City of Johannesburg Investor Road Show

January/February 2011

1Contents

Road Show team

Overview of the City

Political Overview

Financial Overview

Revenue Performance

Funding Strategy

Bond Offering

2Road Show Team

Issuer – City of Johannesburg Metropolitan Municipality

Parks Tau MMC Finance: City of Joburg ParksT@joburg.org.za 011 358 3662

Mavela Dlamini City Manager: City of Joburg Citymanager@Joburg.org.za 011 407 7309

Mankodi MoitseGroup CFO and Executive Director Finance:

City of JoburgMankodiM@joburg.org.za 011 358 3619

Khomotso Letsatsi Director Treasury : City of Joburg Khomotsomap@joburg.org.za 011 242 1043

Mabandla SibisiActing Head of Dealing : City of Joburg

Mabandlas@joburg.org.za 011242 1059

Lead Manager – Standard Bank and Basis Points Capital

Zoya Sisulu Debt Capital Markets - Standard Bank zoya.sisulu@standardbank.co.za

011 378 7032

Khulu Montshiwagae Head Treasury- Basis Points Capital khulu@bpscapital.co.za011 783 6169

Overview of the City of Johannesburg

4Overview of the City

Key Facts

Land Area The City Stretches over 1,664km2

Population 3,8 million people

Households 1,3milliom

% of Provincial Population 37%

% of National Population

7%

% of National GDP Contribution of about 16%

Contribution to National employment

The City contributes approximately 15% of employment

Key SectorsFinance, Business Services andConstruction

The City Of Joburg was established in December 2000, it was the results of a merger of the Greater Johannesburg Metropolitan Council and its substructures namely the Northern, Eastern, Western and Southern Metropolitan Local Councils as well as Midrand and Modderfontein

The City is the most populous of South Africa’s nine metropolitan municipalities and remains the financial hub of the country

Johannesburg is a powerful commercial centre on the African continent with world class facilities including: telecommunications, electricity, broadcasting, clean water, Transportation infrastructure, health care, accommodation, office buildings, conference centres and recreational facilities

The City has set its sights on becoming a World-Class African city in which all residents can enjoy the fruits of economic growth and job creation and lead prosperous and healthy lives

5Governance Structure The City is one of two municipalities to pilot a new governance model allowing the City to refine , amongst others, the roles of the executive ,

council and administrative heads, level of decision making, accountability, institutional structures and the oversight of municipal entities by the respective core departments.

The key role of Council in the new structure is to focus on legislative, participatory and oversight roles. Council delegates its executive function to the Executive Mayor and the Mayoral Committee

Council’s principal role is that of law maker, to debate issues publically and to facilitate political debate and discussion

Section 79 oversight committees have been constituted and are chaired by non-executive Councillors

The portfolio committee’s primary responsibility is oversight of the executive arm of the City’s governance and to monitor the delivery and outputs of the executive

Source: City of Johannesburg Annual Report 2000/9

Legislature

Speaker

Chairman of Committees Chief Whip

Whips

IFP

Portfolio Committees Standing Committees

Community Development

Council

Transportation

Economic Development Health

Dev Planning and Urban Management Public Safety

Housing Infrastructure Development

Finance Economic & CorporateShared Services

Rules Petitions & Public Participation

Ethics/Disciplinary Standing Committee on Public Accounts

Programming PAC

CDP

UDM

ANC

OKM

CF

AZAPO

FF PLUS

Independent

ACDP

DA

ID

6Growth & Development Strategy Package

Analysis

Eco

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Hou

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Infr

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Env

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Spa

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Tra

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Hea

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Sa

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Fin

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Go

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Cor

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Proactive absorption of the poor

Balanced & shared growth

Facilitated social mobility

Settlement restructuring

Sustainability & environmental justice

Innovative governance solutions

6 principles cut across to inform analysis, vision and strategic choices organised in 12 Sector Areas

