ETHEKWINI METROPOLITAN MUNICIPALITY - TMMI - Availability of Annual Financial Statements

TMMI - Availability of Annual Financial Statements

ETHEKWINI METROPOLITAN MUNICIPALITY
JSE alpha code: TMMI
("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 2023 ("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 2022 ("Prior Period") relating to:
1. The increase in consumer debtors is mainly due to changes relating to property rates and service charges
   (Water and Sanitation). The rates adjustments due to re-valuations backdated to previous financial years
   and the deferral of rates.

2. The decrease in payables from exchange transactions due to balances that were written off pertaining
   to the previous reporting period. The balances written off were in respect of trade payables, other
   payables, and retentions where they were either prescribed or no longer valid based on supporting
   documents provided.

3. The decrease in property, plant and equipment is mainly due to balances that were written off
   pertaining to the previous reporting period. These balances written off were in respect of assets where
   there are no expected future economic benefits.

4. The decrease in property, plant, and equipment due to balances that were written off pertaining to the
    previous reporting period. These balances written off were in respect of assets where there are no
    expected future economic benefits.

5. The decrease in consumer deposits is mainly due to balances relating to consumer deposits billed in the
   prior year but not yet paid. These balances were previously reported under other debtors within
   receivables from exchange transactions instead of reducing consumer deposits.

6. The decrease in receivables from exchange transactions to balances relating to consumer deposits billed
   in the prior year but not yet paid during that reporting period and reclassifications to receivables from
   non-exchange transactions.

7. The increase in receivables from non-exchange transactions is due to reclassifications from receivables
   from exchange transactions. The reimbursive grant receivable was previously classified as part of other
   debtors within receivables from exchange transactions.

8. The decrease in unspent conditional grants and receipts is mainly due to the recognition of revenue in
   the year in which conditions were met after having scrutinized the grant conditions in accordance with
    GRAP principles in relation to when the expenditure was incurred.

9. Cash flow statement, the adjustments have resulted in restatement in the comparative cash flow

Full details of the restatements are disclosed in note 45 of the 30 June 2023 AFS.

In addition, the AGSA audit report, on page 450 of the 2022/23 Annual Report, contains emphasis of
matters in relation to:

1. Recognition of a provision for debt impairments on consumer debtors, the recoverability of these
   amounts was doubtful.
2. Material water losses were incurred by the Municipality. The losses arose from ageing and
   deteriorating infrastructure, uncontrolled and unplanned rapid rural expansion, illegal connections,
   and intermittent water supply.
3. Material water losses were incurred by the Municipality. The losses arose as a result of transmission
   and distribution losses as well as illegal connections.
4. Various legal claims were lodged against the Municipality. The ultimate outcome of the claims could
   not be determined.
5. Materially underspent capital budget which details thereof are disclosed in AFS.


The AGSA audit opinion, on page 450 of the 2022/23 Annual Report, is not modified in respect of these
matters.

The AGSA further identified other material irregularities and is in the process of evaluating further actions
to be taken to ensure resolution of the material irregularities and they will be reported in AGSA audit
report for the next financial year. Furthermore, a progress report was included on the previously reported
material irregularities:

1. Procurement of surgical face masks at with tie-on at prices higher that the limits in National Treasury
   circular.
2. Procurement of N95 masks at with tie-on at prices higher that the limits in National Treasury circular.
3. Suspected Material Irregularity – payments made to supplier for services not rendered.


The final AFS and Auditor-General Report of eThekwini are included in the draft Annual Report available
on the Municipality's website at

https://www.durban.gov.za/storage/Documents/Performance%20Monitoring%20and%20Evaluation/An
nual%20Reports/EThekwini%20Municipality%202022%20-%202023%20Annual%20Report.pdf

and for inspection at 263 Dr Pixley Ka Seme Street, Durban, 4001.

31 January 2024

JSE Debt Sponsor
Absa Corporate and Investment Bank (a division of Absa Bank Limited)

Date: 31-01-2024 05:30:00
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