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2012/13 – 2014/15 BUDGET 2 TABLE OF CONTENTS

Page PART 1 – ANNUAL BUDGET

1.1 Executive Mayor’s Report 5

1.2 Council Resolutions 7

1.3 Executive Summary 8

1.4 Operating Revenue Framework 10

1.5 Operating Expenditure Framework 18

1.6 Capital Expenditure 22

1.7 Annual Budget Tables – Parent Municipality 24

1.8 Consolidated Budget Tables 40

PART 2 – SUPPORTING DOCUMENTATION

2.1 Overview of annual budget process 55

2.2 Alignment of annual budget with Integrated Development Plan 56

2.3 Measurable performance objectives and indicators 58

2.4 Overview of budget related policies 61

2.5 Overview of budget assumptions 62

2.6 Overview of budget funding 64

2.7 Expenditure on allocations and grant programmes 73

2.8 Allocations and grants made by the municipality 76

2.9 Councillors’ and board members’ allowances and employee benefits 77

2.10 Monthly targets for revenue, expenditure and cashflow 79

2.11 Annual budgets and service delivery and budget implementation plans – Directorates 81

2.12 Contracts having future budgetary implications 81

2.13 Legislation compliance status 87

2.14 Capital expenditure details 89

2.15 Acting Municipal Manager’s quality certification 89 3 LIST OF TABLES

Table No. Title Page

1 Consolidated overview of 2012/13 MTREF 9

2 Summary of main revenue sources 10

3 Mix of main revenue sources 11

4 Operating transfers and grant receipts 12

5. Household Bills 16

6. Summary of operating expenditure by standard classification item 18

7. Repairs and maintenance per asset class 21

8. 2012/13 medium term capital budget per vote 22

9. Budget summary 24

10. Budgeted financial performance (revenue and expenditure by standard classification) 26

11. Budgeted financial performance (revenue and expenditure by municipal vote) 27

12. Budgeted financial performance (revenue and expenditure) 28

13. Budgeted capital expenditure by vote, standard classification and funding source 30

14. Budget financial position 32

15. Budgeted cash flow statement 34

16. Cash backed reserves/accumulated surplus reconciliation 35

17. Asset Management 36

18. Basic service delivery measurement 38

19. Consolidated budget summary 40

20. Consolidated budget financial performance 42

21. Consolidated budget financial performance by vote 43

22. Consolidated budget financial performance by revenue and expenditure 45 4 Table No. Title Page

23. Consolidated budget capital expenditure standard classification 46

24. Consolidated budget financial position 48

25. Consolidated budgeted cash flows 49

26. Consolidated cash backed reserves 50

27. Consolidated asset management 50

28. Consolidated basic service delivery measurement 52

29. Breakdown of the operating revenue over the medium term 64

30. Detail investment information 65

31. Investment particulars by maturity 66

32. Sources of capital revenue over MTREF 60

33. Detail of borrowings 67

34. Capital transfers and grant receipts 68

35. Budget cash flow statement 69

36. Cash backed reserves/accumulated surplus reconciliation 70

LIST OF FIGURES

Figure No. Title Page

1. Main operational expenditure categories for the 2012/13 financial year 21

2. Capital Infrastructure Programme 23

3. 2012/13 Expenditure by IDP Priorities 57

4. Breakdown of operating revenue over the 2012/13 MTREF 64

5. Sources of capital revenue for the 2012/13 financial year 67

6. Growth in outstanding borrowing (long-term liabilities) 68 5 PART 1 – ANNUAL BUDGET

1.1 EXECUTIVE MAYOR’S REPORT

We are tabling the IDP and Budget at a crucial time in our country’s history, while we are still battling with considerable service delivery and economic challenges. Against this backdrop, the Municipality has its own challenges, as is reflected in the feedback received from our communities through public participation processes and in recent service delivery protests. The duty of Government collectively across the different spheres is to respond to these challenges and to ensure that there is effective and efficient service delivery. As the sphere of government closest to the people, our communities look towards the Municipality to provide them with services, improve their quality of life and restore their dignity. Our challenges are further compounded by the fact that the Eastern Cape is one of the poorest of South Africa’s nine provinces. As the economic hub of the Eastern Cape, there is a heavy load on the Metro, and all these factors combine to create an extremely challenging environment for this Municipality.

The 2012/13 IDP Review and MTREF Budget in tandem address some of these challenges, in response to the needs highlighted by our communities. Efficiency and financial discipline will be vital in ensuring the long-term financial sustainability of the institution and that the scarce resources available are channeled to areas of greatest need.

We have identified poor and under-developed wards for special attention in service delivery and budget allocation.

Furthermore, the institution is in the process of establishing a multi-disciplinary Rapid Response Task Team to proactively address service delivery issues.

In order to address the above, this Budget aims to, amongst others, improve operational efficiencies. In this regard, the following areas will be prioritised internally:

(a) Reduction in overtime, telephone and cellphone usage, travelling and the use of out of town venues. (b) Streamlining the use of contracted security services. (c) Addressing fraud and corruption. (d) Organisational re-engineering.

Fiscal issues that will be prioritised and will increase budget availability include the following:

(a) Enhancing revenue collection. (b) Increasing the revenue base and attracting investments (in this regard, a Team was recently established under the Executive Mayor to consider how the institution will vigorously pursue additional sources of funding). (c) Focusing on repairs and maintenance to reduce water and electricity losses. (d) Streamlining trading services to ensure long-term sustainability.

External areas contributing towards the longer term financial sustainability of the Metro, service delivery and job creation that will be prioritised, include the following:

(a) The Presidential Infrastructure Co-ordinating Commission Projects (PICC). These include 17 major national job creation infrastructure projects. Of these, the Special Infrastructure Projects 7 (SIP 7) that were recently launched address the following areas applicable to Nelson Mandela Bay:

 Wastewater treatment and environment  Roads and stormwater 6  Cycle paths  Economic development  Bucket eradication programme

Furthermore, the State President and the Premier’s Address referred to the commencement of Project Mthombo within the Coega IDZ. This has culminated in an agreement signed between SINOPEC and PetroSA to undertake a feasibility study of an Oil Refinery. In addition, economic development in our area will be enhanced by the reduction in port charges and the planned upgrade of our railway network.

(b) Drought mitigation project (Nooitgedacht Low Level Scheme). (c) Promoting the Coega IDZ and other initiatives such as inner-city and tourism investments.

The fact that we celebrate the Centenary of the ANC in 2012, makes it particularly incumbent on us to ensure that the noble ideals of the ruling party find expression in the Municipality’s IDP and Budget so that the ANC-led local state is able to bring a better life for all.

CLLR ZANOXOLO WAYILE EXECUTIVE MAYOR 7

1.2 COUNCIL RESOLUTIONS

(a) The Executive Mayor recommends that the Council resolves that:

1. The annual budget of the Nelson Mandela Bay Municipality for the financial year 2012/13 and the indicative allocations for the projected outer years 2013/14 and 2014/15; and the multi- year and single year capital appropriations be approved for the purpose of complying with section 24(2) of the Municipal Finance Management Act (MFMA) No. 56 of 2003, as set-out in the following tables:

1.1 Budgeted Financial Performance (revenue and expenditure by standard classification); [Page 26] 1.2 Budgeted Financial Performance (revenue and expenditure by municipal vote); [Page 27] 1.3 Budgeted Financial Performance (revenue by source and expenditure by type); [Page 28] 1.4 and Multi-year and single year capital appropriations by municipal vote and standard classification and associated funding by source. [Page 30]

2. The budgeted financial position, budgeted cash flows, cash-backed reserve/accumulated surplus, asset management and basic service delivery targets be noted as set-out in the following tables:

2.1 Budgeted Financial Position; [Page 32] 2.2 Budgeted Cash Flows; [Page 34] 2.3 Cash backed reserves and accumulated surplus reconciliation; [Page 35] 2.4 Asset management; [Page 36] 2.5 Basic service delivery measurement. [Page 38]

3. The consolidated budget that includes the financial impact of the municipal entity (Mandela Bay Development Agency) be noted.

4. The Integrated Development Plan (IDP) be approved as reflected elsewhere in the agenda.

5. Tariffs be increased as follows with effect from 1 July 2012:

Property rates - 13% Water - 13% Sanitation - 13% Refuse - 13% Electricity: - Small business - 8% - Medium & Large business - 11.03% - Inclining Block Tariffs (IBT):

ATTP Domestic Customers

IBT Categories Proposed Tariff 0 - 75 kwh Free 75 - 350 kwh 65,67c per kwh 351 - 600 kwh 105c per kwh 601 kwh and above 129c per kwh

Non-ATTP Domestic Customers 8

IBT Categories Proposed Tariff 0 - 350 kwh 91,305c per kwh 351 - 600 kwh 109c per kwh 601 kwh and above 129c per kwh

6. Indicative tariffs for 2013/14 and 2014/15 be increased as follows:

2013/14 2014/15

Property rates 13% 13% Water 13% 13% Sanitation 13% 13% Refuse 13% 13% Electricity (average increase in income) 11.03% 11.03%

7. The Acting Municipal Manager, in conjunction with the relevant Executive Directors report on their respective project plans, including the capacity to implement the draft 2012/13 to 2014/15 Capital Budget and Programme, so as to ensure the achievement of a minimum spending level of 95%.

8. The Acting Municipal Manager obtain written confirmation from the Provincial Government as to the transfers to be allocated for housing, transportation and library services for the 2012/13 to 2014/15 financial years, and that the possibility of a Metro delegation engaging the Provincial Government in this regard be considered.

9. It be noted that the depleted Capital Replacement Reserve (CRR) is impacting on the Municipality’s ability to fund capital expenditure from its internal sources.

10. It be noted that the 2012/13 Budget is currently “unfunded” by approximately R120 million, based on one month’s working capital requirements.

11. The National Treasury comments relating to the 2012/13 MTREF, as attached per Annexure “B”, be considered by Council.

12. The Acting Municipal Manager report on a quarterly basis to Council regarding the effectiveness of the implementation of the Operational Efficiency Workplan, so as to ensure that the identified budget savings are realised.

13. The Acting Municipal Manager report to Council on a proposed framework to deal with the filling of critical vacancies in the first instance, in line with the available budgetary provisions for such purpose.

1.3 EXECUTIVE SUMMARY

The key service delivery priorities, as reflected in the IDP, and the need to maintain the Municipality’s financial sustainability, informed the development of the Budget.

Specific revenue collection strategies are being implemented by the Municipality, such as the debt relief programme, in order to improve the collection of outstanding consumer debt.

National Treasury’s MFMA Circulars No. 48, 51, 54, 55 and 58 were used to guide the compilation of the 2012/13 MTREF. 9 The Municipality faced the following significant challenges during the compilation of the 2012/13 MTREF:

 Reprioritisation of capital projects and operating expenditure within the revised financial affordability limits of the Budget, taking the cash position into account;  Maintaining revenue collection rates at the targeted levels;  Uncertainty as to the final negotiated salary increases for municipal employees, as the Salary and Wage Collective Agreement for the 2012/13 to 2014/15 financial years has not yet been concluded;  Increased costs associated with bulk electricity and water, placing upward pressure on tariff increases to consumers. Continued high tariff increases may soon render municipal services financially unaffordable;  Depleted Capital Replacement Reserve, impacting on the Municipality’s ability to fund capital expenditure from internal sources;  Allocation of the required operating budget provision for newly created infrastructure and facilities, with a consequential impact on rates and tariff increases.

The following budget principles and guidelines directly informed the compilation of the 2012/13 MTREF:

 The priorities and targets in relation to the key strategic focus areas as determined in the IDP.  The level of property rates and tariff increases to take into account the need to address maintenance and infrastructural backlogs, including the expansion of services.  The level of property rates and tariff increases to ensure the delivery of services on a financially sustainable basis.  An assessment of the relative human resources capacity to implement the Budget.  No budget allocation has been made to programmes and projects, unless the respective programme and project plans have been submitted by the relevant Executive Directors.  The need to enhance the municipality’s revenue base.  No loan funding is available to support the Capital Budget, in view of financial affordability considerations.  In accordance with Section 19 of the Municipal Finance Management Act, the affected Executive Directors to submit comprehensive reports in relation to new projects, inter alia, dealing with the total project costs, funding sources, future operating budget implications and associated tariff implications, before Council finally approves the implementation of any new project.

In view of the aforementioned, the following table represents a consolidated overview of the proposed 2012/13 Medium-term Revenue and Expenditure Framework:

Table 1 (Consolidated Overview of the 2012/13 MTREF)

R thousands Adjustments Budget Budget Year Budget Year +1 Budget Year +2 2011/12 2012/13 2013/14 2014/15

Total Operating Revenue 6,553,464 7,237,960 7,645,238 8,516,229 Total Operating Expenditure 6,935,287 7,364,312 7,646,149 8,354,284 Surplus/(Deficit) (381,823) (126,352) (911) 161,944 Total Capital Expenditure 1,234,602 1,039,459 1,320,646 1,649,349

Total operating revenue has increased by 10.4% or R684 million for the 2012/13 financial year, compared to the 2011/12 Adjustments Budget. For the two outer years, operational revenue increases by 5,6% and 11,4% respectively, resulting in a total revenue growth of R1,96 billion over the MTREF, when compared to the 2011/12 financial year. 10 Total operating expenditure for the 2012/13 financial year amounts to R7,4 billion, resulting in a budgeted deficit of R126.4 million. Compared to the 2011/12 Adjustments Budget, operational expenditure increased by 6.2% in the 2012/13 budget; and by 3.8% and 9.3% for each of the respective outer years of the MTREF. The operating deficit for year two reduces to R0.9 million, with year 3 reflecting an operating surplus of R161.9 million.

The major operating expenditure items for 2012/13 are employee costs (24.3%), bulk electricity and water purchases (30.6%), general expenses (10.9%), grants and subsidies paid (5.5%), repairs and maintenance (6.8%) and depreciation (10.0%).

Funding for the 2012/13 Operating Budget is obtained from various sources, the major sources being service charges such as electricity, water, sanitation and refuse collection and disposal (54.6%), property rates (14.8%), grants and subsidies received from National and Provincial Governments (18.8%).

In order to support the 2012/13 Operating Budget, the following increase in rates and service charges are being proposed, with effect from 1 July 2012:

Property rates - 13% Water - 13% Sanitation - 13% Refuse - 13% Electricity - 11,03% (average increase in income)

The capital budget of R1,04 billion for 2012/13 is 15.8% less than the 2011/12 Adjustment Budget. The decrease is mainly attributable to the unspent Integrated Public Transport System (IPTS) and Drought Relief Grants not being included in the 2012/13 Budget at this stage, pending approval by National Treasury. The Capital Budget increases to R1.32 billion and R1,65 billion, respectively in the 2013/14 and 2014/15 financial years. The Capital Budget over the MTREF will be solely funded from government grants and subsidies, as the Municipality has reached its prudential borrowing limits, whilst no internal funding is available.

1.4 OPERATING REVENUE FRAMEWORK

The continued provision and expansion of services is largely dependent on the Municipality generating the required revenues. Efficient and effective revenue management is thus critical in ensuring the ongoing financial sustainability of the Municipality. It is worth noting that, in accordance with the MFMA, expenditure has to be limited to the realistically anticipated revenues.

The Municipality’s revenue management strategy includes the following key components:

• National Treasury’s guidelines in this regard; • Growth in the revenue base; • Efficient revenue management, targeting a 95,% annual collection rate for property rates and service charges, after discounting Assistance to the Poor (ATTP) subsidies; • Electricity bulk tariff increases as approved by the National Electricity Regulator of South Africa (NERSA); • Water bulk tariff increases as approved by the Department of Water Affairs (DWA); • Ensuring fully cost reflective tariffs for trading services; • The Property Rates Policy; • The ATTP Policy and provision of free basic services; • Tariff Policies; • The level of property rates and tariff increases must ensure financially sustainable services delivery. • The level of property rates and tariff increases to provide for the maintenance and replacement of infrastructure, including the expansion of services. 11

The following table is a summary of the 2012/13 MTREF (classified by main revenue source):

Table 2 (Summary of main revenue sources)

2012/13 Medium Term Revenue Description 2008/9 2009/10 2010/11 Current Year 2011/12 & Expenditure Framework Budget Budget Budget Audited Audited Audited Original Adjusted Full Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecast 2012/13 2013/14 2014/15 Revenue By Source 659,7 756,4 838,8 961,5 961,5 961,56 1,074,6 1,214,3 1,372, Property rates 77 99 55 65 65 5 28 36 205 Service charges - electricity 1,502,3 1,807,7 2,185,5 2,753,3 2,718,3 2,718,3 3,028,3 3,393,6 3,817, revenue 22 51 08 64 64 64 84 51 477 344,7 407,9 569,8 465,3 402,0 402,06 455,5 514,7 586, Service charges - water revenue 30 18 83 83 68 8 47 68 836 Service charges - sanitation 226,5 228,0 246,6 295,1 283,0 283,09 312,0 352,5 401, revenue 07 20 92 70 94 4 33 98 961 96,2 105,4 120,6 134,8 136,7 136,72 155,0 175,3 199, Service charges - refuse revenue 66 86 75 61 27 7 75 12 953 13,3 15,5 17,6 18,7 18,4 18,43 19,8 20,9 22,2 Rental of facilities and equipment 36 45 41 91 31 1 20 92 35 Interest earned - external 166,1 61,7 16,4 21,2 28,0 28,00 25,5 27,0 28,6 investments 28 60 47 57 00 0 28 59 83 Interest earned - outstanding 92,0 82,7 113,3 78,9 81,9 81,99 86,9 92,1 97,6 debtors 41 62 47 93 93 3 13 28 55 27,5 23,4 23,7 24,9 24,1 24,11 32,3 34,2 36,3 Fines 33 15 36 98 19 9 28 68 24 8,55 8,24 8,15 7,39 7,39 7,39 9,0 9,55 10,1 Licences and permits 2 2 3 9 9 9 14 5 29 1,15 1,22 1,61 1,40 1,40 1,40 1,4 1,48 1,5 Agency services 2 0 1 2 2 2 00 4 73 1,021,1 1,454,7 1,363,3 1,384,4 1,234,0 1,234,0 1,361,2 1,065,8 1,155, Transfers recognised - operational 15 43 58 87 94 94 48 40 403 186,6 265,1 357,9 207,7 656,2 656,20 676,0 743,2 785, Other revenue 24 61 12 38 07 7 41 47 794 1,69 Gains on disposal of PPE 6 8 Total Revenue (excluding capital transfers and 4,346, 5,218, 5,865, 6,355, 6,553, 6,553,4 7,237, 7,645, 8,516, contributions) 087 523 515 409 464 64 960 238 229

Table 3 (Mix of main revenue sources)

Description Current Year 2011/12 2012/13 Medium Term Revenue & Expenditure Framework Budget Budget Budget Adjusted R thousand % Year % Year +1 % Year +2 % Budget 2012/13 2013/14 2014/15 Revenue By Source 961,5 1,074, 1,214, 1,372, Property rates 65 14.7% 628 14.8% 336 15.9% 205 16.1% 2,718,3 3,028, 3,393, 3,817, Service charges - electricity revenue 64 41.5% 384 41.8% 651 44.4% 477 44.8% 402,0 455,5 514,7 586,8 Service charges - water revenue 68 6.1% 47 6.3% 68 6.7% 36 6.9% 283,0 312,0 352,5 401,9 Service charges - sanitation revenue 94 4.3% 33 4.3% 98 4.6% 61 4.7% 136,7 155,0 175,3 199,9 Service charges - refuse revenue 27 2.1% 75 2.1% 12 2.3% 53 2.4% 18,4 19,8 20,9 22,2 Rental of facilities and equipment 31 0.3% 20 0.3% 92 0.3% 35 0.3% 28,0 25,5 27,0 28,6 Interest earned - external investments 00 0.4% 28 0.4% 59 0.4% 83 0.3% 81,9 86,9 92,1 97,6 Interest earned - outstanding debtors 93 1.3% 13 1.2% 28 1.2% 55 1.1% 24,1 32,3 34,2 36,3 Fines 19 0.4% 28 0.4% 68 0.4% 24 0.4% 7,39 9,0 9,5 10,1 Licences and permits 9 0.1% 14 0.1% 55 0.1% 29 0.1% 12 1,40 1,4 1,4 1,5 Agency services 2 0.0% 00 0.0% 84 0.0% 73 0.0% 1,234,0 1,361, 1,065, 1,155, Transfers recognised - operational 94 18.8% 248 18.8% 840 13.9% 403 13.6% Description Current Year 2011/12 2012/13 Medium Term Revenue & Expenditure Framework Budget Budget Budget Adjusted R thousand % Year % Year +1 % Year +2 % Budget 2012/13 2013/14 2014/15 656,2 676,0 743,2 785,7 Other revenue 07 10.0% 41 9.3% 47 9.7% 94 9.2%

Total Revenue (excluding capital 7,237,96 7,645, 8,516,22 transfers and contributions) 6,553,464 100.0% 0 100.0% 238 100.0% 9 100.0%

Total Revenue from Rates and Service 5,025, 5,650,66 6,378,43 Charges 4,501,818 68.7% 667 69.4% 5 73.9% 2 74.9%

In the 2011/12 financial year, rates and service charges amounted to R4,5 billion or 68,7%. This increases to R5,0 billion, R5,7 billion and R6,4 billion in the 2012/13, 2013/14 and 2014/15 financial years, respectively. A significant trend is the increase in the total percentage of revenue generated from rates and service charges, which increases from 68.7% in 2012/13 to 74,9% in 2014/15. This growth is mainly attributable to increased electricity revenue, as a result of significant increases in the Eskom bulk electricity tariffs.

Operating grants and transfers (second largest revenue source) amounted to R1,36 billion in the 2012/13 financial year and reduces to R1,16 billion in 2014/15. The year-on-year growth for the 2012/13 financial year amounts to 10.3%, then reduces by 21,7% in 2013/14 and increases by 8,4% in 2014/15.

Property rates represent the third largest revenue source, amounting to 14,8% or R1,08 billion in 2012/13 and increasing to R1,4 billion in 2014/15. The fourth largest revenue source is ‘other revenue’ which consists of items such as building plan fees and disconnection and re-connection fees. Directorates are required to review these charges on an annual basis to ensure that they are cost reflective and market related, where applicable.

The following table provides a breakdown of the various operating grants and subsidies allocated to the Municipality over the medium term:

Table 4 (Operating Transfers and Grant Receipts)

2012/13 Medium Term Revenue Description Current Year 2011/12 & Expenditure Framework Budget Budget Budget Original Adjusted Full Year R thousand Year Year +1 Year +2 Budget Budget Forecast 2012/13 2013/14 2014/15 RECEIPTS: Operating Transfers and Grants 1,270, 828,2 828,2 953,1 1,062, 1,151, National Government: 578 65 65 74 088 651 656,6 656,6 656,6 729,2 781,8 841,2 Local Government Equitable Share 53 53 53 26 38 01 20,0 20,0 20,0 Electricity Demand Side Management 00 00 00 1,2 1,2 1,2 1,2 1,2 1,2 Finance Management 50 50 50 50 50 50 60 60 Water Services Operating Subsidy 0 0 140,0 140,0 270,0 300,0 Public Transport Infrastructure & Systems Grant 00 00 198,702 00 00 419,1 Fuel levy 32 – – 173,5 9,7 9,7 14,6 Expanded Public Works Programme 43 62 62 96 0 0 Infrastructure skills development grant 5,300 5,000 5,200 LG SETA 4,000 4,000 4,000 13 100,7 447,4 447,4 403,7 3,7 3,7 Provincial Government: 28 81 81 52 52 52 96,2 91,1 91,1 Health subsidy 28 83 83 350,0 350,0 400,0 Housing 00 00 00 4,5 Sports and recreation 00 6,2 6,2 3,7 3,7 3.7 Library Subsidies 98 98 52 52 52 6,7 6,7 Other grant providers: – 70 70 0 0 0 2012/13 Medium Term Revenue Description Current Year 2011/12 & Expenditure Framework Budget Budget Budget Original Adjusted Full Year R thousand Year Year +1 Year +2 Budget Budget Forecast 2012/13 2013/14 2014/15 6,7 Donor Management Services 6,770 70 0 0 0 1,371, 1,282, 1,282, 1,356, 1,065, 1,155, Total Operating Transfers and Grants 306 515 515 926 840 403

The Municipality is faced with the challenge of providing services with its limited financial resources. Against the aforementioned background, the Municipality has undertaken the tariff determination process relating to property rates and service charges as follows.

1.4.1 Property Rates

Property rates fund the costs associated with the provision of general services, such as recreational, library and roads and stormwater services.

The following provisions in the Draft Property Rates Policy are highlighted:

 The first R15,000 of the market value of a property used for residential purposes is excluded from the rateable value (Section 17(h) of the MPRA).  100% rebate will be granted to registered indigents in terms of the Indigent Policy.  Pensioners, physically and mentally disabled property owners of rateable property may on submission of an application be granted a rebate. In this regard the following stipulations are relevant to the applicant: (a) must be a natural person; (b) be the owner of the property which is categorised as residential; (c) occupy the property as his or her normal residence or where the owner is unable to occupy the property due to no fault of his/her own, the spouse or minor children may satisfy the occupancy requirement; (d) produce a bar-coded identity document; (e) - pensioners: be at least 60 years of age on 1 July of the financial year concerned; or if the owner turns 60 during the year the rebate will be granted on a pro rata basis from the date on which the applicant turned 60; - disabled: be in receipt of disability grant / pension and submit proof and nature of disability e.g. letter from doctor with application. (f) be in receipt of a total gross annual income from all sources, excluding medical aid contributions, child support / grant but including the income of the spouse of the owner and all persons normally residing on that property, not exceeding R87,620 per annum (R7,302 per month); submit pension statements, previous 3 months (or the number of months determined necessary by the Chief Financial Officer) bank statements from all bank and investment accounts of owner and spouse, and proof of gross salary of any other persons living on the property (not just rental received). All documents provided must clearly state who it is for – documents which do not reflect person’s name or ID No. will not be considered; (g) not be in receipt of an indigent subsidy; (h) provide a certified affidavit declaring any assistance from any other sources. 14 Assistance received from family members not residing on property, will not however be included in the calculation of total household income; (i) provide a certified affidavit to explain any once-off monies received e.g. gifts, donations, etc; and (j) ensure that his/her accounts are not in arrears (or arrangements made to pay all outstanding amounts) before applying for the rebate and continue to pay the rates account in full until rebate is granted as no interest will be reversed; (k) a usufructuary will be regarded as the owner; (l) the criteria of a natural person may be waived at the sole discretion of the municipality to allow for a property owned by a trust where the total number of beneficiaries meets all of the other requirements of this policy; and provided further that the gross monthly income of all persons residing on that property be added to the gross monthly income of the beneficiaries staying on that property; (m) owners qualify for only one rebate per year, if financial circumstances change they can only apply for future years;  Sporting organisations, the sole purpose of which is to use the property owned/leased by them for sporting purposes, whether for gain or not, may qualify for a rebate, with amateur bodies being granted 100% and professional bodies 40%. Any profits earned must be invested in the betterment of the organisation and not be for private gain. Audited financial statement must be provided, if however the sporting body does not have audited financial statement reasons therefore must be provided on the clubs official letterhead.  75% rebate may be granted to the owners of Game Parks. In this regard the following stipulations are relevant: (a) the property must be used predominantly as a game park with the sole purpose of viewing of animals by the general public at an affordable price and for encouraging tourists to the area; (b) the usage of the property must be in accordance with the zoning scheme of the area; (c) the owner must be registered with the South African Revenue Service and provide proof thereof with the application. If proof of registration with SARS cannot be produced due to recent ownership change, upon application, a municipal official, authorised by the Municipal Manager shall issue a certificate of compliance to the owner, after an inspection of the property has been conducted and the municipal official is satisfied that such land is used predominately as a game park; (d) the owner must run educational programs for schools and not for gain institutions at a nominal fee. Proof of such activities must be submitted with the application; (e) the land owner must prove that he/she has complied with the National Veld and Forest Fire Act (Act 101 of 1998) and legislation governing the control of alien invasive species; and (f) property used for hunting of game shall not qualify for the rebate.  If the usage of a property changes during a financial year, the rebate applicable will be reduced pro rata for the balance of the financial year.  All accounts of the applicant must be up to date or arrangements must be made to pay any outstanding balances before any rebate will be granted. The applicant must continue to pay the rates account in full until the rebate is granted as no interest will be reversed.

A property rates increase of 13% is proposed as from 1 July 2012.

1.4.2 Sale of Water and Impact of Tariff Increases

In accordance with National Treasury’s MFMA Circulars, no. 51, 55 and 58, Municipalities are encouraged to review the level and structure of their water tariffs to ensure:

 Fully cost reflective water tariffs – tariffs should include the costs associated with maintenance and renewal of purification plants, water networks and water reticulation expansion;  Water tariffs are structured to protect basic levels of service; and 15  Water tariffs are designed to encourage efficient and sustainable consumption.

National Treasury has also urged municipalities to ensure that water tariffs are fully cost reflective by 2014. In this regard a phased-in approach has been proposed to ensure that tariffs are fully cost reflective by 2014.

A tariff increase of 13% is proposed as from 1 July 2012. The proposed tariff increase is mainly influenced by the following:

 The cost of bulk water purchases increased by 10.0%;  Repairs and maintenance of water infrastructure increased by 6,2%;  Costs of servicing existing external borrowing to fund water infrastructure; and  Providing for debt impairment.

The water tariff structure is designed in such a manner that higher levels of consumption are progressively charged at a higher rate.

1.4.3 Sale of Electricity and Impact of Tariff Increases

NERSA has determined that the Eskom bulk electricity tariff to municipalities would increase by 13.50% as from 1 July 2012. Considering the Eskom tariff increase, the Municipality’s consumer tariffs will be increased by 11,03% on average to offset the additional electricity bulk purchase costs as from 1 July 2012, in line with the NERSA tariff guidelines.

On 24 February 2010, NERSA approved the implementation of Inclining Block tariffs (IBT). On 25 November 2010, NERSA issued its ‘Guildeline on municipal price increase for 2011/12’, which required all municipalities to implement the IBT specified by NERSA for all domestic / residential consumers as from 1 July 2011. This stepped tariff structure will result in consumers with higher consumption levels paying progressively more for electricity.

National Treasury noted the concerns raised by SALGA and its member municipalities, together with Eskom, regarding the implementation of the IBT as proposed by NERSA. On 7 March 2011, NERSA agreed with the different stakeholders that there was a need for further research on the IBT and that NERSA would engage extensively with stakeholders to develop a revised IBT proposal in preparation for the 2012/13 municipal budgets.

At the meeting of 7 March 2011, its was further agreed that municipalities should regard NERSA’s current proposals on IBT as a guideline, and that when a municipality applies to NERSA for the approval of its electricity tariffs (in line with the normal process), it should indicate to what extent it is able to implement an IBT structure. It was further agreed that NERSA would not enforce the current IBT proposal, but that municipalities should nevertheless start restructuring their electricity tariffs to accommodate an IBT structure, appropriate to the municipality’s circumstances.

The Municipality accordingly advised NERSA that it would only be able to implement IBT as from the 2012/13 financial year.

The proposed tariff increases are mainly influenced by the following:

 The cost of bulk electricity purchases increased by 15,8%;  Repairs and maintenance of electricity infrastructure increased by 16.4%;  Costs of servicing existing external borrowing to fund electricity infrastructure;  Providing for debt impairment.

The proposed electricity tariff increases have been finally approval by NERSA. 16

1.4.4 Sanitation and Impact of Tariff Increases

In accordance with National Treasury’s MFMA Circulars, no. 51, 55 and 58, Municipalities are encouraged to review the level and structure of their sanitation tariffs to ensure:

 Fully cost reflective sanitation tariffs – tariffs should include the costs associated with maintenance and renewal of treatment plants, sanitation networks and sanitation infrastructure expansion;  Sanitation tariffs are structured to protect basic levels of service; and  Sanitation tariffs are designed to encourage efficient and sustainable consumption.

National Treasury has also urged municipalities to ensure that sanitation tariffs are fully cost reflective by 2014. In this regard a phased-in approach has been proposed to ensure that tariffs are fully cost reflective by 2014.

Sanitation charges are determined based on the volume of water consumed, which is appropriately reduced by the percentage of water discharged into the sewer system.

A tariff increase of 13% is proposed as from 1 July 2012. The proposed tariff increase is mainly influenced by the following:

 Repairs and maintenance of sanitation infrastructure increased by 3.7%;  Costs of servicing existing external borrowing to fund sanitation infrastructure;  Providing for debt impairment.

1.4.5 Refuse Collection and Disposal and Impact of Tariff Increases

The refuse collection and disposal service is currently operating on a break even basis. A tariff increase of 13% is proposed for the refuse collection and disposal service, as from 1 July 2012.

The proposed tariff increase is mainly influenced by the following:

 Costs of servicing existing external borrowing to fund refuse infrastructure;  Providing for debt impairment.

National Treasury has also urged municipalities to ensure that refuse tariffs are fully cost reflective by 2015.

1.4.6 Overall impact of tariff increases on households

The following table reflects the anticipated impact of the proposed tariff increases on a middle income and affordable range household, as well as an indigent household receiving free basic services.

It is to be noted that the overall impact of the proposed tariff increases on household bills has been maintained to between 9.5% and 17.0%, with indigent households decreasing by 15.6%. The increase in household bills is largely influenced by the electricity tariff increase.

