30

Description2011/12

Budget Year 2012/13

Audited

OriginalAdjustedYearTDFull YearR thousands OutcomeBudgetBudgetactualForecast

Consumer deposits

85,224113,500110,00090,224110,000

Trade and other payables

1,941,0701,853,3971,657,0351,774,7991,657,035

Provisions

113,19285,480113,337113,106113,337

Total current liabilities

2,238,3832,157,5361,985,5312,083,2881,985,531

Non current liabilitiesBorrowing

1,745,2101,629,0131,629,0131,629,0131,629,013

Provisions

1,439,6921,411,4661,439,6921,439,6921,439,692

Tolal non current liabilities

3,184,9013,040,4793,068,7053,068,7053,068,705

TOTAL LIABILITIES

5,423,2845,198,0155,054,2365,151,9935,054,236~NET ASSETS

9,484,06010,404,19810,119,49410,799,35510,119.494

COMMUNITY WEALTH/EQUITY

Accumulated Surplus/(Deficit)

3,794,3383,917,0803,419,3315,081,2543,419,331

Reserves

5,689,7226,487,1186,700,1635,718,1016,700,163

TOTAL COMMUNITY WEALTH/EQUITY

9,484,06010,404,19810,119,49410,799,35510,119,494

Explanatory notes to Table C6 - Budgeted Financial Position

1. The table presents Assets less Liabilities as Community Wealth. The order of items withineach group is also aligned to the convention of showing items in order of liquidity; i.e. assetsreadily converted to cash or liabilities immediately required to be met from cash appear first.

;:

2. Any movement on the Budgeted Financial Performance or the Capital Budget will invariablyimpact on the Budgeted Financial Position. For example, the collection rate assumption willimpact on the cash position of the municipality and consequently inform the level of cash andcash equivalents at year end. Similarly, the collection rate assumption informs the budgetprovision for debt impairment, which in turn impacts on the provision for bad debts. Thesebudget and planning assumptions form a critical link in determining the applicability andrelevance of the budget as well as the determination of ratios and financial indicators. Inaddition the funding compliance assessment is directly informed by forecasting the statementof financial position.

Table C7 Consolidated Monthly Budget Statement - Cash Flow - M09 March 2013

Description 2011/12 Budget Year 2012/13

Audited

OriginalAdjustedMonthlyYearTDYearTDYTDYTD

Full YearR thousands OutcomeBudgetBudgetactualactualbudgetvariancevari·

ForecastanceCASH FLOW FROM OPERATING ACTIVITIES -Receipts

Ratepayers and other

5,155,3295,197,1675,140,204823,3284,776,8413,891,866884,97523%5,140,204

Govemment - operating

1,254,7681,356,9261,433,227301,9231,276,6351,214,34362,2925%1,433,227

Government - capital

1,192,855771,932782,93216,062784,984782,9322,0520%782,932

Interest

180,35827,32843,5844,89047,18438,6258,55922%43,584

Dividends

-Payments

Suppliers and employees

(5,648,044)(5,714,573)(5,758,937)(773,697)(5,155,204)(4,248,292)906,912-21%(5,758,937)

Finance charqes

(201,297)(205,419)(214,732)-(153,386)(181,216)(27,830)15%(214,732)

Transfers and Grants

(22,368)(22,728)(22,628)(670)(11,167)(11,015)153-1%(22,6281

NET CASH FROM/{USED) OPERATING ACTIVITIES1,911,6021,410,6331,403,651371,8361,565,8871,487,24378,6435%1,403,651

31

Description 2011/12 Budget Year 2012/13

Audited

OriginalAdjustedMonthlyYearTDYearTDYTDYTD

Full YearR thousands OutcomeBudgetBudgetactualactualbudgetvariancevari·

Forecastance

CASH FLOWS FROMINVESTING ACTIVITIESReceiptsProceeds on disoosal of PPE

-Decrease (Increase) in non- current debtors

-Decrease (increase) other non- current receivables

19,77713,315 -13,315

Decrease (increase) in non- current investments

-Payments

Caoital assets

(1,191,440)(1,115,084)(1,456,987)(61,084)(712,667)(779,909)(67,242)9%(1,456,987)

NET CASH FROM/(USED) (1,171,663)(1,115,084)(1,443,672)(61,084) (1,443,672)INVESTING ACTIVITIES (712,667)(779,909)(67,242)9%

CASH FLOWS FROM

FINANCING ACTIVITIESReceiptsShort term loans

-Borrowina lona term/refinancina

-Increase (decrease) in consumer (3,275)

(3,500) (3,500)deposits "-

PaymentsRepayment of borrowing

(77,058)(97,444)(112,444) (74,993)(92,726)(17,733)19%(112,444)

NET CASH FROM/(USED) (115,944)

FINANCING ACTIVITIES (77,058)(100,719)(115,944)-(74,993)(92,726)(17,733)19%

NET INCREASE/ (DECREASE)

,.

