PORTFOLIO COMMITTEE OF WATER AND SANITATION
PRESENTATION TITLE
ON
Presented by:
WATER
BOARDS
Name Surname
Directorate
Date
Presented by:
Ms Margaret-Ann Diedricks
Director-General
Date:25 February 2015
(2013/14 FINANCIAL YEAR)
25 FEBRUARY 2015
Contents
• Part 1: Overview by the DirectorGeneral
• Part 2: Water Boards
2
Part 1
• Overview by the Director-General
3
PURPOSE
The purpose of this presentation is to
provide an overview on the performance of
the 12 Water Boards for the 2013-2014
financial year, based on an analysis of their
Annual Reports for 2013/14.
4
WATER BOARDS
The Water Boards listed during 2013/14 were :
Rand Water
Mhlathuze Water
Lepelle Northern Water
Amatola Water
Bushbuckridge Water
Bloem Water
Magalies Water
Overberg Water
Umgeni Water
Sedibeng Water , Botshelo and
Pelladrift
Bushbuckridge and Botshelo Water were disestablished on
01 April 2014 and Pelladrift in October 2014. Figures for these
water boards are included up to that date.
5
Overview of water boards
• Water Boards are public entities and they conduct their
primary business in accordance with a mandate derived
from legislation and government/sector policies and
protocols.
• They are established in terms of Water Services Act , Act
No 108 0f 1997 and are listed as Schedule 3 b under the
PFMA
• Water boards are key strategic entities as all socioeconomic development within their designated area of
supply is linked to the delivery of reliable, healthy and cost
effective bulk services.
• There were a total of 12 water boards in South Africa
during 12/13 financial year and this was reduced to 9 in
13/14 .
6
The key role of Water Sector Institutions is to support South Africa as
a developmental state to deliver on Government Developmental
.
Objectives through :
1. Using water for promoting socio-economic developmental agenda .
2.Reducing inequality through access to water and job creation .
Relevant
Advantages of
Water Institutions
3.Leveraging additional investments for infrastructure development
4.Enabling rural communities to use water for rural livelihoods.
5.Promoting greater citizen participation in decision making
6.Allowing for innovation and knowledge generation.
7
Water & Sanitation sector institutions
Financial year : 1 Jul to 30 Jun
Minister
Catchment Management
Agencies (Schedule 3A
of the PFMA
BreedeGouritz
InkomatiUsutu
Limpopo
PongolaMzimkhulu
Berg-Olifants
Doorn
Olifants
Orange
TsitsikammaMzimvubu
Trans Caledon
Tunnel Authority
(Schedule 2 of
PFMA)
Water Research
Commission
(Schedule 3A of
PFMA)
Komati
Komati
KomatiBasin
Basin
Basin
Water
Water
WaterAuthority
Authority
Authority
(Schedule
(Schedule
(Schedule3A
3A
3Aofof
of
PFMA)
PFMA)
PFMA)
Vaal
Financial year : 1 April to 31 March
Water Boards
(Schedule 3B of
the PFMA)
Amatola Water
Bloem Water
Lepelle Water
Magalies Water
Mhlathuze
Water
Overberg
Water
Rand Water
Sedibeng
Water
Umgeni Water
8
Lepelle
Northern
Magalies
Rand
Sedibeng
Bloem
Umhlathuze
Umgeni
Amatola
Overberg
(not regional)
9
CONSOLIDATED PERFORMANCE
Consolidated review of the financial performance of the Water
Boards based on the Annual Reports for the 2013/14 financial
year. Consolidated water sales, revenue and expenditure
Budget vs Actual Income Statement
June 2014 (R000's)
Volume sold
Actual
Budget
Variance
2 606 962 666
26 33 475 900
(26 513 234)
Variance
%
(1.0)
Sales
Cost of sales
Gross profit
Other income
Operating cost
Direct labour
Energy
Maintenance material
Chemical/purification
Depreciation
General expenses
Other expenses
13 128 083
4 333 789
8 794 294
1 626 378
8 80 313
2 547 656
20 21 955
282 895
395 786
657 326
1 794 729
779 926
14 722 609
6 079 022
8 643 587
181 280
7 309 201
2292 078
2 31 992
293 611
477 286
685 924
1 412 869
115 441
( 1 594 526)
17 452 33
150 707
1 432 343
(1 171 112)
(255 578)
9 997
10 716
81 500
28 598
(381 860)
(664 485)
(10.8)
28.7
1.7
797.2
(16.0)
(11.2)
0.5
3.6
17.1
4.2
(27.0)
(575.6)
Operating surplus (deficit)
Net interest
1 940 359
252 399
1 515 666
140 326
424 693
112 073
28.0
79.9
Other comprehensive income (cost)
Net surplus (deficit) for period
144 478
2 337 236
(17 755)
1 638 237
162 233
698 999
(913.7)
10
42.7
OVERVIEW OF ENTITIES
Variability in Size Volumes supplied kl 000
1600000
1400000
1200000
1000000
800000
600000
400000
200000
0
11
CONSOLIDATED PERFORMANCE (Cont)
Consolidated Revenue: % Spread
% x total Revenues
2%
14%
Amatola
Bloem
1% 1%
3%
3%
2%
0%
5%
Botshelo
3%
0%
Bushbuckridge
Lepelle North
Magalies
Mhlathuze
Overberg
Pelladrift
Rand
66%
Sedibeng
Umgeni
12
CONSOLIDATED PERFORMANCE (Cont)
Consolidated CAPEX Spend
WATER BOARD
ACTUALS
2013/14
BUDGET
2013/14
R OVER
(UNDER) SPEND
% OVER
(UNDER) SPEND
BUDGET
2014/15
Amatola
10 404
43 363
(32 959)
(76.0)
71 440
Bloem
102 444
137 100
(34 656)
(25.3)
49 701
336
336
100.0
Bushbuckridge
1 596
1 596
100.0
Lepelle Northern
73 264
235 893
(162 629)
(68.9)
105 433
Magalies
27 943
442 991
(415 048)
(93.7)
933 284
Mhlathuze
125 197
120 542
4 655
3.9
145 816
Overberg
2 037
705
1 332
188.9
2 668
Pelladrift
424
424
100.0
Botshelo
Rand
2 244 027
2 892 670
(648 643)
(22.4)
2 750 000
Sedibeng
71 255
118 342
(47 087)
(39.8)
157 721
Umgeni
779 001
880 745
(101 744)
(11.6)
1 683 599
TOTALS
3 437 928
4 872 351
(1 434 423)
(29.4)
5 899 662
Note: Figures are based on the figures from the Water Board AR cash flow statements relating to
Acquisition of PPand E and intangible assets.