Table 5 (Table SA14 – Household bills)

2012/13 Medium Term Revenue & Description 2008/9 2009/10 2010/11 Current Year 2011/12 Expenditure Framework Origin Full Budget Budget Audited Audited Audited Adjuste Budget Budget al Year Year Year +2 Outcom Outcom Outcom d Year Year +1 Budge Forecas 2012/1 2014/1 e e e Budget 2012/13 2013/14 t t 3 5 17 % incr. Monthly Account for Household - 'Middle Income Range' Rates and services charges: Property rates (Erf: 1000m2 ; 453. 492. 541. 60 603. 603. 13 682. 770. 878 150m2 improvements) 61 16 38 3.64 64 64 .0% 11 79 .70 Electricity: Basic levy Electricity: 532. 598. 748. 91 913. 913. 21 1,10 1,23 1,36 Consumption(1000 Kwh) 19 72 40 3.04 04 04 .4% 8.07 0.29 6.00

0 - 350 319.57 354.82 393.96

351 – 600 272.50 302.56 335.93 2012/13 Medium Term Revenue & Description 2008/9 2009/10 2010/11 Current Year 2011/12 Expenditure Framework Origin Full Budget Budget Audited Audited Audited Adjuste Budget Budget al Year Year Year +2 Outcom Outcom Outcom d Year Year +1 Budge Forecas 2012/1 2014/1 e e e Budget 2012/13 2013/14 t t 3 5

601 - 1000 516.00 572.91 636.11 15. 16. 18. 2 20. 20. 13 23. 26. 30 Water: Basic levy 96 92 78 0.94 94 94 .0% 66 74 .48 150. 159. 177. 19 198. 198. 13 223. 252. 288 Water: Consumption (30 Kl) 92 98 58 8.00 00 00 .0% 74 83 .22 109. 116. 126. 14 141. 141. 13 159. 180. 205 Sanitation 70 29 75 1.33 33 33 .0% 70 46 .73 41. 44. 48. 5 54. 54. 13 61. 68. 78 Refuse removal 55 05 45 4.02 02 02 .0% 04 98 .64 Other 1,303.9 1,428.1 1,661.3 1,930. 1 2,25 2,52 2,84 Sub-total 3 2 4 97 1930.97 1930.97 7.0% 8.32 9.57 7.77 185. 185. 220. 246. 275 VAT on Services 119.04 131.03 156.79 185.83 83 83 67 23 .67 Total large household 1,422.9 1,559.1 1,818.1 2,116. 2,11 2,11 1 2,47 2,77 3,12 bill: 7 5 3 80 6.80 6.80 7.1% 8.99 5.80 3.44 (0. 17. 12. 12 % increase/-decrease 9.6% 16.6% 16.4% 0%) – 1% 0% .5% Monthly Account for Household - 'Affordable Range' Rates and services charges: Property rates rates (Erf: 117. 127. 140. 15 156. 156. 13 176. 199. 227 300m2 ; 48m2 53 52 27 6.40 40 40 .0% 73 71 .67 improvements) Electricity: Basic levy Electricity: Consumption 265. 372. 45 454. 454. 5 480. 533. 591 (498 KwH) 03 298.16 70 4.69 69 69 .8% 89 93 .53 0 - 350 319.57 354.82 393.96 351 -498 161.32 179.11 197.56 15. 16. 18. 2 20. 20. 13 23. 26. 30 Water: Basic levy 96 92 78 0.94 94 94 .0% 66 74 .48 125. 133. 147. 16 165. 165. 13 186. 210. 240 Water: Consumption (25KL) 77 32 99 5.01 01 01 .0% 46 70 .20 91. 96. 105. 11 117. 117. 13 133. 150. 171 Sanitation 42 91 63 7.78 78 78 .0% 09 39 .45 41. 44. 48. 5 54. 54. 13 61. 68. 78 Refuse removal 55 05 45 4.02 02 02 .0% 04 98 .64 Other 968.8 968 968 9 1,06 1,19 1,33 Sub-total 657.26 716.88 833.82 4 .84 .84 .6% 1.87 0.45 9.97 113. 113. 123. 138. 155 VAT on Services 75.56 82.51 97.10 113.74 74 74 92 70 .72 Total small household 1,082. 1,08 1,08 9 1,18 1,32 1,49 bill: 732.82 799.39 930.82 58 2.58 2.58 .5% 5.79 9.15 5.69 9. 12. 12 % increase/-decrease 9.1% 16.5% 16.2% – – 5% 1% .5% 18 Monthly Account for Household - 'Indigent' Household receiving free basic services Rates and services charges: Property rates rates (Erf: 300m2 ; 48m2 10. 11. 12. 1 13. 13. 13 15. 17. improvements) 32 20 32 3.74 74 74 .0% 53 54 19.78 Electricity: Basic levy Electricity: Consumption 39. 44. 56. 6 65. 65. (60Kwh) 92 91 13 5.11 11 11 0% 0 0 0 2 20. 20. 13 23. 26. 30 Water: Basic levy 15.96 16.92 18.78 0.94 94 94 .0% 66 74 .21 40. 42. 47. 5 52. 52. 13 59. 67. 76 Water: Consumption (6KL) 28 70 40 2.85 85 85 .0% 72 48 .25 40. 42. 46. 5 51. 51. 13 58. 66. 74 Sanitation 26 68 52 1.87 87 87 .0% 61 23 .88 41. 44. 48. 5 54. 54. 13 61. 68. 77 Refuse removal 55 05 45 4.02 02 02 .0% 04 98 .95 Other 2012/13 Medium Term Revenue & Description 2008/9 2009/10 2010/11 Current Year 2011/12 Expenditure Framework Origin Full Budget Budget Audited Audited Audited Adjuste Budget Budget al Year Year Year +2 Outcom Outcom Outcom d Year Year +1 Budge Forecas 2012/1 2014/1 e e e Budget 2012/13 2013/14 t t 3 5

188 202 229 2 258 258 -15.5 218 246 Sub-total .29 .46 .60 58.53 .53 .53 % .56 .97 279.07 24. 26. 30. 3 34. 34. 28. 32. 36 VAT on Services 92 78 42 4.27 27 27 42 12 .30 Total small household 213 229 260 2 292 292 -1 246 279 31 bill: .21 .24 .02 92.80 .80 .80 5.6% .98 .09 5.37 7.5 13.4 12.6 13.0 % increase/-decrease % % % – – -15.6% 13.0% % The basis used for calculating the municipal accounts for the different categories of households is as follows:-

Description Land (m²) Improvements (m²) Electricity (kwh) Water (kl) Household – Middle Income 1000m² 150m² 1000kwh 30kl Household – Affordable Range 300m² 48m² 498kwh 25kl Indigent Household receiving free services 300m² 48m² 75kwh 8kl

1.5 OPERATING EXPENDITURE FRAMEWORK

The Municipality’s expenditure framework for the 2012/13 budget and MTREF is informed by the following:

• The funding of the budget over the medium-term is informed by the requirements of Section 18 and 19 of the MFMA; • A balanced budget approach by limiting operating expenditure to the operating revenue; • The asset renewal strategy and the repairs and maintenance plan; • Strict adherence to the principle of “no budget allocations without a project implementation plan”.

The following table is a high level summary of the 2012/13 budget and MTREF (classified per main type of operating expenditure):

Table 6 (Summary of operating expenditure by standard classification item)

2012/13 Medium Term Revenue Description 2008/9 2009/10 2010/11 Current Year 2011/12 & Expenditure Framework Budget Budget Budget Audited Audited Audited Original Adjusted Full Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecast 2012/13 2013/14 2014/15 19 Expenditure By Type 1,280,8 1,624,4 1,887,3 1,859,5 1,849,5 1,849,5 1,792,9 1,957,3 2,137, Employee related costs 71 44 62 69 69 69 73 23 456 41,2 44,8 45,0 51,0 51,0 51,08 54,5 60,0 66,6 Remuneration of councillors 55 86 53 84 84 4 83 41 45 175,5 419,4 554,2 288,1 282,1 282,15 251,2 282,5 318, Debt impairment 49 67 65 47 51 1 74 23 911 406,2 546,4 571,0 689,1 720,1 720,15 736,1 711,5 656, Depreciation & asset impairment 56 68 60 92 56 6 07 42 940 82,5 113,3 177,6 221,1 215,1 215,16 203,1 191,7 181, Finance charges 00 15 30 17 62 2 37 28 086 941,8 1,237,3 1,575,0 1,931,7 1,944,1 1,944,1 2,250,5 2,560,0 2,915, Bulk purchases 32 81 87 46 28 28 39 06 757 381,6 408,1 415,6 458,4 468,4 468,40 497,2 535,6 577, Other materials 16 04 38 72 04 4 16 07 637 93,2 147,7 144,2 269,6 194,4 194,46 376,0 458,3 496, Contracted services 02 65 71 75 61 1 41 32 814 265,7 364,5 307,5 417,9 370,9 370,96 402,0 451,7 509, Transfers and grants 64 71 56 61 61 1 53 52 521 603,3 812,1 728,5 418,5 839,2 839,21 800,3 437,2 493, Other expenditure 54 13 63 12 12 2 89 95 517 7,53 2,93 5,05 Loss on disposal of PPE 8 3 7 – 4,279,7 5,721,4 6,411,5 6,605,4 6,935,2 6,935,2 7,364, 7,646, 8,354, Total Expenditure 36 45 41 74 87 87 312 149 284

The total operating expenditure increased by R429 million (6.2%) from R6,9 billion in 2011/12 to R7,4 billion in 2012/13. Below is a discussion of the main expenditure components.

Employee related costs

The 2012/13 draft budget provides for annual increments, where applicable, and a general increase of 6%. As the budget only provides for an overall 3,6% increase, any increase negotiated in excess of the budget provision will place upward pressure on this component of the Municipality’s Budget. A Salary and Wage Collective Agreement for the 2012/13 to 2014/15 financial years has not yet been concluded.

The total budget provision of R1,793 billion represents a decrease of 3.1% over the 2011/12 Adjustments budget. It is to be noted that the 2011/12 Adjustments Budget included an amount of R118,1 million for primary health care services, which has been provincialised (no provision has been made for the primary health care service in the 2012/13 to 2014/15 Budget). Upon exclusion of the primary health care service, the 2012/13 budget provision represents an effective 3.6% increase over the 2011/12 Adjustments Budget.

An amount of approximately R22 million has been provided to ensure the implementation of the new wage curve in the 2012/13 financial year, as agreed to by the South African Local Government Bargaining Council. This budget allocation covers the back pay, in accordance with the wage curves collective agreement. In order to curtail personnel costs, the rationalisation of the Municipality’s organisational structure should be considered.

Council’s target for 2012/13 is to restrict personnel costs to 34% of total expenditure. Personnel costs in the 2012/13 Budget represent 24.3% of total expenditure.

Remuneration of Councillors

The remuneration of Councillors is determined by the Minister of Co-operative Governance and Traditional Affairs in accordance with the Remuneration of Public Office Bearers Act, 1998 (Act 20 of 1998). The most recent proclamation in this regard has been taken into account in preparing the budget. As the budget provides for a 6,8% increase, Councillors’ remuneration should be limited to the budget allocated for this purpose.

Debt Impairment 20

The provision for debt impairment was determined based on a targeted annual collection rate of 95%, excluding ATTP subsidies. For the 2012/13 financial year this amounted to R251.3 million and increases to R318.9 million in 2014/15. While this expenditure represents a non-cash flow item, it is taken into account in determining the total costs associated with the rendering of municipal services and the realistically anticipated revenues.

Depreciation and Asset Impairment

The provision for depreciation and asset impairment has been informed by the Municipality’s Asset Management Policy. The budget amounts to R736,1 million for the 2012/13 financial and equates to 10% of the total operating expenditure.

Finance Charges

Finance charges consist primarily of the repayment of interest on existing long-term borrowing (cost of capital). Finance charges constitute 2,8% (R203 million) of total operating expenditure for 2012/13 and reduces to R181 million in 2014/15. It is to be noted that no new borrowing will be raised. 21 Bulk Electricity Purchases

Purchase of Power has increased from R1,879 billion in 2011/12 to R2,177 billion in 2012/13, an increase of 15,8%.

NERSA has approved a 13,5% increase in the Eskom bulk tariff for the 2012/13 financial year. The 2012/13 budget accordingly allows for a 15,8% increase for bulk power purchases from Eskom. It has been estimated, however, that energy consumption levels will not reflect any growth, due to the following:

 Significant increases in electricity prices;  Consumer awareness of the need to conserve energy; and  The implementation of energy conservation measures.

Bulk Water Purchases

The bulk purchase of water increased by R6 680 820 (10%) from R66 808 130 in 2011/12 to R73 488 950 in 2012/13, as follows:

2011/12 2012/13 % DWAF 63 631 710 69 994 880 10 Water Resource Management charge 2 231 631 2 454 790 10 Consumptive charges (includes Return on Assets 61 400 079 67 540 090 10 charge, Depreciation & Operation & Maintenance charges) Gamtoos Irrigation Board 1 673 860 1 841 250 10 Sundays River Irrigation Board 1 502 560 1 652 820 10 Total 66 808 130 73 488 950 10

The total budget provision of R73.5 million is influenced by the declining water consumption patterns, in addition to a water tariff increase of approximately 16.59%.

Other Materials

Other materials comprise, amongst others, the purchase of fuel, diesel, materials for maintenance, cleaning materials and chemicals. In line with the Municipality’s repairs and maintenance plan, expenditure has been prioritised to ensure sustainability of the Municipality’s infrastructure. The budget for 2012/13 amounts to R497.2 million and increases by 7,7% and 7,8% for the two outer years.

Contracted Services

In the 2012/13 financial year, the budget provision amounts to R376,0 million. For the two outer years the increases amount to 21.9% and 8,4% respectively.

Other Expenditure

Other expenditure comprises of various line items relating to the daily operations of the municipality. This expenditure has been identified as an area in which cost savings and efficiencies can be achieved. The expenditure decreased by 4.6% for 2012/13 and then reduces by 45.4% for 2013/14. The reduction in expenditure is mainly attributable to the fact that the expenditure associated with Housing Top Structures has not been included in the budget pending written confirmation of the housing top structures funding by the Provincial Government. In the 2014/15 financial year the expenditure increases by 12.9%. 22 The graph below reflects the expenditure components of the budgeted statement of financial performance.

2012/13 Operating Budget as per Expenditure Category

Transfers and Other expenditure Employee grants 10.9% related costs Remuneration 5.5% 24.3% of councillors 0.7% Contracted services 5.1% Debt impairment 3.4% Other materials 6.8% Depreciation asset impairment Finance charges Bulk purchases 10.0% 2.8% 30.6%

Figure 1 Main operational expenditure categories for the 2011/12 financial year

1.5.1 Priority relating to repairs and maintenance

In line with the Municipality’s stated intention to preserve and maintain its existing infrastructure, the 2012/13 budget and MTREF provide for reasonable growth in the asset maintenance budget, as informed by the asset renewal strategy and repairs and maintenance plan of the Municipality.

During the compilation of the 2012/13 MTREF operational repairs and maintenance was identified as a strategic priority in view of the aging infrastructure and certain deferred maintenance. Repairs and maintenance was accordingly increased by 6.2% in the 2012/13 financial year, from R468,4 million to R497.2 million. The growth for the two outer years amount to 7,7% and 7,8%, respectively. In relation to the total operating expenditure, repairs and maintenance constitutes 6,8%, 7.0% and 6,9% for the respective financial years of the MTREF.

The table below provides a breakdown of the repairs and maintenance in relation to asset class:

Table 7 (Repairs and maintenance per asset class)

2012/13 Medium Term 2009/1 2010/1 Description 2008/9 Current Year 2011/12 Revenue & Expenditure 0 1 Framework Budge Budge Audite Audite Audite Full Budge Adjuste t Year t Year d d d Original Year t Year R thousand d +1 +2 Outco Outco Outco Budget Forecas 2012/ Budget 2013/ 2014/ me me me t 13 14 15 Repairs and maintenance expenditure by Asset Class/Sub-class 304 324 335 369, 378, 378, 39 43 46 Infrastructure ,163 ,392 ,745 802 309 309 9,353 0,465 4,223 65 66 73 89,7 90,1 90,1 9 9 10 Infrastructure - Road transport ,336 ,113 ,310 73 65 65 0,672 6,112 1,879 33 34 28 38,0 36,0 36,0 4 4 49 Infrastructure - Electricity ,965 ,912 ,585 59 85 85 2,006 5,691 ,560 102 117 119 120, 117, 117, 13 14 15 Infrastructure - Water ,375 ,915 ,415 635 634 634 1,853 4,439 7,702 Infrastructure - Sanitation 100 103 111 116, 124, 124, 12 13 14 23

,392 ,325 ,701 606 696 696 9,312 8,336 8,790 2,09 2,12 2,73 4,72 9,72 9,72 5,51 5,88 6,29 Infrastructure - Other 5 7 5 9 9 9 0 7 1 2012/13 Medium Term 2009/1 2010/1 Description 2008/9 Current Year 2011/12 Revenue & Expenditure 0 1 Framework Budge Budge Audite Audite Audite Full Budge Adjuste t Year t Year d d d Original Year t Year R thousand d +1 +2 Outco Outco Outco Budget Forecas 2012/ Budget 2013/ 2014/ me me me t 13 14 15 31 29 31 29, 30, 30, 3 3 4 Community ,701 ,167 ,853 304 578 578 5,387 8,409 1,877 44 54 48 59, 59, 59, 6 6 7 Other assets ,776 ,545 ,040 366 517 517 2,476 6,733 1,537 38 40 41 458, 468, 468, 49 53 57 Total Repairs and Maintenance Expenditure 1,616 8,104 5,638 472 404 404 7,216 5,607 7,637

For the 2012/13 financial year an amount of R399,4 million (80,3%) of total repairs and maintenance, will be spent on infrastructure assets.

1.5.2 Free Basic Services: Basic Social Services Package

The social package assists indigent households that have limited financial ability to pay for municipal services. In order to qualify for free services the households are required to register in terms of the Municipality’s Assistance to the Poor Policy. Detail relating to free services, cost of free basic services, as well as basic service delivery measurement is contained in Table A10 (Basic Service Delivery Measurement).

The cost of the social package of the registered indigent households is largely financed by national government through the local government equitable share allocation, received in terms of the annual Division of Revenue Act.

1.6 CAPITAL EXPENDITURE

The following table provides a breakdown of budgeted capital expenditure by vote:

Table 8 (2012/13 Medium-term capital budget per vote)

Current Year Description 2011/12 2012/13 Medium Term Revenue & Expenditure Framework Budget Budget Budget Adjuste Year Year +1 Year +2 R thousand d % % % % 2012/1 2013/1 2014/1 Budget 3 4 5 Capital expenditure - Municipal Vote Budget and Treasury 27,865 2.26% 7,480 0.729% 10,300 0.78% 10,350 0.63% Public Health 41,706 3.38% 17,500 1.68% 20,000 1.51% 20,000 1.21% Housing Land 102,000 8.26% 165,868 15.96% 185,336 14.03% 186,928 11.33% Economic Development and Recreational Services 61,318 4.97% 10,400 1.00% 16,500 1.25% 30,000 1.82% Corporate Administration 36,339 2.94% 18,200 1.75% 22,000 1.67% 22,600 1.37% Rate and General Engineers 299,162 24.23% 269,662 25.94% 393,817 29.82% 585,909 35.53% Water Service 410,000 33.21% 134,402 12.93% 204,850 15.51% 235,950 14.31% Sanitation 118,723 9.62% 234,600 22.57% 295,800 22.40% 380,900 23.09% Electricity and Energy 86,000 6.97% 121,147 11.92% 157,343 11.91% 160,212 9.71% Executive and Council 12,000 0.97% 11,200 1.17% 10,000 0.76% 11,500 0.70% Safety and Security 4,809 0.39% 3,000 0.29% 2,300 0.17% 5,000 0.30%

Strategic Programmes Directorate 34,680 2.81% 46,000 4.43% 2,400 0.18% – 0.00% 1,234,6 100.00 1,039,4 100.00 1,320,6 100.00 1,649,3 100.00 Total Capital Expenditure 02 % 59 % 46 % 49 % 24

Of the total amount of R1,04 billion for 2012/13, an amount of R805.8 million has been appropriated for the development of infrastructure, which represents 77.5% of the total capital budget. In the outer years this amount totals R1,05 billion (79.8%) and R1,36 billion (82.6%) respectively for each of the financial years. Transport and Roads Services receives the highest allocation of R269.7 million in 2012/13, which equates to 25.9% followed by Sanitation at R234,6 million (22.6%), Housing Reticulation Services at R165,9 million (16.0%), Water at R134.4 million (12.9%) and Electricity Services at R121.1 million (11.7%).

Total new assets represent 39.5% or R410.5 million of the total capital budget while asset renewal/ rehabilitation equates to 60.5% or R628.9 million. National Treasury has suggested that 40% of the capital budget should be allocated for asset renewal/rehabilitation. Further detail relating to asset classes and proposed capital expenditure is contained in Table A9 (Asset Management). Some of the major projects to be undertaken over the medium-term includes, amongst others:

 Reticulation services for housing delivery – R458.1 million;  Construction of new scientific services laboratory – R15 million;  Replacement of fleet – R31.5 million;  Tarring of gravel roads – R180 million;  Stormwater Improvement – R130.6 million;  Construction of Major Roads – R19.5 million;  Informal Housing Electrification – R60 million;  Provision of sidewalks – R15 million;  Electricity infrastructure – R215.2 million;  Integrated Public Transportation System – R652.3 million;  Water treatment works – R190 million;  Water Reticulation Network – R244.8 million;  Bulk Sewers – R263.9 million;  Waste Water Treatment Works – R471.3 million;  Greening and beautification – R6,5 million;  Refuse sites and recycling stations – R6.4 million;  Urban renewal – R48,4 million; and  Sports and Recreational facilities – R56.9million.

Annexure “A” provides a summary of the capital projects included in the Capital budget.

The following graph provides a breakdown of the capital budget to be spent on infrastructure related projects over the MTREF.

700,000,000 600,000,000 500,000,000 400,000,000 300,000,000 200,000,000 100,000,000 - 2008/9 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 Infrastructure - Road transport 65,336,015 66,112,633 86,906,680 89,772,600 269,662,000 393,817,000 585,909,000 Infrastructure - Electricity 33,965,233 34,912,137 25,408,930 38,059,480 121,147,000 157,343,000 160,212,000 Infrastructure - Water 102,374,884 117,914,625 111,949,040 122,634,640 134,401,554 204,850,000 235,950,000 Infrastructure - Sanitation 100,392,357 103,325,341 102,880,780 116,605,850 234,600,000 295,800,000 380,900,000 Infrastructure - Other 2,094,932 2,126,956 2,346,780 4,728,980 48,500,000 5,345,000 2,945,000 25

Figure 2 Capital Infrastructure Programme

1.7 ANNUAL BUDGET TABLES - PARENT MUNICIPALITY

The ten main budget tables, as required in terms of the Municipal Budget and Reporting Regulations, are included in this section. These tables set out the Municipality’s 2012/13 budget and MTREF to be considered for approval by Council. Each table is accompanied by explanatory notes.

Table 9 (Table A1 - Budget Summary) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Audited Audited Audited Budget Budget Budget Original Adjusted Full Year R thousands Outcom Outcom Outcom Year Year +1 Year +2 Budget Budget Forecast e e e 2012/13 2013/14 2014/15 Financial Performance 659, 756, 838, 961,5 961,5 961,5 1,074, 1,214, 1,372, Property rates 777 499 855 65 65 65 628 336 205 2,169, 2,549, 3,122, 3,648,7 3,540,2 3,540,2 3,951, 4,436, 5,006, Service charges 825 175 758 79 53 53 039 329 227 166, 61,7 16,4 21,2 28,0 28,0 25, 27,0 28,6 Investment revenue 128 60 47 57 00 00 528 59 83 1,021, 1,454, 1,363, 1,384,4 1,234,0 1,234,0 1,361, 1,065, 1,155, Transfers recognised - operational 115 743 358 87 94 94 248 840 403 329, 396, 524, 339,3 789,5 789,5 825, 901, 953,7 Other own revenue 243 346 097 21 51 51 517 674 10 Total Revenue (excluding 4,346, 5,218, 5,865, 6,355, 6,553, 7,237, 7,645, 8,516, capital transfers and 087 523 515 409 464 6,553, 960 238 229 contributions) 464 1,280, 1,624, 1,887, 1,859,5 1,849,5 1,849,5 1,792, 1,957, 2,137, Employee costs 871 444 362 69 69 69 973 323 456 41,2 44,8 45,0 51,0 51,0 51,0 54, 60,0 66,6 Remuneration of councillors 55 86 53 84 84 84 583 41 45 406, 546, 571, 689,1 720,1 720,1 736, 711, 656,9 Depreciation & asset impairment 256 468 060 92 56 56 107 542 40 82,5 113,3 177,6 221,11 215,1 203,1 191,7 181,0 Finance charges 00 15 30 7 62 215,162 37 28 86 1,323, 1,645, 1,990, 2,390,2 2,412,5 2,412,5 2,747, 3,095, 3,493, Materials and bulk purchases 448 485 725 18 32 32 755 613 394 265, 364, 307, 417,9 370,9 370,9 402, 451, 509,5 Transfers and grants 764 571 556 61 61 61 053 752 21 879, 1,382, 1,432, 976,3 1,315,8 1,315,8 1,427, 1,178, 1,309, Other expenditure 642 277 156 34 23 23 704 150 241 4,279, 5,721, 6,411, 6,605, 6,935, 6,935, 7,364, 7,646, 8,354, Total Expenditure 736 445 541 474 287 287 312 149 284 66, (502, (546, (250, (381, (381, (126, (9 161, Surplus/(Deficit) 351 922) 026) 066) 823) 823) 352) 11) 944 970, 993, 505, 1,249,4 1,040,5 1,040,5 774, 1,011, 1,301, Transfers recognised - capital 072 724 614 67 06 06 932 688 074 Contributions recognised - capital & contributed assets – – – – – – – – – 1,036, 490, (40, 999, 658, 648, 1,010, 1,463, Surplus/(Deficit) after capital 423 802 412) 401 684 658,684 580 777 018 transfers & contributions Share of surplus/ (deficit) of associate – – – – – – – – – 1,036, 490, (40, 999, 658, 658, 648, 1,010, 1,463, Surplus/(Deficit) for the year 423 802 412) 401 684 684 580 777 018

Capital expenditure & funds sources 2,797, 2,273, 1,517, 1,360, 1,234, 1,234, 1,039, 1,320, 1,649, Capital expenditure 395 293 496 007 602 602 459 646 349 Transfers recognised - capital 1,643, 956, 512, 1,249,4 1,040,5 1,040,5 774, 1,011, 1,301, 032 989 292 67 06 06 932 688 074 23,3 94,4 15,5 38,0 38,0 38,0 23, 33,5 33,5 Public contributions & donations 48 52 37 00 00 00 000 00 00 563, 745, 470, Borrowing 075 200 000 – – – – – – 567, 476, 519, 122,5 156,0 156,0 241, 275, 314,7 Internally generated funds 939 652 667 40 96 96 527 458 75 26 2,797, 2,273, 1,517, 1,410, 1,234, 1,234, 1,039, 1,320, 1,649, Total sources of capital funds 395 293 496 007 602 602 459 646 349

Financial position 2,110, 1,980, 1,425, 1,484,2 1,815,7 1,815,7 2,161, 2,422, 2,848, Total current assets 605 743 756 24 38 38 892 509 649 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Audited Audited Audited Budget Budget Budget Original Adjusted Full Year R thousands Outcom Outcom Outcom Year Year +1 Year +2 Budget Budget Forecast e e e 2012/13 2013/14 2014/15 9,545, 11,384, 12,351, 12,865, 12,925, 12,925, 13,249, 13,858, 14,850, Total non current assets 409 686 271 135 754 754 006 110 519 2,085, 2,061, 1,853, 1,474,8 1,799,2 1,799,2 2,124, 2,251, 2,356, Total current liabilities 650 221 843 67 33 33 459 249 010 1,223, 2,466, 3,125, 2,946,3 2,951,5 2,951,5 3,040, 3,060, 3,095, Total non current liabilities 452 494 880 97 48 48 479 694 576 8,346, 8,837, 8,797, 9,928,0 9,990,7 9,990,7 10,245, 10,968, 12,247, Community wealth/Equity 913 715 304 94 10 10 961 677 583

Cash flows 1,344, 938, 916, 1,617,4 1,697,6 1,697,6 1,364, 1,633, 2,101, Net cash from (used) operating 887 304 465 91 26 26 440 852 036 (2,303, (2,301, (1,499, (1,363, (1,291, (1,291,4 (1,048, (1,282, (1,606, Net cash from (used) investing 651) 966) 718) 169) 421) 21) 473) 527) 479) (68, 1,113, 381, (89,6 (89,5 (89,5 (100, (106, (113, Net cash from (used) financing 054) 172 141 96) 43) 43) 719) 159) 968) Cash/cash equivalents at the 880, 629, 427, 442, 763, 763, 979, 1,224, 1,604, year end 260 770 658 619 935 935 183 348 938

Cash backing/surplus reconciliation 880, 630, 428, 442,6 763,9 763,9 979, 1,224, 1,604, Cash and investments available 987 725 805 39 55 55 203 368 958 Application of cash and 1,280, 1,340, 1,002, 542,0 729,5 729,5 867, 975, 1,051, investments 673 069 379 89 03 03 579 489 640 (399, (709, (573, (99, 34,4 34,4 111, 248, 553, Balance - surplus (shortfall) 686) 344) 574) 450) 52 52 624 879 318

Asset management 9,450, 11,304, 12,289, 12,801, 12,862, 12,862, 13,183, 13,793, 14,785, Asset register summary (WDV) 710 137 797 616 235 235 986 090 499 406,2 546,4 571,06 689,1 720,1 720,1 736,1 711,5 656,9 Depreciation & asset impairment 56 68 0 92 56 56 07 42 40 190, 241, 268, 287,9 513,1 513,1 628, 937, 1,231, Renewal of Existing Assets 818 358 333 00 58 58 949 545 633 381, 408, 415, 458,4 468,4 468,4 497, 535, 577,6 Repairs and Maintenance 616 104 638 72 04 04 216 607 37

Free services Cost of Free Basic Services 191, 216, 187, 178,0 209,9 209,9 231, 262, 300,4 provided 776 810 997 57 07 07 118 507 49 Revenue cost of free services 231, 265, 265, 293,6 284,4 284,4 323, 361, 413,4 provided 313 171 134 63 75 75 048 352 03 Households below minimum service level

Water: 34 – – – – – – – – 2 2 2 2 Sanitation/sewerage: 39 22 23 2 2 2 22 22 2

Energy: – – – – – – – – –

Refuse: 8 12 16 1 1 1 1 1 1

Explanatory notes to Table A1 - Budget Summary

The aim of the Budget Summary is to provide a concise overview of the proposed budget from all of the major financial perspectives (operating expenditure, capital expenditure, financial position, cash flow, and MFMA funding compliance). The table provides an overview of the amounts to be approved by Council within the context of operating performance, resources utilised for capital expenditure, 27 financial position, cash and funding compliance, as well as the Municipality’s commitment to eliminating basic service delivery backlogs. 28 Table 10 (Table A2 - Budgeted Financial Performance (revenue and expenditure by standard classification)) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Audited Audited Audited Adjuste Budget Budget Budget Original Year R thousand Outcom Outcom Outcom d Year Year +1 Year +2 Budget Forecas e e e Budget 2012/13 2013/14 2014/15 t Revenue - Standard 1,951 1,410 1,683 1,689 1,747 1,747 1,927 2,117 2,309 Governance and administration ,261 ,393 ,291 ,573 ,017 ,017 ,558 ,857 ,748 545, 73,7 28,8 1,2 1,2 1,2 5 Executive and council 117 60 64 37 77 77 51 51 2 1,396, 1,324, 1,639, 1,670, 1,726, 1,726, 1,911, 2,101, 2,292, Budget and treasury office 709 803 876 069 898 898 578 375 543 9,4 11,8 14,5 18,2 18,8 18,8 15,9 16,4 17,1 Corporate services 36 29 50 68 41 41 29 30 53 (74, 583, 368, 169, 523, 523, 475, 75, 81, Community and public safety 403) 695 542 151 893 893 241 341 683 2,4 34,0 42,4 14,9 24,3 24,3 18,7 15,2 15,8 Community and social services 29 83 73 17 86 86 03 11 99 (403, 21,1 16,6 42,3 52,0 52,0 22,3 23,8 27,3 Sport and recreation 802) 56 77 16 56 56 01 40 15 54,6 34,5 25,1 27,7 26,8 26,8 33,7 35,7 37,8 Public safety 85 28 45 00 20 20 14 37 81 197, 401, 247, 5,8 356, 356, 400, 4 4 Housing 679 935 171 99 450 450 425 50 77 74,6 91,9 37,0 78,3 64,1 64,1 1 1 Health 06 93 76 19 81 81 98 04 10 Economic and environmental 36, 117, 229, 322, 239, 239, 391, 460, 502, services 960 463 513 848 091 091 356 555 068 8,2 164, 282, 187, 187, 167, 163, 173, Planning and development – 65 024 683 182 182 545 939 856 14,2 101, 40,7 18,7 18,9 18,9 219, 292, 323, Road transport 30 736 91 96 46 46 997 572 927 22,7 7,4 24,6 21,3 32,9 32,9 3,8 4,0 4,2 Environmental protection 30 63 97 69 63 63 14 43 86 2,419 2,973 3,582 4,161 4,036 4,036 4,431 4,978 5,608 Trading services ,604 ,145 ,192 ,277 ,031 ,031 ,465 ,404 ,863 1,449, 1,905, 2,295, 2,903, 2,870, 2,870, 3,120, 3,503, 3,934, Electricity 936 681 991 915 827 827 937 315 407 440, 522, 710, 571, 511, 511, 581, 654, 742, Water 910 577 227 200 991 991 395 278 493 347, 350, 374, 437, 426, 426, 474, 534, 608, Waste water management 989 803 300 816 384 384 317 959 663 180, 194, 201, 248, 226, 226, 254, 285, 323, Waste management 769 084 674 347 830 830 816 852 300 12, 133, 1, 12, 7, 7, 12, 13, 13, Other 668 826 979 559 431 431 341 081 866 4,346 5,218 5,865 6,355 6,553 6,553 7,237 7,645 8,516 Total Revenue - Standard ,089 ,522 ,516 ,408 ,463 ,463 ,960 ,238 ,229

Expenditure - Standard 803, 1,308 1,127 978, 1,060 1,060 1,106 1,189 1,259 Governance and administration 788 ,361 ,638 127 ,340 ,340 ,730 ,093 ,722 173, 321, 133, 172, 155, 155, 172, 190, 206, Executive and council 874 203 149 195 308 308 395 524 926 601, 768, 742, 563, 569, 569, 581, 621, 677, Budget and treasury office 184 615 417 805 748 748 519 017 196 28,7 218, 252, 242, 335, 335, 352, 377, 375, Corporate services 31 543 072 127 284 284 816 552 600 959, 1,104 1,236 930, 1,186 1,186 1,209 870, 945, Community and public safety 770 ,899 ,597 311 ,168 ,168 ,028 450 092 19,5 114, 100, 211, 136, 136, 138, 145, 156, Community and social services 56 386 957 283 869 869 968 554 805 274, 100, 156, 146, 136, 136, 152, 163, 175, Sport and recreation 590 362 012 248 488 488 041 150 923 272, 308, 369, 338, 338, 338, 348, 375, 408, Public safety 496 868 380 366 104 104 237 790 119 273, 434, 342, 34,3 389, 389, 432, 35,0 38,3 Housing 160 102 597 28 950 950 052 28 61 Health 119, 147, 267, 200, 184, 184, 137, 150, 165, 29 969 181 650 086 756 756 730 929 884 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Audited Audited Audited Adjuste Budget Budget Budget Original Year R thousand Outcom Outcom Outcom d Year Year +1 Year +2 Budget Forecas e e e Budget 2012/13 2013/14 2014/15 t Economic and environmental 409, 834, 613, 998, 839, 839, 1,017 1,134 1,202 services 176 709 602 158 084 083 ,932 ,112 ,257 29,7 337, 519, 453, 453, 590, 677, 739, Planning and development – 62 285 211 972 972 142 937 095 211, 274, 185, 215, 148, 148, 180, 195, 198, Road transport 198 859 199 246 087 087 593 210 577 197, 530, 91,1 263, 237, 237, 247, 260, 264, Environmental protection 978 088 18 701 025 025 196 965 585 2,099 2,420 3,423 3,647 3,785 3,785 3,967 4,409 4,921 Trading services ,238 ,633 ,377 ,871 ,593 ,593 ,051 ,864 ,239 1,277, 1,484, 2,119, 2,490, 2,531, 2,531, 2,782, 3,114, 3,500, Electricity 045 720 477 120 635 635 901 728 277 377, 529, 662, 491, 483, 483, 518, 571, 630, Water 979 530 700 633 678 678 942 430 914 255, 261, 369, 433, 480, 480, 456, 490, 529, Waste water management 792 769 219 987 322 322 585 124 044 188, 144, 271, 232, 289, 289, 208, 233, 261, Waste management 423 615 981 132 959 959 622 581 003 7, 52, 10, 51, 64, 64, 63, 42, 25, Other 764 843 327 008 103 103 571 630 976 4,279 5,721 6,411 6,605 6,935 6,935 7,364 7,646 8,354 Total Expenditure - Standard ,736 ,445 ,541 ,474 ,288 ,288 ,312 ,149 ,285 66, (502 (546 (250 (381 (381 (126 ( 161, Surplus/(Deficit) for the year 353 ,922) ,025) ,066) ,825) ,825) ,352) 912) 943

Explanatory notes to Table A2 - Budgeted Financial Performance (revenue and expenditure by standard classification)

The ‘standard classification’ refers to a modified Government Finance Statistics (GFS) reporting structure. The aim of the standard classification approach is to ensure that all municipalities approve a budget in one common format, to facilitate comparison across all municipalities.

