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FIGAP KANTOOR

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OPENBAAR TAPPUNT

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IN HET VLIEGTUIG

WATER KLANTEN

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SCHOOL CHIMOIO

PILOTO EN NHAMAONA

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WATER FOR LIFE

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TERUG NAAR NL

TIJD VOOR ACTIE

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WELCOME TOT VEI'S ANNUAL REPORT. TO OFFER YOU AN OPTIMUM EXPERIENCE, WE ADVISE YOU TO TURN YOUR MOBILE DEVICE IN LANDSCAPE VIEW

EDITORIAL

‘Trust is essential for sharing knowledge with another’. Confidence of the learning party in the intent, knowledge and experience of the person standing opposite him/her. Trust is something you must earn, it doesn’t just appear out of the blue. To acquire it, you have to work together, achieve success together and learn together. A bond of trust really does grow with the years.

VEI IN 2018: STRATEGY IN MOTION

MARCO SCHOUTEN - CEO VEI

Looking back, 2018 can be marked as the year when we made large strides in realizing our strategic VEI#2020 agenda. VEI lived as such, the words of former General Electric CEO Jack Welch: “In real life, strategy is actually very straightforward. You pick a general direction and implement it like hell”. Three pillars guide our actions according to the VEI#2020 strategy, i.e. 1) engagement, 2) building VEI, and 3) project excellence. Our VEI#2020 strategy sets out our course for the years to come, which in itself is incredibly valuable. However, the true art, and the hard work, is in making it real. To make our dream of where we would like to go, come true in real day-to-day practices requires hard work, patience, perseverance and true commitment. That was our daily life in 2018. All of us, with the team at our headquarters in Utrecht, with our board of shareholders, with all our staff spread over 20 countries, with more than 200 short term experts that are committed to make a change, and with all our Water Operator Partners, supporters, donors and contractors.Thanks to the the commitment of all engaged in VEI, VEI is nowadays the largest organization involved in Water Operator Partnerships worldwide. With pride, I can introduce this 2018 annual report to you. You will find that in 2018, the team of VEI was able to have a sustainable impact on the day-to-day lives of 315,000 people in 20 countries by enabling them to access improved water/sanitation service provision. This is a major accomplishment in the history of VEI, as it provides a boosting increase from 2017 of almost 30%. We find that everybody in the world deserves proper, adequate and sustainable water services delivery. Being able to make a practical difference in the lives of so many is what makes us tick, and what gives meaning to our organization and the reason we go to work every day. Another key figure, I would like to highlight in this introduction to the 2018 annual report is that we were able to further unlock the strengths of our five Dutch partner water operators, and herewith enabling them in the effectiveness of their Corporate Social Responsibility programs. In 2018, we managed to increase the total number of short-term input of experts from the Dutch water operators with 20% compared to 2017 to a unparalleled total of 3.412 days. I wish you a lot of reading pleasure, and please while reading it, take at heart that your continued support is essential in making the dream come true of universal sustainable water services. MARCO SCHOUTEN, CEO VEI

IT REQUIRES HARD WORK, PATIENCE, PERSERVERANCE AND TRUE COMMITMENT TO MAKE OUR DREAM OF UNVERSAL WATER SERVICES COME TRUE

Is er water en zo ja, hoe vaak en hoe lang per dag? En wat is de kwaliteit van dit water? Wordt er 24/7 water geleverd?

Hoe is het gesteld met het financiële systeem dat nodig is om de functionaliteit van de geïnvesteerde infrastructuur te garanderen? Is er geld beschikbaar voor beheer en onderhoud?

In hoeverre zijn er technische systemen gekozen om functionaliteit nu en in de toekomst te waarborgen? Dit gaat over het gebruik van materialen, maar ook over de mogelijkheden van onderhoud en beheer.

Dit gaat over de sociale impact van het project. Zorgt het project bijvoorbeeld voor eerlijke kansen op het gebied van arm en rijk en van gender? Bij de water-projecten wordt dit gemeten aan de hand van het geschatte aantal huidige gebruikers; bij sanitatie-projecten is gekeken naar het geschatte aantal huidige gebruikers en naar gedrag (handenwassen, toiletten schoonmaken, etc.).

