mhlathuze water board 1. graphical area of supply 2
TRANSCRIPT
MHLATHUZE WATER BOARD
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GRAPHICAL AREA OF SUPPLY
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OVERVIEW OF THE WATER BOARD
Mhlathuze Water (MW) area of supply covers some 37,000km² stretching from uThukela River in the south and up to East Coast to Mozambique and Swaziland borders, around Vryheid and back to the uThukela River.
MW operational area covers 4 WSA’s in KZN: uMkhanyakude District Municipality Zululand District Municipality uThungulu District Municipality uMhlathuze Local Municipality
Supply Bulk Water and Sanitation services to Industries & Water Services Authorities in its area of operation
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SHC 2014/2015
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Performance Objective
Outcomes/Impact
Indicators Measure Target2014/15
Actual 14/15
Comments/Corrective Action
1. Water Quality
Compliance
Water quality standards met
Test results, SANS 241
% compliance Risk-defined health - ≥95% Risk-defined operational - ≥93% Accute Health - 1 Micro - ≥97% Accute Health - 1 Chem - ≥97% Chronic Health - ≥95% Aesthetic - ≥93%
100% 99.7%100%100% 100% 100%
Target exceeded.Target exceeded.Target exceeded.Target exceeded.Target exceeded.Target exceeded.
2. Non-Revenue Water
Reduced levels of unaccounted for water (UAW)
Water lost as a % of total water produced
% <5% 1.82% Target met.
3. Reliability of supply
No unplanned interruptions to supply exceeding 24 hours
% number of days supply disrupted divided by total number of possible supply days
% <1% 0% Target met.
4. Financial Reporting Compliance
unqualified audit report
Annual external audit
Qualified/Unqualified
Unqualified Audit Opinion Unqualified (Clean Audit)
Target met
5. Staff Turnover
Optimal staff retention
% staff leaving % 8%(2% is the quarterly target)
5.26% Target exceeded.
6. Board Member Attendance
Improved performance of fiduciary duties/governance
Annual attendance
% 80% 81.8% Target met.
SHC 2014/2015 continue
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Performance Objective
Outcomes/Impact
Indicators Measure Target2014/15
Actual 14/15
Comments/Corrective Action
7.Effective Internal Controls And Risk Management
No repeat or unresolved findings
Internal audit reports
Number repeats No repeats findings
No repeats findings
Target met
Number unresolved
No unresolved findings
No unresolved findings
Target met
8. Bulk Supply Agreements Concluded With Municipalities/ Other Customers
Statutory and service level agreements in place
Municipalities/other customers with bulk supply agreements
% 100% 100% Target met.
9. Improve Financial Ratios
Improved viability and sustainability
Financial ratios
Liquidity 1.60 1.88 Target exceeded
Gross profit margin % (Primary Activities)
84% 84% Target met.
Gross profit margin % (Secondary activity)
11.8% 20.60% Target exceeded
Net profit margin % (primary activity) 14% 21.6% Target exceeded
Debt/ Equity ratio 0.47 0.45 Target metReturn on assets % 8.2% 9.00% Target exceeded
Debtors days # 45 days 34.98 Target exceeded
SHC 2014/2015 continue
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Performance Objective
Outcomes/Impact
Indicators Measure Target2014/15
Actual 14/15
Comments/Corrective Action
10. Increase BBBEE Spend
Spend increased and increased new entrants
% of spend increased and # of increased new entrants
% increase Maintain above 51% of discretionary spend
60% Target exceeded
# new entrants
20 new entrants 98 Target exceeded
11. Manage Costs Within The Approved Budget
No over expenditure/losses
Financial reports % variance 5% (over/under budget) 2% over budget
Within target
12. Capital Expenditure
Infrastructure available to meet demands
Overall project expenditure within R target
% variance 75% spent
84.79% Target met.
Overall project completion dates within targets
% variance 80%(20% quarterly target)
90% Target exceeded.
13. Increased access to Services
Contribution to national objectives
No. of new projects
No. of new projectsDOE & DBE
DWS
DEA
144 (based on the number of schools)
15
3
76 DOE
15
3
Target not met.39 DOE projects were cancelled due to the fact that the budget was retracted by DOE. Target met.
Target met.
