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City of Johannesburg Metropolitan Municipality - Annual Financial Statements

Release Date: 28/06/2013 16:30
Code(s): COJ02 COJ04 COJ05 COJ06 COJ07     PDF:  
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Annual Financial Statements

CITY OF JOHANNESBURG METROPOLITAN MUNICIPALITY
INSTRUMENT CODE: COJ02, COJ04, COJ05, COJ06, COJ07
ISIN: ZAG000022153, ZAG000030941, ZAG000054339, ZAG000054354, ZAG000085044
GROUP ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
DATED: 28 JUNE 2013

Overview

The City of Johannesburg is a significant role player in the economy of Gauteng and of
South Africa as a whole. Whilst the City’s budgets and strategies are focused on addressing
Johannesburg’s developmental challenges, it remains vulnerable to the impact of the global,
regional and national economies. Johannesburg contributes approximately 17% to the South
African economy and has a 48% share of the economy of the province of Gauteng. The city
is the single biggest exporting region in the country and also commands the largest share of
imports. Achieving Johannesburg’s developmental and service delivery targets is dependent
on sustained, inclusive economic growth. While Johannesburg has established a competitive
economy, growth is not evenly distributed. Johannesburg’s objective is to manage financial
risk in a way that is resilient, flexible and sustainable over time. It will continue to balance the
needs of short term operational expenditure against investment in infrastructure for the
medium and long term. The City remains committed to prudent management of
Johannesburg’s finances, focusing on strengthening its balance sheet; tightening its credit
policies and continued improvement in revenue collection strategies. These, and other
strategic interventions, will continue to contribute to a financially healthy City.

Highlights
       Surplus up 80.91%
       Revenue up 17.56%
       Cash from operating activities up 96.33%

Financial Performance

The 3 Core contributors to revenue were property rates, service charges and government
grants. The group posted total revenue of R35 billion (2011: R29.8 billion) the growth in
revenue of 17.56% was mainly due to the substantial increase in service charges. Increases
in electricity costs resulted in an increase ‘sales in electricity’, which was a major driver of
the increase in service charges.

Expenditure for the year increased by 10.53% to R29.6 billion (2011: R26.8 billion) mainly
driven by the increase in bulk purchases of water and electricity.

The groups saw a robust increase in surplus of 80.91% as a result of the increase in
revenues coinciding with the ability to contain costs.

Financial Position

Non-current assets increased by 5.29% to R 42.9 billion (2011: R40.8 billion). The main
driver in the increase was increases in property, plant and equipment as a result of
increased infrastructure asset spending.

Current assets increased by 47.86% to R9.8 billion (2011: R6.7 billion), the key drivers were
increases in consumer debtors and cash and cash equivalents. The increase in consumer
debtors resulted from a general increase in consumption of water and electricity. The group
significantly increased deposits in call investment deposit among the various banks, resulting
in considerable increases in cash and cash equivalents.

Non-Current Liabilities remained relatively flat with a slight decrease of 0.96% to R15.6
billion (2011: R15.7 billion), the group experienced an increase of deferred tax, primarily as a
result of a 61.45% increase in fair value and amortised cost adjustments recorded. Increase
in deferred tax was offset by substantial decreases in finance lease obligation and long term
loans and borrowings.

Current Liabilities increased by 15.71% to R10.45 billion (2011: R9.03 billion). Key drivers
were increases in the current portion of structured loans and the rolling of R 700 million of
municipal bonds into the current portion.


Cash Position
The group retains a very strong cash position with a 212.83% increase in cash and cash
equivalents largely as a result of increased revenue.


The Annual Report is available on the City of Joburg website www.joburg.org.za
City of Johannesburg Metropolitan Municipality
Group Annual Financial Statements for the year ended 30 June 2012
Statement of Financial Performance
                                                                    GROUP
Figures in Rand thousand                            Note(s)         2012           2011


Revenue
Property rates                                      30              5,539,477      4,933,897
Service charges                                     31              18,601,300     15,209,782
Rental facilities and equipment                                     189,374        145,500
Interest received                                                   480,264        490,236
Income from agency services                                         194,642        168,166
Public contributions, Donated and contributed property,
plant and equipment                                                 148,887        99,468


Fines                                                               435,336        361,603
Licenses and permits                                                803            806
Government grants                                   32              7,540,386      7,134,966 7
Reversal of impairment                                                 -               -
Other revenue                                       34              1,800,267      1,272,645
Gains on disposal of assets                                         128,854        6,784


Total Revenue                                                       35,059,590     29,823,853


Expenditure
Employee related costs                              35              (7,098,305)    (6,468,824)
Remuneration of councillors                         36              (98,291)       (80,646)
Depreciation and amortisation                       37              (1,717,514)    (1,607,190)
Impairment losses                                   38              (148,774)      (42,789)
Finance costs                                                       (1,606,887)    (1,523,057)
Allowance for impairment of current receivables     39              (2,181,500)    (2,780,370)
Repairs and maintenance                                             (468,300)      (486,111)
Bulk purchases                                      40              (10,147,417)   (8,162,421)
Contracted services                                 41              (2,306,512)    (2,685,328)
Grants and subsidies paid                           42              (132,957)      (111,793)
Loss on disposal of assets                                          (76,663)       (21,554)
General Expenses                                    43              (3,645,630)    (2,835,897)


