MAGALIES WATER 2005/6 FINANCIAL PERFORMANCE

1. MAGALIES WATER 2005/6 FINANCIAL PERFORMANCE Presentation to The Water Affairs and Forestry Portfolio Committee 20 March 2007

2. TABLE OF CONTENTS • Introduction • Area of Supply and Operations • Financial Performance • Operational Performance Linked To Financial Performance • Key Finance-linked Successes In 2005/6 • BEE Procurement • Financial Challenges faced by the Board and plans to overcome them

3. AREA OF SUPPLY AND OPERATIONS • North West Province • Limpopo Province • Gauteng Province • 34 000 km² in three provinces

4. AREA OF SUPPLY AND OPERATIONS Magalies Water has been a provider of high quality water for over 38 years and continues to maintain this standard. This was achieved as a result of well established relationships with our Stakeholders as well as Benchmarking our services with international standards and players.

5. MAGALIES WATER AREA OF SUPPLY AREA OF SUPPLY Limpopo NorthWest Gauteng

6. MUNICIPAL DEMOGRAPHICS TABLE 1:

7. TOTAL NUMBER OF CONSUMERS FOR THE 5 LARGEST MUNICIPALITIES TABLE 2:

8. FINANCIAL PERFORMANCE

9. 5 YEAR PERFORMANCE R175,5m R164,3m R149,5m R117,0m R140,2m R140,1m R116,7m R74,6 R44.4m R56,9m

10. 5 YEARS PERFORMANCE

11. ANALYSIS OF INCOME

12. ANALYSIS OF EXPENDITURE

13. FINANCIAL OVERVIEW Consolidated Balance Sheet - Magalies Water

14. FINANCIAL OVERVIEW Consolidated Income Statement - Magalies Water

15. FINANCIAL OVERVIEW Magalies Water Bulk – Income Statement (Vaalkop, Wallmannsthal, Klipdrift & Cullinan)

16. FINANCIAL OVERVIEW Magalies Water - Retail (CTMM) – Income Statement

17. FINANCIAL OVERVIEW Magalies Water - Retail (Bojanala) – Income Statement

18. FINANCIAL OVERVIEW Magalies Water – Roodeplaat Temba Water Services Trust – Income Statement

19. FINANCIAL OVERVIEW Magalies Water – Rustenburg Water Services Trust – Income Statement

20. INVESTMENTS

21. LOAN STRUCTURE Magalies Water – Loan Stock Outstanding

22. LOAN STRUCTURE Magalies Water – Long Term Commitments Outstanding

23. RATIO’S

24. RATIO’S cont,

25. OPERATIONAL PERFORMANCE LINKED TO FINANCIAL PERFORMANCE

26. OPERATIONAL PERFORMANCE • Magalies Water has assisted Municipalities with the implementation of its refurbishment projects – transfer of assets. Project at Danhouse, Sespond and One-and-Ten villages in Moretele was successfully implemented during 2005/6. • Other projects include the following: • A number of projects were implemented during 2005/6 in co-operation with both Local & District Municipalities. Subject to funding, these projects will be carried forward to subsequent years: • Basic sanitation: Ratjiepane, Moretele R2.0 mil • Basic sanitation: Mabeskraal Moses Kotane R3.5 mil • Basic sanitation: Boitekong Rustenburg R1.5 mil • Basic Water: Disteneng Moretele R1.26 mil • Basic Water: Cyferskuil Moretele R0.3 mil • Basic Water: Tweelaagte Moses Kotane R1.4 mil • Basic water: Bapong Moses Kotane R1.2 mil • Source Augmentation: Derby Kgetleng River R2.02 mil • Installation of connections: Jericho Madibeng R1.6 mil TOTAL = R14.78 Mill

27. OPERATIONAL PERFORMANCE • Excess of 1 500 km pipelines (including reticulation) • 40 reservoirs with a total storage capacity in excess of 400Ml • Capital Infrastructure investment of +/- R800 million over the past 5 years • Capital Infrastructure expenditure incurred in 2005/6 = R70 million (approx.) • R149, 5 Mill to be spent over the next 5 years on pipeline and Infrastructure maintenance

28. KEY FINANCE-LINKED SUCCESSES IN 2005/6

29. KEY FINANCE-LINKED SUCCESSES IN 2005/6

30. KEY FINANCE-LINKED SUCCESSES IN 2005/6 • Successful implementation of the R550 million RTWST project • Successful implementation of the R250 million RWST project • Implementation of balanced tariff increases ranging appr. between 0% - 6.0% • As implementing agent, successfully implemented DWAF projects to the value of R35 mill

31. BEE PROCUREMENT

32. BEE PROCUREMENT • The BEE spend between 2003/4 – 2005/6 is as follows:

33. FINANCIAL CHALLENGES AND PLANS TO STRENGTHEN BALANCE SHEET

34. FINANCIAL CHALLENGES & PLANS

35. FINANCIAL CHALLENGES AND PLANS TO STRENGTHEN BALANCE SHEET • Obtaining Support from DWAF regarding the above average / Inflation raw water tariff increases whilst the Water Board is expected to increase tariffs in line with Inflation targets • Finalisation of the WSA/WSP Service Level Agreements – contracts at various stages of conclusion • Reduction of UFW in areas of operation • Reduction of Operational Expenses - consolidation of business processes has been undertaken through the restructuring of the Organisational Structure in order to further reduce OPEX.

36. FINANCIAL CHALLENGES AND PLANS TO STRENGTHEN BALANCE SHEET • Debt Management – Settle all long-term commitments with current short term investments (Long Term Debts are currently not at favourable rates) • Increase Revenue & Expand business – Conclude contracts with new consumers i.e. new mines in the Merensky Reef. Operate and Manage Municipal Water & Sanitation Infrastructure • Tariff Policy – Charge a higher tariff to commercial consumers/clients • Factoring Debtors – Consider selling the debt book to reduce risk of non-payment of accounts • Investment Portfolio - Review current investment policy to consider other safe investment classes

37. AUDIT OPINION Qualified Audit Opinion by the External Auditors (Gobodo Inc.) On the following: • Retail debtors amounting to R30 million • Revaluation of Fixed Assets not undertaken

38. THANK YOU