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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
TABLE OF CONTENTS PAGE
CORPORATE INFORMATION 1
SENIOR MANAGEMENT TEAM 2
NOTICE - 4th ANNUAL GENERAL MEETING / NOTES 3 - 5
CHAIRMAN’S STATEMENT 6 - 7
MANAGING DIRECTOR’S STATEMENT 8 - 9
BOARD OF DIRECTORS REPORT 10
CORPORATE GOVERNANCE STATEMENT 11 - 12
STATEMENT OF BOARD OF DIRECTORS RESPONSIBILITIES 13
REPORT OF EXTERNAL AUDITORS i - ii
STATEMENT OF COMPREHENSIVE INCOME 14
STATEMENT OF FINANCIAL POSITION 15
STATEMENT OF CHANGES IN EQUITY 16
STATEMENT OF CASH FLOW 17
NOTES TO FINANCIAL STATEMENTS 18 - 24
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
CORPORATE INFORMATION
Incorporation
The company is a limited company by guarantee established under the companies
Act Cap 486 and licensed by Tana Water Services Board through Service Provision
Agreement (SPA) signed on 2nd May 2006 and reviewed on 4th May 2012.
THE BOARD OF DIRECTORS
NAME DESIGNATION
P. K. Munga Chairman
D. Ng’ang’a Managing Director
Fr. J. Gitonga Member (Retired on 2nd May 2013)
G. N. Njeru Member
H. M. Mwithiga Member
S. G. Njogu Member
J. Ng’ang’a Member
P. Kiguta Member
J. Waweru Member
C. E. O. Tana Water Services Board
M. Wambui District Water officer Murang’a East
REGISTERED OFFICE
Muwasco Building, Murang’a
Kangema Road
P. O. Box 1050 - 10200
MURANG’A.
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
BANKERS
Equity Bank Ltd.
P. O. BOX 1060 - 10200,
MURANG’A.
AUDITORS
Auditor General
Kenya National Audit Office
P.O. Box 30084 - 00100
NAIROBI.
SENIOR MANAGEMENT
The Company’s senior management team is as follows:
~ Daniel Ng’ang’a – Managing Director
~ Joseph Maina – Commercial Manager
~ Patrick Mungai – Technical Manager
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
NOTICE OF THE 4TH ANNUAL GENERAL MEETING OF
MURANG’A WATER AND SANITATION COMPANY LIMITED
NOTICE IS HEREBY GIVEN to all members of Murang’a Water and Sanitation Company
that the 4th Annual General Meeting will be held on Friday the 2nd August 2013 at
10.00 a.m. at HOTEL NOKRAS, MURANG’A to conduct the following business:AGENDA
1. Constitution of the Meeting
The Secretary to read the notice convening the meeting after determining that there is
the requisite quorum.
2. Confirmation of minutes
The Secretary to read the minutes of previous AGM held on 2nd May 2012 and to note
any matters arising.
3. Chairman’s Report
To receive and adopt the Chairman’s Report.
4. Managing Director’s Report
To receive and adopt the Managing director’s Report.
5. Report of the Auditors and Financial Statements
To receive the Audited Financial Statements with the Directors’ and Auditors’ reports
thereon for the year ended 30th June, 2012.
6. Appointment and Remuneration of the Auditors
To note that the Auditor General shall continue in office and to authorize the directors
to fix their remunerations.
7. Election of Directors
a) To note that Mrs. Jacinta Ng’ang’a representing Maendeleo ya Wanawake
– Kiharu retired from office and being eligible offered herself for re-election.
b) To note that Mr. Peter Kiguta representing the Kenya National Chamber of
Commerce and Industry-Murang’a retired by rotation, and being eligible
offered himself for re-election.
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
c) To receive and adopt the report from the Selection Committee.
d) To note that Mercy Kimwe and James Waweru left office in March 2013 after
the stakeholders they represented (Municipal Council and County Council of
Murang’a) became defunct.
SPECIAL BUSINESS
8. To consider and pass the following amendments to Memorandum and Articles of
Association:Amendment to Memorandum of Association
a) Paragraph 4 (a) to be amended to read: ‘To be an agent of Tana Water
services Board or her Successor’.
b) Paragraph xv to be introduced as one of the objects of the company to read
‘To protect from alienation all water services assets under its area of
jurisdiction’.
c) Paragraph xvi to be introduced and read: ‘To plough back all surplus income
for the purpose of development and renewal of water assets until such a
time that optimal coverage of water services in the area of jurisdiction is
achieved’.
