annual report 2011/2012 - amazon web...

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“Sustaining the Source and flow of life forever”

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(nat.) (056) 515 0369

(intl.) (+2756) 515 0369

(nat.) (056) 515 0200

(intl.) (+2756) 515 0200

(nat.) (056) 515 0369

(intl.) (+2756) 515 0369

PRESENTATION TO THE PORTFOLIO COMMITTEE (Water and Environmental Affairs)

17 – 18 APRIL 2013

ANNUAL REPORT

2011/2012

2

Table of Contents

• Introduction

• Overview of Sedibeng Water

• Corporate Governance

• Feedback on issues raised by Portfolio Committee in 2012

• Strategic Objectives Outcomes 2011/12

• Progress on Strategic Objectives 2012/13

• Alignment of Strategic Objectives with Government Outcomes 2013/14

• Achievements

• Challenges

• Implementation of PAIA / PAJA

• Annual report 2011/12

• Capex 2011/12

• Budget Analysis

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3

Introduction

• The business performance of the organisation is supported by medium and long-term

strategies.

• The annual report provides progress on all strategic imperatives.

• On-going strategic reviews are aligned to performance management system.

• Business reviews are conducted to focus on key priorities.

• This presentation is based on strategic plan, performance reviews and audited

financial statements.

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Overview (Area of Supply and Operation)

• Sedibeng Water services an operational area spanning more than 86 000 square

kilometers across three provinces: Free State; North West and Northern Cape.

• Sedibeng Water operates 9 water treatment plants and 3 waste water treatment plants

• Provide portable water and sanitation treatment to more than 2.5 million people.

• Provide retail water supply on behalf of WSA’s in North West Region

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5 5

Overview (Area of Supply and Operations . Cont.)

• Service Level Agreements signed with Water Services Authority (WSA)

- Free State Region:

Nala Local Municipality

Maquassi-Hills Local Municipality

- North West Region:

Dr Ruth Mompati District Municipality

Joe Morolong Local Municipality

Ga-segonyana Local Municipality

- Northern Cape Region:

Tsantsabane Local Municipality

Gamagara Local Municipality

Dikgatlong Local Municipality

Nama-Khoi Local Municipality

-Under Negotiation:

Phokwane Local Municipality

Matjhabeng Local Municipality

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6

Overview (Area of Supply and Operation . cont.)

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7

Corporate Governance

Committees:

• Board:

- Executive

- Finance Committee,

- Audit Committee

- Human Capital Committee

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8

Feedback on issues raised by Portfolio Committee in 2012

Board Appointment

• Sedibeng Water has submitted a shortlist of candidates to the Minister of Water and

Environmental Affairs for the appointment of the Board

Outstanding Debts

• Matjhabeng LM declared a dispute on their accounts and took the matter to court.

The court ruled that the municipality must pay the current account less the disputed

portion of the account until the Arbitration is settled.

• Sedibeng Water has requested the Minister to appoint the Arbitrator in line with the

court ruling.

• Sedibeng Water has entered into debt settlement agreements with the municipalities

that are owing. Where the municipalities are failing to pay their accounts, water

restrictions are applied in accordance with the Water Services Act.

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17 APRIL 2013

SEDIBENG WATER – AGE ANALYSIS

SECTOR 30 June 2011 30 June 2012 31 March 2013 30 June 2013

Projected

Municipality / WSA 413,070,890.66 620,592,042.22 682,626,306.69 706,023,805.05

TOTAL 413,070,890.66 620,592,042.22 682,626,306.69 706,023,805.05

% Movement 0% 50% 10% 13%

10

17 APRIL 2013

FREE STATE – AGE ANALYSIS

MUNICIPALITY 30 June 2011 30 June 2012 31 March 2013 30 June 2013

Projected

Maquassi Hills LM 17,792,292.62 28,195,512.94 35,530,847.49 37,975,959.00

Matjhabeng LM 310,471,980.15 479,383,750.87 532,687,121.34 550,454,911.00

Nala LM 32,816,396.94 53,789,919.12 51,684,548.02 50,982,758.00

TOTAL 361,080,669.71 561,369,182.93 619,902,516.85 639,413,628.00

% Movement 0% 55% 10% 13%

11

Investments

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Institution 2012

(R’000)

2011

(R’000)

