Tel: 018 482 9500Fax: 086 532 2528 E-mail: info@midvaalwater.co.zaPO Box 31 • Stilfontein • 2550 • South Africa

www.midvaalwater.co.za

Annual Report - 2012

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Contents Page

Directors and administration 2

Notice of meeting 3

Chairperson’s statement 6-10

Management report, statistical information and schedules 11-39

Annual financial statements 40

Statement of responsibilities by the Board of Directors 42

Report of the independent auditors 43

Directors report 45-46

Balance sheet 47

Income statement 48

Statement of changes in equity 49

Cash flow statement 50

Notes to annual financial statements 56-62

Detailed income statement 63-64

PURIFIED EXCELLENCEPURIFIED EXCELLENCE Water is lifeWater is life...Go Green

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Directors and Administration

Directorate

S Cassim SP SnellH Daniel F MaddonniMD Dikoko -J Douw -JF Ellis CF HumanHJC Ferreira -RU Khan -RS Mack JCC HarmseB Mawasha SC NewberryEPJ Nel RK SelloGL Sebuasengwe L MakhaleOR Thabanchu SL Nakedi

Management

Chief Executive RU KhanDirector Engineering Services FG EllisDirector Operations MJF KrügerDirector Finance & Corporate Services R Mphela

Secretary R Mphela Farm Buffelsfontein 443 I.P. DISTRICT KLERKSDORP PO Box 31 STILFONTEIN, 2550 Telephone number: (018) 482-9500 Website: www.midvaalwater.co.za Email: info@midvaalwater.co.za

Registered Office Farm Buffelsfontein 443 I.P. DISTRICT KLERKSDORP

Postal Address PO Box 31 STILFONTEIN, 2550

Auditors GNR Auditors

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Notice of Meeting

NOTICE IS HEREBY GIVEN that the 59th Annual General Meeting of members of the Midvaal Water Company will be held on Thursday, 06 June 2013 at 10:00 in the Conference Room of the Midvaal Water Company, Stilfontein, for the following purposes:

1. To receive and consider the Annual Financial Statements for the year ended 31 December 2012.

2. To elect directors in accordance with the Articles of Association of the Company.

3. To determine the remuneration of the Auditors.

A member entitled to vote at the meeting may appoint a proxy or proxies to attend, speak and vote in his stead. A proxy need not be a member of the Company. Proxy forms must reach the registered office of the Company at least 48 hours before the time of the meeting.

By order of the Board

MIDVAAL WATER COMPANY STILFONTEIN

09 April 2013

“Save water...secure the future!”

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Directors

MD DikokoChairperson

RU KhanDeputy Chairperson

S CassimAngloGold Ashanti

H DanielBuffelsfontein Gold Mine

J DouwThe City of Matlosana

JF EllisAngloGold Ashanti

HJC FerreiraAngloGold Ashanti

RS MackAngloGold Ashanti

B MawashaAngloGold Ashanti

EPJ NelThe City of Matlosana

GL SebuasengweThe City of Matlosana

OR ThabanchuThe City of Matlosana

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Alternate Directors

SP SnellAngloGold Ashanti

CF HumanAngloGold Ashanti

JCC HarmseAngloGold Ashanti

SC NewberryAngloGold Ashanti

RK SelloThe City of Matlosana

L MakhaleThe City of Matlosana

SL NakediThe City of Matlosana

Other Alternate Director - F Maddonni - Buffelsfontein Gold Mine

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Chairperson’s StatementPreamble

Once again it is time for me to report on the performance of Midvaal Water Company over the previous financial year, which had demonstrated a record of improved services, financial stability and good governance. The Company is justified in being proud of its remarkable achievements during the period under review. Therefore, it is a great pleasure for me to present, on behalf of the Board, the review on the performance and achievements of Midvaal Water Company during the year 2012.

The weakening global economic outlook continued to present serious challenges for the South African economy in 2012. Recent downward revisions of growth forecasts for the global economy largely reflect the ongoing European debt crisis and the likelihood of a mild recession in the Euro zone. In spite of various constraints, the Company improved its kilolitre sales and achieved better results. Improved financial performance during 2012 is mainly attributed to enhanced focus on leadership and skills development, adoption of appropriate technology for key operating activi-ties, refurbishment and modernisation of old and ageing infrastructure, as well as emphasis being placed on process improvements and a culture of innovation and performance.

When comparing the year under review with the previous year, kilolitre sales increased by 2,08% to 44 386 536 kL and revenue by 11,82% to R 243,02 million. The Company continued to achieve its strategic objectives of improving its energy efficiency, modernising its ageing infrastructure and IT and other operational systems combined with their integration, improving its water security and safety planning and implementing and enhancing collaboration with its stakeholders.

During 2012, the expenditure on major mainte-nance and the upgrade of the old and ageing infrastructure amounted to R 54,18 million, which was financed through internally generated resources. The Company anticipates incurring another R 137 million on capital and major mainte- nance projects during 2013 which have been prioritised as unavoidable. The Board of the Company is fully committed to the Infrastructure Rehabilitation Plan of around one billion Rands over the next ten years in order to ensure that the supply capacity is not only maintained, but also augmented in view of its efforts to expand the area of supply and to diversify operations.

The Company continued to experience some deterioration in raw water quality in the Vaal River System during the year under review, in spite of concerted efforts on the part of the Department of Water Affairs to manage the Vaal River System and reduce pollution. Despite the challenges relating to raw water quality, the quality of potable water supplied to consumers fully complied with the SANS 241. This was possible due to rigorous processes of monitoring water quality to address the impacts of the high levels of pollution and health related risks, resulting in additional costs being incurred without receiving any compensa-tion for poor quality raw water.

During 2012, the Board reviewed the constitution of the Company and proposed changes to its composition to bring it in line with the recommendations of the King III Report and the Companies Act 2008 in order to achieve a higher level of independence, minimise the perceived conflict of interest and obtain a balance in the Board by having at least 30% fully independent non-executive directors. A new Memorandum of Incorporation was prepared and was discussed with the members of the Company to achieve the objectives stated above. This matter is expected to be concluded in the beginning of the ensuing year.

During 2012, the Board also considered the status of the Company in terms of its corporate citizenship and identified that the support to the BBBEE initiatives needed to be increased. The Board also looked at strengthening the composi-tion and functioning of the Audit Committee and has suggested to the members the need of appointing independent non-executive directors to the Board in line with the King III Report and prevailing legislation.

The Company has been actively involved in consultation processes regarding the institutional realignment in the water sector, the revision of the National Water Resources Strategy and the National Water Pricing Strategy as a stakeholder

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and member of the South African Association of Water Utilities (SAAWU). SAAWU presented a collective position of its membership based on appropriate consultations and the Company’s Chief Executive, being a member of its EXCO, played a leading role in these matters.

The Department of Water Affairs prioritised its agenda to achieve effective economic growth and social up-liftment; to foster rural development and land reform by increasing access to water supply and sanitation; to ensure sustainable and equitable resource management and improve governance and regulation in the sector. The Company in its own modest way provided full commitment and support to the DWA’s priorities and to the agenda of the National Government, in general.

The Company continued its support to the City of Matlosana, its Water Services Authority (WSA), in all areas possible through the jointly constituted Joint Technical Forum. The Forum has enabled the Company to inter-act effectively and timeously with its WSA and also in joint planning and implementation on matters of mutual interest. The Company takes pride in stating that the Forum is an exemplary mechanism as far as effective co-operative governance and support is concerned. It is noted with pride that the combined efforts of the Company and its WSA resulted in maintaining the Blue Drop status for effective water quality management during 2012.

The Company made concrete progress in its efforts to improve the utilisation of its surplus capacity with the expansion in the Free State Province. The Company is expecting to start the supply of water to Vierfontein, following the completion of its new pump station in Orkney and the pipeline by the Department of Public Works in March 2013. The Company believes that the supply to Vierfontein will create opportunities to expand the area of supply to other parts of the Free State Province in the medium term.

Twinning Agreements

The twinning project with Oslo Water and Sewerage Works, Norway, continued successfully in terms of sharing of knowledge and experiences, building improved capacity, fostering technological advancements and augmenting service delivery in tune with the national targets and millennium development goals. The first phase of the staff exchange programme, which commenced in 2009 with the financial support of Fredskorpset, the Aid Agency of Norway, was successfully completed during 2011.

The twinning partners had meetings in Norway and Zambia to formulate plans to start the second phase of the staff exchange programme on a tripartite basis by including Mulonga Water and Sewerage Company Ltd., Zambia, as a third partner, following consultation with Fredskorpset. During consultations with Fredskorpset, the need of reducing the time period for exchange candidates from one year to around six months was emphasised. The Company was finalising the feasibility studies relating to this matter in order to submit the application to Fredskorpset during the beginning of 2013.

During 2012, the Project Steering Committee (PSC) on Corporate Governance and Twinning Projects organised a workshop in Durban in which all the twinning partners participated with the objective of enhancing collaboration and cooperation to inten-sify the benefits of twinning. Two senior delegates from Mulonga Water and Sewerage Company Ltd. Chingola, Zambia attended the workshop and expressed their desire to become part of the staff exchange programme pursued by Midvaal Water Company and Oslo Water and Sewerage Works. This was accepted by the twinning partners. Their representatives attended a training workshop or-ganised by Fredskorpset to brief them on the support objectives and methodology adopted by them for twinning projects. Later on, the representa-tives from Mulonga Water and Sewerage Company Ltd. also attended the consultation meetings held in Norway and South Africa.

The participants in the Twinning Workshop held in Durban also resolved to establish a Southern African Association of Water Utilities (SAfAWU) and constituted a Task Team to work towards the said objective. The Chief Executive of Midvaal Water Company was also elected as a member of the said Task Team.

The Chief Executive of the Company as a member of the PSC extended lot of support to the Twinning Project and visited Marrakech, Morocco and Marseilles, France to have meetings with relevant stakeholders in support of the objectives of the Implementing Agency Agreement signed by SAAWU with DWA.

Operational Performance

The total sales were recorded at 44 386 536 kilolitres (121,61 ML/day) and compared favourably with a figure of 43 482 455 kilolitres (119,13 ML/day) in 2011, showing an increase of 2,08% over the previous year. The sales to the City of Matlosana increased from 29 004 234 kilolitres in 2011 to 29 614 977 kilolitres in 2012, reflecting an increase

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of 2,11% over the previous year. The sales to the mines improved to 14 577 463 kilolitres for 2012 from 14 298 482 kilolitres in 2011, showing an increase of 2%. There was a decrease of 6,5% in sales to the medium and small consumers. The improved metal prices assisted in maintaining the sales at the budgeted level during 2012.

Midvaal Water Company generated a turnover of R 243,02 million (R 217,32 million for 2011) which showed an increase of 11,82% attributed mainly to price variance. The Company made a surplus of R 18,52 million in 2012 comparing favourably with a figure of R 9,65 million for 2011. This was possible due to strict cost controls and efficiencies gained in operational manage- ment. The depreciation charges increased to R 38,31 million following the revaluation of the assets in 2009. After making a transfer from the assets revaluation reserve with regard to depreciation in terms of the provisions of the International Financial Reporting Standards (IFRS), amounting to R 29,844 million, the equity of the Company at the yearend showed a positive movement of R 48,364 million as compared with R 39,099 million for the previous year.

The total value of assets at 31 December 2012 amounted to R 957,643 million as against a fig-ure of R 913,283 million at 31 December 2011. The value of its property, plant and equipment at 31 December 2012 amounted to R 701,706 million, from a figure of R 693,673 million at 31 December 2011 due to acquisition and capitalisation of plant and equipment during 2012. The value of investments increased to R 166,085 million at 31 December 2012 from a figure of R 152,739 million at 31 December 2011, showing an increase of 8,74% in line with the increase in trade payables.

The capital and reserves of the Company at 31 December 2012 were valued at R 884,652 million compared to a figure of R 866,132 million at 31 December 2011. The total liabilities increased to R 72,992 million at 31 December 2012 com-pared with a figure of R 47,152 million at the end of the previous year, mainly due to amounts owing to the Department of Water Affairs for the supply of raw water.

Constitution of the Board and Governance Structures

In terms of the Articles of Association of the Company, the board members of Midvaal Water Company are nominated by its major consumers, who have entered into consumer agreements with

the Company for the supply of water. The total number of board members is ten, of which five are nominated by its Water Services Authority and the remaining five by the Mining sector.

During 2012, notification was received from the City of Matlosana to change the existing nomina-tions and the new board members were approved in the Board meeting held in December 2012. The term of office of the old directors ended on 31 December 2012 and the term of the new directors will commence in January 2013.

As indicated earlier, the issue of attaining more independence at Board level in terms of the recommendations of King III, will be dealt with in the new Memorandum of Incorporation following consultations with the relevant stakeholders.

The Board of Midvaal Water Company has demonstrated its commitment to highest calibre and standards of corporate governance and continues to espouse the principles of fairness, accountability, responsibility, transparency com-bined with ethical behaviour. As a result, the Company is fully compliant with the generally accepted accounting and sound corporate governance practices and prides itself in attaining its objectives in this regard.

The Board has constituted the following Committees to maintain its oversight on relevant matters:

• Infrastructure Development and Maintenance Committee

• Audit and Risk Management Committee • Human Resources and Remuneration Com-

mittee

These committees have specific Terms of Reference and are assisting the Board to fulfil its oversight and governance responsibilities on matters affecting these committees. The Terms of Reference of these Committees are reviewed from time to time to align them with legislation and meet any newly identified requirements.

The Board has also approved a comprehensive corporate governance policy which continues to be instrumental in further strengthening corporate governance practices and clarifying the role of the Board as well as Management and other structures.The Company has identified the need of making improvements in its corporate governance practices in order to comply with the recommenda-tion of the King III Code on Corporate Governance with specific reference to small and medium enterprises.

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The Board of the Company appreciates the importance of training of non-executive directors and induction and training sessions are held as necessary. The new directors will be inducted in the beginning of the ensuing year.

