RAND WATER ANNUAL REPORT 2023

HOW WE CREATE VALUE

tightened debt collection processes and mechanics. Legal collection processes have been invoked against defaulting customers. The support to municipalities through Rand Water Services is intended to assist with issues of non revenue water, revenue collection, and prudent financial resource management to the benefit of the water sector and our customers. We continue to be positively engaged with our stakeholder base, more specifically our customers. This is accomplished through the customer satisfaction survey which is undertaken annually. The set target of 82.5% was exceeded with a performance of 83.9%. These are impressive results in a challenging environment of increasing outstanding debt owed by these surveyed stakeholders. We remain an outstanding good corporate citizen. Rand Water’s Corporate Social Investment arm, the Rand Water Foundation (RWF) spent 99% of its allocated budget on Corporate Social Investment. RWF implemented 16 projects to provide adequate and dignified sanitation facilities for vulnerable communities. A total of 2759 households benefitted from RWF’s domestic leaks repairs and retrofitting interventions. Further, we monitor performance with regards to Broad Based Black Economic Empowerment (B-BBEE). The B-BBEE spend as a % of total expenditure was 115.1% against a set target of 85%. The award of work to BBBEE compliant entities through the tender systems exceeded the set target of 85% with a performance of 93.3%. In addition, we have completed 18 Socio-Economic Development (SED) projects working with implementing partners on socio economic development contributions. In this regard, three (3) implementing partners were contracted to manage the projects. The setting of Strategic Goals serves to guide the organisation for the next five (5) years. These Strategic Goals become a clear and unambiguous beacon for all entity’s employees. In line with the Innovation Driven Risk-based Strategy, Rand Water must curtail areas of greatest risk. Efforts to manage risk by finding alternatives to Eskom will help to reduce the risk we are faced with. Supply of energy to Rand Water has been uncertain with power outages that have affected Rand Water’s ability to supply water. A business case has been developed for the generation of energy from its extensive pipe network. Raw water constitutes over 45% of Rand Water’s cost structure. The availability of raw water is recognised as one of its critical risks, given that South Africa is a water scarce country, and LHWP Phase 2 will only be completed in 2028.

by Rand Water utilising its subsidiary, Rand Water Services. In addition, the role of the Rand Water Institute will be to develop aligned products and services through a rigorous innovation and testing. The symbiotic relationships that will chart the survival and growth of this organisation. Rand Water’s strategic objective: Achieve Operational Integrity and Use Best Fit Technology, is targeted at ensuring that Rand Water remains at the fore-front in terms of utilizing the best technology and maintenance of a high level of operational integrity. This has been clearly demonstrated by the exceeding water quality standards. Rand Water continues to provide bulk potable water of world class standard to the citizens in the area under its mandate. In addition, it supplied its 18 municipal customers without a failure exceeding 24 hours. We also exceeded the set targets with regards to its capital expenditure programme on the actual amount spent (97%) and the completion of projects (133%). In addition, the target for repairs and maintenance expenditure as a percentage of budget of 95% was exceeded with a performance of 107%. In terms of the Strategic Objective of maintaining financial health and sustainability, the robust performance of the organisation is demonstrated by net surplus increase. This is supported by exceeding the target for gross profit margin of 29% with a performance of 30.8%; and the target for net profit margin of 19% with a performance of 19.8%. This upward trajectory is not common among many entities in the country. It demonstrates that Rand Water may continue to retain enough resources to execute its key mandate of provision of water and sanitation services. The KPIs that missed its target is the Return on Assets, with a performance of 7.3% against a target of 8%. This is attributable to reduced earnings before interest in relation to upward trajectory of total assets. The issue of rising debt owed by municipalities continues to be of concern. Debtors days rose from 77 days to 109 days in the year under review. The default by local municipalities on outstanding debt continues to remain an area of concern. Rand Water is increasingly concerned with the larger metros failing to honour their debts. Tshwane and Ekurhuleni failed on numerous months to honour their debt obligations. These constitute 21% and 17% respectively of Rand Water’s total revenue. The debt recovery strategy is regularly reviewed in conjunction with considerations on the financial and economic circumstances of customers, and the implications thereof on Rand Water. Debt relief measures have been put in place to assist and support customers. Rand Water

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