Sanlam 37 149 32 707

Investec 59 922 52 697

ABSA Bank 26 690 43 353

First Corp Investment 9 121 8 174

Total 132 882 136 931

NORTHERN CAPE – AGE ANALYSIS

MUNICIPALITY 30 June 2011 30 June 2012 31 March

2013

30 June 2013

Projected

Dikgatlong LM 8,584,741.62 5,103,899.58 3,806,530.67 3,374,074.00

Gamagara LM 401,649.40 515,946.27 1,457,643.35 1,771,542.00

Tsantsabane LM 14,568,811.05 18,909,973.74 21,970,698.58 22,990,940.00

TOTAL 23,555,202.07 24,529,819.59 27,234,872.60 28,136,556.00

% Movement 0% 4% 11% 13%

12

17 APRIL 2013

NORTH WEST – AGE ANALYSIS

MUNICIPALITY 30 June 2011 30 June 2012 31 March 2013 30 June 2013

Projected

Dr. Ruth S Mompati DM 10,941,294.91 20,433,746.45 32,894,336.00 37,047,865.85

Ga-Segaonyana LM 1,043,937.33 2,978,332.65 1,425,755.20 1,425,755.20

Joe Morolong LM 10,687,228.51 6,687,228.51 - -

Phokwane LM 5,762,558.13 4,593,732.09 1,168,826.04 -

TOTAL 28,435,018.88 34,693,039.70 35,488,917.24 38,473,621.05

% Movement 0% 22% 2% 11%

13

Feedback on issues raised by Portfolio Committee in 2012 (Cont.)

Disciplinary Action

• The mediation hearing took place on the 06 December 2012. The matter was

resolved amicably. The Director’s contract of employment has been terminated.

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14 14

17 APRIL 2013

STRATEGIC OBJECTIVES AND OUTCOMES AGAINST ACTUAL PERFORMANCE RESULTS FOR

JULY 2011 – JUNE 2012

Performance Objectives Outcomes Indicators Measure Performance Results

Comments Target (%) Actual (%)

1.1 Security of supply and

reliability of services

Improved plant

reliability

Mean time to

repair (hours)

Free State (FS):

Target achieved.

Target achieved.

Target achieved.

24 hours = 0

Northern Cape (NC):

VGG = 0

Namakwa = 0

North West (NW):

= 0

1.2 Treatment processes Meet customer

demand in terms of

quality

Test Results,

SANS or Blue

Drop. Class 1:

Chemistry

% 95

Free State (FS): Target achieved.

Target achieved.

Target achieved.

Chemical failures were as a result of

turbidity due to Bogosing Plant

inefficiencies.

Nitrates were also not meeting

specification on a number of

boreholes samples.

Class 1

- Bacteriological = 99.7%

- Chemical = 99.6%

Northern Cape VGG

Class 1


- Chemical = 98.6%

Namakwa

Class 1


- Chemical = 99.9%

North West (NW):

Class 1


- Chemical = 88.8%

1.3 Adequate infrastructure

Improved and build

capacity on

infrastructure

% compliance to

capital plan

95%

Target achieved.

129%

15 15

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1.4 Resource protection

Reduce water losses

in the production and

distribution system

% acceptable water

losses

10% Free State:

Total water losses =

5.8%

Northern Cape VGG:

Total water losses =

21.53%

Northern Cape

Namakwa:

None

Target achieved

The meter at Beeshoek pump

station is wrongly calibrated. It

shows Sedibeng Water pumping

more water than what is

purchased from Kolomele mine

with over readings of 15.72%. All

the meters were calibrated to

correct the issue.

Meter was installed at the

Orange River pump station in

June 2012

2. Debt collection and cost

recovery

Effective debt

collection and cost

recovery

Collection service delivery

fees in the NW Region

65% 93% Target achieved

Collect bulk water

revenue from

municipalities in the FS

and NC Regions

75% 46% Target not achieved due to

municipalities that are failing to

pay their current account when

due as a result of high

outstanding debt. The main

contributor is Matjhabeng LM

with a debt of R483

Collect bulk water

revenue from business

accounts in the FS and

NC Regions

103%

Target achieved. 100%


JULY 2011 – JUNE 2012

16 16

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2.1 Budget management

and cost management

To ensure adherence to

budgetary limits through

prudent cost

management control

excluding water

purchases , maintenance

and energy cost

Expenditure to be

kept at least 5%

below allocated

budget on

monthly basis

>95% 82%

Target achieved at consolidated

level

Realise budgeted annual

revenue excluding

miscellaneous income

Budgeted annual

revenue

excluding

miscellaneous

income

95% Target achieved 97%

Increase spending on

BEE

% spending on

discretionary

expenditure

65% Target achieved 88%

2.2 Cash flow

management

Realise positive cash flow Positive

budgeted cash

flow , kept above R86.8m R14 6.9m

Target achieved.

2.3 Internal controls Internal Audit issues dealt

with implement Controls

system

Internal Audit

reports and

Control systems 95% 88%

Target not achieved due to some of

financial audit documents which were

in draft stage at year end.