SHC 2014/2015 continue
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Performance Objective
Outcomes/Impact
Indicators Measure Target2014/15
Actual 14/15
Comments/Corrective Action
14. Engagement in Secondary Activities
Extent of involvement
% of total turnover
% of total turnover
63% 61% Target not met due to the external work that was suspended by DOE.
15. Achieve Statutory Reporting Compliance
Reporting compliance achieved
Statutory submissions made on time
Submission dates met/missed
Submission dates met
3rd Quarterly Report submitted on 14 May 2015 (deadline 15 May 2015).Business Plan and Shareholder Compact submitted on 28 May 2015 (deadline 31 May 2015).
Target met.
16. Jobs Created Permanent and contract (direct)
Total Number of jobs created
Number
5
118 Target exceeded.(Due to the transfer of CoU Staff)
Temporary (indirect)
Total Number Number 500(quarterly
target is 125)
768 Target exceeded.
17. Corporate Social Responsibility Initiatives
Good corporate citizenship
Number of initiatives
Number and and value
At least 9 initiatives for
R1.2 m 14 initiatives to the value of R1 145 564
Target exceeded.
18. Training And Skills Development
Skills and capacity building
Training courses, learner-ships, bursaries
Total Number of training, learnership and bursaries
108(quarterly
target is 27)
118 Target exceeded.
Financial Performance 2014/2015 Bulk water volumes increased by 21% mainly due to the increase in
raw water volumes. (RBM and City of uMhlathuze (Esikhaleni) and the increase in potable water supply to the City of uMhlathuze for Richards Bay.
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Financial Performance 2014/2015 Although the tariffs for the all the schemes shows a downward
trend for the past five years, revenue increased overall by 44% generated from better than expected bulk water volume sales. This resulted from the drought situation in KwaZulu Natal, whereby Mhlathuze Water was in a position to supply the City of uMhlathuze with water from the Mhlathuze River and Nsezi Water Treatment Plant.
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Financial Performance 2014/2015 Mhlathuze Water has maintained strong operating surpluses.
Overall, the surplus for the year of R89,9 million (2014: R79,1m) reflects an increase of 14% from the previous year.
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CAPITAL EXPENDITURE 2014/2015 Capital expenditure increase by 9% from the previous year. The three major projects that contributed to the increase are:
– Nsezi Balancing Reservoir (20ML) - R17 million– City of uMhlathuze Pump upgrade - R56 million– Re-route B-line to C-line - R12 million
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Audit Opinion 2014/2015 KPMG Inc. were appointed for the 2014/2015
financial year audit. Annual financial statements were prepared in
accordance with SA GAAP, the relevant provisions of Water Services Act in a manner required by PFMA.
MW received a Unqualified (Clean) Audit Opinion for the 2014/2015 year.
All internal controls were considered as relevant.
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1st Quarter 2015/2016Performance on Key Strategic Objectives:
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Performance Objective
Outcome/ Impact
Indicators/ Calculation
Measure Performance Targets CommentsTarget
2015/16Target
Quarter 1
Actual Quarter
1
Variance
1 Bulk potable water quality
compliance
Water quality standards met
Test results, SANS 241
Class 1:Class 2:
% compliance 95% 95% 100% 5% Target exceeded
2 Manage avoidable
water losses
Reduced avoidable water
losses in treatment and
distribution systems
Avoidable water lost as a percentage of water produced
% <5% <5% 3.80% -1.2% Target met
3 Reliability of supply
No unplanned interruptions to
bulk supply exceeding 24
hours
Number of days supply interrupted as a % of possible
supply days
% <1% <1% 0% 1% Target exceeded
4 Increased access to Services
Contribution to national
objectives of extending services
Actual CAPEX spend on expansion
related projects (initiatives by the Minister) as % of
budget
% 80% 20% 17% -3% Target not met.
Performance on Key Strategic Objectives:
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Performance Objective
Outcome/ Impact
Indicators/ Calculation
Measure Performance Targets CommentsTarget
2015/16Target
Quarter 1
Actual Quarter
1
Variance
5 Financial reporting compliance
Unqualified audit report
Annual external audit Unqualified report with no matters of emphasis (Clean Audit)
Unqualified report with no
matters of emphasis
(Clean Audit)
N/A N/A N/A Annual Target
6 Improve key financial ratios
Improved viability and sustainability
Current Ratio Ratio 1.60 1.59 1.95 0.36 Target exceededGross profit margin % (primary activity)
% 78% 79% 85% 6% Target exceeded
Gross profit margin % (secondary activity)
% 6% 12% 25% 13% Target exceeded
Net profit margin (primary activity)
% 13% 14% 24% 10% Target exceeded mainly due to savings on other operating expenses
Net profit margin (secondary activity)
% 1% 1% -1% -2% Target not met, mainly due to IA fees o/s from DWS due to VAT issue - resolved in Sep, expect payment in Oct. Delay in payment on RBIG projects.