Amendment to Articles of Association
a) Paragraph 3(a) to be amended from ‘Municipal Council of Murang’a’ to
‘County Government of Murang’a’.
b) Paragraph 3 (n) to be introduced to add to members of the company:
‘Murang’a University College’.
c) Paragraph 31(a) to state that the Directors shall not be less than 5 (five) and
not more than 9 (nine). Also the Paragraph to include: ‘At least ⅓ of the
directors shall be from the other gender’.
d) Paragraph 31 (b), (i) to read that the 2 directors will be from the ‘Executive
arm of the County Government of Murang’a’ in place of ‘local authority’.
9. To consider any other business for which due notification will have been received
by the Hon. Secretary forty eight (48) hours before the Annual General Meeting.
DATED AT ......... Murang’a ......... THIS DAY ....... 27th ........ of ........ June ...... 2013.
COMPANY SECRETARY
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
NOTES
Any member entitled to attend and vote at the meeting and who is unable to attend
is entitled to appoint a proxy to attend and vote on his/her behalf. A proxy need not be a
member of the company. A form of proxy is enclosed. To be valid, the proxy form must
be duly completed and signed by the member and must be received by the Company
Secretary at the registered office of the Company at MUWASCO Building, Off Kangema
Road not later than 48 hours before the meeting or any adjournment thereof.
If the appointed is a corporation or a government office, the instrument appointing
the proxy shall be given under its common seal or under the hand of an officer or duly
authorized attorney of such a corporation or government office.
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
CHAIRMAN’S STATEMENT
To my fellow stakeholders
In the year 2011-2012, the company made
great achievement despite the difficult operating
environment brought about by slow economic growth
and the continued rise in input prices.
Expansion programmes
The company has a production capacity of 4,848m 3
of water per day which comprise of the two treatment
works of Kayahwe and Kiharu. The estimated demand
in our area of jurisdiction is 6,500m3.
To meet the growing demand as well as grow our
market share, the company is undertaking an integrated approach that encompasses
improvement of production capacity, expansion of the network and enhancement of
operational efficiency. In this regard, with collaboration from Tana Water Services
Board and funding from African Development Bank, the bulk water project which will
inject 10,500m3 of water into our distribution system is on course. In addition with the
same collaboration a major sewerage expansion project is underway targeting the
upper areas of Murang’a town including Kiharu and Milimani.
We have continued to build rapport with donors and other financiers and I am delighted
to report that Water Services Trust Fund has funded water extension projects to
Kambirwa and Kabuta areas at a total cost of KShs.36 million. The same institution has
funded construction of public sanitation facilities in town at a cost of KShs.9 million
Financial Performance
I am pleased to report a year of continued progress for Muwasco and present to you
the company results of yet another successful operating year in which our financial
performance showed improvement. Revenues increased to KShs.69.6 million in the
year 2012 from KShs.70.2 million in 2011. This growth is attributed to increased sales
volume since the tariffs remained unchanged.
Our positive sales growth, together with consistent efforts to reduce costs as well as
effective cash management has enabled us to deliver an investment of ksh.13million
in fixed assets.
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
Customer service and social responsibility
Satisfying our customers and creating stakeholder value remain our cherished goals.
As we look into the future, our resolve is to remain focused to achieve these goals
through securing adequate water supply, distribution capacity, reducing losses and
expansion of our customer base.
We are also expanding our social responsibility by providing our services to the low
income areas through construction of water kiosks where water is affordable to all
residents of those areas.
Future Outlook
Our new constitution places the water and sanitation services under the county
government and also declares access to clean water a human right. This, together with
the new Water Act which is under review will present some changes in the sector.
Murang’a town being the headquarters of our County is expected to witness increased
economic activities and therefore demand for water and sanitation services is expected
to continue growing. My board is formulating a comprehensive blueprint to spearhead
the provision and improvement of the services to all the citizens of Murang’a County.
I therefore wish to state that with continued support from the Government, Tana Water
Services Board, business partners and commitment of our staff, the company is poised
for sustained success.
I wish also to urge our stakeholders to support every effort being put forward by the
company for the benefit of all.
Tribute
Finally, I pay tribute to my colleagues in the MUWASCO Board of Directors, Tana Water
Services Board, the Government and our customers for their support, and to all staff of
MUWASCO for their relentless efforts in ensuring the success of the company.
Thank you.
