2013 / 2014 Annual ReportPresented By:

February 2015

Political GovernanceCOUNCILLORS

2012/2013 2013/2014

1. Total No. of Councillors 205 205

2. Total No. of

Ward

Councillors

Male 87 87

Female 15 16

3. 2. Total No.

of PR

Councillors

Male 50 52

Female 52 50

Vacant 1 0

Administrative GovernanceThere are 7 Clusters overseen by DCMs & 2 Offices and 3 Units within the Office of the

City Manager

AREAS OF RESPONSIBILITY

CLUSTERS OFFICES IN OCM

1. Finance 1.City Manager’s Operations Office

2. Community and Emergency Services 2. Office of Strategic Management

3. Corporate and Human Resources

4. Governance and International Relations UNITS WITHIN THE OFFICE OF CITY

MANAGER

5. Economic Development and Planning 1. Internal Audit and Risk Management

6. Trading Services 2. Information Management

7. Human Settlements, Engineering Services &

Transport Authority

3. City Integrity and Investigations

BacklogsBasic Services Existing Backlog

(Households) as at

30 June 2013

% Existing Backlog

(Households) as at 30

June 2014

%

Water71 496 7.56% 68 957 7.3%

Sanitation218 248 23.07% 182 271 19.27%

Electricity292 603 31% 274 810 29%

Roads1 138km’s - 1 130.5km’s -

Public Transport

Ranks59 - 58 -

Solid Waste – Kerb-

side refuse removal nil nil nil nil

Service Delivery Losses

37.3

39.2

Non Revenue Water Loss by Volume

2012/2013

2013/20145.85

6.11Unaccountable Electricity Losses

2012/2013

2013/2014

The global benchmarks for water and electricity losses are 25% and

8% respectively. Accordingly compared to the international

benchmark and other Metros in South, the electricity loss in

distribution is acceptable. As regards water, we have put in place a

strategy to reduce the loss to 25% over the next five years.

SCM SPEND

2008/9 2009/10 2010/11 2011/12 2012/13 2013/14

Spend value R 3,639,624 R 4,366,670 R 4,141,556 R 6,329,735 R 8,534,061 R 12,722,69

R 0

R 2,000,000,000

R 4,000,000,000

R 6,000,000,000

R 8,000,000,000

R 10,000,000,000

R 12,000,000,000

R 14,000,000,000

Procurement spend

Awards through Bid Committees

2008/9 2009/10 2010/11 2011/12 2012/13 2013/14

No. of tenders 1015 1102 1088 1275 2064 2271

0

500

1000

1500

2000

2500

No. of tenders

SCM Improvements ISO 9001 accreditation - quality management system

BPI2 (Business and Process Improvement Initiatives):

- centralised contract register

- procurement scheduling

- contract tracking

- supplier address book consolidation

- invoice scanning and logging

SCM Improvements SCM Policy review

E-Procurement – Quotes Management System (QMS)

Improved internal controls – reduce fraud and corruption

Benchmarking

SABS standards

MAJOR CAPITAL SPENDSSERVICE R’M SOME PROJECTS

WATER 561.9 Western Aqueduct; Northern aqueduct; mini-hydro power stations

SANITATION 599.0 Airport; Phoenix WTW; ablution blocks; Kwa mashu WWTW, Tongaat WTW, etc

ELECTRICITY 319.8 Substations; Sapref; MVLV supply

HOUSING 172.3 Cornubia; Etafuleni; Ntuzuma

TRANSPORT 934.0 PTIS; Bayhead – Edwin Swales

ROADS 509.0 Road rehabilitation and reconstruction; N2 interchange; Northern areas upgrade; Port expansion; etc

