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DR P FOR DR P THE BEST DR P FOR DR P THE BEST

Item Slide(s)

Overview 3Feedback on issues raised by PC in 2012 4Annual Report 2011/12 – Income Statement 5 Annual Report 2011/12 – Cash Flow Statement 6Annual Report 2011/12 – Balance Sheet 7Annual Report 2011/12 – Audit Report 8Annual Report 2011/12 – Objectives & KPIs 9CAPEX 10 - 11Strategic Objectives 2012/2013 12Progress Achieving Objectives 2012/13 13Bulk water tariff increases 2013/14 14Adjusted bulk water tariff increases 2013/14 15Alignment with Government Outcomes 16Strategic Focus 2013/14 17Current Challenges 18

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CONTENTS

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OVERVIEW

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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 Name Provision to Capacity m3/day

Actual Utilization

Duivenhoks

Towns 2 030 62%

Rural 2 970 71%

TOTAL 5 000 66%

Rûensveld-East RURAL 3 500 65%

Rûensveld-West

Towns 6 600 63%

Rural 2 900 61%

TOTAL 9 500 62%

Ultimate Target:

Towns -75% Rural –

80%

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FEEDBACK ON ISSUES RAISED BY PC IN 2012

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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.

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ANNUAL REPORT 2011/12 – Income Statement

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Consolidated Income Statement

INCOME

EXPENSES

Water Sales49%

Loan written off41%

Interest2%

Admin Fees2%

Training1%

Other Operational1%

Disposal Assets4%

Raw Water2%

Chemicals7%

Electricity15%

Maintenance5%

Labour Costs44%

Training1%

Depreciation8%

Other18%

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ANNUAL REPORT 2011/12 – Cash Flow Statement

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Cash & Investments

Item Amount (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 Balance 11 790 659

TOTAL END OF YEAR 19 532 535

Item Amount (R)

Operating 3 078 822

HR/Training 558 164

Furniture, Equipm & Vehicles 1 552 307

Infrastructure 14 343 242

Reserved for

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ANNUAL REPORT 2011/12 – Balance Sheet

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CAPITAL EMPLOYED R83 639 461 EMPLOYMENT OF CAPITAL

Retained Income

94%

Current Liabilities

6%

PPE68%

Cash & Investments

23%

Receivables9%

Inventories0%

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ANNUAL REPORT 2011/12 – Audit Report

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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

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ANNUAL REPORT 2011/12 – Objectives & KPIs

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Performance Objective Outcomes / Impact Indicators Measure Target 2011/2012 Actual 2011/2012 Comments

1Water quality compliance

Water quality standards met

Test results, SANS 241 % Compliance ≥90% 96.15% Target met

2 Water lossesReduced levels of

unaccounted for waterWater lost as a % of total water

produced% ≤10% 7.00% Target met

3 Reliability of supplyNo 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

4Obtain unqualified audit report

Unqualified audit report Annual external auditQualified /

UnqualifiedUnqualified Report Unqualified Report Target met

5 Staff turnover Optimal staff retention % staff leaving % ≤10% 12.5%Expiry of fixed-term contracts, dismissal and

retirement

6Board member meeting attendance

Appropriate attendance of meetings

% attendance % ≥80% 100% Target met

7Positive internal audit report

Internal audit issues dealt with

Internal audit reportsSatisfactory /

UnsatisfactorySatisfactory Satisfactory Target met

8Bulk supply agreements with municipalities

Statutory and service leval agreements in place

% municipalities with bulk supply agreements

No 4 / 4 = 100% 1 / 4 = 25% In discussion with municipalities

9Improve financial ratios

Improved viability RatiosPositive trend established

Positive or equal9 out of 10 positive

or equal

Return on Turnover were 14% the previous year, 12% this year attributed to above-inflation

increase in expenses

10Increase BBEEE discretionry spend

% of spend increased Quarterly Reports % increase 0 - 5% -6.34% More maintenance and infrastructure projects

done in the previous year

11Manage costs within the approved budget (operational)

No over expenditure / losses

Financial Reports % variance ≤10% (2.88%) Target met

12Achieve statutory reporting compliance

Reporting compliance achieved

Statutory submissions made on time

Submission dates missed

0 0 Target met

13Surplus targets (operational)

