1. Click to edit Master subtitle style 5/10/10 Botshelo Water 2008/2009 Annual Report Presentation to Portfolio Committee on Water and Environmental Affairs

2. 5/10/10 CONTENTS 1. Relationship with Municipalities – achievements and challenges 2. Financial performance 3. Non- financial performance 4. Overall operating conditions 5. Debt / capital structure 6. Findings and analysis of Auditor – General’s report

3. 5/10/10 Relationship with Municipalities BW has Water Services Provider Agreements with Dr Ruth Segomotsi Mompati and Ngaka Modiri Molema District Municipalities (DrRSMDM & NMMDM) in the North West Province. DrRSMDM & NMMDM are Water Service Authorities and BW provides water services to 7 of their local municipalities.

4. 5/10/10 Relationship with Municipalities - achievements Acceptance of BW Turnaround Strategy/Plan by WSAs & Provincial Government. WSAs, LMs and Dikgosi are involved in BW Strategic Planning sessions. Municipalities accepted new water tariffs. Water supply to rural areas was achieved during the year under review with minimal outages. Accurate and timely meter reading, together with Municipalities, improved acceptance of billing procedures.

5. 5/10/10 Relationship with Municipalities – achievements (continued……) Engagement of National Treasury (MFMA, Sec.42) to mediate i.r.o. of Ditsobotla Local Municipality. Resuscitation of Coordination Committee in particular Dr RSMDM.

6. 5/10/10 Relationship with Municipalities - challenges Re-convening of the Coordination Committee in NMMDM. Delayed payments by WSAs & LMs for water services rendered. Non-payment of long outstanding and growing debts. Term of Water Services Provider Agreements. Failure by Municipalities to promulgate bye - laws (unauthorised connections). Industrial action by Municipalities employees.

7. 5/10/10 Financial analysis - audit report Disclaimer due to: Opening Balances – insufficient audit confirmation by the AG to comply with IFRS, GAAP & Auditing Standards Property Plant and Equipment – Rights and obligations Correction of Errors R37 million corrections made Inventory - Valuation Provision for leave Pay – system ineffective Revenue – limitation of scope (system) Cost of Sales – limitation of scope (system) BW has reported the previous auditors to IRBA

8. 5/10/10 Overview of Income Statement Turnover increase from R75.4 Million to R88.4 Million (17%) Gross Profit increased from R52.8 Million to R61.9 Million (17%) Employee cost reduced by R2.0 Million (5%) Other expenses reduced by R7.0 Million (excluding extraordinary expenses) (38%)

9. 5/10/10 Overview of the Balance Sheet BW is solvent (reserves R7.5 Million) Cash balance R26.0 Million DWA debt were reduced by R16.0 Million due to overbilling Assets were R17.0 Million undervalued in previous years

10. 5/10/10 Financial position and key ratios BW is solvent (reserves R7.5 Million) Debtors collection period (114 days) Current Asset Ratio 0.69 Fire Proof Ratio (excluding stock and DWA debt and provisions) 3.11 Creditors payment period 255 days Creditor payment period excluding DWA 142days

11. 5/10/10 Analysis of water Sales and Revenue Description2009%2008% Bulk Water Sales24.022723.2831 Retail Water Sales15.4217 5.92 8 Rural Recoveries36.1141 8.2711 Government Grants-22.50 30 Projects12.0114 7.7910 Services 0.81 1 7.6710 Total88.3710075.43100

12. 5/10/10 Analysis of Expenditure Description2009% of Turnove r 2008 Cost of Sales26.453022.6230 Employee Costs34.053836.0348 Other Expenses excluding adjustments 18.592129.0338 Turnover88.3775.44

13. 5/10/10 Analysis of Profitability Description2009%2008% Sales88.3710075.44100 Gross Profit61.917051.81 69 Net Profit/(loss)7.94 9(31.79) (42)

14. 5/10/10 Non-financial performance Recruitment of qualified technical staff. Successful implementation of Turn Around Strategy and Plan Launch & implementation of Employee Wellness Programme – to manage change management Water services were provided despite all challenges

15. 5/10/10 Overall operating conditions Non- ownership of the water infrastructure by BW (matter raised with the Ministry). Insufficient funding to adequately maintain the water infrastructure. Lack of water infrastructure in areas to accommodate population growth.

16. 5/10/10 DEBT / CAPITAL STRUCTURE No long term Loans Requests from DWA Assets transfer Writing off of the old debt (R48 million)

17. 5/10/10 Findings and Analysis of AG’s Report 2008 Opening Balances: 2009 figures were audited by the AG. BW will address the 2009 qualifications in order to make the financial figures acceptable. Property, Plant and Equipment Verification in progress Necessary adjustments will be made Fixed property rights may be problematic as ownership transfer procedures take time

18. 5/10/10 Findings and Analysis of AG’s Report Continued Correction of Errors Only a contribution in drawing the disclaimer opinion Inventory Stock sheets compiled will be valued by external valuer. Provision for Leave Pay System changed from manual to electronic ( VIP Payroll to be used for capturing leave) Revenue & Cost of Sales New accounting system introduced.

19. 5/10/10 Thank You 1919