Table 11 (Table A3 - Budgeted Financial Performance (revenue and expenditure by municipal vote)) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Budge Audited Audited Audited Adjust Budget Budget Original Year t Year R thousand Outcom Outcom Outcom ed Year +1 Year +2 Budget Forecas 2012/1 e e e Budget 2013/14 2014/15 t 3 Revenue by Vote 1,396, 1,324, 1,639, 1,670,0 1,72 1,726, 1,91 2,101, 2,292, Vote 1 - Budget and Treasury 709 803 901 81 6,921 921 1,592 390 558 278, 293, 262, 350,8 326 326, 26 292, 330, Vote 2 - Public Health 104 540 975 53 ,541 541 1,472 908 780 197, 401, 263, 25,6 376 376, 42 22, 24, Vote 3 - Human Settlements 679 935 368 61 ,211 211 1,369 652 011 Vote 4 - Economic Development and 103, 151, 142, 149,1 147 147, 13 140, 152, Recreational Services 149 124 470 10 ,232 232 3,555 500 760 11,8 11,8 10,6 11,9 13, 13,5 8, 9, 9,3 Vote 5 - Corporate Services 65 29 68 33 574 74 828 096 81 14,2 101, 28,3 146,0 37, 37,0 20 273, 303, Vote 6 - Rate and General Engineers 30 736 09 58 006 06 2,201 709 932 440, 522, 710, 571,2 511 511, 58 654, 742, Vote 7 - Water Services 910 576 228 00 ,991 991 1,395 278 493 347, 350, 374, 437,8 426 426, 47 534, 608, Vote 8 - Sanitation Services 989 803 212 16 ,384 384 4,317 959 663 1,449, 1,905, 2,295, 2,903,9 2,87 2,870, 3,12 3,503, 3,934, Vote 9 - Electricity and Energy 936 681 991 15 0,827 827 0,937 315 407 498, 10,8 5,5 1,63 1, 1,7 5 5 Vote 10 - Executive and Council 110 87 37 6 774 74 658 02 28 30 54,6 52,1 43,0 45,5 44, 44,6 53 57, 60, Vote 11 - Safety and Security 85 39 31 40 661 61 ,796 024 446 Vote 12 - Nelson Mandela Bay (477, 63,4 62,7 37, 37,0 37 37, 37, Stadium 009) 44 60 – 000 00 ,000 000 000 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Budge Audited Audited Audited Adjust Budget Budget Original Year t Year R thousand Outcom Outcom Outcom ed Year +1 Year +2 Budget Forecas 2012/1 e e e Budget 2013/14 2014/15 t 3 Vote 13 - Strategic Programmes 29,7 28,0 26,0 41,6 33, 33,3 30 17, 19, Directorate 33 24 66 05 342 42 ,840 904 270 4,346 5,218 5,865 6,355, 6,55 6,553 7,23 7,645 8,516 Total Revenue by Vote ,090 ,522 ,516 409 3,464 ,463 7,960 ,238 ,229

Expenditure by Vote to be appropriated 601, 768, 725, 541,4 548 548, 56 598, 652, Vote 1 - Budget and Treasury 184 615 772 37 ,799 799 1,807 274 743 506, 852, 646, 712,8 728 728, 61 661, 709, Vote 2 - Public Health 369 515 547 21 ,161 161 0,319 390 252 273, 434, 446, 137,0 488 488, 53 146, 159, Vote 3 - Human Settlements 160 102 336 41 ,024 024 3,541 139 110 Vote 4 - Economic Development and 282, 296, 255, 463,8 404 404, 38 391, 406, Recreational Services 355 144 969 40 ,725 725 9,218 554 898 48,2 218, 262, 237,2 355 355, 35 378, 376, Vote 5 - Corporate Services 86 543 883 39 ,712 712 6,377 498 079 211, 274, 244, 472,8 320 320, 50 604, 645, Vote 6 - Rate and General Engineers 198 859 138 28 ,459 459 0,086 360 125 377, 529, 664, 491,6 481 481, 51 571, 631, Vote 7 - Water Services 979 530 564 33 ,831 831 9,466 987 504 255, 261, 340, 385,1 387 387, 39 428, 465, Vote 8 - Sanitation Services 792 769 166 92 ,279 279 6,910 055 695 1,277, 1,484, 2,119, 2,491,3 2,53 2,531, 2,78 3,114, 3,500, Vote 9 - Electricity and Energy 045 720 457 20 1,635 635 2,901 728 277 123, 169, 160, 202,1 194 194, 20 221, 240, Vote 10 - Executive and Council 321 065 321 71 ,843 843 1,471 654 838 272, 270, 376, 346,2 345 345, 35 384, 417, Vote 11 - Safety and Security 496 619 367 76 ,351 351 6,370 788 769 Vote 12 - Nelson Mandela Bay 20,8 131, 131, 88,9 120 120, 12 125, 128, Stadium 52 203 644 39 ,708 708 3,523 353 279 Vote 13 - Strategic Programmes 29,7 29,7 37,3 34,7 27,7 27,7 32,3 19,3 20,7 Directorate 01 62 76 39 61 61 21 68 15 4,279 5,721 6,411 6,605, 6,93 6,935 7,36 7,646 8,354 Total Expenditure by Vote ,736 ,445 ,541 474 5,288 ,288 4,312 ,149 ,285 66, (502 (546 (250, (38 (381 (12 ( 161 Surplus/(Deficit) for the year 354 ,923) ,025) 065) 1,824) ,825) 6,352) 912) ,944

Explanatory notes to Table A3 - Budgeted Financial Performance (revenue and expenditure by municipal vote)

1. The purpose of the format in which the budget is presented, is to enable the Council to enforce a vote in accordance with the municipality’s organisational structure, so as to assign responsibility for the revenue and expenditure recorded against these votes to the Municipal Manager and Executive Directors concerned. Operating revenue and expenditure is thus presented by ‘vote’. A ‘vote’ is defined as one of the main segments into which a budget of a municipality is divided into, for the appropriation of funds.

Table 12 (Table A4 - Budgeted Financial Performance (revenue and expenditure)) 2012/13 Medium Term Revenue Description 2008/9 2009/10 2010/11 Current Year 2011/12 & Expenditure Framework Budget Budget Budget Audited Audited Audited Original Adjusted Full Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecast 2012/13 2013/14 2014/15 Revenue By Source 659,7 756,4 838,8 961,5 961,5 961,56 1,074,6 1,214,3 1,372, Property rates 77 99 55 65 65 5 28 36 205 31 Service charges - electricity 1,502,3 1,807,7 2,185,5 2,753,3 2,718,3 2,718,3 3,028,3 3,393,6 3,817, revenue 22 51 08 64 64 64 84 51 477 344,7 407,9 569,8 465,3 402,0 402,06 455,5 514,7 586, Service charges - water revenue 30 18 83 83 68 8 47 68 836 Service charges - sanitation 226,5 228,0 246,6 295,1 283,0 283,09 312,0 352,5 401, revenue 07 20 92 70 94 4 33 98 961 96,2 105,4 120,6 134,8 136,7 136,72 155,0 175,3 199, Service charges - refuse revenue 66 86 75 61 27 7 75 12 953 2012/13 Medium Term Revenue Description 2008/9 2009/10 2010/11 Current Year 2011/12 & Expenditure Framework Budget Budget Budget Audited Audited Audited Original Adjusted Full Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecast 2012/13 2013/14 2014/15 13,3 15,5 17,6 18,7 18,4 18,43 19,8 20,9 22,2 Rental of facilities and equipment 36 45 41 91 31 1 20 92 35 Interest earned - external 166,1 61,7 16,4 21,2 28,0 28,00 25,5 27,0 28,6 investments 28 60 47 57 00 0 28 59 83 Interest earned - outstanding 92,0 82,7 113,3 78,9 81,9 81,99 86,9 92,1 97,6 debtors 41 62 47 93 93 3 13 28 55 27,5 23,4 23,7 24,9 24,1 24,11 32,3 34,2 36,3 Fines 33 15 36 98 19 9 28 68 24 8,55 8,24 8,15 7,39 7,39 7,39 9,0 9,55 10,1 Licences and permits 2 2 3 9 9 9 14 5 29 1,15 1,22 1,61 1,40 1,40 1,40 1,4 1,48 1,5 Agency services 2 0 1 2 2 2 00 4 73 1,021,1 1,454,7 1,363,3 1,384,4 1,234,0 1,234,0 1,361,2 1,065,8 1,155, Transfers recognised - operational 15 43 58 87 94 94 48 40 403 186,6 265,1 357,9 207,7 656,2 656,20 676,0 743,2 785, Other revenue 24 61 12 38 07 7 41 47 794 1,69 Gains on disposal of PPE 6 8 Total Revenue (excluding 4,346, 5,218, 5,865, 6,355, 6,553, 7,237, 7,645, 8,516, capital transfers and 087 523 515 409 464 6,553,4 960 238 229 contributions) 64

Expenditure By Type 1,280,8 1,624,4 1,887,3 1,859,5 1,849,5 1,849,5 1,792,9 1,957,3 2,137, Employee related costs 71 44 62 69 69 69 73 23 456 41,2 44,8 45,0 51,0 51,0 51,08 54,5 60,0 66,6 Remuneration of councillors 55 86 53 84 84 4 83 41 45 175,5 419,4 554,2 288,1 282,1 282,15 251,2 282,5 318, Debt impairment 49 67 65 47 51 1 74 23 911 406,2 546,4 571,0 689,1 720,1 720,15 736,1 711,5 656, Depreciation & asset impairment 56 68 60 92 56 6 07 42 940 82,5 113,31 177,6 221,1 215,1 215,16 203,1 191,7 181,0 Finance charges 00 5 30 17 62 2 37 28 86 941,8 1,237,3 1,575,0 1,931,7 1,944,1 1,944,1 2,250,5 2,560,0 2,915, Bulk purchases 32 81 87 46 28 28 39 06 757 381,6 408,1 415,6 458,4 468,4 468,40 497,2 535,6 577, Other materials 16 04 38 72 04 4 16 07 637 93,2 147,7 144,2 269,6 194,4 194,46 376,0 458,3 496, Contracted services 02 65 71 75 61 1 41 32 814 265,7 364,5 307,5 417,9 370,9 370,96 402,0 451,7 509, Transfers and grants 64 71 56 61 61 1 53 52 521 603,3 812,1 728,5 418,5 839,2 839,21 800,3 437,2 493, Other expenditure 54 13 63 12 12 2 89 95 517 7,53 2,93 5,05 Loss on disposal of PPE 8 3 7 – Total Expenditure 4,279, 5,721, 6,411, 6,605, 6,935, 7,364, 7,646, 8,354, 736 445 541 474 287 6,935,2 312 149 284 87

66,3 (502, (546, (250, (381, (381,8 (126, (9 161, Surplus/(Deficit) 51 922) 026) 066) 823) 23) 352) 11) 944 970,0 993,7 505,6 1,249,4 1,040,5 1,040,5 774,9 1,011,6 1,301, Transfers recognised - capital 72 24 14 67 06 06 32 88 074

Contributions recognised - capital – – – – – – – – – Contributed assets 1,036, 490, (40,4 999, 658, 648, 1,010, 1,463, Surplus/(Deficit) after capital 423 802 12) 401 684 658,6 580 777 018 transfers & contributions 84 32 Taxation Surplus/(Deficit) after 1,036, 490, (40,4 999, 658, 658,6 648, 1,010, 1,463, taxation 423 802 12) 401 684 84 580 777 018 Attributable to minorities 1,036, 490, (40,4 999, 658, 648, 1,010, 1,463, Surplus/(Deficit) attributable 423 802 12) 401 684 658,6 580 777 018 to municipality 84 Share of surplus/ (deficit) of associate 1,036, 490, (40,4 999, 658, 658,6 648, 1,010, 1,463, Surplus/(Deficit) for the year 423 802 12) 401 684 84 580 777 018 33 Explanatory notes to Table A4 - Budgeted Financial Performance (revenue and expenditure)

Revenue

1. The Financial Performance Budget is required to be approved concurrently by revenue source and expenditure type, so as to ensure consistency with annual reporting format requirements. A key aim is to facilitate comparison between the annual results and the original budget, so as to assess performance.

2. Total revenue amounts to R7,2 billion in 2012/13 and increases to R8,5 billion in 2014/15. This represents a year-on-year increase of 10.4% for the 2012/13 financial year, 5,6% for the 2013/14 financial year and 11,4% for the 2014/15 financial year.

3. Revenue from property rates amounts to R1,1 billion in the 2012/13 financial year and increases to R1,4 billion in 2014/15, which amounts to 14.8% of the total operating revenue base of the Municipality. It remains relatively constant over the medium-term, whilst tariff increases of 13% have been provided for 2012/13 and 13% for the two outer years.

4. Services charges relating to electricity, water, sanitation and refuse collection and removal constitute the biggest component of the total revenue base, amounting to R3,95 billion for the 2012/13 financial year and increasing to R5,0 billion in 2014/15. For the 2012/13 financial year services charges amount to 54.6% of the total revenue base and grows to 58.8 % in 2014/15. This growth is mainly attributable to the increase in the bulk price of electricity.

5. Transfers recognised – operating includes the local government equitable share and other operating grants from national and provincial government. It is to be noted that the grants increased by 10.3% for 2012/13 and reduces by 21.7% for 2013/14. In the 2014/15 financial year the grants increase by 8,4%.

Expenditure

6. Bulk purchases have increased significantly over the 2008/09 to 2012/13 period, increasing from R941,8 million to R2,3 billion. These increases are mainly attributable to the substantial increases in the cost of bulk electricity from Eskom.

Table 13 (Table A5 - Budgeted Capital Expenditure by vote, standard classification and funding source) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Audited Audited Audited Budget Budget Budget Original Adjusted Full Year R thousand Outcom Outcom Outcom Year Year +1 Year +2 Budget Budget Forecast e e e 2012/13 2013/14 2014/15 Capital expenditure - Vote Multi-year expenditure to be appropriated 27, 51, 55, 54,9 27,8 27,8 7,4 10,3 10,3 Vote 1 - Budget and Treasury 306 396 769 65 65 65 80 00 50 94, 81, 108, 25,0 41,7 41,7 17,5 20,0 20,0 Vote 2 - Public Health 182 242 310 94 06 06 00 00 00 57, 79, 90,0 102,0 102, 165, 185, 186, Vote 3 - Human Settlements 683 531 – 00 00 000 868 336 928 Vote 4 - Economic Development and 164, 214, 193, 32,0 61,3 61,3 10,4 16,5 30,0 Recreational Services 809 808 547 00 18 18 00 00 00 69, 46, 88, 30,5 36,3 36,3 18,2 22,0 22,6 Vote 5 - Corporate Services 411 471 482 00 39 39 00 00 00 907, 976, 587, 395,3 299,1 299, 269, 393, 585, Vote 6 - Rate and General Engineers 170 761 299 00 62 162 662 817 909 188, 215, 145, 473,0 410,0 410, 134, 204, 235, Vote 7 - Water Services 807 412 187 00 00 000 402 850 950 111, 131, 125, 116,3 118,7 118, 234, 295, 380, Vote 8 - Sanitation Services 993 950 357 73 23 723 600 800 900 34 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Audited Audited Audited Budget Budget Budget Original Adjusted Full Year R thousand Outcom Outcom Outcom Year Year +1 Year +2 Budget Budget Forecast e e e 2012/13 2013/14 2014/15 257, 217, 170, 86,0 86,0 86,0 121, 157, 160, Vote 9 - Electricity and Energy 520 874 849 00 00 00 147 343 212 15, 6,1 7,5 12,0 12,0 12,0 11,2 10,0 11,5 Vote 10 - Executive and Council 650 99 41 00 00 00 00 00 00 44, 88, 16, 6,50 4,80 4,8 3,0 2,3 5,0 Vote 11 - Safety and Security 256 929 998 0 9 09 00 00 00 Vote 12 - Nelson Mandela Bay 843, 141, Stadium 000 600 – – – – – – – Vote 13 - Strategic Programmes 15, 21, 18, 38,2 34,6 34,6 46,0 2,4 Directorate 607 119 157 75 80 80 00 00 – Capital multi-year expenditure 2,797 2,273 1,517 1,360, 1,234, 1,234, 1,039 1,320 1,649 sub-total ,395 ,293 ,496 007 602 602 ,459 ,646 ,349 2,797 2,273 1,517 1,360, 1,234, 1,234, 1,039 1,320 1,649 Total Capital Expenditure - Vote ,395 ,293 ,496 007 602 602 ,459 ,646 ,349

Capital Expenditure - Standard 112, 282, 151, 97,4 76,2 76,2 36, 42, 44, Governance and administration 367 017 792 65 04 04 880 300 450 15, 6,1 7,5 12,0 12,0 12,0 11,2 10,0 11,5 Executive and council 650 99 41 00 00 00 00 00 00 27, 112, 55, 54,9 27,8 27,8 7,4 10,3 10,3 Budget and treasury office 306 710 769 65 65 65 80 00 50 69, 163, 88, 30,5 36,3 36,3 18,2 22,0 22,6 Corporate services 411 109 482 00 39 39 00 00 00 360, 440, 221, 112, 143, 143, 179, 204, 221, Community and public safety 930 575 070 094 698 698 768 136 928 164, 35, 42, 3,00 3,00 3,0 3,0 10,5 10,0 Community and social services 809 465 170 0 0 00 00 00 00 376, 151, 9,00 28,2 28,2 7,4 6,0 20,0 Sport and recreation 238 209 0 25 25 00 00 00 44, 2,6 16, 6,50 4,80 4,8 3,0 2,3 5,0 Public safety 256 70 998 0 9 09 00 00 00 57, 90,0 102,0 102, 165, 185, 186, Housing 683 – – 00 00 000 868 336 928 94, 26, 10, 3,59 5,66 5,6 5 Health 182 203 694 4 4 64 00 – – Economic and environmental 922, 902, 610, 464, 377, 377, 328, 410, 601, services 777 107 376 575 026 026 162 712 304 15, 45, 18, 58,2 64,7 64,7 46,0 2,4 Planning and development 607 397 157 75 72 72 00 00 – 907, 856, 587, 395,3 299,1 299, 269, 393, 585, Road transport 170 710 299 00 62 162 662 817 909 4,9 11,0 13,0 13,0 12,5 14,4 15,3 Environmental protection 20 00 92 92 00 95 95 558, 648, 534, 685, 637, 637, 494, 663, 781, Trading services 321 593 091 873 673 673 649 498 667 257, 333, 170, 86,0 86,0 86,0 121, 157, 160, Electricity 520 489 849 00 00 00 147 343 212 188, 197, 145, 473,0 410,0 410, 134, 204, 235, Water 807 870 187 00 00 000 402 850 950 111, 117, 125, 116,3 118,7 118, 234, 295, 380, Waste water management 993 234 357 73 23 723 600 800 900 92, 10,5 22,9 22,9 4,5 5,5 4,6 Waste management 697 00 50 50 00 05 05 843, 1 Other 000 68 Total Capital Expenditure - 2,797 2,273 1,517 1,360, 1,234, 1,234, 1,039 1,320 1,649 Standard ,395 ,293 ,496 007 602 602 ,459 ,646 ,349

Funded by: 1,585, 956, 481, 1,222,4 1,013,5 1,013, 771, 1,011, 1,301, National Government 935 989 969 67 81 581 932 688 074 57, 8,3 Provincial Government 097 04 – District Municipality – 22, 27,0 26,9 26,9 3,0 Other transfers and grants 019 00 25 25 00 – – 35 1,643, 956,9 512,2 1,249,4 1,040, 1,040, 774,9 1,011, 1,301,0 Transfers recognised - capital 032 89 92 67 506 506 32 688 74 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Audited Audited Audited Budget Budget Budget Original Adjusted Full Year R thousand Outcom Outcom Outcom Year Year +1 Year +2 Budget Budget Forecast e e e 2012/13 2013/14 2014/15 23, 94, 15, 38,0 38,0 38,0 23,0 33,5 33,5 Public contributions & donations 348 452 537 00 00 00 00 00 00 563, 745, 470, Borrowing 075 200 000 – – – – 567, 476, 519, 122,5 156,0 156, 241, 275, 314, Internally generated funds 939 652 667 40 96 096 527 458 775 2,797 2,273 1,517 1,410, 1,234, 1,234, 1,039 1,320 1,649 Total Capital Funding ,395 ,293 ,496 007 602 602 ,459 ,646 ,349

Explanatory notes to Table A5 - Budgeted Capital Expenditure by vote, standard classification and funding source

1. Table A5 is a breakdown of the capital programme in relation to capital expenditure by municipal vote; capital expenditure by standard classification; and the funding sources necessary to fund the capital budget, including information on capital transfers from national and provincial departments.

2. The capital programme is funded from capital and provincial grants and transfers, public contributions and donations, and internally generated funds. For 2012/13, capital transfers totals R774.9 million (74.6%) and amounts to R1,3 billion for 2014/15 (78.9%). Internally generated funding amounts to R241.5 million, R275.5 million and R314.8 million for each of the respective financial years of the MTREF. The source of the internally generated funding comprises the fuel levy and the equitable share allocation. These funding sources are further discussed in detail in Section 2.6 (Overview of Budget Funding).

Table 14 (Table A6 - Budgeted Financial Position) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Budget Budget Budget Audited Audited Audited Original Adjusted Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecas 2012/13 2013/14 2014/15 t ASSETS Current assets 95,3 124,3 130,6 200,0 200,0 200, 200, 200, 200, Cash 83 61 65 00 00 000 000 000 000 784,8 506,3 298,1 242,6 563,9 563, 779, 1,024, 1,404, Call investment deposits 77 43 20 19 35 935 183 348 938 867,4 599,4 446,3 761,5 546,3 546, 580, 616, 655, Consumer debtors 62 88 68 85 68 368 516 798 348 231,0 615,7 435,9 180,0 390,7 390, 480, 452, 452, Other debtors 08 53 10 00 15 715 573 343 343 Current portion of long- 64 3 1 2 2 2 term receivables 7 4 3 0 0 20 20 20 0 131,2 134,7 114,6 100,0 114,7 114, 121, 129, 136, Inventory 28 64 80 00 00 700 600 000 000 2,110, 1,980, 1,425, 1,484, 1,815, 1,815 2,161 2,422 2,848 Total current assets 605 743 756 224 738 ,738 ,892 ,509 ,649

Non current assets 93,9 80,5 61,4 63,4 63,4 63, 65, 65,0 65,0 Long-term receivables 72 29 54 99 99 499 000 00 00 72 2 2 2 2 2 Investments 7 0 0 0 0 20 20 20 0 1,865,7 70,7 71,2 71,2 71, 71, 71,2 71,2 Investment property 22 63 31 31 231 231 31 31 Investment in Associate Property, plant and 7,260,0 10,821,8 11,788,0 12,400,5 12,359,6 12,359 12,681, 13,290, 14,282, 36 equipment 15 66 94 45 05 ,605 356 460 869 Agricultural Biological 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Budget Budget Budget Audited Audited Audited Original Adjusted Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecas 2012/13 2013/14 2014/15 t 324,9 411,5 430,4 401,0 431,3 431, 431, 431, 431, Intangible 74 09 72 71 99 399 399 399 399 Other non-current assets Total non current 9,545, 11,384, 12,351, 12,865, 12,925, 12,92 13,24 13,858 14,850 assets 409 686 271 135 754 5,754 9,006 ,110 ,519 11,656, 13,365, 13,777, 14,349, 14,741, 14,74 15,41 16,280 17,699 TOTAL ASSETS 015 430 026 358 492 1,492 0,899 ,620 ,169

LIABILITIES Current liabilities

Bank overdraft – 51,8 92,4 92,0 98,6 97,4 97, 105, 112, 104, Borrowing 28 58 55 82 44 444 159 968 093 77,1 79,8 111,1 82,5 82,5 82, 113, 114, 115, Consumer deposits 15 50 25 85 85 585 500 500 500 1,913,3 1,840,5 1,548,0 1,240,0 1,565,6 1,565 1,820, 1,933, 2,040, Trade and other payables 10 34 72 00 04 ,604 800 680 911 43,3 48,3 102,5 53,6 53,6 53, 85, 90,1 95,5 Provisions 98 80 91 00 00 600 000 00 06 2,085, 2,061, 1,853, 1,474, 1,799, 1,799 2,124 2,251 2,356 Total current liabilities 650 221 843 867 233 ,233 ,459 ,249 ,010

Non current liabilities 386,6 1,459,7 1,841,8 1,729,0 1,734,1 1,734 1,629, 1,516, 1,411, Borrowing 57 87 51 21 72 ,172 013 045 952 836,7 1,006,7 1,284,0 1,217,3 1,217,3 1,217 1,411, 1,544, 1,683, Provisions 95 06 29 76 76 ,376 466 649 624 Total non current 1,223, 2,466, 3,125, 2,946, 2,951, 2,951 3,040 3,060 3,095 liabilities 452 494 880 397 548 ,548 ,479 ,694 ,576 3,309, 4,527, 4,979, 4,421, 4,750, 4,750 5,164 5,311 5,451 TOTAL LIABILITIES 102 715 723 264 781 ,781 ,938 ,943 ,586

8,346, 8,837, 8,797, 9,928, 9,990, 9,990 10,24 10,968 12,247 NET ASSETS 913 715 304 094 710 ,710 5,961 ,677 ,583

COMMUNITY WEALTH/EQUITY Accumulated Surplus/ 3,392,2 3,243,1 3,607,5 3,535,2 4,251,0 4,251 3,963, 4,769, 6,119, (Deficit) 52 90 69 30 94 ,094 987 384 257 4,954,6 5,594,5 5,189,7 6,392,8 5,739,6 5,739 6,281, 6,199, 6,128, Reserves 61 25 34 64 16 ,616 974 293 326 Minorities' interests TOTAL COMMUNITY 8,346, 8,837, 8,797, 9,928, 9,990, 9,990 10,24 10,968 12,247 WEALTH/EQUITY 913 715 304 094 710 ,710 5,961 ,677 ,583

Explanatory notes to Table A6 - Budgeted Financial Position

1. The table presents Assets less Liabilities as Community Wealth. The order of items within each group is also aligned to the convention of showing items in order of liquidity; i.e. assets readily 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 invariably impact on the Budgeted Financial Position. For example, the collection rate assumption will impact on the cash position of the municipality and consequently inform the level of cash and cash equivalents at year end. Similarly, the collection rate assumption informs the budget provision for debt impairment, which in turn impacts on the provision for bad debts. These budget and planning assumptions form a critical link in determining the applicability and 37 relevance of the budget as well as the determination of ratios and financial indicators. In addition the funding compliance assessment is directly informed by forecasting the statement of financial position.

Table 15 (Table A7 - Budget cash flow statement) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Adjuste Budget Budget Budget Audited Audited Audited Original Year R thousand d Year Year +1 Year +2 Outcome Outcome Outcome Budget Forecas Budget 2012/13 2013/14 2014/15 t CASH FLOW FROM OPERATING ACTIVITIES Receipts 2,852,2 2,704,2 5,412,1 4,261, 4,670, 4,670, 5,197, 5,820, 6,507, Ratepayers and other 09 02 24 084 097 097 167 175 782 1,021,1 1,454,7 1,363,3 1,371, 1,282, 1,282, 1,356, 1,065, 1,155, Government - operating 15 43 58 306 407 407 926 840 403 970,0 993,7 531,2 1,246, 1,249, 1,249, 771, 1,011, 1,301, Government - capital 72 24 95 467 768 768 932 688 074 258,1 167,5 16,4 21, 28, 28, 25, 27, 28,6 Interest 68 43 47 257 000 000 528 059 83 Dividends Payments (3,637, (4,136, (5,933, (4,987 (5,229 (5,229 (5,702 (6,011 (6,618, Suppliers and employees 899) 060) 419) ,425) ,724) ,724) ,869) ,445) 042) (82,5 (145,9 (177,1 (208, (213, (213, (205, (193, (182, Finance charges 00) 78) 10) 791) 337) 337) 239) 867) 546) (36,2 (99,8 (296,2 (86, (89, (89, (79, (85, (91, Transfers and Grants 77) 70) 31) 407) 584) 584) 005) 600) 318) NET CASH FROM/(USED) 1,344, 938, 916, 1,617 1,697 1,697 1,364 1,633 2,101 OPERATING ACTIVITIES 887 304 465 ,491 ,626 ,626 ,440 ,852 ,036 CASH FLOWS FROM INVESTING ACTIVITIES Receipts 2,25 Proceeds on disposal of PPE 6 0 Decrease (Increase) in non- current debtors Decrease (increase) other non- 23,0 31,4 19,0 1,2 1,2 1,2 current receivables 07 84 96 97 97 97 Decrease (increase) in non- 10,5 current investments 61 Payments (2,337, (2,333, (1,521, (1,364 (1,292 (1,292 (1,048 (1,282 (1,606, Capital assets 225) 450) 064) ,466) ,718) ,718) ,473) ,527) 479) NET CASH FROM/(USED) (2,303, (2,301, (1,499, (1,36 (1,29 (1,29 (1,04 (1,28 (1,606 INVESTING ACTIVITIES 651) 966) 718) 3,169) 1,421) 1,421) 8,473) 2,527) ,479)

CASH FLOWS FROM FINANCING ACTIVITIES Receipts Short term loans 1,165,0 470,0 Borrowing long term/refinancing 00 00 Increase (decrease) in consumer (11,6 2,5 2,5 2,5 (3, (1, (1,0 deposits 15) 15 15 15 275) 000) 00) Payments (56,4 (51,8 (88,8 (92, (92, (92, (97, (105, (112, Repayment of borrowing 38) 28) 59) 211) 058) 058) 444) 159) 968) NET CASH FROM/(USED) (68,0 1,113, 381, (89, (89, (89, (100 (106 (113 FINANCING ACTIVITIES 54) 172 141 696) 543) 543) ,719) ,159) ,968)

NET INCREASE/ (DECREASE) IN (1,026, (250, (202, 164 316 316 215 245 380, CASH HELD 818) 490) 112) ,626 ,662 ,662 ,248 ,165 589 Cash/cash equivalents at the year 1,907, 880, 629, 277 447 447 763 979 1,224 begin: 077 260 770 ,992 ,273 ,273 ,935 ,183 ,348 Cash/cash equivalents at the year 880, 629, 427, 442 763 763 979 1,224 1,604 end: 260 770 658 ,619 ,935 ,935 ,183 ,348 ,938 38 Explanatory notes to Table A7 - Budgeted Cash Flow Statement 1. The budgeted cash flow statement represents the first measurement in determining whether the budget is funded.

2. It reflects the expected cash in-flows versus cash out-flows that is likely to result from the implementation of the budget.

3. The cash position of the Municipality declined significantly over the 2007/08 to 2011/12 period, from R1.9 billion to R763.9 million.

4. The 2012/13 MTREF has been informed by the planning principle of striving to ensure adequate cash reserves over the medium-term.

5. Cash and cash equivalents amounts to R979,2 million as at the end of the 2012/13 financial year and increases to R1.6 billion in 2014/15. The 2012/13 cash balance is significantly influenced by the unspent grants of approximately R580 million relating to the previous year(s).