P. K. MUNGA
CHAIRMAN, BoD
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
MANAGING DIRECTOR’S STATEMENT
General overview
During the year under review; 2011/12, strategies
aimed at securing adequate water supply, expanding
water access to the residents, improving the quality
of supply and service to our customers, as well as
the financial performance took the center stage of our
operations. Accordingly, the company embarked on
negotiations with donors and other financiers to source
for funds for investment in infrastructure expansion and
rehabilitation.
Company performance
The company’s performance has continued to improve despite the many challenges
facing it. The performance has been slowed by the continued use of water and
sewerage tariffs which are not cost recovering and therefore investment in expansion
and rehabilitation of the infrastructure has been affected.
However, the company has formed a good rapport with our external financiers and
partners and we expect more support in the coming year in the following projects:1. Completion and commissioning of the bulk water project funded by ADB through
Tana Water Services Board (KShs. 517 million).
2. Completion and commissioning of the Kambirwa water project funded by WSTF
(KShs.17 million).
3. Completion and commissioning of the Kabuuta water project funded by WSTF
(KShs. 20 million).
4. Completion and commissioning of two Public sanitation facilities in Murang’a
town funded by WSTF (KShs. 9 million).
5. Completion of Murang’a urban sewerage project funded by ADB through Tana
Water Services Board (KShs. 175 million).
6. Finalize the funding agreement with the World Bank for rehabilitation and
extension of our water reticulation system (KShs. 400 million)
7. Non-Revenue Water management tools and capacity building through the
benchmarking project funded by EU members through WASPA.
Human resource
The company’s human resource has continued to be a valuable asset in achieving
business objectives, targets, customer satisfaction and stakeholder expectations.
Consequently, the company’s work ethics are founded on team-work, staff
empowerment,
innovation, professionalism, equal opportunity and integrity.
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
In order to enhance staff productivity, the company has embraced a performance
management system as a basis for rewarding and identifying areas of improvement.
Information Communication Technology (ICT)
The company recognizes that ICT is the backbone of the company’s business. It is
vital for the establishment and support of all existing and new business and customer
service initiatives, as well as company’s operations.
The company has therefore continued to embrace new technology and has during
the year under review acquired a new billing and customer service software. It has
also operationalized the use of Mpesa services for bills payment as part of improved
customer service.
Health and the Environment
The company has continued to expand its services to the un-served areas where raw
water has been used for domestic use. By providing clean, safe and affordable water
to such areas, the company is playing a major role in improving the health of the
residents.
The company has also invested in maintenance of our sewerage ponds and conducting
environmental audits to achieve a clean and safe environment. Continuous laboratory
tests and analysis of both treated water and water discharged from our sewerage
treatment works ensures that we comply with the stringent regulatory standards.
Conclusion
We acknowledge that our company plays a major role in the socio-economic
development of our County. We shall therefore continue to actively pursue strategies
aimed at increasing access to safe water, improving the quality of supply, services
to our customers and securing our sustainability. With the commitment of our staff,
the guidance of the board, support of the stakeholders and the Government, we are
confident that we shall continue to satisfy our customers’ expectations.
D. NG’ANG’A
MANAGING DIRECTOR.
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
REPORT OF THE BOARD OF DIRECTORS
The Board of Directors have the pleasure in submitting their annual Report and
Financial
Statements for the Period ended 30 JUNE 2012.
PRINCIPAL ACTIVITY
The company’s main activity is the provision of wholesome clean water and sanitation
services to the residents of Murang’a municipality and its environs.
INCOME
The results of activities for the year show a surplus of KShs. 626,691 as set out on
page fourteen of the accounts.
THE BOARD OF DIRECTORS
The board members who held office during the year were as indicated on page three
of the accounts.
AUDITORS
The Auditor General was appointed as auditor and has expressed willingness to
continue in office in accordance with the public Audit Act 2003.
By order of the Board
……………………………….
D. NG’ANG’A
MANAGING DIRECTOR
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
CORPORATE GOVERNANCE STATEMENT
Corporate governance is the process and structure used to direct and manage business
affairs of the company towards enhancing prosperity and corporate accounting with
the ultimate objective of realizing stockholder’s long term value.
The company conducts its operations in accordance with the principles of good
corporate governance as provided in the Water Services Regulatory Board (WASREB)
guidelines and Water Act 2002 provisions.
Board of Directors
The composition of the Board is compliant with good corporate governance practices
and WASREB regulations. The role of the chairman and the Managing Director are
segregated. The Managing Director is in charge of the day to day running of the
business of the company. A non-executive director acts as the chairman of the Board.