1. Long-Term Goals2. Long Term Strategic Interventions

bridging into …

3. Five-Year IDP Objectives4 Five-Year IDP Programmes

The GDS package …

Vision

7City Priorities – 2006 to 2011

The City’s vision is an expression of Johannesburg’s continued role as a wealth leader and opportunity creator – a role it has played for more

than a century. But it also emphasises the need to transform Johannesburg from a city where only a few enjoy the fruits of propsperity, while

the majority continue to struggle

The city’s vision will be driven by the following six core development principles

Core development principles

1. Proactive absorption of the poor The need of the poor must be prioritised and therefore will facilitate the transition of the poor, identified as new households , new internal and circular migrants, those in hostels, informal settlements and historical ghettoes, youth and refugees

2. Balanced and shared growth The City will continue to keep the cost of doing business as low as possible, but will also aim to ensure that the benefits of growth are shared more broadly

3. Facilitated social mobility and equality

Crucial to the City’s development that people are assisted out of poverty through shared growth and other measures

4. Settlement restructuring Includes bringing jobs closer to people and people closer to jobs

5. Sustainability and environmental justice

To become a more sustainable city buy anticipating and managing the effects of environmental change. Its means promoting environmental justice , as well as ensuring that quality of life is enhanced , by extending green infrastructure to areas that have historically functioned as grey and featureless dormitory

6. Innovative governance solutions The City recognises that the development challenges cannot be met alone. The City of Johannesburg is committed to finding joint solutions to these challenges by working closely with citizens, communities, business, all spheres of government and interested stakeholders

8Revenue Management

The City embarked on a aggressive credit control campaign

Approximately 30,000 accounts were subjected to the credit control

Of that 15,000 made arrangements to pay or paid in full

Challenge Expected Action

Deeds transfers not updated on the billing system

Investigate and correct the interface between LIS and the billing system.

Ensure updating of +- 10 000 records not on the billing system.

Manage exceptions from the error report from SAP

Adhoc confirmed address changes by LIS

Finalise and test the interface

Update physical and stand numbers changes confirmed.

Incorrect stand and physical addresses on the billing system

Extract of customers of accounts with the same addresses

Correct incorrect addresses

Exorbitant billing amountsPut controls not to release incorrect bills

Take disciplinary action for releasing incorrect bills

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Challenge Expected Action

Implausible and outsorts Timely releasing of implausible and outsorts within 5 days

Estimated meters -Inaccessible

Move water meters on the boundaries

Convert inaccessible electricity meters to prepaid

Estimated meters (Faulty)

Replacement of meters

Investigate and correct the interfaces between MOE and R & CRM

Wrongly printed statements

Correct the ageing on the statements

Correct the consumption on the statements

Cancel the workflow for adjustment approvals.

Ensure proper control on adjustment capturing

Revenue Management

10Revenue Management

Challenge Expected Action

Printing errors Clear the workbench errors

Billing & invoicing logs Clear and resolve the logs

Incorrect CCMS disconnections amounts Investigate and correct the differences between CCMS and Billing system

Incorrect cut offs

Investigate updates of accounts loaded for disconnection

Develop business rules to validate accounts before sent for disconnection

e-Services not working Post all statements through Post Office

Incorrect Inner-City property zoning Investigate and update zoning

Prepaid Meters not showing/marked Investigate and update prepaid found

11Operational Highlights

16,000 housing opportunities created

Eradicated 17 informal settlements, 3 layout plans approved and formalised 3 informal settlements

More than 18,000 title deeds lodged to promote secondary property market

Implementation of programmes focused on education, prevention, ARV treatment, capacity development and wellness

Following the successful launch of phase 1A in September 2009 there has been a 52% increase in traffic numbers. Phase 1A 143 buses

ECA drawdown of $42 million on 27 Dec 2010

Implementation of Phase 1B included the 23km bus lane, 33 bus stations and 125 buses in operation

Exceeded targets for the increased provision of basic services

Electrification of more than 5,000 household unit in formalised areas

Daily cleaning of 119 informal settlements

Provision of free basic services to all indigent households

To assist poverty stricken households and individuals – more than 570,000 beneficiaries registered

Provide support with education, skills development and food supply, improving access to social grants, rehabilitation of homeless and displaced persons and the placement of job seekers