Table 16 (Table A8 - Cash Backed Reserves/Accumulated Surplus Reconciliation) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Budget Budget Budget Audited Audited Audited Original Adjusted Full Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecast 2012/13 2013/14 2014/15 Cash and investments available Cash/cash equivalents at the year 880,2 629,7 427,6 442,6 763,9 763,93 979, 1,224, 1,604, end 60 70 58 19 35 5 183 348 938 Other current investments > 90 93 1,12 ( (0 days 0 5 7 0 0) ) 0 (0) 0 72 2 2 2 2 2 2 2 Non current assets - Investments 7 0 0 0 0 20 0 0 0 Cash and investments 880, 630, 428, 442, 763, 763,9 979, 1,224 1,604 available: 987 725 805 639 955 55 203 ,368 ,958

Application of cash and investments 645,3 206,1 301,7 325,6 325,60 580, 619, 654, Unspent conditional transfers 67 96 12 – 04 4 800 280 219

Unspent borrowing – – – – – – – – – Statutory requirements Other working capital 148,6 687,8 107,2 374,7 356,8 356,89 239, 306, 345, requirements 66 21 92 40 99 9 779 989 848 Other provisions Long term investments committed – – – – – – – – – Reserves to be backed by 486,6 446,0 593,3 167,3 47,0 47,00 47,0 49,2 51,5 cash/investments 40 52 75 49 00 0 00 20 73 Total Application of cash and 1,280, 1,340, 1,002, 542, 729, 729,5 867, 975, 1,051 investments: 673 069 379 089 503 03 579 489 ,640 (399, (709, (573, (99,4 34,4 34,45 111, 248, 553, Surplus(shortfall) 686) 344) 574) 50) 52 2 624 879 318

Explanatory notes to Table A8 - Cash Backed Reserves/Accumulated Surplus Reconciliation

1. The cash backed reserves/accumulated surplus reconciliation is aligned to the requirements of MFMA Circular 42 – Funding a Municipal Budget.

2. The table assesses the funding levels of the budget by firstly forecasting the cash and investments at year end and secondly reconciling the available funding to the liabilities/commitments that exist. 39 3. As part of the budgeting and planning guidelines that informed the compilation of the 2012/13 MTREF, the end objective of the medium-term framework was to ensure the budget is funded as required in accordance with section 18 of the MFMA.

4. It is to be noted that the budget progressively moves from a funding surplus of R111.6 million in 2012/13 to a surplus of R553.3 million in 2014/15.

Table 17 (Table A9 - Asset Management) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Adjuste Budget Budget Budget Audited Audited Audited Original Year R thousand d Year Year +1 Year +2 Outcome Outcome Outcome Budget Forecas Budget 2012/13 2013/14 2014/15 t CAPITAL EXPENDITURE 2,276, 1,994, 1,043, 1,072 721 721, 410, 383, 417, Total New Assets 898 760 023 ,107 ,447 447 510 101 716 684,5 794,8 381,1 248, 131, 131, 118, 107, 114, Infrastructure - Road transport 05 39 59 800 811 811 112 385 648 221,5 313,8 159,8 60, 4, 4,1 26,5 26,5 24,5 Infrastructure - Electricity 04 85 85 400 100 00 00 00 00 107,8 151,6 102,1 435, 372, 372, 16,0 18,0 20,0 Infrastructure - Water 08 10 35 000 450 450 00 00 00 33,0 87,1 92,1 38, 2, 2,5 7,5 7,5 7,5 Infrastructure - Sanitation 92 50 40 073 500 00 00 00 00 21,6 32,3 29, 29, 148, 158, 160, Infrastructure - Other 75 – 04 – 295 295 668 836 428 1,068,5 1,347,4 767,6 782, 540, 540, 316, 318, 327, Infrastructure 85 84 22 273 156 156 780 221 076 1,052,1 425,8 142,1 90, 46, 46, 58,0 15,9 28,7 Community 33 50 64 369 814 814 00 00 00 9,85 Heritage assets 0 – – – – – – – – 57,6 120,0 102,0 102,0 Investment properties 83 – – 00 00 00 – – – 35,1 186,9 133,2 14, 4, 4,3 23,5 34,4 46,9 Other assets 70 74 37 500 312 12 30 00 00

Agricultural Assets – – – – – – – – –

Biological assets – – – – – – – – – 53,4 34,4 64, 28, 28, 12,2 14,5 15,0 Intangibles 77 52 – 965 165 165 00 80 40

Total Renewal of Existing 190, 241, 268, 287 513 513, 628, 937, 1,231 Assets 818 358 333 ,900 ,158 158 949 545 ,633 107,9 80,4 112, 164, 164, 148, 280, 453, Infrastructure - Road transport 10 48 – 500 690 690 550 852 221 15,5 10,8 10,9 25, 81, 81, 94,6 130, 135, Infrastructure - Electricity 16 02 65 600 900 900 47 843 712 37,0 63,8 43,0 45, 37, 37, 116, 182, 211, Infrastructure - Water 68 02 52 000 550 550 402 850 950 30,3 51,3 33,2 78, 116, 116, 225, 284, 369, Infrastructure - Sanitation 24 25 18 300 225 225 100 300 400 59,0 10, 27, 27, Infrastructure - Other – – 84 500 773 773 – – – 190,8 206,3 146,3 271, 428, 428, 584, 878, 1,170, Infrastructure 18 77 19 900 138 138 699 845 283 10,8 68,8 41, 41, 11,3 15,9 17,7 Community – 43 37 – 801 801 00 00 00 21,9 Heritage assets – – 20 – – – – – –

Investment properties – – – – – – – – – 24,1 31,2 16, 31, 31, 23,4 27,8 27,6 Other assets – 38 57 000 458 458 50 00 50

Agricultural Assets – – – – – – – – –

Biological assets – – – – – – – – – 40 11, 11, 9,5 15,0 16,0 Intangibles – – – – 762 762 00 00 00

Total Capital Expenditure 792,4 875,2 381,1 361, 296, 296, 266, 388, 567, Infrastructure - Road transport 15 87 59 300 500 500 662 237 869 237,0 324,6 170,8 86, 86, 86, 121, 157, 160, Infrastructure - Electricity 20 87 49 000 000 000 147 343 212 144,8 215,4 145,1 480, 410, 410, 132, 200, 231, Infrastructure - Water 76 12 87 000 000 000 402 850 950 63,4 138,4 125,3 116, 118, 118, 232, 291, 376, Infrastructure - Sanitation 16 75 57 373 725 725 600 800 900 21,6 91,3 10, 57, 57, 148, 158, 160, Infrastructure - Other 75 – 88 500 068 068 668 836 428 1,259,4 1,553,8 913,9 1,054, 968, 968, 901, 1,197, 1,497, Infrastructure 03 61 41 173 293 293 479 066 359 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Adjuste Budget Budget Budget Audited Audited Audited Original Year R thousand d Year Year +1 Year +2 Outcome Outcome Outcome Budget Forecas Budget 2012/13 2013/14 2014/15 t 1,052,1 436,6 211,0 90, 88, 88, 69,3 31,8 46,4 Community 33 93 01 369 616 616 00 00 00 9,85 21,9 Heritage assets 0 – 20 – – – – – – 57,6 120, 102, 102, Investment properties 83 – – 000 000 000 – – – 35,1 211,1 164,4 30, 35, 35, 46,9 62,2 74,5 Other assets 70 12 94 500 770 770 80 00 50

Agricultural Assets – – – – – – – – –

Biological assets – – – – – – – – – 53,4 34,4 64, 39, 39, 21,7 29,5 31,0 Intangibles 77 52 – 965 927 927 00 80 40 TOTAL CAPITAL EXPENDITURE 2,467, 2,236, 1,311, 1,360 1,234 1,234 1,039 1,320 1,649 - Asset class 716 118 356 ,007 ,606 ,606 ,459 ,646 ,349

ASSET REGISTER SUMMARY - PPE (WDV) 2,792,6 4,193,1 2,849,7 4,833 3,044 3,044, 3,560, 3,867, 4,305, Infrastructure - Road transport 85 73 52 ,478 ,971 971 061 292 505 1,151,1 1,306,5 1,437,6 1,435 1,441 1,441, 1,478, 1,559, 1,646, Infrastructure - Electricity 99 08 55 ,590 ,066 066 616 783 401 902,70 1,153,96 941,7 1,580,4 1,323,2 1,323,2 1,646,0 2,009,7 2,316,2 Infrastructure - Water 9 6 76 03 49 49 91 25 71 596,5 683,4 771,1 837, 878, 878, 1,089, 1,351, 1,734, Infrastructure - Sanitation 84 28 60 347 338 338 231 179 868 41,1 83,4 2,268,1 165, 1,918 1,918, 1,585, 1,268, 1,203, Infrastructure - Other 39 24 38 258 ,907 907 096 473 447 5,484,3 7,420,4 8,268,4 8,852, 8,606, 8,606, 9,359, 10,056, 11,206, Infrastructure 16 99 80 076 531 531 094 453 492 1,339,6 2,726,2 2,810,6 2,591 2,856 2,856, 2,908, 2,940, 2,732, Community 57 58 27 ,040 ,504 504 307 515 039 59,1 111,0 126,4 99, 126, 126, 126, 126, 121, Heritage assets 46 83 74 982 474 474 474 474 474 1,865,7 70,7 71,2 71, 71, 71,2 71,2 71,2 Investment properties 22 63 31 – 231 231 31 31 31 376,8 564,0 582,5 857, 770, 770, 287, 167, 222, Other assets 96 26 13 447 096 096 481 018 864

Agricultural Assets – – – – – – – – –

Biological assets – – – – – – – – – 324,9 411,5 430,4 401, 431, 431, 431, 431, 431, Intangibles 74 09 72 071 399 399 399 399 399 TOTAL ASSET REGISTER 9,450, 11,304, 12,289, 12,80 12,86 12,862 13,183 13,793 14,785 SUMMARY -PPE (WDV) 710 137 797 1,616 2,235 ,235 ,986 ,090 ,499

EXPENDITURE OTHER ITEMS Depreciation & asset 406,2 546,4 571,0 689, 720, 720, 736, 711, 656, impairment 56 68 60 192 156 156 107 542 940 41 Repairs and Maintenance by 381,6 408,1 415,6 458, 468, 468, 497, 535, 577, Asset Class 16 04 38 472 404 404 216 607 637 65,3 66,1 73,3 89, 90, 90, 90,6 96,1 101, Infrastructure - Road transport 36 13 10 773 165 165 72 12 879 33,9 34,9 28,5 38, 36, 36, 42,0 45,6 49,5 Infrastructure - Electricity 65 12 85 059 085 085 06 91 60 102,3 117,9 119,4 120, 117, 117, 131, 144, 157, Infrastructure - Water 75 15 15 635 634 634 853 439 702 100,3 103,3 111,7 116, 124, 124, 129, 138, 148, Infrastructure - Sanitation 92 25 01 606 696 696 312 336 790 2,09 2,12 2,73 4, 9, 9,7 5,5 5,8 6,2 Infrastructure - Other 5 7 5 729 729 29 10 87 91 304,1 324,3 335,7 369, 378, 378, 399, 430, 464, Infrastructure 63 92 45 802 309 309 353 465 223 31,7 29,1 31,8 29, 30, 30, 35,3 38,4 41,8 Community 01 67 53 304 578 578 87 09 77

Heritage assets – – – – – – – – –

Investment properties – – – – – – – – – 45,7 54,5 48,0 59, 59, 59, 62,4 66,7 71,5 Other assets 52 45 40 366 517 517 76 33 37 TOTAL EXPENDITURE OTHER 787,8 954,5 986,6 1,147, 1,188, 1,188, 1,233, 1,247, 1,234,5 ITEMS 72 72 97 663 560 560 322 149 77 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Adjuste Budget Budget Budget Audited Audited Audited Original Year R thousand d Year Year +1 Year +2 Outcome Outcome Outcome Budget Forecas Budget 2012/13 2013/14 2014/15 t

Renewal of Existing Assets as % of total capex 7.7% 10.8% 20.5% 21.2% 41.6% 41.6% 60.5% 71.0% 74.7% Renewal of Existing Assets as % of deprecn" 47.0% 44.2% 47.0% 41.8% 71.3% 71.3% 85.4% 131.8% 187.5% R&M as a % of PPE 5.3% 3.8% 3.5% 3.7% 3.8% 3.8% 3.9% 4.0% 4.0% Renewal and R&M as a % of PPE 6.0% 6.0% 6.0% 6.0% 8.0% 8.0% 9.0% 11.0% 12.0%

Explanatory notes to Table A9 - Asset Management

1. The table provides a summarised version of the capital programme divided into new assets and renewal of existing assets; and also reflects the relevant asset categories. The associated repairs and maintenance and depreciation is also reflected.

It also provides an indication of the resources deployed for maintaining and renewing existing assets, as well as the extent of asset expansion.

2. National Treasury has suggested that municipalities should allocate at least 40% of their capital budget to the renewal/rehabilitation of existing assets, and allocations to repairs and maintenance should be 8% of PPE. In this regard the expenditure relating to the renewal/rehabilitation of existing assets amounts to 60.5% of the capital budget, whilst repairs and maintenance constitute 3,9% of PPE.

Table 18 (Table A10 - Basic Service Delivery Measurement) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Budg Origi Full Adjuste et Budget Budget Outcom Outcom Outcom nal Year R thousand d Year Year +1 Year +2 e e e Budg Forecas Budget 2012/ 2013/14 2014/15 et t 13 Household service targets Water: Piped water inside dwelling 211, 265, 205, 3 309, 309, 2 306, 315, 42 09,09 97,67 120 000 877 6 096 096 0 600 798 Piped water inside yard (but not in 5,5 7,0 8,1 8,1 8,6 8,9 dwelling) 00 00 8,164 64 64 8,409 61 21

Using public tap (at least 29,0 65, 7 75,8 75,8 78,09 80,4 82,8 min.service level) 00 000 5,816 16 16 0 33 46 Other water supply (at least min.service level) – 3 3 Minimum Service Level and Above 245, 337, 205, 93,07 393, 393, 84,16 395, 407, sub-total 620 000 877 6 076 076 9 694 565 Using public tap (< min.service level) Other water supply (< min.service level) 34,38 No water supply 0 Below Minimum Service Level sub- 34,38 total 0 – – – – – – – – 3 3 280, 337 205, 93,07 393, 393, 84,16 395, 407, Total number of households 000 ,000 877 6 076 076 9 694 565 Sanitation/sewerage: 2 3 216, 256, 98,59 298, 298, 07,55 316, 326, Flush toilet (connected to sewerage) 700 000 8 598 598 6 783 286 3 3,0 2,9 2,9 3,1 3,2 Flush toilet (with septic tank) 00 00 2,980 80 80 3,069 61 56 Chemical toilet Pit toilet (ventilated) Other toilet provisions (> min.service level) 3 3 Minimum Service Level and Above 217, 259, 01,57 301, 301, 10,62 319, 329, sub-total 000 000 – 8 578 578 5 944 542 39,00 22,0 22,5 21,85 21,8 21,8 21,8 21,85 21,85 Bucket toilet 0 00 00 9 59 59 59 9 9 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Budg Origi Full Adjuste et Budget Budget Outcom Outcom Outcom nal Year R thousand d Year Year +1 Year +2 e e e Budg Forecas Budget 2012/ 2013/14 2014/15 et t 13 Other toilet provisions (< min.service level) No toilet provisions

Below Minimum Service Level sub- 39,0 22, 22,5 2 21,8 21,8 21,85 21,8 21,8 total 00 000 00 1,859 59 59 9 59 59 3 3 256, 281 22, 23,43 323, 323, 32,48 341, 351, Total number of households 000 ,000 500 7 437 437 4 803 401 Energy:

Electricity (at least min.service 37,5 36, 32,0 3 35,0 35,0 27,50 27,5 27,5 level) 20 000 10 5,000 00 00 0 00 00 2 2 Electricity - prepaid (min.service 227, 232, 361, 36,00 236, 236, 77,00 277, 277, level) 095 000 740 0 000 000 0 000 000 2 3 Minimum Service Level and Above 264, 268, 393, 71,00 271, 271, 04,50 304, 304, sub-total 615 000 750 0 000 000 0 500 500 Electricity (< min.service level) Electricity - prepaid (< min. service level) Other energy sources Below Minimum Service Level sub- total – – – – – – – – – Total number of households 264, 268 393, 2 271, 271, 3 304, 304, 43 71,00 04,50 615 ,000 750 0 000 000 0 500 500 Refuse: 2 2 170, 172, 137, 75,08 275, 275, 97,09 297, 297, Removed at least once a week 102 000 561 3 083 083 0 090 090 2 2 Minimum Service Level and Above 170, 172, 137, 75,08 275, 275, 97,09 297, 297, sub-total 102 000 561 3 083 083 0 090 090 Removed less frequently than once 7,4 9,0 13,4 a week 00 00 28 Using communal refuse dump Using own refuse dump Other rubbish disposal 8 3,0 2,3 1,1 1,1 1,0 1,0 No rubbish disposal 86 00 71 1,191 91 91 1,096 96 96 Below Minimum Service Level sub- 8,2 12, 15,7 1,1 1,1 1,0 1,0 total 86 000 99 1,191 91 91 1,096 96 96 2 2 178, 184 153, 76,27 276, 276, 98,18 298, 298, Total number of households 388 ,000 360 4 274 274 5 185 185

Households receiving Free Basic Service

Water (6 kilolitres per household per 108, 115, 79,0 8 75,2 75,2 74,86 75,1 75,4 month) 000 000 35 5,156 41 41 7 66 67

Sanitation (free minimum level 108, 115, 79,0 8 75,2 75,2 74,86 75,1 75,4 service) 000 000 35 5,156 41 41 7 66 67

Electricity/other energy (50kwh per 99,0 105, 79,0 8 67,8 67,8 67,15 67,4 67,6 household per month) 00 000 35 5,156 00 00 8 27 96

Refuse (removed at least once a 80,0 83, 79,0 7 70,3 70,3 68,48 68,7 69,0 week) 00 000 35 8,705 21 21 5 59 34

Cost of Free Basic Services provided (R'000)

Water (6 kilolitres per household per 42,1 45, 45,3 2 59,8 59,8 50,70 57,8 66,4 month) 14 483 13 0,258 34 34 3 01 71

57,1 61, 63,8 5 55,1 55,1 88,17 100, 115, Sanitation (free sanitation service) 41 998 62 6,071 45 45 1 515 592

Electricity/other energy (50kwh per 52,6 66, 34,0 4 41,8 41,8 32,06 35,5 39,4 household per month) 91 313 58 9,110 82 82 7 89 93

39,8 43, 44,7 5 53,0 53,0 60,17 68,6 78,8 Refuse (removed once a week) 30 016 65 2,618 46 46 7 02 92

Total cost of FBS provided 191,7 216,8 187,9 178,0 209,9 209,9 231,1 262,5 300,4 (minimum social package) 76 10 97 57 07 07 18 07 49 Highest level of free service provided

42, 1 15,0 15,0 15,00 15,0 15,0 Property rates (R value threshold) 700 15 5,000 00 00 0 00 00 Water (kilolitres per household per 45,4 month) 83 8 8 8 8 8 8 8 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Budg Origi Full Adjuste et Budget Budget Outcom Outcom Outcom nal Year R thousand d Year Year +1 Year +2 e e e Budg Forecas Budget 2012/ 2013/14 2014/15 et t 13 Sanitation (kilolitres per household 1 1 1 per month) 15 11 11 11 11 11 1 1 Sanitation (Rand per household per 61, 7 1 1 month) 998 86 62 62 98 11 25 44 7 Electricity (kwh per household per 7 7 month) 75 75 75 75 75 75 5 5 2 2 2 2 Refuse (average litres per week) 85 00 00 200 00 00 Revenue cost of free services provided (R'000)

Property rates (R15 000 threshold 39,5 42, 18,2 1 20,5 20,5 23,11 26,1 29,5 rebate) 37 700 64 8,419 99 99 2 06 00

Property rates (other exemptions, 26,7 4 31,7 31,7 35,88 35,6 41,5 reductions and rebates) 40 9,717 42 42 4 77 51

42,1 45, 60,4 6 59,3 59,3 67,60 77,0 88,6 Water 14 483 18 7,728 01 01 4 68 28

57,1 61, 63,8 5 77,3 77,3 88,17 100, 115, Sanitation 41 998 62 6,071 43 43 1 515 592

52,6 66, 51,0 4 42,7 42,7 48,10 53,3 59,2 Electricity/other energy 91 313 86 9,110 03 03 0 84 40

39,8 48, 44,7 5 52,7 52,7 60,17 68,6 78,8 Refuse 30 677 65 2,618 87 87 7 02 92 Municipal Housing - rental rebates Housing - top structure subsidies Other Total revenue cost of free 2 3 services provided (total social 231, 265 265, 93,66 284, 284, 23,04 361, 413, package) 313 ,171 134 3 475 475 8 352 403

Explanatory notes to Table A10 - Basic Service Delivery Measurement

1. Table A10 provides an overview of service delivery levels, including backlogs (below minimum service level), for each of the main services.

1.8 Consolidated Budget Tables

The ten main budget tables, as required in terms of the Municipal Budget and Reporting Regulations, are included in this section. These tables set out the Municipality’s and the Entity’s 2012/13 budget and MTREF to be noted by Council.

Table 19 (Table A1 –Consolidated Budget Summary)

2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Audited Audited Audited Budget Budget Budget Original Adjusted Full Year R thousands Outcom Outcom Outcom Year Year +1 Year +2 Budget Budget Forecast e e e 2012/13 2013/14 2014/15 Financial Performance 659, 756, 838, 961,5 961,5 961,56 1,074, 1,214, 1,372,2 Property rates 777 499 855 65 65 5 628 336 05 2,169, 2,549, 3,122, 3,648,7 3,540,2 3,540,25 3,951, 4,436, 5,006,2 Service charges 774 064 678 79 53 3 039 329 27 169, 65, 19, 23,7 30,5 30,50 27, 29, 31,1 Investment revenue 411 323 252 57 00 0 328 059 83 1,021, 1,458, 1,365, 1,384,4 1,234,0 1,234,09 1,361, 1,065, 1,155,4 Transfers recognised - operational 086 570 737 87 94 4 248 840 03 335, 397, 529, 348,3 812,5 812,57 832, 909, 961,3 Other own revenue 975 335 557 67 71 1 509 136 71 Total Revenue (excluding 4,356, 5,226, 5,876, 6,366, 6,578, 6,578,9 7,246, 7,654, 8,526, capital transfers and 023 791 077 955 984 84 752 700 390 contributions) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework 45 Audited Audited Audited Budget Budget Budget Original Adjusted Full Year R thousands Outcom Outcom Outcom Year Year +1 Year +2 Budget Budget Forecast e e e 2012/13 2013/14 2014/15 1,286, 1,629, 1,893, 1,866,2 1,856,5 1,856,52 1,800, 1,965, 2,146,3 Employee costs 491 721 082 26 26 6 625 587 80 41, 44, 45, 51,0 51,0 51,08 54, 60, 66,6 Remuneration of councillors 255 886 053 84 84 4 583 041 45 407, 546, 571, 689,3 720,2 720,15 736, 711, 657,1 Depreciation & asset impairment 147 632 232 01 80 6 327 752 40 82, 113, 177, 221,1 215,3 215,16 203, 191, 181,2 Finance charges 503 367 630 17 12 2 317 908 46 1,323, 1,645, 1,990, 2,390,2 2,412,5 2,412,53 2,747, 3,095, 3,493,3 Materials and bulk purchases 835 499 779 18 32 2 755 613 94 184, 283, 296, 354,8 307,8 307,86 345, 390, 444,3 Transfers and grants 882 059 231 69 69 9 775 862 77 898, 1,393, 1,448, 985,2 1,318,0 1,318,04 1,427, 1,178, 1,309,2 Other expenditure 960 259 655 13 45 5 714 160 49 4,225, 5,656, 6,422, 6,558, 6,881, 6,881,3 7,316, 7,593, 8,298, Total Expenditure 073 423 661 027 648 74 096 923 433 130, (429, (546, (191, (302, (302,3 (69, 60, 227, Surplus/(Deficit) 950 632) 584) 072) 664) 90) 344) 777 957 926, 937, 438, 1,249,4 1,040,5 1,040,50 774, 1,011, 1,301,0 Transfers recognised - capital 614 373 055 67 06 6 932 688 74 Contributions recognised - capital & contributed assets – – – – – – – – – 1,057, 507, (108, 1,058, 737, 738,1 705, 1,072, 1,529, Surplus/(Deficit) after capital 564 740 529) 395 842 17 588 465 031 transfers & contributions Share of surplus/ (deficit) of associate – – – – – – – – – 1,057, 507, (108, 1,058, 737, 738,1 705, 1,072, 1,529, Surplus/(Deficit) for the year 564 740 529) 395 842 17 588 465 031

Capital expenditure & funds sources 2,825, 2,321, 1,567, 1,406, 1,325, 1,325,8 1,079, 1,363, 1,695, Capital expenditure 767 134 555 732 827 27 076 240 098 Transfers recognised - capital 1,643, 956, 512, 1,249,4 1,040,5 1,040,50 774, 1,011, 1,301,0 032 989 292 67 06 6 932 688 74 23, 94, 17, 38,0 43,0 43,00 23, 33, 33,5 Public contributions & donations 348 452 802 00 00 0 000 500 00 563, 745, 470, Borrowing 075 200 000 – – – – – – 596, 524, 567, 169,2 242,3 242,32 281, 318, 360,5 Internally generated funds 311 493 461 65 20 0 144 052 24 2,825, 2,321, 1,567, 1,456, 1,325, 1,325,8 1,079, 1,363, 1,695, Total sources of capital funds 766 135 555 732 827 27 076 240 098

Financial position 2,156, 2,024, 1,440, 1,500,3 1,839,3 1,839,31 2,194, 2,451, 2,871,7 Total current assets 105 194 471 53 14 4 699 513 53 9,546, 11,385, 12,351, 12,911, 13,017, 13,017,7 13,407, 14,070, 15,119, Total non current assets 844 477 503 752 769 69 513 759 651 2,080, 2,035, 1,867, 1,474,8 1,799,2 1,799,23 2,157, 2,280, 2,379,3 Total current liabilities 314 884 522 67 33 3 536 516 28 1,224, 2,467, 3,126, 2,946,3 2,951,5 2,951,54 3,040, 3,060, 3,095,5 Total non current liabilities 968 722 917 97 48 8 479 694 76 8,397, 8,906, 8,797, 9,990,8 10,106, 10,106,3 10,404, 11,181, 12,516, Community wealth/Equity 666 064 535 40 302 02 198 062 500

Cash flows 1,367, 1,012, 933, 1,660,2 1,754,0 1,764,69 1,410, 1,683, 2,151,7 Net cash from (used) operating 101 481 208 26 54 6 633 821 45 (2,303, (2,379, (1,499, (1,409, (1,382, (1,382,6 (1,115, (1,336, (1,663, Net cash from (used) investing 772) 759) 938) 894) 646) 46) 084) 285) 082) (68, 1,112, 380, (89,6 (89,5 (89,54 (100, (106, (113,9 Net cash from (used) financing 054) 788 950 96) 43) 3) 719) 159) 68) Cash/cash equivalents at the 926, 671, 486, 458, 787, 798,1 1,011, 1,253, 1,627, year end 301 811 031 748 511 53 895 272 967

Cash backing/surplus reconciliation 927, 672, 487, 458,7 787,5 787,53 1,011, 1,253, 1,627,9 Cash and investments available 008 747 159 68 31 1 915 292 87 46 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Audited Audited Audited Budget Budget Budget Original Adjusted Full Year R thousands Outcom Outcom Outcom Year Year +1 Year +2 Budget Budget Forecast e e e 2012/13 2013/14 2014/15 1,248, 1,308, 1,095, 541,8 735,8 733,32 901, 1,005, 1,075,4 Application of cash and investments 194 912 437 34 03 9 304 348 75 (321, (636, (608, (83, 51,7 54,2 110, 247, 552, Balance - surplus (shortfall) 187) 164) 278) 066) 28 02 611 944 512

Asset management 9,451, 11,304, 12,290, 12,848, 12,862, 12,862,2 13,342, 14,005, 15,054, Asset register summary (WDV) 369 879 587 233 235 35 493 739 631 407, 546, 571, 689,3 720,2 720,15 736, 711, 657,1 Depreciation & asset impairment 147 632 232 01 80 6 327 752 40 247, 319, 316, 352,9 600,2 600,22 668, 979, 1,276,8 Renewal of Existing Assets 169 776 127 00 25 5 091 635 49 381, 408, 415, 458,4 468,4 468,40 497, 535, 577,6 Repairs and Maintenance 616 104 638 72 04 4 216 607 37

Free services 191, 216, 187, 178,0 209,9 209,90 231, 262, 300,4 Cost of Free Basic Services provided 776 810 997 57 07 7 118 507 49 Revenue cost of free services 231, 265, 265, 293,6 284,4 284,47 323, 361, 413,4 provided 313 171 134 63 75 5 048 352 03 Households below minimum service level

Water: 34 – – – – – – – – 2 2 2 Sanitation/sewerage: 39 22 23 2 2 22 22 22 2

Energy: – – – – – – – – –

Refuse: 8 12 16 1 1 1 1 1 1

Table 20 (Table A2 –Consolidated Budget Financial Performance) 2012/13 Medium Term Revenue Description 2008/9 2009/10 2010/11 Current Year 2011/12 & Expenditure Framework Budget Budget Budget Audited Audited Audited Original Adjusted Full Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecast 2012/13 2013/14 2014/15 Revenue - Standard Governance and 1,951, 1,410, 1,683, 1,689, 1,747, 1,747, 1,927, 2,117, 2,309, administration 261 393 291 573 027 027 558 857 748 545,1 73,7 28,8 1,23 1,27 1,27 5 5 5 Executive and council 17 60 64 7 7 7 1 1 2 1,396,7 1,324,8 1,639,8 1,670,0 1,726,9 1,726,9 1,911,5 2,101,3 2,292,5 Budget and treasury office 09 03 76 69 08 08 78 75 43 9,43 11,8 14,5 18,2 18,8 18,8 15,9 16,4 17,15 Corporate services 5 29 50 68 41 41 29 30 3 Community and public (74,4 583, 368, 169, 523, 523, 475, 75,3 81,6 safety 04) 695 542 151 893 893 241 41 83 2,42 34,0 42,4 14,9 24,3 24,3 18,7 15,2 15,89 Community and social services 9 83 73 17 86 86 03 11 9 (403,8 21,1 16,6 42,3 52,0 52,0 22,3 23,8 27,31 Sport and recreation 02) 56 77 16 56 56 01 40 5 54,6 34,5 25,1 27,7 26,8 26,8 33,7 35,7 37,88 Public safety 85 28 45 00 20 20 14 37 1 197,6 401,9 247,1 5,89 356,4 356,4 400,4 45 47 Housing 79 35 71 9 50 50 25 0 7 74,6 91,9 37,0 78,3 64,1 64,1 9 10 11 Health 06 93 75 19 81 81 8 4 0 Economic and 46,8 125, 240, 334, 264, 264, 400, 470, 512, environmental services 95 732 075 394 601 601 148 017 229 9,93 16,5 174,5 294,2 212,6 212,6 176,3 173,4 184,0 Planning and development 6 33 86 29 92 92 37 01 17 14,2 101,7 40,7 18,7 18,9 18,9 219,9 292,5 323,9 Road transport 30 36 91 96 46 46 97 72 27 22,7 7,46 24,6 21,3 32,9 32,9 3,81 4,04 4,28 Environmental protection 30 3 97 69 63 63 4 3 6 47 2,419, 2,973, 3,582, 4,161, 4,036, 4,036, 4,431, 4,978, 5,608, Trading services 603 145 192 277 031 031 465 404 863 1,449,9 1,905,6 2,295,9 2,903,9 2,870,8 2,870,8 3,120,9 3,503,3 3,934,4 Electricity 36 81 91 15 27 27 37 15 07 440,9 522,5 710,2 571,2 511,9 511,9 581,3 654,2 742,4 Water 10 76 28 00 91 91 95 78 93 2012/13 Medium Term Revenue Description 2008/9 2009/10 2010/11 Current Year 2011/12 & Expenditure Framework Budget Budget Budget Audited Audited Audited Original Adjusted Full Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecast 2012/13 2013/14 2014/15 347,9 350,8 374,3 437,8 426,3 426,3 474,3 534,9 608,6 Waste water management 89 03 00 16 84 84 17 59 63 180,7 194,0 201,6 248,3 226,8 226,8 254,8 285,8 323,3 Waste management 69 84 74 47 30 30 16 52 00 12,6 133, 1,9 12,5 7,4 7,4 12,3 13,0 13,8 Other 68 826 79 59 31 31 41 81 66 4,356, 5,226, 5,876, 6,366, 6,578, 6,578, 7,246, 7,654, 8,526, Total Revenue - Standard 023 791 077 955 984 984 752 700 390