The current Board is composed of Managing Director, the C.E.O Tana Water Services
Board and nine other directors drawn from various stakeholders. The Board is therefore
composed of committed individuals with diverse and complementary skills to ensure
that there is sufficient wealth of experience at Board level.
Board meetings
Board Meetings are held every quarter and in exceptional circumstances as dictated
by demand exigencies of company operations.
Board committees
The Board has approved the delegation of certain authorities to the Board sub
committees where applicable, and to the management.
The Board has three committees which are guided by clear terms of reference. The
committees are instrumental in monitoring the company operations, systems and
internal controls. The committees are as follows:
Audit committee
The members of this committee are all non-executive directors. All the members meet
minimum financial literacy standards. The committee meets four times in a year and the
managing Director and the internal auditor attend most meetings of the committee.
The committee is responsible for ensuring that the Company’s internal controls are
adequate and that the assets at the disposal of the company are safe-guarded. It
ensures that proper polices and internal control procedures are in place and also
helps to ensures that the set policies and procedures are adhered to and advices on
improvements and introduction of new control procedures.
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
Finance and administration committee
The committee comprises of three non executive directors and C.E.O Tana water
services Board. The committee is chaired by a non-executive director and meets four
times a year.
The role of the committee is to monitor and review the operational and financial
performance of the company against key performance indicators, identifying
shortcomings and ensuring corrective measures and action are taken. The committee
also reviews the company’s investment plans in capital expenditure and recommends
to the board for approval. The committee has also the responsibility of ensuring that
the systems of financial controls are effectively administered.
This committee as well has the responsibility of ensuring the company has the right
staff, at the right place and doing the right thing. More so, the committee will ensure
that staff welfare is guaranteed.
Their terms of reference includes but not confined to human resource planning,
employee welfare, recruitment, training, performance appraisal, discipline, health and
safety and HIV/ AIDS.
Technical committee
The committee comprises of three non executive directors and C.E.O Tana water
services Board. The committee is chaired by a non-executive director and meets four
times a year.
This committee oversees planning, coordination and execution of development and
rehabilitation projects to ensure expansion of reticulation system and to improve
efficiency in water production and distribution including sewerage network
Directors’ Remuneration
The remuneration of non-executive directors consists of sitting allowances in connection
with Board and committee meetings.
Going concern
The directors confirm that the company has adequate resources to continue in business
for the foreseeable future and therefore the continued use of the going concern as a
basis when preparing financial statements.
SIGNED:
-------------------------------- -------------------------------CHAIRMAN MANAGING DIRECTOR
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
STATEMENT OF THE BOARD OF DIRECTORS’ RESPONSIBILITY
The Companies Act Cap 486 requires the Board of Directors to prepare financial
statements for each year that give a true and fair view of the state of affairs of the
Company as at the end of the financial year and of the results of the activities for that
year. It also requires the Board to ensure that the Company maintains proper
accounting
records which disclose with reasonable accuracy the financial position of the Company.
The Board is also responsible for safeguarding the assets of the Company.
The Board of Directors accepts responsibility for the financial statements, which have
been prepared using appropriate accounting policies supported by reasonable and
prudent judgements and estimates, in conformity with International Financial Reporting
Standards and the requirements of the Companies Act.
The Board is of the opinion that the financial statements give a true and fair view of
the state of affairs of the Company and of its income and expenditure. The Board of
Directors further accepts responsibility for the maintenance of accounting records that
may be relied upon in the preparation of the financial statements, as well as systems
of control.
Nothing has come to the attention of the Board of Directors to indicate that the
Company will not remain a going concern for at least twelve months from the date of
this statement.
SIGNED: ------------------------------ ---------------------CHAIRMAN DIRECTOR
MURANG’A WATER AND SANITATION COMPANY LIMITED
Report of the External Auditor
KENYA NATIONAL AUDIT OFFICE
Website : www.kenao.go.ke
P. O. Box 30084 - 00100
NAIROBI
Telephone : + 254 20 342330
Fax : +254 20 311482
E-mail : eagakenao.go.ke
REPUBLIC OF KENYA
REPORT OF THE AUDITOR-GENERAL ON MURANG’A WATER AND
SANITATION COMPANY LIMITED FOR THE YEAR ENDED 30 JUNE 2012.
REPORT ON THE FINANCIAL STATEMENTS
I have audited the accompanying financial statements of Murang’a Water and Sanitation
Company Limited set out on pages 14 to 24, which comprise the statement of financial
position as at 30 June 2012, and the statement of comprehensive income, statement of
changes in equity and statement of cash flows for the year then ended, and a summary
of significant accounting policies and other explanatory information in accordance with
the provisions of Article 229 of the Constitution of Kenya and Section 14 of the Public
Audit Act, 2003. I have obtained all the information and explanations which, to the best
of my knowledge and belief, were necessary for the purpose of the audit.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with International Financial Reporting Standards and for such
internal control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or
error.
