12.11
SELF EVALUATION STATEMENT ON FINANCIAL RESPONSIBILITY
12.11.1
Operating Performance
Figure 12-11: Operating Performance indicators
Operating Incom e
800
ons)
(milli
600
Rand
R a nd (mi l l i o ns)
642
588
619
556
400
660
614
276
200
F09
F10
F11
F12
F13
F14
F15
N et F inance C osts
(milli
120
116
Rand
ons)
Rand (m illions)
160
108
83
117
101
82
71
80
40
F09
F10
F11
F12
F13
F14
F15
N et Profit
ons)
(milli
R a nd (mi l l i o ns)
Rand
600
526
505
503
486
559
532
400
168
200
F09
F10
F11
F12
F13
F14
F15
The forecasted decline in operating profits is due to the low volume growth in water sales combined with
double digit increases in both direct and indirect costs. Net profits are projected to reduce significantly due
to the following impairments:
F'12: Maphumulo BWS Scheme (Phase 1)
R 181m
F'12: Mhlabatshane BWS Scheme
R 150m
F’12: Total
R 331m
F'15: Ozwathini BWS Scheme
R 85m
F'16: Richmond Pipeline
R 98m
The lower debt levels have however contributed to lower finance costs which has had a positive impact on
net profits
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Umgeni Water has three business segments namely Bulk Potable Water, Bulk Wastewater and Section 30
Activities as described below.
Bulk Potable Water
Table 12-33: Performance Ratios
Cost per kilolitre - Bulk water
Net surplus ( R millions)
Umgeni Water
F08
F09
F10
F11
F12
Target
Actual
Actual
2.235
2.020
1.900
2.090
2.330
3.712
470
381
496
485
472
157
F13
F14
F15
3.182
3.313
3.640
492
548
520
Forecast
The cost per kilolitre of bulk potable water is projected to increase from F’10 onwards due to the significant
increases in the direct costs of production and the impairment of rural development projects.
Figure 12-13: Cost per kilolitre – Bulk Water (Cost Components)
Direct Costs
Indirect Costs
Finance charge
4.0
0. 20
0. 23
3.5
0. 17
0. 25
3.0
0. 21
1. 37
R a nd pe r k i l o l i tr e
1. 28
1. 70
2.5
0. 99
1. 04
0. 15
2.0
0. 39
0. 18
0. 26
1.5
1. 01
0. 90
0. 83
0. 75
1.0
0.5
1. 78
0. 80
0. 89
1. 01
1. 94
2. 06
2. 19
2. 32
1. 17
F'08
Actual
F'09
Actual
F'10
F'11
F'12
Forecast
Forecast
Forecast
F'13
Forecast
F'14
Forecast
F'15
Forecast
F'16
Forecast
Bulk Wastewater
The bulk wastewater section of the business segment is not projected to show growth and will maintain an
average net profit of around R 7 million per annum due to relatively low increases in the management fee
and higher costs.
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Section 30 Activities
The revenue from section 30 activities is projected to increase from R 184 million in F’09 to R 206 million
in F’10.
This growth arises from Umgeni Water’s appointment as an implementation agent for the
Department of Water Affairs, the Department of Education and District Municipalities.
12.11.2
Financial Position
Table 12-34: Financial and Solvency Ratios
Umgeni Water
F08
F09
Target
Actual
Actual
1.374
Current Ratio
F10
F11
F12
0.991
2.174
1.915
1.580
F13
F14
F15
1.520
1.723
1.964
Forecast
Net Debt : Equity Ratio
<0.7
1.116
0.482
0.554
0.312
0.341
0.380
0.298
0.214
Debt : Equity Ratio
<0.7
2.040
1.283
0.741
0.647
0.596
0.458
0.377
0.289
Debt Service
>1.75
3.364
5.512
7.108
7.881
2.551
5.303
6.507
7.484
Debt : Asset ratio
Return on Assets
<0.40
0.569
0.486
0.367
0.350
0.337
0.287
0.247
0.208
15% to 20%
21%
23%
18%
14%
7%
13%
13%
12%
(income before interest & taxes divided by total
assets excluding investments)
Umgeni Water’s gearing, although significantly higher than the sector average, has shown a steady
improvement since 2002 and is now projected to reach an acceptable level of 0.741 in F’10 after the
redemption of the UG65 bond.
The reduction in debt impacts positively on the debt to asset ratio which will reduce from 0.486 in F09 to
0.367 in F’10 which is within the targeted ratio of less than 0.40.
Asset productivity as measured by the return on assets ratio shows a declining trend from 23 % in F’09 to
12 % in F15, due to the capital expenditure programme with lower operating profits.
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