceHERITAGE ASSETSHeritage assetsMACHINERY AND EQUIPMENTTransport assetsComputer equipmentFurniture and offi ce equipmentOther machinery and equipmentBIOLOGICAL ASSETSBiological assetsTotal Opening Balance10,22610,2265,626,6862,156,713549,022517,2932,403,65818,58218,5825,655,49410,22610,2263,477,384254,739613,862275,3932,333,39015,29315,2933,502,903Current year adjustments to prior year balancesMACHINERY AND EQUIPMENTTransport assetsComputer equipmentFurniture and offi ce equipmentOther machinery and equipmentBIOLOGICAL ASSETSBiological assetsTotal AdjustmentsAdditionsMACHINERY AND EQUIPMENTTransport assetsComputer equipmentFurniture and offi ce equipmentOther machinery and equipmentBIOLOGICAL ASSETSBiological assetsTotal Additions(331,258)(39,262)(42,194)722(250,524)(2,646)(2,646)(333,904)545,14457,94565,58227,063394,554--545,144--------2,451,5792,004,48269,705283,39593,9973,3113,3112,454,890DisposalsMACHINERY AND EQUIPMENTTransport assetsComputer equipmentFurniture and offi ce equipmentOther machinery and equipmentBIOLOGICAL ASSETSBiological assetsTotal Disposals79,2959,11324,5039,90635,773--79,295289,157102,508132,08931,56322,9972222289,179Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government45

GAUTENG PROVINCE PUBLIC DEPARTMENTSDisclosure Notes to the Combined Financial Statementsas at 31 March 2012Movable Tangible Capital Assets cont.2011/2012Notes R’0002010/2011R’000Closing balanceHERITAGE ASSETSHeritage assetsMACHINERY AND EQUIPMENTTransport assetsComputer equipmentFurniture and offi ce equipmentOther machinery and equipmentBIOLOGICAL ASSETSBiological assetsTotal Assets10,22610,2265,761,2772,166,283547,907535,1722,511,91515,93615,9365,787,43910,22610,2265,639,8062,156,713551,478527,2252,404,39018,58218,5825,668,61434. Minor assetsMOVEMENT IN MINOR ASSETS PER THE ASSET REGISTER FOR THEYEAR ENDED 31 MARCH 2012Opening BalanceIntangible assetsHeritage assetsMachinery and equipmentBiological assetsTOTAL10640848,76810,376859,290-----Current Year Adjustment to prior year BalancesIntangible assetsMachinery and equipmentBiological assetsTOTAL6(140,057)50(140,001)----AdditionsIntangible assetsMachinery and equipmentBiological assetsTOTAL1777,7371,94979,703----46 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC DEPARTMENTSDisclosure Notes to the Combined Financial Statementsas at 31 March 2012Minor assets cont2011/2012Notes R’0002010/2011R’000DisposalsIntangible assetsMachinery and equipmentBiological assetsTOTALClosing balanceIntangible assetsHeritage assetsMachinery and equipmentBiological assetsTOTAL MINOR ASSETS2635,485135,51210340750,96312,374763,480---------35. Intangible Capital AssetsMOVEMENT IN INTANGIBLE CAPITAL ASSETS PER ASSET REGISTERFOR THE YEAR ENDED 31 MARCH 2012Opening Balance CostCurrent Year Adjustment to prior year BalancesServices and operating rightsAdditionsDisposalsClosing balanceServices and operating rightsTotal intangible assets-(9,890)-(9,890)(9,890)(9,890)-------Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government47

GAUTENG PROVINCE PUBLIC DEPARTMENTSDisclosure Notes to the Combined Financial Statementsas at 31 March 201236. Immovable Tangible Capital Assets2011/2012Notes R’0002010/2011R’000MOVEMENT IN IMMOVABLE TANGIBLE CAPITAL ASSETS PER ASSETREGISTER FOR THE YEAR ENDED 31 MARCH 2012BUILDINGS AND OTHER FIXED STRUCTURESDwellingsNon-residential buildingsOther fi xed structuresHERITAGE ASSETSHeritage assets72,265,28019,248,26823,002,26830,014,74454,82654,82670,480,75919,164,92021,966,62429,349,21527,41827,418LAND AND SUBSOIL ASSETSLand19,711,36718,359,07919,711,367 18,359,079MOVEMENT IN IMMOVABLE TANGIBLE CAPITAL ASSETS92,031,47388,867,256Current Year Adjustment to prior year BalancesBUILDINGS AND OTHER FIXED STRUCTURESDwellingsNon-residential buildingsOther fi xed structuresHERITAGE ASSETSHeritage assetsLAND AND SUBSOIL ASSETSLandTOTAL Current Year Adjustment to prior year Balances(66,953)-69,534(136,487)3,3133,3131,055,2011,055,201991,561---------AdditionsBUILDINGS AND OTHER FIXED STRUCTURESDwellingsNon-residential buildingsOther fi xed structuresHERITAGE ASSETSHeritage assetsLAND AND SUBSOIL ASSETSLandTOTAL Additions1,344,353-932,867411,48610,72810,728114,261114,2611,469,3421,802,75083,3481,149,223570,17927,40827,4081,352,2881,352,2883,182,44648 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC DEPARTMENTSDisclosure Notes to the Combined Financial Statementsas at 31 March 2012Immovable Tangible Capital Assets cont.2011/2012Notes R’0002010/2011R’000DisposalsBUILDINGS AND OTHER FIXED STRUCTURESNon-residential buildingsOther fi xed structuresTOTAL disposals37,677-37,67737,67718,22939917,83018,229Closing balanceBUILDINGS AND OTHER FIXED STRUCTURESDwellingsNon-residential buildingsOther fi xed structuresHERITAGE ASSETSHeritage assetsLAND AND SUBSOIL ASSETSLandTOTAL IMMOVABLE TANGIBLE CAPITAL ASSETS73,505,00319,248,26824,004,66930,252,06668,86768,86720,880,82920,880,82994,454,69972,265,28019,248,26823,115,44829,901,56454,82654,82619,711,36719,711,36792,031,473Prior Year amountR’000Restated Amount EffectR’000 R’00037. Restatement of comparative information RestatedPrior yearThe comparative figures for the following accountshave been implicatedStatement of financial performanceOther RevenueUnspent conditional grants to be surrendered to theNational departmentOther Revenue fund expenditureGoods and servicesAid assistanceTransfers and subsidiesSoftware and other intangibles29,760,5541,514,960598,2891,058,30113,613,8672,76512,959,26613,10629,746,0901,507,728361,7341,287,62412,344,2892,63714,228,60813,470(14,464)(7,232)(236,555)229,323(1,269,578)(128)1,269,342364Statement of financial positionUnauthorized expenditureReceivablesAid assistance prepaymentInvestmentsVoted funds to be surrenderedDepartmental revenue to be surrenderedPayablesAid assistance repayable13,923,6436,044,961594,006(103)2,601,4692,677,938315,0311,690,2131288,138,2455,225,6991,230,769-109,004--1,572,670103(5,785,398)(819,262)636,763103(2,492,465)(2,677,938)(315,031)(117,543)(25)Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government49

GAUTENG PROVINCE PUBLIC DEPARTMENTSDisclosure Notes to the Combined Financial Statementsas at 31 March 2012Prior Year amountRestated AmountEffectRestatement of comparative information RestatedPrior year cont.Cash flow Statement3,166,8933,166,637(256)Net cash fl ow available from operating activitiesNet cash fl ows from investing activitiesNet cash fl ows from fi nancing activitiesCash and cash equivalent at end of period3,861,744(2,290,719)1,224,831371,0373,861,616(2,034,883)968,995370,909(128)255,836(255,836)(128)Restatement of prior year fi gures is reported in the combined fi nancial statements due to the reclassifi cation of various account itemsfor a number of departments. These transactions were deemed to have been incorrectly classifi ed in the previous fi nancial year due toreporting template changes or non-adherence to the departmental fi nancial reporting framework and they have now been rectifi ed in thecurrent fi nancial year.50 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

