UMGENI WATER Presentation to Portfolio Committee on Water

UMGENI WATER Presentation to Portfolio Committee on Water Affairs & Forestry Annual Report 2005/2006 19 MARCH 2007

UMGENI WATER Annual Report 2005/2006 AGENDA 1. Introduction 2. Key Achievements 3. Challenges 4. Going Forward

Umgeni Water 2005/2006 KEY ACHIEVEMENTS SOUND FINANCIAL PERFORMANCE: R 137 m surplus achieved matches planned expectations R 101 m reduction in net debt Ensures Financial viability of UW

UMGENI WATER KEY ACHIEVEMENTS 2005/2006 Financial Performance Overview Results from operations Five Year Summary

UMGENI WATER KEY ACHIEVEMENTS 2005/2006 Financial Performance Overview Results from operations 2005/2006 compared to 2004/2005 Revenue: 7. 6% increase Volumes: 2. 5% increase Operating and Admin Expenses: increased by 8. 5% Major Expenses: Asset impairments: R 42. 8 m (2005: R 70. 0 m) Provision for doubtful debts: R 25. m (2005: R 7. 2 m) Amortisation of reticulation assets transferred to WSA R 91. 6 m Finance costs: 18% reduction Net Surplus R 137 m : R 97 m increase from 2005

UMGENI WATER KEY ACHIEVEMENTS 2005/2006 Financial Performance Overview DEBT CAPITAL STRUCTURE 5 YEAR OVERVIEW

UMGENI WATER KEY ACHIEVEMENTS 2005/2006 Financial Performance Overview Financial Position 2005/2006 Fitch Credit Ratings reaffirmed : AA Long Term and F 1+ Short Term Capital expenditure has increased from previous year to R 80. 6 m Debt/Capital Structure Reduction of net debt from R 2 024 m to R 1 924 m Net Debt to equity ratio improved by 20. 2% (ability to repay debt improved) Well within Borrowing Limit set by National Treasury Limit R 3 500 m

UMGENI WATER KEY ACHIEVEMENTS 2005/2006 STRENGTHENED CORPORATE GOVERNANCE & COMPLIANCE Unqualified Audit Report Ongoing Evaluation of Board Performance Review of Delegation of Authority Document Conversion and adoption of International Financial Reporting Standards (IFRS) Enterprise wide risk management framework in place Met all Business Plan requirements 100% compliance Water Quality Standards : contractual & statutory standards

UMGENI WATER KEY ACHIEVEMENTS 2005/2006 CUSTOMER & STAKEHOLDER RELATIONS Excellent customer relations with all our customers Successful Tariff consultations Joint Planning of infrastructure to enhance IDPs & WSDPs Enhancing the ability of local government to deliver better: technical support; maintenance management skills & technical training to DM OR Tambo/KSD Municipality water crisis intervention

UMGENI WATER KEY ACHIEVEMENTS 2005/2006 Extending Access to Water & Sanitation Implementation Support to Provincial Department of Education: School sanitation programme • Completed: Value of Project: R 36 m District: Ugu, i. Lembe, u. Mgungundlovu 54 Schools 30 200 learners benefitted Incubation programme for emerging contractors/enhances qualification to CIDB Three year Programme/partnership

UMGENI WATER KEY ACHIEVEMENTS 2005/2006 Extending Access to Water Implementation of KZN Regional Bulk Water delivery plan: PROJECTS • Completed: Eston-Umbumbulu pipeline Customers: e. Thekwini, Ugu, u. Mgungundlovu Potential households served : 50 000 • Significant Progress with implementation : South Coast Pipeline Customers: e. Thekwini, Ugu Potential households served : 100 000

Extension to Wartburg Bulk System – R 250 Million Lower Mvoti (Ngcebo Kwa. Dukuza - R 250 Million North Coast Pipeline R 52 Million ‘ 57 Pipeline Augmentation R 72 Million Greendale- Howick Pipeline – R 5 Million DV Harris to Worldsview Pipeline R 61 Million Richmond Pipeline R 61 Million ‘ 61 Pipeline Augmentation R 103 Million Implementation of KZN Plan South Coast Pipeline R 200 Million

KZN Bulk Water Supply Plan Aligned with National & Provincial strategies, e. g. KZN Provincial Spatial Economic Development Strategy

Umgeni Water 2005/2006 CHALLENGES Historical capital cost of transferred rural schemes (policy contradiction) Regional Bulk Scheme funding mechanisms Defaulting Municipality

UMGENI WATER GOING FORWARD 2006/2007 The Board will continue to focus on • Debt reduction • Affordable tariff • Operational efficiencies • Service delivery : R 1 100 m 5 year capex programme • Continual alignment to government priorities • 2010 Readiness Plan

UMGENI WATER’S KWAZULU NATAL BULK DELIVERY PLAN District Municipality Total No. of HH less than RDP standard Potential no. of HH < than RDP standard to be supplied KZN Plan % Sisonke 35 015 29 486 84 u. Mgungundlovu 44 767 40 629 91 u. Gu 75 869 74 550 98 u. Mzinyathi 43 618 14 846 34 e. Thekwini 87 079 85 337 98 i. Lembe 45 588 33 623 74 331 936 278 471 84 Total

UMGENI WATER’S KZN BULK DELIVERY PLAN – potential number of households that could be served after implementation

Umgeni Water’s Contribution Towards Eradication of Backlogs PROJECT NAME Potential number of people served (75 L pp pd) ‘ 61 Pipeline Augmentation Budget 4 417 000 R 303 Mill 200 000 R 38. 6 Mill North Coast System 1 267 000 R 100. 5 Mill South Coast System 1 000 R 195 Mill Ugu Sub-regional Schemes 144 000 R 79. 4 Mill Richmond pipeline 533 000 R 61 Mill Wartburg System 317 000 R 250 Mill Howick/Hilton/Groenkloof System Lower Mvoti System (Ngcebo/Kwa. Dukuza) Feasibility studies being done R 252 Mill Sisonke/Ixopo System Ditto R 34 Mill

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