INTEGRATED ANNUAL REPORT Cementing the future of Namibia’s water supply TABLE OF CONTENTS

ABOUT THIS REPORT 1

CHAIRPERSON’S MESSAGE 3

ABOUT NAMWATER 5

2019/20 YEAR AT A GLANCE 6

NAMWATER’S OPERATIONAL MODEL 8

OUR SIX CAPITALS 10

NAMWATER’S GOVERNANCE STRUCTURE 11

BOARD OF DIRECTORS 12

CORPORATE GOVERNANCE 14

EXECUTIVE TEAM 18

CEO’s REPORT 20

PERSPECTIVE ON OUR BUSINESS 24

2019/20 PERFORMANCE 34

Financial perspective 38

Internal processes perspective 42

Customer perspective 58

Talent and technology perspective 64

Stakeholder perspective 74

ANNUAL FINANCIAL STATEMENTS 78

APPENDIX A 152

ii NamWater - 2019/20 ABOUT THIS REPORT

In the spirit of our long-standing concise and honest assessment of our Approval by the Board commitment to good corporate performance for the financial period between Responsibility for the integrity of the 01 April 2019 and 31 March 2020, focusing on integrated annual report rests with the governance, transparency and material issues that impact on our business. Board of Directors, which is assisted by the accountability, NamWater presents Audit and Risk Committee and Executive this Integrated Annual Report for the The principle of materiality has been applied Management. financial period 2019/20. in order to determine the content and extent of disclosure in the Integrated Annual Report. NamWater’s Board of Directors has To all our stakeholders who have an interest accordingly applied its collective mind and, in in NamWater, this report provides an overview Reporting principles its opinion, this integrated report addresses all of our governance, strategy, performance This report is compiled and presented material issue and offers a balanced view of and activities, all of which aim to generate in accordance with the requirements of its strategy and performance. lasting value for Namibians across the the Namibia Water Corporation Act 12 length and breadth of the country. NamWater of 1997 (as amended), the Code of Good We, as the Board, believe that this report strives to improve the quality of information Governance Principles for Namibia 2014 has been prepared in accordance with the on the supply of bulk water available to its (NamCode) and the IIRC’s International International Integrated Reporting Framework. stakeholders and an integrated report is Integrated Reporting Framework (2013). the most efficient approach to corporate NamWater has implemented these codes as The report has been approved by the Board on reporting. far as practicable and will work to improve 30 November 2020. implementation continually. As such, the report provides insight regarding BOARD OF DIRECTORS: NamWater’s resources, the relationships and Approvals and assurance Mr T. Maswahu - Chairperson risks inherent in running our business, and In accordance with the Public Enterprises Dr A. Matros-Goreses - Vice Chairperson explains how NamWater interacts with the Governance Amendment Act (Act 8 of 2015), Mr S. Haihambo - Non-executive director environment to create value over time. read together with the Companies Act (Act 28 Ms L. Ashipala - Non-executive director of 2004) as amended, the consolidated annual Mr J.R. Kaumbi - Non-executive director Embarking on a journey of integrated thinking, financial statements were audited by the Dr P. Mushendami - Non-executive director NamWater will strive to continuously improve Corporation’s independent external auditors, Ms V. Kinyaga - Non-executive director its use of integrated reporting. The report itself Grand Namibia. is prepared in accordance with the framework Mr M. Gaweseb - Non-executive director and guidelines of the International Integrated Ms A. Nsinano - Executive director Reporting Council (IIRC) and provides a Ms H. Jesaja - Non-executive director Annual Report - 2019/20

Integrated Annual Report - 2019/20 1 2 NamWater - 2019/20 CHAIRPERSON’S MESSAGE

the practicality of bringing water from the Kavango River to central Namibia.

Though the study is in an advanced stage of preparation, lockdown measures associated with COVID-19 have prevented the study’s team from completing it in the course of the reporting year. It is with keen anticipation that results are expected during the coming financial year.

As COVID-19 became a reality in Namibia towards the end of the reporting year, the impact of the pandemic, and the crucial importance of running water for hygienic purposes, will certainly continue to be felt by NamWater in the coming financial year. A crucial dimension of the attendant challenges will be local authorities’ ability to secure payment for water supplied. We foresee this becoming a major challenge, one that will need to be addressed at national Water is life, without which no man, The Khomas and Erongo regions will level. animal or vegetation can survive. In a remain the hub of the country’s industrial drought-prone country such as Namibia, development. In both areas, naturally available Overall, NamWater was able to fulfil its securing the water supply is a crucial and water resources will not be able to meet the mandate during the reporting year. The continuous challenge. demand. coming financial year shall witness the launching of several major infrastructural Having fulfilled its mandate to provide water In light of these realities NamWater projects aimed at securing water supply. of a high quality and to the satisfaction of all spent much time and effort during the These projects should also help stimulate the stakeholders—with regard for the environment, reporting year to initiate planning and to construction industry by creating jobs. and the scarcity and dependency of everyone investigate options for securing water on this precious resource—NamWater closed resources in the long term. In conclusion, I wish to express my the 2019/20 financial year on a resounding appreciation to the former Minister of then note. As the driving force on the Technical Agriculture, Water and Forestry, Hon. Alpheus Committee of Experts for the Cabinet !Naruseb, for unwavering support and The Corporation succeeded in supplying water Committee on water-supply security, strategic guidance during his tenure as line to all its customers, noting particularly those NamWater worked hard to cement the future minister. A word of appreciation is also due to who suffered from three consecutive years of of Namibia’s water supply. The committee’s Deputy Minister, Hon. Anna Shiweda, and the drought. In our northern regions, NamWater recommendations to Cabinet led to the Executive Director, Mr Percy Misika, for their needed to implement emergency measures approval of over N$1.8 billion to fund critical valuable support during the reporting year. to address the water shortage experienced by water-supply projects over the next five years, man and animals. a long-overdue investment in the growth and A word of welcome to the new Minister of prosperity of the country. Agriculture, Water and Land Reform, Hon. However, our work is never finished. Though Calle Schlettwein. We look forward to the NamWater must provide water to Namibians A key area of the committee’s work is benefits we will surely accrue from his on a daily basis, its primary challenge lies in development of the desalination option. Much extensive experience. securing the water supply for future access, has been said and discussed concerning especially in those areas where natural desalination, and given Namibia’s 1,500-kilometre I would also like to thank fellow members water resources are constrained or scarce, coast line, it appears to be a logical solution to of the Board of Directors, NamWater’s such as the central and southern regions the problem of scarcity. Desalination would be management team and our employees for of the country. Water is also a driver of the one way to secure the water supply over the long their hard work, as well as our customers for economy—nearly all industries depend heavily term. However, desalination technology is neither their continued loyalty. on water. simple nor cheap. NamWater will continue to provide quality For these reasons, the committee has water to Namibians, while cementing the studied desalination as a supply option security of long-term water supply. for the Khomas Region, comparing it with

THADDIUS MASWAHU Chairperson: Board of Directors

Integrated Annual Report - 2019/20 3 4 NamWater - 2019/20 ABOUT NAMWATER

NamWater is mandated to provide water of a high quality and to the satisfaction of its stakeholders, as well as provide all water-related services, taking the environ- ment, the issue of scarcity and universal dependency on water into consideration.

Our vision

Water For All, Forever!

Strategic values

• We serve NamWater’s interests as a priority. • We are performance driven. • We are unique. • We embrace diversity. • We build on synergy. • We practice discipline. • We are accountable.

What we do

NamWater is Namibia’s bulk supplier of water and water-related services to industries, government institutions, municipalities, local authorities and commercial entities such as mines.

NamWater also supplies water to secondary rural pipelines, serving communities through the Division of Water Supply and Sanitation Coor- dination within regional councils, in accordance with delegation by the Department of Water Affairs within the Ministry of Agriculture, Water and Land Reform.

In terms of Article 100 of the Namibian Constitution, land, water and natural resources belong to the State. As custodian of the natural water resources of Namibia, Government is responsible for providing water as a basic human need and enabler for development. The mandate to execute this Government responsibility and policy is embedded in NamWater’s purpose for existence.

Represented by the Board of Directors, NamWater is, therefore, the commercialised entity with regards to water management, the Govern- ment of Namibia being its sole shareholder.

The Corporation strives to provide its customers with a reliable supply of quality water at affordable rates and to recover the full cost of sup- plying that resource to sustain a viable enterprise to this end.

It is the duty of the Board of Directors to ensure that NamWater man- ages Namibia’s scarce water resources in the best interests of the country and the Namibian people.

Integrated Annual Report - 2019/20 5 2019/20 YEAR AT A GLANCE

NamWater succeeded in providing a Revenue increased with N$52 million, The year witnessed extensive planning sufficient volume of water to meet the from N$1.624 billion to N$1.677 for the purpose of identifying infra- demand during the reporting year, to billion. This represents an increase of structural projects that would secure include the period of lockdown due to the COVID-19 pandemic, thereby 3.2 per cent. the supply of water over the long term. fulfilling its mandate.

As the nation faces the threat posed by the COVID-19 pandemic, the importance of clean water to the nation is more pertinent than ever before. Washing hands and maintaining hygienic practices are crucial to fighting the virus. NamWater faces two major challenges: As national bulk-water supplier, NamWater was called upon to NamWater’s infrastructure has aged develop measures that would to the point that is typified by the fact ensure a continuous supply of that most maintenance work carried out water. during the reporting year was conducted after breakdowns. This is an unhealthy position for the Corporation, which Various measures were imposed also faces a shortage of skilled human without regard for their expected resources in technical fields, placing a impact on company finances, major strain on operations. such as lifting water rationing, bypassing customers who had been on prepaid water-metering systems, and supplying water to vulnerable communities with water tankers.

6 NamWater - 2019/20 Integrated Annual Report - 2019/20 7 NAMWATER’S OPERATIONAL MODEL HOW WE CREATE VALUE

CAPITAL INPUTS

1. Natural resources capital Our value chain activities ‘Natural resources’ refers to all renewable and non-renewable resources in the environment, as well as processes that provide goods and services 1. Harvest supporting the current and future prosperity of NamWater. They include water, air, land, minerals and Water harvesting refers to harvested rainwater runoff from forests, as well as biodiversity in the ecosystem. catchments, rivers and streams. This collected water is stored 2. Financial capital for use at a later point in time or recharged into groundwater. Rain is the country’s primary source Financial capital is represented by the pool of funds of water; lakes, groundwater and available to NamWater for the provision of service, rivers are secondary sources. namely the supply of quality water services at affordable prices. NamWater’s financial capital is obtained through 2. Storage financing mechanisms such as debt, equity or grants, Water storage is a broad term or that which is generated through operations and referring to the storage of investments. both potable water for human consumption, and non-potable water for use in agriculture. 3. Operational capital This is accomplished with dams and reservoirs, in which water is collected and kept in volume Operational capital refers to ‘manufactured’ objects, which so that it may be drawn for use are part of NamWater’s infrastructure, that are available when in demand. to the Corporation for use in the provision of water to Namibians. 3. Abstraction Groundwater abstraction 4. Intellectual capital is the process of taking water from an underground source, either temporarily Intellectual capital is the sum of NamWater’s knowledge- or permanently. Most based intangibles, which include intellectual property, such water is treated to produce water either for drinking or as patents, copyrights, software, rights and licenses, as well irrigation. as tacit knowledge, procedures and processes.

5. Human resources capital

Human resources capital refers to NamWater’s employees 4. Purification and the competencies, capabilities and experience they Water purification is the possess. It also includes their personal motivation removal of undesirable to innovate, their alignment with and support for chemicals, biological contaminants, suspended NamWater’s governance framework, risk-management solids and gases from approach and ethical values. In addition, it includes their raw water to produce loyalty and motivation to improve the processes, goods water that is of a quality high enough for human and services they manage, as well as their ability to consumption or for lead, manage and collaborate. industrial use. 5. Bulk distribution 6. Social and relationship capital Bulk distribution refers to Social and relationship capital refers to the the delivery of water for drinking or for industrial- relationships NamWater maintains with key use to customers, either by stakeholders, within and between communities, means of pipelines or tanker trucks. Annually, NamWater groups of stakeholders and other networks, as distributes 135 million well as its ability to share information in order to cubic metres of water to its enhance individual and collective wellbeing. customers.

8 NamWater - 2019/20 Our five strategic themes Our top five risks

1. Insufficient availability of water. 1. We care. 2. Failure to implement critical water infrastructure projects. 2. We secure water. 3. Inability to collect significant percentage of revenue from 3. We grow through innovation. water sales to rural communities and local authorities, and non-cost reflective tariffs. 4. We are efficient. 4. Inability to grow market share which will negatively 5. We attract quality. impact on real sales growth. 5. Inability to execute our mandate.

CAPITAL Our customers OUTCOMES

1. Ministries VALUE 1. Financial capital PROPOSITIONS (Financial perspective) By focusing on pp 38-41 outcomes, we can create shared value for all our stakeholders. 2. Operational capital (Internal processes FOR CUSTOMERS 2. Commercial industries Daily supply of high-quality perspective) water at affordable prices pp 42-57 to households, for drinking cleaning and cooking, as well as to commercial 3. Natural resources enterprises to ensure their long-term sustainability. capital (Customer perspective) pp 58-62 FOR EMPLOYEES 3. Regional customers Helping employees to learn and to earn, innovate 4. Human resources capital and grow, as responsible stewards of Namibia’s water (Talent and technology resources. perspective) FOR OUR pp 64-71 SHAREHOLDER 4. Local authorities Fulfilling our mandate to provide quality water 5. Intellectual capital (Talent at affordable prices to and technology perspective, Namibians, and through this service, assist the Research and development Government to achieve activities) Vision 2030, HHP and NDP5 goals. pp 72-73 Local authorities’ FOR SOCIETY customers Efficiently securing and 6. Social and relationship supplying affordable water capital (Stakeholder to key stakeholders, and thereby serve society to the Households perspective) best of our ability. pp 74-77

Integrated Annual Report - 2019/20 9 OUR SIX CAPITALS

All companies and institutions depend on various forms of capital or resources for the execution of their operations. In this Integrated Annual Report, the reporting capitals, or pillars of NamWater’s business, are established in the financial, operational, intellectual property, human resource, social and relationship, and natural-resource environments.

The capitals are resources of value that increase, decrease or are transformed through the activities and outputs of the Corporation, and therefore are never fixed in time. A constant flow occurs between and inside the capitals as they evolve. For the purpose of this report, the capitals are categorised and described as follows:

Financial capital

Financial capital is the pool of funds available to the Corporation to provide services, supplying quality water at affordable prices, and is obtained through financing mechanisms such as debt, equity or grants, or generated through operations or investments as presented in the financial statements. Intellectual capital Operational capital Intellectual capital is the sum of NamWater’s knowledge-based intangibles, which include intellectual property, such as patents, Operational capital refers to ‘manufactured’ objects, which are part of copyrights, software, rights and licenses, as well as tacit knowledge, NamWater’s infrastructure, that are available to the Corporation for use procedures and processes. in the provision of water to Namibians. Human resources capital

Human resources capital refers to NamWater’s employees and the competencies, capabilities and experience they possess. It also includes their personal motivation to innovate, their alignment with and support for NamWater’s governance framework, risk-management approach and ethical values. In addition, it includes their loyalty and motivation to improve the processes, goods and services they manage, as well as their ability to lead, manage and collaborate.

Social and relationship capital

Social and relationship capital refers to the relationships NamWater maintains with key stakeholders, within and between communities, groups of stakeholders and other networks, as well as its ability to share information in order to enhance individual and collective wellbeing.

Natural resource capital

‘Natural resources’ refers to all renewable and non-renewable resources in the environment, as well as processes that provide goods and services supporting the current and future prosperity of NamWater. They include water, air, land, minerals and forests, as well as biodiversity in the ecosystem.

10 NamWater - 2019/20 NAMWATER’S GOVERNANCE STRUCTURE

SHAREHOLDER: GOVERNMENT OF THE REPUBLIC OF NAMIBIA AS REPRESENTED BY THE MINISTER OF AGRICULTURE, WATER AND LAND REFORM

Hon. Calle Schlettwein Minister of Agriculture, Water and Land Reform

BOARD OF DIRECTORS

CHIEF EXECUTIVE OFFICER

Integrated Annual Report - 2019/20 11 BOARD OF DIRECTORS

The role of the Board of Directors is to ensure that NamWater follows principles of good corporate governance, which is vital to its compliance with laws and legislative frameworks. Corporate governance further ensures that the Board acts in a manner that is accountable before its sole shareholder and demonstrates transparency to its stakeholders. The Board is ultimately accountable for the Corporation’s strategy and oversight of the business, and it reports to the Corporation’s shareholder. The Board establishes strategic objectives, policies, performance criteria and delegates their planning and implementation to management, within relevant risk parameters. Achievements and conformance with agreed parameters are monitored through performance reports and budget updates.

Mr Thaddius Maswahu Dr Anna Matros-Goreses Mr Michael Gaweseb Chairperson Deputy Chairperson Director

Mr Maswahu was initially appointed on Dr Matros-Goreses was initially appointed on the Mr Gaweseb was initially appointed on the the Board in April 2014 as a director and Board in April 2014 and reappointed in 2017, at Board in 2014 and reappointed in March reappointed in 2017, at that time also as which time she was also appointed as Deputy 2017, and is now serving in the Board Chairperson of the Board. He holds academic Chairperson of the Board. During the second Strategy Committee. He is a consumer qualifications in Marketing and served as term she has also served as the Chairperson rights activist who is a holder of a Master of a Marketing Executive in various Namibian of the Audit Committee. She holds a PhD in Business Administration degree. He served companies, with the latest portfolio held being Water Science and Management specialising on the boards of various public enterprises the Marketing Executive at Standard Bank in Economic Regulation of Water Pricing and is in Namibia, the Council of Consumers Namibia Ltd until 2015, when he went into currently employed as the Director of the Project International in London, ACP-EU Follow-up private business. He is currently a Namibian Services Unit at the Namibia University of Science Committee in Brussels, as well as on the entrepreneur, particularly with interests in the and Technology. She has worked in the water Review Panel under the Ministry of Finance. fuel retail sector. sector before moving to the academic sector.

Ms Hilde Jesaja Ms Viviane Kinyaga Dr Postrick Mushendami Director Director Director

Ms Jesaja was initially appointed on the Board Ms Kinyaga was appointed on the Board in Dr Mushendami was appointed on the in 2014 and reappointed in March 2017, now March 2017, and serves as a member of the Board in March 2017, and has served as the serving in the Board Remuneration and HR Board Strategy Committee. She holds a MSc in Chairperson of the Remuneration and Human Committee. She holds academic qualifications Integrated Water Resources Management and Resources Committee, as well as being a in the areas of public administration and has is currently employed at the Benquela Current member of the Board Audit Committee. He served in various positions in the local authority Commission Secretariat. She was previously holds a PhD in Economics and is currently governance structures, having previously served the Executive Director of the Desert Research employed as the Deputy Director at the Macro as the Mayor of Otjiwarongo. She is currently Foundation of Namibia. Models and Financial Stability Department at employed in the Ministry of Home Affairs in the Bank of Namibia. Otjiwarongo and also serves as a Councillor in the Otjiwarongo Town Council.

12 NamWater - 2019/20 Mr Sikongo Haihambo Mr Joshua Razikua Kaumbi Director Director

Mr Haihambo was appointed on the Board in Mr Kaumbi was appointed on the Board in March 2017, and serves as the Chairperson March 2017, and serves as a member of the of the Board Strategy Committee, as well Board Remuneration and Human Resources as being a member of the Board Audit Committee and the Board Audit Committee. Committee. He holds academic qualifications He holds academic qualifications in Political in the areas of Business Management and Science and Law, and is an admitted legal Strategy and is currently working as a private practitioner. Mr Kaumbi is currently employed Consultant mainly in the areas of strategy. as Chief Legal Adviser at the Namibia Mr Haihambo has previously worked as University of Science and Technology and has the Acting Statistician General, as well as previously practiced law in private practice as the Deputy CEO: Operations at Millennium the principal of JR Kaumbi Incorporated. Challenge Account, amongst other roles.

Ms Laura Ashipala Ms Aino Nsinano Director Director

Ms Ashipala was appointed on the Board in Ms Nsinano was appointed on the Board in March 2017, and serves as a member of the March 2017 as an employee representative Board Remuneration and Human Resources in line with the NamWater Act provisions, and Committee. She holds an MSC academic serves as a member of the Board, as well as qualifications in Water Resources Management on the Board Strategy Committee. She has an and Engineering and has previously served Masters of International Business, a Bachelor in the Department of Water Affairs. She is of Accounting, a post graduate diploma in currently employed as a Water Scientist at the Management practice specialising in Innovative Department of Infrastructure and Technical Management, and participated in Management Services in the City of Windhoek. and Senior Management Development programmes. She is currently employed as the Head Financial Accounting in NamWater.

Integrated Annual Report - 2019/20 13 CORPORATE GOVERNANCE

14 NamWater - 2019/20 PROTECTING VALUE THROUGH EFFECTIVE CORPORATE GOVERNANCE

NamWater’s vision is to function as an operating, diversified bulk-water-supply company that provides quality water and related services to the satisfaction of its stakeholders, acting responsibly with regard to the environment, the scarcity of water and the dependency that all have on water.

The Board, its committees, executives and employees of NamWater are The Board of Directors is responsible to the company’s stakeholders devoted to achieving the highest standards of corporate governance, for the oversight and implementation of governance, in the conduct of corporate responsibility, risk management and social responsibility. business.

Application of the provisions of the THE BOARD OF DIRECTORS NamCode (2014) and the King IV Composition and attendance

Report on Corporate Governance During the year under review, the Board was comprised of the 2016 following directors: • Mr T. Maswahu - Chairperson The Board of Directors confirms that the company during the • Dr A. Matros-Goreses - Vice Chairperson year under review, has applied the provisions of the NamCode • Mr S. Haihambo - Non-executive director (2014) to the King (IV) Report on Corporate Governance (2016). • Ms L. Ashipala - Non-executive director • Mr J.R. Kaumbi - Non-executive director • Dr P. Mushendami - Non-executive director Code of ethics • Ms V. Kinyaga - Non-executive director • Mr M. Gaweseb - Non-executive director NamWater is committed to operating in accordance with the • Ms A. Nsinano - Executive director highest standards of professional and business ethics, through • Ms H. Jesaja - Non-executive director the development of a community of directors and employees who share the highest ethical values. In terms of gender profile, males and females are equally represented on the Board. Amongst the best practices to which the directors, management and employees dedicate themselves are the following: Operations of the Board • Compliance with all statutory provisions, both legislative and regulatory The Board establishes strategic objectives, policies, performance • The protection of human life by observance of edge safety, criteria and delegates their planning and implementation to health and environmental practices management, within relevant risk parameters. Achievements and • Treatment of all employees and stakeholders with respect conformance with agreed parameters are monitored through • Eschewing discrimination for any reason against any performance reports and budget updates. person • Ensuring equality of opportunity, based on merit, for all employees Matters reserved for the Board • Ensuring quality of life for all stakeholders by improving the environment The Board reserves for itself the adjudication of certain matters. • Upholding the integrity off all stakeholders These matters include, but are not restricted to, the following: • Respect for the cultural background of all stakeholders • Approval of financial statements • Avoidance of potential conflicts of interest with transpar- • Annual capital and operational expenditure plan ency by declaring all interests • Major capital projects • Deploying company resources solely for the benefit of the • Significant changes to the organisational structure company and its shareholders, and • Approval of policies • Providing all employees with opportunities to develop and • Risk management, and advance professionally. • Oversight of assurance.

Integrated Annual Report - 2019/20 15 PROTECTING VALUE THROUGH EFFECTIVE CORPORATE GOVERNANCE (continued)

Training and upgrading the knowledge of secretary does not serve the Corporation as a director and maintains a position of independence characterised by reserve in the office’s directors relationship with the Board and its executives.

Directors are provided information necessary to discharge their The Board’s function is guided by principles encapsulated in a Board responsibilities as members of the Board of Directors and, in certain charter and subcommittee charters, which serve as terms of reference instances, as members of subcommittees of the Board. for the work of the Board and its committees. These were reviewed by the Board and subcommittees during the financial year. All directors have access to the company secretary, who provides independent professional advice. The company secretary advises the chairman and directors, individually and collectively, with regards to corporate governance and compliance with legislation. The company

Committees of the Board of Directors

AUDIT AND RISK COMMITTEE The terms of reference of the committee include, but are not restricted to, the following: Dr A. Matros-Goreses (non-executive director) served as chairperson of the Audit and Risk Committee during the period • Ensure that remunerative scales conform to guidelines pro- under review. She, together with Mr J. R. Kaumbi (non-executive vided by Ministry of Public Enterprises remunerative structures director), Dr P. Mushendami (non-executive director) and Mr S. • Ensure, in consultation with management, that employees Haihambo (non-executive director), served as the committee’s receive market-related remuneration packages. members. • Ensure that remuneration practices reward productivity and each employee’s contribution to the improvement of company The committee’s responsibilities, which are defined in its terms outcomes. of reference include, but are not restricted to, the following: STRATEGY COMMITTEE • Review the effectiveness of internal controls, to include internal financial control and business-risk management During the period under review, members who served on the • Evaluate the effectiveness of the external auditors Strategy Committee were Mr S. Haihambo (chairperson), Mr M. • Approve fees paid to the external auditors Gaweseb (non-executive director), Ms V. Kinyaga (non-executive • Review the financial statements director) and Ms A. Nsinano (executive director). • Review the audit findings • Ensure that risk and control processes are relevant and are The Strategy Committee is tasked to assist the Board of Directors effectively communicated within the Corporation in fulfilling its oversight responsibilities relating to the medium- and • Ensure that risk assessments are conducted regularly in long-term strategic direction and development of the Corporation. order to identify emerging and fluctuating risks • Enhance the Corporation’s risk-management framework of The committee provides advice and expertise so that strategic prudent and effective control options may be explored fully before being tabled at Board meetings • Enable risk assessment and management appropriate to the for deliberation and approval. evolving structure and needs of the Corporation • Communicate the Corporation’s risk-management strategy TECHNICAL COMMITTEE to all employees, ensuring it is incorporated into the lan- guage and culture of the Corporation, and The members of the Technical Committee who served during • Satisfy members of the committee that appropriate steps the period under review were Ms V Kinyaga (chairperson), Mr T. have been taken to manage risk and to minimise the effect Maswahu (non-executive director), Ms L. Ashipala (non-executive of loses on the Corporation. director), Ms A. Nsinano (executive director) and Dr A. Matros– Goreses (non-executive director). REMUNERATION AND HUMAN RESOURCES COMMITTEE The Technical Committee is tasked to conduct investigations, analyses and to exercise diligence for the purpose of validating and Members serving on the Remuneration and Human Resources testing the technical aspects of the Corporation’s operations and Committee during the period under review were Dr P. capital-project development. Mushendami (chairperson), Mr J.R. Kaumbi (non-executive director), Ms L. Ashipala (non-executive director), Mr T. Maswahu (non-executive director) and Ms H. Jesaja (non-executive director).

16 NamWater - 2019/20 Statutory provision of fees paid to Company secretary directors The company secretary oversees the portfolio of the secretariat and governance advisory services, and plays a critical role as the legal and In terms of the Public Enterprises Governance Act 1 of 2019 the Board governance advisory to the Board, in regards to risk and compliance may, in consultation with the Minister of Agriculture, Water and Land management and attends all Board and committee meetings as Reform, determine the fees payable in respect of the chairperson and secretary. The company secretary’s role is pivotal to entrenching good other directors for service as members on the Board of Directors of the corporate governance. Corporation. The Board fees are effective as of 16 April 2018 as passed by the Ministry of Public Enterprises. Payment in the upper quartile: the The Board and its individual directors have access to the company table below depicts payments made to directors. secretary, who is charged with the task of guiding members in the discharge of their duties and responsibilities in the best interests of Board of Directors Fees the Corporation. The company secretary oversees the preparation and coordination of induction and ongoing training of Board members. SITTING FEES BOARD SUB COMMITTEE Internal audit Chairperson N$14,372.65 N$6,978.48 Director N$8,127.75 N$4,762.47 The Internal Audit Unit is an independent, assurance service provider. RETAINER The propose, authority and responsibility of the Internal Audit Division Chairperson N$8,677.14 N$4,215.68 is defined in the Internal Audit Charter, which is approved by the Board Director N$7,088.18 N$2,719.33 Audit Committee. The Internal Audit Charter is in line with best practice guidelines stipulated by the Institute of Internal Auditors. Internal The shareholding Minister confirmed that NamWater employees and audit function gives the Audit and Risk Committee and management civil servants are also entitled to Board fees, provided they attend Board assurance regarding the appropriateness and effectiveness of internal meetings while on approved leave of absence from work, as the same controls. provision is applicable to Board members in the employ of the State. The Internal Audit Unit, represented by the Head: Internal Audit, reports to the Audit and Risk Committee on a quarterly basis and has Relations with stakeholders unrestricted access to the chairperson and the committee members. NamWater ceased the co-sourcing agreement, which was entered into NamWater conducts an ongoing dialogue with its stakeholders, with with an external service provider to serve as the vehicle through which business analyst/advisers and with stakeholders from other sectors. internal audit assurance could be provided. The agreement, which was The shareholding minister, the Minister of Agriculture, Water and in place for a three-year period, ended on 16 October 2019. Since then, Land Reform, presides over the annual general meeting at the end assurance was solely provided by the in-house Internal Audit Unit. of the financial year, during which the minister is presented a report of NamWater’s financial results, as well as other activities of the In an effort to ensure the sustainability and continuous strengthening Corporation, achieved during the financial year. of internal controls across all the Corporation’s Business Units, it is NamWater’s strategic initiative to strengthen capacity within the in- Board charter house Internal Audit Unit.

The Board’s function is guided by principles encapsulated in a Board charter and subcommittee charters, which serve as terms of reference for the work of the Board and its committees. These were reviewed and approved in line with corporate-governance best practice.

Integrated Annual Report - 2019/20 17 EXECUTIVE TEAM

NamWater’s day-to-day activities are overseen by a passionate group of fully committed individuals, who ensure that the Corporation fulfils its mandate and realises its vision to supply water continuously for all Namibians.

NamWater’s executive team is seriously intent on striking a balance between achievement of the Corporation’s mission and responsibility to the environment, given the currently challenging economic climate and ongoing conditions of drought.

As a commercial bulk-water provider, equilibrium must be sought between NamWater’s objective, namely providing water for the nation, and ensuring that the Corporation is run with adherence to sound financial practices that will guarantee sustainability.

It is imperative that NamWater does not overburden the Namibian Government financially as its sole stakeholder, and at the same time builds public trust as a long-term sufficient supplier and distributor of affordable, quality water.

Abraham Nehemia Dr Kaliki Kambanda Coenie Koegelenberg CHIEF EXECUTIVE OFFICER CHIEF: WATER SUPPLY NORTH CHIEF: WATER SUPPLY COASTAL

Kadiva Hamutumwa Fernando Somaeb Onni-Ndangi Iithete CHIEF: STRATEGY AND NEW BUSINESS CHIEF FINANCIAL OFFICER HEAD: LEGAL SERVICES AND COMPANY DEVELOPMENT SECRETARY

18 NamWater - 2019/20 Dr Eino Mvula Andries Kok CHIEF: WATER SUPPLY CENTRAL ACTING CHIEF: WATER SUPPLY SOUTH

Etheldreda Nandi Timothy Silombela HEAD: INTERNAL AUDIT ACTING HEAD: PROGRAMME MANAGEMENT

Integrated Annual Report - 2019/20 19 CEO’S REPORT

It gives me great pleasure to introduce the NamWater Integrated Report for the year ending 31 March 2020.

The financial year 2019/20 was characterised by extensive planning to prepare NamWater to meet the challenges of the coming decade, cementing the future of Namibia’s water supply, while at the same time ensuring a continuous supply of water to our customers in the short term.

Delivering on our strategic themes

In preparing this Integrated Report, we have utilised the framework provided by the International Integrated Reporting Council (IIRC) and report our performance during the reporting year, following the outline of our five strategic themes: • We care • We secure water • We grow through innovation • We are efficient, and • We attract the best.

This format deviates from former reporting structures, a change we believe has produced a more transparent report—not only because of its adherence to the IIRC’s framework, but because it clearly articulates the Corporation’s performance to our shareholder and stakeholders. It is a complex, yet important task to report performance in a transparent manner, to enable stakeholders to see, as clearly as we do, the daily realities we face.

Financial performance

The overall financial strength of the Corporation increased year-on-year, as the net equity position of NamWater improved by 7 per cent. This was on the back of increase in assets by 2 per cent and reduction in liabilities by 0.26 per cent. Abraham Nehemia Chief Executive Officer The consistent revenue generation, along with robust expense deployment strategies, has allowed the Corporation to deploy further capital towards capital infrastructure, as net current assets increased by 25 per cent compared with the previous financial year. Although the drought years was a prevalent factor, varios initiatives assisted NamWater to reduce its overall funding gap.

At the end of the reporting year, the Corporation reported a operating profit margin of 4 per cent compared with a budgeted deficit margin of -0.2 per cent. This was driven by higher water sales to City of Windhoek towards the end of the year and under-expenditure on most of the cost elements.

Revenue collection and water supplied

During the reporting year, NamWater supplied 135 million cubic metres of water to our customers, which is 9.6 per cent less than the previous reporting year when 142 million cubic metres of water were supplied. This was due to the drought experienced during the year when less water was available in dams.