Total Expenditure                                                   (29,628,750)   (26,805,980)


Fair value adjustments                                              (23,996)       (15,942)
Share of (deficit)./surplus of associate accounted for
under the equity method                                             (70)           9,799
Loss on non-current assets held for sale or disposal
Groups                                                              (300)          –
Taxation                                                            (448,294)      (271,107)


Surplus for the year                                                4,958,180      2,740,623
Statement of Financial Position

                                                                      GROUP
Figures in Rand thousand                                    Note(s)   2012           2011

ASSETS
Current Assets
Inventories                                                 4         4 313,351      214,456
Loans to Municipal Entities                                 5              -            -
Other financial assets                                      6         263,170        157,944
Current tax receivable                                                2,343          2,384
Trade and other receivables                                  7        7 998,041      1,210,024
VAT receivable                                               8        8 78,513       113,682
Consumer debtors                                             9        9 6,018,505    4,267,159
Cash and cash equivalents                                   10        10 2,174,445   695,161
                                                                      9,848,368      6,660,810
Non-Current Assets
Investment property                                        11         1,308,735      1,306,552
Property, plant and equipment                              12         37,910,444     36,092,886
Intangible assets                                          13         668,789        820,334
Investments in Municipal Entities                          14             -               -
Investment in joint ventures                               15         31,575         31,423
Investment in associates                                   16         13,737         13,960
Loans to Municipal Entities                                5              -             -
Other financial assets                                      6         2,934,833      2,433,340
Deferred tax                                                17        20,727         18,351
Consumer debtors                                            9         45,391         59,576
                                                                      42,934,231     40,776,422
Non-current assets held for sale and assets of disposal groups        136,606        3,233

Total Assets                                                          52,919,205     47,440,465


LIABILITIES
Current Liabilities
Loans and borrowings                                        20        1,547,753      366,309
Current tax payable                                                   4,657          12,278
Finance lease obligation                                    21        24,816         25,458
Trade and other payables                                    22        7,199,199      7,243,796
VAT payable                                                 8         841,525        709,942
Obligations arising from conditional grants and receipts    23        810,935        653,091
Provisions                                                  24        16,691         15,720
Deferred income                                             26        9,933          9,623
Bank overdraft                                              10                       72
                                                                      10,455,509     9,036,289

Non-Current Liabilities
Loans and borrowings                                        20        11,277,553     11,843,619
Finance lease obligation                                    21        68,295         202,796
Retirement benefit obligation                               25        1,789,466      1,743,487
Deferred tax                                                17        1,123,756      699,499
Provisions                                                  24        674,208        662,029
Deferred income                                             26        102,746        113,363

Interest rate swap liability                                27        108,114        41,976
Consumer deposits                                           28        57,494         446,418

                                                                      15,601,632     15,753,187

Total Liabilities                                                     26,057,141     24,789,476

Net Assets                                                            6,862,064      22,650,989

NET ASSETS
Reserves
Hedging reserve                                                       (94,065)       (26,033)
Accumulated surplus                                                   26,956,129     22,677,022

Total Net Assets                                                      6,862,064      22,650,989
Cash Flow Statement
                                                                      GROUP
Figures in Rand thousand                                 Note(s)      2012            2011
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts
Sale of goods and services                                            26,873,567      22,198,651
Grants                                                                7,540,386       7,134,966
Interest income                                                       335,958         297,948
                                                                      34,749,911      29,631,565
Payments
Employee costs                                                        (7,098,305)     (6,468,824)
Suppliers                                                             (20,109,303)    (18,573,669)
Finance costs                                                         (1,606,887)     (1,523,057)
Taxes on surpluses                                                    (448,294)       (271,107)
                                                                      (29,262,789)    (26,836,657


Net cash flows from operating activities 44                           5,487,122       2,794,908


CASH FLOWS FROM INVESTING ACTIVITIES


Purchase of property, plant and equipment                12           (3,549,284)     (3,783,645)
Proceeds from sale of property, plant and equipment      12           166,955         91,733
Purchase of investment property                          11           (26,390)        –
(Purchase of other intangible assets                     13           (30,821)        (55,460)
Non-current assets held for sale                                      (133,373)       (3,233)
Investments made                                                      (555,321)       (171,513)
(Investments redeemed                                                 57,876          255,452
(Increase)/decrease in non-current receivables                        (5,495)         1,277
Net cash flows from investing activities                              (4,075,853)     (3,665,389)


CASH FLOWS FROM FINANCING ACTIVITIES


Repayment of borrowings                                               (371,404)       (266,499)
Proceeds from borrowings                                              1,000,208       1,512,029 1
Repayment of provisions                                               (296,886)       9,800)
Finance lease payments                                                (135,143)       (61,217)
Repayment of post-retirement benefits                                 (139,765)       (128,887)
Increase/(decrease) in consumer deposits                              11,077          219,762
Net cash flows from financing activities                              68,087          1,265,388


Net increase/(decrease) in cash and cash
Equivalents                                                           1,479,356       394,907
Cash and cash equivalents at the beginning of the year                695,089         300,182


Cash and cash equivalents at the end of the year         10           2,174,445       695,089




Debt Sponsor – The Standard Bank of South Africa Limited, acting through its Corporate and
Investment Banking division

Contact: Zoya Sisulu: +27 11 378 7032

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