CHAPTER 1 INTRODUCTION AND OVERVIEW

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CHAPTER 1 INTRODUCTION AND OVERVIEW Powered By Docstoc
					 2009 – 2010 Mangaung Local Municipality




                Annual Report




Planning Performance Progress
                • The Editorial Team


                   Managing Editor




    • Compilation and Editorial Support




        Teboho Maine, Director: IDP and
           Organisational Performance


 Tankiso Mea: Head of the Speaker’s Office




                     • Published by


         Mangaung Local Municipality
                     P.O. Box 3704
                     Bloemfontein
                            9300
                      South Africa


               Tel. +27 (51) 405 8212
               Fax. +27 (51) 405 8141


  e-mail teboho.maine@mangaung.co.za
   website: http://www.mangaung.co.za




This Annual Report is published by the Mangaung Local Municipality. It reviews all activities of the Municipality for the period July 2009 to
June 2010. Every effort has been made to ensure that the facts are correct.
             FOREWORD BY THE EXECUTIVE MAYOR



             It is always a daunting task to provide a complete account on the
             responsibilities conferred upon us by the electorate. Most significantly,
             we do so being quite conscious of the fact that the general public
             deserves its rightful place at the apex of ‘accountability chain’. In this
             context we present this Annual Report of Mangaung Local Municipality
             for the financial year 2009/10 to the people of South Africa united in
             diversity, the populace of Free State and particularly the community of
             Mangaung.


             We owe this timeous reporting to the invaluable contributions and
             guidance of the Office of the Auditor General, Treasury, legislative
             select and portfolio committees of the Free State Legislature, Free State
             Provincial Government, the media and general public at large.


             It was during the financial year under review wherein a global economic
             recession, as it impacted on both private and public sector alike,
             thwarted our institutional capacity to deliver on the promises we have
             made. But the prudency of our financial regulatory framework spared
             us both political and administrative hemorrhage.


             Hosting the mega-show piece – the FIFA Soccer World Cup 2010™, was
             another milestone that is now in the annals of world history. Without
             negating our core mandate with regard to service delivery, we have
             sacrificed human capital in particular and other resources for the
             success of this tournament. This event has yielded good results in the
             form of economic spin-offs boosting our local hospitality industry, job


Mangaung Local Municipality Annual Performance Report 2009/2010
             creation, and improvement on our infrastructure development.
             Undoubtedly, much needed revenue was injected accordingly in
             Mangaung.


             Although the period under-review witnessed the prevalence of
             community violent protests across the country, our Municipality has
             intelligibly managed to timeously identify and settle dispute issues
             whilst at latent stage. We derived this strength from our own
             undertaking that we shall be “in unity to Broaden participation for all
             our residents towards creating a decent work for all South Africans”.
             Hence both our IDP and Budget process were premised on the
             community-based and ward-based planning processes. We are truly
             committed to ensuring genuine participatory democracy in the
             governance of our Municipality.


             Subsequent to the adoption of the national Local Government
             Turnaround Strategy (LGTAS), we also convened a consultative session
             with the Provincial Coordinating Unit and Intergovernmental Working
             Group constituted by the national and provincial cooperative
             governance and traditional affairs departments, the Office of the
             Premier and sector departments, to give a blessing to our own
             Municipal Turnaround Strategy and we committed ourselves to the
             following five strategic objectives;


                    Ensure that municipalities meet the basic service needs of
                     communities;
                    Build clean, effective, efficient, responsive and accountable local
                     government;
                    Improve the performance and professionalism in municipalities;


Mangaung Local Municipality Annual Performance Report 2009/2010
                    Improve national and provincial policy, oversight and support;
                     and
                    Strengthen        partnerships    between    local   government,
                     communities and civil society.


             We are tabling this report very excited about the prospects of
             Mangaung as a metro since the pronouncement of demarcation board
             with regard to Mangaung Metro status. We are also satisfied that all
             systems are in place regarding our readiness to assume metropolitan
             status at the determined time.


             This report further demonstrates our commitment in ensuring that our
             communities have a right to live in a clean and healthy environment as
             enshrined in the Constitution. As part of improving our waste
             management systems we have launched a ward-based Mayoral
             Cleaning Campaign – details on this campaign will be provided at the
             end of 2010/11 financial year. Whilst here, we should also take this
             opportunity to thank all community members and Councillors,
             especially Ward Councillors who played an active role in the success of
             the project


             Regarding service delivery, our Municipality is on course. We have
             allocated land for both social and economic purposes, approved funds
             for housing – for new applications and for upgrading dilapidated
             houses. And, we continue to provide free 6kl of water and 50kw of
             electricity to the registered indigents in accordance with the provisions
             of our Indigent Policy.




Mangaung Local Municipality Annual Performance Report 2009/2010
             We have also made great strides with regard to economic growth as we
             met our target on job creation, establishment of new SMMEs as well as
             linking the HDI SMMEs with other financial institutions.


             Regarding the audit report we once again, regrettably got a disclaimer
             for non-compliance. However, with our current framework for financial
             recovery plans as well as the vigorous process of filling key positions –
             especially relating to internal auditing, risk management and
             monitoring and evaluation, we envisage to undo this unforeseen
             situation in due course.


             We have indeed laid a solid foundation for a better future.



             ...………………………
             F. K MORULE
             Executive Mayor
             Mangaung Local Municipality


             Date: 21 January 2011




Mangaung Local Municipality Annual Performance Report 2009/2010
             INTRODUCTION BY THE CITY MANAGER



             This is indeed an exciting year to present the Annual Report for the
             Mangaung Local Municipality for the financial year 2009/2010. We are
             still basking in the limelight of the ever-successful World Cup
             tournament in the history of FIFA as reflected by the flawless logistical
             arrangements and preparations. The first ever FIFA World Cup to be
             held on the African soil has scored the highest revenue for FIFA in the
             entire history of the football tournament. We pride ourselves as the
             Municipality for having been part of this historic event and for
             contributing directly to its success.


             Our Municipality and the rest of the country have been heaped with
             praises across the political spectrum in our country and by many
             football nations across the globe leaving our detractors and
             doomsayers with eggs on their faces. At the local level, the 2010 FIFA
             World Cup has left an indelible legacy of social cohesion, jobs creation
             through economic growth and a world-class infrastructure in
             Mangaung.


             Our Council and administration are in better shape and are collectively
             responding to the pressing challenge of providing effective and efficient
             services to the inhabitants of our Municipality. The Council has been
             more visible in the community interacting with our key stakeholders at
             various forus and utilising a variety of mediums. This alone, has
             engendered a sense of pride amongst our citizenry in the Council and
             its administration. Central theme has been improved relations between
             the council, and its administration and the communities through


Mangaung Local Municipality Annual Performance Report 2009/2010
             meaningful and genuine engagement.


             We are steadily realising the noble goals of economic growth and jobs-
             creation. We managed to achieve our goal of creating job opportunities
             for more than 5000 people, thus exceeding our target for the year. We
             not only facilitated the establishment of more than 200 new SMMEs,
             we also linked them with financial institutions to help them access
             funding     for    start-up    capital.    Furthermore,   we    facilitated
             entrepreneurship training sessions for these new entrepreneurs. We
             believe that by growing our SMME sector, we will concurrently increase
             jobs opportunities. Moreover, we are making steady improvement in
             attracting investors in our Municipality in line with our Vision as
             articulated in the IDP of ensuring that Mangaung is recognised
             nationally and internationally as a safe and attractive place to live, work
             and invest. In this reporting year we attracted investment from two
             major investors, with massive revenue injection to our fiscus and the
             economy of the Municipality.


             We are also advancing towards financial sustainability through
             improved revenue collection and investment attraction. Through our
             concerted campaign to identify and register all indigent households we
             are able to identify and target households which can afford to pay for
             Municipal services. This campaign has resulted in improved collection
             of revenue through service charges. We have also tightened our screws
             in terms of fiscal discipline and sound financial management systems.
             This strategy is born us fruits as exemplified by improved financial
             accountability. We are a step closer to improving our not so good
             record with regard to the Auditor-General’s reports.




Mangaung Local Municipality Annual Performance Report 2009/2010
             The morale of the heart-beat of our organisation, our staff, is at all-
             times high due to sound human resources strategy that has been put in
             place. This has led to improved delivery of services to our communities
             as reflected in the recent client satisfaction survey which indicates that
             the majority of the populace is happy with the quality of most of our
             services and particularly our turn-around time in responding to
             emergency calls and general queries. These and many other
             achievements outlined in the Annual Report, bears testimony to the
             fact that, indeed, Mangaung is a city on the move as our motto attests.




             ...………………………
             S J Msibi
             City Manager




Mangaung Local Municipality Annual Performance Report 2009/2010
TABLE OF CONTENTS



                Foreword by the Executive Mayor
                Introduction by the City Manager

 Chapter 1      Introduction and Overview                              1
                Introduction                                           1
                Location and Overview                                  1
                Economic Development                                   1
                Governance                                             2
                Challenges                                             4

 Chapter 2      Council Performance Highlights                         5
                Municipal Council                                      5
                Office of the Speaker                                  5
                Key Milestones of the Council                          7
                Community Priorities                                   8

 Chapter 3      Administrative Performance                             10
                Economic Development and Growth                        10
                Infrastructure Development and Service Delivery        13
                Community and Social Development                       21
                Financial Management and Viability                     26
                Governance and Transformation                          31
                Interventions                                          34
                Emerging Issues and Challenges                         35

 Chapter 4      Human Resources and other Organizational Management    37
                Introduction                                           37
                Human Resource Strategy                                37
                Results                                                39
                Human Resource Management                              39
                Labour Relations                                       39
                Skills Development and Training                        40
                Employment Equity Plan                                 41
                Filling of Posts                                       44
                Disclosure of Information                              47
                Retirement Funds                                       49
                Medical Aid Schemes                                    51
                Performance Management System                          51
                Defining Performance Management                        51
                Institutional Arrangements of Performance Management   53
                Performance Management System and Policy               54



Mangaung Local Municipality Annual Performance Report 2009/2010
 Chapter 5        Audited Statements and Related Financial Information    55
                  Accounting Officer’s Responsibilities and Approval      55
                  General Information                                     57
                  Accounting Officer’s Report                             62
                  Statement of Financial Position                         90
                  Statement of Financial Performance                      91
                  Statement of Changes in Net Assets                      92
                  Cash Flow Statement                                     94
                  Accounting Policies                                     95
                  Notes to the Annual Financial Statements               116

 Appendices
              A   Schedule of External Loans                             183
              B   Analysis of Property, Plant and Equipment              185
              C   Segmental Analysis of Property, Plant and Equipment    191
              D   Segmental Statement of Financial Performance           193
              E   Actual versus Budget ( Revenue and Expenditure)        194
              F   Disclosure of Grants and Subsidies in terms of MFMA    197




Mangaung Local Municipality Annual Performance Report 2009/2010
     List of Acronyms

     AIDS                    Acquired Immune Deficiency Syndrome
     CBD                     Central Business District
     CBP                     Community-Based Planning
     CCTV                    Close Circuit Television
     CCMA                    Commission for Conciliation Mediation and Arbitration
     CDW                     Community Development Worker
     CFO                     Chief Financial Officer
     COID                    Compensation for Occupational Injuries and Diseases
     COO                     Chief Operating Office
     DBSA                    Development Bank of South Africa
     ED                      Executive Director
     FIFA                    Federation Internationale de Football Association
     GRAP                    Generally Recognised Accounting Procedures
     GAMAP                   Generally Accepted Municipal Accounting Practices
     HDF                     Housing Development Fund
     HIV                     Human Immunodeficiency Virus
     HR                      Human Resources
     HRM                     Human Resources Management
     IAS                     International Accounting Standards
     ICT                     Information and Communication Technology
     IDC                     Industrial Development Corporation
     IDP                     Integrated Development Planning
     IFRS                    International Finance Reporting Standards
     IMFO                    The Institute of Municipal Finance Officers
     IPMS                    Individual Performance Management System
     IPSAS                   International Public Sector Accounting Standards




Mangaung Local Municipality Annual Performance Report 2009/2010
     IT                      Information Technology
     Km                      Kilo Metre
     Kl                      Kilo Litre
     LGSETA                  Local Government Sector Education and Training Authority
     LLF                     Local Labour Forum
     LOC                     Local Organising Committee
     ME                      Municipal Entity
     MEC                     Member of Executive Council
     MFMA                    Municipal Financial Management Act
     MIG                     Municipal Infrastructure Grant
     PDI                     Previously Disadvantaged Individuals
     PTIS                    Public Transport Infrastructure System
     SALA                    South African Local Authorities
     SALGBC                  South African Local Government Bargaining Council
     SAMWU                   South African Municipal Workers Union
     SANS                    South African National Standards
     SDBIP                   Service Delivery and Budget Implementation Plan
     SEDA                    Small Enterprise Development Agency
     SMME                    Small, Micro and Macro Enterprises
     UIF                     Unemployment Insurance Fund
     Controlling Entity      Mangaung Local Municipality stand alone financial results
     Economic Entity         Group consolidated financial results




Mangaung Local Municipality Annual Performance Report 2009/2010
      CHAPTER 1: INTRODUCTION AND OVERVIEW


                     Introduction
                     The vision of Mangaung Local Municipality (MLM) – hereby referred to
                     as Mangaung, is for Mangaung “to be recognised nationally and
                     internationally as a safe and attractive place to live, work and invest.”
                     Guided by our five-year development blueprint; the Integrated
                     Development Plan (IDP) we are making an impressive strides in realising
                     this vision. This annual report reports on some of the major
                     achievements in this endeavour during the 2009/2010 financial year.

                     Location and Overview
                     Mangaung is the biggest municipality in the Free State, and is growing
                     at a faster pace. The municipality comprises of three towns;
                     Bloemfontein, Botshabelo and Thaba Nchu and is a home to 752 906
                     (645 440 in 2001) with 202 762 households (188 876 in 2001).
                     Mangaung is strategically located in Free State province. Free State is
                     centrally located in South Africa linking five provinces of Gauteng,
                     KwaZulu-Natal, Eastern Cape, Northern Cape and North West. In
                     particular, Mangaung links the important towns of Johannesburg and
                     Cape Town via N1, and Durban and Kimberly through N8. Rail Way lines
                     connect important provinces of Gauteng, Durban, Cape Town and
                     Eastern Cape. The latter three have largest sea ports linking South
                     Africa with the rest of the worlds. The Municipality therefore, offers
                     ideal business opportunities for hospitality, transport and
                     manufacturing industries.

                     Bloemfontein, the biggest of the three cities, is the most developed
                     with world-class facilities. The city has two universities, and hosts the
                     provincial government, large military facilities and the High Court of
                     South Africa. It was sports facilities of high standards. Largely because
                     of this impressive infrastructure Mangaung was chosen to host both
                     the FIFA Confederations Cup™ in 2009 and the 2010 FIFA World Cup™
                     the following year. Both these global events have been hailed as
                     resounding success stories.

                     Economic development
                     In line with the national development trends, the residents of
                     Mangaung continue to enjoy better living conditions which continue to
                     improve over the many years since 2000. The economic conditions of



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                 Page | 1
                     our residents have improved in real terms. Statistics indicate that there
                     is a modest upward movement of residents from lower to middle
                     income level. At the same time, the number of residents with no
                     income has decreased by 40%. This is due to a marginal increase in
                     employment figures. About 221232 people were employed in 2007
                     compared to 156830 in 2001. Mangaung continues to attract
                     investment. As this report will indicate, Mangaung managed to attract
                     investment to the tune of more than R300m in the reporting period.
                     Access to basic amenities such as housing, electricity, water, sanitation,
                     health and education has improved significantly. Crime levels have also
                     declined. These achievements indeed make Mangaung a safe and
                     attractive place to live, work and invest in.

                     Governance
                     The Mangaung governance structure comprises of the Council,
                     Executive Mayor, the City Managers and Executive Directors. Table 1.1
                     outlines and responsibilities, oversight and accountability of each
                     structure.

                     Table 1.1 Governance Structure of Mangaung
                                                                                   Accountable
                       Structure     Responsible for              Oversight Over
                                                                                       to
                      Council        Approve              Executive Mayor,         Community
                                     policies and         Mayoral Committee
                                     budget               and Audit Committee
                      Executive      Policies,            City Manager             Council
                      Mayor          budget,
                                     outcomes,
                                     management
                                     and oversight
                                     over City
                                     Manager
                      City           Outputs and          The administration       Executive
                      Manager        implementation                                Mayor
                      CFO and        Outputs and          Financial management     City
                      EMT            implementation       and operational          Manager
                                                          functions


                     The Mangaung Council is constituted by 89 elected Councillors; 45
                     Councillors are ward representatives and 44 represent their political
                     parties on a proportional basis. The parties in Council are illustrated in
                     table 1.2.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                  Page | 2
                     Table 1.2 Political Parties represented in the Council, the total, ward and PR
                     seats
                                                                  Total      Ward
                                     Party                                                PR Seats
                                                                  Seats      Seats
                      African National Congress                    65         37             28
                      Democratic Alliance                          15          8             7
                      Freedom Front                                 3          8             7
                      African People’s Convention                   2          0             2
                      African Christian Democratic                  1          0             1
                      Party
                      United Christian Democratic                  2            0             2
                      Party
                      Dikwankwetla Party                           1            0             1


                     The work of the Council is coordinated by the Executive Mayor who is
                     elected by the Council. The Executive Mayor is assisted by Councillors in
                     a Mayoral Committee. The Mayoral Committee consists of councillors
                     appointed by the Executive Mayor to serve on the Mayoral Committee.
                     The Executive Mayor together with the Mayoral Committee also
                     oversees the work of the administrative arm. Each member of the
                     Mayoral Committee has a portfolio with specific functions. Table 1.3
                     lists the name and portfolio of each MMC.

                     Table 1.3: Members of the Mayoral Committee
                         Members of Mayoral Committee                  Responsible Councillor
                      Finance                                     Councillor T Marais
                      Policy and Strategy                         Councillor MA Siyonzana
                      Planning and Housing                        Councillor LS Moroka
                      Health and Welfare                          Councillor NA Phupha
                      Special Projects and 2010 Programmes        Councillor CSK Sechoaro
                      Economic Development and Tourism            Councillor NM Mzozana
                      Community Participation and IDP             Councillor KNL Makhanya
                      Corporate Governance                        Councillor NG Mokotjo
                      Public Safety and Social Development        Councillor SKM Choene
                      Services and Infrastructure                 Councillor FB Nzapheza

                     The administration is headed by the City Manager as the Chief
                     Accounting Officer. The City Manager is further responsible and
                     accountable for the formation and development of an economical,
                     effective, efficient and accountable administration as well as the
                     management of the provision service in a sustainable and equitable
                     manner within the municipality. The administration is made up of the
                     following directorates headed by Executive Management Teams:
                     Finance, Corporate Services, Community and Social Development,




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                      Page | 3
                     Infrastructure Services, Economic Development and Planning. Table 1.4
                     outlines the Executive Management Team of Mangaung.

                     Table 1.4: MLM’s Executive Management Team
                                     Directorate                           Official
                      City Manager                                Sandile Msibi
                      CFO                                         Raymond Taye
                      ED: Corporate Services                      Amos Goliath
                      ED: Infrastructure Services                 Luvuyo Ntoyi
                      ED: Economic Develoment and Planning        German Ramathebane
                      ED: Community and Social                    Esther Radebe
                      Development


                     Challenges
                     The fast growth in population size, attributable mainly to migration
                     from neighbouring towns as well as the neighbouring country of
                     Lesotho, presents a challenge of addressing the backlog of services
                     delivery. The list of people waiting for essential services continues to
                     grow despite the best efforts to address it. The effects of the recent
                     economic down-turn can still be felt across the globe with the
                     developing countries hardest-hit mainly by declining levels of direct
                     foreign investment. This phenomenon hampers our efforts to grow our
                     economy and the levels of service delivery and improve the lives of our
                     people.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                Page | 4
      CHAPTER 2: COUNCIL PERFORMANCE HIGHLIGHTS

                     Municipalities in South Africa are governed by Municipal Councils.
                     Mangaung Council is therefore the governing body of the Mangaung
                     Local Municipality (MLM) and the custodian of its powers, duties and
                     functions, both legislative and administrative. The Constitution of the
                     RSA, read in conjunction with Municipal Structures and Municipal
                     Systems Acts (both as amended) stipulates that the purpose of the
                     municipality includes but is not limited to:

                            Providing good governance for its community in terms of
                             representation of the public interests including consideration of
                             people well-being and the interests of the municipality
                            Developing and evaluating policies and programmes of the
                             municipality
                            Ensuring that administrative policies, systems and procedures
                             are in place to implement the decisions of the Council
                            Providing services, facilities, and other services that the
                             municipality considers necessary or desirable for all members of
                             its community
                            Ensuring accountability and transparency of the operations of
                             the municipality, including the activities of senior management
                             of the municipality
                            Fostering the current and future economic, social and
                             environmental well being of its community

                     The Mangaung Council collectively develops policies through the
                     adoption of by-laws and passing of resolutions. It is important to note
                     that individual members of the Council cannot make a decision on
                     behalf of Council neither could they acting as individual members, give
                     orders and direction to staff. To do either, they must give a collective
                     direction as a group at a properly convened Council meeting.

                     Furthermore, the Constitution of the Republic of South Africa, 1996,
                     Chapter 7, Section 160 (1) defines the role of the Council in the
                     following words:

                     A Municipal Council
                         (a) Makes decisions concerning the exercise of all the powers and
                             the performance of all the functions of the municipality
                         (b) Must elect its chairperson




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                 Page | 5
                         (c) May elect an executive committee and other committees,
                             subject to national legislation
                         (d) May employ personnel that are necessary for the effective
                             performance of its functions

                     The Council therefore performs a legislative and executive role. The
                     local government legislation defines and allows the following legislative
                     role for Council:

                            Development of Integrated Development Planning (IDP)
                            Policy
                            Approval of By-laws
                            Formulation and approval of the Budget
                            Setting tariffs for rates and charges
                            Approve the implementation of community-based planning
                             (CBP) to afford communities an opportunity to influence the IDP
                             and resources allocation
                            Successful hosting of the IDP/Budget Representative Forum to
                             afford stakeholders an opportunity to make inputs into the final
                             IDP and Budget.

                     Office of the Speaker of Council
                     The Speaker of Council is the elected chairperson of the Council in
                     terms of Section 160 (1) (b) of the Constitution and Section 36 of the
                     Municipal Systems Act (MSA). The main duties and responsibilities of
                     the Speaker of the Council are the following:

                            Presiding at meetings of Council and ensuring that Council
                             meets at least quarterly
                            Receiving a report of the accounting officer of the municipal
                             entity regarding any interference by a Councillor outside that
                             Councillor’s assigned duties, in the financial affairs of the
                             municipal entity; or the responsibilities of the board of directors
                             of the municipal entity
                            Determining the reasonable time period to be allowed during a
                             Council meeting at which an annual report is to be discussed or
                             at which decisions concerning an annual report are to be taken
                             for the discussion of any written submissions received from the
                             local community or organs of state on the annual report and for
                             members of the local community or any organs of state to
                             address the Council




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                   Page | 6
                            Receiving information from the Auditor-General regarding the
                             failure to submit annual financial statements
                            Submitting information received from the Auditor-General
                             regarding the failure to submit annual financial statements to
                             the Council
                            Must liaise closely with the Office of the City Manager and the
                             responsible unit, namely, Committee Services, for the agenda
                             and minutes of each meeting, in consultation with the Executive
                             Mayor as and when necessary
                            Must co-ordinate the arrangements inter alia regarding venues,
                             dates and the circulation of agendas and minutes of all the
                             meetings of the Council and Council committees
                            Must liaise with Councillors, as well as members of the public
                             and media who attend Council meetings, regarding proper
                             conduct during such meetings to ensure compliance with
                             Council’s rules and orders
                            Responsible for ward committees, community development
                             workers (CDWs) and matters of public participation in general;
                            Holding both the executive and administration accountable for
                             the performance of their functions
                            Determination of Council agenda including dates for the
                             meetings
                            Exercise and implementation of those powers and duties
                             assigned to the Speaker during meetings
                            Implementation of community-based planning (CBP)
                            Capacity building and personal development of Councillors, and
                            Facilitate interface with other stakeholders and organisations
                             including provincial and national departments on matters of
                             community development

                     Key Milestones of the Council for 2009/2010
                            Conducted successful Ward Committee elections and an
                             induction workshop
                            Facilitated the processes of public participation during the
                             development and review of several MLM policies
                            Facilitated community involvement in planning processes
                             including IDP and budget
                            Conducted a workshop on roles and responsibilities and the
                             relationship between Councillors, ward committees and
                             Community Development Workers (CDW)
                            Implementation of CBP




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                               Page | 7
                          Provision of ongoing support and development programmes to
                           the Councillors, including monitoring
                          Ensuring that ward committees are functional and receive
                           support
                          Fostering of good working relations between Councillors, ward
                           committees and CDWs
                          Participated in the activities and initiatives of the District and
                           Provincial Speakers’ Forums
                          Promoted good working relations between Councillors and
                           administration
                          Commenced the process of street naming
                          Intervened and assisted to quell a number of community protest
                           actions on service delivery for stability in Mangaung
                          Hosted a workshop on eradication of informal settlements
                          Commenced the process of payment of out-of-pocket expenses
                           to the amount of R1 000 per ward committee member
                          Facilitated the process of community inputs on delimitation of
                           new municipal ward boundaries
                          Initiated the discussions on the separation of powers between
                           the executive and legislature in the Municipality
                          Fostering good relations with other spheres of government and
                           supporting activities initiated by them

                     Community Priorities

                     The Municipal Systems Act (as amended) has prompted changes in the
                     way in which the Council plans for the future of the municipality. It also
                     provides greater scope for communities to make their own choices
                     about what the Council does and how.

                     This legislation requires the Mangaung Council to undertake an
                     exercise, at least once in every five years, to identify community
                     development priorities. These development priorities are determined
                     with active participation by affected communities. These priorities form
                     the basis for the long-term integrated development plan.

                     Since the first term of Council in 2000-2004, the Mangaung Local
                     Council has been consulting with members of the community, local
                     business community and community organisation to determine the
                     priorities of the people of Mangaung. Along with the development
                     priorities for the second term of the Council (2005-2009), these
                     priorities were formulated based on the information gathered on social




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                  Page | 8
                     dynamics, service provision and people’s perception of the
                     Municipality’s strengths, weaknesses, opportunities, and threats. The
                     outcomes are as outlined below.

                     Table 2.1 Mangaung desired outcomes
                         Preferred
                                                    We know we are succeeding when
                         outcome
                                        Mangaung has strong and healthy economy.
                       Personal
                                        The standard of living has improved.
                       income and
                                        Economic development prioritises future
                       jobs
                                         wellbeing.
                                        Prevalence of crime has been reduced.
                                        People are safe at all the time in Mangaung and,
                       Security         Everybody is able to participate in the economy
                                         of the municipality, particularly those who are
                                         most vulnerable.
                                        The people of Mangaung own their houses
                       Housing
                                         serviced with acceptable infrastructural services.
                                        Everybody receives a good basic education and
                       Improved          there is broad range of learning opportunities in
                       education         Mangaung.
                                        Mangaung people are skilled people.
                       Improved         The people of Mangaung have access to well-
                       infrastructural   maintained, affordable level of infrastructure.
                       services
                                        We have access to affordable health services that
                                         meet our needs.
                       HIV/AIDS and  The level of HIV/AIDS infection and affection has
                       health            been reduced.
                                        The Municipal environment supports the health
                                         of the community.
                                        Mangaung is attractive and well maintained.
                                        Everybody takes responsibility for their impact on
                       Clean
                                         the environment.
                       environment
                                        We manage the Municipality to minimise damage
                                         to the environment.
                                        People have access to improved and well-
                       Recreational
                                         maintained recreational facilities.
                       facilities
                                        More people participate in recreational facilities.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                               Page | 9
CHAPTER 3: ADMINISTRATIVE PERFORMANCE


              Economic Development and Growth

                     Strategic Priority Area: Stimulate integrated and sustainable
                     economic development

                     The Focus
                            Enable economic growth and development for improved and
                             new job opportunities
                            Creating the right conditions for sustained support and growth



                     Targets for 2009/2010
                            Create 5 000 new formal and informal sector jobs
                            Realize R1.1 billion increase in rand value in local services
                             rendered and products purchased
                            Established 200 new small, micro and macro enterprises
                             (SMMEs)
                            Link 200 previously disadvantaged individuals (PDI) SMMEs are
                             with local financial institutions
                            Through the municipality’s informal economy policy, implement
                             three projects
                            Facilitate four business plans for livelihoods projects
                             supplemented through labour-based construction, community
                             based services/projects
                            Hold five exhibitions and place eight adverts in the local media
                            Produce and distribute 3 000 visitors’ guides and 5 000 tourists’
                             maps
                            Service 10 000 visitor and tourists through information services
                            Enter and conclude three partnership agreements to support
                             the municipality’s programmes
                            Attract four investors and facilitate one development
                            Register three townships through Deeds Office
                            20 PDIs are allocated land for social and economic purposes
                            Implement development projects at two nodes along N8
                             corridor




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                 Page | 10
                            Implement three projects emanating from CBD Masterplan and
                             conduct at least three active engagements with stakeholders in
                             the CBD for project implementation processes
                            Finalise 80% of land use applications within the prescribed time
                             frames
                            Process 80% of traffic impact studies received within the
                             prescribed time frames
                            80% of persons displaying signs or advertisements comply with
                             the outdoor advertising by-laws
                            Complete, capture and submit 2 400 subsidy applications to the
                             province for building new individual houses
                            Complete, capture and submit 300 subsidy applications for the
                             upgrading and/or re-building of dilapidated house to province
                            Complete, capture and submit 1 000 identified and/or affected
                             properties declaration to the province for the upgrading of land
                             tenure
                            Complete, capture and submit 176 subsidy applications for the
                             building of new high density house to the province



                     Highlights for 2009/2010
                     Sustaining a high-performance economy and exploring new ways to
                     diversify our business community requires solid planning and
                     collaboration. To achieve our immediate and long-term goals, we work
                     closely with many partners to nurture our diverse business community,
                     which includes small- and medium-sized firms. We also foster an
                     environment that encourages new and established businesses to grow
                     and expand.

                     The following are some highlights of Mangaung Local Municipality’s
                     performance.

                     As in the case of all municipalities across the country, Mangaung Local
                     Municipality was faced with and affected by the challenges posed by
                     the global economic crisis of 2008-09. Despite this economic downturn,
                     the Municipality managed to create 5 103 formal and informal sector
                     job opportunities. Furthermore, 257 new SMMEs were established
                     while 200 PDI SMMEs were assisted with financing by local financial
                     institutions that include banks, SEDA, IDC, etc. The Municipality also
                     facilitated four business plans aimed at improving the livelihoods of the
                     SMMEs and supplemented them through labour-based construction,
                     community based services and projects.



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                 Page | 11
                     The implementation of the informal economy policy yielded eight
                     tangible and sustainable projects. As part of boosting the municipal
                     economy two investors were attracted to the municipality and more
                     than R302 million in local services rendered and products were
                     procured within the municipality.

                     As it relates to tourism attraction, a number of initiatives that included
                     distribution of tourist guides, exhibitions and advertisements were
                     undertaken and almost 26 726 tourists were serviced through the
                     Information Centre.

                     The Municipality managed to register three townships and as a result
                     allocated pieces of land to 20 PDIs for social and economic purposes.
                     97% of land use applications were finalized within the prescribed
                     timeframe. Additionally 6 424 housing subsidy applications were
                     completed in respect of the land identified for the construction of low-
                     cost housing with further 2 066 applications for the identified land
                     tenure upgrading in Bloemfontein as whole handled and 695
                     applications for upgrading of dilapidated houses in Batho Location were
                     processed. To achieve the objective of densification in the municipality,
                     284 applications for Hostel 1 (White City) were processed.

                     In terms of out-door advertising, 80% of person displaying their adverts
                     complied with the municipal out-door advertising by-laws and R595 522
                     in revenue was generated from out-door advertising.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                  Page | 12
                    Infrastructure Development and Service Delivery

                    Strategic Priority Area: Service delivery excellence within and
                    around Mangaung Local Municipality

                     The Focus
                            Eradicating service backlog by maintaining the existing and
                             extending access to infrastructure services
                            Continuing to provide responsive and quality services
                            Ensuring the conservation and prevention of losses of
                             infrastructural resources



                     Targets for 2009/2010
                            There is access to functioning basic water supply to 92.27% of
                             formal erven
                            85.24% of households that have access on their stand to at least
                             a functioning basic sanitation
                            74.41% of households with access to waterborne sanitation
                            All households with access to basic levels of electricity
                            95% of households in formal erven should have access to a
                             weekly door-to-door refuse collection service
                            15 litter hotspots serviced
                            Upgrading of landfill sites in Mangaung Areas
                            Botshabelo Landfill Sites Upgrading and Rehabilitation
                            Closure of Thaba Nchu Landfill Sites
                            18.8% households with access to ventilated pit latrine (VIP)
                            All identified and registered indigent households should receive
                             free basic water
                            8.54% of sewer disruptions or failures per 1 000 erven per
                             month
                            6.80% of water disruptions or failures per 1 000 erven per
                             month
                            100% of roads and stormwater disruptions or failures per month
                            70% availability of critical fleet
                            80% plant and equipment availability
                            100% development of quality management system from the
                             division



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                Page | 13
                            100% compliance at MLM premises
                            95% development of the lockout system
                            80% vehicles of MLM connected to a tracking system
                            Development of fleet management system policy
                            70% revenue recovery
                            Acquisition of accreditation certificate


                     Highlights for 2009/2010
                     The Municipality is progressively working to improve the level and
                     delivery of infrastructural services and provide relevant and cost-
                     effective services to residents and businesses. Citizens value the
                     services the Municipality provides, and they want to continue seeing
                     these services delivered in a responsible and efficient manner.

                     During the year under review Council’s key services delivery
                     achievements in the provision and maintenance of infrastructural
                     services included the provision of access to a functioning basic water
                     supply to 93.69% of households in formal erven which represents 157
                     356 of the total households serviced. Access to sanitation was provided
                     to 142 760 households signifying 85% achievement against 85.24% of
                     the target set. The municipality also provided and maintained
                     waterborne sewerage system to 75.18% of the residents which
                     represents 126 268 households and 18.8% of households had minimum
                     VIP sanitation access.

                     All registered and deserving indigent households totalling to 29 000 by
                     the end of 2009/2010 financial year were receiving free basic services
                     in the form of 6kl of water and 50 kw of electricity in line with the
                     municipal indigent policy.

                     A total of 2 278.6 km of streets and roads were re-gravelled, resealed
                     and tarred to provide access to erven and properties during this
                     financial year. This means that the target set according to the scorecard
                     has been achieved and the percentage of access and main roads re-
                     gravelled, resealed and tarred has been attained by 90.8%.

                     During the year under review, the municipality installed a total number
                     of 2 156 subsidised electricity connections in informal settlements
                     achieving 100% of the target set for the financial year.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                 Page | 14
                     The Municipality’s electricity reinforcement for the 2010 FIFA World
                     Cup™ was on track and met to ensure that the electricity supply
                     requirements are uninterrupted during the international soccer event.

                     The Municipality administers a waste collection service that includes
                     weekly to door to door domestic waste collection and trade waste
                     collection that is done according to requests. Public cleaning that
                     includes litter-picking and to some extent street sweeping and ad hoc
                     services related to eradication of illegal dumping is also done. To
                     ensure that waste is disposed of in an environmentally sustainably
                     manner, waste collected is transported to three municipal owned
                     permitted landfill sites. The Municipality also ensures that business
                     premises have appropriate collection vehicle access and storage
                     facilities. About 420 000 tons of waste was disposed of at the three
                     landfill sites during the report period. As part of ensuring a clean city a
                     total of 15 litter hotspots mainly in and around the CBD were attended
                     to, as well as conducting cleaning awareness campaigns across the
                     municipal area. These concerted efforts by the Municipality ensured
                     that 95% of households in formal erven now have access to a weekly
                     door-to-door refuse collection service.

                     As part of the refuse collection service of the Municipality, a
                     Community Waste Services Programme has been adopted to utilise a
                     total of eleven SMMEs in the weekly door-to-door waste collection and
                     public cleaning services. The total budget spent on this job-creating
                     initiative amounted to 6.4% of the total operational expenditure. The
                     Municipality's intention to comply with waste management principles
                     and promoting sustainability allows it to conduct awareness and
                     education on how to manage waste holistically and according to the
                     waste management hierarchy. About 85 education and awareness
                     sessions on waste management were conducted to this effect. As part
                     of the education and awareness initiative in schools the municipality
                     introduced a cleanest school competition programme. A total of 27
                     schools within the entire Mangaung benefited from 254 refuse
                     receptacles for different recyclable waste that were given out to all the
                     competing schools. Forty-four clean-up campaigns were also conducted
                     to augment the education and awareness programme.

                     In terms of conserving and preventing losses on infrastructural
                     resources, the Municipality managed to attend 8.70% against 8.54% of
                     sewer disruption or failures per 1000 erven per month, 6.58% versus
                     the target of 6.80% of water disruptions or failures per 1 000 erven per
                     month. All roads and stormwater disruptions or failures per month
                     were handled during the financial year.



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                   Page | 15
                     Other performance highlights includes:

                            20% progress was made towards upgrading of landfill sites in
                             Mangaung areas through installation of weighbridge , upgrading
                             access roads, and installation of a stormwater and leachate
                             management system and renovation of offices at the Southern
                             landfill site
                            No significant progress made to Botshabelo landfill sites
                             upgrading and rehabilitation in terms of the development of
                             stormwater and leachate management system
                            No significant progress made on the closure of Thaba Nchu
                             landfill sites
                            66.25% of critical fleet was available for service delivery
                             activities
                            70% of plant and equipment was made available
                            Development of quality management system policy was at 60%
                            The development of lockout system was concluded
                            70% of municipal fleet were installed with tracking system
                            Development of fleet management system policy
                            70% revenue was recovered
                            The Municipality acquired accreditation of LGSETA MERSETA
                             certificate

                     Mangaung 2010 Soccer World Cup
                     Mangaung Local Municipality was one of the host cities for the 2010
                     FIFA World Cup™ and it hosted a successful international event from
                     the 14th until the 27th of June 2010.

                     Mangaung was commended for the turnaround in the completion of
                     key infrastructure projects such as the widening of Nelson Mandela
                     Drive and Parfitt Avenue, the timeous completion of the Bloemfontein
                     Airport Bridge.

                     Furthermore compliments were received for the branding of the 2010
                     FIFA World Cup™. All the transport arrangements worked to precision.
                     The Municipality maximised the involvement of the taxi industry as part
                     of the shuttle service.

                     The Fan Fest at the Mangaung Outdoor Sport Centre was voted the
                     best Fan Fest by Radio 702 due to the diverse entertainment package
                     which it offered.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                               Page | 16
                     The 2010 FIFA World Cup™ event was considered a great success and
                     provided a perfect platform to once again put Mangaung on the
                     international map.

                     In terms of the progress achieved the Municipality bestowed significant
                     progress in finalising all its operational plans to ensure its successful
                     hosting of the 2010 event. The 2010 FIFA World Cup™ highlights
                     include the following:

                            Successful completion of the Free State stadium, maintenance
                             and rehabilitation of the pitch, as well as the stadium pitch in
                             Seisa Ramabodu and Botshabelo
                            Submission of Mangaung compliance reports to LOC on 1 March
                             2010
                            Completion of projects related to PTIS which include
                             Bloemspriut pedestrian route and bridge, Wilcocks road and
                             public transport plan
                            Volunteer programme exceeded expectations of the host city
                             volunteers
                            Great support from Provincial government, SAPS and other local
                             stakeholders
                             Well run Fan Fest with great entertainment catering for a
                             variety of groups within community (e.g. Kids, Youth, Adult,
                             Poetry, Comedy, etc)
                            A total of 124 604 people visited the Mangaung Fan Fest
                             between 10 June 2010 and 11 July 2010
                            Recorded the highest attendance of 22 563 people during the
                             Bafana against France on 22 June 2010
                            A daycare facility accommodated a daily average of 500
                             children; a unique feature which also assisted in getting the Fan
                             Fest voted the best
                            “5-a-side” programme for the under-17 involving 350 kids from
                             32 teams competed over four weekends. Two kids were
                             selected to form part of the Celtics youth development
                             programme as a result of the Fan Fest “5-a-side” programme
                            Establishment of Public Viewing Areas in Botshabelo and Thaba
                             Nchu
                            Great atmosphere at the stadium and within the city in general




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                 Page | 17
                     Addressing Infrastructural Backlog
                     Mangaung Local Municipality has experienced tremendous increase in
                     urbanisation over the past five years which has placed pressure on its
                     budgets that have not grown as fast as this urbanisation and/or its
                     resident population. The population growth is also driven by migration
                     from neighbouring provinces as well as neighbouring countries.
                     Although the future growth of the municipality depends on migrants, in
                     the short term their arrival stretches municipal resources.

                     Mangaung Local Municipality is continuously working to eliminate
                     infrastructural backlogs in its area of jurisdiction, and mainly with a
                     focus in informal settlements to an acceptable level. Communities and
                     residents recognise the changing infrastructural landscape and the
                     implementation patterns that emerge in addressing the service delivery
                     backlogs.

                     To ensure that minimum services are provided and the backlog is
                     addressed, the Municipality ensured that service delivery infrastructure
                     is in place and maintained depending on the level and standard of
                     service the municipality has decided to provide to each ward or section
                     of the community based on the IDP 2009/2010. The table below
                     exemplifies in detail the functional areas in addressing the backlog
                     during the year under review through new infrastructure or renewal of
                     existing infrastructure.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                Page | 18
Table 2.2 Municipal Service Delivery Backlogs

                                                             30 June 2008                                    30 June 2009                                   30 June 2010
                                                  Required         Budgeted        Actual         Required          Budgeted        Actual       Required        Budgeted        Actual
 Water Backlog (6 kl per month)
 Backlogs to be eliminated (No. households not        12 396             736                736        11 873             523            523         11 620            253                253
 receiving minimum standard of service) 167 954
 Backlogs to be eliminated (% households               7.38%           0.44%           0.44%           7.07%            0.31%          0.31%          0.692          0.15%           0.15%
 identified as backlogs / total household in
 municipality)
 Spending on new infrastructure to eliminate          46.485          19.442           19.442          49.035          22.792          22.792        52.813          28.101          28.101
 backlogs (R‘000)
 Spending on renewal of existing                     173.969          10.091           10.091         183.853            0.00            0.00       222.726          9.1147           9.147
 infrastructure to eliminate backlog (R ‘000)
 Total spending to eliminate backlogs (R ‘000)       220.454          29.533           29.533         232.888          22.792          22.792       275.539          37.248          37.248
 Spending on infrastructure to ensure no new           1.859               0                0           1.641               0               0         2.113               0               0
 backlogs created (R‘000)

 Sanitation Backlogs
 Backlogs to be eliminated (No. households            30 991           30 89           30 89          20 208           10 783         10 783         18 955          1 253            1253
 not receiving minimum standard of service)
 Backlogs to be eliminated (% households             18.45%           1.84%            1.84%          12.03%           6.42%           6.42%        11.29%           0.75%           0.75%
 identified as backlogs / total household
 Spending on new infrastructure to eliminate         395.755         106.609         106.609         283.922           45.781         45.781       292.855         137.806         137.806
 backlogs (R‘000)
 Spending on renewal of existing                      84.368           7.610           7.610          80.308            1.577          1.577       103.531            0.00            0.00
 infrastructure to eliminate backlog (R ‘000)
 Total spending to eliminate backlogs (R ‘000)       480.123         114.219         114.219         364.230           47.358         47.358       396.386         137.806         137.806
 Spending on infrastructure to ensure no new          15.830               0               0          11.357                0              0        11.714               0               0
 backlogs created (R‘000)

 Refuse Removal Backlogs
 Backlogs to be eliminated (No. households                   -                -                               -                -             -       39 700                 -               -
 not receiving minimum standard of service)
 Backlogs to be eliminated (% households                     -                -               -                -               -             -         24%                  -               -
 identified as backlogs / total household in
 municipality)
 Spending on new infrastructure to eliminate      R3 640 000      R1 820 000       R2 800 000      R3 320 000                  0             0   R4 900 000                 0   R13 978 224
 backlogs (R‘000)
 Spending on renewal of existing                             -    R7 356 420       R8 387 041                  -   R8 660 590      R9 879590                     R9 526 650      R9 842 150
 infrastructure to eliminate backlog (R ‘000)
 Total spending to eliminate backlogs (R ‘000)               -    R9 176 420      R1 1187 041                  -   R8 660 590      R9 879 590                    R9 526 650     R23 820 374
 Spending on infrastructure to ensure no new                 -             -                -                  -            -               -               -             -               -
 backlogs created (R‘000)



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                                   Page | 19
                                                                30 June 2008                                              30 June 2009                                             30 June 2010
                                                     Required         Budgeted              Actual             Required          Budgeted            Actual            Required         Budgeted               Actual


 Electricity Backlog (50 kw per month)
 Backlogs to be eliminated (No. households       5 384              1 445              1 445               4 000               2 675             2 675             5 811               3 663             3 663
 not receiving minimum standard of service)
 Backlogs to be eliminated (% households         82.5%              26.8%              26.8%               33.2%               66.8%             66.8%             36.96%              63.04%            63.04%
 identified as backlogs / total household in
 municipality)
 Spending on new infrastructure to eliminate     R20.4 mil          R10.8 mil          R10.8 mil           R22 mil             R14.3 mil         R14.3 mil         R31.97 mil          R20.5 mil         R20.5 mil
 backlogs (R‘000)
 Spending on renewal of existing                 0                  0                  0                   0                   0                 0                 0                   0                 0
 infrastructure to eliminate backlog (R ‘000)
 Total spending to eliminate backlogs (R ‘000)   R20.4 mil          R10.8 mil          R10.8 mil           R22 mil             R14.3 mil         R14.3 mil         R31.97 mil          R20.5 mil         R20.5 mil
 Spending on infrastructure to ensure no new     R14.9 mil          0                  0                   R7.28 mil           0                 0                 R11.8 mil           0                 0
 backlogs created (R‘000)

 Road Backlogs
 Backlogs to be eliminated (No. households                1530.9                 20                  20              1510,9                20                 20            1490,9               19,6                19,6
 not receiving minimum standard of service)
 Backlogs to be eliminated (% households                  60.7%                 .8%                  .8%               59,9%              .8%             .8%                59,1%                 .8%                  .8%
 identified as backlogs / total household in
 municipality)
 Spending on new infrastructure to eliminate         R3,9 billion       72 466 340         72 466 340           R4,5 billion       68 891 540    68 891 540             R7,5 billion       78 727 224         31 240 537
 backlogs (R‘000)
 Spending on renewal of existing                     R6,5 million       R6,5 million       R6,5 million         R14 million        R14 million   R14 million       R22.9 million       R22.9 million         R22.9 million
 infrastructure to eliminate backlog (R ‘000)
 Total spending to eliminate backlogs (R ‘000)   R3,907 billion          78966340           64565109        R4,5014 billion         82891540         82891540           R7,5 billion       78727224             31240537
 Spending on infrastructure to ensure no new      R210 million           78640390           49701955          R240 million          87335055         69893283          R300 million        99589460             39642260
 backlogs created (R‘000)




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                                                                 Page | 20
                    Community and Social Development

                     Strategic Priority Area: Service delivery excellence within and
                     around Mangaung Local Municipality

                     The Focus
                            Continuing to provide responsive and quality services
                            Communities are self-reliant, proud and strong as the risks that
                             face them have been identified and reduced and women, youth,
                             aged and the disabled have been mainstreamed
                            Residents perceive municipal area as a safe and secure place to
                             live in, visit and to do business
                            Reduce crime levels and eliminate crime hotspots



                     Targets for 2009/2010
                            10 workplaces contingency plans completed
                            25% of existing contingency plans revisited and exercised of
                             identified high risk premises in the MLM
                            12 of rural disaster management committees established and
                             met during the financial year
                            2 cluster committees established in Thaba Nchu and Botshabelo
                             to deal with emergencies
                            5 of sub-directorates with established internal disaster
                             management committees
                            Management of major public gatherings to ensure public safety
                            110 community members trained in first aid per year and on
                             record
                            90% of fire and rescue calls handled in compliance to SANS
                             10090 i.e dispatch within 3 minutes
                            90% of customers satisfied with service rendered by control
                             centre
                            Reactive emergency response to equal or exceed SANS 10090 in
                             respect of 70% of incidents attended
                            100% of high risk premises to be inspected
                            33% of moderate risk premises to be inspected
                            20% of low risk premises to be inspected
                            Conducting 150 compliance certificate inspections in terms of
                             Occupational Health and Safety Act



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                     Page | 21
                            100% of building plans scrutinised for compliance to statutory
                             fire safety measures
                            32 schools interacted with on fire safety and emergency
                             preparedness
                            300 health care facility staff members trained in fire safety and
                             evacuation procedures
                            6 public outreach events in creating public awareness on Fire
                             Safety and Disaster Management
                            Fire safety training of the 300 members of the commercial
                             community;
                            65% of fire-fighters trained to fire-fighter 2 level
                            50% of fire-fighters trained to rescue awareness level
                            25% of fire-fighters trained to rescue operations level
                            75% of fire and rescue staff trained to hazmat operations level
                            20 fire and rescue staff trained to hazmat technician level
                            20 fire and rescue staff trained in USAR- structural collapse and
                             confined space rescue modules
                            1 officer trained as hazmat task force incident commander
                            2 training instructors trained as hazmat technician instructors
                            80 fire brigade reservists recruited and trained to fire fighter 1
                             level
                            80 food samples taken per month and in accordance with
                             Foodstuffs, Cosmetics and Disinfectants Act 54 1972
                            150 Drinking Water samples taken per month and 99%
                             complying with SANS 241
                            95% of communicable diseases reported and investigated within
                             48 hrs in order to identify possible sources
                            99% environmental pollution complaints received and attended
                             to within 24 hrs
                            All building plans scrutinized in accordance with SABS Building
                             regulations with specific relevance to Health requirements
                            95% noise related nuisances handled and resolved within the
                             given time limit of three hrs
                            85% applicable businesses in MLM that have a valid trading
                             license
                            90% food premises applying for certificate of acceptability
                             inspected within two weeks
                            40 schools reached with relevant education
                            750 MLM employees reached
                            15 farms reached
                            99% unidentified bodies found in MLM area buried within 2
                             weeks of request received from Provincial Department of
                             Health



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                       Page | 22
                            12 buffer zone camps (controlled commonages and MLM open
                             spaces-parks) inspected and monitored per annum
                            Review and implement business plan for the zoo Upgrade to
                             ensure that the zoo is compliant with legislation and standard
                             required in keeping animals
                            70% visitors satisfied with the conditions and services provided
                             at zoo
                            All game remain in a healthy condition and basal coverage of
                             grasses maintained
                            All parks maintained at acceptable maintenance standards at
                             the end of the financial year
                            One park to be developed
                            1 000 greening trees planted in MLM
                            5 city entrances upgraded and beautified
                            Eradication of alien vegetation species - bush encroachment
                             removed on Naval Hill
                            Installation of CCTV Completion of phase 4 (installation of 39
                             PTZ cameras at the identified hot spots)
                            Reduce crime levels at the top ten hot spots
                            Eliminate 4 crime hot spots (Thaba Nchu Taxi Rank, Botshabelo
                             CBD, South Landfill, Bloemfontein CBD)
                            Reduced the number of traffic related crimes in Mangaung
                             municipal area by increasing the number of notices issued to
                             135 820
                            53 260 traffic cases successfully enforced to finality and
                             payment received
                            Reduction of robbery related incidences by 3 178, burglary by 4
                             962, theft out of motor vehicles by 2 958 in Mangaung
                             Municipal
                            50 seminars held per annum
                            Reduce the impact of HIV/AIDS on the community by identifying
                             and referring 15 child headed families and orphanages.


                     Highlights for 2009/2010
                     The following are some highlights of how the Mangaung Local
                     Municipality is delivering its community and social development to
                     reduce the vulnerability to stresses and shock.