20 NamWater - 2019/20 We collected sufficient revenue to ensure of crucial shortages will be tracked. In the Corporation’s financial and operational addition, attention will be directed to the sustainability. Our revenue increased with execution of priority infrastructure projects. 3.2 per cent from N$1.624 billion to N$1.677 billion. The cost of energy to run operations During the reporting year, NamWater’s aging was managed within the year’s target. Energy infrastructure produced a situation in which costs are among the four highest operational 80 per cent of the repair and maintenance costs. Consequently, it is imperative to work accomplished followed breakdowns. manage them effectively and efficiently. There was also an upswing in system failures compared with the previous year, specifically The drought experienced during most of the during the period between September 2019 reporting year commanded our attention. The and March 2020. Board approved a sum of N$18.85 million to finance emergency measures to bring water to This statistic indicates that water schemes areas where the effects of three consecutive are old, or staff needed to perform scheduled At the end of the reporting year, NamWater’s years of drought had impacted most heavily, maintenance is simply not available. Regularly Capital work-in-progress was valued at especially in the northern regions of the scheduled maintenance would be required N$841 million. Capitalisation for the year country. N$10 million of that amount was to turn this 80-per-cent ratio in the opposite under review is N$68 million compared to allocated to drill boreholes and upgrade direction, which could only be achieved with N$80.1 million of 2018/19, an indication of the borehole infrastructure. a staff complement large enough to perform slow execution of capital projects. that scheduled maintenance. Currently, Facing major challenges NamWater is unable to employ the necessary This situation forced NamWater to review its number of artisans, handymen and work infrastructural projects, prioritising those that hands to do this due to scarcity of these skills. would have the greatest impact in securing NamWater continues to face weighty the water supply in the future, and focusing all challenges: low reservoir levels, an aging At the same time, NamWater continues to its efforts on those projects. infrastructure and a paucity of technical lose valuable talent due to the normal toll of skills needed to maintain and upgrade employee retirement, producing skills gap infrastructure. Mitigating challenges between those with insufficient skills and those who left employment. A drought-prone country that has experienced Mitigating these challenges, the Board approved another season marked by low rainfall, a medium-term initiative to re-employ certain Furthermore, the slow execution of capital Namibia must deal with a trend of sinking retired water specialists, specifically for project projects placed a burden on the Corporation, reservoir levels below 50 per cent. Despite this management of priority infrastructural projects. which created a huge impact on assets trend, overall the country’s reservoirs did not operations, as equipment was utilised beyond drop below 60 per cent on average during the These specialists have also been tasked with its design parameters. Currently, due to the reporting year. upgrading the skills of relevant technicians at high water demand, some schemes were NamWater, to strengthen the Corporation’s pool over-utilised, producing breakdowns as the The trend is an indication that the demand of technical skills. operational norm. for water exceeds the supply. In the coming financial year, critical reservoirs will be identified for which water levels and incidents

Integrated Annual Report - 2019/20 21 CEO’s Report (continued)

The Corporation’s organisational structure responsible for managing the water supply in and upgrade it, or invest in a new one, was also revised with the Board’s approval their rural areas. incorporating the latest technology. during the reporting year. Senior- and middle- management positions were reviewed with Unfortunately, NamWater’s budget cannot afford Securing the water supply in the Khomas assistance from external consultants; lower expenditure for infrastructural development or Region presents two options: moving echelons were reviewed in-house. technical skills at the rural level. However, when desalinated water to the region from the customers in rural areas encounter water- coast or bringing water from the Kavango NamWater operations are highly technical supply problems, they inevitably end up at our River south. Each of these options requires in nature. Technical expertise, unfortunately, door, seeking a solution. an extensive study being conducted by is in short supply and the Corporation is in outside experts. This study would have competition with the private sector for the Currently, NamWater supplies more than been completed had lockdown measures limited number of artisans and technical 51,946 rural households that depend on it associated with the COVID-19 pandemic not experts it requires to close the skills gap. for water, which should be managed through regional councils. It is a managerial challenge interrupted the process. Due to these shortages, recruiting efforts by that will stay with us for the foreseeable future, NamWater’s Human Resource Development and the Corporation will need to address The study is 70 per cent completed and will Centre (HRDC) remain critical. NamWater it in the upcoming financial year with the be concluded during the coming financial has funded the training of artisans since assistance of the line ministry. year. This study is crucial to cementing a its inception. Many artisans who received long-term solution for securing the water qualifications through the efforts of the Stakeholder engagement and supply in these regions, and will bring to an Corporation’s HRDC are keeping the engines labour relations end the long-standing debate regarding their of the Namibian economy running. relative feasibility. We look forward with great The reporting year produced a number of anticipation to its conclusion. During the reporting year, 116 artisans stakeholder engagement initiatives. The received qualifications, of whom 15 were management team and I met with regional In conclusion water-care artisans (specialising in water governors and local authorities, meetings and wastewater treatment) and 21 were that contributed substantially to improving The COVID-19 pandemic has created an training officers. NamWater will continue to relationships with those entities. impact on the Corporation through a chain of support our HRDC in its endeavour to enlarge economic challenges whose origins lie in the the country’s vocational skills pool. Significant improvements in labour relations job market as Namibians lose employment were also effected during the reporting year, and income, affecting their ability to pay for Taking hands with local which in turn produced an improvement in basic services, access to water obviously authorities employee morale. being the most crucial to life. Another challenge that foreseeably will stay Desalination study As a result, NamWater has been forced with us is the ability of local authorities to to ‘open the taps’, so to speak, to ensure continuation of the water supply to the collect revenue from their customers. If they As the Chairperson noted in his message, fail to collect payment for water consumed by country, even though many local authorities much discussion in the reporting year circled their customers, municipalities will neither be have been slow or unable to pay for water the subject of desalination. Due to the fact in a position to pay NamWater. This situation as they struggle to exact payment from their needs to be addressed as a matter of urgency. that the Kuiseb River and Omdel aquifers are customers. under considerable pressure, desalination seems to be the only option for cementing This situation is expected to hit the Decentralisation of rural water Corporation particularly hard during the supply the future of the water supply in the Erongo Region—that much is a given. coming financial year. The economic challenges and impact on the job market The decentralisation of the rural water supply due to ongoing restrictions associated However, the Corporation needs to remains a challenge for the Corporation with the pandemic will exacerbate the that needs to be addressed. NamWater is a determine the feasibility to take over the financial position of local authorities even bulk supplier, while the regional councils are Orano desalination plant at Wlotzkasbaken further, whose effect will in turn impact on NamWater’s revenue collection.

22 NamWater - 2019/20 Appreciation NamWater is moving. I believe the decade we are entering will see dramatic changes in Namibia’s I wish to extend a word of appreciation to the water sector, and NamWater will be on the scene Board of Directors, under the leadership of Mr to lead the country into a new era of cementing Thaddius Maswahu, for its invaluable strategic the future of the country’s water supply. guidance during the reporting year.

I want to thank our customers for their continued support and patronage.

I extend a warm expression of appreciation to Abraham Nehemia my management team and staff for their hard Chief Executive Officer work, dedication and loyalty.

I am enthusiastic about the future of Namibia and the next phase of development into which

Integrated Annual Report - 2019/20 23 PERSPECTIVE ON OUR BUSINESS

24 LEGISLATIVE ENVIRONMENT As a public enterprise, NamWater is subject to a gamut of laws, policies and regulations that shape the Corporation’s operational environment. Key legislation that affected the Corporation during the period under review included the following: Public Enterprises Governance Act (Act 8 of 2019) The Public Enterprises Governance Act (Act 1 of 2019) replaced the State-Owned Enterprises Governance Act (Act 2 of 2006) and was gazetted on 17 May 2019. The act creates a new blueprint for regulating all public enterprises (PEs). The issue of PE classification came under scrutiny during the period under review and it was resolved that NamWater would remain a tier-3 PE and continue reporting to its shareholding minister in the Ministry of Agriculture, Water and Land Reform.

Public Procurement Act (Act 15 of 2015) During the preceding review period it was established that the Corporation would be required to align its operations with a new procurement regime as prescribed in this legislation. Certain activities continue uninterrupted in order to facilitate the implementation of the Act. The procurement committee has made valuable recommendations, playing an important role in the revised procurement process.

Water Resources Management Act (Act 11 of 2013) Though the Water Act (Act 54 of 1956) remained in force during the period under review, pending the implementation of a new Water Resources Management Act (Act 11 of 2013), discussions within the Corporation continued to be dominated by developments associated with the new legislation. It is crucial that NamWater be prepared for the implementation of the Act. Throughout the period under review, the authorities formulating new regulations under the Act kept the Corporation up to date on developments. Full implementation of the Act will have a significant impact on NamWater’s operations, particularly through appointment of various statutory bodies, to include a regulator. In terms of NamWater compliance, prompt follow-up on issues affecting water regulation will be critical.

Water Quality Standards and Guidelines Under the Water Resources Management Act (Act 11 of 2013) A key area that will be affected by the implementation of the new Act is the introduction of new water-quality standards and guidelines that will eventually be annexed to the Water Resources Management Act. While the full implementation of these standards and guidelines may lie sometime in the future, it is important that the Corporation—the entity that will be most affected by the new regulations—prepares itself for the requirements to be imposed under a new water- quality regime. The NamWater team is fully aware that the introduction of the new standards and guidelines will mean ‘business unusual’ for the Corporation and it will be important that we are prepared for these changes in the laws governing our operations.

Environmental Management Act (Act 7 of 2007) The nature of the service provided by NamWater dictates that utmost care is observed in complying with relevant environmental laws and regulations. In this regard, the Environmental Management Act stands out as the primary legislation protecting the country’s natural resources. We believe NamWater is a leader in best practice by ensuring that appropriate authorisation for new schemes is always obtained. The Corporation aspires to stand as a model of compliance with regard to this important legislation.

25 OVERVIEW OF OUR OPERATIONS

NamWater is mandated to supply water of acceptable quality and in sufficient volume to the nation. Consequently, our operations are spread across Namibia, covering the length and breadth of the country.

The mandate itself represents a great infrastructure. With consideration of all their water requirement. NamWater remains challenge, because it is often expected that of the factors involved, it is a remarkable the supplier of choice for other industrial water-supply solutions be engineered for achievement that the average NamWater customers as well, which include processing communities living at great distances from tariff is only 1.5 cents per litre, which is plants that require large quantities of water water resources. NamWater utilises innovative about 1,000 times cheaper than the bottled continuously. technologies, which vary in their complexity water available in the marketplace. and cost, to be able to supply diverse Retail customers communities in a country that must cope with NamWater products While the Corporation’s mandate does not seriously limited water resources. stipulate supply to individual customers NamWater’s product is either raw, meaning per se, it has become difficult to ignore Maintenance of infrastructure is an integral untreated water, or potable, which is treated demands from individual users when they part of the strategic activities inherent in water. The NamWater supply chain consists live in proximity to NamWater’s pipelines and the Corporation’s ongoing operations. The of harvesting, storing, abstracting, purifying schemes. The number of individual customers total external expenditure on maintenance and distributing water to customers. supplied directly by the Corporation has for the period under review was N$57.538 risen from 839 in 2006 to 51,946 in 2020. million against a budget of N$52.5 million, NamWater customers This situation requires constant attention in and amount which was N$5 million above the the area of customer service and demands expected budget expenditure. efficiency in resource allocation. The growth The primary objective of NamWater is in peri-urban settlements has also produced to supply water in bulk volume to bulk demand for the extension of the Corporation’s The process of supplying water customers. These bulk customers are: services. NamWater operates on a cost-recovery • Municipalities and local authorities; Government ministries and other agencies basis. Consequently, the Corporation must • Commercial entities such as mines; This customer category has become recover money spent in the process of • Government institutions; significant and stands apart from local supplying water and the construction of new • Regional councils; authorities. An example is health facilities water infrastructure or schemes and the • Town councils; at border posts. Provision of Government ongoing maintenance of the same. • Village councils; and services in remote areas often requires that • Industries. water-supply solutions be introduced, even The process of supplying water is a costly though human settlement is limited and exercise. NamWater’s infrastructure, Municipalities and local authorities interventions are costly. which consists of dams, reservoirs, pipes, NamWater supplies water to 50 of the purification plants and the like, is not only country’s 55 local authorities. The five it expensive to build, but also to maintain. does not supply had developed their own While the Corporation has received substantial Laying one kilometre of water pipeline supply systems by the time NamWater was support from Central Government to establish may cost N$5 million. One of the major established. Other towns in this category such schemes, perennially late payment of challenges facing the Corporation is that include those that developed into mining bills by some agencies is a common problem. many Namibians do not live where water towns for which mining companies developed As new settlements and growth points have is found. This means that NamWater must their own water-supply infrastructure. proliferated throughout the country, demands lay pipe over long distances to take water on water supplies have increased and the to them. Mines and other industries or companies Corporation, together with regional councils, The Corporation provides 33 per cent of the must shoulder responsibility to manage the The transportation of water to remote areas water supplied to mines in Namibia. This task needs that are constantly arising. of our country, which are often difficult is often a complex one, as the Corporation to access, requires electricity, one of the needs to balance the demand of these mines Individual customers and rural communities greatest burdens on NamWater’s expenses. with the sustainability of the resources Although NamWater’s primary mandate Incremental concessions on tariffs, which available. In this regard, NamWater must specifies the supply of bulk water, the the Corporation receives from Government, consider principles established in the Water Corporation continues to supply water do not always cover the actual cost of the Supply and Sanitation Policy, which ranks to individual customers and small rural service. We strive with the limited resources human consumption higher than industrial communities. at our disposal to keep the water flowing, processes. The Corporation liaises continually at the same time maintaining an aging with mines in order to help them streamline

26 NamWater - 2019/20 Annually, NamWater supplies 85.2 million m3 of treated water and 50.5 million m3 of irrigation water to Namibia, with the biggest customers listed in table below.

NamWater’s biggest customers compared with rest of Namibia’s water consumption

Annual Consumption Annual Consumption Biggest Customers (m3) (%)

Mines 13,313,379 16%

City of Windhoek 10,046,208 12% NamWater suppliers Walvis Bay 6,440,070 8% The Corporation draws on a contingent Swakopmund 5,082,737 6% of suppliers who provide a steady flow of goods and services, which facilitate the Rundu Town Council 4,846,055 5.5% water-supply delivery process. These range from providers of specialised services of Ongwediva Town Council 1,315,535 1.5% a technical or financial nature to those who provide basic commodities utilised in Rest of Namibia 44,245,381 51% abstraction, purification or conveyance of water. TOTAL 85,289,365 100%

It poses an ongoing challenge to source these services at a reasonable cost, simultanously considering relevant Namibia: Treated 85,289,365 63% legislation, such as the Affirmative Action (Employment) Act or the new procurement Namibia: Irrigation 50,590,012 37% regime. Our overall concern remains continuous development of a procurement TOTAL 135,879,377 100% system that will be accessible to all suppliers without having to compromise the quality of goods and services supplied.

Integrated Annual Report - 2019/20 27 STAKEHOLDER ENGAGEMENT Factors impacting on our value creation

NamWater values the importance of positive engagement In order to remain geared for operational activities essential and collaboration with all stakeholders within the to the discharge of its mandate, the Corporation has adopted an aggressive training philosophy, in terms of which water sector in order to support the development of the NamWater provides its workforce with continuous on-the- industry throughout the country. As water plays a pivotal job training, which includes practical and theoretical training role in economic development, it is important that all through management-development programmes. players within the sector fully appreciate the importance and scarcity of the commodity. The Corporation also facilitates basic literacy training for unskilled and semiskilled employees, which is offered at its To this end NamWater, during the period under review, has created Human Resources Development Centre (HRDC) located in platforms to engage its stakeholders both at local and government Okahandja. level. This effort has also engaged key customers such as the mines. Our customers Going forward, NamWater is active redesigning its stakeholder While the Corporation’s mandate points specifically to bulk engagement approach in order to improve engagement on different water supply, the needs on the ground have increasingly levels, as well as stimulate greater awareness of water supply. This changed the nature of NamWater’s customers, with the effort has been assigned as high priority in every department of the spread ranging from mainly bulk customers to also including Corporation and in our strategic framework by way of design of a a large number of individual customers. Corporate Stakeholder Engagement Plan. This major shift in focus has posed a significant customer During the period under review key focus was directed on developing management challenge that must be addressed. Without appropriate change-management frameworks within the Corporation in customers, there would be no need for the Corporation and, order to manage change effectively. Being a business exhibiting a high therefore, they remain a key stakeholder in the business of degree of diversity, it is advisable to ensure that change is managed water supply. well to promote buy-in with stakeholder engagement. During the period under review, in the face of uncertainty Our shareholder regarding the security of water supply, some customers have The Government of the Republic of Namibia is NamWater’s sole questioned NamWater’s relevance as the bulk water supplier shareholder and remains a key stakeholder in the supply of water in for the country. Our position is that this debate ought to be bulk to the Namibian nation. The role of the shareholder in this context discussed to its logical conclusion at appropriate fora in is assumed by the Minister of Agriculture, Water and Land Reform, order to ensure that there is no ambiguity about the reason as line minister to whom the Corporation is answerable. Without the for the Corporation’s existence. support of its shareholder—from whom the Corporation acquired most of its assets—the supply of water to a country such as Namibia would Our suppliers be impossible. The Corporation draws on a contingent of suppliers who provide a steady flow of goods and services, which facilitate Attention to NamWater’s unique position was highlighted when the new the water-supply delivery process. These range from Ministry of Public Enterprise categorised public enterprises and the providers of specialised services of a technical or financial Corporation was one of the few public enterprises that remained under nature to those who provide basic commodities utilised in direct supervision of its line ministry. Naturally, it remains an important abstraction, purification or conveyance of water. strategic goal of the Corporation to maintain sound relationships with its stakeholders. It poses an ongoing challenge to source these services at a reasonable cost, at the same time taking into account Our employees relevant legislation, such as the Affirmative Action Despite major advances in technology in recent years, water supply (Employment) Act or the new procurement regime. Our remains a labour-intensive business that requires highly skilled and overall concern remains continuous development of a dedicated human resources. During the period under review, the procurement system that will be accessible to all suppliers Corporation employed a staff of 962 individuals, of which 526 were without having to compromise the quality of goods and full-time employees, complemented by 268 contract employees. services supplied.

Our employee demographic reflects an aging workforce that is highly skilled, assisted by a contingent of largely young graduates and recruits with less experience.

28 NamWater - 2019/20 MANAGING OUR MATERIAL RISK

The Board takes the overall governance responsibility These documents will drive the risk management process. over risk management, as promulgated in the NamCode, which is the Corporate Governance Code for Namibia. During November 2019, NamWater underwent a risk-assessment process and identified 32 risks, of which a top ten were designated Enterprise risk management is still in a stage of infancy. NamWater’s and are listed in the table below. In the upcoming financial year the risk-management function currently resides in the Internal Audit Unit. Corporation will expand this process. To ensure that risk management is given the attention it deserves, NamWater is in the process of revising the corporate structure to Risk responses ensure that risk management will have a permanent position with a For identified, confirmed and rated risks, ‘risk owners’ have been dedicated driver. identified. It is the responsibility of the risk owner to ensure that an appropriate treatment of the risk be prescribed, implemented and

Achievements in risk management progress is monitored on a continual basis. The Corporation has recognised the need to strengthen its risk- management processes. During the reporting year, in its effort to fulfil Future outlook of risk management in NamWater this goal, as recommended in the NamCode and the King IV Report The Corporation aspires to establish a robust process of risk on Corporate Governance, the Board initiated revision of the Board management, monitoring and reporting. To grow, maintain and Audit Committee Charter to explicitly expand the responsibility of entrench risk-management processes in the Corporation’s ‘blood the Board with regards to risk management. This process is driven stream’, NamWater has planned to undertake the following: by the corporate secretary and resulted in renaming the Board Audit Committee to the Board Audit and Risk Committee. • Appoint a dedicated personnel support to the risk-management functions under the umbrella of the Internal Audit Unit, The Risk Management Framework was adopted during the reporting • Undertake to develop a streamlined process of risk management year. Within the framework the following documents were created: among all assurance providers, i.e. health and safety, water quality, internal audit, and compliance by legal services, by way of • the Risk Management Policy, and a combined assurance process, and • the Risk Management Procedures and Protocols. • Research, pilot and implement software suitable for a seamless, efficient and robust process of risk-management assessment, response and monitoring.

NO. TEN TOP RISKS OF NAMWATER RISK RANKING

1 Insufficient water availability.

2 Failure to implement critical water infrastructure projects.

3 Inability to collect a significant percentage of revenue from water sales to rural communities and local authorities.

4 Inability to grow the Corporation’s market share which will negatively impact on real sales growth.

5 Inability to execute and keep up with NamWater’s mandate.

6 Failure to implement the Enterprise Assets Management strategy.

7 Failure to comply or meet the World Health Organisation’s water quality standards.

8 Waste water above the standards set and adopted from the International Water Association for Water Balance.

9 Slow recovery from a disaster should it occur due to insufficient disaster recovery management systems.

10 Unsustainable water tariffs.

Very high

High

Integrated Annual Report - 2019/20 29 OUR STRATEGY Delivering value through our strategy

NamWater steered its operations and activities according to a corporate strategy map, following five corporate strategic themes, which are depicted on the following page.

The NamWater Value Proposition From a global perspective, high performance organisations face challenges in the implementation of strategy. The six most common global challenges are:

• Improving organisational capabilities to drive improved business results and inspire innovation, • Overcoming critical shortages of talent, • Aligning organisations and making them more agile, • Cost management and process improvement to mitigate risk, • Leveraging differences to make a difference, and • Building strong organisational culture to drive performance.

During the financial year NamWater has firsthand experience of these strategic challenges. By acknowledging shortfalls in those terms, the Corporation continuously endeavoured to build solid strategic platforms to drive strategy improvement through:

• Developing leadership to execute strategy. • Focusing on strategic risk management and providing appropriate strategy- management infrastructure. During its annual strategic review, the Corporation reviewed a plan to ensure strategic focus. Furthermore, the process of organisational restructuring was carried out and approved by the Board to ensure strategic alignment from senior management level to the lowest operational level.

Much time and effort were invested to ensure that effective plans were in place and that, going forward, NamWater would be able to execute these plans, specifically in terms of infrastructure.

The new organisational structure will serve as a platform to align the entire workforce and ensure that strategic focus is created. Only then will NamWater be able to effectively address the listed strategic challenges towards achieving its vision of Water For All, Forever!

30 NamWater - 2019/20 NamWater Corporate Strategy Map

NamWater’s Corporate Strategy Map depicts strategic objectives that have been identified for the corporate strategy for the period between 2019 and 2021. The Strategy Map serves as a focal point for strategy execution.

Corporate Strategy Map

Water For All, Forever!

Customer and Stakeholder

Ensure Sustainability Achieve Sustainable Enhance Brand and Ensure Customer We care. of Supply Development Priorities Reputation Satisfaction To implement a To achieve an Ensure 90% availability Customer Care To achieve targets set increase in of all water schemes Framework which in HPP and NDP5 by stakeholder at all times, with a 5% responds to satisfying We secure 2020/21. engagement results reduction in energy all NamWater customer in terms of frequency, water. cost by 2021. segments and their quality and outcomes. needs by 2021. Finance

Secure Optimal Funding Improve Capital We grow Expenditure Rate through innovation. To improve execution To reduce the NamWater of capital development funding gap by N$300 projects by investing an million by 2021. 60% available budget on a rolling two-year basis.

Internal Processes

Improve Internal Meet Water Demand Diversify Business We are Efficiency efficient.

To achieve 6% To increase revenue To maintain water implementation success contribution of non- supply cost of N$11.38 of the streamlined bulk water services by per m3 by 2021. Corporate Strategic Plan 1% per annum from by 2021. 2020.

Talent and Technology Enhance Culture and Develop a Learning Organisation Implement Technology Engagement We attract Drive the best.

To realise an To achieve an 80% Optimise the use organisational culture To achieve leadership resourced organisational of technology in where every employee benchmark strength structure by 2021 en- 0.5% identified key is valued as an asset by of 80% by 2021. route to a fully resourced business processes 2021 (60%). structure by 2024. by 2021.

Integrated Annual Report - 2019/20 31 Alignment with Vision 2030

NamWater’s strategic plan is aligned with Vision 2030, and is guided by the principles outlined in the National Development Plan (NDP5), as well as the Harambee Prosperity Plan. Implementing the strategic plan, NamWater will ensure that its progress is shared with the shareholder and its stakeholders.

Five themes and balanced-scorecard perspectives

The corporate strategy is built on five themes, which are encapsulated in the strategic plan. NamWater’s strategy map consists of 13 strategic objectives, each of which aims to improve performance and its monitoring in order to maintain high performance standards.

The Corporation has also adopted the balanced scorecard as a performance measurement tool for implementing the strategic plan. Each objective has a clear framework that outlines its measures, targets and an appropriate plan of action or initiative.

This Strategy Map describes the process of value creation through a series of cause-and-effect linkages among the objectives outlined in the four balanced scorecard perspectives. The ultimate goal is to create long-term value for both the shareholder and stakeholders.

Organisational value is created by satisfying a customer-value proposition. Internal processes create and deliver value that satisfies customers, and also contributes to financial objectives. Value for customers is created through improvement in performance driven by intangible assets, people, technology and culture, which in turn creates value for shareholders.

Based on a strategy-management philosophy, the Strategy Map was presented to all functional departments by way of a well-crafted methodology. In this scheme each department has a departmental plan that is linked to the corporate plan and outlines each unique contribution to achieve the overall vision. In each unit this process is key to implementation and facilitates easy reviews to track progress toward the strategic vision.

32 NamWater - 2019/20 Strategic themes

Strategic theme: We grow through innovation NamWater promotes creativity and a spirit of innovation among its employees. This mindset is geared toward discovery of new business processes that will assist the Corporation to grow in the fulfilment of its mandate. Innovation promotes exploration of areas of diversification into new products and markets.

Strategic theme: We are efficient At NamWater, we fully appreciate the importance of water affordability. We are aware that providing water without due regard for its cost is not sustainable. It is not only our duty, but also our mandate to ensure that water remains affordable to the people of our country. We will ensure that our business processes remain efficient. Whenever efficiency regarding cost is practiced, effectiveness in delivery of an adequate water supply is bound to follow.

Strategic theme: We secure water NamWater remains the primary supplier of bulk water in Namibia. This demands that it maintains access to and secures all available sources of water inside the country. NamWater has a deep understanding of our customers’ current and future water requirements. With our grasp of the country’s water situation, appropriate resources can be mobilised and water-supply infrastructure developed and operated to purify and deliver water to customers. The best environmental practices for managing water sources are implemented to ensure future sustainability.

Strategic theme: We attract the best This theme highlights the importance and role of NamWater’s employees. The theme expresses the importance of maintaining an able and motivated workforce and the imperative to employ highly qualified individuals who take ownership of our mandate and mission. Using the shared responsibility concept in assignments, initiatives and projects, staff will become engaged, active participants to create futures for themselves as well as for the Corporation, at the same time building competencies, skills and abilities that are foundational to their development.

Strategic theme: We care We constantly strive to anticipate the needs of our customers and stakeholders and to provide well-considered solutions even before queries are raised. The ability to accomplish this demands constant research and observation, as well as the capacity to anticipate other expectations our customers might have. In this respect we would like to produce a ‘wow’ response from our customers and stakeholders.

Integrated Annual Report - 2019/20 33 2019/20 PERFORMANCE Water is fundamental to socioeconomic Without sufficient technically skilled employees, who growth and ensures quality of life. In this are able to maintain and repair the infrastructure, regard, Namibia has made enormous progress which is currently the case, the reliability of its in providing safe water to the majority of its equipment will certainly decrease. citizens. As Namibia’s population grows and the country develops, water-supply networks However, during the reporting year, and despite also need to be expanded and maintained. these challenges, NamWater managed to meet the demand throughout the entire country. This feat was NamWater, as Namibia’s bulk water supplier, has to a remarkable achievement, especially given drought operate within two time frameworks: conditions and the impact of a pandemic. • Provide a continuous supply of water to the nation (short term), and simultaneously ensure In the following pages, NamWater’s performance sufficient water is available for a two-year during the reporting year is presented, following the period (medium term), and perspectives of the balanced-scorecard framework: • Ensure long-term sustainability of the Namibia’s • Finance water supply. • Internal process • Customers, and This means that NamWater must satisfy the daily • Talent and technology. demand, at the same time it develops infrastructure to meet the future’s increased demand. At this point NamWater’s five strategic themes will supply the in time, NamWater faces major challenges in two foundation on which each of these perspectives will crucial areas: infrastructure and human resources. be built, namely: • We grow through innovation Without adequate and reliable infrastructure, water • We are efficient cannot be delivered to where it is needed. At this • We secure water moment, NamWater’s infrastructure is aging, and • We attract the best, and in many locations our equipment has seriously • We care. deteriorated, having been pushed to perform beyond its design specifications.

34 NamWater - 2019/20 Integrated Annual Report - 2019/20 35 Overall performance in regard to NamWater’s strategy

Strategic performance is continuously tracked through strategically relevant behaviour measured against set targets, as well as with progress in the implementation of prioritised strategic initiatives.

Summary of progress with strategic initiatives

During the year under review, tracking the progress of each strategic initiative and expressing it as a percentage of overall progress proved to be a challenging exercise. This was due to the fact that the Corporation was in the middle of a transitional period of two years, streamlining its corporate strategy.

Performance indicator guidelines Colour Code On target At risk Attention required Not started yet

During the year under review, NamWater achieved the following performance against strategic initiatives:

Progress with Strategic Initiatives

Summary Objective Status

Require attention At risk On target Not started

Period Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

% progress 27% 14% 14% 14% 20% 45% 38% 38% 29% 17% 24% 24% 24% 24% 24% 24%

The graph below depicts the status with execution of strategic initiatives or progress.

InitiativeInitiative StatusStatus per per Quarter Quater 100% 90% 80% 70% 60% 50% 45% 38% 38% 40% 27% 29% 30% 24% 24% 24% 24% 24% 24%

% of total Initaitives 20% 17% 20% 14% 14% 14% 10% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 RequireAttention attention At risk On target Not started Require At Risk On Target Not Measured Categories per Quarter Categories per quater

The Corporation is working to achieve set targets per measurable objective indicated in the strategic plan. The above table depicts where targets have been met as a percentage of a total number of measures undertaken.

Tracking progress precisely for each strategic initiative and expressing it as a percentage is still difficult at this stage. NamWater is implementing project-management templates that will track overall progress and performance.

36 NamWater - 2019/20 Integrated Annual Report - 2019/20 37 OUR FINANCIAL CAPITAL

FINANCIAL PERSPECTIVE

Strategic Theme: We grow through innovation.

WATER SOLD AND REVENUE GENERATED

During the reporting year, the volumes of potable water sold decreased In terms of volume water supplied, the coastal region was the largest, by 4.6 per cent when compared to the previous financial year due to the consisting of about 38 per cent of the Corporation’s supply volume. severe drought conditions that impacted the supply of water. However, As a result, the coastal region contributed to the greatest amount of revenue for the year increased by 2.5 per cent at the back of annual revenue, accounting for N$642 million of the total revenue of N$1.6 tariff increases that were applied. Desalinated water volumes sold billion for the year under review. This was followed by the central increased for the period under review due to increased water demands region, accounting for 28 per cent, equating to N$466 million of from the coastal mines. revenue.

Irrigation water volumes sold decreased by 5 per cent. This was due Volume of Water Contributed, 2019/20 to lower-than-anticipated dam levels as result of the severe drought conditions experienced in the country. This was mainly applicable to the South region, Hardap Dam Scheme. 10% North region, Overall, revenue increased by 2.5 per cent year-on-year primarily 24% informed by annual tariff adjustments on the potable and irrigation PRICE QUANTITY PRICE water coupled with increase in supply of desalinated water to the respective customers. Coastal region, 38%

Central region, 28%

As a commercial entity, NamWater’s financial status is directly impacted by the volume of water sold.

Comparison of Volume of Water sold: 2018/2019 and 2019/2020 (million cubic metres) Description FY 2019/20 FY 2018/19 Variation m³ % Variation Potable Water 85,292,006 89,400,147 -4,108,141 -4.6% Irrigation Water 50,590,012 53,254,935 -2,664,923 -5.0% Total 135,882,018 142,655,082 -6,773,064 -9.6%

Comparison of Revenue from Water sold: 2018/2019 and 2019/2020 (N$ ‘000) Description FY 2019/20 FY 2018/19 Variation % Variation Potable Water 1,284,386 1,249,159 35,227 2.8% Irrigation Water 16,628 16,124 504 3.1% Total 1,301,015 1,265,283 35,731 5.9%

38 NamWater - 2019/20 REVENUE FROM TOP FIVE CUSTOMERS DEBTORS

The economic headwinds experienced in the country with the further NamWater’s top five customers to its revenue continue to account for contraction of the Namibian economy has not isolated NamWater, more than 60 per cent of the Corporation’s total revenue for the year as the average collection rate of the Corporation has been firming under review. These top customers are shown in the graph below and at 73 per cent for the year under review compared with 76 per cent their contribution in value to NamWater’s revenue in the table below. in the prior year. This represents a reduction of 3 per cent, which have primarily been as result of the deterioration of the Town Council debtors book. The Rundu Town Council remains the biggest contributor Top Five Customers ito Revenue Contributed, 2019/20 Top Ten Customer ito Revenue Contributed, 2019/20 to the debtors’ book. Swakopmund Municipality, 10% Rössing Uranium, The debtors increased from N$933 million in the previous reporting 18% year to N$1,084 million in the reporting year, averaging an increase of Walvis Bay 16 per cent. The increase in debtors were primarily informed by specific Municipality, 10% customer specific events over and above the tariff increases, driven by contraction of the economy and overall impact. The net trade debtors, however, increased by 20 per cent to N$374 million.

COLLECTION RATE CUSTOMER FYE 2019 FYE 2020 MOVEMENT SEGMENT

City of Windhoek, Town Councils 103% 80% (23%) Swakop Uranium, 25% Village Councils 85% 58% (27%) 37% Municipalities 98% 100% 2% Rural Water 50% 51% (1%) Community % of total Irrigation Top five customers Amount in N$ 62% 58.5% 5% revenue Farmers Swakop Uranium N$385,062,993 23% Private 72% 70% 2% City of Windhoek N$255,757,078 15% Customers

Rössing Uranium N$193,666,893 11% Substantial efforts were allocate to improve the collection rates from Walvis Bay Municipality N$104,613,341 6% customers during the reporting year. These included the transition of local authorities to bulk prepaid systems, among others. The prepaid Swakopmund Municipality N$103,994,915 6% roll-out programme is continuing, with an envisaged date of six customers being brought up on the system during the next financial year. It is the intention that once the programme has been fully CASH FLOW rolled out, it would help to improve the overall collection rates of the Corporation in the segments most effected. During the reporting period, the Corporation generated N$396 million from operations, compared with N$378 million during the previous financial year.

The cash generated from investing activities increased in relation from the previous financial year from (N$286 million) to (N$190 million). This was at the back of underspending on the capital expenditure projects.

Importantly, as we look at the sustainability of water supply infrastructure, it is clear that the amount needed for the refurbishment of infrastructure over the next few years will exceed the amount generated internally from cash-flows. Hence the Corporation has taken proactive view of engaging its shareholder to coming on board of funding critical water infrastructure.