SECTION C:GAUTENG PROVINCIAL GOVERNMENTPUBLIC ENTITIES COMBINED FINANCIALINFORMATION

Report of the Auditor - General : Public EntitiesGAUTENG PROVINCIAL PUBLIC ENTITIESfor the year ended 31 March 2012REPORTING OF THE AUDITOR-GENERAL TO THE GAUTENG PROVINCIAL LEGISLATURE ON COMBINED GAUTENG PROVINCEPUBLIC ENTITIESREPORT ON THE COMBINED FINANCIAL STATEMENTSIntroduction1.I have audited the combined fi nancial statements of the combined Gauteng Provincial Public Entities set out on pages 53 to 87, whichcomprise the combined statement of fi nancial position as at 31 March 2012, the combined statement of fi nancial performance, statement ofchanges in net assets and the cash fl ow statement for the year then ended, and the notes, comprising a summary of signifi cant accountingpolicies and other explanatory information.Accounting officer’s responsibility for the combined financial statements2.The accounting offi cer is responsible for the preparation of these combined fi nancial statements in accordance with the South AfricanStandards of Generally Recognised Accounting Practice (SA Standard of GRAP) and the requirements of the Public Finance ManagementAct, 1999 (Act No.1 of 1999) (PFMA) and for such internal control as the accounting offi cer determines is necessary to enable the preparationof combined fi nancial statements that are free from material misstatement, whether due to fraud or error.Auditor-General’s responsibility3.4.5.My responsibility is to express an opinion on these combined fi nancial statements based on my audit. I conducted my audit in accordance withthe Public Audit Act of South Africa, 2004 (Act No.25 of 2004) (PAA), the General Notice issued in terms thereof and International Standardson Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether the combined fi nancial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined fi nancial statements.The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the combinedfi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant tothe entity’s preparation of the combined fi nancial statements in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluatingthe overall presentation of the combined fi nancial statements.I believe that the audit evidence I have is suffi cient and appropriate to provide a basis for my audit opinion.Opinion6.In my opinion, the combined fi nancial statements present fairly, in all material aspects, the fi nancial position of the combined GautengProvince Public Entities as at 31 March 2012 and its fi nancial performance and cash fl ows for the year then ended, in accordance with SAStandards of GRAP and the requirements of the PFMA.Additional matter7.I draw attention to the matter below. My opinion is not modifi ed in respect of this matter.Financial reporting framework8.The combined fi nancial statements for Gauteng Provincial Entities were prepared in accordance with SA GRAP 6: consolidation of fi nancialstatements. The combined fi nancial statements are not different to consolidated fi nancial statements. Therefore the wording of my opinionrefl ects that these fi nancial statements are fairly presented.REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS9. In accordance with the PAA and the General Notice issued in terms thereof, I report the following fi ndings relevant to compliance with lawsand regulations and internal control, but not for the purpose of expressing an opinion.52 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESReport of the Auditor-General : Departmentsfor the year ended 31 March 2012Compliance with laws and regulations10.I performed procedures to obtain evidence that the entity has complied with applicable laws and regulations regarding fi nancial managementand other related matters. My fi ndings on material non-compliance with specifi c matters in key applicable laws and regulations as set out inthe General Notice issued in terms of the PAA are as follows:Annual financial statements11.12.The combined fi nancial statements submitted for auditing were not prepared in all material respects in accordance with the requirements ofsection 55(1) of the PFMA as it contained material misstatements identifi ed by auditors. Material misstatements identifi ed by the auditors weresubsequently corrected, resulting in the combined fi nancial statements receiving an unqualifi ed audit opinion.Section 19(1)(a) of the PFMA requires that Provincial Treasury prepare consolidated fi nancial statements in respect of the provincialdepartments in the province; public entities under the ownership control of the provincial executive of the province and the provincial legislaturein the province. The Gauteng Department of Finance (Treasury) did not prepare such consolidation as envisaged in the PFMA. Two separatecombinations were prepared due to a signifi cantly different basis of accounting being applied.Internal control13.I considered internal control relevant to my audit of the fi nancial statements and compliance with laws and regulations. The matters reportedbelow under the fundamentals of internal control are limited to the signifi cant defi ciencies that resulted in the fi ndings on compliance withlaws and regulations included in this report.Leadership14.15.The accounting offi cer did not exercise adequate oversight responsibility regarding fi nancial reporting, and compliance and related internalcontrols resulting in material misstatements being identifi ed by the auditors.The department did not properly plan and provide training on the preparation of consolidated fi nancial statements.Financial and performance management16.17.Group wide controls that were implemented concerning consolidation of public entities were inadequate and limited instructions were issuedto the entities regarding the requirements for the provincial combination thus resulted in material misstatements in the combined fi nancialstatements of the Gauteng Province public entities submitted for audit.The fi nancial statements to be included in the annual report were not reviewed adequately for completeness and accuracy prior to submissionfor audit purposes.Johannesburg28 May 2013Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government53

GAUTENG PROVINCIAL PUBLIC ENTITIESCombined Statement of Financial Positionas at 31 March 2012ASSETSNon-current assetsProperty, plant and equipmentInvestment propertyHeritage assetsIntangible assetsTrade and other receivablesOther investmentsFinance lease receivablesDeferred tax assetsRestatedNotes2011/2012R’0002010/2011R’000234567891,740,540818,156175,2673,181160,969173,45973,399-3,144,9711,917,580889,274170,6061,767148,35898,74488,0911,3253,315,745Current assetsTrade and other receivablesFinance lease receivablesOther investmentsInventoriesCash and cash equivalentsAssets classifi ed as held for sale6871011121,492,93860,5161,200104,1513,004,0574,662,86237,7774,700,6391,374,80849,6151,200147,3462,268,1453,841,11435,7883,876,902TOTAL ASSETS7,845,6107,192,647LIABILITIESNon-current liabilitiesLoans and borrowingsFinance lease obligationsProvisionsDeferred tax liabilities1314159148,0262,39738627,084177,893143,1731,71838635,593180,870Current liabilitiesLoans and borrowingsTrade and other payablesFinance lease obligationsCurrent income tax liabilitiesProvisions13161415205,5383,593,8142,9561,096202,4484,005,852299,4342,935,4113,27227446,4493,284,840Liabilities of assets classifi ed as held for sale125,1094,010,9614,5993,289,439TOTAL LIABILITIES4,188,8543,470,309NET ASSETSContributed capitalOther reservesAccumulated surplus/defi citMinority InterestTOTAL NET ASSETS17104,3771,118,3702,457,585(23,576)3,656,756104,3771,116,5002,507,810(6,349)3,722,338TOTAL NET ASSETS AND LIABILITIES7,845,6107,192,64754 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCIAL PUBLIC ENTITIESCombined Statement of Financial Performanceas at 31 March 2012REVENUENon-exchange revenueTransfers and subsidiesFines, penalties and forfeitsExchange revenueSale of goods and rendering of servicesInterest, dividends and rent on landOther operating revenueProfi t on disposal of assetsRestatedNotes2011/2012R’0002010/2011R’00018192021852,199849,9992,2003,882,8953,585,16473,126224,612(7)4,735,094855,152851,8443,3084,067,2053,826,304125,702115,204(5)4,922,357EXPENDITURECompensation of employeesGoods and servicesInterest and rent on landLoss on disposal of assetsDepreciation/amortisation and impairment222324(495,560)(3,911,153)(4,444)5,178(147,288 )(4,553,267)(421,875)(3,857,239)(74,290)(2,125)(116,396)(4,471,925)Gains/losses on revaluation of assets/liabilitiesSurplus/Deficit (before tax)Income tax expenseSurplus/Deficit from continuing operationsSurplus/defi cit for the year from discontinued operationsSURPLUS/DEFICIT FOR THE YEAR25(117,960)63,8677,91671,783(8,232)63,551(9,897)440,535(10,705)429,830(3,995)425,835Attributable to:Owners of the controlling entityMinority interests80,778(17,227)426,527(692)Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government55

GAUTENG PROVINCIAL PUBLIC ENTITIESCombined Statement of Changes in Net Assetsas at 31 March 2012ContributedCapitalRevaluationReserveOtherreserveMinorityInterestAccumulatedsurplus/deficitTotalR’000R’000R’000R’000R’000 R’000Balance at 1 April 2010 as originally stated- correction of prior period error- change in accounting policyAs restatedSurplus / (defi cit) for the yearDepreciation transfer on property,plant and equipmentOther movementsGains on revaluation of property,plant and equipmentBalance at 1 April as originally stated- correction of prior period error- change in accounting policyAs restatedSurplus / (defi cit) for the yearDepreciation transfer on property,plant and equipmentOther movementsBalance at 31 March 2012104,377104,377104,377104,377104,377777,442(18,567)-758,875---358,3971,117,272--1,117,272--(133)1,117,139568,724-(576,716)(7,992)--7,230-(762)(10)-(772)--2,0031,231(5,725)71(5,654)(695)(6,349)(6,349)(17,227)(23,576)1,888,184(332,415)604,1052,159,874425,9051(75,705)-2,510,075(2,266)-2,507,80980,3092(130,536)2,457,5843,333,002(350,911)27,3893,009,480425,9051(69,170)358,3973,724,613(2,276)-3,722,33780,3092(145,893)3,656,75556 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCIAL ENTITIESCombined Cash Flow Statementfor the year ended 31 March 2012RestatedNotes2011/2012R’0002010/2011R’000Cash flow from operating activitiesCash receiptsTransfers and subsidiesFines, penalties and forfeitsSale of goods and rendering of servicesInterest, dividends and rent on landOther operating revenueCash paymentsCompensation of employeesGoods and servicesInterest and rent on landTaxation paidNet cash generated from operating activities266,621,7812,689,1982,2003,487,976107,904334,503(5,596,436)(495,184)(5,093,743)(4,574)(2,935)1,025,3458,653,6994,236,7613,3083,846,339165,153402,138(7,527,064)(419,431)(7,007,411)(72,421)(27,801)1,126,635Cash flow from investing activitiesAcquisition of controlled entity (net of cash acquired)Purchase of assetsProceeds from the sale of assetsPurchase of available-for-sale fi nancial assetsLoans granted to associates/other economic entitiesLoan repayments received from associates/other economic entitiesNet cash used in investing activities(75,484)(261,407)15,8935,566(20,651)22,727(313,356)(130)(222,715)1,637(5,176)(24,192)22,082(228,494)Cash flow from financing activitiesPurchase of treasury sharesRepayment/issuance of fi nancial guarantee contractsProceeds from borrowingsRepayments of borrowingsNet cash used in financing activities(11)(202)12,71817,23429,739-(2,988)14,824(27,326)(15,490)Net (decrease)/increase in cash, cash equivalents and bank overdraftsCash, cash equivalents and bank overdrafts at beginning of the yearExchange gains/(losses) on cash and bank overdraftsCash, cash equivalents and bank overdrafts at end of the year741,7282,257,750-2,999,478882,6511,375,102(3)2,257,750Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government57

