Our Board. Adv Mosotho Petlane 43. Mr Percy Sechemane 44. Mr Dawood Coovadia 48. Dr Michael Ellman. Adv Matshidiso Hashatse 44

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1 Our Board Fom left to right: Adv. Mosotho Petlane, Mr. Percy Sechemane, Mr. Dawood Coovadia, Dr. Michael Ellman, Adv. Matshidiso Hashatse, Ms. Matshidiso Magonare, Mr. Lefadi Makibinyane Adv Mosotho Petlane 43 Acting Chairperson Member of the Board of Rand Water as from: 1 June 2002 Academic qualifications: BA, LLB, Postgraduate Diploma in Business Administration, MBA Adv Petlane is an Executive Director at the Sedibeng District Municipality, and serves as a Commissioner with the General Public Service Sector Bargaining Council (GPSSBC). He is also the Chairperson of the Vaal University of Technology Foundation. Mr Percy Sechemane 44 Chief Executive Member of the Board of Rand Water as from: 1 September 2008 Academic qualifications: BCom, MBA Dinizulu Kumalo Percival Sechemane (Percy) is Rand Water s Chief Executive. He is a former CEO of Landis & Gyr, and a former COO for Red One. He also held senior positions (i.e. General Manager) in Eskom, Regional Manager for Western Region and the City of Cape Town. During his career Percy always operated in the engineering space. He holds a B.Com and MBA degree. Mr Dawood Coovadia 48 Member of the Board of Rand Water as from: 1 April 2005 Academic qualifications: BCompt (Hons), BCompt, CA (SA), BAC (SA), CMC, FIMC, FIAC, FCIS, FSAIM, GIA (SA), CAT (UK), M Inst D and JP Mr Coovadia is a Chartered Accountant (SA) practicing with Coovadia and Associates. He practices as a registered professional Accountant, Internal Auditor, Management Consultant and Tax Advisor. He is a non-executive director of the S A National Roads Agency Limited and the Gauteng Enterprise Propeller. He also serves as Chairman and member of several Audit and Board s. Dr Michael Ellman Member of the Board of Rand Water as from: 1 June 2002 Academic qualifications: Bsc, MSc Chemical Engineering, MBA, PhD Dr Ellman is a Senior Consultant and Managing Member of Siyadingana Consultants CC, with more than 35 years professional and managerial experience in the mining, chemical, oil and gas, electricity, standards development and water sectors. Dr Ellman serves on the Advisory Board of the Department of Chemical Engineering at the University of Pretoria. He is a former president of the South African National of the International Electro-technical Commission (IEC) in Geneva; and is also a former Chairman of the Electro-technical Sector Board of the SABS. 64 Adv Matshidiso Hashatse 44 Member of the Board of Rand Water as from: 1 April 2009 Academic qualifications: BA Journalism, LLB, LLM Adv Hashatse is the Director of Equity and Institution Culture at Rhodes University. She was previously the Deputy Dean of Students at Rhodes University. Adv Hashatse has over 20 years experience during which time has worked in and serviced clients in Telecommunications, Regulation, Automative, Mining Industry, Fundamental Human Rights and Gender and Development. Ms Matshidiso Magonare 46 Mr Lefadi Makibinyane Member of the Board of Rand Water as from: 1 April 2009 Academic qualifications: BA Ed, B Ed (Hons Environmental Education) Integrated Environmental Management (IEM), Project Management, Community Capacity Building (Cert), Assessor (Cert), Moderator (Cert) Ms Magonare is a former education and training quality manager at the Chemical Industries Education and Training Authority (CHIETA). She has extensive experience in education and training, environmental education and community development; and has held numerous positions with both the S A Qualifications Authority and the then Department of Environmental Affairs and Tourism. Member of the Board of Rand Water as from: 1 April 2009 Academic qualifications: MBL (Investment Banking & International Finance), B.Eng (Hons) in Chemical Engineering, MDP (Project Management), Professional Engineer, Chartered Engineer, MIChemE Mr Makibinyane is currently a Strategic Executive Director at the City of Tshwane Metropolitan Municipality where he heads the Public Works and Infrastructure Development Department (Water & Sanitation and Energy & Electricity). He has extensive Management, Technical/Engineering and Commercial/Financial experience gained with local and international Blue Chip companies over a 21 year working career.

