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TMMI - Availability of Annual Financial Statements
ETHEKWINI METROPOLITAN MUNICIPALITY
JSE alpha code: TMM
("EThekwini", "eThekwini" or the "Municipality")
AVAILABILITY OF ANNUAL FINANCIAL STATEMENTS
EThekwini hereby advises that it has publicly released its audited Annual Financial Statements for the year
ended 30 June 2025 ("AFS"). The auditors of eThekwini, Auditor-General South Africa, have issued an
unqualified audit report relating to the AFS.
The AFS contain various restatements for the year ended 30 June 2024 ("Prior Period") relating to:
1. Debtors' balance relating to Water Services was adjusted to correct the duplication of accrual reversal
in the prior year, following the processing of the 6kl rebate adjustments on the billing system. The
accrual was raised in the prior years to account for charges relating to the incorrect application of rebate
to certain customers. When the billing adjustments were subsequently processed on the system, the
reversal of accrual was duplicated, resulting in the understatement of the debtor balance.
Debtors' balance relating to Waste Water Services was adjusted for impairment losses following the
additional debtor amount that resulted from the application of incorrect tariff. In the prior year, there
were already conditions that cast doubt about the recoverability of this additional debtor amount, but
the impairment loss was not recognised.
Rates adjustments, including deferred rates as well as changes stemming from re-valuations backdated
to previous financial years. Adjustments for electricity and refuse debtors on the consolidated financial
statements mainly relate to the elimination of allowance for impairment on municipal entity debtor
balances, which was not reversed in the prior year.
2. The carrying amount of long-term receivables (non current) relating to the study assistance scheme was
derecognised since it does not meet the recognition criteria in terms of the standards. In the prior years,
the Municipality recognised the cost of funding external students as a long-term receivable since, in
terms of the bursary agreement, the students are expected to work-back the time equivalent to the period
of funding. The Municipality would then amortise the carrying amount over the work-back period. This
accounting treatment was reviewed in the current year in terms of the GRAP requirements, and the
review resulted to the prior year correction of error being performed.
3. The adjustments include the recognition of liabilities in relation to the invoices that were received late
and not accrued in the prior year. Balances relating to some retentions, deposits, Income received in
advance, reclassification of prior year overtime, closure of prior year open receipts and trade and other
payables were derecognized where, through assessment, it was confirmed that the Municipality no
longer has an obligation to pay them. This was due to factors such as expiry through the prescription
Act, duplication of some invoices, technical issues relating to accounting system and non-compliance
with Central Supplier Database requirements.
4. Cost adjustments include capitalisation of assets received or completed in prior periods but not
accounted for and the derecognition of assets where there are no expected future economic benefits.
Depreciation and impairment adjustments due to changes in useful lives and prior year capitalisation
of projects.
5. Amortization adjustments relate to the extension of useful lives of various intangible assets not adjusted
in the previous periods, reclassification of prior year costs, disposal, reversal of prior year depreciation
for Servitudes and capitalization of costs.
6. Receivables from exchange transaction adjustments include accruals, provision for bad debts, reduction
in the prepayment balance as a result of finalization of land transfers, derecognition of other debtors
and DOHS debtors incorrectly recorded in the prior year.
7. Reclassification of VAT input accrual from VAT liability to VAT asset. In the prior year, the VAT
input and output accrual balance were incorrectly netted off under VAT liability line item even though
they relate to the two separate arrangements that do not meet the offsetting principles.
8. Cash and Cash Equivalent adjustments relating to call and fixed deposits balances relates to the
capitalisation of interest earned and not yet received at the end of the period. In the prior year, the
interest receivable was recognised separately under receivables from exchange transactions instead of
being capitalised in the investment balance in line with the subsequent measurement policy which
requires the financial assets to be measured at amortised cost.
9. Receivables from non-exchange adjustment relating to a prior year grant accrual receivable.
10. Investment Property adjustment relating to disposals that were not processed in the prior year.
11. Unspent conditional grants adjustment reallocation. In the previous year, the funds received for
construction and rehabilitation of R293 houses were accounted for as grant funding. The accounting
treatment was reviewed, since the municipality is accredited to undertake housing development projects
as a project developer on behalf of the DOHS, and this resulted in the reclassification of these funds
from unspent grants to income received in advance. The reclassification was recognised as prior year
adjustments in accordance with the standards of GRAP.
12. Rental of facilities and equipment, and Grants and subsidies adjustments relating to the derecognition
of revenue forgone, which was recognised for rental of facilities as zero or nominal amount. In the
current year, this accounting treatment was reviewed and found not to be consistent with the GRAP
principles. The adjustments to Grants were made due to a Guarantee that was withheld from a
Developer due to non-compliance to Conditions of agreement and incorrect classification of Income
received in advance as unspent grant and grants that were spent.
