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2. Item Slide(s) Overview 3 Feedback on issues raised by PC in 2012 4 Annual Report 2011/12 – Income Statement 5 Annual Report 2011/12 – Cash Flow Statement 6 Annual Report 2011/12 – Balance Sheet 7 Annual Report 2011/12 – Audit Report 8 Annual Report 2011/12 – Objectives & KPIs 9 CAPEX10 - 11 Strategic Objectives 2012/2013 12 Progress Achieving Objectives 2012/13 13 Bulk water tariff increases 2013/14 14 Adjusted bulk water tariff increases 2013/14 15 Alignment with Government Outcomes 16 Strategic Focus 2013/14 17 Current Challenges 18 2 CONTENTS

3. OVERVIEW 3  Provide Bulk potable water to the towns of Caledon (Theewaterskloof LM), Heidelberg & Slangriver (Hessequa LM)  Provide Retail potable water to rural areas around Caledon (Theewaterskloof LM), Bredasdorp & Waenhuiskrans (Cape Agulhas LM), Swellendam (Swellendam LM), Heidelberg & Witsand (Hessequa LM).  Retail water provided to ± 850 clients over a pipe network of ± 1400 km. CAPACITY & UTILIZATION Scheme NameProvision toCapacity m3/day Actual Utilization Duivenhoks Towns2 03062% Rural2 97071% TOTAL5 00066% Rûensveld-East RURAL3 50065% Rûensveld-West Towns6 60063% Rural2 90061% TOTAL9 50062% Ultimate Target: Towns -75% Rural – 80%

4. FEEDBACK ON ISSUES RAISED BY PC IN 2012 4  CAPEX underspending – decision to delay capital plan and embark on implementation of asset management system (Municipal Assistant) to provide more informed plan; funding required to complete implementation.

5. ANNUAL REPORT 2011/12 – Income Statement 5 Consolidated Income Statement INCOME EXPENSES

6. ANNUAL REPORT 2011/12 – Cash Flow Statement 6 Cash & Investments ItemAmount (R) Net Income 31 289 100 Changes in Working Capital 493 046 Adj for Depreciation 2 233 946 Loan Written off(25 409 400) Movement CAPEX( 4 742 485) Movement Fin Assets 3 877 669 Opening Balance11 790 659 TOTAL END OF YEAR19 532 535 ItemAmount (R) Operating 3 078 822 HR/Training 558 164 Furniture, Equipm & Vehicles 1 552 307 Infrastructure 14 343 242 Reserved for

7. ANNUAL REPORT 2011/12 – Balance Sheet 7 CAPITAL EMPLOYEDR83 639 461EMPLOYMENT OF CAPITAL

8. ANNUAL REPORT 2011/12 – Audit Report 8  Unqualified Audit Report  Annual report not available in time of audit due to staff shortage  Performance Management (not influencing audit opinion):  Not fully comply  Auditors report quarterly to Auditor General on progress regarding compliance  With each quarter progress is made

9. ANNUAL REPORT 2011/12 – Objectives & KPIs 9 Performance ObjectiveOutcomes / ImpactIndicatorsMeasureTarget 2011/2012Actual 2011/2012 Comments 1 Water quality compliance Water quality standards met Test results, SANS 241% Compliance≥90%96.15% Target met 2Water losses Reduced levels of unaccounted for water Water lost as a % of total water produced %≤10%7.00% Target met 3Reliability of supply No unplanned interruptions to supply exceeding 24 hours % of number of days supply disrupted divided by total number of possible supply days %≤2%0% Target met 4 Obtain unqualified audit report Unqualified audit reportAnnual external audit Qualified / Unqualified Unqualified Report Target met 5Staff turnoverOptimal staff retention% staff leaving%≤10%12.5% Expiry of fixed-term contracts, dismissal and retirement 6 Board member meeting attendance Appropriate attendance of meetings % attendance%≥80%100% Target met 7 Positive internal audit report Internal audit issues dealt with Internal audit reports Satisfactory / Unsatisfactory Satisfactory Target met 8 Bulk supply agreements with municipalities Statutory and service leval agreements in place % municipalities with bulk supply agreements No4 / 4 = 100%1 / 4 = 25%In discussion with municipalities 9 Improve financial ratios Improved viabilityRatios Positive trend established Positive or equal 9 out of 10 positive or equal Return on Turnover were 14% the previous year, 12% this year attributed to above-inflation increase in expenses 10 Increase BBEEE discretionry spend % of spend increasedQuarterly Reports% increase0 - 5%-6.34% More maintenance and infrastructure projects done in the previous year 11 Manage costs within the approved budget (operational) No over expenditure / losses Financial Reports% variance≤10%(2.88%) Target met 12 Achieve statutory reporting compliance Reporting compliance achieved Statutory submissions made on time Submission dates missed 00 Target met 13 Surplus targets (operational) Targets as per SHC metFinancial Reports% variance≤10%36.34% Operational Income = 0.58% more than budgeted (R176 695) Operational Expenses = 2.88% less than budgeted (R808 000)

10. CAPEX 10  BUDGETED VS ACTUAL 2011/2012  Budgeted BP = R7 514 000 - Actual = R5 079 670 (68%)  Available capital for infrastructure limited – very careful planning needed as well as reserve for emergencies.  Decided on Extensive Asset Management System (Municipal Assistant)  Phase 1 (production) 100% completed & Phase 2 (retail) only 1/3 completed. Funding required to complete.

