Wrap Text
Availability of the Annual Financial Statements for the year ended 30 June 2025 - 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 2025
In terms of sections 6.5 and 6.7 of the JSE Debt and Specialist Securities 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 2025 are available on Ekurhuleni's website for downloading at 9am in
the below link:
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 qualified audit opinion.
The details below are selected direct extracts from the Audit Report.
"Basis for qualified opinion Consumer debtors
3. I was unable to obtain sufficient and appropriate evidence to confirm the valuation and completeness of
receivables from exchange transactions and non-exchange transactions. During the financial year, data
within the computerised accounts receivable system was subject to manipulation through unauthorised
manual adjustments and system overrides, which compromised the integrity of the financial data on
receivables balance. These circumventions compromised the reliability of the information produced by the
system and the audit trail supporting receivables from exchange and non-exchange transactions.
4. I was unable to confirm or verify by alternative means receivable from exchange transactions, non-exchange
transactions and consumer debtors as disclosed in notes 11, 12 and 13 in the financial statements as at 30
June 2025. As a result, I was unable to determine whether any adjustments were necessary to the recorded
receivables. Consequently, I was unable to determine the impact of the misstatement on receivables from
exchange transactions, receivables from non-exchange transactions and consumer debtors.
Context for opinion
5. I conducted my audit in accordance with the International Standards on Auditing (ISAs). My responsibilities
under those standards are further described in the responsibilities of the auditor- general for the audit of the
consolidated and separate financial statements section of my report.
6. I am independent of the group in accordance with the International Ethics Standards Board for Accountants'
International Code of Ethics for Professional Accountants (including International Independence Standards)
(IESBA code) as well as other ethical requirements that are relevant to my audit in South Africa. I have
fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA code.
7. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my
qualified opinion.
8. In terms of the IRBA Rule on Enhanced Auditor Reporting for the Audit of Financial Statements of Public
Interest Entities, published in Government Gazette No. 49309 dated 15 September 2023 (EAR Rule), I
report:
Material uncertainty related to going concern
13. I draw attention to the matter below. My opinion is not modified in respect of this matter.
14. As disclosed in note 46 to the consolidated and separate financial statements, the performance indicators
suggest that the group may continue to experience short-term financial pressure. despite improvements in
cash flow. While the group has demonstrated an increased ability to generate revenue, the pace at which
cash becomes available may not always align with immediate financial obligations. Liquidity and solvency
levels remain below expectations, largely due to historical financial performance.
15. In terms of the EAR Rule, I report on how I have evaluated management's assessment of the group's ability
to continue as a going concern. I considered:
• the group's cash flow projections, approved budget and Integrated Development Plan (IDP) to determine
whether sufficient resources are available to sustain operations
• assumptions relating to revenue collection and funding sources, including the impact of low collection
rates on cash flows
• the group's ability to meet its financial obligations
• the impact of identified financial pressures and governance deficiencies
• council resolutions, mayoral committee minutes, and oversight reports for indications of financial
distress or planned remedial actions.
16. I concluded that the management's assessment of the group's ability to continue as a going concern is
appropriate.
Key audit matters
17. Key audit matters are those matters that, in professional judgement, were of most significance in my
audit of the consolidated and separate financial statements for the current period. These matters
were addressed in the context of my audit of the consolidated and separate financial statements as a
whole and in forming my opinion, and I do not provide a separate opinion on these matters.
18. In addition to the matter described in the material uncertainty related to the going concern section, I
have determined the matter described below to be the key audit matter to be communicated in my
report. In terms of the EAR Rule, I am required to also report the outcome of audit procedures or key
observations with respect to the key audit matter.