IN CASH HELD662,880194,830(155,965)310,752778,227614,608 (155,965)

Cash/cash equivalents at beqinninq:507,590817,0651,170,470 1,170,470817,065 1,170,470

Cash/cash equivalents at month/year end:1,170,4701,011,8951,014,505 1,948,6971,431,673 1,014,505

Explanatory notes to Table C7 - Budgeted Cash Flow Statement

1. The budgeted cash flow statement represents the first measurement in determining whetherthe budget is funded.

2. It reflects the expected cash in-flows versus cash outflows that are likely to result from theimplementation of the budget.

1.7.2 Monthly Budget Supporting Tables - NMBM

The supporting budget reporting tables, as required in terms of the Municipal Budget and ReportingRegulations, are included in this section of the report. The table below sets out the materialvariances relating to the Municipality's financial performance for the period July 2012 to March 2013.

Supporting Table SC1 Material variance explanations - M09 March 2013

Below budget due to the rate at which vacant

positions are filled. Also influenced by the factthat TASK has not yet been implemented I No remedial action required.

Description

R thousands

Revenue By Source

Emplovee related costs

Reasons for material deviations

Actual accrued revenue is in line with the

Adjustments Budae!.

Remedial or corrective steps/remarks

No remedial action required.

32

1.8 ANALYSIS OF THE MUNICIPALITY'S BALANCE SHEET

In this section the Municipality's Debtors, Creditors and Investments will be analysed.These components have a significant impact on the Municipality's financial position.

1.8.1 Overview of Outstanding Consumer Debtors (Inclusive of VAT)

Below is an analysis of the outstanding consumer debtors as at 31 March 2013 compared to theposition as at 30 June 2012.

Debtors' Age Analysis (Inclusive of VAT) as at June 2012

Debtors Age Principal0-30 DaysArrange31 - 6061 - 90Above 91Total%

Total%Analysis by

-mentDaysDaysDaysOverdue DebtOverdue

DebtTotalIncome source Debt

Debt

RandsRandsRandsRandsRandsRandsRands Rands

Water Tariffs

NIL36,602,97210,563,15123,548,30514,097,278281,309,864329,518,59826.32%366,121,57023.00%

Electricity Tariffs

NIL191,334,48810,230,13375,702,49543,025,180134,625,451263,583,25921.05%454,917,74728.58%

Rates (PropertyR9,002,637

55,764,9802,933,51812,542,9155,932,731222,160,769243,569,93319.45%308,337,55019.37%Rates)'

Sewerage!

NIL22,986,1775,560,3799,250,8435,385,095109,875,028130,071,34510.39%153,057,5229.62%Sanitation Tariffs

Refuse RemovalNIL12,136,4883,460,2024,570,3263,029,39990,085,063101,144,9908.08%113,281,4787.12%Tariffs '.

Housing (Rental NIL559,27590,519299,060360,36715,201,96815,951,9141.27%16,511,1891.04%Income)

Other

309,70811,077,8537,834,3945,351,9473,659,407151,284,390168,130,13813.43%179,517,69911.28%

Total By Income9,312,345

330,462,23340,672,29631,265,89175,489,457,004,542,5331,251,970,177100.00%1,591,744,75!100.00%Source

Prihci-0-30 Days

Arrange-31 - 6061 - 90Above 91Total Total Debt%pal

%By Customer

mentDaysDaysDaysOverdue DebtOverdue

Total

Debt

Debt

Rands

RandsRandsRandsRandsRandsRands Rands

Government

NIL9,524,179NIL6,630,0153,122,65331,087,71040,840,3773.26%50,364,5563.16%

Business

2,250,26975,092,01610,913,89529,578,96816,680,223227,197,484284,370,57022.71%361,712,85522.72%

Households

,062,076245,846,03829,758,40195,056,90855,686,582746,257,339926,759,22974.02%1,179,667,34474.11%

Total By

9,312,345330,462,23340,672,296131,265,89175,489,4571,004,542,5331,251,970,177100.00%1,591,744,755100.00%

Customer Group

Debtors' Age Analysis (Inclusive of VAT) as at March 2013

Debtors Age Princi·0-30 Days

Arrange-31 - 6061 - 90Above 91Total Total Debt%Analysis by

pal mentDaysDaysDaysOverdue%TotalIncome source Overdue

Debt DebtDebt

Rands

RandsRandsRandsRandsRandsRands Rands

Water Tariffs

NIL48,727,0096,423,59628,809,28420,674,003321,874,047377,780,93023.88%426,507,93919.82%

Electricity Tariffs

NIL183,439,22512,512,56351,381,69618,338,754286,567,099368,800,11223.31%552,239,33725.66%-Rates (Property 217,804,32164,509,8955,580,57619,287,6559,177,781286,636,319320,682,33120.27%602,996,54728.02%Rates)'

Sewerage!