10kl free water to 188,000 indigent households

6kl free water to all households

Free basic electricity provided to 73,139 households in area supplied through City Power

Provision of Basic Services and Demand Side Management

Measuring poverty and the revised social package

Provision of Free Basic Services

Creation of Housing Opportunities HIV and AIDS awareness and support

Rea Vaya Bus Rapid Transit

Upgrading of the CBD and retail improvement

Investment of R1.6 bln through the Urban Development Zone

Increased participation of SAPS in strategic forums and crime prevention operations

Targeted enforcement operations to reduce crime incidents

Joint operations between JMPD, SAPS and other agencies resulted in 38,000 arrests for priority crimes

Fully operation CCTV Control Centre in the Inner City with 231 surveillance cameras, 6 patrol vehicles and 200 foot patrollers

203,403 trees planted

2 Soweto Nurseries development completed

Memorial Tree Programme introduced in 2008, 38,000 memorial trees planted to date

More than 200,000 beneficiaries reached through the tree education and awareness programme

Inner City Regeneration Crime Prevention Strategy Greening of the City

12Risks and Challenges

The City has identified the following risks and challenges:

RiskDetails

Economic environment Global recession impacted resident’s ability to pay resulting in increased use of legal

interventions for debt collection Financial sustainability addressed through the development and implementation of Financial

Strategy

Unemployment trends The City is addressing unemployment through the Joburg 2030 process as well as the Extended

Public Works Programme and especially by supporting labour intensive sectors. EPWP job creation targets of 120 000 we met with 153 834 jobs mainly contributed by construction sectors. Drive for other sectors to contribute is underway.

Housing demand Targeted housing delivery of 100 000 by 2011. 69 000 houses were delivered by 2009/10 and

11 000 will be delivered by 2010/11. Shortfall on housing delivery 20 000. Severely impacted by budgetary constraints, economic conditions and liquidity constraints in the banking sector

Infrastructure upgrades Electricity losses are approximately 13%, exceeding 5-year target of 12 mainly due to cable theft

and illegal connections Water losses increased from 31.4% in 2006/07 to 37.4% in 2009/10 against target of 30%, due to

lack of prepaid meters and suspension Gcin” amanzi Increasing demand for maintenance in roads & storm water infrastructure

Culture of non-payment Encouraging culture of timely payment , increasing accessibility of pay channels and customer

channels Programme Phakama to manage City’s revenue value chain from a single platform

Health Improve accessibility of health care and intensify fight against HIV/AIDS through implementation

of programmes and better co ordination with other spheres of governments

Public Safety Increased co-operation with counterparts in the province and SAPS aimed at reducing crime

Focused crime prevention programmes and addressing the social and urban environmental

factors that create opportunities for the perpetration of crime

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City of Joburg: The big issues 2011

1. The trading services: Revenue enhancement and protection

– The ESKOM tariff juggernaut

– Electricity Supply grid: Elimination of power outages

– Service Demand Management

2. Economic investment

3. Green city plan: Global warming and impact

4. Transportation:

– Public transportation investment

– Congestion Management & reducing the cost of business

5. Clean City Waste removal 24/7 (Environmental Management)

6. Revenue collection and Financial prudence

– Customer relations enhancement

7. Development Planning

– Turn around of development planning processes

8. Inner city Urban Regeneration & Management and housing

9. Public Safety: Law, Bylaw enforcement and Policing function

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Electricity IDP Plan

1. Load management interventions: Intake stations

2. Electrification in high demand /growth areas

3. Side Management (DSM) program

• Customer education program

• Alternative energy sources

• Advanced metering solutions

4. Electricity supply in developments approved as per IDP

• Reduction of power outages (systems failure)

• Installation of universal public lighting

• Reduction of Non Technical Losses

• Controlled Provision of prepaid meters

• Provision of adequate electricity capacity

5. Services Backlog elimination

Political Overview

16Local Government Elections

The term of office of current municipal Councils commenced on 01 March 2006 and ends on 02 March 2011

Elections should be held within 90 days after expiry of the lastelection, in this instance the 90 day period starts from 02 March 2011 and ends on 30 May 2011