Major Projects• IRPTN

• Inner City – iTRUMP - regeneration

• Priority nodes

• Cornubia

• New central library

• Dube Tradeport

• Western Aqueduct

CONSOLIDATED

ANNUAL

FINANCIAL STATEMENTS

FOR THE YEAR ENDED

30 JUNE 2014

Financial Highlights(in Rand millions) 2014 2013

TOTAL REVENUE 7% 26,465 24,654

TOTAL EXPENDITURE 11% 24,478 22,118

ACCUMULATED SURPLUS FUNDS &

RESERVES

8% 29,517 27,269

NET CASH & CASH RESOURCES

(bank, investments, cash & call deposits)

23% 6,860 5,560

TOTAL ASSETS 8% 52,987 48,934

CONSUMER DEBTORS -2% 2,879 2,924

Financial Highlights (Cont…)Ratios

RATIO COMMENTS 2013 2014

LIQUIDITY:

Current

Ratio

The decrease, in comparison to prior year, is attributable to the substantial

increase in in payables from exchange transactions. The cash resources

represents 107 days cash on hand and is mainly due to austerity measures

implemented as well as unspent grants.

1.24 : 1 1.23 : 1

Borrowings to Asset

Ratio

This ratio has improved from the prior year, due to a 9% increase in assets

with a minimal net increase in borrowings. 21% 20%

Collection

Rates

National Treasury benchmark is 95%

Dedicated teams to target top debtors, major debtors and government

debt more effective

Billing versus cash collection

103.41% 104.84%

Financial Highlights (Cont…)Ratios

RATIO COMMENTS 2013 2014

Electricity Distribution Losses The norm for electricity losses ranges from

5.6% to 12%.

In comparison to other Metro's, eThekwini

Municipality maintains its losses at a lower

end of the norm.

5.85% 6.11%

Water distribution losses The estimated water losses were due mainly

to water theft and delays in the SCM

processes. The success of the NRW

programme has been hampered in the

2013/14 financial year due to the non-

availability of materials and resources.

37.3% 39.2%

Repairs and Maintenance/

Operating Exp %

Well above sector average 8% 8%

Days cash on Hand Benchmark: 90 Days 96 Days 109 Days

INCOME

Property rates20%

Interest2%

USDG6%

Equitable share7%

Sale of water9%

Sale of electricity35%

Other service charges

5%

Other grants and subsidies

3% Fuel levy7%

Other6%

EXPENDITURE

Employee costs28%

Bulk purchases32%

contracted services5%

Finance costs4%

Bad debts7%

Repairs & Maintenance

8%

Depreciation7%

Other9%

BALANCE SHEET

%(DECREASE)/

INCREASE

2014

R’m

2013

R’m

Assets

–Cash and investments

–Prop, Plant & Equip,

–Intangibles

–Inv Prop

–Consumer Debtors

–Other

19%

7%

12%

0%

(2%)

14%

7,716

38,113

774

329

2,879

3,176

6,465

35,740

692

329

2,924

2,784

TOTAL 8% 52,987 48,934

PPE

–Land & Buildings

–Infrastructure

–Community (Includes Stadium)

–Other

17%

6.6%

(1.3)%

1.1%

5,359

25,745

3,948

3,061

4,579

24,133

4,000

3,028

BALANCE SHEET

%

Increases/

Decreases

2014

R’ m

2013

R’ m

Liabilities

–Long term Liabilities

–Retirement Benefit

Obligation

–Creditors

–Unspent Conditional Grants

–Other

4%

(3)%

18%

28%

23%

10,370

2,815

5,733

1,328

3,225

10,000

2,888

4,864

1,039

2,613

Total Liabilities 10% 23,471 21,404

Net Assets 7% 29,517 27,530

SALIENT FEATURES - BALANCE SHEETProperty, plant

& Equipment;

Intangibles;

Invest Prop

Acquisitions of R 4bn (incl. WIP), Depreciation of R1.6b.

L-term Borrowings Increased due to new loan raised of R1,5b from DBSA.

Consumer Debtors Consumer debtors decreased by 2%.Provision for bad debts based

on assessment of recoveries per category of debtors - Collection

rate 105.1%.