                     During the year under review Emergency Management Services
                     completed 7 municipal workplace contingency plans while 44% of the
                     existing contingency plans were reviewed and 23 (21%) exercised.



Mangaung Local Municipality Annual Performance Report 2009/2010
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                     As part of the overall disaster management plan, five sub-directorates
                     established internal disaster management committees to monitor the
                     execution of the plan and identify potential types of disasters that can
                     affect their operations and livelihood of the communities. The basic
                     overall responsibilities of the committees are to ensure that the
                     respective sub-directorates will be adequately prepared to promptly
                     respond during disasters.

                     During the review period 120 planning meetings were attended and a
                     Joint Operations Centre was established to manage 68 events to ensure
                     public safety.

                     Further 240 community members were trained in first aid and also to
                     increase awareness of the need for fire and disaster preparedness. Six
                     public outreach events were also held and 51 schools and 3 549
                     learners interacted with in creating public awareness on fire safety and
                     disaster management.

                     During the period under review the Emergency Control Centre dealt
                     with a total of 1 409 calls relating to the fire and rescue service. In 1
                     033 instances appropriate resources were dispatched within three
                     minutes. This translates into almost 74%. Out of 192 callers polled to
                     determine their satisfaction with the service rendered by the
                     emergency control centre 184 (96%) callers expressed their satisfaction
                     with the service rendered by the Centre.

                     In 2009/2010 131 high (55.95% of identified high risk premises), 467
                     moderate (44.75% of identified moderate risk premises) and 2 151 low
                     risk premises (8.48% of identified low risk premises) were inspected
                     and scrutinized for compliance with statutory fire safety measures. 174
                     compliance certificates were issued following inspections in terms of
                     the Occupational Health and Safety Act.

                     In 2009/2010 the operational section of the fire and rescue division
                     responded to 1 330 calls for assistance. In 83% of the responses the
                     response standard set by SANS 10090 was achieved. The 1 330
                     responses translate into attending 977 incidents of fires, 237 of rescue,
                     two hazardous materials and 114 special services.

                     In the year under review environmental health unit ensured that
                     drinking water quality was kept well within the South African National
                     Standards 241. The compliance rate of 99% of 1294 samples taken is
                     well above the national norm of 97%. Further the all possible sources of



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                      Page | 24
                     communicable diseases reported were identified and investigated
                     within 48 hours.

                     The unit also embarked on identifying and implementing health and
                     education programme in delivering and advocating the services to 22
                     rural villages and reaching 40 schools focusing on hygiene education,
                     health promotion and environmental protection for the health of the
                     communities.

                     For the past financial year, the municipality maintained 82% of all parks
                     at acceptable standards, upgraded and landscaped five city entrances
                     and planting 2 850 new trees to make our municipality a healthier place
                     to live and visit, improving air quality, and lowering energy
                     consumption (and therefore carbon emissions). At the same time, good
                     conditions of recreational facilities will make Mangaung a safer,
                     stronger municipality by providing beautiful spaces for children,
                     communities and residents to meet.

                     With regard to security, a huge investment was made in CCTV
                     technology and 82 PTZ cameras were installed at the identified hot
                     spots within the municipality, to effectively contribute to the reduction
                     of crime. Moreover, the municipality identified four crime prone
                     hotspot areas to reduce criminal activity.

                     The law enforcement unit continued to make a valuable contribution to
                     the safety at Thaba Nchu taxi rank, Botshabelo CBD, South Landfill,
                     South Park Cemetery, Naval Hill, Hoffman Square, Bloemfontein CBD
                     and MLM taxi ranks to users by reducing crime level and rate through
                     search and seizure and as well as enforcement of compliance to
                     municipal by-laws.




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                     Financial Management and Viability

                     Strategic Priority Area: Improving and sustaining financial viability

                     The Focus
                            Ensure that organisation’s finances are managed in a
                             sustainable manner and meet the needs of the community
                            Ensure full compliance and effective internal controls over
                             municipal financial management and reporting



                     Targets for 2009/2010
                            Realise 29.2% debt coverage
                            Achieve 25.8% outstanding service debtors to revenue
                            Cost coverage should be at 0.8%
                            97.5% cash collection
                            95% spent on the municipality’s capital budget
                            All 40 000 registered indigent households to have access to free
                             basic services in line with the indigent policy
                            25.5% net debtors to annual income
                            External debt to revenue to be less than 5%
                            Creditor payment days within 30 days
                            Less than 15% capital charges to total expenditure
                            Improve the municipal audit process to achieve unqualified
                             audit opinion
                            Develop and adopt asset management policy in working
                             towards 30% fully compliant asset register



                     Highlights for 2009/2010
                     The Finance Directorate is responsible for the general financial
                     management of the municipality. Financial management is about
                     planning income and expenditure, and making decisions that will
                     enable the institution to survive financially. Financial management
                     includes financial planning, management and budgeting, financial
                     accounting and analysis, financial decision making and action. The
                     finance directorate also plays an oversight role as it has to make sure



Mangaung Local Municipality Annual Performance Report 2009/2010
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                     that each and every unit in the municipality complies with prudent
                     fiscal management and adheres to MFMA. The main objective of the
                     Finance Directorate is to ensure that Mangaung finances are managed
                     in an economic, efficient and effective manner. Financial practices are
                     aimed at ensuring financial sustainability of the municipality, which will
                     enable the municipality to meet the needs of the community.

                     Actual financial performance achieved as compared to budget for
                     revenue, operating expenditure and capital expenditure was 122%,
                     103% and 75.45% respectively for the 2009/10 financial year.

                     The achievement in respect of the measure of outstanding service
                     debtors to revenue was 47.13% against a target of 25.8%. The decline
                     in the performance ratio is in line with rising/increasing debtor’s book,
                     mainly as a result of uncollectable debts or inability of communities to
                     pay for municipal services.

                     Cost coverage which is an indicator of the available cash and
                     investments as against the required monthly fixed operating
                     expenditure to keep the municipal machinery running achievement was
                     a cover of 0.21 times , instead of a benchmark figure of 0.8 times. This
                     outcome serves to confirm the liquidity challenges facing the
                     municipality, as alluded to earlier/above.

                     Percentage of net debtors to annual income ratio measures the extent
                     of the net debtors (total debtors less provision for doubtful debts/
                     impairment) as a percentage of income of the municipality. The ideal
                     percentage of the net debtors to annual income ratio should be 25.5%.
                     However, the outcome for 2009/10 is 15.80%. The outcome is
                     indicative of the debt collection challenges facing the municipality, with
                     about 70.9% of our debtor’s book being doubtful or impaired.

                     Number of creditors days measures how many days does it take for the
                     municipality to pay its creditors. The measured outcome for this year
                     indicates that it takes the municipality on average 35.07 days to settle
                     its debts, instead of the prescribe 30 days time limit. This trend
                     continued to decline in the first quarter of the 2010/11 financial year,
                     though.

                     Debt coverage is a measure of total operating revenue minus operating
                     grants, as a percentage of debt service payments (external loans) due
                     within the financial year. The cover for the year is 47090.8% against a
                     benchmark of 29.2%. This is mainly as a result of the low external loan
                     exposure of the municipality.



Mangaung Local Municipality Annual Performance Report 2009/2010
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                     Percentage capital charges to total expenditure measures the
                     proportion of capital costs charges in relation to the total operating
                     expenditure of the municipality. The actual performance was 7.82% for
                     the year, against a benchmark of 15%.

                     The collection rate of the municipality declined from a high rate of
                     104.74% on the final outcome of June 2009 to a low of 98.51% at the
                     end of June 2010. In terms of monthly cash collection rate defined by
                     billing for the previous month against cash received in the current
                     month, the municipality achieved 70.23%. This is significantly short of
                     the required 97.5% collection rate of fees and service charges. Despite
                     the decline, the municipality must continue to aggressively collect
                     monies owed to it and must therefore continuously work on finding
                     creative ways to do that. Some of the highlights instituted to improve
                     the municipality’s cash collection include:

                            FBS to all municipal households discontinued from January 2010
                             and only the approved indigent households qualify to access the
                             free 6kl of water, 50kwh of electricity and in addition they are
                             exempted from paying rates and sanitation fees. The rest of the
                             citizens are expected to pay for their consumption
                            Establishment of dedicated business units dealing with different
                             categories of debtors have been established namely, business,
                             government and residential units. The idea is to focus on each
                             and every debtor type to ensure that the services are paid
                             regularly and on time
                            Introduction of a dedicated unit dealing with disconnections
                             located in debt collection sub-directorate and every debtor who
                             fails to pay the account in time is disconnected
                            No business account is allowed to make repayment
                             arrangements as was the case in the previous financial years.
                             The policy has been changed to ensure that all businesses pay
                             their account on time and failure to pay lead to immediate
                             disconnection

                     During the year under review, the municipality exercised some degree
                     of caution in spending pattern due to its financial situation and
                     considering the economic meltdown. As a result, the municipality’s
                     expenditure on capital budget was at 75.67% by the end of the financial
                     year.




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                     A process has been started to register indigent households in the
                     municipality in terms of the approved policy on indigents. During the
                     year under review the municipality was able to register 29 000 indigent
                     households and is continuously improving its efforts to register all
                     qualifying indigent households. Once all indigents are registered, the
                     municipality will be in a better position to focus and strengthen all the
                     efforts for collection on people who can afford to pay for services
                     rendered by the municipality. Among other measures, electricity and
                     water supply cuts are used as a mechanism to change the behaviour of
                     users of the municipality’s services to pay for such services.

                     Over a 12 month period our investments decreased by R70.2 million
                     from R96.8 million to R26.6 million as at the end of June 2010. This
                     declining trend needs to be reversed during the 2010/11 financial year.
                     This poses a serious threat to the municipality’s liquidity and ability to
                     pay accounts timeously. To curb or arrest this downward trend, the
                     municipality has amongst others, put the following measure in the
                     2010/11 financial year:

                            Limited its capital budget programme mainly to external loans
                             and grant projects. Funds from own resources being mainly
                             provided as top-up capital required for counter funding
                            Developed and adopted the Municipal Turnaround Strategy and
                             the Financial Recovery Plan, as intervention measures to return
                             the municipality to a sustainable and liquid institution
                            Has budgeted for a surplus in its new budget in order to
                             accumulate and maintain a certain amount of “own monetary
                             reserves” net of any commitments, in the form of investments

                     In terms of financial reporting in compliance to MFMA, the Municipality
                     continues to strive for full compliance in terms of submitting reports to
                     National Treasury and to the Council. The budget and annual financial
                     statements were completed within the required timelines.

                     Like most municipalities compliance with ever-changing accounting
                     standards such as Generally Recognised Accounting Practice (GARP)
                     /Generally Accepted Municipal Accounting Practices (GAMAP) remains
                     a challenge. Our main challenge is, in terms of expertise and financial
                     resources, the compilation of a GRAP/GAMAP compliant fixed asset
                     register. The municipality has gone in the market looking for service
                     provider experts in this field to help with the implementation of such
                     standards.




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                     In terms of long term domestic credit rating performance, the
                     municipality obtained BBB+ whilst the short term result was A3. The
                     key factors which would affect Mangaung Local Municipality’s credit
                     rating negatively are the increasing debtors balance and decreasing
                     cash and equivalents. In the other previous years the municipality
                     received positive ratings in both long term and short term.




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                                                                                 Page | 30
                     Governance and Transformation

                     Strategic Priority Area: Institutional excellence through re-
                     engineering, effective leadership and long range development planning

                     The Focus
                            Strategic leadership and management
                            Promote effective intergovernmental relations and mobilize
                             other resources
                            Ensure responsive and accountable local governance



                     Targets for 2009/2010
                            90% implementation of the Service Delivery and Budget
                             Implementation Plan (SDBIP)
                            IDP reviewed annually and aligned to all municipal planning
                             processes
                            SDBIPs streamlined and linked to performance management
                             and plans
                            Internal audit delivers reports to management and the audit
                             committee
                            Four meetings held with the Audit Committee to discuss
                             matters relating to MLM and its entities as per MFMA
                            Two reports on the activities of Audit Committee submitted to
                             Council on the activities of the Audit Committee
                            Approved risk management policy
                            Annual operational plan developed and implemented
                            8 departmental intranet pages redeveloped, launched and
                             operational
                            Integrated data warehouse plan for the municipality developed
                            Internet migrated to a share point
                            Time and attendance management system installed
                            Operational 42 servers virtualized and implemented
                            Development and implementation of disaster recovery and
                             business continuity plans
                            Develop and implement printing strategy
                            Desktop support strategy and implementation case developed




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                   Page | 31
                            Access point name deployed and functional at 5 satellite offices,
                             and on all 3-G data cards migrated
                            Audit the general network and IT security of the municipality
                            Install and operationalise access control system as part of
                             coordination of the Mangaung 2010 City IT&T programme
                            Acquire and maintain information technology equipment and
                             the system and its availability at all times
                            Internet and email support
                            Optimum information communication and technology service
                             support
                            Trained and certified officials



                     Highlights for 2009/2010
                     The development of Service SDBIPs is a requirement under MFMA
                     which gives effect to the municipality’s IDP and annual budget and in
                     Mangaung these are integral to the establishment of performance
                     management system. The SDBIP facilitates accountability and
                     transparency of the municipal administration and managers to the
                     Council and Councillors to the community. It also fosters the
                     management, implementation and monitoring of the budget, the
                     performance of top management and the achievement of the strategic
                     objectives as laid out in the 2009/2010 approved IDP.

                     The SDBIP indicates the consolidation of Mangaung’s quarterly service
                     delivery and financial performance targets that seek to improve
                     performance and intervention catalyst to strengthening service
                     delivery, and assigns responsibility for their implementation. The
                     Municipality reviewed its quarterly performance achievements based
                     on the approved SDBIP, and reported progress on performance against
                     targets set to Council and ultimately publishes the yearly achievements
                     in the annual report.

                     The overall performance target of the municipality during the year
                     under review was to achieve 90% of the implementation of the
                     programmes, projects and services (performance measures) identified
                     in the SDBIP and as part of realising municipal IDP and actualising the
                     budget. The municipality managed to achieve 61% of its performance
                     measures in the SDBIP.

                     Information communication and technology is a central component of
                     effective and efficient service delivery and benefit the municipality as a



Mangaung Local Municipality Annual Performance Report 2009/2010
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                     whole. The municipality was able to virtualise all 42 servers by utilising
                     the existing IT infrastructure during the year under review and disaster
                     recovery and business continuity plans were developed.

                     Desktop strategy and printing strategy has been developed and
                     implemented for benefit of increasing the efficiency in the delivery
                     process of printed information.

                     With the introduction of the shared access point and the
                     intranet/internet applications and its operationalisation in the
                     municipality’s five satellite offices and the migration of all 3-G data
                     cards, the municipality has been successful in adding value to
                     communication and dissemination of information.

                     With the training and certification of four officials, the municipality is
                     able to acquire and maintain its Information and Communication
                     Technology (ICT) infrastructure in-house. As a result, the municipality
                     achieved 100% performance in relation to availability of internet and e-
                     mails and ICT support services with the organization.

                     Operational time and attendance management system has been
                     installed as a time tracking solution to address the tracking and
                     accounting for employee hours, salary and wages by cost centre,
                     employment function or directorate while giving management the
                     ability to measure and track labour efficiency as well as for payroll
                     purposes.




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                    Interventions for 2009/2010


                         •   Accountability and responsiveness of municipality is about:
                             – Policies, processes, and approaches of municipality for
                                 better service delivery
                             – Expenditure and revenue management, grant utilisation,
                                 and financing of indigent services
                             – Citizens and/or people participation
                                 Tools, instruments and user feedback
                         •   Key role of the municipality on citizens/civil society, private
                             sector is to improve citizens access to information and their
                             participation in the local governance processes would lead to
                             greater accountability and transparency
                         •   Citizens participation has been widely recognized as a deterrent
                             to corruption particularly at local governments
                         •   Good governance would minimize or eliminate graft and corrupt
                             practices in local governments and will improve service delivery,
                             access and development
                         •   Improving service delivery and access through enhanced
                             municipal performance through decentralisation:
                              Deconcentration
                              Devolution
                              Debureaucratisation
                            Data quality control
                              It is imperative to maintain the integrity of data so that it is
                                 reasonably accurate and credible to outsiders such as
                                 elected officials and citizens and members of media




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                                                                                       Page | 34
                     Emerging Issues and Challenges



                     The Challenges and Issues
                            Unsatisfactory and often dysfunctional governance systems
                             including corruption and malfeasance
                            Lack of resources and inappropriate allocation of resources
                            Inefficient revenue systems
                            Weak delivery of vital municipal services
                            Are we doing the right things, i.e delivering services consistent
                             with citizen preferences
                            Or are we doing it right, i.e providing services of a given quality
                             at the lowest rates and tax costs to citizens
                            What is the extent to which municipal programs meet stated
                             goals
                            Are municipal services being delivered in a least cost manner for
                             a given quantity and quality of services
                            Is the access to municipal services being expanded with
                             appropriate partnership or contractual relationships between
                             and beyond municipality? What activities or programs could be
                             outsourced in whole or in part to the private sectors
                            Are municipal resources being put to their best use, for
                             example, is
                              Governance quality, service delivery and access is enhanced
                                 by:
                                 o More closely matching services with citizen preferences
                                      (eg. Availability of land for human settlement, etc)
                                 o Moving municipality closer to the people they are
                                      intended to serve
                                 o Ensure greater accountability of the municipality
                            Installing effective accountability measures to prevent
                             corruption
                            Response time - time from a request for a service was made
                             until the time the service unit provided a response:
                              Especially for emergency services (police, fire, etc), and
                              Time to get registered, obtain permits, receive assistance,
                                 applications acted upon, etc.




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                                                                                        Page | 35
                            With manual data collection or tabulation procedures,
                             the opportunities for inaccuracies and data manipulation
                             are particularly high




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                        Page | 36
      CHAPTER 4: HUMAN RESOURCE AND ORGANISATIONAL MANAGEMENT


                     Introduction
                     Local and global organisations, both private and public, are
                     continuously facing challenges of better delivering their services to
                     clients and they depend on their workforce to help differentiate and
                     position themselves as the best in their class. To avoid extinction and
                     irrelevance these organisations must creatively and innovatively
                     identify, develop, manage and connect with the human talent and
                     expertise at their disposal. The strategic management of human
                     resources is therefore critical in ensuring that Mangaung builds a
                     workforce that is highly productive, responsive and customer-oriented.

                     The modern organisation is also characterised by a continuous state of
                     change and the municipality is no exception. This organisational change
                     impacts not only on the business processes of the municipality, but also
                     on our employees. It is therefore essential that, in order to maximize
                     organisational effectiveness, the human potential in the municipality
                     (i.e. individuals' capabilities, time, and talents) is managed in an
                     effective and efficient manner. Human resources management
                     therefore works to ensure that employees are able to meet the
                     strategic objectives of the municipality, as contained in the IDP.

                     The human resources management function is also responsible for the
                     strategic management of human capital of the organisation so as to
                     ensure that the strategic development vision and objectives of the
                     municipality are attained. Essentially, the function is responsible for
                     bringing people into the municipality (recruitment and selection),
                     helping them to perform their work (individual performance
                     management), compensating them for their labour (benefits
                     administration), and creating a positive working environment
                     (employee relations). This chapter aims to highlight a number of these
                     human resources management practices that may have a bearing on
                     bringing the organisation closer to realising its objectives and targets
                     for the period under review.

                     Human Resources Strategy
                     During the 2007/8 financial year a human resources strategy as well as
                     an implementation plan was developed. This strategy basically consists
                     of six strategic goals and 16 strategic objectives for the human



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                     Page | 37
                     resources management function in the municipality that are aligned
                     with the strategic objectives of the municipality, as contained in the
                     IDP. All relate to two main focus areas of the MLM. The goals of the
                     human resource strategy are to:

                            Ensure that the required number of employees with the
                             required skills and expertise are available when needed
                            Ensure sound labour relations
                            Ensure that employees are developed in accordance with the
                             Work Place Skills Plan
                            Enhance the quality of institutional and individual performance;
                            Ensure that all relevant human resource systems are established
                             and implemented
                            Promote Occupational Health and Wellness Services

                     Moreover, a human resources management model was developed to
                     enhance the image and streamline the functioning of the Human
                     Resources Management Sub-Directorate of the municipality. This
                     model prescribes the operational activities that need to be performed
                     in order to achieve the strategic goals and objectives as contained in
                     the Human Resources Strategy. The model subscribes to the following
                     value systems as contained in the IDP:

                            Civic pride and responsibility in our citizens
                            Accountability, honesty and integrity
                            Mutual trust and strong partnerships with stakeholders through
                             transparent and accountable governance
                            Valuing people and their diversity, including cultural diversity

                     The following issues, taken from the IDP, are integrated into different
                     facets of both the Human Resources Strategy and the human resource
                     management model:

                            Facilitating opportunities for PDI’s
                            Improving the skills of the workforce
                            Promoting and strengthening our cultural diversity and richness
                            Promoting community confidence
                            Focusing on HIV/AIDS programmes and support
                            Developing and supporting programmes to increase literacy
                            Maintaining high standards of integrity, honesty and
                             transparency
                            Improving customer care and responsiveness
                            Rationalising the service portfolio to core business



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                                                                                     Page | 38
                     Results

                     During this report period the HRM Sub-Directorate of MLM continued
                     to work on the projects contained in the human resource strategy
                     implementation plan. The following successes have been achieved:

                            The Employee Reward Programme was developed; it will be
                             taken to the LLF Forum for ratification
                            The IPMS for employees in level 4 and lower has been
                             developed but not yet implemented as organised labour has
                             requested that it be put on hold until the national TASK job
                             evaluation process has been finalised
                            MLM is awaiting results from the National Job Evaluation
                             Committee
                            There were 76 Work Study investigations reports

                     Human Resources Management
                     Towards the end of the report period a specific position was created in
                     the Human Resources Management Sub-Directorate for a person who
                     would be dedicated to the review, revision and upgrade of all human
                     resource policies. The following policies were reviewed or developed:
                     Scarce Skills Policy, Retention Strategy, Rapid Progression Policy and
                     Bursary Policy

                     Labour Relations

                     The relationship between the employer and its employees, as
                     represented by organised labour, is governed by collective agreements
                     as well as the Constitution of the Republic of South Africa as well as
                     other applicable labour legislation. The Human Resource Management
                     Sub-Directorate is tasked with the responsibility of ensuring sound
                     labour relations in the municipality by effectively managing and
                     enhancing all relevant aspects of labour and employee relations.

                     The consultative forum used for the purposes of addressing issues of
                     common interest between the employer and organised labour is the
                     LLF. During this report period the Human Resource Management sub-
                     directorate faced a number of challenges in getting the LLF to function
                     in a proper manner.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                    Page | 39
                     A total of 12 LLF meetings were scheduled during the financial year of
                     which only three (27 October 2009, 17 and 18 October 2010 and 24
                     March 2010) took place. Notwithstanding the lack of LLF meetings, the
                     relationship between the parties remained positive and promising.

                     The maintenance of discipline in the workplace still remains one of the
                     most important aspects with which the Human Resource Management
                     Sub-Directorate deals and the directorate is committed to maintaining
                     a disciplined workforce. Thirty-eight disciplinary processes, hearings,
                     grievances, ill-health and damages/losses we held and 26 disputes
                     referred to Commission for Conciliation, Mediation and
                     Attribution/South African Local Government Bargaining Council.

                     Skills Development and Training
                     One of the strategic goals of the human resource strategy is to ensure
                     that the employees of the municipality are developed in accordance
                     with the Workplace Skills Plan. This implies that the municipality should
                     annually draft a Workplace Skills Plan, obtain the “buy-in” of organised
                     labour for the plan, submit it to the Local Government Sector Education
                     and Training Authority (LGSETA) for approval and ensure that the skills
                     development interventions, as contained in this plan, are undertaken
                     once the funding for the plan is received from the LGSETA.

                     The municipality drafted the Workplace Skills Plan (WSP) that was co-
                     signed with organised labour for submission to the LGSETA. As a result
                     of the submission the municipality received the mandate from the
                     LGSETA for implementation of training programmes.

                     Skills development programmes that were presented included the
                     following:

                            Basic SHE Representative Skills
                            Hazard Identification and Risk Assessment
                            Certificate Programme in Management Development
                            Local Government Accountancy Certificate
                            Marketing Learnership
                            MS Level 1 (Basic) and 2 (intermediate)
                            Induction Programme
                            Batho Pele Change Management
                            Batho Pele Principles
                            Chairing Disciplinary Hearings
                            Sustainable Human Settlements in the context of HIV/AIDS



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                                                                                      Page | 40
                     During this financial year the centralization of training was taken
                     forward with the establishment of the Human Resources Development
                     Sub-directorate within the Corporate Services Directorate. Traffic
                     Training, First Aid and Mechanical Training were incorporate into the
                     new Sub-directorate.

                     Employment Equity Plan
                     The municipality has made significant strides in ensuring representation
                     at the different levels within the organisation. The following
                     employment equity targets were set for the municipality for the 2008/9
                     financial year:

                            70% of staff employed in the three highest levels of
                             management should be Black people (i.e. African, Indian and
                             Coloured)
                            50% of staff employed in the three highest levels of
                             management should be women
                            2% of staff employed in different categories and levels should
                             be people with disabilities
                            50% of staff employed in different categories and levels should
                             be black people (i.e. African, Indian and Coloured)

                     Table 4.1 contrasts the above-mentioned employment equity targets
                     against the actual employee statistics as on 30 June 2010.

                     4.1. Employment equity statistics
                                                                         Actual employee
                                  Employment Equity Target               statistics as on 30
                                                                             June 2010
                      70% of staff employed in the three highest
                                                                              94.56%
                      levels of management should be Black people
                      40 % of staff employed in the three highest
                                                                              13.52%
                      levels of management should be women
                      2% of staff employed in different categories
                                                                               0.4%
                      and levels should be people with disabilities
                      50% of staff employed in different categories
                                                                                88%
                      and levels should be black people

                     Women are under-represented in the three highest levels of
                     management and people with disabilities are also under-represented in
                     the workforce. This will be a focus area when Employment Equity Plan



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                       Page | 41
                     of the municipality is finalised. The employment equity statistics with
                     regard to occupational categories and levels are reflected in Table 4.2.
                     Table 4.3 represents the percentage employment equity with regard to
                     gender representivity for 2008/09 and 2009/10.

                     The municipality must exercise a careful balancing act in order to
                     ensure that its total employee related costs remain within acceptable
                     limits when compared to the total income of the municipality. The high
                     number of vacancies that exist within the municipality does however
                     have a negative impact on other factors such as service delivery,
                     overtime costs and employee morale.

                     The staff establishment of the municipality increased with a total of
                     184 positions during the report period. There was an increase in the
                     number of positions that were filled and in the number of vacant
                     positions. A comparison of the staff establishment statistics as on 30
                     June 2009 to 30 June 2010 is given in Table 4.4.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                     Page | 42
4.2. Employment Equity Representation by Sex, and Race, June 2010

Occupational                      Female                                            Male
                                                                                                                  TOTAL
 Categories     African   Coloured   Indian   White   Total    African   Coloured    Indian    White      Total
Legislators,    20        1          2        6       29       78        5           1         28         112     141
senior
officials and
managers
Proffesionals   22        1          0        8       31       45        1           1         35         82      113
Technicians     53        3          0        11      67       146       17          1         86         250     317
and
associate
professional
Clerks          294       51         0        90      435      204       18          0         42         264     699
Services and    46        5          0        9       60       271       26          1         59         357     417
sales
workers
Skilled         3         0          0        1       4        30        4           0         2          36      40
agricultural
and fishery
workers
Craft     and   3         0          0        1       4        142       15          0         46         203     207
related
trades
workers
Plant     and   19        0          0        1       20       279       2           0         8          289     309
machine
operators
and
assemblers
Elementary      406       7          0        1       414      1046      26          0         1          1073    1487
Occupations
TOTAL           866       68         2        128     1064     2241      114         4         307        2666    3730
PERMANENT
%               23.22%    2%         0.08%    3.4%    29%      60%       3%          0.1%      8%         71%     100%
People with     15 = 0.39%
disability

                      4.3. Employment Equity Representation by Sex in 2009 and 2008
                               Gender                        Year                        Percentage
                                                            2009                              72.7
                       Males in MLM
                                                            2008                            73.84
                                                            2009                              27.3
                       Females in MLM
                                                            2008                            20.24




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                     Page | 43
                     Filling of Posts
                     4.4. Comparison of the staff establishment, 2009 and 2010
                                             End June 2010        End June 2009
                      Filled permanent posts        3 761                3 577
                      Vacant posts                  1 452                2 453
                      Total                         5 213                5 030
                                                          End June 2010
                      Directorate             Incumbents    Vacancies        Posts
                      Office of the City
                                                  159           131           290
                      Manager
                      Regional Operations         41            15             56
                      Community and Social
                                                  856           379          1235
                      Development
                      Economic Dev and
                                                  247           84            331
                      Planning
                      Corporate Services          307           89            396
                      Finance                     259           77            336
                      Infrastructural
                                                 1381           569          1950
                      Services
                      Centlec                     511           108           619
                      Total                      3 761         1 452         5 213

                     4.5. Trends of total employee related costs, 2009/10
                                                                             Total Employee
                                          Total
                                                               Total        Related Costs as %
                         Year          Employee
                                                            Expenditure          of Total
                                      Related Costs
                                                                               Expenditure
                      2009/10            695 516 688        2 412 592 779                 28.83

                     The total employee related costs as % of total expenditure is 28.83%
                     and is less than the National Treasury bench mark of 29%. The
                     expenditure on employee related costs is also expressed as a
                     percentage of total income for the purposes of the restructuring grant
                     conditionality which requires of the municipality to maintain a salary
                     budget of 29% of the total income of the municipality including Centlec.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                        Page | 44
                     Table 4.6 shows the expenditure on employee related costs during the
                     last two financial years.

                     Table 4.6 Employee related costs, 2010 and 2009


                     4       Employee related costs                  2010             2009
                     .
                     6Current service cost                          18 556 000        16 754 000
                       Employee related costs – salaries           457 396 143       400 262 360
                     s and wages
                     h
                       Employee related costs –                     98 398 638        82 920 311
                     o
                       contributions for UIF, pensions, and
                     w
                       medical aid
                     s
                       Housing benefits and allowances               3 541 749         5 160 168
                       Long-service awards                                   -            15 000
                     t
                       Overtime payments                            47 433 564        35 061 137
                     h
                       Performance bonuses                                   -         2 126 847
                     e
                       Actuarial loss on defined benefit            11 425 000                 -
                     t plan obligation
                     r Provision for bonuses                         1 707 646           967 371
                     eProvision for leave                           18 326 434        10 662 331
                     nTravel, motor car, accommodation,             38 732 514        35 700 604
                     dsubsistence and other allowances
                     s Total employee related costs                695 516 688       589 630 129

                     Table 4.7 shows the trends of total employee related costs over the last
                     seven years when expressed as a percentage of total expenditure.

                     Table 4.7: Trends of total employee related costs
                                                                               Total Employee
                                    Total Employee             Total
                         Year                                                Related Costs as %
                                     Related Costs          Expenditure
                                                                            of Total Expenditure
                      2003/4             339 965 290        1 153 556 564           29.47
                      2004/5             412 662 113        1 334 125 281           30.93
                      2005/6             442 097 983        1 363 811 259           32.42
                      2006/7             504 262 384        1 773 744 046           28.43
                      2007/8             530 166 477        1 745 890 143           30.37
                      2008/9             589 630 129        2 095 229 800           28.14
                      2009/10            695 516 688        2 412 592 779           28.83




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                         Page | 45
                     The target for the ratio for the total employee related costs for the
                     2009-10 financial year was 29% which means that the actual figure of
                     28.83% is less than the target.

                     The expenditure on employee related costs is also expressed as a
                     percentage of total income for the purposes of the Restructuring Grant
                     conditionality which requires of the municipality to maintain a salary
                     budget of 29% of the total income of the municipality.

                     Table 4.8: Total employee related costs
                                                                                       Total
                                                                                    Employee
                                      Total Employee                               Related Costs
                         Year                                     Total Income
                                       Related Costs                               as % of Total
                                                                                      Income
                      2009/10               695 516 688            2 707 768 709       25.69
                      2008/9                589 630 129            2 302 847 556       25.60
                      2007/8                530 166 477            1 828 232 706      28.41%

                     The expenditure on overtime increased with 6.82% from R 35 061 137
                     during the 2008-09 financial year to R47 433 564 during the 2009-10
                     financial year.

                     The table below shows the overtime costs in relation to the total
                     employee related costs over the past three financial years.

                     Table 4.9 Overtime costs
                                                                                     Overtime
                                                                                   Costs as % of
                                      Total Employee
                         Year                                  Overtime Costs          Total
                                       Related Costs
                                                                                    Employee
                                                                                   Related Costs
                      2009/10              R695 516 688             R47 433 564        6.82
                      2008/9               R589 630 129             R35 061 137        5.95
                      2007/8               R530 166 477             R28 978 394        5.47


                     The four highest levels of management (i.e. the City Manager, CEO, the
                     COO, CFO, EDs, GM, Executive Manager) contributed to 2.21 % of the
                     municipality’s total employee related costs during the 2009/10 financial
                     year.



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                           Page | 46
                     These management employee related costs, are expressed as a
                     percentage of the Total Employee Related Costs for the 2008/09 and
                     2009/10 financial years in the table below:

                     Table 4.10: Management employee related costs expressed as a percentage
                     of total employee related costs
                                                                  Financial Year   Financial Year
                                                                     2009/10          2008/9
                      Management Employee Related                     15 349 699      40 593 706
                      Costs
                      Total Employee Related Costs                  695 516 688      590 789 149
                      Management Employee Related                          2.21             6.87
                      costs as a % of Total Employee
                      Related Costs


                     Disclosure of Information
                     The remuneration of the MLM’s Councillors was as follows:

                     Table 4.11 Remuneration of Councillors and board members over the last two
                     financial years, 2009/10 and 2008/09
                         Remuneration of Councillors                 2009/10         2008/09
                      Executive Mayor                                   675 011         625 594
                      Deputy Executive Mayor                            540 008          504 680
                      MMCs Members                                    4 556 322        4 219 997
                      Speaker                                           540 008          500 474
                      Councillors                                    15 086 774       13 578 193
                      Chief Whip                                        506 258          473 138
                      Non-executive board members –                     378 822          737 000
                      Directors’ fees
                      Total Councillors' Remuneration                22 283 203       20 639 076

                     The remuneration of the of the MLM’s senior officials was as follows:

                     Table 4.12 Remuneration of Senior Managers over the last two years, 2009/10
                     and 2008/09
                      Senior Managers                 2009/10                        2008/9
                      Remuneration of the City Manager and CEO
                      Annual remuneration                 4 685 283                    3 290 977



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                           Page | 47
                      Senior Managers                             2009/10        2008/9
                      Car allowance                                    220 000       150 000
                      Contribution to UIF,                             183 652        15 767
                      medical and pension funds
                      Performance bonus                                      -       358 215
                       Total                                         5 088 935     3 814 959

                       Remuneration of the CFO                                        2008/9
                      Annual remuneration                            1 696 722     4 495 250
                      Car allowance                                    156 000       156 000
                      Contribution to UIF,                             212 657       182 769
                      medical and pension funds
                      Performance bonus                                      -       230 918
                       Total                                         2 065 379     5 064 937

                       Remuneration of the COO
                      Annual remuneration                            1 439 785     2 144 586
                      Car allowance                                      8 790        72 165
                      Performance bonus                                      -       174 054
                      Contribution to UIF,                                 382         8 415
                      medical and pension funds
                      Leave pay                                       312 606              -
                      Total                                          1 761563      2 399 220

                      Remuneration of the ED: Corporate Services
                      Annual remuneration                 1 260 746                  952 637
                      Car allowance                          84 000                   84 000
                      Performance bonus                           -                  172 905
                      Contribution to UIF,                     1542                    1 539
                      medical and pension funds
                      Acting allowance                        6 002                        -
                      Total                               1 352 290                1 211 081

                      Remuneration of the ED: Community and Social Development
                       Annual remuneration                519 983                           -
                       Car allowance                        73 000                          -
                       Contribution to UIF,                 88 555                          -
                       medical and pension funds
                       Total                              681 538                           -




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                      Page | 48
                      Senior Managers                   2009/10                 2008/9
                       Remuneration of the ED: Infrastructure
                       Annual remuneration                    927 928               812 880
                       Car allowance                          240 000               240 000
                       Contribution to UIF,                    12 870                11 479
                       medical and pension funds
                       Total                                1 180 798             1 064 359

                       Remuneration of the ED: Economic Development and Planning
                       Annual remuneration                  629 229           542 033
                       Car allowance                         60 000            60 000
                       Performance bonus                           -           57 986
                       Contribution to UIF,                     771               769
                       medical and pension funds
                       Total                                690 000           660 788
                       Remuneration of the Company Secretary
                       Annual remuneration                  843 239            52 403
                       Remuneration of the Executive Manager Engineering
                       Annual remuneration                  821 068           653 655
                       Performance bonus                           -          137 088
                       Total                                821 068           790 743
                       Remuneration of the General Manager Corporate Services
                       Annual remuneration                  864 889           130 550

                     Retirement Funds
                     Mangaung Local Municipality employees are members of the following
                     Retirement Funds:

                     Table 4.13 Retirement Funds
                                                                                Employer
                                   Name of Fund                   Membership
                                                                               Contribution
                      SAMWU National Provident Fund                    1 252     18.07%
                      SALA Pension Fund                                  960     20.78%
                      Free State Municipal Pension Fund                  237     18.07%
                      Free State Municipal Provident Fund                374     18.07%
                      Government Employee Pension Fund                   549     13.00%
                      Old Mutual Orion Pension Fund                       40     17.50%




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                      Page | 49
                     The following retirement funds claims were processed for the period 1
                     June 2009 – 30 June 2010.

                     Table 4.14 Retirement funds claims
                                                                                       Ill-
                                       Death Retirement Resignation       Dismissal
                                                                                      Health
                      Samwu
                      National
                                         19           18          2           1          2
                      Provident
                      Fund
                      SALA
                      Pension             4            7          9           1          2
                      Fund
                      Free State
                      Municipal
                                         11            6          0           0          1
                      Pension
                      Fund
                      Free State
                      Municipal
                                          0            4          1           0          0
                      Provident
                      Fund
                      Governmen
                      t Employee
                                          0            3          3           1          0
                      Pension
                      Fund
                      TOTAL              34           38          15          3          5

                     With regard to future risks or liabilities the following number of
                     employees is due for compulsory retirement within the 2010/2011
                     financial year.

                     Table 4.15: Number of employees due for compulsory retirement within
                     2010/11 financial year
                      Name of Fund                                     Number of employees
                      Samwu National Provident Fund                            12
                      SALA Pension Fund                                         4
                      Free State Municipal Pension Fund                         1
                      Free State Municipal Provident Fund                       5
                      Government Employee Pension Fund                         12
                      Old Mutual Orion Pension Fund                             2
                      No Retirement Fund                                        3



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                      Page | 50
                                             Total                                  39

                     Medical Aid Schemes
                     The following Medical Aid Schemes are accredited by the SALGBC.

                     Table 4.16: List of Medical Aid Schemes accredited by SALGBC
                      Name of Medical Aid Scheme                          Membership
                                 Key Health                                  180
                                   Bonitas                                   499
                                   Hosmed                                    372
                                Samwumed                                    388
                                  LA Health                                  243
                                    Total                                   1 682

                     The maximum amount of the employer subsidy is R 2 850.80.

                     Performance Management System
                     Performance management is regarded as a critical communication tool
                     that helps managers to provide a motivating climate to assist
                     employees in developing and achieving high standards of performance.
                     The Municipal Systems Act 32 of 2000 requires that the municipalities
                     establish a performance management system that is commensurate
                     with its resources, best suited to its circumstances and in line with the
                     priorities, objectives, indicators and targets contained in its IDP. It is
                     also required to promote a culture of performance management
                     among its political structures, political office bearers and Councillors
                     and its administration.

                     MLM has developed and implemented a range of systems and
                     processes targeting improved performance and enhanced service
                     delivery for its citizens. This system was aimed at meeting the
                     legislative requirements as laid down by the Municipal Systems Act, 32
                     of 2000 and the Municipal Structures Act, 117 of 1998.

                     Defining Performance Management
                     Performance management is about the setting and measurement of
                     desired outcomes and activities of the organisation, its individual



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                         Page | 51
                     components as well as its staff who contribute to the achievement of
                     the strategic vision of the organisation. It is a multilevel process that
                     starts with an overall strategy and follows through to organisational,
                     directorates and individual performance management and appraisal.

                     It is performance at individual, directorates, organisational and
                     municipal-wide level that collectively contributes to the Municipality’s
                     success in ensuring delivery to its citizens. Performance management
                     includes planning, monitoring, measurement and report of
                     performance at a city-wide, organisational (departmental, regional and
                     municipal entity) and individual level. For this reason, the Municipality
                     has chosen to adopt an integrated performance management system -
                     with the process starting with the Mangaung’s strategic planning
                     phases and moving all the way through to the various levels of the
                     contribution; from municipal, organisational to individual levels.

                     With this approach, performance priorities for the Municipality as a
                     whole are cascaded through the entire organisation, such that
                     employees understand their unique and important contribution to the
                     organisation meeting its strategic objectives.

                     Performance management within the Municipality therefore starts with
                     the Municipality’s IDP encompassing the development of key areas of
                     performance and targets across the municipality. The design of the
                     system is in such a way that key performance areas, indicators and
                     target measures contained in the municipality’s scorecard are cascaded
                     to directorates and then into individual performance plans, maintaining
                     that the a positive alignment between individual performance and
                     organisational performance is secured.

                     Performance management therefore forms part of a strategic
                     management approach within the Municipality, aimed at ensuring that
                     the organisation is strategy-led and that key systems such as integrated
                     development planning, budgeting and performance management are
                     integrated. This approach enables the Municipality to plan and budget
                     better, monitor and measure performance more effectively and report
                     on achievements in a transparent and convincing manner.

                     The three-tiered approach to performance management, and its
                     alignment with the planning and IDP process, is outlined in the diagram.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                      Page | 52
                     Performance management can therefore be defined further at the city-
                     wide, organisational and individual level, where:

                     Municipal-wide performance management is the process of strategic
                     planning through which performance objectives for the Municipality
                     are identified, based on input from the Integrated Development Plan,
                     Mayoral Priorities and the Vision, and then monitored and measured
                     via the City Manager’s scorecard.

                     Organisational performance management is the process through
                     which performance objectives for the City, as defined in the municipal
                     administration’s scorecard, are translated into the Service Delivery and
                     Budget Implementation Plans (SDBIPs) and scorecards for the various
                     directorates. Directorates’ performance is monitored at the level of
                     (SDBIPs) and Executive Director scorecard.

                     Individual performance management is the process through which the
                     objectives as defined in scorecards at the level of directorates are
                     cascaded into individual scorecards, allowing for planning, monitoring,
                     reviewing and rewarding of performance, and the enhancement of
                     development, at the level of the individual employee.

                     Institutional            Arrangements         of      Performance
                     Management
                     In support of the implementation of the performance management
                     system and policy, the City has a range of institutional arrangements
                     that seek to ensure that the performance management is effectively
                     implemented and managed. These include the following:

                     The Chief Operating Officer holds responsibility for overseeing and
                     managing the performance management system and for providing
                     strategic and administrative support to the City Manager and plays a
                     role in ensuring the integration and alignment of IDP, SDBIPs, budget
                     and individual scorecards.

                     Human Resource, according to the Performance Management Policy
                     and Procedure, is viewed as the custodian of the performance
                     management system on behalf of employees, and holds the
                     responsibility for ensuring effective implementation and operation of
                     the system.



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                     Page | 53
                     Performance Management System and Policy
                     Performance management within Mangaung local Municipality is
                     presently regulated through the following key documents:

                          The Performance Management System
                          The Performance Management Policy
                          The Performance Reward Scheme

                    Furthermore, the Municipality has had the benefit of learning from the
                    implementation of the system since its inception. This will necessitate
                    a thorough review of all key documents and processes relating to
                    performance management.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                   Page | 54
      CHAPTER 5: AUDITED FINANCIAL STATEMENT AND RELATED FINANCIAL
      INFORMATION


                     ACCOUNTING               OFFICER’S           RESPONSIBILITIES          AND
                     APPROVAL
                     The accounting officer is required by the Municipal Finance
                     Management Act (Act 56 of 2003), to maintain adequate accounting
                     records and is responsible for the content and integrity of the annual
                     financial statements and related financial information included in this
                     report. It is the responsibility of the accounting officer to ensure that
                     the annual financial statements fairly present the state of affairs of the
                     group as at the end of the financial year and the results of its
                     operations and cash flows for the period then ended. The external
                     auditors are engaged to express an independent opinion on the annual
                     financial statements and were given unrestricted access to all financial
                     records and related data.
                     The annual financial statements have been prepared in accordance
                     with Standards of Generally Recognised Accounting Practice (GRAP).
                     The annual financial statements are based upon appropriate accounting
                     policies consistently applied and supported by reasonable and prudent
                     judgements and estimates.
                     The accounting officer acknowledges that he is ultimately responsible
                     for the system of internal financial control established by the group and
                     places considerable importance on maintaining a strong control
                     environment. To enable the accounting officer to meet these
                     responsibilities, the he sets standards for internal control aimed at
                     reducing the risk of error or deficit in a cost effective manner. The
                     standards include the proper delegation of responsibilities within a
                     clearly defined framework, effective accounting procedures and
                     adequate segregation of duties to ensure an acceptable level of risk.
                     These controls are monitored throughout the group and all employees
                     are required to maintain the highest ethical standards in ensuring the
                     group’s business is conducted in a manner that, in all reasonable
                     circumstances, is above reproach. The focus of risk management in the
                     group is on identifying, assessing, managing and monitoring all known
                     forms of risk. While operating risk cannot be fully eliminated, the group
                     endeavours to minimise it by ensuring that appropriate infrastructure,
                     controls, systems and ethical behaviour are applied and managed




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                Page | 55
                     within predetermined procedures and constraints.
                     The accounting officer is of the opinion, based on the information and
                     explanations given by management, that the system of internal control
                     provides reasonable assurance that the financial records may be relied
                     on for the preparation of the annual financial statements. However, any
                     system of internal financial control can provide only reasonable, and
                     not absolute, assurance against material misstatement or deficit.
                     The accounting officer has reviewed the group’s cash flow forecast for
                     the year to 30 June 2011 and, in the light of this review and the current
                     financial position, he is satisfied that the group has or has access to
                     adequate resources to continue in operational existence for the
                     foreseeable future.
                     Although the accounting officer is primarily responsible for the financial
                     affairs of the group, he is supported by the group's external auditors.
                     The external auditors are responsible for independently reviewing and
                     reporting on the group's annual financial statements. The annual
                     financial statements have been examined by the group's external
                     auditors and their report is presented on page 7.
                     The annual financial statements set out on pages 7 to 100, which have
                     been prepared on the going concern basis, were approved by the
                     accounting officer on 30 September 2010 and were signed on behalf of
                     the group by:




                     _______________
                     Mr. SJ Msibi
                     City Manager




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                Page | 56
                     GENERAL INFORMATION


                     Legal form of entity               An organ of state within the local
                                                        sphere of government exercising
                                                        legislative and executive authority.
                    Nature of business and principal activities     Providing   municipal
                                                  services and maintaining the best
                                                  interest of the local community, mainly
                                                  in the Mangaung area.
                    Jurisdiction of entity              Area FS172, as a local municipality,
                                                        as demarcated by the Demarcation
                                                        Board and indicated in the demarcation
                                                        map published for FS172.
                    Mayoral committee
                    Executive Mayor                     Mr FK Morule

                    Councillors
                    Speaker                             Councillor AT Stander

                    Deputy Executive Mayor              Councillor MA Siyonzana

                    Councillor Members of the Mayoral Committee

                                                        Councillor SKM Choene
                                                        Councillor KNL Makhanya
                                                        Councillor A Marais
                                                        Councillor NG Mokotjo
                                                        Councillor LS Moroka
                                                        Councillor NM Mzozana
                                                        Councillor FB Nzapheza
                                                        Councillor AN Phupha
                                                        Councillor CSK Sechoaro

                     Council Whip                       Councillor SM Sefuthi

                     Councillors of the Council         Councillor NL Adoons
                                                        Councillor GM Bacela



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                  Page | 57
                                                        Councillor FR Botes
                                                        Councillor PI Chobane
                                                        Councillor ME Dennis
                                                        Councillor GC Dithebe
                                                        Councillor JC Erasmus
                                                        Councillor SE Finger
                                                        Councillor GS Fouche
                                                        Councillor EK Goliath
                                                        Councillor JU Grobbelaar
                                                        Councillor MD Hlujane
                                                        Councillor W Horn
                                                        Councillor JS Human
                                                        Councillor TA Jacobs
                                                        Councillor TB Jacobs
                                                        Councillor DE Janse van Vuuren
                                                        Councillor CE Jenkinson
                                                        Councillor LR July
                                                        Councillor ZT Khi
                                                        Councillor MS Khutlane
                                                        Councillor JAA Lazenby
                                                        Councillor MJ Lephoi
                                                        Councillor SP Leraisa
                                                        Councillor TK Litabe
                                                        Councillor DG Lubbe
                                                        Councillor PP Machelebeta
                                                        Councillor TJ Makae
                                                        Councillor MM Makhele
                                                        Councillor BM Makoa
                                                        Councillor M Masoabi
                                                        Councillor MJ Matsoenslane
                                                        Councillor MA Mavuya
                                                        Councillor MB Mbange
                                                        Councillor TM Mfazwe
                                                        Councillor H Minnie
                                                        Councillor SO Mogorosi
                                                        Councillor BM Mohlouoa
                                                        Councillor ME Moilwa



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                 Page | 58
                                                        Councillor LG Mokgothu
                                                        Councillor SG Moletsane
                                                        Councillor MR Mompati
                                                        Councillor TA Mophethe
                                                        Councillor B Motaung
                                                        Councillor KJ Mtshiwane
                                                        Councillor SS Nakedi
                                                        Councillor WT Nkikane
                                                        Councillor TS Nthako
                                                        Councillor GJ Olivier
                                                        Councillor JE Petersen
                                                        Councillor SD Phokoje
                                                        Councillor DJ Phuthi
                                                        Councillor XD Pongolo
                                                        Councillor JD Powell
                                                        Councillor JC Pretorius
                                                        Councillor MA Ramokone
                                                        Councillor FP Ramokotjo
                                                        Councillor TM Ramona
                                                        Councillor GK Saohatse
                                                        Councillor MA Seeco
                                                        Councillor E Snyman- Van Deventer
                                                        Councillor SN Soebehle
                                                        Councillor PM Somimi
                                                        Councillor SP Tanyane
                                                        Councillor AP Terblanche
                                                        Councillor AL Toba
                                                        Councillor MM Tsomela
                                                        Councillor PJJ Van Biljon
                                                        Councillor JP Van Der Merwe
                                                        Councillor R Van Der Merwe
                                                        Councillor AS Zerwick
                                                        Councillor NM Zophe

                     Grading of local authority         High Capacity Municipality

                     Accounting Officer                 Mr. SJ Msibi



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                     Page | 59
                     Chief Finance Officer (CFO)        Mr. BR Taye

                     Registered office                  Bram Fisher Building
                                                        Cnr Nelson Mandela          Street    and
                                                        Markgraaff Street
                                                        Bloemfontein
                                                        9301

                     Business address                   Bram Fisher Building
                                                        Cnr Nelson Mandela          Street    and
                                                        Markgraaff Street
                                                        Bloemfontein
                                                        9301

                     Postal address                     P O Box 3704
                                                        Bloemfontein
                                                        9300

                     Auditors                           The Auditor-General of South Africa

                     Attorneys                          Bezuidenhouts Attorneys
                                                        Bosiu Attorneys
                                                        EG Coopers Attorneys
                                                        Fourie Attorneys
                                                        Hill, McHardy & Herbst Attorneys
                                                        Kramer Weihmann & Joubert Attorneys
                                                        Mabalane Seobe Attorneys
                                                        NW Phalatsi & Partners Attorneys
                                                        Rosendorff Reitz Barry Attorneys
                                                        Van der Merwe & Sorour Attorneys
                                                        Vermaak & Dennis Attorneys

                     Debt collectors                    Messrs Alberts
                                                        Messrs Bezuidenhouts
                                                        Messrs Claude Reid
                                                        Messrs Hill, McHardy & Herbst
                                                        Messrs Matsepes
                                                        Messrs Naudes
                                                        Messrs Phatshoane Henney Inc




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                  Page | 60
                                                        Messrs Rosendorff, Reits Barry
                                                        Messrs Stander, Venter & Kleynhans
                                                        Messrs Symington & De Kok
                                                        Messrs Thoabala Attorney
                                                        Messrs Van Wyk & Preller
                                                        Messrs Vermaak & Dennis
                                                        Messrs Vorster & Partners
                                                        Messrs Webbers
                                                        Messrs NICS (National Integrated Credit
                                                        Solution)

                     Grading of local authority          Mangaung Local Municipality is a Grade
                                                         5 local authority in terms of item IV of
                                                         Government Notice R999 of 2 October
                                                         2001, published in terms of the
                                                         Remuneration of Public Office Bearers
                                                         Act,1998.