Service Level Agreements

The Company has signed service level agree-ments (SLAs) with all its clients, which are working satisfactorily in the best mutual interest. The agreements are reviewed from time to time to ensure their relevance in terms of operational and business needs, taking particular care of the needs of the clients. The Company is presently busy with the review of the SLA with the City of Matlosana to specifically enhance compliance with the Municipal Finance Management Act and the Consumer Protection Act.

The service level agreement for the purchase of raw water from the Department of Water Affairs was concluded during 2009 which regulates the relationship of the Company with the Department regarding the supply of raw water and other related issues. The supply of raw water in terms of the agreed protocol in the Vaal River System continues to be a challenge faced by the Company on a perpetuating basis in view of inadequate actions to deal with the deteriorating quality of raw water.

Achievements During 2012

The achievements of the Company during 2012 are briefly set out below:

• The Company received the Golden Arrow 2012 Leaders and Achievers Award and was rated Excellent-1st overall in the water providing sec-tor in the North West province. The Company has been the recipient of this award five times since the inception of these awards. The Com-pany is justifiably proud of such an achievement and I congratulate the Board and the Company as a whole to achieve continued excellence in this regard.

• The Blue Drop certification of the City of Matlosana and the Company was a historical landmark in 2012. The Company’s plant was assessed as one of the best four large water treatment plants in the Country.

• The Waste Water Recycling System was commissioned successfully and operational data analysis has started. This will enable us to deal with our water loss effectively and improve recycling and the effective management thereof.

• Interventions undertaken through Siyakha per-taining to diversity management and cultural rejuvenations reached an advanced stage with positive feedback. Remaining work will continue during 2013.

• The start of the functioning of the Local Labour Forum is also considered to be a landmark achievement in the Company which will pave the way for more effective and beneficial consultation processes in the Company.

• The implementation of the Enterprise Assets

Management System (Maximo) was completed during 2011. During 2012, the integration of the said system with the Financial System (Epicor) was also completed. The only remaining aspect is the implementation of the workflow arrangements to increase the processing of transactions electronically without manual intervention.

• After successfully implementing the VIP Payroll

System and HR Information System, the Company is now busy with the implementation of a VIP Performance Management System, which will be completed during 2013.

• The Learnership in Water Treatment at

NQF level 2 involving 23 learners, was also completed successfully during 2012.

• The refurbishment of the North Filters was completed during 2012 at a cost of R 47 million, which increased the filtration capacity of the Company by 90 ML/day.

• The project to incorporate the Vierfontein Distribution System to supply water to Vierfontein was completed at a cost of R 16,83 million. The construction of the new Vierfontein Pump station at a cost of R 5,38 million was also completed.

• The Company introduced a comprehensive wellness programme during 2012 which provides total life care to the employees and their families through ICAS, a renowned Service Provider appointed by the Company. The wellness programme, inter alia, provides for face-to-face counselling, trauma counselling, life management services, etc.

• The Company continued to maintain its 5-Star grading for the health, safety and environmental practices for the seventh year in the running. The Company also achieved a new record of 2,71 million accident-free kilometres travelled.

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Operational Outlook

The global economic situation is still not stable while some signs of recovery are evident. The Company is able to sustain its operations at half of its installed capacity, which is hovering around 120 ML to 125ML/day. With the metal prices still on the high, it is expected that mining activities will not slow down in the region. There is evidence of growth in the municipal sector with new housing and on a smaller scale with industrial activities taking place in the region. The increase in the component of municipal sale is an opportunity as well as a challenge. The culture of non-payment which is prevalent in the communities is having a serious impact on the City of Matlosana, which is unable to meet its obligations in time, with the result that an amount of over R 45 million was in arrear at the end of December 2012. The Company is dependent on the City of Matlosana for up to 65% of its revenue generation, with its fortune thus being linked to the financial strength of its Water Services Authority (WSA). The management and recovery of debt for the WSA and for the Company are crucial for survival and sustainability. The Company continues to cooperate and assist the WSA in many ways and has given it ten months time to pay the arrear amount of R 45 million. The liquidity of the Company is under stress due to delayed payments by the City of Matlosana. It is hoped that this situation will change for the better, in foreseeable future.

There is a definite prospect of supplying water to Vierfontein in the short term and to Viljoenskroon in the medium term. In addition, the upgrading of the infrastructure in Khuma will also create the prospects of supplying additional 4 to 5 ML/day water in the ensuing years.

In spite of the current uncertainty surrounding water demand in the region, it is inevitable that the Company continues to make significant invest-ments towards the refurbishment of its ageing plant and equipment in order to keep its infrastructure in good condition and to ensure un-interrupted water supply. The capital outlay planned for refurbishment initiatives for the period 2011 to 2021 is estimated to be in excess of R 900 million. This poses serious challenges to generate adequate cash surpluses for meeting infrastructure refurbishment needs of this magni-

tude. While the Company strives to keep its tariffs at an acceptable level, it is important that cost reflective tariffs are sustained to meet the additional cash generation needs whilst maintain-ing viability and sustainability.

The Company will review its mission and strategies during 2013 to check their relevance to the operational and long term perspectives, focusing on the effectiveness and sustainability of the Company.

In Conclusion

At this juncture, I would like to express my sincere gratitude to the outgoing directors for their valued contribution and support. At the same time, I wish to heartily welcome the new directors to the Board and look forward to a beneficial and long lasting relationship with them. The achievements of the Company would not have been possible without the commitment, dedication and support of all the members of the Board.

I also wish to thank all employees of the Company and the management team under the able lead-ership of the Chief Executive, Mr. R U Khan for their continued dedication, loyalty and support and for exceeding the budgeted targets repeatedly. I am also proud to note that the Company remains Preferred Partner of Choice in the region. I also wish to place on record my appreciation for the support received from DWA and Honourable Ms. Edna Molewa, the Minister of Water and Environmental Affairs on various issues which are critical for the transformation and optimisation of the water sector.

I am also very grateful for the continued support and patronage received from the clients and the twinning partners of the Company. Midvaal Water Company continues to strive to serve its clients and communities in support of their needs and aspirations in the best possible manner in terms of its competence and resources. The renewed efforts to improve performance through continued innovation are part of our culture and energise us to serve better.

MD DIKOKO

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Management Report for 2012Introduction

The operating conditions during 2012 were difficult due to inadequate abatement of the debt crises in the global economy and slow recovery leading to downward adjustments in the growth rate in various parts of the world. The South African growth rate below 3% and the GDP per capita were at the bottom of the level of the BRICS countries and large budget deficits persisted. Against this background, the Company performed well and exceeded budgeted targets during 2012 on an overall basis.

During 2012, the Company achieved its strategic objectives which pertained to achieving efficiencies and optimisation in resource utilisation, effective energy management, process improvements particularly in the area of waste management, training and skills development to alleviate critical skills shortages, risk management, IT systems development and implementation, employee’s welfare and wellness and consolidation of various aspects of its business.

The Company’s Board has charted out proper strategies to maintain its viability and sustain-ability. Notwithstanding, the dependence of the Company on the City of Matlosana to generate over 65% of its revenue was found to be a serious risk area due to delayed payments of its invoices and arrear accumulation. This situation also forced the Company to further streamline and downscale its refurbishment plan. Although the liquidity of the Company was maintained at a satisfactory level, substantial outlays for capital expenditure resulted in the utilisation of its investments and the inadequate recovery of the arrears added uncertainties to its operations.

The Company continued to accord high priority to the functioning of the Joint Technical Forum it has constituted with City of Matlosana, its Water Services Authority, to promote joint planning of infrastructure, achieve and maintain Blue Drop status, provide data capturing support and security of water supply in the region, etc. Extensive activities relating to integrated risk management and water safety planning were also undertaken.

The building of partnerships in the sector and sharing knowledge and expertise are the key strategic objectives. As a result, the existing twinning relationships were strengthened whereas new partners were also identified to share knowledge and experiences, build an improved technological base and undertake staff exchanges for imparting additional skills to staff with a different perspective. The Chief Executive of the Company worked tirelessly to achieve the objective of establishing a Southern African Association of Water Utilities (SAfAWU) in the Southern African Development Community as a member of the Task Team created to form this new Organisation.

The efforts of the Company to expand its area of supply will materialise with the expectation of supplying water to Vierfontein in the short term and to Viljoenskroon in the medium term. While the supply of water to the water indigent areas of the North West Province is still on the agenda, the slow pace in reaching consensus by the local and national governments is a major impediment in expediting the project, which continues to be influenced adversely through inflationary pressures due to delays in its implementation.

Management continues to show and reaffirm its dedication, professionalism and commitment to continually improve overall performance and sustainability of the Company. Therefore, achieving excellence and innovation are the key elements of its performance culture.

The Company’s Board of ten members is constituted by the members nominated by its major clients. In this process, the City of Matlosana has nominated five Board members whereas the remaining five members are nominated by the mining sector. This is not a desirable arrange-ment in terms of the recommendations of the King III report and the prescriptions of the new Companies Act of 2008. The Company started the process of preparation and consultation on a new Memorandum of Incorporation which needs to be submitted as per the current legislative require-ments, preferably before end of April 2013. The new Memorandum of Incorporation has proposed a mixed arrangement relating to the constitution of the Board by having 60% Board members nominated by the major clients and 40% fully independent non-executive Board members, elected based on the requirements of specific skills needed in the Board. The Nominations Committee will be constituted by the Board to make recommendations in this regard. This is intended to alleviate the perceived conflict of interest, acquire more independence in the Board’s operation and enhance compliance with the

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King III report recommendations and the new Companies Act. Engagements with the major clients are continuing and the matter is expected to be concluded in the beginning of the ensuing year.

The key activities undertaken during the year 2012 included the following:

• The Company reviewed its strategies and objectives in line with new developments with a view of enhancing its resilience in the wake of debt recovery challenges, reduction in sales to the mining sector due to downscaling and rationalisation, continuing adverse impact of inflation on its operating costs, etc.

• The Management and Extended Management teams focused on the implementation of the remaining parts of the Enterprise Assets Management System (Maximo System) which pertained to the development of a system of delegation for authorisation of purchase requisitions and orders, customisation of reports for project management and budgetary control, workflow management and ensuring that all the new assets are capitalised and depreciated in line with the requirements of the International Financial Reporting Standard for small and medium enterprises. The review of the Assets Policy also started to meet the operational needs and compliance with accounting standards.

• The Board of the Company spent extra time in special meetings to deal with the new Memorandum of Incorporation in order to change the constitution of the Board to make it more compliant to the King III report and the Companies Act 2008.

• The Company reviewed its Capital Expenditure and Major Maintenance programme in the wake of challenges faced due to delayed payments of invoices by the City of Matlosana and adverse impacts on its liquidity situation. It was decided that high impact projects should be prioritised and undertaken in the short term, subject to a regular review of the plan in terms of the operational needs and available resources.

• The continuation of the Learnership in Water Treatment at NQF Level 2 during 2012 involving 22 internal learners out of a workforce of 130 (17%) and one external learner, made it necessary to make various adjustments in the operation of the Company. This included the engagement of temporary staff to meet the operational needs during the period of absence of the employees in classes and also extend the period of the Learnership up to February 2013

because of the need of extra practical work required for the Learnership. Based on feedback from the Learnership Service Provider, the learners made good progress and are expected to complete it successfully in 2013.

• The Company continues to assist City of Matlosana, its Water Services Authority, with the management of water quality and its bulk water infrastructure with specific reference to tap water in the distribution network, in order to support it in maintaining and improving the Blue Drop Certification status and meeting compliance requirements. As a result of the combined efforts of the Company and the City of Matlosana, it is a pleasure to report that the City maintained its status in so far as Blue Drop Certification was concerned. The Treatment plant of the Company was also adjudged as of one of the four best managed large water treatment plants in the Country and is considered a worthwhile and praiseworthy achievement.

• The campaigns to stimulate public awareness on water issues focusing on water use efficien- cies, water conservation, health and hygiene promotion, cost recovery and placement of advertisements of the Company at the Council’s key pay points were undertaken. The water quality results were also published in the media jointly by the Company and the City of Matlosana to meet Blue Drop Certification requirements.

• The Company continued its support in strengthening the capacity of the South African Association of Water Utilities (SAAWU) at the level of EXCO and its Committees. SAAWU has been deliberating on concerns regarding pollution and resource quality, water security for both social and economic development, as well as service quality. The Chief Executive has been involved through SAAWU structures in the review of the National Water Resources Strategy, the review of the Pricing Strategy, the proposals on institutional re-alignment as well as the restructuring of the resource manage-ment institutions. The Chief Executive also assisted SAAWU as a member of the Project Steering Committee on Corporate Governance and Twinning Project. He was also part of the training team to train directors of Boards of Water Utilities.

• The management takes pride in mentioning that the Company received the Golden Arrow 2012 Leaders and Achievers Award as Excellent -1st overall in the water providing sector in the North West province. The Company also

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maintained its 5-Star grading for the health, safety and environmental practices in the past eight years including the year 2012. The achievement of over two million accident-free kilometres was improved upon during 2012.

• The Company focused serious attention and resources in completing the consolidation and integration of various IT systems. The Company has now started the process of implementing the VIP Performance Management system, which will be completed during 2013.

• The Company continues to pay special attention to the requirements of its stakeholders and undertook various initiatives and actions to improve their welfare. The personal development plans were mostly completed during 2012 and will be utilised for succession planning purposes. The introduction of a comprehensive wellness programme during 2012 was a landmark development as this provides total life care to the employees and their families through ICAS, a renowned Service Provider appointed by the Company. This programme provides a wide range of services which are tailored to meet the needs of Midvaal Water Company’s community. This has been in line with the continued endeavours to enhance the working conditions of the employees, improve their standard of living, thereby attaining better work satisfaction at all levels.