NIL4,315,6232,488,92315,591,67411,155,822142,104,071171,340,49010.83%205,656,1139.55%Sanitation TariffsRefuse Removal

NIL1,545,9291,534,7506,287,5134,397,712115,219,530127,439,5058.06%140,985,4346.55%TariffsHousing (Rental

NIL723,56857,202465,208351,40222,484,76323,358,5751.48%24,082,1431.12%Income)

Other

739,2406,719,8113,722,9884,437,4415,184,844179,076,431192,421,70412.16%199,880,7559.29%

Total By Income218,543,561

351,981,06032,320,598126,260,47169,280,3181,353,962,26(1,581,823,647100.00%2,152,348,268100.00%Source

33

Princi-Arrange-

61 - 90Above 91 Total Debt%pal 0-30 Days 31 - 60 Days Total Overdue%

By CustomermentDaysDaysDebt

Overdue Total

GroupRands

Rands RandsDebt Debt

Rands

RandsRandsRands Rands

Government

52,0378,749,679NIL14,319,2016,879,22529,459,53850,657,9643.20%59,459,6802.76%

Business

46,958,38471,297,12111,792,75121,317,87311,454,875272,208,18616,773,68520.03%435,029,18920.21%

Households

171,533,141271,934,26020,527,84790,623,39750,946,2181,052,294,53E1,214,391,99876.77%1,657,859,39877.03%

Total ByCustomer

218,543,561351,981,06032,320,598126,260,47169,280,3181,353,962,26C1,581,823,647100.00%2,152,348,268100.00%Group

The aforementioned analysis indicates that the overdue consumer debts have increased toR329.9 million from June 2012 to March 2013 as follows:

By Income source 30 June 201231 March 2013Difference

Water Tariffs

R 329,518,598R 377,780,930R 48,262,332

Electricity Tariffs

R 263,583,259R 368,800,112R105,216,853

Rates (Property Rates)

R 243,569,933R 320,682,331R 77,112,398

Seweraqe / Sanitation Tariffs

R 130,071,345R 171,340,490R 41,269,145

Refuse Removal Tariffs

R 101,144,990R 127,439,505R 26,294,515

Housing (Rental Income)

R15,951,914 R23,358,575 R7,406,661

Other

R168,130,138 R 192,421,704R 24,291,566

Total By Income Source

R1 ,251 ,970,177R1,581,823,647R329, 853,4 70

By Customer Group-.

GovernmentR40,840,377 R50,657,964 R9,817,587

Business

R 284,370,570R 316,773,685R 32,403,115

Households

R 926,759,229R1,214,391,998R287,632,768

Total By Customer Group

R1,251,970,177R1 ,581 ,823,647R329,853,470

/')-

The credit control policy is being implemented to its fullest extent 'except for the component dealingwith the sale in execution of both movable and immovable assets. The Municipality is currentlyimplementing the Debt Relief Programme, as previously approved by Council.

1.8.2 Overview of Creditors position

Below is an analysis of the status of the major creditors:

Supporting Table SC4 Monthly Budget Statement - aged creditors - M09 March 2013

0- 30 Days31-60 days61 - 90 daysAbove 91 daysTotalDetail

%R'OOO

R '000R '000R '000R '000

Bulk Electricity

--- --

Bulk Water

--- --0.0

PAVE deductions

164264 164264-38.4

VAT (output less input)

--- --0.0

Pensions / Retirementdeductions

78315-- -7831518.3

Loan Repayments

--- --0.0

Trade Creditors

17302910902443129018566443.3

Auditor-General

--- 0.0

Other

--- --0.0

Total

415608109024431290428243100.0

34

The above amounts represent invoices still to be paid. Creditors' payments approximate 54 days,based on the date of invoice. The target for payment days is recorded at 35 days from receivingthe relevant invoice from the service provider to the payment date. The 54 days excludes delayedpayments as a result of irregular expenditure.