                      Relevant legislation              The Constitution of the Republic of
                                                        South Africa
                                                        The Municipal Structures Act 117 of
                                                        1998
                                                        The Municipal Systems Act 32 of 2000
                                                        The Municipal Finance Management Act
                                                        56 of 2003
                                                        The Municipal Property Rates Act 6 of
                                                        2004
                                                        The Basic Conditions of the Employment
                                                        Act 75 of 1997
                                                        The Value Added Tax Act 89 of 1991
                                                        The Skills Development Act 9 of 1999
                                                        The Water Service Act 108 of 1997
                                                        The Housing Act of 1997
                                                        The Promotion of Access to Information
                                                        Act 2 of 2000
                                                        The Disaster Management Act 57 of
                                                        2000




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                  Page | 61
                     REPORT OF THE AUDITOR-GENERAL TO THE FREE
                     STATE LEGISLATURE AND THE COUNCIL OF THE
                     MANGAUNG LOCAL MUNICIPALITY

                     REPORT ON                 THE        CONSOLIDATED        FINANCIAL
                     STATEMENTS
                     Introduction

                     I was engaged to audit the accompanying consolidated financial
                     statements and financial statements of the Mangaung Local
                     Municipality (MLM), which comprise the consolidated and separate
                     statement of financial position as at 30 June 2010, and the consolidated
                     and separate statement of financial performance, statement of changes
                     in net assets and cash flow statement for the year then ended, and a
                     summary of significant accounting policies and other explanatory notes,
                     as set out on pages 95 to 182.

                     The accounting officer’s responsibility for the consolidated financial
                     statements

                     The accounting officer is responsible for the preparation and fair
                     presentation of these financial statements in accordance with South
                     African Standards of Generally Recognised Accounting Practice (SA
                     Standards of GRAP), and in the manner required by the Local
                     Government: Municipal Finance Management Act of South Africa, 2003
                     (Act No. 56 of 2003) (MFMA) and the Division of Revenue Act of South
                     Africa, 2009 (Act No. 12 of 2009) (DoRA). This responsibility includes:
                     designing, implementing and maintaining internal control relevant to
                     the preparation and fair presentation of financial statements that are
                     free from material misstatement, whether due to fraud or error;
                     selecting and applying appropriate accounting policies; and making
                     accounting estimates that are reasonable in the circumstances.

                     The Auditor-General’s responsibility




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                Page | 62
                     As required by section 188 of the Constitution of the Republic of South
                     Africa, 1996 (Act No. 108 of 1996), section 4 of the Public Audit Act of
                     South Africa, 2004 (Act No. 25 of 2004) (PAA) and section 126(3) of the
                     MFMA, my responsibility is to express an opinion on the consolidated
                     financial statements based on conducting the audit in accordance with
                     the International Standards on Auditing read with General Notice 1570
                     of 2009, issued in Government Gazette 32758 of 27 November 2009.
                     Because of the matters described in the Basis for disclaimer of opinion
                     paragraphs, however, I was not able to obtain sufficient appropriate
                     audit evidence to provide a basis for an audit opinion.

                     Basis for Disclaimer of Opinion
                     Property, plant and equipment

                     As a result of the audit findings detailed below, I was unable to obtain
                     sufficient appropriate audit evidence to conclude on the existence,
                     completeness, valuation, presentation and disclosure, and rights to
                     property, plant and equipment with a carrying value of R2 937 222 306
                     (2009: R2 459 723 584) as disclosed in note 4 to the separate financial
                     statements and R4 220 930 155 (2009: R2 790 755 113) as disclosed in
                     note 4 to the consolidated financial statements. Consequently, the
                     accuracy, completeness and occurrence of depreciation charges on
                     property, plant and equipment amounting to R125 349 838 (2009:
                     R121 619 599) as presented in the separate statement of financial
                     performance and R171 250 568 (2009: R158 909 801) in the
                     consolidated statement of financial performance could also not be
                     determined. The municipality and municipal entity’s records did not
                     permit the performance of reasonable alternative audit procedures.

                     For assets with a carrying value of R1 907 387 539 (2009:
                     R1 647 499 577) included in the amount disclosed in note 4 to the
                     separate financial statements and R3 191 095 388 (2009: R1 978 531
                     106) in the consolidated financial statements, the descriptions, serial
                     numbers, location and condition of items as indicated in the fixed asset
                     register were inadequate for identification purposes. Furthermore,
                     management did not conduct a full asset verification during the year.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                Page | 63
                     The valuation roll was not reconciled with the land and buildings
                     according to the asset register of the municipality to ensure that all
                     properties registered in the name of the municipality are recognised as
                     property, plant and equipment. A difference of R565 367 424 was
                     identified between the total value of the municipality’s properties
                     according to the valuation roll and the total value of the municipality’s
                     properties according to the fixed asset register. Since the municipality’s
                     accounting records did not permit the application of reasonable
                     alternative procedures, I was unable to confirm the completeness and
                     valuation of land and buildings included in property, plant and
                     equipment in note 4 to the separate and consolidated financial
                     statements.

                     An amount of R3 828 070 was disclosed as a decrease in revaluation of
                     land and building assets in the prior year as per note 4 to the separate
                     and consolidated financial statements. I could not be provided with
                     detailed explanations and a breakdown of this amount. Consequently, I
                     could not determine the completeness and valuation of the revaluation
                     reserve, the accumulated surplus and property, plant and equipment
                     for the current and prior year.

                     Management of the municipal entity did not provide sufficient
                     appropriate audit evidence to an amount of R9 739 899 in respect of
                     fixed asset acquisitions as disclosed in note 4 to the consolidated
                     financial statements.

                     The municipality has not accounted for property, plant and equipment
                     in accordance with SA Standards of GRAP in the following respects:

                     Paragraph 5 of the SA Standard of GRAP, GRAP 16, Investment property
                     (GRAP 16) requires an asset to be recognised as investment property
                     when it is property held to earn rentals or for capital appreciation, or
                     both. Paragraphs 2 and 18 of GRAP 16 require a municipality to
                     disclose investment property separately in the financial statements.
                     Management has not separately identified its investment property in
                     the current and prior year and no disclosures have been made of
                     investment property in the financial statements. Consequently, I could
                     not obtain adequate audit assurance as to the completeness, valuation,
                     existence, and presentation and disclosure of investment property and



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                 Page | 64
                     property, plant and equipment in the separate and consolidated
                     financial statements for the current and prior year.

                     Paragraph 6 of SA Standard of GRAP, GRAP 17, Property, plant and
                     equipment (GRAP 17) requires a municipality to disclose heritage assets
                     separately in the financial statements. Management has not completed
                     its processes regarding the identification of heritage assets for separate
                     disclosure in the financial statements. Consequently, I could not obtain
                     adequate audit assurance as to the completeness, valuation, and
                     presentation and disclosure of heritage assets as disclosed in note 4 to
                     the separate and consolidated financial statements for the current and
                     prior year.

                     In accordance with paragraph 39 of GRAP 17, the accounting policy
                     indicated that the MLM measured land and buildings by using the
                     revaluation model. Contrary to the accounting policy, the city council
                     erven listing reflected a total of 1 784 erven with zero values in the
                     prior year which had not been revalued. Consequently, I could not
                     obtain adequate audit assurance as to the completeness and valuation
                     of property, plant and equipment and the revaluation reserve as
                     disclosed in the comparative amounts of note 4 to the separate and
                     consolidated financial statements.

                     Paragraph 53 of GRAP 17 requires each part of an item of property,
                     plant and equipment with a cost that is significant in relation to the
                     total cost of the item to be depreciated separately. Paragraphs 61 and
                     71 require the municipality to review its assets’ residual values, useful
                     lives and depreciation method at least at each reporting date. The
                     municipality and municipal entity has not complied with these
                     requirements in the current and prior year. Consequently, I could not
                     obtain adequate audit assurance as to the valuation of property, plant
                     and equipment and the accuracy of depreciation charges as disclosed in
                     note 4 to the separate and consolidated financial statements for the
                     current and prior year.

                     In the previous year 112 erven with a total value of R82 734 000 were
                     included in property, plant and equipment, as disclosed in the prior
                     year amount in note 4 to the separate and consolidated financial
                     statements. These erven were not registered in the name of the



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                 Page | 65
                     municipality and therefore did not conform to the definition and
                     recognition criteria of property, plant and equipment as stated in
                     paragraphs 10 and 11 of GRAP 17 and should not be recorded as
                     property of the municipality. Consequently, property, plant and
                     equipment and the accumulated reserve in the prior year are
                     overstated by R82 734 000 in the prior year. As a result of the limitation
                     reported in paragraph 4(b) above, the impact on the current year
                     amount could not be reliably determined.

                     In the prior year 165 erven with a total value of R17 354 200 which
                     conform to the definition and recognition criteria of property, plant and
                     equipment as stated in paragraphs 10 and 11 of GRAP 17 and which
                     were identified as municipal property on the erven listing, were not
                     included in the valuation roll. Consequently, property, plant and
                     equipment and the revaluation reserve were understated by this
                     amount in the prior year in the separate and consolidated financial
                     statements. As a result of the limitation reported in paragraph 4(b)
                     above the impact on the current year amounts could not be reliably
                     determined.

                     The accounting policy of the municipality as set out in accounting policy
                     notes 1.9 and 1.10 requires that property, plant and equipment should
                     be assessed for impairment at each reporting date. Management did
                     not assess whether there was a decrease in the value of property, plant
                     and equipment during the financial year under review and the prior
                     year. Consequently, I could not obtain adequate audit assurance as to
                     the valuation of the municipality’s property, plant and equipment as
                     disclosed in note 4 to the separate and consolidated financial
                     statements.

                     Contrary to the definition of an asset as stated in GRAP 1 and GRAP 17,
                     all animals owned by the municipality and housed in the zoo and nature
                     conservation areas within the Mangaung district, have not been
                     recorded in the fixed asset register and accounted for in the financial
                     statements. A formally approved and documented policy framework
                     regarding the management and valuation of these animals was not in
                     place during the year under review and the municipality has not
                     adopted an accounting policy in this regard. Consequently, I was unable
                     to obtain adequate audit assurance as to the completeness, valuation,



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                 Page | 66
                     existence, presentation and disclosure of, and the municipality’s rights
                     to, these assets as disclosed in note 4 to the separate and consolidated
                     financial statements.

                     Sufficient appropriate audit evidence could not be submitted with
                     regard to assets under construction amounting to R431 254 847 as
                     disclosed in note 4 to the separate and consolidated financial
                     statements. Assets under construction were also not identified and
                     disclosed for the municipal entity in the consolidated financial
                     statements as required by paragraph 83(b) of GRAP 17. Since the
                     municipality and municipal entity’s accounting records did not permit
                     the application of reasonable alternative audit procedures, I was unable
                     to obtain all the information and explanations I considered necessary to
                     gain adequate audit assurance as to the valuation, existence,
                     completeness and rights to assets under construction.

                     Inventories

                     Inventory amounting to R42 010 584 (2009: R42 857 850) as disclosed
                     in note 10 to the consolidated financial statements was not carried at
                     the lower of cost or net realisable value, as required by SA Standards of
                     GRAP, GRAP 12, Inventories and in line with accounting policy note 1.8.
                     Due to the nature and volume of the items involved I could not quantify
                     the extent by which inventory, operating expenses and retained income
                     have been misstated.

                     Consumer and other receivables

                     In the prior year, journals amounting to R250 949 841 which were
                     posted between the unallocated deposit suspense accounts and
                     consumer and other receivables in the separate and consolidated
                     financial statements, were not appropriately reviewed and authorised. I
                     could therefore not determine whether these journals were valid and
                     accurately recorded and could therefore not gain adequate audit
                     assurance as to the valuation and presentation and disclosure of
                     consumer receivables in the prior and current year.

                     Included in the balance of consumer debtors, as disclosed in note 13 to
                     the separate and consolidated financial statements, were suspense



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                 Page | 67
                     accounts for unallocated deposits with a credit balance amounting to
                     R11 546 808 (2009: R14 954 820). These unallocated deposits represent
                     receipts that have not yet been allocated to the relevant financial
                     statement line items as at 30 June 2010 and 30 June 2009, respectively.
                     As these payments have not been adequately allocated subsequent to
                     year-end, I was unable to obtain adequate audit assurance as to the
                     completeness, valuation, presentation and disclosure, and the
                     municipality’s rights to consumer and other receivables and the
                     completeness, accuracy and classification of service charges and other
                     income as disclosed in the separate and consolidated financial
                     statements.

                     Consumer receivables included in note 13 amounting to R173 874 233
                     (2009: R135 753 925) and other receivables included in note 11
                     amounting to R21 041 653 (2009: R2 506 592) in the consolidated
                     financial statements have not been impaired in accordance with the
                     requirements of South African Statement of Generally Accepted
                     Accounting Practice, IAS 39 (AC 133), Financial instruments: Recognition
                     and measurement (IAS 39). The municipal entity only made a general
                     provision for doubtful receivables totalling R48 002 191 (2009:
                     R37 476 894). As the relevant information was not available, I was not
                     able to determine what the impairment charge should have been had
                     IAS 39 been applied correctly. I was therefore unable to quantify the
                     amount by which consumer and other receivables, bad debts and
                     provision for bad debts, and accumulated surplus are misstated in this
                     regard. No alternative procedures could be performed in this regard.

                     For several debtors included in note 13 of the consolidated financial
                     statements amounting to R37 899 524 no payments were made for a
                     period of two months subsequent to year end. As a result, sufficient
                     appropriate audit evidence regarding the existence of these debtors
                     could not be obtained. The municipal entity’s records did not permit
                     the performance of alternative audit procedures in this regard.

                     Non-current receivables

                     The profit on the sale of the electricity distribution department to
                     Centlec (Pty) Ltd (Centlec) in the 2005-06 financial year, as determined
                     by the municipality, amounted to R788 999 047 and was included in the



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                Page | 68
                     accumulated surplus balance. There were ambiguities within the sale-
                     of-business agreement and sufficient supporting documentation could
                     not be obtained with regard to the basis of the valuation and the
                     qualifications of the valuators used. Consequently, I was unable to
                     obtain adequate audit assurance as to the valuation of the
                     shareholders loan amounting to R657 303 374 (2009: R639 899 751) as
                     disclosed in note 7 to the separate financial statements and the
                     accumulated surplus amounting to R1 912 885 217 (2009:
                     R1 614 885 453) as disclosed in the separate statement of financial
                     position. The municipality’s records did not permit the performance of
                     reasonable alternative audit procedures.

                     Payables from exchange transactions

                     The municipal entity has applied for exemption from normal tax as per
                     section 10(1)(c)(A) of the Income Tax Act of South Africa, 1962 (Act No.
                     58 of 1962). As at year-end the entity had not yet been granted
                     exemption from normal tax by the Commissioner of the South African
                     Revenue Service. In the absence of the above exemption, the entity had
                     a present legal obligation to recognise a current tax liability as well as a
                     deferred tax liability as required by SA Statement of Generally Accepted
                     Accounting Practice, IAS 12 (AC 102), Income taxes. This issue was also
                     reported on in previous financial years. Due to the material effect of
                     scope limitations, misstatements and other issues of non-compliance
                     with SA Standards of GRAP, GRAP 9 Revenue from exchange
                     transactions (GRAP 9), GRAP 17 and IAS 39 referred to in this report, I
                     was unable to quantify the extent by which the income tax liability,
                     deferred tax, accumulated surplus and income tax expense were
                     misstated in this regard in the consolidated financial statements.

                     For the consolidated comparative amounts, sufficient appropriate audit
                     evidence for adjustment journals processed against payables from
                     exchange transactions amounting to R29 221 776 could not be
                     provided. The municipal entity’s records did not permit the
                     performance of alternative audit procedures in this regard.

                     Consumer deposits




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                   Page | 69
                     I was unable to confirm the existence of consumer deposits totalling
                     R38 368 916 (2009: R33 518 852) included in the balance disclosed in
                     note 28 to the consolidated financial statements as sufficient
                     appropriate audit evidence could not be provided. The municipal
                     entity’s records did not permit the application of alternative audit
                     procedures regarding consumer deposits.

                     Revenue

                     Accounting policy note 1.14 is not in accordance with GRAP 9, since
                     service charges from the sale of prepaid meter vouchers was
                     recognised immediately on receipt of cash and not only at the stage
                     when the municipal entity no longer retains continuing managerial
                     involvement to the degree usually associated with ownership or
                     effective control over the goods sold. As a result, the sale of prepaid
                     electricity revenue was incorrectly recognised as service charges
                     revenue, instead of deferred income as required by GRAP 9 in the
                     consolidated financial statements. Due to the volume of transactions
                     involved and the fact that the system could not provide us with the
                     relevant information, I could not quantify the extent to which service
                     charges is overstated and deferred income understated in the
                     consolidated financial statements. No alternative procedures could be
                     performed in this regard.

                     Electricity usage differences totalling R62 609 871 (2009: R25 737 144)
                     in value were identified between the system and the underlying meter
                     reading books. As a result I was unable to confirm the occurrence of
                     sale of electricity revenue as disclosed in note 32 to the financial
                     statements. Had the electricity usage in units been captured correctly
                     on the system, the effect would have been to decrease service charges
                     by an amount of R62 609 871 (2009: R25 737 144), increase the value-
                     added tax (VAT) receivable by R8 765 382 (2009: R3 603 200) and
                     decrease consumer receivables by R71 375 253 (2009: R29 340 344) in
                     the consolidated financial statements.

                     As a result of the matters detailed below, I was unable to obtain
                     sufficient appropriate audit assurance as to the completeness,
                     accuracy, occurrence, classification and cut-off of service charges
                     revenue relating to the sale of electricity as disclosed in note 32 of the



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                 Page | 70
                     consolidated financial statements amounting to R952 760 231 (2009:
                     R700 559 342). No alternative audit procedures could be performed in
                     this regard:

                     I was unable to obtain meter reading books substantiating revenue on
                     sale of electricity totalling R76 953 122 in respect of the prior year.
                     Evidence substantiating electronic meter device readings totalling
                     R385 101 122 (2009: R306 748 421) as levied in the debtors’ sub-ledger
                     could not be obtained.

                     An approved policy stipulating the principles to be used by
                     management as the basis to estimate the levies charged for street and
                     traffic light consumption amounting to R10 065 990 (2009: R9 633 036)
                     could not be provided. The municipal entity’s records did not permit
                     the application of alternative audit procedures in this regard.

                     The electronic data supporting revenue from prepaid electricity sales
                     totalling R180 089 183 (2009: R116 245 343) included in the amount as
                     per note 32 and free services recoverable revenue totalling
                     R33 215 925 (2009: R31 607 251) included in the amount disclosed in
                     note 33 respectively to the consolidated financial statements could not
                     be obtained. No alternative audit procedures could be performed in
                     this regard.

                     Sufficient appropriate audit evidence in respect of public contributions
                     revenue received for system upgrades totalling R12 267 290 (2009:
                     R11 850 458) included in system upgrades revenue in the consolidated
                     statement of financial performance to the consolidated financial
                     statements.

                     Sufficient appropriate audit evidence for estimated consumption levied
                     on the electricity billing system, Consbill, to the amount of R6 833 455
                     (2009: R4 325 586) could not be obtained.
                     Sufficient appropriate audit evidence in respect of debit journals
                     against service charges relating to the sale of electricity totalling
                     R23 827 223 could not be obtained.

                     The completeness and accuracy of departmental consumption
                     amounting to R8 284 536 (2009: R8 659 279), as included in service



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                Page | 71
                     charges, could not be determined due to the lack of information
                     regarding the apportionment of the consumption between Centlec and
                     the parent municipality. The distinction made between the
                     departmental consumption relating to Centlec and the electricity
                     consumption of all buildings and equipment related to MLM which are
                     supposed to be recovered, was therefore not clear.

                     Supporting evidence for prior year general ledger journals processed
                     with an absolute value of R21 668 164 could not be obtained.
                     Supporting evidence for prior year subledger journals processed with
                     an absolute value of R20 347 687 could not be obtained.

                     General expenditure

                     Management of the municipal entity were unable to provide me with
                     sufficient appropriate audit evidence as to the occurrence, accuracy,
                     completeness and classification of prior years’ expenditure
                     transactions, relating to the municipal entity, amounting to R74 038
                     090 of which R72 661 832 is incorporated in the accumulated surplus
                     opening balance at 1 July 2009 presented in the consolidated
                     statement of changes in net assets and R1 376 258 in the general
                     expenditure of the consolidated comparative year figures. The
                     municipal entity’s records did not permit me to perform reasonable
                     alternative audit procedures with regard to these expenditure
                     transactions.

                     Cash flow statement

                     I was unable to confirm whether the consolidated cash flow statement
                     and the related notes were fairly stated due to the material effect on
                     the consolidated cash flow statement and related notes of scope
                     limitations and identified misstatements as reported in this report.

                     Capital commitments

                     Paragraph 83(c) of GRAP 17 states that the financial statements shall
                     disclose for each class of property, plant and equipment recognised in
                     the financial statements the amount of contractual commitments for
                     the acquisition of property, plant and equipment. Management did not



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                              Page | 72
                     maintain an updated contract register which provides particulars,
                     including the committed amount, of all approved capital contracts, the
                     expenditure incurred to date and the municipality’s future capital
                     commitments in respect of each contract in the current and previous
                     year. I was unable to perform reasonable alternative audit procedures
                     and consequently, I could not obtain adequate audit assurance as to
                     the completeness, existence and valuation of capital commitments
                     totalling R532 981 188 (2009: R527 370 241), as disclosed in note 49 to
                     the      separate     financial  statements      and     R532 981 188
                     (2009: R575 775 920), as disclosed in note 49 to the consolidated
                     financial statements.

                     Contingent liabilities

                     The valuation and completeness of the contingent liabilities as
                     disclosed in note 50 to the consolidated financial statements could not
                     be determined due to the lack of information as no supporting
                     documentation could be provided by the municipal entity. No
                     alternative procedures could be performed in this regard.

                     Fruitless and wasteful expenditure

                     Although fruitless and wasteful expenditure as identified by the audit
                     process had been disclosed in note 75 to the consolidated financial
                     statements, the municipality and municipal entity have not further
                     investigated their operating and capital expenditure to determine
                     whether all matters of fruitless and wasteful expenditure have been
                     appropriately identified, investigated and disclosed. I was unable to
                     perform reasonable alternative audit procedures. Consequently, I could
                     not obtain adequate audit assurance as to the accuracy and
                     completeness of fruitless and wasteful expenditure amounting to R22
                     006 511 (2009: R2 763 523) as disclosed in note 75 to the consolidated
                     financial statements.
                     Irregular expenditure

                     Although irregular expenditure as identified by the audit process had
                     been disclosed in note 76 to the consolidated financial statements, the
                     municipality and municipal entity have not further investigated their
                     operating and capital expenditure to determine whether all matters of



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                               Page | 73
                     irregular expenditure have been appropriately identified, investigated
                     and disclosed. I was unable to perform reasonable alternative audit
                     procedures. Consequently, I could not obtain adequate audit assurance
                     as to the accuracy and completeness of irregular expenditure
                     amounting to R143 255 885 (2009: R40 777 973) as disclosed in note 76
                     to the consolidated financial statements.

                     Disclaimer of opinion

                     Because of the significance of the matters described in the Basis for
                     disclaimer of opinion paragraphs, I have not been able to obtain
                     sufficient appropriate audit evidence to provide a basis for an audit
                     opinion on the consolidated and separate financial statements of the
                     MLM. Accordingly, I do not express an opinion on these financial
                     statements.

                     Emphasis of Matters
                     I draw attention to the matters below. My opinion is not modified in
                     respect of these matters:

                     Irregular expenditure

                     As disclosed in note 76 to the consolidated financial statements,
                     irregular expenditure to the amount of R102 477 912 (2009:
                     R17 637 896), was incurred during the current financial year by the
                     municipality and the municipal entity due to non-adherence to supply
                     chain management policy requirements. The total reported irregular
                     expenditure that is still under investigation amounts to R143 255 885.

                     Fruitless and wasteful expenditure

                     As disclosed in note 75 to the consolidated financial statements,
                     fruitless and wasteful expenditure to the amount of R19 209 989
                     (2009: R2 749 797), was incurred during the current financial year by
                     the municipality and the municipal entity as a result of the reasons set
                     out in the note. The total reported fruitless and wasteful expenditure




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                Page | 74
                     that is still under investigation amounts to R22 006 511 (2009:
                     R2 796 522).

                     Unauthorised expenditure

                     As disclosed in note 74 to the consolidated financial statements, non-
                     budgeted expenditure to the amount of R56 213 592 (2009:
                     R222 616 568) was incurred during the current financial year, which is
                     regarded as unauthorised expenditure. The total reported unauthorised
                     expenditure that is still under investigation amounts to R399 081 386
                     (2009: R342 867 794).

                     Restatement of corresponding figures

                     As disclosed in notes 52 to 70 to the consolidated financial statements,
                     the corresponding figures for 30 June 2009 have been restated as a
                     result of errors discovered during the 2009-10 financial year in the
                     financial statements of the MLM at, and for the year ended,
                     30 June 2009.

                     Material impairments

                     As disclosed in note 13 to the separate and consolidated financial
                     statements, a provision for a decrease in value to the amount of
                     R769 615 854 (83.43%) (2009: R686 534 450 (83.98%)) and
                     R817 618 045 (71.45%) (2009: R724 011 344 (73.08%)) respectively, has
                     been made with regard to consumer receivables amounting to
                     R922 495 152 (2009: R817 468 341) and R1 144 371 574 (2009:
                     R990 699 160) respectively.

                     Additional matters

                     I draw attention to the matter below. My opinion is not
                     modified in respect of this matter:

                     Unaudited supplementary schedules




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                Page | 75
                     The appendices set out on pages 183 to 204 do not form part of the
                     financial statements and are presented as additional information. I
                     have not audited these schedules and accordingly I do not express an
                     opinion thereon.

                     Report on Other Legal and Regulatory Requirements
                     As required by the PAA and in terms of General Notice 1570 of 2009,
                     issued in Government Gazette 32758 of 27 November 2009, I include
                     below my findings on the report on predetermined objectives,
                     compliance with the following key laws and regulations: MFMA, DoRA,
                     Local Government: Municipal System Act of South Africa, 2000 (Act No.
                     32 of 2000) (MSA), Municipal Supply Chain Management Regulations of
                     South Africa (GNR.868 of 30 May 2005) (SCM regulations), Local
                     Government: Municipal Planning and Performance Management
                     Regulations of South Africa, 2001 (GNR.796 of 24 August 2001),and
                     financial management (internal control).

                     Predetermined objectives

                     Material findings on the report on predetermined objectives, as set out
                     on pages 5 to 33, are reported below:

                     Non-compliance with regulatory and reporting requirements

                     Existence and functioning of a performance audit committee

                     Contrary to the requirements of regulation 14(3) and 14(4) of the
                     Municipal Planning and Performance Management Regulations, 2001,
                     the audit committee that also functions as the performance audit
                     committee did not:

                     •    meet at least twice during the financial year
                     •    review the quarterly reports of the internal auditors on their audits
                          of the performance measurements of the municipality
                     •    review the municipality’s performance management system and
                          make recommendations in this regard to the council of the MLM




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                  Page | 76
                     •    submit an auditor’s report to the council of the MLM regarding the
                          performance management system at least twice during the
                          financial year.

                     Internal auditing of performance measurements

                     Due to a lack of adequate resources, the internal audit department did
                     not audit the performance measurements on a continuous basis and
                     did not submit reports with regard to each quarter on their audits to
                     the municipal manager and the performance audit committee, as
                     required by section 45 of the MSA.

                     Service delivery agreement

                     The service delivery agreement in place between the MLM and its
                     municipal entity, Centlec, with regard to the provision of electricity as
                     required by section 76 of the MSA lapsed in previous years and the new
                     agreement was only concluded after year-end due to communication
                     breakdowns between the MLM and Centlec. As a result, the parent
                     municipality did not by agreement with the municipal entity establish
                     annual performance objectives and key performance indicators for the
                     municipal entity to be included in the entity’s multi-year business plan.

                     Lack of adoption or implementation of a performance management
                     system

                     The annual report of the municipal entity did not include an assessment
                     by the municipal entity’s accounting officer of the municipal entity’s
                     performance against any measurable performance objectives, set in
                     terms of the service delivery agreement or other agreement between
                     the municipal entity and its parent municipality, as required by section
                     121(4)(d) of the MFMA.

                     The above is due to the fact that the parent municipality did not include
                     key performance indicators in the integrated development plan.
                     Furthermore there is a lack of an effective, efficient and transparent
                     system and internal controls regarding performance management,
                     which describe and represent how the municipal entity’s processes of




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                 Page | 77
                     performance planning, monitoring, measurement, review and reporting
                     will be conducted, organised and managed.

                     Reliability of reported performance information

                     The following criteria were used to assess the reliability of the planned
                     and reported performance:

                     Validity: Has the actual reported performance occurred and does it
                     pertain to the entity i.e. can the reported performance information be
                     traced back to the source data or documentation?
                     Accuracy: Amounts, numbers and other data relating to reported actual
                     performance has been recorded and reported appropriately.

                     Completeness: All actual results and events that should have been
                     recorded have been included in the reported performance information.
                     The following audit findings relate to the above criteria:

                     Reported targets not reliable as inadequate supporting source
                     information was provided

                     For the basic water and sanitation services objectives selected from the
                     integrated development plan, the validity, accuracy and completeness
                     of 22% of the reported targets could not be established, as the
                     information provided was not based on the actual number of
                     installations finalised, but on the deemed number of installations as per
                     the progress payments made on the projects.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                 Page | 78
                     No supporting source documentation

                     Sufficient appropriate audit evidence in relation to any of the selected
                     objectives for the municipal entity could not be obtained. There were
                     also no satisfactory audit procedures that I could perform to obtain the
                     required assurance as to the validity, accuracy and completeness of the
                     reported information for the municipal entity.

                     Compliance with Laws and Regulations

                     Municipal Finance Management Act

                     The annual budget was not prepared, tabled and approved in
                     accordance with the applicable laws and regulations
                     Contrary to the requirements of section 16(1) and (2) of the MSA, the
                     annual budget was only tabled at a council meeting 60 days before the
                     start of the budget year.

                     Section 88 of the MFMA was not complied with, as no supporting
                     documentation could be submitted to prove that the accounting officer
                     of the municipal entity has by 20 January 2010 submitted a mid-year
                     budget and performance assessment report to the board of directors
                     and the parent municipality. Furthermore the midyear budget and the
                     performance assessment report were not made public for the
                     municipal entity.

                     The accounting officer did not adhere to his statutory responsibilities

                     Contrary to the requirements of section 62(1)(a) and (d) of the MFMA,
                     the accounting officer did not in certain instances adhere to his
                     legislative responsibility of managing the financial administration of the
                     municipality by not taking reasonable steps to ensure that:

                            the resources of the municipality were used effectively,
                             efficiently and economically in order to prevent or detect
                             irregular, unauthorised, and fruitless and wasteful expenditure.

                     Section 127(1) of the MFMA was not complied with as the annual
                     reports of the municipal entity for the previous four financial years



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                 Page | 79
                     were not submitted to the municipal manager of the parent
                     municipality within the stipulated timeframe.

                     Municipal officials did not adhere to their statutory responsibilities

                     Contrary to the requirements of section 78(1) of the MFMA, some
                     senior managers and some officials of the municipality, in exercising
                     financial management responsibilities did not take reasonable steps
                     within his/her areas of responsibility to ensure that:

                            the system of financial management and internal control
                             established for the municipality is carried out diligently in order to
                             prevent or detect irregular, unauthorised, and fruitless and
                             wasteful expenditure
                            the financial and other resources of the municipality were utilised
                             effectively, efficiently, economically and transparently in order to
                             prevent or detect irregular, unauthorised, and fruitless and
                             wasteful expenditure
                            all revenue due to the municipality was collected
                            the assets of the municipality were managed effectively.

                     The audit committee was not properly established or not functioning
                     properly

                     Contrary to the requirements of section 166(1) of the MFMA, the
                     municipality and municipal entity did not have a functioning audit
                     committee for the full year under review. The audit committee’s
                     extended term lapsed on 31 December 2009; therefore the committee
                     also did not fulfil all its responsibilities as set out in section 166 of the
                     MFMA.

                     Expenditure was not paid within the parameters set by the applicable
                     legislation

                     Payments of the MLM to suppliers totalling R34 898 443 (2009: R20 052
                     006) were not made within 30 days of date of receipt of the relevant
                     invoice or statement, as prescribed by section 65(2)(e) of the MFMA.
                     Section 99(2)(b) of the MFMA was not complied with as the municipal
                     entity did not pay all invoices within 30 days of receiving thereof.




Mangaung Local Municipality Annual Performance Report 2009/2010
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                     Supply chain management legislative requirements were not
                     implemented or not adhered to (not resulting in irregular
                     expenditure)

                     Contrary to the requirements of section 116(2)(b) and (c), capacity was
                     not established in the municipality to ensure that contracts are
                     properly enforced and to monitor the performance of contractors on a
                     monthly basis.

                     Contrary to the requirements of regulation 46(2)(e) of the supply chain
                     management regulations, section 7 of schedule 1 of the MSA and
                     section 5A of schedule 2 of the MSA, annual declarations of all interests
                     were not made by senior managers and some councillors.

                     Contrary to the requirements of regulation 41(2) of the supply chain
                     management regulations, the risk assessment for the identification,
                     consideration and avoidance of potential risks in the supply chain
                     management system had not yet been completed at year-end.

                     Contrary to the requirements of regulation 36(2) of the supply chain
                     management regulations, the deviations from procurement processes
                     were not in all instances reported to the council.

                     Section 111 of the MFMA and section 2(1) of the supply chain
                     management regulations were not complied with as the municipal
                     entity does not have an approved and implemented supply chain
                     management policy which resulted in the incurring of irregular, fruitless
                     and wasteful expenditure.

                     The financial statements were not prepared in accordance with
                     applicable legislation

                     Contrary to the requirements of section 122(1) of the MFMA, the
                     municipality and its municipal entity did not prepare financial
                     statements which fairly present the state of affairs of the municipality,
                     its financial results, its financial position as at the end of the financial
                     year as material adjustments had to be made to the financial
                     statements.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                   Page | 81
                     Particulars of all non-compliance with the MFMA were not disclosed in
                     the notes to the financial statements as required by section 125(2)(e) of
                     the MFMA.

                     Expenditure was incurred otherwise than in accordance with sections
                     15 of the MFMA resulting in unauthorised expenditure

                     Expenditure was not incurred in accordance with the approved budget
                     of the municipality and exceeded the limits of the amounts
                     appropriated for four votes in the approved budget of the municipality.

                     Expenditure was incurred in contravention of or not in accordance
                     with applicable legislation resulting in irregular expenditure, fruitless
                     and wasteful expenditure

                     Expenditure was identified that was not incurred in accordance with
                     the requirements of the MFMA, MSA and the supply chain
                     management policy of the municipality and the expenditure was also
                     not condoned in terms of the relevant act or regulation. In terms of the
                     definition of irregular expenditure as set out in section 1 of the MFMA,
                     the expenditure is regarded as irregular expenditure.

                     Section 105 of the MFMA was not complied with as the municipal
                     entity did not take all reasonable steps to ensure that any irregular,
                     fruitless and wasteful expenditure and other losses were prevented.
                     Refer to notes 75 and 76 in the consolidated annual financial
                     statements for details of incurred expenditure.

                     The internal audit unit was not properly established

                     Section 165(1) of the MFMA was not complied with as the municipal
                     entity did not have a fully functioning internal audit division. The
                     internal audit division of the parent municipality performed limited
                     procedures and did not perform the functions as required by section
                     165(2) of the MFMA for the municipal entity.




Mangaung Local Municipality Annual Performance Report 2009/2010
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                     Compliance with “Other enabling legislation”

                     Included in gross consumer receivables was an amount of R71 579 155
                     (2009: R100 581 534), which was due to the municipality by
                     government institutions. A total of R67 719 574 (2009: R95 517 543) of
                     this balance had been outstanding for longer than 30 days as at
                     30 June 2010. I could not be provided with adequate evidence that the
                     municipality had complied with section 64(3) of the MFMA which
                     requires the accounting officer of MLM to inform the National Treasury
                     in writing of any payments from an organ of state in respect of
                     municipal taxes or services which had been outstanding for longer than
                     30 days.

                     Companies Act

                     The statutory requirements of the Companies Act have not been
                     complied with

                     Section 240 of the Companies Act of South Africa, 2008 (Act No. 71 of
                     2008) was not complied with as the register of directors’ interest in
                     contracts was not accurately kept and followed up by the municipal
                     entity.

                     Section 179 of the Companies Act, 2008 was not complied with as the
                     municipal entity has not held an annual general meeting for the 2008-
                     09 financial year within the prescribed time frame.

                     Internal Control
                     I considered internal control relevant to my audit of the financial
                     statements and the report on predetermined objectives as well as
                     compliance with the MFMA, MSA and DoRA, but not for the purposes
                     of expressing an opinion on the effectiveness of internal control.

                     The matters reported below are limited to the significant deficiencies
                     regarding the basis for disclaimer of opinion paragraphs, the findings on
                     the report on predetermined objectives and the findings on compliance
                     with laws and regulations.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                 Page | 83
                     Leadership

                     Actions to address prior year qualifications were partly implemented in
                     the current year.

                     The leadership did not ensure that the municipality implement
                     adequate measures to prevent and detect;

                            Irregular expenditure
                            Unauthorised expenditure
                            Non-compliance with laws and regulation

                     Actions to improve on the recording and reporting of performance
                     information still need to be enhanced.

                     A high turnover of key management positions within the municipal
                     entity resulted in financial and risk management and internal control
                     responsibilities not being fully achieved. After expiry of his contract, the
                     former chief executive officer was appointed on a month-to-month
                     basis in the prior year. His services were terminated in January 2010.
                     The CFO has also resigned in May 2010. Since then an acting CEO and
                     CFO were appointed. A process has been started on the filling of both
                     positions; however, no appointments were made to date. As a result
                     sufficient actions were not taken timeously to address audit findings
                     and to exercise sound corporate governance within the municipal
                     entity.

                     The results of improved communication and co-operation between the
                     parent municipality and the municipal entity to ensure that they
                     operate as a team to resolve identified issues and to achieve overall set
                     objectives and service delivery became visible only during the latter
                     part of the year under review.

                     Actions to mitigate risk were not appropriately taken as the municipal
                     entity’s audit action plan was not fully implemented in the current year.

                     Financial and performance management




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                   Page | 84
                     Finance staff had a general lack of understanding of the GRAP
                     accounting framework and as a result are not compiling regular,
                     accurate and complete financial reports. The financial statements were
                     subjected to material corrections during the audit process.

                     Limitation of scope relating to property, plant and equipment exists
                     due to prior-year’s inadequate document management procedures, a
                     lack of capacity and expertise as well as a failure from senior
                     management to adequately address the matters previously reported.

                     Inadequate implementation of a process to ensure that complete,
                     timely, relevant, accurate and accessible information is available to
                     support information included in the performance report of the
                     municipality.

                     A lack of implementation and monitoring of controls to prevent non-
                     compliance with laws and regulations and in particular to prevent
                     irregular and unauthorised expenditure.

                     To date the municipal entity has shared an accounting system and bank
                     account with the parent municipality. As a result, several controls in
                     respect of record management do not reside at the municipal entity.
                     Inadequate filing procedures at the parent municipality have resulted in
                     significant limitations of scope during the current and previous year’s
                     audits. As a result, significant difficulties were experienced in respect of
                     the availability of information. Centlec has, however, put control
                     measures in place regarding adequate filing which resulted in an
                     improvement as most of the information requested was provided.

                     The financial statements of the municipal entity were subjected to
                     material corrections resulting from the audit process which are
                     attributable to the weaknesses in design and implementation of
                     internal control in respect of financial management, response to
                     identified risks and weaknesses in information systems.

                     Governance

                     The term of the audit committee of the municipality expired in
                     September 2009. Although the municipality started the advertising for



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                   Page | 85
                     new members in 5 October 2009 and extended the term of the audit
                     committee to 31 December 2009, the municipality still did not have an
                     audit committee at the date of this report as the proposal to the
                     council was referred back. The municipal entity shares the audit
                     committee and internal audit functions with the parent municipality.

                     Although the municipality has started to appoint additional internal
                     auditors, all internal audits as per the internal audit plan for the year
                     under review could not be completed timeously due to inadequate
                     supervision in the internal audit unit. The internal audit section of the
                     parent municipality performed limited services in respect of the
                     municipal entity. Centlec has, however, appointed an external audit
                     firm as internal auditors from 1 July 2010.

                     Risk management strategy for the municipality has been drafted but
                     not yet formalised pending the approval from the council. Furthermore,
                     an anti-corruption and fraud prevention plan has been drafted but not
                     yet formalised pending council approval. The municipal entity’s risk
                     assessment and fraud prevention plan were not finalised/compiled and
                     implemented during the current year.

                     Policies and procedures related to the municipal entity’s financial
                     reporting, risk management and compliance with laws and regulations
                     were not yet drafted and functional during the current financial year
                     and must still be developed.

                     The accounting officer of the municipal entity did not prioritise and
                     take appropriate actions to address lack of discipline in the supply chain
                     management directorate which resulted in irregular, fruitless and
                     wasteful expenditure being incurred.

                     Other Reports
                     Investigations

                     During the previous year an investigation was conducted by an
                     independent consulting firm on request of the entity. The investigation
                     was initiated based on the allegation of possible abuse of suspense




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                 Page | 86
                     accounts by employees and had resulted in criminal proceedings being
                     instituted against two employees. The investigation had not been
                     completed at the date of this report and the extent of any permanent
                     losses has not yet been established.

                     A consulting firm was appointed to conduct an investigation into the
                     irregularities within the municipal entity relating to:

                            The financial affairs
                            Policies and procedures and internal controls
                            The systems and controls at the stores that resulted in theft of
                             materials
                            All issues reported on in the Auditor-General's report
                            Human resource process

                     The consulting firm was appointed on 22 February 2009 to conduct the
                     investigation referred to above. However, up to date the firm has not
                     been able to provide the board and the auditors with the final forensic
                     audit report.

                     The South African Revenue Service is currently busy with an
                     investigation with regard to revised VAT returns that have been
                     submitted by the municipality and the municipal entity. At the date of
                     this report the investigation was still in progress.

                     Performance audits

                     A performance audit commissioned by the AGSA on infrastructure has
                     been completed, but not yet released. Due to the wide consultation at
                     a national level, the performance audit had not been signed off by the
                     AGSA at the date of this report.

                     Pretoria

                     17 December 2010




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                                                                                Page | 87
                     ACCOUNTING OFFICER’S REPORT

                     The accounting officer submits his report for the year ended 30 June
                     2010.

                     1.    Review of activities

                     Main business and operations

                     The group is engaged in providing municipal services and maintaining
                     the best interest of the local community, mainly in the Mangaung area,
                     and operates principally in South Africa.

                     The operating results for the year were satisfactory. The financial
                     position of the group is also satisfactory.

                     Net surplus of the group was R 285,160,555 (2009: surplus R
                     140,775,796).

                     2.    Going concern

                     We draw attention to the fact that at 30 June 2010, the group had an
                     accumulated surplus of R 1,819,282,969 and that the group's total
                     assets exceed its liabilities by R 3,403,286,064.

                     The annual financial statements have been prepared on the basis of
                     accounting policies applicable to a going concern. This basis presumes
                     that funds will be available to finance future operations and that the
                     realisation of assets and settlement of liabilities, contingent obligations
                     and commitments will occur in the ordinary course of business.

                     The ability of the group to continue as a going concern is dependent on
                     a number of factors. The most significant of these is that the accounting
                     officer continues to procure funding for the ongoing operations for the
                     group.

                     3.    Subsequent events




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                  Page | 88
                     The accounting officer has evaluated the events after year end, and no
                     matter or circumstance arising since the end of the financial year will
                     have an impact on the current annual financial statements.

                     4. Accounting Officer's interest in contracts

                     None.

                     5.    Accounting policies

                     The annual financial statements have been prepared in accordance
                     with Standards of Generally Recognised Accounting Practice (GRAP)
                     issued by the Accounting Standards Board in accordance with the
                     Municipal Finance Management Act (Act 56 of 2003).

