form 20-f - no a la farfana de colina - form 20-f part i item 17 item 18 item 1. identity of...

FORM 20-FCascal N.V. - HOOFiled: July 01, 2009 (period: March 31, 2009)

Registration of securities of foreign private issuers pursuant to section 12(b) or (g)

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20-F - FORM 20-F

PART I

Item 17 Item 18 Item 1. Identity of Directors, Senior Management and Advisers Item 2. Offer Statistics and Expected Timetable Item 3. Key Information Item 4. Information on the Company Item 4A. Unresolved Staff Comments Item 5. Operating and Financial Review and Prospects Item 6. Directors, Senior Management and Employees Item 7. Major Shareholders and Related Party Transactions Item 8. Financial Information Item 9. The Offer and Listing Item 10. Additional Information Item 11. Quantitative and Qualitative Disclosures About Market Risk Item 12. Description of Securities Other than Equity Securities PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies Item 14. Material Modifications to the Rights of Security Holders and Use

of Proceeds

Item 15. Controls and Procedures Item 15T. Controls and Procedures Item 16A. Audit Committee Financial Expert Item 16B. Code of Ethics Item 16C. Principal Accountant Fees and Services Item 16D. Exemptions from the Listing Standards for Audit Committees Item 16E. Purchases of Equity Securities by the Issuer and Affiliated

Purchasers

Item 16F. Change in Registrant s Certifying Accountant Item 16G. Corporate Governance PART III

Item 17. Financial Statements Item 18. Financial Statements Item 19. Exhibits SIGNATURES

EX-4.28 (EX-4.28)

EX-15.6.1 (EX-6.1)

EX-8.1 (EX-8.1)

EX-12.1 (EX-12.1)

EX-12.2 (EX-12.2)

EX-13.1 (EX-13.1)

EX-13.2 (EX-13.2)

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UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 20-F(Mark One)

� REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THESECURITIES EXCHANGE ACT OF 1934

OR

� ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934For the fiscal year ended March 31, 2009

OR

� TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

OR

� SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from to

Commission file number: 001-33921

CASCAL N.V.(Exact name of Registrant as specified in its charter)

N/A(Translation of Registrant’s Name into English)

The Netherlands(Jurisdiction of incorporation or organization)

Biwater HouseStation Approach

DorkingSurrey, RH4 1TZUnited Kingdom

(Address of principal executive offices)

Jonathan Lamb+ 44 1306 746 080

[email protected] House

Station ApproachDorking

Surrey, RH4 1TZUnited Kingdom

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Source: Cascal N.V., 20-F, July 01, 2009

Title of each class Name of each exchange on which registered

Common shares, par value EUR 0.50 per share New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close ofthe period covered by the annual report: 30,566,007 common shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes � No �

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reportspursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes � No �

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes � No �

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of thischapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and postsuch files).

Yes � No �

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-acceleratedfiler. See definitions of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer � Accelerated filer � Non-accelerated filer �

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements includedin this filing:

U.S. GAAP � International Financial Reporting Standards as issued by the International Accounting StandardsBoard � Other �

If “Other” has been checked in response to the previous question, indicate by check mark which financial statementitem the registrant has elected to follow.

Item 17 � Item 18 �

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).

Yes � No �


Table of contents Page Explanatory Note 1 Forward-looking statements 2 PART I Item 1. Identity of Directors, Senior Management and Advisors 2 Item 2. Offer Statistics and Expected Timetable 2 Item 3. Key Information 3 Item 4. Information on the Company 23 Item 4A. Unresolved Staff Comments 43 Item 5. Operating and Financial Review and Prospects 43 Item 6. Directors, Senior Management and Employees 87 Item 7. Major Shareholders and Related Party Transactions 95 Item 8. Financial Information 100 Item 9. The Offer and Listing 102 Item 10. Additional Information 103 Item 11. Quantitative and Qualitative Disclosures About Market Risk 112 Item 12. Description of Securities Other than Equity Securities 113 PART II Item 13. Defaults, Dividend Arrearages and Delinquencies 113 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 113 Item 15. Controls and Procedures 113 Item 15T. Controls and Procedures 114 Item 16A. Audit Committee Financial Expert 114 Item 16B. Code of Ethics 114 Item 16C. Principal Accountant Fees and Services 114 Item 16D. Exemptions from the Listing Standards for Audit Committees 116 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 116 Item 16F. Change in Registrant’s Certifying Accountant 116 Item 16G. Corporate Governance 116 PART III Item 17 Financial Statements 118 Item 18 Financial Statements 118 Item 19 Exhibits 118 Signatures 122 EX-4.28 EX-6.1 EX-8.1 EX-12.1 EX-12.2 EX-13.1 EX-13.2


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Explanatory note

This annual report contains some of our trademarks and service marks, including Cascal.

