annual financial statements in terms section ......18-09-2014 yes 19-09-2014 yes 23-10-2014 yes...

NAME OF RETIREMENT FUND: CAPE RETIREMENT FUND FOR LOCAL GOVERNMENT

FINANCIAL SERVICES BOARD

REGISTRATION NUMBER: 12/8/32689/2

FOR THE PERIOD: 1 JULY 2014 TO 30 JUNE 2015

Page Page

Regulatory information* 2-7 Statement of changes in net assets 18

and Funds

Statement of responsibility by 8

the Board of Fund Notes to the financial statements 19-34

Statement of responsibility by 9 Report of the valuator* 35-37

the Principal Officer*

Report of the independent auditors 38-43

Report of the independent 10

auditors Schedule pertaining to annual 44-92

financial statements*

Report of the Board of Fund* 11-16

Assets held in compliance with 93-111

Statement of net assets and funds 17 Regulation 28

Report of the independent auditors on 112

compliance with regulation 28 to the

Registrar of Pension Funds

* Not subject to any engagement by an auditor

F

E

IB

I

D

IA

C HB

B

HA

ANNUAL FINANCIAL STATEMENTS

IN TERMS SECTION 15 OF THE PENSION FUNDS ACT NO 24, 1956

AS AMENDED (PENSION FUNDS ACT)

CONTENTS

Schedule Schedule

A G

1

Name of Retirement Fund: Cape Retirement Fund for Local Government

SCHEDULE A

REGULATORY INFORMATION

For the period ended 30 JUNE 2015

Registered office of the Fund

Postal address: PO Box 4300

Tyger Valley

7536

Physical address: Bellmont Office Park

Twist Street

Bellville

7535

Financial reporting periods

Current: 1 July 2014 to 30 June 2015

Previous: 1 July 2013 to 30 June 2014

Board of Fund

Full name Capacity* Date appointed

or re-appointed

date (for all

Board members)

Date resigned (for

all Board members)

Brian William Shepherd C 19-02-2010 01-Aug-14

Andreas Jacobus Smith AD 15-02-2013

Willem Wouter van Gass M 15-02-2013

Hester Annette Cawood AD 13-02-2015

Ian Ronald Iversen E 14-02-2014

Johannes Petrus Beukman M 15-02-2013

Soyisile Andreas Mokweni M + C 13-02-2015

Edward Thornton Scott M 13-02-2015

Andile Phillip Gqabi E 17-02-2012

Clara Meyer E 15-02-2013

Petrus Johannes Francois Louw E 14-02-2014

Thembilizwe Andries Loko M 13-02-2015

Andrew Mellville Owen M 13-02-2015

Jan Johannes Wagner M 13-02-2015

- Stefanus Lodewikus Venter (Independent Chairperson)

- Keneilwe Moloko (Independent Member)

- Marthin Grobler (Independent Member)

- Soyisile Andreas Mokweni (Member Trustee)

- Willem Wouter van Gass (Member Trustee)

- Andreas Jacobus Smith (Alternate Trustee)

Governance note: schedule of meetings held by the Board of Fund in terms of the Rules of the Fund

Meeting date Place of meeting Quorum (yes/no)

31-07-2014 Yes

01-08-2014 Yes

18-09-2014 Yes

19-09-2014 Yes

23-10-2014 Yes

24-10-2014 Yes

04-12-2014 Yes

05-12-2014 Yes

12-02-2015 Yes

27-03-2015 Yes

16-04-2015 Yes

15-05-2015 Yes19-06-2015 YesBellmont Office Park, Twist Street, Bellville, 7535

Bellmont Office Park, Twist Street, Bellville, 7535








[email protected]




[email protected]

[email protected]

[email protected]


[email protected]

[email protected]

[email protected]

[email protected]

[email protected]

BW Shepherd was appointed as Principal Officer and subsequently resigned on 01-Aug-2014 as Chairperson. As per Fund Rule 2.2.1(4)

in the event of the Chairperson resigning before the expiry of his term, the Deputy Chairperson, being SA Mokweni, shall assume the role

as Chairperson. At a Special Board of Fund meeting held on 13-02-2015, after the conclusion of the Fund's Annual General Meeting, SA

Mokweni was re-elected as Chairperson.

* M = member elected, C = chairperson, I = independent, A = alternate, E = employer appointed, R = representative (section 26(2)

appointment), S = sponsor appointed, AD = additional

The Fund has appointed an Audit Committee as a sub-committee of the Board of Fund. The following persons are members of the Audit

Committee as at 30 June 2015:

[email protected]

E-mail address

[email protected]

[email protected]

[email protected]

[email protected]

2

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]/%20william


REGULATORY INFORMATION - Continued


Fund officers

Principal Officer Monitoring person*

Full name Andreas Jacobus Smith Andreas Jacobus Smith

Postal address PO Box 4300, Tyger Valley, 7536 PO Box 4300, Tyger Valley, 7536

Physical address Bellmont Office Park, Twist Street, Bellville, 7535 Bellmont Office Park, Twist Street, Bellville, 7535

Telephone number 021-943 5300 021-943 5300

E-mail address [email protected] [email protected]

Appointed: May-14

Terminated: Aug-14


Full name Brian William Shepherd Brian William Shepherd





Appointed: Aug-14

Terminated: Jul-15


Full name Jacobus Jacob Van Lille Sadie Jacobus Jacob Van Lille Sadie





Appointed: Jul-15

*(In terms of Section 13A of the Pension Funds Act)

Professional service providers

(Indicate the date of appointment/resignation of any service provider during the reporting period)

Actuary/Valuator Auditor

Full name Sean Neethling Ernst & Young

Postal address PO Box 2212, Bellville, 7535 PO Box 656, Cape Town, 8000

Physical address Parc du Cap, Mispel Road, Bellville, 7530 35 Lower Long Street, Cape Town, 8000



Benefit administrator Fund consultants

Full name Verso Financial Services (Pty) Ltd Brenda Krummeck



Telephone number 021-943 5300 021-943 5300E-mail address [email protected] [email protected]

Investment advisors

Full name GraySwan Financial Services (Pty) Ltd

Postal address Private Bag X34, Suite 184, Somerset West, 7129

Physical address A2 The Beachhead, 10 Niblick Road, Somerset West, 7130

Telephone number 021-852 9092E-mail address [email protected]

Investment advisors

Full name Sukha & Associates (Pty) Ltd

Postal address PO Box 955, Milnerton, 7435

Physical address JFA House, 138 Democracy Way, Milnerton, 7441

Telephone number 021-551 1741E-mail address [email protected]

Benefit administrator's registration number in terms of Section 13B: Verso Financial Services 24/292

Fund consultant's FAIS registration number: Brenda Krummeck 14985

Investment advisor's FAIS registration number: GraySwan Financial Services 42290

Investment advisor's FAIS registration number: Sukha & Associates 42932

3

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]




Investment administrators

Full name Stanlib Asset Management Ltd

Postal address PO Box 202, Melrose Arch, 2076

Physical address 17 Melrose Boulevard, Melrose Arch, 2196

Telephone number 011-448 6401

E-mail address [email protected]

Investment administrator's FAIS registration number: 719


Full name Coronation Asset Management (Pty) Ltd

Postal address PO Box 44684, Claremont, 7735

Physical address 7th Floor, MontClare Place, Corner of Campground and Main Roads, Claremont, 7708





Full name Allan Gray South Africa (Pty) Ltd

Postal address PO Box 51318, V & A Waterfront, Cape Town, 8002

Physical address 1 Silo Square, V&A Waterfront, Cape Town, 8001





Full name Investec Asset Management (Pty) Ltd

Postal address PO Box 1655, Cape Town, 8000

Physical address 36 Hans Strijdom Avenue Foreshore, Cape Town, 8001





Full name Sanlam Investment Management (Pty) Ltd

Postal address Private Bag X8, Tyger Valley, 7536

Physical address 55 Willie van Schoor Avenue, Bellville, 7530





Full name Verso Multi Manager (Pty) Ltd , name changed to Naviga Solutions (Pty) Ltd

Postal address PO Box 4300, Tyger Valley, 7536

Physical address Bellmont Office Park, Twist Street, Bellville, 7535




4

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]