13
CONSOLIDATED PERFORMANCE (Cont)
Water Board Surplus/(Deficit) in 2013/14
WATER BOARD
Amatola
Bloem
Botshelo
Bushbuckridge
Lepelle Northern
Magalies
Mhlathuze
Overberg
Pelladrift
Rand
Sedibeng
Umgeni
SURPLUS
2013/14 R'000
29 159
65 635
24 407
6 071
17 799
34 142
79 198
1 273
(1 040)
1 180 351
97 929
802 312
% OF TOTAL
1.2
2.8
1.0
0.3
0.8
1.5
3.4
0.1
50.4
4.2
34.3
14
CONSOLIDATED PERFORMANCE (Cont)
Municipal Debtors (July 2014)
Water Board
Amatola
Bloem
Bushbuckridge
Lepelle N
Magalies
Mhlathuze
Overberg
Pelladrift
Sedibeng
Rand
Umgeni
TOTAL
DAYS 30
DAYS 60
DAYS 90
DAYS 120+
ARREARS
31 869 352
5 185 030
1 290 525
29 762 040
68 106 947
54 745 392
2 735 105
2 466 648
54 127 155
114 074 300
16 806 660
16 806 660
14 903 991
305 459 171
353 976 482
14 805 584
7 158 714
7 450 892
278 855 148
308 270 338
8 813 164
4 205 161
3 246 262
15 218 952
31 483 539
3 474 888
136
9
0
3 475 033
286 100
53 584
0
0
339 684
221 798
230 662
251 492
0
703 952
52 951 537
58 801 145
51 875 861
859 130 709
1 022 759 252
14 948 489
7 672
0
0
14 956 161
12 575 115
1 675 970
2 5002
40 925
14 317 012
191 947 628
89 723 417
81 510 066
1 451 591 662
1 904 772 773
Source: DWS figures as at July 2014
15
Executive Management Bonuses for 2013-14
Name
2 014
R'000
Amatola water
626
Bloem Water
2 235
Botshelo Water
0
Bushbuckridge Water
0
Lepelle water #
2 964
Umgeni water
1 378
Mhlathuze water
354
Magalies Water
1 015
Sedibeng Water
751
Overberg Water *
276
Rand Water
8 229
Pelladrift Water
0
WBs Total
R17 828
*Performance bonus plus other cash benefits
# Other cash benefits
16
CONSOLIDATED PERFORMANCE (Cont)
Audit Reports
11 of the 12 Water Boards received Unqualified Audit Reports
on their financial statements for the 2013/14 financial year.
Botshelo Water received a Qualified Audit Report (Reported to
Parliament)
17
STRATEGIC CHALLENGES
Viability of some water boards
Amatola Water continues to face challenges due to limited
growth in its bulk water business, its low tariff structure and
exposure to secondary activities in support of local
government. While there has been an improvement over the
past two years from a turnaround strategy implemented by the
Board, the profitability is low (R29 million in 2013/14) and this
has an impact on the ongoing sustainability of the
organisation.
The levels of municipal debt remain a serious concern for
Bloem, Botshelo, Bushbuckridge, Lepelle Northern and
Sedibeng Water where the levels are substantial and viability
and sustainability of the entities is potentially threatened as the
overall debt levels are increasing. This critical issue needs to
be fully addressed on an ongoing basis by all stakeholders.
18
SUMMARY AND CONCLUSION
While there are a number of areas for concern and specific
institutional challenges that are being addressed, the overall
performance of Water Boards during the 2013/14 reporting
period has been generally satisfactory. Overall Water Boards
have delivered on their mandate and provided appropriate
levels of assurance of supply and quality of water and services
delivered to municipalities and other key customers. In doing
so, these important and strategic entities contributed positively
to governments broad social economic development agenda.
Levels of compliance by Water Boards are on an improving
trend and ongoing steps initiatives/interventions are being
implemented by DWS to ensure a more rigorous and proactive
monitoring of water board performance by the DWS.