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12. STRATEGIC OBJECTIVES 2012/13 12  Ensure access to potable water in area of service  To manage financial affairs to meet current and future obligations  To operate, maintain, develop and refurbish infrastructure  To be an aligned and effective institution  To empower and develop employees

13. PROGRESS ACHIEVING OBJECTIVES 2012/13 13 Performance ObjectiveOutcomes / ImpactIndicatorsMeasureTarget 2012/2013Actual 2012/2013 1 Water quality compliance Water quality standards metTest results, SANS 241% Compliance≥90%95.23% 2Non Revenue Water Reduced levels of unaccounted for water Water lost as a % of total water produced %≤10%7.54% 3Reliability of supply No unplanned interruptions to supply exceeding 24 hours % of number of days supply disrupted divided by total number of possible supply days %≤2%0% 4 Obtain unqualified audit report Unqualified audit reportAnnual external audit Qualified / Unqualified Unqualified ReportN/A 5Staff turnoverOptimal staff retention% staff leaving%≤10%4.48% 6 Board member meeting attendance Appropriate attendance of meetings % attendance%≥80%83% 7 Positive internal audit report Internal audit issues dealt with Internal audit reports Satisfactory / Unsatisfactory SatisfactoryN/A 8 Bulk supply agreements with municipalities Statutory and service leval agreements in place % municipalities with bulk supply agreements No2 of 6 9Improve financial ratiosImproved viabilityRatios Positive trend established Positive or equalPositive trend 10 Increase BBEEE discretionry spend % of spend increasedQuarterly Reports% increase0 - 5%2.84% 11 Manage costs within the approved budget (operational) No over expenditure / lossesFinancial Reports% variance≤5%(4.69%) 12 Achieve statutory reporting compliance Reporting compliance achieved Statutory submissions made on time Submission dates missed 00 13 Surplus targets (operational) Targets as per SHC metFinancial Reports% variance≤10%Targets met

14. BULK WATER TARIFF INCREASES 2013/14 14  Proposed bulk water tariff increases for 2013/14 (based on consecutive increases of 16%):  Heidelberg & Slangrivier: R4.84 – R5.57 per m 3 = 15.08% (73c/m 3 ) increase  Caledon: R4.11 – R4.77 per m 3 = 16.06% (66c/m 3 ) increase  Excludes allocation based basic levy as well as capital levy of 25c/m 3  Motivation:  Increases of above inflation for certain input costs (especially electricity, chemicals & labour equalling about 78% of total operational cost of bulk provision (excluding depreciation).  Urgent need for capital to do infrastructure refurbishment. Even with proposed tariff increase for 2013/14 and similar increases thereafter, capital will still be insufficient.

15. ADJUSTED BULK WATER TARIFF INCREASES 2013/14 15  Adjustment to proposed bulk water tariffs for 2013/14 due to Eskom reduced increase:  Overberg Water Board financial year starts 1 July  Eskom financial year starts 1 April  Based on a 9.6% Eskom tariff increase from 1 April 2013 as well as 1 April 2014, the effective increase will be 12.23% for Overberg Water for the 2013/14 financial year (consecutive increases of 16% provided for in budget)  Result in a decrease in electricity budget of R214 674  Result in a decrease of 5c/m 3 on the proposed tariff  Heidelberg & Slangrivier: R4.84 – R5.52 per m 3 = 14.05% (68c/m 3 ) increase  Caledon: R4.11 – R4.72 per m 3 = 14.84% (61c/m 3 ) increase  Due to the negligible saving, Overberg Water requests that the initially proposed tariffs are left unchanged in the light of capital needs for infrastructure refurbishment.  Otherwise Overberg Water Board will give rebate of 5c/m 3 on actual consumption.

16. ALIGNMENT WITH GOVERNMENT OUTCOMES 16 Overberg Water contributes to the Ministerial Programme of Action as follows:  Outcome 7: Vibrant, Equitable and Sustainable Rural Communities with Food Security for All  Partnering with local municipalities to ensure rural communities have access to potable water (Witsand/Slangrivier). Operational support Hessequa and Kannaland LMs.  Administer the distribution and installation of rain water harvesting tanks.  Retail client base is largely commercial farmers, providing employment and food security.  Training initiatives undertaken with internal and government funding leading to permanent and fixed-term employment opportunities.  Outcome 10: Environmental Assets and Natural Resources that are well protected and continually enhanced  Delivering Class 1 potable water.  Employing new technology in water purification (UF plant) to reduce use of chemicals.  Water conservation and demand management initiatives.

17. STRATEGIC FOCUS 2013/14 17  Compilation of regional water services master plan in conjunction with DMs and LMs  Securing income stream  Investigating access to and applying for capital funding  Targeted increase in staff complement  Complete implementation of Performance Management System  Continued training to address skills shortage in water sector (Process Controllers)  Continued support to DWA and wider water sector participation

18. CURRENT CHALLENGES 18  Access to capital  Sustainability of Tariffs  Ability of consumers to pay  Ability of Overberg Water to absorb above-inflation increases  Increasing the staff complement amid financial constraints  Staff complement must increase to maintain service standards, assist municipalities and comply to regulatory, legal and audit requirements.

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