City cements its solid financial performance

27 March 2017

 

The City of Johannesburg achieved a R3.8-billion surplus in the 2015-2016 financial year, Chief Financial Officer Reggie Boqo said during an investor roadshow at the Hyatt Hotel in Rosebank on Friday March 24.

 

The figure represents a R200-million increase compared with the achievement of the corresponding period the previous year.

Boqo said the 5% increase was the result of healthy liquidity levels, with a closing cash balance of R4.4-billion compared with R4.9-billion the year before, the successful redemption of bonds and other liabilities, and a 6% increase in total income,” Boqo said.

He attributed the 6% increase in income to an improvement in the revenue collection rate from 91.7% to 94.7%.

The City’s revenue amounted to a total of R44-billion, derived from service charges (54%), government grants and subsidies (20%), property rates (19%), other (6%) and interest received (1%) and reported a total expenditure of R40-billion.

The City also received an upgrade by Moody’s to Aa1.za/P-1.za from A2.za/P-1.za. “[This] is a strong rating level in a challenging environment,” Boqo said.

The City’s efforts towards achieving prudent financial management and clean administration continued to bear fruit as it once again received an unqualified audit opinion. “Corrective measures and action plans have been put in place to ensure matters reported by the Auditor-General are remedied going forward. We will continue to intensify actions to ensure we receive a clean audit,” said Boqo.

He said the City’s total assets had also increased substantially – from R56.374-billion in June 2012 to R81.351-billion in June 2016. He attributed the increase in assets mainly to the growth in the public-private sector engagement – from R36-billion in 2011 to R62 billion in 2016 – and an increase in cash balances from R695 million in 2011 and R4.4-billion in 2016.

“Over the past five years, the City has intentionally worked towards building up cash resources through the implementation of more stringent cash management practices including weekly and monthly cash projections, which are proactively monitored. We are managing cash comfortably year on year and have turned the corner to sustainable high levels of liquidity,” added Boqo.

He said the City’s Financial Development Plan had played an essential role in ensuring the continued financial sustainability and the effective financial planning of the City.

“Improving service delivery through increased spending such as the start of the re-fleeting of Metro Buses and road and storm water infrastructure upgrades continues to deliver results. I hope this gives comfort that your investments with us and in the infrastructure we see going up in Rosebank and Sandton and others are solid,” Boqo told the investors.