19
Part 2
WATER BOARDS
•
•
•
•
Rand Water (including Bushbuckridge Water);
Mhlathuze Water;
Lepelle Water; and
Amatola Water
20
Rand Water
Presented by:
Chairperson:
Chief Executive:
Adv Hashatse
Mr P Sechemane
21
Institutional Reform and Realignment Process
On 15th April 2013, the then Honourable Minister for Water and Environmental Affairs, Ednah Molewa
announced to the Portfolio Committee on Water and Environmental Affairs that she had approved the
Institutional Reform and Realignment process. The important conclusions are
• The number of water boards were reduced from twelve to nine
• Bushbuckridge Water Board (BBR) and Botshelo were disestablished
• Rand Water took over the BBR area of service
• Magalies Water Board and Sedibeng Water Board took over the Botshelo Water Board area of service
The intention of the Directive has been translated by Department of Water and Sanitation (DWS) into the
following:
Phase 1: Take over of BBR
Phase 2: Water service schemes – Regional bulk infrastructure (Abstraction, purification an distribution).
Taking over responsibility for the Western Highveld Scheme which is defined as a regional
scheme and serves the municipalities of JS Moroka and Thembisile in Mpumalanga as well
as small pieces of the Elias Motsoaledi and Ephraim Mogale LMs in Limpopo Province. This
includes the following municipal areas: Nketoana, Phumelela, Mafube and Maluti a Phofung (all
in the north east of the Free State); Pixley Ka Seme, Lekwa and Dipaleseng (in the south of
Mpumalanga).
Phase 3: Water resource schemes, Upper Vaal Management Area
•
Takeover, Management and Operating water resources, that is, dams, tunnels, and related pipe
network of a regional nature)
•
Taking transfer of water resources infrastructure in the northern part of Mpumalanga (primarily
the Olifants WMA) which includes the following municipalities: Emakhazeni, Thaba Chweu and
the North of Mbombela.
•
Taking transfer of local water resources schemes in the Upper Vaal WMA, and supporting water
management institutions functioning there (DWA and future Vaal CMA).
22
Institutional Reform and Realignment Process
Rand Water’s previous and extended area of operations
Rand
Water’s
Extended Area of
Operations includes
- 27
new
local
councils
- Gauteng
- Limpopo (Greater
Groblersdal
and
Great Mable Hall
- North
West
(Rustenberg
and
Madibeng areas)
- Mpumalanga
- Northern Free State
(Boundary of the
Upper Vaal WMA) –
Maluti-a-Phofung,
Dihlabeng,
Nketoana, etc
Current
New
Total
Population
12 million
4 – 7 million
16 – 19 million
Economy (% of GDP)
34%
7 – 16%
41 – 50%
The exact numbers are difficult to calculate because the extended area incorporates portions of Limpopo, North West and Free
State. Only Mpumalanga and Gauteng are included in total.
23
Ministerial Directives
Rand Water has been a proud partner to the Honourable Minister in providing water services
on an emergency basis
Molopo Eye to
Mahikeng
Ministerial
Directive
Bushbuckridge
Municipality –
Intervention
Msukaligwa
(Ermelo) Local
Municipality
Emalahleni
Intervention
Sedibeng
Regional Bulk
Sanitation
Scheme
Botshelo Water
Board
Extended area
of Operations
(BBR, Upper
Vaal WMA)
Rural Development Strategy - The Department has identified 24 district municipalities for
rural water development. Rand Water is assisting at least 7 of these rural municipalities by
increasing access to water services.
24
Operational Performance Snapshot
Rand Water supplies an average of 4183 Ml per day, 2.7% growth in volumes yoy.
The highest recorded peak daily demand is 4923 Ml per day.
We stepped up our investment in infrastructure by 18% to R1.75 billion.
Revenue grew up by 12% to R8.665 billion.
New revenue streams growth by 73% to R652 million
Increase in net income by 18.6% to R1.18 billion
Continued to assist municipalities to improve the blue drop and green drop status.
Other
municipalities
13%
Mines
4%
Industries
1%
Greater
Johannesburg
Metro
37%
Emfuleni
6%
Tshwane
Metro
16%
Ekurhuleni
Metro
23%
4,500
4,413
4,400
4,300
4,205
4,200
Ml/day
•
•
•
•
•
•
•
4,095
4,100
4,000
3,925
4%
4,309
2%
2.4%
2013
2014
3%
3,900
3,800
4%
3,700
3,600
2010
2011
Total volumes per day
2012
5%
5%
4%
4%
3%
3%
2%
2%
1%
1%
0%
incr in Volume Sold %
25
Performance Snapshot Against
Triple Bottom line
•Social: Continuous Water supply, Sanitation solutions, RWA, RWF & CSR
initiatives as well as job creation and capacity building.