• The Company reviewed its supply chain management (SCM) policy and the Board approved the new policy which will be implemented from the year 2013 after necessary actions are taken to formulate a new data base of suppliers and service providers. The necessary implementation structures will be developed to improve its compliance with the preferential procurement framework and bring more transparency in its SCM process. This will also be in support of its registration as an Implementing Agent for DWA.

• A number of critical refurbishment projects continued entailing considerable time and efforts. The North Filters project was completed at a cost of R 47 million. Similarly, some other pipeline and pump station projects were also completed. In spite of the prevailing situation, the Company will focus on prioritising the critical projects which are essential to maintain and improve water safety and security in the region and augment service delivery to the communities.

Sales During the Year

The sales of the Company recorded an increase of 2,08% from 43 482 455 kilolitres for 2011 to 44 386 536 kilolitres during 2012 despite the reduction in the sales to the mining sector in the region.

The ratios in which consumers used water during 2012 and 2011 were as follows:

CLIENTELE 2012 2011Mining Industry and Small Consumers 33,30% 33,30%Municipalities and Other 66,70% 66,70%

The sales projected for the year 2013, based on estimates of consumption from the consumers, is 45 745 503 kilolitres, at 125,33 ML/day as against a sales target of 121,61 ML/day in the previous year. In view of the strength of the gold price, the target appears realistic with the expectation that the mining activities in the region can be sustained in the ensuing years. Table 1 reflects raw water purchased and treated water sold per month, for 2012.

Graphs 1, 2 and 3 refer respectively to:

1. Comparison between average supply and peak supply of water from 1992 to 2012.

2. Monthly sales from 1992 to 2012.3. Cost per kilolitre and water tariff from 1992 to

2012.

Corporate Governance

Board members are nominated by the Company’s major consumers, who have entered into consumer agreements with the Company as per the Articles of Association. The major consumers include the City of Matlosana, (the Water Services Authority), AngloGold Ashanti Gold Mining Company and Buffelsfontein Gold Mine (previously Simmer & Jack Gold Mine).

Composition of the Board Committees

The Board of the Company has constituted three Board Committees to support it in its oversight function and corporate governance. The Committees and their constitution are stated below:

“Make conservation a habit.”

14 A n n u a l R e p o r t 2 0 1 2

Infrastructure Development and Maintenance Committee (IDMC)Members:

Mr H Daniel (Chairperson)Mr L SebuasengweMr L NakediMr J DouwMr J HarmseMr R KhanMr F EllisMe M KrügerMr J Grobler

The Infrastructure Development and Maintenance Committee is responsible to carry out the mandate of the Board regarding infrastructure development, refurbishment and maintenance through Capital and Major Maintenance projects.

Audit and Risk Management Committee (ARMC)Members:

Mr J Douw (Chairperson)Mr S Cassim Mr C HumanMe P Nel

Me R ThabanchuMr R Khan

The Audit and Risk Management Committee is responsible for ensuring adequacy and effective-ness of the systems of internal control, accounting systems, information systems, auditing processes and risk management. It is also involved in the review of annual financial statements and the de-velopment of policies on relevant matters. It also assists the Board in the appointment of the auditors of the Company.

Human Resources and Remuneration Committee (HRRC)Members:

Mr M Dikoko (Chairperson)Me P NelMe L MakhaleMr R Khan

This Committee is overseeing the structuring of the organisation, training and skills development, transformation and ensuring a proper system of remuneration in line with the market trends and affordability of the Company.

Attendance Schedule of Board and Board Committee Meetings:

BOARD IDMC ARMC HRRCScheduled Meetings per year 4 4 4 4MD Dikoko 4 - - 4H Daniel 4 4 - -OR Thabanchu 4 - 4 -EPJ Nel 4 - 4 3GL Sebuasegwe 4 4 - -J Douw 4 4 4 -L Nakedi 4 4 - -L Makhale - - - 3RK Sello - - - -CF Human 2 - 2 -RU Khan 4 4 3 4B Mawasha - - - -S Cassim 2 - - -JF Ellis 2 - - -HJC Ferreira - - - -RS Mack 1 - - -F Maddonni - - - -J Harmse - 3 - -SC Newberry - - - -SP Snell - - - -

15

Risk Management

Through a proper Risk Management process, the Company annually identifies the risks, analyse those risks and put measures in place to manage and mitigate them. During 2012, an extensive exercise was undertaken to review the Integrated Risk Management Plans of all the departments and the five key risks per Department were identified with a view of making sure that those are appropriately managed and mitigated. Regular reports are submitted to the Board of the Company through the Audit and Risk Management Committee with recommendations on measures to be taken to safeguard the interest of the Company in critical areas.

The Board of the Company relies on the internal audit in the Company to get reports on the prevailing situation as far as the internal control environment; accounting practices; record keeping; reliance on information etc. are concerned. This function has been outsourced to maintain full independence and objectivity. Stratus Financial Services were the Internal Auditors for the year 2012, who performed continuous audits based on the approved plans on various aspects of the Company’s operations. It is a pleasure to report that they were satisfied with the internal control environment of the Company and found no material weaknesses causing concern.

During the year 2012, the External Auditors of the Company were GNR Auditors, who worked in conjunction with Roesch Auditors who reviewed the audit work undertaken by them. This is in line with the association agreement signed by the two firms of the Auditors in terms of the requirements of the Independent Regulatory Board for Auditors (IRBA).

Water Treatment and Quality Assurance

The raw water source for the Company, the Middle Vaal River, is known to be highly susceptible to contamination due to its extensive utilisation. Continuous and thorough water quality assessments are therefore vital to ensure the suitability for use. Through the various local, regional and national monitoring programmes, the Company, the Department of Water Affairs, Dr Kenneth Kaunda District Municipality and City of Matlosana are monitoring the water quality in the KOSH area from source to tap to ensure that incidents and aspects that can result in possible health risks are detected and acted upon in time.

During the past year, hundreds of water samples were taken to determine the presence of any

radioactive, biological, inorganic and organic contamination. Significant deterioration was experienced in the overall microbiological status of the Middle Vaal River, which is also reflecting the continuous and uncontrolled spillages of raw and inadequately treated sewage effluents, upstream in the River. Pollution was also the cause of high levels of taste and odour producing algae in the raw water during the first half of the year and resulted in numerous consumer complaints about the aesthetic quality of their drinking water. The Target Water Quality Objectives for the catchment are used as guideline for the raw water quality. The average compliance is illustrated by Table 3: River Water Quality - January to December 2012.

The treatment facility at Midvaal Water Company has seen many upgrades and process improve-ments over a long period to address quality concerns as these emerged from time to time. Adequate systems are therefore in place to ensure that safe drinking water is continuously supplied to its consumers. The Company is proud to report that our compliance with the SANS 241 requirements remains exemplary in spite of the various challenges faced by it. As in the past, we are committed to delivering good quality drinking water to our consumers. The potable water supplied during 2012 complied 100% with the Class I requirements for both the microbiological requirements as well as the chemical determinands with health implications. In both instances, these levels of compliance indicate “excellent” water quality in terms of Table C.2 of SANS 241: 2006 (Edition 6.1). The quality report is presented in Table 4: Potable Water Quality - January to December 2012. The monthly performance of Midvaal in terms of drinking water quality management can also be viewed on the internet under the Web site of DWA: www.dwa.gov.za/bluedrop.

The catchment area of the Vaal River received above average rainfall during 2012. However,

16 A n n u a l R e p o r t 2 0 1 2

no traditional summer floods occurred that could flush the river system adequately to improve water quality.

A cost breakdown of water treatment and sludge treatment chemicals used during 2012 is provided in Graph No 7.

The total rainfall in our area of supply during the twelve-month period under review was 721 mm compared to the long-term average of 637 mm (Table 5).

Scientific Services

The Scientific Services (SS) Section had an eventful year in 2012. A major achievement was the suc-cessful External Audit by the South African Nation-al Accreditation System (SANAS) on 11 & 12 July 2012. The assessment covered the complete scope of accreditation and a new certificate has been issued for compliance to ISO/IEC 17025:2005 for the next 5-year cycle. This achievement once again proved what a dedicated team with a mutual goal can accomplish. One Technical and two Management Requirements internal audits cov-ered the complete quality system and ensured full compliance with the requirements of ISO 17025.

Several staff members attended training courses which enabled the Section to meet its Skills Development goals. Through these programmes, employees take charge of their personal development and improve their competencies and skills levels for promotion. The Company has invested significant funds in improving the equipment and laboratory facilities over the past number of years and this resulted in the need for well qualified and experienced staff to operate the advanced equipment in accordance with the Quality Management System. Although the Section from time to time loses competent staff to other

organisations, it offers the opportunity to discover new jewels who contribute to the overall objectives and goals of the Section.

One of the focus areas for 2012 was to improve turnaround times for analytical results. We are proud to report that this objective was achieved during the year, mainly because of improved resources and a competent staff contingency. This performance reflected in the annual Client Survey, which had always been the barometer of the level of service provided by Scientific Services. Scores achieved in the 2012 Client Survey were indeed motivating. These were:

1. Service - 99% 2. Turnaround times - 89% 3. Quality - 99% 4. Prices - 88%.

Although cut-backs as high as 41% in the expenditure on samples for analysis by major clients had a large influence on the income of the Section, increases by smaller clients (as high as 380%) and quite a number of new clients assisted in increasing the total income from external clients through the year.

17

The additional ICP, together with a hydride generator purchased for improvement in areas of concern (especially Proficiency Test evaluations, better accuracy and sensitivity), also assisted with improving the turnaround times. The lower detection limits for heavy metals also brought SS in line with ever increasing concern about human and environmental health.

Testing for Legionella and Somatic Coliphages readied the Microbiology Laboratory for the new National Drinking Water Standard (SANS 241). Progress has also been made with improving Quality and Traceability of analyses in the Microbiology Laboratory.

The new Discrete Analyser, replacing the slower (albeit accurate) Ion Chromatograph was a welcome addition and contributed to improved performance in the relevant areas.

The main goals of sustainable income, shorter turnaround times as well as continued improve-ments in accuracy and quality of analyses were achieved during 2012 whilst the Section could operate on a sustainable base.

Catchment Management and Water Quality Monitoring Programmes

The Company participates in various projects and structures on local, regional as well as national level to improve on the overall management and quality of water in the Vaal River. The Department of Water Affairs implemented the Integrated Water Resource Management Plan for the Vaal River in 2010. The Company is represented on this Strategy Steering Committee to monitor progress of the recommended actions to achieve improvements in the water quantity and quality in the Vaal River System. The fact that DWA has started implementing the short-term Acid Mine Drainage (AMD) projects in 2012 and was busy planning for the long-term strategies was a relief as AMD is regarded as one of the key risk factors as far is water quality in the Vaal River is concerned.

The Company is also actively involved with the Schoon Spruit - Koekemoer Spruit Catchment Management Forum (CMF), established in 2010. The main focus of the Forum for 2012 was the completion of the Resource Water Quality Objectives for this catchment. A monitoring sub-committee was established, comprising all major stakeholders in the area, to consolidate all monitoring programmes currently running in the catchment. The purpose was to establish who was monitoring what, where and how often and to establish a co-operative compliance monitoring framework. This would in turn allow the CMF to

make crucial recommendations for the protection, development and management of the water quality and thus the water resources in this catchment. The Department of Water Affairs is busy with the re-alignment of the water resource management institutions and the Company participated in various consultation meetings. DWA proposed that the current nineteen catchments should be reduced to only nine and for the Vaal it is proposed that one super Vaal Catchment Management Area will be established. Concerns pertaining to the viability and feasibility of such arrangements were noted, however, the Minister still had to sign the recommendation and gazette the document towards the end of 2012.

The Board of Midvaal Water Company is keenly involved in water quality matters and processes in order to ensure the safety of supply and maintenance of appropriate health and hygiene standards, as these issues are of keen importance to it.

Joint Technical Forum

The Joint Technical Forum, established by the Company with the City Council of Matlosana, continued its functioning during 2012 in terms of the agreed Terms of Reference. Progress was made with the installation by the Company of some telemetry equipment at specific bulk storage reservoirs of the Council. This improved the overall efficiency with which the Company can operate the bulk distribution network. In addition, there are proposals made by the Company to the City of Matlosana to further enhance co-operative governance and co-ordination. These proposals are aimed at improving the delivery of services at the grass root levels including a proposal to operate and maintain the Council’s bulk distribution network on a cost recovery basis in order to provide the needed support in this regard. This matter is still under the consideration of the Council. Joint Task Teams were also constituted during 2012 to look at specific challenges faced by the Council pertaining to its distribution network.The activities of the Forum will continue during 2013 with a view to enhance co-operation to meet the set out objectives.

Awareness Campaigns and Public Relations

A variety of activities were launched during 2012 to improve community awareness about environmental, health and hygiene and other water issues. Special events were jointly organised by the Company, DWA-NW and Dr Kenneth Kaunda District Municipality during National Water Week in terms of the identified objectives.

18 A n n u a l R e p o r t 2 0 1 2

The Company and City of Matlosana jointly achieved Blue Drop status for the second year in a row in 2012. As this achievement underlines the commitment and ability of both Water Services Provider and Water Services Authority to produce safe drinking water, joint campaigns were launched in 2012 to bring this achievement under the attention of consumers and visitors to the KOSH area. Advertisement boards were erected along the main routes in Klerksdorp and articles were placed in the local newspapers as well as on the Company’s webpage to inform stakeholders and consumers about the safety of the tap water.

A water conservation/water demand management (WC/WDM) schools program was rolled out in line with our commitment to support the DWA National programmes. This program entails the fixing of leaking taps and toilet cisterns at one of the schools in the supply area of the Company, as well as the presentation of related messages through song and drama by a local artists group. A social component was also included for another school where by concrete tables and benches were donated for the area where the learners wait after school for their transport. At all three schools, murals were painted by the Learners of these schools with messages and slogans on water conservation as a constant reminder that water should be saved for the future.