GAUTENG PROVINCIAL ENTITIESStatement of Accounting Policies & Related Mattersfor the year ended 31 March 20121. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe annual combined fi nancial statements have been prepared inaccordance with standards of Generally Recognized AccountingPractice (GRAP) including any interpretations, guidelines and directivesissued by the Accounting Standards Board (ASB).The following are the principle accounting policies of the group whichare, in all material respects, consistent with those applied in the previousyear, except as otherwise indicated:1.1 Basis of preparationThe fi nancial statements have been prepared on the historical costbasis, except as modifi ed for the revaluation of land and buildings, plantand equipment, investment properties and marketable securities.Basis of combinationThe combined annual fi nancial statements have been prepared inaccordance with section 19 of the PFMA (Act no. 1 of 1999) in termsof Generally Recognized Accounting Practice. The combined annualfi nancial statements consist of the aggregation of all public entities andtrading entities under the ownership control of the provincial executive ofthe Gauteng Provincial Government as required by the Public FinanceManagement Act, 1999, Act 1 of 1999 (PFMA) with journals to eliminateinter entity transactions and balances if material as per the materialityframework set by management.Normally, combined fi nancial statements are prepared for a group ofenterprises under the control of a parent. Control is the power to governthe fi nancial and operating policies of an enterprise so as to obtainbenefi ts from its activities. The fi nancial statements of each entity withinthe group must be combined on a line by line by adding items of assets,liabilities, net assets, revenue and expenses together.1.2 Presentation currencyThese fi nancial statements are presented in South African Rands,which is the functional and presentation currency of the entities usedin the combination and the amounts have been rounded to the nearestthousand.Unless otherwise stated all fi nancial fi gures have been rounded to thenearest one thousand Rand (R’000).1.3 Revenue Recognition1.3.1 Revenue from exchange transactionsRevenue is derived from a variety of sources which includesadministration fees, services rendered, sale of goods, interest revenue,etc.Revenue is recognised when it is probable that future economic benefi tsor service potential will fl ow to the entity and these benefi ts can bemeasured reliably.Fair value is the amount for which an asset could be exchanged, orliability settled, between knowledgeable, willing parties in arm’s lengthtransaction.MeasurementRevenue is measured at the fair value of the consideration received orreceivable for the supply of services in the ordinary course of activities.Rendering of servicesWhen the outcome of a transaction involving the rendering of servicescan be estimated reliably, revenue associated with the transaction isrecognised by reference to the stage of completion of the transactionat the reporting date. The outcome of a transaction can be estimatedreliably when all the following conditions are satisfi ed:• the amount of revenue can be measured reliably;• it is probable that the economic benefi ts or service potential associatedwith the transaction will fl ow to the entity;• the stage of completion of the transaction at the reporting date can bemeasured reliably; and•the costs incurred for the transaction and the costs to complete thetransaction can be measured reliably.When services are performed by an indeterminate number of acts overa specifi ed time frame, revenue is recognized on a straight line basisover the specifi ed time frame unless there is evidence that some othermethod better represents the stage of completion. When a specifi c actis much more signifi cant than any other acts, the recognition of revenueis postponed until the signifi cant act is executed.When the outcome of the transaction involving the rendering of servicescannot be estimated reliably, revenue is recognized only to the extent ofthe expenses recognized that are recoverable.1.3.2 Revenue from non-exchange transactionsNon-exchange transactions are transactions that are not exchangetransactions. In a non-exchange transaction, an entity either receivesvalue from another entity without directly giving approximately equalvalue in exchange, or gives value to another entity without directlyreceiving approximately equal value in exchange.Fair value is the amount for which an asset could be exchanged, orliability settled, between knowledgeable, willing parties in arm’s lengthtransaction.Non exchange revenue relates to government grants from provincialgovernment and are recognised when there is a reasonable assurancethat they will be received or when there is a legal obligation for the grantto be paid.RecognitionAn infl ow of resources from a non-exchange transaction recognised asan asset is recognised as revenue, except to the extent that a liability isalso recognised in respect of the same infl ow.As the entity satisfi es a present obligation recognised as a liability inrespect of an infl ow of resources from a non-exchange transactionrecognised as an asset, it reduces the carrying amount of the liability58 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESStatement of Accounting Policies & Related Mattersfor the year ended 31 March 2012recognised and recognises an amount of revenue equal to thatreduction.MeasurementAn asset acquired through a non- exchange transaction shall initially bemeasured at its fair value at the date of acquisition.1.4 Irregular and Fruitless and wasteful expenditureIrregular expenditure means expenditure incurred in contravention of,or not in accordance with, a requirement of any applicable legislation,including:••The PFMA, orAny provincial legislation providing for procurement procedures inthat provincial government.Fruitless and wasteful expenditure means expenditure that was madein vain and would have been avoided had reasonable care beenexercised.All irregular and fruitless and wasteful expenditure is recognised as anexpense in the statement of fi nancial performance in the year that theexpenditure was incurred. The expenditure is classifi ed in accordancewith the nature of the expense, and where recovered, it is subsequentlyaccounted for as revenue in the statement of fi nancial performance.Any irregular, fruitless and wasteful expenditure is charged againstincome in the period in which it is incurred.1.6.2 Retirement benefit costsThe entity provides retirement benefi ts for its employees through adefi ned contribution plan for government employees. Payments todefi ned contribution retirement plans are charged as an expense asthey fall due.1.6.3 Termination benefitsTermination benefi ts are recognised as an expense in the statement ofcomprehensive income when the payment is made.1.6.4 Medical benefitsProvision for medical benefi ts is made through defi ned benefi t plans.These benefi ts are funded by employer and employee contributions.Employer contributions are expensed when money is paid.1.7 Goods and ServicesPayments made under operating leases are recognised on a straightlinebasis over the term of the lease. Lease incentives received arerecognised as an integral part of the total lease expense, over the termof the lease. Contingent lease payments are accounted for by revisingthe minimum lease payments over the remaining term of the leasewhen the lease adjustment is confi rmed.1.5 Borrowing CostsBorrowing costs directly attributable to the acquisition, construction orproduction of qualifying assets are added to the cost of those assets,until the assets are substantially ready for their intended use or sale.Qualifying assets are assets that necessarily take a substantial periodto get ready for their intended use or sale.1.6 Compensation of employeesThe accounting policy in terms of compensation of employees is asfollows:1.6.1 Short-term benefitsThe costs of employee benefi ts are recognised in the period in whichthe employee renders the related service. Employee entitlements areexpensed in the statement of comprehensive income in the year inwhich it occurs.A provision is made for the estimated liability as a result of servicesrendered by employees up to the reporting date. Provision included inthe statement of fi nancial position are provision for leave entitlement andbonuses when the entity has a present legal or constructive obligationto make such payments as a result of past events and reliable estimateof the obligation can be made.1.8 Interest and Rent on landBorrowing costs are capitalised to the extent that they relate to theacquisition, construction or production of a qualifying asset, all otherborrowing costs are expensed in the period in which it is incurred.Minimum lease payments made under fi nance leases are apportionedbetween the fi nance expense and the reduction of the outstandingliability. The fi nance expense is allocated to each period during thelease term so as to produce a constant periodic rate of interest on theremaining balance of the liability.1.9 TaxationCurrent tax assets and liabilitiesCurrent tax is the expected tax payable on the taxable income for theyear, using tax rates enacted or substantially enacted at the reportingdate, and any adjustment to tax payable in respect of previous years.Current tax liabilities (assets) for the current and prior periods aremeasured at the amount expected to be paid to (recovered from) the taxauthorities, using the tax rates (and tax laws) that have been enacted orsubstantively enacted by the Statement of Financial Position date.Deferred tax assets and liabilitiesA deferred tax liability is recognised for all taxable temporary differences,Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government59

GAUTENG PROVINCE PUBLIC ENTITIESStatement of Accounting Policies & Related Mattersfor the year ended 31 March 2012except to the extent that the deferred tax liability arises from the initialrecognition of an asset or liability in a transaction which at the time ofthe transaction, affects neither accounting surplus nor taxable profi t (taxloss).A deferred tax asset is recognised for all deductible temporarydifferences to the extent that it is probable that taxable surplus will beavailable against which the deductible temporary difference can beutilised. A deferred tax asset is not recognised when it arises from theinitial recognition of an asset or liability in a transaction at the time ofthe transaction, affects neither accounting surplus nor taxable profi t (taxloss).A deferred tax asset is recognised for the carry forward of unused taxlosses and unused STC credits to the extent that it is probable thatfuture taxable surplus will be available against which the unused taxlosses and unused STC credits can be utilised.Deferred tax is provided using the liability method on temporarydifferences between the tax bases of assets and liabilities and theircarrying amounts for fi nancial reporting purposes at the reporting date.Deferred tax liabilities are recognised for all taxable temporarydifferences, except:When the deferred tax liability arises from the initial recognition ofgoodwill or an asset or liability in a transaction that is not a businesscombination and, at the time of the transaction, affects neither theaccounting surplus nor taxable surplus or defi citIn respect of taxable temporary differences associated with investmentsin subsidiaries, associates and interests in joint ventures, when thetiming of the reversal of the temporary differences can be controlledand it is probable that the temporary differences will not reverse in theforeseeable future.Deferred tax assets are recognised for all deductible temporarydifferences, the carry forward of unused tax credits and any unusedtax lossesDeferred tax assets are recognised to the extent that it is probable thattaxable surplus will be available against which the deductible temporarydifferences, and the carry forward of unused tax credits and unused taxdefi cit can be utilised, except when the deferred tax asset relating to thedeductible temporary difference arises from the initial recognition of anasset or liability in a transaction that is not a business combination and,at the time of the transaction, affects neither the accounting surplus nortaxable surplus or lossIn respect of deductible temporary differences associated withinvestments in subsidiaries, associates and interests in joint ventures,deferred tax assets are recognised only to the extent that it is probablethat the temporary differences will reverse in the foreseeable future andtaxable profi t will be available against which the temporary differencescan be utilisedThe carrying amount of deferred tax assets is reviewed at eachreporting date and reduced to the extent that it is no longer probablethat suffi cient taxable surplus will be available to allow all or part of thedeferred tax asset to be utilised. Unrecognised deferred tax assets arereassessed at each reporting date and are recognised to the extentthat it has become probable that future taxable surplus will allow thedeferred tax asset to be recovered. Deferred tax assets and liabilitiesare measured at the tax rates that are expected to apply in the yearwhen the asset is realised or the liability is settled, based on tax rates(and tax laws) that have been enacted or substantively enacted at thereporting date.Deferred tax assets and deferred tax liabilities are offset if a legallyenforceable right exists to set off current tax assets against currentincome tax liabilities and the deferred taxes relate to the same taxableentity and the same taxation authority.1.10 Property, plant and equipmentLand and buildingsLand and buildings, and plant and equipment are stated in the balancesheet at their revalued amounts, being their fair value on the basisof their existing use at the date of revaluation, less any subsequentaccumulated depreciation. Revaluations are performed with suffi cientregularity to ensure that the carrying amount does not differ materiallyfrom that which would be determined by using fair value at the balancesheet date. Any revaluation increase arising from the revaluation ofland and buildings or plant and equipment is credited to the propertiesrevaluation reserve, except where it reverses a revaluation decreasefor the same asset previously recognised as an expense, in whichcase the increase is credited to the income statement to the extentof the decrease previously charged. A decrease in carrying amountarising from the revaluation of land and buildings or property, plant andequipment is charged as an expense where it exceeds the balance, ifany, held in the properties revaluation reserve relating to a previousrevaluation of that asset.On the subsequent sale or retirement of a revalued property, theattributable revaluation surplus remaining in the revaluation reserve istransferred to the income statement.Other property, plant and equipmentOther items of property, plant and equipment are stated at cost lessaccumulated depreciation. Depreciation is charged so as to write offthe cost or valuation of assets, other than land and properties underconstruction, over their estimated useful lives, using the straight-linemethod. Assets held under fi nance leases are depreciated over theirexpected useful lives on the same basis as owned assets or, whereshorter, the term of the relevant lease. The gain or loss arising fromthe disposal or retirement of an asset is determined as the differencebetween the sales proceeds and the carrying amount of the asset andis recognised in income.Depreciation is calculated on the depreciable amount, using the straightlinemethod over the estimated useful lives of the assets. Componentsof assets that are signifi cant in relation to the whole asset and that havedifferent useful lives are depreciated separately.60 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESStatement of Accounting Policies & Related Mattersfor the year ended 31 March 2012The annual depreciation rates are based on the following estimatedaverage asset lives:Average useful lives are as followsBuildingsMotor vehicleFurniture and fi ttingsOffi ce equipmentInformation technology equipment1.11 Impairment Assets20 - 50yrs3 - 35yrs1 - 23yrs1 - 10yrs1 - 9yrsAt each balance sheet date, the entity/group reviews the carryingamount of its assets to determine whether there is an indicationthat those assets may be impaired. If any such indication exists, therecoverable amount of the asset is estimated in order to determine theextent of the impairment loss if any. Where it is not possible to estimatethe recoverable amount for an individual asset, the recoverable amountis determined for the cash generating unit to which the asset belongs.If the recoverable amount of an asset is estimated to be less than itscarrying amount, the carrying amount of the asset is reduced to itsrecoverable amount. Impairment losses are immediately recognised asan expense, unless the relevant asset is carried at the revalued amountunder another standard, in which case the impairment loss is treated asa revaluation decrease under the standard.Where an impairment loss subsequently reverses, the carrying amountof an asset is increased to the revised estimate of its recoverable amount,but so that increased carrying amount does not exceed the carryingamount that would have been determined had no impairment loss beenrecognised for the asset in prior years. A reversal of an impairmentloss is recognised as income immediately, unless the relevant asset iscarried at the revalued amount under another standard, in which casethe reversal of the impairment loss is treated is a revaluation increaseunder that other standard.fair value as at the date of acquisition.The most important amortization rates are as follows:Computer software1 – 5yrsIntangible assets are acquired computer software’s that is initiallyrecognised at cost. Following initial recognition intangible asset arecarried at cost less any accumulated amortization and any impairmentlosses. The useful lives of these intangible assets are assessed tobe fi nite. Intangible assets are amortized on a straight-line basis overthe expected useful life and this expense is taken to the statement offi nancial performance.Amortization period and amortization method for intangible assetsare reviewed every period end. Intangible assets with fi nite lives areamortized over the useful lives and are tested for impairment annually.1.13 Investment PropertyInvestment property, which is property held to earn rentals and/or forcapital appreciation, is stated at its fair value at the balance sheetdate. The fair value is determined by an independent sworn appraiserbased on market evidence of the most recent prices achieved in arm’slength transactions of similar properties in the same area. Gains orlosses arising from changes in the fair value of investment property areincluded in the net profi t or loss for the period in which they arise.1.14 Cash and Cash EquivalentsCash and cash equivalents comprise cash on hand and demanddeposits and other short term highly liquid investments that are readilyconvertible to a known amount of cash and are subject to an insignifi cantrisk of changes in value. These are initially and subsequently recordedat fair value.1.12 Intangible AssetsAn asset is identifi ed as an intangible asset when it:• is capable of being separated or divided from an entity and sold,transferred, licensed, rented or exchanged, either individually ortogether with a related contract, assets or liability; or• arises from contractual rights or other legal rights, regardlesswhether those rights are transferable or separate from the entityor from other rights and obligationsAn intangible asset is recognised when:• it is probable that the expected future economic benefi ts or servicepotential that are attributable to the asset will fl ow to the entity;and• the cost or fair value of the asset can be measured reliably.Intangible assets are initially recognised at cost.An intangible asset acquired at no or nominal cost, the cost shall be its1.15 Capital CommitmentsContracted commitments are not recognised in the statement offi nancial position as liability or as expenditure in the statement ofcomprehensive income but are included in the disclosure notes to thefi nancial statements. These commitments are linked to specifi c servicedelivery contracts are payable in subsequent fi nancial years.1.16 LeasesA lease is classifi ed as a fi nance lease if it transfers substantially allthe risks and rewards incidental to ownership. A lease is classifi ed asan operating lease if it does not transfer substantially all the risks andrewards incidental to ownership.The determination of whether an arrangement is, or contains a lease isbased on the substance of the arrangement at inception date of whetherthe fulfi llment of the arrangement is dependent on the use of a specifi cCombined Financial Information Annual Report 2011/12 | Gauteng Provincial Government61