#2

Institutionele

Duurzaamheid

Sociale

#1

#3

Technische

#5

Waterkwantiteit

en -Kwaliteit

Betreft de lokale institutionele capaciteit die nodig is om de functionaliteit op de lange termijn te waarborgen. Bijvoorbeeld: is er een lokaal bedrijf dat verantwoordelijk is voor onderhoud van de faciliteiten?

Financiële

#4

Ecologische

#6

Dit gaat in op de vraag of het functioneren van het project wordt beïnvloed door overstromingen of droogte, tijdens de projectperiode maar ook voor de langere termijn.

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ABOUT VEI

WATER AND SANITATION FOR ALL: AS COMMITTED DUTCH WATER OPERATORS, WE EMBRACE OUR RESPONSIBILITY TO MAKE THIS DREAM COME TRUE.

VEI is the world’s leading promotor and implementor of WOPs WOPs are peer support partnerships between water and sanitation utilities aiming to share knowledge and skills to make utilities stronger, healthier and more resilient.

WOPs work through peer-to-peer exchange of skills, knowledge and goodwill to build the capacity of a utility that demands for assistance or guidance. Across the world, water utilities are struggling to provide safe water services. Almost one billion people still lack access to good water, while 2,4 billion people lack access to proper sanitation. Despite different circumstances, utilities in a partnership share common concerns and challenges: about human resources development, daily operations of production and distribution systems, and investment planning. Established in 2004 by Dutch water operators, Vitens and Evides Waterbedrijf (both shareholders) have developed into an effective organisation with a stable annual turnover of € 20 million that is engaged in implementing WOPs with dozens of water operators over more than 20 countries worldwide, capacitating hundreds of employees from water utilities, and providing over 300,000 people with improved access to water services, mostly from low-income areas in Africa, Asia and South America. VEI is firmly rooted in the Dutch water sector. Through VEI, the Dutch water operators are committed to achieve the Sustainable Development Goal 6 of the United Nations: sustainable water and sanitation services for all. The Netherlands has a long history when it comes to water. Over the past 160 years Dutch water operators have established themselves as the best in-class water providers. Five Dutch water operators (Vitens, Evides Waterbedrijf, WML, Waterbedrijf Groningen and Brabant Water) share their expertise with their colleague water operators around the world. With a joint workforce of 3,600 utility employees, a distribution network of more than 102,700 kilometres, five million customer connections and an annual production capacity of 880 million m3 tap water in the Netherlands, they have extensive and lasting experience that is worth sharing. Ownership and sustainability WOPs of VEI focus on building the resident capacity of water operator staff, rather than doing it for them. VEI arranges on the spot assistance by deploying water operator experts to their colleague local water operator. This peer-to-peer interaction ensures that knowledge and the wealth of operational expertise can be shared with water operators abroad. The results are impressive: tangible change, improved operational performance and, ultimately, universal and equitable access to safe and affordable drinking water for more people. Attracting investments Based on solid business cases multilateral and bilateral financiers will be attracted to invest in hardware and corresponding technical assistance of water operators. A WOP may increase sustainability and quality of an investment program and ensure caretaking extends service life time of the assets. The combination of additional investment and peer-to-peer support at operational level acts as a kick-start for local economic development and growth. Moreover, VEI can exclusively tap into the fund in which Dutch water consumers donate voluntarily, Water for Life, to raise water services access to the (peri)urban poor.

In 2018, VEI worked on: 46 projects in 20 countries, 12 projects were completed.

