Annual Report 2013
Together we keep Tonga Clean, Green and Healthy Table of Contents Board of Directors... 2 Chairman s Report... 3 CEO s Report... 6 Overview... 6 Management Team...7 Current Status of Targets Set in Business Plan... 7 Developing and Enforcing Legislation... 7 Improving Revenue Collection... 8 Improving Management of Expenditure... 9 Improving Debt Collection... 9 Human Resources and Staff Management... 10 Promoting Business and Community Relations and Customer Service... 111 Improving Maintenance of Equipment and Machinery... 11 Upgrading Tapuhia SWMF... 12 Improving Consistent Documentation... 13 Financial Statements for Year Ended 30 June 2013... 14 Annual Report 2012-2013 Financial Year 1
Board of Directors Mr. Aisea Taumoepeau; SC Chairman Fr. Atolo Tu inukuafe Director 2 Mr.Malakai Vakasiuola Director Annual Report 2012-2013 Financial Year Dr.Malakai Ake Director
Together we keep Tonga Clean, Green and Healthy Chairman s Report The 2012/2013 year has been one of consolidation and building by WAL. We recognise that to achieve our vision of keeping Tonga Clean, Green and Healthy we need to be a viable and efficient organisation. We still have some way to go, but are confident that we have built the foundations for continued growth in revenue and improved quality service provision. One of our most significant achievements for the year has been to enter into a co-billing arrangement with the Tonga Water Board for all households in the Nuku alofa area. On every water bill the waste charge is now listed, providing a more convenient way for the customer to pay this charge whilst increasing the cost efficiency of billing. The change in the way we bill has also seen a greater compliance with paying the waste charge. There is now a consequence for not paying a waste bill, with the potential for water disconnection if the arrears meet a cut-off point. The arrangement with the Tonga Water Board has greatly improved the cashflow of WAL. Our remaining challenge is to increase participation in the waste collection service and payment of the waste charge for the rural areas. In the coming year we will be trialling a cobilling venture with Tonga Power Ltd to explore whether we can build on our success and encourage greater participation and increased payment levels. WAL has significant assets to manage in order to continue providing reliable services and operate to strict environmental principles. We look forward to 2 new waste collection trucks, a septage tanker truck, a front end loader, and the construction of Cell 2 at Tapuhia Landfill, to be funded by ADB and AusAID through the Nuku alofa Urban Development Sector Project. Delays in the implementation of this project have created some difficulties for WAL, but we are now working closely with the project to achieve a sustainable solid waste management system. Significant achievements during the period of July 2012 June 2013 A NPAT (excluding depreciation) of $272,085 exceeding the amount envisaged in the Business Plan of TOP$ 177,678. Annual Report 2012-2013 Financial Year 3
Joint Billing between WAL and TWB for the Nuku alofa area is now well established, improving payment compliance and cashflow. Lifting of Cell 1 at Tapuhia to its 2 nd level, and ongoing operations at the landfill in compliance with environmental requirements; Repair of longstanding, non-operative waste collection trucks, compactor and loader for Tapuhia SWMF, and maintenance of the fleet to provide reliable services; Restored regular weekly waste collection services for the Tongatapu households at the affordable rate of $10.00 per month; Provided septage services, utilising the old (now restored) Septage Waste Truck formerly operated by the Ministry of Works; Renewed septage beds and upgrading the treatment plant at Tapuhia SWMF; Way Forward Overall, WAL has had a positive year. The leadership team and the responsive and committed staff are tackling the challenges ahead with vigour and determination. I am confident the following will improve our performance for our shareholders and our clients in the 2013 / 2014 FY: Following a trial, to implement joint billing with Tonga Power Ltd for all rural areas in Tongatapu; Improvement of Financial and Asset Management, Public Awareness, Delivery of Services, and facilitating the ADB and AusAID project. A tariff review that enables us to fully understand our service standards, the costs of meeting these standards, and determines the way forward to becoming an economically sustainable enterprise. WAL will continue to provide an essential service to the community, improving our service standards and customer focus. Our key challenge for 2013/14 is to improve our financial capacity and revenue. I have confidence in the strategies we now have in place and the abilities of our staff to meet this challenge and see another year of growth and strengthening for WAL. On behalf of the Board of Directors, I would like to extend my gratitude to 4 Annual Report 2012-2013 Financial Year