                     6.    Accounting Officer

                     The accounting officer of the group, during the year and to the date of
                     this report is, as follows:




                     ___________________________

                     Mr. SJ Msibi
                     City Manager




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                               Page | 89
                                  Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                            Statement of Financial Position
                                                                             Controlling entity               Economic entity
                                                                          2010             2009           2010            2009
                                                         Note(s)           R                 R              R               R

Current Assets
Current portion of non-current receivables                   7          27,784,424       14,713,893     14,060,234       3,922,453
Inventory                                                   10          11,438,504        6,244,099     53,449,088      49,101,949
Other receivables from exchange transactions                11          80,747,156       81,745,321     82,791,626      83,854,176
Other receivables from non-exchange transactions            12             395,802          315,258        395,802         315,258
Consumer receivables from exchange transactions             13         152,879,298      130,933,891    326,753,529     266,687,816
Cash and cash equivalents                                   14          45,244,821      237,908,991     45,461,179     284,482,251
                                                                       318,490,005      471,861,453    522,911,458     688,363,903

Non-Current Assets
Property, plant and equipment                                4       2,937,222,307    2,459,723,584   4,220,930,156   2,790,755,113
Intangible assets                                            5           2,808,295        5,133,548       2,808,295       5,133,548
Investments                                                  6              10,467            8,795          10,367           8,695
Non-current receivables                                      7         813,895,980      755,148,567      11,775,846      15,762,076
                                                                     3,753,937,049    3,220,014,494   4,235,524,664   2,811,659,432
Total Assets                                                         4,072,427,054    3,691,875,947   4,758,436,122   3,500,023,335

Liabilities
Current Liabilities
Current portion of non-current borrowings                   21           1,976,260        1,785,058      1,976,260       1,785,058
Finance lease liability                                     22           1,729,914        1,611,141      1,916,360       1,769,870
Unspent conditional grants and receipts                     23         231,685,748      416,585,976    232,726,540     419,121,478
Payables from exchange transactions                         25         678,957,236      487,378,495    546,852,220     371,790,186
Payables from non-exchange transactions                     26           3,660,624        3,251,757      3,660,624       3,251,757
VAT payable                                                 27          87,095,362       55,990,136     68,098,179      55,592,399
Consumer deposits                                           28          25,107,132       23,889,773     63,476,048      57,408,625
                                                                     1,030,212,276      990,492,336    918,706,231     910,719,373

Non-Current Liabilities
Defined benefit plan obligation                              9         350,917,000      297,121,000    350,917,000     297,121,000
Non-current borrowings                                      21          10,517,382       12,493,642     10,517,383      12,493,642
Finance lease liability                                     22             644,038        1,334,925        723,766       1,518,500
Non-current provisions                                      24          74,285,678       69,859,875     74,285,678      69,859,875
                                                                       436,364,098      380,809,442    436,443,827     380,993,017
Total Liabilities                                                    1,466,576,374    1,371,301,778   1,355,150,058   1,291,712,390
Net Assets                                                           2,605,850,680    2,320,574,169   3,403,286,064   2,208,310,945

Net Assets
Reserves
Housing development fund                                    15          11,202,948       21,376,064      11,202,948      21,376,064
Revaluation reserve                                         16         584,022,037      584,022,037     584,022,037     584,022,037
Mark-to-market reserve                                      17               7,832            6,160           7,832           6,160
Other NDR                                                   18                   -                -     899,850,291               -
Self insurance reserve                                      19          74,606,710       73,132,814      74,606,710      73,132,814
COID reserve                                                20          14,313,277       13,654,505      14,313,277      13,654,505
Accumulated surplus                                                  1,921,697,876    1,628,382,589   1,819,282,969   1,516,119,365
Total Net Assets                                                     2,605,850,680    2,320,574,169   3,403,286,064   2,208,310,945




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                 Page | 90
                              Mangaung Local Municipality Consolidated
                                     Annual Financial Statements for the year ended 30 June 2010

                                      Statement of Financial Performance
                                                                             Controlling entity                 Economic entity
                                                                             2010               2009            2010            2009
                                                             Note(s)          R                 R               R               R

Revenue
Property rates                                                   31        342,459,519      278,659,802       338,503,889      278,659,802
Service charges                                                  32        429,527,465      403,345,700     1,382,279,326    1,103,893,644
Fees earned                                                                          -                -         2,911,312        2,184,602
Fines                                                                        1,385,004        4,733,684         1,385,004        4,733,684
Government grants and subsidies                                  33        853,818,002      722,291,389       858,670,800      716,894,915
Income for agency services                                                 107,165,586       90,528,323                 -          191,255
Other income                                                     34         36,893,354       94,953,536        36,893,354       94,953,536
Licences and permits                                                           199,304          237,948           199,304          237,948
Interest earned                                                  40        167,795,985      156,439,702        47,137,769       63,043,544
System upgrades                                                                      -                -        20,198,157       18,297,526
Rental of facilities and equipment                               44         19,589,794       19,757,100        19,589,794       19,757,100
Total Revenue                                                            1,958,834,013     1,770,947,184    2,707,768,709    2,302,847,556

Expenditure
General expenses                                                 35        272,671,853      200,226,942      293,416,201      204,464,568
Employee related costs                                           37        693,031,853      588,275,863      695,516,688      589,630,129
Remuneration of councillors and board members                    38         21,904,381       19,902,076       22,283,203       20,639,076
Bad debts and provision for bad debts                            39         82,710,130      251,028,299       93,235,427      256,960,387
Depreciation and amortisation                                    41        125,349,838      121,619,599      171,250,568      158,909,801
Finance costs                                                    42         41,039,433       43,514,825       49,800,246       44,522,462
Repairs and maintenance                                                     93,472,154       92,567,267      125,595,595      126,192,406
Contracted services                                              45        114,119,000       43,852,808      172,282,945       73,400,741
Grants and subsidies paid                                        46         42,000,502      101,120,514        7,557,577        6,316,663
Bulk purchases                                                   47        187,207,256      168,087,285      781,654,329      614,193,567
Total Expenditure                                                      (1,673,506,400)(1,630,195,478)(2,412,592,779)(2,095,229,800)
(Profit)/Loss due to foreign exchange transactions                             (167,058)           24,090        (167,058)            24,090
Surplus for the period                                                     285,160,555       140,775,796      295,008,872     207,641,846




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                       Page | 91
                                                              Mangaung Local Municipality Consolidated
                                                                  Annual Financial Statements for the year ended 30 June 2010


                                                                               Statement of Changes in Net Assets
                                             Capitalisation         Housing         Revaluation       Mark-to-         Other NDR             Self insurance COID reserve Total reserves Accumulated   Total net
                                                reserve           development         reserve         market                           reserve                                            surplus      assets
                                                                      fund                            reserve
                                                   R                    R                R               R                 R             R                R                R               R                R


Controlling entity
Opening balance as previously reported          382,691,159           33,071,514     587,850,107              6,265                -   73,259,404       12,856,623      707,043,913 1,078,883,920     2,168,618,992
Adjustments
Fundamental errors affecting net assets                   -                    -               -                  -                -            -                 -              -      9,039,558         9,039,558
Balance at 01 July 2008 as restated             382,691,159           33,071,514     587,850,107              6,265                -   73,259,404          12,856,623 1,089,735,072 1,087,923,478     2,177,658,550
Changes in net assets
Surplus for the year                                      -                     -               -                 -                -             -                -               -    140,775,796     140,775,796
Asset revaluation                                         -                     -      (3,828,070)                -                -             -                -     (3,828,070)               -     (3,828,070)
Contributions to insurance                                -                     -               -                 -                -     1,762,598       2,082,464       3,845,062      (3,845,062)               -
Transfer from Housing fund                                -          (11,695,450)               -                 -                -             -                -    (11,695,450)     11,695,450                -
Unbundling of reserves                        (382,691,159)                     -               -                 -                -             -                -   (382,691,159)    388,659,157        5,967,997
Insurance claims processed                                -                     -               -                 -                -    (1,889,188)     (1,284,582)     (3,173,770)       3,173,770               -
Fair value loss                                           -                     -               -              (105)               -             -                -           (105)               -           (105)
Total changes                                 (382,691,159)          (11,695,450)     (3,828,070)              (105)               -     (126,590)         797,882     (14,852,333)    540,459,111      142,915,619
Balance at 01 July 2009                                   -           21,376,064     584,022,037              6,160                -   73,132,814       13,654,505       692,191,580 1,628,382,589    2,320,574,169
Changes in net assets
Surplus for the year                                          -                 -                 -               -                -            -                 -               -    285,160,555     285,160,555
Contributions to insurance reserve                            -                 -                 -               -                -    2,297,910        2,346,900       4,644,810      (4,644,810)              -
Insurance claims processed                                    -                 -                 -               -                -     (824,014)      (1,688,128)     (2,512,142)       2,626,426        114,284
Transfers                                                     -      (10,173,116)                 -               -                -            -                 -    (10,173,116)     10,173,116               -
Fair value gain                                               -                 -                 -           1,672                -            -                 -          1,672                -          1,672
Total changes                                                 -      (10,173,116)                 -           1,672                -    1,473,896          658,772      (8,038,776)    293,315,287     285,276,511
Balance at 30 June 2010                                       -       11,202,948     584,022,037              7,832                -   74,606,710       14,313,277      684,152,804 1,921,697,876     2,605,850,680
Note(s)                                                                 15              16               17               18             19               20

Economic entity
Opening balance as previously reported          382,691,159           33,071,514     587,850,107              6,265                -   73,259,404          12,856,623 1,089,735,072 1,069,169,333     2,158,904,405
Adjustments
Prior year adjustments                                        -                 -                 -               -                -             -                -               -   (348,955,063)   (348,955,063)
Balance at 01 July 2008 as restated             382,691,159           33,071,514     587,850,107              6,265                -   73,259,404        12,856,623 1,089,735,072      720,214,270    1,809,949,342




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                                                Page | 92
                                                                       Mangaung Local Municipality Consolidated
                                                                         Annual Financial Statements for the year ended 30 June 2010

                                                                                Statement of Changes in Net Assets
                                                 Share capital /         Hedging        Revaluation         Fair value         Other NDR       Insurance         COID reserve Total reserves Accumulated    Total net
                                                  contributed            reserve          reserve          adjustment                           reserve                                        surplus       assets
                                                    capital                                                   assets-
                                                                                                          available-for-
                                                                                                           sale reserve
                                                       R                    R               R                    R                R               R              R               R               R                R
Changes in net assets
Prior period error adjustments                                     -                -                 -                    -               -               -            -               -    188,579,934     188,579,934
Net income (losses) recognised directly in net                     -                -                 -                    -               -               -            -               -    188,579,934     188,579,934
assets
Surplus for the period                                             -                -                 -                    -               -               -            -               -    207,641,846     207,641,846
Total recognised income and expenses for the                       -                -                 -                    -               -               -            -               -    396,221,780     396,221,780
year
Asset revaluation                                             -                     -     (3,828,070)                   -                  -              -              -     (3,828,070)              -     (3,828,070)
Contributions to insurance reserve                            -                     -               -                   -                  -      1,762,598     2,082,464       3,845,062     (3,845,062)               -
Transfer from Housing fund                                    -          (11,695,450)               -                   -                  -              -              -    (11,695,450)    11,695,450                -
Unbundling of reserves                             (382,691,159)                    -               -                   -                  -              -              -   (382,691,159)   388,659,156        5,967,997
Insurance claims processed                                    -                     -               -                   -                  -    (1,889,188)    (1,284,582)     (3,173,770)      3,173,771               -
Fair value loss                                               -                     -               -                (105)                 -              -              -           (105)              -           (105)
Total changes                                      (382,691,159)         (11,695,450)     (3,828,070)                (105)                 -     (126,590)        797,882    (397,543,492)   795,905,095      398,361,603
Balance at 01 July 2009                                       -           21,376,064     584,022,037                6,160                  -    73,132,814     13,654,505      692,191,580 1,516,119,365    2,208,310,945
Changes in net assets
Surplus for the period                                             -                -                 -                 -                -               -               -             -     295,008,872     295,008,872
Asset revaluation: Centlec                                         -                -                 -                 -      899,850,291               -               -   899,850,291                -    899,850,291
Contributions to insurance reserve                                 -                -                 -                 -                -       2,297,910      2,346,900      4,644,810      (4,644,810)              -
Insurance claims processed                                         -                -                 -                 -                -       (824,014)     (1,688,128)    (2,512,142)       2,626,426        114,284
Transfers                                                          -     (10,173,116)                 -                 -                -               -               -   (10,173,116)     10,173,116               -
Fair value gain                                                    -                -                 -             1,672                -               -               -         1,672                -          1,672
Total changes                                                      -     (10,173,116)                 -             1,672      899,850,291       1,473,896       658,772     891,811,515     303,163,604    1,194,975,119
Balance at 30 June 2010                                            -      11,202,948     584,022,037                7,832      899,850,291      74,606,710       14,313,277 1,584,003,095 1,819,282,969     3,403,286,064




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                                                      Page | 93
                               Mangaung Local Municipality Consolidated
                                     Annual Financial Statements for the year ended 30 June 2010

                                                    Cash Flow Statement
                                                                             Controlling entity                 Economic entity
                                                                             2010              2009             2010            2009
                                                             Note(s)          R                 R               R               R


Cash flows from operating activities

Receipts
Taxation                                                                     30,985,715      20,556,712        30,985,715    20,556,712
Cash receipts from customers                                                687,974,167     477,961,272     1,640,434,755 1,178,584,700
Grants                                                                      668,917,774     921,661,367       667,690,774   858,464,767
Interest received                                                           149,617,343     128,654,648       149,617,343   128,654,648
Other receipts                                                              145,643,248     190,448,856        39,252,630   100,633,957
                                                                       1,683,138,247 1,739,282,855 2,527,981,217 2,286,894,784


Payments
Employee costs                                                             (682,241,154)      (599,492,939)(1,454,177,989)(1,209,549,979)
Suppliers                                                                  (221,385,094)    (289,865,671) (219,914,299) (289,865,671)
Other payments                                                             (295,551,661)    (341,047,324) (128,895,726) (135,720,352)
Inventories                                                                  (5,033,240)       (1,075,543)     (5,033,240)    (1,075,543)
                                                                       (1,204,211,149)(1,231,481,477)(1,808,021,254)(1,636,211,545)

Net cash flows from operating activities                        48
                                                                            478,927,098      507,801,378      719,959,963      650,683,239

Cash flows from investing activities

Purchase of property, plant and equipment                        4         (600,523,308)    (478,637,572)    (699,250,069) (589,597,692)
Proceeds from sale of property, plant and equipment              4                     -         233,219                 -       233,861
Purchase of other intangible assets                              5                     -         (78,110)                -       (78,110)
Movement in current investments                                                        -         161,547                 -       161,547
Loans to economic entities repaid                                                      -                -    (136,729,396)    49,349,360
Increase in non-current receivables                                         (75,844,835)     (37,851,943)    (221,918,453)   486,039,338
Sale of financial assets                                                               -                -      12,408,210               -
Interest Income                                                               8,568,971       27,785,053     (112,089,245) (65,611,105)
Finance costs                                                                          -                -      (8,726,490)     (950,567)
Net cash flows from investing activities                                   (667,799,172)     (488,387,806)(1,166,305,443) (120,453,368)

Cash flows from financing activities

Repayment of shareholders loan                                                         -                -      17,403,624    15,191,304
Loans repaid                                                                 (1,785,058)      (1,656,364)     144,288,560 (525,547,645)
Movement in consumer deposits                                                          -                -       1,217,359     1,370,710
                                                                                       -                -      47,749,715    21,029,659
Proceeds from other financial liabilities
                                                                              1,217,359        1,370,710                 -            -
Movement in consumer deposits
                                                                               (572,114)      (1,256,033)        (682,567)  (1,446,598)
Finance lease payments
                                                                             (2,652,283)      (3,885,019)      (2,652,283)  (3,885,019)
Finance costs
                                                                             (3,792,096)      (5,426,706)     207,324,408    (493,287,589)
Net cash flows from financing activities

Net increase/(decrease) in cash and cash                                   (192,664,170)      13,986,866     (239,021,072)      36,942,282
equivalents
Cash and cash equivalents at the beginning of the                          237,908,991       223,922,125      284,482,251      247,539,969
period
Cash and cash equivalents at the end of the period                14         45,244,821      237,908,991       45,461,179      284,482,251


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                               Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                                     Accounting Policies
1.   Presentation of Annual Financial Statements

The annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice
(GRAP) issued by the Accounting Standards Board in accordance with the Municipal Finance Management Act (Act 56 of 2003).

Accounting policies for material transactions, events or conditions not covered by the GRAP reporting framework have been developed in
accordance with paragraphs 7, 11 and 12 of GRAP 3 and the hierarchy approved in Directive 5 issued by the Accounting Standards Board.

These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention
unless specified otherwise.

A summary of the significant accounting policies, which have been consistently applied, are disclosed below.

These accounting policies are consistent with the previous year's financial statements, unless explicitly stated otherwise.

1.1 Significant judgements and sources of estimation uncertainty

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

Significant judgements include:

Trade receivables and loans and receivables

The group assesses its trade receivables, held to maturity investments and loans and receivables for impairment at the end of each reporting period.
In determining whether an impairment loss should be recorded in surplus or deficit, the group makes judgements as to whether there is observable
data indicating a measurable decrease in the estimated future cash flows from a financial asset.

The impairment for trade receivables, held to maturity investments and loans and receivables is calculated on a portfolio basis, after removing
individually impaired items, based on historical loss ratios, adjusted for national and industry-specific economic conditions and other indicators
present at the reporting date that correlate with defaults on the portfolio. These annual loss ratios are applied to loan balances in the portfolio and
scaled to the estimated loss emergence period.

Available-for-sale financial assets

The group follows the guidance of IAS 39 to determine when an available-for-sale financial asset is impaired. This determination requires significant
judgement. In making this judgment the group evaluates, amongst other factors, the duration and extent to which the fair value of an investment is
less than its cost, the financial health of and near-term business outlook for the investee, (including factors such as industry and sector performance),
changes in technology and operating and financing cash flow.

Allowance for slow moving, damaged and obsolete inventory

An allowance is made for slow-moving, damaged and obsolete inventory to write inventory down to the lower of cost or net realisable value.
Management has made estimates of the selling price and direct cost to sell on certain inventory items. The write down, if any, is included in the
statement of financial performance.

Fair value estimation

The fair value of financial instruments traded in active markets (such as trading and available-for- sale securities) is based on quoted market prices at
the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price.




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                                Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                                       Accounting Policies

1.1 Significant judgements and sources of estimation uncertainty (continued)

Provisions

Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of
provisions are included in note 24 - Provisions.

Provisions are measured at management's best estimate of the expenditure required to settle the obligation at the reporting date, and are
discounted to present value where the effect is material.

Useful lives and residual values

The group re-assess the useful lives and residual values of property, plant and equipment on an annual basis. In re-assessing the useful lives and
residual values of property, plant and equipment management considers the condition and use the individual assets, to determine the remaining
period over which the asset will be used.

Post employment benefits

The present value of the post retirement obligation depends on a number of factors that are determined on an actuarial basis using a number of
assumptions. The assumptions used in determining the net cost (income) include the discount rate. Any changes in these assumptions will impact on
the carrying amount of post retirement obligations.

The group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present
value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the
group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that
have terms to maturity approximating the terms of the related pension liability.

Other key assumptions for pension obligations are based on current market conditions. Additional information is disclosed in Note 9.

Effective interest rate and deferred payment terms

The group uses the prime rate adjusted for rates used by main suppliers or creditors to discount future cash flows.

1.2 Property, plant and equipment

Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the production or supply of
goods or services, rental to others, or for administrative purposes, and are expected to be used during more than one period.
The cost of an item of property, plant and equipment is recognised as an asset when:
         it is probable that future economic benefits or service potential associated with the item will flow to the group; and
         the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost on acquisition date.

The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and
condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving
at the cost. The cost, if any, also includes the necessary costs of dismantling and removing the asset and restoring the site on which it is located.

Where an asset is acquired at no cost, or for a nominal cost, its cost is its fair value as at date of acquisition.

Where an item of property, plant and equipment is acquired in exchange for a non- monetary asset or monetary assets, or a combination of
monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item's fair value was not
determinable, it's deemed cost is the carrying amount of the asset(s) given up.

When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to,
replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying
amount of the replaced part is derecognised.

Major spare parts and servicing equipment which are expected to be used for more than one period are included in property, plant and



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                               Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                                     Accounting Policies

1.2 Property, plant and equipment (continued)
equipment. Similarly, if the major spare parts and servicing equipment can be used only in connection with an item of property, plant and
equipment, they are accounted for as property, plant and equipment.

Subsequent measurement - Revaluation model (Land and Buildings)
Subsequent to initial recognition items of property, plant and equipment are carried at a revalued amount, being its fair value at the date of
revaluation less any subsequent accumulated depreciation and impairment losses. Land is not depreciated, except for landfill and quarry sites, as it is
deemed to have an indefinite useful life.

Revaluations are performed every 5 years by registered valuators for every class separately.

An increase in the carrying amount of an asset as a result of a revaluation is credited directly to the property revaluation reserve, except to the
extent that it reverses a revaluation decrease of the same asset previously recognised in surplus or deficit.

A decrease in the carrying amount of an asset as a result of a revaluation is recognised in surplus or deficit, except to the extent of any credit balance
existing in the revaluation surplus in respect of that asset.

Subsequent measurement - Cost model
Subsequent to initial recognition, items of property, plant and equipment are measured at cost less accumulated depreciation and impairment
losses.

Where the group replaces parts of an asset, it derecognises the part of the asset being replaced and capitalises the new component. Subsequent
expenditure incurred on an asset is capitalised when it increases the capacity or future economic benefits associated with the asset.

Depreciation and impairment
Property, plant and equipment are depreciated on the straight-line basis over their estimated useful lives of the assets.

Subsequent to initial recognition, property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses. Assets
held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the
relevant lease. Components of assets that are significant in relation to the whole asset and that have different useful lives are depreciated separately.

Depreciation commences when the asset is ready for its intended use. The annual depreciation rates are based on the following estimated average
asset lives:

     •   •   Roads and storm water                                             15-30
     •   •   Housing                                                           30
     •   •   Water and sewerage                                                15-20
     •   •   Buildings                                                         30
     •   •   Recreational facilities                                           20-30
     •   •   Security                                                          3-5
     •   •   Buildings                                                         30
     •   •   Specialised vehicles                                              10-15
     •   •   Plant and machinery                                               5-60
     •   •   Other vehicles                                                    5-7
     •   •   Office equipment                                                  3-5
     •   •   Furniture and fittings                                            7-10
     •   •   Specialised plant and equipment                                   10-15
     •   •   Other items of plant and equipment                                3-5
     •   •   Landfill sites                                                    15
     •   •   Quarries                                                          20-30
     •   •   Finance lease: Equipment                                          5
     •   •   Finance leases: 3G cards                                          3
     •   •   Finance leases: Cell phones                                       2

The residual value, useful life and depreciation method of each asset are reviewed annually. If the expectations differ from previous estimates, the
change is accounted for as a change in accounting estimate in the statement of financial performance.
The group tests for impairment where there is an indication that an asset may be impaired. An assessment of whether there is an indication of
possible impairment is done at each reporting date. Where the carrying amount of an item of property, plant and equipment is greater than the
estimated recoverable amount (or recoverable service amount), it is written down immediately to its recoverable amount (or recoverable service
amount) and an impairment loss is charged to the statement of financial performance.
Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                      Page | 97
                                Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                                      Accounting Policies

1.2 Property, plant and equipment (continued)

Derecognition
Items of property, plant and equipment are derecognised when the asset is disposed of, or when there are no further economic benefits or service
potential expected from the use of the asset.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is
derecognised. The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying value and is recognised in the Statement of Financial Performance.

1.3 Site restoration and dismantling cost

The group has an obligation to dismantle, remove and restore items of property, plant and equipment. Such obligations are referred to as
‘decommissioning, restoration and similar liabilities’. The cost of an item of property, plant and equipment includes the initial estimate of the costs
of dismantling and removing the item and restoring the site on which it is located, the obligation for which a group incurs either when the item is
acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

If the related asset is measured using the cost model:
            subject to second bullet, changes in the liability are added to, or deducted from, the cost of the related asset in the current period;
            if a decrease in the liability exceeds the carrying amount of the asset, the excess is recognised immediately in surplus or deficit; and
            if the adjustment results in an addition to the cost of an asset, the group considers whether this is an indication that the new carrying
             amount of the asset may not be fully recoverable. If there is such an indication, the asset is tested for impairment by estimating its
             recoverable amount, and any impairment loss is recognised in surplus or deficit.

1.4   Intangible assets

An asset is identified as an intangible asset when it:
                                                                                                                                      a
          is capable of being separated or divided from the group and sold, transferred, licensed, rented or exchanged, eitherindividully or
          together with a related contract, asset or liability; or
         arises from contractual rights or other legal rights, regardless whether those rights are transferable or separate from the group or from
          other rights and obligations.

An intangible asset is recognised when:
         it is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to the group; and
         the cost or fair value of the asset can be measured reliably.

Intangible assets are initially recognised at cost.

For an intangible asset acquired at no or nominal cost, the cost shall be its fair value as at the date of acquisition.

An intangible asset arising from development (or from the development phase of an internal project) is recognised when:
         it is technically feasible to complete the asset so that it will be available for use or sale.
         there is an intention to complete and use or sell it.
         there is an ability to use or sell it.
         it will generate probable future economic benefits or service potential.
         there are available technical, financial and other resources to complete the development and to use or sell the asset.
         the expenditure attributable to the asset during its development can be measured reliably.

Subsequent to initial recognition intangible assets are carried at cost less any accumulated amortisation and any impairment losses.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over
which the asset is expected to generate net cash inflows or service potential. Amortisation is not provided for these intangible assets, but they are
tested for impairment annually and whenever there is an indication that the asset may be impaired. Where the carrying amount of an item of an
intangible asset is greater than the estimated recoverable amount (or recoverable service amount), it is written down immediately to its recoverable
amount (or recoverable service amount) and an impairment loss is charged to the Statement of Financial Performance.

Amortisation is provided to write down the intangible assets, on a straight -line basis, to their residual values. Amortisation commences when the
asset is ready for its intended use. The annual amortisation rates are based on the following estimated average asset lives:


Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                     Page | 98
                                Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                                       Accounting Policies

1.4   Intangible assets (continued)

Item                                                                               Useful life
Computer software                                                                  3 years

Intangible assets are derecognised:
         on disposal; or
         when no future economic benefits or service potential are expected from its use or disposal.

The gain or loss is the difference between the net disposal proceeds, if any, and the carrying amount. It is recognised in the statement of financial
performance when the asset is derecognised.

1.5 Investments

Investments in controlled entities

In the municipality’s separate annual financial statements, investments in investments are carried at cost less any accumulated impairment.

The cost of an investment in controlled entity is the aggregate of:
         the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the group; plus
         any costs directly attributable to the purchase of the controlled entity.

An adjustment to the cost of a business combination contingent on future events is included in the cost of the combination if the adjustment is
probable and can be measured reliably.

1.6 Financial instruments

Classification

The group classifies financial assets and financial liabilities into the following categories:
        Held-to-maturity investments
        Loans and receivables
        Available-for-sale financial assets

Initial recognition and measurement

Financial instruments are recognised initially when the group becomes a party to the contractual provisions of the instruments.

The group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or a residual interest
in accordance with the substance of the contractual arrangement.

Financial instruments are measured initially at fair value, except for investments in residual interests for which a fair value is not determinable, which
are measured at cost and are classified as available-for-sale financial assets.

For financial instruments which are not at fair value through surplus or deficit, transaction costs are included in the initial measurement of the
instrument.

Transaction costs on financial instruments at fair value through surplus or deficit are recognised in surplus or deficit.

Regular way purchases of financial assets are accounted for at trade date.

Subsequent measurement

Financial instruments at fair value through surplus or deficit are subsequently measured at fair value, with gains and losses arising from changes in
fair value being included in surplus or deficit for the period.

Net gains or losses on the financial instruments at fair value through surplus or deficit exclude dividends and interest.

Dividend income is recognised in surplus or deficit as part of other income when the group's right to receive payment is established.




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                                                     Accounting Policies

1.6 Financial instruments (continued)
Loans and receivables
Loans and receivables are subsequently measured at amortised cost, using the effective interest method, less accumulated impairment losses.
Amortised cost refers to the initial carrying amount, plus interest and less repayments.

Loans to employees
After initial recognition these loans are measured at amortised cost, using the effective interest rate method, less any impairment loss recognised to
reflect irrecoverable amounts.

Trade and other receivables
After initial recognition these receivables are measured at amortised cost, using the effective interest rate method, less any impairment loss
recognised to reflect irrecoverable amounts.

Held-to-maturity investments
Held-to-maturity investments are subsequently measured at amortised cost, using the effective interest rate method, less accumulated impairment
losses.

Available-for-sale financial assets
Available-for-sale financial assets are subsequently measured at fair value. This excludes investments in residual interests for which a fair value is not
determinable, which are measured at cost less accumulated impairment losses.

Fair value determination

Fair value information for trade and other receivables is determined as the present value of estimated future cash flows discounted at the effective
interest rate computed at initial recognition.

The fair values of quoted investments (such as available for sale investments) are based on current bid prices.

Impairment of financial assets

The group assesses, at each statement of financial position date, whether a financial asset or group of financial assets is impaired.

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is
measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses
that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial
recognition). The carrying amount of the asset shall be reduced either directly or through the use of an allowance account. The amount of the loss
shall be recognised in surplus or deficit.

If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value, because
its fair value cannot be reliably measured, or on a derivative asset that is linked to and is settled by delivery of such an unquoted equity instrument,
the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of
estimated future cash flows, discounted at the current market rate of return for a similar financial asset to the financial asset that is impaired. Such
impairment losses are not reversed.

When a decline in the fair value of an available-for-sale financial asset has been recognised directly in net assets and there is objective evidence that
the asset is impaired, the cumulative deficit that had been recognised directly in net assets shall be removed and recognised in surplus or deficit even
though the financial asset has not been derecognised.

The amount of the cumulative deficit that is removed from equity and recognised in surplus or deficit are the difference between the acquisition cost
(net of any principal repayment and amortisation) and current fair value, less any impairment loss on that financial asset previously recognised in
surplus or deficit.

The recoverable amounts of cash-generating units and recoverable service amounts of non -cash- generating units and individual assets have been
determined based on the higher of value-in-use calculations and fair values less costs to sell. These calculations require the use of estimates and
assumptions.

The group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be
recoverable. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of
assets.

At the end of each reporting period the group assesses all financial assets, other than those at fair value through surplus or deficit, to determine
whether there is objective evidence that a financial asset or group of financial assets has been impaired.


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                                                      Accounting Policies

1.6 Financial instruments (continued)

For amounts due to the group, significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default of
payments are all considered indicators of impairment.

Impairment losses are recognised in surplus or deficit when there is objective evidence that it is impaired. The impairment is measured as the
difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest
rate computed at initial recognition. The carrying amount of the asset is reduced either directly or through use of an allowance account.

Impairment losses are also not subsequently reversed for available-for-sale investments in residual interests which are held at cost because fair value
was not determinable.

Derecognition

Financial assets

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised where:
       the rights to receive cash flows from the asset have expired;
       the group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay
             to a third party under a ‘pass-through’ arrangement; or
       the group has transferred its rights to receive cash flows from the asset and either
             -     has transferred substantially all the risks and rewards of the asset, or
             -     has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and
rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the group’s continuing involvement in the asset.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the
asset and the maximum amount of consideration that the group could be required to repay. Where continuing involvement takes the form of a
written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of the group’s continuing
involvement is the amount of the transferred asset that the group may repurchase, except that in the case of a written put option (including a cash-
settled option or similar provision) on an asset measured at fair value, the extent of the group’s continuing involvement is limited to the lower of the
fair value of the transferred asset and the option exercise price.


Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. Where an existing financial liability is
replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the
respective carrying amounts is recognised in surplus or deficit.

Gains and losses

A gain or loss arising from a change in a financial asset or financial liability is recognised as follows:
       A gain or loss on an available-for-sale financial asset is recognised directly in net assets, through the statement of changes in net assets,
            until the financial asset is derecognised, at which time the cumulative gain or loss previously recognised in net assets is recognised in
            surplus or deficit; and
       For financial assets and financial liabilities carried at amortised cost, a gain or loss is recognised in surplus or deficit when the financial
            asset or financial liability is derecognised or impaired, and through the amortisation process.

Held to maturity

These financial assets are initially measured at fair value plus direct transaction costs.

At subsequent reporting dates these are measured at amortised cost using the effective interest rate method, less any impairment loss recognised to
reflect irrecoverable amounts. An impairment loss is recognised in surplus or deficit when there is objective evidence that the asset is impaired, and
is measured as the difference between the investment’s carrying amount and the present value of estimated future cash flows discounted at the
effective interest rate computed at initial recognition. Impairment losses are reversed in subsequent periods when an increase in the investment’s
recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying
amount of the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not
been recognised.



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                                      Annual Financial Statements for the year ended 30 June 2010

                                                      Accounting Policies

1.6 Financial instruments (continued)

Trade and other receivables

Trade receivables are measured at initial recognition at fair value plus direct transaction costs, and are subsequently measured at amortised cost
using the effective interest rate method, less any impairment loss recognised to reflect irrecoverable amounts. Appropriate allowances for estimated
irrecoverable amounts are recognised in surplus or deficit when there is objective evidence that the asset is impaired. Significant financial difficulties
of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30
days overdue) are considered indicators that the trade receivable is impaired. The allowance recognised is measured as the difference between the
asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

An impairment of trade receivables is accounted for by reducing the carrying amount of the asset through the use of an allowance account, and the
amount of the loss is recognised in surplus or deficit within operating expenses. When a trade receivable is uncollectible, it is written off against the
allowance account for trade receivables.

Trade and other receivables are classified as loans and receivables.

Available-for-sale financial assets

These financial assets are non-derivatives that are either designated in this category or not classified elsewhere.

Assets are recognised and derecognised on a trade date basis where the purchase or sale of an asset is under a contract whose terms require delivery
of the asset within the timeframe established by the market concerned.

Available-for-sale financial assets are initially and subsequently measured at fair value. Gains and losses arising from changes in fair value of an
available-for-sale financial asset are recognised in net assets until the asset is disposed of or determined to be impaired.

Interest on available-for-sale financial assets calculated using the effective interest rate method is recognised in surplus or deficit as part of other
income. Dividends received on available-for-sale residual interests are recognised in surplus or deficit as part of other income when the group's right
to receive payment is established.

Changes in fair value of available-for-sale financial assets denominated in a foreign currency are analysed between translation differences resulting
from changes in amortised cost and other changes in the carrying amount. Translation differences on monetary items are recognised in surplus or
deficit, while translation differences on non-monetary items are recognised in net assets. Changes in the fair value of monetary and non-monetary
securities classified as available-for-sale are recognised in net assets.

The group assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the
case of equity securities classified as available-for- sale, a significant or prolonged decline in the fair value of the security below its cost is considered
an indicator of impairment. If any such evidence exists for available- for-sale financial assets, the cumulative loss - measured as the difference
between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in surplus or deficit - is
removed from net assets as a reclassification adjustment and recognised in surplus or deficit.

Impairment losses recognised in surplus or deficit for investments in residual interests classified as available-for- sale are not subsequently reversed
through surplus or deficit. Impairment losses recognised in surplus or deficit for debt instruments classified as available- for-sale are subsequently
reversed if an increase in the fair value of the instrument can be objectively related to an event occurring after the recognition of the impairment
loss.

Equity investments for which a fair value is not determinable are held at cost. Impairments on such investments are not reversed.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible
to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially measured at amortised cost, using the
effective interest rate method.

Trade and other payables

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

Trade and other payables are classified as financial liabilities carried at amortised cost.




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                                      Annual Financial Statements for the year ended 30 June 2010

                                                       Accounting Policies

1.6 Financial instruments (continued)

Bank overdraft and borrowings

Bank overdrafts and borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest
rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the
term of the borrowings in accordance with the group’s accounting policy for borrowing costs.

Other financial liabilities are measured initially at fair value and subsequently at amortised cost, using the effective interest rate method.

Bank overdrafts are classified as financial liabilities carried at amortised cost.

1.7 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating
lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Finance leases - lessee

Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased item or, if
lower, the present value of the minimum lease payments at the commencement of the lease term. The corresponding liability to the lessor is
included in the statement of financial position as a finance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.

Minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to
each period during the lease term so as to produce a constant periodic rate of payment on the remaining balance of the liability.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets, or where shorter, the term of
the relevant lease.

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date of whether the
fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. The
classification of the lease is determined using the standard of GRAP on Leases.

Operating leases - lessor

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts is
recognised as an expense and the contractual payments are recognised as either a pre-paid expense asset or liability depending on whether the
payment exceeds the expense or vice versa.

Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an
expense over the lease term on the same basis as the lease revenue.

Income for leases is disclosed under revenue in the statement of financial performance.

Contingent rentals received / receivable are recognised as revenue in the period when they become due and are not included in the straight-line
lease revenue.

Operating leases - lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts is
recognised as an expense and the contractual payments are recognised as either a pre-paid expense asset or liability depending on whether the
payment exceeds the expense or vice versa.

1.8 Inventory

Inventory are initially measured at cost except where inventory are acquired at no cost, or for nominal consideration, then their costs are their fair
value as at the date of acquisition.
Subsequently inventory are measured at the lower of cost and net realisable value.




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                                     Annual Financial Statements for the year ended 30 June 2010

                                                      Accounting Policies

1.8 Inventory (continued)

Inventory are measured at the lower of cost and current replacement cost where they are held for;
        distribution at no charge or for a nominal charge; or
        consumption in the production process of goods to be distributed at no charge or for a nominal charge.

Net realisable value is the estimated selling price in the ordinary course of operations less the estimated costs of completion and the estimated costs
necessary to make the sale, exchange or distribution.

Current replacement cost is the cost the group incurs to acquire the asset on the reporting date.

The cost of inventory comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventory to their present
location and condition.

The cost of inventory of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects is assigned
using specific identification of the individual costs.

The cost of inventory is assigned using the first-in, first-out (FIFO) formula. The same cost formula is used for all inventory having a similar nature and
use to the group.

When inventory are sold, the carrying amounts of those inventory are recognised as an expense in the period in which the related revenue is
recognised. If there is no related revenue, the expenses are recognised when the goods are distributed, or related services are rendered. The amount
of any write-down of inventory to net realisable value or current replacement cost and all losses of inventory are recognised as an expense in the
period the write-down or loss occurs. The amount of any reversal of any write-down of inventory, arising from an increase in net realisable value or
current replacement cost, are recognised as a reduction in the amount of inventory recognised as an expense in the period in which the reversal
occurs.

1.9 Impairment of cash-generating assets

Cash-generating assets are those assets held by the group with the primary objective of generating a commercial return. When an asset is deployed
in a manner consistent with that adopted by a profit-orientated entity, it generates a commercial return.

Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the
asset’s future economic benefits or service potential through depreciation (amortisation).

Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulated depreciation
and accumulated impairment losses thereon.

A cash-generating unit is the smallest identifiable group of assets held with the primary objective of generating a commercial return that generates
cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.

Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.

Depreciation (Amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life.

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties,
less the costs of disposal.

Recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

Useful life is either:
          the period of time over which an asset is expected to be used by the group; or
          the number of production or similar units expected to be obtained from the asset by the group.

Identification

When the carrying amount of a cash-generating asset exceeds its recoverable amount, it is impaired.

The group assesses at each reporting date whether there is any indication that a cash-generating asset may be impaired. If any such indication exists,
the group estimates the recoverable amount of the asset.
Irrespective of whether there is any indication of impairment, the group also test a cash-generating intangible asset with an indefinite useful life or a
cash-generating intangible asset not yet available for use for impairment annually by comparing its carrying amount with
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                                                    Accounting Policies

1.9 Impairment of cash-generating assets (continued)
its recoverable amount. This impairment test is performed at the same time every year. If an intangible asset was initially recognised during the
current reporting period, that intangible asset was tested for impairment before the end of the current reporting period.

Value in use

Value in use of a cash-generating asset is the present value of the estimated future cash flows expected to be derived from the continuing use of an
asset and from its disposal at the end of its useful life.

When estimating the value in use of an asset, the group estimates the future cash inflows and outflows to be derived from continuing use of the
asset and from its ultimate disposal and the group applies the appropriate discount rate to those future cash flows.

Basis for estimates of future cash flows

In measuring value in use the group:
        base cash flow projections on reasonable and supportable assumptions that represent management's best estimate of the range of
         economic conditions that will exist over the remaining useful life of the asset. Greater weight is given to external evidence;
        base cash flow projections on the most recent approved financial budgets/forecasts, but excludes any estimated future cash inflows or
         outflows expected to arise from future restructurings or from improving or enhancing the asset's performance. Projections based on these
         budgets/forecasts covers a maximum period of five years, unless a longer period can be justified; and
        estimate cash flow projections beyond the period covered by the most recent budgets/forecasts by extrapolating the projections based on
         the budgets/forecasts using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. This growth
         rate does not exceed the long-term average growth rate for the products, industries, or country or countries in which the entity operates,
         or for the market in which the asset is used, unless a higher rate can be justified.

Composition of estimates of future cash flows

Estimates of future cash flows include:
        projections of cash inflows from the continuing use of the asset;
        projections of cash outflows that are necessarily incurred to generate the cash inflows from continuing use of the asset (including cash
         outflows to prepare the asset for use) and can be directly attributed, or allocated on a reasonable and consistent basis, to the asset; and
        net cash flows, if any, to be received (or paid) for the disposal of the asset at the end of its useful life.

Estimates of future cash flows exclude:
        cash inflows or outflows from financing activities; and
        income tax receipts or payments.

The estimate of net cash flows to be received (or paid) for the disposal of an asset at the end of its useful life is the amount that the group expects to
obtain from the disposal of the asset in an arm's length transaction between knowledgeable, willing parties, after deducting the estimated costs of
disposal.

Discount rate

The discount rate is a pre-tax rate that reflects current market assessments of the time value of money, represented by the current risk-free rate of
interest and the risks specific to the asset for which the future cash flow estimates have not been adjusted.

Recognition and measurement (individual asset)

If the recoverable amount of a cash -generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable
amount. This reduction is an impairment loss.

An impairment loss is recognised immediately in surplus or deficit.

When the amount estimated for an impairment loss is greater than the carrying amount of the cash-generating asset to which it relates, the group
recognises a liability only to the extent that is a requirement in another Standard of GRAP.

After the recognition of an impairment loss, the depreciation (amortisation) charge for the cash-generating asset is adjusted in future periods to
allocate the cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.



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                                                     Accounting Policies

1.9 Impairment of cash-generating assets (continued) Cash-

generating units

If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not possible to estimate
the recoverable amount of the individual asset, the group determines the recoverable amount of the cash-generating unit to which the asset belongs
(the asset's cash-generating unit).

If an active market exists for the output produced by an asset or group of assets, that asset or group of assets is identified as a cash-generating unit,
even if some or all of the output is used internally. If the cash inflows generated by any asset or cash-generating unit are affected by internal transfer
pricing, the group use management's best estimate of future price(s) that could be achieved in an arm's length transaction in estimating on:
          the future cash inflows used to determine the asset's or cash-generating unit's value in use; and
          the future cash outflows used to determine the value in use of any other assets or cash-generating units that are affected by the internal
           transfer pricing.

Cash-generating units are identified consistently from period to period for the same asset or types of assets, unless a change is justified.

The carrying amount of a cash-generating unit is determined on a basis consistent with the way the recoverable amount of the cash-generating unit
is determined.

An impairment loss is recognised for a cash-generating unit if the recoverable amount of the unit is less than the carrying amount of the unit. The
impairment is allocated to reduce the carrying amount of the cash-generating assets of the unit on a pro rata basis, based on the carrying amount of
each asset in the unit. These reductions in carrying amounts are treated as impairment losses on individual assets.

In allocating an impairment loss, the entity does not reduce the carrying amount of an asset below the highest of:
          its fair value less costs to sell (if determinable);
          its value in use (if determinable); and
          zero.

The amount of the impairment loss that would otherwise have been allocated to the asset is allocated pro rata to the other cash-generating assets of
the unit.

Where a non-cash -generating asset contributes to a cash-generating unit, a proportion of the carrying amount of that non -cash-generating asset is
allocated to the carrying amount of the cash-generating unit prior to estimation of the recoverable amount of the cash-generating unit.

Reversal of impairment loss

The group assess, at each reporting date, whether there is any indication that an impairment loss recognised in prior periods for a cash-generating
asset may no longer exist or may have decreased. If any such indication exists, the entity estimates the recoverable amount of that asset.

An impairment loss recognised in prior periods for a cash- generating asset is reversed if there has been a change in the estimates used to determine
the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of the asset is increased to its recoverable
amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss
does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been
recognised for the asset in prior periods.

A reversal of an impairment loss for a cash-generating asset is recognised immediately in surplus or deficit.

After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the cash-generating asset is adjusted in future periods
to allocate the cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

A reversal of an impairment loss for a cash-generating unit is allocated to the cash-generating assets of the unit pro rata with the carrying amounts of
those assets. These increases in carrying amounts are treated as reversals of impairment losses for individual assets. No part of the amount of such a
reversal is allocated to a non-cash-generating asset contributing service potential to a cash-generating unit.


In allocating a reversal of an impairment loss for a cash-generating unit, the carrying amount of an asset is not increased above the lower of:




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                                                     Accounting Policies

1.9   Impairment of cash-generating assets (continued)
           its recoverable amount (if determinable); and
           the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised
            for the asset in prior periods.

The amount of the reversal of the impairment loss that would otherwise have been allocated to the asset is allocated pro rata to the other assets of
the unit.

Redesignation

The redesignation of assets from a cash-generating asset to a non-cash-generating asset or from a non-cash-generating asset to a cash-generating
asset only occur when there is clear evidence that such a redesignation is appropriate.

1.10 Impairment of non-cash-generating assets

Non-cash-generating assets are assets other than cash-generating assets.

Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the
asset’s future economic benefits or service potential through depreciation (amortisation).

Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulated depreciation
and accumulated impairment losses thereon.

A cash-generating unit is the smallest identifiable group of assets held with the primary objective of generating a commercial return that generates
cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.

Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.

Depreciation (Amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life.

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties,
less the costs of disposal.

Recoverable service amount is the higher of a non-cash-generating asset’s fair value less costs to sell and its value in use.

Useful life is either:
          (a) the period of time over which an asset is expected to be used by the group; or
          (b) the number of production or similar units expected to be obtained from the asset by the group.

Identification

When the carrying amount of a non-cash-generating asset exceeds its recoverable service amount, it is impaired.

The group assesses at, each reporting date, whether there is any indication that a non-cash-generating asset may be impaired. If any such indication
exists, the group estimates the recoverable service amount of the asset.

Irrespective of whether there is any indication of impairment, the entity also test a non-cash-generating intangible asset with an indefinite useful life
or a non- cash-generating intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable
service amount. This impairment test is performed at the same time every year. If an intangible asset was initially recognised during the current
reporting period, that intangible asset was tested for impairment before the end of the current reporting period.

Value in use

Value in use of a non-cash-generating asset is the present value of the non-cash-generating asset’s remaining service potential.

The present value of the remaining service potential of a non-cash-generating asset is determined using the following approach:

Depreciated replacement cost approach

The present value of the remaining service potential of a non-cash-generating asset is determined as the depreciated replacement cost of the asset.
The replacement cost of an asset is the cost to replace the asset’s gross service potential. This cost is depreciated to reflect the asset in its used
condition. An asset may be replaced either through reproduction (replication) of the existing asset or through




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                                    Annual Financial Statements for the year ended 30 June 2010

                                                    Accounting Policies

1.10 Impairment of non-cash-generating assets (continued)
replacement of its gross service potential. The depreciated replacement cost is measured as the reproduction or replacement cost of the asset,
whichever is lower, less accumulated depreciation calculated on the basis of such cost, to reflect the already consumed or expired service potential
of the asset.

The replacement cost and reproduction cost of an asset is determined on an “optimised” basis. The rationale is that the group would not replace or
reproduce the asset with a similar asset if the asset to be replaced or reproduced is an overdesigned or overcapacity asset. Overdesigned assets
contain features which are unnecessary for the goods or services the asset provides. Overcapacity assets are assets that have a greater capacity than
is necessary to meet the demand for goods or services the asset provides. The determination of the replacement cost or reproduction cost of an
asset on an optimised basis thus reflects the service potential required of the asset.

Restoration cost approach

Restoration cost is the cost of restoring the service potential of a cash- generating asset to its pre-impaired level. The present value of the remaining
service potential of the asset is determined by subtracting the estimated restoration cost of the asset from the current cost of replacing the
remaining service potential of the asset before impairment. The latter cost is determined as the depreciated reproduction or replacement cost of the
asset, whichever is lower.

Service units approach

The present value of the remaining service potential of the asset is determined by reducing the current cost of the remaining service potential of the
asset before impairment, to conform to the reduced number of service units expected from the asset in its impaired state. The current cost of
replacing the remaining service potential of the asset before impairment is determined as the depreciated reproduction or replacement cost of the
asset before impairment, whichever is lower.

Recognition and measurement

If the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its
recoverable service amount. This reduction is an impairment loss.

An impairment loss is recognised immediately in surplus or deficit.

When the amount estimated for an impairment loss is greater than the carrying amount of the non-cash-generating asset to which it relates, the
group recognises a liability only to the extent that is a requirement in another Standard of GRAP.

After the recognition of an impairment loss, the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to
allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

Reversal of an impairment loss

The group assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for a non-cash-
generating asset may no longer exist or may have decreased. If any such indication exists, the group estimates the recoverable service amount of
that asset.

An impairment loss recognised in prior periods for a non-cash-generating asset is reversed if there has been a change in the estimates used to
determine the asset’s recoverable service amount since the last impairment loss was recognised. The carrying amount of the asset is increased to its
recoverable service amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset attributable to a reversal of
an impairment loss does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment
loss been recognised for the asset in prior periods.

A reversal of an impairment loss for a non-cash-generating asset is recognised immediately in surplus or deficit.

After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the non-cash -generating asset is adjusted in future
periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining
useful life.

Redesignation

The redesignation of assets from a cash-generating asset to a non-cash-generating asset or from a non-cash-generating asset to a cash-generating
asset only occur when there is clear evidence that such a redesignation is appropriate.




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                                     Annual Financial Statements for the year ended 30 June 2010

                                                      Accounting Policies

1.11 Share capital / contributed capital

An equity instrument is any contract that evidences a residual interest in the assets of an group after deducting all of its liabilities.

1.12 Employee benefits

Short-term employee benefits

The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave,
bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.

The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the
case of non-accumulating absences, when the absence occurs.

The expected cost of surplus sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such
payments as a result of past performance.

Defined contribution plans

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

Payments made to industry- managed (or state plans) retirement benefit schemes are dealt with as defined contribution plans where the group’s
obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan.

Defined benefit plans

For defined benefit plans the cost of providing the benefits is determined using the projected credit method.

Actuarial valuations are conducted on an annual basis by independent actuaries separately for each plan.

Consideration is given to any event that could impact the funds up to end of the reporting period where the interim valuation is performed at an
earlier date.

Past service costs are recognised immediately to the extent that the benefits are already vested, and are otherwise amortised on a straight-line basis
over the average period until the amended benefits become vested.

To the extent that, at the beginning of the financial period, any cumulative unrecognised actuarial gain or loss exceeds ten percent of the greater of
the present value of the projected benefit obligation and the fair value of the plan assets (the corridor), that portion is recognised in surplus or deficit
over the expected average remaining service lives of participating employees. Actuarial gains or losses within the corridor are not recognised.

Gains or losses on the curtailment or settlement of a defined benefit plan is recognised when the group is demonstrably committed to curtailment or
settlement.

When it is virtually certain that another party will reimburse some or all of the expenditure required to settle a defined benefit obligation, the right to
reimbursement is recognised as a separate asset. The asset is measured at fair value. In all other respects, the asset is treated in the same way as
plan assets. In surplus or deficit, the expense relating to a defined benefit plan is presented as the net of the amount recognised for a
reimbursement.

The amount recognised in the statement of financial position represents the present value of the defined benefit obligation as adjusted for
unrecognised actuarial gains and losses and unrecognised past service costs, and reduced by the fair value of plan assets.

Any asset is limited to unrecognised actuarial losses and past service costs, plus the present value of available refunds and reduction in future
contributions to the plan.

1.13 Provisions and contingencies

Provisions are recognised when:
         the group has a present obligation as a result of a past event;
         it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation; and
         a reliable estimate can be made of the obligation.



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                                    Annual Financial Statements for the year ended 30 June 2010

                                                     Accounting Policies

1.13 Provisions and contingencies (continued)

The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date.

Where the effect of time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to
settle the obligation.

The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised
when, and only when, it is virtually certain that reimbursement will be received if the group settles the obligation. The reimbursement is treated as a
separate asset. The amount recognised for the reimbursement does not exceed the amount of the provision.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable
that an outflow of resources embodying economic benefits or service potential will be required, to settle the obligation.

Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as
an interest expense.

A provision is used only for expenditures for which the provision was originally recognised.

Provisions are not recognised for future operating surplus.

If an entity has a contract that is onerous, the present obligation (net of recoveries) under the contract is recognised and measured as a provision.

A constructive obligation to restructure arises only when the group:
           has a detailed formal plan for the restructuring, identifying at least:
            -     the activity/operating unit or part of an activity/operating unit concerned;
            -     the principal locations affected;
            -     the location, function, and approximate number of employees who will be compensated for services being terminated;
            -     the expenditures that will be undertaken; and
            -     when the plan will be implemented; and
           has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing
            its main features to those affected by it.

A restructuring provision includes only the direct expenditures arising from the restructuring, which are those that are both:
         necessarily entailed by the restructuring; and
         not associated with the ongoing activities of the group

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 50.

Decommissioning, restoration and similar liability

Changes in the measurement of an existing decommissioning, restoration and similar liability that result from changes in the estimated timing or
amount of the outflow of resources embodying economic benefits or service potential required to settle the obligation, or a change in the discount
rate, is accounted for as follows:

If the related asset is measured using the cost model:
            changes in the liability is added to, or deducted from, the cost of the related asset in the current period.
            the amount deducted from the cost of the asset does not exceed its carrying amount. If a decrease in the liability exceeds the carrying
             amount of the asset, the excess is recognised immediately in surplus or deficit.
            if the adjustment results in an addition to the cost of an asset, the entity consider whether this is an indication that the new carrying
             amount of the asset may not be fully recoverable. If there is such an indication, the entity test the asset for impairment by estimating its
             recoverable amount, and account for any impairment loss, in accordance with the accounting policy on impairment of assets as described
             in accounting policy 1.9 and 1.10.

The adjusted depreciable amount of the asset is depreciated over its useful life. Therefore, once the related asset has reached the end of its useful
life, all subsequent changes in the liability is recognised in surplus or deficit as they occur. This applies under both the cost model and the revaluation
model.




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                                Mangaung Local Municipality Consolidated
                                     Annual Financial Statements for the year ended 30 June 2010

                                                      Accounting Policies

1.13 Provisions and contingencies (continued)

The periodic unwinding of the discount is recognised in surplus or deficit as a finance cost as it occurs.

1.14 Revenue from exchange transactions

Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net
assets, other than increases relating to contributions from owners.

An exchange transaction is one in which the municipality receives assets or services, or has liabilities extinguished, and directly gives approximately
equal value (primarily in the form of goods, services or use of assets) to the other party in exchange. Exchange Revenue comprises of rates, service
charges for sanitation, water, refusal removal and income for agency services

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length
transaction.

Measurement

Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates.

Sale of goods

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

Rendering of services

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is
recognised by reference to the stage of completion of the transaction at the reporting date. The outcome of a transaction can be estimated reliably
when all the following conditions are satisfied:
           the amount of revenue can be measured reliably;
           it is probable that the economic benefits or service potential associated with the transaction will flow to the group;
           the stage of completion of the transaction at the reporting date can be measured reliably; and
           the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

When services are performed by an indeterminate number of acts over a specified time frame, revenue is recognised on a straight-line basis over the
specified time frame unless there is evidence that some other method better represents the stage of completion. When a specific act is much more
significant than any other acts, the recognition of revenue is postponed until the significant act is executed.

Service charges consist of flat rate service charges and services based on consumption. Flat rate service charges relate to the levying of a fixed
amount for the rendering of services, regardless of consumption. Consumption based service charges are based on the consumption by consumers.

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of
the expenses recognised that are recoverable.

Service revenue is recognised by reference to the stage of completion of the transaction at the reporting date. Stage of completion is determined by
services performed to date as a percentage of total services to be performed.

Interest, dividends and royalties

Revenue arising from the use by others of entity assets yielding interest, royalties and dividends is recognised when:
          It is probable that the economic benefits or service potential associated with the transaction will flow to the group, and
          The amount of the revenue can be measured reliably.

Interest is recognised, in surplus or deficit, using the effective interest rate method.

Royalties are recognised as they are earned in accordance with the substance of the relevant agreements.



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                                    Annual Financial Statements for the year ended 30 June 2010

                                                    Accounting Policies

1.14 Revenue from exchange transactions (continued)

Dividends, or their equivalents are recognised, in surplus or deficit, when the group’s right to receive payment has been established.

1.15 Revenue from non-exchange transactions

Non-exchange transactions are defined as transactions where the entity receives value from another entity without directly giving approximately
equal value in exchange.

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length
transaction.

Measurement

Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates.

Rates, including collection charges and penalties interest

Revenue from rates, including collection charges and penalty interest, is recognised when:
          it is probable that the economic benefits or service potential associated with the transaction will flow to the group;
          the amount of the revenue can be measured reliably; and
          there has been compliance with the relevant legal requirements.

Changes to property values during a reporting period are valued by a suitably qualified valuator and adjustments are made to rates revenue, based
on a time proportion basis. Adjustments to rates revenue already recognised are processed or additional rates revenue is recognised.

Collection charges are recognised once the period legally prescribed for the levying of the charge has elapsed. Legal fees actually incurred in
recovering non-payment of rates are recognised as an expense and not offset against revenue from collection charges.

Penalty interest is levied on unpaid amounts each month. This revenue is recognised when leviable in terms of law.

Fines

Revenue from the issuing of fines is recognised when:
          it is probable that the economic benefits or service potential associated with the transaction will flow to the group; and
          the amount of the revenue can be measured reliably.