Expenditure - Standard Governance and 803, 1,308, 1,127, 978, 1,060, 1,060, 1,106, 1,189, 1,259, administration 788 361 638 127 340 340 730 093 722 173,8 321,2 133,1 172,1 155,3 155,3 172,3 190,5 206,9 Executive and council 74 03 49 95 08 08 95 24 26 601,1 768,6 742,4 563,8 569,7 569,7 581,5 621,0 677,1 Budget and treasury office 84 15 17 05 48 48 19 17 96 28,7 218,5 252,0 242,1 335,2 335,2 352,8 377,5 375,6 Corporate services 31 43 72 27 84 84 16 52 00 Community and public 905, 1,039, 1,236, 930, 1,186, 1,186, 1,209, 870, 945, safety 107 878 597 311 168 168 028 450 092 19,5 114,3 100,9 211,2 136,8 136,8 138,9 145,5 156,8 Community and social services 56 86 57 83 69 69 68 54 05 219,9 35,3 156,0 146,2 136,4 136,4 152,0 163,1 175,9 Sport and recreation 27 41 12 48 88 88 41 50 23 272,4 308,8 369,3 338,3 338,1 338,1 348,2 375,7 408,1 Public safety 96 68 80 66 04 04 37 90 19 273,1 434,1 342,5 34,3 389,9 389,9 432,0 35,0 38,36 Housing 60 02 97 28 50 50 52 28 1 119,9 147,1 267,6 200,0 184,7 184,7 137,7 150,9 165,8 Health 69 81 50 86 56 56 30 29 84 Economic and 409, 834, 624, 1,013, 848, 848, 969, 1,081, 1,146, environmental services 176 709 723 803 536 261 716 886 403 29,7 348,4 534,8 463,4 463,1 541,9 625,7 683,2 Planning and development – 62 05 56 24 50 26 11 41 211,1 274,8 185,1 215,2 148,0 148,0 180,5 195,2 198,5 Road transport 98 59 99 46 87 87 93 10 77 197,9 530,0 91,1 263,7 237,0 237,0 247,1 260,9 264,5 Environmental protection 78 88 18 01 25 25 96 65 85 2,099, 2,420, 3,423, 3,647, 3,785, 3,785, 3,967, 4,409, 4,921, Trading services 238 633 377 871 593 593 051 864 239 1,277,0 1,484,7 2,119,4 2,490,1 2,531,6 2,531,6 2,782,9 3,114,7 3,500,2 Electricity 45 20 77 20 35 35 01 28 77 377,9 529,5 662,7 491,6 483,6 483,6 518,9 571,4 630,9 Water 79 30 00 33 78 78 42 30 14 255,7 261,7 369,2 433,9 480,3 480,3 456,5 490,1 529,0 Waste water management 92 69 19 87 22 22 85 24 44 188,4 144,6 271,9 232,1 289,9 289,9 208,6 233,5 261,0 Waste management 23 15 81 32 59 59 22 81 03 7,7 52,8 10,3 51,0 64,1 64,1 63,5 42,6 25,9 Other 64 43 27 08 03 03 71 30 76 Total Expenditure - 4,225, 5,656, 6,422, 6,621, 6,944, 6,944, 7,316, 7,593, 8,298, Standard 073 423 661 119 740 466 096 923 432 Surplus/(Deficit) for the 130, (429, (546, (254, (365, (365, (69,3 60,7 227, year 950 632) 584) 164) 757) 482) 44) 76 958

Table 21 (Table A3 –Consolidated Budget Financial Performance by Vote) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework 48 Audited Audited Audited Budget Budget Budget Original Adjusted Full Year R thousand Outcom Outcom Outcom Year Year +1 Year +2 Budget Budget Forecast e e e 2012/13 2013/14 2014/15 Revenue by Vote 1,396, 1,324, 1,639, 1,670,0 1,726,9 1,726,9 1,911, 2,101, 2,292, Vote 1 - Budget and Treasury 709 803 901 81 21 21 592 390 558 278, 293, 262, 350,8 326,5 326,5 261, 292, 330, Vote 2 - Public Health 104 540 975 53 41 41 472 908 780 197, 401, 263, 25,6 376,2 376,2 421, 22, 24, Vote 3 - Human Settlements 679 935 368 61 11 11 369 652 011 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Audited Audited Audited Budget Budget Budget Original Adjusted Full Year R thousand Outcom Outcom Outcom Year Year +1 Year +2 Budget Budget Forecast e e e 2012/13 2013/14 2014/15 Vote 4 - Economic Development 113, 159, 153, 160,6 172,7 172,7 142, 149, 162, and Recreational Services 084 392 032 57 52 52 347 962 921 11,8 11,8 10,6 11,9 13,5 13,5 8,8 9, 9,3 Vote 5 - Corporate Services 65 29 68 33 74 74 28 096 81 Vote 6 - Rate and General 14,2 101, 28,3 146,0 37,0 37,0 202, 273, 303, Engineers 30 736 09 58 06 06 201 709 932 440, 522, 710, 571,2 511,9 511,9 581, 654, 742, Vote 7 - Water Services 910 576 228 00 91 91 395 278 493 347, 350, 374, 437,8 426,3 426,3 474, 534, 608, Vote 8 - Sanitation Services 989 803 212 16 84 84 317 959 663 1,449, 1,905, 2,295, 2,903,9 2,870,8 2,870,8 3,120, 3,503, 3,934, Vote 9 - Electricity and Energy 936 681 991 15 27 27 937 315 407 498, 10,8 5,5 1,63 1,77 1,77 6 5 5 Vote 10 - Executive and Council 110 87 37 6 4 4 58 02 28 54,6 52,1 43,0 45,5 44,6 44,6 53, 57, 60, Vote 11 - Safety and Security 85 39 31 40 61 61 796 024 446 Vote 12 - Nelson Mandela Bay (477, 63,4 62,7 37,0 37,0 37, 37, 37, Stadium 009) 44 60 – 00 00 000 000 000 Vote 13 - Strategic Programmes 29,7 28,0 26,0 41,6 33,3 33,3 30, 17, 19, Directorate 33 24 66 05 42 42 840 904 270 4,356 5,226 5,876 6,366, 6,578, 6,578, 7,246 7,654 8,526 Total Revenue by Vote ,023 ,791 ,077 955 984 984 ,752 ,700 ,390

Expenditure by Vote to be appropriated 601, 768, 725, 541,4 548,7 548,7 561, 598, 652, Vote 1 - Budget and Treasury 184 615 772 37 99 99 807 274 743 506, 852, 646, 712,8 728,1 728,1 610, 661, 709, Vote 2 - Public Health 369 515 547 21 61 61 319 390 252 273, 434, 446, 137,0 488,0 488,0 533, 146, 159, Vote 3 - Human Settlements 160 102 336 41 24 24 541 139 110 Vote 4 - Economic Development 227, 231, 267, 479,4 414,1 413,9 341, 339, 351, and Recreational Services 691 122 090 85 77 03 002 328 045 48,2 218, 262, 237,2 355,7 355,7 356, 378, 376, Vote 5 - Corporate Services 86 543 883 39 12 12 377 498 079 Vote 6 - Rate and General 211, 274, 244, 472,8 320,4 320,4 500, 604, 645, Engineers 198 859 138 28 59 59 086 360 125 377, 529, 664, 491,6 481,8 481,8 519, 571, 631, Vote 7 - Water Services 979 530 564 33 31 31 466 987 504 255, 261, 340, 385,1 387,2 387,2 396, 428, 465, Vote 8 - Sanitation Services 792 769 166 92 79 79 910 055 695 1,277, 1,484, 2,119, 2,491,3 2,531,6 2,531,6 2,782, 3,114, 3,500, Vote 9 - Electricity and Energy 045 720 457 20 35 35 901 728 277 123, 169, 160, 202,1 194,8 194,8 201, 221, 240, Vote 10 - Executive and Council 321 065 321 71 43 43 471 654 838 272, 270, 376, 346,2 345,3 345,3 356, 384, 417, Vote 11 - Safety and Security 496 619 367 76 51 51 370 788 769 Vote 12 - Nelson Mandela Bay 20,8 131, 131, 88,9 120,7 120,7 123, 125, 128, Stadium 52 203 644 39 08 08 523 353 279 Vote 13 - Strategic Programmes 29,7 29,7 37,3 34,7 27,7 27,7 32, 19, 20, Directorate 01 62 76 39 61 61 321 368 715 4,225 5,656 6,422 6,621, 6,944, 6,944, 7,316 7,593 8,298 Total Expenditure by Vote ,073 ,423 ,661 119 740 466 ,096 ,923 ,432 130, (429 (546 (254, (365, (365, (69, 60, 227 Surplus/(Deficit) for the year 950 ,632) ,584) 164) 756) 482) 344) 776 ,958 49 Table 22 (Table A4 –Consolidated Budget Financial Performance Revenue and Expenditure) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Budge Budget Budget Audited Audited Audited Original Adjusted Year t Year R thousand Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecas 2012/1 2013/14 2014/15 t 3 Revenue By Source 659,7 756,4 838,8 961,5 961,5 961, 1,07 1,214,3 1,372,2 Property rates 77 99 55 65 65 565 4,628 36 05 Property rates - penalties & collection charges Service charges - electricity 1,502,2 1,807,6 2,185,4 2,753,3 2,718,3 2,718 3,02 3,393,6 3,817,4 revenue 71 40 28 64 64 ,364 8,384 51 77 344,7 407,9 569,8 465,3 402,0 402, 45 514,7 586,8 Service charges - water revenue 30 18 83 83 68 068 5,547 68 36 Service charges - sanitation 226,5 228,0 246,6 295,1 283,0 283, 31 352,5 401,9 revenue 07 20 92 70 94 094 2,033 98 61 96,2 105,4 120,6 134,8 136,7 136, 15 175,3 199,9 Service charges - refuse revenue 66 86 75 61 27 727 5,075 12 53 Service charges - other 14,6 15,5 17,6 18,7 18,4 18, 19 20,9 22,23 Rental of facilities and equipment 67 45 41 91 31 431 ,820 92 5 Interest earned - external 169,4 65,3 19,2 23,7 30,5 30, 27 29,0 31,18 investments 11 23 52 57 00 500 ,328 59 3 Interest earned - outstanding 92,0 82,7 113,3 78,9 81,9 81, 86 92,1 97,65 debtors 41 62 47 93 93 993 ,913 28 5

Dividends received – 27,5 23,4 23,7 24,9 24,1 24, 32 34,2 36,32 Fines 33 15 36 98 19 119 ,328 68 4 8,55 8,24 8,15 7,39 7,39 7, 9, 9,55 10,12 Licences and permits 2 2 3 9 9 399 014 5 9 1,15 1,22 1,61 1,40 1,40 1, 1, 1,48 1,57 Agency services 2 0 1 2 2 402 400 4 3 1,021,0 1,458,5 1,365,7 1,384,4 1,234,0 1,234 1,36 1,065,8 1,155,4 Transfers recognised - operational 86 70 37 87 94 ,094 1,248 40 03 191,9 266,1 363,3 216,7 679,2 679, 68 750,7 793,4 Other revenue 18 50 71 84 27 227 3,033 09 55 11 1,69 Gains on disposal of PPE 4 8 Total Revenue (excluding capital transfers and 4,356, 5,226, 5,876, 6,366, 6,578, 6,57 7,24 7,654, 8,526, contributions) 023 791 077 955 984 8,984 6,752 700 390

Expenditure By Type 1,286,4 1,629,7 1,893,0 1,866,2 1,849,8 1,849 1,80 1,965,5 2,146,3 Employee related costs 91 21 82 26 69 ,869 0,625 87 80 41,2 44,8 45,0 51,0 51,0 51, 54 60,0 66,64 Remuneration of councillors 55 86 53 84 84 084 ,583 41 5 175,6 419,4 554,2 288,1 282,1 282, 25 282,5 318,9 Debt impairment 18 70 75 47 51 151 1,284 33 19 407,1 546,6 571,2 689,3 720,2 720, 73 711,7 657,1 Depreciation & asset impairment 47 32 32 01 80 156 6,327 52 40 82,5 113,3 177,6 221,1 215,3 215, 20 191,9 181,2 Finance charges 03 67 30 17 12 162 3,317 08 46 941,8 1,237,3 1,575,0 1,931,7 1,944,1 1,944 2,25 2,560,0 2,915,7 Bulk purchases 32 81 87 46 28 ,128 0,539 06 57 382,0 408,1 415,6 458,4 468,4 468, 49 535,6 577,6 Other materials 03 18 92 72 04 404 7,216 07 37 94,9 147,7 144,2 269,6 194,4 194, 37 458,3 496,8 Contracted services 76 65 71 75 61 461 6,041 32 14 184,8 283,0 296,2 417,9 370,9 370, 34 390,8 444,3 Transfers and grants 82 59 31 61 61 961 5,775 62 77 620,8 823,0 745,0 427,3 848,0 840, 80 437,2 493,5 Other expenditure 28 92 52 91 91 091 0,389 95 17 7,53 2,93 5,05 Loss on disposal of PPE 8 3 7 – 4,225, 5,656, 6,422, 6,621, 6,944, 6,94 7,31 7,593, 8,298, Total Expenditure 073 423 661 119 739 4,739 6,096 923 433

Surplus/(Deficit) 130, (429, (546, (254, (365, (36 (6 60,7 227,9 50

950 632) 584) 164) 755) 5,755) 9,344) 77 57 926,6 937,3 438,0 1,249,4 1,040,5 1,040,5 774,9 1,011,6 1,301,0 Transfers recognised - capital 14 73 55 67 06 06 32 88 74 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Budge Budget Budget Audited Audited Audited Original Adjusted Year t Year R thousand Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecas 2012/1 2013/14 2014/15 t 3

Contributions recognised - capital – – – – – – – – – Contributed assets 1,057, 507, (108, 674, 674 70 1,072, 1,529, Surplus/(Deficit) after capital 564 740 529) 995,30 751 ,751 5,588 465 031 transfers & contributions 3 Taxation Surplus/(Deficit) after 1,057, 507, (108, 995,30 674, 674 70 1,072, 1,529, taxation 564 740 529) 3 751 ,751 5,588 465 031 Attributable to minorities 1,057, 507, (108, 674 70 1,072, 1,529, Surplus/(Deficit) attributable 564 740 529) 995,30 674,751 ,751 5,588 465 031 to municipality 3 Share of surplus/ (deficit) of associate 1,057, 507, (108, 995,30 674, 674 70 1,072, 1,529, Surplus/(Deficit) for the year 564 740 529) 3 751 ,751 5,588 465 031

Table 23 (Table A5 –Consolidated Budget Capital Expenditure – Standard Classification) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Budge Audited Audited Audited Budget Budget Original Adjusted Full Year t Year R thousand Outcom Outcom Outcom Year +1 Year +2 Budget Budget Forecast 2012/1 e e e 2013/14 2014/15 3 Capital expenditure - Vote Multi-year expenditure to be appropriated 27,3 51,39 55,76 54,9 27,8 27,8 7,4 10,3 10,3 Vote 1 - Budget and Treasury 06 6 9 65 65 65 80 00 50 94, 81, 108, 25,0 41,7 41,7 17 20, 20,0 Vote 2 - Public Health 182 242 310 94 06 06 ,500 000 00 57, 79, 90,0 102,0 102,0 16 185, 186,9 Vote 3 - Human Settlements 683 531 – 00 00 00 5,868 336 28 Vote 4 - Economic Development and Recreational 193, 262, 243, 78,7 152,5 152,5 50 59, 75,7 Services 181 649 606 25 43 43 ,017 094 49 69, 46, 88, 30,5 36,3 36,3 18 22, 22,6 Vote 5 - Corporate Services 411 471 482 00 39 39 ,200 000 00 Vote 6 - Rate and General 907, 976, 587, 395,3 299,1 299,1 26 393, 585,9 Engineers 170 761 299 00 62 62 9,662 817 09 188, 215, 145, 473,0 410,0 410,0 13 204, 235,9 Vote 7 - Water Services 807 412 187 00 00 00 4,402 850 50 111, 131, 125, 116,3 118,7 118,7 23 295, 380,9 Vote 8 - Sanitation Services 993 950 357 73 23 23 4,600 800 00 257, 217, 170, 86,0 86,0 86,0 12 157, 160,2 Vote 9 - Electricity and Energy 520 874 849 00 00 00 1,147 343 12 15, 6,1 7,5 12,0 12,0 12,0 11 10, 11,5 Vote 10 - Executive and Council 650 99 41 00 00 00 ,200 000 00 44, 88, 16, 6,50 4,80 4,80 3, 2,3 5,00 Vote 11 - Safety and Security 256 929 998 0 9 9 000 00 0 Vote 12 - Nelson Mandela Bay 843, 141, Stadium 000 600 – – – – – – – Vote 13 - Strategic 15, 21, 18, 38,2 34,6 34,6 46 2,4 Programmes Directorate 607 119 157 75 80 80 ,000 00 – Capital multi-year 2,825 2,321 1,567 1,406, 1,325, 1,325, 1,07 1,363 1,695, expenditure sub-total ,767 ,134 ,555 732 827 827 9,076 ,240 098

Total Capital Expenditure - 2,825 2,321 1,567 1,406, 1,325, 1,325, 1,07 1,363 1,695, Vote ,767 ,134 ,555 732 827 827 9,076 ,240 098

51 Capital Expenditure - Standard Governance and 112, 282, 151, 97,4 76,2 76,2 36 42, 44,4 administration 367 017 792 65 04 04 ,880 300 50 15, 6,1 7,5 12,0 12,0 12,0 11 10, 11,5 Executive and council 650 99 41 00 00 00 ,200 000 00 27, 112, 55, 54,9 27,8 27,8 7, 10, 10,3 Budget and treasury office 306 710 769 65 65 65 480 300 50 69, 163, 88, 30,5 36,3 36,3 18 22, 22,6 Corporate services 411 109 482 00 39 39 ,200 000 00 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Budge Audited Audited Audited Budget Budget Original Adjusted Full Year t Year R thousand Outcom Outcom Outcom Year +1 Year +2 Budget Budget Forecast 2012/1 e e e 2013/14 2014/15 3 Community and public 360, 440, 221, 112, 143, 143, 17 204, 221, safety 930 575 070 094 698 698 9,768 136 928 164, 35, 42, 3,00 3,00 3,00 3, 10, 10,0 Community and social services 809 465 170 0 0 0 000 500 00 376, 151, 9,00 28,2 28,2 7, 6,0 20,0 Sport and recreation 238 209 0 25 25 400 00 00 44, 2,6 16, 6,50 4,80 4,80 3, 2,3 5,00 Public safety 256 70 998 0 9 9 000 00 0 57, 90,0 102,0 102,0 16 185, 186,9 Housing 683 – – 00 00 00 5,868 336 28 94, 26, 10, 3,59 5,66 5,66 Health 182 203 694 4 4 4 500 – – Economic and 951, 949, 660, 511, 468, 468, 36 453, 647, environmental services 149 948 435 300 251 251 7,779 306 053 43, 93, 68, 105,0 118,9 118,9 85 44, 45,7 Planning and development 979 238 216 00 97 97 ,617 994 49 907, 856, 587, 395,3 336,1 336,1 26 393, 585,9 Road transport 170 710 299 00 62 62 9,662 817 09 4,9 11,0 13,0 13,0 12 14, 15,3 Environmental protection 20 00 92 92 ,500 495 95 558, 648, 534, 685, 637, 637, 49 663, 781, Trading services 321 593 091 873 673 673 4,649 498 667 257, 333, 170, 86,0 86,0 86,0 12 157, 160,2 Electricity 520 489 849 00 00 00 1,147 343 12 188, 197, 145, 473,0 410,0 410,0 13 204, 235,9 Water 807 870 187 00 00 00 4,402 850 50 111, 117, 125, 116,3 118,7 118,7 23 295, 380,9 Waste water management 993 234 357 73 23 23 4,600 800 00 92, 10,5 22,9 22,9 4, 5,5 4,60 Waste management 697 00 50 50 500 05 5 843, 1 Other 000 68 Total Capital Expenditure - 2,825 2,321 1,567 1,406, 1,325, 1,325, 1,07 1,363 1,695, Standard ,767 ,134 ,555 732 827 827 9,076 ,240 098

Funded by: 1,585, 956, 481, 1,222,4 1,013,5 1,013,5 77 1,011, 1,301,0 National Government 935 989 969 67 81 81 1,932 688 74 57, 8,3 Provincial Government 097 04 – District Municipality – 22, 27,0 26,9 26,9 3, Other transfers and grants 019 00 25 25 000 – – Transfers recognised - 1,643 956, 512, 1,249, 1,040, 1,040, 77 1,011 1,301, capital ,032 989 292 467 506 506 4,932 ,688 074 Public contributions & 23, 94, 17, 38,0 43,0 43,0 23 33, 33,5 donations 348 452 802 00 00 00 ,000 500 00 563, 745, 470, Borrowing 075 200 000 – – – – 596, 524, 567, 169,2 242,3 242,3 28 318, 360,5 Internally generated funds 311 493 461 65 20 20 1,144 052 24 2,825 2,321 1,567 1,456, 1,325, 1,325, 1,07 1,363 1,695, Total Capital Funding ,766 ,135 ,555 732 827 827 9,076 ,240 098 52 Table 24 (Table A6 –Consolidated Budget Financial Position) 2012/13 Medium Term Revenue Description 2008/9 2009/10 2010/11 Current Year 2011/12 & Expenditure Framework Budget Budget Budget Audited Audited Audited Original Adjusted Full Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecast 2012/13 2013/14 2014/15 ASSETS Current assets 141,4 166,4 189,0 200,0 200,1 200,13 200,7 200,9 201, Cash 24 04 39 00 30 0 12 24 030 784,8 506,3 298,1 258,7 587,3 587,38 811,1 1,052,3 1,426, Call investment deposits 77 43 20 48 81 1 83 48 937 867,4 599,4 446,3 761,5 546,3 546,36 580,5 616,7 655, Consumer debtors 62 88 68 85 68 8 16 98 348 230,4 616,9 392,1 180,0 390,7 390,71 480,6 452,4 452, Other debtors 67 38 72 00 15 5 48 03 398 Current portion of long-term 64 3 1 2 2 2 2 receivables 7 4 3 0 0 20 0 0 20 131,2 134,9 114,7 100,0 114,7 114,70 121,6 129,0 136, Inventory 28 87 59 00 00 0 20 20 020 2,156, 2,024, 1,440, 1,500, 1,839, 1,839,3 2,194, 2,451, 2,871 Total current assets 105 194 471 353 314 14 699 513 ,753

Non current assets 93,9 80,5 61,4 63,4 63,4 63,49 65,0 65,0 65, Long-term receivables 72 29 54 99 99 9 00 00 000 70 2 2 2 2 Investments 7 0 0 20 0 0 20 1,865,7 70,7 71,2 71,2 71,23 71,2 71,2 71, Investment property 22 63 31 31 1 31 31 231 79 6 (53 Investment in Associate 5 9 8) 7,260,6 10,822,5 11,788,8 12,447,1 12,451,6 12,451,6 12,839,7 13,502,9 14,551 Property, plant and equipment 66 14 16 62 20 20 63 19 ,731 Agricultural Biological 324,9 411,6 430,5 401,0 431,3 431,39 431,4 431,5 431, Intangible 82 02 40 71 99 9 99 89 669 Other non-current assets 9,546, 11,385, 12,351, 12,911, 13,017, 13,017, 13,407, 14,070, 15,11 Total non current assets 844 477 503 752 769 769 513 759 9,651 11,702, 13,409, 13,791, 14,412, 14,857, 14,857, 15,602, 16,522, 17,99 TOTAL ASSETS 949 671 974 104 083 083 212 272 1,404

LIABILITIES Current liabilities

Bank overdraft – 52,2 92,8 93,1 98,6 97,4 97,44 105,1 112,9 104, Borrowing 91 24 16 82 44 4 59 68 093 77,1 79,8 111,1 82,5 82,5 82,58 113,5 114,5 115, Consumer deposits 15 50 25 85 85 5 00 00 500 1,907,3 1,814,4 1,560,4 1,240,0 1,565,6 1,565,6 1,853,3 1,962,4 2,063, Trade and other payables 02 84 01 00 04 04 97 47 709 43,6 48,7 102,8 53,6 53,6 53,60 85,4 90,6 96, Provisions 07 27 80 00 00 0 80 00 026 2,080, 2,035, 1,867, 1,474, 1,799, 1,799,2 2,157, 2,280, 2,379 Total current liabilities 314 884 522 867 233 33 536 516 ,328

Non current liabilities 388,1 1,461,0 1,842,8 1,729,0 1,734,1 1,734,1 1,629,0 1,516,0 1,411, Borrowing 73 16 88 21 72 72 13 45 952 836,7 1,006,7 1,284,0 1,217,3 1,217,3 1,217,3 1,411,4 1,544,6 1,683, Provisions 95 06 29 76 76 76 66 49 624 1,224, 2,467, 3,126, 2,946, 2,951, 2,951,5 3,040, 3,060, 3,095 Total non current liabilities 968 722 917 397 548 48 479 694 ,576 3,305, 4,503, 4,994, 4,421, 4,750, 4,750,7 5,198, 5,341, 5,474 TOTAL LIABILITIES 282 607 439 264 781 81 015 210 ,904

8,397, 8,906, 8,797, 9,990, 10,106, 10,106, 10,404, 11,181, 12,51 NET ASSETS 666 064 535 840 302 302 198 062 6,500 53

2012/13 Medium Term Revenue Description 2008/9 2009/10 2010/11 Current Year 2011/12 & Expenditure Framework Budget Budget Budget Audited Audited Audited Original Adjusted Full Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecast 2012/13 2013/14 2014/15 COMMUNITY WEALTH/EQUITY 3,443,0 3,311,5 3,607,8 3,597,9 4,266,1 4,266,1 3,917,0 4,709,9 6,047, Accumulated Surplus/(Deficit) 06 39 01 76 59 59 80 47 103 4,954,6 5,594,5 5,189,7 6,392,8 5,840,1 5,840,1 6,487,1 6,471,1 6,469, Reserves 61 25 34 64 42 42 18 15 397 Minorities' interests TOTAL COMMUNITY 8,397, 8,906, 8,797, 9,990, 10,106, 10,106, 10,404, 11,181, 12,51 WEALTH/EQUITY 666 064 535 840 302 302 198 062 6,500

Table 25 (Table A7 –Consolidated Budgeted Cash Flows) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Budget Budget Budget Audited Audited Audited Original Adjusted Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecas 2012/13 2013/14 2014/15 t CASH FLOW FROM OPERATING ACTIVITIES Receipts 2,929,7 2,716,9 5,279,2 4,270,1 4,656,9 4,656, 5,197, 5,820,1 6,507, Ratepayers and other 42 54 53 30 55 955 167 75 782 1,021,1 1,454,7 1,363,3 1,371,3 1,282,4 1,282, 1,356, 1,065,8 1,155, Government - operating 15 43 58 06 07 407 926 40 403 970,0 993,7 531,2 1,246,4 1,249,7 1,249, 771, 1,011,6 1,301, Government - capital 72 24 95 67 68 768 932 88 074 261,4 148,0 132,5 23,7 30,5 30, 27, 29,0 31,1 Interest 51 86 98 57 00 500 328 59 83 Dividends Payments (3,696, (4,088, (5,899, (5,019, (5,225, (5,225 (5,714 (6,024, (6,634, Suppliers and employees 500) 377) 956) 328) 746) ,746) ,573) 186) 817) (82,5 (112,7 (177,1 (208,7 (213,3 (213, (205, (194,0 (182, Finance charges 03) 79) 10) 91) 37) 337) 419) 47) 706) (36,2 (99,8 (296,2 (23,3 (26,4 (26, (22, (24,7 (26, Transfers and Grants 77) 70) 31) 15) 92) 492) 728) 09) 174) NET CASH FROM/(USED) 1,367, 1,012, 933, 1,660, 1,754, 1,754 1,410 1,683, 2,151 OPERATING ACTIVITIES 101 481 208 226 054 ,054 ,633 821 ,745

CASH FLOWS FROM INVESTING ACTIVITIES Receipts 14 2,25 Proceeds on disposal of PPE 0 0 Decrease (Increase) in non- current debtors Decrease (increase) other non- 23,0 10,3 (19,0 1,29 1,29 1,2 current receivables 07 79 96) 7 7 97 Decrease (increase) in non- 10,5 current investments 61 Payments (2,337, (2,390, (1,483, (1,411, (1,383, (1,383 (1,115 (1,336, (1,663, Capital assets 480) 138) 093) 191) 943) ,943) ,084) 285) 082) NET CASH FROM/(USED) (2,303, (2,379, (1,499, (1,409, (1,382, (1,38 (1,11 (1,336, (1,663 INVESTING ACTIVITIES 772) 759) 938) 894) 646) 2,646) 5,084) 285) ,082)

CASH FLOWS FROM FINANCING ACTIVITIES Receipts Short term loans Borrowing long 1,164,6 469,8 term/refinancing 16 09 Increase (decrease) in (11,6 2,51 2,51 2,5 (3, (1,0 (1, consumer deposits 15) 5 5 15 275) 00) 000) 54 Payments (56,4 (51,8 (88,8 (92,2 (92,0 (92, (97, (105,1 (112, Repayment of borrowing 38) 28) 59) 11) 58) 058) 444) 59) 968) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Budget Budget Budget Audited Audited Audited Original Adjusted Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecas 2012/13 2013/14 2014/15 t NET CASH FROM/(USED) (68,0 1,112, 380, (89,6 (89,5 (89, (100 (106, (113 FINANCING ACTIVITIES 54) 788 950 96) 43) 543) ,719) 159) ,968)

NET INCREASE/ (DECREASE) (1,004, (254, (185, 160, 281, 281 194 241, 374, IN CASH HELD 725) 490) 780) 636 864 ,864 ,830 377 695 Cash/cash equivalents at the 1,931, 926, 671, 298, 505, 505 817 1,011, 1,253 year begin: 026 301 811 112 647 ,647 ,065 895 ,272 Cash/cash equivalents at the 926, 671, 486, 458, 787, 787 1,011 1,253, 1,627 year end: 301 811 031 748 511 ,511 ,895 272 ,967

Table 26 (Table A8 –Consolidated Cash backed Reserves) 2012/13 Medium Term Revenue Description 2008/9 2009/10 2010/11 Current Year 2011/12 & Expenditure Framework Full Budget Budget Budget Audited Audited Audited Original Adjusted Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecas 2012/13 2013/14 2014/15 t Cash and investments available Cash/cash equivalents at the 926,3 671,8 486,0 458,7 787,5 787, 1,011,8 1,253,2 1,627, year end 01 11 31 48 11 511 95 72 967 Other current investments > ( 93 1,12 ( ( ( ( 90 days 0) 6 8 0) 0) (0) 0) 0 0) Non current assets - 70 2 2 2 2 2 Investments 7 0 0 20 0 0 0 Cash and investments 927, 672, 487, 458, 787, 787 1,011, 1,253, 1,627, available: 008 747 159 768 531 ,531 915 292 987

Application of cash and investments 645,3 206,1 301,7 325,6 325, 580,8 619,2 654, Unspent conditional transfers 67 96 12 – 04 604 00 80 219

Unspent borrowing – – – – – – – – – Statutory requirements Other working capital 116,1 656,6 200,3 374,4 363,1 363, 273,5 336,8 369, requirements 87 64 50 85 99 199 04 48 683 Other provisions Long term investments committed – – – – – – – – – Reserves to be backed by 486,6 446,0 593,3 167,3 47,0 47, 47,0 49,2 51,5 cash/investments 40 52 75 49 00 000 00 20 73 Total Application of cash 1,248, 1,308, 1,095, 541, 735, 735 901, 1,005, 1,075, and investments: 194 912 437 834 803 ,803 304 348 475 (321, (636, (608, (83,0 51,7 51, 110, 247, 552, Surplus(shortfall) 187) 164) 278) 66) 28 728 611 944 512

Table 27 (Table A9 –Consolidated Asset Management) 2012/13 Medium Term Revenue Description 2008/9 2009/10 2010/11 Current Year 2011/12 & Expenditure Framework Budget Budget Budget Audited Audited Audited Original Adjusted Full Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecast 2012/13 2013/14 2014/15 CAPITAL EXPENDITURE 2,277,0 1,994,9 1,045,6 725,60 725,60 410,98 383,60 418,24 Total New Assets 89 01 14 1,072,473 5 5 5 5 9 684,50 794,83 381,15 131,81 131,81 118,11 107,38 114,64 Infrastructure - Road transport 5 9 9 248,800 1 1 2 5 8 221,50 313,88 159,88 Infrastructure - Electricity 4 5 5 60,400 4,100 4,100 26,500 26,500 24,500 55 107,80 151,61 102,13 372,45 372,45 Infrastructure - Water 8 0 5 435,000 0 0 16,000 18,000 20,000 Infrastructure - Sanitation 33,092 87,150 92,140 38,073 2,500 2,500 7,500 7,500 7,500 148,66 158,83 160,42 Infrastructure - Other 21,675 – 32,304 – 29,295 29,295 8 6 8 1,068,58 1,347,48 Infrastructure 5 4 767,622 782,273 540,156 540,156 316,780 318,221 327,076 1,052,13 425,85 142,16 Community 3 0 4 90,369 46,814 46,814 58,000 15,900 28,700 Heritage assets 9,850 – 2,265 – 3,793 3,793 – – – 102,00 102,00 Investment properties 57,683 – – 120,000 0 0 – – – 187,11 133,45 Other assets 35,361 5 8 14,786 4,652 4,652 23,905 34,798 47,321 2012/13 Medium Term Revenue Description 2008/9 2009/10 2010/11 Current Year 2011/12 & Expenditure Framework Budget Budget Budget Audited Audited Audited Original Adjusted Full Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecast 2012/13 2013/14 2014/15 Intangibles 53,477 34,452 105 65,045 28,190 28,190 12,300 14,686 15,152

Total Renewal of Existing 247,16 319,77 316,12 600,22 600,22 668,09 979,63 1,276,8 Assets 9 6 7 352,900 5 5 1 5 49 Infrastructure - Road 164,26 158,86 236,64 236,64 177,69 317,94 498,43 transport 1 6 47,794 170,500 7 7 2 2 7 130,84 135,71 Infrastructure - Electricity 15,516 10,802 10,965 25,600 81,900 81,900 94,647 3 2 116,40 182,85 211,95 Infrastructure - Water 37,068 63,802 43,052 45,000 37,550 37,550 2 0 0 116,22 116,22 225,10 284,30 369,40 Infrastructure - Sanitation 30,324 51,325 33,218 78,300 5 5 0 0 0 Infrastructure - Other – – 59,084 10,500 27,773 27,773 – – – Infrastructure 247,169 284,795 194,113 329,900 500,095 500,095 613,841 915,935 1,215,499 Community – 10,843 68,837 – 41,801 41,801 11,300 15,900 17,700 Heritage assets – – 21,920 – – – – – – Other assets – 24,138 31,257 23,000 46,568 46,568 33,450 32,800 27,650 Intangibles – – – – 11,762 11,762 9,500 15,000 16,000