13. The transactions relating to expenditure incorrectly accounted for as Contribution to Capital instead of
Contracted Services-Building, Rates Assessment income pertaining to prior year and Incorrect
Accounting treatment of GRAP109 transactions.
14. Cash flow statement adjustments have resulted in restatement in the comparative cash flow.
Additionally, during the current year the Municipality implemented changes in the classification of
some of the items on the cash flow statement due to lessons learned from the ongoing review and
benchmarking of the financial statements in line with best practice. The summary and impact of the
changes are as follows:
- Cash flow receipts and payments: A reclassification of R3.64billion relating to changes in working
capital was made to correctly split the movement in the VAT receivable between cash receipts from
customers and cash paid to suppliers in line with the nature of the underlying transactions.
- Purchase of property, plant and equipment, intangibles and heritage assets: A reclassification of
R727.42million relating to changes in working capital was made between operating and investing
activities to correct the amount of cash paid to purchase property, plant and equipment, intangibles and
heritage assets to ensure that the capital expenditure is adjusted to include VAT and exclude capital
expenditure not yet paid. Given that cash purchases of heritage assets and intangibles are not material,
purchases in relation to fixed assets were grouped and presented together, which is consistent to the
principle applied for proceeds from the sale of fixed assets.
- Finance costs and repayment of loans: A reclassification of R47.74million was made between finance
costs and repayment of loans. The finance cost previously only took into account an adjustment of the
amount accrued at year-end, instead of looking at the movement in the accrued amount since the prior
year accrual would have been paid in the comparative year, thus resulting in an increase in finance costs
and decrease in repayments of loans.
Full details of the restatements are disclosed in note 46 of the 30 June 2024 AFS.
In addition, the audit report contains emphasis of matters in relation to:
Significant uncertainties
1. As disclosed in note 44 to the consolidated and separate financial statements, various legal claims were
lodged against the group. The ultimate outcome of these matters could not be determined and no
provision for any liability that may result was made in the consolidated and separate financial
statements.
Material debt impairments, losses and write-offs.
2. As disclosed in note 6 to the consolidated and separate financial statements, the group recognised a
provision for debt impairments of R24,43 billion (2023-24: R19,45 billion) on consumer debtors, as
the recoverability of these amounts was doubtful.
3. As disclosed in note 52 to the consolidated and separate financial statements, the Municipality wrote
off bad debts of R1,40 billion (2023-24: R0,41 billion) due to Council decision to write off monies
owed by insolvent and deceased estates.
4. As disclosed in note 52 to the consolidated and separate financial statements, material water losses of
676 636 kl/day (2023-24: 622 743 kl/day) were incurred by the Municipality, which resulted in losses
of R2,91 billion (2023-24: R2 billion). These losses arose mainly from ageing and deteriorating
infrastructure, uncontrolled, unplanned rapid rural expansion and illegal connections.
5. As disclosed in note 52 to the consolidated and separate financial statements, material electricity losses
of 1,11 billion kilowatt hours (2023-24: 1,12 billion kilowatt hours) were incurred by the Municipality,
which resulted in losses of R1,91 billion (2023-24: R1,72 billion). These losses arose as a result of
transmission and distribution losses as well as illegal connections.
The AGSA audit opinion is not modified in respect of these matters.
The Material Irregularities identified are as follows:
Water meters not repaired or maintained
1. In performing physical verification of water meters at consumer properties, instances of non-functional
meters were identified. The Municipality did not maintain, repair or replace certain non-functional
meters resulting in non-compliance with section 63(1)(a) of the MFMA.
2. The lack of an accurate and verifiable metering system for measuring consumption led to consumers
being billed an amount of zero for water consumption. The irregularity has resulted in a material
financial loss by 30 June 2024 and is likely to result in further material financial losses for the
eThekwini Municipality as the Municipality cannot legally and accurately bill consumers for water
services until properly functioning meters are installed. Consequently, revenue from services had been
forgone.
3. The Accounting Officer was notified of the Material Irregularity on 08 July 2025 and invited to make
written submission on the actions taken and that will be taken to address the matter.
4. The Accounting Officer responded on the 05 August 2025 with proposed actions including repairs
replacements of meters and approval of water turnaround strategy
5. AG will follow up on the implementation of the planned actions during the next audit
The AFS and Audit Report are included in the Annual Report of eThekwini and will be available
on the Municipality's website at https://www.durban.gov.za/page/annual-reports and for
inspection at 263 Dr Pixley Ka Seme Street, Durban, 4001.
A further announcement will be released once the Annual Report and Audit Report are available
on the website.
30 January 2026
JSE Debt Sponsor
Absa Corporate and Investment Bank (a division of Absa Bank Limited)
Date: 30-01-2026 09:09:00
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