Update on appointment of board members and withdrawal of intention to incorporate Mhlathuze water into Umgeni Water Umgeni Water Company code : BIUMWA UPDATE ON APPOINTMENT OF BOARD MEMBERS TO THE BOARD OF UMGENI WATER AND WITHDRAWAL OF INTENTION TO INCORPORATE MHLATHUZE WATER INTO UMGENI WATER We refer to previous SENS (and public) announcements regarding the above matters that are of profound governance significance to Umgeni Water. 1. THE BOARD APPOINTMENTS When the previous Minister of Water and Sanitation, the Honourable Nomvula Mokonyane, MP, announced the appointment of an Interim Board for Umgeni Water in September 2017, she simultaneously provided an assurance that the process for the appointment of a permanent Board would be expedited. In conformance with this Ministerial undertaking and in line with the Water Services Act, the Board appointment process was initiated and concluded in January 2018. A Panel Report that emanated from the short-listing and interview processes was subsequently presented to the then-Minister of Water and Sanitation. It is worth noting that the Board appointment process and concomitant Panel Report presentation occurred against the backdrop of acceleration in political developments at national level that culminated in Cabinet/Executive changes in February 2018. As is widely known, Minister Mokonyane was replaced by the current Minister, the Honourable Gugile Nkwinti, MP, as Executive Authority responsible for the Water and Sanitation portfolio. The current Minister of Water and Sanitation has applied his mind in relation to the Panel Report and has considered it prudent to direct Umgeni Water to initiate the process de novo. In compliance with provisions of the Water Services Act, the nomination process will commence again with an advertisement calling for nominations and closing date for submission of names is 27 July 2018. The advert will be published in various English and isiZulu-medium print media without delay. A Selection Panel will be constituted to consider all nominations and make its recommendations to the Minister of Water and Sanitation ideally before the end of September 2018. We are confident that by the 1st of November 2018 a new Board will begin conducting its business, further reinforcing strict adherence to corporate governance in all its manifestations. In the meantime, as the process for the appointment of a permanent Board is rolled out, Umgeni Water continues to perform at optimum in governance and associated matters. The organisation’s conformance to the tenets of governance is monitored and overseen by various mechanisms, including committees of the current Board, an independently-chaired Ethics Committee, regular Umgeni Water-stakeholder engagements that assess compliance to contractual obligations and quarterly reporting to the Executive Authority. Completion of the 2017/18 financial year on 30th June 2018 will now pave the way for a comprehensive annual external-led audit of the organisation’s performance in various disciplines. The organisation has consistently obtained clean or unqualified audits over the past decade, and it is confident that it will again receive a clean audit. 2. PROPOSED INCORPORATION OF MHLATHUZE WATER INTO UMGENI WATER The Honourable Minister of Water and Sanitation has withdrawn a decision to dis-establish Mhlathuze Water and transfer its assets, liabilities and staff to Umgeni Water and change the name of Umgeni Water to KwaZulu-Natal Water Board. Preliminary preparations made by Umgeni Water with regards to accommodating the proposed provincial water sector changes, specifically commissioning of an independent due diligence exercise that was to have been conducted to ascertain or confirm matters related to Mhlathuze Water, are no longer necessary and will, therefore, be discontinued. Umgeni Water wishes to state firmly and unambiguously that it continues to remain a sound investment platform - as is reflected in the organisation’s good standing and financial sustainability. The Ministerial decision will assist in ending speculation about the future of the two KwaZulu- Natal-based water boards, until such time the matter of rationalisation of the water sector and amalgamation or dis-establishment of entities is reopened by the Executive Authority after careful consideration of all relevant factors. It is important to be mindful that the proposed dis-establishment of Mhlathuze Water would have occurred in the context of rationalisation of the South African water sector, as recommend in the roadmap of the National Development Plan. Umgeni Water remains committed to the National Government’s institutional realignment vision and will continue to provide expert advice when called upon to do so. In the short-term to medium-term Umgeni Water will intensify efforts to expand its coverage in KwaZulu-Natal through provision of services and products to municipalities that are facing service delivery challenges, or when requested by the Provincial Government or Department or Water and Sanitation to intervene as implementing agent. 5 July 2018 Debt Sponsor Nedbank Corporate and Investment Banking Date: 05/07/2018 12:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.