Unless otherwise indicated, (1) the terms “we,” “us,” “our company,” “our” and “Cascal” refer to Cascal B.V. or N.V., as thecase may be, and its direct and indirect subsidiaries and joint venture investments in projects in China, Indonesia and ThePhilippines, unless the context otherwise requires, (2) “Biwater” refers to Biwater Plc and its direct and indirectsubsidiaries and joint venture investments and excludes Cascal and its subsidiaries and joint venture investments, unlessthe context otherwise requires, (3) “the Biwater Group” refers to Biwater Plc and its subsidiaries, including Cascal and itssubsidiaries, (4) “shares” refer to the common shares of Cascal N.V., (5) all references to “U.S. Dollars,” “USD,” “dollars,”“$” and “US$” are to the legal currency of the United States, all references to “British Pound sterling,” “GBP,” and “£” areto the legal currency of the United Kingdom, all references to the “Rand” or “ZAR” are to the legal currency of SouthAfrica, all references to “Rupiah” or “IDR” are to the legal currency of Indonesia, all references to “Yuan” or “RMB” are tothe legal currency of China, all references to “MXP” are to the legal currency of Mexico, all references to the “UF” are toUnidades de Fomento, the Chilean inflation-free currency, all references to the “CHP” are to the legal currency of Chile, allreferences to “Peso” are to the legal currency of The Philippines, and all references to “EUR”, “euro” and “€” are to thelawful currency of the member states of the European Monetary Union that have adopted the single currency inaccordance with the Treaty establishing the European Community, as amended by the Treaty on European Union, (6) allreferences to the “SEC” are to the Securities and Exchange Commission, and (7) all references to a fiscal year refer toour fiscal year ended or ending March 31 of that year. Discussions of the history of our business in this annual reportinclude the achievements of the businesses we have acquired prior to their acquisition by us.

Our reporting currency is the U.S. Dollar, but we conduct substantially all of our business in the local currencies of thecountries in which we operate. Amounts used in this annual report that are taken or derived from our financialstatements and that have been translated into one currency from another currency have been translated in themanner described in Note 2 “Accounting policies” to our consolidated financial statements. Unless otherwisenoted or the context otherwise requires, all other currency translations in this annual report have been madeusing exchange rates as of March 31, 2009. We make no representation that any amounts could have been, or couldbe, translated into U.S. Dollars at any particular rate or at all.

All references to our results of operations and financial condition are reported in accordance with generally acceptedaccounting principles in The Netherlands, or Dutch GAAP, unless otherwise noted. As noted, some selected financial datais presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.

Market and industry information

Some of the market, industry, population and similar information used throughout this annual report is based on estimatesby our management, using information we have obtained from various third-party sources but have not independentlyverified, as well as assumptions made by us based on such information and our knowledge of the water and wastewaterindustry. These sources include publications by the World Health Organization and governmental bodies, statisticalalmanacs and similar sources that we believe are reputable. Management believes that its estimates are reasonable andreliable. Some of the market and industry information discussed in this annual report is approximated. We are not awareof any misstatements regarding any market, industry or similar information presented in this annual report, but suchinformation involves risks and uncertainties and is subject to change based on various factors, including those discussedunder the headings “Forward-looking statements” and Item 3 “Key Information — Risk factors” in this annual report.