2 Fom left to right: Ms. Savannah Maziya, Ms. Phumelo Ndumo, Ms. Noluphumzo Noxaka, Ms. Thembisile Nwedamutswu, Prof. Frederick A. O. Otieno, Ms. Ferhina Saloojee, Mr. Mdibanisi Tsheke Ms Savannah Maziya 43 Member of the Board of Rand Water as from: 1 April 2009 Academic qualifications: BCom (Hons) Finance & Broadcast Communication (USA), MBA Strategy & Finance (UK) Ms Maziya is the Group Chief Executive of the Bunengi Group, a company that is involved in construction, mining, social infrastructure, financial services and agriculture. She also serves on the boards of the Bunengi Group, Wilson Bayley Holmes-Ovcon (WBHO) Construction. Ms Maziya also Chairs the National Regulator for Compulsory Specifications. Ms Phumelo Ndumo 43 Member of the Board of Rand Water as from: 1 April 2005 Academic qualifications: BCom, MBL, Higher Diploma in Computer Auditing Ms Ndumo has occupied senior positions with three of South Africa s major banks, and was also an executive manager for corporate finance and strategy at Metropolitan Retirement Administrators. With competencies in finance, auditing, project management and communications; she also serves as a non-executive director for a number of entities. Ms Ndumo is an author, and is the founding Managing Director of Thuthuka SA. Ms Noluphumzo Noxaka 39 Member of the Board of Rand Water as from: 1 April 2009 Academic qualifications: CA (SA), MBA, BAdmin, BCom. Acc Hons, N Dip Financial Markets and Instruments, H Dip Computer Audit Ms Noxaka CA (SA) is a Director with Alatha Consulting, providing business advisory and management consulting services. She was previously GM Finance and Administration at SAMRO LTD with responsibility for the Finance, Credit, Pension Fund, Human Resources and Administration portfolios. She has occupied senior positions within Audit and Finance functions in the Finacial Services Sector including that of Chief Financial Officer at Meeg Bank Ltd and Strategic Projects Consultant at ABSA. Ms Noxaka is on the board of NECSA and serves on a few Audit s. Ms Thembisile Nwedamutswu 50 Member of the Board of Rand Water as from: 1 April 2009 Academic qualifications: Policy Studies (Masters), Adv Diploma in Accounting, Dip Business Admin, Youth Development Certificate, Training of Trainers Cert, Organisation and Strategic Management Certificate Ms Nwedamutswu is the Chief Executive of the Independent Development Trust. She was previously Deputy Director for Integrated Development and Poverty Relief at the Department of Social Development. She has experience in social development, and has occupied senior positions in the public sector. She is a former member of the Independent Development Trust and the Peoples Housing Trust. Prof. Frederick A. O. Otieno 55 Member of the Board of Rand Water as from: 1 April 2005 Academic qualifications: PhD (Civil), MBA, MSc, BSc (Civil) (Eng) (Hon), PrEng, FSAICE Professor Otieno is a professional engineer in South Africa and the United Kingdom. A Fellow of the S A Institute of Civil Engineers and the Water Institute of Southern Africa, he is currently a Professor of Civil Engineering and the Deputy Vice Chancellor: Technology Innovation and Partnerships, at the Durban University of Technology. He has worked as a Consulting Engineer, researcher and entrepreneur in Civil, Water Engineering and Environmental Management. Professor Otieno has served as president of WISA, and is a nonexecutive director, and a member of numerous organisations. Ms Ferhina Saloojee 52 Member of the Board of Rand Water as from: 1 June 2002 Ms Saloojee is a former councillor with the Rustenburg Local Municipality. She has served in numerous leadership roles in local government, as well as in private sector institutions. Ms Saloojee holds directorships in a number of companies, including Halotsal (Pty) Ltd, Bergers Filling Station and Salvest Property Investments CC. Mr Mdibanisi Tsheke 44 Member of the Board of Rand Water as from: 1 June 2002 Academic qualifications: National Preliminary Certificate in Business Administration Mr Tsheke is a former Executive Mayor of the Govan Mbeki Local Municipality. He serves on the Executive of the South African Local Government Association, and as an Executive of SANCO. 25