A monthly report is submitted to Management Team on the outcome of the creditors' paymentprocess. Executive Directors are held responsible for outcomes in the following two areas: -

• Adhering to the 19 days allocated to Directorates for processing of payments; and• Reporting on and being held accountable for irregular expenditure - this will be dealt with

through the MPAC Sub-Committee for irregular, fruitless and wasteful and unauthorisedexpenditure.

Payment of Service Providers

Section 65(2)(e) of the MFMA states that "all monies owing by the Municipality be paid within30 days of receiving the relevant invoice or statement, unless prescribed otherwise for certaincategories of expenditure".

To ensure efficient administration, all reporting in relation to payment is based on using the invoicedate as the baseline and not the date of receipt of the invoice. An average number of days to makepayment from the date of invoice have been calculated at 35 days, by .allowing 5 days for postaltravel of the invoice from the supplier to the municipality ..

For performance measuring purpose the 35 days has been split as follows:

• Phase 1 - The Directorate has 19 days to process the payment from the date of invoice;• Phase 2 - Creditors, Accountants & Cash Management have 16 days to finalise the payment

process.

It must be noted that the date of receipt is inserted in the payments program by the directorate.

This reporting standard is being applied due to the fact that:

• Service Providers grant discount based on the invoice date, irrespective of the invoice receiptdate.

• Performance of the NMBM in relation to payment is determined by the Service Provider fromthe date of the invoice.

• Recording of the invoice receipt date may be subjective, impractical to manage and difficult toprove.

Table 1: Reflecting number of Days taken by Directorates to process documentation for

payment by Creditors Section from the Date of Invoice

Directorate JanFebMarchBudqet & Treasury

211823

Chief Operatinq Officer916663

Corporate Services503958

Economic Development; Tourism & Aqriculture6837103

Electricity & Energy354942

Public Health293654

Human Settlements296032

Infrastructure & Engineering313831

Water Service243228

Municipal Manager Administrative Support299729

Office of the Executive Mayor161213163

35

Directorate JanFebMarchSafety & Security

4110525Sanitation

315136

Special Projects & Proqrammes646016

Recreational & Cultural Services215069

Average for all Directorates394243

Table 1 above illustrates by Directorate the number of days taken to process paymentdocumentation from the date of the invoice. The Directorates are still lagging in efforts to meet the19 days turnaround time assigned to them in Phase 1.

The following Directorates have improved for the latest month (March):

Directorate No. of DaysNo. of DaysTarget for(February)

(March), DirectorateHuman Settlements

603219

Municipal Manager Administrative Support972919

Safety and Security1052519

Sanitation513619

Special projects and programmes601619

During March 2013, the number of days to process payment documentation increased for thefollowing Directorates: "

Directorate No. of DaysNo. of DaysTarget for(February)

(March)DirectoratePublic Health

365419

Corporate Services39

;.<58 19Recreational & Cultural Services

506919

Economic Development Tourism & Agricultural3710319

The number of days taken by the Directorates to process documentation for payment remainsunacceptably high and impacts negatively on the NMBM's compliance with Section 65(2)(e) of theMFMA Compliance with Section 65(2)(e) of the MFMA is dependant on all role players within thepayment value chain adhering to their respective timeframes.

Table 2: Reflecting Average number of Days taken by the NMBM to pay Service Providersfrom the date that the EFT is available for release

Month Number of DaysNumber of DaysDelay inTotal No. of daystaken by

taken by Creditorsrelease offrom dateAccountant to sign

to process & finalEFT'sDirectorate approvesoff documentation

Sign Off of EFT invoiceJanuary

513624

February37111-March 36110

Table 2 above reflects the Phase 2 process payment cycle where the target has been set at 16 days.This phase of processing is consistently within the target number of days, except for the month ofJanuary 2013 where it amounted to 24.

Upon combining Phase 1 and Phase 2 of the payment process, the number of days taken to paycreditors from the date of the invoice compares as follows with the target of 35 days.

January 2013February 2013March 2013

- 63 days- 53 days- 54 days

36

In accordance with the MFMA, invoices must be paid within 30 days of the receipt of the invoice. Byusing the invoice receipt date, as recorded by the directorates, the number of days taken to paycreditors is as follows:

January 2013February 2013March 2013

- 46 days- 35 days- 32 days

It remains the responsibility of each directorate to ensure that Invoices are received and processedrelating to service delivery within their respective directorates. The results in Table 1 indicate that thedirectorates are still taking an exceptionally high number of days to process payment sourcedocumentation.