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Forward-looking statements

Many statements we make in this annual report contain forward-looking statements that reflect our current expectationsand views of future events. These forward-looking statements can be identified by words or phrases such as “may,” “will,”“expect,” “anticipate,” “aim,” “estimate,” “target,” “predict,” “project,” “continue,” “forecast,” “should,” “would,” “intend,”“plan,” “believe,” “is/are likely to,” “hope” or other similar expressions. We have based these forward-looking statementslargely on our current expectations and projections about future events and financial trends that we believe may affect ourfinancial condition, results of operations, business strategy and financial needs. These forward-looking statements mayrelate to, among other things:

• our anticipated growth strategies in the markets in which we operate or in new markets;

• the levels of growth we anticipate in our targeted markets;

• our future business development, results of operations and financial condition;

• our ability to continue to control costs and maintain the quality of our water and wastewater services;

• our ability to successfully negotiate rate adjustments and other pricing issues with government regulators andpublic-sector clients;

• our ability to identify, acquire and integrate complementary operations;

• our expectations regarding the payment of dividends;

• our ability to retain senior management and other highly-skilled personnel;

• our anticipated use of proceeds; and

• the importance of our alliances, joint venture partners and investments.

The forward-looking statements included in this annual report are subject to risks, uncertainties and assumptions aboutus. Our actual results of operations may differ materially from the forward-looking statements as a result of risk factorsdescribed under Item 3 “Key Information — Risk factors” and elsewhere in this annual report.

The risk factors described under Item 3 “Key Information — Risk factors” include a discussion of the most significantfactors that make our business risky and are not exhaustive. Other sections of this annual report include additional factorsthat could adversely affect our business and financial performance. Moreover, we operate in an emerging and evolvingenvironment. New risk factors emerge from time to time, and it is not possible for our management to predict all riskfactors, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination offactors, may cause actual results to differ materially from those contained in any forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation toupdate or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.2


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Item 3. Key Information

A. Selected Financial Data

The tables below present selected consolidated financial data for and as of the end of our fiscal years 2005, 2006, 2007,2008 and 2009. The selected consolidated statement of income data for our fiscal years 2007, 2008 and 2009 and theconsolidated balance sheet data as of March 31, 2008 and 2009 have been derived from our audited consolidatedfinancial statements included elsewhere in this annual report and should be read in conjunction with, and are qualified intheir entirety by, those consolidated financial statements and related notes. The selected consolidated statement ofincome data for our fiscal years 2005 and 2006 and the consolidated balance sheet data as of March 31, 2005, 2006 and2007 below have been derived from audited consolidated financial statements not included in this annual report. Ourselected consolidated statement of income data for our fiscal years 2007, 2008 and 2009 and the consolidated balancesheet data as of March 31, 2008 and 2009 have been reconciled to U.S. GAAP. U.S. GAAP varies in certain significantrespects from Dutch GAAP. See Note 28 “Summary of differences between accounting policies generally accepted in TheNetherlands and in the United States of America” to our consolidated financial statements for a further discussion of thereconciliation of the selected consolidated financial data to U.S. GAAP.

You should read the selected consolidated financial data set forth below in conjunction with Item 5 “Operating andFinancial Review and Prospects” appearing elsewhere in this annual report.

Dutch GAAP For the year ended March 31,(Dollars in thousands, except share and per share data) 2009 (1) 2008(2) 2007(3) 2006 2005

Consolidated statement of income data(4): Revenue $ 163,396 $ 160,642 $ 121,703 $ 110,596 $ 110,919 Raw and auxiliary materials and other external costs 42,041 35,188 23,821 19,463 18,435 Staff costs 33,735 34,348 24,431 20,912 22,731 Depreciation and amortization of intangible and

tangible fixed assets and negative goodwill(5) 22,968 22,786 17,980 16,066 16,585 (Profit)/loss on disposal of intangible and tangible

fixed assets(6) (688) (749) (989) 201 (1,053)Other operating charges(7) 28,563 28,060 19,446 22,468 24,111 Incremental offering—related costs — 767 809 — —

Total operating expenses 126,619 120,400 85,498 79,110 80,809

Operating profit 36,777 40,242 36,205 31,486 30,110 (Loss)/Gain on disposal of subsidiary(8) (68) 1,691 — 4,135 12,762 Exchange rate results (9) 9,975 (2,381) (6,782) (246) (421)Interest income 2,751 2,935 2,687 4,317 1,208 Interest expense (16,319) (20,238) (16,397) (12,495) (7,773)

Profit before taxation 33,116 22,249 15,713 27,197 35,886 Taxation (14,263) (9,716) (6,944) (8,199) (6,018)Minority interest (1,012) (945) (753) (378) (4,066)