2.4 Financial

management

Unqualified audit report Obtain an

unqualified audit

opinion

Unqualified audit opinion 100%

Target achieved

3.Equity Improve the employment

equity profile by focusing

on gender ,diversity,

designated group and

disability

Appropriate level

of gender

representation at

management

level 30% 10.00%

Target not achieved. The position of

management structure comprised of

12 positions. In order to achieve

gender representation on that level,

it depends on natural attrition. A

vacant position was advertised at

Scientific Services and interviews are

currently being arranged


JULY 2011 – JUNE 2012

17 APRIL 2013

STRATEGIC OBJECTIVES AND OUTCOMES AGAINST ACTUAL PERFORMANCE RESULTS

SECOND QUARTER OF 2012/ 2013 (JULY 2012 – DECEMBER 2012)

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Performance

Objective

Outcomes

/Impact Indicators Measure

Performance Results Comments

Target (%) Actual (%)

1. Water Quality

Compliance

Water quality

standards met

Test results,

SANS 241

% compliance 96% Free State:

- Bacteriological =

99.93%

- Chemical = 99.90%

Northern Cape -

Vaal Gamagara:

- Bacteriological =

96.30%

- Chemical = 99.90%

Northern Cape -

Namakwa:

- Bacteriological =

99.90%

- Chemical = 99.90%

North West:

- Bacteriological =

98.73%

- Chemical = 99.90%

Target achieved

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Performance

Objective

Outcomes



Target (%) Actual (%) 2.Non Revenue Water Reduced levels of

unaccounted for

water (UAW)

Water lost as a % of

total water

produced

% 10% Free State: 0.32%

Northern Cape: 3.07%

Target achieved.

3. Reliability of

supply

No unplanned

interruptions to

supply exceeding

24 hours

% number of days’

supply disrupted

divided by total

number of possible

supply days

% 0 Free State: None

North West: None

Northern Cape – VGG:

None

Target achieved.

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)

19

Performance

Objective

Outcomes



Target (%) Actual (%) 3. Reliability of

supply (continued)

No unplanned

interruptions to

supply exceeding

24 hours

% number of days’

supply disrupted

divided by total

number of possible

supply days

% 0 Northern Cape –

Namakwa: Yes

Target achieved.

4. Financial Reporting

Compliance

Unqualified audit

report

Annual external

audit

Qualified /

Unqualified

Unqualified

Report

Annual Target achieved.

No financial

systems break-

down was

experienced which

may lead to

qualified audit

report.

5. Staff Turnover Optimal staff

retention

% staff leaving % 8% 0.80% Target achieved.

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Performance

Objective

Outcomes



Target (%) Actual (%) 6. Board Member

Attendance

Improved

performance of

fiduciary

duties/governance

Annual attendance % 67% 100% Target achieved

7.Effective Internal

Controls And Risk

Management

No repeat or

unresolved

findings

Internal audit

reports

Number

repeats

Number

unresolved

1.25

0.75

N/A

N/A

Target achieved.

8. Bulk Supply

Agreements

Concluded With

Municipalities/ Other

Customers

Statutory and

service level

agreements in

place

Municipalities/othe

r customers with

bulk supply

agreements

% 80% 92% Target achieved

9. Improve Financial

Ratios

Improved viability

and sustainability

Financial ratios Liquidity

Gross profit

margin %

(primary

activity)

1.51

67.50%

1.58

73.90%

Target achieved

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21

Performance

Objective

Outcomes



Target (%) Actual (%) 9. Improve Financial

Ratios (continued)

Improved viability

and sustainability

Financial ratios Gross profit

margin %

(secondary

activity)

Net profit

margin %

(primary

activity)

Net profit

margin %

(secondary

activity)

Debt/ Equity

ratio

Return on

assets %

Debtors days #

78.60%

4.91%

5.32%

0.09

0.06

166.79

76.85%

11.56%

21.56%

0.08

0.19

255.39

Target achieved except for

gross profit margin on

secondary activities and

debtors days.

Matjhabeng LM continues to

pay the current account but

no payment is made on the

outstanding debt.

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Performance

Objective

Outcomes



Target (%) Actual (%) 10. Increase BBBEE

Spend

Spend increased

and increased new

entrants

% of spend

increased and #

of increased

new entrants

% increase

# new entrants

5%

12

Free State

1.08% and there

were no new

entrants.

North West

0.28% and there

were no new

entrants.

Northern Cape

3.86% and no

new entrants

Target not achieved for all

the regions.