GAUTENG PROVINCE PUBLIC ENTITIESStatement of Accounting Policies & Related Mattersfor the year ended 31 March 2012asset or assets or the arrangement conveys a right to use the asset.1.16 1 Finance Leases•An investment in a fi nancial asset that does not have a quotedmarket price in an active market and whose fair value cannot bemeasured reliably”Finance leases are recognised as assets and liabilities in the statementof fi nancial position at the amounts equal to the fair value of the leasedasset or, if lower, the present value of the minimum lease payments.The corresponding liability to the lessor is included in the statement offi nancial position as a fi nance lease obligation.The lease payments are apportioned between the fi nance charge andthe reduction of the outstanding liability. The fi nance charge is allocatedto each period during the lease term so as to produce a constantperiodic rate on the remaining balance of the liability.1.16 2 Operating LeasesOperating lease payments are recognised as an expense on a straightline basis over the lease term. The difference between the amountsrecognised as an expense and the contractual payment are recognisedas an operating lease asset or liability.1.17 InventoriesInventories are stated at the lower of cost and net realisable value. Netrealisable value represents the estimated selling price in the ordinarycourse of business less any costs of completion and costs to be incurredin marketing, selling and distribution.Cost is determined on the following bases:Raw materials and consumable stores are value at average cost.Finished goods and work in progress are valued at raw material costplus labour cost and an appropriate portion of related fi xed and variablemanufacturing overhead expenses based on normal capacity.1.18 Financial instrumentsFinancial assets and fi nancial liabilities are recognised on the group’sbalance sheet when the group becomes a party to the contractualprovisions of the instrument.Trade receivablesTrade receivables are stated at their nominal value as reduced byappropriate allowances for estimated irrecoverable amounts.InvestmentsAll investments are initially recognised at cost, transaction costsincluded. At subsequent reporting dates the following categories ofinvestments are measured at amortised cost by using the effectiveinterest rate method if they have a fi xed maturity or at cost if there is nofi xed maturity:• Loans and receivables originated by the group and not held fortrading• Held to maturity investmentsCost and amortised cost are inclusive of any impairment loss recognizedto refl ect irrecoverable amounts. The fi nancial assets are subject toreview for impairment at each balance sheet date.The annual amortisation of any discount or premium on the acquisition ofa held-to-maturity security is aggregated with other investment incomereceivable over the term of the instrument so that the revenue recognizedin each period represents a constant yield on the investment.Investments other than held-to-maturity debt securities are classifi edas available-for-sale investments and trading investments and aremeasured at subsequent reporting dates at fair value without anydeduction for transaction costs that may be incurred on sale or otherdisposal. Where securities are held for trading purposes, unrealizedgains and losses are included in net profi t or loss for the period. Foravailable-for-sale investments, unrealised gains and losses are dealtwith in equity, until the security is disposed of or is determined to beimpaired at which time the net profi t or loss is included in the net profi tor loss for the period.Equity instrumentsEquity instruments are recorded at the proceeds received, net of directissue costs.BorrowingsIn terms of section 66(3)(c) of the Public Finance Management Act,1999, Public Entity Limited may only through the Minister of Financeto borrow money or, in the case of the issue of a guarantee, indemnityor security, only through the Minister of Labour, acting with theconcurrence of the Minister of Finance. In terms of section 32.1.1 ofthe Treasury Regulations Public Entity Limited may borrow money forbridging purposes with the approval of the Minister of Finance, subjectto certain conditions. Interest-bearing bank loans and overdrafts arerecorded at the proceeds received, net of direct issue costs. Financecharges, including premiums payable on settlement or redemption,are accounted for on an accrual basis and are added to the carryingamount of the instrument to the extent that they are not settled in theperiod in which they arise.Trade payablesTrade and other payables are stated at their nominal value.1.19 PROVISIONSProvisions are recognised when the group has a present obligation as aresult of a past event and it is probable that this will result in an outfl owof economic benefi ts that can be estimated reliably.1.20 Government GrantsGovernment grants are recorded as deferred income when theybecome receivable and are then recognised as income on a systematicbasis over the period necessary to match the grants with the relatedcosts which they are intended to compensate.62 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESStatement of Accounting Policies & Related Mattersfor the year ended 31 March 20121.21 Comparitive FiguresComparative fi gures where necessary have been adjusted to conformto changes in presentation in the current year.1.22 Related PartiesParties are considered to be related if one party has the ability to controlthe other party or exercise a signifi cant infl uence over the other partyin making fi nancial and operating decisions or if the related party entityand other entity are subject to common control.Related parties include:• Key management personnel and close members of the family ofkey management personnel.Provincial departments and entities that directly or indirectly havecontrol.Key management is defi ned as being individuals with the authority andresponsibility for planning, directing and controlling the activities of anentity. All individuals from the level of corporate executives up to boardof directors are regarded as key management.Close family members of key management are considered to be thosefamily members who may be expected to infl uence, be infl uenced bykey management individuals or other parties related to an entity.A related party transaction is a transfer of resources, services orobligation between the reporting entity and a related party, regardlessof whether a price is charged. Related party transactions excludetransactions with any other entity that is a related party solely becauseof its economic dependence on the reporting entity or the governmentof which it forms part. Related party transactions are measured andrecognized on terms and conditions are normal for such transactions.1.23 Materiality for the GroupInformation is material if its omission, misstatement, or non-disclosurecould infl uence the decisions of users made on the basis of the fi nancialstatements. Materiality depends on the size of the item or error judgedin the particular circumstances of its omission, misstatement, or nondisclosurein the fi nancial statements. Thus, materiality providesa threshold or cut-off point rather than being a primary qualitativecharacteristic which information must have if it is to be useful.All balances and transactions between entities included in thecombination that are regarded as material will be eliminated. Balancesand transactions that are less than 2% of combined total expenditureare not considered to be material and are therefore not eliminated.Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government63