Debt equity % 0.37% 0.37% 0.44% -0.07% Target not met, expected to improve when capital payments are due in Nov, Dec, May and June.
Return on Assets Ratio 7% 7% 9% 2% Target exceeded
Debtors days Number 45days 42 days 38 days 4 days Target exceeded
Repairs and maintenance as % of PPE and
% 3% 0.75% 0.33% -0.42% Target - 1.5% of maintenance cost against the PPE value of R658 million is expected to be spend at end of Dec 2015.
Staff remuneration as % of total operating expenditure
% 13% 12% 13% 1% Target met
Performance on Key Strategic Objectives:
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Performance Objective Outcome/ Impact Indicators/ Calculation
Measure Performance Targets CommentsTarget 2015/1
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Target Quarter
1
Actual Quarter
1
Variance
7 Increase BBBEE expenditure in relation to operational projects
Spend increased and increased new entrants awarded contracts in the financial year
Spend % achieved 51% 51% 81% 30% Target exceeded
8 Manage costs within the approved budget
Actual expenditure compared with budgeted epxenditure for the quarter
Financial reports % increase 5% 5% 4% -1% Within target - increase in energy cost, more pumping is required due to drought in the KZN area.
9 Capital expenditure programme
Infrastructure available to meet demands
Overall project expenditure within R target
% variance 80% 20% 14% 6% Target not met, expenditure is expected to improve in the 2nd quarter, as a lot of projects are in progress.
Overall project completion dates within targets
% variance 85% 21% 30% 11% Target exceeded.
10 Engagement in secondary activities
Growth in turnover from secondary (other activities)
% of total turnover
% 54% 54% 58% 4% Target exceeded
11 Bulk supply agreements concluded with municipalities/other customers
Statutory and Service Level Agreements in place
Municipalities/Other Customers with bulk supply agreements
% 100% N/A N/A N/A Annual Target
Performance on Key Strategic Objectives:
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Performance Objective
Outcome/ Impact Indicators/ Calculation
Measure Performance Targets CommentsTarget
2015/16Target
Quarter 1
Actual Quarter
1
Variance
12 Implementation of Ministerial directives
New Ministerial directives issued are implemented on time
Progress against implementation plan
% 80% N/A N/A N/A Annual Target
13 Support Rural Development Total Number of
identified rural Municipalities supported
Signed contracts, MOUs etc
Number 2 N/A 1 1 Target met
14 Achieve statutory reporting compliance
All statutory reports submitted on time
Submission dates met
% 100% 100% 100% 0% Target met.
15 Staff levels Optimal staff retention
Staff turnover % 8% 2% 0.37% 1.30% Target met.
16 Training and Skills Development
Skills and capacity building
Learnerships Number 12 3 11 8 Target exceeded
Bursaries employees
Number 25 6 7 1 Target exceeded
Graduate Programmes
Number 4 1 2 1 Target exceeded
Performance on Key Strategic Objectives:
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Performance Objective
Outcome/ Impact Indicators/ Calculation
Measure Performance Targets Comments
Target 2015/16
Target Quarter
1
Actual Quarter
1
Variance
17 Jobs Created Permanent and contract (direct)
Total number Number 5 1.25 1.00 (0.25) Target not met
Temporary (indirect)
Total number Number 200 50 135 85 Target exceeded.
18 Board Effectiveness
Improved performance of fiduciary duties/governance
Board Member attendance of all Board/committee meetings
% 80% 80% 63.6% -16.4% Target not met.