1.8.3 Investment Portfolio

Below is an analysis of the Investment Portfolio as at 31 March 2013

Financial Institution ABSAFNBInvestecNedbankStandardStanlibABSATotalBank

Type of Investment

TermTermCallCallTermCallCurrentDeposit

DepositDepositDepositDepositDepositAccountR'OOOR'OOO

R'OOOR'OOOR'OOOR'OOOR'OOOR'OOO"

Value of Investment30 June 2012

00470,607470,50010,20035,071184,0921,170,470

Add: Investments Made (July 2012 to Mar 2013)270,000920,00055,000190,000939,200002,374,200

Less: Investments

,:

Matured (July 2012 to Mar 2013)-920,000-360,000-495,000-930,20000-2,705,200

Net movement in currentaccount

000001,109,227 1,109,227

Value of Investments:31 Mar 2013

270,0000165,607165,50019,20035,0711,293,3191,948,697% Exposure Of Institution

13.90.008.508.490.991.8066.37100

Actual Interest Earned(July to Mar 2013)

07,3748,2728,0177,5641,06610,09242,385

The increase in the investment portfolio since 30 June 2012 amounts to R778.2 million. The increasein the investment portfolio is mainly due to the receipt of grants, which have not yet been fully spent.The following analysis indicates to what extent the investments are committed:

Cash backed ReservesBank Balances and CashShort-term Investment Deposits

Application of CashUnspent Conditional GrantsStatutory Funds - COlDSelf Insurance Fund

Outstanding Creditors LiabilityInternally Generated FundingCurrent Provisions

r"""\_ ,.,.... '.

R'OOO

655,3781,293,3191.948.697

992,71719,00931,500

428,243227,301113,106

1.811.876

37

The cash reserves exceed the commitments mainly due to the receipt of grant funding and the fuellevy during March 2013. As these funds are committed towards funding expenditure during theperiod April to June 2013, the Municipality remains in a position where all commitments are not yetfully covered by cash reserves.

The sustainability of the Municipality will remain under pressure until sufficient working capital levelshave been established. The following financial strategies are being implemented to address thissituation:

• Operating and Capital expenditure funded from the Municipality's own revenue sources havebeen reduced to the revised financial affordability levels established in terms of the 2012/13Adjustments Budget.

• Optimisation of all revenue streams.

• Increasing collection rates above the targeted percentage utilising the credit control policy ofCouncil and the Debt Relief Programme, integrated with the Masakhane Programme.

• Disposal of serviced land in order to boost the depleted Capital Replacement Reserve.• No capital projects will be funded from the Municipality's own revenue sources until such time

as sufficient funds are available to cover the commitments not yet funded.

1.8.4 Allocation and Grant receipts and expenditure for the 2012/13 financial year

Below is an analysis of grants received as at 31 March 2013: 1;".,

Supporting Table Se6 Monthly Budget Statement - transfers and grant receipts - M09 March2013

Description 2011/12 Budget Year 2012113

Audited

OriginalAdjustedMonthlyYearTDYearTDYTDYTD

Full YearR thousands OutcomeBudgetBudgetactualactualbudgetvariancevarianc

ForecasteRECEIPTS: Operatina Transfers andGrants

National Government:

831,260953,174973,834258,982954,352973,834(19,482)·2.0%953,174Local Govemment Equitable Share

656,653729,226729,226182,307708,783729,226(20,443)-2.8%729,226

Finance Manaqement

1,2501,2501,250 1,2501,250 1,250Public Transport Infrastructure and Systems

140,000198,702198,70258,702198,702198,702-198,702

EPWP

5,12314,69614,696 14,69614,696-14,696

LG Seta

8,0754,0005,0077505,9685,007961 4,000Infrastructure Skills Development Grant

5,3002,3001,3002,3002,300 5,300Electricity Demand Side Management

10,000-Afcon Grant

3,15915,92315,92315,92315,923

Disaster Manaqement Grant

6,7306,7306,730-

Other transfers and Grants

7,000--Provincial Government:

420,386403,752434,53642,941300,843326,719(25,876)-7.9%403,752

Health subsidy

89,9519,1223,5554,8734,873-Housing

324,689400,000414,27536,886288,583310,706(22,123) 400,000

Library

5,7473,7523,752 3,752(3,752) 3,752

Housing Accreditation

4,8874,8874,887

Water Leaks

2,5002,4992,4992,500(1)0.0%

Other arant providers:

3,121-21,220 -21,44121,2202211.0% -

SALA/IDA88 221-221

Columbia University HIV/AIDS

2,626

Marine and Coastal

407210210210

38

Description 2011/12 Budget Year 2012/13

Audited

OriginalAdjustedMonthlyYearTDYearTDYTDYTD

Full YearR thousands OutcomeBudgetBudgetactualactualbudgetvariancevarianc

ForecasteDevelopment

EU 3RD TRANCHE

21,01021,01021,010

-Total Operating Transfers and Grants1,254,7681,356,9261,429,590301,9231,276,6351,321,773(45,137)-3.4%1,356,926