•Environmental: Blue & Green drop standards achieved, Environmental
conservation programs; Water Catchments, Wetland rehabilitation
•Economic: YOY increases; Revenue 12%, Gross income 15%, Net income
19%, Cash from operations 22%and Capital expenditure 40%
Presidential Outcomes
•A long and healthy life for all South Africans- Undisrupted, continuous
supply of quality water
•Skilled and capable workforce: Rand Water Academy, Capacity building
and Job creation
•Efficient local government system: Rand Water Mpumalanga
•Implementing Agent on behalf of Municipalities or Government
Departments
Shareholder Compact
•Institutional Realignment
•Enhanced quality and quantity of water resources; Water demand
management
•R2.45 bn spent on ensuring the maintenance and supply availability
of our bulk water infrastructure
•R652m in growth projects to Strengthen and implement strategies for
water management in the country:
26
Performance Snapshot
No:
Perform ance objective
Key perfom ance indicator
1
Water quality compliance
Compliance SANS 241 Class 1
Compliance SANS 241 Class 2
>= 95%
>= 99%
Achieved 99.65% (1)
Achieved 99.98% (1)
2
Non revenue w ater
<= 3.9%
Achieved 3.5% (2)
3
Reliability of service
Water lost as a percentage of total w ater
produced
Number of days supply disrupted divided by
total number of possible supply days
0 days
Achieved 0 days
4
Financial reporting compliance
Unqualif ied external audit report
Qualif ied external audit report
100%
0%
Achieved 100%
Achieved 0%
5
Financial reporting compliance
Unqualif ied external audit report
Qualif ied external audit report
100%
0%
Achieved 100%
Achieved 0%
6
7
8
Staf f turnover
Board member attendance
Ef f ective internal controls and
risk management
Bulk supply agreements
concluded w ith
municipalities/other customers
Percentage of staf f leaving
Annual attendance
No repeat on unresolved internal audit f indings
Improve f inancial perf omance
Net income margin (primary activities)
Net income margin (secondary activities)
>=12.8%
>= 0.5%
Achieved 16.5% (4)
Achieved 1.5% (5)
Gross margin (primary activities)
>= 25.9%
Achieved 27.3% (6)
Gross margin (secondary activities)
>= 5%
Achieved 5.58% (7)
Debt equity
<= 37%
Achieved 28.6% (8)
Return on assets
>= 7.1%
Achieved 8.98% (9)
Debtors days
<= 33 days Not achieved 34 days
9
10
Municipalities/other customers w ith bulk supply
agreements
Target
<= 5%
>= 80%
0 f indings
100%
Perfom ance result
Achieved 2.45% (3)
Achieved 80%
Achieved 0 f indings
Achieved 100%
27
Performance Snapshot
No:
Pe rform ance obje ctive
Ke y pe rfom ance indicator
11
Increase BBBEE spend
Percentage of spend increased and increased
new entrants
>= 85%
Achieved 92.66% (10)
12
Manage costs w ithin the
approved budget
Capital expenditure
No over expenditure/losses
<= 15%
Achieved 1.2%
Percentage variance of overall projects
expenditure against target
<= 5%
Not achieved 8% (11)
Percentage variance of overall project
completion dates against target
<= 5%
Achieved -1%
13
Targe t
Pe rfom ance re s ult
14
Increased access to services
Capital expenditure spend of number of
expansion projects
>= 26%
Not applicable (12)
15
Engagement in secondary
activities
Achieve statutory reporting
compliance
Jobs created
Total turnover (Rm)
>=R 372m
Achieved R 652 (13)
16
17
18
19
Corporate social responsibility
initiatives
Training and skills development
20
Good Governance
21
Corporate social responsibility
initiatives
Statutory submissions made on time
100%
Achieved 100%
Number of permanent and contract staf f
(direct)
Number of temporary (indirect) RWF and RW
Contractors
Percentage spent on corporate social
responsibility initiatives
Total number of graduates enrolled by the Rand
Water Academy
>= 3 268
Not achieved 3 229
>= 1 900
Achieved 4 816 (14)
>= 95%
Achieved 100%
>= 30
Not achieved 19 (15)
Breaches of materiality and signif icance
f ramew ork
Number of identif ied Rural District Municipalities
supported by Rand Water
<= RNil
Achieved RNil
>= 4
Achieved 7
28
Contribution to government and Minister’s performance agreement (cont.)
Outcome No. 10:
Environmental assets & natural resources that are well protected and enhanced.
Rand Water Foundation –
•
Water and Sanitation Programmes
•
Environment Conservation Programme
•
Enterprise Development Programme
•
NGO Support Programme
•
Health, including HIV and AIDS Programme
•
Educational & Training Programme
2013/14: R31 million
Rand Water Foundation – External funding 2013/14
•
Water and Sanitation Programmes
million
•
Environment Conservation Programme
•
Enterprise Development Programme
•
•
Providers of external funding include : GDARD, GDE, SAB , SANBI Fezile Dabi District
Municipality, and DWS
R35
29
Financial performance overview
12%
15%
Revenue
R8.7 bn
Gross Income
R2.4 bn
19%
22%
40%
Net Income
R1.2 bn
Net cash from
operations
R1.5 bn
Capital
expenditure
*R2.2 bn
*Excluding Capitalised Borrowing
Costs
EBITDA
1600
1,395
1,201
753
Return on Capital Employed
(%)
16.0%
941
12.0%
800
8.0%
400
4.0%
0
0.0%
2011
2012
2013
2014
EBITDA margin
EBITDA (Rm)
1200
20.0%
30
Ploughing Back Our Net Income
•
•
Made good progress with our Capital
R’m
3,000
Investment Programme.
2,000
Gross Income
1,000
Work closely with our Stakeholder on
2,073
2,392
2013
2014
28.0%
26.0%
24.0%
22.0%
20.0%
1,589
2012
the development of the new National
Gross Income
Gross Income %
Water Pricing Strategy.
•
Remain focused on improving our
processes.
•
Limiting expenses and containing
cost.
from operation.
4.0
Advancing our Capital Expenditure
3.5
Programme.