Total Capital Expenditure Infrastructure - Road 848,76 953,70 428,95 368,45 368,45 295,80 425,32 613,08 transport 6 5 3 419,300 7 7 4 7 5 237,02 324,68 170,84 121,14 157,34 160,21 Infrastructure - Electricity 0 7 9 86,000 86,000 86,000 7 3 2 144,87 215,41 145,18 410,00 410,00 132,40 200,85 231,95 Infrastructure - Water 6 2 7 480,000 0 0 2 0 0 138,47 125,35 118,72 118,72 232,60 291,80 376,90 Infrastructure - Sanitation 63,416 5 7 116,373 5 5 0 0 0 148,66 158,83 160,42 Infrastructure - Other 21,675 – 91,388 10,500 57,068 57,068 8 6 8 1,315,75 1,632,27 1,040,25 1,040,25 1,234,15 Infrastructure 4 9 961,735 1,112,173 0 0 930,621 6 1,542,575 1,052,13 436,69 211,00 Community 3 3 1 90,369 88,616 88,616 69,300 31,800 46,400 Heritage assets 9,850 – 24,185 – 3,793 3,793 – – – 102,00 102,00 Investment properties 57,683 – – 120,000 0 0 – – – 211,25 164,71 Other assets 35,361 3 5 37,786 51,220 51,220 57,355 67,598 74,971 Agricultural Assets – – – – – – – – – Biological assets – – – – – – – – – Intangibles 53,477 34,452 105 65,045 39,952 39,952 21,800 29,686 31,152 TOTAL CAPITAL EXPENDITURE 2,524,2 2,314,6 1,361,7 1,325,8 1,325,8 1,079,0 1,363,2 1,695,0 - Asset class 58 77 41 1,425,373 31 31 76 40 98

ASSET REGISTER SUMMARY - PPE (WDV) Infrastructure - Road 2,792,68 4,193,17 2,849,75 3,044,97 3,044,97 3,560,06 3,867,29 4,305,50 transport 5 3 2 4,833,478 1 1 1 2 5 1,151,19 1,306,50 1,437,65 1,441,06 1,441,06 1,478,61 1,559,78 1,646,40 Infrastructure - Electricity 9 8 5 1,435,590 6 6 6 3 1 Infrastructure - Water 902,70 1,153,96 941,77 1,580,403 1,323,24 1,323,24 1,646,09 2,009,72 2,316,27 56 9 6 6 9 9 1 5 1 596,58 683,42 771,16 878,33 878,33 1,089,23 1,351,17 1,734,86 Infrastructure - Sanitation 4 8 0 837,347 8 8 1 9 8 2,268,13 1,918,90 1,918,90 1,585,09 1,268,47 1,203,44 Infrastructure - Other 41,139 83,424 8 165,258 7 7 6 3 7 5,484,31 7,420,49 8,268,48 8,606,53 8,606,53 9,359,09 10,056,45 11,206,49 Infrastructure 6 9 0 8,852,076 1 1 4 3 2 1,339,65 2,726,25 2,810,62 2,856,50 2,856,50 2,908,30 2,940,51 2,732,03 Community 7 8 7 2,591,040 4 4 7 5 9 111,08 126,47 126,47 126,47 126,47 126,47 121,47 Heritage assets 59,146 3 4 99,982 4 4 4 4 4 1,865,72 Investment properties 2 70,763 71,231 – 71,231 71,231 71,231 71,231 71,231 377,54 564,67 583,23 770,09 770,09 445,88 379,47 491,72 Other assets 7 4 5 904,064 6 6 8 7 6 324,98 411,60 430,54 431,39 431,39 431,49 431,58 431,66 Intangibles 2 2 0 401,071 9 9 9 9 9 TOTAL ASSET REGISTER 9,451,3 11,304,8 12,290,5 12,862,2 12,862,2 13,342,4 14,005,7 15,054,6 SUMMARY - PPE (WDV) 69 79 87 12,848,233 35 35 93 39 31

EXPENDITURE OTHER ITEMS Depreciation & asset 407,14 546,63 571,23 720,28 720,15 736,32 711,75 657,14 impairment 7 2 2 689,301 0 6 7 2 0 Repairs and Maintenance by 381,61 408,10 415,63 468,40 468,40 497,21 535,60 577,63 Asset Class 6 4 8 458,472 4 4 6 7 7 Infrastructure - Road 101,87 transport 65,336 66,113 73,310 89,773 90,165 90,165 90,672 96,112 9 Infrastructure - Electricity 33,965 34,912 28,585 38,059 36,085 36,085 42,006 45,691 49,560 102,37 117,91 119,41 117,63 117,63 131,85 144,43 157,70 Infrastructure - Water 5 5 5 120,635 4 4 3 9 2 100,39 103,32 111,70 124,69 124,69 129,31 138,33 148,79 Infrastructure - Sanitation 2 5 1 116,606 6 6 2 6 0 Infrastructure - Other 2,095 2,127 2,735 4,729 9,729 9,729 5,510 5,887 6,291 Infrastructure 304,163 324,392 335,745 369,802 378,309 378,309 399,353 430,465 464,223 Community 31,701 29,167 31,853 29,304 30,578 30,578 35,387 38,409 41,877 Other assets 45,752 54,545 48,040 59,366 59,517 59,517 62,476 66,733 71,537 2012/13 Medium Term Revenue Description 2008/9 2009/10 2010/11 Current Year 2011/12 & Expenditure Framework Budget Budget Budget Audited Audited Audited Original Adjusted Full Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecast 2012/13 2013/14 2014/15 TOTAL EXPENDITURE OTHER 788,76 954,73 986,86 1,188,6 1,188,5 1,233,5 1,247,3 1,234,7 ITEMS 3 6 9 1,147,772 84 60 42 59 77

Renewal of Existing Assets as % of total capex 9.8% 13.8% 23.2% 24.8% 45.3% 45.3% 61.9% 71.9% 75.3% Renewal of Existing Assets as % of deprecn" 60.7% 58.5% 55.3% 51.2% 83.3% 83.3% 90.7% 137.6% 194.3% R&M as a % of PPE 5.3% 3.8% 3.5% 3.7% 3.8% 3.8% 3.9% 4.0% 4.0% Renewal and R&M as a % of PPE 7.0% 6.0% 6.0% 6.0% 8.0% 8.0% 9.0% 11.0% 12.0%

Table 28 (Table A10 –Consolidated Basic Service Delivery Measurement) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Budg Origi Full Adjuste et Budget Budget Outcom Outcom Outcom nal Year R thousand d Year Year +1 Year +2 e e e Budg Forecas Budget 2012/ 2013/14 2014/15 et t 13 Household service targets Water: 3 2 211, 265, 205, 09,09 309, 309, 97,67 306, 315, Piped water inside dwelling 120 000 877 6 096 096 0 600 798 Piped water inside yard (but not in 5,5 7,0 8,1 8,1 8,6 8,9 dwelling) 00 00 8,164 64 64 8,409 61 21 Using public tap (at least 29,0 65, 7 75,8 75,8 80,4 82,8 min.service level) 00 000 5,816 16 16 78,09 33 46 57 0 Other water supply (at least min.service level) – 3 3 Minimum Service Level and Above 245, 337, 205, 93,07 393, 393, 84,16 395, 407, sub-total 620 000 877 6 076 076 9 694 565 Using public tap (< min.service level) Other water supply (< min.service level) 34,3 No water supply 80 Below Minimum Service Level sub- 34,3 total 80 – – – – – – – – 3 3 280, 337 205, 93,07 393, 393, 84,16 395, 407, Total number of households 000 ,000 877 6 076 076 9 694 565 Sanitation/sewerage: 2 3 216, 256, 98,59 298, 298, 07,55 316, 326, Flush toilet (connected to sewerage) 700 000 8 598 598 6 783 286 3 3,0 2,9 2,9 3,1 3,2 Flush toilet (with septic tank) 00 00 2,980 80 80 3,069 61 56 Chemical toilet Pit toilet (ventilated) Other toilet provisions (> min.service level) 3 3 Minimum Service Level and Above 217, 259, 01,57 301, 301, 10,62 319, 329, sub-total 000 000 – 8 578 578 5 944 542

39,0 22, 22,5 2 21,8 21,8 21,85 21,8 21,8 Bucket toilet 00 000 00 1,859 59 59 9 59 59 Other toilet provisions (< min.service level) No toilet provisions

Below Minimum Service Level sub- 39,0 22, 22,5 2 21,8 21,8 21,85 21,8 21,8 total 00 000 00 1,859 59 59 9 59 59 3 3 256, 281 22, 23,43 323, 323, 32,48 341, 351, Total number of households 000 ,000 500 7 437 437 4 803 401 Energy:

Electricity (at least min.service 37,5 36, 32,0 3 35,0 35,0 27,50 27,5 27,5 level) 20 000 10 5,000 00 00 0 00 00 2 2 Electricity - prepaid (min.service 227, 232, 361, 36,00 236, 236, 77,00 277, 277, level) 095 000 740 0 000 000 0 000 000 2 3 Minimum Service Level and Above 264, 268, 393, 71,00 271, 271, 04,50 304, 304, sub-total 615 000 750 0 000 000 0 500 500 Electricity (< min.service level) Electricity - prepaid (< min. service level) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Budg Origi Full Adjuste et Budget Budget Outcom Outcom Outcom nal Year R thousand d Year Year +1 Year +2 e e e Budg Forecas Budget 2012/ 2013/14 2014/15 et t 13 Other energy sources Below Minimum Service Level sub- total – – – – – – – – – 2 3 264, 268 393, 71,00 271, 271, 04,50 304, 304, Total number of households 615 ,000 750 0 000 000 0 500 500 Refuse: Removed at least once a week 170, 172, 137, 2 275, 275, 2 297, 297, 58 75,08 97,09 102 000 561 3 083 083 0 090 090 2 2 Minimum Service Level and Above 170, 172, 137, 75,08 275, 275, 97,09 297, 297, sub-total 102 000 561 3 083 083 0 090 090 Removed less frequently than once 7,4 9,0 13,4 a week 00 00 28 Using communal refuse dump Using own refuse dump Other rubbish disposal 8 3,0 2,3 1,1 1,1 1,0 1,0 No rubbish disposal 86 00 71 1,191 91 91 1,096 96 96 Below Minimum Service Level sub- 8,2 12, 15,7 1,1 1,1 1,0 1,0 total 86 000 99 1,191 91 91 1,096 96 96 2 2 178, 184 153, 76,27 276, 276, 98,18 298, 298, Total number of households 388 ,000 360 4 274 274 5 185 185

Households receiving Free Basic Service

Water (6 kilolitres per household per 108, 115, 79,0 8 75,2 75,2 74,86 75,1 75,4 month) 000 000 35 5,156 41 41 7 66 67

Sanitation (free minimum level 108, 115, 79,0 8 75,2 75,2 74,86 75,1 75,4 service) 000 000 35 5,156 41 41 7 66 67

Electricity/other energy (50kwh per 99,0 105, 79,0 8 67,8 67,8 67,15 67,4 67,6 household per month) 00 000 35 5,156 00 00 8 27 96

Refuse (removed at least once a 80,0 83, 79,0 7 70,3 70,3 68,48 68,7 69,0 week) 00 000 35 8,705 21 21 5 59 34

Cost of Free Basic Services provided (R'000)

Water (6 kilolitres per household per 42,1 45, 45,3 2 59,8 59,8 50,70 57,8 66,4 month) 14 483 13 0,258 34 34 3 01 71

57,1 61, 63,8 5 55,1 55,1 88,17 100, 115, Sanitation (free sanitation service) 41 998 62 6,071 45 45 1 515 592

Electricity/other energy (50kwh per 52,6 66, 34,0 4 41,8 41,8 32,06 35,5 39,4 household per month) 91 313 58 9,110 82 82 7 89 93

39,8 43, 44,7 5 53,0 53,0 60,17 68,6 78,8 Refuse (removed once a week) 30 016 65 2,618 46 46 7 02 92

Total cost of FBS provided 191,7 216,8 187,9 178,0 209,9 209,9 231,1 262,5 300,4 (minimum social package) 76 10 97 57 07 07 18 07 49 Highest level of free service provided

42, 1 15,0 15,0 15,00 15,0 15,0 Property rates (R value threshold) 700 15 5,000 00 00 0 00 00 Water (kilolitres per household per 45, month) 483 8 8 8 8 8 8 8 Sanitation (kilolitres per household 1 1 1 per month) 15 11 11 11 11 11 1 1 Sanitation (Rand per household per 61, 7 1 1 month) 998 7 86 62 62 98 11 25 Electricity (kwh per household per 7 7 month) 75 75 75 75 75 75 5 5 2 2 2 2 Refuse (average litres per week) 85 00 00 200 00 00 Revenue cost of free services provided (R'000)

Property rates (R15 000 threshold 39,5 42, 18,2 1 20,5 20,5 23,11 26,1 29,5 rebate) 37 700 64 8,419 99 99 2 06 00

Property rates (other exemptions, 26,7 4 31,7 31,7 35,88 35,6 41,5 reductions and rebates) 40 9,717 42 42 4 77 51 59 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Budg Origi Full Adjuste et Budget Budget Outcom Outcom Outcom nal Year R thousand d Year Year +1 Year +2 e e e Budg Forecas Budget 2012/ 2013/14 2014/15 et t 13

42,1 45, 60,4 6 59,3 59,3 67,60 77,0 88,6 Water 14 483 18 7,728 01 01 4 68 28

57,1 61, 63,8 5 77,3 77,3 88,17 100, 115, Sanitation 41 998 62 6,071 43 43 1 515 592

52,6 66, 51,0 4 42,7 42,7 48,10 53,3 59,2 Electricity/other energy 91 313 86 9,110 03 03 0 84 40

39,8 48, 44,7 5 52,7 52,7 60,17 68,6 78,8 Refuse 30 677 65 2,618 87 87 7 02 92 Municipal Housing - rental rebates Housing - top structure subsidies Other Total revenue cost of free 2 3 services provided (total social 231, 265 265, 93,66 284, 284, 23,04 361, 413, package) 313 ,171 134 3 475 475 8 352 403 60 PART 2 – SUPPORTING DOCUMENTATION

2.1 OVERVIEW OF ANNUAL BUDGET PROCESS

The Budget process started in August 2011 after the approval of a timetable and strategy to guide the preparation of the 2012/13 to 2014/15 Operating and Capital Budgets.

The timetable provides broad timeframes for the IDP and Budget preparation process. It allows for consultation with stakeholders, such as the elected public representatives, employees of the Municipality, Civil Society, State departments, business and labour, during April/May 2012. The main aims of the timetable were to ensure that a revised IDP and a balanced Budget were tabled in March 2012. The IDP and Budget was tabled by the Executive Mayor at a Council meeting held on 29 March 2012, following which it was submitted to National Treasury as well as being subjected to a consultation process with stakeholders, such as the elected public representatives, employees of the Municipality, Civil Society, business, labour, National and Provincial Governments.

The consultation took the form of a series of public meetings in the various wards under the direction and leadership of the Executive Mayor and his Mayoral Committee. Taking the inputs of the aforementioned consultations into account, the Executive Mayor tabled the IDP and Budget for consideration and approval at a Council meeting held on 30 May 2012.

The Service Delivery and Budget Implementation Plan is the mechanism that ensures that the IDP and the Budget is aligned.

The Budget was also considered by the Budget Task Team. The Task Team consists of Councilllors of the Budget and Treasury Committee, whilst being chaired by the Portfolio Councillor. The main objective of the Budget Task Team is to ensure that the budget is maintained within the affordability levels, taking the IDP deliverables into account. The capacity to spend the Budget by the relevant Directorates, efficient and effective utilisation of budget allocations and the need to adequately maintain the Municipality’s infrastructure and facilities were highlighted as key challenges, in addition to the ongoing financial sustainability of the Budget.

The deliberations of the Budget Task Team were considered by the IDP and Budget Steering Committee under the direction of the Executive Mayor. The IDP and Budget Steering Committee consists of the Executive Mayor, the Chairperson of the Budget and Treasury Standing Committee, the Municipal Manager and senior officials. The primary aims of the Committee are to ensure that:

 The budget compilation process complies with legislation;  There is proper alignment between the service delivery priorities as set out in the Municipality’s IDP and the budget, taking into account the need to maintain the financial sustainability of the Municipality;  The Municipality’s revenue and tariff determination strategies generate sufficient cash resources to deliver services; and  The various spending priorities of the different municipal directorates are properly evaluated and prioritized in the allocation of resources.

2.1.1 IDP & Budget Timetable 2012/13 to 2014/15

The preparation of the 2012/13 to 2014/15 IDP and Budget was guided by the following schedule of key deadlines as approved by Council on 28 July 2011. 61

Activity Date IDP/Budget Schedule approved by Council 28 July 2011 Budget Strategy and Assumptions approved by Council 7 September 2011 Tabling of draft IDP and Budget in Council 29 March 2012 Public Participation 4 to 24 April 2012 Final adoption of IDP and Budget by Council 30 May 2012 Approval of SDBIP by Executive Mayor 27 June 2012

2.2 ALIGNMENT OF ANNUAL BUDGET WITH INTEGRATED DEVELOPMENT PLAN

The Integrated Development Plan (IDP) determines and prioritises the needs of the community.

The review of the IDP in terms of the Municipal Systems Act was guided and informed by the following principles:

 Achievement of the five strategic priorities of NMBM.  Focus on service delivery of backlogs and the maintenance of infrastructure.  Address community priorities (needs) as identified in the IDP.

The review of the IDP focused on establishing measurable performance indicators and targets. These targets informed the preparation of the multi-year budget, as well as the Service Delivery and Budget Implementation Plan (SDBIP).

The 2012/13 to 2014/15 Operating and Capital Budgets were prepared in accordance with the IDP. The key strategic focus areas of the IDP are as follows:

 Municipal transformation and development  Service delivery and infrastructure development  Local economic development  Financial sustainability and viability  Good governance and public participation

The abovementioned strategic focus areas informed the preparation of the Budget.

After the tabling of the budget, a series of meetings was held throughout the municipal area to consult with the elected public representatives, employees of the Municipality, Civil Society, business, labour, National and Provincial Governments on how the budget addresses the IDP priorities and objectives. The feedback flowing from these meetings was referred to the relevant Directorates for their attention.

The linking of capital projects to the IDP priorities has been relatively simple, whilst the difficulty in the past has been to link the Operating budget to the IDP. This is now facilitated through the SDBIP.

Below is a table, which illustrates the link between the Budget and the IDP. 62 BUDGET ALLOCATION ACCORDING TO IDP PRIORITIES

Municipal Service Good Transformation Delivery and Local Financial Governance and Infrastructure Economic Sustainability and Public Development Development Development and Viability Participation Total R '000 R '000 R '000 R '000 R '000 R '000 2012/13 Budget Capital Expenditure 5,280 887,088 134’521 6,990 5,580 1,039,459 Operating Expenditure 736,431 3,093,011 810,074 1,546,505 1,178,290 7,364,312 Total 741,711 3,980,099 944,595 1,554,495 1,183,870 8,403,171

2013/14 Budget Capital Expenditure 5,500 1,104,135 196,616 8,000 6,395 1,320,646 Operating Expenditure 764,615 3,211,383 841,076 1,605,691 1,223,384 7,646,149 Total 770,115 4,315,518 1,037,692 1,613,691 1,229,779 8,966,795

2014/15 Budget Capital Expenditure 5,725 1,342,569 284,485 8,550 8,020 1,649,349 Operating Expenditure 835,428 3,508,799 918,971 1,754,400 1,336,686 8,354,284 Total 841,153 4,851,368 1,203,456 1,762,950 1,344,706 10,003,633

Figure 3 – 2012/13 Expenditure by IDP Priorities

2012/13 Expenditure by IDP Priorities

Good Governance Municipal and Public Transformation and Participation Development 14.1% 8.8% Financial Sustainability and Viability 18.5%

Service Delivery Local Economic and Infrastructure Development 47.4% 11.2%

2.2.1 Alignment with National and Provincial Priorities

The Municipality’s priorities are aligned to those of the National and Provincial Governments. 63 The matrix below shows the alignment with National and Provincial Government priorities:

Infrastructure and Economic Social Financial Institutional services Transformation Transformation Management Transformation

Roads and Economic Safety and Security Budget and Executive and Council Stormwater Development Treasury Electricity and Human Settlements Corporate Services Energy Water Services Public Health Sanitation Recreational Services Strategic Programmes Directorate

The above is an indication of NMBM’s alignment to the National and Provincial Key Performance Areas and how Directorates are aligned thereto. It should, however, be noted that in terms of implementation all Directorates are focusing on the five areas. In order to monitor and evaluate service delivery and financial performance, key performance indicators are included in all Executive Directors’ performance agreements.

2.3 MEASURABLE PERFORMANCE OBJECTIVES AND INDICATORS

This section contains the key performance indicators.

Description of Basis of calculation 2008/9 2009/1 2010/1 Current Year 2011/12 2012/13 Medium Term financial indicator 0 1 Revenue & Expenditure Framework Audite Audite Audite Origina Adjuste Full Budget Budget Budget d d d l d Year Year Year Year Outco Outco Outco Budget Budget Foreca 2012/1 +1 +2 me me me st 3 2013/1 2014/1 4 5 Borrowing Management

Credit Rating Aa3.za Aa3.za Aa3.za Aa3.za Aa3.za Aa3.za Aa3.za Aa3.za Aa3.za Capital Charges to Interest & Principal Paid 3.2% 2.9% 4.2% 4.7% 4.4% 4.4% 4.1% 3.9% 3.5% Operating Expenditure /Operating Expenditure Capital Charges to Own Finance charges & Repayment of 4.2% 4.4% 5.9% 6.3% 5.8% 5.8% 5.1% 4.5% 4.0% Revenue borrowing /Own Revenue Borrowed funding of Borrowing/Capital expenditure 0.0% 95.3% 47.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 'own' capital excl. transfers and grants and expenditure contributions Safety of Capital Gearing Long Term Borrowing/ Funds & 7.8% 26.1% 35.5% 27.0% 30.2% 30.2% 25.9% 24.5% 23.0% Reserves Liquidity Current Ratio Current assets/current liabilities 1 1 0 1 1 1 1 1 1 .0 .0 .8 .0 .0 .0 .0 .1 .2 Current Ratio adjusted Current assets less debtors > 90 1 1 0 1 1 1 1 1 1 for aged debtors days/current liabilities .0 .0 .8 .0 .0 .0 .0 .1 .2 Liquidity Ratio Monetary Assets/Current 0 0 0 0 0 0 0 0 0 Liabilities .4 .3 .2 .3 .4 .4 .5 .5 .7 Revenue Management Annual Debtors Last 12 Mths Receipts/Last 12 Mths Billing 91.0% 73.9% 121.1% 86.1% 88.3% 88.3% 88.8% 88.8% Collection Rate (Payment Level %) Current Debtors Collection Rate (Cash receipts % of Ratepayer & 90.3% 73.0% 120.7% 86.1% 88.3% 88.3% 88.8% 88.8% Other revenue) Outstanding Debtors to Total Outstanding Debtors to 27.5% 24.8% 16.1% 15.8% 15.3% 15.3% 15.6% 14.8% 13.8% Revenue Annual Revenue Creditors Management 64 Creditors System % of Creditors Paid Within Terms 84.0% 82.0% 84.0% 77.0% 77.0% 77.0% 78.0% 80.0% 82.0% Efficiency (within`MFMA' s 65(e)) Creditors to Cash and 139.2% 259.5% 291.4% 280.2% 162.3% 162.3% 126.6% 107.4% 86.4% Investments

Other Indicators Electricity Distribution % Volume (units purchased and 6.7% 7.5% 2.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% Losses (2) generated less units sold)/units purchased and generated Description of Basis of calculation 2008/9 2009/1 2010/1 Current Year 2011/12 2012/13 Medium Term financial indicator 0 1 Revenue & Expenditure Framework Audite Audite Audite Origina Adjuste Full Budget Budget Budget d d d l d Year Year Year Year Outco Outco Outco Budget Budget Foreca 2012/1 +1 +2 me me me st 3 2013/1 2014/1 4 5 Water Distribution % Volume (units purchased and 30.0% 29.3% 26.3% 24.3% 24.3% 24.3% 24.3% 24.3% 24.3% Losses (2) own source less units sold)/Total units purchased and own source Employee costs Employee costs/(Total Revenue - 29.5% 31.1% 32.2% 29.3% 28.2% 28.2% 24.8% 25.6% 25.1% capital revenue) Remuneration Total remuneration/(Total 30.4% 32.0% 32.9% 30.1% 29.0% 29.0% 25.5% 26.4% 25.9% Revenue - capital revenue) Repairs & Maintenance R&M/(Total Revenue excluding 8.8% 7.8% 7.1% 7.2% 7.1% 7.1% 6.9% 7.0% 6.8% capital revenue) Finance charges & FC&D/(Total Revenue - capital 11.2% 12.6% 12.8% 14.3% 14.3% 14.3% 13.0% 11.8% 9.8% Depreciation revenue) IDP regulation financial viability indicators i. Debt coverage (Total Operating Revenue - 15 35 39 41 41 41 44 46 52 Operating Grants)/Debt service .2 .7 .7 .4 .4 .4 .4 .4 .0 payments due within financial year) ii.O/S Service Debtors Total outstanding service 38.7% 36.6% 22.2% 20.3% 20.7% 20.7% 21.0% 18.9% 17.3% to Revenue debtors/annual revenue received for services iii. Cost coverage (Available cash + 3 1 1 1 1 1 2 2 3 Investments)/monthly fixed .5 .8 .1 .1 .8 .8 .2 .5 .0 operational expenditure

2.3.1 Performance indicators and benchmarks

2.3.1.1 Borrowing Management Capital expenditure may be funded from capital grants, internal sources and long term borrowing. The ability of a municipality to raise long term borrowing is largely dependant on its creditworthiness and financial position. The following financial performance indicators formed part of the compilation of the 2012/13 MTREF:

• Capital charges to operating expenditure is a measure of the cost of borrowing, compared to the total operating expenditure. The cost of borrowing is decreasing from 4,1% in 2012/13 to 3,5% in 2014/15. The decrease is attributable to no further borrowing being planned over the MTREF period.

2.3.1.2 Safety of Capital

• The gearing ratio is a measure of the total long term borrowings over funds and reserves. Between 2007/08 and 2010/11 the gearing ratio peaked at 35,5%. This was mainly as a result of increased borrowing levels. Over the 2012/13 MTREF, the ratio decreases from 25.9% in 2012/13 to 23.0% in 2014/15.

2.3.1.3 Liquidity • The current ratio is a measure of the current assets divided by the current liabilities. The Municipality has set a benchmark limit of 1. For the 2012/13 MTREF the current ratio increases from 1.0 in 2012/13 to 1.2 in 2014/15. 65 • The liquidity ratio is a measure of the municipality’s ability to utilise cash and cash equivalents to meets its current liabilities. A liquidity ratio of 1 should be maintained. Over the MTREF, the ratio increases from 0,5 in 2012/13 to 0,7 in 2014/15. This represents a pertinent risk for the Municipality, as any under collection of revenue will result in serious financial challenges for the Municipality. As part of the medium term financial planning objectives, this ratio must be maintained at a minimum of 1.

2.3.1.4 Revenue Management • As part of the Financial Recovery Plan, an aggressive revenue management framework is being implemented to increase cash inflows from current billings, as well as from debtors that are in arrears in excess of 90 days.

2.3.2 Drinking Water Quality and Waste Water Management

The Municipality performs the dual roles of a Water Service Authority and a Water Service Provider, in managing the provision of drinking water and the treatment of wastewater.

The Municipality achieved a scoring of 95.1% in relation to its Blue Drop status for the supply of water, compared to the scoring of 95.08% achieved in the previous assessment. The improvement is attributable to concerted efforts by the Municipality to improve the management of Drinking Water Quality over the past 12 months, especially a significant improvement in overall chemical quality. The cleanliness and sound condition of assets was also a major contributing factor. In order to enhance its Blue Drop status in the next assessment cycle, the Municipality will have to focus specifically on its water safety plan.

An average Green Drop Score of 80.8% was achieved for the seven Waste Water Treatment Systems managed by the Municipality, compared to the scoring of 70% achieved in the previous assessment.

The assessment revealed the following: -

 Training of process controllers not yet adequate, even though there is a significant improvement since the previous assessment.

 Special attention should be given to process optimisation (especially disinfection, to ensure compliance with authorisation limits.

Despite the areas requiring attention to improve the Green Drop rating of the Municipality, it achieved the second highest average score for the Eastern Cape Province.

It is furthermore, the Municipality’s intention to address the areas requiring attention in the forthcoming financial year.

2.3.3 Basic social services package for indigent households

The Constitution stipulates that a municipality must structure and manage its administration, budgeting and planning so as to give priority to the basic needs of the community and to promote their social and economic development. The basic social package is an affirmation of the Municipality’s commitment to push back the frontiers of poverty by providing social welfare to those residents who cannot afford to pay, as a result of adverse social and economic conditions.

The initiatives carried out by the Municipality in this regard are detailed below. 66

Service Social Package Approximate Est. No. of Cost R‘000 Housholds Assessment Rates All residential property owners are exempted 20 545 254 007 from paying rates on the first R15 000 of their property values. Full credit for property rates for indigent 54 196 57 852 consumers Water The first 8kl of water per month provided free to 67 728 85 156 indigent consumers Electricity The first 75kwh of electricity provided free to 49 110 56 156 indigent consumers Refuse removal Full credit for the monthly charge. 52 618 78 705 Sewerage Full credit for monthly charge of sewerage to 56 071 85 156 indigent consumers (For waterborne sewerage removal the maximum credit is based on 11kl per month) MURP Allocation Developmental Nodal Areas 21 221 Indigent control Costs to administer and monitor indigent 15 392 admin costs customers Water Maintenance provided in Wards where the 20 049 maintenance majority are indigent consumers Sewerage Maintenance provided in Wards where the 6 000 Maintenance majority are indigent consumers Refuse co-ops Co-ops to clean indigent and informal residential 14 073 areas Total Operating 377 003 Costs

In addition to the aforementioned operating costs, the Equitable Share allocation is fully utilised towards capital projects linked to the Wards where the majority of the indigent consumers reside.

The Municipality thus fully utilises the Equitable Share allocation towards assisting the poor. It is however clear that the Equitable Share allocation is not sufficient to assist in addressing all the needs of the communities and the pressure on this vital funding source is ever increasing due to the high increases in specifically the electricity tariffs.

2.4 OVERVIEW OF BUDGET RELATED POLICIES

The MFMA and the Budget and Reporting Regulations require budget related policies to be reviewed, and where applicable, be updated on an annual basis.

2.4.1 Financial Management Policies

The policies were adopted by the Council in May 2010. The policies govern the financial management functions of the Municipality, such as budgeting, virements, financial statements, etc.

2.4.2 Review of credit control and debt collection policies

The Collection Policy was reviewed and approved by Council in March 2011. A review of certain components of the policy was considered necessary to achieve a higher collection rate.

The 2012/13 MTREF has been prepared on the basis of achieving an average revenue collection rate of 95% on current billings, excluding ATTP subsidies. In addition, the collection of debt in excess of 67 90 days has been prioritised as a specific strategy, in order to improve the Municipality’s cash position.

2.4.3 Budget Adjustment Policy (part of Financial Management Policies)

The adjustments budget process is regulated by the MFMA and is aimed at entrenching increased levels of discipline, responsibility and accountability in the financial management practices of the Municipality. In order to ensure that the Municipality continues to deliver on its core service delivery mandate, the mid-year review and adjustments budget processes are utilised to ensure that underperforming functional areas are identified and funds redirected to performing functional areas.

2.4.4 Supply Chain Management Policy

A revised Supply Chain Management Policy was adopted by Council in December 2011.

2.4.5 Cash Management and Investments Policy

The Cash Management and Investments Policy was amended by Council in December 2005. The aim of the policy is to ensure that surplus cash and investments are adequately managed, especially the funds set aside for the cash backing of certain reserves.

2.4.6 Tariff Policies

The different tariff policies provide a broad framework for the determination of tariffs. The different policies were approved on various dates, whilst a consolidated tariff by-law is in the process of being finalised.

All the above policies are available on the Municipality’s website, as well as the following budget related policies:

• Asset Management Policy; • Property Rates Policy; • Funding and Reserves Policy; • Borrowing Policy; • Basic Social Services Package (Assistance to the Poor Policy); • Financial Management Policies, which includes virement policy.

2.5 OVERVIEW OF BUDGET ASSUMPTIONS

Budget assumptions/parameters are determined in advance of the budget process to allow budgets to be constructed to support the achievement of the longer-term financial and strategic targets.

The municipal fiscal environment is influenced by a variety of macro economic control measures. National Treasury provides guidelines on the ceiling of year-on-year increases in the total Operating Budget, whilst the National Electricity Regulator of South Africa (NERSA) regulates bulk electricity tariff increases and the Department of Water Affairs (DWA) regulates bulk water tariff increases. The Municipality’s employee related costs are also influenced by collective agreements concluded in the South African Local Government Bargaining Council. Various government departments also affect municipal service delivery through the level of grants and subsidies.

The following principles and guidelines directly informed the compilation of the Budget:

 The priorities and targets in relation to the key strategic focus areas as determined in the IDP.  The level of property rates and tariff increases to take into account the need to address maintenance and infrastructural backlogs, including the expansion of services. 68  The level of property rates and tariff increases to ensure the delivery of municipal services on a financially sustainable basis.  An assessment of the relative human resources capacity to implement the Budget.  No budget allocation has been made to programmes and projects, unless the respective programme and project plans have been submitted by the relevant Executive Directors.  The need to enhance the municipality’s revenue base.  No loan funding is available to support the Capital Budget, in view of financial affordability considerations.  No growth in revenue sources has been provided for in view of current consumption trends in municipal services.  No growth in property rates income has been provided for, in view of the depressed property market.

The Municipality faced the following significant challenges in preparing the 2012/13 – 2014/15 Budget:

 Reprioritisation of capital projects and operating expenditure within the revised financial affordability limits of the Budget, taking the cash position into account;  Maintaining revenue collection rates at the targeted levels;  Uncertainty as to the final negotiated salary increases for municipal employees, as the Salary and Wage Collective Agreement for the 2012/13 to 2014/15 financial years has not yet been concluded;  Increased costs associated with bulk electricity and water, placing upward pressure on tariff increases to consumers. Continued high tariff increases may soon render municipal services financially unaffordable;  Depleted Capital Replacement Reserve, impacting on the Municipality’s ability to fund capital expenditure from internal sources;  Allocation of the required operating budget provision for newly created infrastructure and facilities, with a consequential impact on rates and tariff increases.