The group has two types of fines: spot fines and summonses. There is uncertainty regarding the probability of the flow of economic benefits or
service potential in respect of spot fines as these fines are usually not given directly to an offender. Further legal processes have to be undertaken
before the spot fine is enforceable. In respect of summonses the public prosecutor can decide whether to waive the fine, reduce it or prosecute for
non- payment by the offender. The revenue from summonses is recognised when the public prosecutor pays over to the entity the cash actually
collected on summonses issued.

Levies

Levies are recognised as revenue when:
           it is probable that the economic benefits or service potential associated with the transaction will flow to the group; and
           the amount of the revenue can be measured reliably.

Levies are based on declarations completed by levy payers. The estimate of levies revenue when a levy payer has not submitted a declaration are
based on the following factors:
           the extent and success of procedures to investigate the non-submission of a declaration by defaulting levy payers;
           internal records maintained of historical comparisons of estimated levies with actual levies received from individual levy payers;
           historical information on declarations previously submitted by defaulting levy payers; and
           the accuracy of the database of levy payers as well as the frequency by which it is updated for changes.

Changes to estimates made when more reliable information becomes available are processed as an adjustment to levies revenue.




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                               Mangaung Local Municipality Consolidated
                                     Annual Financial Statements for the year ended 30 June 2010

                                                     Accounting Policies

1.15 Revenue from non-exchange transactions (continued)

Government grants

Government grants are recognised as revenue when:
        it is probable that the economic benefits or service potential associated with the transaction will flow to the group,
        the amount of the revenue can be measured reliably, and
        to the extent that there has been compliance with any restrictions associated with the grant.

The group assesses the degree of certainty attached to the flow of future economic benefits or service potential on the basis of the available
evidence. Certain grants payable by one level of government to another are subject to the availability of funds. Revenue from these grants is only
recognised when it is probable that the economic benefits or service potential associated with the transaction will flow to the entity. An
announcement at the beginning of a financial year that grants may be available for qualifying entities in accordance with an agreed programme may
not be sufficient evidence of the probability of the flow. Revenue is then only recognised once evidence of the probability of the flow becomes
available.

Restrictions on government grants may result in such revenue being recognised on a time proportion basis. Where there is no restriction on the
period, such revenue is recognised on receipt or when the Act becomes effective, which-ever is earlier.

When government remit grants on a re-imbursement basis, revenue is recognised when the qualifying expense has been incurred and to the extent
that any other restrictions have been complied with.

Other grants and donations

Other grants and donations are recognised as revenue when:
          it is probable that the economic benefits or service potential associated with the transaction will flow to the group;
          the amount of the revenue can be measured reliably; and
          to the extent that there has been compliance with any restrictions associated with the grant.

Grants funded by public contributions are only recognised when it is probable that economic benefits or service potential associated with the
transaction will flow to the group. If conditions are attached, a liability is recognised, which is reduced and revenue recognised as the conditions are
satisfied.

Donations are measured at the fair value of the consideration received or receivable when the amount of the revenue can be measured reliably. If
conditions are attached, a liability is recognised, which is reduced and revenue recognised as the conditions are satisfied.
If goods in- kind are received without conditions attached, revenue is recognised immediately. If conditions are attached, a liability is recognised,
which is reduced and revenue recognised as the conditions are satisfied.

1.16 Investment income

Investment income is recognised on a time-proportion basis using the effective interest method.

1.17 Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of
that asset until such time as the asset is ready for its intended use. The amount of borrowing costs eligible for capitalisation is determined as
follows:
           Actual borrowing costs on funds specifically borrowed for the purpose of obtaining a qualifying asset less any investment income on the
            temporary investment of those borrowings.
           Weighted average of the borrowing costs applicable to the group on funds generally borrowed for the purpose of obtaining a qualifying
            asset. The borrowing costs capitalised do not exceed the total borrowing costs incurred.

The capitalisation of borrowing costs commences when all the following conditions have been met:
           expenditures for the asset have been incurred;
           borrowing costs have been incurred; and
           activities that are necessary to prepare the asset for its intended use or sale are undertaken.

Capitalisation is suspended during extended periods in which active development is interrupted.

Capitalisation ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.



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                                Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                                    Accounting Policies

1.17 Borrowing costs (continued)

All other borrowing costs are recognised as an expense in the period in which they are incurred.

1.18 Translation of foreign currencies

Foreign currency transactions

A foreign currency transaction is recorded, on initial recognition, in Rands, by applying to the foreign currency amount the spot exchange rate
between the functional currency and the foreign currency at the date of the transaction.

At each reporting date:
          foreign currency monetary items are translated using the closing rate;
          non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the
           date of the transaction; and
          non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the
           fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were
translated on initial recognition during the period or in previous annual financial statements are recognised in surplus or deficit in the period in which
they arise.

When a gain or loss on a non-monetary item is recognised directly in net assets, any exchange component of that gain or loss is recognised directly in
net assets. When a gain or loss on a non-monetary item is recognised in surplus or deficit, any exchange component of that gain or loss is recognised
in surplus or deficit.

Cash flows arising from transactions in a foreign currency are recorded in Rands by applying to the foreign currency amount the exchange rate
between the Rand and the foreign currency at the date of the cash flow.

1.19 Comparative figures

Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year.

1.20 Unauthorised expenditure

Unauthorised expenditure means:
          overspending of a vote or a main division within a vote; and
          expenditure not in accordance with the purpose of a vote or, in the case of a main division, not in accordance with the purpose of the
           main division.

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

1.21 Fruitless and wasteful expenditure

Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.

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




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                               Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                                    Accounting Policies

1.22 Irregular expenditure

Irregular expenditure is expenditure that is contrary to the Municipal Finance Management Act (Act No.56 of 2003), the Municipal Systems Act (Act
No.32 of 2000), the Public Office Bearers Act (Act No. 20 of 1998) or is in contravention of the group’s supply chain management policy. Irregular
expenditure excludes unauthorised expenditure. Irregular expenditure is accounted for as expenditure, and where recovered, it is subsequently
accounted for as revenue in the statement of financial performance.

1.23 Presentation currency

These annual financial statements are presented in South African Rand.

1.24 Offsetting

Assets, liabilities, revenue and expenses have not been offset except when offsetting is required or permitted by a Standard of GRAP.

1.25 Budget information

Municipalities are typically subject to budgetary limits in the form of appropriations or budget authorisations (or equivalent), which is given effect
through authorising legislation, appropriation or similar.

General purpose financial reporting by municipalities shall provide information on whether resources were obtained and used in accordance with the
legally adopted budget.

The annual financial statements and the budget are on the same basis of accounting therefore a comparison with the budgeted amounts for the
reporting period have been included as Annexure E to the annual financial statements.

Comparative information is not required.

1.26 Related parties

The group operates in an economic sector currently dominated by entities directly or indirectly owned or controlled by the South African
Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only entities within the local
sphere of government are considered to be related parties.

Related party disclosures for transactions between government entities that took place on terms and conditions that are considered in arms length
and in the ordinary course of business are not disclosed in accordance with IPSAS 20 Related Party Disclosure.

Key management is defined as being individuals with the authority and responsibility for planning, directing and controlling the activities of the
group. We regard all individuals from the level of Municipal Manager, Executive directors and Council Members as key management per the
definition of the financial reporting standard.

Close family members of key management personnel are considered to be those family members who may be expected to influence, or to be
influenced by key management individuals, in their dealings with the group.




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                               Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                Notes to the Annual Financial Statements
                                                                                Controlling entity               Economic entity


2.   Changes in accounting policy

The annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice on a
basis consistent with the prior year except for the adoption of the following new or revised standards.
      GRAP 1

There is no impact on the annual financial statements, because the group applied the IGRAP 1 principles in the past.

3.   New standards and interpretations

GRAP 9: Revenue from Exchange Transactions

The definition of revenue in terms of GRAP 9 incorporates the concept of service potential. Revenue is the gross inflow of economic
benefits or service potential when those inflows result in an increase in net assets, other than increases relating to contributions from
owners.

Entities may derive revenue from exchange or non-exchange transactions.

An exchange transaction is one in which the group receives resources or has liabilities extinguished, and directly gives approximately
equal value to the other party in exchange.

Non-exchange revenue transaction is a transaction where an entity receives value from another entity without directly giving
approximately equal value in exchange.

An entity recognises revenue when it is probable that economic benefits or service potential will flow to the group, and the group can
measure the benefits reliably.

GRAP 9 clarifies that this Standard only applies to revenue from exchange transactions.

Other than terminology difference, no effect on initial adoption of Standard on GRAP 9.

The effective date of the standard is for years beginning on or after 01 April 2009.

The group has adopted the standard for the first time in the 2010 annual financial statements.

The adoption of this standard has not had a material impact on the results of the group, but has resulted in more disclosure than would
have previously been provided in the annual financial statements.

GRAP 24: Presentation of Budget Information in the Financial Statements

Subject to the requirements of paragraph .19, an entity shall present a comparison of the budget amounts for which it is held publicly
accountable and actual amounts either as a separate additional financial statement or as additional budget columns in the financial
statements currently presented in accordance with Standards of GRAP. The comparison of budget and actual amounts shall present
separately for each level of legislative oversight:
           the approved and final budget amounts; and
           the actual amounts on a comparable basis.


Where an entity prepares its budget and annual financial statements on a comparable basis, it includes the comparison as an additional
column in the primary annual financial statements. Where the budget and annual financial statements are not prepared on a
comparable basis, a separate statement is prepared called the ‘Statement of Comparison of Budget and Actual Amounts’. This
statement compares the budget amounts with the amounts in the annual financial statements adjusted to be comparable to the
budget.

A comparable basis means that the budget and annual financial statements:
         are prepared using the same basis of accounting i.e. either cash or accrual;
         include the same activities and entities;
         use the same classification system; and
         are prepared for the same period.

This Standard has been approved by the Board but its effective date has not yet been determined by the Minister of Finance.


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                               Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                Notes to the Annual Financial Statements
                                                                                Controlling entity                 Economic entity


3.   New standards and interpretations (continued)

The group has early adopted the standard.

The adoption of this standard has not had a material impact on the results of the group, but has resulted in more disclosure than would
have previously been provided in the annual financial statements.

GRAP 12: Inventories

GRAP 12 includes the definition of current replacement costs as the cost the group would incur to acquire the asset on the reporting
date. GRAP 12 also includes the principal of service potential associated with the item that will flow to the group as part of recognition
criteria for inventories as well as the concept of goods purchased or produced for distribution at no charge or for a nominal
consideration, which is specific to the public sector.

Initial measurement is required at cost (an exchange transaction) and where inventories are acquired at no cost or nominal
consideration (non-exchange transaction), their cost shall be their fair value at acquisition date.

Subsequent measurement shall be at lower of cost and net realisable value except if inventories are held for:
         distribution at no charge or for a nominal charge, or
         consumption in the production process of goods to be distributed at no charge or for a nominal charge.

If the above applies then subsequent measurement shall be at the lower of cost or current replacement cost.

The retail method of measurement of cost is excluded from GRAP 12.

The effective date of the standard is for years beginning on or after 01 April 2009.

The group has adopted the standard for the first time in the 2010 annual financial statements.

The impact of the standard is not material.

GRAP 14: Events after the reporting date

An event, which could be favourable or unfavourable, that occurs between the reporting date and the date the annual financial
statements are authorised for issue.

GRAP 14 requires the date of authorisation for issue is the date on which the annual financial statements have received approval from
management to be issued to the executive authority or municipal council.

Two types of events can be identified:
          those that provide evidence of conditions that existed at the reporting date (adjusting events after the reporting date); and
          those that are indicative of conditions that arose after the reporting date (non-adjusting events after the reporting date).

An entity shall adjust the amounts recognised in its annual financial statements to reflect adjusting events after the reporting date.

An entity shall not adjust the amounts recognised in its annual financial statements to reflect non-adjusting events after the reporting
date.

The effective date of the standard is for years beginning on or after 01 April 2009.

The group has adopted the standard for the first time in the 2010 annual financial statements.

The impact of the standard is not material.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                     Page | 117
                               Mangaung Local Municipality Consolidated
                                     Annual Financial Statements for the year ended 30 June 2010

                                 Notes to the Annual Financial Statements
                                                                                 Controlling entity                 Economic entity


3.   New standards and interpretations (continued)

GRAP 17: Property, Plant and Equipment

GRAP 17 does not require or prohibit the recognition of heritage assets but if an entity recognises heritage assets the group needs to
comply with GRAP 17 disclosure requirements.

The disclosure requirement for temporarily idle, fully depreciated property, plant and equipment and for property, plant and
equipment that are retired from active use is required in GRAP 17 whereas IAS 16 only encourages this disclosure.

The effective date of the standard is for years beginning on or after 01 April 2009.

The group has adopted the standard for the first time in the 2010 annual financial statements.

The impact of the standard is not material.

GRAP 102: Intangible Assets

GRAP 102 excludes guidance on accounting for intangible assets acquired as part of an entity combination and in-process research and
development costs acquired in an entity combination.

Recognition requirement includes the concept of the probable flow of service potential.

GRAP 102 distinguishes between impairment loss of cash generating and non-cash-generating assets.

Intangible assets acquired at no, or for a nominal cost, shall be measured on acquisition date at its fair value.

In GRAP 102 the identifiability criterion in the definition of an intangible asset has been expanded to include contractual rights arising
from binding arrangements, and to exclude rights granted by statute.

Additional guidance included in GRAP 102 to explain that distinction should be made between assets associated with the item of
property, plant and equipment and the intangible asset.

The effective date of the standard is for years beginning on or after 01 April 2009.

The group has adopted the standard for the first time in the 2010 annual financial statements.

The impact of the standard is not material.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                       Page | 118
                                 Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                   Notes to the Annual Financial Statements
                                                                               Controlling entity               Economic entity
                                                                             2010           2009                2010            2009
                                                                              R               R                 R                R


4.         Property, plant and equipment


Controlling entit                                              2010                                             2009
                                          Cost /            Accumulated Carrying value      Cost /            Accumulated Carrying value
                                        Valuation         depreciation                    Valuation         depreciation
Land                                  1,620,526,156          (266,127,243) 1,354,398,913 1,415,495,305       (246,462,392) 1,169,032,913
Heritage assets                           1,190,608         (1,190,608)               -      1,190,608         (1,190,608)             -
Other assets                            438,511,983       (242,904,395)    195,607,588     348,711,922      (224,367,009) 124,344,913
Infrastructure                        2,336,004,795          (966,167,297) 1,369,837,498 2,031,583,760       (883,909,110) 1,147,674,650
Community                                26,593,397        (11,125,843)      15,467,554     26,593,397       (10,226,057)     16,367,340
Leased assets                             7,500,376         (5,589,622)       1,910,754      9,532,028         (7,228,260)     2,303,768
Total                                         4,430,327,315 (1,493,105,008) 2,937,222,307 3,833,107,020 (1,373,383,436) 2,459,723,584


Economic entity                                                     2010                                           2009
                                             Cost /             Accumulated Carrying value       Cost /    Accumulated Carrying value
                                            Valuation         depreciation                      Valuation     depreciation
Land and buildings                         1,557,659,506         (197,183,135) 1,360,476,371 1,392,636,751    (226,370,235) 1,166,266,516
Heritage assets                                1,190,608        (1,190,608)                -     1,190,608      (1,190,608)             -
Other assets                                 439,334,038     (253,480,617)       185,853,421 349,411,038      (230,963,518) 118,447,520
Infrastructure                             2,336,004,795         (966,167,297) 1,369,837,498 2,031,583,760    (883,909,110) 1,147,674,650
Community assets                              26,593,397       (11,125,843)       15,467,554    26,593,397     (10,226,057)    16,367,340
Plant and machinery                        1,288,482,734           (1,098,176) 1,287,384,558 444,723,300      (105,027,981) 339,695,319
Leased assets                                  7,500,376        (5,589,622)        1,910,754     9,532,028      (7,228,260)     2,303,768
Total                                            5,656,765,454 (1,435,835,298) 4,220,930,156 4,255,670,882 (1,464,915,769) 2,790,755,113

Reconciliation of property, plant and equipment - Economic entity - 2010

                                           Opening            Additions         Under         Revaluations Depreciation           Total
                                           balance                           construction
Land and buildings                         1,166,266,516        1,808,270     203,222,581       9,512,319         (20,333,315) 1,360,476,371
Other assets                                 118,447,520       45,052,934      44,918,067               -         (22,565,100) 185,853,421
Infrastructure                             1,147,674,650      121,306,836     183,114,199               -         (82,258,187) 1,369,837,498
Community assets                              16,367,340                -                -              -            (899,786) 15,467,554
Plant and machinery                          339,695,319       98,555,822                -    890,337,971         (41,204,554) 1,287,384,558
Leased assets                                  2,303,768        1,271,361                -              -          (1,664,375)     1,910,754
                                           2,790,755,113      267,995,223     431,254,847     899,850,290        (168,925,317) 4,220,930,156

Reconciliation of property, plant and equipment - Economic entity - 2009

                             Opening          Additions          Under          Disposals      Revaluations      Depreciation      Total
                             balance                          construction
Land and buildings         968,609,105        7,623,580       214,296,441          (11,994)      (3,828,070)       (20,422,546) 1,166,266,516
Other assets               112,848,872       12,828,082        16,603,382         (216,411)                 -     (23,616,405) 118,447,520
Infrastructure             998,164,130       57,219,119       169,702,140                -                  -      (77,410,739) 1,147,674,650
Community assets            17,258,089           14,933                  -          (5,456)                 -        (900,226)     16,367,340
Plant and machinery        261,174,260      110,465,475                  -               -                  -     (31,944,416) 339,695,319
Leased assets                3,561,318          844,540                  -               -                  -      (2,102,090)      2,303,768
                         2,361,615,774      188,995,729       400,601,963         (233,861)      (3,828,070)     (156,396,422) 2,790,755,113




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                          Page | 119
                              Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                Notes to the Annual Financial Statements
                                                                                Controlling entity                 Economic entity
                                                                                2010              2009           2010           2009
                                                                                 R                 R              R              R


4.   Property, plant and equipment (continued)

Assets subject to finance lease (Net carrying amount)

Office equipment                                                                                                     1,661,329          2,179,568
Cellphones and 3G                                                                                                      563,557            424,436
                                                                                                                     2,224,886          2,604,004

Refer to Appendix B and C for more detail on Property, plant and equipment.               A GRAP compliant        asset register is still in
progress.

The revaluation performed relates to the controlled entity - Centlec (Pty) Ltd. The effective date of the revaluations for the property
was 14 May 2010. Revaluations fro property was performed by Border's Real Estate Valuers. Border's Real Estate VAluers is not
connected to the group. The effective date of the revaluations for the infrastructure was 30 June 2010. Revaluations for infrastructure
assets was performed by Corrective Power. Corrective Power is not connected to the group. The valuations was performed using the
depreciated replacement costs method and assumptions were based on current market conditions. The revaluation of assets were
performed in order to establish a GRAP compliant fixed asset register. The municipality is however still in the process to establish a
GRAP compliant register.

Refer to note 49 for contractual commitments for capital expenditure.
None of the entity's assets are pledged as security, except for finance leased assets.

Transitional provisions (2008/2009)
2008/09 was the first year that GRAP 17 was applied and the group made use of the transitional provisions contained in Directive 3 as
from 1 July 2008. The Property, Plant and Equipment of Thaba Nchu and Botshabelo were acquired through a transfer of functions
during 2000. According to the transitional provisions of the standard the group is not required to measure this Property, Plant and
Equipment for a period of three years, from the later date of the transfer of functions or the implementation date of the standard, i.e.
1 July 2008.

The Property, Plant and Equipment has almost been written off in total, but has been taken up on the Asset Register of Mangaung and
the provisional amounts not yet written off, are therefore included in the above Property, Plant and Equipment figures. The Property,
Plant and Equipment fully written off, are still in use.

The cost of Property, Plant and Equipment of Thaba Nchu and Botshabelo, respectively, as reflected on their individual Balance Sheets
at date of transfer was as follow:

Thaba Nchu Municipality        R 40,935,100
Botshabelo Municipality       R109,206,357
                              R 150,141,457

The group would also like to make use of the transitional provisions contained in Directive 3 regarding the valuation of new identified
Property, Plant and Equipment. The transitional provisions in the Standard of GAMAP on Property, Plant and Equipment allow
individual entities a period of up to three years from the date of initial adoption of the Standard of GAMAP to comply in full with the
recognition requirements of that Standard, for those assets that were not previously recognised. Where entities have taken advantage
of that transitional period, the period remains in force, even where entities are adopting the Standard of GRAP on Property, Plant and
Equipment for the first time, regarding measurement of Property, Plant and Equipment.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                            Page | 120
                                    Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                      Notes to the Annual Financial Statements
                                                                                 Controlling entity               Economic entity
                                                                                2010          2009               2010           2009
                                                                                R               R                  R              R


5.   Intangible assets


Controlling entit                                             2010                                                2009
                                         Cost /         Accumulated Carrying value           Cost /         Accumulated Carrying value
                                        Valuation       amortisation                        Valuation       amortisation
Computer software                        17,428,471       (14,620,176)        2,808,295        17,428,471     (12,294,923)        5,133,548


Economic entity                                               2010                                                2009
                                           Cost         Accumulated Carrying value              Cost        Accumulated Carrying value
                                                        amortisation                                        amortisation
Computer software                        17,428,471       (14,620,176)        2,808,295        17,428,471     (12,294,923)        5,133,548

Reconciliation of intangible         assets - Economic entity - 2010

                                                                                          Opening     Amortisation            Total
                                                                                          balance
Computer software                                                                           5,133,548   (2,325,253)           2,808,295

Reconciliation of intangible assets - Economic entity - 2009

                                                                         Opening          Additions     Amortisation          Total
                                                                         balance
Computer software                                                          7,568,815           78,110       (2,513,377)       5,133,548

6.   Investments

OVK Holdings Ltd                         Mangaung Local Municipality                                               10,367              8,695
                                                                                                                   10,367              8,695

Council's Valuation

OVK Holdings Ltd                                                                                                   10,367              8,695

The valuation is based on the following:
OVK Holdings Ltd: Valuation obtained from OVK Holdings Ltd - Quoted market value, these shares have been issued to the group with
no initial cost.

Terms and conditions:
No terms and conditions that are attached to the investments were renegotiated during the year.

Credit quality of investments:
The credit quality of investments that are neither past due nor impaired can be accessed by reference to external credit ratings (if
available) or to historical information about counterparty default rates.

Investments pledged as security:
An investment, included under cash and cash equivalents, of R10,318,261.29 is pledged as security to the Commissioner of the
Workmen's Compensation Fund to guarantee the payment of claims in respect of injuries while on duty.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                          Page | 121
                                   Mangaung Local Municipality Consolidated
                                         Annual Financial Statements for the year ended 30 June 2010

                                     Notes to the Annual Financial Statements
                                                                                    Controlling entity              Economic entity
                                                                                  2010            2009           2010          2009
                                                                                   R                R             R               R


7.   Non-current receivables

Loans and receivables
Housing selling scheme loans                                                   42,731,900       40,174,899      42,731,900        40,174,899
Erven loans                                                                    17,602,970       16,714,938      17,602,970        16,714,938
Motor vehicle loans                                                               975,093        1,443,469          975,093        1,443,469
Study loans                                                                        49,599           61,509            49,599           61,509
Other loans to Centlec (Pty) Ltd                                              163,617,713      115,867,998                  -               -
Shareholders loan to Centlec (Pty) Ltd                                        657,303,374      639,899,751                  -               -
Naledi Local Municipality                                                               -                -          764,610          878,455
Kopanong Local Municipality                                                             -                -        2,849,556        3,108,212
Mohakare Local Municipality                                                             -                -        1,462,597        1,603,151
                                                                              882,280,649      814,162,564      66,436,325        63,984,633
Impairment - motor vehicle loans                                                 (889,596)        (648,629)        (889,596)       (648,629)
Impairment - study loans                                                          (49,599)         (59,599)          (49,599)        (59,599)
Impairment - erven loans                                                       (8,334,174)      (7,735,519)      (8,334,174)     (7,735,519)
Impairment - housing selling scheme loans                                     (31,326,876)     (35,856,357)    (31,326,876)     (35,856,357)
                                                                              841,680,404      769,862,460     25,836,080        19,684,529

Non-current assets
Loans and receivables                                                         813,895,980      755,148,567     11,775,846        15,762,076

Current assets
Loans and receivables                                                          27,784,424         14,713,893   14,060,234         3,922,453
                                                                              841,680,404      769,862,460     25,836,080        19,684,529

Renegotiated terms of financial assets at fair value through surplus or deficit

None of the financial assets that are fully performing have been renegotiated in the last year.

Non-current receivables pledged as security

None of the non-current receivables was pledged as security for any financial liabilities.

Security held for any of the non-current receivables

No securities are held for any of the non-current receivables.

Reconciliation for impairment

Impairment for motor vehicle loans
Opening balance                                                                    648,629          747,310       648,629           747,310
Contribution to impairment                                                         240,967          (98,681)      240,967           (98,681)
                                                                                   889,596          648,629       889,596           648,629

Impairment for study loans
Opening balance                                                                      59,599          62,503         59,599           62,503
Contribution to impairment                                                          (10,000)         (2,904)       (10,000)          (2,904)
                                                                                    49,599           59,599         49,599           59,599

Impairment for erven loans
Opening balance                                                                   6,280,082        5,771,367    6,280,082         5,771,367
Contribution to impairment                                                        2,054,092          508,715    2,054,092           508,715
                                                                                  8,334,174        6,280,082    8,334,174         6,280,082



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                       Page | 122
                                     Mangaung Local Municipality Consolidated
                                       Annual Financial Statements for the year ended 30 June 2010

                                     Notes to the Annual Financial Statements
                                                                                   Controlling entity                  Economic entity
                                                                                 2010            2009               2010          2009
                                                                                  R                R                 R               R


7.   Non-current receivables (continued)

Impairment for housing selling scheme loans
Opening balance                                                                37,475,309        25,632,871        37,475,309       25,632,871
Contribution to impairment                                                     (6,148,433)       11,842,438         (6,148,433)     11,842,438
                                                                               31,326,876        37,475,309        31,326,876       37,475,309



Credit quality of other financial assets

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if
available) or to historical information about counterparty default rates.

The assumption was made that the credit quality of the short term portion of long term receivables would equate to the credit quality
of the receivable's long term portion.

The credit quality of the short term portion of long term receivables was evaluated in terms of the risk group and ageing of the
individual receivable account.

Details of loans and receivables:

Kopanong Local Municipality
The capital funding provided to the Kopanong Local Municipality is repayable in monthly installments based on the estimated useful life
of the capital assets as originally determined by Mangaung Local Municipality. The capital advance bears interest at 10%.

Mohokare Local Municipality
The capital funding provided to the Mohokare Local Municipality is repayable in monthly installments based on the estimated useful
life of the capital assets as originally determined by Mangaung Local Municipality. The capital advance bears interest at 10%.

Naledi Local Municipality
The capital funding provided to the Naledi Local Municipality is repayable in monthly installments based on the estimated useful life of
the capital assets as originally determined by Mangaung Local Municipality. The capital advance bears interest at 10%.

Motor vehicle loans
Permanent staff obtained loans at 8.50% interest per annum repayable over a period of 3 to 6 years. Other staff's loans bear interest of
prime plus 1% and are also repayable over a period of 3 to 6 years. These loans are repaid on a monthly basis by way of salary
deductions. These loans are being phased out and are completely repayable in the year 2010.

Study loans
Staff members qualified for interest free study loans under the approved study scheme of the group. These loans are repaid on a
monthly basis by way of salary deductions. These loans are being phased out and no further loans are granted.


Erven loans
Loans were granted to the public for the sale of erven, repayable over a maximum period of 5 years at an interest rate of 1% above the
bank rate of the group. These loans are repaid on a monthly basis. No further loans are granted.


Housing selling scheme loans
Housing loans were granted to qualifying individuals and public organisations in terms of the housing program. These loans attract
interest of between 6% and 14% per annum and are repayable over 20 years. These loans are repaid on a monthly basis by way of
salary deductions for officials and six monthly payments for public organisations.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                           Page | 123
                              Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                Notes to the Annual Financial Statements
                                                                              Controlling entity                Economic entity
                                                                              2010              2009     2010             2009
                                                                               R                 R         R                R


8.   Financial liabilities by category

The accounting policies for financial instruments have been applied to the line items below:

Economic entity - 2010

                                                                                                        Loans and         Total
                                                                                                       receivables
Non-current borrowings                                                                                    12,493,642      12,493,642
VAT payable                                                                                               68,098,179      68,098,179
Finance lease liability                                                                                    2,640,126       2,640,126
Payables from exchange transactions                                                                      546,852,220     546,852,220
Payables from non-exchange transactions                                                                    3,660,624       3,660,624
Consumer deposits                                                                                         63,476,048      63,476,048
Unspent conditional grants                                                                               232,726,540     232,726,540
Non-current provisions                                                                                    74,285,678      74,285,678
                                                                                                        1,004,233,057 1,004,233,057

Economic entity - 2009

                                                                                                        Loans and         Total
                                                                                                       receivables
Non-current borrowings                                                                                    14,278,700      14,278,700
VAT payable                                                                                               55,592,399      55,592,399
Finance lease liability                                                                                    3,288,370       3,288,370
Payables from non-exchange transactions                                                                  371,790,187     371,790,187
Payables from exchange transactions                                                                        3,251,757       3,251,757
Consumer deposits                                                                                         57,408,625      57,408,625
Unspent conditional grants                                                                               419,121,478     419,121,478
Non-current provisions                                                                                    69,859,875      69,859,875
                                                                                                        994,591,391      994,591,391




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                 Page | 124
                               Mangaung Local Municipality Consolidated
                                     Annual Financial Statements for the year ended 30 June 2010

                                 Notes to the Annual Financial Statements
                                                                               Controlling entity                 Economic entity
                                                                               2010              2009             2010            2009
                                                                               R                  R               R               R


9.   Retirement benefits

Defined benefit plan

The defined benefit plans disclosed below are represented by medical aid for retired employees and pension payments for both retired
and current employees. The group pays 60% of the medical aid contributions of retired employees who were in the service of the
Council on or before 1 October 1981, as well as a pension to retired employees based on certain criteria to be met, set out in the
Group's Conditions of Service.

The group obtained an actuarial valuation for the first time on the defined benefit plans as at 30 June 2009.

Analysis of defined benefit obligation

Present value of the defined benefit obligation                               2,693,000         2,421,000         2,693,000       2,421,000
Present value of unfunded obligations                                       348,224,000       294,700,000       348,224,000     294,700,000
                                                                            350,917,000       297,121,000       350,917,000     297,121,000

Movements in the present value of defined benefit obligation

Opening balance                                                             297,121,000       301,087,000       297,121,000     301,087,000
Benefits paid                                                                (5,894,000)       (8,069,000)        (5,894,000)    (8,069,000)
Net expense recognised in the statement of financial                         59,690,000         4,103,000        59,690,000        4,103,000
performance
                                                                            350,917,000       297,121,000       350,917,000     297,121,000

Net expense recognised in the statement of financial performance

Current service cost - included under employee related cost                        18,556,000      754,000       18,556,000       16,754,000
Interest cost - included under finance cost                                        29,709,000      933,000       29,709,000       31,933,000
Actuarial (gains) losses - included under (other income) /                         11,425,000      584,000)      11,425,000     (44,584,000)
employee cost
                                                                                   59,690,000     ,103,000       59,690,000       4,103,000

Key assumptions used

Assumptions used on last valuation- 30 June 2010.

Discount rates used                                                                9.50 %           9.50 %            9.50 %          9.50 %
Health care cost inflation                                                         7.75 %           8.00 %            7.75 %          8.00 %
Inflation rate                                                                     5.80 %           6.00 %            5.80 %          6.00 %
Salary inflation                                                                  13.00 %           7.50 %           13.00 %          7.50 %
Pension increase allowance                                                         5.75 %           6.00 %            5.75 %          6.00 %
Expected retirement age ( in years )                                               55.00            55.00             55.00            55.00
Membership discontinued at retirement or death-in-                                10.00 %          10.00 %           10.00 %         10.00 %
service

Assumed healthcare cost trends have a significant effect on the amounts recognised in surplus for the year. The value of the liability
could also be overstated or understated, depending on the extent to which actual experience differs from the assumptions adopted.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                        Page | 125
                                   Mangaung Local Municipality Consolidated
                                        Annual Financial Statements for the year ended 30 June 2010

                                      Notes to the Annual Financial Statements
                                                                                  Controlling entity                  Economic entity
                                                                                2010            2009               2010          2009
                                                                                 R                R                 R               R


10.   Inventory

Consumable stores - at cost                                                    4,273,803           3,320,693     47,812,560         47,155,893
Water maintenance materials - at cost                                          4,825,580             952,150       4,825,580           952,150
Water in reservoirs - at cost                                                    880,339             521,410         880,339           521,410
Water in pipes - at cost                                                         286,708             336,941         286,708           336,941
Fuel - at cost                                                                 1,172,074           1,112,905       1,172,074         1,112,905
                                                                              11,438,504           6,244,099     54,977,261         50,079,299
Inventory (write-downs)                                                                -                   -      (1,528,173)        (977,350)
                                                                              11,438,504           6,244,099     53,449,088         49,101,949

10.1 Inventory recognised as an expense

Inventory - expense                                                            5,355,570           1,076,939     607,073,823       447,183,221

11. Other receivables from exchange transactions

Deferred lease income                                                          44,433,162          40,311,521     44,433,162         40,311,521
Employee costs in advance                                                               -                   -      1,334,157            570,770
Interest on investments                                                           303,687             435,572        303,687            435,572
Leave receivables                                                                 781,575             552,453        781,575            552,453
Mohokare                                                                                -                   -        710,313          1,538,085
Outstanding health claims                                                       1,537,952           1,537,952      1,537,952          1,537,952
Sundry receivables                                                             65,327,094          67,253,311     65,327,094         67,253,311
Impairment of sundry receivables                                              (31,636,314)        (28,345,488)   (31,636,314)      (28,345,488)
                                                                              80,747,156          81,745,321     82,791,626         83,854,176

Other receivables pledged as security

Other receivables were not pledged as security.

Not any portion of other receivables from exchange transactions was pledged as security for any financial liabilities.

Credit quality of other receivables

The credit quality of other receivables that are neither past nor due nor impaired can be assessed by reference to external credit
ratings (if available) or to historical information about counterparty default rates.

The assumption was made that the credit quality of the short term portion of long term receivables would equate to the credit quality
of the receivable's long term portion.

The credit quality of the short term portion of long term receivables was evaluated in terms of the risk group and ageing of the
individual receivable account.

Trade receivables

None of the financial assets that are fully performing have been renegotiated in the last year.

Reconciliation of impairment of trade and other receivables

Opening balance                                                               28,345,488          20,809,490     31,468,512         20,809,490
Contributions to provision                                                     3,290,826           7,535,998      2,238,414         10,659,022
                                                                              31,636,314          28,345,488     33,706,926         31,468,512


Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                         Page | 126
                                   Mangaung Local Municipality Consolidated
                                       Annual Financial Statements for the year ended 30 June 2010

                                     Notes to the Annual Financial Statements
                                                                               Controlling entity                 Economic entity
                                                                               2010              2009            2010             2009
                                                                                R                 R                R                R


12. Other receivables from non-exchange transactions

Conditional Grant                                                              274,867             274,867        274,867             274,867
Insurance claims                                                               120,935              40,391        120,935              40,391
                                                                               395,802             315,258        395,802             315,258

Other receivables from non-exchange transactions pledged                 as security

Other receivables from non-exchange transactions were not pledged as security.

Not any portion of other receivables from exchange transactions was pledged as security for any financial liabilities.

Credit quality of other receivables from non-exchange transactions

The credit quality of other receivables from non-exchange transactions that are neither past nor due nor impaired can be assessed by
reference to external credit ratings (if available) or to historical information about counterparty default rates.

The assumption was made that the credit quality of the short term portion of long term receivables would equate to the credit quality
of the receivable's long term portion.

The credit quality of the short term portion of long term receivables was evaluated in terms of the risk group and ageing of the
individual receivable account.

Other receivables from non-exchange transactions

None of the financial assets that are fully performing have been renegotiated in the last year.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                         Page | 127
                                 Mangaung Local Municipality Consolidated
                                     Annual Financial Statements for the year ended 30 June 2010

                                   Notes to the Annual Financial Statements
                                                                             Controlling entity                Economic entity
                                                                           2010            2009             2010          2009
                                                                            R                R               R               R


13. Consumer receivables from exchange transactions

Gross balances
Rates, water and sewerage                                                914,591,501     813,160,287     914,591,501    813,160,287
Electricity                                                                2,070,612        3,123,024    223,947,034    176,353,843
Housing rental                                                            17,379,847       16,139,850     17,379,847      16,139,850
Less: Unallocated deposits                                               (11,546,808)    (14,954,820)    (11,546,808)   (14,954,820)
                                                                         922,495,152     817,468,341    1,144,371,574   990,699,160

Less: Impairment
Rates, water and sewerage                                               (752,527,903)   (670,787,215)   (752,527,903) (670,787,215)
Electricity                                                                         -               -    (48,002,191) (37,476,894)
Housing                                                                  (17,087,951)    (15,747,235)    (17,087,951) (15,747,235)
                                                                       (769,615,854)    (686,534,450)   (817,618,045) (724,011,344)

Net balance
Rates, water and sewerage                                                162,063,598     142,373,072     162,063,598    142,373,072
Electricity                                                                2,070,612        3,123,024    175,944,843    138,876,949
Housing rentals                                                              291,896          392,615        291,896         392,615
Other: Unallocated deposits                                              (11,546,808)    (14,954,820)    (11,546,808)   (14,954,820)
                                                                         152,879,298     130,933,891     326,753,529    266,687,816

Rates: ageing
Current (0 -30 days)                                                      25,189,041      23,954,287      25,189,041     23,954,287
31 - 60 days                                                              11,516,104      12,990,450      11,516,104     12,990,450
61 - 90 days                                                               9,885,187      11,423,351       9,885,187     11,423,351
90+ days                                                                 274,023,670     267,385,688     274,023,670    267,385,688
                                                                         320,614,002     315,753,776     320,614,002    315,753,776

Electricity: ageing
Current (0 -30 days)                                                               -               -      10,234,270        938,271
31 - 60 days                                                                       -               -      18,834,572     24,719,442
61 - 90 days                                                                       -               -       9,232,744     15,082,637
90 + days                                                                  2,070,612       3,123,024     174,098,640    120,658,651
                                                                           2,070,612       3,123,024     212,400,226    161,399,001

Water and sewerage: ageing
Current (0 -30 days)                                                      47,378,897      38,126,073      47,378,897     38,126,073
31 - 60 days                                                              26,295,398      26,012,308      26,295,398     26,012,308
61 - 90 days                                                              17,721,772      21,010,250      17,721,772     21,010,250
90 + days                                                                489,522,537     398,760,744     489,522,537    398,760,744
Reclassifying journal on understatement of water                          13,058,895      13,497,136      13,058,895     13,497,136
services
                                                                         593,977,499     497,406,511     593,977,499    497,406,511

Housing rental: ageing
Current (0 -30 days)                                                         414,132         563,249         414,132        563,249
31 - 60 days                                                                 236,032         489,740         236,032        489,740
61 - 90 days                                                                 221,072         435,735         221,072        435,735
91 + days                                                                 16,508,611      14,651,126      16,508,611     14,651,126
                                                                          17,379,847      16,139,850      17,379,847     16,139,850

Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                 Page | 128
                             Mangaung Local Municipality Consolidated
                                   Annual Financial Statements for the year ended 30 June 2010

                               Notes to the Annual Financial Statements
                                                                           Controlling entity               Economic entity
                                                                           2010              2009           2010            2009
                                                                           R                  R             R               R


13. Consumer receivables from exchange transactions (continued)

Summary of receivables by customer classification

Residential
Current (0 -30 days)                                                      46,670,418       38,035,102      46,670,418     38,035,102
31 - 60 days                                                              23,501,775       22,809,873      23,501,775     22,809,873
61 - 90 days                                                              18,550,975       20,564,454      18,550,975     20,564,454
91 + days                                                                618,776,250      527,414,925     618,776,250    527,414,925
                                                                         707,499,418      608,824,354     707,499,418    608,824,354
Less: Impairment                                                        (653,253,099)    (532,570,359)   (653,253,099) (532,570,359)
                                                                          54,246,319       76,253,995     54,246,319      76,253,995

Industrial/ commercial
Current (0 -30 days)                                                      22,014,496       20,224,232     22,014,496       20,224,232
31 - 60 days                                                              11,381,651        9,343,120     11,381,651        9,343,120
61 - 90 days                                                               7,059,434        7,725,628      7,059,434        7,725,628
91 + days                                                                 83,153,436       73,048,251     83,153,436       73,048,251
                                                                         123,609,017      110,341,231    123,609,017     110,341,231
Less: Impairment                                                         (55,176,569)     (64,175,389)   (55,176,569)    (64,175,389)
                                                                          68,432,448       46,165,842     68,432,448      46,165,842

National and provincial government
Current (0 -30 days)                                                       3,859,581        5,063,991       3,859,581       5,063,991
31 - 60 days                                                               2,925,624        7,478,878       2,925,624       7,478,878
61 - 90 days                                                               1,995,407        4,578,936       1,995,407       4,578,936
91 + days                                                                 62,798,543       83,459,729      62,798,543      83,459,729
                                                                          71,579,155      100,581,534      71,579,155    100,581,534
Less: Impairment                                                         (45,835,339)     (89,788,701)    (45,835,339)   (89,788,701)
                                                                          25,743,816       10,792,833     25,743,816      10,792,833

Total
Current (0 -30 days)                                                      72,544,495       63,323,325     72,544,495      63,323,325
31 - 60 days                                                              37,809,050       39,631,871     37,809,050      39,631,871
61 - 90 days                                                              27,605,816       32,869,018     27,605,816      32,869,018
91 + days                                                                780,079,077      683,922,905    778,008,464     683,922,905
Reclassifying journal on understatement of water                          13,058,895       13,497,136     13,058,895      13,497,136
services
                                                                         931,097,333      833,244,255     929,026,720    833,244,255
Less: Impairment                                                        (769,615,854)    (686,534,450)   (817,618,045) (724,011,344)
Unallocated deposits                                                     (11,546,808)     (14,954,820)    (11,546,808) (14,954,820)
Electricity                                                                2,944,627         (821,094)    226,891,662    138,055,855
                                                                         152,879,298      130,933,891    326,753,529     232,333,946

Less: Impairment
91 + days                                                               (769,615,854)    (686,534,450)   (817,618,045) (724,011,344)

Reconciliation of impairment
Balance at beginning of the year                                        (686,370,934)    (455,128,200)   (724,011,344) (455,128,200)
Contributions to provision                                               (83,244,920)    (231,406,250)    (93,606,701) (268,883,144)
                                                                        (769,615,854)    (686,534,450)   (817,618,045) (724,011,344)



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                 Page | 129
                              Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                Notes to the Annual Financial Statements
                                                                               Controlling entity               Economic entity
                                                                               2010              2009           2010            2009
                                                                               R                  R             R               R


13. Consumer receivables from exchange transactions (continued)

Consumer receivables pledged as security

Consumer receivables were not pledged as security.

Not any portion of consumer receivables was pledged as security for any financial assets.

Credit quality of consumer receivables

The credit quality of consumer receivables that are neither past nor due nor impaired can be assessed by reference to external credit
ratings (if available) or to historical information about counterparty default rates.

The assumption was made that the credit quality of the short term portion of consumer receivables would equate to the credit quality
of the receivable's long term portion.

The credit quality of the short term portion of consumer receivables was evaluated in terms of the risk group and ageing of the
individual receivable account.

Government debt has been impaired in line with IAS 39, as uncertainties exist regarding the recovery period of the government debt,
due to the fact that certificates of agreement on outstanding government debt were not available on year-end.

Trade receivables

None of the financial assets that are fully performing have been renegotiated in the last year.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                       Page | 130
                              Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                Notes to the Annual Financial Statements
                                                                                  Controlling entity                    Economic entity
                                                                                2010            2009                 2010          2009
                                                                                 R                R                   R               R


14.     Cash and cash equivalents

Cash and cash equivalents consist of:

Cash on hand                                                                      54,869             54,719            54,869             54,719
Positive bank balances                                                        18,550,843        141,020,645        18,767,201        187,593,905
Held-to-maturity investments maturing within 1 - 3                            26,639,109         96,833,627        26,639,109         96,833,627
months from reporting date
                                                                              45,244,821        237,908,991        45,461,179        284,482,251

Restriction on the use of cash and cash equivalents

The cash and cash equivalents held by the group may only be used in accordance with its mandate; as such no restrictions have been
placed on the use of cash and cash equivalents for the operations of the group.

Credit quality of cash at bank and short term deposits, excluding cash on hand

The credit quality of cash at bank and short term deposits, excluding cash on hand that are neither past due nor impaired can be
assessed by reference to external credit ratings (if available).

Cash and cash equivalents pledged as collateral

Total financial assets pledged as collateral                                  10,318,261          7,389,636        10,318,261          7,389,636
An investment of R10,318,261.29 is pledged as
security to the Commissioner of the Workmen's
Compensation Fund to guarantee the payment of
claims in respect of injuries while on duty.

The group had the following bank accounts

Account number / description                                                       Bank statement                          Cash book

                                                                                2010               2009             2010                2009

                                                                        R                   R                 R                  R

Current account (primary bank account) ABSA 470000465                          9,713,167         79,463,381         8,816,740         80,361,320
Current account (fresh produce market) ABSA 470001348                          3,382,869          3,093,304         3,382,869          3,093,304
Current account (2010 FIFA world cup) ABSA 4067877886                          5,311,349         57,566,021         5,311,349         57,566,021
Current account (direct deposits Banktel) ABSA 470001380                               -                  -         1,039,885                  -
Current account (Centlec (Pty) Ltd) ABSA 4058833582                              216,358         46,573,260           216,358         46,573,260
Total                                                                         18,623,743        186,695,966        18,767,201        187,593,905

15.     Housing development fund

Unappropriated surplus                                                         21,376,064        21,376,064         21,376,064        21,376,064
Transfer                                                                     (10,173,116)                 -       (10,173,116)                 -
                                                                              11,202,948         21,376,064        11,202,948         21,376,064

The housing development fund is represented by the
following assets and liabilities:
Housing selling scheme loans (refer to note 7)                              11,405,024          2,699,589         11,405,024          2,699,589
Housing rental receivables (refer to note 13)                                  291,896            392,615            291,896            392,615
Payables                                                                             -            (57,209)                 -            (57,209)
                                                                            11,696,920          3,034,995         11,696,920          3,034,995



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                           Page | 131
                               Mangaung Local Municipality Consolidated
                                     Annual Financial Statements for the year ended 30 June 2010

                                Notes to the Annual Financial Statements
                                                                               Controlling entity                  Economic entity
                                                                               2010              2009              2010            2009
                                                                               R                  R                R               R


15. Housing development fund (continued)

The Housing Development Fund was established in terms of the Housing Act, (Act No. 107 of 1997). Loans from National and Provincial
government used to finance housing selling schemes undertaken by the group were extinguished on 1 April 1998 and transferred to a
Housing Development Fund. Housing selling schemes, both complete and in progress as at 1 April 1998, were also transferred to the
Housing Development Fund. In terms of the Housing Act, all proceeds from housing developments, which include net rental income
and sales of houses, must be paid into the Housing Development Fund. Monies outstanding to the credit of the Housing Development
Fund can be used only to finance housing developments within the municipal area subject to the approval of the Provincial MEC
responsible for housing.

16. Revaluation reserve

Closing balance                                                           584,022,037       584,022,037   584,022,037       584,022,037

The surplus arising from the revaluation of land is credited to a non-distributable reserve. On disposal, the net revaluation surplus is
transferred to the accumulated surplus/(deficit) while gains or losses on disposal, based on revalued amounts, are credited or charged
to the Statement of Financial Performance.

Any impairment loss of a revalued asset shall be treated as a revaluation decrease. To the extent that the impairment loss exceeds the
revaluation surplus for the same asset, the impairment loss is recognised in surplus/(deficit).

17.   Mark-to-market reserve

Closing balance                                                                     6,160             6,160             6,160             6,160
Asset revaluation                                                                   1,672                 -             1,672                 -
                                                                                    7,832             6,160             7,832             6,160

The surplus is due to the market value adjustment of financial assets classified as available -for-sale financial instruments (OVK Holding
Ltd shares). On disposal, the net mark-to-market surplus is realised to the Statement of Financial Performance.

18. Other NDR

Change during the year                                                                  -                 -   899,850,291                    -

The surplus arising from the revaluation of Centlec (Pty) Ltd property (as revaluated on 14 May 2010 by an independent valuer) is
credited to other non-distributable reserve. On disposal, the net revaluation surplus is transferred to the accumulated surplus/(deficit)
while gains or losses on disposal, based on revalued amounts, are credited or charged to the Statement of Financial Performance.

Any impairment loss of a revalued asset shall be treated as a revaluation decrease. To the extent that the impairment loss exceeds the
revaluation surplus for the same asset, the impairment loss is recognised in surplus/(deficit).

19.   Self insurance reserve

Closing balance                                                               73,132,814         73,132,814       73,132,814        73,132,814
Contributions to insurance reserve                                             2,297,910                  -        2,297,910                 -
Insurance claims processed                                                      (824,014)                 -         (824,014)                -
                                                                              74,606,710         73,132,814       74,606,710        73,132,814

The group has a Self-Insurance Reserve to set aside amounts to offset potential losses or claims, which are not insured externally. The
contribution to the fund is determined by the council’s insurance broker and is transferred to the fund from the accumulated
surplus/(deficit). Claims are settled by transferring a corresponding amount from the self-insurance reserve to the accumulated
surplus. The balance of the self-insurance fund should be invested.



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                            Page | 132
                                     Mangaung Local Municipality Consolidated
                                       Annual Financial Statements for the year ended 30 June 2010

                                     Notes to the Annual Financial Statements
                                                                                 Controlling entity                  Economic entity
                                                                               2010            2009               2010          2009
                                                                                R                R                 R               R


20. COID reserve

Closing balance                                                              13,654,505        13,654,505       13,654,505       13,654,505
Contributions to insurance reserve                                            2,346,900                 -        2,346,900                -
Insurance claims processed                                                   (1,688,128)                -        (1,688,128)              -
                                                                             14,313,277        13,654,505       14,313,277       13,654,505

The group has been exempted from making contributions to the Compensation Commissioner for Occupational Injuries and Diseases
(COID). In terms of the exemption from the Compensation Commissioner, the group has established a COID reserve to offset claims
from employees. Amounts are transferred to the COID Reserve from the accumulated surplus based on the amounts as approved in the
annual budget as well as additional amounts deemed necessary to ensure that the balance of the reserve is adequate to offset
potential claims.

Claims are paid as determined by the Compensation Commissioner. Claims are settled by transferring a corresponding amount from
the COID reserve to the accumulated surplus/(deficit).

21.   Non-current borrowings

Held at amortised cost
DBSA Bloemfontein: Sewer - 8001/104                                            4,372,878        5,589,659        4,372,879        5,589,659
DBSA Bloemfontein: Water - 8001/104                                            5,799,214        6,558,693        5,799,214        6,558,693
DBSA Thaba Nchu: 1864/202                                                        345,290          345,290          345,290          345,290
                                                                             10,517,382        12,493,642       10,517,383       12,493,642

All the loans are from The Development Bank of South Africa and repayments are made on a six monthly basis. The last loan will be
redeemed at 31 December 2015 and the loans bear interest between 10% and 14%.

Refer to Appendix A for more detail on long-term borrowings.

The entity did not default on any of the non-current borrowings whether it be on the capital or the interest portions.

Not any of the terms attached to the non-current borrowings were renegotiated.