Midvaal Water Company is committed to provide its clients with the best services possible in terms of its resources and in support of their requirements. To achieve this goal, the importance of partnerships with its clients and the relevant Government Departments is recognized and efforts are consistently being made to further strengthen our relationships with them. The Company also avails its skills, expertise and resources in assisting to train community workers and to resolve water supply and water quality problems in the region.

Summary of Water Tariffs

The Company’s income is derived from treated water sales and water related professional and scientific services rendered to outside organisations.

The average water tariffs for the years 2012 and 2011 were as follows:

2012 2011Main Consumers 517,52 c/kL 464,14 c/kLMedium and Small Consumers 566,19 c/kL 507,80 c/kL

The above prices exclude VAT. The Company has a successful track record in keeping the tariffs at

the lowest possible levels through operational efficiency and cost control. The tariffs are also competitive when compared with the tariffs charged by other bulk water service providers abstracting water from the Vaal River Catchment.

Cost of Raw Water

The tariff paid to the Department of Water Affairs for raw water, abstracted under permit from the Vaal River, was 255,47 c/kL (including a TCTA levy of 207,33 c/kL). The tariff was 234,22 c/kL until 31 March 2012. As a result, the raw water cost increased by 9,07% as from 1 April 2012. Raw water purchases constituted around 40% of the actual operating expenditure for 2012. Therefore, raw water pricing is a major and sensitive issue as it has far reaching impacts on the operations and tariffs of the Company.

While the price of raw water continues to increase, there are serious challenges faced by the Company as far as the deterioration of the raw water quality is concerned. This is causing additional operating cost to ensure that the quality of potable water is maintained at the required standard all the time.

Finance

The Company adopted the International Financial Reporting Standard (IFRS) for small and medium-sized entities for the first time in 2010. The comparative information for the previous year was restated in terms of the reporting requirements pertaining to IFRS for small and medium-sized entities.

During 2012, the turnover of the Company was recorded at R 243,021 million compared with R 217,316 million in the previous year, represent-ing an increase of 11,82%. The turnover included income from analytical services of R 6,22 million.

During the year under review, the Company showed a profit of R 18,520 million, included is a depreciation charge of R 38,306 million (R 34,230 million for 2011) in terms of IFRS reporting requirements. However, a transfer of R 29,844 million was done from the assets revaluation reserve to bring the value of the reserve in line with the revalued assets. Therefore, there was a positive change in the Equity of R 18,520 million at 31 December 2012 compared to R 9,654 million for the previous year.

The total assets increased to R 957,644 million at 31 December 2012 compared to R 913,284 million in 2011 mainly due to additions to plant and machinery of R 99,144 million that took

19

place during the year under review. The carrying amount of property, plant and equipment at 31 December 2012 increased to R 701,706 million from a previous year’s figure of R 693,673 million. Depreciation increased from R 34,230 million in 2011 to R 38,307 million in 2012 due to revaluation of assets.

Financial Assets increased from R 152,739 million at 31 December 2011 to R 166,085 million at 31 December 2012. The cash and cash equivalents increased to R 28,983 million at 31 December 2012 from R 24,252 million.

Human Resources and Employee Wellness

The strengthening of the HR function is considered essential as the Human Resources section supports the Company’s primary goal to attract, develop and retain staff of the highest caliber. This is to ensure that outputs are aligned to the Company’s strategic objectives.

The Company’s operational activities are split into three departments, namely Engineering, Operations and Finance/Administration. With the proper and efficient support from the Human Resources section, once again the Company’s operating results have indicated the achievement of higher levels of productivity and efficiency. The efforts were specifically focused on the work - life balance by striving towards employee’s holistic wellbeing and personal development aligned to their key performance areas. Another focus area was the enhancement of stakeholder satisfaction through ensuring that their needs are well catered for.

In order to improve efficient management and monitoring of the human resources, the Company has implemented the VIP HR Management and Payroll system which has proven to be a good

investment, considering all the functions that the system has to offer.

The Company is in the process of implementing an electronic performance management process, where all job profiles together with its specific key performance areas and indicators are linked on the system. Further to that, a four point rating scale will be used which will ensure consistency in terms of scoring of individual performance throughout the organisation. This is considered to be a big milestone for the Company.

During 2011, the Board granted approval for the acquisition of a wellness service provider, and after the relevant procurement processes were conducted, ICAS was appointed as the preferred service provider for 2013. The services provided by ICAS include, inter alia, furnishing personal financial and legal advice and also offering counselling on relationships, family matters, substance abuse, trauma and stress. These services are not only meant for employees of the Company but also extended to their immediate family members. The Company’s Wellness Program is known as “Midvaal Water Total Life Care (TLC)”. The programme was launched in December 2012 during the commemoration of World AIDS day and we are grateful that some of the members of our Board of Directors graced this occasion with their presence.

ICAS will also be providing management with quarterly reports in terms of number of employees making use of the programme, frequency of usage, common problem cases, etc. With this programme being in place, the Company hopes to rise to greater heights by taking care of the personal dimensions of its most precious resource.

All of these achievements would have not been possible without the guidance and valuable support of the Human Resources and Remuneration Committee during the review period.

Relationships with Trade Unions

Currently there are two unions that are recognised within the Company, namely United Association of South Africa and the South African Municipal Workers Union. Another milestone for the Company was the establishment of a Local Labour Forum in September 2012. Specific Terms of Reference were drawn up for the Forum and has proven to be functioning efficiently due to the improved communication and working relations between management and organised labour on matters of mutual interest.

20 A n n u a l R e p o r t 2 0 1 2

The Company is also affiliated to the Amanzi Statutory Council which was granted a Bargaining status by the Labour Court in September 2012, which now qualifies it to mediate in all issues of mutual interest between the employer organisation, the South African Association of Water Utilities (SAAWU), and relevant Labour organisations. Both SAMWU and UASA are members of the Amanzi Bargaining Council.

The 2011/2012 salary negotiations were not centrally negotiated at this Council but were done at plant level due to non-uniformity among the water utilities. However, going forward and with Amanzi having been registered as a Bargaining Council, salary negotiations from 2013 onwards, will be addressed at that level.

HIV and AIDS

The Company is continuously striving to raise HIV / AIDS awareness among its employees and the community at large. To enhance these services, a number of employees volunteered their time and services to assist with this objective. They were trained as peer educators and have registered with the South African Business Coalition on HIV / AIDS. They attend regular updates on the disease and come and share their knowledge with fellow employees and community members through departmental information sharing sessions.

The Klerksdorp based AURUM institute who was also in attendance of the commemoration of World AIDS day at the Company, gave motivational talks on the National Health five year strategic plan on HIV / AIDS, on zero tolerance on new infections and zero TB deaths. The Institute conducts twice per annum voluntarily counselling and testing (VCT) on site and provides other health services like blood pressure and sugar level checks, etc.

In future, the Company’s wellness service provider, ICAS, will also be able to provide the Company with statistics regarding its HIV / AIDS profile as they only started functioning in December 2012.

Training and Development

The Workplace Skills Plan covering the period July 2011 to June 2012 was submitted to the EWSETA in time to meet the due date. The Company successfully completed a Learnership in Water Services at NQF level 1 for 22 employed learners as well as 1 unemployed learner, with support from EWSETA in 2010/2011. PWI, the Service Provider appointed by the Company, successfully facilitated the programme. Certificates were re-ceived from EWSETA and a special Graduation ceremony was arranged for the learners in 2012. The Chairperson of the Board attended the function and presented the learners with their certificates.

EWSETA approved funding for the continuation of the Learnership on level 2 which commenced only in March 2012 due to the late approval. Good feedback has been received from line managers regarding the observed improvement on English literacy and basic numeracy from our employees, which indicates that this was a good investment for the Company.

In line with the Company training and development strategic objective, study assistance has been provided to enable employees to study part time with institutions of higher learning. Skills training courses have also been provided in this regard in line with the identified skills gaps and personal developmental plans. This training assists in the continuous development of the employees and to ensure that they stay abreast with new developments in their respective fields of expertise.

Employment equity and skills development form an integral part of the business strategy and operations and have been the focus over many

21

years. The strategy of the Company is paying dividends though at a slow pace due to inherent impediments relating to its environment.

Transformation

Subsequent to an employee satisfaction survey conducted in 2011 and based on the feedback received, it was decided that the Company was in need of change management interventions. After following required procurement processes Siyakha Consulting was appointed as the preferred service provider to conduct change management initiatives in the Company.

The initiatives embarked upon by Siyakha was to determine what the pressing issues within the Compay were, with employees identifying them and Siyakha Consulting assisting them to come up with a desired culture for the Company. The initiative was aimed to assist employees in understanding and being sensitive to each other’s differences including but not limited to racial, cultural and ethnical matters. The initiative was structured in three phases which were:

• Learn It: where employees learnt what diversity is and how it affects them in the work place

• Live It: Employees were given assignments to identify diversity issues in the work environment based on their learning

• Teach It: Employees had to report back on the diversity issues identified and how they have resolved them in their everyday dealings with fellow employees.

In addition to the Siyakha initiatives, communication came through as a key factor that contributed to perceptions and misunderstandings. Consequently, the Company’s communication structures were revisited to improve on its effectiveness in delivering key messages timeously and efficiently.

To ensure continuation of the initative and transferring of skills, Siyakha identified and trained culture champions who will continue with diversity and change management initiatives within the Company to ensure that the momentum of change management does not diminish.

Race and Gender

MALE FEMALE FOREIGN NATIONALS Total

Levels A C I W A C I W Male FemaleE Band 0 0 1 0 0 0 0 0 0 0 1D Upper 0 0 0 1 1 0 0 1 0 0 3D 2 1 0 0 2 1 0 0 0 0 0 4CU 0 0 0 3 0 0 0 2 0 0 5C4 0 0 1 1 0 0 0 1 0 0 3C3 0 0 0 1 0 0 0 2 0 0 3C2 2 0 1 8 0 0 0 0 0 0 11C1 0 0 0 0 2 0 0 3 0 0 5B5 1 0 0 1 0 0 0 0 0 0 2B4 12 0 0 0 1 0 0 4 0 0 17B3 5 0 0 0 1 0 0 0 0 0 6B2 4 1 0 0 0 0 0 0 0 0 5B1 11 0 0 0 2 0 0 0 0 0 13A3 40 0 0 1 9 0 0 0 0 0 50TOTAL PERMANENT

76 1 3 18 17 0 0 13 0 0 128

Temporary employees

2 0 0 0 0 0 0 0 0 0 2

External Learners

0 0 0 0 1 0 0 0 0 0 1

GRAND TOTAL

78 1 3 18 18 0 0 13 0 0 131

22 A n n u a l R e p o r t 2 0 1 2

Experiential Training Program

In terms of its policy, the Company annually employs qualified students from higher educational institutions to enable them to attain the necessary practical work experience. These students were recruited from the ranks of previously disadvantaged individuals. This initiative has to be intensified in consultation with the EWSETA due to dire need for students with tertiary education to prepare them for the workplace. For the past ten years, the Company has appointed students in the laboratory on a one-year contract base for experiential training where they are exposed to all facets of an accredited laboratory. In many instances, these students got the opportunity to apply for vacant analyst positions in the Company and were appointed permanently whereas all the other students got employed in the industry. The Company takes pride in the fact that these students are sought-after in the industry, once they have completed their experiential training at Midvaal Water.

Corporate Social Responsibility

In terms of its budgetary allocations, the Company annually identifies beneficiaries for assistance of some kind. During 2012 through the assistance of field workers and care givers of different charity organisations in the KOSH area, our Peer Educators identified fifteen families who are in dire need for their basic needs. These are child-headed families who do not have birth certificates and ID documents and thus do not get social grants, and the others are being cared for by their grandparents and survive on their social grants. In December, food hampers were distributed to these families and a picnic was arranged where all the kids enjoyed a fun filled day with games and treats, which was a first time experience for them. The Company also bought school uniforms and bags for fifteen underprivileged children.

The Company took part in a fundraising golf day, organised by Wilmed Park Private Hospital. As the main sponsor of the day, the Company sponsored the Matlosana Transplant Games Team with R15 000 to assist them to attend the National Championships in Durban in 2012. All three team members had kidney transplants but in spite of this, received gold or silver medals in the Provincial Championships and consequently qualified for the National Championships.

Furthermore, the Company continued to focus on education, welfare, environment and capacity building in terms of its social responsibility. Annual external bursaries are offered to deserving students from deprived backgrounds to pursue water related careers at higher educational institutions.

Recognition of Achievements

The Company has a structured system of recognizing long services and holds annual award functions to acknowledge loyalty and dedicated employment. The Company also has a system of identifying performer of the month and the performer of the year and the culture of recognising achievement and catching people doing the right things all the time is working well. The Company added financial benefits to its various awards in order to enhance the value of activities related to recognition of employees. There is also a suggestion system, which is linked to a reward system for benefitting employees, who contribute to operational savings etc. by making workable suggestions.

“Save our world…think eco-friendly.”

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Engineering

Security Services

Midvaal Water Company continued to outsource Security Services and G4S has provided these services since 1 November 2011. The security strategies which have been implemented at the outstations continued to be effective and only minor incidents of theft have been reported. Monitoring of outstations utilizing the SCADA System enables full time monitoring and regular outstation patrols

as well as response to call-outs, which ensures effective control.

Due to minor incidents of theft at the main plant, the security effort was increased with more frequent patrols in the high risk areas. Extra plant and housing patrols have also been instituted to increase visibility and the implementation of a quad vehicle enables wider perimeter patrols.

Safety, Health and Environment

The Company retained its 5 Star Safety Grading status, following an intensive grading audit in respect of health and safety compliance for 2012 for the eighth year in a row. It has passed 760 000 Accident Free working man hours and managed to further improve on its Vehicle Accident Free record by completing 3 276 280 accident free kilometres travelled by the end of December 2012. This is indeed a very commendable achievement and the Company celebrated this achievement by giving First Aid kits to all employees to thank them for their dedication, commitment and hard work to attain these results. Without the commit-ment and support of our employees, we would never have been able to celebrate such an achievement.