The BBBEE spending is

currently at 98.5% for Free

State, 93.15% for North

West and 93.43% for

Northern Cape.

11. Capital

Expenditure

Infrastructure

available to meet

demands

Overall project

expenditure

within R target

% variance

95% 38.4%

38.4% of the total project

budget has been spent to

date

12. Increased Access

to Services

Contribution to

national objectives

CAPEX spend

/projects

CAPEX spend

or number of

expansion

projects

R88.8 Million R34.1 Million

R34.1 Million of the total

project budget has been

spent to date

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Performance

Objective

Outcomes



Target (%) Actual (%) 13.Engagement in

Secondary Activities

Extent of

involvement

Financial

reports

% of total

turnover


14. Achieve Statutory

Reporting

Compliance

Reporting

compliance

achieved

Statutory

submissions

made on time

Submission

dates

met/missed


15. Jobs Created Permanent and

contract (direct)

Total Number Number 5 3 Target not achieved

Responses to advertised

posts were not satisfactory

and some vacancies were

re-advertised.

Temporary

(indirect)

Total Number Number 6.25 1 Target not achieved

No temporary posts were

demanded by operations.

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24

Performance

Objective

Outcomes



Target (%) Actual (%) 16. Corporate Social

Responsibility

Initiatives

Good corporate

citizenship

Number of

initiatives

Number 2 7 Target achieved.

17. Training And

Skills Development

Skills and capacity

building

Training

courses, learner-

ships, bursaries

Total Number 22.25 40 Target achieved

18. Good Governance Improved controls

and risk

mitigation

Breaches of

materiality and

significance

framework

Number 1.25 0 Target achieved

25 25

Alignment of Strategic Objectives

Sedibeng Water’s strategic plan is informed by the twelve (12) outcomes that are set out in

the National Government MTSF (Medium Term Strategic Framework (2009-2014).

The six (6) MTSF outcomes that are specifically relevant to the Minister of Water and

Environmental Affairs.

The five (5) Strategic Performance Outcomes that constitute the basic of agreement between the Minister

and the President of South Africa.

The five (5) specific Ministerial Outcomes are set out below:

Enhanced Quality and Quantity of water resources;

Improve access to basic services;

Maintenance and supply of bulk water infrastructure (to ensure water security);

Effective institutions to address government outcomes; and

Co-operative governance mechanisms designed to achieve government outcomes.

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26 26 26

Strategic Objectives 2013/2014

17 APRIL 2013

Sedibeng Water Strategic Objectives and priorities are as follows:

Appropriate treatment of waste water and supply of potable water;

Ensure viability and sustainability;

Create an environment that is conducive to the growth and retention of skills;

Effective and efficient communications; and

Ensure compliance to all legislations, policies, standards and norms.

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17 APRIL 2013

Key Performance Indicators (KPI): 2013/14 – 2017/18

Strategic Objective 1: Appropriate treatment of wastewater and supply of potable water

Performance

Objective

Outcomes

/Impact

Alignment with

MTF

Outcomes

affecting the

Minister

Indicators and/ or Measure

Target

2013/14

Target

2014/15

Target

2015/16

Target

2016/17

Target

2017/18

Security of supply and

reliability of services

Improve plant

reliability

2; 3 & 4

Mean Time To Repair

(hours)

24 hrs

24 hrs

24 hrs

24 hrs

24 hrs

Comply to

maintenance plan

2; 3 & 4

% compliance to maintenance

plan.

95%

90%

90%

90%

90%

Treatment processes

Reduce water losses in

production units

1; 2; & 3

% allowance water losses in

production units.

6%

6%

6%

6%

6%

Meet customer

demand in terms of

quality.

1; 2; 3 & 4

Test Results, SANS or Blue

Drop. Class 1: Chemistry

95%

95%

95%

95%

95%

Adequate infrastructure

Improve and build

capacity on

infrastructure

1; 2; 3 & 4

% compliance to capital plan.

95%

90%

90%

90%

90%

Resource protection

Reduce water losses in

the distribution

system

1; 2; & 3

% acceptable water losses

10%

10%

10%

10%

10%

28

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Strategic Objective 2: Ensure Viability and Sustainability