Non-current liabilities
At amortised cost                                                            10,517,382        12,493,642       10,517,383       12,493,642

Current liabilities
At amortised cost                                                              1,976,260        1,785,058        1,976,260        1,785,058
                                                                             12,493,642        14,278,700       12,493,643       14,278,700




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                         Page | 133
                                   Mangaung Local Municipality Consolidated
                                       Annual Financial Statements for the year ended 30 June 2010

                                     Notes to the Annual Financial Statements
                                                                                   Controlling entity                  Economic entity
                                                                                 2010            2009               2010          2009
                                                                                  R                R                 R               R


22.   Finance lease liability

Minimum lease payments due
Payable within 1 year                                                           1,896,184         1,857,151         2,103,084        2,045,611
Payable within 1 - 5 years                                                        747,062         1,415,233           833,753        1,611,242
                                                                                2,643,246         3,272,384         2,936,837        3,656,853
Less: Future finance charges                                                     (269,294)         (326,318)         (296,711)       (368,483)
Present value of minimum lease payments                                         2,373,952         2,946,066         2,640,126        3,288,370

Present value of minimum lease payments due
Payable within 1 year                                                           1,729,914         1,611,141         1,916,360        1,769,870
Payable within 1 - 5 years                                                        644,038         1,334,925           723,766        1,518,500
                                                                                2,373,952         2,946,066         2,640,126        3,288,370

Non-current liabilities                                                           644,038         1,334,925           723,766        1,518,500
Current liabilities                                                             1,729,914         1,611,141         1,916,360        1,769,870
                                                                                2,373,952         2,946,066         2,640,126        3,288,370

The council leases various equipment under finance leases. A finance lease is a lease that transfers substantially all the risks and
rewards incidental to ownership of an asset. Title may or may not eventually be transferred. The maximum lease term is 5 years and
the average borrowing rate is between 9% and 15%. Some leases have fixed repayment terms and other escalate on average by 10%
per annum. No arrangements have been entered into for contingent rent. Obligations under finance leases are secured by the lessor's
title to the leased asset.

The entity did not default on any of the finance lease obligations, whether it be on the capital or the interest portion.

None of the terms attached to the finance lease obligations were renegotiated.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                            Page | 134
                             Mangaung Local Municipality Consolidated
                                   Annual Financial Statements for the year ended 30 June 2010

                               Notes to the Annual Financial Statements
                                                                           Controlling entity                Economic entity
                                                                           2010              2009            2010            2009
                                                                           R                  R              R               R


23. Unspent conditional grants and receipts

Unspent conditional grants and receipts comprises of:


2010 Soccer DBSA                                                                   -        2,000,000                 -      2,000,000
2010 Stadia Development Grant                                                      -       34,410,832                 -     34,410,832
2010 Stadia Provincial Grant                                              16,622,725       20,285,503       16,622,725      20,285,503
2010 World Cup Host City Operating Grant                                  19,000,000       50,096,750       19,000,000      50,096,750
COGTA Grant Fire Suppression                                                  82,817                -           82,817               -
DBSA Grant Capacity Building Programme                                       234,104          234,104          234,104         234,104
Financial Management Grant                                                    61,718          370,629           61,718         370,629
Housing Grant: Municipal Accreditation funding                             3,422,331        3,524,578        3,422,331       3,524,578
Local Government and Housing Grant                                         1,215,190        9,163,022        1,215,190       9,163,022
Local Government and Housing Infrastructure Grant                          3,965,043       19,705,218        3,965,043      19,705,218
Motheo Contribution Environmental Health                                  13,786,458       10,141,311       13,786,458      10,141,311
Municipal Infrastructure Grant                                            38,703,738       18,305,870       38,703,738      18,305,870
Municipal Systems Improvement grant                                          685,145          765,366          685,145         765,366
National Electrification program                                                   -                -                 -      2,535,502
Provincial Grant Hlasela Project - Batho Car Wash                            150,000                -          150,000               -
Provincial Grant Hlasela Project - Boikemesetso Coop                         100,000                -          100,000               -
Farming
Provincial Grant Hlasela Project - IphahamiIseng                                3,703                -           3,703                  -
Centre
Provincial Grant Hlasela Project - Lehlohonolo Music                            7,200                -           7,200                  -
Group
Provincial Grant Land Use Scheme                                              748,686       1,395,045          748,686          1,395,045
Provincial Grant Planning and Surveying                                       574,210         754,763          574,210            754,763
Provincial Grant Township Establishment Caleb                               1,343,791               -        1,343,791                  -
Motshabi
Demand Side Management Grant                                                       -                -       1,040,792                -
Provincial Grant- Du Plessis/Muller Intersection                             578,732                -         578,732                -
Provincial Grant: Upgrade Housing Batho                                    2,083,399                -       2,083,399                -
Provincial Transfer Grassland                                              4,500,000        4,500,000       4,500,000        4,500,000
Provincial Treasury - Thaba Nchu Station Site Project                       (153,028)               -        (153,028)               -
Provincial grant CCTV                                                        130,851                -         130,851                -
Public Transport Infrastructure and System Fund Grant                    121,120,549      229,233,853     121,120,549      229,233,853
Restructuring Grant                                                          123,685        1,918,768         123,685        1,918,768
Urban Renewal grant                                                          568,879          377,500         568,879          377,500
Water Services Operating and Transfer Subsidy                              2,025,822        9,402,864       2,025,822        9,402,864
(DWAF)
                                                                         231,685,748      416,585,976     232,726,540      419,121,478

See note 33 for reconciliation of grants from other spheres of government. The amounts will be recognised as revenue when the
qualifying expenditure is incurred.

No grants were withheld due to unfilled conditions.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                   Page | 135
                                 Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                                     Controlling entity                 Economic entity
                                                                                     2010              2009             2010            2009
                                                                                     R                  R               R               R


24. Non-current provisions

Reconciliation of non-current provisions - Economic entity - 2010

                                                                           Opening           Expenditure         Discounting          Total
                                                                           Balance             incurred
Provision for rehabilitation                                                 65,688,464           3,941,308                  -       69,629,772
of landfill sites
Provision for the                                                              4,171,411            348,330           136,165         4,655,906
rehabilitation of quarry sites
                                                                              69,859,875          4,289,638           136,165        74,285,678

Reconciliation of non-current provisions - Economic entity                  - 2009

                                                                           Opening           Expenditure         Discounting          Total
                                                                           Balance
Provision for rehabilitation of landfill sites                               60,794,506                   -         4,893,958        65,688,464
Provision for the rehabilitation of quarry sites                              3,664,859             377,852           128,700         4,171,411
                                                                              64,459,365            377,852         5,022,658        69,859,875

Provision for rehabilitation of landfill sites:

The provision for rehabilitation of landfill sites relates to the legal obligation to rehabilitate landfill sites to a condition whereby it
complies to the permit requirements issued in terms of the Mineral and Petroleum Resources Development Act, 28 of 2002. The
provision was determined by an independent expert and approximates the discounted expected future cash flows using reasonable
estimation techniques.

Landfills consist of:
Botshabelo landfill site
Bloemfontein Northern landfill site
Bloemfontein Southern landfill site
Thaba Nchu landfill site


Provision for rehabilitation of quarry sites:

In terms of the Mineral and Petroleum Resources Development Act, 28 of 2002, it is required from the group to execute the
environmental management program to restore the Petra Quarry site after its useful life. Provision has been made for this cost based
on the present value of future cash flows arising from the rehabilitation cost expected as at 31 May 2016. Discount rates used for the
present value calculation was based on inflation and amounts to 10%.

The provision was determined by an independent expert and approximates the discounted expected future cash flows using
reasonable estimation techniques. These quarries include:
Cecilia Quarry Sunnyside
Quarry Thaba Nchu
Quarries Botshabelo
Quarries

Rehabilitation:

Landfill sites
Daily rehabilitation is done at each landfill site. The final restoration of landfill sites are expected to be over a period of 15 years, being
the estimated useful lives of landfill sites. No uncertainties were listed in the engineer's report.

Quarries
Rehabilitation has already started at the Petra Quarry.
No uncertainties were used in the calculation of the rehabilitation cost.

Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                Page | 136
                                   Mangaung Local Municipality Consolidated
                                       Annual Financial Statements for the year ended 30 June 2010

                                     Notes to the Annual Financial Statements
                                                                                Controlling entity                  Economic entity
                                                                                2010              2009              2010            2009
                                                                                 R                 R                R               R


 24. Non-current provisions (continued)
The rehabilitation of quarries is expected to be over a period of 20-30 years, being the estimated useful lives of the quarries.


The calculation of rehabilitation of quarries is based on the estimated use per annum plus the total area to be rehabilitated from the
previous year, multiplied with the estimated restoration cost per unit and increased annually by using an appropriate discounting
factor. The calculation is cumulative and thus equates to the present value of restoration costs as at 30 June.


Engineers were appointed during 2008/09 to provide a detailed report of closure costs for the sites as at
30 June 2009. The estimated closure costs were also provided for previous financial years. The costs as per the engineer's report is
therefore adjusted annually in terms of the National Treasury's growth parameters. A 6% increase for 2010 was applied.

25.   Payables from exchange transactions

Accrued audit fees                                                                      7                2                 3                 -
Mantsopa                                                                                -                -         1,039,417         1,354,933
Naledi                                                                                  -                -            26,747                 -
Kopanong                                                                                -                -         1,012,587                 -
Accrued leave pay                                                                       -                -           162,132           162,132
Deferred interest                                                               6,583,496        6,152,351         6,583,496         6,152,351
Deferred lease expenditure                                                        124,783          134,317           124,783           134,317
Deposits received                                                                       -                -         6,503,574                 -
Inter-company loan from Centlec (Pty) Ltd                                     314,627,575      189,793,336                  -                -
Other payables                                                                  3,285,388          538,975         4,016,555           538,975
Payments received in advanced                                                  83,763,576       94,314,197        83,763,576        94,314,197
Retentions                                                                     25,132,321       29,731,237        25,132,321        29,731,237
Staff bonuses                                                                  14,416,172       12,709,526        14,416,172        12,709,526
Staff leave                                                                    47,219,380       36,040,293        47,219,380        36,040,293
Trade payables                                                                183,804,538      117,964,261       356,851,477       190,652,225
                                                                              678,957,236      487,378,495       546,852,220       371,790,186

The group defaulted on the payment of suppliers within 30 days. The average term of payment of suppliers for the current year was 40
days (2009 - 40 days).

The terms were not renegotiated before the financial statements were authorised for issue.

26.   Payables from non-exchange transactions

Deposits                                                                          441,127           400,779          441,127           400,779
Other payables                                                                  3,219,497         2,850,978        3,219,497         2,850,978
                                                                                3,660,624         3,251,757        3,660,624         3,251,757

The group defaulted on the payment of suppliers within 30 days. The average term of payment of suppliers for the current year was 40
days (2009 - 40 days).

The terms were not renegotiated before the financial statements were authorised for issue.

27. VAT payable

VAT payable                                                                 87,095,362      55,990,136     68,098,179      55,592,399

The Group is registered on the cash basis for VAT purposes. This means that VAT is only declared once cash is received or actual
payments are made.


Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                          Page | 137
                                    Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                    Notes to the Annual Financial Statements
                                                                                 Controlling entity                 Economic entity
                                                                               2010            2009              2010          2009
                                                                                R                R                R               R


28. Consumer deposits

Water                                                                        24,164,502        22,668,765       24,164,502       22,668,765
Interest paid                                                                   942,630         1,221,008          942,630        1,221,008
Electricity                                                                           -                 -       38,368,916       33,518,852
                                                                             25,107,132        23,889,773       63,476,048       57,408,625

Included in deposits is an accrual of interest at an effective interest rate of 4% per annum, which is paid to consumers when deposits
are refunded.

Guarantees in Lieu:
Water deposits                                                                 5,659,252        5,735,215        5,659,252        5,735,215
Electricity deposits                                                                   -                -       10,651,113        8,403,562
                                                                               5,659,252        5,735,215       16,310,365       14,138,777

29. Financial assets by category

The accounting policies for financial instruments have been applied to the line items below:

Economic entity - 2010

                                                                                           Available for      Loans and              Total
                                                                                               sale          receivables
Cash and cash equivalents                                                                               -       45,461,179       45,461,179
Consumer receivables from exchange transactions                                                         -      326,753,529      326,753,529
Current portion of non - current receivables                                                            -       14,060,235       14,060,235
Other receivables from exchange transactions                                                            -       82,791,626       82,791,626
Other receivables from non-exchange transactions                                                        -          395,802          395,802
Non - current receivables                                                                               -       11,775,846       11,775,846
Investments                                                                                        10,367                 -          10,367
                                                                                                   10,367      481,238,217      481,248,584

Economic entity - 2009

                                                                                           Available for      Loans and              Total
                                                                                               sale          receivables
Cash and cash equivalents                                                                               -      284,482,251      284,482,251
Consumer receivables from exchange transactions                                                         -      266,687,816      266,687,816
Current portion of non-current receivables                                                              -        3,922,453        3,922,453
Other receivables from exchange transactions                                                            -       83,854,176       83,854,176
Other receivables from non-exchange transactions                                                        -          315,258          315,258
Non-current receivables                                                                                 -       15,762,076       15,762,076
Investments                                                                                         8,695                 -           8,695
                                                                                                    8,695      655,024,030      655,032,725




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                        Page | 138
                                    Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                    Notes to the Annual Financial Statements
                                                                                Controlling entity                    Economic entity
                                                                              2010            2009                 2010          2009
                                                                               R                R                   R               R


30.   Revenue

Fines                                                                        1,385,004        4,733,684         1,385,004        4,733,684
Government grants & subsidies                                              853,818,002      722,291,389       858,670,800      716,894,915
Income from agency services                                                107,165,586       90,528,323                 -          191,255
Licences and permits                                                           199,304          237,948           199,304          237,948
Property rates                                                             342,459,519      278,659,802       338,503,889      278,659,802
Rental of facilities & equipment                                            19,589,794       19,757,100        19,589,794       19,757,100
Service charges                                                            429,527,465      403,345,700     1,382,279,326    1,103,893,644
                                                                         1,754,144,674    1,519,553,946     2,600,628,117    2,124,368,348

For other income refer to note 34

The amount included in revenue arising from
exchange transactions are as follows:
Service charges                                                            429,527,465      403,345,700     1,382,279,326    1,103,893,644
Rental of facilities & equipment                                            19,589,794       19,757,100        19,589,794       19,757,100
Income from agency services                                                107,165,586       90,528,323                 -          191,255
Licences and permits                                                           199,304          237,948           199,304          237,948
                                                                           556,482,149      513,869,071     1,402,068,424    1,124,079,947

The amount included in revenue arising from non-
exchange transactions is as follows:
Property rates                                                             342,459,519      278,659,802       338,503,889      278,659,802
Fines                                                                        1,385,004        4,733,684         1,385,004        4,733,684
Government grants & subsidies                                              853,818,002      722,291,389       858,670,800      716,894,915
                                                                         1,197,662,525    1,005,684,875     1,198,559,693    1,000,288,401

31.   Property rates

Rates received

Municipal                                                                             -        1,609,031                 -        1,609,031
Residential and commercial                                                 308,762,787      254,742,894       304,807,157      254,742,894
State                                                                       36,795,651       25,479,406        36,795,651       25,479,406
Less: Fair value adjustment                                                 (3,098,919)      (3,171,529)       (3,098,919)      (3,171,529)
                                                                           342,459,519      278,659,802       338,503,889      278,659,802

Valuations
                                                                                                           R'000             R'000

Residential                                                                  28,615,617       10,373,913       28,615,617       10,373,913
Commercial                                                                    7,841,067        5,001,020        7,841,067        5,001,020
State                                                                         3,190,648        1,534,313        3,190,648        1,534,313
Municipal                                                                     2,185,894        1,209,466        2,185,894        1,209,466
                                                                            41,833,226        18,118,712       41,833,226       18,118,712

2009:
Valuations on land and buildings are performed at least every five years. The last valuation came into effect on 1 July 2003 and the
following valuation will come into effect on 1 July 2009. The basic rates of R0.0912 on the value of land and R0.008238 on the value of
improvements are applied to determine assessment rates. A rebate of 40% is granted to owners whose properties are used solely for
residential purposes, including properties which are zoned for the purpose of town houses and flats, as well as smallholding's and
farms used solely for residential and agricultural purposes. A rebate of 20% is applied on residential properties from which an informal
business is operated. A rebate of 100% is granted in the Bloemdustria industrial area.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                       Page | 139
                              Mangaung Local Municipality Consolidated
                                   Annual Financial Statements for the year ended 30 June 2010

                                Notes to the Annual Financial Statements
                                                                             Controlling entity                Economic entity
                                                                             2010              2009            2010            2009
                                                                             R                  R              R               R


31. Property rates (continued)

2010:
From 1 July 2009 the basic rates were adjusted as follows:
- R0,034 on the value of rateable farm property,
- R0,5651 on the value of rateable residential property
- R1,3128 on the value of rateable government property
- R2,8255 on the value of rateable business property
- A rebate of 40% is granted to owners whose properties are used solely for residential purposes, including properties which are zoned
for the purpose of town houses and flats, as well as smallholding's and farms used solely for residential and agricultural purposes.

32.   Service charges

Sale of electricity                                                                 -                 -     952,760,231      700,559,342
Sale of water                                                             303,100,248      298,983,289      303,091,878      298,971,891
Sewerage and sanitation charges                                           127,253,044      106,554,681      127,253,044      106,554,681
Refuse removal                                                              4,593,428         4,046,120        4,593,428        4,046,120
Less: Fair value adjustment                                                (5,419,255)      (6,238,390)      (5,419,255)      (6,238,390)
                                                                          429,527,465      403,345,700     1,382,279,326   1,103,893,644

33.   Government grants and subsidies

2010 Soccer DBSA                                                            2,000,000                -        2,000,000                -
2010 Stadia Development Grant                                              36,390,066      107,192,347       36,390,066      107,192,347
2010 Stadia Provincial Grant                                                3,662,778       44,193,822        3,662,778       44,193,822
2010 World Cup Host City Operating Grant                                   50,096,750        4,703,250       50,096,750        4,703,250
COGTA Grant Fire Suppression                                                2,177,844                -        2,177,844                -
DPLG Grant Sustainable Human Settlement                                             -          274,867                -          274,867
Electricity Demand Side Management Grant                                    4,000,000                -        6,467,980                -
Equitable Share                                                           394,636,828      305,797,405      394,636,828      305,797,405
Finance Management Grant                                                    1,058,911        2,235,348        1,058,911        2,235,348
Housing Grant: Municipal Accreditation Subsidy                                102,247          830,407          102,247          830,407
Local Government and Housing Grant                                          7,947,832          133,778        7,947,832          133,778
Local Government and Housing Infrastructure Grant                          15,740,175       10,362,140       15,740,175       10,362,140
Motheo Contribution Environmental Health                                    2,854,853          636,669        2,854,853          636,669
Municipal Infrastructure Grant                                             56,476,133      101,030,013       56,476,133      101,030,013
Municipal Systems Improvement Grant                                           580,221          589,285          580,221          589,285
National Electrification Program                                            1,227,000       63,196,600        3,611,818       57,800,126
Provincial Grant - Du Plessis /Muller Intersection                          2,421,268                -        2,421,268                -
Provincial Grant CCTV For BFN CBD Stadium Navil Hill                       19,914,149                -       19,914,149                -
Provincial Grant Hlasela Project - Boikemesetso Coop                          200,000                -          200,000                -
Farming
Provincial Grant Hlasela Project - Mystic Beauty Saloon                        200,000                 -        200,000                  -
Provincial Grant Hlasela Project - IphahamiIseng                               140,297                 -        140,297                  -
Centre
Provincial Grant Land Use Scheme                                              646,359          204,955          646,359          204,955
Provincial Grant Planning and Surveying                                       180,553           66,337          180,553           66,337
Provincial Grant Township Establishment Caleb Mots                            656,209                -          656,209                -
Provincial Grant Upgrading Housing Batho                                    5,916,601                -        5,916,601                -
Provincial Grant Upgrading Roads in Batho                                  30,000,000                -       30,000,000                -
Provincial Health Subsidies                                                         -        3,361,470                 -       3,361,470
Provincial Treasury - Thaba Nchu Station Site Project                         153,028                -          153,028                -
Public Transport Infrastructure and Systems Grant                         205,281,304       71,413,664      205,281,304       71,413,664
Restructuring Grant                                                         1,795,083        5,968,212        1,795,083        5,968,212
Urban Renewal Grant                                                           (15,529)               -          (15,529)               -


Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                     Page | 140
                                     Mangaung Local Municipality Consolidated
                                         Annual Financial Statements for the year ended 30 June 2010

                                       Notes to the Annual Financial Statements
                                                                                 Controlling entity                 Economic entity
                                                                               2010            2009              2010          2009
                                                                                R                R                R               R

33. Government grants and subsidies (continued)
Water Services Operating and Transfer Subsidy                                  7,377,042          100,820        7,377,042          100,820
(DWAF)
                                                                             853,818,002     722,291,389       858,670,800      716,894,915

2010 Soccer DBSA

Balance unspent at beginning of year                                           2,000,000        2,000,000        2,000,000        2,000,000
Conditions met - transferred to revenue                                       (2,000,000)               -       (2,000,000)               -
Closing balance                                                                         -       2,000,000                  -      2,000,000

Conditions still to be met - transfer to liabilities (see note 23)

Grant for the expenditure of the 2010 Soccer World Cup.

2010 Stadia Development Grant

Balance unspent at beginning of year                                          34,410,832       68,179,979       34,410,832     68,179,978
Current - year receipts                                                        1,979,234       73,423,200        1,979,234     73,423,200
Conditions met - transferred to revenue                                      (36,390,066)    (107,192,347)     (36,390,066) (107,192,346)
Closing balance                                                                         -      34,410,832                  -     34,410,832

Conditions still to be met - transfer to liabilities (see note 23)

The grant is allocated to the group for the development and improvement of the sport stadium for the 2010 Soccer World Cup.

2010 Stadia Provincial Grant

Balance unspent at beginning of year                                          20,285,503                -       20,285,503                -
Current - year receipts                                                                -       64,479,325                 -      64,479,325
Conditions met - transferred to revenue                                       (3,662,778)     (44,193,822)       (3,662,778)   (44,193,822)
Closing balance                                                               16,622,725       20,285,503       16,622,725       20,285,503

Conditions still to be met - transferred to liabilities (see note 23)

The grant is allocated to the group for the development and improvement of the sport stadium for the 2010 Soccer World Cup.

2010 World Cup Host City Operating Grant

Balance unspent at beginning of year                                          50,096,750                -      50,096,750                 -
Current - year receipts                                                       19,000,000       54,800,000      19,000,000       54,800,000
Conditions met - transferred to revenue                                      (50,096,750)      (4,703,250)     (50,096,750)     (4,703,250)
Closing balance                                                               19,000,000       50,096,750       19,000,000       50,096,750

Conditions still to be met - transferred to liabilities (see note 23)

The grant was allocated to the group to assist host cities with the operational response associated with the hosting of the 2009 FIFA
Confederations Cup and the 2010 FIFA World Cup.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                       Page | 141
                                Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                                  Controlling entity                  Economic entity
                                                                                2010            2009               2010          2009
                                                                                 R                R                 R               R


33. Government grants and subsidies (continued)

COGTA Grant Fire Suppression

Current - year receipts                                                         2,260,660                 -        2,260,660                   -
Conditions met - transferred to revenue                                        (2,177,843)                -       (2,177,843)                  -
Closing balance                                                                    82,817                 -           82,817                   -

Conditions still to be met - transferred to liabilities (see note 23)

To capacitate the fire and rescue division in order to deal with the 2010 soccer events.

DBSA Grant Capacity Building Programme

Balance unspent at beginning of year                                             234,104                  -         234,104              234,104
Current - year receipts                                                                -            234,104                -                   -
Closing balance                                                                  234,104            234,104         234,104              234,104

Conditions still to be met - transferred to liabilities (see note 23)

The grant was allocated to the group to assist with capacity building.

DPLG Grant Sustainable Human Settlement

Balance unspent at beginning of year                                             274,867                  -         274,867              274,867
Conditions met - transferred to revenue                                                -            274,867                -                   -
Closing balance                                                                  274,867            274,867         274,867              274,867

Conditions still to be met - transferred to liabilities (see note 23)

Grant for the financial assistance for the planning and surveying of erven, geo-technical reports and relevant reports.

Electricity Demand Side Management Grant

Current - year receipts                                                         4,000,000                 -        6,467,980                   -
Conditions met - transferred to revenue                                        (4,000,000)                -       (5,427,188)                  -
Closing balance                                                                            -              -       1,040,792                    -

Conditions still to be met - transferred to liabilities (see note 23)

To implement the Electricity Demand Side Management (EDSM) programme by providing capital subsidies to licensed distributors to
address EDSM in residential dwellings, communities and municipal buildings in order to mitigate the risk of load shedding and supply
interruptions.

Equitable Share

Current - year receipts                                                      394,636,828        305,797,405     394,636,828    305,797,405
Conditions met - transferred to revenue                                     (394,636,828)      (305,797,405)   (394,636,828) (305,797,405)
Closing balance                                                                            -              -                 -                  -

In terms of the Constitution, this grant is used to subsidise the provision of basic and administrative services to indigent community
members and to subsidise income.


Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                          Page | 142
                                Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                                 Controlling entity                 Economic entity
                                                                               2010            2009              2010          2009
                                                                                R                R                R               R


33. Government grants and subsidies (continued)

Financial Management Grant

Balance unspent at beginning of year                                             370,629        2,105,977         370,629           2,105,977
Current - year receipts                                                          750,000          500,000         750,000             500,000
Conditions met - transferred to revenue                                       (1,058,911)      (2,235,348)      (1,058,911)       (2,235,348)
Closing balance                                                                   61,718            370,629        61,718            370,629

Conditions still to be met - transferred to liabilities (see note 23)

The purpose of the grant is to promote and support reforms to financial management and the implementation of the Municipal
Finance Management Act (MFMA).

Housing Grant: Municipal Accreditation Funding

Balance unspent at beginning of year                                           3,524,578       1,854,985        3,524,578          1,854,985
Current - year receipts                                                                -       2,500,000                 -         2,500,000
Conditions met - transferred to revenue                                         (102,247)       (830,407)        (102,247)         (830,407)
Closing balance                                                                3,422,331       3,524,578        3,422,331          3,524,578

Conditions still to be met - transferred to liabilities (see note 23)

The grant is allocated to the group to finance and support the municipal accreditation project as well as capacity development.

Local Government and Housing Grant

Balance unspent at beginning of year                                           9,163,022               -        9,163,022          9,296,800
Current - year receipts                                                                -       9,296,800                 -                 -
Conditions met - transferred to revenue                                       (7,947,832)       (133,778)       (7,947,832)        (133,778)
Closing balance                                                                1,215,190       9,163,022        1,215,190          9,163,022

Conditions still to be met - transferred to liabilities (see note 23)

Upgrading of White City Hostels.

Local Government and Housing Infrastructure Grant

Balance unspent at beginning of year                                          19,705,218               -       19,705,218       30,067,358
Current - year receipts                                                                -      30,067,358                 -               -
Conditions met - transferred to revenue                                      (15,740,175)    (10,362,140)      (15,740,175)   (10,362,140)
Closing balance                                                                3,965,043      19,705,218        3,965,043         19,705,218

Conditions still to be met - transferred to liabilities (see note 23)

Grant for infrastructure for housing projects for the Grassland area.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                       Page | 143
                                Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                                   Controlling entity                   Economic entity
                                                                                 2010            2009                2010          2009
                                                                                  R                R                  R               R


33. Government grants and subsidies (continued)

Motheo Contribution Environmental Health

Balance unspent at beginning of year                                            10,141,311         3,777,980       10,141,311          3,777,980
Current - year receipts                                                          6,500,000         7,000,000        6,500,000          7,000,000
Conditions met - transferred to revenue                                         (2,854,853)         (636,669)      (2,854,853)         (636,669)
Closing balance                                                                 13,786,458        10,141,311       13,786,458        10,141,311

Conditions still to be met - transferred to liabilities (see note 23)

Grant for the rendering of environmental health services.

Municipal Infrastructure Grant

Balance unspent at beginning of year                                            18,305,870        16,401,883        18,305,870     16,401,883
Current - year receipts                                                         76,874,000       102,934,000        76,874,000    102,934,000
Conditions met - transferred to revenue                                        (56,476,132)     (101,030,013)      (56,476,132) (101,030,013)
Closing balance                                                                 38,703,738        18,305,870       38,703,738        18,305,870

Conditions still to be met - transferred to liabilities (see note 23)

The grant is used to supplement municipal capital budgets to eradicate backlogs in municipal infrastructure utilised in providing basic
services for the benefit of poor households. The grant was used to construct roads and sewerage infrastructure as part of the
upgrading of informal settlement areas.


Municipal Systems Improvement Grant

Balance unspent at beginning of year                                               765,366           954,651          765,366            954,651
Current - year receipts                                                            500,000           400,000          500,000            400,000
Conditions met - transferred to revenue                                           (580,221)         (589,285)         (580,221)        (589,285)
Closing balance                                                                    685,145           765,366           685,145          765,366

Conditions still to be met - transferred to liabilities (see note 23).

The purpose of the grant is to assist municipalities in building in-house capacity to perform their functions and stabilise institutional
and governance systems as required in the Local Government: Municipal Systems Act 32 of 2000.

National Electrification Program Grant

Balance unspent at beginning of year                                                     -                 -         2,535,502        4,900,015
Current-year receipts                                                                    -                 -         1,227,000       55,435,613
Current - year receipts                                                          1,227,000        63,196,600                  -               -
Conditions met - transferred to revenue                                         (1,227,000)      (63,196,600)       (3,762,502)    (57,800,126)
Closing balance                                                                            -                 -                 -      2,535,502

The grant is used to address the electrification backlog of permanently occupied residential dwellings, the installation of bulk
infrastructure and rehabilitation of electrification infrastructure. The grant is utilised by Centlec (Pty) Ltd.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                           Page | 144
                                Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                               Controlling entity                     Economic entity
                                                                               2010              2009              2010          2009
                                                                                 R               R                  R               R


33. Government grants and subsidies (continued)

Provincial Grant - Du Plessis /Muller Intersection

Current - year receipts                                                         3,000,000                  -       3,000,000                 -
Conditions met - transferred to revenue                                        (2,421,268)                 -      (2,421,268)                -
Closing balance                                                                   578,732                  -         578,732                 -

Conditions still to be met - transferred to liabilities (see note 23)

The purposes of the grant is to assist the group with the Du Plessis/Muller intersection infrastructure project as part of the widening of
Nelson Mandela Drive.

Provincial Grant CCTV For BFN CBD Stadium Navil Hill

Current - year receipts                                                        20,045,000                  -     20,045,000                  -
Conditions met - transferred to revenue                                       (19,914,149)                 -     (19,914,149)                -
Closing balance                                                                   130,851                  -         130,851                 -

Conditions still to be met - transferred to liabilities (see note 23)

Grant for CCTV cameras at the Bloemfontein CDB Stadium in Navil Hill.

Provincial Health Subsidies

Current - year receipts                                                                  -        3,361,470                 -       3,361,470
Conditions met - transferred to revenue                                                  -       (3,361,470)                -     (3,361,470)
Closing balance                                                                          -                 -                -                -

The municipality renders health services on behalf of the Provincial Government and is refunded approximately 60% of total
expenditure incurred. The grant is used mainly to fund primary health care services.

Provincial Grant Hlasela Project - Batho Car Wash

Current - year receipts                                                           150,000                  -         150,000                 -
Closing balance                                                                   150,000                  -         150,000                 -

Conditions still to be met - transferred to liabilities (see note 23)

The purpose of this grant is to assist the group with the implementation of the Operation Hlasela project which is a car wash in Batho.

Provincial Grant Hlasela Project - Boikemesetso Coop Farming

Current - year receipts                                                           200,000                  -         200,000                 -
Conditions met - transferred to revenue                                          (200,000)                 -        (200,000)                -
Closing balance                                                                          -                 -                -                -

Conditions still to be met - transferred to liabilities (see note 23)

The purpose of this grant is to assist the group with the implementation of the Operation Hlasela project: A Cooperative farming in
Boikemesetso.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                         Page | 145
                                Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                              Controlling entity                   Economic entity
                                                                              2010              2009            2010          2009
                                                                              R                 R                R               R


33. Government grants and subsidies (continued)

Provincial Grant Hlasela Project - Lehlohonolo Music Group

Current - year receipts                                                            7,200                -           7,200                  -
Closing balance                                                                    7,200                -           7,200                  -

Conditions still to be met - transferred to liabilities (see note 23)

The purpose of this grant is to assist the group with the implementation of the Operation Hlasela project: the Lehlohonolo Music
Group.

Provincial Grant Hlasela Project -IphahamiIseng Centre

Current - year receipts                                                          144,000                -          144,000                 -
Conditions met - transferred to revenue                                         (140,297)               -         (140,297)                -
Closing balance                                                                    3,703                -           3,703                  -

Conditions still to be met - transferred to liabilities (see note 23)

The purpose of this grant is to assist the group with the implementation of the Operation Hlasela project for swings,
computer internet service and adopting the Iphahamiseng Centre for Vulnerable Children.

Provincial Grant Hlasela Project - Mystic Beauty Saloon

Current - year receipts                                                          200,000                -          200,000                 -
Conditions met - transferred to revenue                                         (200,000)               -         (200,000)                -
Closing balance                                                                        -                -                 -                -

Conditions still to be met - transferred to liabilities (see note 23)

The purpose of this grant is to assist the group with the implementation of the Operation Hlasela project: A Mystic Beauty Saloon.

Provincial Grant Hlasela Project - Re Ba Ikemetseng Bomme

Current - year receipts                                                         100,000                 -         100,000                  -
Closing balance                                                                 100,000                 -         100,000                  -

Conditions still to be met - transferred to liabilities (see note 23)

The purpose of this grant is to assist the group with the implementation of the Operation Hlasela project: Re Ba Ikemetseng Bomme
(Sewing project).

Provicial Grant Land Use Scheme

Balance unspent at beginning of year                                           1,395,045       1,600,000        1,395,045          1,600,000
Conditions met - transferred to revenue                                         (646,359)       (204,955)        (646,359)         (204,955)
Closing balance                                                                 748,686        1,395,045          748,686          1,395,045

Conditions still to be met - transferred to liabilities (see note 23)

To assist the municipality with the compilation of a Town Planning scheme to manage land development.


Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                       Page | 146
                                Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                                 Controlling entity                  Economic entity
                                                                               2010            2009               2010          2009
                                                                                R                R                 R               R


33. Government grants and subsidies (continued)

Provincial Grant Planning and Surveying

Balance unspent at beginning of year                                             754,763            821,100        754,763            821,100
Conditions met - transferred to revenue                                         (180,553)           (66,337)       (180,553)          (66,337)
Closing balance                                                                  574,210            754,763        574,210            754,763

Conditions still to be met - transferred to liabilities (see note 23).

To assist the municipality with the compilation of a Town Planning scheme to manage land development.

Provincial Grant Township Establishment Caleb Motshabi

Current - year receipts                                                        2,000,000                  -       2,000,000                  -
Conditions met - transferred to revenue                                         (656,209)                 -        (656,209)                 -
Closing balance                                                                1,343,791                  -      1,343,791                   -

Conditions still to be met - transferred to liabilities (see note 23)

To assist the group with the establishing of the township establishment Caleb Motshabi.

Provincial Grant Upgrading Housing Batho

Current - year receipts                                                        8,000,000                  -      8,000,000                   -
Conditions met - transferred to revenue                                       (5,916,601)                 -      (5,916,601)                 -
Closing balance                                                                2,083,399                  -      2,083,399                   -

Conditions still to be met - transferred to liabilities (see note 23)

To assist the group with the Hlasela project: the upgrading of Housing in the Batho area.

Provincial Grant Upgrading Roads in Batho

Current - year receipts                                                       30,000,000                  -     30,000,000                   -
Conditions met - transferred to revenue                                      (30,000,000)                 -     (30,000,000)                 -
Closing balance                                                                           -               -                -                 -

Conditions still to be met - transferred to liabilities (see note 23)

To assist the group with the Hlasela project: the upgrading of roads in the Batho area.

Provincial Transfer Grasslands

Balance unspent at beginning of year                                           4,500,000        4,500,000         4,500,000          4,500,000

Conditions still to be met - transferred to liabilities (see note 23)

To be used for installation of storm water drainage and regravelling of roads. Planning and surveying in respect of Phase 3 of the
Grasslands area.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                        Page | 147
                                Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                                   Controlling entity                  Economic entity
                                                                                 2010            2009               2010          2009
                                                                                  R                R                 R               R


33. Government grants and subsidies (continued)

Provincial Treasury - Thaba Nchu Station Site Project

Current - year receipts                                                            153,028                  -         153,028                   -
Conditions met - transferred to revenue                                           (153,028)                 -        (153,028)                  -
Closing balance                                                                           -                 -                    -              -

Conditions still to be met - transferred to liabilities (see note 23)

Grant for infrastructure for PHP housing projects in Thaba Nchu.

Public Transport Infrastructure and System Fund Grant

Balance unspent at beginning of year                                          229,233,853        58,030,517       229,233,853          58,030,517
Current - year receipts                                                        97,168,000       242,617,000        97,168,000        242,617,000
Conditions met - transferred to revenue                                      (205,281,304)      (71,413,664)     (205,281,304)       (71,413,664)
Closing balance                                                               121,120,549       229,233,853      121,120,549         229,233,853

Conditions still to be met - transferred to liabilities (see note 23)

The grant is allocated to the group to improve public transport infrastructure and systems, in accordance with agreed project plans.

Restructuring Grant

Balance unspent at beginning of year                                             1,918,768         7,886,980         1,918,768         7,886,980
Conditions met - transferred to revenue                                         (1,795,083)       (5,968,212)       (1,795,083)      (5,968,212)
Closing balance                                                                   123,685         1,918,768           123,685          1,918,768

Conditions still to be met - transferred to liabilities (see note 23)

The purpose of the grant is to support municipal restructuring initiatives of large municipalities. Funds are made available on the basis
of an approved restructuring plan that addresses challenges in a sustainable manner.

Water Services Operating and Transfer Subsidy (DWAF)

Balance unspent at beginning of year                                             9,402,864        9,503,684          9,402,864         9,503,684
Conditions met - transferred to revenue                                         (7,377,042)        (100,820)        (7,377,042)        (100,820)
Closing balance                                                                 2,025,822         9,402,864         2,025,822          9,402,864

Conditions still to be met - transferred to liabilities (see note 23).

The purpose of the grant is to fund bulk connector and internal infrastructure for water services at a basic level of service.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                           Page | 148
                                Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                                 Controlling entity               Economic entity
                                                                               2010            2009            2010          2009
                                                                                R                R              R               R


33. Government grants and subsidies (continued)

Urban Renewal Grant

Balance unspent at beginning of year                                            377,500                   -     377,500                 -
Current - year receipts                                                         175,850             377,500     175,850           377,500
Conditions met - transferred to revenue                                          15,529                   -      15,529                 -
Closing balance                                                                 568,879             377,500     568,879           377,500

Conditions still to be met - transferred to liabilities (see note 23)

Grant for development of erven.

34.   Other income

Other income from exchange transactions
Administration costs recoverable                                                242,313        1,581,516         242,313      1,581,516
Building plan fees                                                            1,992,830        2,172,988       1,992,830      2,172,988
Commission fresh produce market                                              13,966,878       13,263,780      13,966,878     13,263,780
Entrance fees                                                                 1,255,847        1,095,267       1,255,847      1,095,267
Grave plots                                                                   2,489,429        2,466,006       2,489,429      2,466,006
Parking fees                                                                    730,232          804,888         730,232        804,888
Sale of land                                                                  3,931,995       12,401,238       3,931,995     12,401,238
Sale of redundant materials                                                       2,639          796,940           2,639        796,940
Special removals                                                                765,351        1,180,520         765,351      1,180,520
Sundry income                                                                 9,247,479        9,612,823       9,247,479      9,612,823
Training costs recoverable                                                          667          885,518             667        885,518
Other income from non-exchange transactions
Actuarial gain on defined benefit plan obligation                                      -      44,584,000                -    44,584,000
Reconnection of water                                                            405,753       1,783,063         405,753      1,783,063
Unclaimed deposits                                                             1,861,941       2,324,989       1,861,941      2,324,989
                                                                             36,893,354       94,953,536      36,893,354     94,953,536




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                     Page | 149
                                     Mangaung Local Municipality Consolidated
                                         Annual Financial Statements for the year ended 30 June 2010

                                      Notes to the Annual Financial Statements
                                                                                 Controlling entity              Economic entity
                                                                               2010            2009           2010          2009
                                                                                R                R             R               R


35.   General expenses

Advertising                                                                   1,619,257        1,612,744     2,315,942      2,491,202
Bank charges                                                                  4,247,402        3,638,005     6,564,709      5,583,849
Chemicals                                                                     6,004,385        6,536,979     6,004,385      6,536,979
Community development projects                                                2,863,849        4,022,022     2,863,849      4,022,022
Conferences and delegations                                                   2,976,141        3,563,841     3,486,167      4,287,136
Electricity                                                                  25,039,056       20,174,655       402,413        310,360
Financial Management Grant - projects                                         1,058,911        2,235,348     1,066,757      2,278,908
Fuel                                                                         17,930,143       22,829,907    20,409,566     25,621,985
Hire equipment                                                                3,628,005        3,633,137     4,018,804      4,042,470
IDP CBP and ward committee planning                                           3,110,756        2,906,447     3,110,756      2,906,447
Indigent burials                                                              3,285,924        3,123,240     3,285,924      3,123,240
Insurance                                                                     3,273,581        3,414,747     6,207,935      5,582,552
Stock adjustments                                                               161,165              862     4,320,999        (12,347)
Lease rentals on operating lease                                                      -                -       302,897        321,216
Legal expenses                                                                9,025,271        4,674,841     9,377,843      4,947,094
Marketing                                                                    12,543,380        6,851,582    12,543,380      6,851,582
Sundry expenses                                                              42,569,777       39,940,302    46,297,826     41,489,770
Placement fees                                                                4,039,516                -     4,039,516               -
Postage                                                                       5,294,591        4,660,886     5,296,496      4,672,594
Printing and stationery                                                       4,951,949        5,634,709     5,898,795      6,571,753
Provision for rehabilitation of quarries and landfill sites                   4,425,803        5,615,874     4,425,803      5,615,874
Reconnection test and removal - meters                                        1,072,936        2,668,787     1,072,936      2,668,787
Refreshments                                                                    619,272          673,750       825,060        867,502
Rendering of services                                                                 -                -     3,783,668      8,863,766
Settlement agreement - Centlec (Pty) Ltd                                              -                -    20,000,000               -
Restructuring grant - projects                                                1,795,083        5,968,212     1,795,083      5,968,212
Skills development                                                              175,717          451,639       175,717        451,639
Skills development levy                                                       4,492,945        3,985,203     4,516,534      3,995,413
Special projects - cleansing                                                      1,891           46,952         1,891          46,952
Stores and material                                                           3,649,045        3,567,601     3,649,045      3,567,601
Subscriptions                                                                 4,756,380        3,698,845     4,775,726      3,737,906
Telephone and cellular costs                                                 14,117,430       12,231,569    15,101,846     13,650,119
Tools, plant and equipment                                                      449,406          546,742       634,516      1,105,454
Training costs                                                                1,627,032        1,891,749     2,590,750      2,071,727
Uniforms and protective clothing                                              3,148,317        3,185,204     3,445,690      3,558,791
Vacuum services                                                               5,954,823        4,325,629     5,954,823      4,379,641
Vehicle tracking system                                                         359,419         (484,524)      390,721      (475,697)
World Cup expenditure (disclosed hereunder)                                  59,267,332            9,122    59,267,332           9,122
Water                                                                         3,964,933        3,527,931     3,964,933      3,527,931
Water leakage awareness and repairs                                           4,877,042        4,984,223     4,877,042      4,984,223
Water research                                                                2,025,534        1,795,716     2,028,815      2,138,680
Workmen's compensation contributions                                          2,268,454        2,082,464     2,323,311      2,102,113
                                                                            272,671,853      200,226,942    293,416,201   204,464,568

Distribution of World cup tickets                                                          Quantity
Value of ticket purchases                                                                               -   15,053,914      5,475,470
 Mass Mobilisation programmes                                                                      20,573             -             -
 Organisations for People with disabilities                                                           300             -             -
 Supporters clubs                                                                                   9,000             -             -
 Indigents                                                                                          3,000             -             -
 Community organisations / Churches, schools, etc                                                  12,600             -             -
 Clients/stakeholders                                                                               1,400             -             -
Total tickets acquired                                                                             46,873   15,053,914      5,475,470

Travel costs




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                   Page | 150
                                    Mangaung Local Municipality Consolidated
                                       Annual Financial Statements for the year ended 30 June 2010

                                     Notes to the Annual Financial Statements
                                                                                    Controlling entity                Economic entity
                                                                                    2010              2009         2010          2009
                                                                                      R               R             R               R

35. (continued)
Accounting authority (Councillors)                                                                           -       44,877              -
Senior management and Accounting officer                                                                     -       23,148              -
Other employees                                                                                              -       16,197              -
Total travel costs                                                                                           -       84,222              -

Purchases of other world cup apparel
T-shirts, caps, flyers and other marketing material                                                               3,080,463              -


36.   Surplus for the year

Surplus for the year for the period is stated after accounting for the following:

Operating lease charges
Buildings                                                                       3,464,955           7,641,195     3,464,955      7,641,195

Depreciation and amortisation of property, plant
and equipment
Depreciation - Buildings                                                       19,664,851          19,350,358    20,333,315     20,422,546
Depreciation - Infrastructure                                                  82,258,187          77,410,739    82,258,187     77,410,739
Depreciation - Plant and machinery                                                      -                   -    41,204,554     31,944,416
Depreciation - Other assets                                                    18,537,386          19,342,809    22,565,100     23,616,405
Depreciation - Community assets                                                   899,786             900,226       899,786        900,226
Depreciation - Lease assets                                                     1,664,375           2,094,208     1,664,375      2,102,090
Amortisation - Intangible assets                                                2,325,253           2,513,377     2,325,253      2,513,377
                                                                              125,349,838         121,611,717    171,250,570   158,909,799




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                        Page | 151
                                   Mangaung Local Municipality Consolidated
                                       Annual Financial Statements for the year ended 30 June 2010

                                     Notes to the Annual Financial Statements
                                                                               Controlling entity              Economic entity
                                                                             2010            2009           2010          2009
                                                                              R                R             R               R


37.   Employee related costs

Current service cost                                                        18,556,000       16,754,000    18,556,000    16,754,000
Employee related costs - Salaries and wages                                454,911,308      398,908,094   457,396,143   400,262,360
Employee related costs - Contributions to UIF,                              98,398,638       82,920,311    98,398,638    82,920,311
pensions and medical aids
Housing benefits and allowances                                              3,541,749        5,160,168    3,541,749      5,160,168
Long-service awards                                                                  -           15,000             -        15,000
Overtime payments                                                           47,433,564       35,061,137   47,433,564     35,061,137
Performance bonuses                                                                  -        2,126,847             -     2,126,847
Actuarial loss on defined benefit plan obligation                           11,425,000                -   11,425,000              -
Provision for bonuses                                                        1,706,646          967,371    1,706,646        967,371
Provision for leave                                                         18,326,434       10,662,331   18,326,434     10,662,331
Travel, motor car, accommodation, subsistence and                           38,732,514       35,700,604   38,732,514     35,700,604
other allowances
                                                                           693,031,853      588,275,863   695,516,688   589,630,129

Remuneration of City Manager and Chief Executive Officer

Annual Remuneration                                                          1,008,510          981,988    4,685,283      3,290,977
Car Allowance                                                                  220,000          150,000      220,000        150,000
Contributions to UIF, Medical and Pension Funds                                183,652           15,767      183,652         15,767
Performance Bonus                                                                    -          212,543             -       358,215
                                                                             1,412,162        1,360,298    5,088,935      3,814,959

The remuneration as reflected in 2010, is for a period of 11 months and for 2009 a period of 10 months.

Remuneration of Chief Finance Officer

Annual Remuneration                                                            903,907          876,794    1,696,722      4,495,250
Car Allowance                                                                  156,000          156,000      156,000        156,000
Contributions to UIF, Medical and Pension Funds                                212,657          182,769      212,657        182,769
Performance Bonus                                                                    -           57,140             -       230,918
                                                                             1,272,564        1,272,703    2,065,379      5,064,937

Remuneration of the Chief Operating Officer

Annual Remuneration                                                            207,706        1,028,086    1,439,785      2,144,586
Car Allowance                                                                    8,790           72,165        8,790         72,165
Performance Bonuses                                                                  -                -             -       174,054
Contributions to UIF, Medical and Pension Funds                                    382            8,415          382          8,415
Leave pay                                                                      312,606                -      312,606              -
                                                                               529,484        1,108,666    1,761,563      2,399,220

The remuneration as reflected in 2010 is for a period of 3 months.

Executive Director: Corporate Service

Annual Remuneration                                                          1,260,746          952,637    1,260,746          952,637
Car Allowance                                                                   84,000           84,000       84,000           84,000
Performance Bonus                                                                    -                -             -         172,905
Contributions to UIF, Medical and Pension Funds                                  1,542            1,539        1,542            1,539
Acting allowance                                                                 6,002                -        6,002                -
                                                                             1,352,290        1,038,176    1,352,290      1,211,081




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                 Page | 152
                               Mangaung Local Municipality Consolidated
                                     Annual Financial Statements for the year ended 30 June 2010

                                 Notes to the Annual Financial Statements
                                                                                Controlling entity              Economic entity
                                                                              2010            2009           2010          2009
                                                                               R                R             R               R


37.   Employee related costs (continued)

Executive Director: Community and Social Development

Annual Remuneration                                                            519,983                   -    519,983                -
Car Allowance                                                                   73,000                   -     73,000                -
Contributions to UIF, Medical and Pension Funds                                 88,555                   -     88,555                -
                                                                               681,538                   -    681,538                -

The remuneration as reflected in 2010 is for a period of 7 months.

Executive Director: Infrastructure

Annual Remuneration                                                            927,928             812,880    927,928          812,880
Car Allowance                                                                  240,000             240,000    240,000          240,000
Contributions to UIF, Medical and Pension Funds                                 12,870              11,479     12,870           11,479
                                                                              1,180,798       1,064,359      1,180,798     1,064,359

Executive Director: Economic Development and Planning

Annual Remuneration                                                            629,229             542,033    629,229          542,033
Car Allowance                                                                   60,000              60,000     60,000           60,000
Performance Bonuses                                                                  -              57,986           -          57,986
Contributions to UIF, Medical and Pension Funds                                    771                 769        771              769
                                                                               690,000             660,788    690,000          660,788

The remuneration as reflected in both 2009 and 2010 is for a period         of 6 months.

Remuneration of the Company Secretary

Annual Remuneration                                                                   -                  -    843,239           52,403

Remuneration of the Executive Manager Engineering

Annual Remuneration                                                                   -                  -    821,068          653,655
Performance Bonuses                                                                   -                  -           -         137,088
                                                                                      -                  -    821,068          790,743

Remuneration of General Manager Corporate Services

Annual Remuneration                                                                   -                  -    864,889          130,550




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                  Page | 153
                                  Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                    Notes to the Annual Financial Statements
                                                                                Controlling entity               Economic entity
                                                                              2010            2009            2010          2009
                                                                               R                R              R               R


38. Remuneration of Councillors and board members

Executive Major                                                                675,011          625,594         675,011             625,594
Deputy Executive Mayor                                                         540,008          504,680         540,008             504,680
Mayoral Committee Members                                                    4,556,322        4,219,997       4,556,322           4,219,997
Speaker                                                                        540,008          500,474         540,008             500,474
Councillors                                                                 15,086,774       13,578,193      15,086,774          13,578,193
Chief Whip                                                                     506,258          473,138         506,258             473,138
Non-executive board members - Directors' fees                                        -                -         378,822             737,000
                                                                            21,904,381       19,902,076      22,283,203          20,639,076

In-kind benefits

The Executive Mayor, Deputy Executive Mayor, Speaker, Chief Whip and Mayoral Committee members are full-time employees of the
group. Each is provided with an office and secretarial support at the cost of the Council.

The Executive Mayor and Deputy-Executive director have use of council owned vehicles for official duties.

The Executive Mayor and Deputy Executive Mayor have two bodyguards on a rotational basis and an official driver at the cost of
Council.