The management is also responsible for the submission of these financial statements
to the Auditor-General in accordance with the provisions of Section 13 of the Public
Audit Act, 2003.
Auditor-General’s Responsibility
My responsibility is to express an opinion on these financial statements based on
the audit and report in accordance with the provisions of Section 15(2) of the Public
Audit Act, 2003 and submit the audit report in compliance with Article 229(7) of the
Constitution of Kenya. The audit was conducted in accordance with International
Standards on Auditing. Those standards require compliance with ethical requirements
and that the audit be planned and performed to obtain reasonable assurance about
whether the financial statements are free from material misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the financial statements. The procedures selected depend on the
auditors judgement, including the assessment of the risks of material misstatement
of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
and fair presentation of the financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by the management, as well as evaluating the overall
presentation of the financial statements.
I believe that the audit evidence obtained is sufficient and appropriate to provide a
basis for my qualified audit opinion.
Basis for Qualified Opinion
Unaccounted For Water
During the year review, the company produced a total of 1,606,841 cubic meters (m 3)
of water. However, and out of this volume, only 921,700m3 was billed to customers.
The balance of 685,141m3 or approximately 43% of the total volume represented
Unaccounted For Water (UFW), which is 18% over and above the allowable loss of
25% in accordance with the Water Services Regulatory Board guidelines.The UFW of
43% may have resulted in loss of sales estimated at KShs.15,839,765. The significant
level of UFW may negatively impact on the Company’s profitability and its long term
sustainability.
Qualified Opinion
In my opinion, except for the effects of the matter described in the Basis for Qualified
Opinion paragraph, the financial statements present fairly, in all material respects, the
financial position of the Company as at 30 June 2012, and of its financial performance
and its cash flows for the year then ended, in accordance with International Financial
Reporting Standards and comply with both the Water Act, 2002, and the Companies
Act, Cap 486 of the Laws of Kenya.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
As required by the Kenya Companies Act, I report based on my audit, that:
i) I have obtained all the information and explanations which, to the best of my
knowledge and belief, were necessary for the purpose of the audit;
ii) In my opinion, proper books of accounts have been kept by the Company, so far
as appears from my examination of those books; and,
iii) The Company’s statement of financial position and statements of comprehensive
income are in agreement with the books of account.
Edward R. O. Ouko, CBS
AUDITOR-GENERAL
Nairobi
24 May 2013
ii
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR
ENDED 30 JUNE 2012
INCOME NOTES 2011/12
(KShs)
2010/11
(KShs)
Revenue Grants 2 15,335,365 10,886,419
Billings 3 70,255,025 65,949,011
Other incomes 4 2,788,563 3,407,518
88,378,953 80,242,948
EXPENDITURE
Personal emoluments 5 30,899,579 27,926,137
Administration expenses 6 17,461,650 19,523,282
Production and maintenance
expenses
7 31,265,544 26,768,922
General office expenses 8 2,187,165 1,955,792
Audit fees 18 334,700 249,000
Depreciation 9 5,603,624 4,995,702
87,752,262 81,418,835
SUPRLUS / DEFICIT FROM
OPERATING ACTIVITIES
626,691 (1,175,887)
V.A.T Refunds 10 - 1,319,451
TOTAL (DEFICITS) /SURPLUS 626,691 143,564
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012
NON CURRENT ASSETS
NOTES 2011 / 2012 RESTATED
2010 / 2011
Property, plant and Equipments 9 67,110,554 44,688,841
CURRENT ASSETS
Receivables
Other current assets
Cash and cash equivalent
11
13
12
23,581,426
1,420,287
2,664,625
17,822,855
1,380,165
2,122,516
TOTAL CURRENT ASSETS 27,666,338 21,325,536
CURRENT LIABILITIES 14 (19,464,461) (12,485,902)
NET CURRENT ASSETS 8,201,877 8,839,634
TOTAL NET ASSET 75,312,431 53,528,475
FINANCED BY
Revenue Reserves 15 17,168,428 16,541,737
Capital Reserves 16 33,275,181 33,275,181
G.O.K Capital Grants 17 24,868,822 3,711,557
75,312,431 53,528,475
The financial statements on pages 14-24 were approved by the Board of Directors on
10/09/2012 and were signed on its behalf by:
............................... .................................. .................................