Unspent Conditional Grants

and Cash and investments

The increase is mainly due to delays and under spending on grant

funded projects and this is mainly the PTIG GRANT projects. These

grants are being rolled over to 2014-2015 financial year.

Other Assets The increase is mainly attributable to 58% increase in DOHS Debtor.

Assets

Fixed assets75%

Bank and cash3%

Investments10%

Consumer debtors6% Other

assets6%

Capital Expenditure

(In Rand millions) 2014Budget

Rm

2014Actual

Rm

Percentage Spend

Rm

CAPITAL

Capital Expenditure

(Excl. capital commitments)

4,744 4,202 89%

NB: The capital spend is 109% when housing top structure is

included

• ‘In my opinion, the consolidated and separate financial statementspresent fairly, in all material respects, the financial position of theeThekwini Municipality and its subsidiaries as at 30 June 2014 andits financial performance and cash flows for the year then ended, inaccordance with the SA Standards of GRAP and the requirements ofthe MFMA and DoRA.’

• ‘I did not raise any material findings on the usefulness andreliability of the reported performance information for the selectedobjectives.’

Auditor General’s Opinion 2013/2014

1. Material losses and impairments

The municipality has incurred material water losses amounting to R602,6million (131 021 634 kl).

Response:

• 64 Pressure Reducing Valves were installed and 120 planned for 14/15

• The Leak Detection and Repair Strategy

• 4242 connections were regularised and registered in COINS

• Programme for meter replacement for domestic consumers which are more than 20 years old

• Registered connections

Key Issues & Responses

2. Material underspending of conditional grants and capital budgets

a) The municipality had materially underspent onconditional grants received from the National Departmentof Transport by R819,69 million in respect of the IntegratedRapid Public Transport Network (IRPTN).

b) The municipality had underspent on its capital budget byR505,36 million as a result of delays experienced in GoDurban project and the delay in the implementation ofIRPTN Grant funded projects.

Key issues & Responses

Response

Slow implementation of IRPTN project

Remedial Action:

• Tender for construction contracts

• Section 32 of the SCM Regulations to access existing contracts

• Detailed design is taking place at the same time with construction

• C3 corridor broken down to 9 contracts to spread the work and fast track construction

Key Issues & Responses

Unspent Capital budget

• Preparation and Monitoring of Procurement Plans

• Identify projects where there are savings in order to ensure that they source projects that need funding

• Council monitors Capital spend through EXCO, and Finance and Procurement Committee meetings

Key Issues and Responses

Service Delivery Highlights 2013/14

• 6 823 new houses built

• 667 houses refurbished

• 11.6 km gravel road surfaced , 315 lane km of existing road resurfaced

• 28.5 million bus journeys undertaken

• 895 police officers on duty – attended to 780 335 bylaw infringements

• 51.2 km of sidewalks constructed

Service Delivery Highlights 2013/14• Attended to 10 483 fires, 5 328 other incidents such as road

accidents, and 29 rainstorm incidents with 5 675 blankets and 4 568 food packs/hampers issued

• 2 539 new households received access to potable water

• 15 583 new household were connected to electricity – 14 770 on pre-paid and 843 conventionally

• 35 977 households got access to basic sanitation for the first time

• 662 new units were serviced in terms of refuse removal

• 475 additional properties were provided with stormwatersolutions

Other Highlights• The 2014 Stockholm Industry Water Award (first in any municipality in

the world)

• Completion of Phase 1A of the Cornubia Project

• Cornubia received 2014 Govan Mbeki Human Settlements Award

• Won numerous awards as leading Metro in provision of Housing.

• Our revenue collection with a rate of 104.84 %

• Drastic reduction of irregular expenditure from R782.5million from January 2012 to R334 million in the 2013/2014 financial year, resulting in a 57.2% reduction. Included in the R334 million is a s36 award that we have written to National Treasury to clarify whether this constitutes irregular expenditure or not.

• AA- Credit rating which is the highest given to a municipality