Performance Objective

Outcomes

/Impact

Alignment with

MTF Outcomes

affecting the

Minister

Indicators and/ or Measure

Target

2013/14

Target

2014/15

Target

2015/16

Target

2016/17

Target

2017/18

Debt Collection & Cost

Recovery

Effective debt collection and

cost recovery

2; 3 & 4

Collect bulk water revenue

from municipalities in the FS

and NC Regions

75%

75%

75%

75%

75%

Collect bulk water revenue

from business accounts in

the FS and NC Regions

100%

100%

100%

100%

100%

Budget Management &

Cost Management

Adherence to budgetary limits

through prudent cost

management control

excluding water purchases,

maintenance and energy costs

2; 3 & 4

Expenditure to be kept at

least 5% below allocated

budget on monthly basis

<95%

<95%

<95%

<95%

<95%

Realise budgeted annual

revenue excluding

miscellaneous income

2; 3 & 4

Budgeted annual revenue

excluding miscellaneous

income

95%

95%

95%

95%

95%

Increase spending on BBBEE

2; 3 & 4

% spending on discretionary

expenditure

65%

65%

65%

65%

65%

Cash Flow

Management

Realise positive cash flow

2; 3 & 4

Positive budgeted cash flow,

kept above

R83.3m

R87.1m

R92.5m

R104.7m

R107.5m

Internal Control Internal Audit issues dealt

with and implement Control

systems

2; 3 & 4

Internal Audit reports and

Control systems 95% 95% 95% 95% 95%

Financial Management

Unqualified audit opinion

2; 3 & 4

Obtain an unqualified audit

opinion

100%

100%

100%

100%

100%

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Strategic Objective 3: To create an environment that is conducive to the growth and retention of skills


Outcomes

/Impact

Alignment with

MTF Outcomes

affecting the

Minister

Indicators and/ or

Measure

Target

2013/14

Target

2014/15

Target

2015/16

Target

2016/17

Target

2017/18

Equity Improve the

employment equity

profile by focusing at

gender, diversity,

designated group and

disability

4 & 5

Appropriate level of

gender

representatively at

management level

30%

30%

30%

35%

35%

Representation of

designated group at

middle management to

be in excess of

50%(superintendent

level)

=>50%

=>50%

=>60%

=>70%

=>80%

Achieved

representivity of people

with disability

1%

1.5%

2%

2.5%

3%

Human Capital

Effective training &

development of staff

4 & 5

Spend training budget

100%

100%

100%

100%

100%

Retention of technical

staff

1; 2; 4 & 5

Turnover of technical

staff kept below 1.5%

15%

15%

15%

15%

15%

Provide Safe & Healthy

working Environment &

ensuring Environmental

protection

Prevent and reduce

the rate of disabling

injuries

1; 2; 4 & 5

Statutory requirements

met - DIFR

2

2

2

2

2

Ensuring Employee

Wellness

Implementation of

HIV/AIDS and

wellness programmes

1; 2; 4 & 5

% HIV/AIDS

awareness coverage

and campaigns.

90%

90%

95%

95%

95%

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17 APRIL 2013

Strategic Objective 4: Effective and Efficient communications


Outcomes

/Impact

Alignment with

MTF Outcomes

affecting the

Minister

Indicators and/ or

Measure

Target

2013/14

Target

2014/15

Target

2015/16

Target

2016/17

Target

2017/18

Foster Corporate Social

Responsibility

Ensure that SW plays a

pivotal role in making a

difference in the quality of

life of the communities it

serves

1; 2 & 5

Implement corporate social

responsibility as per budget

95%

95%

95%

95%

95%

Water Value Chain

Awareness through

Public Engagement

Improvement of level of

customer satisfaction

through customer

interaction

1; 2; 3 & 5

Monthly coordinating

meeting with the WSA,

municipalities, at least 18

times per year

80% of

meetings

per SLA

80% of

meetings

per SLA

80% of

meetings

per SLA

80% of

meetings

per SLA

80% of

meetings

per SLA

Respond to breakdown

reports from customers as

per SLA

2; 3; 4 & 5

Adherence to breakdown

response time as per SLA

4 Hours

4 Hours

4 Hours

4 Hours

4 Hours

Encourage Partnership

Initiatives

Involvement and

participation by service level

agreements

1; 2; 3; 4 & 5

% municipalities with

agreements in place,

80%

80%

80%

80%

80%

Institutionalised

Internal Participation

Participate in all

stakeholders forums and

functions

1; 2; 3; 4 & 5

Attendance of internal

stakeholder’s forums and

functions at least 16 times

per year.

75%

75%

75%

75%

75%

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Strategic Objective 5: Ensuring compliance


Outcomes

/Impact

Alignment with

MTF Outcomes

affecting the

Minister

Indicators and/ or

Measure

Target

2013/14

Target

2014/15

Target

2015/16

Target

2016/17

Target

2017/18

Foster the Integrated

management and

statutory reporting

Ensure that Board

meetings are held

annually.

1; 2; 3; 4 & 5

% of Board

meetings per year.