Targets as per SHC met Financial Reports % variance ≤10% 36.34% Operational Income = 0.58% more than budgeted (R176 695) Operational Expenses = 2.88% less

than budgeted (R808 000)

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CAPEX

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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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CAPEX

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6 160

15 950

2 200

2 100

2 000 2 000 2 800 41 980

3 000 4 000 5 000 189 380

12 595

27 500

15 400

TOTAL CAPITAL NEEDED 24 310 2 100 5 000 6 000 7 800 243 955

ITEM 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018 +

UPVC pipelines (replace 2% over 20 years @ 7% PPI with upvc)

Airvalves (replace all over 5 years with new technology)

Servitutes

R'000

Duivenhoks: Increase capacity (increase with 24% - 5000 to 6200 m3/day)

Duivenhoks: Storage dam (raw water dam from Duivenhoksriver - reserve low - capacity 500 000m3)

Rûensveld-East: Rising main (refurbish, upgrade & increase capacity 22%)

Rûensveld-West: Rising main (refurbish, upgrade - capacity enough)

Steel pipelines (replace over 10 years @ 7% PPI with duct iron/mpvc)

Asbestos pipelines (replace over 15 years @ 7% PPI with duct iron/upvc/mpvc)

Connection Pipelines

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STRATEGIC OBJECTIVES 2012/13

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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

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PROGRESS ACHIEVING OBJECTIVES 2012/13

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Performance Objective Outcomes / Impact Indicators Measure Target 2012/2013 Actual 2012/2013

1Water quality compliance

Water quality standards met Test results, SANS 241 % Compliance ≥90% 95.23%

2 Non Revenue WaterReduced levels of

unaccounted for waterWater lost as a % of total water

produced% ≤10% 7.54%

3 Reliability of supplyNo unplanned interruptions

to supply exceeding 24 hours

% of number of days supply disrupted divided by total number of

possible supply days% ≤2% 0%

4Obtain unqualified audit report

Unqualified audit report Annual external auditQualified /

UnqualifiedUnqualified Report N/A

5 Staff turnover Optimal staff retention % staff leaving % ≤10% 4.48%

6Board member meeting attendance

Appropriate attendance of meetings

% attendance % ≥80% 83%

7Positive internal audit report

Internal audit issues dealt with

Internal audit reportsSatisfactory /

UnsatisfactorySatisfactory N/A

8Bulk supply agreements with municipalities

Statutory and service leval agreements in place

% municipalities with bulk supply agreements

No 2 of 6 2 of 6

9 Improve financial ratios Improved viability RatiosPositive trend established

Positive or equal Positive trend

10Increase BBEEE discretionry spend

% of spend increased Quarterly Reports % increase 0 - 5% 2.84%

11Manage costs within the approved budget (operational)

No over expenditure / losses

Financial Reports % variance ≤5% (4.69%)

12Achieve statutory reporting compliance

Reporting compliance achieved

Statutory submissions made on timeSubmission dates

missed0 0

13Surplus targets (operational)

Targets as per SHC met Financial Reports % variance ≤10% Targets met

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BULK WATER TARIFF INCREASES 2013/14

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Proposed bulk water tariff increases for 2013/14 (based on consecutive increases of 16%):

Heidelberg & Slangrivier: R4.84 – R5.57 per m3 = 15.08% (73c/m3) increase

Caledon: R4.11 – R4.77 per m3 = 16.06% (66c/m3) increase

Excludes allocation based basic levy as well as capital levy of 25c/m3

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.

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ADJUSTED BULK WATER TARIFF INCREASES 2013/14

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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/m3 on the proposed tariff

Heidelberg & Slangrivier: R4.84 – R5.52 per m3 = 14.05% (68c/m3) increase Caledon: R4.11 – R4.72 per m3 = 14.84% (61c/m3) 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/m3 on actual consumption.

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ALIGNMENT WITH GOVERNMENT OUTCOMES

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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.

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STRATEGIC FOCUS 2013/14

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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

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CURRENT CHALLENGES

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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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