Net profit $ 17,841 $ 11,588 $ 8,016 $ 18,620 $ 25,802

Net profit from continuing operations (10) $ 17,929 $ 9,888 $ 7,671 $ 14,692 $ 7,581 Basic and diluted net profit from continuing

operations per share(10)(11) $ 0.59 $ 0.42 $ 0.36 $ 0.67 $ 0.35 Basic and diluted net profit per share(11) $ 0.58 $ 0.49 $ 0.37 $ 0.85 $ 1.18 Basic and diluted weighted average number of

shares(11) 30,566,007 23,329,982 21,849,343 21,849,343 21,849,343 Other data: Distributions per share(11) $ 0.18 $ 0.17 $ 4.32 $ — $ 1.10

(1) Our 49% interest in a water company in Yancheng, China was acquired on April 29, 2008 and our share of resultsfrom the operation is reflected in our statement of income data from that date. In June 2008 we acquiredServicomunal and Servilampa in Chile and results of these operations are reflected in our statement of income

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data from June 27, 2008. In July 2008 we acquired a 51% interest in a water company in Zhumadian, China. Theresults of this operation are consolidated in our statement of income data from July 23, 2008.

(2) Siza Water was acquired in May 2007 and is reflected in our statement of income data from May 3, 2007.

(3) Our Panamanian project was acquired in June 2006 and is reflected in our statement of income data from June 26,2006. Our first four Chinese projects were acquired in November 2006 and are reflected in our statement of incomedata from November 15, 2006. Pre-Heat Limited was acquired in February 2007 and is reflected in our statement ofincome data from February 1, 2007.

(4) In addition to the acquisitions that have occurred since the beginning of fiscal year 2007, the comparability of ourresults of operations for the periods presented have been affected by the sale of our Mexican wastewater treatmentplant in October 2004, the sale of our interest in Belize Water Services in October 2005, the sale of our Calamawastewater project effective as of the end of fiscal year 2006, the borrowings incurred in June 2006, the proceeds ofwhich were used to facilitate Biwater’s purchase of 50% of our shares and the early termination of our operation andmaintenance contract in Mexico in January 2008. See Item 5 “Operating and Financial Review and Prospects —Operating results — Overview — Transactions affecting comparability of periods.” Our results of operations reflectour operation and maintenance contract in Mexico as a discontinued operation in all periods presented.

(5) Negative goodwill arose on acquisition of China Water on November 15, 2006 and is described in Note 12 “Negativegoodwill” to our consolidated financial statements.

(6) The profit on disposal in fiscal year 2005 arose primarily from a sale of property in the United Kingdom. The loss infiscal year 2006 arose from the sale of our former wastewater treatment plant in Calama. The profit in fiscal year2007 arose mainly from the disposal of a section of river bed owned by our U.K. subsidiary. The profit in fiscal year2008 is derived from sales of property that were surplus to the needs of our U.K. subsidiary. The profit in fiscal year2009 is derived from sales of property and other assets that were surplus to the needs of our U.K. project company.

(7) Other operating charges include professional fees, insurance, operating lease payments, travel expenses,management fees and bad debts.

(8) Represents the sale of our Mexican wastewater treatment plant in October 2004 and includes gains realized insubsequent periods following receipt of the repayment of promissory notes issued by the Government of Belize inconnection with the sale of our interest in Belize Water Services in October 2005 and the early termination of ouroperation and maintenance contract in Mexico in January 2008. In fiscal year 2009 we have included the costsincurred in progressing the liquidation of our subsidiary companies in Mexico following the early termination of ouroperation and maintenance contract in January 2008.

(9) Currency exchange differences resulting from settlement and translation of monetary assets and liabilities arecharged or credited to the exchange rate results line of our statement of income. See Note 2 “Accounting policies” toour consolidated financial statements.

(10) Does not include the results of our discontinued operations (our Mexican wastewater treatment plant prior to its salein October 2004 and our interest in Belize Water Services prior to its sale in October 2005) and our operations andmaintenance contract in Mexico which was subject to an early termination in January 2008.

(11) Our historical shares outstanding for comparative periods reflect the series of stock split and recapitalizationtransactions that effectively resulted in a 2,607-for-1 stock split assuming it occurred as of the beginning of thecomparative periods presented and that there were 21,849,343 common shares outstanding during all of thecomparative periods presented prior to our initial public offering.