The Minister of Local Government, after consulting the IEC will, by Notice in the Government Gazette, call and set a date for an election of all municipal councils

2011 Municipal Elections will take place in 8 Metropolitan Councils, 226 local Councils, 44 District Councils and 4277 wards

Voter Registration is Scheduled for 5 and 6 February

Election process

The re-determination of municipal boundaries and the delimitation of wards by the Municipal Demarcation Board resulted in structural change in a number of municipalities and Wards

A total of 278 municipal councils will be contested in 2011 municipal elections. It is a reduction of 5 municipalities from current number of 283 municipalities

The Number of wards according to MDB has increased from 3895 to 4277

Local Government Landscape Post 2011 Municipal Elections

17

Option 1: Outgoing council approves 2011/12 budget Option 2: Outgoing council prepares 2011/12 budget, new council approves it

1. Current Mayor prepares a budget schedule that brings the review of the IDP and the tabling of the budget forward to late February or the beginning of March 2011

2. Community consultations on the annual budget conducted in remainder of March and early April 2011

3. Officials complete technical work on annual budget by mid-April 2011

4. Current council approves annual budget before the end of April 2011

5. New council implements annual budget from 1 July 2011

1. Current mayor prepares a budget schedule that brings the review of the IDP and the tabling of the budget forward to early March 2011

2. Community consultations conducted in remainder of March and early April 2011

3. Officials complete technical work on budget during May and ensure that it is ready to be placed before council for approval by 1 June 2011

4. New council must consider budget as their first order of business, after electing the Mayor – and approve it before the start of the new financial year – 30 June 2011

Benefits of Option

Minimises risk of there not being an approved budget at the start of the financial year

Ensures continuity

Safeguards the financial sustainability of the municipality by ensuring tariff increases are locked in before the start of the financial year

Allows new council to approve and ‘take ownership’ of the annual budget

Risks of Option

New council may not be happy with the priorities set out in the annual budget approved by the outgoing council, and so be reluctant to be held accountable for its implementation

There is real risk that the municipal council may not be constituted, or may not get itself organised in time to approve the budget before the start of the municipal financial year, which will put the financial sustainability of the municipality at risk

New council may seek to introduce last minute changes to the tabled budget which will tend to undermine the integrity of the community consultation processes

Local Government Elections – Budget Process

All district councils are strongly advised to adopt option 1. National Treasury also recommends this option for metros and localcouncils, unless specific political circumstances suggest that it is important to allow the new council to approve the budget.

where specific local political circumstances suggest that it is important to allow the new council to approve the budget.

Financial Overview

19Financial Turnaround Strategy - Phases

Stabilisation Consolidation Sustainability

(1-2 years) (2-3 years) (>3 years)

Improve Liquidity levels− Citywide VAT review process−Sale of non-strategic property−Servicing old commitments on servitudes, land sales−Outdoor advertising

Implement revenue maximization initiative− Improve collection −Billing maximizations−Data clean up−Operational efficiencies−SAP Implementation (Phakama)

Managerial and institutional interventions− Establish institutional behavioural change through systematic implementation of expenditure review outcomes−Conduct an institutional review to assess capacity requirements

Sustainable development and service delivery− City wide roll out automatic meter reading and prepaid meters

Pursue alternative revenue sources in line with increasing service delivery demands

Cap spiralling expenditure− Strengthen City’s voice in intergovernmental debates especially regarding major costs−Slow down discretionary operating expenditure

Comprehensive infrastructure plan− Creation of an asset replacement reserve to ensure City assets are not stripped of useful value−Roll out the implementation of Infrastructure Maintenance Plans, linked to the Comprehensive Infrastructure Plan

Capital budget management− Find a balance between continued service delivery and management of debt to revenue ratio−Pursue alternative sources of funding−Maintain consistent levels of expenditure per household−Maintain a balance between Investment in productive economic infrastructure, basic needs and social facilities

20Financial Turnaround Strategy - Progress

Stabilization Phase

Key Deliverable Intervention Progress

Improve Liquidity levels

Citywide VAT review process Service provider has been appointed and work is underway. Completion expected in April 2011