PROJECT COUNTRIES

IMPACT AND FINANCE

SHOW ME THE COUNTRIES

SHOW ME THE RESULTS

THE FIRST WATER CONNECTIONS SUBSIDIZED BY WATERWORX IN ZAMBIA

Choices relating to contract types and project sites are key elements in managing the risk profile of the commitments we enter into. Selection is executed through a criterion-based filtering process weighing impact, financial risks, operational risks and risks relating to employees’ occupational health and safety. A prime condition to weigh our possible involvement is that there must be a reasonable expectation that our efforts will have a sustainable and lasting impact. The motivation of our foreign partner water company (and its management) is an important indicator in respect of this condition. Other considerations relate to the safety situation of the project site, such as indicated for example by the presence of other international organisations, travel infrastructure and accommodation facilities and advice provided by our partner Control Risks. Control Risks is an independent, global risk consultancy specializing in helping organizations manage political, integrity and security risks in complex and hostile environments. Related to this criterion, is that VEI explicitly condemns (and refuses to participate in) all forms of corruption and the presence of VEI employees in a country in no way indicates VEI’s support of a local government’s policy or an endorsement of its governance quality. With respect to the type of contract, VEI’s policy is not to take a financial interest in local entities. VEI focuses its activities on providing technical support to their partners abroad to enable them to manage their service provision sustainably. HEALTH AND SAFETY RISK Impact on the results and/or financial position: limited The health and safety of expatriate- and short-term staff is the main risk to which VEI is exposed. These risks mainly apply to international travel, local transportation (accidents, material damage), illness (nutrition, malaria, infectious diseases), safety on the streets (theft), incidents (natural disasters, terrorism), and ‘Occupational health’: even though the expatriate- and short-term employees mainly fulfil an advisory role, many of them are also involved in the operations of the partner water operators. Cases of personal injury resulting from accidents or incidents causes in the first place personal hardship and inconvenience. But it also has a negative effect on the image of VEI and its shareholders, particularly if such situations are not handled professionally and effectively. Anticipating or reacting to these risks may result in the postponement or cancellation of missions. If this situation continues for a prolonged period, it may lead to delays in the implementation of the projects in question. Among other measures, VEI implements the following controls in order to minimise the risk associated with health and safety.The staff members (expatriates and short-termers) receive preventive information on the political, security and health situations in the countries where we are present;A Travel Handbook (‘Veilig op Reis’), which contains instructions on behaviour and assistance relating to health and safety;Compulsory chauffeurs for short-termers;A crisis management organisation has been set up and an annual training is organised;A ‘Duty of Care’ policy clarifying the obligations of the employer and employee, which the employee must sign to indicate that he/she is aware of all the available information and has read the relevant instructions before being issued a ticket;VEI cooperates with Control Risks (crisis management) and International SOS (health) in order to optimally inform and prepare employees and, if necessary, provide guidance in the area of health and safety.OPERATIONAL RISK Impact on the results and/or financial position: limited The operational risks relate to the quality and effectiveness of the project effort, issue management (water quality, reliability), political risks (human rights, corruption), and employee conduct (professionalism). These affect the reputation of VEI, the Dutch parent water companies and partners. Most VEI projects are partnerships which are entered into by both parties on a voluntary basis, or contracts that are awarded after a tender procedure. Neither poor performance nor bad publicity serves the interests of either of the parties and a critical selection process minimises the likelihood of occurrences of this nature. We know from experience that, when confronted by disappointing (initial) results, the first reaction of the two partners is to look for ways of improving those results. During VEI’s involvement in international collaborative projects during the past 10 