Midvaal Water Company had a number of inspections from the Department of Labour regarding construction projects and contractors on site and can gladly report positive feedback concerning project work and our Contractor Compliance.

An Environmental Legal Compliance Audit was conducted in August 2012 by an independent Environmental Law Advisor, and a number of issues were identified which needed attention. Some issues have been attended to and Action Plans have been put in place to address the remainder during the ensuing year.

Maintenance Activities

The Company continued with its Preventative Maintenance Strategies, which are based on a combination of pre-defined Planned Maintenance Schedules and Condition Monitoring of certain critical parameters associated with the different equipment types. Successful implementation of the Maximo Enterprise Asset Management System enables effective control, management as well as performance monitoring of all the assets of the Company and will support the Replacement and Upgrade Programs thereof.

No serious breakdowns that adversely affected the supply of water to consumers were experienced

24 A n n u a l R e p o r t 2 0 1 2

during 2012 and it was possible to meet the demand of consumers even during long periods of planned Major Maintenance work. A sequence of failures of pump sets at the Intake Pump Station prompted a detailed investigation which revealed problem areas that caused these failures. These aspects will be addressed during 2013 and 2014. The Company is also planning to undertake major refurbishment work at its High Pressure Pump Station during the same period. Several planned shutdowns were held in 2012 during which Major Maintenance work was done. The longest shutdown lasted 48 hours and the others between 24 hours and 36 hours. Work done during these periods significantly improved the capability of the Company to provide water to its consumers in future without unplanned interruptions.

Energy Management

The Company continued to focus on Energy Management with the aim to save on electricity costs and optimise the energy usage. The Company is currently on the Time-Of-Use Tariff System and has implemented operational changes to utilise some of the spare plant capacity to shift load to the lower tariff periods.

Systematic refurbishment of pump stations continued during 2012 to enhance energy efficiency and all new installations for 2012, which include the Vierfontein and Waste Water Recycling Pump Stations, have applicable technology implemented to support energy saving efforts.

The Company also continued to replace con-ventional geysers with solar geysers at its housing facilities where failures occurred and found the switchovers to be very successful. Table 2 reflects electrical power consumption and costs for 2012.

Projects

Major investigations into the condition of the pipelines, reservoirs and pump stations with its associated pump sets and electrical switchgear were performed during 2010, which resulted in the compilation of a comprehensive Refurbishment Plan for the Bulk Distribution System. Investigations have also been undertaken with regard to the different processes utilised in the water treatment plant to formulate a Plant Operations Improvement Plan. Initial results were used to revise the CAPEX and Major Maintenance Programmes and priority areas received the necessary attention through these plans.

Replacement of a 2 500 meter section of the West-2 pipeline has commenced in 2011 and was 100% completed by year-end. The replacement of West-1 pipeline from Vaal Reefs 2# to Domestic and a portion at the 10ML Reservoir commenced in October 2012 and will be completed by August 2013. The completion of these projects will greatly improve water supply to the Dawkinsville and Alabama Pump Stations that feed the areas of Jouberton, Alabama, Doornkruin and Wilkoppies.

Upgrading of the North Filters started in the fourth quarter of 2010 and was completed in February 2012. The upgrading of the North Filters did not only increase the throughput at that plant section but also addressed air binding problems in the filter media. The backwash system was also improved to further enhance the quality of the water through these filters.

Major Maintenance Projects

Several Major Maintenance Projects were under-taken during 2012 as part of the refurbishment of the ageing infrastructure. A major portion of the infrastructure is older than 35 years and needs refurbishment and upgrading to ensure uninterrupted supply of water as well as to be able to effectively treat the ever deteriorating raw water.

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The following Major Maintenance Projects were undertaken during 2012:

Description of project %Completed

ValueR

Transformer Refurbishment 2011 80 275 000

Earthing Survey 95 150 000

Replace Pump Station PLC’s 97 460 000

Replacement of Substation Panels 2011 87 1 020 000

Replacement of Substation Switchgear 2012 55 560 000

Replace Internal Pump Station Emergency Pumps 96 320 000

Refurbish Intake Pump Station Pumps 55 850 000

Repairs to Internal Reservoirs 90 2 116 000

Refurbish Highlift Pump Station Pumps 45 700 000

Replace Faulty Valves West Main Pipe Line 2012 70 990 000

Replace Faulty Valves North Main Pipe Line 2012 98 1 130 000

Replace Endpoint Pump Station Electrical Panels 60 850 000

Capital Projects

Several Capital Projects were undertaken during 2012 to enhance existing processes. These included modifications and extension of existing plant infrastructure; replacement of operational vehicles and equipment; extension of the existing accredited laboratory facilities and energy management.

The main Capital Projects undertaken during 2012 were as under:

Description of project %Completed

ValueR

Additional Offices at Administration Offices 100 1 170 000.00

Upgrading of Ablution Facilities at Conference Area 100 233 000

Upgrade North Filters 95 47 000 000

Replacement of Pipe Work at WTP Reservoirs Phase 2 93 4 420 000

Replacement of Computers 2011 100 113 000

Replace Internal Water Pipes & Valves 80 400 000

Replacement of West Main 2 from Southvaal to VR2# 98 12 000 000

Replacement of West Main 1 from Southvaal to Domestic 64 27 500 000

Replacement of Operational Vehicles 2012 100 295 000

Replace ION with Discreet Analyser 98 1 130 000

New Metal Analysing System 97 1 200 000

“Go Green…it’s clean!”

26 A n n u a l R e p o r t 2 0 1 2

Details of planned Major Maintenance and Capital Projects for 2013

Planned Major Maintenance Projects:

Description of project ValueR

Replacement of Faulty Valves West Main 880 000

Replacement of Faulty Valves North Main 880 000

Refurbish Southvaal Pump Station Building 980 000

Refurbish Dawkinsville Pump Station Building 650 000

Concrete Repairs to Horizontal Settling Dams 850 000

Refurbish Internal Reservoirs 800 000

Refurbish Filter Reservoirs 900 000

Refurbish East/West Filter Structure 2 500 000

Replace DAF Saturators & Pipe Work 1 000 000

Replace Substation Switchgear 810 000

Replace East/West Filters PLC’s 750 000

Replace Chlorinators and Injectors 250 000

Replace East/West Filters Sand 350 000

Planned Capital Projects:

Description of project ValueR

Workshop Store 550 000

Hydraulic Model Phase 3 350 000

Operational Vehicles 1 000 000

Refurbishment of Highlift Pumps with Applicable Pumps 7 920 000

Cathodic Protection from Dawkinsville Pump Station to Reservoir 1 500 000

Replace West Main Pipe Line from 10ML Reservoir to Dawkinsville Pump Station 20 000 000

Cathodic Protection North Main 1 800 000

New Laboratory Equipment 720 000

Heat Exchanger Ozone Plant 190 000

Refurbish Vierfontein Reticulation System 750 000

Refurbish Steel Structure of HSD 1 000 000

Upgrade Energy Management System 1 250 000

Replacement of Laboratory Equipment 750 000

Replace Workshop Tools & Equipment 250 000

27

Management of Midvaal Water Company

From left to right: FG Ellis – Director Engineering R Mphela – Director Finance & Corporate Services MJF Krüger – Director Operations RU Khan – Chief Executive

28 A n n u a l R e p o r t 2 0 1 2

MO

NTH

Raw

wat

erab

stra

cted

from

Va

al R

iver

Wat

er u

sed

in p

lant

and

pipe

line

loss

es

Trea

ted

wat

er s

old

Kilo

litre

sAv

erag

eki

lolit

repe

rda

y

Tota

l%

of w

ater

us

ed in

Pl

ant a

ndlo

sses

kLkL

Nor

th L

ine

Wes

t Lin

eEa

st L

ine

Tota

l

JA

NU

ARY

4

093

060

82

175

1 06

2 88

42

940

167

7 8

344

010

885

121

542

2.01

%

FE

BR

UA

RY3

792

670

73

645

917

607

2 79

2 30

2 9

116

3 71

9 02

5 1

23 9

681.

94%

M

AR

CH

3 87

2 52

0 9

4 41

7 9

94 7

652

777

151

6 1

873

778

103

121

874

2.44

%

A

PRIL

3 65

7 57

0 7

9 31

8 9

61 7

482

612

008

4 4

963

578

252

119

275

2.17

%

M

AY3

805

970

110

831

942

232

2 74

8 89

4 4

013

3 69

5 13

9 1

23 1

712.

91%

JU

NE

3 76

5 60

0 6

4 04

61

058

316

2 63

8 60

8 4

630

3 70

1 55

4 1

19 4

051.

70%

JU

LY3

685

050

79

604

863

757

2 73

5 27

5 6

414

3 60

5 44

6 1

20 1

822.

16%

A

UG

UST

3 70

3 56

0 7

1 57

6 9

02 0

102

723

976

5 9

983

631

984

121

066

1.93

%

SE

PTEM

BER

3 94

9 53

0 9

8 37

2 8

80 2

742

966

653

4 2

313

851

158

124

231

2.49

%

O

CTO

BER

3 62

8 22

0 5

2 36

1 8

33 8

632

737

837

4 1

593

575

859

111

746

1.44

%

N

OVE

MB

ER3

789

490

48

051

903

160

2 83

4 18

1 4

098

3 74

1 43

9 1

29 0

151.

27%

D

ECEM

BER

3 54

2 55

0 4

4 85

8 8

27 8

652

665

494

4 3

333

497

692

124

918

1.27

%

TO

TAL

45 2

85 7

90 8

99 2

5411

148

481

33 1

72 5

46 6

5 50

944

386

536

121

607

1.99

%

TAB

LE 1

: R

aw

Wa

ter

Ab

stra

cted

an

d T

rea

ted

Wa

ter

Sold

Du

rin

g t

he Y

ea

r En

ded

31 D

ece

mb

er

2012

29

TAB

LE 2

: El

ect

rica

l Pow

er

Con

sum

pti

on

an

d C

ost

s fo

r th

e Y

ea

r En

ded

31 D

ece

mb

er

2012

Mon

th

Mid

vaal

Wat

er C

ompa

nyEl

lato

n Pu

mp

Stat

ion

2 x

10M

L Su

pply

Vier

font

ein

Pum

p St

atio

nTo

tal

Units

kWh

Max

Dem

and

kW

Tota

l Cos

tR

Cost

/kLSo

ld R

Units

kWh

Max

Dem

and

kW

Tota

l Cos

tR

Units

kWh

Max

Dem

and

kW

Tota

l Cos

tR

Units

kWh

Max

Dem

and

kW

Tota

l Cos

tR

Units

kWh

Tota

l Cos

tR

Cost

/kLSo

ld R

Kilo

Litre

sSo

ld

Janu

ary

2,5

72,7

01

5671

.11,

042,

427.

410.

2599

148

,684

36

9.0

137,

614.

0015

.00

1.2

515.

5529

3.00

1.8

6250

.89

2,7

21,6

93

1,18

6,80

7.85

0.29

5940

1088

5

Febr

uary

2,6

65,8

51

5789

.01,

103,

672.

880.

2968

163

,880

34

9.0

143,

370.

1615

.00

1.2

515.

5515

1.00

1.8

4577

.12

2,8

29,8

97

1,25

2,13

5.71

0.33

6737

1902

5

Marc

h 2

,428

,235

55

75.1

1,02

1,21

8.10

0.27

03 1

24,0

76

366.

012

3,42

0.48

15.0

01.

249

6.91

150.

001.

946

24.6

6 2

,552

,476

1,

149,

760.

150.

3043

3778

103

April

2,5

92,1

91

5765

.71,

160,

242.

590.

3242

111

,440

37

1.0

117,

032.

7239

29.7

031

.838

40.7

049

2.90

2.6

5325

.65

2,7

08,0

54

1,28

6,44

1.66

0.35

9535

7825

2

May

2,5

91,1

33

5859

.11,

219,

497.

470.

3300

131

,926

36

7.0

127,

954.

1610

04.4

031

.215

62.4

226

5.00

2.8

5426

.68

2,7

24,3

29

1,35

4,44

0.73

0.36

6536

9513

9

*Jun

e 2

,790

,521

59

47.5

1,78

9,43

9.70

0.48

34 1

52,7

35

353.

013

7,67

9.68

31.8

01.

287

2.60

1382

.00

3.3

7435

.50

2,9

44,6

70

1,93

5,42

7.48

0.52

2937

0155

4

*Jul

y 2

,731

,492

55

74.5

2,11

8,27

4.43

0.58

75 1

22,6

86

357.

015

2,14

4.81

31.8

01.

293

3.99

375.

002.

956

58.3

1 2

,854

,585

2,

277,

011.

540.

6315

3605

446

*Aug

ust

2,6

88,1

28

5394

.62,

040,

200.

090.

5617

186

,427

62

7.0

249,

707.

9631

.80

1.2

944.

7134

7.00

3.1

6466

.25

2,8

74,9

33

2,29

7,31

9.01

0.63

2536

3198

4

Sept

embe

r 2

,657

,290

50

79.6

1,55

2,28

6.69

0.40

31 1

80,7

25

462.

020

9,90

8.28

31.8

01.

291

5.21

0.00

0.0

5114

.52

2,8

38,0

47

1,76

8,22

4.70

0.45

9138

5115

8

Octo

ber

2,6

17,9

83

5581

.21,

280,

870.

650.

3582

181

,508

47

1.0

200,

980.

8825

.80

2.1

873.

8218

1.11

2.7

5396

.60

2,7

99,6

98

1,48

8,12

1.95

0.41

6235

7585

9

Nove

mbe

r 2

,727

,496

55

75.4

1,36

7,22

2.93

0.36

54 1

93,9

18

466.

020

8,77

9.43

0.90

1.3

847.

9416

5.19

2.5

5435

.44

2,9

21,5

80

1,58

2,28

5.74

0.42

2937

4143

9

Dece

mbe

r 2

,483

,114

56

99.2

1,26

0,47

9.14

0.36

10 2

24,1

62

468.