Profitability and Productivity
309
337
400
3.5
200
247
3.0
177
100
3.0
3.0
3.2
3.2
2.5
0
2010
2011
2012
Number of employees
2013
2014
Profitability per employee
R'kl
•
Maintaining stable cash generation
Thousands
•
31
Revenue Mix Analysis
• Total Volume increases of 2.4% primarily from the
municipal customers. (1.9% on average ml/d)
• Municipal customer contribution to revenues
contributes 90% of total sales.
Volume of water sold and potable water bulk tariff
4,500
4,400
4,300
4,200
4,100
4,000
3,900
3,800
3,700
3,600
5.02
4.51
3.50
3.99
5.51
6.00
4,413
5.00
4,309
4.00
4,205
3.00
4,095
R/kl
• Revenue growth primarily driven by tariff
increases of 9.82% effective from 1 July 2014.
2.00
3,925
1.00
-
2010
2011
2012
Total volumes per day
2013
2014
Potable water bulk tariff
32
Consolidated Income Statement
For the year ended
30 June
2014
2014
R million
2013
R million
%
change
Revenue
8 665
7 751
11.7%
Net operating
expenses
7 270
6 550
10.9%
EBITDA
1 395
1 201
16.1%
283
247
14.5%
1 112
954
16.5%
Depreciation and
amortisation
Income from
operations before
net finance costs
4%
2013
Cost of raw water
21%
Net investment
income
Taxation
Net income for the
year
(70)
(43)
62.7%
49%
4%
3%
-
997
Chemicals
Other costs
Labour
0%
19%
1 182
Energy
Dep&Amort
18.5%
33
Asset Base Analysis And Cost Breakdown
June 2013
historical cost
June 2013
replacement value
June 2014
historical cost
R’000,000
Net income/loss for the period
997
Adjustments: Depreciation and amortisation
Adjusted profit after revaluation for the year
997
June 2014
replacement
value
1,182
(1,470)
1,182
(1,543)
997
(423)
1,182
(361)
8,512
4,088
9,750
3,727
-
74,094
-
75,402
8,512
78,182
9,750
79,129
10,397
84,000
12,798
88,200
Return on assets
7.6%
NONE
9.2%
NONE
Debt/Equity ratio
24%
2%
32%
4%
Equity cumulative impact: Closing Equity
Adjustments: Revaluation of PPE
Adjusted closing Equity balance
Statement of financial position : PPE
RATIOS
The application of the replacement value method has a direct impact on tariffs
34
Delivering On Growth Strategy
Rand Water has been a proud partner to the Honourable
Minister in providing water services on an emergency basis
For the year
ended
30 June
Revenue
Cost of sales
Gross profit
Rural Development Strategy - The Department has identified 24
district municipalities for rural water development. Rand Water is
assisting at least 7 of these rural municipalities by increasing access
to water services.
GP%
2014
R
million
2013
R
million
652
377
(616)
(342)
36
35
5.6%
9.2%
35
Consolidated Financial Results 2014
Statement of financial position
For the year ended 30 June
2014
R million
2013
R million
12 798
10 397
2 531
2 211
2
2
15 331
12 610
ASSETS
Non-current assets
Current assets
Assets of disposal groups
TOTAL ASSETS
Return on average total assets (%)
36
Consolidated Financial Results 2014
Return on equity (%)
Statement of financial position
2014
R million
2013
R million
Capital and Reserves
9 750
8 511
LIABILITIES
5 581
4 099
Non-current liabilities
3 114
2 073
2 464
2 024
3
2
15 331
12 610
For the year ended 30 June
EQUITY AND LIABILITIES
Current liabilities
Assets of disposal groups
TOTAL EQUITY AND LIABILITIES
Gearing (%)
Strong financial position due to growth in net worth by 15%
37
Abridged Statement Of Cash Flows
Cash generated from operations (R million)
2014
R million
2013
R million
Cash flow from operating activities
1 429
1 180
Cash generated from operations
1 560
1 230
Other
(131)
(50)
Cash flows from investing activities
(2 420)
(1 962)
Capex spend*
(2 244)
(1 644)
1
1
(177)
(319)
999
318
(8)
(464)
For the year ended 30 June
Proceeds from disposal of assets
Other investment activities
Cash flow from financing activities
(Decrease)/Increase in bank and cash
*Capex spend excludes borrowing costs and rehabilitation provisions
Credit ratings:
Standard & Poors
Short term A+
Long term BBB
Fitch Ratings
F1+ (zaf)
AA+ (zaf)
38
Financial Results 2014 – BBR Provisional Take –On Accounts
BBR Performance Snapshot - 9
Statement of Financial Position
months up to 30 March 2014
for the
9 months ended
31 Mar
2014
R million
12 months
ended 30 Jun
2013
R million
ASSETS
61
61
Current assets
99
90
160
150
58
52
102
98
2
3
Current liabilities
100
95
TOTAL EQUITY AND
LIABILITIES
160
150
LIABILITIES
Non-current liabilities
million ~ 2013)
•
Net income : R6.1 million (-R7.9
•
Cash flow from operating activities :
R6.2 million (R9.2 million ~ 2013)
Performance Snapshot post
EQUITY AND LIABILITIES
Capital and Reserves
Revenue : R130.5 million (R154.9
million ~ 2013)
Non-current assets
TOTAL ASSETS
•
disestablishment – 3 months up
to June 2014
•
Recognition of a surplus of R58m at
incorporation of BBR into RW on 1
April 2014.