Capital Transfers and GrantsNational Government:

1,189,467771,932771,93216,062771,932771,932-771,932

Urban Settlements Development Grant499,467592,870592,870 592,870592,870-592,870

Public Transport and Systems

200,000100,000100,000 100,000100,000 100,000Neig hbourhood Development Partnership

15,00064,06264,06216,06264,06264,062-64,062

National Informal Housing Electrification25,00015,00015,000 15,00015,000 15,000

United Nations Development PrOQramme GrantWater Drought Relief grant

450,000 -Other arant providers:

3,388-11,000 -13,05211,0002,05218.7% -

EU 3rd Tranche11,00011,00011,000-

Transport GrantUnited Nations3,388 2,052'.

Total Capital Transfers and Grants1,192,855771,932782,93216,062784,984782,9322,0520.3%771,932

TOTAL RECEIPTS OF

TRANSFERS & GRANTS2,447,6232,128,8582,212,522317,9852,061,6202,104,705(43,085)-2.0%2,128,858

Below is an analysis of the spending associated with the grants as at 31 March 2013:

Supporting Table SC7 Monthly Budget Statement - transfers and grants expenditure - M09March 2013

Description2011/12

Budget Year 2012/13

Audited

OriginalAdjustedMonthlyYearTDYearTDYTDYTDFull YearR thousands OutcomeBudgetBudgetactualactualbudgetvariancevarianceForecast

EXPENDITUREOperatina expenditure ofTransfers and GrantsNational Government:

724,665953,174986,323101,545626,528707,315(80,787)-11.4%929,178Local Govemment Equitable Share

656,653729,226729,22660,769546,919546,920(1)0.0%729,226

Finance Management

1,2501,2501,25090690760(70)-9.2%1,250

Public Transport Infrastructure and Systems18,268198,702198,70218,41251,615132,335(80,720)-61.0%198,702

EPWP

14,69614,6961,4471,566,7092,500(933)-37.3%

LG Seta

4,0004,0001,8325,9842,8003,184113.7%

Infrastructure Skills Development Grant

-5,3007,3003571,1153,000(1,885)-62.8%

Other

2,54631,14918,63818,63819,000(362)-1.9%Electricity Demand Side Management

45,949

Provincial Government:

488,478403,752440,73437,026240,509327,569(87,060)-26.6%403,752

Health subsidy

151,98510,3204,8734,8734,873-Housinq

330,746400,000414,27520,578224,061310,706(86,645)-27.9%400,000

Library

5,7473,7523,7522,8142,8142,814- 3,752

Housinq Accreditation

9,8877,3017,3017,301-Water Leaks

2,5001,4601,4601,875(415)-22.1%

39

Description2011/12

Budget Year 2012/13

Audited

OriginalAdjustedMonthlyYearTDYearTDYTDYTDFull YearR thousands OutcomeBudgetBudgetactualactualbudgetvariancevarianceForecast

. Other grant providers:

-4,32212,5924354355,204(4,769)-91.6%4,322

SALA/IDA

371290290371(81)-21.8%

Columbia University HIV/AIDS

1,532- --Marine and Coastal DeveloDment

403145145203(58)-28.7%

Donated Grants

1,7809,280 4,630(4,630)-100.0%1,780

National Lotteries

2,5422,538 2,542Total operating expenditure of Transfers and Grants:

1,213,1431,361,2481,439,649139,005867,4711,040,088(172,616)-16.6%1,337,252Capital expenditure of Transfers and Grants

National Government:

993,223771,9321,070,59485,101488,181527,448(39,267)-7.4%771,932Urban Settlements Development Grant

502,279592,870592,87066,438314,414340,836(26,422)-7.8%592,870

Public Transport and Systems

80,091100,000340,00011,76751,27078,000(26,730)-34.3%100,000Neighbourhood Development Partnership

33,01164,06264,0625,14948,83539,2009,63524.6%64,062National Informal Housing Electrification

25,00015,00015,0001,74715,00010,7504,25039.5%15,000

Water Drouqht Relief qrant

352,84258,66258,66258,662-Other grant providers:

-3,00011,000--2,000(2,000)-100.0%3,000

Mendi bottle Store

3,000- 2,000(2,000)-100.0%3,000.EU 3rd tranche 11,000-Total capital expenditure of

Transfers and Grants

993,223774,9321,081,59485,101488,181529,448(41,267)-7.8%774,932TOTAL EXPENDITURE OF TRANSFERS AND GRANTS

2,206,3662,136,1802,521,243224,1071,355,6521,569,536(213,883)-13.6%2,112,184

"

Note: The equitable share allocation is utilised to fund ATTP subsidies granted to qualifyinghouseholds, with the remainder being used to support the Municipality's operations.