years, there has not been a single case of premature termination of a collaborative relationship without mutual consent. VEI implements the following controls in order to minimise operational risk:Contract selection, a number of criteria is used such as country, contribution to the VEI mission, and project partners;Limitation in countries where projects are being operated;Selection of partners/alliances;Use of the KPI dashboard, financial reporting and performance reporting in the context of result accountability in respect of all stakeholders (not only the shareholders and financiers) in order contribute positively to developing relevant policy and encouraging broader social debate in this area;A standardised Financial Planning & Control cycle;The communication protocol agreed with the shareholders, which defines an approach and core message for each target audience;To reduce the risk of bribery VEI has a mandatory “code of conduct” for its staff and has also implemented procurement procedures. No violations of the code of conduct has been noted in 2018.STRATEGIC RISK Impact on the results and / or financial position: limited The activities of VEI depend on the contributions and efforts of the Dutch water companies and available funds from the Ministry of Foreign Affairs and other (inter)national donors. The WaterWorX program ensures that the project portfolio is properly filled up until 2021, while the WaterWorX program will form a more important part of the total activities of VEI in the coming years. In 2021 an evaluation will take place on the further continuation of this project for another period until 2025. Because the activities of VEI contribute to the Dutch SDG objectives, the activities of VEI can be continued in the coming years. In addition, VEI is constantly looking for new cooperation and partnerships for other projects. VEI implements the following control measures to minimize strategic risk:External monitoring of the WaterWorX program to ensure that project objectives are met and the program continues after 2021;Continuous search for new projects and project partners;Collaboration with partner Control Risks to identify strategic risks and to take appropriate measures.LAWS AND REGULATIONS Impact on the results and / or financial position: limited Because VEI employees often work abroad for a short or longer period, VEI has to deal with foreign legislation, for example in the area of work visas, wage tax but also procurement guidelines for local investments. VEI implements the following control measures to minimize laws and regulations risk:Presence of compliance officer function to chart risks in the field of legislation and regulations;Make RPM’s constantly alert to foreign legislation.FINANCIAL RISK Impact on the results and/or financial position: limited VEI is a project-based organisation and the associated financial risk is therefore typically related to individual projects. For example, risks associated with penalty clauses, bonus/malus agreements in performance-dependent projects, repayment of subsidies, debt-risks, liability for health damage or other damages (injury), unemployment, VEI employees becoming unfit for work and the risk of payment default on the part of the donor. In the event of early termination of the project, there are also financial consequences in that a suitable position must be found for the permanent staff returning to the parent company or partner company from abroad, or an outplacement procedure has to be initiated. Based on the assumption that not all projects will end at the same time and that new projects will arise or existing projects will be renewed, this risk is limited. VEI implements the following control measures to minimise financial risk:The further pursuit of operational excellence in Project Management and Finance & Control, through optimisation of the administrative/Finance & Control systems and procedures among other measures;Registration/preparation of Utility Support Contracts with realistic performance targets and a good balance between fixed and variable rewards and bonus/malus arrangements;Demanding project finance payment in advance;A standard cooperation agreement has been drawn up in collaboration with Royal Haskoning DHV, a leading firm of consulting engineers and a VEI partner, which focuses on clearly defining liability;Restraint with regard to entering into long-term commitments in relation to rent, vehicles, etc.;Not participating or taking any financial position in local water operating partners;Externally recruited personnel, who mainly work as self-employed contractors or based on fixed-term contracts (duration is based on the contract period).Utrecht, 27 May 2019 M.A.C. Schouten, PhD - CEO VEI