Integrated Annual Report - 2019/20 39 FINANCIAL PERSPECTIVE (continued)

SUPPLIERS

The Corporation continued to service debts to its suppliers within the agreed credit terms on its major suppliers. The top ten suppliers (in terms of N$ value) for the period under review are provided in the table below.

As is evident, a significant portion of the Corporation’s expenditure is made up of energy and water-related expenses payable to the utility companies.

Top ten suppliers to NamWater, for the financial year ending March 2020

Nr. Supplier Nature of the product/service supplied

1 Orano Mining Namibia (Pty) Ltd Desalinated Water

2 NamPower Electricity

3 Receiver of Revenue Payment of Income Tax & PAYE

4 Erongo Red (Pty) Ltd Electricity

5 Cenored Electricity

6 Nored Electricity (Pty) Ltd Electricity

7 Aqua Services & Engineering Water Treatment Chemicals

8 Oshakati Premier Electric Electricity

9 China Jiangxi International Construction

10 EMS Contractors Construction

N$29 million as a result of improved surplus position and reduction INVESTMENT in spending of capital projects as result of delays in awarding of contracts. The Corporation continues to find value in investing some surplus funds in interest bearing instruments, in order to maximise potential returns on funding required for water supply infrastructure TARIFFS development. The net income on the Corporation investments continued to increase from N$95 million to N$99 million giving a year- The approval of tariffs at adequate levels and on time remains a key on-year growth of 4 per cent. This indicate real negative growth of 2 per success factor for the Corporation. NamWater’s target is that longer- cent as the average inflation for the year was in the region of 6 per cent. term tariffs will be approved at sustainable levels, taking cognisance of the capital development programme, which is key in transitioning the core water supply infrastructure of the Corporation from the current TAXATION aged infrastructure.

Due to the nature of the infrastructure of the Corporation, the The tariffs for the year, implemented on 01 June 2019, were increased Corporation’s effective tax rate will almost be above the cor­porate tax with 5 per cent. These approved tariffs was commensurate with the rate. Without large infrastructure replace­ments, the Corporation will be overall condition of the economy of the Corporation at the back of liable for tax, even in the years that the Corporation made losses. The the growing contraction. In the previous year the new tariffs were Corporation has not yet managed to get the legislation put in place for implemented on 1 June 2017 owing to the late approval of tariffs by tax exemption. Cabi­net. Although the increase of 11 per cent was approved, full cost recovery is not achieved as the tariffs do not cover the full cost of As at 31 March 2020, the Corporation had a total of N$1.4 billion in replacing water supply infrastructure. deferred taxation and was liable to pay N$82 million in corporate tax.This is almost 182 per cent increase from prior years liability of

40 NamWater - 2019/20 Integrated Annual Report - 2019/20 41 OUR OPERATIONAL AND NATURAL RESOURCES CAPITALS INTERNAL PROCESSES PERSPECTIVE Strategic Theme: We are efficient. OPERATIONAL STRUCTURE

NamWater’s business model is based on four business The four business units are units whose operations span the entire country. • Business Unit North • Business Unit South The Corporation’s operations are decentralised, employing a Chief: • Business Unit Central, and Water Supply who oversees the strategic and operational planning in • Business Unit Coastal. each business unit. This model ensures that customer water-supply needs are met on a continuous basis. Additionally, the Corporation Supporting the Chief: Water Supply of the four units, are the following: maintains support services in each business unit to ensure effective • Chief Strategy and Business Development, and service delivery. • Chief Financial Officer.

42 NamWater - 2019/20 Map of NamWater’s water-supply schemes

Integrated Annual Report - 2019/20 43 INTERNAL PROCESSES PERSPECTIVE (continued)

Activities of Business Units during the reporting year

Overview of Business Unit North The Northeast unit covers the three political regions of Zambezi, Kavango East and Kavango West. The Zambezi area office manages The Business Unit North is comprised of the northwest and northeast over 6,000 supply points. These depend on the Zambezi River for raw geographical areas of Namibia. These areas cover the Zambezi, water, and on Business Unit North for purification and distribution to Kavango West and Kavango East regions in the northeast, as well as most of the schemes in the region. Product water is purified at the Omusati, part of Kunene, Oshana, Ohangwena and part of Oshikoto Katima Mulilo scheme and supplied to Katima town, Linyanti, Mafuta, regions in the northwest. Mpacha Defence and Airport, Chinchimani and Ngoma.

The map below displays the boundary demarcation on the country map, The Rundu area office, which is responsible for the regions of Kavango and the dots indicate the supply schemes in the Business Unit. Most of West and Kavango East, manages more than 11,000 supply points, 11 the schemes in the four Operational Areas depend on trans-boundary river schemes, nine borehole schemes and comprises 22 bulk-supply supply sources, which are: Kunene River for North Central, Kavango River schemes in the area. for Kavango West and East Regions, B andUSIN ZambeziESS UNIT N RiverORTH for the Zambezi Region supply.

O i g shikango n a Customers u r u ur po M

fo i nk pa na i e m r i The customers served by the Business j o On ma a e ! gen r o g ! ! i Olushan a go dja ! ! ku d ! O a yu ash Eenhana n ar n ar ! N do ak b h ntu ! a nj en ! la ! ! ana S no ba ! Onambutu ! ! K up Mafuta Ongha on ui upi m Mpunguvlei ap o ! O ! ay ash s o T R am Bukalo Unit North can be divided into the following g ! B ng n K o M g K O ge ! S M ! ! ! ! nu am a ! ! ! ya ! Omeg !Onayena en M N Li ! ! Oshitayi !!! ! Chinchimane Opuwo NW ! ! ah !Bagani categories: Opuwo SE K a e na ! ar katop yo nd O ! ! di A thiya Katjinakatji!! N • Regional authorities Omu ! Oshivelo • Local authorities tsegwonime mu O Ü • Institutions under the Ministries of ! Education, Health and Agriculture

BUSINESS UNIT NORTH • A vast network of individual clients • Local water committees (an extension of

! Legend the rural water-supply network), and ! • Etunda irrigation scheme in the ! Water Supply Schemes northwest. Business Unit North ! Regional Authorities ! ! Compiled by: NNN Hatutale-Ihula Date Compiled: 20 January 2021 Business Unit North caters for the regional Source of Data: GIS Office authorities that in turn serve as caretakers Geographic Coordinate System: GCS WGS 1984 Datum: �WGS 1984 Prime Meridian: �Greenwich for some settlements that are not under Angular Unit: �Degree local authorities. Scale 1:1,350,000

Local Authorities Water supply Business Unit North supplies water in bulk to 14 local authorities, The schemes of the Northwest unit are concentrated in the north- namely the town councils of: central geographical area, the primary raw-water source being the • Katima Kunene River by way of the Calueque Dam in Angola. Raw water is • Rundu conveyed via a canal over a distance of 161 kilometres and discharged • Nkurenkuru at four purification plants in the Business Unit, namely Olushandja, • Eenhana Outapi, Ogongo and Oshakati. • Helao Nafidi • Ondangwa Raw water is abstracted from the river based on bilateral water- • Oniipa use agreements between Namibia and Angola, which were signed • Omuthiya respectively in 1926, 1964, 1969, 1990 and 1991. Namibia has an • Ongwediva allocation under which it may draw six cubic metres per second • Oshakati 3 3 (m /s) at Calueque, but is currently only drawing 3.4 m /s with the • Oshikuku infrastructure that is in place. A new pump station has been built by the • Outapi 3 Angolan government that will be capable of drawing 7.4 m /s, and will • Ruacana, and supply southern Angola. • Opuwo.

NamWater will soon commence a water-master-plan study in order to plan an extended utilisation of Namibia’s allocation.

44 NamWater - 2019/20 NamWater registered individual clients from customers. However, a tender has been posted for the provision of Currently, close to 40,000 individual customers are supplied with water a dosing system to be added to the treatment elements in the Zambezi from various NamWater schemes in Business Unit North. filtration system for seasonal application. In addition, a new system, identified as a self-cleaning, flow-centric system, is being tested for Local water-committee retail clients possible insertion that would improve the quality rating at Rundu, Local water committees (LWC) are bulk extensions of the NamWater independent of seasonal occurrences. distribution pipelines. The LWC branch lines number over 600 in the Northwest unit, and convey an average of 508,000 cubic metres of Infrastructure produced water per month, collectively from four purification plants. A number of infrastructural upgrades to improve supply were carried The four plants together produce an average of 1.8 million cubic metres out during the reporting period. per month. Hence, LWC consumption is approximately 28 per cent of the water produced, but which is not properly billed due to inherently The re-instatement of two abstraction pumps at the river tower in complicated transformations that still need to be addressed. Katima was a great relief for delivery to the entire Zambezi Region. The floating pumps previously in use caused interruptions due to Meeting the demand for water insufficiencies of raw water for treatment. Business Unit North manages 19 schemes under suppressed demand: 14 in the northwest and five in the northeast. This situation warrants In the Rundu area, the drilling and connection of the boreholes at Katji- supply interruptions on an ad-hoc basis due to the impact of lowered Katji was another plausible response carried out by NamWater. After pressure and reduced flows at some end-points and communities. the original boreholes had gone dry, this action restored the supply of water to residents. All the main purification plants in the Northwest, namely Opuwo, Olushandja, Outapi, Ogongo and Oshakati, are operating under a In Cuvelai West, the agreement was reached between NamWater, suppressed-demand situation. NamPower and Ghabic at Calueque on drafting an in-house operating regime, which effectively bridged the drought season during the In the Northeast, the main supply point at Rundu is also awaiting year in retrospect. Coordinating carefully with one another, the three upgrade and the project is currently listed on the Rolling-Capital institutions closely monitored the level of the Calueque Dam and Investment Plan. timeously operated the sluice gates to ensure sustainable flow to Namibia for water supply and power generation. This action was Water quality carefully executed during the dry season when inflow to the Kunene Compliance with water-quality standards in the Northwest is excellent; River had ceased. it closed off the year rated at 97 per cent, while the Northeast had an average rating of 88 per cent by year-end. This situation is partially On the subject of the condition and capacity of infrastructure, a attributable to the fact that there is only one Water Quality Monitor to highlight in the operations at Cuvelai east was the implementation of cover the entire Namibia. The Northeast region gets monitored only the reverse-osmosis (RO) plant at Eenhana. every second month. Logistical challenges also contribute to lower sampling frequencies, as well as compromised quality due to the Eenhana is a fast-growing town in the area, and the supply from absence of chlorination at the time. However, the latter rating has since the Omafo scheme was becoming increasingly unreliable, marked improved, after installation of new systems in most of the schemes, by frequent interruptions in service, exacerbated by power failures. while a project is underway to get enhanced assistance from Water The drilling of boreholes alone to augment supply could not last for Supply to accept responsibility for sampling. long after the fresh lenses during and shortly after the rainy season. Furthermore, the water had high fluoride levels that were above the On the other hand, the chemical quality was at an acceptable level acceptable class of supply and NamWater was forced to blend the during most of the year for the entire Business Unit, except in the water. However, due to limited supply from Omafo, blending was Northeast during the rainy season. When the Zambezi and Okavango sometimes not to the proper ratio. rivers rise in the rainy season, iron and magnesium blooms in the raw water. This occurrence is currently not addressed by the treatment Despite these challenges, with implementation of the RO plant, water systems in the Northeast, a situation that has attracted complaints can now be purified and blended at the scheme to ensure sufficient production for supply to Eenhana town.

Integrated Annual Report - 2019/20 45 INTERNAL PROCESSES PERSPECTIVE (continued)

Activities of Business Units (continued)

Overview of Business Unit Coastal Orano desalination plant The privately-owned desalination plant is situated at Wlotzkasbaken, Business Unit Coastal is situated on the west coast of Namibia, approximately 35 kilometres north of Swakopmund. NamWater has an extending from the Ugab River in the north to the Kuiseb River in the off-take agreement to purchase 10.2 million m3 of desalinated water south and to Rössing in the east. per annum to supply to three uranium mines. Although more water is available from this source, its high cost compared to the cost of ground water sources makes it a problematic option.

Kuiseb borehole scheme The Kuiseb borehole scheme consists of Terrace Bay ! approximately 60 interconnected boreholes and is located in the Kuiseb River 25 ¯ kilometres south of Walvis Bay. NamWater has a permit to abstract seven million cubic metres per annum from this source. The Okombahe ! BUSINESS UNIT COASTAL scheme mainly supplies water to Walvis ! Omaruru Nei Neis ! !Tubussis Bay and small customers situated along the

! Spes Bona Legend pipeline towards Swakopmund. Spitzkoppe ! Karibib Omdel ! ! ! ! Usakos Halbichsbrunn ! Water Supply Schemes Henties Bay ! Omdel borehole scheme Pipelines Otjimbingwe ! The Omdel borehole scheme consists of Business Unit Coastal approximately 50 interconnected boreholes and is located in the Omaruru River to the east of Henties Bay. NamWater has a permit to ! Compiled By: NNN Hatutale-Ihula Kuiseb Compiled Date: 20 January 2021 abstract 4.6 million cubic metres per annum Data Source: GIS Office from this source. The scheme supplies water !Gobabeb Geographic Coordinate System: GCS WGS 1984 Datum: �WGS 1984 Prime Meridian: �Greenwich to Henties Bay, Swakopmund, Arandis and Angular Unit: �Degree small customers along the pipeline towards Scale 1 :750,000 Swakopmund. The aquifer has experienced little recharge over the past decade and is therefore under pressure. The only way to reduce abstraction from the Omdel scheme is to augment the water supply to the towns with desalinated water. Water supply Water supply in the coastal business unit is operated as a single Customers integrated system, as it is interconnected and water can be transferred The customers served by the Coastal Business Unit can be divided into from one section to another. It consists of three major water sources the following categories: and one borehole that supply the Gobabeb Research Centre. • Mines • Local Authorities, and Water source Type Capacity Customers • Individual clients.

3 Orano Reverse 20 million m / Husab mine Mines desalination osmosis per annum Rössing Uranium mine: The mine is supplied with desalinated water plant seawater Rӧssing mine desalination sourced from the Orano desalination plant with an annual demand of plant Langer Heinrich approximately 2.9 million cubic metres. The mine considers the cost mine of water currently charged by Orano to be unacceptably high, but pays Kuiseb Borehole Permit for 9 Walvis Bay regularly and on schedule. scheme scheme in the million m3/ Langer Heinrich Uranium mine: The mine is currently on a care-and- Kuiseb river per annum, Swakopmund maintenance regime. The water demand therefore dropped to less than consisting of installed 5,000 cubic metres per annum. ±60 boreholes capacity is 7 Husab Uranium mine: The mine is supplied with desalinated water 3 million m /per sourced from the Orano desalination plant. The mine is in full operation annum and generates demand of approximately 7.3 million cubic metres. This Omdel Borehole Permit for 4.6 Henties Bay volume will make it the second largest single customer of NamWater 3 scheme scheme in the million m /per after the City of Windhoek. The mine considers the cost of water Swakopmund Omaruru River annum currently charged by Orano to be unacceptably high, but pays regularly consisting of ±50 boreholes Arandis and on schedule. Gobabeb One borehole 2,400 m3/per Gobabeb annum Research Institute

46 NamWater - 2019/20 Towns Walvis Bay: The town is supplied with ground water from the Kuiseb scheme and generates an annual demand of approximately 6.5 million cubic metres. The municipality pays regularly and on schedule. Swakopmund: The town is supplied with ground water from the Omdel scheme and generates an annual demand of approximately 4.7 million cubic metres. The municipality pays regularly and on schedule. Henties Bay: The town is supplied with ground water from the Omdel scheme and generates an annual demand of approximately 0.5 million cubic metres. The municipality pays regularly and on schedule. Arandis: The town is supplied with ground water from the Omdel scheme and generates an annual demand of approximately 0.4 million cubic metres. Individual clients: Approximately 100 individual clients are supplied with water from the Omdel and Kuiseb ground-water schemes. Most pay regularly and on schedule, as water supply to those who do not pay is suspended. Gobabeb Research Institute: The Institute is the only customer not connected to the coastal supply network. Its water is supplied from a single borehole.

Meeting water demand The domestic demand already exceeds a safe yield from groundwater sources. This situation necessitates that water from groundwater sources must be augmented by water sourced from the Orano desalination plant to supply to the towns in order to protect the resource.

Water quality All clients, except the Gobabeb Research Institute, receive water of an acceptable standard. The water from the borehole at Gobabeb is classified as unsuitable for human consumption. The centre has installed a reverse-osmoses plant in order to produce water of an acceptable quality.

Infrastructure Most of the bulk-water-supply infrastructure at the coast is 30 years old or older. Despite that age, water supply interruptions due to infrastructural failure are very rare.

NamWater has initiated refurbishment of all reservoirs in the region. The replacement of the bulk pipelines between the Kuiseb water supply scheme and Swakopmund has also begun and is scheduled to be completed over the next five years.

Integrated Annual Report - 2019/20 47 INTERNAL PROCESSES PERSPECTIVE (continued)

Activities of Business Units (continued)

Overview of Business Unit South

Business Unit South is responsible for water supply in the southern region of Namibia. It includes all water-supply schemes from Schlip to areas east, west and south. The head office is located in Keetmanshoop. Water-supply schemes are distributed in radii between 300 and 400 kilometres from Keetmanshoop. The business unit is divided into four operational routes. These routes are overseen by water superintendents who have offices in Mariental, Keetmanshoop, Karasburg and Rosh Pinah. Maintenance teams are managed from Keetmanshoop by a maintenance foreman.

BUSINESS UNIT SOUTH (//KARAS)

Schlip ! ! Aranos ! Kalkrand !Stampriet Ü Gibeon! !Gochas Maltahohe! ! Kriess BUSINESS UNIT SOUTH (//KARAS)

Legend

Gainachas! Tses ! ! ! ! Water Supply Schemes ! Koes Berseba ! Old Scheme Koichab ! Business Unit South(//Karas) Bethanien ! ! Aus !Kosis Aroab!

Compiled by: NNN Hatutale-Ihula Date Compiled: 18 February 2021 Source of Data: GIS Office

Geographic Coordinate System: GCS WGS 1984 Grunau ! Datum: �WGS 1984 Prime Meridian: �Greenwich Ai-Ais! Karasburg Angular Unit: �Degree ! Gabis! Ariamsvlei! Scale 1:800,000 Warmbad !

Water supply Water is supplied to customers in different categories, listed in the table below, which also depicts source and infrastructure data.

32 water-supply schemes are organised under the following categories of supply: Total # schemes 2 Hardap Dam, Naute Dam (Irrigation water)

Total # of schemes 30 See list below (Potable water)

30 potable water-supply schemes supply the following client categories: # Schemes supplying to Keetmanshoop, Mariental & 2 Municipalities Hardap

# Schemes supplying to 3 Aranos, Karasburg, Lüderitz Town Councils Gibeon, Maltahohe, Tses, # Schemes supplying to Kalkrand, Stampriet, Aroab, 10 Village Councils Gochas, Bethanie, Berseba, Warmbad Schlip, Kriess, Noordoewer, # Schemes supplying to 10 Ariamsvlei, Grünau, Aus, Kosis, Settlements Gobabis, Gainachas, Aussenkehr

48 NamWater - 2019/20 recovery of revenue from users. Indirectly these issues have an # Schemes supplying Skorpion Mine, RPZC Mine, 3 influence on Business Unit South’s ability to provide sufficient water to Mines RoshSkor Town to the clients. The business unit is conducting an initiative to assist several local authorities in this regard. # Schemes supplying 1 Ai-Ais to NWR The Hardap irrigation scheme is highly dependent on sufficient inflow # Schemes supplying to into the Hardap Dam and regularly is forced to cope with low levels. On 1 Klein Menasse a border post 6 February 2020 the dam reached its lowest recorded level of 5.9 per cent. On 27 January 2020 supply of water to irrigation clients had been cut off, to ensure that enough water would be available to the town of Three primary supply sources are categorised as follows: Mariental. Fortunately, good rains in February 2020 produced recovery of the dam level to approximately 44 per cent. During that rainy season, # Schemes supplying Keetmanshoop, Mariental & 4 however, floodwater damaged the irrigation canal and after repairs, from dams Hardap, Karasburg, Gabis supply from the irrigation system was only able to resume at the end of March 2020. The Naute Dam on the other hand received sufficient # Schemes supplying 21 Remainder of bulk customers from boreholes inflow on a regular basis to ensure a reliable supply. Aussenkehr, Noordoewer, # Schemes supplying Water quality 5 Skorpion Mine, RPZC Mine, from rivers Water supply to several schemes, namely Bethanie, Grünau, and RoshSkor Town Warmbad, is below required water-quality standards, mostly due to Additional data: fluoride content. Several projects are ongoing that address water- quality issues at all the schemes. The Grünau project is expected to be Number of boreholes 94 completed by September 2020.

Number of reservoirs 64 Operational challenges The Hardap irrigation scheme is operated and maintained on behalf Kilometres of pipeline 550 of the Ministry of Agriculture, Water and Land Reform. This scheme is facing several challenges that need to be resolved. They include, amongst others, the viability of Business Unit South to operate and maintain such a scheme, as well as a lack of funds to refurbish Meeting water demand the scheme in order to ensure reliable supply to its customers. NamWater is currently unable to fully meet the demand of several Establishment of an irrigation board is a measure that is under customers due to insufficient volumes at water sources. In some cases consideration. this problem is permanent, in others it is linked to current insufficient inflows into dams. The areas affected include towns and villages of Flood-control interventions need to be executed on an annual basis Grünau, Ariamsvlei, Aroab and Karasburg. Capital projects to address during the rainy season to ensure the integrity of the dams that provide these insufficiencies have been initiated under the current capital the Business Unit South’s water supply, namely Hardap Dam and Naute budget. Dam. Low flows in the Orange River are also a matter of concern currently. Infrastructure Namibian customers that depend on water from the Orange River Infrastructure in Business Unit South was, for the most part, must rely on releases from dams in South African. Regular periods of constructed in the 1970s and 1980s. This advanced age necessitates drought, rising demand, and poor demand management, contribute to that certain components either be refurbished or replaced. creating low dam levels in South Africa, which in turn have produced a direct impact on flows into the lower Orange River. Several capital projects are in progress in the business unit. These primarily entail the replacement or refurbishment of existing Demand management on the part of our clients, mostly local infrastructure, but also the establishment of new infrastructure, such authorities, is also a matter of concern. Aspects of this problem include as what is required to outfit the new Aussenkehr water-supply scheme, high night flows, high losses in reticulation systems, and sluggish which was finalised during the reporting year.

Integrated Annual Report - 2019/20 49 INTERNAL PROCESSES PERSPECTIVE (continued)

Activities of Business Units (continued)

Overview of Business Unit Central Tsintsabis, Tsumkwe, Okondjatu, Business Unit Central is responsible for management of the water Okombahe, Tubussiss, Spitzkoppe, Otjivero, Epukiro supply in the central regions of Namibia. It includes all water-supply Post 3 and Epukiro Post 10, schemes from Terrace Bay in the west to Tsumkwe in the east, and Aminuis, Anichab, Onderabapa, from Tsinstabis in the north to Leonardville in the south. Dordabis, Ernst Meyer, Oamites, # Schemes supplying to Plessis Plaas, Kwakwas, Osire, 37 Business Unit Central is headquartered in Okahandja; its water-supply Settlements Ovitoto, Kalkfeld, Otjituuo, schemes are distributed in the regions of Khomas, Otjozondjupa, Okamatapati, Goblenz, Okahitwa, Omaheke, part of Oshikoto, part of the Kunene and part of Erongo Sesfontein, Bergsig, Anker, Region. Erwee, Fransfontein, Nei-Neis, Rundu Gate, Rooidag Gate, Maroelaboom, M’kata, Mangetti The business unit is divided into two areas, namely water-supply area Dune, Aasvoëlnes, Omataku Khomas and water-supply area Brandberg. Each area is managed by # Schemes supplying Navachab Mine, Okorussu, an area manager, who is assisted by scheme superintendents and 4 maintenance foremen. to Mines Otjihase, Friedenau Namutoni, Halali, Okaukuejo, BUSINESS UNIT CENTRAL # Schemes supplying to Terrace Bay, Daan Viljoen, Gross Namutoni ! ! Tsintsabis ! Rundu Gate 9 Klein Halal “NWR” Barmen, Ombika, Otjivasandu, ! ! ! Sesfontein Okaukuejo ! Abenab Maroelaboom Rooidaghek Otjovasandu! Renosterkom Tsumeb ! !!! ! !! Von Bach Resort Ombika! ! Aasvoelnes !Otjituuo ! ! Kamanjab Ai-Ais ! ! !! Grootfontein! Berg Aukas Omatako e ! a n !Tsumkwe ! Otavi! t u Erwee ! Kamanjab ! a ! Brandwag D ! Anker 'K ti Kombat t # Schemes supplying to M e g n a 2 Buitepost, Windhoek Airport ! ! M ! Outjo Goblenz a Borderpost Terrace Bay Bergsig ! Fransfontein! ! Otjiwarongo !Khorixa-Ge ! ! Khorixas-Br Otjiwarongo Berg Aukas – Elandspan, # Schemes supplying to Kalkfeld ! Okondjatu Anichab ! ! 4 Okakarara – Elandspan, Goblenz, ! Omatako Dam ! Osire ! Otjinene individual clients Okombahe ! Grootfontein – Omatako canal Ü ! ! Omaruru Epukiro Pos 10 Nei Neis ! Hochfeld ! ! Tubussis ! ! Epukiro Pos 3 ! Spes Bona Plessisplaa Spitzkoppe ! ! ! ! ! Ovitoto Rietfontein BUSINESS UNIT CENTRAL Usakos Halbichsbrunn 2 primary supply sources are categorised as follows: Gobabis NE ! B!uitepos ! Witvlei Otjimbingwe Windhoek !!! ! Ernst Meyer Legend ! ! Seeis ! Daan Viljoen! ! Grunental Von Bach Dam, Swakoppoort, South Station # Schemes supplying ! Water Supply Schemes 7 Omatako, Oanab, Otjivero, Tilda Oamites ! ! Dordabis from Dams !Onderombapa Viljoen, Daan Viljoen Business Unit Central Kwakwas!

Leonardville! ! Aminuis # Schemes supplying 63 Compiled by: NNN Hatutale-Ihula Date Compiled: 18 February 2021 from Boreholes Source of Data: GIS Office

Geographic Coordinate System: GCS WGS 1984 Datum: �WGS 1984 Additional data: Prime Meridian: �Greenwich Angular Unit: �Degree

Scale 1:1,000,000 Number of boreholes 297

Water supply Number of reservoirs 129 Water is supplied to different categories of customers as listed in the table below. The table also depicts source and infrastructure data. Kilometres of pipeline 4,262

89 water-supply schemes are organised under the following categories of supply: Meeting water demand Total # schemes (raw Swakoppoort Navachab Mine, 2 Business Unit Central remains the largest revenue earner for NamWater, water) Canal customers the City of Windhoek being the largest single customer in terms of the Total # of schemes volume of water supplied. The total annual volume of water supplied 87 See list below (Potable water) under Business Unit Central is 25,867,821 cubic metres, of which 10,570,685 cubic metres, representing 41 per cent of the total volume 87 potable water-supply schemes supply the following client of the business unit, was supplied to the City of Windhoek. categories: The demand for water in the central area of Namibia (CAN) remains # Schemes supplying to Windhoek, Otjiwarongo, Gobabis 4 high, while availability of the precious resource remains a challenge, Municipalities and Okahandja particularly because precipitation levels are low, causing low inflow to # Schemes supplying to Otavi, Okakarara, Rehoboth, the dams during the period under review. 6 Town Councils Karibib, Khorixas and Usakos In order to ensure the security of the water supply to the CAN, a number # Schemes supplying to Witvlei, Otjinene, Leornardville, of short-, medium- and long-term measures are under consideration. 6 Village Councils Uis, Kamanjab, Otjimbingwe In addition to water-saving measures adopted by the large water consumers in the central area, NamWater pumped water from Kombat, Berg Aukas and Karst Area through the eastern national water carrier (ENWC) to Von Bach Dam to supplement the naturally available water.

50 NamWater - 2019/20 Challenges also arise with Tubuses, Buitepos, Epukiro Post 3, NamWater has initiated ‘Project Restore’, a refurbishment programme, Kamanjab and Rundu Gate, all of which have been under suppressed whose goal is to ensure that infrastructural capacity is maintained. The demand. programme incorporates Brandberg East, Brandberg West and Khomas Region, and will run during the 2019/20 financial year. Water quality During the reporting year, Business Unit Central has managed to Operational challenges ensure that water supplied to customers was of acceptable quality. The The business unit faces numerous challenges. Shortage of water microbiological parameters of the water supplied were compiled at a value at some of its schemes, as mentioned earlier, remains the greatest of 92 per cent, which is close to the NamWater target of 95 per cent. challenge.

Certain schemes, however, produce below specified water-quality The unit must also contend with an unstable electricity supply, standards, primarily due to high nitrate, sulphate and fluoride content. particularly at the large schemes that supply the canal, while aging Several projects are ongoing to address these issues at the affected infrastructure—the cause of frequent breakdowns such as daily pipe schemes. breaks on Waterberg pipelines—also places constraints on the unit. Lastly, a shortage of technical staff, which reduces the Corportation’s Infrastructure capacity to execute repairs efficiently, also remains a major challenge. Despite the fact that the infrastructure in the central area is quite old (most of its features were built over 30 years ago), the number of water-supply interruptions remains relatively low. Only about 29 interruptions were recorded in the financial year 2019/20.

Asset management and maintenance

Managing our assets in an efficient and effective manner Many staff vacancies at business-unit level exist in both contributes substantially to containing costs and delivering operations and maintenance, a situation that puts strain on on our mandate. Re-engingeering our enterprise’s asset- the EAM division. Of the 37 approved positions, only 23 are management function is one component of greater efficiency. currently filled, leaving a gap of 14 vacant positions, which represents a vacancy ratio of 38 per cent. At the end of the reporting year, NamWater’s total assets were valued at N$5.603 billion. They are comprised of our water-supply The skills of current personnel also need upgrading as a matter of infrastructure, i.e. dams, pipelines, pump stations, and other urgency in order to fill the critical skills gap. A major effort will be tangibles, and assets we utilise to fulfil our mandate, such as a fleet required, but is vital for the long-term sustainability of NamWater. of vehicles, and our head and branch offices, among others. Furthermore, the slow execution of capital projects placed a burden The enterprise asset management (EAM) division is a support unit on maintenance and had a huge impact on asset operations, for all the business units at NamWater. The main operational unit is as equipment was called upon to perform beyond its design based in the capital and provides support services from the Windhoek parameters. In the face of large demands on the waster supply, head office. some schemes were over-utilised and breakdowns became the norm. The main challenges faced by the division during the reporting year were NamWater’s aging infrastructure and a paucity of skilled Procurement of goods and services also posed challenges due to personnel needed to perform repairs and maintenance activities. limits that had been set and as the cost of equipment and services have been rising at a steady pace. Aging infrastructure created a situation in which 80 per cent of the repair and maintenance work accomplished during the reporting year During the reporting year, in order to take stock of NamWater’s was undertaken in response to breakdowns. assets, a new asset-care plan was developed for each scheme, with cognizance of various current conditions. In the next financial This statistic is a clear indicator that our schemes are either year, a trial will be conducted to initiate maintenance schedules old, are not included in a plan of scheduled maintenance, or based on these plans. These will be evaluated on a monthly basis because NamWater lacks the staff required to perform scheduled to monitor if any achievements are forthcoming. maintenance. The Corporation needs to improve scheduled maintenance in order to reverse the trend and to do this, requires Scheme audit reports will also be presented, that should capture a staff complement that includes enough artisans, handymen and key operational parameters such as equipment performance, asset work hands. Also required are onsite operators who can execute reliability and major technical problems that require attention, in operational maintenance on a daily basis. terms of refurbishment, project planning or rescue strategy. The asset-care plans and scheme audit reports will become part of a monthly EAM report, highlighting the division’s performance on both administrative and operational levels.

Integrated Annual Report - 2019/20 51 INTERNAL PROCESSES PERSPECTIVE (continued)

Infrastructure projects

In line with the national development goals, infrastructure-development projects are initiated and executed on an annual basis to replace and refurbish equipment, improve efficiency, increase capacity, upgrade water quality and cater for new business.

To ensure that NamWater’s current level and standard of service remain sustainable and in order to support Capital Projects: Work-in-progress vs Capitalisations: economic development in the country, NamWater 900,000,000 FY2015-FY2020 (N$) executed a number of infrastructure projects. 800,000,000 During the reporting year, NamWater’s asset register indicated capital work-in-progress valued at N$841 700,000,000 million, a decrease by N$9 million over the 2018/19 financial year. Comparing the past five years, the 600,000,000 2016/17 financial year saw the highest capitalisation value of assets, valued at N$252 million. 500,000,000

Work valued at N$68 million was capitalised during 400,000,000 the period under review. This is a huge decline when compared to the financial year of 2018/19. The low Namibian Dollars 300,000,000 values between 2017/18 and the current reporting period, reflect the long periods required for construction 200,000,000 of water works during this period. The graph on the right depicts capital works in progress against the value of 100,000,000 capitalised work over the past five years. 0 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Value of Work-in-progress Value of Work Capitalised

Drought-intervention projects include the following: repaired canal to an earth dam in Elim at • Drilling and rehabilitating boreholes a cost of N$350,000. Together the canal A heavy challenge of the reporting year across the country was carried out at a and earth dam provided much-needed was posed by the countrywide drought. cost of N$10 million. water for the livestock. On 6 May 2019, His Excellency President • NamWater rehabilitated the 130-kilometre • NamWater owns a fleet of 10,000-litre Dr Hage Geingob declared the drought a natural-earth Etaka canal that runs water tankers. These tankers were national disaster. through the Uukolonkadhi, Uukwaluudhi, used to provide treated water to several Ongandjera, Uukwambi and Ondonga communities, hospitals and clinics As the entities responsible for supplying water tribal areas at a project cost of N$3.5 across the 14 regions of Namibia. Water for both human consumption and livestock, million. Upon completion, the canal valued at N$5 million was distributed by the then-designated Ministry of Agriculture, provided water to drought-stricken tankers as one of NamWater’s drought- Water and Forestry and NamWater undertook communities in these constituencies. relief interventions. various interventions to curb the effects of the • NamWater also rehabilitated the drought throughout the country. Some of the 15-kilometre-long earth canal between projects and activities initiated by NamWater Oshikuku and Elim. NamWater pumped water from Oshikuku through the

Borehole drilling project Rehabilitated of Etaka canal Water tanker services

52 NamWater - 2019/20 Significant projects under construction The ten most valuable NamWater-funded projects under construction during the period of review are as follows:

OGONGO-OSHAKATI PIPELINE Budget value: N$220,330,000 Construction of a 54-kilometre, 500mm diameter GRP pipeline with appurtenances between Ogongo and Oshakati. At this stage of the project, the old pipeline will be replaced to improve the security of the water supply. In the short term, this pipeline will also augment the water supply to Oshakati.