P.K MUNGA P. KIGUTA D. NG’ANG’A
CHAIRMAN DIRECTOR MANAGING DIRECTOR
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012
CAPITAL
RESERVES
(KSHS)
G.O.K
CAPITAL
GRANT
REVENUE
RESERVES
(KSHS)
TOTALS
(KSHS)
Balance at 1 July 2010 33,275,181 - 16,398,173 49,673,354
Funds received during
the year
3,711,557 3,711,557
Surplus for the year - - 143,564 143,564
Balance at 30th June
2011
33,275,181 3,711,557 16,541,737 53,528,475
Balance at 1st July
2011
33,275,181 3,711,557 16,541,737 53,528,475
Funds received during
the year
- 21,157,265 21,157,265
Surplus for the year - - 626,691 626,691
Balance at 30th June
2012
33,275,181 24,868,822 17,168,428 75,312,431
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FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
STATEMENT OF CASHFLOW FOR THE YEAR ENDED 30 JUNE 2012
2011 / 2012
(KSHS)
2010 / 2011
Cash Flows from operating activities NOTES (KSHS)
(Deficit)/ Surplus generated from operating
activities
626,691 143,564
Adjustment for: Non cash items
Depreciation 9 5,603,624 4,995,702
Provision for bad debts 6 & 11 333,908 (145,317)
Provision for audit fees 18 312,500 200,000
Amortization 17 (136,946) Adjusted Surplus From operating
Activities Before Working Capital
changes
6,739,777 5,193,949
Changes in working capital
(Increase)/Decrease in receivables
Increase /(Decrease) in Current Liabilities
(Increase)/Decrease in other current asset
(6,092,480)
6,666,060
(40,122)
(612,596)
384,378
253,151
Net cash flows From Operating
Activities
7,273,235 5,218,882
Cash flows from Investing Activities
Purchase of P.P.E 9 (28,025,338) (11,516,664)
Net Cash flows from investing activities (28,025,338) (11,516,664)
Cash flows from Financing Activities
G.O.K Capital Grant 17 21,294,212 3,711,557
Net Cash flows from Financing Activities 21,294,212 3,711,557
Net Decrease/increase in cash & cash
equivalents
542,109 (2,586,225)
Cash and Cash equivalent at start of year 2,122,516 4,708,741
Cash and Cash equivalents at end of
year
12 2,664,625 2,122,516
18
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
NOTES
1) ACCOUNTING POLICIES
a) Basis of preparation
The Financial Statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) under the historical cost convention.
b) Revenue Recognition
The company adopts the accrual basis of accounting for revenue. Revenue is
recognized when it is earned and represents the amount received from the
billings of Water & sewerage and miscellaneous income received from the sale
of tenders and new connections. Expenses are recognized when incurred.
c) Property and Equipment
The Water Act 2002 recognizes Tana water services board as the asset holder of
assets held by Company in the financial year 2011/2012. The company pays
Tana Water Services Board administration cost of 9% based on the company
revenue collected.
Property and equipment are stated at historical cost less accumulated
depreciation. Depreciation is calculated on the reducing balance basis to write
down the cost of each asset to its residual value over its estimated useful life as
follows:
Per Annum RATE %
- Buildings 2.5
- Motor Vehicles 25.0
- Computers and Photocopiers 30.0
- Pipes 2.5
- Equipments and Tools 12.5
- Depreciation is provided for the full year irrespective of the month of purchase
or disposal.
d) Receivables
Trade receivables are recognized and carried at original amount less any
unrecoverable amounts.
e) Reserves
Reserves of the company comprise revenue reserves which represents the
excess of the income over recurrent expenditure.
Capital reserves represent net assets capitalized at the formation of the company
19
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
The water act 2002 and the company’s Articles of association prohibit distribution
of reserves to members and reserves are supposed to be ploughed back to the
system in accordance with the water act.
f) Incorporation
The company is a limited company by guarantee established under the
companies Act Cap 486 and licensed by Tana Water Services Board through
SPA reviewed on 4th May 2012.
g) Retirement benefits
The company and employees contribute to Local Authority Provident Fund
(LAPF) a statutory pension scheme. & Barclays Securities services which is a
National water conservation & pipeline corporation staff Superannuation
Scheme.
h) Reporting currency
These accounts are presented in Kenya Shillings (KShs).
i) Allowance for credit risk
The company provides 10% allowance for credit risk against outstanding water
and sewerage debts.