Full name Kagiso Asset Management (Pty) Ltd


Physical address 5th Floor, MontClare Place, Cnr Campground & Main Roads, Claremont, 7708





Full name Atlantic Asset Management (Pty) Ltd

Postal address Suite 152, Private Bag X3, Roggebaai, 8012

Physical address 10th Floor, 22 Bree Street, Cape Town, 8001





Full name Peregrine Equities (PTY) Ltd

Postal address PO Box 650361, Benmore, 2010

Physical address 6A Sandown Valley Crescent, Sandown, 2010





Full name Standard Bank Corporate and Investment Banking, a division of The Standard Bank of South Africa Ltd

Postal address PO Box 61344, Marshalltown, 2107

Physical address 4th Floor, 3 Simmonds Street, Johannesburg, 2001





Full name ABSA Corporate and Investment Banking, a division of Absa Bank Ltd

Postal address Private Bag X10056, Sandton, 2146

Physical address 15 Alice Lane, Sandton, Johannesburg, 2196





Full name All Seasons Capital Management Ltd

Postal address PO Box 4188, Tygervalley, 7536

Physical address 3 Heuwelkruin Close, Durbanville, 7550




5

mailto:[email protected]:[email protected]:[email protected]:[email protected]





Full name Aberdeen Asset Managers Ltd

Postal address Bow Bells House, 1 Bread Street, London, EC4M 9HH

Physical address Bow Bells House, 1 Bread Street, London, EC4M 9HH

Telephone number 09 440 207 463 6338




Full name Old Mutual Global Index Trackers (Pty) Ltd


Physical address West Campus, Entrance 2, Second Floor, Mutualpark, Jan Smuts Drive Pinelands, 7405




Risk insurer

Full name Momentum Group Ltd (previously Metropolitan) Sanlam Life Insurance Ltd

Postal address PO Box 2212, Bellville, 7535 PO Box 1, Sanlamhof, 7532

Physical address Parc du Cap, Mispel Street, Bellville, 7530 2 Strand Street, Bellville, 7530

Telephone number 086 002 2220 021-916 3130


FSP approval number 3780 2759

Custodian and/or nominees

Full name Standard Bank of South Africa Ltd

Postal address PO Box 2453, Marshalltown, 2107

Physical address Standard Bank Investor Services, 3rd Floor, 25 Sauer Street, Jhb, 2001



FSP approval number 11287

6

mailto:[email protected]:[email protected]:[email protected]:[email protected]




Participating employers

The following employers participate in the Fund in terms of the Rules of the Fund:

!Kheis Municipality Kou-Kamma Municipality

//Khara Hais Municipality Laingsburg Municipality

Alfred Nzo District Municipality Langeberg Municipality

Amahlathi Municipality Lukhanji Municipality

Amatole District Municipality Magareng Municipality

Baviaans Municipality Makana Municipality

Beaufort West Municipality Malethswai Municipality

Bergrivier Municipality Matzikama Municipality

Bitou Municipality Matatiele Local Municipality

Blouberg Local Municipality Mbhashe Municipality (effective 01/04/2015)

Blue Crane Route Municipality Momentum Disability Claims

Booth Memorial Hospital Mhlontlo Municipality

Breede Vallei Municipality Mier Local Municipality (effective 01/11/2014)

Buffalo City Municipality Mnquma Municipality

Camdeboo Municipality Mosselbay Municipality

Cape Agulhas Municipality Naledi Municipality

Cederberg Municipality Namakwa District Municipality

Central Karoo District Municipality Nama Khoi Municipality

Chris Hani District Municipality Ndlambe Municipality

City of Cape Town Nelson Mandela Bay Metropolitan Municipality

Dikgatlong Municipality Ngaka Modiri Molema District Municipality (effective 01/02/2015)

Dr Ruth Segomotsi Mompati District Municipality Ngquashwa Local Municipality (effective 01/08/2014)

Drakenstein Municipality Nkonkobe Municipality

Eden District Municipality Nxuba Municipality

Elundini Municipality Nyandeni Municipality

Emalahleni Municipality Oudtshoorn Municipality

Emthanjeni Municipality Overberg District Municipality

Engcobo Local Municipality (effective 01/11/2014) Overstrand Municipality

Frances Baard District Municipality Phokwane Municipality

Gamagara Municipality Phumelela Local Municipality (effective 01/01/2015)

Gariep Municipality Pixley ka Seme District Municipality

Ga-segonyana Municipality Prince Albert Municipality

George Municipality Renosterberg Municipality

Great Kei Municipality Richtersveld Municipality

Greater Taung Municipality Sakhisizwe Municipality

Saldanha Bay Municipality

Hessequa MunicipalitySarah Baartman District Municipality (effective 01/09/2014 -

previously Cacadu District Municipality)

Ikwezi Local Municipality (effective 01/09/2014) Senqu Municipality

Inkwanca Municipality Siyancuma Municipality

Intsika Yethu Municipality Siyathemba Municipality

Inxuba Yethemba Municipality Sol Plaatjies Kimberley Municipality

Joe Gqabi District Municipality St. Josephs Home for Cronic Invalid

Joe Morolong Local Municipality Stellenbosch Municipality

John Taolo Gaetsewe District Municipality Sunday River Valley Municipality

Kaapse Wynland District Municipality Swartland Municipality

Kagisano-Molopo Local Municipality Swellendam Municipality

Kai!Garib Municipality Theewaterskloof Municipality

Kamiesberg Municipality Thembelihle Municipality

Kannaland Municipality Tsantsabane Municipality

Kareeberg Municipality Tsolwana Municipality

Karoo Hoogland Municipality Ubuntu Municipality

Kgatelopele Municipality Umsobomvu Municipality

Khai-Ma Municipality West Coast District Municipality

King Sabata Municipality Witzenberg Municipality

Knysna Municipality Umzimvubu Local Municipality

Kouga Municipality Z.F. Mgcawu District Municipality

Hantam Municipality

7


SCHEDULE B

STATEMENT OF RESPONSIBILITY BY THE BOARD OF FUND


Responsibilities

●

●

●

●

●

●

●

●

●

●

●

These financial statements:

●

● are to the best of the Board members knowledge and belief confirmed to be complete and correct;

●

●

SA Mokweni

CHAIRPERSON

4 December 2015

WW Van Gass

BOARD MEMBER

4 December 2015

IR Iversen

BOARD MEMBER

4 December 2015

were approved by the Board of Fund on 4 December 2015;

are signed on behalf of the Board of Fund by:

fairly represented the net assets of the Fund at 30 June 2015 as well as the results of its activities for the period then ended;

and

took all reasonable steps to ensure that contributions, where applicable, were paid timeously to the Fund or reported where

necessary in accordance with Section 13A and regulation 33 of the Pension Funds Act;

The annual financial statements of Cape Retirement Fund for Local Government are the responsibility of the Board of Fund. The

Board of Fund fulfils this responsibility by ensuring the implementation and maintenance of accounting systems and practices

adequately supported by internal financial controls. These controls, which are implemented and executed by the Fund and/or its

benefit administrators, provide reasonable assurance that:

transactions are properly authorized and executed; and

The annual financial statements set out on pages 11 to 34 have been prepared for regulatory purposes in accordance with the

Regulatory Reporting Requirements for Retirement Funds in South Africa, the Rules of the Fund and the Pension Funds Act.

ensured that fidelity cover was maintained and that this cover was deemed adequate and in compliance with the Rules of the

Fund; and

ensured that the rules and the operation and administration of the Fund complied with the Pension Funds Act, and all

applicable legislation;

ensured that investments of the Fund were implemented and maintained in accordance with the Fund's investment strategy.

