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WATER for GROWTH and SUSTAINABLE DEVELOPMENT Vision Leading Water Utility That Enhances Value in the Provision of Bulk Water and Sanitation Services

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WATER for GROWTH and SUSTAINABLE DEVELOPMENT Vision Leading Water Utility That Enhances Value in the Provision of Bulk Water and Sanitation Services ANNUAL REPORT 2O12/2O13 UMGENI WATER • AMANZI WATER UMGENI www.umgeni.co.za ANNUAL REPORT ANNUAL 2O12/2O13 WATER FOR GROWTH AND SUSTAINABLE DEVELOPMENT Vision Leading water utility that enhances value in the provision of bulk water and sanitation services We will be known in the water sector as an effectively run, public-oriented and socially accountable organisation, which has its heart and mind, focused on the provision of bulk water services. We will achieve leadership based on our performance and the sustainable value we co-create with our customers and stakeholders and continue to leave a positive legacy in our communities, region and country. Mission Provide innovative, sustainable, effective and affordable bulk water and sanitation services Our business is the provision of bulk water services – both potable and wastewater - to support government services delivery to the people of South Africa and providing water for life. This includes providing all bulk water services to our customers, facilitating integrated planning in the region, supporting municipalities and contributing to water knowledge that will lead to sustainability from source-tap-source. Strategic Intent Key Partner that enables government to deliver effective and efficient bulk water and sanitation services Umgeni Water wants to be recognised as a strategic and sustainable partner of government, co-creating value through providing bulk water and sanitation services as a catalyst for local economic development and government’s developmental agenda. We will provide water services for health and economic benefi ts that contribute to addressing poverty, under-development and inequality. This report is printed on Magno Satin. Magno is a wood free, acid free totally chlorine free triple blade coated paper, manufacture at FSCTM rated mills. This is in line with Umgeni Water’s commitment to sustainability and conservation. PLEASE RECYCLE UMGENI WATER • AMANZI Zululand DM Umkhanyakude DM Amajuba DM Umzinyathi DM Uthungulu DM Uthukela DM Maphumulo Mandini iiLembeLembe Thukela WWSASA Mooi River uuMgungundlovuMgungundlovu Wartburg KwaDukuza WWSASA Mvoti Drakensberg Indian Ocean Howick Ndwedwe Pietermaritzburg Ballito Tongati MMsunduzisunduzi WWSASA Mdloti Bulwer eeThekwiniThekwini Mgeni Richmond WWSASA Durban Mlazi Ixopo SSisonkeisonke WWSASA Mkomazi Umzinto UUgugu Pennington Kokstad WWSASA Mtwalume Legend Mzumbe UW’s 6 WSA Customers Port Shepstone Mzimkulu N Umgeni Water’s current area of operations extends from Thukela River in the North, the 0 125 25 50 75 100 Mtamvuna Mtamvuna River in the South, the Indian Kilometres Ocean in the East Drakensberg Mountains in the West ANNUAL REPORT 2O12/2O13 1 CONTENTS REPORT CREATING 04 PROFILE 54 VALUE Product Quality ORGANISATIONAL PROFILE, 55 GOVERNANCE STRUCTURE 06 AND STRATEGY 60 Customer Satisfaction Infrastructure Stability CHAIRPERSON’S 63 REPORT 1 4 Corporate Social 68 Investment (CSI) CHIEF EXECUTIVE’S REPORT 20 CONSERVING OUR 72 NATURAL RESOURCES CORPORATE GOVERNANCE Environmental Sustainability 26 73 including Water Resources Adequacy STAKEHOLDER UNDERSTANDING AND ENABLING OUR 40 SUPPORT 82 PEOPLE PERFORMANCE AGAINST 2012/2013 SHAREHOLDER 46 COMPACT 2 UMGENI WATER • AMANZI IMPROVING 124 Financial Statements 92 RESILIENCY Notes to Financial Operational Optimisation 130 Statements 93 Risk Management 96 174 GRI CONTENT INDEX FINANCIAL 100 SUSTAINABILITY Financial 102 Review Statement of Directors’ 1 16 Responsibilities and Approval of Annual Financial Statements Report of the Audit 1 17 Committee Independent Auditor’s 1 18 Report Directors’ 120 Report Remuneration 123 Report ANNUAL REPORT 2O12/2O13 3 1.O REPORT PROFILE Umgeni Water as a state-owned public entity has a the King III requirements for integrated reporting, both mandatory obligation to prepare an annual report and due to Umgeni Water already having in place an as such has prepared annual reports every year since integrated strategy and value creation model which its establishment in 1974. This report covers the twelve- straddles four sustainability perspectives and Umgeni month period 1 July 2012 to 30 June 2013. This report Water’s alignment with government’s outcomes also includes information on the subsidiaries owned by approach for performance reporting. This report further Umgeni Water. contains Standard Disclosures that are ‘In accordance’ - Comprehensive with the Guidelines for which Umgeni Water’s annual report complies with statutory information is included in the GRI Content Index at the disclosure requirements of the Water Services Act end of this report. (No. 108 of 