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Dutch GAAP (Dollars in thousands, As of March 31,except per share data) 2009(1) 2008(2) 2007(3) 2006 2005

Consolidated balance sheetdata:

Cash at bank and in hand $ 34,678 $ 54,380 $ 28,321 $ 69,171 $ 34,750 Capital Stock 20,291 24,220 14,547 13,226 14,169 Total assets 551,680 522,403 484,889 403,744 425,682 Short term debt (4) 69,085 9,110 8,839 5,887 5,900 Current liabilities (excluding short

term debt) 54,243 42,703 67,426 23,278 32,373 Long term liabilities(5) 161,812 190,190 245,069 146,942 100,924 Net assets (Shareholders’ equity) 118,214 136,726 38,552 119,039 143,250 Minority shareholders’ interest(6) 35,080 16,101 10,568 84 52,225

(1) Servicomunal and Servilampa were acquired in June 2008 and Zhumadian was acquired in July 2008 and our shareof Yancheng was acquired in April 2008, and all are reflected in our balance sheet data as of March 31, 2009.

(2) Siza Water was acquired in May 2007 and is reflected in our balance sheet data as of March 31, 2008.

(3) Our Panamanian project was acquired in June 2006 and is reflected in our balance sheet data as of March 31, 2007.Our first four Chinese projects were acquired in November 2006 and are reflected in our balance sheet data as ofMarch 31, 2007. Pre-Heat Limited was acquired in February 2007 and is reflected in our balance sheet data as ofMarch 31, 2007.

(4) Short term debt as of March 31, 2009 includes $60 million in connection with our revolving loan facility which matureson March 31, 2010. We have completed the renewal of this revolving loan facility with the same lender for a period oftwo years ending June 30, 2011. The terms of the renewed facility are similar to those under which the previousfacility was granted with the exception of the arrangement fee and interest rate margin, both of which have beenincreased in line with current trends in the corporate lending market. See — Item 5 “Operating and Financial Reviewand Prospects — Liquidity and capital resources”.

(5) Long term liabilities primarily consists of unsecured bank loans, secured bank loans and financial leases.

(6) In the fiscal year 2005, the minority shareholders’ interest included preference shares issued by our U.K. projectcompany, which were redeemed in April 2005, along with the minority shareholders’ interest in our Belize projectcompany, our investment in which was disposed of in October 2005. Subsequently, the minority shareholders’interest relates to our project companies in South Africa and China.

EBITDA from continuing operations represents net profit from continuing operations before interest expense/(income) andexchange rate results, taxation, depreciation and amortization of intangible and tangible fixed assets and negativegoodwill, loss/(profit) on disposal of intangible and tangible fixed assets and minority interest.

EBITDA is a non-GAAP measure and does not represent and should not be considered as an alternative to net profit orcash flow as determined under generally accepted accounting principles. We believe EBITDA facilitates operatingperformance comparisons from period to period. We believe EBITDA may facilitate company to company operatingperformance comparisons by backing out potential differences caused by variations in capital structures (affecting netinterest expense), taxation and the age and book depreciation of facilities and equipment (affecting relative depreciationexpense), which may vary for different companies for reasons unrelated to operating performance and other non-recurringone-time items. We further believe that EBITDA is frequently used by securities analysts, investors and other interestedparties in their evaluation of companies, many of which present an EBITDA measure when reporting their results.

EBITDA has limitations as an analytical tool, and you should not consider it either in isolation or as a substitute foranalyzing our results as reported under Dutch GAAP. Some of these limitations are:

• EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractualcommitments;

• EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

• EBITDA does not reflect our interest expense, or the cash requirements necessary to service interest or principalpayments on our debt;

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• EBITDA does not reflect our tax expense or the cash requirements to pay our taxes;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized willoften have to be replaced in the future, and EBITDA does not reflect any cash requirements of thosereplacements; and

• other companies in our industry may calculate EBITDA differently, limiting its usefulness as a comparativemeasure.

