To leadership Chairperson’s Message It gives me great pleasure to reflect on the performance a demonstration of Rand Water’s commitment to the of Rand Water for the financial year ended 30 June 2008. realisation of government objectives. Rand Water has continued to play a strategic role in ensuring the assurance of bulk water supply within our Furthermore, the feedback received from our stake- service area. This has significantly contributed to economic holders better equipped us to effectively align and growth in our area of service. co-ordinate Rand Water’s activities to those of DWAF within the framework of the Institutional Realignment The year under review has been filled with many chal- (IR) programme. lenges. Despite the challenges presented by, among other issues, climate change, Rand Water has increased its rev- The expression of an unqualified opinion of Rand Water’s enue through the efficiencies brought into its operations. financial statements by the external auditors is indica- The comparatively good rains, coupled with effective water tive of Rand Water’s commitment to good governance. conservation and demand management, also contributed Where incidents breaching sound governance princi- to the favourable cost of sales Rand Water enjoyed. ples were uncovered, appropriate actions were taken. However, this should not in any way engender a sense Rand Water reinvests part of its revenues in communities of complacency in Rand Water, as there is still room for through the Rand Water Foundation, a Section 21 com- further improvement. pany and a vehicle established to carry out our corporate social responsibility (CSR) efforts. Rand Water has adopted the “business unusual” ap- proach to the way we conduct our affairs and has insist- The increased revenue will enable Rand Water to invest in ed on the effective application of resources in pursuit of a maintaining and upgrading ageing infrastructure, thereby sustainable bulk water supply as our primary mandate. guaranteeing a sustainable supply into the future. Rand Water’s investment outlay during the reporting period has I would like to take this opportunity to express my mitigated the risk of infrastructure failure. gratitude to our Honourable Minister of Water Affairs and Forestry for her proactive intervention, which led to the Rand Water has succeeded in keeping its tariff below the exclusion of the water boards from Eskom’s load shedding consumer price index (CPIX). This bodes well for support- programme. The increase in the price of electricity, which ing the government’s poverty alleviation efforts through a is our major input cost, has had a negative multiplier effect stable tariff structure with guaranteed predictability. on the overall cost of water production by Rand Water. However, the organisation has absorbed this increase Stakeholder interaction has enriched the quality without imposing a further burden on our customers. of decisions about the priorities and needs of our stakeholders, including our major shareholder, the On the international level and in support of the Govern- Department of Water Affairs and Forestry (DWAF) and ment’s New Partnership for Africa’s Development (NEPAD), the Portfolio Committee on Water Affairs and Forestry. Rand Water participates in a joint venture with a Dutch To this end, Rand Water has raised its Black Economic company through our subsidiary, Rand Water Services Empowerment (BEE) target from 65% to 70%. This is (Pty) Ltd (RWS) in Ghana. We remain committed to this 8 Rand Water Annual Report 2008 programme through our participation and Rand Water will ensure that value for money (VFM) is derived from participation in this programme. In addition to this, Rand Water will be hosting the Secre- tariat for the regional Water Operators’ Partnership (WOP) at the request of the African Water Association (AFWA). The project is supported by the World Bank, UN Habitat and the International Water Association (IWA). The objec- tive of WOP is to assist the water utilities to contribute to the achievement of their country-specific targets and the Millennium Development Goals (MDGs). Apart from being accorded this honour, Rand Water received several accolades for work completed during the year under review. These include the Water Wise Educa- tion team winning the overall International Water Associa- tion Marketing and Communications Award, as well as the category for the best school information programme. May I, as I conclude, take this opportunity to express my gratitude to the Acting Chief Executive, the management and my colleagues on the Board for their invaluable contributions during the year. I also acknowledge with appreciation the leadership and guidance provided by the Honourable Minister of Water Affairs and Forestry through her department and the Portfolio Committee on Water Affairs and Forestry. Lastly, I would like to thank all our valued customers, stakeholders and other industry partners for their invalu- Jean Ngubane able contribution to Rand Water’s continued growth and success. Chairperson, Rand Water J Ngubane “Safe drinking water and adequate sanitation are crucial for poverty reduction, crucial for sustainable development, and crucial for achieving any and every one of the Millennium Development Goals.” – United Nations Secretary-General Ban Ki-Moon, during an address given on 24 October, 2007. Chairperson Of The Board Rand Water Annual Report 2008 9 Acting Chief Executive’s Report It gives me great pleasure to report on yet another We are also keen to do more in the rest of Africa, where The debt-to-equity ratio is 18% and has reduced by successful year for Rand Water – the year ended the funding shortage is more serious than the skills 14% year on year. 30 June 2008. shortage. We are ideally positioned to do this, as our fellow Africans have more of an affinity with Rand Water These results were achieved in a scenario in which I find it very encouraging to see how this organisation and its employees than with offshore industry players. Rand Water provided more than 3653 million litres of performed during this financial year. I was also water every day, on average, generating R4,3 billion in encouraged by my visit to our operation in Ghana, Financial performance revenue as a result. This is almost R200 million more Here’s to a life which shows what we can achieve by becoming A large part of this annual report deals with the financial than last year’s revenue of R4,1 billion and reflects a in which Rand involved in African countries other than our own. aspects of Rand Water’s sustainability, and I am pleased 3,8% growth in sales. to present a set of financials that indicates a healthy Water finds For 105 years, Rand Water has pursued and achieved position in this regard. I am proud of and encouraged by Rand Water’s healthy excellence in providing the water needs of its distribution balance sheet, as it is vital for sustainable success in any new and sus- area in a sustainable way. This year was no exception. Without a solid financial performance, Rand Water capital intensive, technology focused sector – such as would be in danger of being unable to fulfil its mandate the water sector. This is particularly so because we have tainable ways Rand Water is well aware that sustainability in in the current growth scenario – especially as South to be able to deal with any unexpected events – the managing and providing water, the ultimate shared Africa is the 30th driest country in the world and Rand likelihood of which is increasing as climate change to serve the resource, requires a holistic approach. Water serves the only major metropolis worldwide to be feeds unpredictability into the water supply worldwide. needs of those established well away from any significant water source. We need to achieve the kind of financial results that will Our ability to deal with that unpredictability is crucial, who share a make it possible to grow and maintain our operations Therefore it is encouraging that Rand Water’s surplus because there can be no life – and certainly no in future, while also having due regard for the rose by 8,75%, without having to raise tariffs beyond economic progress – without water. It is this reality that need for life- environment and the challenges of climate change and 5,6% – way below inflation. This puts us in a position underpins our choice of theme for this annual report: the need to draw the poorest of the poor into the body to continue expanding our service to those who need “To life”. Without water, none of us would have any giving water. of those who can depend on a clean water supply and it most, while remaining profitable enough to engage successes to toast. hygienic living conditions at an affordable price. in vital maintenance and expansion projects. An appropriate response to the market is essential, as we operate in a developing country. We are showing We have consistently success in transforming our operations to continue invested in people and excelling in the areas on which we have historically equipment, so there is concentrated, while expanding into those that will help no danger to the water us to improve our revenue streams. We also seek to supply in Rand Water’s address the challenges emanating from poverty in our area of distribution in the distribution area. short to medium term. By maintaining financial To this end, we are actively pursuing our mandate to health, we equip provide both bulk potable water and bulk sanitation, ourselves to continue as well as to find industrial water solutions. Rand Water along this sound aims to become a credible commercial development development partner for the government in its efforts to provide better path to avert a water living circumstances for the bulk of its citizens.