Together we keep Tonga Clean, Green and Healthy the Government of the Kingdom of Tonga for the financial assistance afforded to WAL; Ports Authority Ltd for the on-going support with the in-house arrangement; Tonga Water Board for the joint billing venture; and all household and commercial customers who have remained faithful and cooperative throughout this period of time. I would like to acknowledge with thanks the support of fellow Directors, the CEO and staff of WAL for the drive, initiatives and collective efforts at all times to improve the services and operation of WAL. Having led the organisation for the last few years, I am confident that through the diligence, commitment and resourcefulness of all stakeholders, WAL s goals and objectives will come to fruition. Equally important, is for WAL to work with the people of Tonga for a clean green and healthy environment. Waste collection and disposal services are critical to our standing as a tourism destination, and our well-being as a community that cares for our environment. We all have a part to play in taking pride in our country and preserving its beauty and integrity for future generations. With respect, (for) Aisea H Taumoepeau Chairman, Waste Authority Ltd Annual Report 2012-2013 Financial Year 5
The Year In Review CEO s Report Overview This Annual Report is presented to the Ministry of Public Enterprises to provide an analysis of WAL s performance as measured against our intent in the WAL Business Plan 2012 / 2013. Ms. Kalolaine Fifita Chief Executive Officer As a part of our obligations, we are required to furnish consolidated financial statements, which are included in this report. There is an outstanding matter with non-compliance of WAL in submitting audited financial accounts for the years 2011, 2012 and 2013. We are in the process of rectifying this situation and have made arrangements and a timeframe to meet our obligations. A new financial management system is being installed (Attache) which will give us the means to input all data to date and manage our accounts in an effective and transparent manner into the future. We are grateful to the assistance of the Nuku alofa Urban Management Sector Project who has funded the hardware, initial software costs, and the staff training required to bring our financial management system to a very high standard. In 2011 when I commenced as CEO, the situation of WAL was critical and the whole operation was affected; assets were run down, lack of clear operating systems, diminishing environmental performance, and a very difficult financial position. With the assistance of the Board and the dedicated staff at WAL, we have turned this situation into one of improving performance. We continue to face challenges, particularly behavioural change and acceptance of the need to pay for waste services. However, our strategy of forming partnerships with other service providers is proving effective, and our financial position is improving. We look forward to continued improvements in the coming year. In this Annual Report, we present an analysis of WAL performance against the targets that were set in the 2012/2013 Business Plan. This analysis provides a clear picture of our progress, as well as highlighting areas where we need to maintain focus on performance improvement. With the Nuku alofa Urban Development Sector Project support, we are improving our financial management systems, and reviewing all of our operating and capital costs in order to understand more fully our revenue requirements. Sustainability remains our key focus, and to achieve this we will be continuing to assess a range of strategies. We look forward to continuing to work with the Ministry of Public Enterprises to reach this goal. 6 Annual Report 2012-2013 Financial Year
This led to a continual reliance on a Government subsidy for the 2012 / 2013 FY. On a more positive note for 2013 / 2014 FY, Cabinet passed a regulation for an indirect levy on the import of plastic products. This will provide a consistent source of revenue and assist with the ultimate goal of financial sustainability. Improving Revenue Collection Improving revenue collection is critical to the success of WAL. In the Business Plan, the following targets were set: Increased Operating Revenue Self-funding services Achieving ; $40,000 per month Table 1: Revenue Performance Summary of Revenue Performance Total Revenue for 2011 / 2012 954,997 Total Revenue for 2012 / 2013 1,096,221 % Increase 14.8 % Revenue Target from Business Plan 1,048,725 Above Target by 47,496 The rollout of the joint billing arrangement with TWB was largely completed, with coverage increasing from 17% to over 95% over the year. 46% of total household customers on Tongatapu reside in the Nuku alofa area and 54% in the outer villages. A challenge WAL continues to face is increasing service participation and revenue from the outer villages. A review of commercial rates was undertaken, with charges adjusted based on size and volume of waste. This has further strengthened revenue collection. Regular monthly invoicing of bills and distribution to customers also improved the cashflow of WAL. Self funding of services did not occur in this year. In terms of revenue, targets were consistently met by WAL for 11 out of 12 months. The total revenue received was 14% above the target for the year. This is a significant achievement. Table 2: Actual Revenue and Expenditure compared to Targets Month Monthly Revenue Target Revenue Received Expenditure Expenditure Target Jul 12 40000 47,171 80,000 58,884 Aug 12 42000 48,414 80,000 65,932 Sept 12 43000 55,989 80,000 65,140 Oct 12 45000 59,537 80,000 72,264 Nov 12 48000 53,053 80,000 70,852 Dec 12 50000 47,276 80,000 73,981 Jan 13 52000 63,773 80,000 76,438 Feb 13 54000 61,653 80,000 69,208 Mar 13 55000 60,333 80,000 65,440 Apr 13 58000 62,946 80,000 69,979 May 13 60000 65,513 80,000 66,812 Jun 13 62000 70,563 80,000 68,199 TOTAL 609,000 696,221 960,000 823,129 8 Annual Report 2012-2013 Financial Year
