RAND WATER INTEGRATED RESULTS For The FINANCIAL YEAR ENDED 30TH JUNE 2017 1 RegulatoryAgenda Framework Welcome Strategic Financial Looking Vote of Update Performance forward Thanks 2 Strategic Update Chief Executive: Percy Sechemane 3 About Rand Water Nature of business Vision Rand Water is the largest bulk water utility in Africa and is one of the largest in the world, providing bulk potable water to more than 12 million people in To be a provider of sustainable, universally competitive water and sanitation Gauteng, parts of Mpumalanga, the Free State and North West – an area that solutions for Africa. stretches over 18 000 km2. Additional 13 000 km2 in the Western Highveld On 15th April 2013, the Institutional Reform and Realignment process was Mission approved and announced . The important conclusions were To deliver and supply world class affordable, reliable, and good quality water • The number of water boards were reduced from twelve to nine and related services to all stakeholders through: • Rand Water took over the BBR area of service • Safe, efficient transport, sustainable and innovative business practices; Rand Water draws water from its catchments and purifies it for human • Empowered employees; consumption. The water is then supplied / sold to Municipalities, mines and industries. • Mutually beneficial strategic relationships; and Water sources • Legislative compliance and best practice. Since 1974, the Tugela-Vaal scheme has fed water into the Vaal River to Key statistics supplement its supply. This is done by inter-basin transfer of water from the Tugela River in KwaZulu-Natal. Rand Water is a public utility wholly owned by government (DWS) . Rand Water has been in existence for 114 yrs The Lesotho Highlands Water Project (LHWP) also transfers water to the Vaal . Bulk Water supplier - 4414 Mℓ/d Dam. This entire project comprises six dams and three pumping stations. The first phase of the LHWP was completed in 1998 and is designed to meet the . Total Pipeline Length - 3 500 km demand for water in Gauteng up to the year 2020. Total Number of Reservoirs - 58 1903: 1913 – 1998: The Rand Water Board 1886: was officially Major development schemes Scarcity of water established after the are undertaken to respond to during the peace agreement demand. Developments such as discovery of gold in between the British the Vaal River Scheme, the Vaal the Witwatersrand government and the Dam, Zwartkopjes pumping posed a problem. Boer Republics. station and the Lesotho Highlands Project 1905: 2014: 1893: Rand Water - Take over of the operations of Small private commences with full the former BBR operations, providing companies began - Takeover of regional bulk bulk water to the supplying water. infrastructure in Mpumalanga Witwatersrand area. 4 Strategic and Operational Overview Alignment To National Government Objectives PRESIDENCY Achieve operational integrity and use best Honourable Minister fit technology National Treasury National Department Auditor General National Parliament Shareholder Compact Corporate Business Plan Maintain financial Achieve a high health and Rand Water Strategy Reporting Formats sustainability performance culture Vision Annual Report Mission Annual Assessment of Water Boards Strategic Objectives KPAs Quarterly Reports KPIs Positively engage Achieve growth Rand Water’s operating model re-evaluated to :incorporate: stakeholder base • Alignment to Innovation hub • The Innovation policy was approved by Board in February 2016 • Innovation programs will be assisted by newly approved piloting policy • Partnership with the Dept. of Science & Technology to be at the cutting edge of technological innovation • The Innovation Hub remains critical in the search for new ideas 5 Strategic Themes • Improved operational reliability and performance continues • Operating model provides solid foundation • Balance sheet has sufficient flexibility to fund growth plans • Capital projects development and execution critical focus area • Capital expenditure projected to increase over the next 5 years • Ministerial Directives – Rand Water is actively • Delivering continued & sustained involved in undertaking a number of Directives, shareholder value working closely with the Honourable Minister • New auditors of the organization since October 2016 - Auditor General of South Africa 6 Added Value QUALITY MANAGEMENT SYSTEMS MAINTAINED CERTIFICATION Corporate ISO 9001:2000 - OHSAS 18001:2007 - Laboratories ISO 17025 - Corporate ISO 14001:2004 ACHIEVED DIFR OF 0.29 AGAINST A TARGET OF 0.34 RELIABILITY OF SUPPLY Met peak daily demands and abided to Bulk Water Supply Contracts OCCUPATIONAL, SAFETY, HEALTH & ENVIRONMENT Embedded in our project management processes BLUE DROP CERTIFICATION Increased awards during the year & special recognition for helping Municipalities achieve their Blue Drop Status PRODUCT QUALITY Product Quality - Consistently maintained the national drinking water standard and delivery to customers on the SANS 241 Class 1 and 2 specification. 