Decision making: % number resolutions taken by the board vs number of resolutions required
% 80% 80% 84.6% 4.6% Target exceeded
19 Effective Internal Controls and Risk Management
Internal audit findings dealt with
Internal audit reports Number of repeat findings
3 N/A N/A
N/A
Q1 audit is scheduled to start on 02 November 2015
Number of unresolved findings
3 N/A N/A N/A
Q1 audit is scheduled to start on 02 November 2015
Performance on Key Strategic Objectives:
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Performance Objective
Outcome/ Impact Indicators/ Calculation
Measure Performance Targets
Comments
Target 2015/16
Target Quarter
1
Actual Quarter
1
Variance
20 Good Governance
Improved controls and risk mitigation
Breaches of materiality and significance framework
Number <5 N/A N/A N/A Annual Target
21 Corporate Social Responsibility Initiatives
Good corporate citizenship
Number of initiatives undertaken
Number 5 1.25 1 0 Target not met. Four initiatives approved in the 1st quarter to be implemented in the 2nd quarter.
22 Health and safety within working environment
Reduced number of disabling injuries
Reduced number of disabling injuries
Number 1.75 0.38 1.37 Within target
External Project-CAPEXJozini bulk supply
Project budget summary Approved budget
R2,074billion R980million - Bulk Only (DWS)
R74million – Reticulation Only (COGTA)
Non-approved Budget
R1,02billion (Reticulation. Zone 6 - 12)
Expenditure to date
R752million
Project Progress
Bulk Pipelines, reservoirs and pump stations 74% Complete
Reticulation (No more funding approved) 30% Complete
Current financial year 2015/16
Budget: R290 million
Expenditure: R142,7 million (End Sept 2015)
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Hluhluwe Bulk Water Supply
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Project budget summary
R96million
Approved budget
R96million - Bulk Only (DWS)
Expenditure to date
R160million(Actual cost of works)
Additional R22million approved for the next Phase, but allocation not yet received from DWS.
Project Progress – Phase 4
Bulk Pipelines, reservoirs and reticulation - 98% Complete
Dukuduku Resettlement - Water Supply
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Project budget summary
R143million
Approved budget
R143million - Bulk Only (DWS)
Expenditure to date
R136million
Project Progress
Bulk Pipelines, reservoirs and pump stations 75% Complete
Current financial year 2015/16
Budget: R15 million
Expenditure: R10 million (End Sept 2015)
Hlabisa - Bulk Water Supply
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Project budget summary
R205million
Approved budget
R205million - Bulk Only (DWS)
Expenditure to date
R197million
Project Progress
Bulk Pipelines, reservoirs and pump stations 98% Complete
Current financial year 2015/16
Budget: R8 million
Expenditure: R3 million (End Sept 2015)
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Presentation to the DWS – 2015 first quarter report
Where do we derive our mandate
Section 29
Section 29
Section 30
Section 30
Magalies Water Strategy
Magalies Water Strategy
Vision, Mission, Core Strategy, values
Water Services Authorities being served
Municipality ProvinceMoses Kotane Local Municipality North WestRustenburg Local Municipality North WestThabazimbi Local Municipality LimpopoBela Bela Local Municipality LimpopoModimolle Local Municipality LimpopoCity of Tshwane Metropolitan Municipality Gauteng
April 2014
Bulk Water Services Infrastructure
April 2014
Name Design Capacity (ML/day)
Pipeline length (km)
Reservoir storage capacity
(ML/day)Vaalkop WTP 240 544 271Klipdrift WTP 18 150 1Cullinan WTP 16 10 10Wallmannsthal WTP 12 36 32Total 286 740 314
Where do we serve the Water Services Authorities
April 2014
Municipality Vaalkop Klipdrift Wallmannsthal CullinanMoses Kotane Local Municipality X Rustenburg Local Municipality X Thabazimbi Local Municipality X City of Tshwane Metropolitan Municipality
X X X
Modimolle Local Municipality X Bela Bela Local Municipality X
Map of Supply Area
April 2014
Strategic Trajectory
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F F
F
F
A
B
ED
DC
GG
G
H
B H H
Part A: Northern part of Rustenburg LM including RBA (PWS SOUTH)Part B: Southern parts of Kgetlengrivier LM, with possible extensions to Groot Marico and Zeerust (PWS SOUTH)Part C: Mankwe region of Moses Kotane LM (PWS NORTH)Part D: Madikwe region of Moses Kotane LM (PWS NORTH)Part E: North eastern Moses Kotane LM and part of Thabazimbi LM (PWS NORTH)Part F: Moretele North, Madibeng North, Bela Bela, Modimolle, Mokgoopong, Dr JS Moroka (KLIPVOOR)Part G: Brits, Hartbeespoort and southern parts of Madibeng LM (Mining Belt)Part H: Supply to CoT via Klipdrift, Wallmannsthaal & Cullinan System
Business Growth through capital expansions with area of supply coverage
Performance for the quarter
Item (R'000) Annual budgetActual-September 2015
Budget-September 2015
Revenue 486 624 107 758 110 245 Total expenditure 402 548 81 247 91 706 Capital expenditure 1 012 619 125 000 275 000
Performance for the quarter
Target 2015/16
Target Quarter ended 30 September 2015
Actual Quarter ended 30 September 2015
Variance
Bulk potable water quality compliance
Acute health 1-100%Chronic health-97%Operational parameters-95%Aesthetic parameters-95%
Acute health 1-100%Chronic health-97%Operational parameters-95%Aesthetic parameters-95%
Acute health 1-98.5%Chronic health-98.5%Operational parameters-91.9%Aesthetic parameters-95%
Acute health 1-(1.5%)Chronic health-1.5%Operational parameters-(3.1%)Aesthetic parameters-0%
Manage avoidable water losses
5% 5% 7% 2% Average plant and distribution losses are in excess of the target due to the high losses experienced at the Klipdrift Plant. This is due to non-recycling of backwash water and this process will be enhanced during the plant upgrades.