Approval of the annual financial statements

The Board of Fund hereby confirm to the best of their knowledge and belief that, during the period under review, in the execution of

their duties they have complied with the duties imposed by the Pension Funds Act legislation and the Rules of the Fund, including

the following:

ensured that the proper registers, books and records of the operations of the Fund were kept, inclusive of proper minutes of all

resolutions passed by the Board of Fund;

ensured that proper internal control systems were employed by or on behalf of the Fund;

ensured that adequate and appropriate information was communicated to the members of the Fund, informing them of their

rights, benefits and duties in terms of the Rules of the Fund;

obtained expert advice on matters where they lacked sufficient expertise;

We are not aware of instances of non-compliance with laws and regulations, including the provisions of laws and regulations that

determine the reported amounts and disclosures in the financial statements.

the Fund's assets are safeguarded;

These financial statements have been reported on by the independent auditors, Ernst & Young Inc, who were given unrestricted

access to all financial records and related data, including minutes of all relevant meetings. The Board of Fund believes that all

representations made to the independent auditors in the management representation letter during their audit were valid and

appropriate. The report of the independent auditors is presented on page 10.

Instances of non-compliance

the financial records are reliable.

8


SCHEDULE C

STATEMENT OF RESPONSIBILITY BY THE PRINCIPAL OFFICER


PRINCIPAL OFFICER

Jacobus Jacob Van Lille Sadie

4 December 2015

I confirm that for the period under review the Cape Retirement Fund for Local Government has timeously submitted all

regulatory and other returns, statements, documents and any other information as required in terms of the Pension Funds

Act and to the best of my knowledge all applicable legislation except for the following (where applicable):

Specific instances of non-compliances Remedial action taken

9


SCHEDULE DINDEPENDENT AUDITOR’S REPORT TO THE BOARD OF TRUSTEES OF THE CAPE RETIREMENT FUND FOR LOCAL

GOVERNMENT AND THE REGISTRAR OF PENSION FUNDS

Report on the Annual Financial Statements

We have audited the annual financial statements of the Cape Retirement Fund for Local Government (the “Fund”) which comprise the

report of the Board of Trustees, the statement of net assets and funds as at 30 June 2015, the statement of changes in net assets and

funds for 30 June 2015, and the notes to the financial statements which include the principal accounting policies and other explanatory

information, as set out on pages 11 to 34. The financial statements are prepared for the purpose of reporting to the Registrar of

Pension Funds.

Board of Trustees’ Responsibility for the Annual Financial Statements

The Board of Trustees is responsible for the preparation of these financial statements in accordance with the Regulatory Reporting

Requirements for Retirement Funds in South Africa. The Board of Trustees are also responsible for compliance with the requirements

of the Rules of the Fund and the Pension Funds Act and for such internal control as the Board of Trustees determine is necessary to

enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance

with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the

audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The

procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the

entity's preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for

the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as

evaluating the presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the annual financial statements of the Cape Retirement Fund for Local Government for the year ended on 30 June

2015 have been prepared, in all material respects, in accordance with the Regulatory Reporting Requirements for Retirement Funds in

South Africa.

Financial Reporting Framework

Without modifying our opinion, we draw attention to the note "Purpose and Basis of preparation of Financial Statements" on page 19

which describes the financial reporting framework prescribed by the Registrar to meet its own requirements. Consequently, the

financial statements and related auditor's report may not be suitable for another purpose.

Other Matters

The supplementary information contained in Schedule IA as set out in pages 44 to 92 to these annual financial statements, has been

extracted from the underlying Fund’s accounting records that were the subject of our engagement. We have compared the totals

reflected in Schedule IA to the totals reflected in the underlying Fund’s accounting records to determine whether such totals have been

correctly extracted. However, we have not performed any additional procedures to substantiate the disclosures of the individual totals

included in Schedule IA. We do not express an audit opinion on this schedule.

Ernst & Young Inc.

Director – Malcolm Rapson

Registered Auditor

Chartered Accountant (SA)

Ernst & Young House

35 Lower Long Street

Cape Town

Date:

10


SCHEDULE E

REPORT OF THE BOARD OF FUND


1.

1.1.

1.2.

1.2.1.

1.2.2.

1.2.2.1.

1.2.2.2.

1.2.3.

1.3.

1.3.1.1.

1.3.1.2.

1.3.1.3.

1.4.

1.4.1.

Date of Board

of Fund's

resolution

Effective date

Date registered

by the

Financial

Services Board

05-12-2014 01-01-2015 15-12-2014

05-12-2014 01-01-2015 15-12-2014

27-03-2015 01-07-2015 22-04-2015

27-03-2015 01-07-2015 22-04-2015

27-03-2015 01-07-2015 22-04-2015

15-05-2015 01-03-2015 17-08-2015

15-05-2015 01-03-2015 17-08-2015

15-05-2015 01-03-2015 17-08-2015

6 Amend the rules to expand that where a trustee is found guilty of

misconduct involving dishonesty, such trustee can no longer hold

the office of a trustee.

6 To provide that the Principal Officer may not serve as Trustee in the

interests of good governance.

6 To update the rules to allow for retiring members to postpone

retirement from the Fund in line with income tax legislation (points 3,

4 & 5).

DESCRIPTION OF FUND

Type of fund

In terms of section 1 of the Income Tax Act, 1962 the Fund is classified as a paragraph (a) Pension Fund. The Fund is a defined

contribution fund.

Summary in terms of the Rules of the Fund: On resignation a member is entitled to his or her member’s share. On death,

retirement or ill-health retirement a member/dependant is entitled to a lump sum (For the calculation of these you are referred to

Sections 8 to 11 of the Rules of the Fund).

Benefits

Unclaimed benefits

Participating employers contribute at a rate of 19.5% or 18% of pensionable salary. The Rules were amended during the

current financial period to decrease the councillor employer contribution rate from 19.5% to 7.5% of pensionable

remuneration.Contribution holiday: Not applicable

Strategy of Board of Fund adopted towards unclaimed benefits: Unclaimed benefits, prior to 01/03/2009 older than 2

years will remain in the Fund until the members have been traced. Effective 01/03/2009 all unclaimed benefits will be

transferred to an Unclaimed Benefit Fund in terms of legislation.

In respect of unclaimed benefits, complete records, as prescribed are maintained as from 1 July 2002.

Beneficiary benefits

Strategy of Board of Fund adopted towards beneficiary benefits: Beneficiary payments are made in terms of Rules 14.1 and 14.2

of the Fund.

Contributions (Refer to Section 7 of the Rules of the Fund)

Members contribute at a rate of 7.5% or 9% of pensionable salary. Members may make additional voluntary

contributions as per the Rules of the Fund.

Rules/ amendments

Amendments

Rule

amendment

no

Motivation and description of rule amendment

4 Rule 7.1 (1) was amended to allow new employees who join the

Fund the option to elect to contribute at a rate of 7.5% or 9% of

pensionable remuneration depending on the conditions of service

offered by their particular employer / municipality.

5 Amend the rules to transfer all members under age 50 / non-

councillors to category G to ensure that a minimum risk benefit

(death benefit) is payable on the death of an active in-service

member to ensure that beneficiaries / families have some form of

financial support when a member dies in service.

4 Rule 11.1 was amended to allow members to receive a withdrawal

benefit at any time should they not be entitled to a benefit under any

other rule.

5 Change the name of the Fund to give the Fund a name more

appropriate for its consolidated national participation in local

government.

5 Update the history of the Fund to show this name change.

11


REPORT OF THE BOARD OF FUND - Continued


1.4.2. Revised rules / Consolidated rules:

1.5. Reserves and specified accounts established in terms of the Rules of the Fund:

1.5.1.

Reserve Account R43 577 475 (2014: R19 081 090)

(a)

(b)

(c)

(d)

1.5.2.

(a)

(b)

(c) Preservation Pension Account R61 659 291 (2014: R61 901 925). The Preservation Pension Account

was established to enable the Fund to accept transfers from a pension fund which allows a maximum

commutation of one third of the retirement benefit, whereas the Fund allows full commutation.

Reserves:

The Reserve Account provides for contingencies and obligations of the Fund not covered by the Share

Account or Pensions Account. The Reserve Account includes:

Risk reserve R23 513 627 (2014: R22 344 984). This reserve has been established to absorb the

impact of an adverse experience in the uninsured risk benefits and to account for reinsurance

payments to the Fund and insured death benefits transferred to the Share Account and the Pensions

Expense reserve. This reserve has been established to meet the ongoing Fund expenses. At the end

of each Fund year, any remaining balance whether positive or negative shall be allocated to the

Processing reserve.