3 Enterprise Risk Management The condition of our existing infrastructure and the impact thereof on our future expansion has been identified as a key risk. To mitigate this we use a range of technologies including aerial surveys of our pipeline network using thermal remote scanning technology. An ongoing repetitive condition assessment is also carried out on all our pipelines. Rand Water has approved an Enterprise Risk Management Framework that guides the identification of risks and the mitigation processes. The following risks were approved by the Board during the year under review. 1.. Condition of existing infrastructure and future expansion 2. Alternative revenue streams (other than bulk sanitation) 3. Business efficiency 4. Ability and Capability to supply Bulk Sanitation services 5. Sustainable supply of goods and services 6. Contracting 7. Critical skills attraction and retention 8. Availability, Cost and Tenure of funds 9. Staff capacity and capability 10. Contractual performance 26

4 Our Corporate Governance Report Rand Water was established in terms of the Water Services Act No. 108 of 1997( the Act ). The Government of the Republic of South Africa, through the Department of Water and Environment Affairs (DWEA) and duly represented by the Ministers, is the sole shareholder of Rand Water. The segregation of roles between the Board and Management Compliance cannot be overemphasized in this Report. The Board is responsible for approval of policies and determination of Strategy, while the Rand Water is cognisant of the laws, rules and regulations that role of the Executive is to implement. apply to the entity and it is fully committed to the highest standards of compliance, sound business principles and practices and good The relationship between Rand Water and the Shareholder is governance. Rand Water s Internal Audit conducts a compliance governed by the provisions of the Water Services Act. Rand Water audit on a quarterly basis to assess the level of compliance to all operates within the framework of a variety of legislations. applicable laws and regulations within the organisation. Rand The main objectives, the mandate and duties of Rand Water, Water promotes ethical behaviour and through its systems and and the powers of the Board of Rand Water are regulated by processes, has given life to the ethical culture that is cultivated the Water Services Act. Rand Water upholds and promotes the across the organisation demonstrating its commitment to sound principles of sound financial management as outlined in the Public governance principles. Finance Management Act No. 1 of 1999(the PFMA) and it subscribes to the Protocol on Corporate Governance in the Public Sector which mirrors the King II Code of Corporate Governance, which has subsequently been superseded by the King III Report. 27

5 King III During the year under review, the Board of Rand Water resolved to adopt the King Report on Corporate Governance and it is committed to embrace the principles and the governance framework recommended therein. Rand Water has commenced with the implementation of the key governance requirements as outlined in the King III Report and thus enhancing the organisation s governance practices and processes. To affi rm our compliance, Group Internal Audit Department conducted an assessment on the board s compliance with King III and the review was aligned to the nine chapters as outlined in the said Report. represented by the Minister, is responsible for the appointment of the members of the Board of Rand Water in accordance with the provisions of the Water Services Act No 108 of Rand Water has a unitary board structure, which consists of a majority of non executive members who are independent and one executive member which is the Chief Executive. The position of the Chairperson and the Chief Executive are separated and their duties are clearly segregated. The Acting Chairperson of the Board is an independent non executive member and is supported by an acting Deputy Chairperson who is also independent. Roles and Responsibilities of the Board In view thereof, the Board fi rmly states that it is aware of the areas which Rand Water is fully compliant with King III as well as the areas that require improvement. Code of Ethics During the year under review, Rand Water launched its Code of Ethics to all staff with the objective of fostering and cultivating a culture of compliance and accountability throughout the organization. The Rand Water Code of Ethics applies to the Board Members, senior management, all employees, Rand Water s stakeholders and the public in general. Ethical leadership is promoted through awareness campaigns conducted throughout the organisation as well as the implementation of the ethics management programmes. This ensures high standards of ethical behavior in dealing with stakeholders and amongst Rand Water employees. The Code of Ethics supports Rand Water s vision and the values that the organisation represents. Board The Board of Rand Water is responsible for developing and overseeing the execution of the strategy, managing risk, monitoring performance and ensuring compliance and sustainability within the organisation. Its paramount responsibility is to ensure that Rand Water upholds the highest standard of governance and also creates value through its positive performance. Composition of the Board The Board of Rand Water s responsibilities are clearly defi ned in the Board Charter. Within the powers conferred upon it, the Board has reserved specifi c powers for its decision making. The Board s primary responsibilities are as follows: Fulfi l its role as the focal point of corporate governance and as such must exercise leadership and judgment in directing Rand Water so as to achieve sustainable prosperity for its stakeholders. Retain full and effective control over Rand Water in a manner based on integrity, transparency, accountability and responsibility. Give strategic direction to Rand Water and in the process regularly consider the present and future strengths, weaknesses, opportunities and risks to Rand Water having regard to the dynamics of the changing external environment. Set the risk tolerance level in accordance with the adopted strategy, overseeing the identifi cation and evaluation of key risks as well as the risk management process. Take the necessary steps to ensure that there is a robust system of internal controls on the effectiveness of which regular assurance is received through risk centric internal audits. The Department of Water and Environmental Affairs, duly Institute a robust policy and procedure for the 28

