City bolsters its financial performance
26-01-2015
Despite operating in a largely unstable economic climate throughout the 2013-2014 financial year, the City of Johannesburg is continuing to achieve positive financial results.
During the year under review, the City achieved a surplus of R4 billion, a R600 million improvement compared with the previous year’s surplus of R3,4 billion. The solid performance has been attributed to the City’s financial strategy, which is driven by its Financial Development Plan.
Some of the noteworthy achievements the City made during the past financial year, which ended on 30 June 2014, include:
- Maintaining healthy levels of liquidity and successfully redeeming listed bonds and other liabilities (amounting to R663 million) and further raising R2,083 billion of new funding in loans and bonds;
- Achieving cash and cash equivalents amounting to R5.3 billion, compared with R5,4 billion in the 2012-2013 financial year. This was despite the capital budget increasing by more than 70%;
- Increasing the capital budget from R4.5 billion in the 2012-2013 financial year to R7,7 billion to accelerate capital investment, a key tool in the improvement of service delivery and transformation;
- Recording a 94% improvement in billing and revenue collection; and
- Achieving an unqualified audit opinion as was the case the previous financial year.
At the same time, the City maintained its respectable ratings with Fitch and Moody’s at AA- (zapzaf) with a stable outlook and A1.za with a negative outlook respectively.
The Moody’s rating was subsequently revised down to A2.za with the sovereign downgrade in November 2014.
During the period under review, the City’s assets increased by 5% to R66,6 billion, driven mainly by capital expenditure of R7,3 billion and a cash position of R5,3 billion.
The City also improved on its capacity to spend its capital budget. The spend rose to 93% despite the 71% increase in the capital budget to R7,7 billion.
The total income received during the financial year increased by 13% to R39,5 billion. Operational expenditure went up by 10% to R34,6 billion owing to bulk purchases of both water and electricity, as well as pressures on other expenditure.
Executive Mayor Cllr Parks Tau said significant progress made towards the elimination of “billing issues” had contributed to the City’s positive financial performance.
“The City’s responsiveness to billing has improved as a result of [revenue] ‘open’ days and the Revenue Step Change Programme,” he said.
Group Chief Financial Officer Reggie Boqo said the City remained committed to the prudent management of its finances.
“Our Financial Development Plan will ensure continued financial sustainability and effective planning through prudent borrowing, the generation of annual operating surplus and the creation of cash reserves to increase the level of infrastructural spending,” Boqo said.
He said he expected the year ahead to be a challenging one given the “continuing challenging economic climate and consumer debt levels, which significantly impacted the collection of revenue.