2. GOK GRANTS
Accounting for Government grants
The amount of government grants comprise both capital and recurrent
expenditure.
The grants have been recognized and accounted for as per IAS N0.20.
REVENUE GRANTS 2011 / 12
(KSHS)
2010 / 11
(KSHS)
CHEMICALS 715,000 724,500
AMORTIZATION-WATER
METERS & OTHER CAPITAL GRANTS
455,82
3
41,287
ELECTRICITY 4,300,000 900,000
SALARIES PAID TO
SECONDED STAFFS
9,864,54
2
9,220,632
TOTALS 15,335,365 10,886,419
20
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
3. Revenue.
The principal activity of the company is provision of water and sewerage services
through which the company generated revenue as follows
BILLINGS 2011/2012
(KSHS)
RESTATED
2010/2011
(KSHS)
WATER 50,159,255 48,818,960
SEWERAGE 14,344,865 12,402,801
METER RENT 3,495,700 3,200,250
OTHER BILLINGS 780,705 RE- CONNECTION FEES 1,474,500 1,527,000
TOTALS 70,255,025 65,949,011
4) OTHER INCOMES
INCOME
WATER CONNECTION FEES 1,212,855 1,655,317
SEWER CONNECTION FEES 297,520 155,250
COMPENSATION
(ROAD RE-ROUTING PIPES)
981,845 1,590,448
DISCOUNT & INTEREST RECEIVED 261,763 2,515
SURCHARGES 34,580 3,988
TOTALS 2,788,563 3,407,518
5) PERSONAL EMOLUMENTS
SALARIES 16,969,566 14,877,084
SALARIES (G.O.K GRANT) 9,864,542 9,220,632
LEAVE ALLOWANCES 256,559 230,130
NSSF COMPANY CONTRIBUTIONS 109,000 96,200
PENSION CONTRIBUTION 528,954 474,669
STAFF GRATUITY 1,198,223 1,072,411
CASUAL WAGES 1,972,734 1,955,011
TOTAL PERSONAL EMOLUMENTS 30,899,578 27,926,137
21
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
6) ADMINISTRATION EXPENSES 2011/2012
(KSHS)
RESTATED
2010/2011
(KSHS)
TRAINING 691,350 1,080,602
ADVERTISING 431,125 616,728
BOARDS,COMMITTEES, 966,564 1,572,402
MOTOR VEHICLE EXPENSES 1,684,473 1,675,653
CONSULTANCY & OTHER PROFESSIONAL FEES 549,400 1,534,338
SUNDRY EXPENSES 30,140 11,855
INSURANCES 543,563 545,488
MEMBERSHIP AND SUBSCRIPTIONS 489,577 146,110
COURIER & POSTAL SERVICES 58,835 36,495
TELEPHONE, E-MAIL, FASCSIMILE &
COMMUNICATION
448,911 403,408
LICENCES & PERMITS 57,200 566,260
CATERING SERVICES 244,886 141,433
CONTRACTED GUARDS SERVICES 598,500 570,000
TWSB ADMINISTRATION COST 6,021,087 6,104,743
WASREB LEVY 669,009 678,306
BANK SERVICE COMMISSION & CHARGES 111,380 403,113
LEGAL FEES 8,000 153,000
MEETING COSTS ,CONFERENCES & SEMINARS 323,713 996,477
TRAVEL COST 140,675 130,440
INCREASE(DECREASE )FOR CREDIT RISK 333,908 (145,316)
SUBSISTENCE ALLOWANCES 3,059,354 2,301,747
17,461,650 19,523,282
7) PRODUCTION & MAINTENANCE EXPENSES
ELECTRICITY 19,794,808 15,671,431
OPERATING AND MAINTENANCE COST 7,158,037 7,141,360
CHEMICALS 3,991,330 3,635,890
WATER ABSTRACTION FEE-WARMA 321,369 320,241
31,265,544 26,768,922
8) GENERAL OFFICE EXPENSES
STAFF UNIFORMS 438,254 565,787
GENERAL OFFICE SUPPLIES 1,656,901 1,315,290
NEWSPAPERS, MAGAZINES & PERIODICALS 92,010 74,715
2,187,165 1,955,792
22
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
9) PROPERTY PLANT & EQUIPMENTS (KSHs)
COSTS 1) BUILDINGS
2) PIPES &
FITTINGS
3) EQUIPMENTS
4) MOTOR
VEHICLES
& CYCLES
5) COMPUTERS
& COMPUTER
NETWORKING
6.WORK IN
PROGRESS
TOTALS
Cost as at 1st July
2011
6,880,713 9,205,797 35,754,544 4,811,000 2,098,100 1,281,845 60,031,998
Additions during
the year
3,358,021
4,666,012 7,109,480 1,420,650 14,829,196 31,383,359
WIP Transferred
To building
- - - - - (3,358,021) (3,358,021)
TOTAL as at
30th June 2012
10,238734 13,871,809 42,864,024 4,811,000 3,518,750 12,753,020 88,057,336