CRITICAL PUMP-STATION UPGRADES Budget value: N$108,900,000 The objective of the project is to increase the reliability of water supply. Mechanical, electrical, and electronic equipment at many pump stations and boreholes around the country is old and outdated. Some is so old that no spare parts are available. This project entails the Ogongo pump station replacement of obsolete equipment at identified stations across the country.

OMAHENENE- OLUSHANDJA CANAL REFURBISHMENT Budget value: N$86,707,000 The construction stage of this project entails the refurbishment of the Mahenene-Olushandja canal, the section specifically including design or redesign of sections of the original canal not rehabilitated to date. The project will refurbish the concrete section between Omahenene and Olushandja. Damaged Omahenene-Olushandja canal - before, during and after refurbishment.

CALUEQUE PUMP-STATION UPGRADE ONDANGWA STORAGE Budget value: N$60,000,000 Budget value: N$32,713,000 The project entails upgrading the power supply and replacement of The objective of the project is to increase security of water supply to identified mechanical and electrical equipment at the Calueque pump Ondangwa and the schemes supplied from Ondangwa. The project station. (It is noted that a new pump station had been built by Angola entails the replacement of the 9,000 m3 concrete, rectangular reservoir three years ago, but since relevant contracts are no longer in effect, with a new ground-level, circular concrete reservoir. Namibia has committed to commissioning the station in the interest of the large population that will be served in the central northern region.) OGONGO PURIFICATION UPGRADE Budget value: N$29,810,000 OSHAKATI NEW RESERVOIR The objective of the project is to re-instate the Ogongo purification Budget value: N$41,349,000 plant to its designed output capacity of 1,200 cubic metres per hour. The objective of the project is to improve security of water supply to The project will construct a new raw-water abstraction unit, refurbish Oshakati and the schemes supplied from Oshakati. The project entails clari-flocculators, rehabilitate flash mixer, construct a new pump house the construction of a new 13,500 m3 ground-level, circular concrete and chlorine-dosing system, new instrumentation and controls and reservoir, to be built near the leaking 9,000 m³ reservoir, which upon upgrade the laboratory. completion of the project will be demolished. OUTAPI STORAGE EXTENSION KUISEB UPGRADE Budget value: N$17,750,000 Budget value: N$34,984,628 The objective of the project is to improve water-supply security for The objective of the project is to improve security of water supply Outapi town. The project entails construction of a circular 5,000 m3 to Walvis Bay. Phase 4 of the project is in progress and partially concrete reservoir for Outapi Town. commissioned. The project entails the drilling and installation of new boreholes to increase abstraction capacity from 1,106 to 1,380 cubic KUISEB SCHEME CAPACITY UPGRADE metres per hour. Budget value: N$16,630,000 The overall objective of the project is to increase abstraction capacity from the Kuiseb aquifers to improve the security of water supply to central coastal towns.

Integrated Annual Report - 2019/20 53 INTERNAL PROCESSES PERSPECTIVE (continued)

Strategic objective: improve internal efficiency

Purpose: The purpose of this objective is to achieve a water-supply production cost of N$11.38 per cubic metre by financial year 2020/21. Total Production Cost (including Depreciation): 2019/20 (percentage) KPI: Total production cost, including depreciation 30.00 Operational expenditure including depreciation for the period was a little higher 25.00 than budgeted. The operational budget and strategic targets were not achieved, primarily 20.00 because the budget was overspent by approximately N$10 million. The main factor 15.00 attributing to overspending on the level of Business Units is to be found in the payroll, 10.00 specifically in overtime payments to staff. Percentage This payroll factor pushed a production cost 5.00 of N$11.94 per cubic metre against the target of N$11.38. 0.00

KPI: Non-revenue water Actual Target (Budget-2%): 11.50 Budget: 11.73 Baseline FY19: 11.38 Water is lost or unaccounted for in the system due to evaporation, faulty metering and leakage, giving rise to a factor referred to as non-revenue water, which represents the difference between water produced and water billed. This key performance indicator shows the percentage of non-revenue water as a ratio of the total volume of water billed over the volume produced.

During the reporting year, non-revenue water amounted to 11.2 per cent against a target of eight per cent. The inconsistent behaviour of the graph is a reflection of prepaid water transactions.

Non-revenue water: 2019/20 (percentage) 35%

30%

25%

20%

15%

10%

5%

Percentage 0%

-5%

-10%

-15%

Result Benchmark Baseline FY2019 (11%)

54 NamWater - 2019/20 Strategic objective: meet water demand

Purpose: The purpose of this objective is to achieve an implementation rate of 60 per cent success of the streamlined corporate strategic plan by financial year 2020/21.

KPI: Number of schemes that were over- Scheme Over-abstracted: 2019/20 (number) abstracted 30 25 KPI: Number of customers that were subject to suppressed demand 20

15 These two KPIs measure the degree to which NamWater met the demand for water during 10

the reporting year. Number of schemes 5

The top graph shows that, on average, 17 out 0 of 98 water schemes were over-abstracted in order to deliver to demand. Result Target Baseline FY19

The bottom graphs shows that, on average, 29 schemes operated under suppressed demand Customers under Suppressed Demand: 2019/20 (number) during the reporting year. 35 30

It should also be noted that in some instances 25 water-resource capacity would be subject 20 to constant limitations and therefore a 15 value of zero might never be achieved. This has an immense impact on water-resource 10 management for future water-supply 5 sustainability. Number of schemes 0

Result Target Baseline FY19

Integrated Annual Report - 2019/20 55 INTERNAL PROCESSES PERSPECTIVE (continued)

KPI: Compliance with bacteriological standards management that our quality-testing procedures are well honed and establish confidence in the technical services our laboratories provide. Delivering water that conforms with the highest safety standards is at the core of NamWater’s activities. Bacteriological analysis is conducted to determine bacteria counts and types in produced water. Bacteria analysed include coliforms NamWater’s laboratories specialise in analytical chemistry, conducting and Escherichia coli. These are indicator organisms; their presence biochemical, microbiological and charcoal analyses, to evaluate water is an indication of sewage contamination of water. Elevated levels of in various states and conditions: potable water, sewage treatment, indicator bacteria prompt further analysis of a sample to determine the industrial effluents and groundwater. presence of specific pathogenic bacteria.

Our microbiological laboratories are situated in Windhoek and For technical and economic reasons, it is impractical to subject routine Oshakati. During sampling trips, many microbiological samples are water-quality surveillance to procedures employed for the detection anaysed en route, as the vehicle is equipped with instruments to of harmful organisms (pathogens). Some of the tests involved are allow on-site analysis. Samples are also submitted via courier to the complex and expensive. Worldwide, testing for indicator bacteria is Windhoek laboratory for analysis. used as the standard to determine the bacteriological safety of water. Coliform bacteria are relatively simple to identify and are present in Our microbiological laboratories participate in various proficiency- much larger numbers than more dangerous pathogens. testing schemes with outstanding results. Participation in such schemes provides independent of laboratory competence. NamWater’s Samples are collected at reservoirs and analysed from all our water laboratories are frequently ranked among the top ten per cent of sources — from dams, rivers and boreholes — to determine the quality participating laboratories, clearly demonstrating the high standard of of source water. The importance of bacteriological compliance is linked their performance. to the Corporation’s mandate to provide water that is absolutely safe for human consumption. Our laboratories also provide proficiency testing for more than 80 laboratories in South African and East African countries. Our status Two comparisons are made to rate NamWater’s efforts toward in this regard confirms for the public, customers, authorities and achieving full test compliance, namely the total number of samples taken compared to the required number and secondly, the number of test failures compared with the number of tests conducted. Bacteriological Compliance (samples taken): 2019/20 The goal is to achieve thereby 95-per-cent testing (number) compliance. 3500

3000 During the reporting year, the average target for compliance

2500 with bacteriological sampling was set at 273 tests per month, with an annual target of 3,276 samples. By the end of 2000 the reporting year, 2,538 samples had been taken, indicating 1500 that the target had not been met. Logistical problems, such as vehicle breakdowns, contributed towards creating this 1000 shortfall. Business Units South and Coast have met or Number of samples 500 269 260 292 232 264 exceeded the sampling frequency targets, while Business 201 183 178 124 191 153 13 10 3 7 4 17 16 12 1 12 20 8 Units North and Central have performed below target results. 0

In collaboration with the Research and Development division, an initiative was planned to improve the situation. This # Samples taken # Sample failures initiative would have tested with the automated microbiology # samples taken cumulative # samples to be taken cumulative machine, the TTECTA B16. Unfortunately, an agreement could not be reached and the initiative was not launched. Bacteriological compliance: 2019/20 (percentage) 100% 99% A 95-per-cent bacteriological-test compliance was 98% 98% 98% 98% 97% achieved by the end of the reporting year, which met 97% 98% 97% 96% 96% the target. This performance is an improvement of 95% 96% 95% 95% 95% 94% 94% 94%94% 93% one per cent over compliance achieved in the previous 92% 94% 92% 92% reporting year. 91% 90% 90% Percentage 89% On the other hand, it should be noted that the 95-per-cent 88% compliance was achieved through several samples that was 86% much lower than the required frequency. This performance consequently gives rise to concern, because it skews 84% perception of NamWater’s compliance level. The Corporation will address this situation in the next reporting year.

Result All BU's Target: 95% Baseline FY19: 94%

56 NamWater - 2019/20 Strategic objective: diversify business

Purpose: The purpose of this objective is to increase the revenue During the reporting year, HRDC generated an amount of N$29,467,199 contribution received through non-bulk water services by one per cent against a budget of N$17,454,528 and a baseline of N$15,572,927. The per annum from 2021. laboratory services recorded an income of N$1,586,561 compared with income reported in the previous year of N$1,950,912. Rental of building KPI: Revenue generated generated N$3,921,138 compared with N$3,779,841 the previous year.

This KPI presents revenue generated from sources other than internal Total external revenue, as a percentage of total revenue is sources. External revenue is revenue generated mainly by the Human approximately 1.7 per cent for the reporting year, which meets the Resources Development Centre (HRDC), from laboratory services and target. rental of buildings.

External Revenue, 2019/20 (N$) 35,000,000

30,000,000

25,000,000

20,000,000

15,000,000 Revenue (N$) Revenue 10,000,000

5,000,000

- Buildings Laboratory Services HRDC Total External Revenue

Actual FY 2020 Budget FY 2020 Baseline FY 2019

Integrated Annual Report - 2019/20 57 OUR OPERATIONAL AND NATURAL RESOURCES CAPITALS CUSTOMER PERSPECTIVE

Strategic Theme: We secure water.

SECURE WATER IN THE SHORT AND MEDIUM TERM

Strategic objective: ensure sustainability of water supply

Sustainability of the water supply remains NamWater’s KPI: 90 per cent availability of all water schemes at all times. primary focus and is therefore the most significant yardstick of its performance. A report of the Corporation’s performance Actual performance: is made with respect to two time frames, namely short- to The reservoir average is just below 60 per cent. This value indicates a medium term and long term. water demand that surpasses supply capacity. To achieve operational data effectiveness, the Water-supply Department would next be tasked Purpose: The purpose of this objective is to ensure 90 per cent to identify the most critical reservoirs for tracking incidents and water availability of all water schemes continuously, at the same time levels. Should a downward trend continue, customers could in future achieving a five per cent reduction in energy cost by financial year experience interruptions in water supply. 2021.

58 NamWater - 2019/20 Strategic objective: ensure sustainability of water supply (continued)

KPI: five per cent reduction in energy cost Energy cost: 2019/20 (percentage Energy cost, as depicted in the operational 40% 50.0% cost breakdown (financial quadrant), is one of 35% 45.0% NamWater’s four highest operational costs. 40.0% It is therefore of paramount importance to 30% 35.0% manage the consumption of energy effectively 25% and efficiently. 30.0% 20% 25.0%

A management-information system for 15% 20.0% operational data is in development to track 15.0% energy usage per cubic metre of water for all 10% 10.0% schemes. 5% 5.0% The cost of energy was managed within target 0% 0.0% during the reporting year.

Result Budget: 32.1% Baseline FY19: 34%

KPI: Number of major system failures Major system failures: 2019/20 (number) 20 16 The number of major water-supply 18 interruptions is a lag factor and indicator of 14 16 the health of our water-supply equipment and 12 our ability to supply customers sustainably. 14 10 The number of interruptions is also indicative 12 of how well our equipment and systems are 10 8 maintained. 8 6 6 4 An increase in the number of system failures 4 was recorded in comparison to the number 2 2 reported the previous year, with particular notice of the period between September 2019 0 0 and March 2020.

Breakdowns experienced: Result Baseline FY 19

BU Nr Scheme Reason for breakdown BU Nr Scheme Reason for breakdown

Rosh Pinah Continuous problems with pumps Nkara- Raw water pipe breakage (5) at abstraction tower due to low river pamwe South 2 levels Rundu Town Raw water pipe breakage (4) Keetmans- Water quality problem Katima Raw-water pipe breakage on main hoop Purification pipeline between Zambezi River and purification plant (2) Schwartze- Pipe breakage (2) Calueque Fuses blown on pump nr 1 and kuppe pipeline leak North 16 Coast 20 Orano Plant Plant down due to high sulphur Oshakati Raw-water pump nr 1 was out of outbreaks (18 incidences during operation for two weeks, causing January/February 2020). low levels at Oshakati treatment plant. (Concrete block was replaced Spitzkoppe Borehole water not suitable for due to cracking of cement) human consumption. (Providing water by tanker in the interim.) Olushandja Canal breakage (2) Tubusis Boreholes went dry. (Old boreholes Engombe Pipe breakage were rehabilitated; the shortfall village supplied by tanker.) Swakop- Power failure – caused Okongava Central 6 poort base reservoir to empty for a day. Omatjette Borehole went dry. Von Bach Power failure due to damaged power booster 1 to cable (transformer to pump station). Terminal (Replaced within 48 hours.) Von Bach Level transmission cable failed, treatment cause unknown. (Replaced within plant 24 hours.)

Integrated Annual Report - 2019/20 59 CUSTOMER PERSPECTIVE (continued)

SECURE WATER IN THE LONG TERM

Strategic objective: achieve sustainable development priorities

Purpose: The purpose of this objective is to achieve targets set in the HPP and NDP 5 by financial year 2020/21. Since the national targets for urban and rural water-supply demand and specific expectations in terms of the HPP and NDP5 have not yet been made known to the Corporation, it was not possible to project NamWater coverage in terms of the HPP and NDP plans. The Corporation now seeks to engage the NPC and the line ministry in this regard.

KPI: Volumes of Water Produced (m3) This KPI projects water produced as an indicator of the Corporation’s ability to supply water sustainably. Actual performance: NamWater produced 135,882,018 cubic metres water during the reporting year, which Water produced: 2019/20 (m3) was 6,773,064 cubic metres less than the 160,000,000 previous year, due to the conditions of drought experienced in the year under review. 140,000,000

120,000,000

100,000,000

Cubic metres 80,000,000

60,000,000

40,000,000

20,000,000

- Production Production Production Production Total Target Q1 Q2 Q3 Q4 Production FY2020

60 NamWater - 2019/20 Strategic objective: enhance brand and reputation

Purpose: The purpose of this objective is to raise stakeholder engagement in terms of the frequency, quality and outcome of interactions in order to improve relationships with our stakeholders. KPI: Number of Key Stakeholder Actual performance: Engagements A target of 172 stakeholder engagements was Key Stakeholder Engagements: 2019/20 (number) planned for the financial year, but an actual 59 16 engagements took place. The engagements 14 14 depicted in the graph refer only to those with 13 key customers. The low performance recorded 12 is attributed to the fact that all engagements are not documented. 10 9 8 7 The stakeholder pool will be expanded 6 to include key suppliers and Government 6 5 4 stakeholder engagements. 4 3 3 3 2 2 2 In the next financial year, through the 2 stakeholder-engagement strategy, an action 0 list will be drawn up of all stakeholders that should improve efficiency in tracking and evaluation. Result Target

Strategic objective: ensure customer satisfaction

Purpose: The purpose of this objective is to implement a customer-care protocol by financial year 2020/21 that addresses the needs of all NamWater customer segments and thereby ensures their satisfaction.

KPI: Key Customer Satisfaction A customer survey was not conducted during the reporting year and therefore no projection of customer behaviour over time could be established. The stakeholder-engagement survey will be completed in the next financial year.

High-level committee oversees long-term water-supply projects

The Government of Namibia has appointed a Cabinet committee on water-supply security that consists of a group of technical experts. Among others, the function of the committee is to review all existing proposed water-supply solutions by various stakeholders, including proposals by the Ministry of Agriculture, Water and Land Reform, NamWater and City of Windhoek.

This high-level committee is led by NamWater, and on its recommendation Cabinet approved over N$3 billion to fund critical water-supply projects that will run over the next five years. The most vital projects are captured in the table presented on the following pages.

Water supply projects identified by technical-committee experts

NAME BRIEF PROJECT DESCRIPTION PROGRESS

A comprehensive revision of the water masterplan of The first phase of the study has been completed and the CCA Master Water the central coastal area, as well as an investigation of a consultant is currently busy with the second and final Plan Study possible link to the CAN and also Botswana. The study will phase. Expected completion date: September 2020. be conducted by an international consultancy group with a grant from the Kreditanstalt für Wiederaufbau (KfW). CNA Master Water A comprehensive revision of the water masterplan of Agreements between Germany and Namibia governments Plan Study the central northern area, including full utilisation of and the KfW should be concluded by end of July 2020, Namibia’s specified share of water from the Kunene after which a tender will be advertised for appointment of a River and the development of the Ohangwena II aquifer. consultant to prepare.

Integrated Annual Report - 2019/20 61 CUSTOMER PERSPECTIVE (continued)

Water supply projects identified by technical-committee experts (continued)

NAME BRIEF PROJECT DESCRIPTION PROGRESS

Completion of the preliminary environmental-impact The funding for this study has been included in the TCE CAN Master Water assessment study, forming part of the water masterplan budget and the consultant already appointed to carry out Plan Study study of the central area of Namibia. The technical this part of the study, has been advised to continue. component thereof was completed in 2018.

A water masterplan study on all remaining and possibly The first phase of the work has been completed and the CAN Medium Term viable inland sources available to serve the central area consultant is occupied with phase 2 of the assignment; Alternatives of Namibia over the short-to-medium term. The chosen results expected by September 2020. alternatives will be further evaluated during the second phase of the project. Calueque Pumping The completion and commissioning of the permanent This activity is the responsibility of the PJTC between Station pumping system forming part of the Calueque dam with Angola and Namibia. Little progress has been made and agreement on and appointment of an authority with the matter, being of great concern, has been raised to the Angola to operate and maintain the system. level of the CCWSS for assistance. Omahanene to The replacement and repair of the 10 km long concrete Repair of the canal will be executed by two contractors, Olushandja Canal lined canal running from the Namibian border with working simultaneously on different sections, to facilitate Refurbishment Angola to the Olushandja balancing dam. timely completion. Tenders have been received, evaluated and award of the contract is expected by the CPB shortly.

Olushandja Pump Investigation of the condition of the Olushandja NamWater is currently investigating preparation of a Station and Siphon pumping station and siphon, and its upgrade to meet detailed design and implementation of the project would Refurbishment expected pumping volumes, after the duplication of the be structured and executed. The programming thereof is Oshakati purification works becomes operative. expected shortly.

Olushandja to Ogongo Escalated cleaning, maintenance and repairs of the Maintenance work on this section of the canal is ongoing. Canal Refurbishment 70-km-long concrete canal between Olushandja and Preparation of a design of the sections to be replaced will Ogongo. Also included in the project is the replacement commence in July 2020. Project completion is slated for of the end section at Ogongo. December 2022. A reinvestigation of the capacity and upgrading of A consultant has been appointed to prepare a design Ogongo to Oshakati the 54-km-long concrete canal between Ogongo and and tender documentation for the replacement section. Canal Rehabilitation Oshakati, together with replacement of a 10-km section Assessment of the remainder of this section of the canal is in the vicinity of Oshikuku with a pipeline/pumping expected to commence later in 2020. system. An investigation of the raw water storage requirements The project is presently in the planning phase and a Oshakati Raw Water at Oshakati and the provision thereof, to ensure an provisional programme is awaited and a draft is expected Storage essential surety of water supply at this critical position by July 2020. along the extensive water supply network from Calueque to Oshakati and further.

Duplication of capacity of the existing purification plant Consultants have been shortlisted to prepare a design Oshakati Purification at Oshakati to cater for growing and expected future and supervise construction of the project. A request for Plant Extension demand for water in the region, which has already proposals has been submitted to the CPB for further outstripped the existing capacity of that plant. action. The project will be co-financed by the AfDB.

62 NamWater - 2019/20 Water supply projects identified by technical-committee experts (continued)

NAME BRIEF PROJECT DESCRIPTION PROGRESS

Complete replacement of existing water-abstraction Request for tender proposals has been drawn up to invite Rundu Purification system and purification plant which has reached the submittals by consultants for design and construction Plant Replacement end of its lifetime, and which is unable to meet the supervision of the project. The project will be co-financed growing and future demand for water by Rundu and by the AfDB. surroundings. First phase development of Ohangwena II aquifer A consultant is currently compiling project requirements Ohangwena II Phase system to cater mainly for the demand in an area where after a request for proposals to execute will be 1 (Omafo – Eenhana between and including Oshandi and Eenhana. drawn up. The project will also be co-financed by the Extension) AfDB.

Expansion of the abstraction and pumping capability of A charter has been drafted for approval of the project from Berg Aukas New the Berg Aukas scheme, either by lowering pumps in the NamWater’s needs committee after which a programme Borehole Scheme mine shaft or the development and equipping of new will be finalised and the required geo-hydro work and boreholes externally thereto. drilling of boreholes will commence.

Karst III and IV Large-scale development of a groundwater abstraction Development stage of the project has commenced. Development and collector system in the area between Abenab and Borehole siting is underway after which the required (including Abenab to Tsumeb, able to harness this until now untapped source number of production boreholes will be drilled. This project ENWC link) of water for supply to the CAN. will also be co-financed by the AfDB.

Replacement of Drilling and/or replacement of a number of old Drilling of replacement boreholes was completed over the Boreholes of the boreholes forming part of existing Kuiseb abstraction past five months and NamWater will now proceed with Existing Kuiseb scheme, which can no longer provide the expected their installation and coupling with the distribution system. Scheme volumes. Completion is expected by March 2021.

Drilling new boreholes in the Dorob region of the Kuiseb Drilling and pump testing of new boreholes to tap this New Dorob Borehole aquifer and linking them to the existing supply network additional aquifer were completed and design of the Scheme to increase water surety and supply from the Kuiseb collector system is underway. Construction is planned to system. commence in 2021.

Longer-term project aimed to harness greater potential Project is in early phase of pursuance; only the geo-hydro of water abstraction from Kuiseb aquifer, which lies to investigations and drilling work have been planned and New Kuiseb Borehole the east and south of the area and is presently being budgeted. A development proposal will be prepared once Scheme utilised as a source of supply. the above work has been concluded.

Final phases to complete crucially needed, necessary Replacement work on the NamWater budget is progressing replacement of aged spinal cord pipeline system from according to plan. Tenders for work on the GRN budget are Kuiseb-Swakop the Kuiseb borehole collection reservoirs to Walvis Bay, ready for advertising but depend on availability of funds, Pipeline Replacement Swakopmund and other coastal consumers. which currently are not available.

Necessary replacement of old main pipeline running Project is of lower priority than the Kuiseb-Swakop line Omdel-Wlotzka from the borehole collection system in the Omdel to and will commence in 2023. Pipeline Replacement Wlotzkasbaken.

Assumption of management and upgrading of existing Consultants are investigating better options between seawater desalination plant of Orano at Wlotzkasbaken; purchase and upgrade of existing Orano desalination plant New Desalination alternatively, development of new plant to serve either or the construction of a new plant. An outcome is expected Plant the coastal region or both region and the CAN. by September 2020.

Integrated Annual Report - 2019/20 63 OUR HUMAN AND INTELLECTUAL CAPITALS

TALENT AND TECHNOLOGY PERSPECTIVE

Strategic Theme: We attract the best.

64 NamWater - 2019/20 This theme highlights the role of NamWater’s employees. It emphasises the crucial importance of maintaining a strong and motivated workforce and the imperative of employing highly qualified individuals who identify with the Corporation’s mandate and mission. Applying the shared responsibility concept to assignments, initiatives and projects, staff is encouraged to become engaged and active participants in creating the Corporation’s future, as well as their own futures, at the same time developing the competencies, skills and abilities that contribute to their growth.

Integrated Annual Report - 2019/20 65 TALENT AND TECHNOLOGY PERSPECTIVE (continued)

HUMAN RESOURCES ACTIVITIES Ensure statutory compliance and the HR policy-review project

NamWater obtained affirmative action (AA) compliance for the reporting year that is essential for continuity of business. Its rating was attained through the facilitation of quarterly AA meetings, communication sessions, and through promoting the three-year, AA plans and goals, and promptly submitting NamWater’s AA report.

During the reporting year, the human resources policy manual, approved in 2006, was reviewed, consequently ensuring compliancy with the relevant employment legislation.

Permanent and temporary Staff Numbers, 2019/20 employees 1200

At the end of reporting year, NamWater’s 1000 workforce was comprised of 879 employees, of which 526 were employed in categories 800 other than management, 85 were employed in management, which amounts to 611 600 permanent employees. A total of 268 were temporary employees. 400

NamWater participated in the Number of employees 200 PriceWaterhouseCoopers RemChannel employee-benefit survey in which several public and private Namibian companies 0 participated. The objective was to benchmark Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mrt 20 the competitiveness of NamWater’s employee-benefit offerings for the Namibian Non-Permanent Permanent Total market. This exercise helped the company finish its HR-policy review and to evaluate the Corporation’s remuneration philosophy in the context of market standards and expectations. Staff Movement, 2019/20 (number and percentage)

Business Unit North has a staff compliment of 208 employees, while Business Unit Coastal is the smallest of the four business units run by NamWater. Currently, only 31 positions are filled and a few critical vacancies exist that should be filled in due course. Most of the staff belongs to the maintenance and operational departments. Staff promoted, 18, 34.6% Staff of the Business Unit South consists of 78 staff members, of which 51 are members of the operational department. The staff complement in Staff hired, 33, Business Unit Central currently stands at 132, though proposed staff has 63.5% been established at 208. Operational personnel, 82 employees, make up Staff transferred, the largest portion of the total staff complement, followed by maintenance, 1, 1.9% comprised of 33 employees. Staff movement

During the reporting year, NamWater hired 33 new Recruitment and Selection, 2019/20 permanent employees. Eighteen employees were promoted to higher positions. One employee was 160 transferred within the Corporation. 140 134

120

Recruitment 100 78 73 By the end of the reporting year, 51 vacancies of 80 56 134 activated vacant positions were filled, while 73 60 51 vacancies were in various stages of the recruitment process. 40 20 10 Nine vacancies were put on hold and one Number of employees recruitment submission had still to be finalised. 0 Overall, a total of 73 vacancies were moved forward Vacancies B/F New Activations Positions On Vacancies In Vacancies Filled Total Vacancies FY18/19 FY19/20 Hold & Re- Progress FY20 FY19/20 into the next financial year to be filled. advertised

66 NamWater - 2019/20 Racially Racially Persons with Non-Namibians Total Total Disadvantaged Advantaged Disabilities

Job Category Men Women Men Women Men Women Men Women Men Women All

Senior Management 2 2 0 0 1 0 0 0 3 5 5

Middle Management 14 4 4 0 0 0 0 0 18 4 22

Senior Supervisory 34 23 3 1 0 0 3 0 40 24 64

Skilled 134 56 8 5 0 0 0 0 142 61 203

Semi-skilled 89 59 3 3 0 3 0 0 92 65 157

Unskilled 141 19 0 0 0 0 0 0 141 19 160

Total Permanent 414 163 18 9 1 3 3 0 436 175 611 Employees

Permanent workforce profile A total of 197 employees are over 50 years old. In terms of skills, more than 85 per cent of NamWater’s workforce are in NamWater employed a diverse workforce in conformity with the the unskilled and semi-skilled categories. Employment Equity and Affirmative Action Act. The permanent workforce at the end of the reporting year totalled 611 employees and During the reporting year, 24 employees went into voluntary, age- is well represented in affirmative action’s diverse categories in line with related retirement. the Affirmative Action Act.

Of the 611 permanent employees, 29 per cent are females and 71 per Staff turnover, 2019/20 (number and percentage) cent males: 436 are males and 175 are females.

Staff turnover and retirement Staff died, 4, 11% The staff turnover rate for the reporting year came to 6.05 per cent. A Staff resigned, 9, total of 37 employees left the Corporation: nine employees resigned, 24% 22 retired, and two chose to go into early retirement. Four employees passed away. Staff on early retirement, 2, 5% The turnover rate for resignations was 1.47 per cent, whilst the turnover Staff on normal rate in retirement and deaths was 4.58 per cent. retirement, 22, 59% NamWater administered 24 early and normal retirements during the reporting year. Of the 24 retirements, two employees were in the Grade A, i.e. unskilled category, who chose early retirement.

A total of 22 employees went on normal retirement in the reporting year. The turnover rate for retirement is 3.9 per cent. The employees who Early/Normal Retirement per Grade, 2019/20 went on normal retirements were in the following grading categories: Grade A (unskilled): 11 employees; Grade B (semi-skilled): three (number) employees; Grade C (skilled): five employees; Grade D (management): 30 three employees. 24 25

20

15 Looking ahead 11 10 NamWater plans to review all its divisional processes strategically in 5 3 3 order to identify challenges in service delivery to the Business Units, to 5 2 Number of employees support divisions through stakeholder plans and an increased number 0 of engagement meetings. Grade A Grade B Grade C Grade D Early Retire Total

The Corporation also plans to improve and automate the recruitment In the coming financial year, the Corporation will also develop an and selection process to develop HR capacity to serve the respective abridged version of the recently-reviewed HR policy manual in the form Business Units, support divisions, its employees and job applicants in of an employee booklet. A separate booklet on the administration of the shortest time possible. discipline and grievance processes will also be prepared.

Moreover, acquisition of a cloud-based recruitment and tracking Furthermore, manuals will be prepared on the subjects of standard system is in planning that would streamline and support the operating procedures, on the employee wellness programme, and on recruitment and selection processes, specifically in terms of analytic the recruitment and selection processes, among others. reporting, and applicant tracking up to the point that new employees are inducted into the Corporation.

Integrated Annual Report - 2019/20 67 TALENT AND TECHNOLOGY PERSPECTIVE (continued)

TRAINING AND DEVELOPMENT The HR Strategy division is responsible for talent management and skills Succession development through short- and long-term development initiatives to ensure that employees are equipped with appropriate skills that are up-to-date with the most management recent performance standards of the Corporation or in order to facilitate operations. Different programmes have been implemented: NamWater is currently operating with • Staff development - Identify skills gaps, develop and hone skills to ensure the dedicated efforts of a workforce, employee upgrade in skills for performance improvement. many members of which are • Succession management - Ensure pools of skilled employees are trained and approaching retirement age. In fact, available to meet the strategic objectives of the Corporation and to ensure most of its skilled employees will be that leadership and technical capabilities for current and future operations are retiring within the next five years. upgraded. • Bursary scheme and in-training development programme – Attract and groom Once these staff members leave, graduates to fill specific positions at NamWater. This programme feeds into the the Corporation will have to come to Corporation’s talent base. terms with a huge skill gap, given age • Study loan scheme – Financially support employees to continue studies, on differences between those who will either a full-time or a part-time basis, in specified disciplines for the purpose retire and the skilled employees who of acquisition of formal degrees and diplomas required for appointment and/or will remain. advancement to higher positions in the Corporation. To meet this situation, the HR strategy division will initiate a succession- Number of Interventions and Participants management programme that will Staff development identify critical positions in NamWater 250 226 and select potential successors in the Employees from several departments were 200 workforce to ensure continuity in those 161 152 taken through various training interventions in 150 positions. accordance with an established training plan. 100 65 A total budget of N$1.67 million was spent for 38 The HR Strategy division will also 50 25 staff training. 30 12 implement a skills-transfer process to 0 Number of employees appoint imminent retiree mentors who Q1 Q2 Q3 Q4 will pass skills to selected employees Interventions Participants Study loan scheme within their departments before they leave NamWater. A total amount of N$695,000 was expended Training content distribution for courses attended by employees who are Other Additional plans have been drafted that 1% upgrading their qualifications. Thirty-eight will further develop, standardise and/or 3% 10% Compliance employees attended academic courses 15% implement other initiatives such as: during the financial year of which eight have 19% Continuous successfully completed their studies. improvement • the management-development Systems sustainability programme 44% 8% • a culture and climate survey Functional/Technical • Phase 2 of the succession- Bursary scheme management programme Soft skills • NamWater’s record-management During the period under review, a total of 30 system, and students were supported by NamWater’s Study loan scheme: N$ value • a revenue-growth plan. bursary programme, of which 14 students 400,000 have received qualifications and 16 students 300,000 continue to be sponsored. Six NamWater 200,000 employees were among the students. The 100,000 total amount expended for the bursary 0

programme was N$1.26 million. Namibian Dollars Q1 Q2 Q3 Q4 Amount taken out Amount paid out

68 NamWater - 2019/20 LABOUR RELATIONS

Strategic objective: enhance culture and engagements

Purpose: The purpose of the objective is to foster an organisational culture in which every employee feels he or she is valued. Measures designed to accomplish this objective have been planned to be 70 per cent completed by 2021.

KPI #1: Employee morale

A survey that will gauge employee morale is scheduled to be conducted in the coming financial year.

Strategic objective: develop a posture of learning in the organisation

Purpose: The purpose of the objective is to establish 80 per cent of the targeted resourced organisational structure by 2021 en route to a fully resourced organisational structure by 2024.