•
Revenue streams for 2014 is R43m
•
Net Income for 2014 is R15.5m
39
Projected Peak Day Demands To 2035
Station
Design
capacity
New
capacity
Come on
line by
(first
phase)
2017
Projected peak day demands
Mega litre
2020
2025
2030
2035
Primary Systems
Zuikerbosch
3900
1200
600
4300
4800
5300
5800
Vereeniging
1400
Nil
Nil
1300
1300
1300
1300
2000
Nil
Nil
1470
1610
1750
1980
800
200
Nil
760
780
840
880
1870
600
600
2000
2190
2380
2570
960
300
300
990
1080
1180
1270
Booster Systems
Eikenhof
Zwartkopjes
Palmiet
Mapleton
40
Capital Expenditure Performance
Capital expenditure performance excluding
moveable assets
41
Five Year Capital Expenditure Plan 2015-2019 (R13.5 Billion)
5-year Capital Expenditure (2015/19) R13,5 Billion
For Continuing Business
Top 5 Augmentation projects over the 5-year period
Project
System
Eikenhof
Mapleton
Palmiet
Primary
Zwartkopjes
Mpumalanga
Total
Augmentation Renewal
(Rm)
(Rm)
492
956
2,106
3,641
453
253
(60%) 7,900
694
734
929
2,096
954
168
Total
(Rm)
Planned spend R(m)
2015 - 2019
2015
Annual
2,770
58
1
Zuikerbosch scheme
(System 5)
1,690
2
O6 Palmiet Klipfontein
augmentation
972
350
3,035
3
Hydro power
422
142
4
Mpumalanga Bushbuckridge
253
63
5
B17 Zuikerbosch Palmiet pipeline
223
223
Total
4,640
836
Proportion of total
augmentation spend
61%
1,186
5,737
1,407
System
Primary
Palmiet
All
Mpumalanga
Palmiet
421
(40%) (100%)
5,576 13,476
42
Source Of Funding & Bond Issuances To Date
Facility
amount
RW28
RW21
Utilisation
Available
Cash
872
0
872
RSA Investment
483
0
483
General banking
facilities
500
0
500
DFI
1 000
0
1 000
DMTN
5 000
2 474
2 253
Total
7 855
2 474
5 108
RW23
The organisation is currently working on increasing the size of the DMTN programme to R10 billion in
order to cater for all future funding requirements
Optimal Funding Mix, And Usage
FUNDING PLAN (R MILLIONS)
CORE BUSINESS FUNDING PLAN
2015
2016
2017
2018
2019
TOTAL
Debt capital markets
1 659
1 308
1 078
1 080
0
5 125
Bank/ project funding
34
27
22
22
0
105
1 950
1 100
1 360
1 066
0
5 230
Funding Plan Assumptions:
 The yield curve will be flat in the next
three years;
 Primary activities to be funded as
follows:
Capital market – 78%
Money Market - 20%
General bank/Project funding
- 2%;
 For secondary activities Grant
Funding and Project Financing will be
used to fund the Growth Investments
where possible.
Page 44
PROCESS AND IMPORTANT TIMELINES
9th October 2014
DWS / TCTA raw water pricing
14th October 2014
Customer consultation and information sharing
Submission to Treasury and SALGA for input
Customer notification
8th December 2014
Submission to DWS for Parliamentary approval
Parliamentary approval
14th October 2014
25th January 2015
15th March 2015
45
RAW WATER TARIFF INCREMENT
Rand Water received an effective raw water tariff increment of 8.77 per cent. This is an increment from
R2.8182 cents per kilolitre to R3.0654 cents per kilolitre for the financial year beginning 1st April 2015. This
is composed of the TCTA component which is decreasing by 1% from R2.32 to R2.29. The DWS
component introduces a new element, i.e. AMD. Therefore this is an increase from R0.5 cents per kilolitre
to R0.77 cents per kilolitre, an effective 55% increment. The raw water charge is 23 cents as shown in the
table below.