Data reserve R17 659 619 (2014: R16 781 924). This reserve has been established to absorb strains

caused by erroneous data and other unforeseen contingencies.

Processing reserve (previously Investment reserve) R2 404 229 (2014: negative R20 045 818). This

reserve has been established to account for differences between the actual net Fund returns and the

returns allocated to the Share Account, the Pensions Account and the various Reserve Accounts.

Not applicable.

Accounts:

Share Account R17 620 656 761 (2014: R16 508 462 112). The share account represents the values

of all active members and deferred pensioners of the Fund.

Pensions Account R637 456 748 (2014: R622 535 920). The Pensions Account has been established

to provide for all pensions in payment, including dependants of members or pensioners. The pensioner

liability has been based on a target annual pensioner increase of 100% of CPI. During December 2010,

the pensioner assets have been transferred to separate portfolios held via Sanlam. The Pensions

Account has been included within the Reserve Accounts on the Statement of Net Assets and Fund,

and an analysis of the movement for the period is reflected in note 21.

12




2.

2.1.

2.1.1.

2.1.2.

2.1.3.

2.1.4.

2.1.5.

2.1.6.

2.1.7.

(a)

(b)

(c)

2.1.8.

(a)

(b)

INVESTMENTS

Investment Strategy

The Board of the Fund ("Board") has formulated an investment strategy (as part of the Fund's Investment Policy Statement) whereby the

investments are managed according to the following principles:

General: The Board determines the most optimal strategic or long term asset allocation mix which should be applied to the

investments of the Growth Portfolio (GP) in order to ensure a high degree of certainty that the Fund’s primary goals and the GP’s

long-term investment objectives will be met.

The strategic asset allocation reflects the optimal long-term asset allocation range, taking into account the investment objective of the

GP and hence the member profile of the GP, as well as the long-term real return and risk expectations for each asset class. The

Board will review the GP's strategic asset allocation on an annual basis but at least every 3 years.

Over the short term, the Board may also implement tactical asset allocation decisions taking into account current market and

economic environments in order to enhance the risk-adjusted returns of the GP.

The GP is appropriately diversified between domestic and offshore assets. The risk profile of the GP caters for the needs of

members with a long-time horizon and those members who require long-term capital growth.

Individual member choice: All members over the age of 50 can choose to invest a portion of their investments in a lower risk portfolio

called the Protection Portfolio (“ProP”), Moderate Portfolio or remain in the Growth Portfolio. The Board recommends that members

obtain appropriate advice. These options give members over the age of 50 an appropriate mechanism to preserve capital as they

reach retirement and/or the flexibility to change their risk profile according to their own needs.

The option to switch into or out of the ProP and MP is available three times in a financial year for the ProP and once a year for the

MP. In order to assist members with their decision making, the Board has made available a regulated service provider that provides

specialist individual investment advice.

The ProP and MP is separately managed by a regulated multi manager. The multi manager provides monthly strategy and asset

allocation updates, which are monitored by the Board.

Unclaimed benefits: Benefits that are classified as unclaimed are held within the Fund for a period of two years, where after they are

transferred to an Unclaimed Benefits Preservation Pension / Provident Fund in terms of legislation. Tracing agents are used in

attempting to locate members during this two-year period.

Surplus apportionment allocations: Surplus distribution process completed and approved in terms of Section 15 B(9) of the Pension

Funds Act.

Reserve accounts: Form part of the investment pool - refer to general 2.1.1, except for the Pensions Account which pension assets

are managed in separate portfolios held via Sanlam Investment Management. The assets of the Pensions Account are managed so

as to better match the liability profile of the pensioners. A portion of the assets are used to explicitly match the pensioner liability cash

flows within a Liability-Driven Investment (LDI) portfolio while the remaining assets are invested in an Absolute Return portfolio.

Settlement income: not applicable

Derivative Instruments: The Board utilizes derivative instruments as part of their investment strategy. The Board ensures that the

following have been complied with:

The exposure of the asset class does not exceed the maximum percentages as prescribed to the underlying asset as set out

in Regulation 28.

The investment mandate is in place and reviewed by the Board on a regular basis to ensure compliance with the

requirements as prescribed by Regulation 28 and the relevant Notice.

The investments are monitored for compliance with the provisions of Regulation 28 and adherence to the investment

mandate.

Hedge funds: The Board does not actively utilize hedge funds as part of their investment strategy. Should the Board do so in future,

the Board will ensure that the following have been complied with:


in Regulation 28.



13




(c)

2.1.9.

(a)

(b)

(c)

2.1.10.

2.2.

(a)

(b)

(c)

Total value of investments held 2015 2014

3 630 617 692 3 810 405 772

3 009 661 848 3 273 851 383

1 431 246 801 1 307 713 836

2 609 975 257 2 531 214 002

3 469 280 464 2 592 524 699

1 048 182 416 972 160 980

577 315 055 598 121 448

231 428 090 207 029 768

Atlantic Asset Management (Pty) Ltd 237 730 477 0

298 365 263 751 636 490

1 314 683 274 754 442 729

631 785 507 483 267 944

39 398 728 19 003 437

18 529 670 872 17 301 372 488




mandate.

Private Equity Funds: The Board does not actively utilize private equity funds as part of their investment strategy. Should the Board

do so in future, the Board will ensure that the following have been complied with:


in Regulation 28.




mandate.

Securities Lending Transactions: The Board utilizes securities lending transactions as part of their investment strategy. The Board

ensures that the securities lending transactions are in compliance with the relevant conditions as prescribed by Notice.

Management and performance of Investments

The Board appoints service providers such as asset managers to manage the Fund’s assets. Each service provider is expected to pursue

their own strategies provided that this is within the broad framework of the guidelines set out in the Investment Policy Statement, the

investment agreement/mandate that has been set and/or any specific brief communicated to the service provider.

The service providers are granted full discretion in terms of asset class and stock selection as well as derivative strategies provided that

these are within the guidelines, constraints and discretion described in the IPS as well as their investment mandates. Service providers are

expected to take investment decisions within the appropriate regulatory and legal framework.

The appointed service provider solely determine the performance of their particular mandate. The Board, on the other hand, is responsible

for determining performance at Fund level for the GP, MP, ProP and Pensioner Portfolio by monitoring and evaluating the individual mandate

performances.

The Board evaluate the performance of the appointed service providers' mandates by means of:

monthly information, which is combined and aggregated, for the monitoring, evaluation and analysis of investment performance and

adherence to the Investment Policy of the Fund; and

an analysis of quarterly investment reports; and

regular presentations by the appointed service providers as and when required by the Board.

In order to assess the performance of the various service providers, each mandate is monitored against an appropriate benchmark.

Coronation Asset Management (Pty) Ltd

Allan Gray South Africa (Pty) Ltd

Stanlib Asset Management Ltd

Investec Asset Management (Pty) Ltd

Sanlam Investment Management (Pty) Ltd

Verso Multi Manager (Pty) Ltd , name changed to Naviga Solutions (Pty) Ltd

Total

Kagiso Asset Management (Pty) Ltd

Peregrine Equities (Pty) Ltd

Aberdeen Asset Managers Ltd

Old Mutual Global Index Trackers(Pty) Ltd, trading as Dibanisa Fund Managers

All Seasons Capital Management Ltd

Other

14




3.

ACTIVE DEFERRED UNCLAIMEDMEMBERS PENSIONERS BENEFITS

37 030 69 725 0 7

16 4 1 0 -6

4 334 0 9 0 4

0 0 0 0 0

0 0 0 0 0

-1 323 -5 -52 0 0

-673 -6 0 n/a n/a

-1 0 0 n/a n/a

-157 0 0 0 n/a

-56 0 0 n/a n/a

-8 8 0 0Unclaimed benefits paid 0 0 0 0 0

4. ACTUARIAL VALUATION

5. SURPLUS APPORTIONMENT OR NIL SCHEME

0 5

Numbers at the end of the

period 30/06/2015 (South

African citizen)

39 145 70 683

The financial statements summarize the transactions and net assets of the Fund. The financial statements do not take account

of liabilities to pay pensions and other benefits in the future. In accordance with the Rules of the Fund, the actuarial position of

the Fund, which does take account of such liabilities, is examined and reported on by the actuary at intervals not exceeding

three years. A statutory actuarial valuation was performed as at 30 June 2015 and the Valuator reported that the Fund is in a

sound financial position.