022

9,95

3.53

31.8

02.

297

9.18

620.

212.

956

29.1

8 2

,707

,928

1,

497,

041.

030.

4287

3491

865

TOTA

L 3

1,54

6,13

6 56

26.0

16,9

55,8

32.0

80.

3835

1,9

22,1

67

418.

82,

038,

546.

0951

64.8

06.

413

298.

5844

22.4

12.

367

340.

80 3

3,47

7,89

0 19

,075

,017

.55

0.43

1444

3807

09

* H

igh

tarif

f mon

ths

30 A n n u a l R e p o r t 2 0 1 2

Class I Class II > Class II

Recommended Max. Allowable Unacceptable

DETERMINAND AVERAGE CLASS UNITS operational limit for limited durationColour (aesthetic) <5 I mg/L Pt < 20 20 - 50 > 50Conductivity at 25 ºC (aesthetic) 67.0 I mS/m < 150 150 - 370 > 370Dissolved solids (aesthetic) 413 I mg/L < 1000 1000 - 2400 > 2400pH value at 25 ºC (aesthetic/operational) 8.21 I pH units 5.0 - 9.5 4.0 - 10.0 < 3.0 - >10.0Turbidity (aesthetic/operational/indirect health) 0.5 I NTU < 1 1 - 5 > 5Ammonia as N (operational) 0.4 I mg/L < 1.0 1.0 - 2.0 > 2.0Calcium as Ca (aesthetic/operational) 46 I mg/L < 150 150 - 300 > 300Chloride as Cl- (aesthetic) 61 I mg/L < 200 200 - 600 > 600Fluoride as F- (health) <0.5 I mg/L < 1.0 1.0 - 1.5 > 1.5Magnesium as Mg (aesthetic/health) 21 I mg/L < 70 70 - 100 > 100(Nitrate and Nitrite) as N (health) 1.2 I mg/L < 10 10 - 20 > 20Potassium as K (operational/health) 8 I mg/L < 50 50 - 100 > 100Sodium as Na (aesthetic/health) 51 I mg/L < 200 200 - 400 > 400Sulphate as SO4

= (health) 102 I mg/L < 400 400 - 600 > 600Zinc as Zn (aesthetic/health) 0.05 I mg/L < 5.0 5.0 - 10 > 10Aluminium as Al (health) 0.03 I mg/L < 0.3 0.3 - 0.5 > 0.5Antimony as Sb (health) <0.01 I mg/L < 0.01 0.01 - 0.05 > 0.05Arsenic as As (health) <0.01 I mg/L < 0.01 0.01 - 0.05 > 0.05Cadmium as Cd (health) <0.005 I mg/L < 0.005 0.005 - 0.01 > 0.01Total Chromium as Cr (health) <0.01 I mg/L < 0.1 0.1 - 0.5 > 0.5Cobalt as Co (health) <0.01 I mg/L < 0.5 0.5 - 1.0 > 1.0Copper as Cu (health) 0.03 I mg/L < 1.0 1.0 - 2.0 > 2.0Cyanide (recoverable) as CN- (health) <0.02 I mg/L < 0.05 0.05 - 0.07 > 0.07Iron as Fe (aesthetic/operational) 0.02 I mg/L < 0.2 0.2 - 2.0 > 2.0Lead as Pb (health) <0.01 I mg/L < 0.02 0.02 - 0.05 > 0.05Manganese as Mn (aesthetic) <0.01 I mg/L < 0.1 0.1 - 1.0 > 1.0Mercury as Hg (health) <0.001 I mg/L < 0.001 0.001 - 0.005 > 0.005Nickel as Ni (health) <0.02 I mg/L < 0.15 0.15 - 0.35 > 0.35Selenium as Se (health) <0.01 I mg/L < 0.02 0.02 - 0.05 > 0.05Vanadium as V (health) <0.01 I mg/L < 0.2 0.2 - 0.5 > 0.5Dissolved organic carbon as C (aesthetic/health) 4.6 I mg/L < 10 10 - 20 > 20Phenols (aesthetic/health) 0.006 I mg/L < 0.01 0.01 - 0.07 > 0.07Uranium <0.01 µg/L

Faecal coliform bacteria * 0 100%E. coli 0 100%

Allowable compliance contributionActual compliance

PHYSICAL, ORGANOLEPTIC AND CHEMICAL REQUIREMENTS

* MICROBIOLOGICAL SAFETY REQUIREMENTS: SANS 241: 2006, Ed 6.1

95% minimum100%

ASSESSEMENT OF WATER QUALITY FOR THE PERIOD January – December

Quality of water system

Microbiological requirement

Chemical requirement

Class I Class II Excellent ≥99% ≥95% ≥97% Good ≥98% ≥90% ≥95% Fair ≥97% ≥85% ≥90% Poor <97% <85% <90% Reference: Table C.2 - Compliance frequency targets in

respect of microbiological and chemical requirements that have health implications

(SANS 241: 2006 (Edition 6.1)

TABLE 3: POTABLE WATER January - December 2012

31

DET

ERM

INA

ND

S

UN

ITS

Ave

rage

Idea

l obj

ectiv

eA

ccep

tabl

eTo

lera

ble

Una

ccep

tabl

e

Con

duct

ivity

at 2

5 º Cm

S/m

64To

lera

ble

<30

30 -

6060

- 90

>90

pH v

alue

at 2

5 º C

pH u

nits

8.82

Una

ccep

tabl

e6.

5 - 8

.5<6

.5 &

>8.

5

Iron

as F

em

g/L

0.03

Idea

l<0

.10.

1 - 0

.50.

5 - 1

.0>1

.0

Man

gane

se a

s M

nm

g/L

0.04

Idea

l<0

.05

0.05

- 0.

10.

1 - 0

.3>0

.3

(Nitr

ate

and

Nitr

ite) a

s N

mg/

L1.

0A

ccep

tabl

e<0

.20.

2 - 1

.01

- 3>3

.0

Sol

uble

orth

opho

spha

te a

s P

mg/

L0.

12Id

eal

<0.2

0.2

- 0.4

0.4

- 1.0

>1.0

Chl

orid

e as

Cl-

mg/

L53

Acc

epta

ble

<50

50 -

100

100

- 150

>150

Sod

ium

as

Na

mg/

L52

Idea

l<7

0 70

- 10

010

0 - 2

00>2

00

Sul

phat

e as

SO 4

=m

g/L

103

Acc

epta

ble

<100

100

- 200

200

- 400

>400

Faec

al c

olifo

rm b

acte

riaco

unt /

100m

L78

Idea

l<1

50 /1

0015

0 - 2

0020

0 - 1

000

>100

0

Mag

nesi

um a

s M

gm

g/L

21Id

eal

<30

30 -

100

100

- 500

>500

Alu

min

ium

as

Al

mg/

L0.

04Id

eal

<0.1

50.

15 -

0.30

0.30

- 0.

50>0

.5

Am

mon

ia a

s N

mg/

L0.

40A

ccep

tabl

e<0

.25

0.25

- 1.

01.

0 - 5

.0>5

.0

Fluo

ride

as F

-m

g/L

<0.5

Idea

l<0

.70

0.7

- 1.0

1 - 2

>2.0

Ura

nium

µg/L

<0.0

1

Revi

sion

Num

ber

1

Impl

emen

tatio

n D

ate

2011

/03/

28

Lege

nd b

ased

on

Prop

osed

Tar

get

Wat

er Q

ualit

y O

bjec

tives

for t

heSc

hoon

Spr

uit,

Koe

kem

oer S

prui

t an

d M

iddl

e Va

al C

atch

men

t

Idea

l obj

ectiv

eA

ccep

tabl

eTo

lera

ble

Una

ccep

tabl

e

TAB

LE 4

: R

IVER

WA

TER

Ja

nu

ary

- D

ece

mb

er

2012

32 A n n u a l R e p o r t 2 0 1 2

TAB

LE 5

:

Ra

infa

ll in

mm

for

Five

Yea

rs (

2008 -

2012)

MO

NTH

2008

2009

2010

2011

2012

J

AN

UA

RY10

3.0

302.

519

3.0

172.

051

.5

F

EBR

UA

RY98

.040

.061

.579

.514

2.0

M

AR

CH

114.

542

.570

.041

.095

.0

A

PRIL

1.5

12.5

56.0

129.

528

.5

M

AY33

.543

.523

.014

.30.

0

J

UN

E22

.027

.50.

048

.012

.5

J

ULY

0.0

0.0

0.0

16.0

3.0

A

UG

UST

0.0

36.0

0.0

0.0

1.5

S

EPTE

MB

ER0.

011

.50.

01.

054

.5

O

CTO

BER

26.5

42.5

15.0

17.0

69.1

N

OVE

MB

ER12

6.5

95.0

134.

577

.568

.5

D

ECEM

BER

63.0

96.5

279.

014

6.0

194.

5

T

OTA

L58

975

083

274

272

1

33

GR

AP

H 1

- H

igh

est

an

d A

vera

ge D

aily

Sup

ply

1992 -

2012

050100

150

200

250

300

350

400

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

PEA

K SU

PPL

Y

AVE

RA

GE

SU

PPLY

Yea

r

MEGALITRE/DAY

34 A n n u a l R e p o r t 2 0 1 2

GR

AP

H 2

- M

on

thly

Sa

les

1992 -

2012

Yea

r

2500

3000

3500

4000

4500

5000

5500

6000

6500

7000

Jan '92

Jan '93

Jan '94

Jan '95

Jan '96

Jan '97

Jan '98

Jan '99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Mon

thly

Sal

es

Ave

rage

/Mon

th

KILOLITRE

35

GR

AP

H 3

- C

en

ts p

er

Kilolitr

e 1

992 -

2012

Yea

r

0

100

200

300

400

500

600

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

WA

TER

TA

RIF

F

TOTA

L O

PER

ATIN

G C

OST

S

DIR

EC

T O

PER

ATI

NG

CO

STS

OPE

RAT

ING

OV

ERH

EAD

S

CENT / KILOLITRE

36 A n n u a l R e p o r t 2 0 1 2

GRAPH 4 : Budget 2013

Maintenance

Depreciation

Chemicals

Administration Costs

Electricity

Remuneration and Overheads

Capital

Water Purchases

4.8%

10.0%

2.1%

5.4%

6.7%

12.6%

20.2%

38.2%

37

GRAPH 5 : Operating Budget 2012

Maintenance

Depreciation

Chemicals

Administration Costs

Electricity

Remuneration and Overheads

Capital

Water Purchases

4.7%

10.3%

2.0%

3.6%

6.0%

12.3%

35.8%

25.2%

38 A n n u a l R e p o r t 2 0 1 2

GRAPH 6 : Operating Results: Actual Expenditure 2012

3.4%

13.5%

1.7%

5.3%

6.8%

13.4%

15.8%

40.2%

Maintenance

Depreciation

Chemicals

Administration Costs

Electricity

Remuneration and Overheads

Capital

Water Purchases

39

Oxidation

Flocculation

Stabilisation

Disinfection

Waste Water Treatment

Miscellaneous

GRAPH 7 : Breakdown of Dosing Cost per Process 2012

20.86%

37.31%

7.69%

29.38%

0.12%4.65%

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

40 A n n u a l R e p o r t 2 0 1 2

General InformationCountry of incorporation and domicile South Africa

Directors RS Mack J Douw RK Sello L Makhale SL Nakedi CF Human F Maddonni J Harmse SC Newberry SP Snell

Registered office Farm Buffelsfontein 443 I.P Klerksdorp District Klerksdorp 2570 Business address Farm Buffelsfontein 443 I.P Klerksdorp District Klerksdorp 2570

Postal address P.O. Box 31 Stilfontein 2550

Bankers Standard Bank of SA Ltd

Auditors GNR Registered Auditors Chartered Accountants (S.A.)

Secretary G Garrow

Company registration number 1954/002224/08

Annual Financial Statementsfor the year ended 31 December 2012

1

M D Dikoko R U Khan B Mawasha OR Thabanchu EPJ Nel GL Sebuasengwe H Daniel S Cassim JF Ellis

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

41

IndexThe reports and statements set out below comprise the financial statements presented to the shareholder:

Index Page

Directors’ Responsibilities and Approval 3

Independent Auditors’ Report 4 - 5

Directors’ Report 6 - 7

Statement of Financial Position 8

Statement of Comprehensive Income 9

Statement of Changes in Equity 10

Statement of Cash Flows 11

Accounting Policies 12 - 14

Notes to the Financial Statements 14 - 23

The following supplementary information does not form part of the financial statements and is unaudited:

Detailed Income Statement 24 - 25

Annual Financial Statementsfor the year ended 31 December 2012

2

“Water...vital resource for life.”

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

42 A n n u a l R e p o r t 2 0 1 2

Directors’ Responsibilities and ApprovalThe directors are required by the Companies Act of South Africa, to maintain adequate accounting records and are responsible for the content and integrity of the financial statements and related financial information included in this report. It is their responsibility to ensure that the financial statements fairly present the state of affairs of the company as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with the International Financial Reporting Standard for Small and Medium-sized Entities. The external auditors are engaged to express an independent opinion on the financial statements.

The financial statements are prepared in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the company and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board of directors sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the company and all employees are required to maintain the highest ethical standards in ensuringthe company’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the company is on identifying, assessing, managing and monitoring all known forms of risk across the company. While operating risk cannot be fully eliminated, the company endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the company’s cash flow forecast for the year to 31 December 2013 and, in the light of this review and the current financial position, they are satisfied that the company has or has access to adequate resources to continue in operational existence for the foreseeable future.

The external auditors are responsible for independently reviewing and reporting on the company’s financial statements. The financial statements have been examined by the company’s external auditors and their report is presented on page 4.