1.8.5 Councillor and Board members' allowances and employee benefits

Below is an analysis of Councillor, Board members' allowances and employee benefits:

Supporting Table SC8 Monthly Budget Statement - Councillor and staff benefits - M09 March2013

2011/12Budget Year 2012/13

Summary of Employee and AuditedOriginalAdjustedMonthlyYearTDYearTDYTDYTDFull YearCouncillor remuneration

OutcomeBudgetBudgetactualactualbudgetvariancevarianceForecast

R thousands

%

Councillors (Political Office Bearers plus Other)Basic Salaries and Waaes

48,40652,91751,1764,18238,18138,550(368)-1%51,176-Pension and UIF Contributions -Medical Aid Contributions

-Motor Vehicle Allowance

-Cellphone Allowance

1,5131,6651,6121261,1961,213(17)-1%1,612

Housinq Allowances

-Other benefits and allowances

43235323 323#DIV/O! 432

Sub Total· Councillors

49,91954,58353,2204,34339,70039,763(63)0%53,220

% increase

9.3%6.6% 6.6%

Senior Manaaers of the

Municioalitv

40

2011/12 Budget Year 2012/13Summary of Employee and Audited

OriginalAdjustedMonthlyYearTDYearTDYTDYTDFull YearCouncillor remunerationOutcome

BudgetBudgetactualactualbudgetvariancevarianceForecast

Performance Bonus

7402,2562,068 1,504(1,504)-100%2,068

Sub Total· Senior Managers of Municipalitv9,89020,18015,1147405,60513,454(7,849)·58%15,114

% increase

104.0%52.8% 52.8%

Other Municioal StaffBasic Salaries and Waqes

1,138,7311,231,6671,199,40186,200839,616821,11118,5042%1,199,401

Pension and UIF Contributions

182,738189,387178,22315,357138,702126,25812,44310%178,223

Medical Aid Contributions

101,94997,369101,5359,93279,08364,91314,17022%101,535

Overtime

74,03856,88473,1695,88157,16937,92319,24651%73,769

Performance Bonus

18,91613,35319,7021,45614,0858,9025,18358%19,102

Motor Vehicle Allowance

52,87747,37053,9374,95842,17531,58010,59534%53,937

Housinq Allowances

8,0467,4477,2816195,6074,96564313%7,281

Other benefits and allowances

129,07056,84876,2737,75077,01837,89839,119103%76,273

Lona service awards

38430,24125,8296535120,161(19,809)-98%25,829

Post-retirement benefit obligations

135,72642,22742,227 -42,227

Sub Total- Other Municipal Staff

1,842,4741,772,7931,778,177132,2171,253,8051,153,711100,0949%1,778,177

% increase

·3.8%·3.5% .,·3.5%

Total Parent Municipalitv

1,902,2841,847,5561,846,511137,3001,299,1111,206,92792,1838%1,846,511·2.9%

·2.9% ·2.9%

Unpaid salary, allowances & benefits in arrears:,.

Senior Manaaers of EntitiesBasic Salaries and Waaes

2,5353,349,0003,8293192,6712,871(200)-7%3,829

Pension and UIF Contributions

260408,000 48040360360- 480

Medical Aid Contributions

68109,000 129119797- 129

Performance Bonus

360480,000 39633297297- 396

Motor Vehicle Allowance

108108,000 10898181- 108

Other benefits and allowances

439 --Sub Total· Senior Managers of Entities

3,7704,4544,9424123,5063,706(200)·5%4,942

% increase

18.1%31.1% 31.1%

Other Staff of EntitiesBasic Salaries and Wages

2,0742,5742,8742341,8412,156(315)-15%2,874

Pension and UIF Contributions

30722840834307307- 408

Medical Aid Contributions

14627031026233233- 310

Other benefits and allowances

147126126109494- 126

Sub Total· Other Staff of Entities

2,6743,1983,7183042,4742,789(315)-11%3,718

% increase

19.6%39.1% 39.1%

Total Municipal Entities

6,4447,6528,6607165,9806,496(515)·8%8,660

TOTAL SALARY, ALLOWANCES

& BENEFITS1,908,7281,855,2081,855,171138,0161,305,0911,213,42391,6688%1,855,171

% increase

·2.8%-2.8% ·2.8%

TOTAL MANAGERS AND STAFF

1,858,8091,800,6251,801,951133,6731,265,3911,173,66091,7318%1,801,951

The expenditure on salaries, allowances and benefits is lower than projected mainly due to TASKnot yet being implemented.