Actual R/m 3
Proposed R/m
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
TCTA Vaal River tariff
Capital Unit Charge (CUC)
LHWP1 tariff
LHWP2 tariff
Combined CUC (incl LHWP1 & 2, AMD)
Bulk Operating and Royalties (BO&R) charge
Total Augmentation (TCTA) Vaal River tariff
State Schemes
AMD O&M tariff
State schemes O&M
DWS
Total raw water tarif
TCTA Vaal River tariff
DWS
Total raw water tarif
1.98
0.10
2.08
2.08
2.09
0.11
2.20
2.20
1.69
0.11
1.80
0.5176
2.32
1.69
0.6000
2.29
1.82
0.68
2.50
1.65
0.67
2.33
0.46
0.46
2.67
0.50
0.50
2.81
0.23
0.54
0.77
3.06
0.28
0.58
0.86
3.36
0.65
0.61
1.26
3.59
5.91%
5.21%
6.85%
5.49%
-1.01%
54.93%
8.84%
8.89%
12.06%
9.68%
-6.92%
46.71%
6.81%
46
40%
Tariff Versus Input
Cost Inflation
Tariff Versus Input Cost Inflation
Tariff
Energy - Eskom
Energy - Municipalities
35%
Raw Water
Chemicals
Labour
Other
30%
CPI
25%
20%
15%
10%
5%
Tariff
Energy - Eskom
Energy - Municipalities
Raw Water
Chemicals
Labour
Other
CPI
2010
14.10%
35.0%
35.0%
9.2%
11.6%
8.1%
10.0%
10.0%
2011
12.90%
25.2%
37.7%
7.4%
10.0%
10.7%
5.9%
5.9%
2012
11.30%
16.7%
29.2%
8.5%
12.5%
8.2%
5.7%
5.7%
2013
9.82%
15.0%
15.0%
8.7%
8.9%
8.0%
5.9%
5.9%
2014
8.10%
10.1%
10.1%
6.2%
9.4%
8.5%
5.6%
5.6%
2015
17.1%
18.5%
11.1%
13.0%
8.7%
5.7%
5.7%
47
Proposed Tariff
Rand Water Tariff = Rand Water Internal Inflation
Year-End ~ 30 June
for Financial Year Ending 30th June
Price
Forecast
Percent
increase
2016
of total
%
R m
%
DWA
TCTA
Raw Water
Energy - Eskom
Energy - Municipalities
Chemicals
Multi-Partnered Uncontrollable Costs
Labour
Depreciation
Other
Total
43.7%
3.2%
11.1%
17.1%
18.5%
13.0%
13.1%
8.7%
25.5%
5.7%
1122
3306
4428
1057
936
347
6768
1647
353
615
9383
2016
Weighted
%
12.0%
35.2%
47.2%
11.3%
10.0%
3.7%
72.1%
17.6%
3.8%
6.6%
100.0%
Target bulk tariff increase
5.2%
1.1%
6.3%
1.9%
1.8%
0.5%
10.6%
1.5%
1.0%
0.4%
13.5%
13.5%
The proposed 2015/16 potable water tariff will thus be as follows:
Bond Raised (R m)
Municipalities
Current Tariff
New Tariff
(1 July 2014 – 30 June 2015)
Tariff
1340
(1 July 2015 – 30 June 2016)
C/kl
C/kl
595.520224
675.915454
Excluding VAT at 14 per cent
Excluding VAT at 14 per cent
In line with a well-established approach, Rand Water’s internal inflation is 13.5 per cent. Rand Water
therefore proposes a 13.5 per cent tariff increment for the 2015 / 16 financial year with another 1 per
cent allocated to the establishment of a Water Demand Management Fund. In total Rand Water
proposes
a 14.5 per cent tariff
increment.
Municipalities
Current Tariff
New Tariff
(1 July 2014 – 30 June 2015)
Tariff
(1 July 2015 – 30 June 2016)
C/kl
C/kl
595.520224
681.870656
Excluding VAT at 14 per cent
Excluding VAT at 14 per cent
48
THE WATER DEMAND MANAGEMENT FUND
Non revenue water among Rand Water’s municipal customers has continued to worsen
rather than improve. In 2005, the national average stood at approximately 27%. In Gauteng,
the challenge was to improve these water losses to 15%. However, the national average now
stands at 36.8%. The table below shows that non revenue water in Gauteng has worsened
from 21.8% in 2005 to 35.9% in the 2011.
Name
2005
2011
Joburg Metro
20.6%
38.2%
Ekurhuleni Metro
23.8%
39.8%
Tshwane Metro
14.0%
26.5%
Emfuleni
47.6%
44.4%
Mogale
18.2%
26.0%
Metsimaholo
35.2%
17.2%
Rustenburg
32.3%
39.0%
Midvaal
23.0%
26.2%
Merafong
25.9%
26.0%
Randfontein
12.5%
21.9%
Westonaria
10.3%
29.7%
Lesedi
14.9%
8.2%
Ngwathe
1.2%
24.9%
Kungwini
28.7%
43.0%
Gauteng
21.80%
35.90%
49
In Conclusion
RW is committed to:
•
•
•
Maintain strong link with the Shareholder.
A strategic priority is to work together with our stakeholders to empower them to reach their
potential. Our ability to build effective and mutually beneficial partnerships with provincial
and local governments and communities is of particular importance for us and is a prerequisite for investment
We are streamlining our organisation to become more agile and effective which will also
sustainably improve efficiency
• Focusing on critical value adding activities.
• Eliminating duplication across organisation layers.
• Streamlining key processes.
• Sharing and adopting best practices.
• Embedding a cost conscious and performance driven culture.
•
•
•
•
Meet key water quality standards and provide a continuous and reliable supply of worldclass water.
Roll out and meet Capex target.
Investigate and implement innovative solutions to contribute to more effective and efficient
water management.
Advocating sustainable multi year tariffs
Thank You
51
Mhlathuze Water
Presented by:
Chairperson:
Chief Executive:
Ms Dudu Myeni
Mr A.S. Makhanya
52
Content









Graphical area of supply
Overview of MW
MW Performance 2013/14
 Key Strategic Objectives
 Audit Report
 Financial Performance
 Capital Expenditure
 Borrowing Limits
Mid-year Performance 2014/15
Possible new Capital projects
External Projects
Compliance 2013/2014
Master Plan – uMkhanyakude DM
Tariff Increase 2015/16
53
GRAPHICAL AREA OF SUPPLY
54
OVERVIEW OF THE WATER BOARD
 Mhlathuze Water (MW) area of supply covers some
37,000km² stretching from uThukela River in the south
and up to East Coast to Mozambique and Swaziland
borders, around Vryheid and back to the uThukela River.