Risk inventory and risk management are important topics at VEI. Generally speaking, VEI is exposed to three categories of risk: risk related to health and safety, operational risk and financial risk.

RISK MANAGEMENT

2017:

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2016:

BACK TO PROJECTS & RESULTS

People that gained access to water/ sanitation in 2018

Turnover 2018

VEI PROJECT COUNTRIES

COVER

RESULTS 2018

PDF (including Financial statements)

DIRECTOR'S REPORT

Health-Safety, Operational, Financial

VEI’s growing impact

Marco Schouten

VEI PROJECT

Mission & vision

Countries

Welcome

CONTENTS

VEI

RESULTS

Annual Report

PDF (including Financial statements)

2018

ALMOST 1 BILLION PEOPLE STILL LACK ACCESS TO WATER AND/OR SANITATION

OVERVIEW

The VEI#2020 agenda guides our actions in the years to come and is composed of three strategic pillars: 1) the engagement of the Dutch operators 2) the building of VEI, and 3) project excellence. The first strategic pillar of ‘engagement’ concerns explicitly the need of VEI to pro-actively stimulate engagement of the Dutch water operators with the mission and vision of VEI. Such includes action, like a stronger support to the Foundation Water for Life, and the strengthening of the resourcing process of the short-termers from the water companies. In 2018, VEI managed to engage a record number of 217 individual employees of the five partnering Dutch water operators directly engaged in work for VEI. Looking at the total number of days that were spent by these employees on short mission assignment, the total count is 3.399 days, which is a 30% increase compared to the year 2017. An important strategic action in 2018 with respect to the engagement of the Dutch partner water operators was the novelty to host a meeting in which the directors of the five Dutch water operators, were inspiring one another how and why they were engaged in the international CSR work. A key element in that respect was the position of the drinking water customers’ fund Water for Life, to which VEI is strongly related. VEI has its own CSR policy which can be found on the VEI website. 2018 has been a significant year in the building of VEI. Building VEI refers to continuing our path in professionalizing VEI in its operations, its accountability and transparency, effectiveness and efficiency. This includes elements such as an ICT improvement process, more tailor-made attention to the human resources involved in VEI, and an internal re-organization of tasks and responsibilities. Notably, in 2018 VEI succeeded in transferred our ‘old’ brand of ‘Vitens-Evides International’ to a new branding of ‘VEI’. The branding of VEI included the introduction of a new corporate design: a new website, new brochures, a new company video, and all other communication means. Apart from the branding of VEI, also a key change occurred in the HR organization as VEI started to be an employer. Before, all people working for VEI, were either seconded to VEI by the Dutch water companies, or they were hired through payroll companies or consultancy type of arrangements. During 2018, we succeeded in having all the HR and administrative requirements ready to directly employ our core staff, including for example the registration of VEI as a member of the Employers' association Water Companies (WWb - Werkgeversvereniging Waterbedrijven). Hence, at the end of 2018, VEI employed 12 employees directly. With respect to VEI’s third strategic pillar, project excellence, 2018 has been an absolute record year for VEI. The ‘Project Excellence’-pillar encompasses elements as continuously innovating our products and diversifying our financial sources, centralizing our project-portfolio around the realization of Sustainable Development Goal 6 and the forming of project teams, and of course a successful implementation of our new strategic WaterWorX program. In 2018, our flagship program WaterWorX came up to steam in its’ 2nd year of imple­mentation. Staffing arrangements were finalized for the 16 Water Operator Partnerships under the program, and the first results on direct impact of improved water provision were noted. This has amongst others resulted in an increase in turnover of 12,6% in comparison to 2017 to 19.7 million Euro in 2018. Notably, impact-wise VEI succeeded during 2018 in contributing to give 315,000 people access to improved water and/or sanitation. A staggering number. For interpretation: the city of Utrecht in which our headquarter is based has approximate a same population. Financially, VEI is doing well: no external financing is needed, activities can be financed with own resources. The negative result over 2018 will be covered from the own reserves and has no further consequences. Our solvency, expressed as shareholders’ equity in relation to the balance sheet total, was 14% (compared to 13% in the previous year). The company’s liquidity, expressed as current assets relative to current liabilities, was 1.24 (compared to 1.21 in the previous year). Finally, no unforeseen items of extraordinary expenditure had to be accounted for in relation to 2018 or influenced the future expectations. LOOKING FORWARD TO 2019 The project portfolio is targeted in the coming years, to stabilize around a volume of €20 million, which will accordingly result in stable turnover and costs. However, given our strategy of “a bigger bang for the buck”, VEI strives to give access to 321.000 people to water/sanitation services as a direct result of our activities (compared to the 315.000 achieved in 2018). Due to the execution of our flagship program WaterWorX, we are able to boost the impact on this key indicator, growing in 2020 to a total annual amount of 350,000 people which we can give access to improved water services. The support to the local utilities and thus the contribution to the Sustainable Development Goals can only be reached by actively sharing long-standing expertise and experience of the Dutch drinking water utilities. VEI is strongly rooted in the Dutch drinking water companies and is from and for drinking water utilities. The unlocking of the expertise of the Dutch utilities is most directly personified in the staff that has worked before for the Dutch utilities and are now directly involved in VEI activities. Therefore, target for 2019 is to increase the number of days spent by short term experts from the Dutch water operators to 3.500 days (compared to 3.412 days in 2018), and to increase the number of individual Dutch water utility staff that are involved in short term assignments to 185 individuals. Also, for the number of long-term experts an increase is targeted from 20 persons in 2018 to 21 persons from the Dutch water utilities in 2019.

2018 was probably the most successful year in the history of VEI. VEI made large strides in realizing its’ strategic agenda as set out in the VEI#2020 strategy, while at the same time realizing record numbers in impact and engagement of the Dutch operator’ employees.

2017

WATERWORX

Commencing program

New VEI Program

Concept and design: Remke Beckers Development and interactive design: Casu Media Photography: VEI and Masja Stolk

UNLOCKING THE STRENGTHS OF DUTCH WATER COMPANIES

COLOPHON

ANNUAL REPORT 2018

VEI  P.O. Box 1205 8001 BE Zwolle, The Netherlands www.vei.nl