The financial statements set out on pages 6 to 25, which have been prepared on the going concern basis, were approved by the board of directors on 04 March 2013 and were signed on its behalf by:

M D Dikoko R U Khan

3

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

43

Independent Auditors’ ReportTo the member of Midvaal Water Company (Non-Profit Company)

We have audited the financial statements of Midvaal Water Company (Non-Profit Company), which comprise the statement of financial position as at 31 December 2012, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes, and the directors’ report, as set out on pages 6 to 23.

Directors’ Responsibility for the Financial Statements

The company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities, and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

4 “Live Green, Love Green, Think Green.”

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

44 A n n u a l R e p o r t 2 0 1 2

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of Midvaal Water Company (Non-Profit Company) as at 31 December 2012, and its financial performance and its cash flows for the year then ended in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities, and in the manner required by the Companies Act of South Africa.

Other matter

Without qualifying our opinion, we draw attention to the fact that supplementary information set out on pages 24 to 25 does not form part of the financial statements and is presented as additional information. We have not audited this information and accordingly do not express an opinion thereon.

GNR Registered Auditors4 March 201333 Johannesburg RoadKlerksdorp

5

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

45

Directors’ ReportThe directors submit their report for the year ended 31 December 2012.

1. Review of activities

Main business and operations

There were no changes in the nature of the company’s business during the year under review. The current business operations of the company comprise the abstraction of raw water from the Vaal River, and the distribution thereof, after purification in the bulk, for domestic, mining and industrial use to consumers in the Klerksdorp, Orkney, Stilfontein and Hartbeesfontein (KOSH) area. In addition, the Company provides scientific services to its major clients and public through a Laboratory accredited by SANAS.

The Company has abstraction rights from the Department of Water Affairs and Forestry for 238 megalitres per day from the Vaal River. Total water sales for the year was 44 386 536 kilolitre (2011 - 43 482 455 kilolitre), with a rand value of R 236 804 416 (2011 - R 211 005 540). The City Council of Matlosana was the largest consumer of water during 2012 with sales of 29 614 977 kilolitre, equivalent to 66.7% (2011 - 66.7%), followed by neighbouring Gold Mines, with a consumption of 32.8% (2011 - 32.9%). Other consumers contributed to water sales of 0.5% during 2012 (2011 - 0.4%).

The operating results and state of affairs of the company are fully set out in the attached financial statements and do not in our opinion require any further comment.

2. Events after the reporting period

The directors are not aware of any matter or circumstance arising since the end of the financial year.

3. Directors

The directors of the company during the year and to the date of this report are as follows:

Name Appointed ResignedCHAIRPERSON:M D Dikoko 7 June 2007DEPUTY CHAIRPERSON:R U Khan 12 March 2004DIRECTORS:B Mawasha 6 September 2012OR Thabanchu 7 June 2006EPJ Nel 3 December 2003GL Sebuasengwe 3 December 2003H Daniel 6 September 2007S Cassim 1 September 2011JF Ellis 1 September 2011HJC Ferreira 1 September 2011 6 September 2012RS Mack 1 September 2011J Douw 1 June 2005ALTERNATIVE DIRECTORS:RK Sello 7 June 2006L Makhale 7 June 2006SL Nakedi 7 June 2006CF Human 5 June 2008F Maddonni 1 September 2011J Harmse 1 September 2011SC Newberry 14 June 2012SP Snell 14 June 2012

6

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

46 A n n u a l R e p o r t 2 0 1 2

Directors’ Report4. Secretary

R Mphela resigned as secretary of the company on 01 October 2012 and G Garrow was appointed in her stead in an acting capacity.

The secretary of the company is G Garrow of:

Business address Farm Buffelsfontein 443 I.P Klerksdorp District Klerksdorp 2570 Postal address P.O. Box 31 Stilfontein 2550

5. Auditors

GNR Registered Auditors will continue in office in accordance with section 270(2) of the Companies Act.

7

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

47

Statement of Financial Position

Figures in Rand Note(s) 2012 2011

Assets

Non-Current AssetsProperty, plant and equipment 2 701,705,910 693,672,762Financial Assets 3 166,084,873 152,738,541 867,790,783 846,411,303

Current AssetsInventories 1,777,884 1,952,639Trade and other receivables 5 58,618,406 40,259,467Prepayments 518,839 408,010Cash and cash equivalents 6 28,938,067 24,252,296 89,853,196 66,872,412Total Assets 957,643,979 913,283,715

Equity and Liabilities

EquityReserves 565,228,973 595,073,179Non Distributable Reserve 319,422,969 271,058,330 884,651,942 866,131,509

Liabilities

Non-Current LiabilitiesRetirement benefit obligation 4 26,744,000 21,395,000

Current LiabilitiesTrade and other payables 9 36,850,507 17,018,910Provisions 7 5,490,586 5,542,722Retention Withheld 8 3,906,944 3,195,574 46,248,037 25,757,206Total Liabilities 72,992,037 47,152,206Total Equity and Liabilities 957,643,979 913,283,715

“Make conservation a habit.”8

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

48 A n n u a l R e p o r t 2 0 1 2

Statement of Comprehensive IncomeFigures in Rand Note(s) 2012 2011

Revenue 10 243,021,913 217,316,912Cost of sales (137,853,813) (125,859,930)Gross profit 105,168,100 91,456,982Other income 10,421,791 9,991,669Operating expenses (100,514,033) (97,700,331)Operating profit 11 15,075,858 3,748,320Investment revenue 12 4,276,070 5,905,532Loss on non-current assets held for sale or disposal groups (831,495) -Profit for the year 18,520,433 9,653,852Other comprehensive income - -Total comprehensive income for the year 18,520,433 9,653,852Transfer from asset revaluation reserve with regard to 29,844,206 29,446,032 depreciation and sale of revalued assets Changes in equity for the year 48,364,639 39,099,884

9

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

49

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10

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

50 A n n u a l R e p o r t 2 0 1 2

Statement of Cash Flows

Figures in Rand Note(s) 2012 2011

Cash flows from operating activities

Cash generated from operations 15 52,019,435 19,661,041Interest income 4,276,070 5,905,532Initial Fee - Investment - (57,000)Net cash from operating activities 56,295,505 25,509,573

Cash flows from investing activities

Purchase of property, plant and equipment 2 (47,280,187) (56,041,580)Sale of property, plant and equipment 2 108,710 -Net (Purchase)/Sale of financial assets (5,149,627) 10,649,818Net cash from investing activities (52,321,104) (45,391,765)

Cash flows from financing activities

Movement in retention withheld 711,370 2,125,380

Total cash movement for the year 4,685,771 (17,756,812)Cash at the beginning of the year 24,252,296 42,009,108Total cash at end of the year 6 28,938,067 24,252,296

11

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

51

Accounting Policies1. Presentation of Financial Statements

The financial statements have been prepared in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities, and the Companies Act of South Africa. The financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. They are presented in South African Rands.

These accounting policies are consistent with the previous period.

1.1 Property, plant and equipment

Property, plant and equipment are tangible items that:are held for use in the production or supply of goods or services, for rental to others or for administrativepurposes; and are expected to be used during more than one period.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses.

Depreciation is provided using the straight-line method to write down the cost, less estimated residual value over the useful life of the property, plant and equipment, which is as follows:

Item Average useful lifeLand Not Depreciated / Infinite LifespanBuildings 50 yearsPlant, Machinery and Furniture 15 yearsLaboratory Equipment, Heavy Duty Electrical and Mechanical 10 years

The residual value, depreciation method and the useful life of each asset are reviewed at each annual reporting period if there are indicators present that there is a change from the previous estimate.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item and have significantly different patterns of consumption of economical benefits is depreciated separately over its useful life.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss in the period.

1.2 Financial instruments

RecognitionThe company classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial assets and liabilities are recognised on the company’s financial position when the company becomes party to the contractual provisions of the instrument.

Financial AssetsA financial asset is an asset and is recognised as such when a contractual right to receive an economic benefit exists and are derecognised when these rights or obligations no longer exist.

The Company Classifies it’s financial assets in the following categories:• financial assets measured at fair value through profit or loss.• financial assets measured at amortised cost less impairment.

12

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

52 A n n u a l R e p o r t 2 0 1 2

Accounting Policies1.2 Financial instruments (continued)

Financial assets measured at fair value through profit or loss are initially measured at fair value including any transaction costs. Subsequently these assets are measured at fair value, with gain and losses recognised in profit or loss.

Financial assets measured at amortised cost less impairment are initially measured at the transaction price including any transaction costs. Subsequently, items included in this category are measured at the amortised cost, calculated based on the effective interest method and interest income is included in profit or loss for the period.

Trade and other receivablesTrade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtors will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

Trade and other payablesTrade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Cash and cash equivalentsCash and cash equivalents comprise cash on hand and demand deposits, and other short- term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value.

1.3 Inventories

Inventories are measured at the lower of cost and selling price less costs to complete and sell, on the weighted average cost basis.

1.4 Impairment of assets

The company assesses at each reporting period date whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset.

If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.

If an impairment loss subsequently reverses, the carrying amount of the asset (or group of related assets) is increased to the revised estimate of its recoverable amount (selling price less costs to complete and sell, in the case of inventories), but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset (or group of assets) in prior years. A reversal of impairment is recognised immediately in profit or loss.

1.5 Reserves

Asset Replacement Reserve:The asset replacement reserve is represented by amounts transferred to this reserve from distributable earnings to finance future asset replacements and improvements to the infrastructure of existing assets.

Asset Revaluation Reserve:The asset revaluation reserve originated from the revaluation of property, plant and equipment, and will be reduced annually by depreciation charges on the assets.

13

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

53

Accounting Policies1.6 Employee benefits

Refer to note 4 to the financial statements for retirement benefit disclosure.

1.7 Provisions and contingencies

Provisions are recognised when:the company has an obligation at the reporting period date as a result of a past event;it is probable that the company will be required to transfer economic benefits in settlement; andthe amount of the obligation can be estimated reliably.

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.

1.8 Revenue

Turnover represents the net invoiced sales of water and income derived from analytical services:

Interest is recognised, in profit or loss, using the effective interest rate method.

1.9 Borrowing costs

Borrowing costs are recognised as an expense in the period in which they are incurred.

Notes to the Financial StatementsFigures in Rand

2. Property, plant and equipment

2012 2011 Cost / Accumulated Carrying Cost / Accumulated Carrying Valuation depreciation value Valuation depreciation value

Land 2,481,999 - 2,481,999 2,481,999 - 2,481,999Plant and machinery 782,167,092 (98,425,235) 683,741,857 685,885,966 (63,579,046) 622,306,920Motor vehicles 6,140,634 (3,942,203) 2,198,431 5,605,552 (2,564,912) 3,040,640Work in Progress 13,283,623 - 13,283,623 65,843,203 - 65,843,203Total 804,073,348 (102,367,438) 701,705,910 759,816,720 (66,143,958) 693,672,762

14

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

54 A n n u a l R e p o r t 2 0 1 2

2. Property, plant and equipment (continued)

Reconciliation of property, plant and equipment - 2011

Opening Additions Transfers Depreciation Total balance

Land 2,481,999 - - - 2,481,999Plant and machinery 623,491,943 31,720,993 - (32,906,017) 622,306,919Motor vehicles 3,473,961 890,616 - (1,323,937) 3,040,640Work in Progress 42,413,231 52,502,725 (29,072,753) - 65,843,203 671,861,134 85,114,334 (29,072,753) (34,229,954) 693,672,761

A register containing the information required by paragraph 22(3) of Schedule 4 of the Companies Act is available for inspection at the registered office of the company.

3. Financial Assets

At fair valueStandard Bank Fixed Deposit 14,826,814 -Account Number: 038659085 - 046Stanlib Cash Plus 33,885,997 27,246,641Account Number: 551352882Liberty Investment Builder 2,902,404 2,207,071Policy Number: 2777476Standard Bank Fixed Deposit 32,000,000 30,000,000Account Number: 038659085 - 045 83,615,215 59,453,712

15

Reconciliation of property, plant and equipment - 2012

Opening Additions Disposals Transfers Depreciation Total balanceLand 2,481,999 - - - - 2,481,999Plant and machinery 622,306,919 99,143,883 (916,085) - (36,792,860) 683,741,857Motor vehicles 3,040,640 695,882 (24,120) - (1,513,971) 2,198,431Work in Progress 65,843,203 47,585,254 - (100,144,834) - 13,283,623 693,672,761 147,425,019 (940,205) (100,144,834) (38,306,831) 701,705,910

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

55

Notes to the Financial StatementsFigures in Rand 2012 2011

3. Financial Assets (continued)

At amortised costLiberty Life Guaranteed Capital Bond 27,005,812 25,272,779Policy Number: 15133042000Cost Price: R 20 000 000Period of Investment: 5 yearsMaturity Date: 1 April 2014Guaranteed Minimum Maturity Value: R 30 003 060Effective Interest Rate: 8.45 % per annumLiberty Life Guaranteed Capital Bond 13,323,367 12,489,996Policy Number: 15592767000Cost Price: R 10 000 000Period of Investment: 5 yearsMaturity Date: 1 July 2014Guaranteed Minimum Maturity Value: R 15 172 422Effective Interest Rate: 8.70 % per annumLiberty Life Guaranteed Capital Bond 8,527,038 7,803,205Policy Number: 15652814000Cost Price: R 5 500 000Period of Investment: 5 yearsMaturity Date: 1 January 2013Guaranteed Minimum Maturity Value: R 8 527 038Effective Interest Rate: 9.17 % per annumLiberty Guaranteed Investment Plan 13,154,896 12,801,993Policy Number: 15778083000Cost Price: R 10 000 000Period of Investment: 5 yearsMaturity Date: 1 November 2014Guaranteed Minimum Maturity Value: R 15 584 148Effective Interest Rate: 9.28 % per annumMomentum Guaranteed Growth Plan - 3,396,185Policy Number: 2054933473Cost Price: R 2 441 022Period of Investment: 5 yearsMaturity Date: 1 October 2012Guaranteed Minimum Maturity Value: R 3 757 134Effective Interest Rate: 9.01 % per annumMomentum Guaranteed Growth Plan - 13,381,621Policy Number: 205497152Cost Price: R 9 463 121Period of Investment: 5 yearsMaturity Date: 1 October 2012Guaranteed Minimum Maturity Value: R 14 826 812Effective Interest Rate: 9.40 % per annumMomentum Guaranteed Growth Plus 14,706,986 12,789,914Policy Number: 205988341Cost Price: R 9 239 948Period of Investment: 5 yearsMaturity Date: 1 April 2013Guaranteed Minimum Maturity Value: R 15 089 203Effective Interest Rate: 10.31 % per annumOld Mutual Fairbairn Capital 5,751,559 5,349,136Policy Number: 16133896Cost Price: R 5 000 783Period of Investment: 5 yearsMaturity Date: 1 January 2016Guaranteed Minimum Maturity Value: R 7 230 967Effective Interest Rate: 6.83 % per annum

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

56 A n n u a l R e p o r t 2 0 1 2

Notes to the Financial StatementsFigures in Rand 2012 2011

3. Financial Assets (continued)

82,469,658 93,284,829Total other financial assets 166,084,873 152,738,541

Non-current assetsAt fair value 83,615,215 59,453,712At amortised cost 82,469,658 93,284,829 166,084,873 152,738,541

The fair values of listed or quoted investments are based on the quoted market price at reporting period date.

