| Mon 3 Feb 2025, 7:23 | | Availability of the Annual Financial Statements for the year ended 30 June 2024 - BIEM |
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Availability of the Annual Financial Statements for the year ended 30 June 2024 - BIEM
CITY OF EKURHULENI METROPOLITAN MUNICIPALITY
Established in the Republic of South Africa in terms of section 12(1) of the Local Government: Municipal
Structures Act, 117 of 1998, read with Notice No 6768 of 2000 published in Provincial Gazette
Extraordinary No 141 dated 1 October 2000)
Company code: BIEM
("Ekurhuleni" or the "Issuer")
AVAILABILITY OF THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2024
In terms of sections 6.15 and 6.17 of the Debt Listings Requirements of the JSE Limited, noteholders are advised
that the City of Ekurhuleni Metropolitan Municipality's annual financial statements for the year ended
30 June 2024 are available on Ekurhuleni's website for downloading at:
https://www.ekurhuleni.gov.za/about-the-city/annual-reports/
The annual financial statements of the issuer have been audited by The Auditor General of South Africa, who
have issued an unqualified audit opinion.
The details below are selected direct extracts from the Audit Report.
Key audit matters
I have determined that there are no key audit matters to communicate in this auditor's report.
Emphasis of matters
I draw attention to the matters below. My opinion is not modified in respect of these matters.
Material impairments — Consumer debtors
As disclosed in note 13 to the financial statements, material losses relating to traffic fines have been
impaired. The allowance for impairment of traffic fines debtors amounts to R2 653 787 032 (2023:
R2 197 709 912) which represents 82% (2023: 82%) of total traffic fines. This was due to non-
payment of long outstanding traffic fines.
As disclosed in note14 to the financial statements, a material loss relating to consumer debtors'
balance has been impaired. The allowance for impairment of consumer debtors amounts to R21 412
957 670 (2023: R16 586 465 329) which represents 70% (2023: 68%) of total consumer debtors.
The contribution to the allowance for debt impairment was R5 789 351 498 (2023: R7 976 253
520).This was as a result of a material provision for consumer debtors.
Material losses — Electricity
As disclosed in note 37 to the financial statements, material electricity losses of R2 750 624 166
(2023: R2 333 616 165) was incurred, which represents 16% (2023: 16%) of total electricity
purchased. Technical losses amounted to R736 309 218 (2023: R638 775 862) and was due to
energy dissipation by the equipment and conductors in the distribution lines .Non- technical
losses amounted to R2 014 314 948 (2023: R1 694 840 303) and was due to unidentified,
misallocated or inaccurate energy flows.
An uncertainty relating to the future outcome of exceptional litigation
With reference to note 42 to the consolidated and separate financial statements, the municipality is
the defendant in the various lawsuits. The ultimate outcome of the matters could not be determined
and no provision for any liability that may result was made in the consolidated and separate financial
statements.
I draw attention to the matter below. My opinion is not modified in respect of this matter.
Unaudited disclosure notes
In terms of section 125 (2) (e) of the MFMA, the particulars of non-compliance with the MFMA should
be disclosed in the consolidated and separate financial statements. This disclosure requirement did
not form part of the audit of the consolidated and separate financial statements and, accordingly, I do
not express an opinion on it.
Material irregularity in progress
I identified a material irregularity during the audit and notified the accounting officer of this, as
required by material irregularity regulation 3(2). By the date of this auditor's report, the response of
the accounting officer was not yet due. This material irregularity will be included in the next year's
auditor's report.
Restatements
The City of Ekurhuleni's corresponding figures for 30 June 2023 were restated.
• PPE decreased due to derecognition of capital spares values recognised in the WIP register which were
issued as part of the maintenance programme and additional information received on the donated assets
resulting in the increase in asset values, and the impact of correction of WIP projects resulted in additional
increase on the accumulated depreciation.
• Land was derecognised from Land inventory register. This represents land that was transferred to residents
under social housing schemes in prior years which was incorrectly included in the Land inventory register.
• Investment property increased as results of the unbundling process, correction of one-liners.
• Intangible assets decreased due to increase in accumulated depreciation as a result of project capitalised.
• Receivables from exchange transactions increased with VAT recovery of R44m and write-off previous third
party vendors commission of R13m.
• The impact of these corrections has resulted in a decrease in the Accumulated Surplus.
• Reclassification of grants and subsidies paid (excess consumption written off) to bad debt write off.
• ERWAT - Professional fees to the amount of R4m were capitalised in prior periods for construction projects
that did not realise and completed projects to the value of R4m were not transferred from assets under
construction. Some assets were not depreciated resulting in an error of R303k.
• The Non-controlling interest prior period error was due to the ERWAT prior period error changes.
• EHC - Accrued expenses to the amount of R330k relating to legal services were not accounted for in the
prior year. An amount of R75k was not recognised as a provision in the prior year.
• The correction of the error(s) results in adjustments as follows
Please refer to note number 54 (Prior period errors) in the Notes to the Annual Financial Statements for
further details.
03 February 2025
Debt Sponsor
Absa Bank Limited (acting through its Corporate and Investment Banking Division)
Date: 03-02-2025 07:23:00
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