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