DEPRECIATION
As at 1st July 2011 646,664 465,516 9,849,795 3,001,579 1,379,604 - 15,343,158
Charge for the
year
239,802 335,157 3,934,565 452,355 641,745 - 5,603,624
Total accumulated
depreciation
886,466 800,673 13,784,360 3,453,934 2,021,349 - 20,946,782
NET BOOK
VALUE
As at 30th June
2012
9,352,268 13,071,136 29,079,663 1,357,066 1,497,401 12,753,020 67,110,554
NET BOOK
VALUE
As at 30th June
2011
6,234,049 8,740,281 25,904,749 1,809,421 718,496 1,281,845 44,688,841
Class 3 Equipment comprises of meters accessories and other water networks
Office and lab equipments, furniture and fitting including sewer networks
W.I.P Class 6 comprises the on going construction works of Kambirwa water
project
During the financial year 2011/2012, 253 water meters were issued by the
Tana Water Services Board (TWSB) to the Company
23
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
10) REFUNDS 2011 /12
(KSHS)
2010 / 11
(KSHS)
V.A.T REFUNDS - 1,319,451
TOTAL - 1,319,451
11) RECEIVABLES
Trade Receivables 20,802,307 17,463,227
Other receivables 4,859,350 2,105,950
TOTAL RECEIVABLES 25,661,657 19,569,177
Less allowance for credit risk (2,080,231) (1, 746,322)
NET BOOK VALUE 23,581,426 17,822,855
12) CASH & CASH EQUIVALENT
The company held four bank accounts with Equity, one with Family Bank and M-Pesa,
the accounts are to be used for revenue and Deposit purposes. The fixed deposit
account had been used to obtain a bank guarantee in favour of Kenya Power and
lightening company in lieu of Electricity Deposits for the two water treatment works
electricity accounts. The cash and cash equivalent were as follows:BANK ACCOUNT 1- Savings 532,050 184,354
BANK ACCOUNT 2- Current 452,402 442,399
BANK ACCOUNT 3 - W.S.T.F
PROJECT
88,003 45,735
BANK ACCOUNT 4 - Current 293,645 138,128
M-PESA 49,408 FIXED DEPOSIT ACCOUNT 1,200,000 1,200,000
CASH AT HAND 49,117 111,900
TOTALS 2,664,625 2,122,516
13) OTHER CURRENT ASSETS
Inventories 1,221,368 1,257,550
Prepayments & Deposits 198,919 122,615
TOTALS 1,420,287 1,380,165
24
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
14) CURRENT LIABILITIES
2011/2012
(KSHS)
2010/2011
(KSHS)
Customers Prepayments 546,711 561,694
Suppliers Creditors 5,277,429 2,943,997
Other Creditors 664,424 223,080
Provision for audit fees 2011/12 312,500 450,000
Accrued bills (payables) 6,704,386 4,602,827
Customer Deposits 3,217,929 2,500,546
Gratuity Payable 1,548,522 1,203,758
V.A.T WHT Payable 1,192,560 19,464,461 12,485,902
15) REVENUE RESERVES
Brought forward 16,541,737 16,398,173
Current period 626,691 143,564
Carried forward 17,168,428 16,541,737
16) CAPITAL RESERVES
Brought forward 33,275,181 33,275,181
Carried forward 33,275,181 33,275,181
17) G.O.K CAPITAL GRANT
Brought Forward 3,711,557
Current W.S.T.F PROJECTS 17,536,915 3,355,344
WATER METERS & OTHER FITTINGS 3,757,297 356,213
Transferred to Revenue 2010/11 (36,336)
Completed W.S.T.F Project (16,727)
Amortization Ablution Block (83,884)
TOTALS 24,868,822 3,711,557
18) AUDIT FEE 2011/2012 2010/2011
Current year Provision 312,500 249,000
V.A.T Audit 23,200
Overprovision 2010/11 (1,000)
Income and Expenditure 334,500 249,000
25
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
NOTES
26
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED
27
FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2012
MURANG’A WATER AND SANITATION COMPANY LIMITED__