KPI: HR cost as a ratio of total costs Labout Cost/Total Cost Ratio, 2019/20

35.00% 32.25% 33.01% The purpose of this performance indicator is to ensure 30.31% 29.18% 28.33% 28.29% that the Corporation has sufficient human resources and 30.00% 27.53% 27.16% 24.08% 24.55% 23.83% manages its payroll in a cost-effective manner. The graph 25.00% 22.13% 22.41% depicts the payroll as a percentage of the Corporation’s 20.00% total costs for the reporting year. 15.00% The ratio of NamWater’s payroll versus total costs at 31 10.00% March 2020 is 22.41 per cent compared with 21 per cent 5.00% at the end of March 2019. The ratio remains below an 0.00% acceptable rate of 30 per cent. Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mrt 20 Total

HR Cost/TC Ratio Accpetable Rate

KPI: Overtime as a ratio of payroll cost per month for Overtime as a Ratio of Payroll Cost, 2019/20 financial year 2019/20 12.00% 10.10% The graph depicts overtime as a percentage of the total 10.00% 8.53% 8.45% payroll for the reporting year. The amount of overtime 7.70% 8.00% 7.03% 7.25% 7.07% 7.00% averaged seven per cent for the year, exceeding an 6.57% 6.67% 6.06% 5.76% acceptable rate of five per cent. 6.00% 5.10%

4.00%

2.00%

0.00% Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mrt 20 Total

Actual Target

Integrated Annual Report - 2019/20 69 TALENT AND TECHNOLOGY PERSPECTIVE (continued)

Work-integrated learning

As a reflection of the Corporation’s stance on social responsibility, NamWater provided 51 job-attachment opportunities to learners from Work-integrated Learning, 2019/20 (number) various secondary institutions at NamWater offices across the country. 60 During the reporting year, the Corporation spent N$820,000 on the work-integrated learning programme. 50 40 In-training programme 30 20 During the period under review, 28 graduates participated in the in- training development programme of which 11 students have completed 10 their programme and 17 graduates will continue during the coming 0 financial year. Total # internships Total # job Total # Work in attachments Training given Psychometric Assessments

A total of 13 psychometric assessments were administered in NamWater’s recruitment process.

70 NamWater - 2019/20 HUMAN RESOURCES DEVELOPMENT CENTRE (HRDC)

To assist the Government achieve the goal of an industrialised Namibia by the year 2030, as targeted in the Harambee Prosperity Plan and NDP5, NamWater’s Human Resources Development Centre (HRDC) has been registered with the Namibia Training Authority (NTA) and has been accredited with Namibia Qualification Authority (NQA). Its objective is to raise the number of qualified artisans and instructors in the country.

NamWater has funded training for artisans since its inception. Many artisans who keep the economic engines of Namibia running were qualified at the HRDC.

During the reporting year, 116 artisans received qualifications:

• 21 diesel mechanics • 20 general electrical mechanics • 15 water care artisans (water and wastewater treatment) • 24 office administration officials • 18 plumbing and pipefitting artisans • 7 bricklaying and plastering artisans, and NamWater HRDC also provided subject-matter expertise in different • 11 carpentry and joinery artisans. trades to NQA for assessment of the quality of other training centres for purposes of accreditation and re-accreditation. A total of 21 training officers were trained during the reporting year: NamWater maintains close contact with NTA and NQA to support their • 9 assessor training officers, and efforts to help keep vocational training in Namibia on a sound footing. • 13 assessment instrument design officers. Looking ahead Memorandum of understanding signed In the short term, NamWater HRDC plans to: NamWater signed a memorandum of understanding with NTA, the Roads Construction Company and the Deutsche Gesellschaft für Internationale • Align the HRDC strategy to meet HPP and NDP5 goals and Zusammenarbeit (GIZ) to introduce heavy-plant-operator training objectives by 2021 by expanding the scope of HRDC accreditation (HPOT). The first intake of 20 learners sat a final external assessment and through providing quality training during the months of November and December 2019. • Increase stakeholder engagement through development and execution of a stakeholder-engagement plan NTA and HRDC are currently engaged with external stakeholders to • Improve the effectiveness and efficiency of HRDC internal review the curriculum. Work-integrated-learning (WIL) and stand- processes by reviewing and aligning HRDC policies with NTA and alone-unit short courses will soon be introduced at HRDC. Candidates NAQ policies, guidelines and processes who complete these stand-alone-unit standards will be assessed • Develop by 60 per cent need-driven skills by 2021 through re- by NTA externally and will receive recognised statement-of-results introduction of literacy training, as well as staff skills-development (SOR) certificates. Learners may accumulate these qualifications until training at HRDC, and completion of all the required unit standards after which they would • Optimise utilisation of technology in identified HRDC processes by receive a full qualification if certified competent in all the units of the introducing student portals and virtual online training. HPOT qualification. In the medium term, NamWater HRDC plans to:

Supporting NTA and NQA • Complete construction of the hostel to be able to accommodate more students During the reporting year, NamWater HRDC supported the work of the • Fill all vacant positions at HRDC in line with NQA requirements NTA by occupying seats on their working committees, which include • Continue expansion of the scope of its engagement in NTA to industry skills committees and other technical working groups. Work identify demand-driven TVET fields involved reviewing qualifications and curricula, assisting assessment • Provide effective and efficient customer service for our clients, and and moderation during CBET and modular external examinations and • Provide demand-driven TVET training. assessment material development.

Integrated Annual Report - 2019/20 71 OUR HUMAN AND INTELLECTUAL CAPITALS

TALENT AND TECHNOLOGY PERSPECTIVE (continued)

RESEARCH & DEVELOPMENT ACTIVITIES

The Research & Development (R&D) department is responsible for the following functions: • Manage and direct corporate research and development programmes, • Develop and implement research and development procedures and techniques, and • Evaluate the potential and practicality of products, materials, processes and services.

The R&D department is organised around three operational processes, R&D-focused projects and network- and partnership- are projects undertaken in a systemic manner to namely: managed projects increase NamWater’s store of scientific knowledge from which it may • Innovation processes draw to improve or develop existing or new products and procedures, or • R&D management processes to understand occurrence phenomena which affect water supply. • Network- and partnership-management processes

The drafted R&D policy of 2018 is used as a template for the execution Innovation-focused projects are research projects that involve of research projects. Lessons learned during research become the testing or piloting of new products, technologies and processes that intellectual property of NamWater, which is sometimes owned jointly will improve the delivery of water to consumers. or governed with parties involved in specific research projects. Joint parties may also be required to enter non-disclosure agreements for specific projects.

R&D PROJECTS EXECUTED DURING THE REPORTING YEAR

Piloting of reverse osmosis (RO) membrane technology powered by hybrid (solar PV & wind) at Grünau in //Karas Region of Namibia

The construction of a pilot desalination plant at Grünau with a design capacity of 36 cubic metres per day was externally funded by the Adaptation Fund. The contract was awarded to the Namibia Engineering Corporation (NEC) and construction is scheduled for completion in September 2020 at an estimated cost of N$15.5 million.

The project embraces the following objectives: • acquiring knowledge about the technologies being implemented • improving the quality of water supplied to the consumer, and • dissemination of the acquired knowledge/information to relevant stakeholders in the water sector.

This RO desalination plant will be the first of its kind to be powered by hybrid power (solar PV and wind) in NamWater. Should the outcomes of this R&D project prove encouraging, replication at other NamWater schemes experiencing poor groundwater quality might be recommended. Replication would be informed by the effectiveness of the technologies and affordability of water produced.

72 NamWater - 2019/20 Investigation of corrosion at the NamWater coastal ductile cast iron (DCI) pipeline • The objective of the investigation was: • determine whether the DCI pipeline is likely to reach its intended service life of 30 years without major repairs • establish the root causes of pitting corrosion • determine the suitability of DCI pipe for the coastal environment, and • recommend ways to manage the corrosion.

The investigation was organised in two phases: • a field visit to view pipe corrosion in areas of concern, and • a detailed examination of corroded samples using optical microscopy, SEM-EDS and electrochemical techniques.

The project was a collaborative investigation with the Department of Mining and Mineral Process Engineering of the Namibia University of Science and Technology.

Donation of water-quality Looking ahead research equipment In the coming financial year, the R&D department plans to: Through R&D department research networks, a donation • begin research for the Grünau pilot desalination project of gas chromatography/mass and finalise its construction; spectrometry (GC/MS) and • initiate construction of the Bethanie pilot desalination mercury analyser equipment plant; was received for water-quality • investigate the feasibility of replacing conventional research. power sources with renewable energy sources for NamWater’s supply schemes; This gift was given by the City • test the effectiveness of self-cleaning filters (SCF) of Cincinnati’s metropolitan to remove impurities in raw water treated at the district sewer laboratory. The Nkarapamwe water treatment plant; instruments, which are in • pilot the production of powdered activated carbon, excellent working condition, using local materials and assess the treatment arrived with all its accessories effectiveness and viability of producing our own and an auto-sampler. powdered-activated carbon to treat water compared with purchasing powdered-activated carbon produced The GC/MS will assist abroad; and NamWater’s laboratory to • investigate the condition(s) of unwanted formation detect and identify organic or development of biofilms in the water distribution contaminants in water and systems of the Karibib Water Supply Scheme and therefore help in the prevention propose or recommend mitigation measures. of water pollution.

Integrated Annual Report - 2019/20 73 OUR SOCIAL AND RELATIONSHIP CAPITAL

STAKEHOLDER PERSPECTIVE

Strategic Theme: We care. COMMUNITY RELATIONS

Corporate social responsibility is an integral part of our company culture. As a responsible corporate citizen, we respect the interests of our stakeholders — our shareholder, employees, customers, suppliers, team partners, and the wider community — and we actively seek opportunities to improve the environment and to contribute to the wellbeing of the communities in which we do business.

Our Corporate Social Responsibility Report, which is accessible at In terms of water-supply services, NamWater has activated the following our website www.namwater.com.na, describes our impact on areas measures, which are in line with Government directives in its response to of corporate social responsibility, i.e. the environment, workplace, the COVID-19 pandemic to ensure people have clean water for washing marketplace and society. to be able to curb the spread of the disease:

We continue to engage our personnel, processes and technologies to Lifting of water rationing accelerate discoveries of solutions to some of our country’s challenges NamWater has lifted water rationing to all village councils, previously in in order to produce a positive effect on these areas. effect in order to supply water continuously to the councils.

Our sustainability and ecosystem services are key components of an Customers on pre-paid water metering system innovation strategy and are just one way NamWater delivers service of All NamWater customers who are on pre-paid water-metering systems a high standard by providing meaningful and effective solutions to its have been placed on a by-pass system to permit access to water in their stakeholders. towns and villages. It should be noted, however, that this measure does not cancel outstanding debts. Arrangements have been put in place Furthermore, the Corporation is committed to protecting its employees for local authorities to pay for current consumption once the situation and communities and preserving the natural environment for this and returns to normal. The Corporation has also engaged Government to future generations. To accomplish these aims, NamWater makes daily consider measures to establish subsidies. effort to become an environmentally sustainable company and an institution that supports the marketplace, the workplace and society. Provision of water via water tankers The NamWater Chiefs of the Business Units, in consultation with regional governments, have identified vulnerable communities that do not have Clean water for a healthy nation during access to water supply at present, so that these communities can be pandemic lockdown supplied via water tankers. Consultation will continue for the purpose of identifying these communities. At a time when the nation faces the threat posed by the COVID-19 pandemic, the importance of a clean water supply in order to maintain the health of the nation’s population has become more crucial than ever before. The washing of hands and maintaining high standards of hygiene are of life-saving significance in fighting the COVID-19 virus.

Consequently, NamWater as the nation’s bulk-water supplier, has had to develop measures that ensure continuous water supply, meaning twenty-four hours of every day. The following list describes crucial measures the Corporation has already implemented and without regard for the expected negative impact on company finances.

74 NamWater - 2019/20 To date, a number of communities are being supplied with water using Continuity of water-supply services water tankers. Some of these communities are: NamWater ensures, in one way or another, that the usual supply of water will not be interrupted or affected by the COVID-19 pandemic. While Water tanker services in North Business Unit most of the NamWater staff remains at home in line with the lockdown • Olushendje village in Oshikoto Region initiative, the Corporation has made sure that essential personnel are • Ohameva in Ohangwena either working from home or remain on standby 24 hours a day. • Makaanga at Chivanga village, Lubunge village, Mutotela village and Nziba Customers are still able to pay their water bills at places and institutions • Tuhingireni location as announced in the media. Those customers who want to apply for • Tumweneni location water connections or re-connections are still able to apply. • SunCity location • Kasote location Communication through the media • Ngwangwa location NamWater has extensively made use of the traditional and new media • Baramasone village to reach the public. People were encouraged to listen to the various • Vikota Village, and radio stations, watch NBC TV, log onto various social media platforms • Ngaramateya Village. and read newspapers for important information and necessary contact numbers. Water tanker services in Business Unit Central Greiters Conference facility is one of the country’s quarantine centres. NamWater is supplying water to the centre. Financial implications NamWater has always emphasised the fact that water does not have In addition, NamWater is currently consulting with the City of Windhoek a price, but it is the service of providing water to the nation that has to determine what assistance is required by the community along the financial implications. The COVID-19 intervention measures have Nauaspoort-Oamites pipeline where NamWater will delivery water to resulted in financial implications ranging from current, medium and long informal settlements with a water tanker. terms. Although the Corporation incurred losses amounting to millions of dollars, NamWater prides itself in ensuring that the health and safety Water tanker services in Business Unit Coastal of its employees, customers and the general Namibian people is its first • Topnaar community priority. • Uis settlement areas, and • Tubusis, Okombahe and Spitzkoppe.

Water tanker services in Business Units South • Berseba rural schemes.

Integrated Annual Report - 2019/20 75 COMMUNITY RELATIONS (continued)

General assistance NamWater has donated an amount of N$125,000 to the Disaster Risk Management Fund as a contribution to escalate the battle against the pandemic. In order to ensure the safety of Namibians who provide essential services such as the Namibian Police, NamWater has also donated gloves, masks and sanitiser to the Police serving at roadblocks at entrances to the Erongo and Khomas regions. These donations were made in the month of March 2020.

During this difficult period, NamWater has ensured that details of Crafting of a new corporate social- essential staff were posted on various media platforms, which include the Corporation’s website and Facebook page. The public can make responsibility policy contact via these media, at any time to receive assistance in water- NamWater came to the realisation that a changing environment related matters. necessitates alignment on the part of the Corporation with these changes. It was this realisation that motivated NamWater to craft a new Introducing the stakeholders policy corporate social-responsibility (CSR) policy. NamWater pays special attention with regards to communication with its stakeholders to ensure that strategic partners receive any information they The policy will enable the Corporation to put itself in a better position to need and are able to provide input for the Corporation’s operations. For concentrate on areas in which it can make the greatest impact on the this purpose, NamWater initiated development of a stakeholder policy to wellbeing of Namibian society. The new policy will be launched in the ensure effective interaction and communication among these segments of next financial year. the public. This policy will be implemented in the coming financial year. Rendering high-quality services Investing in education and training In addition, it is a matter of great pride that the Corporation is able to The Corporation’s investment in education and training is ongoing. render high-quality services to its customers through a dedicated and The Human Resources Training Centre (HRDC), whose offices are hard-working staff. situated at NamWater’s premises outside Okahandja, trains young Namibians in various trades, such as bricklaying and diesel mechanics. Graduation ceremonies, which mark the conclusion of three-year training programmes, are held each year.

76 NamWater - 2019/20 Integrated Annual Report - 2019/20 77 NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459)

ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2020

78 NamWater - 2019/20 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 General information General Information

Country of incorporation and domicile Namibia

Nature of business and principal activities Bulk water supply

Directors T Maswahu Dr A Matros-Goreses L Ashipala Dr P Mushendami A S R Nsinano S Haihambo J R Kaumbi H Jesaya V Kinyaga M Gaweseb

Registered office 176 Iscor Street Northern Industrial Area Windhoek Namibia 9000

Business address 176 Iscor Street Northern Industrial Area Windhoek Namibia

Postal address Private Bag 13389 Windhoek Namibia

Bankers First National Bank of Namibia Ltd

Auditors Grand Namibia 9 Axali Doeseb Street Windhoek Box 24304 Windhoek

Secretary O Iithete

Annual Financial Statements - 2019/20 79 1 Namibia Water Corporation Limited (Registration number 97-459)

Contents

Page

Audit Commitee Report 81

Directors’ Responsibility and Approval 82

Independent Auditor’s Report 83 - 86

Directors’ Report 87 - 90

Statement of Financial Position 91

Statement of Profit or Loss and Other Comprehensive Income 92

Statement of Changes in Equity 93

Statement of Cash Flows 94

Accounting Policies 95 - 109

Notes to the Annual Financial Statements 110 - 149

The following supplementary information does not form part of the annual financial statements and is unaudited:

Detailed Income Statement 150 - 151

80 NamWater Integrated Annual Report Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) AnnualAudit Financial Committee’s Statements Report for the year ended 31 March 2020 Audit Committee Report

1. Members of the Audit Committee

The committee is satisfied that the members thereof have the required knowledge and experience as set out in the Namibia Water Corporation Act.

The committee has approved a selection criteria for identifying field experts as and when required, in order to augment their skills with specialist issues.These experts shall operate on an advisory role without holding any membership status in the committee.

2. Meetings held by the Audit Committee

The audit committee performs the duties laid upon it in terms of section 24 (1b) of the Namibia Water Corporation Act 12 of 1997, by holding meetings with the key role players on a regular basis and by the unrestricted access granted to the external and internal auditors.

3. External auditor

The audit committee has appointed Grand Namibia as the independent auditor and Ronald Beukes as the designated partner, who is a registered independent auditor, for appointment of the 2020 audit.

The committee satisfied itself through enquiry that the external auditors are independent as defined by the Namibia Water Corporation policies and as per the standards stipulated by the auditing profession. Requisite assurance was sought and provided by the Namibia Water Corporation that internal governance processes within the firm support and demonstrate the claim to independence.

The audit committee in consultation with executive management, agreed to the terms of the engagement. The audit fee for the external audit has been considered and approved taking into consideration such factors as the timing of the audit, the extent of the work required and the scope.

Unless impracticable, the audit committee resolved not to utilise the external auditors for providing other non-audit services.

4. Annual Financial Statements

Following the review of the annual financial statements, the audit committee recommend board approval thereof.

5. Accounting practices and internal control

The audit committee on a continuous basis, with the assistance of the internal audit department reviews the system of internal controls within the Corporation to ensure that it is adequate to manage the business of the Corporation. The audit committee is not aware of any material breaches in the internal control system that occurred during the financial year under review.

On behalf of the audit committee

Dr A. Matros-Goreses Chairperson - Audit Committee

Windhoek

Annual Financial Statements - 2019/20 81 3 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Directors’ Responsibilities and Approval Directors' Responsibilities and Approval

The directors are required in terms of the Namibia Water Corporation Act to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the Corporation as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards and the Companies Act of Namibia. The external auditors are engaged to express an independent opinion on the annual financial statements.

The annual financial statements are prepared in accordance with International Financial Reporting Standards and the Companies Act of Namibia and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Corporation and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board of directors sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the Corporation and all employees are required to maintain the highest ethical standards in ensuring the Corporation’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Corporation is on identifying, assessing, managing and monitoring all known forms of risk across the Corporation. While operating risk cannot be fully eliminated, the Corporation endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the cash flow forecast for the year to 31 March 2021 and, in light of this review and the current financial position, they are satisfied that the Corporation has or had access to adequate resources to continue in operational existence for the foreseeable future.

T Maswahu Dr A Matros-Goreses Chairperson: Board of Directors Director Date: Date:

82 NamWater Integrated Annual Report 4 87 to 149,

Annual Financial Statements - 2019/20 83 INDEPENDENT AUDITOR’S REPORT (CONTINUED)

84 NamWater Integrated Annual Report INDEPENDENT AUDITOR’S REPORT (CONTINUED)

Annual Financial Statements - 2019/20 85 INDEPENDENT AUDITOR’S REPORT (CONTINUED)

86 NamWater Integrated Annual Report Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Directors’ Report Directors' Report

The directors have pleasure in submitting their report on the annual annual financial statements for the corporation for the year ended 31 March 2020.

This report forms part of the audited annual financial statements.

1. Main business and operations

In terms of Section 5(a) of the Namibia Water Corporation Act, the primary business is to carry out efficiently, and in the best interest of the Republic of Namibia, bulk water supply to customers, in sufficient quantities, of a quality suitable for the consumers' purposes, and by cost-effective, environmentally sound and sustainable means. NamWater supplies water in bulk to industries, municipalities, Government ministries, and individual consumers on a full cost recovery basis.

There has been no material changes to the nature of the Corporation's business from the prior year.

2020 Contribution to turnover Local & regional councils and ministries 52.00 % Mining customers 38.00 % Domestic customers 8.00 % Private businesses 2.00 % 100.00 %

2019 Contribution to turnover Local & regional councils and ministries 54.00 % Mining customers 33.00 % Domestic customers 9.00 % Private businesses 4.00 % 100.00 %

2. Review of financial results and activities

The annual financial statements have been prepared in accordance with International Financial Reporting Standards and the requirements of the Namibia Water Corporation Act. The accounting policies have been applied consistently compared to the prior year, except for the adoption of new or revised accounting standards as set out in note 3 to the annual financial statements.

The Corporation recorded a net loss after tax for the year ended 31 March 2020 of N$(1,082,815). This represented a decrease of 103% from the net profit after tax of the prior year of N$29,063,252. The decrease in profitability is mainly driven by the increase in income tax obligation.

The Corporation's cash flows from operating activities increased by 4.5% from N$378,035,519 in the prior year to N$395 849 692 for the year ended 31 March 2020. The increase in cashflows from operating activities are attributable to an improvement in working capital management practices.

3. Share capital

2020 2019 Authorised Number of shares Ordinary shares 1,000,000,000 1,000,000,000

2020 2019 2020 2019 Issued N$ N$ Number of shares Ordinary shares 959,054,444 959,054,444 959,054,444 959,054,444

There have been no changes to the authorised or issued share capital during the year under review.

Annual Financial Statements - 2019/20 9 87 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Directors’ Report (continued) Directors' Report

4. Dividends

The Corporation's dividend policy is to consider an interim and a final dividend in respect of each financial year. At its discretion, the board of directors may consider a special dividend, where appropriate. Depending on the perceived need to retain funds for expansion or operating purposes, the board of directors may pass on the payment of dividends.

Given the current state of the infrastructure, the board of directors believe that it would be more appropriate for the Corporation to conserve cash and maintain adequate debt headroom to ensure that the Corporation is best placed to withstand any urgent investments in infrastructure replacement as a result of unforeseen failures. Therefore the board of directors has resolved not to declare a dividend for the financial year ended 31 March 2020 (2019 - N$0.00).

5. Directors

T Maswahu Chairperson Non-executive Independent Dr A Matros-Goreses Non-executive Independent L Ashipala Non-executive Independent Dr P Mushendami Non-executive Independent A S R Nsinano Executive S Haihambo Non-executive Independent J R Kaumbi Non-executive Independent H Jesaya Non-executive Independent V Kinyaga Non-executive Independent M Gaweseb Non-executive Independent

There were no change in directors during the 2020 financial year. The initial term of the directors ended on April 2020. The term has been extended for ten months to January 2021.

The Board of directors constituted 4 committees to support their oversight role as directors. Adhoc committee meetings were also held to discuss special issues requiring different skills sets from those constituting the board committees. The 4 committees are the Board Audit Committee, the Board Strategy Committee the Board Human Resources and Remuneration Committee and the Board Technical Committee. The composition of the Committees is shown in the table below. Each of the committee has clearly defined terms of reference, mandates and responsibilities, in respect of matters delegated thereto by the Board. The Board retains full accountability for decisions and actions of the committees.

The following table shows the meetings of the Board and Board Committees and their attendance during the financial period:

Board Audit HR & Technical Strategy Scheme Adhoc MeetingsCommitteeRemuneration Committee Committee Visits Meetings Committee T Maswahu (B) / (T) 8 - 8 2 - 11 3 Dr A Matros-Goreses (A) / (T) 8 10 - 2 - - - S Haihambo (A) / (S) 8 9 - - 5 2 - H Jesaja (B) 7 - 8 - - 5 2 J R Kaumbi (A) / (B) 8 10 7 - - 7 3 V Kinyaga (S) / (T) 7 - - 2 3 5 - L Ashipala (B) / (T) 8 - 8 2 - 2 1 M Gaweseb (S) 8 - - - 5 11 2 Dr P Mushendami (A) 8 9 9 - - 11 2 A S R Nsinano (S) / (T) 8 - - 2 5 7 1

(A) Audit Committee member

(B) HR & Remuneration Committee member

(S) Strategy Committee member

(T) Technical Committee member.

Adhoc meetings constitute the inaguration of the Neckatal Dam and the CEO induction.

88 10 NamWater Integrated Annual Report Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Directors’ Report (continued) Directors' Report

6. Directors' interests in contracts

During the financial year, no contracts were entered into for which directors or officers of the Corporation had an interest and which significantly affected the business of the Corporation.

7. Property, plant and equipment

There was no change in the nature of the property, plant and equipment of the Corporation or in the policy regarding their use.

At 31 March 2020 the Corporation's net investment in property, plant and equipment amounted to N$5,603,069,076 (2019: N$ 5,644,352,257), of which N$95,078,483 (2019: N$ 129,318,727) was added in the current year. Refer to note 4 of the annual financial statements for further details.

The Corporation has commitments in respect of contracts placed for capital expenditure to the amount of N$413,787,781 (2019: N$ 545,501,142). These commitments have been approved by the board of directors of the Corporation. Refer to note 29 of the annual financial statements for further details.

8. Borrowing powers

In terms of the Memorandum of Incorporation, the borrowing powers of the Corporation are unlimited. However, all borrowings by the Corporation are subject to ministerial approval, where such borrowing will result in encumbrance of assets of the Corporation that exceed N$10,000,000. As at 31 March 2020, the Corporation's borrowings totalled N$ 311 516 921 (2019: N$ 451 516 920). A total of N$ 103 745 587 is backed by a sovereign government guarantee issued in favour of Rand Merchant Bank. Refer to note 13 of the annual financial statements for further details. In addition to the committed loans, the Corporation still has an approved unutilised facility of N$ 1 117 950 000 (2019: N$ 901 212 000). Payment guarantees were issued in favour of Orano of N$ 44 472 000 (2019: N$ 44 472 000) and Nampower of N$1 333 443 (2019: N$ 1 333 443). The full amount of this payment guarantee is backed by prepayments and payment guarantees from the Corporation`s customers refer to Note 29.

9. Events after the reporting period

In July 2020 the corporation was rated by Fitch Ratings BB with a negative outlook.

The Corporation with the assistance of it's shareholder, The Ministry of Agriculture, Water and Land Reform commenced with the transfer process of the Neckartal Dam during the previous financial year. The asset would be treated as a donation by the Government to NamWater as is done with all other infrastructure. At year end the transfer was not concluded as the handover of the Dam to The Ministry of Agriculture, Water and Land Reform was not done by the contractor.

The 5 year bonds with a value of N$ 94 million held by NamWater matured on 24 April 2020. The bond capital repayment was done to the bondholders on the date of maturity.

The Corporation was hit by Covid 19 implications which resulted in the provision of water to struggling Local Authorities which were previously on water rationing and prepaid interventions. This resulted in increase in water volumes sold to Local Authorities which might not be recoverable. The Corporation applied for a water subsidy from the shareholder.

10. Going concern

The directors believe that the Corporation has adequate financial resources to continue in operation for the foreseeable future and accordingly the annual financial statements have been prepared on a going concern basis. The directors have satisfied themselves that the Corporation is in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements. The directors are not aware of any new material changes that may adversely impact the Corporation. The directors are also not aware of any material non-compliance with statutory or regulatory requirements or of any pending changes to legislation which may affect the Corporation.

11. Litigation statement

The Corporation becomes involved from time to time in various claims and lawsuits incidental to the ordinary course of business. The Corporation is not currently involved in any such claims or lawsuits, which individually or in the aggregate, are expected to have a material adverse effect on the business or its assets.

Annual Financial Statements - 2019/20 11 89 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Directors’ Report (continued) Directors' Report

12. Auditors

Grand Namibia Chartered Accountants (Namibia) was appointed as statutory auditors for the Corporation for March 2020. Their term of office expires at the end of the 2022 financial year.

13. Secretary

The company secretary is Mr. O Iithete.

Business address 176 Iscor Street Windhoek Namibia

14. Date of authorisation for issue of financial statements

The annual financial statements have been authorised for issue by the directors on 30 November 2020. No authority was given to anyone to amend the annual financial statements after the date of issue.

15. Provision for and collection from doubtful debtors

Efforts to manage the municipal debtors continued during the period, with the signing of repayment agreements with some of the customers, and entering into prepaid metering arrangements with the other customers. The board believes that all doubtful debtors are fully provided for in the annual financial statements, and there is no additional costs that will result from balances in the current financial year.

16. Neckartal Dam

The Corporation advanced the Government of the Republic of Namibia a total amount of N$ 600 million towards the construction of the Neckartal Dam. The advance was funded from cashflow from operations to the value of N$ 200 million and the remainder N$ 400 million from a loan arranged with Rand Merchant Bank. The government through it's line ministry has to date made a total repayment of N$ 296 239 884 towards the long term loan. The balance of the long term loan at year end was N$ 103 745 587. The transfer of the Dam was not concluded at year end. Please refer to Note 9.

17. Vote of thanks

Thanks and appreciation are extended to our shareholder, staff, suppliers and customers for their continued support of the Corporation.

90 12 NamWater Integrated Annual Report Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (RegistrationStatement number of Financial 97/459) Position as at 31 March 2020 Annual Financial Statements for the year ended 31 March 2020 Statement of Financial Position as at 31 March 2020 Figures in Namibia Dollar Note(s) 2020 2019 2018 Restated Restated Assets Non-Current Assets Property, plant and equipment 4 5,603,069,076 5,644,352,257 5,073,157,844 Intangible assets 5 154,874,553 177,875,873 201,230,222 Other receivables 9 177,940,650 243,745,587 200,000,000 Other financial assets 8 64,558,753 116,577,175 78,806,812 6,000,443,032 6,182,550,892 5,553,194,878

Current Assets Inventories 7 10,255,325 7,531,697 7,493,819 Other financial assets: Fair value through profit or loss 8 48,870,657 45,984,250 43,025,805 Trade receivables 9 374,622,600 311,630,955 185,455,887 Other receivables 9 59,139,597 96,848,819 259,511,647 Other financial assets: At Amortised Cost 8 955,587,152 666,837,762 376,789,733 Cash and cash equivalents 10 261,327,015 244,468,995 262,899,249 1,709,802,346 1,373,302,478 1,135,176,140 Total Assets 7,710,245,378 7,555,853,370 6,688,371,018

Equity and Liabilities Equity Share capital 11 959,054,444 959,054,444 959,054,444 Non distributable reserves 12 2,189,672,049 2,211,506,211 1,842,853,316 Retained income 1,641,684,883 1,457,710,414 1,105,997,853 4,790,411,376 4,628,271,069 3,907,905,613

Liabilities Non-Current Liabilities Post retirement medical obligation 14 176,569,000 158,480,000 189,980,210 Deferred income 15 610,400,904 603,742,514 589,427,822 Deferred tax 6 1,439,727,123 1,376,291,273 1,094,964,600 Severance pay obligation 14 4,984,000 3,271,000 3,376,000 Long term loans 13 209,745,587 443,745,587 200,000,000 2,441,426,614 2,585,530,374 2,077,748,632

Current Liabilities Trade and other payables 17 265,971,153 245,679,407 237,476,698 Long term loan: Short term portion 13 101,771,333 7,771,333 7,771,333 Short term bridge facility - - 399,857,942 Deferred income 15 40,362,385 41,627,943 40,277,010 Current tax payable 23 70,302,517 46,973,244 17,333,790 478,407,388 342,051,927 702,716,773 Total Liabilities 2,919,834,002 2,927,582,301 2,780,465,405 Total Equity and Liabilities 7,710,245,378 7,555,853,370 6,688,371,018

Annual Financial Statements - 2019/20 91

13 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) AnnualStatement Financial of Statements Profit orfor theLoss year and ended Other 31 March Comprehensive 2020 Income Statement of Profit or Loss and Other Comprehensive Income Figures in Namibia Dollar Note(s) 2020 2019

Revenue 18 1,677,074,944 1,624,645,449 Cost of sales 27 (369,492,340) (360,899,554) Gross profit 1,307,582,604 1,263,745,895 Other operating income 28 67,884,527 92,519,330 Movement in credit loss allowances 19 (75,492,342) (90,380,306) Other operating expenses 38 (1,297,805,205)(1,292,252,002) Operating (loss)/surplus 19 2,169,584 (26,367,083) Interest income 20 99,055,843 95,146,240 Interest paid 21 (32,995,968) (54,068,478) Profit before taxation 68,229,459 14,710,679 Taxation 16 (69,312,274) 14,352,573 Profit/(Loss) for the year (1,082,815) 29,063,252

Other comprehensive income:

Items that will not be reclassified to profit or loss: Actuarial gain/(losses) on defined benefit liability - Severance Pay 14 685,200 - Actuarial gain/(losses) on defined benefit liability - Post Retirement Medical Aid 14 529,963 54,664,436 Tax related to actuarial gains/losses on defined benefit plans 16 (388,852) (17,492,620) Revaluation of assets 4 238,818,838 856,604,059 Tax related to revaluation of assets (76,422,028) (274,113,299) Total items that will not be reclassified to profit or loss 163,223,121 619,662,576 Other comprehensive income for the year net of taxation 163,223,121 619,662,576 Total comprehensive income for the year 162,140,306 648,725,828

92 NamWater Integrated Annual Report

14 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) StatementAnnual Financial of Statements Changes for thein yearEquity ended 31 March 2020 Statement of Changes in Equity Share capital Revaluation Asset Total reserves Retained Total equity reserve replacement income Figures in Namibia Dollar reserves

Balance at 01 April 2018 959,054,444 1,832,819,682 10,033,634 1,842,853,316 1,079,384,011 3,881,291,771 Restated Severance Obligation - - - - 26,613,841 26,613,841 Restated Balance at 01 April 959,054,444 1,832,819,682 10,033,634 1,842,853,316 1,105,997,853 3,907,905,613 2018 Profit for the year - - - - 29,063,252 29,063,252 Other comprehensive income - 582,490,760 - 582,490,760 37,171,816 619,662,576 Total comprehensive income - 582,490,760 - 582,490,760 66,235,068 648,725,828 for the year IFRS Implementation adjustment - - - - 100,658,878 100,658,878 Deferred tax on bad debt - - - - (32,210,871) (32,210,871) provision prior year Restated Severance Obligation - - - - 3,191,621 3,191,621 Revaluation reserve released to - (213,837,866) - (213,837,866) 213,837,866 - retained income Total contributions by and - (213,837,866) - (213,837,866) 285,477,494 71,639,628 distributions to owners of company recognised directly in equity Balance at 1 April 2019 959,054,444 2,201,472,577 10,033,634 2,211,506,211 1,457,710,414 4,628,271,069 Loss for the year - - - - (1,082,815) (1,082,815) Other comprehensive income - 162,396,810 - 162,396,810 826,311 163,223,121 Total comprehensive Loss for - 162,396,810 - 162,396,810 (256,504) 162,140,306 the year Revaluation reserve released to - (184,230,972) - (184,230,972) 184,230,972 - retained income Total contributions by and - (184,230,972) - (184,230,972) 184,230,972 - distributions to owners of company recognised directly in equity Balance at 31 March 2020 959,054,444 2,179,638,415 10,033,634 2,189,672,049 1,641,684,883 4,790,411,376 Note(s) 11 12

Annual Financial Statements - 2019/20 93

15 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) AnnualStatement Financial of Statements Cash Flows for the year ended 31 March 2020 Statement of Cash Flows Figures in Namibia Dollar Note(s) 2020 2019

Cash flows from operating activities

Cash generated from operations 22 329,720,523 339,879,764 Interest received 99,055,843 92,224,233 Finance costs (32,926,674) (54,068,478) Net cash from operating activities 395,849,692 378,035,519

Cash flows from investing activities

Purchase of property, plant and equipment 4 (95,078,483)(129,318,727) Proceeds on sale of property, plant and equipment 4 1,983,875 1,317,397 Repayment/(Contribution) to Neckartal Dam 140,000,000 140,000,000 Sale/(Purchases) of intangible assets 5 (207,426) (202,286) Sale/(Purchases) of financial assets 8 (236,730,971)(297,923,858) Net cash from investing activities (190,033,005)(286,127,474)

Cash flows from financing activities

Income taxes paid to Government (61,627,713) - Repayment of RMB Loan (140,000,000)(156,112,355) Contributions by Goverment and customers 15 12,669,045 11,347,567 Refund from drought relief fund 15 - 34,426,490 Net cash from financing activities (188,958,668)(110,338,298)

Total cash movement for the year 16,858,019 (18,430,253) Cash at the beginning of the year 244,468,996 262,899,249 Total cash at end of the year 10 261,327,015 244,468,996

94 NamWater Integrated Annual Report

16 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020

AcAccountingcounting Policies Policies

Corporate information

Namibia Water Corporation Limited is a public limited company incorporated and domiciled in Namibia.