Reliability of supply 0% 0% 0% 0%
Increased access to Services
100% 25% 35% 10%
Performance Targets Comments
Organisational Effeciency and Effectiveness
Performance Perspective
Performance Objective
Performance for the quarter
Target 2015/16
Target Quarter ended 30 September 2015
Actual Quarter ended 30 September 2015
Variance
Finance 2 2 3 117% 17% 25% 8%
Not applicable Not applicable Not applicable Not applicable
23% 23% 19% -4%
Not applicable Not applicable Not applicable Not applicable Magalies Water does not operate Section 30 business as a trading activity.
33% 0% 0% 0% Financial leverage has not been utilised to fund capital expansions. The process to develop a funding plan for capital expansions is still being developed to determine the most appropriate funding mix and capital structure.
11% 11% 5% -6%50 days 50 days 47 days 3 days5.30% 5.30% 0.11% -5.19
33% 33% 28.30% 4.7%
Performance Targets Comments
Improve key financial ratios
Performance Perspective
Performance Objective
Performance for the quarter
Target 2015/16
Target Quarter ended 30 September 2015
Actual Quarter ended 30 September 2015
Variance
Finance 30% 30% 0% -30% Most of the contracts will be awarded in the second quarter as procurements processes took effect during the first quarter.
20 5 0 0
Manage costs within the approved budget
5% 5% 11% 6%
100% 25% 12% -13% Projects delayed mainly due to community unrests in the Walmannsthal area. Court interdicts have been obtained to deal with elements that were disruptive to the construction process. Some of the projects were still in procurement phase and will be awarded in the second quarter. The Projects Management and Supply Chain Management Units have been enhanced for projects implementation.
92% 92% 70% -22%
Engagement in secondary activities
2.50% 3% 3% 0%
Performance Targets Comments
Increase BBBEE expenditure in relation to operational projects
Capital expenditure programme
Performance Perspective
Performance Objective
Performance for the quarter
Target 2015/16
Target Quarter ended 30 September 2015
Actual Quarter ended 30 September 2015
Variance
Staff levels 3% 3% 0.3% 2.7%
20 20 20 010 10 10 010 10 10 0
24 6 7 1
500 125 259 134
Performance Targets CommentsPerformance Perspective
Performance Objective
Organisational Capacity
Training and Skills Development
Jobs Created
Performance for the quarter
Target 2015/16
Target Quarter ended 30 September 2015
Actual Quarter ended 30 September 2015
Variance
100% N/A N/A N/A Annual Target
100% N/A N/A N/A Annual Target
0 0 0 0
0 0 0 0
Good Governance 0 0 0 0 There were no breaches to the Materiality and Significance Framework.
Corporate Social Responsibility Initiatives
4 0 0 0 Corporate Social Investments intiatives will be implemented from the second quarter. The needs of Municipalities have been submitted and CSI is implemented on a needs basis.
Internal Audit activities for the year are yet to commence. The rolling 3 year internal audit plan will be submitted to the Audit Committee this quarter.
Performance Targets CommentsPerformance Perspective
Performance Objective
Board EffectivenessGeneral Performance
Effective Internal Controls and Risk Management
Thank you