The multi-year budget is therefore underpinned by the following assumptions:

2012/13 2013/14 2014/15 Assumptions Budget Budget Budget Income % % % % Tariff increases for water 13 13 13 13 Tariff increases for sanitation & refuse 13 13 13 13 Property rates increase 13 13 13 13 Electricity (average increase in income) 25 11.03 11.03 11.03 Revenue collection rates (excluding ATTP subsidies) 93.75 95 95 95 Total expenditure increase allowed (excluding repairs and maintenance) 6 6.2 3.5 9.4 Salary increase 9 6,5 7.5 9.1 Increase in repairs and maintenance 10 6.2 7.7 7.8 Increase in bulk purchase of power costs 26,71 13.5 13.5 13.5

No growth in revenue sources has been provided for, in view of current consumption trends relating to municipal services. Furthermore, no growth in property rates has been provided for, in view of the depressed property market.

It is to be noted that the Budget has been prepared, based on Generally Recognised Accounting Practice (GRAP).

2.6 OVERVIEW OF BUDGET FUNDING 69

2.6.1 Medium-term outlook: operating revenue

The following table provides a breakdown of operating revenue over the medium-term:

Table 29 (Breakdown of the operating revenue over the medium-term)

Description 2012/13 Medium Term Revenue & Expenditure Framework Budget Budget Budget R thousand Year Year +1 Year +2 2012/13 2013/14 2014/15 Revenue By Source 1,074,62 1,214,33 1,372,20 Property rates 8 14.8% 6 15.9% 5 16.1% 3,951,03 4,436,32 5,006,22 Service charges 9 54.6% 9 58.1% 7 58.8% 25,52 27,05 28,68 Investment Revenue 8 0.4% 9 0.4% 3 0.3% 1,361,24 1,065,84 1,155,40 Transfers recognised - operational 8 18.8% 0 13.9% 3 13.6% 825,51 953,71 Other revenue 6 11.4% 901,674 11.8% 0 11.2% Total Revenue (excluding capital transfers 7,237,9 7,645,2 8,516,2 and contributions) 60 100.0% 38 100.0% 29 100.0% Total Expenditure 7,364,3 7,646,1 8,354,2 12 49 84 (126,35 161,94 Surplus/(Deficit) for the year 2) (911) 4

The following graph is a breakdown of the operational revenue per main category for the 2012/13 financial year.

2012/13 Operating Revenue Property rates Other revenue 14.8% 11.4% Transfers - recognised operational 18.8%

Service charges Investment Revenue 54.6% 0.4%

Figure 4 Breakdown of operating revenue over the 2012/13 MTREF

Tariff determination plays a vital role in ensuring the appropriate levels of revenue, so as to achieve a credible and funded budget. Operating revenue is mainly derived from service charges, such as water, electricity, sanitation and refuse collection and disposal, property rates and operating grants.

The revenue management strategy includes the following key components: • Growth in the revenue base; 70 • Targeting a 95% annual collection rate for property rates and service charges, after discounting ATTP subsidies; • National Treasury guidelines; • Electricity bulk tariff increases as approved by NERSA; • Water bulk tariff increases as approved by DWA; • Ensuring fully cost reflective tariffs; • The level of property rates and tariff increases must ensure financially sustainable service delivery; • The Property Rates Policy, and • The level of property rates and tariff increases to provide for the maintenance and replacement of infrastructure, including the expansion of services.

The above principles guide the annual increases in property rates and tariffs, charged to the consumers.

Property rates amount to R1,1 billion in the 2012/13 financial year and increases to R1,4 billion in 2014/15, representing 14.8% of the total operating revenue. It remains relatively constant over the medium-term.

Services charges relating to electricity, water, sanitation and refuse collection and disposal constitute the largest component of the revenue base, amounting to R3,9 billion in the 2012/13 financial year and increasing to R5,0 billion in 2014/15. For the 2012/13 financial year, services charges amount to 54,6% of the total revenue base and increases to 58,8% in 2014/15. This escalation is mainly attributable to the significant increases in the bulk electricity tariffs.

Operational grants and subsidies amount to R1,36 billion, R1,06 billion and R1,15 billion for each of the respective financial years of the MTREF, or 18.8%, 13.9% and 13,6% of total operating revenue.

The tables below provide investment information and investment particulars by maturity.

Table 30 (SA15 – Detail Investment Information)

2012/13 Medium Term 2009/1 20010/ 2008/9 Current Year 2011/12 Revenue & Expenditure 0 11 Framework Investment type Audite Audite Audite Origi Adjust Full Budget Budget Budget d d d nal ed Year Year Year +1 Year +2 Outco Outco Outco Budg Budge Forec 2012/1 2013/1 2014/15 me me me et t ast 3 4 R thousand Parent municipality 2 78 50 29 42,63 56 56 779, 1,02 1,40 Deposits - Bank 5,604 6,363 8,140 9 3,955 3,955 203 4,368 4,958 2 78 50 29 42,63 56 56 779, 1,02 1,40 Total 5,604 6,363 8,140 9 3,955 3,955 203 4,368 4,958

As a result of the Municipality’s cashflow forecasting, cashflow management and monitoring functions, investments are anticipated to increase from R779,2 million in 2012/13 to R1.40 billion in 2014/15. However this amount includes funding in respect of unspent conditional grants in the amount of approximately R580 million. 71 Table 31 (SA16 – Investment particulars by maturity)

Period of Interest Monetary Investments by Maturity Investmen Expiry date to be value t Type of Investment of realised Yrs/Month investment Rand Name of institution & investment ID s millions Call account / money Investec 1-3 months market Variable 170,000 5,343 Call account / money Stanlib 1-3 months market Variable 180,000 5,677 Call account / money Nedbank 1-3 months market Variable 140,000 4,890

Standard Bank 1 year Short term deposit Variable 150,000 4,902 Call account / money First National Bank 1-3 months market Variable 139,203 4,716

TOTAL INVESTMENTS AND INTEREST 779,203 25,528

2.6.2 Medium-term outlook: capital revenue

The following table provides a breakdown of the funding components of the 2012/13 medium-term capital programme:

Table 32 (Sources of capital revenue over the MTREF)

Description Current Year 2011/12 2012/13 Medium Term Revenue & Expenditure Framework

Budge Budget Budget t Year Adjusted R thousand % Year % Year +1 % +2 % Budget 2012/13 2013/14 2014/1 5 Capital Transfers and Grants 1,037, 771,93 1,011, 1,301, National Government: 506 84.0 2 74.3 688 76.6 074 78.9 Provincial Government: – – – Other grant providers: 3,000 0.2 3,000 0.3 0 0 0 0 Transfers recognised - 1,040,50 1,011,68 1,301, capital 6 84.3 774,932 74.6 8 76.6 074 78.9 Public contributions and donations 38,000 3.1 23,000 2.2 33,500 2.5 33,500 2.0 314,77 Internally generated funds 156,096 12.6 241,527 23.2 275,458 20.9 5 19.1 Total Capital Transfers and 1,234, 1,039,45 1,320, 1,649, Grants 602 100.0 9 100.0 646 100.0 349 100.0

The above table is graphically represented as follows for the 2012/13 financial year. 72

2012/13 Draft Capital Budget by Source of Funding

Internally generated funds 23.2% Public & contributions donations 2.2%

Other transfers National and grants Government 0.3% 74.3%

Figure 5 Sources of capital revenue for the 2012/13 financial year

Capital grants constitute 74.6% of the total funding sources, amounting to R774.9 million for the 2012/13 financial year and amounting to R1,30 billion or 78.9% in 2014/15. It is to be noted that no borrowing is planned for the 2012/13 MTREF, in view of financial affordability considerations.

The following table provides a detailed analysis of the Municipality’s borrowings.

Table 33 (Table SA 17 - Detail of borrowings)

2012/13 Medium Term Borrowing - Categorised by 2009/1 20010/ 2008/9 Current Year 2011/12 Revenue & Expenditure type 0 11 Framework Budget Audite Audite Audite Audite Budget Budget Origina Adjuste Year d d d d Year Year +2 R thousand l d +1 Outco Outco Outcom Outcom 2012/1 2014/1 Budget Budget 2013/1 me me e e 3 5 4 Parent municipality Long-Term Loans 385 1,459 1,841 1,729 1,734 1,734 1,629 1,516 1,411 (annuity/reducing balance) ,472 ,787 ,851 ,021 ,172 ,172 ,013 ,045 ,952 1, Local registered stock 185 38 1,45 1,84 1,72 1,73 1,73 1,62 1,51 1,41 Total Borrowing 6,657 9,787 1,851 9,021 4,172 4,172 9,013 6,045 1,952

The following graph illustrates the growth in outstanding borrowing for the 2007/08 to 2013/14 period: 73

2,000,000

1,500,000 Rm

1,000,000

500,000

– 2007/8 2008/9 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

Figure 6 Growth in outstanding borrowing (long-term liabilities)

The following table indicates the capital transfers and grant receipts:

Table 34 (Table SA 18 - Capital transfers and grant receipts)

2012/13 Medium Term Description Current Year 2011/12 Revenue & Expenditure Framework Budget Budget Full Budget Origina Adjust Year Year Year Year R thousand l ed +1 +2 Foreca 2012/1 Budget Budget 2013/1 2014/1 st 3 4 5 Capital Transfers and Grants 1,22 1,23 1,23 771, 1,01 1,30 National Government: 2,467 4,467 4,467 932 1,688 1,074 487, 499, 499, 592, 727, 845, Urban Settlements Development Grant (USDG) 467 467 467 870 986 778 200, 200, 200, 100, 228, 395, Public Transport and Systems 000 000 000 000 702 571 60, 60, 60, 64, 35, 39, Neighbourhood Development Partnership 000 000 000 062 000 725 450, 450, 450, Water Drought Relief 000 000 000 25, 25, 25, 15, 20, 20, Integrated National Electrification Programme 000 000 000 000 000 000 Other capital transfers/grants [insert desc] 0

Provincial Government: – – – – – – Other capital transfers/grants [insert description] 24,0 24,0 24,0 Other grant providers: 00 00 00 0 0 0 15,00 15,00 15,00 Coega Grant 0 0 0 0 0 0 9, 9, 9, Bay West Development Grant 000 000 000 0 0 0 1,24 1,25 1,25 771, 1,01 1,30 Total Capital Transfers and Grants 6,467 8,467 8,467 932 1,688 1,074

2.6.3 Cash Flow Management

Cash flow management and forecasting is a critical step in determining whether the budget is funded over the medium-term. The table includes some specific features:

• Clear separation of receipts and payments within each cash flow category; • Clear separation of capital and operating receipts from government; and 74 • Separation of borrowing and loan repayments (no set-off), to assist with MFMA compliance assessment regarding the use of long term borrowing (debt).

Table 35 (Table A7 - Budget cash flow statement)

2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Adjuste Budget Budget Budget Audited Audited Audited Original Year R thousand d Year Year +1 Year +2 Outcome Outcome Outcome Budget Forecas Budget 2012/13 2013/14 2014/15 t CASH FLOW FROM OPERATING ACTIVITIES Receipts 2,852,2 2,704,2 5,412,1 4,261, 4,670, 4,670, 5,197, 5,820, 6,507, Ratepayers and other 09 02 24 084 097 097 167 175 782 1,021,1 1,454,7 1,363,3 1,371, 1,282, 1,282, 1,356, 1,065, 1,155, Government - operating 15 43 58 306 407 407 926 840 403 970,0 993,7 531,2 1,246, 1,249, 1,249, 771, 1,011, 1,301, Government - capital 72 24 95 467 768 768 932 688 074 258,1 167,5 16,4 21, 28, 28, 25, 27, 28,6 Interest 68 43 47 257 000 000 528 059 83 Dividends Payments (3,637, (4,136, (5,933, (4,987 (5,229 (5,229 (5,702 (6,011 (6,618, Suppliers and employees 899) 060) 419) ,425) ,724) ,724) ,869) ,445) 042) (82,5 (145,9 (177,1 (208, (213, (213, (205, (193, (182, Finance charges 00) 78) 10) 791) 337) 337) 239) 867) 546) (36,2 (99,8 (296,2 (86, (89, (89, (79, (85, (91, Transfers and Grants 77) 70) 31) 407) 584) 584) 005) 600) 318) NET CASH FROM/(USED) 1,344, 938, 916, 1,617 1,697 1,697 1,364 1,633 2,101 OPERATING ACTIVITIES 887 304 465 ,491 ,626 ,626 ,440 ,852 ,036

CASH FLOWS FROM INVESTING ACTIVITIES Receipts 2,25 Proceeds on disposal of PPE 6 0 Decrease (Increase) in non- current debtors Decrease (increase) other non- 23,0 31,4 19,0 1,2 1,2 1,2 current receivables 07 84 96 97 97 97 Decrease (increase) in non- 10,5 current investments 61 Payments (2,337, (2,333, (1,521, (1,364 (1,292 (1,292 (1,048 (1,282 (1,606, Capital assets 225) 450) 064) ,466) ,718) ,718) ,473) ,527) 479) NET CASH FROM/(USED) (2,303, (2,301, (1,499, (1,36 (1,29 (1,29 (1,04 (1,28 (1,606 INVESTING ACTIVITIES 651) 966) 718) 3,169) 1,421) 1,421) 8,473) 2,527) ,479)

CASH FLOWS FROM FINANCING ACTIVITIES Receipts Short term loans 1,165,0 470,0 Borrowing long term/refinancing 00 00 Increase (decrease) in consumer (11,6 2,5 2,5 2,5 (3, (1, (1,0 deposits 15) 15 15 15 275) 000) 00) Payments (56,4 (51,8 (88,8 (92, (92, (92, (97, (105, (112, Repayment of borrowing 38) 28) 59) 211) 058) 058) 444) 159) 968) NET CASH FROM/(USED) (68,0 1,113, 381, (89, (89, (89, (100 (106 (113 FINANCING ACTIVITIES 54) 172 141 696) 543) 543) ,719) ,159) ,968)

NET INCREASE/ (DECREASE) IN (1,026, (250, (202, 164 316 316 215 245 380, CASH HELD 818) 490) 112) ,626 ,662 ,662 ,248 ,165 589 Cash/cash equivalents at the year 1,907, 880, 629, 277 447 447 763 979 1,224 begin: 077 260 770 ,992 ,273 ,273 ,935 ,183 ,348 Cash/cash equivalents at the year 880, 629, 427, 442 763 763 979 1,224 1,604 end: 260 770 658 ,619 ,935 ,935 ,183 ,348 ,938 75

The table reflects that the cash and cash equivalents were largely depleted between the 2007/08 and 2010/11 financial years, decreasing from a positive cash balance of R1,9 billion to a balance of R763.9 million in the 2011/12 Adjustments budget. For the 2012/13 MTREF, the cash and cash equivalents over the medium-term is anticipated to increase from R979.2 million to R1.6 billion in 2014/15. The 2012/13 cash balance is significantly influenced by the unspent grants of approximately R580 million relating to the previous year(s).

Table 36 (Table A8 - Cash Backed Reserves/Accumulated Surplus Reconciliation) 2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Budget Budget Budget Audited Audited Audited Original Adjusted Full Year R thousand Year Year +1 Year +2 Outcome Outcome Outcome Budget Budget Forecast 2012/13 2013/14 2014/15 Cash and investments available Cash/cash equivalents at the year 880,2 629,7 427,6 442,6 763,9 763,93 979, 1,224, 1,604, end 60 70 58 19 35 5 183 348 938 Other current investments > 90 93 1,12 ( (0 days 0 5 7 0 0) ) 0 (0) 0 72 2 2 2 2 2 Non current assets - Investments 7 0 0 0 0 20 20 20 0 Cash and investments 880, 630, 428, 442, 763, 763,9 979, 1,224 1,604 available: 987 725 805 639 955 55 203 ,368 ,958

Application of cash and investments 645,3 206,1 301,7 325,6 325,60 580, 619, 654, Unspent conditional transfers 67 96 12 – 04 4 800 280 219

Unspent borrowing – – – – – – – – – Statutory requirements Other working capital 148,6 687,8 107,2 374,7 356,8 356,89 239, 306, 345, requirements 66 21 92 40 99 9 779 989 848 Other provisions Long term investments committed – – – – – – – – – Reserves to be backed by 486,6 446,0 593,3 167,3 47,0 47,00 47,0 49,2 51,5 cash/investments 40 52 75 49 00 0 00 20 73 Total Application of cash and 1,280, 1,340, 1,002, 542, 729, 729,5 867, 975, 1,051 investments: 673 069 379 089 503 03 579 489 ,640 (399, (709, (573, (99,4 34,4 34,45 111, 248, 553, Surplus(shortfall) 686) 344) 574) 50) 52 2 624 879 318

The underlying purpose of Table A8 is to reflect the predicted cash and investments that are available at the end of a particular budget year and how these funds were used. A surplus would indicate that sufficient cash and investments were available to meet commitments, whilst a shortfall would indicate inadequate cash and investments were available to meet commitments.

The available cash and investments amount to R979.2 million in the 2012/13 financial year and increases to R1.60 billion in 2014/15. The following is a breakdown of the application of this funding:

• Unspent conditional transfers (grants) – unspent grant funding is anticipated over the 2012/13 MTREF.

• There is no unspent borrowing from previous financial years.

• The main purpose of the other working capital requirements is to ensure that sufficient funds are available to meet commitments as and when they fall due. A key challenge is often the mismatch between the timing of receipts from debtors and payments due to employees and creditors. High levels of non-payment by debtors will result in a greater requirement for working capital, ultimately causing cash flow challenges. 76 For the purposes of the cash backed reserves and accumulated surplus reconciliation, a provision equivalent to one month’s operational expenditure has been provided for. The desired cash levels are, however, two months’ operational expenditure in order to ensure the continued liquidity of the Municipality. Any underperformance in relation to debtor collections could place upward pressure on the Municipality’s ability to meet its commitments.

• Reserves must be cash backed in order to support the budget. The reserves requiring cash backing, includes the Self Insurance Fund and COID.

It is concluded that the Municipality’s cash backed and accumulated surpluses reconciliation reflects surpluses of R111.6 million, R248.9 million and R553.3 million for the 2012/13, 2013/14 and 2014/15 financial years respectively.

It is to be noted that for all practical purposes that the 2010/11 and 2011/12 MTREF was unfunded, when considering the funding requirements of section 18 and 19 of the MFMA.

2.6.5 Funding Compliance Measurement

National Treasury requires the Municipality to assess its financial sustainability against the different measures outlined below.

2012/13 Medium Term Description 2008/9 2009/10 2010/11 Current Year 2011/12 Revenue & Expenditure Framework Full Budget Audited Audited Audited Budget Budget Original Adjusted Year Year Outcom Outcom Outcom Year +1 Year +2 Budget Budget Forecas 2012/1 e e e 2013/14 2014/15 t 3 Funding measures Cash/cash equivalents at the year 880,2 629,7 427,6 442,6 763,9 763, 979, 1,224,3 1,604,9 end - R'000 60 70 58 19 35 935 183 48 38 Cash + investments at the yr end (399,6 (709,3 (573,5 (99,4 34,4 34, 111, 248,8 553,3 less applications - R'000 86) 44) 74) 50) 52 452 624 79 18 Cash year end/monthly 3. 1. 1. 1. 1. 1 2. 3. employee/supplier payments 5 8 1 1 8 .8 2.2 5 0 Surplus/(Deficit) excluding 952,3 855,3 633,6 999,4 658,6 657, 1,282, 1,632,5 2,035,3 depreciation offsets: R'000 59 69 75 01 84 983 848 77 25 Service charge rev % change - macro CPIX target exclusive N.A. 10.8% 13.8% 10.4% (8.4%) (6.0%) 5.6% 6.4% 6.9% Cash receipts % of Ratepayer & Other revenue 90.3% 73.0% 120.7% 86.1% 88.3% 88.3% 88.8% 88.8% 88.8% Debt impairment expense as a % of total billable revenue 6.2% 12.6% 13.9% 6.2% 6.2% 6.2% 5.0% 5.0% 5.0% Capital payments % of capital expenditure 83.6% 102.6% 100.2% 100.3% 104.7% 104.7% 100.9% 97.1% 97.4% Borrowing receipts % of capital expenditure (excl. transfers) 0.0% 88.5% 46.8% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Grants % of Govt. legislated/gazetted allocations 100.0% 100.0% 100.0% Current consumer debtors % change -incr(decr) N.A. 10.6% (27.4%) 6.7% (0.5%) 0.0% 13.2% 0.8% 3.6% Long term receivables % change - incr(decr) N.A. (14.3%) (23.7%) 3.3% 0.0% 0.0% 2.4% 0.0% 0.0% R&M % of Property Plant & Equipment 5.3% 3.8% 3.5% 3.7% 3.8% 3.8% 3.9% 4.0% 4.0% Asset renewal % of capital budget 6.8% 10.6% 17.7% 21.2% 41.6% 41.6% 60.5% 71.0% 74.7%

Below is a discussion of the different measures.

2.6.5.1 Cash/cash equivalent position The forecasted cash and cash equivalents for the 2012/13 MTREF amounts to R979.2 million, R1.22 billion and R1.60 billion for the respective financial years. 77 2.6.5.2 Cash plus investments less application of funds For the 2012/13 to 2014/15 budgets, the available cash and investments exceed the application of funds by an amount of R111.6 million, R248.9 million and R553.3 million respectively. 78 2.6.5.3 Monthly average payments covered by cash or cash equivalents The ratio has been declining significantly for the period 2008/09 to 2011/12, moving from 3,5 to 1,8. As part of the 2012/13 MTREF, the cash position causes the ratio to move from 2.2 to 3.0.

2.6.5.4 Surplus/deficit excluding depreciation offsets For the 2012/13 MTREF the indicative outcome is a surplus of R1,28 billion, R1.63 billion and R2.03 billion. The surplus is made up as follows:

2012/13 2013/14 2014/15 R R R Operating Budget Surplus (126,352) (911) 161,944 (Deficit) Capital Grants (Transfers) 774,932 1 011,688 1 301,074 Depreciation Offsets 634,267 621,800 572,306 Total R1,282,848 R1,632,577 R2,035,325

It needs to be noted that a surplus does not necessarily mean that the budget is funded from a cash flow perspective, and therefore the first two measures in the table are critical.

2.6.5.5 Property Rates/service charge revenue as a percentage increase less macro inflation target This is calculated by deducting the maximum macro-economic inflation target (which is currently 3 - 6 %), so as to determine the real increase in revenue. The percentage growth totals 5,6%, 6,4% and 6,9% for the respective financial years of the 2012/13 MTREF. The real increases in revenue are more or less in line with the inflation target figures.

2.6.5.6 Cash receipts as a percentage of ratepayer and other revenue

The outcome is 88,8% for each of the respective financial years.

2.6.5.7 Debt impairment expense as a percentage of billable revenue

The provision has been set at 5% over the MTREF, in line with the revenue collection trends.

2.6.5.8 Capital payments percentage of capital expenditure

The purpose of this measure is to determine whether the timing of payments has been taken into account in forecasting the cash position.

2.6.5.9 Borrowing as a percentage of capital expenditure (excluding transfers, grants and contributions)

No borrowing has been planned for the 2012/13 MTREF.

2.6.5.10 Transfers/grants revenue as a percentage of Government transfers/grants available

The purpose of this measurement is mainly to ensure that all available transfers from national and provincial government have been budgeted for. All transfers are included in the budget.

2.6.5.11 Repairs and maintenance expenditure level

The expenditure constitutes 3.9% of Property, Plant and Equipment, whilst National Treasury has suggested an 8% level. 79

2.6.5.12 Asset renewal/rehabilitation expenditure level

The expenditure constitutes 60.5% of the capital budget, whilst National Treasury has suggested a 40% level.

2.7 EXPENDITURE ON ALLOCATIONS AND GRANT PROGRAMMES

GRANTS RECEIVED 2012/13 Medium Term Description Current Year 2011/12 Revenue & Expenditure Framework Adjuste Budget Budget Budget Original Full Year R thousand d Year Year +1 Year +2 Budget Forecast Budget 2012/13 2013/14 2014/15 RECEIPTS:

Operating Transfers and Grants 1,270 828, 828, 953, 1,062 1,151, National Government: ,578 265 265 174 ,088 651 656, 656, 656,6 729, 781, 841,2 Local Government Equitable Share 653 653 53 226 838 01 20, 20, 20,0 Electricity Demand Side Management 000 000 00 1, 1, 1,2 1,2 1,2 1,25 Finance Management 250 250 50 50 50 0 6 60 Water Services Operating Subsidy 00 0 140, 140,0 270, 300,0 Public Transport Infrastructure and Systems Grant 000 00 198,702 000 00 419, Fuel Levy 132 – – 173, 9, 9,7 Other 543 762 62 0 0 0 Expanded Public Works Programme 14,696 0 0 Infrastructure Skills Development Grant 5,300 5,000 5,200 LGSETA 4,000 4,000 4,000 100,7 447,4 447,4 403,7 3,7 3,7 Provincial Government: 28 81 81 52 52 52 96, 91, 91,1 Health subsidy 228 183 83 350, 350,0 400, Housing 000 00 000 4, Sports and Recreation 500 6, 6,2 3,7 3,7 Library Subsidy 298 98 52 52 3,752 2, 2,0 Other grant providers: – 081 81 0 0 0 1, 1,5 560 60 0 0 0 5 52 21 1 1,371 1,277 1,277, 1,154 1,073 1,163, Total Operating Transfers and Grants ,306 ,827 827 ,719 ,480 403 Capital Transfers and Grants 1,222 1,234 1,234, 771,9 1,011 1,301, National Government: ,467 ,467 467 32 ,688 074 487, 499, 499,4 592, 727, 845,7 Urban Settlements Development Grant 467 467 67 870 986 78 200, 200, 200,0 100, 228, 395,5 Public Transport Infrastructure and Systems 000 000 00 000 702 71 60, 60, 60,0 64, 35,0 39,7 Neighbourhood Development Partnership 000 000 00 062 00 25 450, 450, 450,0 Water Drought Relief Fund 000 000 00 25, 25, 25,0 15, 20,0 20,0 Integrated National Electrification Programme 000 000 00 000 00 00 80

Other capital transfers/grants [insert desc] 0

Provincial Government: – – – – – – 2012/13 Medium Term Description Current Year 2011/12 Revenue & Expenditure Framework Adjuste Budget Budget Budget Original Full Year R thousand d Year Year +1 Year +2 Budget Forecast Budget 2012/13 2013/14 2014/15

Other capital transfers/grants [insert description] 24, 24, 24,0 Other grant providers: 000 000 00 0 0 0 15, 15, 15,0 Coega Grant 000 000 00 0 0 0 9, 9, 9,0 Bay West Development Grant 000 000 00 0 0 0 1,246 1,258 1,258, 1,011 1,301, Total Capital Transfers and Grants ,467 ,467 467 771,932 ,688 074 2,617 2,536 2,536, 2,128 2,077 2,456, TOTAL RECEIPTS OF TRANSFERS & GRANTS ,773 ,294 294 ,858 ,528 477

GRANTS EXPENDITURE 2012/13 Medium Term Revenue Description Current Year 2011/12 & Expenditure Framework Adjuste Full Budget Budget Budget Original R thousand d Year Year Year +1 Year +2 Budget Budget Forecast 2012/13 2013/14 2014/15 EXPENDITURE:

Operating expenditure of Transfers and Grants 1,328 768, 768, 953, 1,062 1,151,6 National Government: ,260 459 459 174 ,088 51 656, 656, 656,6 729, 781, 841,20 Local Government Equitable Share 653 653 53 226 838 1 20,0 58, 58,2 Electricity Demand Side Management 00 288 88 1,2 1, 1,2 1,2 1,2 Finance Management 50 250 50 50 50 1,250 30, 30,0 198, 270, 300,00 Public Transport Infrastructure and Systems Grant 000 00 702 000 0 419, Fuel Levy 132 231,2 22,2 22,26 Other 25 68 8 0 0 0 Expanded Public Works Programme 14,696 0 0 Infrastructure Skills Development Grant 5,300 5,000 5,200 LGSETA 4,000 4,000 4,000 106, 456, 456, 403, 3, 3,75 Provincial Government: 227 398 398 752 752 2 96,2 95, 95,1 Health subsidy 28 152 52 5,4 350, 350,0 400, Housing 99 000 00 000 5, 5,7 3,7 3,7 Library Subsidy 747 47 52 52 3,752 4,5 Sports and Recreation 00 5, 5,4 Other 499 99 12, 12, Other grant providers: – 656 656 4,322 0 0 12, 12,6 2,5 National Lotteries 656 56 42 0 0 Donated Grants 1,780 0 0

Total operating expenditure of Transfers and 1,434 1,237 1,237 1,361 1,065 1,155,40 Grants: ,487 ,513 ,513 ,248 ,840 3 Capital expenditure of Transfers and Grants 81 1,172 1,013 1,013 771,9 1,011 1,301,0 National Government: ,467 ,581 ,581 32 ,688 74 487, 499, 499, 592, 727, 845,77 Municipal Infrastructure Grant (MIG) 467 768 768 870 986 8 200, 75, 75,0 100, 228, 395,57 Public Transport and Systems 000 000 00 000 702 1 2012/13 Medium Term Revenue Description Current Year 2011/12 & Expenditure Framework Adjuste Full Budget Budget Budget Original R thousand d Year Year Year +1 Year +2 Budget Budget Forecast 2012/13 2013/14 2014/15 60,0 56, 56,3 64,0 35,0 Neighbourhood Development Partnership 00 309 09 62 00 39,725 25,0 25, 25,0 15,0 20,0 Integrated National Electrification Programme 00 000 00 00 00 20,000 400, 354, 354, Water Drought Relief Fund 000 504 504 0 3, 3,0 Other capital transfers/grants [insert desc] 000 00 0 27, 26, 26, 3,00 Other grant providers: 000 925 925 0 0 0 15,0 15, 15,0 Coega Grant 00 000 00 0 0 0 12, 11 11, Bay West Development Grant 000 ,925 925 0 0 0 Mendi Bottle Store Funds 3,000 Total capital expenditure of Transfers and 1,199 1,040 1,099 774,9 1,011 1,301,0 Grants ,467 ,506 ,467 32 ,688 74

TOTAL EXPENDITURE OF TRANSFERS AND 2,633 2,278 2,295 2,136 2,077 GRANTS ,954 ,019 ,094 ,180 ,528 2,456,477

GRANTS RECONCILIATION 2012/13 Medium Term Revenue Description Current Year 2011/12 & Expenditure Framework Full Adjuste Budget Budget Budget Original Year R thousand d Year Year +1 Year +2 Budget Forecas Budget 2012/13 2013/14 2014/15 t Operating transfers and grants: National Government: 57,6 174, 174, 233,9 23 233,9 Balance unspent at beginning of the year 82 985 985 63 3,963 63 1,270, 828, 828, 953, 1,062, 1,151,65 Current year receipts 578 265 265 174 088 1 1,328 776, 776, 951,1 1,062 1,151,6 Conditions met - transferred to revenue ,260 455 455 74 ,088 51 226,7 226,7 233,9 233,9 Conditions still to be met - transferred to liabilities 95 95 63 63 233,963 Provincial Government: 5,4 17,4 17,4 11,3 11,3 Balance unspent at beginning of the year 99 10 10 60 60 11,360 100, 447, 447, 403, 3,7 Current year receipts 728 481 481 752 52 3,752 106, 453, 453, 403, 3, 3,75 Conditions met - transferred to revenue 227 531 531 752 752 2 11,3 11,3 11,3 11,3 Conditions still to be met - transferred to liabilities 60 60 60 60 11,360 Other grant providers: 20,6 20,6 14,9 10,5 Balance unspent at beginning of the year 58 58 00 78 10,578 6,77 6,77 Current year receipts 0 0 0 0 0 12, 12, 4, Conditions met - transferred to revenue – 528 528 322 0 0 14,9 14,9 10,5 10,5 Conditions still to be met - transferred to liabilities 00 00 78 78 10,578 1,434 1,242 1,242 1,361 1,065 1,155,4 Total operating transfers and grants revenue ,487 ,514 ,514 ,246 ,840 03 253, 253, 255 255 255,9 Total operating transfers and grants - CTBM – 055 055 ,901 ,901 01

82

Capital transfers and grants: National Government: 37,9 37,9 240, 24 240,3 Balance unspent at beginning of the year 08 08 331 0,331 31 1,222, 1,234, 1,234, 771,9 1,011, 1,301,07 Current year receipts 467 467 467 32 688 4 1,222 1,030 1,030 771,9 1,011 1,301,0 Conditions met - transferred to revenue ,467 ,582 ,582 32 ,688 74 2012/13 Medium Term Revenue Description Current Year 2011/12 & Expenditure Framework Full Adjuste Budget Budget Budget Original Year R thousand d Year Year +1 Year +2 Budget Forecas Budget 2012/13 2013/14 2014/15 t 241, 241, 24 24 240,3 Conditions still to be met - transferred to liabilities 793 793 0,331 0,331 31 Other grant providers: 3,0 12,2 12,2 19, 16, Balance unspent at beginning of the year 00 71 71 445 445 16,445 24,0 24,0 24,0 Current year receipts 00 00 00 0 0 0 27, 27, 27, 3,00 Conditions met - transferred to revenue 000 000 000 0 0 0 9,2 9,2 16, 16, Conditions still to be met - transferred to liabilities 71 71 445 445 16,445 1,249 1,057 1,057 774,9 1,011 1,301,0 Total capital transfers and grants revenue ,467 ,582 ,582 32 ,688 74 251, 251, 256 256,7 Total capital transfers and grants - CTBM – 064 064 256,776 ,776 76

2,683 2,300 2,300 2,136 2,077 2,456,4 TOTAL TRANSFERS AND GRANTS REVENUE ,954 ,096 ,096 ,180 ,528 77 504, 504, 512 512 512,6 TOTAL TRANSFERS AND GRANTS - CTBM – 119 119 ,677 ,677 77

2.8 ALLOCATIONS AND GRANTS MADE BY THE MUNICIPALITY

The table below reflects the grants and allocations made by the Municipality. It includes grants-in-aid made in accordance with the Municipality’s grants-in-aid policy and transfers to entities and other organisations to primarily support their operational expenditure.