The annual financial statements for the year ended 31 March 2020 were authorised for issue in accordance with a resolution of the directors.

1. Significant accounting policies

The annual financial statements have been prepared in accordance with International Financial Reporting Standards and the Companies Act of Namibia. The annual financial statements have been prepared on the historic cost basis, and incorporate the principal accounting policies set out below. The functional and presentation currency is Namibia Dollars.

These accounting policies are consistent with the previous period, except where otherwise stated.

1.1 Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision- maker. The chief operating decision-maker, who is responsible for allocating resources and assessing the performance of the operating segments has been identified as the Management Executive Committee (EXCO). An operating segment is a component of the Corporation that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Corporations’ other components. An operating segment’s results are reviewed regularly by EXCO to make decisions about resources to be allocated to the segment and assess performance, and for which separate financial information is available.

The basis of segmental reporting has been set out in note 2.

1.2 Significant judgments and sources of estimation uncertainty

In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgment is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significant estimations include:

Trade and other receivables

The Corporation assesses its trade receivables for impairment at the end of each reporting period. The impairment for Individual domestic consumer trade receivables is calculated on a portfolio basis, based on historical loss ratios, adjusted for national and industry-specific economic conditions and other indicators present at the reporting date that correlate with defaults on the portfolio. Impairment for bulk consumer trade receivables is calculated on a case by case basis, based on historical payment patterns by the customers.

17 Annual Financial Statements - 2019/20 95 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Accounting Policies (continued) Accounting Policies

1.2 Significant judgments and sources of estimation uncertainty (continued)

Fair value measurement

The Corporation measures financial instruments such as financial assets through profit and loss, and non-financial assets such as property, plant and equipment, at fair value at each reporting date. Fair value related disclosures for financial instruments and non-financial assets that are measured at fair value or where fair values are disclosed, are summarised in the following notes:

-Disclosures for valuation methods, significant estimates and assumptions - Notes 4, 8 and 13

-Quantitative disclosures of fair value measurement hierarchy - Note 34

-Property, plant and equipment under revaluation model - Note 4

-Financial instruments (including those carried at amortised cost) - Note 8, 9, 13, 17

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements assumes that transactions are taking place in a active market. In the absence of the latter it would assume that it would be based on the next advantageous market. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non- financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Corporation uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the annual financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

-Level 1 — Quoted market prices in active markets for identical assets or liabilities that the entity can access at measurement date.

-Level 2 — Inputs other than quoted market prices included within level 1 that are observable for the asset or liability either directly or indirectly.

-Level 3 — Inputs that are unobservable for the asset or liability.

For assets and liabilities that are recognised in the annual financial statements on a recurring basis, management determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the quoted market prices that is significant to the fair value measurement as a whole) at the end of each reporting period. The management committee consists of Chief Executive Officer, General Manager: Finance, the General Manager: Corporate Services and the Four Business Unit Chiefs for water supply. External valuers are involved for valuation of significant assets, such as properties. Involvement of external valuers is decided upon annually by management after discussion with and approval by the Corporation’s Audit Committee. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. Management decides, after discussions with the Corporation’s external valuers, which valuation techniques and inputs to use for each case.

96 18 NamWater Integrated Annual Report Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Accounting Policies (continued) Accounting Policies

1.2 Significant judgments and sources of estimation uncertainty (continued)

At each reporting date, the management committee analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Corporation’s accounting policies. For this analysis, management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents. Management, in conjunction with the Corporation’s external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable. On an interim basis, the Management and the Corporation’s external valuers present the valuation results to the Audit Committee and the Corporation’s independent auditors. This includes a discussion of the major assumptions used in the valuations. The Corporation engaged an independent valuation specialist to assess the fair values as at 31 March 2020. Land & buildings were valued by reference to market-based evidence, using comparable prices adjusted for specific market factors such as nature, location and condition of property. Refer to note 4 for detailed estimation criteria for Land and Buildings. On an annual basis, the Corporation assesses whether the variables influencing the fair value of assets have changed materially. Where such change is noted, a decision to do a new revaluation will be done. A new valuation will be done after seven years from the date of any full revaluation. A period of 7 years is considered appropriate due to the nature of water infrastructure.

For the purpose of fair value disclosures, the Corporation has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability.

Post retirement medical aid & Severance pay obligation

Post retirement defined benefits are provided for certain existing and former employees. Actuarial valuations which are performed by external valuers are based on assumptions which include employee turnover, mortality rates, the discount rate, healthcare inflation costs and rates of increase in compensation costs.

Severance pay provision in line with the current interpretation of the provisions of the Labour Act are provided for certain existing employees. Assumptions on termination dates, discount rates and future salary increments were done based on currently available information, to compute the liability.

1.3 Property, plant and equipment

The cost of an item of property, plant and equipment is recognised as an asset when:  it is probable that future economic benefits associated with the item will flow to the Corporation; and  the cost of the item can be measured reliably.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. When a component of property, plant and equipment is replaced, the replacement cost is capitalised as part of the carrying amount of the property, plant and equipment, provided that the recognition criteria are met. The remaining carrying amount of the replaced part is derecognised at that stage.

The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment, where the entity is obligated to incur such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories.

Major spare parts and stand by equipment which are expected to be used for more than one period are included in property, plant and equipment. In addition, spare parts and stand by equipment which can only be used in connection with an item of property, plant and equipment are accounted for as property, plant and equipment.

Major inspection costs which are a condition of continuing use of an item of property, plant and equipment and which meet the recognition criteria above are included as a replacement in the cost of the item of property, plant and equipment. Any remaining inspection costs from the previous inspection are derecognised.

Property, plant and equipment (other than land, buildings and water schemes) is subsequently measured at cost less accumulated depreciation and any impairment losses.

Revaluations are made with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period.

Annual Financial Statements - 2019/20 19 97 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Accounting Policies (continued) Accounting Policies

1.3 Property, plant and equipment (continued)

A revaluation surplus is recorded in Other Comprehensive Income and credited to the asset revaluation reserve in equity. However, to the extent that it reverses a revaluation deficit of the same asset previously recognised in profit or loss, the increase is recognised in profit or loss. A revaluation deficit is recognised profit or loss, except to the extent that it offsets an existing surplus on the same asset recognised in the asset revaluation reserve.

An annual transfer from the asset revaluation reserve to retained earnings is made for the net of tax difference between depreciation based on the revalued carrying amount of the asset and depreciation based on the asset's original cost.

Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to their estimated residual value.

Property, plant and equipment in the course of construction which is for production, supply or administrative purposes (accounted for as assets under construction) is carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Corporation's accounting policy. Such Property, plant and equipment is reclassified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other assets, commences when the assets are ready for their intended use.

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Average useful life Buildings 50 years Construction equipment 5 years Furniture and fixtures 10 years Motor vehicles 4 years Operational equipment 5 years Water schemes 10 to 50 years

The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting period. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

The depreciation charge for each period is recognised in profit or loss.

The gains or losses arising from the derecognition of an item of property, plant and equipment is included in profit or loss when the item is derecognised. The gains or losses arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

The asset class for water schemes is composed of a number of subclasses that have different useful lives, hence the large range of useful lives. The shorter end of the range is composed of mainly mechanical components whilst the longer end is composed of civil components.

Refer to note 4 for the carrying amounts of Property, plant and equipment.

The residual value of an asset is the estimated amount that the Corporation would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

1.4 Intangible assets

Intangible assets are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses.

The amortisation period and the amortisation method for intangible assets are reviewed every period-end.

Gains and losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is de- recognised. Amortisation is included in operating expenses.

98 20 NamWater Integrated Annual Report Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Accounting Policies (continued) Accounting Policies

1.4 Intangible assets (continued)

Following initial recognition, of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. During the period of development, the asset is tested for impairment annually. Amortisation is provided to write down the intangible assets, on a straight line basis, as follows:

Item Useful life Computer software 3 to 5 years Electricity supply points 3 to 30 years

The length of the amortisation period for electricity supply points is influenced by the length of the electricity contract agreement with the supplier.

Refer to note 5 for carrying amount of intangible assets.

1.5 Tax

Current tax assets and liabilities

Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.

Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities

A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised. A deferred tax asset is not recognised when it arises from the initial recognition of an asset or liability in a transaction which is not a business combination and, affects neither accounting profit nor taxable profit (tax loss).

A deferred tax asset is recognised for carrying forward the unused tax losses, to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred tax relates to the same taxable entity and the same taxable authority.

Annual Financial Statements - 2019/20 21 99 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Accounting Policies (continued) Accounting Policies

1.5 Tax (continued)

Tax expenses

Current and deferred taxes are recognised as income or an expense and included in the Statement of Profit or Loss and Other Comprehensive Income for the period, except to the extent that the tax arises from:  a transaction or event which is recognised, in the same or a different period, to other comprehensive income, or  a business combination.

Tax effect of all items presented in other comprehensive income are presented on the face of the other comprehensive income section of the statement of profit or loss and other comprehensive income.

Value added taxation

 When the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable.

The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

1.6 Leases

The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception date. The arrangement is assessed for whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement coveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Operating leases - lessor

Operating lease income is recognised as an income on a straight-line basis over the lease term.

Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease income.

1.7 Inventories

Inventories are measured at the lower of cost and net realisable value on the first-in-first-out basis.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

The cost of inventories comprises of all costs of purchase and other costs incurred in bringing the inventories to their present location and condition.

When inventories are used, the carrying amount of those inventories are recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

1.8 Impairment of non-financial assets

The Corporation assesses at each end of the reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the Corporation estimates the recoverable amount of the asset. An asset's recoverable amount is the higher of an asset's or cash generating units (CGU) fair value less costs of disposal and its value is use.

Irrespective of whether there is any indication of impairment, the Corporation also:  tests intangible assets for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test is performed during the annual period and at the same time every period.

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NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Accounting Policies (continued) Accounting Policies

1.8 Impairment of non-financial assets (continued)

If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease, however, if this is exhausted, the impairment loss would be recognised in profit or loss.

1.9 Share capital and equity

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Ordinary shares are recognised at par value and classified as 'share capital' in equity. Any amounts received from the issue of shares in excess of par value is classified as 'share premium' in equity. Dividends are recognised to retained income in the year in which they are declared.

1.10 Employee benefits

Short-term employee benefits

The cost of short-term employee benefits, (benefits expected to be settled before 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.

The expected cost of profit sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance, and a reliable estimate of the obligation can be made.

Defined contribution plans

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. The expense is recognised in the period in which the service is rendered. The liability is recognised to the extent that contributions are outstanding and where the liability is not expected to be settled within 12 months after the end of the reporting period, it shall be discounted.

Defined benefit plans The Corporation operates a defined benefit post-employment medical aid and a severance pay benefit plan which requires contributions to be made to a separately administered fund. The funds have no assets. The cost of providing the benefit under the defined benefit plan is determined using the projected unit credit method.

Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability, are recognised immediately in the Statement of Financial Position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognised in profit or loss on the earlier of; the date of the plan amendment or Curtailment and the date that the Corporation recognises related restructuring cost

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Corporation recognises the following changes in the net defined benefit obligation under administration expenses in the Statement of Profit or Loss and Other Comprehensive Income; service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements and net interest expense or income.

Reliance is placed on expert valuation.

Annual Financial Statements - 2019/20 23 101 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Accounting Policies (continued) Accounting Policies

1.11 Government grants

Government grants are recognised when there is reasonable assurance that:  the Corporation will comply with the conditions attaching to them; and  the grants will be received.

Government grants are recognised as income over the periods necessary to match them with the related costs that they are intended to compensate.

A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs is recognised as income of the period in which it becomes receivable.

Government grants related to assets, including non-monetary grants at fair value, are presented in the statement of financial position by setting up the grant as deferred income. The Corporation releases the deferred income into the profit and loss over the related assets financed from the government grant.

Grants related to income are presented as a credit in the Statement of Profit or Loss and Other Comprehensive Income.

Repayment of a grant related to income is applied first against any un-amortised deferred credit set up in respect of the grant. To the extent that the repayment exceeds any such deferred credit, or where no deferred credit exists, the repayment is recognised immediately as an expense.

Repayment of a grant related to an asset is recorded by increasing the carrying amount of the asset or reducing the deferred income balance by the amount repayable. The cumulative additional depreciation that would have been recognised to date as an expense in the absence of the grant is recognised immediately as an expense.

Government grants received are recognised in the Statement of Cashflows as cash flows from financing activities due to he fact that a liability (deferred income) is raised for such grants when they are received, and is amortised over the life of the infrastructure that is created utilising such grant funding.

1.12 Revenue

Interest is recognised, in the Statement of Profit or Loss and Other Comprehensive Income, using the effective interest rate method.

Revenue on assets donated from customers is recognised as part of revenue in the profit or loss to match the depreciation of the assets per annum. The Corporation adopted the application of IFRS 15 to recognise revenue in the prior year.

Revenue from sale of water is recognised at the point in time of when control of the asset is transferred to the customer, generally delivery of the water is at the point of bulk meter. The normal credit terms are 30 days from invoice.

There are no separate performance obligations other than the supply of water. The transaction price is fixed.

Significant financing component

The Corporation receives advance payments fom customers for sale of water. The length of time is limited to a month. Given that the water purchased is less than a month. The Corporation applies the practical expedient for short-term advances received from customers. That is the promised amount of the consideration not adjusted for the effects of a significant financing component if the period between the transfer of the promised goods or service is payment one year or less.

Non-Cash Consideration

The Corporation does not allow non-cash consideration for water services.

Variable Consideration

The Corporation does not allow variable consideration for water services.

Contract Assets

102 24 NamWater Integrated Annual Report Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Accounting Policies (continued) Accounting Policies

1.12 Revenue (continued)

The Corporation does not have any contract assets as there are no conditional performance considerations to be fullfilled after the water was supplied.

Contract Liabilities

The Corporation does not have any contract liabilities as there are no conditional performance obligations to be fullfilled.

Collectability of Revenue

Revenue may only be recognised if it is believed at the time of sale that the revenue is likely to be recovered from the customer. The recoverability requirement is not considered to have been met in contracts who have a poor payment history and for which the entity does not have the ability to manage the credit risk. The entity accounts for revenue from these contracts on a cash (rather than accrual) basis. Where the recoverability requirement is met, revenue is recognised on an accrual basis. Management applied significant judgement in determinig whether the recoverability requirement has been met. The application of this judgement did not have a material impact on the revenue recognised in the current year.

1.13 Interest Income

Included in investment income is a total of N$ 45 546 394 (2019: N$ 32 852 978) which is not yet realised. On some investments the actual interest realised will depend on the interest rates at the time of requesting for a payout of the investment income generated. The directors do not believe that the amounts disclosed as investment income earned will materially differ from the amounts that will be received by the Corporation.

1.14 Borrowing costs

Borrowing costs consist of interest and other costs that the Corporation incurs in connection with the borrowing of funds.

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset until such time as the asset is ready for its intended use. The amount of borrowing costs eligible for capitalisation is determined as follows:  Actual borrowing costs on funds specifically borrowed for the purpose of obtaining a qualifying asset less any temporary investment of those borrowings.  Weighted average of the borrowing costs applicable to the entity on funds generally borrowed for the purpose of obtaining a qualifying asset. The borrowing costs capitalised do not exceed the total borrowing costs incurred.

The capitalisation of borrowing costs commences when:  expenditures for the asset have occurred;  borrowing costs have been incurred, and  activities that are necessary to prepare the asset for its intended use or sale are in progress.

Capitalisation is suspended during extended periods in which active development is interrupted.

Capitalisation ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.

All other borrowing costs are recognised as an expense in the period in which they are incurred.

Annual Financial Statements - 2019/20 25 103 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Accounting Policies (continued) Accounting Policies

1.15 Deferred income

There are instances where customers fund the construction of their infrastructure by paying for all the costs incurred for the establishment of the infrastructure. At the end of the construction period, the assets are transferred to NamWater. The donations are accounted for as follows:  the fair value of the assets donated is reflected as assets.  the assets are depreciated according to the NamWater policy on similar asset classes.  an amount equal to the fair value of the asset is recognised as income in Other Income in the Statement of Profit or Loss and Other Comprehensive Income in the year that the asset is available for use.

The Corporation signs a water supply agreement with the respective customers which stipulates the obligations of each party regarding the future utilisation, and the repairs and maintenance of the respective assets.

The cash in flows creating deferred income, are recognised in the Statement of Cash flows as cash flows from financing activities.

1.16 Asset Replacement Reserve

In order to reserve funds for the replacement of infrastructure, the Corporation is compelled to allocate internally generated profits after tax into a funded replacement reserve account. These funds are included in non-distributable reserves in the Statement of Financial Position. The funds so allocated are utilised by the Corporation to fund the acquisition and construction of new infrastructure.

104 NamWater Integrated Annual Report 26 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Accounting Policies (continued) Accounting Policies

1.17 Financial Instruments

The Corporation adopted consequential amendments to IFRS 9 Financial Instruments: Disclosures.

IFRS 9 introduced new requirements for:

1) The classification and measurement of financial assets and financial liabilities,

2) Impairment of financial assets, and

3) General hedge accounting.

Details of these new requirements as well as their impact on the Corporation’s financial statements are described below. The Corporation has applied IFRS 9 in accordance with the transition provisions set out in IFRS 9. The date of initial application (i.e. the date on which the Corporation has assessed its existing financial assets and financial liabilities in terms of the requirements of IFRS 9) is 1 April 2018. Accordingly, the Corporation has applied the requirements of IFRS 9 to instruments that continue to be recognised as at 1 April 2018 and has not applied the requirements to instruments that have already been derecognised as at 1 April 2018.

(a) Classification and measurement of financial assets

All recognised financial assets that are within the scope of IFRS 9 are required to be measured subsequently at amortised cost or fair value on the basis of the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets, specifically:

• debt instruments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured subsequently at amortised cost;

• debt instruments that are held within a business model whose objective is both to collect the contractual cash flows and to sell the debt instruments, and that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured subsequently at fair value through other comprehensive income (FVTOCI);

• all other debt investments and equity investments are measured subsequently at fair value through profit or loss (FVTPL)

Namwater Business Model

The objective of the entity's business model is to hold assets only to collect cash flows, or to collect cash flows to sell ("the Business Model test"), and

The contractual cash flows of an asset give rise to payments on specified dates that are soley payments of principal and interest ("SPPI") on the pricipal amount oustanding ("the SPPI test").

The directors of the Corporation reviewed and assessed the Corporation’s existing financial assets as at 1 April 2018 based on the facts and circumstances that existed at that date and concluded that the initial application of IFRS 9 has had no impact on the Corporation’s financial assets as regards their classification and measurement as outlined below

(b) Impairment of financial assets

In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires the Corporation to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of the financial assets. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.

Specifically, IFRS 9 requires the Corporation to recognise a loss allowance for expected credit losses on:

(1) Debt investments measured subsequently at amortised cost or at FVTOCI;

(2) Lease receivables;

(3) Trade receivables and contract assets; and

Annual Financial Statements - 2019/20 27 105 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Accounting Policies (continued) Accounting Policies

(4) Financial guarantee contracts to which the impairment requirements of IFRS 9 apply.

In particular, IFRS 9 requires the Corporation to measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses (ECL) if the credit risk on that financial instrument has increased significantly since initial recognition. However, if the credit risk on a financial instrument has not increased significantly since initial recognition, the Corporation is required to measure the loss allowance for that financial instrument at an amount equal to 12-months ECL. IFRS 9 also requires a simplified approach for measuring the loss allowance at an amount equal to lifetime ECL for trade receivables, contract assets and lease receivables in certain circumstances. The reconciliation between the ending provision for impairment in accordance with IAS 39 and the provision in accordance with IAS 37 (for the financial guarantee contracts) to the opening loss allowance determined in accordance with IFRS 9 for the above financial instruments on 1 April 2018 is disclosed in their respective notes.

(c) Classification and measurement of financial liabilities

The application of IFRS 9 has had no impact on the classification and measurement of the Corporation’s financial liabilities.

(d) Disclosures in relation to the initial application of IFRS 9

There were no financial assets or financial liabilities whose classification has changed as a result of applying IFRS 9.

(e) Impact of initial application of IFRS 9 on financial performance

Financial Instruments Business Model IFRS 9 Measurement IAS 39 Measurement

Endowmwment policies Not held for contractual Fair value through Fair value through

cashflows which are SPPI profit and loss profit and loss

Short term deposits Collect contractual cash Amortised Cost Amortised cost

flows which represents SPPI

Sinking fund for Collect contractual cash Amortised cost Amortised cost bond redemption flows which represents SPPI

Trade receivables Collect contractual cash Amortised cost Amortised cost

flows which represents SPPI

Other receivables Collect contractual cash Amortised cost Amortised cost

flows which represents SPPI

Bonds Collect contractual cash Amortised cost Amortised cost

flows which represents SPPI

Trade and other payables Collect contractual cash Amortised cost Amortised cost

flows which represents SPPIt

Financial assets and financial liabilities are recognised in the Corporation’s statement of financial position when the Corporation becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis.

106 28 NamWater Integrated Annual Report Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Accounting Policies (continued) Accounting Policies

Classification

The classification of financial assets is dependent on the ‘business model’ test and ‘contractual cash flow’ test to determine whether they are measured at fair value or amortized cost.

The classification of financial liabilities under IFRS 9 remain broadly the same as in IAS 39.

Debt instruments that meet the following conditions are measured subsequently at amortised cost:

•the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Debt instruments that meet the following conditions are measured subsequently at fair value through other comprehensive income (FVTOCI):

• the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL).

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Subsequent measurement

All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets as outlined below:

Financial Instruments Business Model IFRS 9 Measurement

Endowment policies Not held for contractual cashflows Fair value through profit and loss

which are SPPI

Short term deposits Collect contractual cash flows which Amortised cost

represents SPPI

Sinking fund for bond redemption Collect contractual cash flows which Amortised cost

represents SPPI

Trade receivables Collect contractual cash flows which Amortised cost

represents SPPI

Other receivables Collect contractual cash flows which Amortised cost

represents SPPI

All financial liabilities are measured subsequently at amortised cost using the effective interest method.

(i) Amortised cost and effective interest method

The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income/expense over the relevant period.

Annual Financial Statements - 2019/20 107 29 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 AcAccountingcounting Policies Policies (continued)

The effective interest rate is the rate that exactly discounts estimated future cash receipts/payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the financial instrument, or, where appropriate, a shorter period, to the gross carrying amount of the financial instrument on initial recognition.

The amortised cost of a financial instruments is the amount at which the financial instruments is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

Interest income is recognised using the effective interest method. Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset. Interest income is recognised in profit or loss and is included in the "interest income" line item (note 20).

(ii) Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are measured at FVTPL. Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss to the extent they are not part of a designated hedging relationship. The net gain or loss recognised in profit or loss includes any dividend or interest earned on the financial asset and is included in the ‘other gains and losses’ line item. Fair value is determined in the manner described in note 35.

(iii) Impairment of financial assets

The Corporation recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

The Corporation always recognises lifetime ECL for trade receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Corporation’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

For all other financial instruments, the Corporation recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Corporation measures the loss allowance for that financial instrument at an amount equal to 12- month ECL.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

(iv) Measurement and recognition of expected credit losses

The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information. As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date; for financial guarantee contracts, the exposure includes the amount drawn down as at the reporting date, together with any additional amounts expected to be drawn down in the future by default date determined based on historical trend, the Corporation’s understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.

For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Corporation in accordance with the contract and all the cash flows that the Corporation expects to receive, discounted at the original effective interest rate.

The Corporation recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

Derecognition of financial instruments

108 30 NamWater Integrated Annual Report Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 AcAccountingcounting Policies Policies (continued)

The Corporation derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. The difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

The Corporation derecognises financial liabilities when, and only when, the Corporation’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

Definition of default

Default is defined as a customer that fails to honour the agreed commitments in quantitive and timeous terms.

Write-off is the point in time that the customer has been declared insolvent and liquidated.

Annual Financial Statements - 2019/20 31 109 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020

NotesNotes toto the the Annual Annual Financial Financial Statements Statements Figures in Namibia Dollar

2. Segmental information

The current year's reportable segments are operating segments which are identified on both a geographic and product basis.

Segmental Information

The Corporation has five reportable segments, as described below, which are the Corporation’s core geographical areas of operation. The operating areas are managed separately. Each of the strategic geographical areas are reviewed by the Board through the Corporation`s internal management reports on at least a quarterly basis. The following summary describes the operations in each of the Corporation’s reportable segments:

` Reportable Segment Products and services North Treated and irrigation water Central Treated water South Treated and irrigation water Coastal Treated, desalination water Other Support services

Segmental revenue and results

The EXCO assesses the performance of the operating segments based on the measure of profit/loss. This measure excludes the effects of non-recurring expenditure from the operating segments such as restructuring costs, legal expenses and impairments when the impairment is the result of an isolated, non-recurring event. The measure also excludes the effects of unrealised gains/losses on financial instruments. Interest income and expenditure are not allocated to operating segments, as this type of activity is driven by the central treasury function. This measure is consistent with all prior periods which are presented.

All sales are made to external local customers. The Corporation does not have intersegmental revenue.

The segment information provided to the EXCO is presented below. The information presented includes a reconciliation of the current year's profit/loss to net profit after tax.

32 110 NamWater Integrated Annual Report Annual FinancialStatements - Annual FinancialStatementsfortheyear ended31March 2020

Notes to the Annual Financial Statements (continued) 2019/20 111 112

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to thenumber Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

2. Segmental information (continued)

Revenue Separately disclosable items

Total segmentRevenue fromProfit & LossDepreciation Interest Interest Taxation revenue external for period and revenue expense customers amortisation North 356,116,519 356,116,519 205,184,445 (97,405,001) - - - Central 502,591,484 502,591,484 278,064,651 (201,721,699) - - - Coastal 598,093,127 598,093,127 206,629,680 (91,393,513) - - - South 165,826,859 165,826,859 83,259,438 (36,488,317) - - - Other 2,017,459 2,017,459 (361,851,465) (10,645,302) 95,146,240 (54,068,478) 14,352,573

Total 1,624,645,4481,624,645,448 411,286,749 (437,653,832) 95,146,240 (54,068,478) 14,352,573 Namibia Water CorporationLimited(Registrationnumber97-459) Profit for the year 29,063,252

Analysis of revenue by product/service

Refer to note18 for the revenue analysis perproduct type.

Information about customers

Included in revenue, is revenue from individual customers which each represent more than 10% of the total revenue.

NamWater IntegratedAnnual Report Segment 2020 2019

% N$ % N$ Municipality of Windhoek Central 13 255,757,078 17 348,026,340 Swakop Uranium South 19 385,062,993 18 368,677,531 Total 32.00640,820,071 35.00716,703,871

34 Annual FinancialStatements - Annual FinancialStatementsfortheyear ended31March 2020

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to thenumber Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

2. Segmental information (continued) 2019/20

Segment assets and liabilities

The amounts provided to the EXCO with respect to total assets are measured in a manner consistentwith that of the financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset.

Total assets reflects all non-current assets.

The amounts provided to the EXCO with respect to total liabilities are measured in a manner consistent with that of the financial statements. These liabilities are allocated based on the operations of the segments.

The current year interest-bearing liabilities, post retirement benefit liabilities and deferred tax are not considered to be segment liabilities but are rather managed by the treasury function. All items that cannot be traced to a spefic segment due to their nature are grouped as reconciling items.

The table below provides information on segment assets and liabilities as well as a reconciliation to total assets and liabilities asstatement per the of financial position:

35 113 114

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to the number Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

2. Segmental information (continued)

2020

Non-current Trade Total assets Total assets receivables liabilities North 923,079,683 193,866,472 1,116,946,155 30,030,426 Central 2,202,353,630 78,345,259 2,280,698,889 1,977,758 South 1,043,261,838 49,515,029 1,092,776,867 48,530,816 Coastal 1,408,211,676 52,901,622 1,461,113,298 329,435,372 Other 245,595,556 237,074,475 482,670,031 240,788,917 Total 5,822,502,383 611,702,857 6,434,205,240 650,763,289 Namibia Water CorporationLimited(Registrationnumber97-459) Reconciling items Bank, cash & investments / Unallocated liabilities 1,265,784,813 265,971,153 Current Tax Payable - - - 70,302,517 Inventory - - 10,255,325 - Deferred tax - 1,439,727,123 Interest bearing liabilities - 311,516,920 Post retirement and severance pay obligations - 181,553,000 Total as per statement of financial position 7,710,245,3782,919,834,002

Reclassification of prior year segment disclosure NamWater IntegratedAnnual Report In the prior year the coastal segment was not separately disclosed but rather the information relating to this segment was included in "other". In the current year we have reclassified this to present it separately as it's own segment and excluded it from the "other" segment for better disclosure.

36 Annual FinancialStatements - Annual FinancialStatementsfortheyear ended31March 2020

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to thenumber Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

2. Segmental information (continued) 2019/20 2019

Non-current Trade Total assets Total assets receivables liabilities North 1,029,622,209 165,002,7541,194,624,963 23,205,318 Central 2,091,795,459 104,186,3692,195,981,828 542,204 South 1,074,993,589 42,363,4241,117,357,013 52,344,796 Coastal 1,462,975,174 105,297,6751,568,272,849 354,717,571 Other 279,418,875 235,375,139 514,794,014 214,560,568 Total 5,938,805,306 652,225,3616,591,030,667 645,370,457

Reconciling items Bank, cash and investments / Unallocated liabilities 957,291,005 245,679,407 Current Tax Payable - - - 46,973,244 Inventory - - 7,531,698 - Deferred tax - 1,376,291,273 Interest bearing liabilities - 451,516,920 Post retirement obligations and severance pay obligations - 161,751,000 Total as per statement of financial position 7,555,853,3702,927,582,301

Geographical information

The Corporation only has local customers. All revenue, assets and liabilities are attributable to local customers.

37 115 116

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to the number Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the nnualA Financial Statements Figures in Namibia Dollar 2020 2019

2. Segmental information (continued)

Unallocated assets Inventories 10,209,482 7,053,329 Other financial assets 795,999,494 829,399,187 Cash and cash equivalents 524,594,827 244,468,995 1,330,803,8031,080,921,511

Unallocated liabilities Trade and other payables 266,025,950 258,382,396

Significant judgments and estimates used in determining segments Namibia Water CorporationLimited(Registrationnumber97-459) The Corporation'sreportable segments are strategic business units within the Corporation.The areas are generally managedseparately from each other,and withineach geographicoperating region, have generally similar customers.ith W the exceptionof the South region, which suppliessome of its water from a desalinationplant, the sourcesof water are generallysimilar across all the regions,with the Northernregion having a larger percentageof its water suppliedfrom surface water (rivers and dams).

Althoughthe operatingregions meet most of the aggregationcriteria, management decided to report on the geographical areas as operatingregions, because decisions by the EXCO are mainly done based on the operatingregions, and the managers responsible for running these operating regions report separately to the EXCO.

3. New Standards and Interpretations NamWater IntegratedAnnual Report 3.1 Standards and interpretations notet effective y and not adopted in the currentear y

38 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements (continued) Notes to the Annual Financial Statements

3. New Standards and Interpretations (continued)

3.2 Standards and interpretations not yet effective and not adopted in the current year

3.3 Standards and interpretations effective and adopted in the current year

The following standards and interpretations have been published and have been included as disclosure areas from 31 March 2019.

IFRS 16 - Leases

IFRS 16 replaces IAS 17 and applies (is effective) for annual reporting periods beginning on or after 1 January 2019. It aims to improve representation of lessee’ assets and liabilities as well as increasing transparency of lessees’ financial obligation and leasing activities.