 MW operational area covers 4 WSA’s in KZN:
 uMkhanyakude District Municipality
 Zululand District Municipality
 uThungulu District Municipality
 uMhlathuze Local Municipality
 Northern of ILembe District Municipality
 Supply Bulk Water and Sanitation services to Industries
& Water Services Authorities in its area of operation
55
ANNUAL REPORT 2013/2014
Performance on Key Strategic Objectives:
Item
Performance
Objective
Target 2013/14
Achievement
Comments
1.
Water quality
compliance
97% - microbiological 100%
parameters
97% - chemical
100%
parameters
Target exceeded
2.
Water losses
<5%
1%
Target exceeded
3.
Reliability of
supply
<1% interruptions
0%
interruptions
Target exceeded
4.
Financial reporting Unqualified audit
compliance
report
Unqualified
(clean) audit
report
Target met
56
ANNUAL REPORT 2013/2014
Performance on Key Strategic Objectives cont.
Item
Performance
Objective
Target 2013/14
Achievement
Comments
5.
Staff turnover
5%
4.64%
Within target
6.
Board member
attendance
80%
80%
Target met
6.
Bulk supply
100%
agreements with
customers
100%
Target met
7.
Financial ratio’s
1.69
0.59%
8.6%
34.28 days
Target not met
Target met
Target exceeded
Target exceeded
Current ratio – 2.13
Debt equity – 0.64%
Return on assets – 6.5%
Debtors days – 37.2
days
57
ANNUAL REPORT 2013/2014
Performance on Key Strategic Objectives cont.
Item
Performance
Objective
Target 2013/14
Achievement
Comments
8.
Increase BBBEE
spend
Maintain above
51%
Achieved 65.8% Target exceeded
9.
BBBEE rating
Level 3 or lower
Achieved level
2
Target exceeded
10.
Increase access DOE & DBE - 245
to services – no.
of new projects
DWS - 16
DEA - 3
174
16
3
Target not met due
to delay in getting
necessary approvals
Target met
Target met
Engagement in
secondary
activities
62%
Target exceeded
11.
56%
58
ANNUAL REPORT 2013/2014
Performance on Key Strategic Objectives cont.
Item
Performance
Objective
Target 2013/14
Achievement
Comments
12.
Jobs created
External - 500
Internal - 176
673
182
Target exceeded
Target exceeded
13.
Corporate social
responsibility
initiatives
At least 6 initiatives
Total budget R1.4
million
8 projects
Target exceeded
total spent CSI
R1.9 million
14.
Training and skills
development Total number of
training,
leaderships and
bursaries
155
118
Target not met
Due to the
training budget
being exhausted
59
ANNUAL REPORT 2013/2014 (Cont.)
◊Audit Report:
◊KPMG Inc. were appointed for the 2013/2014
financial year audit.
◊Annual financial statements were prepared in
accordance with SA GAAP, the relevant provisions of
Water Services Act in a manner required by PFMA.
◊MW received a Unqualified (Clean) Audit Opinion
for the 2013/2014 year.
◊All internal controls were considered as relevant.
60
ANNUAL REPORT 2013/2014 (Cont.)
Annual Financial Statements:
 Mhlathuze Water has maintained strong operating surpluses.
Overall the profit for the year of R79.1 (2013: R68,1) million reflects
an increase of 16% from the previous year.
 Bulk water volumes increased by 8% mainly due to the increase in
raw water volumes. (Tronox and RBM consumed more water)
61
ANNUAL REPORT 2013/2014 (Cont.)
Annual Financial Statements:
 The graphs on tariffs for the 2 major Water schemes shows a
downward trend for the past five years.
62
ANNUAL REPORT 2013/2014 (Cont.)
Annual Financial Statements:
 The graphs on tariffs for the two Waste water schemes shows a
downward trend for the past five years.
63
ANNUAL REPORT 2013/2014 (Cont.)
Annual Financial Statements:
 Revenue increased by 10% for 2013/2014YE (mainly due to
the 42% increase in IA fees under other activities (external
projects).
64
ANNUAL REPORT 2013/2014 (Cont.)
Annual Financial Statements:
 Energy cost only increased by 3% due to savings. Mhlathuze Water are
operating on an Enerflex tariff option from the City of uMhlathuze
(CoU) for the Nsezi WTP, and for the Transfer Scheme the Night Saver
rural option from Eskom, where the charges are for three months’ high
season and nine months’ low season.
65
ANNUAL REPORT 2013/2014 (Cont.)
Annual Financial Statements:
 Maintenance costs decreased by 8% from the prior year. In the prior year a
once-off ad hoc maintenance on plant breakdowns was done. For the
current year Mhlathuze Water had implemented preventative
maintenance, which improved on the breakdowns experienced in the prior
year. For the current year the emphasis was mainly on the recovery of the
offshore pipeline on the A and C-Line and due to the unfavourable weather
conditions the work could not be completed by the end of June 2014 and
will be carried forward to the 2014/2015 year.
66
ANNUAL REPORT 2013/2014 (Cont.)
Annual Financial Statements:
 Chemicals costs decreased by 17% mainly due to minimum chemicals
being used because of lower raw water turbidity from the Mhlathuze
River, and purification process optimisation initiatives to reduce
purification costs/chemical dosages.
67