- __ m • _

41

1.8.6 Key performance indicators

The table below reflects the key performance indicators as per the 2012/13 Budget and theassociated performance to date.

Supporting Table SC2 Monthly Budget Statement - performance indicators - M09 March 2013

2011/12Budget Year 2012/13

Description of financial indicator

Basis of calculationAuditedOriginalAdjustedYearTD

OutcomeBudgetBudgetactual

BorrowinQ ManaQement

Capital Charges to Operating Expenditure

Interest & principal paid/Operating Expenditure4.1%4.1%3.4%4.4%

Borrowed funding of 'own' capital

Borrowings/Capital expenditure excl. transfers andexpend iture

qrants 0.0%0.0%0.0%0.0%

Safety of CaoitalLoans, Accounts Payable, Overdraft & Tax

Debt to Equity

Provision/ Funds & Reserves39.9%34.5%33.5%32.5%

Gearinq

Lonq Term Borrowinq/ Funds & Reserves18.4%15.6%16.1%15.1%

Llcluidjty Current Ratio

Current assets/current liabilities94.3%101.7%102.4%147.0%

Liquidity Ratio

Monetarv Assets/Current Liabilities54.2%"'46.9%51.1%93.5%

Revenue ManaoemimtAnnual Debtors Collection Rate(Pavment Level %)

Last 12 Mths Receipts/ Last 12 Mths Billing94.46 %95.0%95.0%91.74

Outstandinq Debtors to Revenue

Total Outstandinq Debtors to Annual Revenue12.4%15.5%12.9%14.0%,Creditors Manaqement

% of Creditors Paid Within Terms (within MFMA s

Creditors System Efficiency65(e)) 73.0%75.0%75.0%58.0%

Other Indicators

% Volume (units purchased and generated less

Electricity Distribution Lossesunits soldl/units purchased and generated9.0%10.0%9.0%9.4%

% Volume (units purchased and own source less

Water Distribution Lossesunits sold)fTotal units purchased and own source29.97%36.4%36.4%27.4%

Employee costs

Employee costsfTotal Revenue - capital revenue27.8%24.8%24.6%22.6%

Repairs & Maintenance

R&MfT otal Revenue - capital revenue6.5%6.9%6.8%5.7%

Interest & Depreciation

I&DfTotal Revenue - capital revenue16.2%13.0%15.0%12.5%

IDP reQulation financial viability indicators-

(Total Operating Revenue - Operating Grants)/Debti. Debt coveraqe

service payments due within financial year)18.919.624.724.8

Total outstanding service debtors/annual revenueii. O/S Service Debtors to Revenue

received for services11.912.811.614.0

(Available cash + Investments)/monthly fixediii. Cost coverage

operational expenditure1.82.32.33.7

ThA ::!hnvA t::!hlA i~ rli~r.II~~Arlin rlAt::!il hAlmA!

42

1.8.6.1 Borrowing Management

1.8.6.1.1 Borrowinq to Asset Ratio

This ratio assesses to what extent there are adequate assets to cover the amount of outstandinglong-term borrowing (refer figure 1).

The ratio is determined as follows:

Long-Term Borrowing / Total Assets

The risk that the Municipality might not be able to settle its long term borrowing becomes greater ifthis ratio is high. The Municipality must therefore exercise due caution, so that its assets are notoverburdened by raising excessive borrowing. The careful and judicious management of borrowingis considered very critical, in order to ensure the Municipality's continued financial viability.

As at the end of March 2013, the borrowing to asset ratio was at 0.102:1, compared to anadjustments budget target of 0.107: 1. The actual ratio as at 30 June 2012 was 0.117: 1. As no furtherborrowing is planned over the 2012/13 MTREF, this ratio is expected to reduce. A ratio of 0.107: 1 asreflected in the 2012/13 Adjustments Budget appears to be appropriate for the Municipality from afinancial affordability and sustainability perspective. External borrowing should only be utilised forthe creation of economic assets that will generate future revenue streams for the Municipality.

"

Figure 1: BorrowinQ to Asset Ratio

0.25

0.2

0.15

0.1

0.05

o

2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012

0.2

0.15

0.1

0.05

o

I-+- Actual - Target I

---

...--.- ~~-

.

....Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13

I-+- Actual - Target I