39. Bad debts and provision for bad debts

Non-current receivables                                                     (3,699,859)      12,086,054        3,863,376     12,249,568
Consumer receivables from exchange transactions                             83,119,163      231,406,250      92,429,501     257,772,876
Other receivables from exchange transactions                                 3,290,826        7,535,998       (3,057,450)    (4,062,057)
                                                                            82,710,130      251,028,302      93,235,427     265,960,387

40.   Interest earned

Interest earned
Bank                                                                         2,574,559        5,104,276       2,574,559       5,155,840
Consumer receivables                                                        23,553,754       27,332,063      23,553,754      27,332,063
Investments                                                                  8,568,971       18,371,666       8,568,971      18,371,666
Non-current receivables                                                    123,489,030       96,218,310       2,271,832       2,160,301
Fair value adjustment                                                        9,609,671        9,413,387       9,609,671       9,413,387
Interest charged on trade and other receivables                                      -                -         558,982         610,287
                                                                           167,795,985      156,439,702      47,137,769      63,043,544

41.   Depreciation and amortisation

Property, plant and equipment                                              123,024,585      119,106,221     168,925,315     156,396,423
Intangible assets                                                            2,325,253        2,513,378       2,325,253       2,513,378
                                                                           125,349,838      121,619,599     171,250,568     158,909,801




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                    Page | 154
                                  Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                    Notes to the Annual Financial Statements
                                                                                 Controlling entity                 Economic entity
                                                                               2010            2009              2010          2009
                                                                                R                R                R               R


42.   Finance cost

Borrowings - The Development Bank of South Africa                             1,385,859         2,257,982        1,385,859        2,257,982
Consumer deposits                                                               942,630         1,221,008          942,630        1,221,008
External loans - Centlec (Pty) Ltd                                                    -                 -        8,726,490          950,567
Defined benefit plan obligation                                              29,709,000        31,933,000       29,709,000       31,933,000
Fair value adjustments to payables                                            7,617,777         7,695,351        7,617,777        7,695,351
Finance leases                                                                  323,794           407,484          358,117          464,554
Late payment of tax                                                           1,060,373                 -        1,060,373                -
                                                                             41,039,433        43,514,825       49,800,246       44,522,462

43.   Operating leases

Lessor:

The future minimum lease payments received under
non-cancelable operating leases are as follows:
Receivable within 1 year                                                      6,716,666         3,287,197        6,716,666        3,287,197
Receivable within 1 - 5 years                                               145,269,782        14,210,152      145,269,782       14,210,152
Receivable later than 5 years                                               121,198,260       180,187,379      121,198,260      180,187,379
                                                                            273,184,708       197,684,728      273,184,708      197,684,728

The group leases various fixed properties under non -cancelable operating leases to various institutions. The lease agreements have
escalations between 6 - 12% per year with the agreements varying between 2 - 50 years. Rental income, for these agreements, to the
value of R 6,879,692 has been recognised in the Statement of financial performance during the year.

Lessee:

The future minimum lease payments under non-
cancelable operating leases are as follows:
Payable within 1 year                                                              632,011          594,149           594,149          594,149
Payable within 1 - 5 years                                                         862,581        1,336,836           742,687        1,336,836
                                                                                 1,494,592        1,930,985         1,336,836        1,930,985

Operating lease payments represent rentals payable by the group for certain of its office properties. Leases are negotiated for an
average term of 5 years and rentals are fixed for an average of three years.

No sublease contracts existed for the reporting period.

No contingent rental agreements existed for the reporting period.

44. Rental of facilities and equipment

Facilities and equipment
Rental of facilities                                                         13,573,726        14,671,467       13,573,726       14,671,467
Rental of equipment                                                           3,293,684         3,429,470        3,293,684        3,429,470
Rental of other                                                               2,722,384         1,656,163        2,722,384        1,656,163
                                                                             19,589,794        19,757,100       19,589,794       19,757,100




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                          Page | 155
                                    Mangaung Local Municipality Consolidated
                                       Annual Financial Statements for the year ended 30 June 2010

                                     Notes to the Annual Financial Statements
                                                                                   Controlling entity                 Economic entity
                                                                                 2010            2009              2010          2009
                                                                                  R                R                R               R


45.   Contracted services

Other contracted services                                                       40,442,112      31,985,155       80,215,726         57,443,040
Security services                                                               13,384,414       8,674,873       13,384,414          8,674,873
Debt collection services                                                        30,056,876       3,192,780       30,056,876          3,192,780
VAT review fees                                                                 30,235,598               -       30,235,598                  -
Commission vendors                                                                       -               -       18,390,331          4,090,048
                                                                              114,119,000       43,852,808      172,282,945         73,400,741

46.   Grants and subsidies paid

Other subsidies
Bursaries - employees                                                              826,383         723,253          826,383            723,253
Free services (Eskom)                                                           39,364,134      36,669,683        6,148,209          5,062,432
Central Agricultural Society                                                         8,107           7,370            8,107              7,370
Cost of living allowance - pensioners                                              153,642         141,874          153,642            141,874
Employees and ex-employees                                                            (258)              -             (258)                 -
Miscellaneous grants                                                                93,364          83,434           93,364             83,434
National Electrification Program Grant                                           1,227,000      63,196,600                 -                 -
SPCA                                                                               328,130         298,300          328,130            298,300
                                                                                42,000,502    101,120,514         7,557,577          6,316,663

Bursaries - employees
Bursaries are paid to employees in accordance with the approved study scheme.


Centlec (Pty) Ltd - free services recoverable
The free electricity provided by Centlec (Pty) Ltd and Eskom is recoverable from the Equitable Share Grant.

Central Agricultural Society
The payment to the Central Agricultural Society is for the maintenance of Council's property at the show grounds, which are used in
accordance with an agreement with the society.

Cost of living allowance - pensioners
The cost of living allowance is applicable to Black pensioners of the former Bloemfontein municipality who did not belong to a pension
fund, which are subsidised according to an approved formula.

Miscellaneous grants
Miscellaneous grants are allocated mainly for ad hoc grants and the free use of Council facilities, as approved during the year.

National Electrification Program Grant
The National Electrification Program Grant received by the group. See note 25.1

SPCA
The subsidy to SPCA is paid annually to assist this organisation in performing its tasks.

47.   Bulk purchases

Electricity                                                                             -               -       594,447,073        446,106,282
Water                                                                         187,207,256     168,087,285       187,207,256        168,087,285
                                                                              187,207,256     168,087,285       781,654,329        614,193,567




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                         Page | 156
                                   Mangaung Local Municipality Consolidated
                                     Annual Financial Statements for the year ended 30 June 2010

                                    Notes to the Annual Financial Statements
                                                                             Controlling entity                Economic entity
                                                                           2010            2009             2010          2009
                                                                            R                R               R               R


48.   Cash generated from operations

Surplus                                                                  285,160,555     140,775,796     295,008,872    207,641,846
Adjustments for:
Depreciation and amortisation                                            125,349,838     121,619,599     171,250,568    158,909,801
Interest on fair value of receivables                                     (9,609,671)     (9,413,387)     (9,609,671)    (9,413,387)
Interest on fair value of payables                                         7,617,777       7,696,806       7,617,777       7,696,806
Interest income                                                           (8,568,971)    (18,371,666)     (9,127,953)   (19,033,517)
Finance costs                                                              2,652,283       3,885,019     132,630,294      98,950,665
Debt impairment                                                           82,710,130     251,028,299      82,710,130    251,028,300
Movements in provisions                                                    4,425,803       5,400,510       4,425,803       5,400,510
Defined benefit plan: Benefits paid                                       (5,894,000)     (8,069,000)     (5,894,000)    (8,069,000)
Defined benefit plan: Current service cost                                18,556,000      16,754,000      18,556,000      16,754,000
Defined benefit plan: Interest                                            29,709,000      31,933,000      29,709,000      31,933,000
Defined benefit plan: Actuarial gains / losses                            11,425,000     (44,584,000)     11,425,000    (44,584,000)
recognised in profit / loss
Provision for leave                                                       18,326,434                 -    18,326,434               -
Provision for bonuses                                                      1,706,646                 -     1,706,646               -
Other non-cash items                                                        (769,626)      (7,696,806)      (769,627)   (23,695,023)
Changes in working capital:
Inventory                                                                 (5,033,240)     (1,075,809)      (4,185,974)  (10,975,775)
Consumer receivables                                                     (21,781,890)    (29,897,774)    (392,676,330) (267,867,989)
Other receivables                                                            851,651     (24,168,444)         851,651   (24,168,444)
Impairment                                                               (82,672,371)   (166,719,471)     (82,672,371) (166,719,471)
Deferred income                                                                     -               -      (1,494,710)     2,535,502
Payables                                                                 178,680,263      18,778,015      606,086,937    224,432,724
VAT                                                                       30,985,715      20,556,712       30,985,715     20,556,712
Unspent conditional grants and receipts                                 (184,900,228)    199,369,979     (184,900,228)   199,369,979
                                                                         478,927,098     507,801,378     719,959,963    650,683,239

49.   Capital commitments

Commitments in respect of capital expenditure

Approved and contracted for
      Plant and machinery                                                         -               -                -    48,405,679
      Infrastructure                                                    509,680,520     513,317,295     509,680,520    516,317,295
         Community                                                       23,300,668      11,052,946      23,300,668      11,052,946
                                                                         532,981,188     524,370,241     532,981,188    575,775,920




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                 Page | 157
                                  Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                    Notes to the Annual Financial Statements
                                                                            Controlling entity           Economic entity
                                                                            2010              2009    2010          2009
                                                                             R                 R       R               R


50.   Contingent liabilities

Guarantees by group in respect of housing loans at                                                   2,973,881      3,197,981
financial institutions for officials

Pending claims: Mangaung Local Municipality
The municipality is being sued according to the                                                               -               -
following pending claims against the Council. All the
claims are being contested based on legal advice.
- A claim for payment of animals which have died after                                                 184,000                -
the date of delivery.
- A claim for an alleged breach of contract in respect of                                              300,000          300,000
the allocation of a      tender.
- Outstanding claims regarding labour disputes.                                                               -       500,000
- Claim against municipality from person wishing to                                                   1,260,000     1,260,000
evict persons from erf in Botshabelo.
- A claim for an alleged breach of contract regarding the                                             3,500,000    22,000,000
constructing of the Free State stadium for 2010.
- A claim for death benefits paid to dependants of                                                      92,000           80,000
Tshehlana on behalf of the municipality.
- A claim for death benefits paid to dependants of                                                      74,700           65,000
Manjingolo on behalf of the municipality.
- A claim for damages due to wrongful sale of property.                                                  3,364      1,400,000
- Claims by individuals due to injuries in various                                                     450,000         11,517
incidents.
- Claims by individuals due to damage of vehicles in                                                   402,500          286,848
various incidents.
- A claim by Murray and Roberts Properties for                                                         400,000          350,000
repayment of Service Charges.
- A claim for mediation on a civil engineering contract                                               1,000,000               -
- A claim for damage to electrical appliances at Ascot                                                1,000,000               -
Court
- A claim by the Bloem Water Board for an arrear                                                     66,982,760               -
account is disputed by the mu
- A claim for damages caused to a property during the                                                   17,417                -
demolishment of older buildings
- A claim for money owed due to Giraffes bought from                                                   240,000                -
Roc Safari's
- A claim for damages due to unprocedural sale of                                                      350,000                -
property against the municipality as successor of
Bainsvlei Municipality
- A claim from the municipality for the payment of death                                               145,000                -
benefits SALA Pension Fund
- Legal fees for an application from the municipality to                                               209,792                -
remove about 370 illegal occupants from several erven
in Botshabelo
- Legal fees for an application from the municipality to                                                27,835                -
enforce a decision from the MEC to move the entrance
to the Morningside Scheme from MER Street
- Legal fees for Arbitration proceedings in the                                                        830,183                -
construction dispute regarding the FS Stadium
- Legal fees regarding a claim against the municipality                                                 52,000                -
to transfer land to the plaintiff
- Legal fees for the claim for damages - employee                                                        4,560                -
injured whilst on duty
- Legal fees for the claim by Murray and Roberts                                                        22,635                -
Properties for repayment of Service Charges

Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                           Page | 158
                                    Mangaung Local Municipality Consolidated
                                       Annual Financial Statements for the year ended 30 June 2010

                                     Notes to the Annual Financial Statements
                                                                             Controlling entity           Economic entity
                                                                             2010              2009    2010          2009
                                                                              R                 R       R               R

50. Contingent liabilities (continued)
- Legal fees for an application by the municipality to                                                   26,652                -
cancel a title deed erroneously issued to Mr Mokoena
- Legal fees for an application to transfer an erf to Me C                                               18,000                -
King - opposed on behalf of entitled Me J King
- Legal fees for the eviction of Me A Lelima from Erf                                                    27,850                -
34360
- Legal fees for the eviction of occupants from Erf                                                      15,000                -
23475
- Legal fees for the application to evict illegal occupants                                               8,042                -
from Mooiwater Conservancy Bainsvlei
- Legal fees for the claim for damages caused to a                                                       25,372                -
property during the demolishment of older buildings
- Legal fees for the eviction of Mr Jampies from Plot 98,                                                42,939                -
Grassland
- Legal fees for the application to enforce an                                                          239,694                -
adjudication ruling for payment of RMIP JV
- Legal fees for the eviction of persons illegally                                                       25,000                -
conducting a creche on municipal property
- Legal fees for the claim from the municipality to review                                              151,877                -
the decision to award a tender to someone else
- Legal fees for a claim for money owed due to Giraffes                                                  46,608                -
bought from Roc Safari's
- Legal fees for the application of contempt of court -                                                  34,863                -
Westraad Trust
- Legal fees for the application to cease building                                                       35,669                -
activities - Westraad Trust Eco Home Development
Trust
- Legal fees for the application of contempt of court by                                                 33,608                -
several occupiers of the Mooiwater Conservancy
- Legal fees for the application to evict illegal occupants                                              28,000                -
of Plot 25
- Legal fees for the application to evict illegal occupants                                              48,658                -
of Plot 25
- Legal fees for damages due to unprocedural sale of                                                    225,000                -
property against the municipality as successor of
Bainsvlei Municipality (DJ van Jaarsveld)
- SARS investigation on VAT may result in further                                                              -               -
interest and penalties, no amount can be determined

Pending claims: Centlec (Pty) Ltd                                                                              -               -
The entity is being sued according to the following                                                            -               -
pending claims against the board:
- A security service contract was terminated in terms of                                               2,176,000     2,176,000
provisions of termination for breach of contract. The
entity consequently received a claim from the supplier
for damages suffered as a result of the termination of
the service agreement.
- A construction contract was terminated. The closed                                                    700,000          700,000
corporation has instituted a claim against Centlec (Pty)
Ltd.
- A potential settlement amount is being claimed from                                                   600,000          600,000
Centlec (Pty) Ltd regarding a labour dispute.
                                                                                                      82,057,578    29,729,365




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                            Page | 159
                                  Mangaung Local Municipality Consolidated
                                     Annual Financial Statements for the year ended 30 June 2010

                                   Notes to the Annual Financial Statements
                                                                            Controlling entity                Economic entity
                                                                             2010             2009            2010            2009
                                                                            R                  R              R               R


51. Related parties

Relationships
Controlling entity                                                            Mangaung Local Municipality
Controlled entity                                                             Centlec (Pty) Ltd

A company, Centlec (Pty) Ltd, of which Mangaung Local Municipality is the sole shareholder, was formed to take over all activities in
respect of the supply of electricity for their own account. The financial information of these two entities are consolidated in this
financial statements as the economic entity.

Loans to key management and close family members                                            Opening        Loans repaid       Closing
                                                                                            balance                           balance
Mochochoko T M M                                                                                   256             (256)              -
Mafisa MA                                                                                       43,453          (40,302)          3,151
                                                                                                43,709          (40,558)          3,151

Senior staff obtained loans at 8.50% interest per annum repayable over a maximum period of 6 years. Repayments are made on a
monthly basis by way of salary deductions. These loans are being phased out and are repayable in the year 2010.

Remuneration of key management personnel and Council

See note 37 for remuneration of key management personnel and Councillors.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                    Page | 160
                                  Mangaung Local Municipality Consolidated
                                        Annual Financial Statements for the year ended 30 June 2010

                                    Notes to the Annual Financial Statements
                                                                              Controlling entity      Economic entity


52. Restatement of comparative information regarding 2009               prior period errors

Summary of restatement due to errors. Note 53 to note 70

The summary of restatements due to errors:

Statement of financial position
Decrease in consumer receivables from exchange                                                                 (73,817,869)
transactions
Decrease in other receivables from exchange                                                                    (12,566,584)
transactions
Decrease in non-current payables from exchange                                                                      (140,473)
transactions
Decrease in VAT payable                                                                                          2,934,137
Increase in payables from exchange transactions                                                                 17,334,120
Increase in property, plant and equipment                                                                          526,816
Increase in intangible assets                                                                                        78,109
Increase in finance lease liability                                                                                (23,470)
Decrease in stock                                                                                                  (66,812)

Statement of financial performance
Increase in provision for bad debts                                                                              72,059,259
Increase in general expenditure                                                                                     186,132
Decrease in gain on foreign exchange                                                                                   (713)
Increase in grants and subsidies paid                                                                            15,362,785
Increase in depreciation                                                                                               8,814
Decrease in repairs and maintenance                                                                               (349,050)
Increase in service charges levied                                                                             (13,498,008)
Increase in finance charges                                                                                            1,455
Increase in bulk purchases                                                                                           67,079
Increase in other income                                                                                             (4,635)
Increase in property rates                                                                                      (3,595,154)
Decrease in contracted services                                                                                      49,698
Increase in rental income                                                                                           853,653
Increase in grant income                                                                                       (15,998,216)

Increase in opening balance accumulated surplus                                                                 (9,039,558)




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                       Page | 161
                              Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                Notes to the Annual Financial Statements
                                                                            Controlling entity               Economic entity


53. Prior period errors - Water income understated

The water estimations were understated at year end, based on adjustments made during the year. This also resulted in the water
debtors to be understated.

The correction of the error results in adjustments as follows:

Statement of financial position
Decrease in consumer receivables from exchange                                                                              13,497,136
transactions

Statement of financial performance
Increase in service charges levied                                                                                         (13,497,136)


Cash flow statement

Cash flow from operating activities
Accumulated surplus                                                                                                        (13,497,136)
Movement in receivables                                                                                                      13,497,136
                                                                                                                                      -




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                   Page | 162
                               Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                              Controlling entity                  Economic entity


54. Prior period errors - rental of Central Park bus terminus

Rent received per lease agreement were not recorded in the appropriate year.                       The impact is that the rent received is
understated, receivables is understated and VAT output is understated.

The correction of the error results in adjustments as follows:

Statement of financial position
Decrease in other receivables from exchange                                                                                           973,164
transactions
Decrease in VAT payable                                                                                                              (119,511)

Statement of financial performance
Increase in rental of facilities and equipment                                                                                       (853,653)


Cash flow statement

Cash flow from operating activities
Movement in accumulated surplus                                                                                                        853,653
Movement in VAT output                                                                                                                 119,511
Movement in accounts receivable                                                                                                      (973,164)
                                                                                                                                             -

55. Prior period errors - Understatement of grants and subsidies paid

During the 2007/2008 financial year an insurance claim was received to replace a turbine. An amount to the value of R5,116,039,
representing the unspent portion of the insurance claim, was incorrectly recorded as a creditor. The effect of the restatement is
summarised below and only affects the economic entity:


Statement of financial position
Trade and other payables                                                                                                           5,116,039
Opening retained income                                                                                                          (5,116,039)

56.   Prior period errors - Centlec inter company transaction

No service charges were levied on properties transferred from the municipality to Centlec from the effective date of sale 1 July 2005,
but not yet registered in the name of Centlec. The comparative figures have been restated.

The correction of the error results in adjustments as follows:

Statement of financial position
Decrease in payables from exchange transactions                                                                                  12,226,491
Increase in accumulated surplus                                                                                                  (8,630,464)

Statement of financial performance
Increase in property rates income                                                                                                (3,595,154)

Cash flow statement

Cash flow from operating activities
Movement in payables - Centlec (Pty) Ltd                                                                                         (3,595,154)
Increase in profit                                                                                                                 3,595,154
                                                                                                                                             -




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                        Page | 163
                              Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                              Controlling entity               Economic entity


57. Prior period errors - Intangible assets

During May 2009 new servers and computer software were purchased for the Fresh Produce Market, these costs were expensed as
they were incurred. The cost of these assets should have been capitalised as an asset and not expensed.

The correction of the error results in adjustments as follows:

Statement of financial position
Increase in Property, plant and equipment                                                                                           95,035
Increase in Intangible assets                                                                                                       78,110

Statement of financial performance
Decrease in Repairs and maintenance                                                                                               (173,145)

Cash flow statement

Cash flow from operating activities
Payments - suppliers                                                                                                               173,145

Cash flow from investing activities
Purchases of property, plant and equipment                                                                                         (95,035)
Purchase of intangible assets                                                           -              -                           (78,110)
                                                                                                                                  (173,145)

58. Prior period errors - Finance leases

Not all movements in finance leases were correctly accounted for in the prior periods. Certain leases were also erroneously omitted
from the prior periods finance lease liability balance. The disposal of certain leases were not brought into account in some instances.

The correction of the error results in adjustments as follows:

Statement of financial position
Property, plant and equipment                                                                                                        22,688
Finance lease liability                                                                                                            (23,470)

Statement of financial performance
Decrease in general expenditure: hire of equipment                                                                                  (9,484)
Increase in finance cost                                                                                                              1,454
Increase in depreciation                                                                                                              8,812

Cash flow statement

Cash flow from operating activities
Accumulated surplus                                                                                                                    782

Cash flow from investing activities
Movement in property, plant and equipment                                                                                           22,688

Cash flow from financing activities
Movement in finance lease liability                                                                                                (23,470)




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                     Page | 164
                               Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                              Controlling entity                   Economic entity


59.   Prior period errors - General expenditure

Transactions were incorrectly allocated to training cost and not to conferences & delegations.

The correction of the error results in adjustments as follows

Statement of financial performance
Decrease in general expenditure:    training cost                                                                                  (16,144)
Increase in general expenditure:   conferences and                                                                                   16,144
training

Cash flow statement

60.   Prior period errors - VAT

Apportionment VAT was not claimed on transactions relating to Free Services for Electricity.                   The receipts should be
recorded in 2008/09, hence the error was corrected and the comparative statements restated.

The summary of restatements due to errors:

Statement of financial position
Increase in VAT receivable                                                                                                           635,432

Statement of financial performance
Decrease in general expenditure:   Grants and                                                                                     (635,432)
subsidies paid

Cash flow statement

Cash flow from operating activities
VAT payable                                                                                                                       (635,432)
Accumulated surplus                                                                                                                 635,432
                                                                                                                                           -

61. Prior period errors - Foreign exchange

The foreign exchange gain calculated on a transaction before the 2008/09 year end was not included in the financial statements for
2009. The comparative figures for 2008/09 have been restated.

The correction of the error(s) results in adjustments as follows:

Statement of financial position
Increase in payables from exchange transactions                                                                                      (8,409)

Statement of financial performance
Increase in general expenditure: world cup expenditure                                                                                9,122
Increase in gain on foreign exchange difference                                                                                       (713)

Cash flow statement

Cash flow from operating activities
Payables from exchange transactions                                                                                                    8,409
Accumulated surplus                                                                                                                  (8,409)
                                                                                                                                           -




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                     Page | 165
                               Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                            Controlling entity                Economic entity


62. Prior period errors - VAT on Insurance claims

Output VAT was not declared on insurance claims income received.

The correction of the error(s) results in adjustments as follows:

Statement of financial position
Increase in VAT payable                                                                                                           (57,302)

Statement of financial performance
Increase in general expenditure:    other                                                                                           1,300
Increase in repairs and maintenance                                                                                                39,459
Increase in general expenditure:    contracted services                                                                             3,896
Increase in general expenditure:    telephone and                                                                                   2,292
cellular costs
Increase in general expenditure:    tools, plant and                                                                               10,355
equipment

Cash flow statement

Cash flow from operating activities
VAT payable                                                                                                                       (57,302)
Self insurance reserve                                                                                                              57,302
                                                                                                                                         -

63. Prior period errors - Receipts of parking and Zoo entrance

Receipts for parking garage and Zoo entrance fees, were only recorded in 2009/10 although it was issued during 2008/09. The receipts
should be recorded in 2008/09, hence the error was corrected and the comparative statements restated.

The correction of the error(s) results in adjustments as follows:

Statement of financial position
Increase in sundry receivables                                                                                                      4,635

Statement of financial performance
Increase in other income:    Entrance fees                                                                                         (4,372)
Increase in other income:    Parking fees                                                                                            (263)

Cash flow statement

Cash flow from operating activities
Other receivables from exchange transactions                                                                                         4,635
Accumulated surplus                                                                                                                (4,635)
                                                                                                                                         -

64. Prior period errors - Rodenbeck smallholdings

Rodenbeck smallholdings were received for outstanding debt, but was not recognised in Property, plant and equipment, but expensed
in the 2008/09 financial year. The land should have be recorded in 2008/09, hence the error was corrected and the comparative
statement restated.

The correction of the error(s) results in adjustments as follows:

Statement of financial position
Property, plant and equipment                                                                                                      455,090
Opening accumulated surplus or deficit                                                                                           (455,090)
                                                                                                                                         -




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                    Page | 166
                               Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                              Controlling entity                Economic entity


65. Prior period errors - Water stock calculation

The calculation of the purified water was incorrectly done, resulting in stock being overstated. The comparative figures have been
restated.

The correction of the error(s) results in adjustments as follows:

Statement of financial position
Decrease in inventory                                                                                                                 (67,079)

Statement of financial performance
Increase in bulk purchases                                                                                                             67,079

Cash flow statement

Cash flow from operating activities
Inventory                                                                                                                             (67,079)
Accumulated surplus                                                                                                                     67,079
                                                                                                                                             -

66.   Prior period errors - VAT

VAT incorrectly claimed on expenses hence expenditure was understated.                       A correcting journal was processed, but was
incorrectly posted to the 2009/2010 financial year.

The correction of the error(s) results in adjustments as follows:

Statement of financial position
Decrease in the VAT Input Debtor                                                                                                       (3,254)

Statement of financial performance
Increase in general expenditure: Marketing                                                                                                698
Increase in general expenses: Other                                                                                                     2,411

Cash flow statement

Cash flow from operating activities
VAT payable                                                                                                                              3,110
Accumulated surplus                                                                                                                    (3,110)
                                                                                                                                             -

67. Prior period errors - Centlec suspense account

Two Centlec suspense accounts should be reallocated from Mangaung Local Municipality to Centlec (Pty) Ltd. These accounts are
included under the payments in advance list of Mangaung. The error has been rectified.

The correction of the error(s) results in adjustments as follows:

Statement of financial position
Increase in inter-company suspense account                                                                                             140,472
Decrease in payables in advance                                                                                                      (140,472)

Cash flow statement

Cash flow from operating activities
Increase in inter-company suspense account                                                                                             140,472
Decrease in payments: Suppliers                                                                                                      (140,472)
                                                                                                                                             -




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                      Page | 167
                               Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                 Notes to the Annual Financial Statements
                                                                             Controlling entity                 Economic entity


68. Prior period errors - Duplication of transactions

A journal was incorrectly captured to reverse a transaction during January 2009 that never occurred. The reversal journal was
corrected. The comparative statements for 2008/09 have been restated and it only affects the controlling entity:

The correction of the error(s) results in adjustments as follows:

Statement of financial position
Decrease in VAT payables                                                                                                           2,239,750
Increase in payables from exchange transactions                                                                                 (18,237,966)

Statement of financial performance
Increase in other payments: Free services - Electricity                                                                          15,998,216

Cash flow statement

Cash flow from operating activities
Taxation                                                                                                                         (2,239,750)
Restatement- Increase in suppliers                                                                                                18,237,966
Restatement- Increase in other payables                                                                                         (15,998,216)
                                                                                                                                           -

69. Prior period errors - finance leases

Depreciation on capitalised finance leases was recalculated. It was previously calculated on the incorrect commencement dates.
Cellular phone contracts should have been scrapped when a new contract was signed, this was not previously done. The comparative
statements for 2008/09 have been restated.

The correction of the error(s) results in adjustments as follows:

Statement of financial position
Property, plant and equipment                                                                                                       (45,996)
Opening accumulated surplus or deficit                                                                                                45,996

70.   Prior period errors - Impairment for consumer receivables

Impairment for consumer receivables was recalculated in terms of the Financial Asset impairment policy and procedures. The
comparative statements for 2008/09 have been restated.

The correction of the error(s) results in adjustments as follows:

Statement of financial position
Decrease in consumer receivables from exchange                                                                                  (60,624,720)
transactions
Decrease in other receivables from exchange                                                                                     (11,598,054)
transactions
Increase in non-current receivables from exchange                                                                                   163,516
transactions

Statement of financial performance
Increase in bad debts and provision for bad debts                                                                                72,059,259

Cash flow statement

Cash flow from operating activities
Accumulated surplus                                                                                                               72,059,259
Bad debts and provision for bad debts                                                                                           (72,059,259)
                                                                                                                                           -



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                      Page | 168
                               Mangaung Local Municipality Consolidated
                                     Annual Financial Statements for the year ended 30 June 2010

                                 Notes to the Annual Financial Statements
                                                                                 Controlling entity                  Economic entity
                                                                                 2010              2009              2010            2009
                                                                                 R                  R                R               R


71. Risk management

Financial risk management

The group has exposure to the following risks from its use of financial instruments:
- Liquidity risk
- Market risk
- Credit risk

This note presents information about the group's exposure to each of the above risks and the group's objectives, policies and processes
for measuring and managing risk. Further quantitative disclosures are included throughout the Annual Financial Statements.

Liquidity risk

Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group's approach to
managing liquidity is to ensure as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both
normal and stressed conditions, without incurring unauthorised expenditure. The group manages liquidity risk through an ongoing
review of future commitments and credit facilities. Cash flow forecasts are prepared and adequate utilised borrowing facilities are
monitored. The group has not defaulted on external loans, payables and lease commitment payments being either interest or capital
and no re-negotiation of terms were made on any of these instruments.


The following are contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of
netting agreements. .


Impairment losses
All of the group's financial assets have been reviewed for indicators of impairment. Certain receivables and investments were found to
be impaired and a provision of R841,852,413 (2009: R759,180,042) has been recorded accordingly. The impaired trade receivables are
mostly due from consumers defaulting on service costs levied by the group. Refer to Note 7, 13 and 11 for the impairment
reconciliation of trade and other receivables.


Maximum exposure to credit risk at reporting date
was:
Available for sale investments                                                      10,467            8,795            10,467             8,795
Cash and cash equivalents                                                       45,244,821      237,908,991        45,461,179       284,482,251
                                                                                45,255,288      237,917,786        45,471,646       284,491,046

Maximum exposure to credit risk at reporting date
for loans and receivables as per counter parties
was:
Trade and other receivables from exchange                                     922,495,152       817,304,825     1,146,442,187       993,822,184
transactions
Trade and other receivables from non - exchange                                    395,802           315,258           395,802           315,259
transactions
Loans to group entities - Centlec (Pty) Ltd                                   820,921,087       755,767,749                 -                 -
Study loans                                                                        49,599            61,509            49,599            61,509
Motor vehicle loans                                                               975,093         1,443,469           889,596         1,443,469
Erven loans                                                                    17,602,970        15,259,501        17,602,970        16,714,938
Housing selling scheme loans                                                   42,731,900        41,793,851        42,731,900        40,174,900
Other receivables                                                             111,601,895       109,538,356       113,646,365       111,647,211
                                                                            1,916,773,498     1,741,484,518     1,321,758,419     1,164,179,470



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                            Page | 169
                               Mangaung Local Municipality Consolidated
                                        Annual Financial Statements for the year ended 30 June 2010

                                 Notes to the Annual Financial Statements
                                                                                   Controlling entity                  Economic entity
                                                                               2010             2009            2010             2009
                                                                                R                R                R                R


71.   Risk management (continued)

Economic entity

Non- Derivative financial liabilities
At 30 June 2010                                                             Less than 1      Between 1       Between 2     Over 5 years
                                                                               year          and 2 years     and 5 years
Secured bank loans                                                              3,189,746        3,058,159       8,779,708     1,463,285
Trade and other payables                                                      542,109,220                -               -              -
Finance lease liability                                                         1,916,360          723,766               -              -

At 30 June 2009                                                             Less than 1      Between 1       Between 2     Over 5 years
                                                                               year          and 2 years     and 5 years
Secured bank loans                                                              3,189,746        3,189,746       8,911,293     4,389,852
Trade and other payables                                                      374,296,642                -               -              -
Finance lease liabilities                                                       1,769,869        1,518,500               -              -

Economic entity

In addition, some of the unimpaired trade receivables are past due as at the reporting date. The age of financial assets past due but not
impaired is as follows:

Unimpaired trade receivables
Current (0 - 30 days)                                                          12,868,953       10,883,110      24,592,330       20,906,402
31 - 60 days                                                                    6,705,856        6,840,755      16,822,784       17,785,110
60 - 90 days                                                                    4,897,270        5,689,273      10,942,320       12,144,282
90 days +                                                                     135,700,290      116,989,388     282,196,871      255,924,944
                                                                              160,172,369      140,402,526     334,554,305      306,760,738

The ageing of impaired consumer receivables at reporting date was as follows:

Impaired Consumer receivables
Current (0 - 30 days)                                                          60,113,117       51,760,499      58,624,010       53,163,056
31 - 60 days                                                                   31,341,678       32,651,743      40,059,322       45,235,574
61 - 90 days                                                                   22,930,761       27,180,063      26,118,455       30,981,049
90 days +                                                                     644,364,528      563,808,170     683,503,395      657,885,882
                                                                              758,750,084      675,400,475     808,305,182      787,265,561




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                        Page | 170
                               Mangaung Local Municipality Consolidated
                                     Annual Financial Statements for the year ended 30 June 2010

                                 Notes to the Annual Financial Statements
                                                                                 Controlling entity                   Economic entity
                                                                                 2010              2009               2010            2009
                                                                                 R                  R                 R               R


71. Risk management (continued)

Market rate risk

Market risk is the risk that changes in the market prices, such as interest rates and equity prices will affect the group's income or the
value of its holdings of financial instruments.

Interest rate risk
The group limits its interest rate risk on financial liabilities by ensuring that reasonable fixed interest rates are negotiated on long term
loans.

At reporting date the interest rate profile of the group's interest bearing financial instruments was:


Fixed rate instruments
Financial assets                                                               820,921,087      755,767,749                  -                 -
Financial liabilities                                                           37,600,774       38,168,473         75,969,690        71,687,325
                                                                               858,521,861      793,936,222         75,969,690        71,687,325

Variable rate instruments
Financial assets                                                               299,244,819      464,445,719        475,379,878       648,881,759
Financial liabilities                                                          848,458,511      855,260,124        717,660,462       742,549,621
                                                                             1,147,703,330    1,319,705,843      1,193,040,340     1,391,431,380

Fair value sensitivity analysis on fixed rate instruments
The group does not account for any fixed rate financial assets and liabilities at fair value through profit and loss, therefore a change in
interest rates at reporting date would not affect profit or loss.

Cash flow sensitivity analysis for variable rate instruments
The analysis below assumes that all other variables except interest rates will remain constant. A 100 basis points (2009: 300 basis
points) increase or decrease was used to report possible changes in surplus for the year due to interest rate risk. The sensitivity rates
are based on managements assessments of reasonable possible changes in interest rates. A decrease in rates used of 1% in comparison
to the prior year is the result of anticipated Reserve Bank repo rate adjustments in an attempt to keep interest rates consistent and
hence stabilising the economy during the global economic crisis. The prime lending rates are thus affected by these changes. The prior
periods expected fluctuation was larger as interest rates increased quite significantly owing to the rising inflation rates which is not the
case as at this reporting date. Inflation has remained constant owing to the global economic recession.

Cash flow sensitivity:

30 June 2010                                                              Profit or loss                 Profit or loss
                                                                          100 bp          100 bp         100 bp          100 bp
                                                                          increase        decrease       increase        decrease
Variable rate instruments                                                    (12,337,046)     12,337,046    (12,922,360)    12,922,359

30 June 2009                                                              Profit or loss                 Profit or loss
                                                                          300 bp          300 bp         300 bp          300 bp
                                                                          increase        decrease       increase        decrease
Variable rate instruments                                                    (34,287,218)     34,287,218    (28,556,544)    28,556,544

Other market price risk
The group is exposed to equity price risk through its investment in a widely held company. The investment is with a reputable public
company thus limiting the group's exposure to price risk. Price risk is also limited due to minimal Rand value of the investment. A
sensitivity analysis was based on managements estimates of anticipated changes in market prices of the shares at reporting date, this
equated to a 18% (2009: 3%) variation. The rate used for the sensitivity analysis increased by 15% in comparison to prior year due to
the increase in the share price of the widely held company. The effects



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                            Page | 171
                               Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                 Notes to the Annual Financial Statements
                                                                                Controlling entity                  Economic entity
                                                                                2010              2009              2010            2009
                                                                                R                  R                R               R


71. Risk management (continued)
of this variation would constitute a R1 884 decrease or increase in equity (2009: R264).


Fair values

The fair value of financial assets with standard terms and conditions and traded in an active market is determined with reference to
quoted market bid prices and ask prices respectively. Except as detailed below, disclosures of all other fair values of applicable financial
instruments has not been made as a reliable estimate of their values could not be determined:


30 June 2010                                                             Carrying            Fair value      Carrying            Fair value
                                                                         amount                              amount
Available for sale investments (OVK holdings Limited)                               2,535           10,367              2,535           10,367

30 June 2009                                                                                                 Carrying            Fair value
                                                                                                             amount
Available for sale investments (OVK holdings Limited)                               2,535           10,367              2,535            8,595

72. Going concern

We draw attention to the fact that at 30 June 2010, the group had an accumulated surplus of R 1,819,282,969 and that the group's
total assets exceed its liabilities by R 3,403,286,064.

The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis
presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities,
contingent obligations and commitments will occur in the ordinary course of business.

Although certain going concern ratios may appear unfavourable, the municipality still has the power to levy rates and taxes and it will
continue to receive funding from government as evident from the equitable share allocation in terms of the Division of Revenue Act,
Act 1 of 2010.

73. Events after the reporting date

The Accounting Officer is not aware of any matter or circumstances arising since the end of the financial year to the date of this report
in respect of matters which would require adjustments to or disclosure in the annual financial statements.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                           Page | 172
                                     Mangaung Local Municipality Consolidated
                                       Annual Financial Statements for the year ended 30 June 2010

                                     Notes to the Annual Financial Statements
                                                                             Controlling entity              Economic entity
                                                                            2010               2009       2010          2009
                                                                              R                 R         R                R


74.   Unauthorised expenditure

Opening balance                                                                                        342,867,794    120,251,226
Add: Unauthorised expenditure - current year                                                            56,213,592    222,616,568
                                                                                                       399,081,386    342,867,794

Details of unauthorised expenditure – current year


Incidents regarding 2007/2008:             Disciplinary steps taken/criminal proceedings

Office of the City Manager                 Awaiting condonation                                           965,000
Infrastructural Services                   Awaiting condonation                                        21,389,005
Miscellaneous Services                     Awaiting condonation                                       168,868,774
Water                                      Awaiting condonation                                        31,393,789

Incidents regarding 2008/2009:             Disciplinary steps taken/criminal proceedings

Unbudgeted expenditure                     Awaiting condonation                                       107,235,351
Unbudgeted capital expenditure -           Awaiting condonation                                           423,098
Environmental Management
Unbudgeted capital expenditure -           Awaiting condonation                                        12,592,777
Infrastructure Services

Incidents regarding 2009/2010:             Disciplinary steps taken/criminal proceedings

Overspending on the Finance                None                                                         6,880,638
directorate due to debt collection
service providers overpaid
City Manager                               None                                                           791,620
Fresh produce market                       None                                                           527,316
Miscellaneous services                     None                                                        48,014,018
                                                                                                      399,081,386




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                               Page | 173
                                   Mangaung Local Municipality Consolidated
                                       Annual Financial Statements for the year ended 30 June 2010

                                      Notes to the Annual Financial Statements
                                                                             Controlling entity          Economic entity
                                                                             2010              2009   2010          2009
                                                                             R                  R      R               R


75. Fruitless and wasteful expenditure

Opening balance                                                                                        2,796,522        46,725
Add: Fruitless and wasteful expenditure                                                               19,209,989     2,749,798
                                                                                                      22,006,511     2,796,523
Details of fruitless and wasteful expenditure                   Disciplinary steps taken/criminal
                                                                          proceedings

During 2008 an amount of R41,490 was identified as      It was found that this expense could not         41,490          41,490
fruitless and wasteful expenditure that was paid as     be recovered and an item was prepared
penalties and interest to SARS on late payment of UIF for condonation
for Councillors. The municipality ceased payment of UIF
for councillors according to a directive received from
SALGA during 2003. During 2006/07 it was determined
that UIF was payable to SARS, which resulted in
penalties and interest on late payment of UIF. This
amount is not recoverable as no official of the
municipality is liable for the non-payment of the UIF
contributions.
                                                        It was found that this expense could not          5,235           5,235
During the 2008/09 financial year interest to the       be recovered and an item was prepared
amount of R5,235 was paid to Eskom on overdue           for condonation
accounts.

During 2008/09 financial year excessive credit card To be condoned as the money can not be                2,010           2,010
expenditure of the Executive Mayor was incurred          recovered as there was weaknesses in
relating to accommodation.                               the policies. A new Business Credit Card
                                                         policy has been drafted and are awaiting
                                                         approval

Fruitless and wasteful expenditure incurred for          To be condoned by council                    2,744,214     2,744,214
settlement and legal cost.

No support could be obtained that official attended      The matter is being investigated                 3,574           3,574
the meeting.

An advance payment was made to a supplier while None                                                  1,099,158               -
it is unsure whether the site has been established.

Interest paid on late payment as a result of             None                                           191,066               -
payment kept back as penalties charged to a
supplier for breach of contract. Court ordered the
penalties not to be charged to the supplier. After
the payment was made by the municipality, the
municipality lodged an appeal.

Expenditure incurred on fuel cards while the use of      None                                            36,606               -
the fuel cards has been stopped.

Differences on electricity expenses                      The matter was identified during the 2010        1,077               -
                                                         audit and thus still needs to be
                                                         investigated.
Discrepancies regarding credit card expenditure          The matter was identified during the 2010        3,272               -
                                                         audit and thus still needs to be
                                                         investigated.
Interest and penalties paid to SARS due to late          The result of the investigation from SARS    5,099,888               -
submission of a VAT return                               is awaited



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                            Page | 174
                                   Mangaung Local Municipality Consolidated
                                         Annual Financial Statements for the year ended 30 June 2010

                                     Notes to the Annual Financial Statements
                                                                               Controlling entity        Economic entity
                                                                               2010              2009   2010             2009
                                                                                R                 R       R               R

75. Fruitless and wasteful expenditure (continued)
Centlec (Pty) Ltd transactions:
Interest incurred on late payments of bulk electricity The matter was identified during the 2010        7,271,180               -
payments amounted to R7,271,180                           audit and thus still needs to be
                                                          investigated.

Termination charges for the Ntlangani Business            The matter was identified during the 2010      4,353,231              -
Solutions                                                 audit and thus still needs to be
                                                          investigated.
Penalties and interest incurred for late payment of       The matter was identified during the 2010      1,063,789              -
VAT payable                                               audit and thus still needs to be
                                                          investigated.
Expenditure relating to soccer tickets                    The matter was identified during the 2010         89,775              -
                                                          audit and thus still needs to be
                                                          investigated.
Travel and subsistence payments in contravention of       The matter was identified during the 2010            796              -
the policy                                                audit and thus still needs to be
                                                          investigated.
Late submission of the annual return to Cipro             The matter was identified during the 2010            150              -
resulted in a penalty                                     audit and thus still needs to be
                                                          investigated.
                                                                                                        22,006,511      2,796,523




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                               Page | 175
                                    Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                    Notes to the Annual Financial Statements
                                                                              Controlling entity           Economic entity
                                                                              2010              2009    2010          2009
                                                                               R                 R       R               R


76.   Irregular expenditure

Opening balance                                                                                         40,777,973    23,140,077
Add: Irregular expenditure                                                                             102,477,912    10,104,296
Add: Irregular expenditure - not previously disclosed                                                            -     7,533,600
                                                                                                       143,255,885     40,777,973

Details of irregular expenditure

Incident                                                 Disciplinary steps taken/criminal
                                                                     proceedings
Vehicle tracking expenditure                     Officials suspended, investigation ongoing.           14,706,860     14,706,860


Irregularities surrounding circumstances of      The Contract has been terminated, Internal               961,607          961,607
the awarding of tender MD58 - 2006/2007          audit has recommended that the supplier be
                                                 blacklisted. The expenditure is awaiting
                                                 condonement from Council.

Irregular training costs incurred                The official has resigned on the 1st March               931,789          931,789
                                                 2009. No costs can be recovered from the
                                                 official according to the Disciplinary Tribunal.
                                                 The expenditure is awaiting condonation from
                                                 Council.

Irregular skills development costs incurred      The official has resigned on the 1st March             1,291,436      1,291,436
                                                 2009. No costs can be recovered from the
                                                 official according to the Disciplinary Tribunal.
                                                 The expenditure is awaiting condonation from
                                                 Council.

Expenditure incurred without adhering to the The matter is being investigated                             192,535          192,535
Supply Chain Management Policy requiring
three quotations

Expenditure incurred without adhering to the The matter is being investigated                           1,507,434      1,507,434
Supply Chain Management Policy requiring
three quotations
                                              These transactions have been investigated by              5,060,762      5,060,762
Expenditure incurred without adhering to the  the Anti-Fraud department and are in the
Supply Chain Management Policy and handed     process of being handed over to SAPS. The
over to the Fraud and Risk Management section relevant employees were suspended. The
                                              expenditure is awaiting condonation from
                                              Council.

Expenditure incurred for which the               The matter is being investigated                       3,554,014      3,554,014
appropriateness of authorisation or approval
could not be confirmed

Expenditure incurred without adhering to the These transactions have been investigated and                119,951          119,951
Supply Chain Management Policy requiring an are in the process of being handled over to
requisition                                  SAPS. The relevant employees were
                                             suspended. The expenditure is awaiting
                                             condonation from Council.
Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                              Page | 176
                                  Mangaung Local Municipality Consolidated
                                        Annual Financial Statements for the year ended 30 June 2010

                                    Notes to the Annual Financial Statements
                                                                              Controlling entity          Economic entity
                                                                             2010               2009   2010          2009
                                                                               R                 R      R               R


76.   Irregular expenditure (continued)

Expenditure incurred without adhering to the The matter is being investigated                           759,775          759,775
Supply Chain Management Policy requiring
a invoice

Expenditure incurred without adhering to the The matter is being investigated                           170,566          170,566
Supply Chain Management Policy requiring
a deviation letter

Expenditure incurred without adhering to the These transactions have been investigated by               658,717          658,717
Supply Chain Management Policy and              the Anti-Fraud department and are in the
handed over to the Fraud and Risk               process of being handed over to SAPS. The
Management section                              relevant employees were suspended. The
                                                expenditure is awaiting condonation from
                                                Council

Specimen signature could not be provided to These transactions relate to weaknesses in the                8,000            8,000
substantiate approval signatures               system. The authorising controls has been
                                               improved. The expenditure is awaiting
                                               condonation from Council.

Expenditure incurred without adhering to the The matter is being investigated                           407,917          407,917
Supply Chain Management Policy requiring
that suppliers should be included on the
approved suppliers list for orders below
R30,000

Expenditure incurred without adhering to the The matter is being investigated                           159,643          159,643
Supply Chain Management Policy requiring
a deviation letter for deviating from the
supply chain management procedures

 Expenditure incurred without adhering to theThe matter is being investigated                          5,069,781     5,069,781
Supply Chain Management Policy requiring
a deviation letter for deviating from the
supply chain management procedures

Irregular payments made regarding IDP,            The matter was identified during the 2010 audit       584,692                -
CBP and ward committee planning                   and thus still needs to be investigated.

Supply chain policy not adhered to with           After investigation no proof of quotations or         977,009          977,009
appointing of suppliers                           tenders could be found.

Employees were still being paid after             After investigation no proof could be obtained        172,638          172,638
termination date                                  that amounts were paid back

No quotations could be obtained                   After investigation no tender document could          893,766          893,766
                                                  be obtained from supply chain management

Tender process not followed                       After investigation no tender document could          150,200          150,200
                                                  be obtained from supply chain management.



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                            Page | 177
                                   Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                    Notes to the Annual Financial Statements
                                                                               Controlling entity              Economic entity
                                                                              2010               2009       2010          2009
                                                                                R                 R          R               R

76. Irregular expenditure (continued)
Supply chain process not followed                 After investigation it was found that the                   598,246         598,246
                                                  deviation was inappropriately approved with not
                                                  being an emergency.

Tender documents, advertisement and               After investigation if was found that the original        2,227,520        2,227,520
tender evaluation form not supplied               tender documents, the advertisements and
                                                  tender evaluation forms could not be found.

Appropriateness of authorisation could not        After investigation the authorisation could not             197,807         197,807
be verified                                       be verified

3 Written quotations could not be obtained        Identified during the audit and thus still needs          2,932,442                    -
from Supply Chain Management                      to be investigated.

No quotations could be obtained from              Identified during the audit and thus still needs            410,789                    -
Supply Chain Management                           to be investigated.

The procurement of goods and services was Identified during the audit and thus still needs                    606,693                    -
split to avoid complying with the Supply       to be investigated.
Chain Management requirements

Deviations from competitive bidding were          Identified during the audit and thus still needs        53,472,760                 -
approved on the basis of it being an              to be investigated.
emergency, even though immediate action
was not necessary and sufficient time was
available to follow a bidding process Centlec
(Pty) Ltd incurred irregular expenditure during   The expenditure is awaiting condonation by the          44,470,536                 -
the year                                          board

                                                                                                        143,255,885     40,777,973




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                 Page | 178
                              Mangaung Local Municipality Consolidated
                                    Annual Financial Statements for the year ended 30 June 2010

                                  Notes to the Annual Financial Statements
                                                                               Controlling entity                 Economic entity
                                                                             2010            2009              2010          2009
                                                                              R                R                R               R


77. Additional disclosure in terms of the Municipal Finance              Management Act

Contributions to organised local government

Council subscriptions                                                        3,321,301       2,889,434         3,321,301       2,889,434
Amount paid - current year                                                  (3,321,301)     (2,889,434)       (3,321,301)    (2,889,434)
                                                                                     -                  -              -                -

Audit fees

Opening balance                                                                336,705                -          336,705               -
Prior year audit fee                                                         5,096,033       5,140,190         5,096,033       5,140,190
Current year regularity audit fees                                           2,027,277         668,683         2,027,277         668,683
Current year performance audit fees                                            652,538         619,419           652,538         619,419
Amount paid - current year                                                  (7,635,217)     (6,268,448)       (7,635,217)    (6,268,448)
Restatement of audit fees                                                             -        176,861                  -        176,861
                                                                              477,336             336,705       477,336           336,705

PAYE and UIF

Opening balance                                                             5,602,945        5,311,370         5,602,945       5,311,370
Current year payroll deductions                                            83,835,898       72,963,362        83,835,898      72,963,362
Amount paid - current year                                                (83,835,898)     (67,360,417)      (83,835,898)   (67,360,417)
Amount paid - previous years                                               (5,602,945)      (5,311,370)       (5,602,945)    (5,311,370)
                                                                                     -       5,602,945                 -      5,602,945

Skills development levy

Opening balance                                                                378,752         345,839           378,752         345,839
Payable during the current year                                              5,275,265       4,587,943         5,275,265       4,587,943
Amount paid - current year                                                  (5,275,265)     (4,209,191)       (5,275,265)    (4,209,191)
Amount paid - previous years                                                  (378,752)       (345,839)         (378,752)      (345,839)
                                                                                     -            378,752              -          378,752

Pension and Medical Aid Deductions

Opening balance                                                               249,547                -          249,547               -
Current year payroll deductions and council                               139,861,484      121,676,920      139,861,484     121,676,920
contributions
Amount paid - current year                                               (139,861,484)    (121,427,373)     (139,861,484) (121,427,373)
                                                                              249,547             249,547       249,547           249,547

VAT

VAT receivable                                                             87,095,362       55,990,136        18,367,095         397,737
VAT payable                                                                87,095,362       55,990,136       (86,551,701)   (55,870,625)
                                                                          174,190,724      111,980,272       (68,184,606)   (55,472,888)

All VAT returns have been submitted by the due date during the year.

