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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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