Sale of non-strategic property Procurement processes in progress

Servicing old commitments on servitudes, land sales

Land parcels identified awaiting expression of interest Funds expected to flow by June 2011

Outdoor advertising Negotiations underway for new revenue packages for different advertisers. Up front payments expected by June 2011

Implement revenue maximization initiative

Improve collection Maintained collection levels in the face of recessionary environment. Collection

level of 92.6% achieved in 2010 compared to 91.1% in 2009

Billing maximizations and Operational efficiencies

Billing project team appointed in July 2010 to address all billing matters following Migration to SAP ensuring improved efficiencies across the revenue value chain

Data clean up Ongoing process

SAP Implementation (Phakama) All databases successfully migrated to SAP by June 2010 System has inbuilt error checks and save guards which have impacted timing of

billing

Cap spiralling expenditure

Strengthen City’s voice in intergovernmental debates especially

regarding major costs

City participation in forums such as the Cities Budget forum and various other debates e.g. engagements with NERSA on electricity tariffs, REDS debate (through IMFO)

Slow down discretionary operating expenditure

Expenditure review interventions resulted in overall reduction of proportion of City expenditure spent on general expenses and consultants

21

The City illustrated a sound 24% growth in total revenue, mainly as a result of increased grants and subsidies for the Soccer

World Cup

Expenditure growth of 13% is as a result of bulk purchases for water and electricity

Employee related costs remained well contained at 26% of operating expenditure

Financial Performance

Expenditure compositionRevenue composition

Source: City of Johannesburg Group - Draft Annual Financial Statements for the Year Ended 30 June 2010

22Financial Performance

Source: City of Johannesburg Group - Draft Annual Financial Statements for the Year Ended 30 June 2010

Statement of financial performance for the period ended 30 JuneBudgeted statement of the financial performance for the period ended 30

June

R’0002007

Actual2008

Actual2009

Actual2010

(Unaudited)2011

Budget2012

Budget2013

Budget

Total Revenue 15,884,175 17,959,812 20,491,790 25,153,400 26,308,874 29,261,396 32,779,602

Total Expenditure

14,289,388 16,005,490 19,724,684 22,151,687 25,164,848 28,086,212 31,596,679

Surplus / (Loss) 1,594,787 1,954,322 755,439 2,896,538 1,013,632 1,002,256 1,034,545

Budget growth in the medium term is expected to slow down as the City “cools off” after a period of sustained high growth

23Financial Performance

Total assets vs. borrowings vs. cash equivalents

Total assets grew by a moderate 7%, attributable to the capitalisation of some world cup related projects.

In 2010, R4.6 billion was spent on capex.

The City’s total interest-bearing liabilities increased by a conservative 7% from R10.4 billion in 2009 to R11.1 billion in 2010 as

a result of the efforts by the City to complete some of the capital projects in time for the Soccer World Cup 2010.

Source: City of Johannesburg Group - Draft Annual Financial Statements for the Year Ended 30 June 2010

Revenue Performance

25Annual Collection Rates

2009/10 financial year provided revenue collection of the City with unprecedented settings including

– the turbulent global economic environment and

– migration into the new system yet sustains the fundamentals of revenue collection.

Revenue collection exceeded expectation with a citywide total collection of R16.5 billion at a percentage rate of 92.7%

This can be attributed to multiple interventions including revenue maximization efforts and management of the panel of collecting attorneys to yield the desired output of increased revenue collection

In 2010/2011, the City plans to increase revenue collection to a minimum of R18 billion which represents a 9% increase from the previous year

Jun-10 Jun-09 Jun-08 Jun-07

BillingActual

ReceiptsJun-10 Billing

Actual Receipts

Jun-09 BillingActual

ReceiptsJun-08 Billing

Actual Receipts

Jun-07

R’000 R’000 % R’000 R’000 % R’000 R’000 % R’000 R’000 %

Revenue and CRM - Total

10,240.444 9,086,234 88.7 9,125,336 7,747,292 84.9 8,164,882 7,470,684 91.5 7.515,075 6,835,358 91.0