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsfor the year ended 31 March 20112. Property, plant and equipment2011/2012Notes R’0002010/2011R’000Land and BuildingsOpening net carrying amountCost or valuationAccumulated depreciation and impairmentAdditionsDisposalDepreciation chargeRevaluation adjustmentsOtherClosing net carrying amount 31 MarchCost or valuationAccumulated depreciation and impairment1,438,2802,065,745(627,465)698(167,226)(15,685)--1,256,0671,889,319(633,252)1,124,2721,364,448(240,176)-(28,612)(15,724)358,397(53)1,438,2802,065,745(627,465)Machinery and equipmentOpening net carrying amountCost or valuationAccumulated depreciation and impairmentAdditionsDisposalDepreciation chargeImpairment defi cit (recognised)/reversedOtherClosing net carrying amount 31 MarchCost or valuationAccumulated depreciation and impairment10,96523,554(12,589)3,895(241)(3,962)14728511,08926,958(15,869)9,15730,040(20,883)4,755(169)(2,916)2711110,96523,554(12,589)VehiclesOpening net carrying amountCost or valuationAccumulated depreciation and impairmentAdditionsDisposalDepreciation chargeTransfer (to)/from asset held for sale or disposal group classifi ed as held for saleTransfer (to)/from inventories and/or investment propertyWork-in-progressAssets acquired through a business/entity combinationBorrowing costs capitalisedExchange differencesOtherClosing net carrying amount 31 MarchCost or valuationAccumulated depreciation and impairment331,523698,869(367,346)202,147(39,960)(115,832)(50,198)(115,206)(35,767)84,90653,174(219)33,462348,030831,229(483,199)376,224657,263(281,039)149,386(22,849)(86,320)(8,023)(102,593)5,853(921)8,031-12,735331,523698,869(367,346)64 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsfor the year ended 31 March 2011Property, plant and equipment cont.2011/2012Notes R’0002010/2011R’000Office furniture and fittingsOpening net carrying amountCost or valuationAccumulated depreciation and impairmentAdditionsDisposalDepreciation chargeImpairment defi cit (recognised)/reversedBorrowing costs capitalisedOtherClosing net carrying amount 31 MarchCost or valuationAccumulated depreciation and impairment30,77061,424(30,654)3,268(323)(9,153)12110(59)24,63460,114(35,480)36,37162,076(25,705)3,879(1,061)(9,236)116-70130,77061,424(30,654)OtherOpening net carrying amountCost or valuationAccumulated depreciation and impairmentAdditionsDisposalDepreciation chargeImpairment defi cit (recognised)/reversedOtherClosing net carrying amount 31 MarchCost or valuationAccumulated depreciation and impairment106,042165,153(59,111)47,276(504)(10,898)139(41,335)100,720149,988(49,268)64,343120,919(56,576)52,358(489)(10,679)750(241)106,042165,153(59,111)Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government65

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsfor the year ended 31 March 2011Property, plant and equipment cont.2011/2012Notes R’0002010/2011R’000Total property, plant and equipmentOpening net carrying amountCost or valuationAccumulated depreciation and impairmentAdditionsDisposalDepreciation chargeTransfer (to)/from asset held for sale or disposal group classifi ed as held for saleTransfer (to)/from inventories and/or investment propertyWork-in-progressAssets acquired through a business/entity combinationImpairment defi cit (recognised)/reversedRevaluation adjustmentsBorrowing costs capitalisedExchange differencesOtherClosing net carrying amount 31 MarchCost or valuationAccumulated depreciation and impairment1,917,5803,014,745(1,097,165)257,284(208,254)(155,530)(50,198)(115,206)(35,767)84,906407-53,184(219)(7,647)1,740,5402,957,608(1,217,068)1,610,3672,234,746(624,379)210,378(53,180)(124,875)(8,023)(102,593)5,853(921)893358,3978,031-13,2531,917,5803,014,745(1,097,165)(1,217,068) (1,097,165)The below disclosure relates to land and building revaluation for the Gauteng Housing Fund.Property, plant and equipment consist of property stock held for the provision of housing service benefi ts, and are disclosed as perGRAP 17. Properties are in the process of being devolved to municipalities and sold to qualifying individuals. The property consists offl ats, houses and vacant stands at various locations in Gauteng Province.Land and buildings have been revalued by independent valuers as at 31 March 2012. The valuation of buildings determined byindependent valuers has been applied prospectively as the Municipal Valuation roll was used in previous year.Various methods have been used to determine the value of the properties involved. With many of the properties valuers have appliedDirect Comparison method which entails the identifying of the subject property and fi nding transactions of similar properties that soldin the open market conditions between a willing buyer and willing seller. The valuers used these transactions to identify a market valuefor the properties. The Valuers also used Cost less Depreciation Method which takes into consideration the building cost applicableon buildings of a property which are depreciated to determine a market value for the property. This method was used on only a fewproperties valued.The carrying amount that would have been recognised had the assets been carried under cost model is equivalent to the revaluedamount.The total PPE for the combined annual fi nancial statements amounts to R 1,740,540 (2012) and R 1,917,580 (2011) and of whichGauteng Housing Fund contributes 65% (2012) and 68% (2011). Below are the carrying amounts for the Gauteng Housing Fund.Land and buildings Gauteng Housing Fund2012R’0002011R’000Carrying amount as at 31 March1,124,4771,304,14766 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsfor the year ended 31 March 20113. Investment property2011/2012Notes R’0002010/2011R’000Opening net carrying amountAdditionsFair value adjustment during the yearTransfer (to)/from asset held for sale or disposal group classifi ed as held for saleOtherClosing net carrying amount 31 March889 2742 957(115 642)42 550(983)818,156875 68814 03414 067-(14 515)889,274The carrying amount of investment property relates to investment property for the Blue IQ Investment Holdings Company entities and isthe fair value of the property as determined by an independent appraiser. The fair values were determined having regard to the expectedfuture cash fl ow from the property and recent market transactions for similar properties in the same location as the Blue IQ InvestmentProperty.Investment property comprises of a number of commercial properties that are leased to third parties. Each of the leases contains aninitial non-cancellable period which varies between 3 to12 years. Subsequent renewals are negotiated with the lessee. No contingentrent is charged.Investment property is valued annually and the current methodology is consistent with that used in the previous fi nancial period.In terms of the PFMA Act, Investment properties can only be sold with the approval of the Executive Authority.The following amounts have been recognised in the Statement ofFinancial PerformanceTotal rental income2012R’00057,2542011 RestatedR’00053,914The following amounts have been recognised in the Statement ofFinancial Position2012R’0002011 RestatedR’000Investment Property in the Statement of Financial Position is made up asBlue IQ Investment Holding Company971,2611,023,105Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government67

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsfor the year ended 31 March 20114. Heritage assets2011/2012Notes R’0002010/2011R’000Opening net carrying amountCostAccumulated ImpairmentAdditionsClosing net carrying amount 31 MarchCostAccumulated Impairment170,606170,606-4,661175,267175,267-170,553170,553-53170,606170,606-The Heritage assets as disclosed above belong to Constitutional Hill Development Company which is a subsidiary of Blue IQ InvestmentHoldings Company.5. Intangible assetsComputer software, licences and trademarks, and other assetsComputer softwareOpening net carrying amountGross carrying amountAccumulated amortization and impairmentRevaluation adjustmentsAdditionsAssets acquired through a business/entity combinationDisposalsAmortizationImpairment defi cit (recognized)/reversedOtherClosing net carrying amount 31 MarchGross carrying amountAccumulated amortization and impairment1,7127,785(6,073)-3,26931-(1,412)(22)(415)3,1636,968(3,805)1,9756,461(4,486)-981343-(1,820)323(90)1,7127,785(6,073)Licenses and trademarksOpening net carrying amountGross carrying amountAccumulated amortization and impairmentRevaluation adjustmentsAdditionsClosing net carrying amount 31 MarchGross carrying amountAccumulated amortisation and impairment----141414---------68 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsfor the year ended 31 March 2011Intangible assets cont.2011/2012Notes R’0002010/2011R’000OtherOpening net carrying amountGross carrying amountAccumulated amortisation and impairmentRevaluation adjustmentsAdditionsAmortisationClosing net carrying amount 31 MarchGross carrying amountAccumulated amortisation and impairment5555--108(159)44-106153(47)-80(131)5555-Total intangible assetsOpening net carrying amountGross carrying amountAccumulated amortisation and impairmentAdditionsAssets acquired through a business/entity combinationDisposalsAmortisationImpairment defi cit (recognised)/reversedOtherClosing net carrying amount 31 MarchGross carrying amountAccumulated amortisation and impairment1,7677,840(6,073)3,39131-(1,571)(22)(415)3,1816,986(3,805)2,0816,614(4,533)1,061343-(1,951)323(90)1,7677,840(6,073)6. Trade and other receivablesTrade receivablesLess: provision for impairment of trade receivablesTrade receivables - netPrepaymentsReceivables from related partiesLoans to related partiesOtherAnalysis for reporting purposes:Non-currentCurrentMovement in the provision for impairment of trade receivablesBalance at 1 AprilProvision for receivables impairmentReceivables written off during the year as uncollectibleUnused amounts reversedUnwinding of discountBalance at 31 March1,833,696(344,513)1,489,18338,93149,435(5,467)81,8251,653,907160,9691,492,9381,653,907428,482(78,185)(317)-(5,467)344,5131,820,961(428,482)1,392,47958,3205,541-66,8261,523,166148,3581,374,8081,523,166425,84935,623(36,279)(1,280)4,569428,482Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government69

