Fwd: P/P: W57: MEDIA RELEASE: City's 2010 financial report shows positive financial growth
Trevor Hughes
From: Lisa Poole <Lisa....@capetown.gov.za>
Date: Thu, Sep 9, 2010 at 11:41 AM
Subject: P/P: W57: MEDIA RELEASE: City's 2010 financial report
shows positive financial growth
To: William Mxolose <William...@capetown.gov.za>
Sent to you on behalf of Subcouncil 15
CITY OF CAPE TOWN
MEDIA RELEASE
07 SEPTEMBER 2010
City’s 2010 financial report shows positive financial growth
The City of Cape Town has submitted its 2009/2010 financial statements
to the Auditor-General (AG). The AG’s report on these statements will
be submitted to Council in January 2011.
“Despite a worldwide economic recession and local downturn, the report
shows positive growth and a sound financial position and I am very
pleased with our progress. We have emerged on the other side of the
2010 FIFA World Cup™ with improved capital investments and a strong
cash position,” said the City’s Executive Deputy Mayor and Mayoral
Committee Member for Finance, Alderman Ian Neilson.
The highlights in the financial report include:
· The City’s total property, plant and equipment holdings
increased by 21.95% to R20.1 billion. This includes capital
expenditure of R4.7 billion. Over R1.5 billion has been spent on
cash-generating infrastructure assets, including R667 million on
Electricity; R577 million on Water and Sanitation; and R285 million on
Waste Management.
These investments are in line with the City’s long-term goal of
infrastructure-led growth, which is conducive to investment in Cape
Town.
· The amount spent on repairs and maintenance amounted to R1.5
billion. Ensuring the longevity of assets is very important and the
increase shows good management principles.
· The financial year has also seen an increase in the City’s
available cash and cash investments, rising by R0.72 billion to over
R4.72 billion. The City’s reserves and provisions are fully
cash-backed ensuring a stable liquidity position.
· The report reflects a 17.47% increase in revenue from 2009,
which includes growth in the property market and high tariff increases
for electricity arising from high bulk costs. Overall, actual revenue
of R16.5 billion was 99.35% of the amount budgeted for.
· The City reports a very good gearing ratio (i.e. debt to
revenue) of 26.09%. This figure is well below the 50% considered to be
an upper benchmark for municipalities, which indicates that the City’s
borrowings of R5.8 billion remain at a sustainable level with revenue
comfortably covering its debts.
· In terms of collections, the City’s payment ratio has
increased from 94.07% in 2009 to 95.17% for the year ended June 2010.
The total debtors older than one year amounts to R2.8 billion. This
amount is fully covered by a bad debt provision, but the City will
continue to pursue outstanding amounts where the debtors can afford to
pay.
· The report reflects a R100 million reduction in debt owed to
the City by government departments in various spheres. The City will
continue to follow up with government departments to ensure that this
figure is further reduced.
The City invested in two flagship projects this year, namely the 2010
FIFA World Cup™ and the Integrated Rapid Transit (IRT) system. Both
projects seek to provide long-term benefits for Cape Town, in the form
of infrastructure.
The Cape Town Stadium was handed over for the 2010 FIFA World Cup™,
ahead of schedule, on 14 December 2009. There was an estimated
completion cost of R4.36 billion.
The IRT project will revolutionise public transport in Cape Town over
the next 20 years, as it is implemented. Total capital expenditure to
date on the project is R1.05 billion. Phase 1A should be completed by
2013, at an estimated cost of R4.6 billion. The investment in road
transport during the year amounted to R1.6 billion.
Less prominent in the public eye, but equally high on the Council
agenda, has been the ongoing upgrade to the City’s bulk water, sewage
and electricity systems.
The positive financial position was further confirmed by the City’s
assessment from the independent credit ratings agency Moody’s, earlier
this year. For the fourth consecutive year, the City managed to retain
its double-A credit-rating with stable outlook in the Moody’s annual
rating review.
“ This is a significant achievement. This prized rating provides
investors and the community with confidence in the financial
leadership and management of this municipality. A strong rating allows
for a lower interest rate from banks and other financial institutions,
which places the City in a stronger financial position,” Alderman
Neilson said.
The City of Cape Town is rated as the highest of the five metropolitan
municipalities rated by Moody’s in South Africa, whose ratings span
from Aa2.za to Aa3.za. It compares favourably with the other large
metros in South Africa in terms of both budgetary performance and
management.
Recently the City achieved an additional short-term issuer rating of
P-1.za from Moody’s. A good issuer rating means that investors are of
the opinion that the City has the ability to honour unsecured
financial contracts and obligations.
End
Issued by: Communication Department, City of Cape Town
Media enquiries: Alderman Ian Neilson, Executive Deputy Mayor &
Mayoral Committee Member: Finance, City of Cape Town, Tel: 021 400
1306 or Cell: 083 306 6730
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