100%

100%

100%

100%

100%

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Section 8 OVERVIEW OF ALIGNMENT WITH GOVERNMENT MTSF AND MINISTERIAL PERFORMANCE OUTCOMES

33

Achievements 2011/2012

Financial Viability and Sustainability

• Costs were prudently managed within budgetary limits

• Organisation is financially sound and viable at consolidated level

• Revenue and surplus targets were exceeded in the Free State and

Northern Cape regions

Operational Process Efficiency

• Total production and distribution water losses of 5.68% in the Free State

and Northern Cape Regions

• Water quality met Class 1 and or 2 requirements

• Average expenditure on BBBEE of over 88%

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34

Recruitment and development of employees

• Financial assistance (34 bursary holders).

• ABET (13 employees).

• Water and Wastewater Process Operation Learnership NQF 3 with the

ESETA (Completed and awaiting external verification).

• Experiential training (10 students).

• Training was conducted according to the Works Skills Development

Plan.

• Retention of technical staff was kept below 1.5%.

• WSP/ATR approved by EWSETA

Achievements 2011/2012 (Cont.)

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35

HIV/AIDS Programme

• Awareness campaigns were undertook throughout the whole organisation.

• Voluntary counseling and testing was made available to employees

QUALITY CONTROL LABORATORY

• The laboratory maintained its accredited status after being audited by SANAS

(South African National Accreditation Standards) and an international auditor from

ILAC (International Laboratory Accreditation Co- operation)

Achievements 2011/2012 (Cont.)

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36

Financial Viability and Sustainability

Cost Recovery

• The organisation continues to experience challenges in cost recovery from the

WSAs (some Municipalities do not pay timeously for services rendered).

Contractual agreement

• Lack of willingness by WSA to enter into long-term contractual obligations with WSP

Inadequate budget allocation in the North West Region

•Insufficient funding hampering service delivery

Challenges

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37

Operational Process Efficiency

Costs of Maintenance/ Chemical

• The high costs of maintenance/ chemicals impact on the high expenditure

for the organisation, which result in higher water tariff.

Raw Water Quality

• The quality of raw water from the Vaal River is very poor, resulting in

high purification cost.

Blue/ Green Drop Status

• Lack of commitment from some municipalities in the programme. This result

in water boards failing to achieve the required status.

Challenges (Cont)

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38

• Sedibeng Water enforce transparency and accountability through

stakeholders interaction, coordinating meetings with Water Service

Authority.

• Promote information by providing audited annual reports, news letters

magazine on water quality and supply of water, which is accessible to the

public.

• Sedibeng Water provide regular and updated information to ensure that

the company provide its current state of affairs.

• Water quality and water problems are communicated well in advance to

the Water Service Authorities and public. The information on water related

matters is shared with all stakeholders continuously.

Implementation of PAIA

17 APRIL 2013

39

• Sedibeng Water has entered into a service level agreements with Water

Service Authorities/ mines to ensure provision of reliable water supply

with an intention to perform its constitutional obligations.

• Sedibeng Water is using the media to inform water users of their rights

and educate consumers on how to preserve water resources.

• Water related problems are communicated and explained to stakeholders

and public where the provision of water cannot be guaranteed.

• Water related diseases are shared with the public to ensure that the

public (water users) is not unfairly disadvantaged.

Implementation of PAJA

17 APRIL 2013

40

FINANCIAL STATEMENTS 2011/12

17 APRIL 2013

41

ANNUAL REPORT

2011/12

• Another Unqualified Audit Report

17 APRIL 2013

42

17 APRIL 2013

Financial overview for the previous five years

Abridged Consolidated Income Statement

Description 2012 2011 2010 2009 2008

(R’000) (R’000) (R’000) (R’000) (R’000)

Revenue 570,451

472,798

407,079 401,330

331,985

Cost of Sales 170,240

140,079

139,940 149,241

108,592

Gross Profit 400,211

332,719

267,139 252,089

223,393

Other Income 78,859

55,257

37,457 34,998

28,753

Operating Costs 463,282

371,243

273,150 265,232

197,707

Net operating profit 40,180

16,733

31,446 21,855

54,439

Net Finance Income (Charges)

15,918

7,057

(474)

(2,522)

(11,419)

Net Surplus Before Grants 60,098

23,790

30,972 19,333

43,020

Government Grants -

1,758

13,293 13,731

13,257

Net Surplus After Government Grants 60,098

25,538

44,265 33,064

56,277

43

17 APRIL 2013

Abridged Consolidated Balance Sheet

Description 2012

(R’000)

2011

(R’000)

Percentage (%)

Variance

(R%)

