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BIEM - Availability of the Annual Financial Statements for the year ended 30 June 2017
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”)
Bond Code: EMM01
ISIN: ZAG000078916
Bond Code: EMM02
ISIN: ZAG000084526
Bond Code: EMM03
ISIN: ZAG000094848
Bond Code: EMM04
ISIN: ZAG000105669
Bond Code: EMM05
ISIN: ZAG000115148
Bond Code: EMM06
ISIN: ZAG000127358
Bond Code: EMM07
ISIN: ZAG000145194
Bond Code: EMM07P
ISIN: ZAG000145384
AVAILABILITY OF THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE
2017; RESTATEMENT AND EMPHASIS OF MATTERS
In terms of section 7.4 of the JSE Limited Debt Listings Requirements, note holders are hereby advised that
the Issuer’s Annual Financial Statements for the year ended 30 June 2017 are available on Ekurhuleni’s
website.
The document can be viewed or downloaded through the below link:
http://www.ekurhuleni.gov.za/2016-17
The City of Ekurhuleni’s 2015/16 comparative figures were restated due to material errors that were
identified and reclassification of amounts which were previously disclosed. Presented below are those
items contained in the statement of financial position and statement of financial performance that have
been affected by prior-year adjustments.
Property plant and equipment, investment property, projects completed in prior years were only
capitalised in the current year as projects close out reports were provided in the current year, and certain
projects were derecognized as they did not meet the subsequent capitalisation requirements. Land that
was previously reserved for social housing units were brought back as they will no longer be used for
social housing purposes. Other assets were reclassified between the asset categories as they either
categorised incorrectly between the various types, were found or removed from the relating registers..
The correction of the errors results in adjustments as follows (detected in 2017):
Statement of Financial Position
Work-in-progress(opening balance) 01/07/2015) (2 243 183 502) (2 243 183 502)
Land(opening balance) 01/07/2015) 299 367 041 299 367 041
Community assets(opening balance 01/07/2015) 180 253 745 180 253 745
Other assets(opening balance 01/07/2015) 69 502 733 69 502 733
Investment property(opening balance 01/07/2015) (121 853 038) (121 853 038)
Intangible assets(opening balance 01/07/2015) (217 976 248) (217 976 248)
Infrastructure assets(opening balance 01/07/2015) 1 274 224 200 1 274 224 200
Finance lease obligation-current(01/07/2015) 16 275 0
Trade & other payables from exchange (183 427) 0
Provision-current(01/07/2015) 5 421 550 0
Finance lease obligation- non-current(01/07/2015) (94 284) 0
Non-controlling interest 148 468 0
Accumulated surplus(opening balance 01/07/2015) (754 356 487) (759 665 068)
Statement of Financial Performance
Depreciation for the year 33 131 966 33 131 966
Impairment and derecognition loss 165 705 123 165 705 123
Finance costs 31 446 0
Repairs and maintenance (4 637 541) 0
Employee costs 89 161 0
Impairment and derecognition loss (556 911) 0
Net surplus for the year (193 763 244) (198 837 089)
Detail of the Restatements
Statement of Financial Position
Majority of the prior period errors emanated from the completed capital projects (Work-In-Progress) that
were not capitalised in previous financial years, details of case are as follows:
1. Work in progress, community assets, other assets and infrastructure assets relate to projects
completed in the prior year which were only capitalised in the 2016/2017 financial year as the
projects close out reports were only finalised and presented in the 2016/2017 financial year.
Certain roads infrastructure capital projects had to be derecognized as they relate to rehabilitation
purposes.
2. Land that was previously reserved for social housing units were brought back as they will no longer
be used for social housing purposes.
3. Municipal properties rented to tenants, who operated shops on these properties in townships, were
transferred to these tenants so that they became the title holders of these properties.
4. In terms of intangible assets certain projects were derecognized as they did not meet the
subsequent capitalisation requirements of an asset and certain projects were derecognized as they
will no longer be developed, like ERM.
Statement of Financial Performance
Prior period errors regarding:
1. Depreciation on assets capitalised that were not previously depreciated.
2. Impairment and de recognition loss in terms of intangible assets as mentioned in no.4 above.
The Auditor General Report contains Emphasis of Matters and an extract is set out below:
Emphasis of matters
1. Material uncertainties
With reference to note 45 to the consolidated and separate financial statements, the group is the
defendant in various lawsuits. The outcome of these matters cannot presently be determined
and/or reliably measured, therefore, no provision for any liabilities that may result has been made
in the consolidated and separate annual financial statements.
2. Restatement of corresponding figures
As disclosed in note 48 to the consolidated and separate financial statements, the corresponding
figures for 30 June 2016 have been restated as a result of errors discovered in the financial
statements of the group for the year ended 30 June 2017.
3. Material impairments
As disclosed in the note 14 to the consolidated and separate financial statements, the consumer
debtor’s balance has been significantly impaired. The allowance for impairment of consumer
debtors amounts of R10 456 750 395(2015-2016:R7 966 251 084) which represents 69 %( 2015-
2016:60%) of total consumer debtors. The contribution to the provision for debt impairment was R1
438 672 537(2015-16:R1 447 471 856)
4. Material losses
As disclosed in note 57 to the consolidated and separate financial statements, material electricity
losses amounting to R1 135 074 900(2015-16:R1 327 872 680) were incurred which represent
12.39% (2015-16:15.64%) of total electricity purchased. Technical losses amounted to R66 959
419(2015-16:R78 344 488),Non-technical losses amounted to R73 666 361(2015-16:R129 334
799)
As disclosed in note 53 to the consolidated and separate financial statements, material water
losses amounting to R787 774 009(2015-16:R759 000 125) were incurred which represent 30.57
%( 2015-16: 30.6%) of the total water purchased. Technical losses amounted to R118 166
101(2015-16: R113 850 019).Non-technical amounted R122 658 413(2015-16: R118 404 020)
19 February 2018
Debt Sponsor
Absa Bank Limited (acting through its Corporate and Investment Banking Division)
Date: 19/02/2018 11:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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