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 20117. Other investmentsRestatedNotes2011/2012R’0002010/2011R’000Non-current investmentsHeld-to-maturity investmentsFinancial assets designated at fair value through surplus/defi citBalance at 31 March161,77511,684173,45983,88614,85898,744The following entities reported other non-current investments.Gauteng Enterprise Propeller – in line with the objectives of the entity the department transferred an investment in Wakegem (Pty) Ltdwith a cost value of R55 000 000. During the fi nancial year, the entity further injected R20 000 000 funds into the investments.Gauteng Partnership Fund – the equity investments in Brickfi elds Housing Company (Pty) Ltd has been valued atR 11 648. The cost of this investments is R 10 000. The investments consist of 300 ordinary shares of R 1 each and the loan of R 9 999.This loan investments is unsecured, bears interest from time to time at the rate not exceeding 25%.Gauteng Film Commission – investments were made in line with the GFC approved policy which is in line with the Treasury Regulationswhich outlines how our public funds should be invested. This relates to bank guarantees.Current investmentsHeld-to-maturity investmentsBalance at 31 March1 2001 2001 2001 2008. Finance lease receivablesReconciliation between the total gross investment in the lease and the present value ofthe minimum lease payments:Gross investment in fi nance leaseNo later than 1 yearLater than 1 year and no later than 5 yearsLater than 5 yearsUnearned future fi nance incomeNet investment in fi nance leasesAnalysis for reporting purposes:Non-currentCurrent60,51673,145254133,915-133,915133,91573,39960,51649,61587,636455137,706-137,706137,70688,09149,61570 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 20119. Deferred tax2011/2012Notes R’0002010/2011R’000Deferred tax assetDeferred tax liabilityDeferred tax liabilities (net)-27,08427,084(1,325)35,59334,268Movement in deferred income tax assets and liabilities during the year:Balance at 1 AprilCharged/(credited) to the statement of fi nancial performanceCharged directly to net assetsOtherBalance at 31 March34,268(4,806)(2,742)36427,08425,5362,0826,650-34,26810. InventoriesFinished goodsConsumableTotal104 13021104 151147 33214147 34611. Cash and cash equivalentsBank balances and cash on handCall depositsTotal2,881,625122,4323,004,0572,072,960195,1852,268,145Cash and cash equivalents in the statement of cash flowsCash and cash equivalentsBank overdrafts3,004,057(4,579)2,999,4782,268,145(10,395)2,257,750Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government71

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 201112. Assets classified as held for sale and discontinued operations2011/2012Notes R’0002010/2011R’000Assets of a disposal group classifi ed as held for saleProperty, plant and equipmentTotal37,77737,77735,78835,788Liabilities of a disposal group classifi ed as held for saleTrade and other payablesTotal5,1095,1094,5994,599Analysis of the result of discontinued operations, and the result recognised on theremeasurement of assets or disposal group, is as follows:RevenueExpensesSurplus/(defi cit) before tax of discontinued operationsTaxationSurplus/(defi cit) after tax of discontinued operationsPre-tax gain/(loss) recognised on the remeasurement of assets of a disposal groupTaxationAfter tax gain/(loss) on the remeasurement of assets of a disposal groupSurplus/(defi cit) for the year from discontinued operations7,210(15,442)(8,232)-(8,232)---(8,232)7,206(11,201)(3,995)-(3,995)---(3,995)DISCONTINUED OPERATIONS - BLUE IQ INVESTMENT HOLDINGS (PTY) LTDGauteng Motorsport Company (Proprietary) LimitedBlue IQ is a shareholder of Gauteng Motorsport (Pty) Ltd (“GMSC’). The “GMSC” was mandated to deliver on the Department ofEconomic Development (“DED”) obligations in respect of the international motorsport event rights that the DED had acquired andto manage the marketing and operations of all such events. However, as a result of the review process undertaken by the Gautengprovincial government of all agency programmes, the DED took the decision to exit the motorsport programme and the related hostingrights agreements resulting in the company being placed into voluntary liquidation by Blue IQ, as the shareholder, on 7 December 2009.Greater Newtown Development Company (Proprietary) LimitedThe entity’s shareholders are Blue IQ Investment Holdings (Proprietary) Limited (77%) and City of Johannesburg Municipality (23%)(“COJ). Johannesburg Development Agency (“JDA”) is a wholly owned subsidiary of COJ. In October 2008 COJ assigned theirshareholding of 23% in Newtown to JDA. The shareholders have agreed to winding down of operations and liquidation of the entity asa result of the governing agreement of No.1 Central Place the net assets of the entity will be transferred to COJ upon liquidation. BlueCatalyst Investment (Proprietary) Limited. The entity is wholly owned by Blue IQ Investment Holdings (Proprietary) Limited. The Boardof Blue IQ resolved to wind down the operations and liquidate the entity as a result of the review process undertaken by the Gautengprovincial government of all agency programmes. The company was placed in voluntary liquidation in February 2011 and liquidator hasnot been appointed by the Master of the Court.Genesis Fitness (Proprietary) LimitedBlue IQ is 100% shareholder of Genesis Fitness (Proprietary) limited (“GF”). To date the Blue IQ has invested in excess of R29 million inBlue Catalyst associated entities (including the R5 million inter-bank guarantee).Subsequent to 2009/10 year end audit, management initiated a process of resolving the Genesis Fitness (GF) external audit fi ndings bysetting up a sub-committee to outline actions, steps and processes to close the fi ndings. To that end, a fi le comprising all steps taken byBlue IQ to address GF fi nancial management and audit fi ndings was prepared.72 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 2011Assets classified as held for sale and discontinued operations cont.Blue Catalyst Matching Fund TrustBlue Catalyst Matching Fund Trust (BCMFT) is a special purpose entity whose benefi ciary is Blue Catalyst Investments. The BCMFTowns 100% interest in Genesis Fitness (Proprietary) Limited. BCMFT was dissolved on the 11 February 2011.For the effect on the Statement of Position please refer to the Blue IQ Group Statements for the period ending 31 March 2012.NON-CURRENT ASSETS HELD FOR SALE - GAUTENG GAMBLING BOARDAs disclosed in the Gauteng Gambling Board fi nancial statements assets held for sale consists of land and buildings purchasedon 31 March 1999. The offi ce building is held under Title Deed number T86131. The property is situated at portion 4 of Erf 44Verwoerdburgstad Registration Division JR Province of Gauteng and measures 2,210 square meters in extent. The property wasrevalued by an independent valuator on 31 December 2009 at R 14,100,000. The revalued amount on 31 December 2009 was used asthe carrying amount .For the effect on the Statement of Position please refer to the Gauteng Gambling Board Statements for the period ending 31 March2012.NON-CURRENT ASSETS HELD FOR SALE - G-FLEETIn G-Fleet Vehicles held for sale comprise of vehicles transferred from property plant and equipment as refl ected in PPE. The transferredassets consist of vehicle that are uneconomical to maintain and those that were involved in accidents. Management have committed toselling these assets through an auction to be held in the new fi nancial year13. Loans and borrowingsNon-current liabilitiesOtherTotal2011/2012Notes R’000148,026148,0262010/2011R’000143,173143,173Current liabilitiesBank overdraftOtherTotalTotal borrowings4,579200,959205,538353,56410,395289,039299,434442,607Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government73

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 201114. Finance lease obligations2011/2012Notes R’0002010/2011R’000Reconciliation between the total minimum lease payments and the present value ofminimum lease payments:No later than 1 yearLater than 1 year and no later than 5 yearsLater than 5 yearsFuture fi nance charges on fi nance leasesPresent value of finance lease obligationsAnalysis for reporting purposes:Non-currentCurrent3,0632,500-(210)5,3535,3532,3972,9563,5641,787-(361)4,9904,9901,7183,27215. ProvisionsLegal claimsEmployee benefi tsLand provisionTotal52936,254166,051202,83447529,14717,21346,835Analysis for reporting purposes:Non-currentCurrent386202,448202,83438646,44946,835The provision represents management best estimate of the liability for employee benefi ts, legal costs and land provision. Provisionfor leave is based on current salary rates included in the statement of fi nancial position. A provision is made for the estimated liabilityas a result of services rendered by employees up to the reporting date. Provision for bonus is based on management best estimatesof expenditure required to settle the present obligation. Provision for legal costs relates to a civil case against Gauteng EconomicDevelopment Agency. The land provision relates to Gautrain Management Agency. The expected settlement of the provision is in thefollowing fi nancial year.Movement in balance:Balance at 1 AprilAdditional provisionsUnused amounts reversedUnwinding of discountUsed during the yearOtherBalance at 31 March46,835257,231(10,969)-(90,280)17202,834-------74 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 201116. Trade and other payables2011/2012Notes R’0002010/2011R’000Trade payablesAmounts due to related partiesAccrued expensesGovernment grantsOperating lease liabilityOtherTotal1,073,634780,600130,159841,2981,559766,5643,593,8141,052,882545,224235,573379,5374,697717,4982,935,41117. Other reservesLand and buildings revaluation reserve - SPOOther reserves – SPOBalance at 31 March1,117,1391,2311,118,3701,117,272(772)1,116,50018. Transfers and subsidiesTransfer payment from controlling entityTransfer payment from other departments/entitiesOther444,398405,159442849,999421,952422,8637,029851,84419. Fines, penalties and forfeitsFinesPenalties2,0651352,2003,1831253,308Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government75

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 201120. Sale of goods and rendering of services2011/2012Notes R’0002010/2011R’000Administrative feesLicences and permitsRegistration feesInspection feesServices renderedSale of goods62,77855,4064,5582,8141,093,8062,428,5803,585,16452,92444,9784,7833,1631,076,4582,696,9223,826,30421. Interest, dividend and rent on landInterestShort-term bank depositsFinancial support loansOther73,12660,7059,0233,39873,126125,70241,108725777,337125,70222. Compensation of employeesSalaries and wagesExecutive director’s emolumentsSocial contributionsDefi ned contribution plan expense448,56125,10316,0895,807495,560384 75921 8269 4845 806421 87576 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 201123. Goods and services2011/2012Notes R’0002010/2011R’000Administrative feesAdvertisingAssets less than capitalisation thresholdAudit costBad debts written offBursaries (employees)CommunicationComputer servicesConsultants, contractors and agency/outsourced servicesCourier and delivery costsEntertainmentInventory consumedMaintenance, repairs and running costsOperating leasesOwned and leasehold property expenditureTransport costsTravel and subsistenceTraining and staff developmentVenues and facilitiesOther operating expenditure37,8575,32721915,30361,0329246,7614,481366,8284482,3762,744264,82932,1851,04711,3197,1056,0729333,083,3633,911,15342,7954,343915,43819,3523297,6665,385403,7804131,2892,985225,03132,974-17,5858,5456,9655633,061,7923,857,23924. Interest and rent on landFinance lease liabilitiesOther3314,1134,4442,72271,56874,290Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government77

