Annual Report 2014/15
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AMATOLA WATER BOARD INTEGRATED ANNUAL REPORT 2014/15 CONTENTS Public Entity General Information 1 Reporting Framework 2 Reporting Profile 3 Overview of Amatola Water 6 Business Model and Strategy 11 Corporate Governace 17 Performance Review 59 Review of Operations 70 Economic Outlook and Financial Sustainability 101 G4 Disclosures 106 Annual Financial Statements 120 Annexures 160 Glossary of Terms and Acronyms 164 PUBLIC ENTITY GENERAL INFORMATION Registered name of Public Entity: Amatola Water Board, was established by the then Honourable Minister of Water Affairs and Forestry, as proclaimed in Government Gazette Number 18409, of 14 November 1997. This was done by the Honourable Minister as empowered by the Water Services Act No. 54 of 1956 in terms of section 108(2). Registered Head Office Address: 6 Lancaster Road, Vincent, East London, Eastern Cape, South Africa Postal Address: Private Bag X3, Vincent, 5217 Contact Telephone Numbers: +27 43 707 3700/3752 Website: www.amatolawater.co.za Stakeholder Liaison Officer: Name: Ms. A. Mvunelo or Mr. U. Mbali Contact Details: Office of CEO, 6 Lancaster Road, Vincent, East London, Eastern Cape, South Africa Land Line: 043 707 3701 Email: [email protected] / [email protected] 1 REPORTING FRAMEWORK Introduction Amatola Water had adopted a combination of legislative and best practice reporting framework. Amatola Water has adopted basic reporting framework requirements set out by and in the National Treasury Annual Report Template aligned to PFMA and WSA legislative requirements. The Board of Amatola Water and Management in striving to achieve integrated reporting and sustainability reporting has through this report; implemented a format which combines the integrated report framework endorsed by the International Integrated Reporting Council (IIRC) and has combined this report with the Global Reporting Initiatives Sustainability Reporting Guidelines, the fourth generation guidelines, more commonly known as the G4 Guidelines. Integrated Reporting An integrated report is a concise communication about how an organisation strategy, governance performance and prospects in the context of its external environment lead to the creation of value in the short, medium and long term. Integrated reporting however; is a process founded on integrated thinking that results in a periodic integrated report by an organisation about value creation over time and related communications regarding aspects of value creation. In true Integrated Reporting style in this report the content elements are fundamentally linked to each other and not mutually exclusive. Although the organisations management has undertaken to do an integrated report it is in the process of entrenching the integrated reporting processes within the organisation to catalyse integrated thinking, which is the active consideration by the organisation of the relationships between its various operating and functional units and the consideration of the stakeholder uses or affects. Integrated thinking leads to integrated decision making and actions that consider the creation of value over the short, medium and long term. Sustainability Reporting The Water Board is striving to achieve sustainability reporting, in line with Global Reporting Initiatives (GRI), the next generation of sustainability reporting (G4), which was released in May 2013. Previously Amatola Water undertook standard disclosures within the context of G3. Sustainability reports, reporting in line with GRI, conveys disclosures by an organisations of its most critical impacts, be it positive or negative on the environment, society and the economy. The Water Board aims to generate reliable, relevant, and standardized information with which to assess opportunities and risks, and enable more informed decision- making within the business and among the stakeholder’s. Amatola Water acknowledges its role and ultimate impact on the public at large in that it has undertaken to fully integrate the process of sustainability reporting. This report combines the aspects of annual and sustainability reports in a condensed narrative format. It addresses the long term integrated value offering including financial, human, social, environmental and intellectual capital. Amatola Water acknowledges that it is in the process of fully appreciating sustainability and integrated reporting and that through continuous improvement and implementation it will increase its standards of reporting. The standard and specific G4 disclosures are attached hereto on pages 106-119. 2 AMATOLA WATER SUSTAINABILITY AND INTEGRATED ANNUAL REPORT 2014/2015 REPORTING PROFILE This Amatola Water Board annual integrated report is reporting information for the financial year from 1 July 2014 to 30 June 2015. The Water Board annually reports in terms of its legislative compliance on its performance for the financial year which commences 1 July until 30 June. Last year, the Water Board released its first attempt at an integrated annual report for the financial year 2013/2014 in August 2014. The Board of Amatola Water and the Management acknowledge that this is the first attempt at sustainability reporting and second attempt at integrated reporting, but is dedicated and committed to achieving higher standards in both qualitative and quantitative reporting of this nature. The Board of Amatola Water and Management aims to achieve “In Accordance” reports and with the comprehensive option of disclosures made up of standard and specific disclosures as indexed pages 106-119 of this report. Principles of Integrated Reporting The Water Board strives to upgrade its standards for disclosure of information and this report, and in so doing, going forward, have implemented (and are committed to improving on) the seven basic guiding principles from the International Integrated Reporting Framework. These principles are: • STRATEGIC FOCUS AND FUTURE ORIENTATION As an integrated report this report provides insights into the organisation’s strategy, and how it relates to the organisation’s ability to create value in the short, medium and long term, and to its use of and effect on the capitals. • CONNECTIVITY OF INFORMATION As an integrated report this report shows a holistic picture of the combination, interrelatedness, and dependencies between the factors that affect the organisations ability to create value over time. • STAKEHOLDER RESPONSIVENESS As an integrated report this report provides insights into the nature and quality of the organisations relationships with its key stakeholders, including how and to what extent the organisation understands, takes into account and responds to their legitimate needs and interests. The organisations has identified its stakeholders and created varied opportunities for stakeholder communications, including direct dialogue. In line with G4 principles, the organisation also publishes contact details for relevant departments in the company that receive stakeholder feedback. • MATERIALITY As an integrated report this report discloses information about matters that substantively affect the organisation’s ability to create value over the short, medium and long terms. • CONCISENESS This annual integrated report aims to be concise with full, and transparent disclosures. • RELIABILITY AND COMPLETENESS This annual integrated report includes all material maters, both positive and negative, in a balanced way and without material error. For reliability the organisation provides messages and commitment statements from CEO and the Chairman of the Board and Chairman of Audit and Risk Committee and furthermore discloses in this report the extent of third party independent assurances. • CONSISTENCY AND COMPARABILITY The information in this annual integrated report is presented (a) on the basis that is consistent over time and (b) in a way that enables comparison with other organisations to the extent it is material to the organisations own ability to create value over time. The Water Board is committed to providing consistent and comparable information. Furthermore, in line with the G4 guidelines, the organisation actively discloses quantitative and qualitative data. 3 The Principles of Sustainability Reporting The Content Principles Amatola Water when defining this report content reviewed the Global Reporting Initiatives Reporting Content Principles and attempted to achieve these Content Principles as listed below, and are committed to improving through its reporting on the assurance of these content principles: • MATERIALITY The information in this report covers aspects that: • reflect the organisation’s significant economic, environmental, and social impacts; or is • Substantively influence the assessments and decisions of stakeholders. • STAKEHOLDER INCLUSIVENESS The organisation identified its stakeholders and explained how it had responded to their reasonable expectations and interests. • SUSTAINABILIT Y CONTEXT This report presents the organisation’s performance in the wider context of sustainability. • COMPLETENESS This report includes coverage of material aspects sufficient to reflect significant economic, environmental and social impacts, and to enable stakeholders to assess the organisation’s performance in the reporting period. • BALANCE This report reflects positive and negative aspects of the organisation’s performance to enable a reasoned assessment of overall performance. The Quality Principles The Water Board in ensuring quality of this report considered the following quality principles to