Non-Current Assets 897,754 835,190 7.49%

Current Assets 644,852 444,852 44.96%

Total Assets 1,542,606 1,280,042 20.51%

Equity

1,028,381 900,768 14.17%

Non-Current Liabilities 95,669 94,702 1.02%

Current Liabilities 418,556 284,572 47.08%

Total Equity & Liabilities 1,542,606 1,280,042 20.51%

44

Investments

17 APRIL 2013

Institution 2012

(R’000)

2011

(R’000)

Sanlam 37, 149 32, 707

Investec 59, 922 52, 697

ABSA Bank 26, 690 43, 353

First Corp Investment 9, 121 8, 174

Total 132, 882 136, 931

45

Financial Ratio Analysis

17 APRIL 2013

Profitability 2012 2011 2010 2009 2008

Gross profit margin 70.16% 70.40% 65.62% 62.81% 67.29%

Rate of return on assets

4% 2% 3% 3% 6%

Assets turnover ratio

0.37 0.38 0.30 0.38 0.35

Debtors collection period in

days 462.17 370.50 294.71 201.68 134.51

Short-Term Liquidity

Current ratio

1.54 1.56 1.22 1.56 1.72

Long Term Solvency

Long term debt ratio

0.06 0.07 0.07 0.25 0.26

Debt Equity ratio

0.09 0.11 0.10 0.43 0.44

46 46

CAPEX 2011/2012

17 APRIL 2013

REGIONS BUDGET

R’000

ACTUAL

R’000

% Achieved COMMENTS

FREE STATE 24,700 18,968 77% Saving realised on the projects

NORTHERN CAPE 12,150 11,156 92% Saving realised on the projects

NORTH WEST 2,450 5,812 237% Target Exceeded

NAMAKWA 18,800 28,463 151% Target Exceeded

TOTAL R 58,100 R 64,399 111% Capital expenditure Achieved

47

17 APRIL 2013

EXECUTIVE MANAGEMENT

Director: Corporate

Services (Acting Chief

Executive

Salary Bonuses Performance

Payments

Expense

Claims

Other Total

R.T Takalani 1,305,423 83,344 317,600 133,552 270,286 2,110,205

Director: Operations

K.E Sempe 1,219,225 79,040 - - - 1,298,265

Senior Management

N.D Basson 724,842 - 237,010 128,490 307,132 1,397,474

G.M Dippenaar 945,420 51,738 216,345 135,606 - 1,349,109

I.M Hasenjager 1,004,785 - 232,644 281,775 - 1,519,204

R.M Mpe 698,678 82,290 161,780 81,117 55,856 1,080,721

M.I Motsamai 828,170 39,084 190,508 136,445 181,163 1,375,370

T.N Molobye 1,017,808 54,890 235,401 222,143 76,054 1,606,296

N.A Theys 811,477 39,891 193,280 194,858 44,502 1,284,008

N.Makhakhe 807,204 45,897 194,250 63,244 120,344 1,230,939

N.E Ratshitanga 933,242 48,314 210,188 141,192 - 1,332,936

M.Lebitso 585,937 45,248 155,804 138,689 81,058 1,006,736

TOTAL 10,882,211 569,736 2,344,810 1,657,111 1,136,395 16,590,263

48

BUDGET ANALYSIS

17 APRIL 2013

49 49

17 APRIL 2013

The 2013/14 Tariff Increase

Sedibeng Water’s tariff increase is 8.5%.

• All stakeholders were consulted as required by Section 42 of the MFMA (Act 56 of 2003).

• Eskom and Sedibeng Water signed an agreement on demand and energy saving

programmes which resulted in 5% energy saving. The 5% efficiency saving was built into

the electricity tariff.

• The impact will result in reduced operating shortfall and not an increase in surplus.

50

Budget Analysis 2012/2013 and 2013/2014

17 APRIL 2013

Budgeted Budgeted Difference Difference

2013/2014 2012/2013

R'000 R'000 R'000 %

Volume of treated water sold (in Kl'000) 96,712 95,773 939 0.98%

REVENUE 692,958 633,032 59,926 9.47%

Cost of sales (Raw water purchased) 223,594 207,497 16,096 7.76%

Gross Profit 469,365 425,535 43,829 10.30%

Other operating income 25,648 24,075 1,573 6.53%

Operating & administrative expenses 486,548 429,125 53,414 12.45%

Salaries & wages 176,440 163,270 13,170 8.07%

Electricity 113,859 99,008 14,851 15.00%

Maintenance 31,722 27,882 3,839 13.77%

Purification 32,850 29,864 2,986 9.9%

Depreciation and Amortisation 51,282 31,743 19,540 61.56%

Other administrative expenses 80,395 77,358 3,038 3.93%

Operating profit before interest 8,465 20,486 (8,012) -39%

Net Finance charges 12,520 18,883 (6,364) -34%

Net profit after interest and grants 20,985 39,369 (14,376) -37%

17 APRIL 2013

CAPEX – FREE STATE REGION

51

Year ending 30 June 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 Total

DESCRIPTION Year 1 Year 2 Year 3 Year 4 Year 5

Doubling of 11,3 km Buisfontein-Pipe line - 4,000,000 4,000,000 4,000,000 4,000,000