Funds invested solely for Post Retirement benefit purposes include the following:

- Liberty Investment Builder (Account No.: 20777467), R 2,902,404.- Liberty Life Guaranteed Capital Bond (Account No.: 15652814000), R 8,527,038.

4. Retirement benefits

Defined benefit plan

Retirement benefits of the employees of the company are covered by two Provident Funds, namely, the Sanlam Umbrella Provident Fund and the Mineworkers Provident Fund. The company joined the Sanlam Umbrella Provident Fund on 1 November 2007.

Employees who belong to the Mine Officials Pension Fund are still members of that fund.

Post Retirement Medical Aid:

Provision is made against income for future costs of post-retirement medical costs, based on an independent actuarial valuation. Costs are recognised in the income statement.

The actuarial valuation method used to value the liability is the projected unit credit method. The actuarial valuation is based on the current value of future obligations in respect of benefits of both current and future pensioners. In respect of current pensioners, the calculation is based on the current value of future medical aid contributions. In respect of current active members who will retire in future, the calculation is based on the value of expected future medical aid contributions after retirement.

In order to qualify for the benefits, certain conditions, as set out in the employees guide, must be met.

The latest actual valuation was perfomed on 31 December 2012

Opening balance (21,395,000) (17,456,000)Movement in Provision (5,349,000) (3,939,000) (26,744,000) (21,395,000)

The actual valuation includes the following unexpected calculated gain / (loss), which will decrease the liability:

Change in Real Discount Rate (2,246,000) (980,000)Higher than expected inflation (955,000) (2,557,000)Unexpected change in membership (224,000) 1,467,000 (3,425,000) (2,070,000)

17

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

57

Notes to the Financial StatementsFigures in Rand 2012 2011

4. Retirement benefits (continued)

Key assumptions used

Important calculation assumptions in calculating the obligation at 31 December 2012.

Discount rates used 9.50 % 8.25 %CPI inflation 7.00 % 5.25 %Health care cost inflation 9.00 % 7.25 %Assumed rates of mortality: PA (90) Ultimate table rated down 1.00 % 1.00 % 2 years plus percentage improvement p.a. from 2006Expected retirement ages 63 / 65 63 / 65

5. Trade and other receivables

Trade receivables 57,124,852 37,608,813VAT 1,589,684 2,844,961Provision for Bad Debt (198,126) (198,126)Provision for Compensation Commissioner 101,996 -Loan to Employees - 3,819 58,618,406 40,259,467

Credit quality of trade and receivables

Trade receivables comprise of two main categories: government and corporate. Management evaluates credit risk relating to the customers on an on-going basis. The assessment takes into account the financial position, past experiences and other factors.

6. Cash and cash equivalents

Cash and cash equivalents consist of:

Cash on hand 5,000 5,000Bank balances 28,933,067 24,247,296 28,938,067 24,252,296

7. Provisions

Reconciliation of provisions - 2012

Opening Increase / Total balance (Decrease) in Provision

Leave Pay and Bonus Provision 5,542,722 (52,136) 5,490,586

Reconciliation of provisions - 2011

Opening Increase / Total balance (Decrease) in ProvisionLeave Pay and Bonus Provision 4,973,098 569,624 5,542,722

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Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

58 A n n u a l R e p o r t 2 0 1 2

Notes to the Financial StatementsFigures in Rand 2012 2011

8. Retention withheld

Retention withheld constitutes a percentage of contracted price owed to the contractor which is held for a duration after completion as a form of surety. It is a construction industry standard in accordance with ECSA (Engineering Council of South Africa) to withhold these monies.

With regard to Civil Construction a 10% retention is withheld for the period of the contract, of which, on completion, 5% is paid and the remaining 5% withheld for a minimum period of 6 months.

With regard to Mechanical or Electrical contracts 5% retention is withheld for a minimum of 6 months after completion.

Contracts not subject to Retention of monies only occur in the instance that the contractor provides surety on the contract by means of a Retention bond, which is found to be satisfactory by Midvaal Water Company.

9. Trade and other payables

Trade payables 32,637,772 12,840,316Chlorine Rebate 86,799 -Sundry Payables 4,125,936 4,178,594 36,850,507 17,018,910

10. Revenue

Water Sales 236,804,417 211,005,540Analytical Services 6,217,496 6,311,372 243,021,913 217,316,912

11. Operating profit

Operating profit for the year is stated after accounting for the following:

Loss on sale of non-current assets held for sale and net assets of disposal groups 831,495 -Depreciation on Buildings 12,651,226 12,474,691Depreciation on property, plant and equipment 24,141,634 20,431,327Depreciation on Motor Vehicles 1,513,971 1,323,937Employee costs 37,841,697 34,570,592External Auditors Fee 133,833 194,919Internal Auditors Fee 153,150 82,400Post retirement medical aid provision / (written back) 5,766,405 4,305,260Fair value adjustment - financial assets 371,984 180,763Amortisation charges - financial assets 7,824,718 8,484,385

12. Investment revenue

Interest revenueBank 4,275,948 5,897,887Loans to directors managers and employees 122 7,645 4,276,070 5,905,532

13. Taxation

The receipts and accruals of the company are exempt from income tax in terms of section 10(1)(b) of the Income Tax Act 1962 (Act No. 58 of 1962).

19

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

59

Notes to the Financial StatementsFigures in Rand 2012 2011

14. Auditors’ remuneration

External Auditors Fees 133,833 194,919Internal Auditors Fees 153,150 82,400 286,983 277,319

15. Cash generated from operations

Profit before taxation 18,520,433 9,653,852Adjustments for:Depreciation 38,306,831 34,229,954Loss on sale of non-current assets and disposal groups 831,495 -Interest received (4,276,070) (5,905,532)Fair value adjustments (371,984) (180,763)Movements in retirement benefit assets and liabilities 5,349,000 3,939,000Movements in provisions (52,136) 569,626Initial Fee - Investment - 57,000Amortisation Charges (7,824,718) (8,484,385)Changes in working capital:Inventories 174,755 (14,634)Trade and other receivables (18,358,939) (15,539,074)Prepayments (110,829) (51,515)Trade and other payables 19,831,597 1,387,512 52,019,435 19,661,041

16. Related parties

Related party transactionsThere are directors of Midvaal Water Company who are representatives and who are also part of the management of clients of Midvaal Water Company.

Transactions with the above clients (related parties) are the following:

• Midvaal Water Company’s sales to those clients were R 286,066,560 (99.6% of total sales) for the financial year.

• The outstanding amounts on debtors accounts were R 53,641,236.• At year end, subsequent payments received till 15 February 2012 on those accounts were

R 26,903,581.

Related Party Transactions Sales Debtors Subsequent PaymentsCity of Matlosana 179,424,868 46,546,033 20,070,720Anglo Gold Ashanti 55,756,962 5,555,372 5,298,621Simmer and Jack 15,753,749 1,539,831 1,537,050 250,935,579 53,641,236 26,906,391

20

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

60 A n n u a l R e p o r t 2 0 1 2

Notes to the Financial StatementsFigures in Rand

17. Directors’ emoluments

Executive

2012 EmolumentsBasic Salaries 1,410,611Bonuses and performace-related payments 688,894Sums paid by way of expense allowance / other 441,373 2,540,878

2011 EmolumentsBasic Salaries 1,337,901Bonuses and performance-related payments 323,540Sums paid by way of expense allowance / other 2,138,954 3,800,395

Non-executive

2012 EmolumentsFor services as directors 1,266,426Sums paid by way of expense allowance / other 17,789 1,284,215

2011 EmolumentsFor services as directors 1,035,201Sums paid by way of expense allowance / other 54,233 1,089,434

21

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

61

Notes to the Financial StatementsFigures in Rand 2012 2011

18. Prior period errors

Certain assets were incorrectly expensed in previous years through Major Maintainance. Thus Retained Income was restated for the amount of expense incorrectly captured in Major Maintainance. The incorrect treatment of major maintainance resulted from implementation problems relating to the asset management software program.

Prior to 2011 there were changes in Statement of Financial Position. The changes were as follows:

Statement of Financial Position (2010)

Property Plant and Equipment 23,695,980

Asset Revaluation Reserve (15,849,939)

Non Distributable Reserve ( 7,846,041)

The comparative amounts have been restated. The effect of the restatement on the financial statements of 2011 is summarised below:

Statement of Financial PositionProperty, plant and equipment - 3,872,154Accumulated Depreciation - (1,002,418)Non distributable reserve - (2,869,736)

Statement of Comprehensive IncomeMajor Maintainance - (3,872,154)Depreciation - 1,002,418Profit for the year - (2,869,736)

19. Risk Management

Credit risk Management

The financial assets that expose the company to potential credit risk include cash, debtors and investments. The maximum level of credit risk of the company is represented by the disclosed carrying values of these items.

Credit risk relating to cash and cash equivalents is limited by placing cash and short term deposits of surplus cash with major financial institutions with a proven credit history.

Interest rate risk management

No material interest rate risk exists on the financial assets of the company, as the majority of the investments of the company are guaranteed maturity investments

Liquidity risk management

No liquidity risk currently exists.

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Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

62 A n n u a l R e p o r t 2 0 1 2

Notes to the Financial StatementsFigures in Rand 2012 2011

20. Commitments

Commitments in terms of Capital ExpenditureAuthorised and contracted for 39,060,000 62,022,750Authorised and not yet contracted for 184,199,603 113,595,592 223,259,603 175,618,342

To be expendedWithin one year 41,065,000 72,252,290In second to fifth year inclusive 50,524,064 59,520,286Later than five years 131,670,539 43,845,766 223,259,603 175,618,342

This capital expenditure is to be financed from:Internal Cash 223,259,603 175,618,342

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Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

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Detailed Income StatementFigures in Rand Note(s) 2012 2011

RevenueWater Sales 236,804,417 211,005,540Analytical Services 6,217,496 6,311,372 10 243,021,913 217,316,912

Cost of salesWater Purchases (113,816,835) (104,500,406)Chemicals used in production (4,752,162) (6,150,565)Manufacturing Expenses (19,284,816) (15,208,959) (137,853,813) (125,859,930)Gross profit 105,168,100 91,456,982

Other incomeRental income 773,710 570,909Recoveries (1) 251,858Finance Income 316,246 42,037Fair Value Adjustment 371,984 180,763Amortisation Cost on Financial Assets 7,824,718 8,484,385Sundry Income 1,075,081 110,100Transport - 226,387Interest received 12 4,276,070 5,905,532SETA Grants 60,053 125,230 14,697,861 15,897,201

Expenses (Refer to page 25) (100,514,033) (97,700,331)Operating profit 11 19,351,928 9,653,852Loss on non-current assets held for sale or disposal groups (831,495) -Profit for the year 18,520,433 9,653,852

24“Better earth, better existence,

better tomorrow…Go Green”

The supplementary information presented does not form part of the financial statements and is unaudited.

Midvaal Water Company (Non-Profit Company) (Registration number 1954/002224/08) Trading as Midvaal Water CompanyFinancial Statements for the year ended 31 December 2012

64 A n n u a l R e p o r t 2 0 1 2

Detailed Income StatementFigures in Rand Note(s) 2012 2011

Operating expensesAdvertising (506,552) (306,806)Auditors’ remuneration 14 (286,983) (277,319)Bank charges (58,891) (58,932)Depreciation, amortisation and impairments (38,306,831) (34,229,954)Directors emoluments (3,825,093) (4,889,829)Employee costs (37,841,697) (34,570,592)Entertainment (11,693) (10,869)General Running Cost (176,538) (2,106,135)Compensation Commissioner (101,996) (245,829)Investment Fees - (57,000)Post Retirement Medical Cover (5,766,405) (4,305,260)Stock Write-off - (30,957)Technical Services (518,779) (238,838)General Expenses (609,496) (561,977)IT expenses - (56,302)Insurance (676,998) (680,938)Levies (88,734) (59,517)Postage (15,945) (11,305)Printing and stationery (70,432) (143,817)Protective clothing (1,577) (64,494)Repairs and maintenance (9,505,781) (13,033,985)Royalties and license fees (126,491) (133,854)Security (487,852) (445,383)Subscriptions (189,302) (155,689)Telephone and fax (250,975) (277,102)Training (719,751) (432,576)Travel - local (369,241) (314,992)Utilities - (80) (100,514,033) (97,700,331)

25

The supplementary information presented does not form part of the financial statements and is unaudited.

Tel: 018 482 9500Fax: 086 532 2528 E-mail: info@midvaalwater.co.zaPO Box 31 • Stilfontein • 2550 • South Africa

www.midvaalwater.co.za

Annual Report - 2012

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