The statutory actuarial valuation of the Fund as at 30 June 2003 (the surplus apportionment date), showed that there was no

actuarial surplus available for distribution in terms of the Pension Funds Second Amendment Act, 2001. Following a detailed

investigation, the Trustees certified that there was no improper use of surplus as defined in the Act.

A scheme for the apportionment of nil-surplus was submitted to the Financial Services Board on 8 April 2004. The Registrar

noted the scheme on 8 August 2005 and issued a certificate to the Fund in terms of Section 15B(9)(i) of the Act.

MEMBERSHIP

PENSIONERS BENEFICIARIES

Numbers at the beginning of the

period 01/07/2014

Adjustments

Additions

Transfers in

Transfers out

Withdrawals

Retirements

Retrenchments

Deaths

Ill Health

Transfers (from) / to pensioners


period 30/06/201539 162 70 683

0 5


period 30/06/2015 (non - South

African citizen)

17 0 0 0 0

The 20 adjustments on the active members and deferred pensioners membership, relates to late exits and late new entrants,

that were not included in the previous period. The adjustments on the pensioners membership relates to 1 child's outstanding

COE which was received after June 2014, therefore re-instating the pension. The adjustments for the Unclaimed Benefits

relates to 6 members who were traced.

15




6.

6.1.

7.

8.

9.

10.

INVESTMENTS IN PARTICIPATING EMPLOYERS

Investments in terms of section19(4A) of the Act

HOUSING LOAN FACILITIES

The Fund rules provide for the granting of housing loan guarantees

The Fund has a scheme in accordance with section 19(5) of the Pension Funds Act and Rule 15, in terms of which the Fund

issues collateral only to First National Bank who grants housing loans to members. The borrowing member's member share

acts as the collateral security issued to the financial institution. The total monetary value of the collateral security issued

amounted to R608 305 015 (2014: R520 627 935). This represents 7 446 (2014: 7 265) housing loans. The guarantees are

secured by pledges by the members concerned to the Fund in accordance with Section 19(5)(b)(i)(bb) of the Pension Funds

Act. The amount of the guarantee may not exceed 60% of the cash benefit that a member would receive if he or she had to

voluntarily terminate membership of the Fund.

With effect from 01 July 2015 the Fund's name has been changed to Consolidated Retirement Fund for Local Government in

order to give the Fund a name more appropriate for its consolidated national participation in local government.

SIGNIFICANT MATTERS

Not applicable.

ADDITIONAL DISCLOSURE

Not applicable.

SUBSEQUENT EVENTS

The Fund does not hold any investments in participating employers.

16


SCHEDULE F

STATEMENT OF NET ASSETS AND FUNDS AT 30 JUNE 2015

Notes 30 JUNE 2015 30 JUNE 2014

R R

ASSETS

Non-current assets 18 529 670 872 17 301 372 488

2 18 529 670 872 17 301 372 488

Current assets 250 153 164 246 876 541

Transfers receivable 5 0 0

Accounts receivable 4 20 166 530 34 338 914

Contributions receivable 12 91 178 956 78 519 946

Cash at bank 138 807 678 134 017 682

Total assets 18 779 824 036 17 548 249 029

FUNDS AND LIABILITIES

Members' Funds and surplus account 17 682 316 052 16 570 364 037

Members' individual accounts 17 682 316 052 16 570 364 037

Reserves 681 034 223 641 617 010

Reserve accounts 21 681 034 223 641 617 010

Total Funds and reserves 18 363 350 275 17 211 981 047

Non - current liabilities 420 886 209 726

Unclaimed benefits 9 420 886 209 726

Current liabilities 416 052 874 336 058 256

Transfers payable 7 0 0

Benefits payable 8 383 479 876 290 873 786

Accounts payable 10 32 572 999 45 184 470

Total Funds and liabilities 18 779 824 036 17 548 249 029

Investments (incl investment & owner occupied properties)

17


SCHEDULE GSTATEMENT OF CHANGES IN NET ASSETS AND FUNDSFor the period ended 30 JUNE 2015

A+B A BMembers' individual Reserves

Notes Totals accounts/ Refer Totals30 June 2015 Accumulated funds note 21 30 June 2014

30 June 2015 30 June 2015

R R R R

Contributions received and accrued 12 1 853 486 984 1 550 390 579 303 096 405 1 646 728 929Reinsurance proceeds 158 413 361 155 384 442 3 028 918 162 074 488

Net investment income 13 990 816 386 0 990 816 386 3 198 606 441(less) Allocated to unclaimed benefits 0 0 0 0Other income 13.1 15 439 448 0 15 439 448 2 361 447Less: Re-insurance premiums -242 166 819 0 -242 166 819 -213 225 078

Administration expenses 14 -61 302 580 0 -61 302 580 -54 612 192Net income before benefits and transfers 2 714 686 780 1 705 775 021 1 008 911 759 4 741 934 035

Transfers and benefits -1 563 317 552 -1 532 085 423 -31 232 129 -1 169 181 362Transfers from other Funds 5 9 716 966 9 716 966 0 9 015 863Transfers to other Funds 7 0 0 0 0Benefits 8 -1 573 034 517 -1 541 802 388 -31 232 129 -1 178 197 225

1 151 369 229 173 689 599 977 679 630 3 572 752 673

Funds and reserves 17 211 981 047 16 570 364 037 641 617 010 13 639 228 374Balance at beginning of period 17 211 981 047 16 570 364 037 641 617 010 13 639 228 374

Net total after benefits and transfers 18 363 350 275 16 744 053 636 1 619 296 639 17 211 981 047

Transfer between reserve accounts 21 0 0 0 0Investment return allocated

Current members 0 938 262 417 -938 262 417 0

Balance at the end of the period 18 363 350 275 17 682 316 052 681 034 223 17 211 981 047

18


SCHEDULE HA

NOTES TO THE FINANCIAL STATEMENTS


The following are the principle accounting policies used by the Fund. These policies have been applied to all years presented,

unless otherwise specifically stated.

PRINCIPAL ACCOUNTING POLICIES

PURPOSE AND BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements are prepared in accordance with the Regulatory Reporting Requirements for Retirement Funds in

South Africa, the Rules of the Fund and the provisions of the Pension Funds Act in South Africa.

The financial statements are prepared on the historical cost and going concern bases, except where specifically indicated in

the accounting policies below:

FINANCIAL INSTRUMENTS

A financial instrument is any contract that gives rise to both a financial asset of one entity and a financial liability or equity

instrument of any other entity. A financial asset or a financial liability is recognized when its contractual arrangements become

binding and is derecognized when the contractual rights to the cash flows of the instrument expire or when such rights are

transferred in a transaction in which substantially all risks and rewards of ownership of the instrument are transferred.

Financial instruments carried on the statement of net assets and funds, include cash and bank balances, investments, housing

loans, receivables and accounts payable.

Financial instruments are recognized on acquisition using trade date accounting, which includes transaction costs. Upon initial

recognition financial instruments are designated at fair value through the statement of changes in net assets and funds as the

assets or liabilities are managed, evaluated and reported internally on a fair value basis and/or the designation eliminates or

significantly reduces an accounting mismatch which would otherwise arise.

Subsequent to initial recognition, these instruments are measured as set out below.

INVESTMENTS

Investments are classified at fair value through the statement of changes in net assets and funds and are measured at fair

value.

Loans (other than housing loans) – loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determined payments that are not quoted in an active

market other than those that the Fund intends to sell in the short term or that is designated as at fair value through the

statement of changes in net assets and Funds. Loans and receivables are measured at fair value.

Bills and bonds comprise investments in government or provincial administration, local authorities, participating employers,

subsidiaries or holding companies and corporate bonds.

Bills and bonds

The fair value of listed bills and bonds traded on active liquid markets is based on regulated exchange quoted ruling closing

prices at the close of business on the last trading day on or before the statements of net assets and Funds date.