1997), section 55 of the Public Finance Management Act (No. 1 of 1999) and relevant The performance content of this annual report shows regulations. Notwithstanding the legislative requirements, Umgeni Water’s progress with meeting pre-determined Umgeni Water has committed to aligning the objectives and performance indicators as per its organisation to the King III Code of Governance for approved Business Plan and Shareholder Compact, South Africa, 2009. There is a signifi cant amount of and contains an audited performance scorecard convergence of Umgeni Water’s Annual Report with for 2012/2013. The fi nancial content of the annual 4 UMGENI WATER • AMANZI Additional information concerning all aspects of the report and its contents can be obtained from: Umgeni Water P.O. Box 9, Pietermaritzburg, 3200 or at the organisation’s head offi ce, at 310 Burger Street, Pietermaritzburg, 3201 Tel: +27 (33) 3411 111 • Fax: +27 (33) 3411 084 Email: [email protected] Website: www.umgeni.co.za report further contains audited fi nancial statements organisation’s business, namely water treatment works for 2012/2013. Over the years, Umgeni Water has operations, monitoring programmes and analytical developed and maintained sound in-house processes laboratories are externally certifi ed or accredited in for identifying, collecting, collating, verifying and storing accordance with relevant ISO standards. information used in managing its performance. The annual report content is structured to provide The assurance of the annual report for both fi nancial suffi cient information to all stakeholders including, and performance information is provided by Internal customers, regulatory bodies, investors, employees Audit and the Audit Committee of the Board. In and civil society, regarding Umgeni Water’s annual addition, as a state-owned entity Umgeni Water is performance and progress towards moving the audited by the Auditor-General of South Africa for both organisation in a direction that supports sustainable fi nancial and performance information. development. Specifi c stakeholder information is contained in the Stakeholder Understanding and Further information on the scope covered by Internal Support chapter of this report. and External Audit is provided in the Corporate Governance chapter of this report. In addition to assurance via these routes, vital areas of the ANNUAL REPORT 2O12/2O13 5 2.O ORGANISATIONAL PROFILE, GOVERNANCE STRUCTURE AND STRATEGY 66 UMGENI WATER • AMANZI 2.1 LEGISLATIVE MANDATE 2.3 SUPPLY AREA AND Umgeni Water is a public entity established in CUSTOMERS 1974 to provide water services - water supply and sanitation services - to other water services (SHOWN IN MAP) institutions in its service area. The organisation operates in accordance with the Water Services Over the years Umgeni Water has grown into the Act (No. 108 of 1997) and the Public Finance largest bulk water supplier in KwaZulu-Natal and Management Act (No. 1 of 1999), amongst others, has an operational area of 21 155 square kilometres. and is categorised as a National Government Umgeni Water’s operational area is bounded by Business Enterprise. Umgeni Water reports directly the uThukela River in the North, the Mtamvuna to the Department of Water Affairs through the River in the South, the Indian Ocean in the East and Chairman of the Board and the Chief Executive. The Drakensberg Mountains in the West. Executive Authority of the water board is the Minster of Water and Environmental Affairs. Umgeni Water has its head offi ce in Pietermaritzburg and is supported by offi ces to serve its regions, namely Ulwandle (coastal region) and Izintaba 2.2 ACTIVITIES OF (inland region). UMGENI WATER The organisation derives its revenue from the sale of bulk potable water to its six customers: The primary activities of Umgeni Water, as • eThekwini Metropolitan Municipality, pronounced in section 29 of the Water Services • iLembe District Municipality, Act, is to provide water services (water supply • Ugu District Municipality, and sanitation services) to other water services • Sisonke District Municipality, institutions in its service area. • uMgungundlovu District Municipality, and • Msunduzi Local Municipality. In addition, section 30 of the Water Services Act, enables Umgeni Water to undertake other activities, Umgeni Water’s infrastructure assets in support of its provided these do not impact negatively on the primary business comprise: organisation’s ability to perform its primary activity. • Approximately 746 kilometres of pipelines and These include: sixty-six (66) kilometres of tunnels, • Providing management services, training and • Thirteen (13) dams, of which fi ve (5) are managed other support services to other water services on behalf of the Department of Water Affairs and institutions, in order to promote co-operation in two (2) on behalf of the Ugu District Municipality, the provision of water services, • Eleven (11) water treatment
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