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 201125. Income tax expense2011/2012Notes R’0002010/2011R’000Current tax:Current tax on surplus for the yearAdjustments in respect of prior yearsTotal current taxDeferred taxOrigination and reversal of temporary differencesImpact of change in tax rate(3,110)-(3,110)(4,806)1,099(5,905)(7,916)8,4891348,6232,0821,43964310,705Reconciliation between tax expense and accounting surplus/defi citSurplus/defi cit before taxRevenue not subject to taxExpenses not deductible for tax purposesAdjustment in respect of prior years63,9583,212(12,914)1,786(7,916)440,53520,600(11,667)1,77210,70526. Net cash generated from operating activitiesSurplus/defi cit before tax including discontinued operationsAdjustments for:DepreciationAmortisationImpairment(Profi t)/Loss on disposal of assetsFair value (gains)/losses on fi nancial instrumentsForeign exchange (gains)/losses on operating activitiesChanges in working capitalOther55,726969,619155,5301,571(385)(4,494)108,499898207,229500,7711,025,345436,540690,095124,8751,951(1,216)2,542(2,273)862279,721283,6331,126,63578 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 201127. Contingent liabilities2011/2012Notes R’0002010/2011R’000Legal claims and other disputesService providersOtherThe contingent liabilities in the current year are attributable to thefollowing:(i) Employees capped leave;(ii) Pending court case;(iii) Settlement disagreement.492-25374547520725693828. Operating lease arrangementsLesseeUp to 1 year1 to 5 yearsMore than 5 yearsUp to 1 year1 to 5 yearsMore than 5 yearsUp to 1 year1 to 5 yearsMore than 5 years15,15028,973-44,12384--849645-14168,470111,664101,850281,984515384-89910545-150TotalUp to 1 year1 to 5 yearsMore than 5 yearsR’00015,33029,018-44,348R’00069,090112,093101,850283,033As at reporting date the entities had outstanding commitments under non – cancellable operating leases in terms of the following leasecategories:(i)(ii)(iii)(iv)(v)(vi)(vii)(viii)(ix)Gauteng Gambling Board – Photo copiers, telecommunications systemsGauteng Enterprise Propeller – Rental payable for use of offi ce properties and equipmentGauteng Partnership Fund – Represents rental payable for offi ce premisesMedical Supplies Depot – Maintenance contractsGauteng Fund Project Offi ce – Rental of offi ce spaceGauteng Economic Development Agency – Rental of offi ce spaceGauteng Liquor Board – Leases of offi ce spaceGauteng Tourism Authority – Offi ce space leases, photo copiers and motor vehicle leasesBlue IQ – Leasing of investment property, offi ce space and equipment.Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government79

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 2011Operating lease arrangements cont.2011/2012Notes R’0002010/2011R’000LessorUp to 1 year1 to 5 yearsMore than 5 yearsTotalUp to 1 year1 to 5 yearsMore than 5 years2,744--2,7442,744--2,744--------As at reporting date the Gauteng Fund Project Offi ce entered into a sub-lease agreement with the Gauteng Partnership Fund to sub-letfi rst fl oor until 31 March 2013.29. Capital commitmentsCommitments for the acquisition of property, plant and equipment- Contracted for but not provided in the fi nancial statementsCommitments for the acquisition of investment property- Contracted for but not provided in the fi nancial statementsTotal future capital commitments20,82620,82642,95142,95163,77755,19755,19711,90311,90367,10030. Change in Accounting policyItems in Statement of Financial PerformanceDecrease in depreciation of Investment Property-(8,530)Items in Statement of Financial PositionDecrease in carrying amount of Investment propertyIncrease in cost of heritage assetsIncrease in accumulated surplus(Increase)/decrease in net assets-----(134,687)170,606(27,389)27,38927,38980 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 201131. Related Parties2011/2012Notes R’0002010/2011R’000Grants received from related partiesRelated Parties transactionsGauteng Department of Economic DevelopmentDepartment of Agriculture and Rural DevelopmentDepartment of Health and Social DevelopmentDepartment of FinanceMaropeng a’ Africa Leisure (Pty) LtdDinokeng Game Reserve Management AssociationRelated Parties balancesGauteng Department of Economic DevelopmentDepartment of Agriculture and Rural DevelopmentDepartment of Health and Social DevelopmentMaropeng a’ Africa Leisure (Pty) LtdJohannesburg Development Agency (Pty) Ltd587,19321,6302,404,02250,00018,1274,8723,085,84413,3751,262946,1192252,9151,013,693665,0343132,757,37150,0009,1434,1273,485,98811,601-919,685-52,915984,201Key Management RemunerationBasic salary2012Bonus2012Other Benefits2012 TotalR’000R’000R’000 R’000Blue IQ Investment Holdings (Pty) LtdCradle of Humankind World Heritage SiteDinokeng tsa TaemaneGauteng Economic Development AgencyGauteng Film CommissionGauteng Gambling BoardGauteng Liquor BoardGauteng Tourism AuthorityGauteng Enterprise PropellerCost RecoveryGautrain Management AgencyGauteng Partnership FundMedsasGauteng Project Fund Offi ceG-FLEETGauteng Housing FundTotal15,0032,2532,2533,7872,76411,0067106,54311,130-4,743-1,6536,5434,555-72,9431,912--4743261,78527768371-1,542-8798367-7,757-2012012,5465911,4136675371,196-125-1615032,832-10,97316,9152,4542,4546,8073,68114,2041,4047,84812,697-6,410-1,9027,1447,754-91,673Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government81

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 201132. Tax (paid) refunded2011/2012Notes R’0002010/2011R’000Balance at the beginning of the yearCurrent tax for the year recognised in surplus and defi citBalance at the end of the yearVAT899(475)(555)(131)(2,804)(2,935)(515)(8,623)(899)(10,037)(16,232)(26,269)33. Fruitless and Wasteful ExpenditureAmounts spent on fruitless and wasteful expenditureas defi ned by section 81 of the PFMA No 1 of 1999Opening balanceFruitless and wasteful expenditure - current yearFruitless and wasteful expenditure - condoned19,2281,029(2,328)17,92910,2818,947-19,228Detail of Fruitless and Wasteful ExpenditureThe fruitless and wasteful expenditure incurred in the current financial year is attributed to the following:(i)(ii)Settlement of legal claim for damages.Interest costs.34. Irregular ExpenditureOpening balanceIrregular expenditure incurred during the yearLess: Amounts condonedIrregular expenditure22,40659,956(2,474)79,88847925,391(3,464)22,406Detail of Irregular ExpenditureThe irregular expenditure incurred in the current financial year is attributed to the following:(i) Acquisition of tracking system 2005/Deviation of DRT on paving project.(ii) Non-compliance to Supply Chain Management processes.(iii) No original tax clearance certifi cates.(iv) Ex-post facto transactions deviations.82 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 201135. Financial Instruments and Risk ManagementThe fi nancial instruments consist mainly of cash at bank and cash equivalents, trade and other receivables, tradeand other payables and fi nance leases. All fi nancial instruments are measured and recognised at fair value.The bank balances, receivables and payables approximate their fair value due to the short term nature of these instruments.Fair value versus carrying amountsThe fair value together with the carrying amounts shown in the Statement of Financial Position are as follows:Fair value2012R’000Carryingamount2012R’000Fair value2011Carryingamount2011R’000 R’000Financial AssetsTrade and Other ReceivablesCash and cash equivalentsFinance lease receivablesTotal Financial Assets1,492,9382,999,47860,5164,552,9321,492,9382,999,47860,5164,552,9321,374,8082,257,75049,6153,682,1731,374,8082,257,75049,6153,682,173Financial LiabilitiesTrade and Other PayablesFinance Lease ObligationsTotal Financial Liabilities3,593,8142,9563,596,7703,593,8142,9563,596,7702,935,4113,2722,938,6832,935,4113,2722,938,683Financial InstrumentsPotential concentrations of credit risk consist mainly of cash and cash equivalents and trade and other receivables.At 31 March 2012, there were no consideration to be any signifi cant concentration of credit risk which had not been insured oradequately provided for.Fair Value of financial instrumentsThe carrying amounts of the following fi nancial instruments, approximate their fair value due to the fact that these instruments arepredominantly short term nature.Cash and cash equivalent bank balances with commercial interest rates.Trade and other receivables - due to the short term of receivablesTrade and other payables - are subject to normal trade credit terms and short payment cycles.No fi nancial instrument is carried at an amount in excess of its fair value.Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government83

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 2011Financial Instruments and Risk Management cont.Risk ManagementLiquidity Risk ManagementLiquidity risk is managed through the compilation and monitoring of cash fl ow forecasts as well as ensuring that there are adequatebanking facilities.The maturity profi les of the fi nancial liabilities are summarized as follows:At 31 March 2012Less than1 yearBetween 1and 2 yearsBetween 2and 5 yearsOver 5 yearsTrade and Other PayablesFinance Lease Obligations3,593,8142,956-2,397----At 31 March 2011Less than1 yearBetween 1and 2 yearsBetween 2and 5 yearsOver 5 yearsTrade and Other PayablesFinance Lease Obligations2,935,4113,272-1,718----Credit riskCredit risk exposure and concentrations of credit riskThe carrying amount of fi nancial assets represents the maximum credit exposure at the reporting date. The maximum exposure to creditrisk at the reporting date was:Financial InstrumentTrade and Other ReceivablesCash and cash equivalents2012R’0001,492,9382,999,4782011R’0001,374,8082,257,75084 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 201136. Restatement of prior year figuresRestatement of prior year fi gures is reported in the combined fi nancial statements due to the reclassifi cation of various account items fora number of entities. Due to a change in management judgment, these transactions are deemed to have been incorrectly classifi ed in theprevious fi nancial year and have now been rectifi ed in the current fi nancial year.Secondly the substantial restatement of the prior year fi gures is due to the Gauteng Housing Fund that did not form part of the combinedfi nancial statements last year and in the current fi nancial year it forms part of the combined fi nancial statements.The comparative fi gures for the following accounts have been implicated:Combined Statement of Financial PositionAssetsNon-current assetsProperty, plant and equipmentInvestment propertyBiological assetsTrade and other receivablesOther investmentsFinance lease receivables2011R’000Restated1,917,580889,274170,606148,35898,74488,09120112011R’000 R’000Error As previouslyreported1,304,214(134,687)170,60620,5303(115)613,3661,023,961-127,82898,74188,206Current assetsTrade and other receivablesCash and cash equivalentsAssets classifi ed as held for sale1,374,8082,268,14535,788(26,882)1,716(2,783)1,401,6902,266,42938,571LiabilitiesNon-current liabilitiesLoans and borrowingsFinance lease obligationsProvisionsCurrent liabilitiesLoans and borrowingsTrade and other payablesFinance lease obligationsProvisions - Current SPOLiabilities of assets classifi ed as held for saleNet AssetsOther reservesAccumulated surplus/defi cit - SPO143,1731,718386299,4342,935,4113,27246,4494,5991,116,5002,507,810(13,870)(1,573)38624,2658,7221,573760(70)1,117,167200,421157,0433,291-275,1692,926,6891,69945,6894,669(667)2,307,389Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government85