ALLOCATIONS AND GRANTS MADE BY THE MUNICIPALITY

2012/13 Medium Term 2009/1 2010/1 Description 2008/9 Current Year 2011/12 Revenue & Expenditure 0 1 Framework Budget Budget Audite Audite Audite Origi Adjust Full Budget Year Year d d d nal ed Year Year R thousand +1 +2 Outco Outco Outco Budg Budge Forec 2012/1 2013/1 2014/1 me me me et t ast 3 4 5 Cash Transfers to Entities/Other External Mechanisms

63,09 MBDA 13,620 76,885 19,953 2 63,092 63,092 56,778 60,890 65,144

Centenary Hall Promotions Former Entity 129

Feather Market Promotions - Former Entity 1,188

63,09 63,09 Total Cash Transfers To Entities/Ems' 14,937 76,885 19,953 2 63,092 2 56,778 60,890 65,144 Cash Transfers to Organisations

Grants in Aid 6,722 6,314 7,117 7,159 7,159 7,159 7,618 8,058 8,523

16,15 Grants to Other Organisations 14,618 16,671 15,352 5 16,235 16,235 15,109 16,652 17,651 83

23,31 23,39 Total Cash Transfers To Organisations 21,340 22,985 22,469 5 23,395 5 22,728 24,709 26,174 Total Cash Transfers To Groups Of Individuals: – – – – – – – – –

86,40 86,48 TOTAL CASH TRANSFERS AND GRANTS 36,277 99,870 42,422 7 86,487 7 79,005 85,600 91,318

Groups of Individuals

229,48 264,70 265,13 331,5 284,47 284,47 Indigent 7 1 4 55 5 5 323,048 366,152 418,203

Total Non-Cash Grants To Groups Of 229,48 264,70 265,13 331,5 284,47 284,4 323,04 366,15 418,20 Individuals: 7 1 4 55 5 75 8 2 3

TOTAL NON-CASH TRANSFERS AND 229,48 264,70 265,13 331,5 284,47 284,4 323,04 366,15 418,20 GRANTS 7 1 4 55 5 75 8 2 3

265,76 364,57 307,55 417,9 370,96 370,9 402,05 451,75 509,52 TOTAL TRANSFERS AND GRANTS 4 1 6 61 1 61 3 2 1 84

2.9 CO UNCILLORS AND BOARD MEMBERS ALLOWANCES AND EMPLOYEE BENEFITS

COUNCILLORS & BOARD MEMBER ALLOWANCES AND EMPLOYEE BENEFITS

Summary of Employee and 2009/1 2010/1 2012/13 Medium Term Revenue 2008/9 Current Year 2011/12 Councillor remuneration 0 1 & Expenditure Framework Audite Audite Audite Full Origina Adjuste Budget Budget Budget d d d Year R thousand l d Year Year +1 Year +2 Outco Outco Outco Forecas Budget Budget 2012/13 2013/14 2014/15 me me me t A B C D E F G H I Councillors (Political Office Bearers plus Other) 39 43, 43 49, 49,5 49,5 52,9 58,2 64,61 Basic Salaries and Wages ,995 509 ,671 518 18 18 17 09 2 1, 1, 1, 1, 1,5 1,5 1,66 1,83 2,03 Cellphone Allowance 261 376 382 565 65 65 5 2 4 41 44 45 51 51, 51, 54,5 60,0 66,6 Sub Total - Councillors ,255 ,886 ,053 ,084 084 084 83 41 45 8 0 13 6.8 10.0 11.0 % increase .8% .4% .4% – – % % %

Senior Managers of the Municipality 10 11, 11 17, 16,0 16,0 17,9 19,5 20,84 Basic Salaries and Wages ,909 404 ,845 171 69 69 24 51 8 1, 1, 1, 2,1 2,1 2,25 2,47 2,73 Performance Bonus 317 546 162 872 14 14 6 6 7 Sub Total - Senior Managers 12 12 12 19 18, 18, 20,1 22,0 23,5 of Municipality ,226 ,950 ,006 ,043 183 183 80 27 85 5 ( 58 (4. 11.0 9.2 7.1 % increase .9% 7.3%) .6% 5%) – % % %

Other Municipal Staff 832,0 992,4 1,092,7 1,292,1 1,269,1 1,269,1 1,231,66 1,347,96 1,472,5 Basic Salaries and Wages 11 83 94 52 63 63 7 1 96 19 146 16 187 183, 183, 189,3 207,3 228,7 Pension and UIF Contributions 8,819 ,594 7,615 ,825 923 923 87 84 06 63 78, 92 98, 93,8 93,8 97,3 108,0 119,9 Medical Aid Contributions ,346 130 ,186 739 62 62 69 56 35 65 87, 72 56, 66,4 66,4 56,8 60,4 65,56 Overtime ,958 600 ,264 020 07 07 84 59 2 12 13, 16 15, 15,9 15,9 13,3 13,6 14,20 Performance Bonus ,351 537 ,417 487 60 60 53 02 8 63 43, 46 46, 50,1 50,1 47,3 47,4 47,46 Motor Vehicle Allowance ,131 768 ,308 503 16 16 70 14 3 13 9, 8, 8, 8,0 8,0 7,44 7,44 7,45 Housing Allowances ,971 875 266 700 18 18 7 9 1 54, 75 65, 103, 103, 56,8 61,5 65,11 Other benefits and allowances 085 ,902 761 715 715 48 12 6 19 23, 26 29, 30,2 35,0 41,42 Long service awards ,057 926 ,592 205 88 88 41 78 9 Post-retirement benefit 161 27 40, 40,1 40,1 42,2 46,3 51,40 obligations ,496 7,012 134 34 34 27 80 5 Sub Total - Other Municipal 1,26 1,61 1,87 1,84 1,831 1,831 1,772, 1,935, 2,113, Staff 8,644 1,494 5,355 0,526 ,386 ,386 793 296 871 27 1 ( (0. (3.2 9.2 9.2 % increase .0% 6.4% 1.9%) 5%) – %) % %

1,32 1,66 1,93 1,91 1,900 1,900 1,847, 2,017, 2,204, Total Parent Municipality 2,126 9,329 2,415 0,652 ,652 ,652 556 364 101 26 1 ( (0. (2.8 9.2 9.3 .3% 5.8% 1.1%) 5%) – %) % %

TOTAL SALARY, ALLOWANCES 1,32 1,66 1,93 1,91 1,900 1,900 1,847, 2,017, 2,204, & BENEFITS 2,126 9,329 2,415 0,652 ,652 ,652 556 364 101 26 1 ( (0. (2.8 9.2 9.3 % increase .3% 5.8% 1.1%) 5%) – %) % % 1,28 1,62 1,88 1,85 1,849 1,849 1,792, 1,957, 2,137, TOTAL MANAGERS AND STAFF 0,871 4,444 7,362 9,569 ,569 ,569 973 323 456 85 86 DISCLOSURE OF SALARIES, ALLOWANCES & BENEFITS

Performa Contributi Allowanc In-kind Total Disclosure of Salaries, Allowances & Benefits Salary nce ons es benefits Package Bonuses Rand per annum Councillors 882,8 20,5 903,4 Speaker 72 36 08 827,6 20,5 848,2 Chief Whip 92 36 28 1,103,5 41,1 1,144,7 Executive Mayor 89 50 39 882,8 20,5 903,4 Deputy Executive Mayor 72 36 08 827,6 20,5 848,2 Executive Committee 92 36 28 48,392,3 1,542,1 49,934,4 Total for all other councillors 25 54 79 52,917, 1,665, 54,582, Total Councillors 042 – 448 490 Senior Managers of the Municipality 1,939,4 462,7 2,402,2 Municipal Manager (MM) 60 60 20 1,395,5 195,3 1,590,9 Chief Finance Officer 50 80 30 1,247,3 174,6 1,421,9 Executive Director- Corporate Services 10 30 40 1,408,8 Executive Directors –Infrastructure 1,408,800 00 Executive Directors - Electricity & Energy 1,150,100 161,000 1,311,100 Executive Directors- Human Settlement, Special 3,343,2 50,00 3,393,2 Projects 40 0 40 1,205,2 174,6 1,379,8 Executives Directors - Health 50 30 80 Executives Directors Economic Development 1,189,400 156,500 1,345,900 Executives Directors - Safety & Security 1,258,530 176,210 1,434,740 List of each offical with packages >= senior manager 1,292,1 180,9 1,473,0 Chief Operating Officer 80 10 90 Strategic Manager 1,247,300 174,720 1,422,020 1,247,3 174,6 1,421,9 Office of the Executive Mayor 10 30 40 174,6 174,6 Chief of Staff 30 30 17,924, 2,256, 20,180, Total Senior Managers of the Municipality 430 – – 000 430

TOTAL COST OF COUNCILLOR, DIRECTOR and 70,841, 1,665, 74,762, – 2,256,00 EXECUTIVE REMUNERATION 472 448 920 0 87 2.10 MONTHLY TARGETS FOR REVENUE, EXPENDITURE AND CASH FLOW

Medium Term Revenue and MONTHLY CASH FLOWS Budget Year 2012/13 Expenditure Framework Budget Budget Budget Augu Octob Novemb Decemb Februar R thousand July Sept. January March April May June Year Year +1 Year +2 st er er er y 2012/13 2013/14 2014/15 Cash Receipts By Source 1 80 80 71, 89 77,2 85,2 78,6 80,5 80,3 80,3 80,1 80,3 964, 1,090, 1,231, Property rates ,350 ,336 384 ,785 15 97 52 38 99 99 35 61 851 365 537 Service charges - electricity 207 229 291, 269 238,3 227,1 232,2 207,8 247,1 212,8 237,8 229,8 2,831, 3,173, 3,570, revenue ,306 ,325 722 ,512 96 83 85 96 23 84 37 00 269 253 325 Service charges - water 26 29 37, 34 30,4 29,0 29,7 26,5 31,6 27,2 30,4 35,8 368, 415, 473, revenue ,511 ,327 306 ,466 87 53 05 87 03 24 15 62 546 815 297 Service charges - sanitation 15 17 22, 20 18,1 17,3 17,7 15,8 18,8 16,2 18,1 14,3 212, 239, 272, revenue ,800 ,479 234 ,541 70 15 04 45 35 25 27 92 669 479 051 Service charges - refuse 6, 7, 9, 8, 7,6 7,2 7,4 6,6 7,9 6,8 7,6 6,7 90,1 101, 115, revenue 648 354 355 643 45 85 49 67 25 27 27 30 53 375 008 Rental of facilities and 1, 1, 1, 1, 1,6 1,6 1,6 1,6 1,6 1,6 1,6 1,6 19,8 20,9 22,2 equipment 652 652 652 652 52 52 52 52 52 52 52 52 20 92 35 Interest earned - external 3, 3, 2, 2, 2,0 2,1 1,8 1,4 1,1 1,8 1,5 1,3 25,5 27,0 28,6 investments 870 500 800 300 00 00 00 00 00 00 00 58 28 59 83 2, 2, 2, 2, 3,0 2,8 2,8 2,8 2,5 2,5 2,5 2,7 32,3 34,2 36,3 Fines 314 446 826 889 54 06 14 00 13 80 47 39 28 68 24 8 89 84 85 93 56 58 54 62 9,0 9,5 10,1 Licences and permits 815 730 00 820 9 6 4 0 0 5 8 8 14 55 29 1 11 11 11 11 11 11 11 11 1,4 1,4 1,5 Agency services 117 117 17 117 7 7 7 7 7 7 7 7 00 84 73 Transfer receipts - 339 104 34, 33 282,2 98,2 33,3 114,6 216,6 33,3 33,3 33,3 1,356, 1,065, 1,155, operational ,428 ,650 333 ,333 88 80 33 39 39 33 33 33 926 840 403 18 164 19, 19 19,1 164,9 19,1 19,1 162,9 19,1 19,1 22,1 667, 733, 775, Other revenue ,132 ,974 132 ,132 32 74 32 32 73 32 32 41 116 589 304 702 641 493, 483 681,0 636,9 425,4 478,2 771,4 402,7 432,9 429,1 6,579 6,913 7,691, Cash Receipts by Source ,943 ,888 662 ,189 54 07 97 03 39 57 70 13 ,621 ,074 868

Other Cash Flows by Source 203 51 3, 1, 198,8 51,3 232,9 28,9 771, 1,011, 1,301, Transfer receipts - capital ,623 ,506 000 800 23 28 – 18 34 – – 0 932 688 074 Increase (decrease) in ( ( (2 ( (27 (27 (27 (27 (27 (27 (27 (27 (3,2 (1,0 (1,0 consumer deposits 273) 273) 73) 273) 3) 3) 3) 3) 3) 3) 3) 3) 75) 00) 00) Total Cash Receipts by 906 693 496, 484 879,6 687,9 425,2 710,8 800,1 402,4 432,6 428,8 7,348 7,923 8,991, Source ,293 ,121 389 ,716 04 62 24 48 00 84 97 40 ,278 ,762 942

Cash Payments by Type 161 143 143, 143 196,3 145,3 143,6 143,5 142,8 142,8 142,7 142,8 1,791, 1,956, 2,136, Employee related costs ,308 ,011 888 ,381 40 71 19 13 69 15 64 97 776 042 085 4, 4, 4, 4, 4,2 4,2 5,7 4,7 4,7 4,7 4,7 4,7 54,5 60,0 66,6 Remuneration of councillors 224 224 224 224 24 24 14 05 05 05 05 04 83 41 45 Finance charges 40 28, 23,6 9,9 40,0 – 27,8 – 23,3 11,2 205, 193, 182, 88

,311 – 826 70 64 42 30 31 66 239 867 546 Medium Term Revenue and MONTHLY CASH FLOWS Budget Year 2012/13 Expenditure Framework Budget Budget Budget Augu Octob Novemb Decemb Februar R thousand July Sept. January March April May June Year Year +1 Year +2 st er er er y 2012/13 2013/14 2014/15 240 236 280, 160 160,1 167,0 143,3 163,2 148,5 144,0 145,1 152,0 2,141, 2,440, 2,781, Bulk purchases - Electricity ,644 ,703 741 ,108 57 83 68 39 93 13 71 11 832 457 303 Bulk purchases - Water & 6, 5, 6, 5, 6,9 6,6 5,0 6,1 5,9 6,2 6,2 6,3 72,6 81,4 91,2 Sewer 287 281 102 294 95 94 67 24 94 05 78 18 39 51 25 33 34 30, 42 54,7 49,9 46,7 46,0 35,2 35,2 44,0 41,6 495, 533, 575, Other materials ,700 ,667 525 ,840 48 90 64 59 45 45 89 51 523 932 804 35 26 24, 30 21,8 30,6 33,0 20,6 28,4 27,4 26,4 35,4 340, 442, 489, Contracted services ,129 ,647 408 ,780 43 09 03 35 97 97 97 47 994 200 097 3, 7, 1, 5,8 35,1 1,1 18,1 1,9 5,3 79,0 85,6 91,3 Transfers and grants - other 042 – 047 384 35 – 72 70 06 15 – 33 05 00 18 224 50 50, 48 52,3 51,8 52,6 54,9 54,3 53,3 55,3 56,2 805, 497, 477, Other expenditure ,783 ,422 316 ,941 04 51 50 31 54 54 54 62 523 321 882 749 500 576, 436 526,1 465,7 505,3 440,3 466,1 415,7 448,1 455,8 5,987 6,290 6,891, Cash Payments by Type ,427 ,955 078 ,953 16 86 99 77 94 50 89 89 ,113 ,911 906

Other Cash Flows/Payments by Type 121 31 40, 68 77,1 86,0 87,2 101,9 102,5 98,7 103,8 128,2 1,048, 1,282, 1,606, Capital assets ,960 ,841 805 ,054 96 52 29 04 64 21 77 70 473 527 479 12 16, 4,1 15,0 12,3 17,7 4,4 15,0 97,4 105, 112, Repayment of borrowing ,073 738 09 00 42 33 48 00 44 159 968 Other Cash Flows/Payments – Total Cash Payments by 883 532 633, 505 607,4 566,8 604,9 542,2 586,4 514,4 556,5 599,1 7,133 7,678 8,611, Type ,460 ,796 621 ,007 21 38 70 81 91 71 14 59 ,030 ,597 352

NET INCREASE/ (2 22 160 (137 272,1 121,1 (179, 168,5 213,6 (111, (123, (170, 215, 245, 380, (DECREASE) IN CASH 0,291 ,833 ,325 ,233) 83 24 746) 67 09 987) 817) 319) 248 165 590 HELD ) Cash/cash equivalents at the 763 786 947, 809 789,5 1,061, 1,182, 1,003, 1,171, 1,385, 1,273, 1,149, 763, 979, 1,224, month/year begin: ,935 ,768 093 ,860 69 753 876 130 697 306 320 502 935 183 348 Cash/cash equivalents at the 786 947 809, 789 1,061, 1,182, 1,003, 1,171, 1,385, 1,273, 1,149, 979,1 979, 1,224, 1,604, month/year end: ,768 ,093 860 ,569 753 876 130 697 306 320 502 83 183 348 937 89

2.11 ANNUAL BUDGETS AND SERVICE DELIVERY AND BUDGET IMPLEMENTATION PLANS –DIRECTORATES

In terms of section 53 (1)(c)(ii) of the MFMA, the Service Delivery and Budget Implementation Plan (SDBIP) constitutes a detailed plan for implementing the Municipality’s delivery of services and its annual budget, which must include the following:

(a) Monthly projections of

 Revenue to be collected, by source; and  Operational and capital expenditure, by vote.

(b) Service delivery targets and performance indicators for each quarter.

In accordance with Section 53 of the MFMA, the Executive Mayor is required to approve the SDBIP within 28 days after the approval of the budget. Furthermore, the Executive Mayor must ensure that the revenue and expenditure projections for each month and the service delivery targets and performance indicators, as set out in the SDBIP, are made public within 14 days after the approval of the SDBIP.

The SDBIP gives effect to the IDP and Budget of the Municipality. It includes the service delivery targets and performance indicators for each quarter, which forms the basis for the performance agreements of the Executive Directors. It therefore facilitates oversight over the financial and non- financial performance of the Municipality and allows the Municipal Manager to monitor the performance of the Executive Directors, the Executive Mayor/Council to monitor the performance of the Municipal Manager, and the Community to monitor the performance of the Municipality.

The SDBIP relating to the 2012/13 financial year will be approved by the Executive Mayor during July 2012, following the approval of the Budget.

2.12 CONTRACTS HAVING FUTURE BUDGETARY IMPLICATIONS

Below the schedule of contracts impacting on future budgets:

Contracts impacting on the Municipality’s revenue

Start of End of Escal- Description of lease lease ation Period 2011/12 2012/13 2013/14 2014/15 lease contract contract % Isimilo Investments (PTY) LTD 1 (Beachview, Maitland 487/35 & Maitland Beach) 01-10-04 30-09-44 0 40 240,000 240,000 240,000 240,000 Buhlebendalo Properties (PTY) 2 LTD (Van Staden Resorts) 05-08-04 04-08-44 0 40 240,000 240,000 240,000 240,000 Logistics Park 3 Lease 01-04-08 31-05-58 0 50 1 1 1 1 Rental of 4 Uitenhage Fresh 361,40 Produce Market 01-09-03 31-08-13 10 10 298,679 328,548 3 397,543

778,680 808,548 841,404 877,544 90

Contracts Impacting on the Municipality’s Expenditure

Start of End of Escal- Description of lease lease lease ation Period 2011/12 2012/13 2013/14 2014/15 contract contract % Office space rented from Clemlen 1 Investments - Murray & Roberts Building 01-03-09 29-02-2012 9% 3 2562316 1807718 Parking space rented from Clemlen 2 investments - Murray & Roberts Buidling 01-03-09 29-02-2012 9% 3 132030 93147 Office space rented from Apexhi 3 Properties - 7th floor Fidelity Building 01-02-09 31-01-2014 10% 5 297944 360513 222076 244,284 Office space rented from Apexhi 4 Properties - 11th & 12th floor Fidelity Building 01-02-09 31-01-2014 10% 5 805695 886264 974891 1,072,380

Parking space rented 5 from Fidelity Building - 11th & 12th floor 01-02-09 31-01-2014 10% 5 68750 75625 83188 91,507 Office space rented from Community Property Co/ Advent 6 Asset Mgmt. - Shop 26 Motherwell Shopping centre 01-01-09 31-12-2014 9% 5 220516 240362 261994 285,573 Office space rented from Apexhi 7 Properties - Shop 64 - Cleary Park 01-08-05 31-07-2010 9% 5 Parking space rented from Apexhi 8 Properties - Cleary Park - shop 64 01-08-05 31-07-2010 9% 5 Office space rented from Apexhi 9 Properties - Ground Floor Fidelity Building 01-02-09 31-01-2012 10% 3 437967 Office space rented from Zig Zag 10 Properties - 2nd and 3rd Floor Corner House Building 01-08-09 M2M 9% AR1122 Copier, S/N 5510529Y Leased 11 From Sharp Electronics 01-09-06 31-08-2011 0% 5 275 AR5320 Copier, S/N 65079364 Leased 12 From Sharp Electronics 01-10-06 30-09-2011 0% 5 837 91

Start of End of Escal- Description of lease lease lease ation Period 2011/12 2012/13 2013/14 2014/15 contract contract % AR1122 Copier, S/N 65107022 Leased 13 From Sharp Electronics 01-09-06 31-08-2011 0% 5 275 AR1122 Copier, S/N 65106702 Leased 14 From Sharp Electronics 01-09-06 31-08-2011 0% 5 275 AR1451 Copier, s/n 15 65022521-Sharp - 1st Brister House 19-04-06 18-04-2011 0% 5 Monthly rental for C451 Copier, S/N 16 K040001807 - Purchasing and Supplies 01-11-08 31-10-2011 0% 3 12493 Monthly rental for 17 C353 Purchasing Dept 01-11-08 31-10-2011 0% 3 8605 Monthly rental of 18 Konica Minolta C451 01-06-09 31-05-2012 0% 3 39460 Photostat Machine 19 AR 5316 leased from Sharp Electronics 01-09-05 31-08-2010 0% 5 Monthly Rental for AR5316 s/n 55041856 - Fleet 20 management services, Deal Party - Sharp 31-08-05 30-08-2010 0% 5 Monthly Rental for AF2035e Copier s/n 21 J7953000233 - Nashua 01-10-05 31-09-10 15% 5 Monthly Rental for B350 Copier, S/N 22 21220476 - Water & Roads Dept - Minolta 01-03-09 29-02-2012 10% 3 7330 Monthly Rental for C10 COPIER, S/N 23 263000701 - ADDO DEPOT - Minolta 20-10-08 19-10-2011 0% 3 871 Monthly Rental for C353 COPIER, S/N 24 E0470002128 - DEAL PARTY - Minolta 01-12-08 30-11-2011 0% 3 10756 Monthly Rental for B211 COPIER, S/N 25 4108096 -SOUTH DEPOT - Minolta 01-05-09 30-04-2012 0% 3 6241 Monthly Rental for B211 COPIER, S/N 26 4112840 - NORTH DEPOT - Minolta 01-03-09 29-02-2012 0% 3 4889 92

Start of End of Escal- Description of lease lease lease ation Period 2011/12 2012/13 2013/14 2014/15 contract contract % Monthly Rental for Minolco C451 - 27 K040003479 - Water - ETB 01-02-09 31-01-2012 0% 3 17386 Monthly Rental for 28 J040001404 - c550 - I & E - Brister 15-09-08 14-09-2011 0% 3 9362 Monthly Rental for C10 s/n 263000833 - 29 Roads and Stormwater -Struandale – Minolco 01-11-08 31-10-2011 0% 3 1393 Monthly Rental for 30 Konica Monolta- E041005029 01-03-09 29-02-2012 0% 3 14734 Rental of Konica 31 Minolta c253 E041002063 01-03-09 28-02-2012 0% 3 14734 Monthly Rental for 32 COPIER C203, S/N E04003113 - Minolta 01-05-09 30-04-2012 0% 3 17891 Monthly rental of 33 Konica Minolta C353 01-11-08 31-10-2011 0% 3 6663 Monthly rental of 34 Konica Minolta B163 01-10-08 30-09-2011 0% 3 Rental of Office space 35 from Cleary Park office no 93 01-08-05 31-07-2010 9% 5 Rental of Parking Bay - Cleary Park 36 Shopping Centre no 93 01-08-05 31-07-2010 9% 5 Rental of Office space 37 from Unique Mbane(SA) (Pty) LTD 01-05-09 30-04-2012 11% 3 603870 Rental of Konica 38 Minolta B420 01-12-08 30-11-2011 0% 3 8988 Rental Konica Minolta 39 B250 01-08-08 31-07-2011 0% 3 867 40 Konica Minolta c353 01-04-09 31-03-2012 0% 3 19361 Rental of Konica 41 Minolta C353 01-04-09 31-03-2012 0% 3 19361 Rental of Konica 42 Minolta B163 01-12-08 30-11-2011 0% 3 3143 Konica Photocopier - 7020 Leased from 43 The Rental Company Trust 01-10-05 30-09-2010 0% 3 Panasonic Equipment - DP1820P - leased 44 from Panasonic Business Systems 08-01-07 07-01-2012 0% 5 3006 Rental for B211 Copier S/N Addo 45 Depot from MINOLTA SA 01-12-08 30-11-2011 0% 3 2468 Photocopier - Leased 46 from Minolta SA B211 Copier 01-02-09 31-01-2012 0% 3 2961 93

Start of End of Escal- Description of lease lease lease ation Period 2011/12 2012/13 2013/14 2014/15 contract contract % Photocopier - Leased 47 from Minolta SA B211 Copier 01-05-09 31-05-2012 0% 3 4474 Rental of AF2016 Copier, S/N 48 K8166621392, Leased From Nashua EC 01-11-06 31-10-2011 15% 5 4282 Rental of B211 Copier, S/N 4104481, 49 Leased From Minolta SA 01-04-08 31-03-2011 0% 3 Premises situated at 66 Caledon Street, 50 Uitenhage leased from JU-THY Eindomme Trust 01-10-09 30-09-2012 10% 3 326681 83570

Property (Buick Street 51 ) - Leased from Eastern Province Livestock Agency 01-09-04 31-07-2014 5% 10 10370 10888 11433 12005 Rental of AX1450 Copier, S/N 52 75054739, Leased From Sharp Electronics 01-01-08 31-12-2010 0% 3 Rental of AR1163 53 Copier Sharp S/N 75069589 01-05-08 30-04-2011 0% 3 Rental of Xerox 123 Digital Copier With Multi Coin Box, S/N 54 3551913820 Main Library Leased from Technologies Acceptances (Pty) Ltd 01-08-05 31-07-2010 0% 5 Rental of Xerox 123 Digital Copier With 55 Multi Coin Box, S/N 3551913901 01-08-05 31-07-2010 0% 5 Rental of Xerox 123 Digital Copier With 56 Multi Coin Box, S/N 3551917087 01-08-05 31-07-2010 0% 5 Rental of Xerox M123 Digital Copier With 57 Multi Coin Box, S/N 3551910414 01-08-05 31-07-2010 0% 5 Rental of Xerox M123 Digital Copier With 58 Multi Coin Box, S/N 3551911887 01-08-05 31-07-2010 0% 5 Rental of Xerox M123 Digital Copier With 59 Multi Coin Box, S/N 3551912360 01-08-05 31-07-2010 0% 5 Rental of Xerox M123 Digital Copier With 60 Multi Coin Box, S/N 3551915645 01-08-05 31-07-2010 0% 5 94

Start of End of Escal- Description of lease lease lease ation Period 2011/12 2012/13 2013/14 2014/15 contract contract % Rental of Xerox M123 Digital Copier With 61 Multi Coin Box, S/N 3551908436 - Walmer Library 01-08-05 31-07-2010 0% 5 Rental of Xerox M123 Digital Copier With 62 Multi Coin Box, S/N 3551952826 - West End Library 01-08-05 31-07-2010 0% 5 Rental of Xerox M123 Digital Copier With 63 Multi Coin Box, S/N 3551913510 - Zwide Library 01-08-05 31-07-2010 0% 5 Rental of Xerox M123 Digital Copier With 64 Multi Coin Box, S/N 3551915823 01-08-05 31-07-2010 0% 5 Rental of Xerox C128 Copier, S/N 65 3313647365 from Technologies Acceptance (Pty) Ltd 01-12-07 30-11-2010 10% 3 Rental of Xerox C128 Copier, S/N 66 3313646644, from Technologies Acceptance (Pty) Ltd 01-12-07 30-11-2010 10% 3 Rental of Xerox C128 Copier, S/N 67 3313644889, from Technologies Accetance (Pty) Ltd 01-12-07 30-11-2010 10% 3 Rental of Xerox C128 Copier, S/N 68 3313645095, from Technologies Acceptance (Pty Ltd 01-12-07 30-11-2010 10% 3 Rental of Xerox C128Copier, S/N 69 3313652830, from Technologies Acceptance (Pty) Ltd 01-12-07 30-11-2010 10% 3 Rental of Xerox C128 Copier, S/N 70 3313650382, from Technologies Acceptance (Pty) Ltd 01-12-07 30-11-2010 10% 3 Rental of Xerox C128 Copier, S/N 3313650447 - Newton 71 Park Library, from Technologies Acceptance (Pty) Ltd 01-12-07 30-11-2010 10% 3 Rental of Xerox C128 Copier, S/N 3313651460 - North 72 End Library, from Tachnologies Acceptance (Pty) Ltd 01-12-07 30-11-2010 10% 3 95

Start of End of Escal- Description of lease lease lease ation Period 2011/12 2012/13 2013/14 2014/15 contract contract % Rental of Xerox C128 Copier, S/N 3313654183 - Zwide 73 Library, from Technologies Acceptance (Pty) Ltd 01-12-07 30-11-2010 10% 3 Rental of Xerox C128 Copier, S/N 74 3313651532, from Technologies Acceptance (Pty) Ltd 01-12-07 30-11-2010 10% 3 Rental of Office Space from Africorp 75 International (Kwantu Towers 3rd + 4th Floors) 01-04-06 31-03-2009 10% 3 76 Standard Bank Ltd

5709520 3558087 1553582 1,705,749

2.13 LEGISLATION COMPLIANCE STATUS

Below a discussion of the Municipality’s progress relating to the implementation of the MFMA:

Implementation of the MFMA

The municipality has been implementing the provisions of the MFMA in accordance with a documented Implementation Plan. The municipality monitors its implementation status on an ongoing basis through reporting via its Committees, including the following:

 The Municipal Manager’s Management Team includes all Executive Directors, which meets fortnightly and attends to MFMA issues requiring attention.  The Budget and Treasury Committee – a standing committee of the Council, which meets every six weeks. The committee considers specific MFMA implementation issues and reports via the Mayoral Committee to Council.  Meetings between the Municipal Manager, COO and Acting CFO to discuss MFMA implementation issues, as and when necessary. Issues requiring attention are monitored so that actions are taken to ensure compliance.

The following reflects the status of implementation of some of the key MFMA areas:

IDP

The IDP review process has been concluded. A draft revised 2012/13 IDP has been developed, which was considered and approved at a Council meeting held on 29 March 2012. The IDP includes specific deliverables that forms the basis for the Budget and SDBIP.

Budget

The annual budget document has been developed taking the MFMA and National Treasury (NT) requirements into account. Budgets are being tabled and approved within the required legislated timeframes. 96

Annual Report

The Annual Report has been developed taking the MFMA and NT requirements into account. The 2010/11 Annual Report was tabled in January 2012.

Oversight Report

The Municipal Public Accounts Committee is considering the 2010/11 annual report. Its Oversight Report was considered and adopted at a Council meeting held on 29 March 2012.

In-Year Reporting

The municipality submits the various reports required to the Executive Mayor, Council, and NT on an ongoing basis, in accordance with the MFMA.

Supply Chain Management Policy (SCM)

A Supply Chain Management Policy has been adopted and implemented in accordance with the MFMA and NT requirements.

All the required committee structures are in place. Whilst the municipality is working at making these new processes operate more efficiently and effectively, it is considered that the municipality is currently complying with the MFMA and NT guidelines.

Budget and Treasury

A Budget and Treasury Office has been established in accordance with the MFMA and NT requirements, consisting of an Acting CFO and municipal officials reporting to the Acting CFO.

Audit Committee

An Audit Committee has been established and meets on a quarterly basis.

Internal Audit Function

The Municipality has an Internal Audit sub-directorate reporting to the Chief Operating Officer and operating in accordance with an audit plan.

In relation to the 2012/13 financial year and beyond, the municipality plans to focus on the following high priority areas:

 Maintaining the unqualified audit opinion expressed by the Auditor–General (AG) in relation to the 2010/11 Financial Statements. An action plan has been developed to address any shortcomings. Implementation of the plan is monitored by the Municipal Manager in the first instance.

 Further strengthening of the integration and linkages between the IDP, Budget, SDBIP and Annual Report. 97

Internship Programme

The Municipality currently has two Interns on the Municipal Financial Management Internship programme, as approved by National Treasury. All but one of the Municipality's previous Interns, have been appointed in permanent positions within the Municipality. The Interns undergo training in various sections of the Budget and Treasury Directorate and monthly meetings are held to assess their progress and to discuss their future assignments. All Interns have completed the National Treasury MFMA Learnership programme.

2.14 CAPITAL EXPENDITURE DETAILS

A summary of the budgeted capital expenditure is reflected in Annexure “A”.

2.15 ACTING MUNICIPAL MANAGER’S QUALITY CERTIFICATION

Quality Certificate I, THEMBA HANI, Acting Municipal Manager of Nelson Mandela Bay Municipality, hereby certify that the annual budget and supporting documentation have been prepared in accordance with the Municipal Finance Management Act and the regulations made under the Act, and that the annual budget and supporting documents are consistent with the Integrated Development Plan of the Municipality

Print Name: THEMBA HANI

Acting Municipal Manager of Nelson Mandela Bay Municipality (EC000)

Signature ______

Date ______

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