Where previously a lease was defined as an agreement whereby the payment or series of payments resulted in (created) the right to use an asset for an agreed period of time, under IFRIS 16 it is defined as a contract or part of a contract, that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Thus under IFRS 16, leases are accounted for based on a ‘right-of-use model’ where at the commencement date, a lessee has a financial obligation to make lease payments to the lessor for its right to use the underlying asset during the lease term while the lessor conveys that right to use the underlying asset at the commencement of the lease, which is the time when it makes the underlying asset available for use by the lessee.

IFRS 16 prescribes a single model of accounting for every lease for the lessees where a lessee does not need to classify the lease at its inception and determine whether it’s finance or operating, rather they need to recognize a right-of-use asset and corresponding liability in its statement of financial position for all the leases; The asset shall be depreciated and a liability amortized over the lease term.

There is however a recognition exemption whereby the lessee may elect to not apply the above requirements to short term leases and leases for which the underlying asset is of low value.

Also, Under IFRS 16, rental or lease payments must be split to account for a lease element and a service element separately, mostly as an expense through profit or loss.

The corporation does not have any sale-and-leaseback arrangements in place and there were no modification or reassessment in place, hence the implications of these aspects of IFRS 16 are not considered for the assessment.

Lease agreements where the corporation is a lessor

The lessor’s accounting remains largely unchanged from IAS 17. As such, the corporation will continue to classify leases as either finance leases or operating leases in line with IFRS 16.

IFRS 16 therefore does not have significant impact on the accounting for leases where the corporation is the lessor.

Application of IFRS 16 on Lease agreement where the corporation is a lessee

Short-term leases: The corporation applied the recognition exemption instead of recognition requirements of IFRS 16 to its Leases of Machinery and Properties as these leases meet the definition of a short term lease as per IFRS 16 due to the lease periods of 12 months or less at the commencement date.

Machinery is leased only in the event of breakdowns or emergencies for periods not exceeding 3 months, while Property leases are for office space leased for periods of up to 12 months renewable before the end of the 12 months.

The corporation accounts for payments associated to these leases as an expense on straight line basis and shall continue to do so due to the short duration of such agreements.

Long-term lease agreements:

The corporation further has Long-term lease agreements for Printers. These are classified as long-term as the lease period is 36 months.

Annual Financial Statements - 2019/20 117 39 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements (continued) Notes to the Annual Financial Statements

3. New Standards and Interpretations (continued)

Through this agreement, the Lessor (Nashua) grants the corporation right of use over the Equipment for the said period in exchange for a fixed monthly rental charge of N$2,729.71. The equipment however remains the property of the Lessor during the entire period of the lease.

Based on its salient aspects the agreement meets the definition of a lease in terms of IFRS 16 and therefore needs to be accounted according to the requirements IFRS 16. The corporation therefore need to recognise a right-to-use asset and a corresponding liability in respect of the lease agreements for the printers.

Transition:

Lessees and lessors are not, upon transition, required to reassess whether an existing contract contains a lease. i.e. if an entity concluded under IAS 17 Leases that the contract is not a lease, an entity does not have to reassess the contract in accordance with IFRS 16.

There are two approaches for transition accounting.

Full retrospective approach:

Retrospectively apply the new standard to each prior reporting period presented as required by IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

Under this transition approach, entities need to adjust equity at the beginning of the earliest comparative period presented.

Modified retrospective approach:

The lessee does not restate comparative information. Consequently, the date of initial application is the first day of the annual reporting period in which a lessee first applies the requirements of the new leases standard. At the date of initial application of the new leases standard, lessees recognise the cumulative effect of initial application as an adjustment to the opening balance of retained earnings at the date of initial application

Under this approach, lessees with leases previously classified as operating leases should recognise:

A lease liability, measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the date of initial application.

Right-of-use-asset at the date of initial application. The lessee shall choose to measure the right-of-use asset (on a lease by lease basis) at the carrying amount as if IFRS 16 had been applied since the commencement date of a lease using a discount rate based on the lessee’s incremental borrowing rate at the date of initial application or an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments recognised immediately before the date of initial application.

The corporation does not have leases which are classified as a finance lease therefore the implications of leases previously classified as finance leases are not considered.

Also, the corporation does not foresee that IFRS 16 will have a material impact on periods commencing on or after the effective date as its operating leases previously classified as operating leases are not material.

It is unlikely that the standard will have a material impact on the Corporation's annual financial statements.

118 40 NamWater Integrated Annual Report Annual FinancialStatements - Annual FinancialStatementsfortheyear ended31March 2020

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to the number Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

4. Property, plant and equipment 2019/20

2020 2019 Cost /AccumulatedCarrying valueCost /AccumulatedCarrying value Valuation depreciation Valuation depreciation Operational and Administration Land and Buildings 530,210,914 (73,521,341) 456,689,573 285,269,190 (65,841,406) 219,427,784 Construction Equipment 64,597,688 (49,969,750) 14,627,938 60,934,651 (44,264,291) 16,670,360 Furniture and fixtures 44,508,440 (36,699,601) 7,808,839 37,209,741 (33,606,882) 3,602,859 Motor vehicles 131,040,262 (87,835,489) 43,204,773 124,483,432 (79,570,984) 44,912,448 Operational equipment 27,691,216 (21,831,747) 5,859,469 25,510,942 (20,384,829) 5,126,113 Water schemes 6,805,127,673(2,571,976,312)4,233,151,3616,733,583,833(2,229,844,572)4,503,739,261 Assets under construction 841,727,123 - 841,727,123 850,873,432 - 850,873,432 Total 8,444,903,316(2,841,834,240)5,603,069,0768,117,865,221(2,473,512,964)5,644,352,257

Reconciliation of property, plant and equipment - 2020

Opening Additions Disposals Transfers Revaluations Depreciation Depreciation Total balance on transfers and retirements Operational Land and Buildings 157,130,623 - - - 238,818,838 - (3,552,054) 392,397,407 Administrative Buildings 62,297,175 - - 6,122,886 - - (3,641,676) 64,778,385 Construction equipment 16,670,360 3,823,754 (160,717) - - 160,717 (5,866,176) 14,627,938 Furniture and fixtures 3,602,859 7,505,183 (206,483) - - 180,938 (3,273,658) 7,808,839 Motor vehicles 44,912,448 11,230,752 (4,673,922) - - 4,673,920 (12,938,425) 43,204,773 Operational equipment 5,126,113 2,212,758 (35,820) 3,337 - 35,758 (1,482,677) 5,859,469 Water schemes 4,503,739,261 12,029,011 (2,329,152) 61,783,330 - 2,119,743 (344,190,832)4,233,151,361 Assets under construction 850,873,432 58,277,025 - (67,909,553) - - - 841,240,904 5,644,352,271 95,078,483 (7,406,094) - 238,818,838 7,171,076 (374,945,498)5,603,069,076

41 119 120

NotesNAMIBIA to the WA AnnualTER CORPORA Financial StatementsTION LIMITED (continued) (Registration number 97/459) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

4. Property, plant and equipment (continued)

Reconciliation of property, plant and equipment - 2019

Opening Additions Disposals Transfers Revaluations Depreciation Depreciation Total balance on transfers and retirements Operational and Adminstration Land and Buildings 165,953,817 2,840,380 - - 56,727,228 - (6,093,641) 219,427,784 Construction Equipment 17,822,551 4,856,848 - - - - (6,009,039) 16,670,360 Furniture and fixtures 2,556,152 2,341,608 (101,038) - - 74,158 (1,268,021) 3,602,859 Motor vehicles 37,346,856 19,358,502 (4,304,088) - - 4,049,105 (11,537,927) 44,912,448 Operational equipment 5,256,309 1,388,949 (123,360) - - 87,152 (1,482,937) 5,126,113 Water schemes 4,001,169,406 10,562,488 (995,392) 80,149,273 799,876,831 682,286 (387,705,631)4,503,739,261

Assets under construction 843,052,753 87,969,952 - (80,149,273) - - - 850,873,432 Namibia Water CorporationLimited(Registrationnumber97-459) 5,073,157,844 129,318,727 (5,523,878) - 856,604,059 4,892,701 (414,097,196)5,644,352,257

Pledged as security

All the Property, plant and equipment are free of any encumbrances.

Transfers between asset categories

A number of transfers were done between asset categories. The transfers were to capitalise assets that were under construction in the previous year, and which were completed in the current year. NamWater IntegratedAnnual Report Capitalised expenditure

2 Addition to capital work in progress 58,277,025 87,969,952 Transferred to fixed assets (67,909,553) (80,149,273)

Work in progress is capitalisedwhen expendituresare incurred to create fixed assets. Once the assets are ready for use, they are transferred from Assets under construction to the respective asset classes.

42 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) NotesAnnual Financial to the Statements Annual Financialfor the year ended Statements 31 March 2020 (continued) Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

4. Property, plant and equipment (continued)

Compensation received for losses on property, plant and equipment – included in operating profit.

Computer equipment and Vehicles 285,028 529,637

During the financial year, the Corporation received insurance compensation for damage to some of its assets. The damaged equipment were decommissioned.

Revaluations

The Corporation endevours to value its property plant and equipment every 7 years. Previous valuations were performed on different classes of assets on the 1st of April 2012, 1st April 2013 and 1st April 2014. A revaluation on land and non operational buildings were performed in the current financial year. A revaluation on buildings and water schemes were performed in the previous financial year. The revaluations were performed by Messers Lund Consulting Engineers and Property Valuations Namibia. The organisation is not connected to the Corporation and has recent experience in the location and category of the Water Supply Infrastructure being valued.

The valuation was based on the open market value for existing use for the land and buildings, and for water supply infrastructure was based on the replacement cost.

The carrying value of the revalued assets under the cost model would have been:

Land and Buildings 86,077,717 82,556,821 Water schemes 1,264,078,299 1,269,047,016

Fair value of the revalued assets was determined using the market comparable method for land and buildings and replacement cost for water supply infrastructure. This means that valuations performed by the valuer are based on active market prices, significantly adjusted for difference in the nature, location or condition of the specific property. As at the date of the revaluation, fair values of the revalued assets were based on valuation performed by Mr. P. J Scholtz (Sworn Valuer) of Property Valuations Namibia.

Significant unobservable valuation input: Price per square meter on Buildings N$ 200 to N$ 9 500 and on Land N$ 0.10 to N$ 600.

Significant increase / (decreases) in estimated price per square meter in isolation would result in a significantly higher (lower) fair value.

Please refer to Note 34 for the sensitivity analysis performed on the note items.

Other information

In prior years the government constructed water supply infrastructure and donated this to the Corporation. Some of the donated water supply infrastructure is dedicated to supply water to rural communities.

For further information on capital expenditure commitments, refer to note 29.

For further additional fair value information, refer to note 35.

Proceeds of N$ 1 983 875 (2019: N$ 1 317 397) were received from the disposal of assets with a carrying value of N$ 7 406 094 (2019: N$ 416 018).

Details of properties

A register containing the information required by the Companies Act is available for inspection at the registered office of the Corporation.

Annual Financial Statements - 2019/20 121

43 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to the number Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

5. Intangible assets

2020 2019 Cost /Accumulated Carrying valueCost /Accumulated Carrying value Valuation amortisation Valuation amortisation N$ N$ N$ N$ N$ N$ Computer software 18,669,301 (18,336,480) 332,821 18,461,876 (17,961,650) 500,226 Electricity Supply points 255,404,817 (100,863,085) 154,541,732 255,404,817 (78,029,170) 177,375,647 Total 274,074,118 (119,199,565) 154,874,553 273,866,693 (95,990,820) 177,875,873

Reconciliation of intangible assets - 2020

Opening Additions Amortisation Total balance Computer software 500,226 207,426 (374,831) 332,821 Electricity Supply points 177,375,647 - (22,833,915) 154,541,732 177,875,873 207,426 (23,208,746) 154,874,553

Reconciliation of intangible assets - 2019

Opening Additions Amortisation Total balance Computer software 1,020,660 202,286 (722,720) 500,226 Electricity Supply Points 200,209,562 - (22,833,915) 177,375,647 201,230,222 202,286 (23,556,635) 177,875,873

Pledged as security

All intangible assets are free of encumbrances.

Other information

Computer software is replaced once it has reached the end of it's useful life.

Electricity Supply Points have a remaining useful life of 6 years.

Contractual commitments

There are no commitments to purchase any new intangible assets.

122 NamWater Integrated Annual Report

44 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to thenumber Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

6. Deferred tax

Deferred tax (liability)/asset

Liabilities for health care benefits accrued 63,628,275 62,619,943 Endowment policies (76,132,389) (85,133,112) Inventory (1,341,317) (2,212,878) Severance Obligation Adjustment (12,524,160) (14,026,100) Doubtful debt allowance 149,787,264 170,506,613 Revaluation of Property plant and equipment (1,509,090,390)(1,422,467,309) Revaluation of Property, plant & equipment released to retained income (28,308,028) (28,308,028) Income received in advance (9,051,724) (9,051,724) Reversal of deferred tax actuarial gain - 1,593,780 Performance Bonus Provision (3,135,980) - Property, plant and equipment (14,205,262) (47,477,832) Assessed loss utilised (2,334,626) (2,334,626) Insurance claims prepaid (11,096) - Interest deduction debtors write off 2,992,310 - Total deferred tax liability (1,439,727,123)(1,376,291,273)

The deferred tax assets and the deferred tax liability relate to income tax in the same jurisdiction, and the law allows net settlement. Therefore, they have been offset in the statement of financial position as follows:

Deferred tax liability (1,439,727,123)(1,376,291,273)

Reconciliation of deferred tax asset / (liability)

At beginning of year (1,376,383,112)(1,094,964,600) Deferred taxation through Other Comprehensive Income IFRS 9 prior year adjustment - (32,210,139)

Deferred taxation through profit or loss Liabilities for health care benefits accrued 1,008,332 (10,211,840) Investment income accrued 9,000,723 (8,446,738) Inventory 871,561 140,957 Provision for doubtful debts (17,727,039) 21,497,200 Property, plant and equipment (53,350,511) 28,024,899 Provision for bonuses (3,135,982) (6,059,723) Insurance claims prepaid (11,095) (39,829) Revaluation of PPE - (274,113,299) (1,439,727,123)(1,376,383,112)

7. Inventories

Spare parts and consumables 10,255,325 7,531,697

Inventory is free of any encumbrances. Total inventories is measured at the lower of cost and net realisable value.

8. Other financial assets

At fair value through profit or loss - designated Investments 48,870,657 45,984,250 The amount is comprised of N$ 48 870 657 (2019: N$ 45 984 250) in endowment policies.

Annual Financial Statements - 2019/20 123

45 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) NotesAnnual Financial to the Statements Annual forFinancial the year ended Statements 31 March 2020 (continued) Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

8. Other financial assets (continued)

Amortised Cost Other financial asset 861,587,153 666,837,762 The investment is a short term deposit of N$ 273 million held in a 48hr investment facility, with nominal interest rate of 5.75%, N$ 200 million short term deposit, with interest rate of 8.57% maturing 12 December 2020, N$150 million short term deposit, with interest rate 8.70% maturing 14 June 2021, N$ 50 million short term deposit, with interest rate 7.10% maturing 23 June 2020 and N$ 160 million short term deposit, with interest rate of 7.86% maturing 22 December 2020. The total investments includes interest accrued on the above investments. A total of N$ 776 million (2019: N$ 500 million) reinvestments were made during the year.

Other financial assets-current 637,440,741 712,822,012

Long term Amortised Cost - Sinking Fund 64,558,753 116,577,175

The non-current held to maturity investments comprise of an investment in a sinking fund held with Standard Bank Namibia to redeem the bonds at muturity. ( refer to note 13).

Short term At fair value through profit or loss 48,870,657 45,984,250 Amortised Cost 955,587,153 666,837,762 1,004,457,810 712,822,012 Total other financial assets 1,069,016,563 829,399,187

124 NamWater Integrated Annual Report

46 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) NotesAnnual Financial to the Statements Annual Financialfor the year ended Statements 31 March 2020 (continued) Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

8. Other financial assets (continued)

Fair value information

Reconciliation of financial assets held at fair value through profit and loss Opening balance 45,984,250 43,025,805 Investment income unrealised 2,913,933 2,922,008 Movement in investment income (27,526) 36,437 48,870,657 45,984,250

Reconciliation of financial assets at Amortised cost Opening balance 666,837,762 376,789,733 Investment during the year 1,126,622,134 1,020,921,854 Interest income unrealised 28,570,082 20,079,808 Interest income realised 33,483,731 24,758,533 Disinvestments during the year (993,926,556) (775,712,166) 861,587,153 666,837,762

Other Financial Assets at Amortised cost: Long term Opening balance 116,577,175 78,806,812 Investment during the year 27,919,200 27,919,200 Interest income unrealised 14,062,379 9,851,163 158,558,754 116,577,175

Sales/Purchases of Investments Disinvestments during the year: Financial Assets at amortised cost 993,926,556 775,712,166 Investments during the year: Financial Assets at amortised cost (1,126,622,134)(1,020,921,852) Additional Investments in Sinking Fund (41,981,579) (37,770,362) Investment Income: Financial Assets at Amortised cost (62,053,814) (44,838,343) (236,730,971) (327,818,391)

Financial assets at fair value through profit or loss are recognised at fair value, which is equal to their carrying amounts at the date of reporting.

The amortised cost investments are recognised at cost plus investment income earned and are both current and non- current in nature. The short term held to maturity investments comprise of fixed term deposits held at a term not exceeding 12 months. The non-current held to maturity investments comprise of an investment in a sinking fund held with Standard Bank to redeem the bonds at muturity. ( refer to note 13).

Reconciliation of financial assets

Financial assets at fair value through profit or loss are denominated in the following currencies:

Namibian dollar 48,870,657 45,984,250

Financial assets at amortised cost are denominated in the following currencies:

Namibian dollar 861,587,153 666,837,762

There were no gains or losses realised on the disposal of held to maturity financial assets in 2020 and 2019, as all the financial assets were disposed of at their redemption date.

Sinking fund - Standard Bank Namibia - Namibian Dollar 158,558,753 116,577,175

Annual Financial Statements - 2019/20 125

47 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to thenumber Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

8. Other financial assets (continued)

Credit quality of other financial assets

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to historical information and forward looking information about counterpart and industry default rates. With regards to the investments, only investments in the money market, with products that guarantee the capital balance invested are allowed per the investment policy. The investments in these institutions must be investment grade.

9. Trade and other receivables

Trade receivables 1,083,639,143 933,578,858 Allowance Account (709,016,533) (622,026,752) Subsistence & Travel advances 44,877 78,849 Other receivables 237,035,370 340,594,406 611,702,857 652,225,361

Other Receivables

Included in other receivables is an amount of N$ 159 556 841 advanced to the government relating to the Neckartal Dam of which N$ 55 646 725 is short term and N$ 103 910 116 is long term, refundable from government. Other receivables also include an amount of N$ 30 980 679 relating to other government projects. These amounts are underwritten to be paid by the Namibian Government which reduces the risk of default.

Credit quality of trade and other receivables

The credit quality of trade and other receivables that are neither past due nor impaired can be assessed by reference to historical and forward looking payment performance and default rates. The credit quality of customers is assessed and regularly monitored by the debtor’s committee. Bulk water sales are covered by performance agreements.

The overall allowance account improved from prior year as a result of the improvement in the credit quality of debtors due to improved payment terms and collection rate on a significant base of customer segment. The improvement in credit quality reduces the overall credit risk.

None of the financial assets that are fully performing have been renegotiated during the last year.

Fair value of trade and other receivables

Management assessed that the fair values of trade and other receivables approximate their carrying amounts largely due to the short term maturities of these instruments.

126 NamWater Integrated Annual Report

48 Annual Financial Statements for the year ended 31 March 2020

Notes to the Annual Financial Statements (continued)

Annual Financial Statements - 2019/20 127 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) AnnualNotes Financial to the Statements Annual forFinancial the year ended Statements 31 March 2020 (continued) Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

9. Trade and other receivables (continued)

Reconciliation of provision for impairment of trade and other receivables

Opening balance 622,026,752 676,176,634 Adjustment of opening balance: IFRS 9 adoption in respect of expected credit loss - (100,658,878) Revised subtotal 622,026,752 575,517,756 Provision for impairment 66,028,245 35,773,726 Amounts written off (44,125,094) (43,871,310) Interest provision 65,086,630 54,606,580 709,016,533 622,026,752

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The company does not hold any collateral as security. Included in related party trade receivables is an amount of N$ 288 848 588 relating to Local Authorities and Regional Councils which according to management has the higest risk of defaulting. However, repayment agreements have been entered into with these customers. Also included in trade receivables is an amount of N$ 466 045 624 owed by private consumers, rural water supply and legal dormant accounts which also carries a relatively high risk of defaulting. The amounts are fully provided for.

Trade receivables include amounts owing from related parties. Trade receivables are non-secured and interest bearing on a 60 day term.

Other receivables include study loans given to employees and other sundry receivables. The receivables are non-secured and non-interest bearing with no repayment terms.

Subsistence & Travel advances relate to travel advances for which employees have not yet submitted proof of travel. The advances are non-secured, and non-interest bearing with no repayment terms.

Assumptions and judgements used to calculate the expected credit loss

The sectors of the Corporations customers that are supplied with bulk water include, mining customer, local authorities private businesses and individuals. In arriving at the estimated credit losses the Corporation considered at looking at the historic collection rate of these customers for the past three years and the following assumptions were factored to arrive at the credit losses balance.

Forward looking factors considered

Namibian GDP growth rate as given this key indicator used to verify the country's growth rate.

International Uranium prices were used as a key determinant of the viability of the mining activities and the customer's ability to repay.

10. Cash and cash equivalents

Cash and cash equivalents relate to money on hand and deposits held with banking institutions. The avarage interest rate earned on deposits with banking institutions in call and current accounts avaraged 1.73% p.a. (2019: 4.45%). The reduction in the interest rates were informed by the overall reduction in the prime lending rates from the Bank of Namibia.

Cash on hand 98,309 62,985 Bank balances 261,228,706 244,406,011 261,327,015 244,468,996

The total amount of undrawn facilities available for future operating activities and 1,117,950,000 901,212,000 commitments

128 NamWater Integrated Annual Report

50 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) NotesAnnual Financial to the Statements Annual forFinancial the year ended Statements 31 March 2020 (continued) Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

10. Cash and cash equivalents (continued)

Exposure to currency risk

Namibia Dollar amount Namibia Dollar 261,327,016 244,468,996

11. Share capital

Authorised 1 000 000 000 Ordinary shares of N$1 each 1,000,000,000 1,000,000,000

Issued 959,054,444 ordinary shares of N$ 1 each 959,054,444 959,054,444

12. Non distributable reserves

Revaluation reserves equal to the depreciation net of tax on the revalued portion of assets is released directly into Retained Income.

Opening balance 2,201,472,577 1,832,819,682 Revaluation Reserve 162,396,810 582,490,761 Revaluation reserve released into retained income (184,230,972) (213,837,866) Revaluation reserves 2,179,638,415 2,201,472,577 Asset replacement reserve 10,033,634 10,033,634 2,189,672,049 2,211,506,211

The Asset Replacement reserve relate to money set aside for the future replacement of fixed assets. As guided by the Namibia Water Corporation Act, the Corporation can capitalise part of it's profits as may be deemed necessary into a capital relacement reserve for future replacement of it's assets.

13. Financial liabilities at amortised cost

Held at amortised cost Loan: RMB 103,745,587 243,745,587 The loan is repayable over 5 years at an interest rate of prime less 1.65%, currently 7.35% payable monthly. The Corporation is expected to make a payment of N$ 7 792 614 within the next 12 months.

Held at amortised cost Bonds issued 207,771,333 207,771,333 On 24 April 2015 NWC020 of N$94 million and NWC022 of N$106 million were issued. The bonds are unsecured, and have fixed coupon rates of 9.05% and 9.57% respectively payable semi-annually and are maturing on 24 April 2020 and 24 April 2022 respectively. The bonds are denominated in Namibian Dollars. This is the first two tranches of NamWater's Medium Term Note Programme (MTNP) aimed at funding water supply infrastructure. The MTNP is listed on the Namibian Stock Exchange with a total facility of N$1 billion. The bonds have an effective interest rate of 9.26% and 9.80%. 311,516,920 451,516,920

Annual Financial Statements - 2019/20 129

51 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) NotesAnnual Financial to the Statements Annual forFinancial the year ended Statements 31 March 2020 (continued) Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

13. Financial liabilities at amortised cost (continued)

Non-current liabilities Longterm Portion 209,745,587 443,745,587

Current liabilities Short term portion at amortised cost 101,771,333 7,771,333 311,516,920 451,516,920

The fair value of the loan approximates the carrying amount.

14. Retirement benefits

14.1 Post Employment Medical Aid obligation

The Corporation has an obligation to continue to fund 50% of the employees' contribution to Medical Aid after employment. The liability is actuarially calculated on an annual basis. The employees are free to join their medical aid service provider of choice, whilst the Corporation utilises one of the medical aid funds to benchmark the level of contributions to the fund.

The plan is a post employment medical benefit plan, and was closed in September 2010 to new members joining the Corporation.

Reliance is placed on expert valuation, NMG Actuarial Consultants.

Carrying value

Present value of the defined benefit obligation-not funded (176,569,090) (158,480,000)

Net expense recognised in Profit or loss

Current service cost 5,130,000 6,524,000 Interest cost 16,640,000 19,857,000 21,770,000 26,381,000

Opening Balance Present value of the defined benefit obligation-not funded (158,480,090) (189,980,210)

Movements for the year

Contributions to retired employees 3,151,037 3,216,774 Net expense recognised in Profit or loss (21,770,000) (26,381,000) (18,618,963) (23,164,226)

Net acturial gain recognised in other comprehensive income Actuarial gain through OCI 529,963 54,664,346

Closing Balance Present value of the defined benefit obligation-not funded (176,569,090) (158,480,090)

130 NamWater Integrated Annual Report

52 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to thenumber Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

14. Retirement benefits (continued)

Key assumptions used

Assumptions used on last valuation on .

Normal retirement age (years) 60 60 Discount rate 10.62 % 10.62 % Medical inflation rate 8.52 % 8.52 % Figures in Namibia Dollar PA(90)-2 PA(90)

Sensitivity analysis to mortality rates Change in accrued liability 5,120,501 (4,767,363) Change in current service cost - year following 143,640 (138,510) Change in interest cost - year following 465,920 (449,280) Decrease/ (increase) in liability 5,730,061 (5,355,153)

The actual mortality experience of the current employees and the continuation members will materially affect the actual cost. Should the actual cost be higher than that assumed in the valuation, the cost of subsidies will decrease. Likewise, should the actual mortality be lower than that assumed the cost will be greater than expected. Figures in Namibia Dollar -1% decrease +1% increase

Sensitivity to medical aid inflation Change in total accrued liability (23,130,539) 28,427,609 Change in current service cost - year following (707,940) 872,100 Change in interest cost - year following (2,296,320) 2,828,800 (Decrease)/ increase in liability (26,134,799) 32,128,509

The cost of subsidy after retirement is dependent on the increase in the contributions to the medial aid scheme before and after retirement. The rate at which these contributions increase will thus have direct effect on the liability of future retirees. Management believes a realistic assumption on medical aid inflation is a change of 1%

Sensitivity to discount rate -1% decrease +1% increase N$ N$ Change in total accrued liability 28,604,178 (22,777,401) Change in current service cost-year following 436,050 (5,130,000) Change in interest cost- year following 1,414,400 (1,198,080) 30,454,628 (29,105,481)

The variable having the greatest effect on the liability is the real discount rate, i.e. the discount rate net of health care cost inflation. Even small changes to this assumption have a relatively large impact on the liabilities. Management believes that the realistic assumption on medical aid discount rate is a change of 1%.

14.2 Severance pay obligation

In terms of the current interpretation of the provisions of the Labour Act, there is a requirement for the Corporation to provide for the payment for all permanent staff members who will part with the Corporation at the age of 65 years. An actuarial valuation was done to determine the fair value of the liability. Assumptions used are as per the last valuation performed on 31 March 2020.

Reliance is placed on expert valuation, Strategic Actuarial Partners Namibia (Pty) Ltd.

Annual Financial Statements - 2019/20 131

53 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to thenumber Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

14. Retirement benefits (continued)

Carrying value Present value of defined benefit obligation - not funded 4,984,000 3,271,000

Net expense recognised in Statement of profit or loss Service cost 911,316 169,266 Interest cost 1,486,884 276,172 Actuarial (gain)/loss (685,200) - 1,713,000 445,438

Movement for the year Opening balance 3,271,000 3,376,000 Net expense recognised in Profit or loss 1,713,000 445,438 Actual Severance Payment - (550,438) 4,984,000 3,271,000

Figures in Namibia Dollar -1% decrease +1% increase

Sensitivity to salary inflation Change in liability (209,328) 234,248 Change in service cost plus interest cost (78,798) 87,363 (Decrease)/increase in liability (288,126) 321,611

The effect of a 1% increase and decrease in the salary inflation assumption on the contractual liability and the annual expense is shown in the table above. Management believes that it is a realistic assumption to expect a change in salary inflation of 1%.

Valuation assumptions Salary inflation 5.80 6,80% Consumer price index 5,80% 5,80%

15. Deferred income

Non-current liabilities 610,400,904 603,742,514 Current liabilities 40,362,385 41,627,943 650,763,289 645,370,457

The Corporation received revenue from external sources for capital projects as listed below:

132 NamWater Integrated Annual Report

54 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) NotesAnnual Financial to the Statements Annual Financialfor the year ended Statements 31 March 2020 (continued) Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

15. Deferred income (continued)

Summary of deferred income Swakopmund - Langer Heinrich Upgrade 70,564 92,357 Rossing - Valencia 266,105 266,105 Finkenstein Water Supply 77,636 81,959 Langer Heinrich Water Supply 54,447,495 55,821,320 Aus Scheme Extension 12,888 17,875 Ondobe Pipeline 314,686 335,177 Skorpion Mine Water Supply 46,790,375 48,605,739 Opuwo Treatment Plant 1,599,870 1,771,646 Klein Manasse 695,628 734,139 Ogongo Oshakati Canal Rehabilitation 13,297,678 13,297,678 Andara Water Supply 211,927 231,882 Ndiyona Water Supply 912,326 974,236 Ogongo Agricultural College Pumpstation 149,281 152,686 Mpunguvlei Pipeline 343,178 343,798 Rosh Pinah pipeline upgrade 681,924 911,131 Calueque Pump Station upgrade 406,839 406,839 Oshikango Pipeline Reroute 257,227 265,607 Oanob - Oamites Water Supply 83,000 83,000 Swakop South Water Supply 142,252,025 162,839,449 Outapi road crossings 192,343 208,449 Rural water supply infrastructure 227,782,520 227,782,520 Kalkveld extension & upgrade 1,459,807 1,459,807 Vioolsdrift / Noordoewer dam study 375,411 375,411 NTA/GIZ Heavy Operator Training 3,034,737 3,343,291 Swakopmund-Rossing Upgrade 200,562 118,599 Omdel-Swakopmund Pipeline Replacement 130,461,129 135,845,847 Aussenkehr New Town Scheme 350,000 350,000 Unicef Water Tankers 9,384,318 12,265,100 Shamvhura-Shamangorwa Rural Water Scheme 5,217,319 5,217,319 Farm Hoffnung Boreholes 357,319 377,245 Water Security Project - (35,336,002) Cuvecom Project 2,949,004 3,097,701 Eenhana Water Treatment Plant Project 4,390,676 1,295,055 Dessert Research Foundation Project 1,737,492 1,737,492 Less: Transfer to current portion of deferred income (40,362,385) (41,627,943) 610,400,904 603,742,514

Reconciliation of deferred income Opening balance 645,370,458 629,704,833 Transfer to capital redemption (32,990,096) (30,108,432) Contribution from government and customers 12,669,045 39,643,809 Transfer to other receivables 22,766,957 - Other Projects 2,946,925 6,130,248 650,763,289 645,370,458

The amount of N$ 32 990 096 (2019:N$ 30 108 432) is included in Capital redemption as Revenue. The full balance of Capital redemption includes amounts that are direct payments from customers, not going through the Deferred Income account.

Annual Financial Statements - 2019/20 133

55 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) AnnualNotes Financial to the Statements Annual forFinancial the year ended Statements 31 March 2020 (continued) Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

16. Taxation

Major components of the tax expense through Statement of Profit or Loss

Current Taxation Local income tax - current period 82,687,304 10,552,353

Deferred Taxation Originating and reversing temporary differences (63,344,010) (24,904,926)

Major components of tax expense through Statement of Other Comprehensive Income Current Taxation Local income tax - current period 7,514,560 19,086,400 Deferred Taxation Revaluation of property, plant & equipment (76,422,028) 274,113,299 (68,907,468) 293,199,699

Reconciliation of the tax expense

Reconciliation between accounting profit and tax expense.

Accounting profit/(loss) 68,914,758 14,710,679

Tax at the applicable tax rate of 32% (2019: 32%) 22,052,723 4,707,417

Exempted income 10,593,164 (20,035,239) Disallowed expenditure 378,260 975,249 Portion recognised in OCI 76,591,616 - 109,615,763 (14,352,573)

The corporate tax rate remained unchanged in the current year at 32% (2019:32%).

17. Trade and other payables

Financial instruments: Trade payables 79,723,023 23,941,465 Value added tax 9,276,924 19,865,025 Payroll control accounts 4,707,535 (101,252) Other payables 14,190,853 19,823,394 Accrued leave pay 31,866,347 45,857,236 Accrued bonus 13,895,241 3,771,709 Year end accruals 112,311,230 132,521,830 265,971,153 245,679,407

The carrying amounts of trade and other payables are denominated in the following currencies.

Namibia Dollar Amount Namibia Dollar 265,971,153 245,679,407

134 NamWater Integrated Annual Report

56 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to thenumber Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

17. Trade and other payables (continued)

Trade payables and year end accruals comprise of amounts accrued for services provided by suppliers. The amounts are due for payment 30 days from the date of the supplier statements. Other payables to third parties are pension funds, retirement funds and provision for rentention creditors.

Accrued leave pay relates to the cumulative number of leave days owed to employees. Each employee accrues 2.5 days of leave per month of service.

Accrued bonus relates to provision payable to employees for the 13th cheque as well as a performance related bonus. The 13th cheque is equivalent to 69% of an employee's monthly package, and payable in November of each year.