City of Johannesburg -Total

17,945,447 16,618,908 92.6 15,313,217 13,951,573 91.1 12,907,769 12,173,338 94.3 11,846,397 11,161,955 94.2

26Billing and Collection (5 months ended 31 December 2010)

DescriptionActual 2 months

ended August 10

Budget 2 months

ended August 10 Variance

Actual 3 months

ended November 10

Budget 3 months

ended November 10 Variance

Total Billing 3,036,146 4,004,576 (968,431) 6,571,672 5,346,916 1,224,756

Total Collections 2,783,981 3,775,191 (991,210) 5,385,500 5,015,260 370,240

27

Service0-30 days

%

31-60 days

%

61-90 days

%

Over 90 days

%

Total

R’000

Rates 18.69% 4.83% 5.55% 70.9% 2,977,703.00

Electricity 26.62% 6.84% 4.28% 62.3% 2,076,035.00

Water 11.69% 4.36% 4.36% 79.6% 4,168,432.00

Refuse 6.26% 6.01% 5.58% 82.1% 563,836.00

Housing Rental 2.58% 1.52% 1.32% 94.6% 229,574.00

TOTAL 16% 5% 5% 74% 10,015,580.00

2010 Consumer Debtors Age Analysis by Service Type

28Debtors Age Analysis for Metros

Metro 0-30 days

%

31-60 days

%

61-90 days

%

Over 90 days

%

Total

%

Nelson Mandela Bay

49.7 6.9 1.4 42.1 5.5

Ekurhuleni Metro 14.5 5.7 3.2 76.7 24.4

City of Johannesburg

26.9 3.6 2.1 67.3 29.8

City of Tshwane 25.2 2.6 2.0 70.2 10.5

eThekwini 22.0 5.2 6.4 66.4 14.8

Cape Town 19.3 5.4 3.1 72.2 15.0

TOTAL 23.1 4.7 3.1 69.1 100

Debtors Age Analysis as at 1st quarter ended 30 September 2010

Source: National Treasury Local Government Database

29Debt Serviceability

As anticipated, accelerated capital program has put pressure on prudential ratios

The City’s Financial Strategy aims to gradually reduce the debt to revenue to 46% in the medium term

2010 Unaudited 2009 2008 2011f 2012f 2013f

Salaries to Opex 26% 26% 26% 26% 25% 24%

Debt to Revenue 54% 54% 46% 50% 49% 47%

Current Ratio 0.61 0.66 0.78 0.84 0.99 1.19

Interest to Opex 7% 6% 5% 5.7% 5.75 5.0%

Source: City of Johannesburg Group - Draft Annual Financial Statements for the Year Ended 30 June 2010

Funding

31Medium Term Capex Spend 2009/10 – 2012/13

Category Budget year 2009/2010

Budget year 2010/2011

Budget year 2011/2012

Budget year 2012/2013 Total

(R millions)

Loans/borrowings 1,992 1,512 1,512 2,300 7,316

Grants and donations 2,627 1,090 2,181 1,829 7,727

Internally generated funds 855 457 278 279 1,869

Total Capex 5,474 3,059 3,971 4,408 16,912

The majority of the capital spend over the short to medium-term will be focused on improving City Power, Joburg Water and

transportation

In terms of the approved medium-term budget, the City's total external borrowing requirements from 2009/10 to 2012/13 is

approximately R7,316billion

Loans/borrowings form the bulk of funding for the 2009 /10financial year. To date a R 479mln facility has been arranged with

AFD (French Development Agency), the balance expected to be funded by the bond issue

The level of capital expenditure will continue to be based on principles of affordability, prudential indicators and sustainability

and reassessed continuously

Source: City of Johannesburg Medium Term Budget 2010/11 – 2012/13

32Funding Strategy and Debt Structure

Strategic focus to create a well governed and managed city

External borrowing requirements of approximately R 3.95billion from 2009/10 to 2011/12

The City will continue to seek innovative, cost effective and efficient funding mechanisms

Maintain diversity in funding sources and closely manage the debt maturity profile