16,000,000

Refurbish 650 mm diameter Welkom

ringline 1,500,000 1,500,000 - - -

3,000,000

Enlarge Koppie Alleen-Brabant pipe line 15,000,000 15,000,000 8,000,000 - -

38,000,000

New booster pump station on Welkom-

Wesselsbron pipe line 1,500,000 2,000,000 - - -

3,500,000

Airvalves - Pipelines

1,600,000

1,600,000

1,600,000 - -

4,800,000

Electric Fence - Installations

500,000

500,000

500,000 - -

1,500,000

Replace Rotork Actuators

1,000,000 - - -

1,000,000

Replace Roof De Erf Pump

station/Balkfontein

2,000,000 - - - -

2,000,000

Replace PLC Equipment

2,000,000

2,000,000

1,000,000

1,000,000

1,000,000

7,000,000

Replace Lawnmowers - -

200,000 - -

200,000

Replace LDV's and Vehicles

1,500,000

1,500,000

1,600,000

1,600,000

1,600,000

7,800,000

17 APRIL 2013

CAPEX – FREE STATE REGION (Cont.)

52

Year ending 30 June 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 Total

DESCRIPTION Year 1 Year 2 Year 3 Year 4 Year 5

Replace Heavy Machinery and Equipment

2,500,000 -

2,000,000

2,500,000

2,500,000

9,500,000

Refurbish pump stations 12,550,000 -

2,000,000

2,500,000

2,500,000

7,000,000

Refurbish Telemetry System

500,000

500,000

200,000 - -

1,200,000

Replace Technical equipment

2,100,000

1,800,000

200,000

400,000

400,000

3,100,000

Refurbish Electrical switchgear

1,000,000 - -

200,000

200,000

1,400,000

Civil refurbishment projects

6,750,000

2,500,000

2,500,000 - -

7,500,000

Mechanical Refurbishment Projects

1,500,000

2,500,000

1,000,000

3,000,000

3,000,000

11,000,000

Furniture / Computers/ IT projects /

other

3,064,000

2,450,000

2,540,000 - -

6,040,000

Total

57,819,000 40,900,000

29,840,000

15,200,000

15,200,000

158,959,000

17 APRIL 2013

CAPEX – NORTHERN CAPE (VAAL GAMAGARA)

53

DESCRIPTION 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 Total

Year 1 Year 2 Year 3 Year 4 Year 5

Metsi- mantle road (re-tar) 6,000,000 - - - - 6,000,000

Cathodic Protection 7,000,000 - - - - 74,950,500

Pumpstations / Extention 18,550,000 56,400,500 5,600,000 - - 46,606,350

Flow Meters / Pumps 12,024,350 34,582,000

3,200,000

150,000

150,000 5,900,000

Regional Laboratory 10,500,650 - - - - 13,700,650

Vehicles 2,550,000 550,000 - - - 3,100,000

Furniture / Computers/ Other 600,000 1,487,500 200,000 200,000 200,000 2,687,500

Total 57,225,000 93,020,000 9,000,000 350,650 350,000 159,945,000

17 APRIL 2013

CAPEX – NORTH WEST REGION

54



Vehicles

600,000

450,000

450,000

200,000

200,000

1,900,000

Installation of telemetry

system

1,000,000

500,000

500,000

500,000

500,000

3,000,000

Furniture and IT equipment

300,000

400,000

50,000

50,000

50,000

850,000

Replacement of meters

5,000,000

5,000,000

5,000,000

5,000,000

5,000,000

25,000,000

TOTAL

6,900,000

6,350,000

6,000,000

5,750,000

5,750,000

30,750,000

17 APRIL 2013

CAPEX – NORTHERN CAPE (NAMAKWA)

55



Replace Pipeline 106,000,000 120,000,000 120,000,000 120,000,000 120,000,000 586,000,000

Furniture / Vehicles and

IT equipment

2,808,000 2,823,000 2,837,032 2,620,235 2,620,235 11,989,702

TOTAL 108,808,000 122,823,000 122,837,032 122,620,235 122,620,235 599,708,502

56

THANK YOU

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17 APRIL 2013

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