The VAT of the group is currently under investigation.

Councillors' arrear consumer accounts



Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                     Page | 179
                             Mangaung Local Municipality Consolidated
                                  Annual Financial Statements for the year ended 30 June 2010

                               Notes to the Annual Financial Statements
                                                                            Controlling entity                  Economic entity
                                                                            2010              2009              2010            2009
                                                                            R                  R                R               R


77. Additional disclosure in terms of the Municipal Finance Management Act (continued)

The following Councillors had arrear accounts outstanding for more than 90 days at 30 June 2010:

30 June 2010                                                                            Outstanding         Outstanding       Total
                                                                                        less than 90        more than 90        R
                                                                                            days               days
                                                                                              R                  R
Dithebe GC                                                                                             26              21              47
Human WF                                                                                            9,962          18,822          28,784
Khi ZT                                                                                                 50              16              66
Lubbe DG                                                                                              940             993           1,933
Makoa BM                                                                                            4,367         101,578         105,945
Matsoentlane MJ                                                                                       230             134             364
Mbange MB                                                                                           1,588           3,252           4,840
Mokotjo NG                                                                                          2,457           9,070          11,527
Moletsane SG                                                                                        3,720           9,810          13,530
Mtshiwane KJ                                                                                          507             191             698
Nthako TS                                                                                              13              10              23
Nzapheza FB                                                                                           376             261             637
Ramokotjo FP                                                                                          577          21,227          21,804
Saohatse GK                                                                                           564             557           1,121
Tsomela MM                                                                                            334             453             787
Van der Merwe R                                                                                         -             535             535
                                                                                                   25,711         166,930         192,641

30 June 2009                                                                            Outstanding         Outstanding       Total
                                                                                        less than 90        more than 90        R
                                                                                            days               days
                                                                                              R                  R
Adoons NL                                                                                               -             597             597
Choene SKM                                                                                          1,108           1,105           2,213
Dithebe GC                                                                                              -              69              69
Goliath EK                                                                                          1,234           2,992           4,226
Human JS                                                                                            3,293          12,596          15,889
July LR                                                                                               720             566           1,286
Lubbe DG                                                                                              552             292             844
Masita MJ                                                                                             155             126             281
Matsoentlane MJ                                                                                       284           2,036           2,320
Mbange MB                                                                                           4,416          15,821          20,237
Minnie H                                                                                                -             540             540
Mokotjo NG                                                                                          2,717           6,635           9,352
Monyabane TA                                                                                        2,142          23,120          25,262
Moroko LS                                                                                             206             446             652
Morule FK                                                                                           1,688          25,635          27,323
Motaung B                                                                                             893          13,701          14,594
Mtshiwane KJ                                                                                          543           1,838           2,381
Nothnagel J                                                                                         (123)           4,219           4,096
Nzapheza FB                                                                                            18             251             269
Petersen JE                                                                                           851           3,464           4,315
Ramokone MA                                                                                             -             241             241
Saohatse GK                                                                                           705           6,056           6,761
Sechoaro CSK                                                                                            -             461             461
Sefuthi SM                                                                                              -             379             379
Siyonzana MA                                                                                          957           1,666           2,623
Somimi PM                                                                                             240             576             816
Stander AT                                                                                            969           7,182           8,151
Tanyane SP                                                                                             83             213             296


Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                     Page | 180
                                   Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                    Notes to the Annual Financial Statements
                                                                                Controlling entity                   Economic entity
                                                                              2010            2009                2010          2009
                                                                              R                 R                  R               R

77. Additional disclosure in terms of the Municipal Finance                Management Act (continued)
Tsomela MM                                                                                       344                   1,158            1,502
                                                                                                    23,995         133,981            157,976

During the year the following Councillors’ had arrear accounts outstanding for more than 90 days.

30 June 2010                                                                                                    Highest
                                                                                                              outstanding
                                                                                                                amount
Erasmus JC                                                                            -                   -             820
Nakedi SS                                                                             -                   -           2,602
Choene SKM                                                                            -                   -           1,441
Morule FK                                                                             -                   -          23,562
Siyonzana MA                                                                          -                   -          10,873
                                                                                      -                   -         39,298

30 June 2009                                                                                                    Highest
                                                                                                              outstanding
                                                                                                                amount
Dithebe GC                                                                            -                   -           1,737
Jenkinson CE                                                                          -                   -           4,398
Makhanya KNL                                                                          -                   -           2,674
Minnie H                                                                              -                   -           1,961
Moahi MM                                                                              -                   -             280
Mzozana NM                                                                            -                   -             796
Mzuzwana P                                                                            -                   -           1,406
Van Biljon PJJ                                                                        -                   -           7,851
                                                                                      -                   -         21,103

Supply chain management regulations

Paragraph 12(1)(d)(i) of Government Gazette No. 27636 issued on 30 May 2005 states that a supply chain management policy must
provide for the procurement of goods and services by way of a competitive bidding process. The entity complied with the supply chain
management policy.


78. Utilisation of Long-term liabilities reconciliation

Long-term liabilities                                                    12,493,642       14,278,700      12,493,643     14,278,700

Long-term liabilities have been utilized in accordance with the Municipal Finance Management Act. Sufficient cash has been set aside
to ensure that long-term liabilities can be repaid on redemption date.

79. Actual operating expenditure versus budgeted operating expenditure

The comparison of the group's actual financial performance with that budgeted is set out in Annexure E.


80. Actual capital expenditure versus budgeted capital expenditure

Refer to Appendix E.




Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                        Page | 181
                                  Mangaung Local Municipality Consolidated
                                      Annual Financial Statements for the year ended 30 June 2010

                                    Notes to the Annual Financial Statements
                                                                             Controlling entity                    Economic entity
                                                                             2010              2009            2010           2009
                                                                              R                 R               R                R


81. Deviations from the Supply Chain Management Policy

Deviations
For the financial year there were instances where                                                              81,203,970       32,358,019
goods and services were procured and deviated from
the normal Supply Chain Management Policy. This
was reported to Council.

Deviations                                                                                                  Number of            2010
                                                                                                            deviations
Emergency                                                                                                               2           29,101
Sole supplier                                                                                                           6        1,260,743
Urgent                                                                                                                103       79,914,126
                                                                                                                      111       81,203,970

82. Non-compliance with legislation

During the audit of the financial statements the following non-compliance issues were identified:
Supply chain management regulations 12(1)(c), 17(1)(a) - (c)
Goods and services of a transaction value between R10 000 and R200 000 were procured without inviting at least three written
price quotations from accredited prospective providers and the deviation was not approved by the CFO or his/her delegate.

Supply chain management regulations 12(3)
The procurement of goods and services was deliberately split into parts or items of lesser value merely to avoid complying with the
requirements of the supply chain management policy and legislation.

Supply chain management regulations 36(1)
Goods and services with a transaction value above R200 000 were not procured by means of a competitive bidding process and the
deviation was not approved by the accounting officer or his/her delegate in accordance with the supply chain management policy.
Deviations from competitive bidding were approved on the basis of it being an emergency, even though immediate action was not
necessary and sufficient time was available to follow a bidding process.
Deviations from competitive bidding were approved on the basis of it being an emergency, even though proper planning would
have prevented such emergency.

Municipal Finance Management Act section 2(1)(f)
Contracts were awarded without justification to bidders who did not score the highest points.

Construction Industry Development Board Act section 18(1)
Construction contracts were awarded to contractors who are not registered with the Construction Industry Development Board
(CIBD).

Municipal Finance Management Act section 116(2)(b)
The performance of all contractors were not monitored on a monthly basis.

Municipal Finance Management Act section 116(3)(a)
Contracts were amended or extended without tabling the reasons to the council and/or notifying the public as required by the
MFMA.

Municipal Finance Management Act section 116(3)(b)
Contracts were extended or renewed to such an extent that competitive bidding processes were being circumvented.

Municipal Finance Management Act section 116(1)(b)(iii)
Contracts of longer than three years were not reviewed at least once every three years.

Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                  Page | 182
                                                                           MANGAUNG LOCAL MUNICIPALITY


                                                                                     APPENDIX A


                                                                SCHEDULE OF EXTERNAL LOANS AS AT 30 JUNE 2010: GROUP

                          Loan        Redeemable          Balance at                              Redeemed during       Balance at      Carrying Value of         Other Costs in
                                                                           Received during the
                                                                                                                                        Property, Plant &        accordance with
                                                                                  year
                                                                                                                                           Equipment                 MFMA
                        number                           01 July 2009                                the year          30 June 2010
                                                               R                   R                    R                    R                 R                       R
Annuity Loan

DBSA @ 14%                1864         30-09-2011     539,483                                -            194,193             345,290              952,102                     -

DBSA @ 10%                8001         31-12-2015     13,739,217                             -           1,590,865         12,148,352         12,804,404                       -

Total annuity loans                                   14,278,700                             -           1,785,058         12,493,642         13,756,506                       -



Total external loans                                  14,278,700                             -           1,785,058         12,493,642         13,756,506                       -




             Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                    Page | 183
                                                                            MANGAUNG LOCAL MUNICIPALITY


                                                                                    APPENDIX A (1)


                                                                SCHEDULE OF EXTERNAL LOANS AS AT 30 JUNE 2009: GROUP

                         Loan                                                                                                             Carrying Value of         Other Costs in
                                        Redeemable           Balance at     Received during the   Redeemed during       Balance at
                        number                                                                                                            Property, Plant &        accordance with
                                                                                   year
                                                                                                                                             Equipment                 MFMA
                                                             01 July 2008                            the year          30 June 2010
                                                                   R                R                   R                    R                   R                       R
Annuity Loan

DBSA @ 11.25%            12280          31/12/2008       22,121                              -             22,121                     -                       -                      -

DBSA @ 12.00%             1529          31/03/2009       21,665                              -             21,665                     -                       -                      -

DBSA @ 14.00%             1864          30/09/2011       709,099                             -            169,616             539,483                996,215                         -

DBSA @ 10.00%             8001          31/12/2015       15,182,178                          -           1,442,961         13,739,217           13,992,959                           -

DBSA @ 5.00%             102803         31/03/2011       -                         31,214,572          31,214,572                     -                       -                      -

Total annuity loans                                      15,935,063                31,214,572          32,870,935          14,278,700           14,989,174                           -



Total external loans                                     15,935,063                31,214,572          32,870,935          14,278,700           14,989,174                           -




             Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                      Page | 184
                                                                                           MANGAUNG LOCAL MUNICIPALITY


                                                                                                      APPENDIX B




                                                                 ANALYSIS OF PROPERTY, PLANT AND EQUIPMENT AS AT 30 JUNE 2010: GROUP
                                                               Cost price                                                                            Accumulated depreciation
                         Opening                                               Under                             Closing
Statutory Name           Balance       Additions       Revaluation          Construction       Disposals         Balance       Opening Balance       Depreciation       Disposal       Closing Balance    Carrying amount
                             R            R                R                     R                R                 R                R                    R                R                 R                  R
Land and Buidlings

Land                     595,610,879               -                    -                  -               -    595,610,879                      -                  -              -                  -        595,610,879

Buildings                830,222,540    1,808,270        9,512,319.00        203,222,581                   -   1,044,765,710       259,566,904          20,333,315                 -      279,900,219          764,865,491

Sub Total              1,425,833,419    1,808,270           9,512,319        203,222,581                   -   1,640,376,589       259,566,904          20,333,315                 -      279,900,219        1,360,476,370


Plant and
machinery
Plant and
machinery                714,355,746   98,555,822         890,337,971                                      -   1,703,249,539       374,660,427          41,204,554                        415,864,981        1,287,384,558

                        714,355,746    98,555,822         890,337,971                      -               -   1,703,249,539       374,660,427          41,204,554                 -      415,864,981        1,287,384,558


Heritage

Historical Buildings       1,170,929               -                    -                  -               -      1,170,929          1,170,929                      -              -         1,170,929                      -
Painting & Art
Galleries                    19,679                -                    -                  -               -         19,679              19,679                     -              -             19,679                     -

Sub Total                  1,190,608               -                    -                  -               -      1,190,608          1,190,608                      -              -         1,190,608                      -


Infrastructure
Roads &
Stormwater               728,709,277   99,906,468                       -    145,597,408                   -    974,213,153        314,217,474          41,737,244                 -      355,954,718          618,258,435


                 Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                                        Page | 185
                                                                ANALYSIS OF PROPERTY, PLANT AND EQUIPMENT AS AT 30 JUNE 2010: GROUP
                                                              Cost price                                                                         Accumulated depreciation
                        Opening                                               Under                             Closing
Statutory Name          Balance       Additions       Revaluation          Construction       Disposals         Balance       Opening Balance    Depreciation      Disposal       Closing Balance    Carrying amount
                            R             R               R                     R                R                 R                R                 R               R                 R                  R

Street Lights            22,595,958     4,035,088                   -                     -               -     26,631,046          2,228,028         929,697                 -         3,157,725          23,473,321

Traffic Light            14,100,383           4,851                 -                     -               -     14,105,234          4,120,983         780,143                 -         4,901,126           9,204,108

Railway Sidings           1,962,990               -                 -                     -               -      1,962,990          1,116,985             57,332              -         1,174,317              788,673
Sewerage
Purification             70,999,843      386,585                    -         2,657,815                   -     74,044,243         31,923,224        3,014,588                -       34,937,812           39,106,431

Sewerage Mains          650,691,648    16,537,484                   -        23,753,584                   -    690,982,716        154,290,286       24,024,934                -      178,315,220          512,667,496

Water Purification        3,895,884               -                 -         3,298,451                   -      7,194,335          2,531,806         101,963                 -         2,633,769           4,560,566

Water Mains             538,184,121      436,360                    -         7,806,941                   -    546,427,422        373,399,545       11,593,454                -      384,992,999          161,434,423

Electricity Mains          443,656                -                 -                     -               -        443,656              80,779            18,832              -             99,611             344,045

Sub Total             2,031,583,760   121,306,836                   -       183,114,199                   -   2,336,004,795       883,909,110       82,258,187                -      966,167,297        1,369,837,498


Community Assets

Parks and Gardens        26,593,397               -                 -                     -               -     26,593,397         10,226,057         899,786                 -       11,125,843           15,467,554

Sub Total                26,593,397               -                 -                     -               -     26,593,397         10,226,057         899,786                 -       11,125,843           15,467,554


Other Assets

Site Development         75,791,225      709,717                    -        16,959,888                   -     93,460,830         28,131,716        2,198,395                -       30,330,111           63,130,719
Furniture & Office
Equipment               109,951,544    13,017,400                   -        24,908,187                   -    147,877,130         82,867,125        9,326,075                -       92,193,200           55,683,930
Tools, Plant &
Equipment                39,485,766     3,280,574                   -                     -               -     42,766,340         29,773,921        2,096,749                -       31,870,670           10,895,670

Motor Vehicles          163,951,832    28,045,244                   -         3,049,992                   -    195,047,068        129,960,086        8,943,879                -      138,903,965           56,143,102

Sub Total              389,180,367     45,052,934                   -        44,918,067                   -    479,151,367        270,732,848       22,565,099                -      293,297,947          185,853,421

                Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                                   Page | 186
                                                             ANALYSIS OF PROPERTY, PLANT AND EQUIPMENT AS AT 30 JUNE 2010: GROUP
                                                           Cost price                                                                     Accumulated depreciation
                       Opening                                             Under                         Closing
Statutory Name         Balance       Additions     Revaluation          Construction       Disposals     Balance       Opening Balance    Depreciation     Disposal    Closing Balance    Carrying amount
                          R              R             R                     R                R             R                R                 R              R              R                    R


Leased Assets
Furniture & Office
Equipment               9,532,028      1,271,361                 -                     -   3,303,013      7,500,376          7,228,260        1,664,375    3,303,013         5,589,622            1,910,754

Sub Total               9,532,028      1,271,361                 -                     -   3,303,013      7,500,376          7,228,260        1,664,375    3,303,013         5,589,622            1,910,754



Grand Total          4,598,269,325   267,995,223      899,850,290        431,254,846       3,303,013   6,194,066,671      1,807,514,214     168,925,316    3,303,013    1,973,136,517         4,220,930,154



                                                                                                                                                                                         4,220,930,155.00

                                                                                                                                                                                         (0.64)




              Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                        Page | 187
                                                                                           MANGAUNG LOCAL MUNICIPALITY


                                                                                                   APPENDIX B (1)




                                                                ANALYSIS OF PROPERTY, PLANT AND EQUIPMENT AS AT 30 JUNE 2009: GROUP
                                                               Cost price                                                                        Accumulated depreciation
                         Opening                                               Under                             Closing        Opening                                                Closing
Statutory Name           Balance       Additions       Revaluation          Construction       Disposals         Balance        Balance         Depreciation         Disposal          Balance         Carrying amount
                             R            R                R                     R                R                 R              R                 R                  R                 R                  R
Land and Buidlings

Land                     598,992,247      446,702          (3,828,070)                 -                   -    595,610,879                 -                  -                -                  -       595,610,879

Buildings                608,761,215     7,176,878                   -      214,296,441            11,994       830,222,540     239,144,358        20,422,546                   -      259,566,904         570,655,636

Sub Total              1,207,753,462     7,623,580         (3,828,070)      214,296,441            11,994      1,425,833,419    239,144,358        20,422,546                   -      259,566,904       1,166,266,515


Plant and
machinery
Plant and
machinery              2,700,731,900   110,465,475                                           2,096,841,629      714,355,746    2,439,557,640       31,944,416      2,096,841,629    374,660,427.00         339,695,319

                       2,700,731,900   110,465,475                   -                 -     2,096,841,629      714,355,746    2,439,557,640       31,944,416      2,096,841,629       374,660,427         339,695,319


Heritage

Historical Buildings       1,170,929               -                 -                 -                   -      1,170,929       1,170,929                    -                -        1,170,929                   -
Painting & Art
Galleries                    19,679                -                 -                 -                   -         19,679            19,679                  -                -             19,679                 -

Sub Total                  1,190,608               -                 -                 -                   -      1,190,608       1,190,608                    -                -        1,190,608                   -


Infrastructure
Roads &
Stormwater               646,057,973    26,445,370                   -       56,205,934                    -    728,709,277     274,166,982        40,050,492                   -      314,217,474         414,491,803


                 Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                                    Page | 188
                                                               ANALYSIS OF PROPERTY, PLANT AND EQUIPMENT AS AT 30 JUNE 2009: GROUP
                                                              Cost price                                                                   Accumulated depreciation
                        Opening                                               Under                         Closing       Opening                                             Closing
Statutory Name          Balance       Additions       Revaluation          Construction   Disposals         Balance       Balance         Depreciation      Disposal          Balance         Carrying amount
                            R            R                R                     R            R                 R             R                 R               R                 R                  R

Street Lights            16,005,958     6,590,000                   -                 -               -     22,595,958      1,588,832          639,196                 -        2,228,028          20,367,930

Traffic Light            12,700,463     1,399,920                   -                 -               -     14,100,383      3,434,566          686,417                 -        4,120,983           9,979,400

Railway Sidings           1,962,990               -                 -                 -               -      1,962,990      1,059,653              57,332              -        1,116,985               846,005
Sewerage
Purification             70,999,843               -                 -                 -               -     70,999,843     29,232,412         2,690,812                -       31,923,224          39,076,619

Sewerage Mains          537,265,826          6,448                  -      113,419,374                -    650,691,648    130,864,553        23,425,733                -      154,290,286         496,401,362

Water Purification        3,895,884               -                 -                 -               -      3,895,884      2,429,843          101,963                 -        2,531,806           1,364,078

Water Mains             515,329,908    22,777,381                   -           76,832                -    538,184,121    363,659,583         9,739,962                -      373,399,545         164,784,576

Electricity Mains          443,656                -                 -                 -               -        443,656           61,947            18,832              -             80,779             362,877

Sub Total             1,804,662,501    57,219,119                   -      169,702,140                -   2,031,583,760   806,498,371        77,410,739                -      883,909,110       1,147,674,650


Community Assets

Parks and Gardens        26,583,920        14,933                   -                 -          5,456      26,593,397      9,325,831          900,226                 -       10,226,057          16,367,340

Sub Total                26,583,920        14,933                   -                 -          5,456      26,593,397      9,325,831          900,226                 -       10,226,057          16,367,340


Other Assets

Site Development         59,187,948               -                 -       16,603,382            105       75,791,225     26,294,643         1,837,073                -       28,131,716          47,659,509
Furniture & Office
Equipment               107,109,961     2,842,225                   -                 -       642.00       109,951,544     73,103,791         9,763,334                -       82,867,125          27,084,419
Tools, Plant &
Equipment                37,912,629     1,576,897                   -                 -          3,760      39,485,766     27,664,277         2,109,644                -       29,773,921           9,711,845

Motor Vehicles          158,358,825     8,408,960                   -                 -    2,815,953       163,951,832    122,657,780         9,906,355      2,604,049        129,960,086          33,991,746

Sub Total              362,569,363     12,828,082                   -       16,603,382     2,820,460       389,180,367    249,720,491        23,616,406      2,604,049        270,732,848         118,447,519

                Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                           Page | 189
                                                            ANALYSIS OF PROPERTY, PLANT AND EQUIPMENT AS AT 30 JUNE 2009: GROUP
                                                           Cost price                                                                   Accumulated depreciation
                       Opening                                             Under                         Closing        Opening                                           Closing
Statutory Name         Balance       Additions     Revaluation          Construction     Disposals       Balance        Balance        Depreciation      Disposal         Balance       Carrying amount
                          R             R              R                     R              R               R              R                R               R                R                R


Leased Assets
Furniture & Office
Equipment               8,939,488       844,540                  -                 -        252,000       9,532,028       5,378,170        2,102,090        252,000         7,228,260         2,303,768

Sub Total               8,939,488       844,540                  -                 -        252,000       9,532,028       5,378,170        2,102,090        252,000         7,228,260         2,303,768



Grand Total          6,112,431,242   188,995,729       (3,828,070)      400,601,963    2,099,931,539   4,598,269,325   3,750,815,469    156,396,423    2,099,697,678    1,807,514,214     2,790,755,111




              Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                       Page | 190
                                                                                        MANGAUNG LOCAL MUNICIPALITY


                                                                                                   APPENDIX C


                                                           SEGMENTAL ANALYSIS OF PROPERTY, PLANT AND EQUIPMENT AS AT 30 JUNE 2010: GROUP
                                                                 Cost price                                                                       Accumulated depreciation
                        Opening                                             Under                                Closing         Opening                                                Closing
Statutory Name          Balance        Additions       Revaluation       Construction          Disposals         Balance         Balance       Depreciation          Disposal           Balance       Carrying amount
                           R               R               R                     R                R                 R               R                R                  R                  R                 R
Office of the City
Manager                  13,161,856     9,819,477                                       -                  -     22,981,333       6,649,453        1,969,197                    -        8,618,650         14,362,682

Corporate Services      171,635,967                -                                    -                  -    171,635,967      86,493,790        6,620,549                    -       93,114,339         78,521,628

Finance                  25,898,627     1,087,346                                       -       (2,942,513)      24,043,460      13,914,485        2,366,205          (2,942,513)       13,338,177         10,705,283
Community and
Social Development      292,622,707    10,560,007                              29,221,506                  -    332,404,219     171,051,257       11,647,519                    -      182,698,776        149,705,444
Economic
Development and
Planning                669,055,080        10,510                               2,320,796                  -    671,386,386      32,035,988        2,803,410                    -       34,839,398        636,546,988
Infrastructural
Services              1,993,977,778   132,595,056                             358,596,159                  -   2,485,168,993    615,572,834       81,377,693                    -      696,950,527       1,788,218,467
Miscellaneous
Services                  9,641,559                -                                    -         (360,500)       9,281,059       7,219,446                   -         (360,500)        6,858,946           2,422,113

Housing                  65,626,662     1,970,715                              30,010,994                  -     97,608,371      32,295,598        1,627,198                    -       33,922,796         63,685,575
Fresh Produce
Market                   27,734,114                -                                    -                  -     27,734,114      17,510,258        1,262,913                    -       18,773,171           8,960,943

Water                   563,752,670    13,225,350                              11,105,392                  -    588,083,412     390,640,327       13,349,902                    -      403,990,229        184,093,183

Electricity             765,162,305    98,726,762         899,850,290                                          1,763,739,357    434,130,778       45,900,731                    -      480,031,509       1,283,707,848

                      4,598,269,325   267,995,223       899,850,290     431,254,847         (3,303,013)        6,194,066,671   1,807,514,214   168,925,316        (3,303,013)         1,973,136,517   4,220,930,154




                Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                                    Page | 191
                                                           SEGMENTAL ANALYSIS OF PROPERTY, PLANT AND EQUIPMENT AS AT 30 JUNE 2009: GROUP
                                                                 Cost price                                                                          Accumulated depreciation
                        Opening                                                 Under                               Closing         Opening                                             Closing
Statutory Name          Balance        Additions       Revaluation           Construction         Disposals         Balance         Balance       Depreciation       Disposal           Balance       Carrying amount
                           R               R               R                      R                   R                R               R                R               R                  R                 R
Office of the City
Manager                  13,673,706                -                    -                   -        (511,850)      13,161,856       5,275,863        1,885,440        (511,850)         6,649,453           6,512,403

Corporate Services      171,517,861       118,106                                           -                 -    171,635,967      79,614,320        6,879,470                 -       86,493,790         85,142,177

Finance                  25,192,464       862,041                                           -        (155,878)      25,898,627      13,180,772          884,669        (150,956)        13,914,485         11,984,142
Community and
Social Development      279,037,218     3,573,517                               10,928,350           (916,378)     292,622,707     159,911,572       11,932,529        (792,844)       171,051,257        121,571,450
Economic
Development and
Planning                661,586,606     8,631,716          (3,828,070)           2,772,055           (107,227)     669,055,080      29,547,226        2,595,883        (107,121)        32,035,988        637,019,092
Infrastructural
Services              1,571,982,207    40,997,773                              381,762,538           (764,740)    1,993,977,778    538,276,650       78,032,641        (736,457)       615,572,834       1,378,404,944
Miscellaneous
Services                  8,985,484       908,075                                           -        (252,000)       9,641,559       5,378,169        2,093,277        (252,000)         7,219,446           2,422,113

Housing                  60,564,474                -                             5,062,188                    -     65,626,662      30,627,153        1,668,445                 -       32,295,598         33,331,064
Fresh Produce
Market                   27,734,114                -                                        -                 -     27,734,114      16,112,426        1,397,832                 -       17,510,258         10,223,856

Water                   541,112,652    22,944,381                                     76,832         (381,195)     563,752,670     379,209,113       11,736,035        (304,821)       390,640,327        173,112,343

Electricity           2,751,044,456   110,960,120                                               (2,096,842,271)    765,162,305    2,493,682,205      37,290,202   (2,096,841,629)      434,130,778        331,031,527

                      6,112,431,242   188,995,729         (3,828,070)       400,601,963         (2,099,931,539)   4,598,269,325   3,750,815,469   156,396,423     (2,099,697,678)     1,807,514,214   2,790,755,111




                Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                                    Page | 192
                                                                         MANGAUNG LOCAL MUNICIPALITY


                                                                                      APPENDIX D


                                                            SEGMENTAL STATEMENT OF FINANCIAL PERFORMANCE: GROUP

                         2009                                                                                                           2010
      Actual            Actual            Surplus/                                                                    Actual           Actual                Surplus/
     Income           Expenditure         (Deficit)                              Department                          Income          Expenditure             (Deficit)
        R                  R                 R                                                                          R                 R                     R
                                                                               Property Rates                                                      -
   278,236,177             -            278,236,177                                                               345,558,438                               345,558,438
                                                                                                                        17,996,350       135,962,693
   16,424,510        122,141,651       (105,717,141)                     Office of the City Manager                                                        (117,966,343)
                                                                                                                                          73,556,922
    1,348,182         64,262,435        (62,914,253)                          Corporate Services                   1,668,562                               (71,888,360)
                                                                                                                        38,592,142        96,781,564
   46,009,689         57,556,419        (11,546,730)                               Finance                                                                 (58,189,422)
                                                                                                                        12,408,943       216,151,510
   17,990,711        189,359,597       (171,368,886)                Community and Social Development                                                       (203,742,567)
                                                                                                                        12,640,846        50,719,608
   13,183,638         42,962,588        (29,778,950)                Economic Development and Planning                                                      (38,078,762)
                                                                                                                                         408,256,723
   202,999,394       325,760,298       (122,760,904)                      Infrastructural Services                299,668,356                              (108,588,367)
                                                                                                                                         312,281,322
   580,386,533       378,911,385        201,475,148                       Miscellaneous Services                  569,673,686                               257,392,364
                                                                                                                                          26,883,937
   17,711,015         27,881,822        (10,170,807)                               Housing                         5,414,485                               (21,469,452)
                                                                                                                        16,071,532        13,150,022
   15,460,221         11,894,135         3,566,086                         Fresh Produce Market                                                              2,921,510
                                                                                                                                         307,971,067
   376,615,984       315,926,069        60,689,915                                  Water                         404,514,626                               96,543,559
                                                                                                                                         793,804,262
   736,481,502       558,549,310        177,932,192                               Electricity                     1,006,320,536                             212,516,274

2,302,847,556      2,095,205,709     207,641,847                                                            2,730,528,502              2,435,519,630    295,008,872


            Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                           Page | 193
                                                      STATEMENT OF COMPARATIVE AND ACTUAL INFORMATION: MUNICIPALITY
                                                                                                  2009/10
                                                            Budget
                                                                                                                                           Actual Outcome     Actual Outcome
                                        Original      Adjustments (i.t.o.                  Actual         Unauthorised
             Description                                                  Final Budget                                       Variance       as % of Final     as % of Original
                                        Budget         S28 and s31 of the                 Outcome         Expenditure
                                                                                                                                               Budget             Budget
                                                            MFMA)
                                         R'000               R'000           R'000          R'000            R'000            R'000            R'000               R'000

Financial Performance

Property Rates                             323,209                    -         323,209        342,460                   -       19,251                106%             106%

Service charges                            451,427                    -         451,427        430,913                   -      (20,514)               95%                 95%

Investment revenue                         114,004                    -         114,004        853,819                   -      739,815                749%             749%

Transfers recognised - operational         442,714              34,098          476,811        167,796                   -     (309,015)               35%                 38%

Other own revenue                          248,852              (9,831)         239,021        163,846                   -      (75,175)               69%                 66%
Total Revenue (excluding capital
transfers and contributions)              1,580,206             24,266         1,604,472     1,958,834                   -      354,362                122%             124%



Employee costs                             668,186              (2,186)         666,000        693,032                   -       27,032                104%             104%

Remuneration of councillors                 22,304                    -          22,304         21,904                   -         (400)               98%                 98%

Debt impairment                             45,000                    -          45,000         82,710                   -       37,710                184%             184%

Depreciation and asset impairment          144,981                    -         144,981        125,350                   -      (19,631)               86%                 86%

Finance charges                               4,370             (2,557)           1,813         41,039                   -       39,226            2264%                939%

Materials & bulk purchases                 302,661               1,777          304,438        187,207                   -     (117,231)               61%                 62%

Transfers and grants                          7,083                  -            7,083         42,001                   -       34,918                593%             593%
Other expenditure                                               82,923                                                                                 104%             127%
             Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                 Page | 194
                                                         STATEMENT OF COMPARATIVE AND ACTUAL INFORMATION: MUNICIPALITY
                                                                                                      2009/10
                                                               Budget
                                                                                                                                                Actual Outcome     Actual Outcome
                                          Original       Adjustments (i.t.o.                  Actual          Unauthorised
              Description                                                    Final Budget                                        Variance        as % of Final     as % of Original
                                          Budget          S28 and s31 of the                 Outcome          Expenditure
                                                                                                                                                    Budget             Budget
                                                               MFMA)
                                           R'000                R'000           R'000          R'000             R'000            R'000             R'000               R'000
                                             379,544                                462,467      480,430                             17,963

Total Expenditure                          1,574,129               79,957         1,654,086      1,673,673         56,213,592        19,587                 101%             106%



Surplus/(Deficit)                               6,077             (55,692)         (49,614)       285,161         -56,213,592       334,775             -575%               4692%



Transfers recognised - capital               232,176              259,830          492,006               -                   -              -                  -                0%
Contributions recognised - capital &
contributed assets                            10,453                     -          10,453               -                   -              -                  -                0%

Surplus/(Deficit) after capital
transfers & contributions                    248,706              204,139          452,845        285,161         -56,213,592       334,775                 63%              115%



Share of surplus/(deficit) of associate              -                   -                -              -                   -              -                  -                0%

Surplus/(Deficit) for the year               248,706              204,139          452,845        285,161         -56,213,592       334,775                 63%              115%


Capital expenditure & funds sources
Capital expenditure

Transfers recognised - capital               520,544               59,232          579,776               -                   -              -                0%                 0%

Public contributions & donations                5,453                    -           5,453               -                   -              -                0%                 0%

Borrowing                                     34,000              (15,619)          18,381               -                   -              -                0%                 0%

Internally generated funds                   202,741                9,735          212,476               -                   -              -                0%                 0%
             Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                      Page | 195
                                                     STATEMENT OF COMPARATIVE AND ACTUAL INFORMATION: MUNICIPALITY
                                                                                                 2009/10
                                                           Budget
                                                                                                                                           Actual Outcome     Actual Outcome
                                        Original     Adjustments (i.t.o.                  Actual         Unauthorised
             Description                                                 Final Budget                                       Variance        as % of Final     as % of Original
                                        Budget        S28 and s31 of the                 Outcome         Expenditure
                                                                                                                                               Budget             Budget
                                                           MFMA)
                                         R'000              R'000           R'000          R'000            R'000            R'000             R'000               R'000

Total sources of capital funds             762,738              53,348         816,086               -                  -              -               0%                  0%


Cash flows
Net cash from (used) operating
activities                                                                                    478,927
Net cash from (used) investing
activities                                                                                  (667,799)
Net cash from (used) financing
activities                                                                                     (3,792)
Cash/cash equivalents at the year
end                                                                                            45,245




             Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                 Page | 196
                                                                                     MANGAUNG LOCAL MUNICIPALITY


                                                                                                APPENDIX F




                                           DISCLOSURE OF GRANTS AND SUBSIDIES IN TERMS OF SECTION 123 OF MFMA, 56 OF 2003 FOR THE YEAR ENDED 30 JUNE 2010: GROUP
                                                     Quarterly Receipts                                              Quarterly Expenditure                                             Compli
               Name of
                                                                                                                                                                                        ance      Reasons
               Organ of
 Name of                                                                                                                                                           Delayed/   Reason     with     for non-
               State or
  Grants                       September           December        March            June            September       December       March             June          withheld     s      conditi   complianc
               Municipal
                                                                                                                                                                                         ons          e
                entity
                                                                                                                                                                                        (Y/N)
                                   R                  R               R               R                 R              R              R               R
2010
Soccer
DBSA          DBSA         -                   -               -                -               -               -              -                2,000,000.00         No        N/A      Yes        N/A
2010 Stadia
Developme     National
nt Grant      Government   533,956.57          688,554.67      308,055.51       448,667.44      10,942,441.55   3,827,110.55   11,834,153.31    9,786,360.68         No        N/A      Yes        N/A
2010 Stadia
Provincial    Provincial
Grant         Government   -                   -               -                -               -               -              -                3,662,778.00         No        N/A      Yes        N/A
2010 World
Cup Host
City
Operating     National
Grant         Government   -                   -               -                19,000,000.00   7,760,145.53    6,236,650.04   4,010,594.23     32,089,360.00        No        N/A      Yes        N/A
COGTA
Capital
Grant Fire
Suppressio    Provincial
n Similator   Government   -                   -               -                440,000.00      -               -              -                439,863.84           No        N/A      Yes        N/A
COGTA
Operating
Grant Fire    Provincial
Reservists    Government   -                   -               -                1,820,660.00    -               -              -                1,737,979.58         No        N/A      Yes        N/A
DBSA Grant
Capacity
Building      National
Programme     Government   -                   -               -                -               -               -              -                -                    No        N/A      Yes        N/A
DWAF          National
Grant         Government   -                   -               -                -               -               -              478,166.37       6,898,875.44         No        N/A      Yes        N/A
              Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                       Page | 197
                                              DISCLOSURE OF GRANTS AND SUBSIDIES IN TERMS OF SECTION 123 OF MFMA, 56 OF 2003 FOR THE YEAR ENDED 30 JUNE 2010: GROUP
                                                        Quarterly Receipts                                              Quarterly Expenditure                                             Compli
                Name of
                                                                                                                                                                                           ance      Reasons
                Organ of
 Name of                                                                                                                                                              Delayed/   Reason     with     for non-
                State or
  Grants                          September           December         March            June           September       December         March            June         withheld     s      conditi   complianc
                Municipal
                                                                                                                                                                                            ons          e
                 entity
                                                                                                                                                                                           (Y/N)
                                      R                  R               R                R                R              R               R               R
Electricity
Demand
Side
Manageme       National
nt Grant       Government     -                   3,360,000.00     640,000.00       -              -               -                -               6,467,980.00        No        N/A      Yes        N/A
Equitable      National
Share          Government     160,155,473.00      128,124,378.00   106,356,977.00   -              52,446,232.52   114,711,612.61   76,193,839.68   151,285,143.02      No        N/A      Yes        N/A
Financial
Manageme       National
nt Grant       Government     750,000.00          -                -                -              24,915.00       79,998.00        329,669.93      624,328.08          No        N/A      Yes        N/A
Housing
Accreditati    Provincial
on Subsidy     Government     -                   -                -                -              51,461.77       8,763.98         20,765.60       21,255.88           No        N/A      Yes        N/A
Local
Governmen
t & Housing
Grant          Provincial
White City     Government     -                   -                -                -              4,133,747.50    1,621,210.15     250,589.37      1,942,284.98        No        N/A      Yes        N/A
Local
Governmen
t & Housing
Infrastructu   Provincial
re Grant       Government     -                   -                -                -              680,770.66      6,554,221.87     1,073,272.84    7,431,909.32        No        N/A      Yes        N/A
Mig Grant
Capacity       National
Building       Government     -                   -                -                -              -               -                -               56,123.35           No        N/A      Yes        N/A
Mig Grant -
Infrastructu   National
ral Services   Government     27,152,000.00       22,342,000.00    27,380,000.00    -              4,058,589.24    12,343,569.63    11,100,677.75   28,917,172.73       No        N/A      Yes        N/A
Motheo
Contr-
Enviroment     Motheo
al Health      Municipality   -                   -                2,000,000.00     4,500,000.00   -               177,427.00       63,394.66       2,614,031.66        No        N/A      Yes        N/A
Municipal
System         National
Improveme      Government     500,000.00          -                -                -              -               137,331.89       10,070.45       432,818.84          No        N/A      Yes        N/A

               Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                          Page | 198
                                             DISCLOSURE OF GRANTS AND SUBSIDIES IN TERMS OF SECTION 123 OF MFMA, 56 OF 2003 FOR THE YEAR ENDED 30 JUNE 2010: GROUP
                                                       Quarterly Receipts                                              Quarterly Expenditure                                             Compli
                 Name of
                                                                                                                                                                                          ance      Reasons
                 Organ of
 Name of                                                                                                                                                             Delayed/   Reason     with     for non-
                 State or
  Grants                         September           December        March            June           September       December        March             June          withheld     s      conditi   complianc
                 Municipal
                                                                                                                                                                                           ons          e
                  entity
                                                                                                                                                                                          (Y/N)
                                     R                  R               R               R                R              R               R               R
nt Grant


National
Electrificati
on Program      National
Grant           Government   1,227,000.00        -               -                -              1,227,000.00    -               -                2,384,821.00         No        N/A      Yes        N/A
Provincial
Grant - Du
Plessis
/Muller
Intersectio     Provincial
n               Government   -                   -               3,000,000.00     -              -               -               -                2,421,267.63         No        N/A      Yes        N/A
Provincial
Grant CCTV
For BFN
CBD
Stadium         Provincial
Navil Hill      Government   -                   20,045,000.00   -                -              -               -               14,579,317.00    5,334,832.25         No        N/A      Yes        N/A
Provincial
Grant           Department
Hlasela Proj    of Social
- Batho Car     Developmen
Wash            t            -                   -               150,000.00       -              -               -               -                -                    No        N/A      Yes        N/A
Provincial
Grant
Hlasela Proj
-               Department
Boikemeset      of Social
so Coop         Developmen
Farming         t            -                   -               -                200,000.00     -               -               -                200,000.00           No        N/A      Yes        N/A
Provincial
Grant
Hlasela Proj    Department
-               of Social
Lehlohonol      Developmen
o Music         t            -                   -               -                7,200.00       -               -               -                -                    No        N/A      Yes        N/A

                Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                         Page | 199
                                            DISCLOSURE OF GRANTS AND SUBSIDIES IN TERMS OF SECTION 123 OF MFMA, 56 OF 2003 FOR THE YEAR ENDED 30 JUNE 2010: GROUP
                                                      Quarterly Receipts                                              Quarterly Expenditure                                             Compli
                Name of
                                                                                                                                                                                         ance      Reasons
                Organ of
 Name of                                                                                                                                                            Delayed/   Reason     with     for non-
                State or
  Grants                        September           December        March            June           September       December        March             June          withheld     s      conditi   complianc
                Municipal
                                                                                                                                                                                          ons          e
                 entity
                                                                                                                                                                                         (Y/N)
                                    R                  R               R               R                R              R               R               R
Group


Provincial
Grant
Hlasela Proj   Department
- Mystic       of Social
Beauty         Developmen
Saloon         t            -                   -               -                200,000.00     -               -               -                200,000.00           No        N/A      Yes        N/A
Provincial
Grant
Hlasela Proj   Department
-              of Social
IphahamiIs     Developmen
eng Centre     t            -                   -               144,000.00       -              -               -               -                140,296.95           No        N/A      Yes        N/A
Provincial
Grant
Hlasela Proj   Department
-Re Ba         of Social
Ikemetseng     Developmen
Bomme          t            -                   -               100,000.00       -              -               -               -                                     No        N/A      Yes        N/A
Provincial
Grant Land
Use            Provincial
Scheme         Government   -                   -               -                -              -               179,427.38      317,533.49       149,397.73           No        N/A      Yes        N/A
Provincial
Grant
Planning
and            Provincial
Surveying      Government   -                   -               -                -              149,802.88      -               -                30,750.00            No        N/A      Yes        N/A
Provincial
Grant
Township
Establishm
ent Caleb      Provincial
Motshabi       Government   -                   -               -                2,000,000.00   -               -               -                656,208.84           No        N/A      Yes        N/A


               Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                        Page | 200
                                            DISCLOSURE OF GRANTS AND SUBSIDIES IN TERMS OF SECTION 123 OF MFMA, 56 OF 2003 FOR THE YEAR ENDED 30 JUNE 2010: GROUP
                                                      Quarterly Receipts                                              Quarterly Expenditure                                               Compli
                Name of
                                                                                                                                                                                           ance      Reasons
                Organ of
 Name of                                                                                                                                                              Delayed/   Reason     with     for non-
                State or
  Grants                        September           December         March            June            September        December         March             June        withheld     s      conditi   complianc
                Municipal
                                                                                                                                                                                            ons          e
                 entity
                                                                                                                                                                                           (Y/N)
                                    R                  R               R                R                 R               R               R                R
Provincial
Grant
Upgrading
Housing        Provincial
Batho          Government   8,000,000.00        -                -                -               -                1,236,870.17     1,611,245.54     3,068,485.18       No        N/A      Yes        N/A
Provincial
Grant
Upgrading
Roads in       Provincial
Batho          Government   30,000,000.00       -                -                -               1,099,158.00     10,910,561.86    9,900,709.84     8,089,570.16       No        N/A      Yes        N/A
Provincial
Grant -
Urban          Provincial
Renewal        Government   -                   175,850.00       -                -               (15,529.10)      -                                 -                  No        N/A      Yes        N/A
Provincial
Health         Provincial
Subsidies      Government   -                   -                -                -               -                -                -                -                  No        N/A      Yes        N/A
Provincial
Transfer       Provincial
Grasslands     Government   -                   -                -                -                                -                -                -                  No        N/A      Yes        N/A
Provincial
Treasury -
Thaba
Nchu
Station Site   Provincial
Project        Government   153,028.00          -                -                (153,029.11)    -                153,028.00       -                -                  No        N/A      Yes        N/A
Public
Transport
Infra &
System         National
Grant          Government   67,168,000.00       15,000,000.00    15,000,000.00                    45,610,947.61    75,634,809.17    26,938,520.88    57,097,025.90      No        N/A      Yes        N/A
Restructuri    National
ng Grant       Government   -                   -                -                -               896,657.18       236,547.20       596,461.94       65,416.32          No        N/A      Yes        N/A

                            295,639,457.57      189,735,782.67   155,079,032.51   28,463,498.33   129,066,340.34   234,049,139.50   159,308,982.88   336,246,337.36


               Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                          Page | 201
                                                                                        MANGAUNG LOCAL MUNICIPALITY


                                                                                                   APPENDIX F (1)




                                           DISCLOSURE OF GRANTS AND SUBSIDIES IN TERMS OF SECTION 123 OF MFMA, 56 OF 2003 FOR THE YEAR ENDED 30 JUNE 2009: GROUP
                                                     Quaterly Receipts                                               Quarterly Expenditure                                              Compli
               Name of
                                                                                                                                                                                         ance     Reasons
               Organ of
 Name of                                                                                                                                                           Delayed/               with    for non-
               State or                                                                                                                                                       Reasons
  Grants                       September         December           March             June             September    December        March            June          withheld             conditi   complia
               Municipal
                                                                                                                                                                                          ons       nce
                entity
                                                                                                                                                                                         (Y/N)
                                   R                 R                R                 R                   R          R              R                R
2010
Soccer
DBSA          DBSA         -                                -                 -                -   -                           -            -    -                    No       N/A       Yes        N/A
2010 Stadia
Developme     National
nt Grant      Government   48,164,032         2,646,640         11,948,712        10,663,816       23,299,462        52,535,380     24,129,605   7,227,900            No       N/A       Yes        N/A
2010 Stadia
Provincial    Provincial
Grant         Government   -                  64,479,325                      -                -   -                           -    15,070,480   29,123,342           No       N/A       Yes        N/A
2010 World
Cup Host      National
City Grant    Government   -                                -                 -   54,800,000       -                           -            -    4,703,250            No       N/A       Yes        N/A
DBSA Grant
Capacity
Building      National
Programme     Government   -                                -                 -                -   -                           -            -    -                    No       N/A       Yes        N/A
DPLG Grant
Sustainable
Human         Provincial
Settlement    Government   -                                -                 -                -   -                           -            -    274,867              No       N/A       Yes        N/A
DWAF          National
Grant         Government   -                                -                 -                -   -                           -            -    100,820              No       N/A       Yes        N/A
Equitable     National
Share         Government   97,257,939         72,943,454        135,596,012                    -   58,683,139        57,663,348     73,569,305   115,881,613          No       N/A       Yes        N/A
Financial
Manageme      National
nt Grant      Government   500,000                          -                 -                -   35,593                  86,983      877,454   1,235,318            No       N/A       Yes        N/A
Housing       Provincial
Accreditati   Government   2,000,000                        -                 -   500,000          14,629                  61,736      162,515   591,526              No       N/A       Yes        N/A
              Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                      Page | 202
                                               DISCLOSURE OF GRANTS AND SUBSIDIES IN TERMS OF SECTION 123 OF MFMA, 56 OF 2003 FOR THE YEAR ENDED 30 JUNE 2009: GROUP
                                                         Quaterly Receipts                                               Quarterly Expenditure                                              Compli
                 Name of
                                                                                                                                                                                             ance     Reasons
                 Organ of
 Name of                                                                                                                                                               Delayed/               with    for non-
                 State or                                                                                                                                                         Reasons
  Grants                           September         December           March           June             September   December           March              June        withheld             conditi   complia
                 Municipal
                                                                                                                                                                                              ons       nce
                  entity
                                                                                                                                                                                             (Y/N)
                                       R                   R              R                 R                R           R                R                  R
on Subsidy
Local
Governmen
t & Housing     Provincial
Grant           Government     -                                -               -                -   -                          -             5,298    128,480            No       N/A       Yes        N/A
Local
Governmen
t & Housing
Infrastructu    Provincial
re Grant        Government     -                                -               -                -   -                          -          936,939     9,425,201          No       N/A       Yes        N/A
Mig Grant -
Capacity        National
building        Government     -                                -               -                -   -                       6,661            31,133   135,431            No       N/A       Yes        N/A
Mig Grant -
Infrastructu    National
ral Services    Government     11,437,000         16,948,000        6,087,000       68,462,000       14,231,385        43,063,563       11,674,704     31,887,136         No       N/A       Yes        N/A
Motheo
Contr
Environme       Motheo
ntal Health     Municipality   -                                -               -   7,000,000        -                          -             42,103   594,566            No       N/A       Yes        N/A
Municipal
System
Improveme       National
nt Grant        Government     400,000                          -               -                -   -                          -          221,803     367,482            No       N/A       Yes        N/A
National
Electrificati
on Program      National
Grant           Government     -                  13,268,000                    -   49,928,600       -                          -                 -    57,800,126         No       N/A       Yes        N/A
Provincial
Health          Provincial
Subsidies       Government     -                  65,000            3,294,299       2,171            840,368              840,367          840,368     840,367            No       N/A       Yes        N/A
Provincial
Grant Land
Use             Provincial
Scheme          Government     -                                -               -                -   -                          -          204,955     -                  No       N/A       Yes        N/A


                Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                          Page | 203
                                           DISCLOSURE OF GRANTS AND SUBSIDIES IN TERMS OF SECTION 123 OF MFMA, 56 OF 2003 FOR THE YEAR ENDED 30 JUNE 2009: GROUP
                                                     Quaterly Receipts                                               Quarterly Expenditure                                                 Compli
               Name of
                                                                                                                                                                                            ance     Reasons
               Organ of
 Name of                                                                                                                                                              Delayed/               with    for non-
               State or                                                                                                                                                          Reasons
  Grants                       September         December           March            June             September      December          March             June         withheld             conditi   complia
               Municipal
                                                                                                                                                                                             ons       nce
                entity
                                                                                                                                                                                            (Y/N)
                                   R                 R                R                R                  R              R                R                   R
Provincial
Grant
Planning &    Provincial
Surveying     Government   -                                -               -                 -   -                             -               -    66,337              No       N/A       Yes        N/A
Provincial
Transfer      Provincial
Grasslands    Government   -                                -               -                 -   -                             -               -    -                   No       N/A       Yes        N/A
Public
Transport
Infra &
System        National
Grant         Government   80,000,000         80,000,000                    -    82,617,000       682,848             14,397,339       26,590,919    29,742,558          No       N/A       Yes        N/A
Restructuri   National
ng Grant      Government   -                                -               -                 -   3,972,310              620,534          901,046    474,322             No       N/A       Yes        N/A
Urban
Renewal       Provincial
Grant         Government   -                                -               -    377,500          -                             -               -    -                   No       N/A       Yes        N/A

                           239,758,971.00     250,350,419.00    156,926,023.00   274,351,087.00   101,759,734.00   169,275,911.00   155,258,627.00   290,600,642.00




              Mangaung Local Municipality Annual Performance Report 2009/2010
                                                                                                                                                                         Page | 204
  Mangaung Local Municipality
              Contact Details
            Bram Fischer Building
Cnr Nelson Mandela Drive and Markgraaf Street
                Bloemfontein
               P.O. Box 3704
             Bloemfontein, 9300

         Office of the City Manager
             Tel: (051) 405 8212
             Fax: (051) 405 8149

   e-mail: teboho@civic.mangaung.co.za

           www.mangaung.co.za

				
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