Together we keep Tonga Clean, Green and Healthy Improving Management of Expenditure Expenditure management was a key focus for the year, working towards efficient service delivery. The KPIs indicated in the business plan were to: Improve management of expenditure by 9.7% Timely payment of debts to suppliers The monthly expenditure target was set at $80,000 or less for each month. As can be seen above in Table 2, the monthly expenditure achieved the target in every month. Overall, the expenditure was well within the target at 14% below the total maximum expenditure budgeted. Again, this is an achievement that WAL are very satisfied with. Summary of Expenditure Management Performance Total Expenditure for 2011 / 2012 1,139,407 Total Expenditure for 2012 / 2013 824,135 % Decrease 27.7% Expenditure Target Set in Business Plan 971,048 Below Target by 146,913 Figure 1: Revenue and Expenditure Performance, 2012 / 2013 FY 90,000 80,000 70,000 $ 60,000 50,000 40,000 30,000 20,000 10,000 - MONTHS Revenue Collection vs. Expenditure for July 2012 - June 2013 Revenue Expenditure Business Revenue Plan Target Target from BP One of the performance targets is to achieve timely payment of debts to suppliers. This can be challenging given the cashflow constraints, but is important in maintaining good relationships with suppliers. In this financial year, despite the constraints, WAL managed to pay all debts to suppliers, and are now trading on a cash or 30 day account basis. Improving Debt Collection Debt collection also has a significant impact on the sustainability of WAL. Carrying a large debtor balance is to be avoided. The KPIs indicated in the business plan were to: Reduce debtor balance by 40% Annual Report 2012-2013 Financial Year 9
As stated earlier, collection increased and the net result is a decrease in debtor balance. Revenue Department is yet to finalize arrears and consequentially WAL shall revise the actual debtor balance. The Board approved an Old Debts Adjustment Policy. This gives management more flexibility in negotiating old debt payments with customers. By allowing some of the arrears to be reduced or allowing time to pay, customers are encouraged to stay within the system and continue to pay current service fees while addressing the arrears as negotiated in line with the policy. This pragmatic approach improves revenue collection overall, and reduces the burden of a large debtor balance. WAL also completed categorizing of debts to residential, commercial and aged, which improves the monitoring and planning for debt collection activities. Human Resources and Staff Management WAL s performance is dependant on skilled and hard-working staff. This includes the waste collection crews, the landfill operators, and the management and office staff of WAL. In the business plan, the staff targets are: Consistent Staff Training; performance & skill focus Efficient delivery of services Operational efficiency In May 2013, a training workshop was conducted for all WAL staff, jointly funded by NUDSP and WAL. The training required all staff to participate in sessions that developed our vision as a team, identified our strengths and weaknesses, and identified strategies for WAL to improve our organisational performance and enhance our working relationships. This workshop is part of an overall staff development framework that has been developed and will be implemented over 2013/2014. WAL are also tapping into training opportunities for waste management courses in Japan and the Pacific Region. 10 Annual Report 2012-2013 Financial Year
At the end of FY 2013, there were some challenges in this area. The existing rear loading compactor trucks are in a poor condition. With the expectation of new compactor trucks from the NUDSP, the delayed start up of the project has been problematic. WAL expect the new trucks will be in operation in early 2014. This delay has led to vehicle (and therefore service) unreliability at times, and increased vehicle maintenance costs. However, we feel that there has been a balance struck between keeping the service operating whilst minimising repair expenses. We look forward to the new plant and machinery, as we now have established reporting formats and maintenance schedules. The new equipment gives us the opportunity to increase the lifespan of our machinery through improved maintenance procedures. In the past, although WAL have developed a machinery service and repair schedule, there were not always enough funds to allow this to be consistently applied. With repairing machines on an as needs basis, the repairs are often more costly, as preventative maintenance has not occurred. Breakdowns also place greater demand on WAL meeting the customer service expectations. In 2012/13, WAL was able to improve maintenance practices, particularly towards the end of the year as financial resilience improved. Upgrading Tapuhia SWMF The Tapuhia Solid Waste Management Facility is one of the leading landfills in the Pacific in terms of its design and environmental protection systems. However, it must be operated as a modern engineered landfill rather than a dumpsite in order to achieve the standards as per its design. Since early 2012 there has been a significant turnaround of management and operations at the site. Key staff have demonstrated experience and competency, and have ensured that environmental safeguards, proper waste compaction, and sequenced operations have all been reinstated. The Business Plan KPI s for Tapuhia are: Efficient delivery of service Clean and better, healthy living and natural environment Compliance with Public Health & Environment s standard for a clean & healthy environment 12 Annual Report 2012-2013 Financial Year
Unaudited Financial Statements for Year Ended 30 June 2013 14 Annual Report 2012-2013 Financial Year