18. Revenue

Water sales - Treated water 1,170,949,661 1,135,332,812 Water sales - Desalinated water 451,494,155 440,636,981 Interest received on overdue trade receivables 1,819,650 2,994,094 Water sales - Untreated water 24,304,839 29,557,456 Water sales - Irrigation water 16,628,157 16,124,106 Capital redemption 11,878,482 - 1,677,074,944 1,624,645,449

19. Operating Profit/(Loss)

Operating (loss)/surplus for the year is stated after accounting for the following:

(Loss)/Profit on sale of property, plant and equipment 1,041,263 686,251 Amortisation of intangible assets 23,208,746 23,556,635 Depreciation on property, plant and equipment 375,237,762 414,097,196 Employee costs 313,172,921 303,927,864 Amount expensed in respect of retirement benefit plans: 51,878,956 55,832,814 - Defined contribution funds 25,033,956 24,314,314 - Defined benefit funds 26,845,000 31,518,500

Provision for expected credit losses Current year provision for allowance account 75,492,342 90,380,306

Audit fees 738,547 762,619

20. Interest Income

Interest from investments held at amortised cost (note 8) 76,116,193 54,689,503 Interest refund from Government 12,120,330 30,388,970 Endowment policy earinings: unrealised fair value gain 2,913,931 2,922,007 Bank Interest 7,905,389 7,145,760 Total interest income 99,055,843 95,146,240

21. Interest Paid

Borrowings 32,926,674 51,410,712 Inland Revenue 69,294 2,657,766 32,995,968 54,068,478

Annual Financial Statements - 2019/20 135

57 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) NotesAnnual Financial to the Statements Annual Financialfor the year ended Statements 31 March 2020 (continued) Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

22. Cash generated from operations

Profit/(Loss) before taxation 68,229,459 14,710,679 Adjustments for: Depreciation of property, plant & equipment (refer to note 4) 375,237,761 414,097,196 Profit/(Loss) on sale of assets (1,635,481) (686,251) Amortisation of intangible assets (refer to note 5) 23,208,746 23,556,635 Fair value adjustment not realised (2,913,933) (2,922,007) Interest income (refer to note 20) (96,141,910) (92,224,233) Unrealised interest income - (29,930,971) Interest Paid 32,926,674 54,068,478 Movements in retirement benefit liabilities less payments processed (refer to note 14) 20,331,963 27,752,788 Capital Redemption (Refer to note 15) (33,103,639) (30,108,432) Changes in working capital: (Increase)/decrease Inventories (2,723,628) (37,878) (Increase)/decrease Trade receivables (62,991,645) (25,516,190) (Increase)/decrease Other receivables (36,485,841) (21,082,759) Increase/(decrease) Trade and other payables 45,781,997 8,202,709 329,720,523 339,879,764

23. Current Tax Payable

Balance at beginning of the year (46,973,244) (17,333,790) Current tax for the year recognised in profit or loss (82,687,304) (10,553,054) Current tax for the year recognised in OCI - (19,086,400) Reclasification of prior year tax accruals to current tax (2,269,682) - Current tax paid during the year 61,627,713 - Balance at end of the year (70,302,517) (46,973,244)

24. Financial assets by category

The categories for financial instruments are listed below:

2020

Amortised Fair valueTotal Cost through profit or loss - Mandatory N$ N$ N$ Other financial assets 1,020,145,906 48,870,657 1,069,016,563 Other receivables 237,080,247 - 237,080,247 Trade receivables 374,622,600 - 374,622,600 Cash and cash equivalents 259,568,675 - 259,568,675 1,891,417,428 48,870,657 1,940,288,085

136 NamWater Integrated Annual Report

58 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) NotesAnnual Financial to the Statements Annual Financialfor the year ended Statements 31 March 2020 (continued) Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

24. Financial assets by category (continued)

2019

Amortised Fair valueTotal Cost through profit or loss N$ N$ N$ Other financial assets 783,414,937 45,984,250 829,399,187 Other receivables 340,594,406 - 340,594,406 Trade receivables 311,552,106 - 311,552,106 Cash and cash equivalents 244,468,995 - 244,468,995 1,680,030,444 45,984,250 1,726,014,694

25. Capital work in progress

Capital work in progress comprise a number of infrastructure creation projects that were not yet completed at the end of the financial year. A total of N$ 58 277 025 (2019: N$ 87 969 952) was added to work in progress (refer to note 4), whilst N$ 67 909 553 (2019: N$ 80 149 273) was transferred to fixed assets and intangible assets after completion of the work(refer to note 4).

The projects included here are at various stages of completion.

26. Financial liabilities by category

The accounting policies for financial instruments have been applied to the line items below:

2020

Financial Total liabilities at amortised cost N$ N$ Trade and other payables 192,034,253 192,034,253 Long term loans 311,516,920 311,516,920 503,551,173 503,551,173

2019

Financial Total liabilities at amortised cost N$ N$ Trade and other payables 156,463,295 156,463,295 Long term loans 451,516,920 451,516,920 607,980,215 607,980,215

27. Cost of sales

Sale of goods Purchase of desalinated water 369,492,340 360,899,554

Annual Financial Statements - 2019/20 137

59 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to thenumber Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

28. Other operating income

Profit/(loss) on sale of assets 1,041,263 686,251 Rental income 3,921,138 3,779,841 Insurance proceeds 351,288 529,637 Capital redemption 33,103,639 31,620,039 Human Resource Development Centre, Laboratory services and other income 29,467,199 55,903,562 67,884,527 92,519,330

29. Commitments and guarantees

Authorised capital expenditure

Already contracted for but not provided for  Property, plant and equipment 413,787,781 545,501,142

Not yet contracted for but authorised by directors 203,683,185 114,950,458

This committed expenditure relates to water supply infrastructure and will be financed by available bank facilities, retained profits, mortgage facilities, existing cash resources, and funds internally generated.

Operating leases – as lessor (income)

Minimum lease payments due - within one year 8,283,226 5,674,418 - in second to fifth year inclusive 35,169,166 25,368,675 43,452,392 31,043,093

Lease rentals increase on an annual basis with inflation, for all the houses that are located in urban areas. Management considers houses individually that are located in communal or remote areas to escalate their rentals.

Payment guarantees were issued in favor of the corporation towards the desalinated water purchases. Guarantees in favor of Namwater comprised of the following:

Payment Guarantees from Customers Rossing 12,551,181 12,551,181

138 NamWater Integrated Annual Report

60 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to thenumber Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

30. Related parties Members of key management Abraham Nehemia - Chief Executive Officer Kadiva Hamutumwa- Chief Strategy Officer and New Business Development Fernando Somaeb - Chief Financial Officer Andries Kok - Acting Chief Water Supply South Coenrad Koegelenberg - Chief Water Supply Coastal Kaliki Kambanda - Chief Water Supply North Eino Mvula - Chief Water Supply Central Aino-Sylvia Nsinano- Executive Director

Related party balances

Amounts included in Trade and other receivables regarding related parties Ministries 42,778,045 42,095,316 Towns and Village councils 288,848,588 216,765,245 Municipalities 88,591,954 89,912,721 Namibia Wildlife Resorts Ltd 713,767 2,260,798 Roads Construction Company Ltd 618,520 662,246 UNAM 143,507 1,351,391 Namibia Airports Company 276,256 468,104 Other related parties 441,659 18,933,435

Related parties of N$ 628 817 (2019: N$ 11 568 735) were provided for as likely not to be collectable at the end of the financial year.

Amounts included in Trade and other payables regarding related parties Erongo Red (5,944,786) (679,494) Cenored (12,643) (2,025,660) Nored Electricity (Pty) Ltd (3,589,482) (47,942) Telecom (66,696) (105,104) NamPower (10,475,301) (78,034) Municipalities (1,036,657) (382,622) Towns and VIllage councils (1,222,008) (115,044)

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm's length transactions. Outstanding balances at the year-end are unsecured, and accrue interest at prime lending rate. Settlement of the balances outstanding occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. The impairment on the receivables is shown above. The assessment for impairment is undertaken each financial year, through examining the financial position of the related party and the market in which the related party operates.

Annual Financial Statements - 2019/20 139

61 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to thenumber Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

30. Related parties (continued)

Related party transactions

Sales to related parties Ministries (53,312,947) (68,035,744) Town and village councils (383,388,947) (357,919,202) Municipalities (616,346,175) (680,527,318) Namibia Wildlife Resorts Ltd (8,651,933) (7,850,194) Roads Construction Company Ltd (737) (9,518) Namport (900,965) (1,163,826) Namibia Airports Company (3,198,563) (3,320,937) Roads Authority (55,786) (39,508) NamPower (73,538) (154,779) Cenored (173,610) (138,888) Unam (3,057,111) -

Purchases from related parties Erongo Red 91,571,164 81,394,116 Cenored 52,234,641 45,962,390 Nored Electricity (Pty) Ltd 49,967,087 37,108,255 Telecom 2,615,560 2,859,233 NamPower 175,264,341 182,324,439 Municipalities 8,034,034 10,577,288 Road Fund Administration 2,608,173 1,979,012 Nampost 3,698,712 3,285,884 Oshakati Premier (Pty) Ltd 12,791,593 13,923,275

Advances (to)/from related parties Loan advanced to government 103,745,587 243,745,587 Refund from drought relief fund 12,569,045 34,426,490

Compensation to key management Short-term employee benefits 10,359,120 8,625,902 Post-employment benefits - Pension - Defined contribution plan 1,113,795 771,753 11,472,915 9,397,655

Nature of relationships

The above entities are considered related parties because of the significant influence that the shareholder has on these entities through the shareholders ownership or ability to direct.

140 NamWater Integrated Annual Report

62 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to the number Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

31. Directors' emoluments

A total of N$ 3 236 062 (2019: N$ 3 712 831) was paid to the directors during the year.

Non-executive & Executive (fees & expenses)

2020

Directors' feesCommittees Retainer fees Directors Total fees expenses N$ N$ N$ N$ N$ T Maswahu 203,506 45,080 150,355 48,323 447,264 Dr A Matros-Goreses 65,022 65,353 151,962 - 282,337 L Ashipala 81,750 42,862 131,287 - 255,899 Dr P Mushendami 131,920 93,928 168,638 18,788 413,274 A S R Nsinano 112,886 33,337 131,287 6,510 284,020 S Haihambo 76,988 63,467 168,278 24,074 332,807 J R Kaumbi 135,687 66,494 150,322 8,205 360,708 H Jesaya 97,555 33,337 117,690 46,103 294,685 V Kinyaga 80,826 28,244 138,769 - 247,839 M Gawaseb 148,784 28,575 117,690 22,180 317,229 1,134,924 500,677 1,426,278 174,183 3,236,062

2019

Directors' feesCommittees Retainer fees Directors' Total fees expenses N$ N$ N$ N$ N$ T Maswahu 281,047 28,575 140,551 36,515 486,688 Dr A Matros-Goreses 137,940 47,783 135,646 23,479 344,848 L Ashipala 148,611 28,575 119,835 25,778 322,799 Dr P Mushendami 178,125 80,790 170,783 29,677 459,375 A S R Nsinano 196,519 21,266 119,835 30,705 368,325 S Haihambo 119,308 49,511 170,963 22,006 361,788 J R Kaumbi 185,405 42,863 153,300 31,877 413,445 H Jesaya 165,933 36,704 119,835 49,235 371,707 V Kinyaga 68,854 14,288 117,690 16,547 217,379 M Gaweseb 212,098 19,050 119,835 15,494 366,477 1,693,840 369,405 1,368,273 281,313 3,712,831

32. Drought relief fund pledge

During the 2017 financial year, the corporation paid to the Ministry of Agriculture Water and Forestry an amount of N$ 235,000,000. The money was utilised for emergency works required to mitigate the drought effect on water supply in Central Areas of Namibia (CAN).

To date the Government refunded the Corporation a total of N$ 116 289 212.

The amount contributed to the drought relief was accounted for as follows: Balance refunded during the current financial year 12,569,045 34,426,490

Annual Financial Statements - 2019/20 141

63 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to thenumber Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

33. Risk management

Capital risk management

The Corporation's objectives when managing capital are to safeguard the Corporation's ability to continue as a going concern in order to provide returns for the shareholder, benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The capital structure of the Corporation consists of debt, which includes the borrowings disclosed in note 13, cash and cash equivalents disclosed in note 10, and equity as disclosed in the statement of financial position.

In order to maintain or adjust the capital structure, the Corporation may adjust the amount of dividends paid to shareholder, return capital to shareholder, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Corporation monitors capital on the basis of the debt: equity ratio.

This ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings (including 'current and non-current borrowings' as shown in the statement of financial position) less cash and cash equivalents. Total equity is represented in the statement of financial position.

The Corporation's strategy is to maintain a debt: equity ratio of lower than 50%.

There are no externally imposed capital requirements.

There have been no changes to what the entity manages as capital, the strategy for capital maintenance or externally imposed capital requirements from the previous year.

The debt: equity ratio at 2020 and 2019 respectively were as follows:

Total borrowings Loans 13 311,516,920 451,516,920 Post employment benefit and severance pay obligation 14 181,553,000 200,602,000 Other current liabilities 17 265,971,153 245,679,407 759,041,073 897,798,327 Less: Cash and cash equivalents 10 261,327,015 244,468,995 Net debt 497,714,058 653,329,332 Total equity 4,790,411,376 4,628,271,069 Total capital 5,288,125,434 5,281,600,401

Gearing ratio 9 % 12 %

Financial risk management

The Corporation’s activities expose it to a variety of financial risks: market risk (fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk.

The Corporation's board of directors have the overall responsibility for the development and enforcement of a risk management process. The risk management process is managed by the Audit Committee, which is a subcommittee of the board. Activities of the Audit Committee are reported to the full Board for ratification.

The Corporation’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Corporation’s financial performance. Risk management is carried out by the Finance Department under policies approved by the board of directors. Corporate finance identifies and evaluates financial risks in close co-operation with the Corporation’s operating units. The board of directors provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk and credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity. 142 NamWater Integrated Annual Report 64 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to the number Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

33. Risk management (continued)

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the Corporate Finance Department maintains flexibility in funding by maintaining availability under committed credit lines.

Liquidity risk is the risk that the Corporation will encounter difficulty in meeting obligations associated with financial liabilities as they fall due. The Corporation's approach to liquidity risk management is to always have adequate liquidity to meet obligations as they fall due. This is achieved through maintaining adequate cash resources, as well as lines of credit with the Corporation's bankers. In addition to that, a close relationship is maintained with the central government in order to ensure that the central government funds the activities of the Corporation which are not economically viable.

Cash flow forecasts are prepared and borrowing facilities maintained to cover the short term operational cash flows. In addition to this, the Corporation's cash investments adequate to meet all annual operational costs are maintained in investment instruments which can be called on short notice. With regards to the bonds issued by the Corporation, the board has approved the establishment of a sinking fund, into which the Corporation will periodically save funds which will be used to redeem the bonds at the end of their term.

The table below analyses the Corporation’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

At 31 March 2020 Less than 1Between 1 year and 2 years N$ N$ Unsecured bonds in issue 101,771,333 106,000,000 Trade and other payables 265,971,153 - RMB Bank Loan 7,792,614 95,952,973

At 31 March 2019 Less than 1Between 1Between 2 year and 2 years and 5 years N$ N$ N$ Unsecured bonds in issue 7,771,333 102,535,200 136,432,600 Trade and other payables 245,679,407 - - RMB Bank Loan - 147,771,333 126,341,943

Annual Financial Statements - 2019/20 143

65 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) NotesAnnual Financial to the Statements Annual Financialfor the year ended Statements 31 March 2020 (continued) Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

33. Risk management (continued)

Interest rate risk

As the Corporation has significant interest-bearing assets and liabilities, the Corporation’s income and operating cash flows are substantially affected by changes in market interest rates.

The Corporation’s interest rate risk arises from long-term borrowings and money market investments held with financial institutions. During 2020 and 2019, the Corporation’s borrowings were denominated in the Namibia Dollar. The Corporation settled its variable interest rate loans, and replaced the amount with fixed interest rate bonds.

The Corporation analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Corporation calculates the impact on profit and loss of a defined interest rate shift.

Cash flow interest rate risk

` Financial instrument Current Due in lessDue in one to interest rate than a year two years Fixed term deposits 12 months 8.00 % 955,587,152 - Cash in current banking institutions 1.73 % 261,327,015 - Listed bonds 9.33 % 101,771,333 106,000,000

Fair value interest rate risk

` Financial instrument Current Due in less interest rate than a year Endowment policies 6.09 % 48,870,657

At the reporting date, the interest rate profile of the Corporation's interest bearing financial instruments was as follows:

Ratio of fixed interest rate financial instruments % % Financial assets 61 61 Financial liabilities 100 100 - -

Variable rate instruments Financial assets Financial liabilities

A sensitivity analysis to a change in interest rates has been performed based on the exposure to interest rates at the reporting date. For floating rate investments, the analysis is prepared assuming the amount of the investment outstanding at the reporting date was outstanding for the whole year. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonable possible change in interest rates. The sensitivity analysis assumes that all other variables remain constant and has been prepared on the same basis for the prior year.

If interest rates had been 100 basis points higher/ lower and all other variables were held constant, the Corporation's profit for the year ended 31 March 2020 would decrease / increase by N$ 3 000 000 (2019: N$ 6 075 000)

144 NamWater Integrated Annual Report

66 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to thenumber Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

33. Risk management (continued)

Credit risk

Credit risk is the risk that counter party will not meet its obligations under a financial instrument or customer contract leading to financial risk. The Corporation is exposed to this risk in cash deposits, cash equivalents and trade debtors.

The Corporation only deposits cash with major financial institutions with high quality credit standing and limits exposure to any one counter-party to a maximum of 30%.

Trade receivables are dominated (77%) by local and regional authorities and government ministries. Management evaluate credit risk relating to customers on an ongoing basis. Such evaluation mainly focuses on historical payment history of the customers, assisted by continuous meetings with the major debtors to get updated information about the customers. Whilst there are no credit limits set for customers in the above category, exposure to the customers is managed through a 60 days credit term policy. The utilisation of credit terms is regularly monitored, and reviewed in a management Debtors Committee.

A number of the customers had exceeded their credit limit. In addition to reviewing all other available information, management believes all those customers who had exceeded their credit limits, and the other information available also pointed to doubt in the collectability of the amounts owed, were fully provided for during the financial period.

Generally no collateral if held by the corporation to support future payments by the customers. For the desalinated water, the Corporation holds prepayments and payment guarantees as follows: (1) a prepayment for electricity charges equal to 1.5 times the month's invoice (2) a bank guarantee equal to 2 times the month's invoice and (3) a prepayment equal to 2 times the monthly invoice for the capacity and output payment.

The corporation believes that all the financial assets that are neither past due nor impaired is of such a good quality that the amounts will be collected in full on their due dates.

Financial assets exposed to credit risk at year end were as follows:

` Financial instrument Fair value through profit and loss 48,870,657 45,984,250 Trade receivables 374,622,600 311,552,106 Held to maturity investments 955,587,152 666,837,762 Cash and cash equivalents 261,327,015 244,468,995

The maximum exposure to credit risk for trade receivables by type of customer is: Treated water consumers Local & regional councils and government ministries 400,587,558 289,972,544 Mines 123,434,951 84,485,965 Domestic rural 449,856,606 400,364,105 Industries 26,259,630 26,016,482 Sundry debtors 83,500,398 132,739,762 1,083,639,143 933,578,858

The above balances are shown before impairments.

The following table shows the total number of active customers over the years:

Number of years Number of customers

0 - 4 years 16,291 21,934 5 - 10 years 20,934 15,866 > 10 years 14,721 10,638 51,946 48,438

Annual Financial Statements - 2019/20 145 67 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) AnnualNotes Financial to the Statements Annual forFinancial the year ended Statements 31 March 2020 (continued) Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

33. Risk management (continued)

The Corporation holds collateral for desalinated water customers. This collateral is required to support early payments that are required to the desalinated water supplier. The Corporation also has to issued collateral to the supplier.

The credit quality of customers whose balances are not yet past their due date nor impaired is considered of a high quality.

Prepayment 51,206,270 28,442,882 Bank guarantees - 29,118,487 Subtotal 51,206,270 57,561,369 Less: Bank guarantees in favour of Orano (44,472,000) (44,472,000) 6,734,270 13,089,369

Foreign exchange risk

The effect of foreign exchange risk is very limited as the Corporation has very limited transactions in foreign currencies with the exception of purchases of some pieces of spare parts, plant and equipment. At year end, the Corporation did not have any material balances in foreign currencies.

Price risk

The Corporation is indirectly exposed to equity securities price risk because of investments held by the Corporation and classified on the statement of financial position as at fair value through profit or loss. The Corporation is not exposed to commodity price risk. To manage its price risk arising from investments, the Corporation has only invested in capital protected investments which protects the initial capital amounts. On a periodic basis, the interest earned on these investments is divested and reinvested, in order to qualify for capital protection. Diversification of the portfolio is done in accordance with the 30% limit exposure to any one financial institution, set by the Corporation. All investments are done through financial institutions, in order to also increase the expertise of the parties involved in investment decisions.

No sensitivity analysis was done on the price risk as the Corporation does not deal directly in any equity instruments.

Excessive risk concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Corporation's performance to developments affecting a particular industry.

In order to avoid excessive concentrations of risk, the Corporation's policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risk are controlled and managed accordingly. The Corporation maintains an adequate cash buffer to be able to continue trading in any financial year, should any group of customers with similar characteristic not be able to honour their commitments to the Corporation. This amount for the year ended 31 March 2020 was set at N$ 225 million (2019: N$ 226 million).

34. Fair value information

Fair value hierarchy

The table below analyses assets and liabilities measured at fair value. The different levels are defined as follows:

Level 1: Quoted market prices in active markets for identical assets or liabilities that the corporation can access at measurement date.

Level 2: Inputs other than quoted market prices included in level 1 that are observable for the asset or liability either directly or indirectly.

Level 3: Inputs that are unobservable for the asset or liability. 146 NamWater Integrated Annual Report

68 Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED Notes(Registration to thenumber Annual 97/459) Financial Statements (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements Figures in Namibia Dollar 2020 2019

34. Fair value information (continued)

Levels of fair value measurements

Level 1

Recurring fair value measurements

Assets Note(s)

Financial assets designated at amortised cost 8 Endowment policies 48,870,657 45,984,250 Total 48,870,657 45,984,250

Level 2

Recurring fair value measurements

Liabilities Note(s)

Financial liabilities measured at amortised cost 13 Bonds issued (207,771,333) (207,771,333) Bank Loan: RMB (103,745,587) (243,745,587) Total financial liabilities measured at amortised cost (311,516,920) (451,516,920) Total (311,516,920) (451,516,920)

Endowment policies are valued utilising the indices for the portfolios where the funds are invested. Fair value of quoted investments in the portfolio is valued with reference to quoted market prices.

Level 3

Recurring fair value measurements

Assets

Liabilities Note(s)

Buildings and Water Schemes 4,689,821,670 4,723,167,045 - -

Details of the Corporations property, plant and equipment and information about the fair value hierachy as at 31 March 2020 Buildings Level 3 238,818,838 56,727,228 Water Schemes Level 3 - 799,876,831 238,818,838 856,604,059

Sensitivity Analysis

If the price per square meter decreases by 10% from N$ 9 500 to N$ 8 550, the building valuation would have decreased to N$ 214 936 954. If the price per square meter increase by 10% from N$ 9 500 to N$ 10 450, the building valuation would have increased to N$ 262 700 722.

Annual Financial Statements - 2019/20 147 69 Namibia Water Corporation Limited (Registration number 97-459)

Notes to the Annual Financial Statements (continued)

148 NamWater Integrated Annual Report Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED NA(RegistrationMIBIA number WA TER97/459) CORPORATION LIMITED Notes(RegistrationAnnual Financial to thenumber Statements Annual 97/459) Financialfor the year ended Statements 31 March 2020 (continued) Annual Financial Statements for the year ended 31 March 2020 Notes to the Annual Financial Statements NotesFigures in toNamibia the Dollar Annual Financial Statements 2020 2019

3734.. IFRSFair value 16 information (continued)

TheIf the Corporation replacement has cost assessed per cubic the impactmeter decreasesof IFRS 16 byand 10% will fromapply N$the 120modified to N$ prospective 108, the replacement transition approach. cost of theAlthough water itschemes, is concluded reservoirs that after would the have assessment decreased the to impactN$ 237 is 137 not 220. material For pipelines,to warrant the extensive replacement disclosure cost would for the have financial decreased year underto N$ review.449 600 The 000. value If the of price equipment per cubic identified meter underincrease the byapplication 10% from of N$the 120 IFRS to 16N$ is 132 leases the ofreplacement photocopiers cost which would can have be concludedincreased toas N$ below 289 materiality 834 380 for as reservoirs it is deemed and as N$ low 618 value 200 item.000 for pipelines. 38. Operating Expenses Total 238,818,838 856,604,059 Operating expenses for the year includes the following expenses: DepreciationTotal and Amortisation 398,446,508238,818,838 437,653,831856,604,059 Employee Costs 328,457,700 328,242,178 Utilities 338,036,953 322,536,323 Repairs and Maintenance 57,406,754 39,069,653 2017 1,122,347,915 1,127,501,985

Assets

Other Other 2 Total Property Plant and Equipment ft Please refer to accounting policy in 1.2 and note 4 for information about the valuation techniques and inputs used to derive the PPE valuation. a Property Plant and Equipment r Fair Value information (continued)

Please refer to accounting policy in 1.2 and note 4 for information about the valuation techniques and inputs used to derive the PPE valuation. D 35. Prior period error - IAS 8 Severance Pay Obligation

An acounting error of judgement was identified for the 2018 and 2019 financial year audit. The nature of the error was as a result of changing circumstances between initial recognition and the current practice dictating the recognition of the liability. The labour act makes provision for the liability to accrue conditionally at the age of 65. According to the NamWater HR policy, retirement of an employee occurs at the age of 60 hence by default the Corporation is not obliged to pay out severance to retired employees. As a result the retirement portion of the liability has to be eliminated out.

The total impact on the financial line items are demonstrated below:

2020 2019 2018 Decrease/(Increase) in deferred taxation (580,480) 65,920 12,524,160 Decrease/(Increase) in severance obligation liability 1,814,000 (206,000) (39,138,001) Total (increase)/decrease in liability 1,233,520 (140,080) (26,613,841)

2020 2019 2018 Increase/(Decrease) in OCI not classified through profit and loss (1,233,520) 140,080 26,613,841

36. Employee Costs 2020 2019

Annual Financial Statements - 2019/20 149

70 - 9 December 2020 - 12:44 71 Namibia Water Corporation Limited (Registration number 97-459)

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) AnnualDetailed Financial Income Statements Statement for the year ended 31 March 2020 Detailed Income Statement Figures in Namibia Dollar Note(s) 2020 2019

Revenue Water sales - Treated Water 1,170,949,661 1,135,332,812 Water sales - desalinated water 451,494,155 440,636,981 Interest received - debtors 1,819,650 2,994,094 Water sales - Untreated water 24,304,839 29,557,456 Water sales - Irrigation water 16,628,157 16,124,106 Capital Redemption 11,878,482 - 18 1,677,074,944 1,624,645,449

Cost of sales Purchases - Desalinated water (369,492,340) (360,899,554) Gross profit 1,307,582,604 1,263,745,895 Other operating income Other rental income 3,921,138 3,779,841 Insurance proceeds 351,288 529,637 Capital redemption 33,103,639 31,620,039 HRDC, Laboratory and other income 29,467,198 55,903,562 Interest received 99,055,843 95,146,240 Profit on sale of assets 1,041,263 686,251 28 166,940,369 187,665,570

Other operating expenses Advertising and community outreach (2,380,246) (2,029,815) Amortisation (23,208,746) (23,556,635) Auditors remuneration - external auditors 19 (738,547) (762,619) Bad debts (75,492,342) (90,380,306) Bank charges (2,313,826) (1,982,997) Consulting and contractor fees (6,963,185) (6,823,304) Courier services (1,719,025) (1,637,841) Depreciation (375,237,762) (414,097,196) Directors fees (excluding expenses) (3,061,883) (3,431,470) Employee costs (338,206,877) (328,242,178) Entertainment & refreshments (1,210,167) (2,428,272) Fleet services (34,358,020) (32,778,326) Insurance (4,810,760) (4,595,308) Legal expenses (854,519) (678,858) Materials and supplies (37,647,105) (38,509,871) Miscellaneous expenses (4,541,440) (4,083,961) Post employment benefits (24,168,198) (31,519,969) Printing and stationery (3,775,861) (2,336,090) Property charges (2,112,846) (1,482,125) Recoupment of internal charges & project costs capitalised (9,573,417) (2,873,652) Repairs and maintenance (57,538,027) (39,069,653) Security (7,235,316) (6,404,926) Subscriptions (6,471,807) (5,094,093) Training courses (1,578,289) (3,001,906) Travel subsistence and accommodation (9,989,166) (11,913,986) Utilities (338,110,169) (322,916,951) (1,373,297,546)(1,382,632,308) Operating profit 19 101,225,427 68,779,157 Finance costs 21 (32,995,968) (54,068,478)

The supplementary information presented does not form72 part of the annual financial statements and is unaudited. 150 The supplementary information presented does not form part of the annual financial statementsNamWater and Integrated is unaudited Annual Report Annual Financial Statements for the year ended 31 March 2020

NAMIBIA WATER CORPORATION LIMITED (Registration number 97/459) DetailedAnnual Financial Income Statements Statement for the year (continued) ended 31 March 2020 Detailed Income Statement Figures in Namibia Dollar Note(s) 2020 2019

Profit before taxation 68,229,459 14,710,679 Taxation 16 (69,312,274) 14,352,573 (Loss) profit for the year (1,082,815) 29,063,252

The supplementary information presented does not form part of the annual financial statements and is unaudited. Annual Financial Statements - 2019/20 151 73 The supplementary information presented does not form part of the annual financial statements and is unaudited Namibia Water Corporation Limited (Registration number 97-459)

Appendix A Dam Levels

% Content of Hardap, Naute and Oanob dams 120 Hardap Naute Oanob 100

80

60 % CONTENT

40

20

0 26/03/2019 25/04/2019 25/05/2019 24/06/2019 24/07/2019 23/08/2019 22/09/2019 22/10/2019 21/11/2019 21/12/2019 20/01/2020 19/02/2020 20/03/2020 19/04/2020

% Content of Bondels and Dreihul Dams

120 Bondels

Dreihuk 100

80

% Content 60

40

20

0 01/04/2019 15/04/2019 29/04/2019 13/05/2019 27/05/2019 10/06/2019 24/06/2019 08/07/2019 22/07/2019 05/08/2019 19/08/2019 02/09/2019 16/09/2019 30/09/2019 14/10/2019 28/10/2019 11/11/2019 25/11/2019 09/12/2019 23/12/2019 06/01/2020 20/01/2020 03/02/2020 17/02/2020 02/03/2020 16/03/2020 30/03/2020

152 NamWater Integrated Annual Report Annual Financial Statements for the year ended 31 March 2020

% Content of Calueque and Olushandja dams

70 Calueque Olushandja 60

50

40

% Content 30

20

10

0 01/04/2019 15/04/2019 29/04/2019 13/05/2019 27/05/2019 10/06/2019 24/06/2019 08/07/2019 22/07/2019 05/08/2019 19/08/2019 02/09/2019 16/09/2019 30/09/2019 14/10/2019 28/10/2019 11/11/2019 25/11/2019 09/12/2019 23/12/2019 06/01/2020 20/01/2020 03/02/2020 17/02/2020 02/03/2020 16/03/2020 30/03/2020

% Content of Otjivero Main & Silt and Daan &Tilda Viljoen and dams 100

90 Otjivero Main Otjivero Silt 80 Daan Viljoen 70 Tilda_Viljoen

60

50

% Content 40

30

20

10

0 01/04/2019 15/04/2019 29/04/2019 13/05/2019 27/05/2019 10/06/2019 24/06/2019 08/07/2019 22/07/2019 05/08/2019 19/08/2019 02/09/2019 16/09/2019 30/09/2019 14/10/2019 28/10/2019 11/11/2019 25/11/2019 09/12/2019 23/12/2019 06/01/2020 20/01/2020 03/02/2020 17/02/2020 02/03/2020 16/03/2020 30/03/2020

Annual Financial Statements - 2019/20 153 Namibia Water Corporation Limited (Registration number 97-459)

% Content of Friedenau, Goreangab and Nauaspoort dams

120

100

Friedenau 80 Goreangab

Nauaspoort 60 % Content

40

20

0 01/04/2019 15/04/2019 29/04/2019 13/05/2019 27/05/2019 10/06/2019 24/06/2019 08/07/2019 22/07/2019 05/08/2019 19/08/2019 02/09/2019 16/09/2019 30/09/2019 14/10/2019 28/10/2019 11/11/2019 25/11/2019 09/12/2019 23/12/2019 06/01/2020 20/01/2020 03/02/2020 17/02/2020 02/03/2020 16/03/2020 30/03/2020

% Content of Swakoppoort, Von Bach and Omatako dams 120

Swakoppoort 100 Von Bach

Omatako 80

60 % CONTENT

40

20

0 31/03/2019 30/04/2019 30/05/2019 29/06/2019 29/07/2019 28/08/2019 27/09/2019 27/10/2019 26/11/2019 26/12/2019 25/01/2020 24/02/2020 25/03/2020

154 NamWater Integrated Annual Report Annual Financial Statements for the year ended 31 March 2020

% Content of Omaruru Delta and Omatjenne dams

18 Omaruru_Delta 16 Omatjenne

14

12

10

8 % Content % 6

4

2

0 01/04/2019 15/04/2019 29/04/2019 13/05/2019 27/05/2019 10/06/2019 24/06/2019 08/07/2019 22/07/2019 05/08/2019 19/08/2019 02/09/2019 16/09/2019 30/09/2019 14/10/2019 28/10/2019 11/11/2019 25/11/2019 09/12/2019 23/12/2019 06/01/2020 20/01/2020 03/02/2020 17/02/2020 02/03/2020 16/03/2020 30/03/2020

Annual Financial Statements - 2019/20 155 Notes

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156 NamWater - 2019/20 Notes

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Integrated Annual Report - 2019/20 157 INTEGRATED ANNUAL REPORT

172 Iscor Street + 264 61 710 000 Northern Industrial Area [email protected] Windhoek www.namwater.com.na