7 Added Value ATTAINED AN UNQUALIFIED AUDIT OPINION FINANCIAL CAPITAL Strong improvement in operating margins and returns in excess of the weighted cost of capital ATTAINED BBBEE of 95% AGAINST TARGET OF 85% CUSTOMER CENTRIC APPROACH SATISFACTION RATE OF 85% ACHIEVED 84.4 % OF PERFORMANCE TARGETS AS SET OUT IN THE SHAREHOLDERS COMPACT JOB CREATION 238 permanent & contract & 6 021 direct/Indirect temporary jobs created 8 Rand Water Academy Presidential Outcome 5: SKILLS - A skilled and capable workforce to support an inclusive growth path Rand Water Academy Pillars: Research Platforms | Centre of Excellence | Centre of Competence | International Water Professionals Exchange Hub | WAT/SAN Solutions NATIONAL TREASURY GRADUATE INTERNSHIP PROGRAMME WAR ON LEAKS PROGRAMME MPUMALANGA SKILLS AUDIT Graduate Intake A skills audit has been completed in the Mpumalanga (NT 2, NT 3 & NT 80) province as part of the Rand Water’s Master Plan in the 90 Extended Area of Operations. 80 70 80 60 ACADEMY INTERNATIONAL FOOTPRINT 50 40 28 30 20 17 10 9 11 7 8 0 Total INTERNATIONAL NETHERLANDS UNESCO IHE OFFICE FOR WATER Engineers WATER PARTNERSHIP Town PlanningTown Quantity Survey Quantity Systems Natural Sciences Natural Management Construction Construction Project Geographic Information Geographic RURAL DEVELOPMENT GRADUATE INTERNSHIP PROGRAMME Current Trainee Headcount Initiated a project with UNESCO – IHE to implement a Graduate Intake 5000 4294 FIPAG Academy for Professional Development in Water (RD 1, RD 2 & RD 3) 4000 and Sanitation in Mozambique ( Maputo). 3000 2313 Total 28 2000 1477 ACADEMY LOCAL FOOTPRINT 997 Legal 3 675 1000 225 Engineering 3 0 Information… 4 Phase 1 Phase 2 Process Controller 10 Artisans Water Agents Plumbers Government Statutory Municipalities Mines Human Resources 5 Departments Bodies Finance 3 Current Headcount: 9 981 Trainees 0 10 20 30 Phase 1 = 2699 Graduate Intake Phase 2 = 7282 9 RandRedemptionWater FoundationReserve Policy and Requirements Water and Sanitation Projects Environment Conservation Projects • Schools Sanitation and Water Supply • Rehabilitation of Wetlands • Schools Rainwater Harvesting • Clearing of Alien Vegetation • Rural and Urban Landscaping and Greening • Water Demand Management & Initiatives Conservation • Expanded Public Works Programme Land Care • Household Sanitation - Bucket Eradication Education and Training Programme • Rural Communities Water Supply • Back to School Education Support Project • Municipal Capacity Building • Early Childhood Development Support • Training on : Operations and Maintenance of • Adopt-a-Learner Study Support Grant • The National Curriculum Support and Waste Water Treatment Plants Schools Mobile Libraries Enterprise Development Projects • High School Career Guidance Health, including HIV, and AIDS projects • Business Start –Up Project • Business Incubation Project • Community Home Based Care • The Business Information and • Community Based Health Awareness Raising Project • Infrastructure Development Support • Business Partnerships Development • School Based Health Education and Awareness Raising on HIV and AIDS 10 RegulatoryPerformance Framework Snapshot • Social: Continuous Water supply, Sanitation solutions, RWA, RWF & CSR initiatives as well as job creation and capacity building. Triple • Environmental: Blue & Green drop standards achieved, Environmental conservation Bottom line programs; Water Catchments, Wetland rehabilitation • Economic: YOY increases; Revenue 8%, Gross income 12%, Net income 11%, Cash Reserves of R805m and Capital spent R2.5bn • A long and healthy life for all South Africans - Uninterrupted supply of quality water for over 24 hours. System stabilised and energy management initiatives enhanced Presidential after the interruptions experienced in September 2014. Outcomes • Skilled and capable workforce: Rand Water Academy, Capacity building and Job creation • Efficient local government system: Rand Water Mpumalanga • Implementing Agent on behalf of Municipalities or Government Departments • Institutional Realignment Shareholder • Enhanced quality and quantity of water resources; Water demand management and Acid mine drainage Compact • R2.5 bn spent on ensuring the maintenance and supply availability of our bulk water infrastructure • Implemented projects amounting to R124m on behalf of National Departments & Local Authorities 11 Financial Performance Chief Financial Officer : Matshidiso Nyembe 12 Salient Features - Highlights • Change in accounting framework – transition to IFRS from