Key audit matter How matter was addressed and outcomes or
key observation
Revenue from service charges (electricity and Our audit procedures included:
water)
• Evaluating the design and implementation
The municipality generates a significant portion of of key controls over the revenue and
its revenue from service charges relating to billing cycle.
electricity and water supplied to residents and
businesses. Due to the large number of • Testing a sample of consumer accounts
consumers, reliance on automated billing systems to confirm that tariffs applied were
and the risk of inaccuracies in metre readings and approved by the council and correctly
billing processes, revenue from service charges configured in the billing system.
was considered to be a matter of most
significance in our audit. • Testing metre readings and consumption
data used to generate billing.
In addition, there is a risk that revenue may be
misstated due to incorrect tariff application, • Performing analytical procedures
incomplete billing or system related errors. The comparing electricity and water revenue
recognition of revenue is governed by the with prior years and consumption trends.
applicable GRAP 9 and GRAP 23.
• Performing cut-off testing around year-
end to ensure that revenue was
recognised in the correct reporting period.
• Assessing the adequacy of disclosures
relating to revenue in the financial
statements.
No material misstatements were identified as
a result of procedures performed.
Emphasis of matters
19. I draw attention to the matters below. My opinion is not modified in respect of these matters.
20. As disclosed in note 13 to the consolidated and separate financial statements, material loss relating
to traffic fines has been impaired. The allowance for impairment of traffic fines debtors amounts to R2
739 788 968 (2024: R2 653 787 032), which represents 82% (2024: 82%) of total traffic fines. This
was due to non-payment of long-outstanding traffic fines.
21. As disclosed in note 40 to the consolidated and separate financial statements, material electricity loss
of R3 067 588 141 (2024: R2 750 624 166) was incurred, which represents 15,5% (2024: 16%) of
total electricity purchased. Technical loss of R858 388 622 (2024: R736 309 218) was due to
electricity lost while being distributed from the source of generation through the transmission and
distribution network to the final consumer. Non-technical loss of R2 209 199 519 (2024: R2 014 314
948) was due to administrative and technical errors, negligence, theft of electricity, tampering with
metres and connections, which form part of illegal consumptions and faulty metres.
22. With reference to note 46 to the consolidated and separate financial statements, the group 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 financial statements.
Other matters
23. I draw attention to the matter below. My opinion is not modified in respect of these matters.
24. 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 irregularities
56. In accordance with the PAA and the Material Irregularity Regulations, I have a responsibility to report
on material irregularities identified during the audit and on the status of material irregularities as
previously reported in the auditor's report.
Material irregularity in progress
57. I identified another 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 responses of
the accounting officer were not yet due. This material irregularity will be included in next year's
auditor's report.
Status of previously reported material irregularities
58. The material irregularities identified are as follows:
Distribution centre not utilised
59. Resources of the municipality were not utilised economically, as required by section 62(1) (a) of the
MFMA. The municipality did not take appropriate steps to ensure that once the distribution centre was
completed, it was placed in use. The distribution centre was completed, and an occupancy certificate
was issued on 27 June 2022.
60. The non-compliance is likely to result in the misuse of the vacant distribution centre at the Ekurhuleni
fresh produce market for the CoE. The expansion on the fresh produce market was constructed and
completed on 27 June 2022 and was intended to boost the economy within the CoE, as well as
generate an additional stream of revenue. The cost of expanding the fresh produce market with the
additional distribution centre amounted to R39 778 318.
61. The accounting officer was notified of the material irregularity on 12 December 2024.
62. The accounting officer has taken the following actions to address the material irregularity:
• Property valuers appointed in February 2025 completed the valuation of the distribution centre
in February 2025.
• The council passed a resolution in July 2025 authorising the AO to conduct the required public
participation process relating to the proposed long-term lease of the distribution centre.
• A provincial government gaz ette was issued in August 2025 pertaining to the notice of the
public participation process to be conducted on the proposed long-term leasing of the
distribution centre, with a meeting scheduled for 4 Septembe r 2025. Hereafter, the public
participation outcome will be submitted to the council to request the resolution to finalise the
proc ess. After the receipt of this approval, the AO will iss ue a bid advertising to invite potential
tenants, followed by the bid evaluation and subsequent award. The distribution centre will then
be handed over to the successful bidder and the commencement of the functionality of the
distribution centre will take place.