6 management of confl icts of interest. Defi ne the levels of materiality, reserving specifi c powers to itself and delegating other matters, with the necessary written authority to management. Safeguard compliance with all relevant laws and regulations, audit and accounting principles, and Rand Water s code of ethics. Board of Rand Water and the Board Subcommittee Members Board Members Audit Risk Treasury Nominations Capital Investment Human Resources and Remuneration Adv M Petlane [Acting Chairperson] Ms P Ndumo Ms P Ndumo Ms P Ndumo Ms N Noxaka Ms T Nwedamutswu [Acting Deputy Chairperson] Ms N Noxaka [Acting Chairperson] Adv M Petlane [Chairperson] Ms N Noxaka Ms N Noxaka Ms N Noxaka Ms T Nwedamutswu Adv M Petlane Ms T Nwedamutswu [Acting Chairperson] Prof FAO Otieno Prof FAO Otieno Prof FAO Otieno Prof FAO Otieno Adv M Hashatse Adv M Hashatse Adv M Hashatse Mr M Tsheke Mr M Tsheke Mr M Tsheke [Chairperson] Mr D Coovadia Mr Coovadia Mr D Coovadia [Chairperson] Dr M Ellman Dr M Ellman Dr M Ellman Dr M Ellman Ms F Saloojee Ms F Saloojee Ms F Saloojee Ms F Saloojee Ms F Saloojee [Chairperson] Ms M Magonare Ms M Magonare Ms M Magonare Mr DKP Sechemane Mr DKP Sechemane Ms S Maziya Ms S Maziya Ms S Maziya Mr L Makibinyane Mr L Makibinyane Mr L Makibinyane The Board of Rand Water has a Board Charter which sets the parameters within which the Board will operate and to ensure the application of the principles of good corporate governance in all dealings. The Board established its subcommittees which have the delegated authority and power to execute its mandate on behalf of the Board without abdicating the responsibilities of the Board. All the Board subcommittees have the approved Terms of Reference which also sets out the specifi c responsibilities delegated by the Board. The roles and responsibilities of the s are fully outlined below: Audit The Audit committee has six non executive members who are all independent. The Chief Executive, the Chief Financial Offi cer, the Group Governance Executive and other executives attend the committee meetings without any voting rights. The Audit was established by the Board of Rand Water to assist it with meeting its responsibilities in compliance with section 51 of PFMA and the National Treasury Regulations. The has an independent role with accountability to both the Board and the Shareholder. The serves as an independent oversight and advisory body responsible for the fi nancial reporting and fi nancial information, risk management processes, internal fi nancial control and compliance thereto, 29