Listed bills and bonds:

Unlisted bills and bonds:

A market yield is determined by using appropriate yields of existing bonds and bills that best fit the profile of the instrument

being measured and based on the term to maturity of the instrument. Adjusting for credit risk, where appropriate, a discounted

cash flow model is then applied, using the determined yield, in order to calculate the fair value.

19


NOTES TO THE FINANCIAL STATEMENTS - Continued


Equities

Equity instruments consist of equities with primary listing on the JSE, equities with secondary listing on the JSE, foreign listed

equities and unlisted equities.

Listed equities:

Hedge funds

Investments in participating employer(s) comprise loans, investments in listed and unlisted equities and other investments.

Refer to respective policies for basis of accounting. Currently the Fund does not hold any investments in participating

employers.

Equity instruments are subsequently measured at fair value and the fair value adjustments are recognized in the statement of

changes in net assets and funds. The fair value of equity instruments with standard terms and conditions and traded on active

liquid markets is based on regulated exchange quoted ruling closing prices at the close of business on the last trading day on

or before the statements of net assets and funds date.

Unlisted equities:

If a quoted closing price is not available i.e. for unlisted instruments, the fair value is estimated using pricing models, or by

applying appropriate valuation techniques such as discounted cash flow analysis or recent arm’s length market transactions in

respect of equity instruments.

Preference shares

Listed preference shares:

The fair value of listed preference shares traded on active liquid markets is based on regulated exchanged quoted ruling

closing prices at the close of business on the last trading day on or before the statement of net assets and funds date.

Hedge fund investments are designated as fair value through the statement of changes in net assets and funds by the Fund

and are initially recognized at fair value on trade date.

Listed hedge funds:

Hedge fund investments are subsequently measured at fair value and the fair value adjustments are recognized in the

statement of changes in net assets and funds. The fair value of hedge fund investments traded on active liquid markets is

based on regulated exchange quoted ruling closing prices at the close of business on the last trading day on or before the

statement of net assets and funds date.

Unlisted – where investor (fund) has no right to the underlying instrument - investment partners:

Hedge fund investments are subsequently measured at fair value and the fair value adjustments are recognized in the

statement of changes in net assets and funds. The value of the financial asset owned by the Fund is measured in relation to

the percentage holdings by each investment partner in the total fair value of the hedge fund. The fair value is estimated using

pricing models or by applying appropriate valuation techniques such as discounted cash flow analysis or recent arm’s length

market transactions in respect of hedge fund instruments.

Unlisted preference shares:

In respect of unlisted preference shares, the fair value is determined by applying appropriate valuation techniques such as

discounted cash flow analysis or recent arm’s length market transactions in respect of preference shares.

Collective investment scheme

Investments in collective investment schemes are valued at fair value which is the quoted unit values, as derived by the

collective investment scheme manager with reference to the rules of each particular collective investment scheme, multiplied

by the number of units.

Investment in participating employers

20




Unlisted – where investor (fund) has a right to the underlying instrument:Hedge fund investments are subsequently measured at fair value and the fair value adjustments are recognized in the

statement of changes in net assets and funds. As the Fund has the right to the underlying instrument, a look through principle

is applied, and the underlying instrument are separately measured and disclosed. The fair value is estimated using pricing

models or by applying appropriate valuation techniques such as discounted cash flow analysis or recent arm’s length market

transactions in respect of the hedge fund instrument.

CASH AND CASH EQUIVALENTS

Cash and deposits comprise cash in hand, deposits held at call with banks, and other short-term highly liquid investments with

original maturities of three months or less. Cash and cash equivalents are measured at fair value.

RESERVES

Reserve accounts comprise particular amounts of designated income and expenses as set out in the Rules of the Fund and

are recognized in the year in which such income and expenses accrue to the Fund.

SURPLUS

Surplus apportionments are recognized on the date of approval of the surplus apportionment scheme by the Registrar. Surplus

is measured at the values contained in the approved surplus apportionment scheme, adjusted for investment return or late

payment interest until date of approval of the scheme as determined by the Rules of the Fund.

TRANSFERS TO AND FROM THE FUND

Section 14 and 15B transfers to or from the Fund are recognized on the date of approval of the scheme/arrangement of

transfer of business by the Financial Services Board, as contained in the approval certificate from the Registrar.

Individual transfers (Section 13A(5) transfers) are recognized on the earlier of receipt of the written notice of transfer

(Recognition of Transfer) or receipt of the actual transfer value.

All the above transfers are measured at the values as per the section 14 application or the value of the transfer at effective

date of transfer adjusted for investment return or late payment interest as guided by the application.

ACCOUNTS RECEIVABLE

Accounts receivable are financial assets measured initially at fair value and subsequently measured at amortized cost using

the effective interest rate method, less any allowance for impairment.

ACCOUNTS PAYABLE

Accounts payable are financial liabilities measured initially at fair value, net of transaction costs that are directly attributable to

the liability and subsequently measured at amortized cost using the effective interest method.

IMPAIRMENT

Financial assets carried at amortized cost:

The Fund assesses at each statement of net assets and funds date whether there is objective evidence that a financial asset

or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are

incurred only if there is objective evidence of impairment as a result of one or more events that have occurred after the initial

recognition of the asset (a loss event) and that loss event has an impact on the estimated future cash flows of the financial

asset or group of financial assets that can be reliably estimated.

The Fund first assesses whether objective evidence of impairment exists individually for financial assets that are individually

significant. If the Fund determines that no objective evidence of impairment exist s for an individually assessed financial asset,

whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and

collectively assesses them for impairment.

21




If there is objective evidence that an impairment loss has been incurred on loans and receivables or held to maturity

investments carried at amortized cost, the amount of the loss is measured as the difference between the asset’s carrying

amount and the present value of the estimated future cash flow (excluding future credit losses that have been incurred)

discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount

of the loss is recognized in the statement of changes in net assets and funds. If a loan has a variable interest rate, the

discount rate for measuring any impairment loss is the current effective interest rate determined under contract. As a practical

expedient, the Fund may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event

occurring after the impairment was recognized (such as improved credit rating), the previously recognized impairment loss is

reversed in the statement of changes in net assets and funds.

Impairment of loans and receivables:

A provision for impairment of loans and receivables is established when there is objective evidence that the Fund will not be

able to collect all amounts due according to their original terms.

PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions:

Provisions are recognized when the Fund has a present legal or constructive obligation as a result of past events, for which it

is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate of the amount

of the obligation can be made.

The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the

statement of net assets and funds date, as determined by the judgment of the Board of Trustees of the Fund.

Contingent liabilities:

A contingent liability is not recognized in the statement of net assets and funds, but disclosed in the notes to the financial

statements, unless the possibility of an outflow of resources embodying economic benefits is remote.

Contingent assets:

A contingent asset is not recognized in the statement of net assets and funds, but disclosed in the notes to the financial

statements when an inflow of economic benefits is probable.

CONTRIBUTIONS

Contributions are measured at the fair value of the consideration received or receivable.

Contributions are accrued and recognized as income in accordance with the actuarial recommendations, and the Rules of the

Retirement Fund. Contributions received are apportioned between retirement funding and funding for risk and other expenses.

The apportionment is governed by the Rules of the Fund and actuarial recommendations.

Voluntary contributions are recognized when they are received from annual payments or accrued where monthly recurring

payments are made.

Any contributions outstanding at the end of the reporting year are recognized as a current asset – contribution receivable. Any

contributions received in advance at the end of the reporting year are recognized as a current liability – accounts payable.

Contributions transferred from surplus accounts:

Contributions transferred from surplus accounts include any contributions that are funded from the surplus accounts and

relates to contribution holiday after surplus apportionment has been approved and the corresponding approval of the utilization

of the employer and member surplus accounts.

22




Compound interest on late payments or unpaid amounts and values shall be calculated for the year from the first day of the

month following the expiration for the year in respect of which the relevant amounts or values are payable or transferable until

the date of receipt by the Fund.

Interest charged on late payment of contributions:

BENEFITS

Benefits payable and pensions are measured in terms of the Rules of the Fund.