• The public meeting took place on 4 September 2025 in the Supper Hall, Springs Civic Centre
however, there was no attendance by any members of the community.
• Engagements were undertaken with National Treasury and Provincial Treasury to obtain
guidance on the prescribed process to be followed in respect of the proposed long-term lease of
the property.
• No disciplinary process was initiated as the project manager is no longer in the employment of
the municipality.
63. I will follow up on the implementation of the planned action during my next audit."
Restatements
The City of Ekurhuleni's corresponding figures for 30 June 2025 were restated.
• Net increase in PPE of R83,208,808 is made up as follows:
• PPE land decreased by R28,843,597 due to reclassification of land to investment properties as land is now
held to earn rental income.
• Infrastructure assets increased by R94,003,428 due to capitalisation of donated assets.
Information/documents on donated assets were only provided to the City in the current year in order to
determine fair values of the donated assets and update the City's records.
• Community assets decreased by R59,932,495 due to unbundling of one-liners projects capitalisation in prior
years and impairments of projects vandalised in previous years, and the .unbundling resulted in adjustments
to accumulated depreciation.
• Operational and Housing buildings increased by R77,963,568 due to capitalisation of projects completed in
prior years.
• Movable assets increased by R17,844 due to correction of expected useful lives of assets that were
assumed to be not in use in prior year.
• Net decrease in land inventory of R24,495,942 is made up as follows:
• Land inventory decreased due to derecognition of land inventory that was transferred to residents under
social housing scheme administered by human settlement department and reclassification of land to
investment properties as land is now held to earn rental income.
• Net increase in investment properties of R36,466,906 is made up as follows:
• Investment properties increased due to reclassification of land from land inventory and PPE land to
investment properties as land is now held to earn rental income.
• The impact of the donated assets and additional capitalisation above resulted in restatement of the
Statement of Financial Performance as follows: an increase in the public contribution of R250,275,092, and
increase in additional depreciation of R28,142,603 and the impact also resulted in an increase of
R12,090,637 on the opening balance of the Accumulated Surplus.
• All these changes resulted in the closing balance of accmulated surplus decreasing by R179.864,471.
• During the 2024 financial year, management made an error on the disclosure note number 55, mistatement
resulted in the amount owing to the agent being disclosed as R186,723,071 instead of R273,656,720. The
comparative figures have been reinstated to reflect the amendments. The opening balance for 2025 have
been corrected.
• The disclosure of the MFMA note 48 has been restated to be aligned with the reporting format of PAYE, UIF
and SDL, including Medical and Pension deductions.
• ERWAT
The carrying value of some assets classified under Property, plant and equipment were overstated due to
errors related to capitalisation and depreciation of assets;
• The carrying value of some assets classified under Intangible assets were overstated due to errors related
to amortisation of assets;
• Payments made in advance to Johannesburg Water for Waste water treatment services were incorrectly
classified as expenditure under bulk purchases. The error has been corrected by classifying the
prepayments as other receivables form exchange transactions;
• As a consequence of the de-recogntion of service charges to Johanessburg Water, the related trade
receivable previously recognised on relation to these charges had to be de-recognised;
• Included within the debt impairment provision was an amout relating to Johannesburg Water. This amount
had to reversed as the related receivable were de-recognised as part of the service charges;
• General expenses has been restated as a result of expenditure incurred to repairs and maintanence.
• The contingent liability disclosure was updated with ERWAT and EHC disclosure items."
Please refer to note number 58 (Prior period errors) in the Notes to the Annual Financial Statements for
further details.
27 March 2026
Debt Sponsor
Absa Bank Limited (acting through its Corporate and Investment Banking Division)
Date: 27-03-2026 08:57:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