7 internal and external audit, performance monitoring and evaluation and legislative and regulatory compliance. Treasury The Treasury has six non executive members who are all independent. The Chief Financial Offi cer, the Funding Manager and other executives attend the committee meetings without any voting rights. The Treasury was established by the Board of Rand Water to oversee the operations of the Treasury function including, guiding Treasury Policies, assisting with the overall treasury strategy and monitoring the risks concomitant to the treasury function with the powers and duties set out herein: Capital Investment The Capital Investment has six non executive members who are all independent. The Chief Operating Offi cer, the Chief Financial Offi cer, the Group Governance Executive and other executives attend the committee meetings without any voting rights. The Capital Investment was established by the Board of Rand Water to optimally control the major capital investment that falls within the scope of the Primary Activities and Other Activities as defi ned in the Water Services Act 108 of 1997 ( the Act ) in order to achieve a high level of confi dence of investors in Rand Water s credit worthiness. The approves Capital Investment projects. To assist, oversee and monitor the Issuance of Rand Water Stock, New fi nancial instruments, Funding structures and their tax implications. Regularly assess Rand Water s credit worthiness in the light of changing fi nancial circumstances and ensure compliance with all legal and regulatory fi nancial requirements. Oversee the development and implementation of investment, funding and liquidity strategies in line with Treasury Policies approved by Rand Water. Oversee the development and implementation of policies and procedures with regard to treasury activities and transactions. Review the Funding Strategy, Investment Strategy, Hedging Strategy as well as the counterparty limits. Develop a treasury risk management policy framework incorporating performance measurements and benchmarks against which the performance of the treasury function can be evaluated. Monitor adherence to performance of investment strategies ensuring proper governance in the investment process Human Resources and Remuneration The Human Resources and Remuneration has 5 non executive members who are all independent. The Chief Executive, the Chief Financial Offi cer, the Group Human Resources Executive and the Group Strategy Executive attend the committee meetings without any voting rights. The Human Resources and Remuneration was established by the Board of Rand Water to assist the Board with the following: Overseeing development of remuneration policies for nonexecutive members that create value for Rand Water over the long term and to oversee the application thereof. Directing the administration of the bursary scheme. Overseeing the establishment and implementation of human resources policies that promote an equitable, progressive and legally compliant working environment. The provides the Board and the Shareholders with an authoritative and credible view of the performance of Rand Water. 30

8 Risk The Risk has six non executive members and two executive members, being the Chief Executive and the Group Shared Services Executive. The non executive members are all independent. The Chief Operating Offi cer, the Chief Financial Offi cer, the Group Governance Executive and other executives attend the committee meetings without any voting rights. The Risk has been established by the Board of Rand Water to assist and support it in accordance with the risk management frameworks and enterprise-wide risk management plan. This include the following: approval of an enterprise-wide risk management plan that meets the requirements of Rand Water s stated philosophy; implementation by management of the approved risk management process; oversight of implementation and effectiveness of risk management, including obtaining assurance thereon; and regular review and improvement of the risk management strategy. Nominations The Nominations has four members, one of which is the Chief Executive. The other three members of the committee are non executive members who are all independent. The Nominations has been established by the Board of Rand Water to assist the Board in ensuring that: The Board has the appropriate composition for it to execute its duties effectively; Board members are appointed through a formal process; Induction and ongoing training and development of Board members takes place; and Formal succession plans for the Board, Chief Executive and senior management appointments are in place. Rand Water Board and Subcommittees: Summary of Meeting Attendance for the Period July June 2011 Board Members Board [9 meetings] Audit [8 meetings] Risk [4 meetings] Treasury [7 meetings] Nominations [1 meeting] Capital Investment [5 meetings] Adv M Petlane 7/9 1/1 4/9 Ms P Ndumo 3/9 4/8 4/7 Ms N Noxaka 9/9 8/8 4/4 1/1 4/5 Ms T Nwedamutswu 4/9 1/1 5/9 Prof FAO Otieno 8/9 2/4 3/5 9/9 Adv M Hashatse 5/9 6/8 1/4 Mr M Tsheke 9/9 4/4 4/5 Mr D Coovadia 6/9 8/8 7/7 Dr M Ellman 8/9 8/8 5/7 5/5 Ms F Saloojee 8/9 2/4 5/7 5/5 7/9 Ms M Magonare 6/9 4/4 7/9 Mr DKP Sechemane 7/9 1/1 Ms S Maziya 8/9 5/7 1/5 Mr L Makibinyane 8/9 4/8 2/7 Human Resources and Remuneration [9 meetings] 31