Benefit payments and monthly pension payments are recognized as an expense when they are due and payable in terms of

the Rules of the Fund. Any benefits not paid at the end of the reporting year are recognized as a current liability – benefits

payable / due.

Reinsurance proceeds

Reinsurance proceeds are measured at the fair value of the consideration received or receivable and are accrued and

recognised as income at the same time as the recognition of the related claim.

INVESTMENT INCOME

Dividends:

Dividend income is recognized in the statement of changes in net assets and funds when the right to receive payment is

established – this is the last date to trade for equity securities. For financial assets designated at fair value through the

statement of changes in net assets and funds, the dividend income forms part of the fair value adjustment.

Interest:

Interest income in respect of financial assets held at amortized cost is accounted for in the statement of changes in net assets

and funds using the effective interest rate method. Collective investment schemes’ distribution:

Collective investment schemes’ distribution:

Distribution from collective investment schemes are recognized when the right to receive payment is established.

Income from policies with insurance companies:

Income from investment policies from insurance companies is included in the adjustment to the movement of the financial

asset.

Interest on late payment of contributions and / or loans and receivables:

Interest on late payment of contributions, surplus improperly utilized and / loans and receivables is accounted for in the

statement of changes in net assets and funds using the effective interest method.

Adjustment to fair value:

Gains or losses arising from changes in the fair value of financial assets at fair value through the statement of changes in net

assets and funds are presented in the statement of changes in net assets and funds in the year in which they arise.

Expenses incurred in managing investments:

Expenses in respect of the management of investments are recognized as the service is rendered.

ADMINISTRATION EXPENSES

Expenses incurred in the administration of Retirement Funds are recognized in the statement of changes in net assets and

funds in the reporting year to which they relate.

In the event that an expense has not been paid at the end of a reporting year the liability will be reflected in the accounts

payable note. If the expense was paid in advance or overpayment occurred, the applicable amount will be disclosed under the

accounts receivable note.

23




ACCOUNTING POLICIES, CHANGING IN ACCOUNTING ESTIMATES AND ERRORS

–

–

–

–

–

–

The Fund applies adjustments arising from changes in accounting policies and errors prospectively. The adjustment relating to

a change in the accounting policy or error is therefore recognized in the current and future years affected by the change.

Details of guarantees given or received;

Provisions for doubtful debts related to the amount of outstanding balances; and

The expense recognized during the year in respect of bad or doubtful debts due from related parties.

Their terms and conditions, including whether they are secured, and the nature of the consideration to be provided in the

settlement;

RELATED PARTIES

In considering each possible related-party relationship, attention is directed to the substance of the relationship and not merely

the legal form.

If there have been transactions between related parties, the Fund shall disclose the nature of the related party relationship as

well as the following information for each related party relationship:

The amount of the transactions;

The amount of outstanding balances;

24




2. Investments

2.1. Investment summary Note A B A+B Total Fair value Amortized cost

Local Foreign 30 June 2015 30 June 2014 30 June 2015 30 June 2015

R R R R R R

Cash 1 564 544 265 852 791 1 565 397 056 1 337 073 896 1 565 397 056 0

Commodities 113 450 745 0 113 450 745 129 397 557 113 450 745 0

Debt Instruments including Islamic debt instruments 2 153 543 971 102 502 200 2 256 046 170 2 223 485 959 2 256 046 170 0

Equities (including demutualization shares) 7 722 487 536 18 604 079 7 741 091 614 7 748 293 343 7 741 091 614 0

Insurance policies 0 0 0 0 0 0

Collective Investment Schemes 2 370 749 471 4 475 672 432 6 846 421 903 5 822 739 244 6 846 421 903 0

Hedge Funds 0 0 0 50 860 010 0 0

Private equity Funds 0 0 0 0 0 0

Derivative market instruments 2 647 017 0 2 647 017 -14 745 392 2 647 017 0

Other assets 4 616 367 0 4 616 367 4 267 871 4 616 367 0Total 13 932 039 371 4 597 631 501 18 529 670 872 17 301 372 488 18 529 670 872 0

25

Name of Retirement Fund:


For the period ended

3.2 Housing loan guarantees

●

●

●

4. Accounts receivable 30 June 2015 30 June 2014R R

Accrued interest: call and fixed deposits 104 214 99 520

Cape Joint Properties loan payments 0 664 849

Interest on late payment of contributions 527 753 213 467

Reinsurance recoveries 17 906 017 32 607 884

Scrip lending fee 596 890 601 542

Prepaid expenses 41 394 74 205

SARS VAT 965 907 71 610

Other 24 354 5 836

Total 20 166 530 34 338 913

The total housing loan guarantee facility available to the Fund is R610 000 000.00

and is renewable on 30/06/2016.

The Fund has granted guarantees to First National Bank for loans granted to 7

446 members of the Fund.The guarantees amounted to R608 305 015.

The amount of the guarantee may not exceed 60% of the benefit that a member

would receive in terms of the Rules of the Fund and section 19(5) of the Pension

Funds Act if he or she had to terminate membership of the Fund voluntarily.

26




5. Transfers from other funds

A B C D A+B+C-D

Effective Number Applied for Accrual Transfers Return on Assets Accrual

date of not yet approved 30 June 2014 Approved transfers transferred 30 June 2015

members (contingency)

R R R R R R

Total transfers in terms of Section 14*

- Government Employees Pension Fund 30-06-2009 1 0 0 256 392 0 256 392 0

Individual transfers 0 0 9 460 573 0 9 460 573 0

Total 1 0 0 9 716 966 0 9 716 966 0

Transfers approved (B) 9 716 966

Return on transfers (C) 0

Statement of changes in net assets and funds 9 716 966

27




8. Benefits

A B C D E A+B+C-D-E

8.1. Benefits - current members Benefits due Benefits for Return Payments Transferred Benefits

30 June 2014 30 June 2015 allocated to unclaimed due

benefits 30 June 2015

R R R R R R

Monthly pension 1 655 217 31 419 100 0 31 429 794 0 1 644 523

Lump sums on retirements 89 963 540 809 584 904 5 845 425 778 193 471 0 127 200 398

Full benefit 89 963 540 809 584 904 5 845 425 778 193 471 0 127 200 398

Pensions commuted 0 0 0 0 0

Lump sums before retirement 196 147 006 679 333 745 5 270 703 632 795 839 406 476 247 549 139

Disability benefits 17 515 453 77 574 165 781 082 75 786 754 0 20 083 945

Death benefits 107 707 705 180 997 505 541 296 165 247 281 691 123 998 532

Withdrawal benefits 70 923 848 420 670 915 3 947 610 391 669 927 405 785 103 466 662

Retrenchment benefits 0 91 160 716 91 876 0 0

Minimum benefit payments made in terms of Section 15 0 0 0 0 0 0

Defaults - housing loan facilities 0 257 423 0 257 423 0 0

Other 3 108 023 41 319 350 3 867 37 345 425 0 7 085 815

Defaults - divorce grants 3 108 023 41 319 350 3 867 37 345 425 0 7 085 815

Total 290 873 786 1 561 914 521 11 119 996 1 480 021 952 406 476 383 479 876

Benefits for 30 June 2014 (B) 1 561 914 521

Return allocated (C) 11 119 996

Statement of changes in net assets and funds 1 573 034 517

28

Name of Retirement Fund:Cape Retirement Fund for Local Government



9. Unclaimed benefits 30 June 2015 30 June 2014

R R

Balance at the beginning of the period 209 726 0

Transferred from benefits payable 406 476 590 654

Adjustments -195 316 90 980

Investment income allocated 0 0

Less: 0 471 907

Tracing expenses 0 0

Administration expenses 0 0

Other expenses 0 0

Benefits paid 0 0

Transferred to unclaimed benefits Fund 0 471 907

Balance at the end of the period 420 886 209 726

10. Accounts payable 30 June 2015 30 June 2014

R R

Audit fees 348 452 327 362

Actuarial fees 37 638 0

Admin fees 263 635 418 360

Vunani consulting fees 32 827 0

Legal fees 291 707 22 515

Other expenses 26 134 32 536

Performance fees for asset managers 5 871 012 16 332 507

Management expenses 49 757 159 166

SARS (PAYE - includes tax recovered from benefits paid) 3 566 123 9 071 799

SARS (VAT) 73 262 73 874

Regulation 28 reporting fees 81 054 121 581

Reinsurance control funeral 596 596

Reinsurance premiums 21 930 802 18 624 174

Balance at the end of the period 32 572 999 45 184 470

29




A B C D A+B+C-D

12. Contributions Arrear Towards Towards Contributions Arrear

30 June 2014 retirement reinsurance received 30 June 2015

and expenses

R R R R R

Member contributions - received and accrued 26 173 315 614 968 625 0 610 748 955 30 392 985