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 2011Restatement of prior year figures cont.2011R’0002011R’0002011R’000Combined Statement of Financial PerformanceRestatedErrorAs previouslyreportedRevenueTransfers and subsidiesSale of goods and rendering of servicesInterest, dividends and rent on landOther operating incomeProfi t on disposal of assets851,8443,826,304125,702115,204(5)(181,722)272,834(58,929)(20,031)(11)1,033,5663,553,470184,631135,2356ExpenditureCompensation of employeesGoods and servicesInterest and rent on landLoss on disposal of assetsDepreciation/amortisation and impairment(421,875)(3,857,239)(74,290)(2,125)(116,396)8(69,755)(190)227(3,989)(421,883)(3,787,484)(74,100)(2,352)(112,407)Gains/losses on revaluation of assets/liabilitiesSurplus/defi cit for the year from discontinued operations(9,897)(3,995)1(2,787)(9,898)(1,208)Attributable to:Owners of the controlling entityMinority interests426,527(692)(66,377)(3417)492,904(2,725)86 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

GAUTENG PROVINCE PUBLIC ENTITIESNotes to the Combined Financial Statementsas at 31 March 2011Financial Instruments and Risk Management cont.2011R’0002011R’0002011R’000Combined Cash Flow StatementCash flow from operating activitiesCash receiptsSale of goods and rendering of servicesInterest, dividends and rent on landOther operating incomeCash paymentsGoods and servicesTaxation paidRestated8,653,6993,846,339165,153402,138(7,527,064)(7,007,411)(27,801)Error5,451,1435,288,045154,5412,1495,478,8445,239,199(8,175)As previouslyreported3,202,556(1,441,706)10,612399,989(2,048,220)(1,768,212)(19,626)Cash flow from investing activitiesPurchase of assetsProceeds from the sale of assets(222,715)1,637(51)(24)(222,664)1,661Cash flow from financing activitiesProceeds from issuance of ordinary shares / contributed capitalPurchase of treasury sharesRepayments of borrowings--(27,326)-190-21(569)19021(26,757)Cash, cash equivalents and bank overdrafts at beginning of the yearCash, cash equivalents and bank overdrafts at end of the year1,375,1022,257,750(8,713)(8,679)1,383,8152,266,42937. Events after the reporting dateGAUTENG TOURISM AUTHORITYThe DED is currently in a process of realignment which may have an impact on the existence of the GTA in its current form. The GTA, COH WHSand Dinokeng are in the process of integration. If this process is fi nalised in the 2012/2013 fi nancial year, the current form of the new organizationmay change.GAUTENG ECONOMIC DEVELOPMENT AGENCYSubsequent to the fi nancial year end 31 March 2012, the Provincial Legislature assented to the amendment of the Blue IQ Act which providesfor the creation of the Gauteng Growth and Development Agency (GGDA) and the dissolution of GEDA. The amendment act came into effecton 1 June 2012 from which date the functions, staff, assets and liabilities are to be transferred to GGDA. It is therefore not appropriate for thesefi nancial statements to be prepared on the going concern basis. In deciding what basis must be used for the preparation of the fi nancial statementsmanagement has considered the following facts:• A budget of R68m has been allocated to GEDA by the Department of Economic Development for operations of GEDA for the 2012/13 fi nancialyear.• The operations GEDA will continue under the GGDA.• The GGDA is successor in title to the assets and liabilities of GEDA.Combined Financial Information Annual Report 2011/12 | Gauteng Provincial Government87

GAUTENG PROVINCE PUBLIC ENTITIESOther Notes to the Combined Financial Statementsas at 31 March 2012Events after the reporting date cont.In the light of the above management has determined that assets and liabilities will still be refl ected at carrying values provided that the useful livesof PPE of GEDA are aligned to those of the GGDA to facilitate consolidation.GAUTENG GAMBLING BOARDBoard MembersOn the 23 January 2012, the Executive authority terminated the membership of all board members and the board launched an urgent applicationseeking to set aside the decision taken by the executive authority to terminate the membership of the respective members of the board. Thejudgment was delivered on 8 May 2012 wherein the applicant application was dismissed with costs including the costs occasioned by theemployment of senior counsel. On 8 may 2012, the application lodged an application to appeal and the judgment was delivered on 11 May 2012wherein the application to appeal was dismissed with costs.Appointment of an administratorDue to the termination of the Board membership by the Executive Authority, an administrator was appointed to perform the functions and exercisethe powers of the Board, either in whole or in part, excluding the granting and revocation of licenses in terms of section 18C of the GautengGambling Board Act.GAUTRAIN MANAGEMENT AGENCYOCD2 was certifi ed by the Independent certifi er on the 6 June 2012, with the phase 2 operating commencement date from Rosebank to ParkStation being 7 June 2012.The commencement of a full fare generating service on OCD 2 represents a non-adjusting event after the reporting dare, and accordingly noadjustments have been made to the annual fi nancial statements.Except for the above mentioned matter the GMA does not have any other subsequent events to report requiring adjustment or disclosure in thefi nancial statements for the year ended 31 March 2012.GAUTENG FILM COMMISSIONFollowing the determination by the Premier of Gauteng that creative industries and Gauteng Film Commission will be transferred from Departmentof Economic Development to its more suited position within the Department of Sports, Arts, Culture and Recreation subsequent to the year-enddue diligence report, memorandum of association and hand over report has been prepared by both MEC’s of Department of Sports, Arts, Cultureand Recreation and Department of Economic Development until the budget adjustment process. As part of this process Mr Mzwandile Masina wasappointed as the Acting Chief Executive Offi cer on the 1 April 2012.38. Adjustments to prior year figuresPrior year fi gures were adjusted as a result of elimination journals passed on inter-entity transactions and balances; however the fi gures are notmaterial.88 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

SECTION D:OTHER INFORMATION

Detailing Audit Outcomes for Departments and Entities - Annexure 1 Afor the year ended 31 March 2012VOTE NUMBER NAME OF DEPARTMENT AUDIT OUTCOME1 Offi ce of the Premier Financially unqualifi ed with fi ndings on emphasis of matter andpredetermined objectives2 Legislature Financially unqualifi ed with fi ndings on emphasis of matter andcompliance with laws and regulations3 Economic Development Financially unqualifi ed with fi ndings on emphasis of matter andcompliance with laws and regulations4 Health and Social Development Qualifi ed5 Education Financially unqualifi ed with fi ndings on emphasis of matter andcompliance with laws and regulations6 Local Government and Housing Financially unqualifi ed with fi ndings on emphasis of matter,predetermined objectives and compliance with laws andregulations7 Roads and Transport Financially unqualifi ed with fi ndings on emphasis of matter,predetermined objectives and compliance with laws andregulations8 Community Safety Financially unqualifi ed with fi ndings on emphasis of matter andcompliance with laws and regulations9 Agriculture and Rural Development Financially unqualifi ed with fi ndings on emphasis of matter,predetermined objectives and compliance with laws andregulations10 Sports, Arts, Culture and Recreation Financially unqualifi ed with fi ndings on emphasis of matter andcompliance with laws and regulations11 Finance Financially unqualifi ed with fi ndings on emphasis of matter,predetermined objectives and compliance with laws andregulations12 Infrastructure Development Financially unqualifi ed with fi ndings on emphasis of matter,predetermined objectives and compliance with laws andregulationsNAME OF ENTITYAUDIT OUTCOMEGauteng Fund Project Offi ceGauteng Enterprise PropellerGauteng Tourism AuthorityGauteng Gambling BoardGauteng Economic Development AgencyGauteng Film CommissionFinancially unqualifi ed with fi ndings on emphasis of matter andcompliance with laws and regulationsFinancially unqualifi ed with fi ndings on emphasis of matter,predetermined objectives and compliance with laws andregulationsFinancially unqualifi ed with fi ndings on predetermined objectivesand compliance with laws and regulationsFinancially unqualifi ed with fi ndings on predetermined objectivesand compliance with laws and regulationsFinancially unqualifi ed with fi ndings on emphasis of matter andcompliance with laws and regulationsFinancially unqualifi ed with fi ndings on compliance with laws andregulations90 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

Detailing Audit Outcomes for Departments and Entities - Annexure 1 Aas at 31 March 2012Detailing Audit Outcomes for Departments and Entities - Annexure 1A cont.Gauteng Liquor BoardBlue IQ Investments Holding (Pty) LtdCradle of Humankind World HeritageDinokeng World HeritageG-Fleet ManagementGautrain Management AgencyCost RecoveryGauteng Medical Supplies DepotGauteng Housing FundGauteng Partnership FundQualifi edFinancially unqualifi ed with fi ndings on emphasis of matter andcompliance with laws and regulationsFinancially unqualifi ed with fi ndings on predetermined objectivesFinancially unqualifi ed with fi ndings on predetermined objectivesFinancially unqualifi ed with fi ndings on emphasis of matter,predtermined objectives and compliance with laws and regulationsFinancially unqualifi ed with fi ndings on compliance with laws andregulationsFinancially unqualifi ed with fi ndings on compliance with laws andregulationsFinancially unqualifi ed with fi ndings on compliance with laws andregulationsFinancially unqualifi ed with fi ndings on emphasis of matterFinancially unqualifi ed with no fi ndingsCombined Financial Information Annual Report 2011/12 | Gauteng Provincial Government91

Categorised Entities According to Departments - Annexure 1 Bas at 31 March 2012DEPARTMENTNAME OF ENTITYFinanceEconomic DevelopmentGauteng Fund Project Offi ceGauteng Enterprise PropellerGauteng Tourism AuthorityGauteng Gambling BoardGauteng Economic Development AgencyGauteng Film CommissionGauteng Liquor BoardBlue IQ Investments Holding (Pty) LtdCradle of Humankind World HeritageDinokeng World HeritageRoads and TransportAgriculture and Rural DevelopmentHealth and Social DevelopmentLocal Government and HousingGautrain Management AgencyG-Fleet ManagementCost RecoveryMedical Supplies DepotHousing FundGauteng Partnership Fund92 Gauteng Provincial Government | Combined Financial Information Annual Report 2011/12

PR233/2013ISBN: 978-0-621-42095-1