9 The Office of the Group Company Secretary Rand Water s Group Company Secretary provides the Board with guidance on all governance issues and ensures that the Board functions effectively and that procedures, rules and regulations are fully observed. The offi ce of the Group Company Secretary also assists with the implementation and monitoring of good business governance practices throughout the organisation, and compliance to applicable legislation, policies, rules and regulations. The offi ce of the Group Company Secretary forms part of our accountability framework of Rand Water which focuses on adding value to the business by leveraging the value created by conformance. It is the responsibility of the Group Company Secretary to ensure that newly appointed members are inducted, and that the organisation has an induction programme for the purposes of their training and development with regard to their roles and responsibilities, their fi duciary duties, applicable legislation and regulations. In addition to that, the Group Company Secretary s responsibility is to update members of the Board of Rand Water on the relevant laws, regulations and any legislative changes from time to time. Delegation of Authority The Board defi nes the levels of materiality in relation to the business of the organisation thereby reserving specifi c powers and then delegate other matters to the Chief Executive. In view thereof, Rand Water has adopted a comprehensive delegation of authority framework in accordance with Section 5 of the Public Finance Management Act of 1999 ( PFMA ), which clarifi es the various levels of materiality and assists with the limits of authorisations throughout the organisation. The Framework is then cascaded to the entire business by means of the Delegation of Authority through the protocol process as stipulated therein. The delegation does not in any way divest the Board of its responsibilities, authority and duties. Board Evaluation In line with the King III Report, the Board engaged consultants to conduct an independent evaluation of the Board subcommittees and the individual Board members to ensure optimal performance across the Board. The independent evaluation was conducted in accordance with the performance evaluation guidelines provided by the Department of Water Affairs. The assessment was conducted to monitor performance and to make the Board aware of areas that require improvement, training and to assess the level of contribution by the individual Board members. Rand Water is comfortable that the Board and its subcommittees are functioning in accordance with the governance practices. Ms Pertunia Mohlabi is Rand Water's Group Company Secretary 32

10 "We are implementing policies and collaborating with our stakeholders to promote the better management of water to mitigate the effects of climate change." - Adv. Mosotho Petlane (Acting Chairperson) In March 2011, in collaboration with UN-Habitat and the Department of Water Affairs, Rand Water participated in the United Nations World Water Day Conference and Exhibition in Cape Town. Seen at the Rand Water stand, from left to right; Adv. Mosotho Petlane (Acting Chairperson), Prof FAO Otieno (Member of the Board), Mr Mdibanisi Tsheke (Member of the Board) and Mr Percy Sechemane (Chief Executive). 33

11 Our Portfolio Integrating (PIC) From left to right: Ms Wayida Mohamed, Mr Sipho Mosai, Ms Fikile Sithole, Mr Percy Sechemane, Mr Tawanda Nyandoro, Ms Matshidiso Nyembe, Dr Fawcett Ngoatje 34

12 Mr Percy Sechemane Chief Executive Portfolio Integrating member as from: 1 September 2008 Academic qualifi cations: BCom, MBA Mr Sipho Mosai Chief Operating Officer Portfolio Integrating member as from: 1 April 2009 Academic qualifi cations: MSc, MBA Responsibilities: Operations Scientifi c Services Strategic Asset Management Strategic Customer Partnerships Bulk Sanitation Specialist Services Ms Matshidiso Nyembe Chief Financial Officer Portfolio Integrating member as from: 18 May 2009 Academic qualifi cations: BCompt, BCom (Hon), CTA, CA (SA) Responsibilities: Funding Financial Management Ms Fikile Sithole Group Governance Executive Portfolio Integrating member as from: 1 September 2008 Academic qualifi cations: LLB, Higher Diploma in Labour Law, BA Law, Diploma in Corporate Governance, Board Leadership Programme (GIBS), Admitted Attorney of the High Court Responsibilities: Corporate Social Responsibility Forensic Audit Internal Audit Mr Tawanda Nyandoro Acting Group Strategy Executive Portfolio Integrating member as from: 8 October 2010 Academic qualifi cations: BCom, BCom (Hon), MCom, BSc Hon (Accounting Science) Responsibilities: Corporate Planning Corporate Research and Development Financial and Economic Planning Ms Wayida Mohamed Strategic Human Capital Executive Portfolio Integrating member as from: 20 April 2009 Academic qualifi cations: BA (Hon), Dip Human Resources Management, Post Graduate Programme, Executive Leadership, Registered Skills Development Assessor and Moderator Responsibilities: Compensation and Information Employee Relations Organisational Development and Design Talent Management Dr Fawcett Ngoatje Group Shared Services Executive Portfolio Integrating member as from: 1 July 2008 Academic qualifi cations: BAEcon (Hon), Project Management, MDev, PhD Responsibilities: Risk Advisory Services Corporate Communications IT and Knowledge Management Legal Services Logistic Services Supply Chain Management 35