The following instruments are being considered:

Long-term funding

Debt Capital markets

Development Finance Institutions

Project finance and PPP

Other project specific funding options e.g. ECAs

Bilateral loans

Bond switch

Short-term funding

Commercial Paper

General Banking Facilities

Long term liabilities

33Redemption Management

Municipal Bonds Outstanding

Issue Date Maturity dateNominal

R bln

COJ0230-Jun-04 15-Sep-16 1.00

COJ0326 –Apr-05 26-Apr-13 0.70

COJ0405-Jun-06 05-Jun-18 1.73

COJ0505-Jun-08 05-Jun-23 2.27

COJ0609-Dec-08 15-Dec-15 0.90

Total 6.60

Debt Maturity Profile

The City has carefully managed the issuance of bonds and CP such

that the debt maturity profile is well spread ensuring the City is not

under pressure when redemptions occur

A bond sinking fund has been established to further assist with the

management of the City’s bond redemptions

Currently a balance of R 1.475bln is available in the fund, following

the successful redemption of COJ01 (R 1bln) in April 2010

CP redemptions are managed similarly with grant receipts being

ring fenced to facilitate redemptions

In the current financial year R 1.017bln of CP has been redeemed

Remaining grant and levy allocations of over R 2bln will be used to

redeem outstanding CP

Commercial Paper Outstanding

Issue Date Maturity dateNominal

R bln

COJ04C* 8 - Jul -10 10 -Jan- 11 1.017

COJ05C 8 - Jul- 10 8 - Apr - 11 0.435

COJ06C 26-Aug-10 28-Feb-11 0.200

COJ07C 26-Aug-10 26-May-11 0.900

COJ08C 26-Aug-10 26 -May-11 0.148

COJ09C 15-Dec-10 17-May-11 0.702

Total 3.40

*Redeemed on 10 January 2011

Offering summary

35Credit Rating

Rationale:

The deepest and most diversified local economy of all the cities in the country

Considered the business capital and main financial and economic centre of South Africa

Good fiscal flexibility embedded in the current institutional framework

Stable outlook based on:

Expectation that the municipality will maintain a prudent financial policy

Although the debt burden will increase, it is expected to remain at a manageable level

Agency Description Long-term rating Short-term rating Outlook

Fitch Issuer Rating AA- (zaf) F1+ (zaf) Stable

Moody’s Issuer Rating Aa3.za P- 1.za Stable

36COJ Credit highlights

The City of Johannesburg was the first municipality to tap the South African Debt Markets. Since then COJ has been a pioneer in

the capital market funding of municipalities having issued retail bonds and commercial paper. the following factors set the City apart

as an issuer

Importance to the Countries Economic Development

As the largest municipality the City is of critical economic and strategic importance to South Africa

The City is a financial hub of the country and provides a vital gateway to the country and the African continent as a whole

Long Standing Reputation in the Debt Capital markets

The City has developed a strong reputation as an issuer, having consistently tapped the market since its debut bond in 2004

Established an externally managed sinking fund to facilitate redemption of the City’s bonds

Successful redemption of COJ01 in April 2010, this was the first municipal bond issued in the market

COJ has highlighted the importance of the DCM to is long term funding strategy

Strong Financial Performance

Strong Diverse economic base coupled with a strong tax base

Stable financial performance in recent years with signs of recovery following the 2008 crisis

Manageable debt burden and sound liquidity profile

Unqualified audit for 3 consecutive years

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Issuer City of Johannesburg Metropolitan Municipality

Documentation Domestic Medium Term Note Programme

Issuer Rating Aa3.za/AA-.za

Offered Securities Senior unsecured notes

Structure of Notes Fixed Rate

Proposed Amount Up to ZAR [1.1] billion

Tenor (Maturity) [10]/[15] years

Companion / Benchmark Bond [●●]

Coupon (Dates) Payable semi-annually in arrears

Issue Date [●●]

Settlement Date [●●]

Listing JSE

Proposed Offering Summary

38

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Think ahead. It wasn’t raining when Noah built the Ark

Engagement & Investor clarifications