Employer contributions received and accrued 52 346 631 921 671 799 303 096 402 1 216 328 861 60 785 971

Additional contribution in respect of actuarial shortfall 0 0 0 0 0

Additional voluntary contributions - employer 0 0 0 0 0

Additional voluntary contributions - members 0 13 750 159 0 13 750 159 0

Other 0 0 0 0 0

Total 78 519 946 1 550 390 582 303 096 402 1 840 827 974 91 178 956

Towards retirement 1 550 390 582

Towards reinsurance and expenses 303 096 402

Statement of changes in net assets and funds 1 853 486 984

30




13. Net investment income 30 June 2015 30 June 2014R R

Income from investments

Dividends 290 789 207 256 434 571

Interest 309 613 164 272 121 135

Collective investment schemes distribution 51 553 441 32 763 579

Interest on late payment of contributions 544 526 176 057

Adjustment to fair value

Adjustment to fair value (realized income) 1 323 383 396 880 093 205

Adjustment to fair value (unrealized income) -919 938 008 1 826 655 548

1 055 945 726 3 268 244 095

Less: Expenses incurred in managing investments -65 129 340 -69 637 655

Total 990 816 386 3 198 606 441

13.1. Other income 30 June 2015 30 June 2014R R

Bad debts recovered 0 0

Other 15 439 448 2 361 447

Scrip lending fee 5 957 905 5 535 751

Other 9 481 543 -3 174 304

Total 15 439 448 2 361 447

14. Administration expenses Notes 30 June 2015 30 June 2014R R

Actuarial fees 451 659 426 501

Administration fees 38 272 352 34 054 180

Audit fees

Audit services 334 772 308 609

Other 856 368 243 903

Consultancy fees 15 509 66 814

Fidelity Insurance 219 238 231 708

Levies 596 429 548 245

Other

Bank charges 43 784 38 295

Communication and client service 7 959 121 7 301 984

Communication and client service - other 1 443 706 1 234 081

Document storage fees 156 493 148 910

Legal costs 1 207 479 158 933

Post Retirement Medical Aid contributions 74 372 70 495

Printing & Stationery 30 680 21 552

Telephone 10 389 13 321

Subscriptions 44 731 46 036

Sundry expenses 65 151 211 796

Subsistence & Travel 122 284 145 985

JSE Monitoring fees 124 095 0

Furniture & Equipment 119 415 0

Office expenses 126 807 114 879

Principal officer expenses 14.3 1 540 257 3 477 036

Staff expenses 14.2 1 816 203 231 977

Board of Fund expenses 14.1 5 671 286 5 516 953

Total 61 302 580 54 612 192

14.1. Board of Fund expenses 30 June 2015 30 June 2014R R

Remuneration 3 178 243 2 547 845

Meeting allowances 587 625 833 159

Expenses - subsistence and travel 1 180 238 1 359 966

Other payments

- AGM 41 460 33 180

- Year end function 70 687 125 671

- Catering 40 380 36 693

- Institute of Retirement Funds conference fees 6 566 13 099

- Overseas trips 411 666 406 860

- Training 119 650 148 265

- Risk cover premium 34 771 12 215

Total 5 671 286 5 516 953

31




14.2. Staff expenses 30 June 2015 30 June 2014R R

Remuneration * 1 816 203 197 566

Contributions to retirement fund 0 34 411

Total 1 816 203 231 977

* The Fund appointed a Chief Investment Officer, effective 1 July 2014.

14.3. Principal Officer expenses 30 June 2015 30 June 2014R R

Remuneration * 1 502 477 2 940 888

Contributions to retirement fund 0 536 148

Other payments 37 780 0

Total 1 540 257 3 477 036

17. Risk management policies

●

●

●

● Cash flow risk

● Currency risk

●

●

●

The Board of Fund has overall responsibility for the establishment and oversight of the fund’s risk management policies.

The Fund’s risk management policies are established to identify and analyze the risks faced by the Fund, to set appropriate risk

limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly

to reflect changes in market conditions and the Fund’s activities.

* During 2014 the employment contract of the previous Principal Officer, JF Koekemoer was terminated prematurely and

therefore all benefits due to him were paid accordingly.

Solvency risk

Solvency risk is the risk that the investment returns on assets will not be sufficient to meet the Fund's contractual

obligations to members.

Continuous monitoring by the Board and the Fund's actuary takes place to ensure that appropriate assets are held

where the Fund's obligation to members are dependant upon the performance of specific portfolio assets and that a

suitable match of assets exist for all other liabilities.

Credit risk

Credit risk is the risk that a counter-party to a financial instrument will fail to discharge an obligation, and cause the

Fund to incur a financial loss. The Board monitors receivable balances on an on-going basis with the result that the

Fund’s exposure to bad debts is not significant. An appropriate level of provision is maintained.

Legal risk

Legal risk is the risk that the Fund will be exposed to contractual obligations which have not been provided for. Legal

representatives of the Fund monitor the drafting of contracts to ensure that rights and obligations of all parties are

clearly set out.

Cash flow risk is the risk that future cash flows associated with monetary financial instrument will fluctuate in amount. In

the case of a floating rate debt instrument, for example, such fluctuations result in a change in the effective interest rate

of the financial instrument, usually without a corresponding change in its fair value.

The Board of Fund monitors cash flows by using monthly cash flow projections.

Currency risk is the risk that the value of an instrument will fluctuate in Rands owing to changes in foreign exchange

rates. The Fund’s exposure to currency risk is mainly in respect of foreign investments made on behalf of members of

the Fund for the purpose of seeking desirable international diversification of investments.

The Board of Fund monitors this aspect of the Fund’s investments and limits it to SARB limits of total assets.

Liquidity risk is the risk that the Fund will encounter difficulty in raising funds to meet commitments associated with

financial instruments.

Liquidity risk

The Fund’s liabilities are backed by appropriate assets and it has significant liquid resources.

Market risk

Market risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices of

market interest rates.

Investments

Investments in equities are valued at fair value and therefore susceptible to market fluctuations. Investments are

managed with the aim of maximizing the Fund’s returns while limiting risk to acceptable levels within the framework of

statutory requirements.

Continuous monitoring takes place to ensure that appropriate assets are held where the liabilities are dependent upon

the performance of specific portfolios of assets and that a suitable match of assets exists for all non–market related

liabilities.

32




18.

19.

Related party Relationship Description Transactions

Cape Joint Properties (Pty) Ltd 50% Shareholding Loan R4,616,367

The following trustees are directors of related parties:

- WW van Gass Cape Joint Properties (Pty) Ltd (ended 15-Aug-2014)

- JP Beukman Cape Joint Properties (Pty) Ltd

- PJF Louw Cape Joint Properties (Pty) Ltd (appointed 15-Aug-2014)

No remuneration was paid to these directors by the company.

- BW Shepherd (resigned 31/12/2014)

–

–

The following transactions between the participating employers and the Fund occurred during the period:

Board of Fund

Active members of the Fund:

- SA Mokweni

The following Board members of the Fund make contributions to the Fund and receive benefits from the Fund:

Promised retirement benefits

The actuarial present value of promised retirement benefits, distinguishing between vested benefits and non-vested benefits is

set out in the report of the valuator.

The participating employers made contributions to the Fund for members’ retirement and towards the Fund’s expenses

to the value of R921 671 799 and R303 096 402 respectively (Refer note 12 of the financial statements).

- C Meyer

annual financial statements in terms section ......18-09-2014 yes 19-09-2014 yes 23-10-2014 yes...

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