Because of these limitations, EBITDA from continuing operations should not be considered as the primary measure of ouroperating performance or as a measure of discretionary cash available to us to invest in the growth of our business. Thefollowing is a reconciliation of net profit from continuing operations, the most directly comparable Dutch GAAPperformance measure, to EBITDA from continuing operations. Year ended March Year ended March Year ended March (Dollars in thousands) 31, 2009 31, 2008 31, 2007

Net profit from continuing operations $ 17,929 $ 9,888 $ 7,671 Add: Interest expense, net and exchange rate results 3,604 19,593 20,506 Taxation 14,232 9,359 6,806 Depreciation and amortization of intangible and

tangible fixed assets and negative goodwill 22,968 22,740 17,932 Profit on disposal of intangible and tangible fixed

assets (688) (749) (989)Minority interest 1,012 945 753

EBITDA from continuing operations $ 59,057 $ 61,776 $ 52,679

Revenue from continuing operations 163,396 157,777 118,567

EBITDA as a percentage of revenue from continuingoperations 36.1% 39.2% 44.4%

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The tables below set forth our selected consolidated financial data according to U.S. GAAP; the dual column presentationof our results of operations for fiscal year 2007 arises from the change in basis due to the Nuon transaction:

U.S. GAAP Aggregated For the For the for the For the For the period period year year year April 1, June 26, ended ended ended 2006 to 2006 to March 31,(Dollars in thousands, March 31, March 31, June 25, March 31, 2007except per share data) 2009(1) 2008(2) 2006 2007(3) (Unaudited)(3)(4)

Condensedconsolidatedstatement of incomedata:

Revenue $ 141,506 $ 143,133 $ 22,882 $ 82,005 $ 104,887 Costs and expenses:

Raw and auxiliarymaterials 35,139 31,176 4,710 15,036 19,746

Operations andmaintenance 57,450 56,863 7,673 29,652 37,325

Depreciation andamortization 17,829 19,671 3,695 13,131 16,826

Income from continuingoperations 31,088 35,423 6,804 24,186 30,990

Interest income 2,619 2,768 860 1,745 2,605 Interest expense 16,183 20,062 2,157 13,852 16,009 Other income/(expense) 9,975 (2,266) (696) (6,083) (6,779)

Income from continuingoperations beforeincome taxes 27,499 15,863 4,811 5,996 10,807

Taxation (8,904) (8,532) (1,908) (4,146) (6,054)Share of net profit of

equity methodinvestments(5) 4,496 3,348 714 2,335 3,049

Minority interest incontinuing operations (687) (644) (21) (125) (146)

Net income fromcontinuing operations 22,404 10,035 3,596 4,060 7,656

Discontinued operations Income from

operations 11 (60) 77 329 406 Gain on disposal of

Belize WaterServices 203 1,295 — — —

(Loss)/Gain ontermination ofoperations inMexico (271) 396 — — —

Income tax (31) (229) (15) (100) (115)

Net income fromdiscontinuedoperations (88) 1,402 62 229 291

Net income $ 22,316 $ 11,437 $ 3,658 $ 4,289 $ 7,947 Net income (loss) per

share—basic anddiluted(6) Continuing operations $ 0.73 $ 0.43 $ 0.17 $ 0.19 $ 0.36 Discontinued

operations $ 0.00 $ 0.06 — $ 0.01 $ 0.01

$ 0.73 $ 0.49 $ 0.17 $ 0.20 $ 0.37

Weighted averagenumber of

30,566,007 23,329,982 21,849,343 21,849,343 21,849,343


shares—basic anddiluted(6)

(1) In June 2008 we acquired Servicomunal and Servilampa in Chile and results of these operations are reflected in ourstatement of income data from June 27, 2008. In July 2008 we acquired a 51% interest in a water company inZhumadian, China. The results of this operation are consolidated in our statement of income data from July 23, 2008.

(2) Siza Water was acquired in May 2007 and is reflected in our statement of income data from May 3, 2007.7


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(4) The aggregated results for the year ended March 31, 2007 are non-GAAP measures representing an aggregation ofour audited results for the period April 1, 2006 to June 25, 2006 prior to the acquisition by Biwater of Nuon’s 50%share in us, and our audited results for the period June 26, 2006 to March 31, 2007. See Note 28 “Summary ofdifferences between accounting policies generally accepted in The Netherlands and in the United States of America”to our consolidated financial statements.

(5) Consists of net profit from our interests in our projects in Indonesia and The Philippines and our 49% interest in awater company in Yancheng, China from its date of acquisition on April 29, 2008.

(6) Basic and diluted net profit per share is computed by dividing the net profit applicable to common shares by theweighted average number of common shares outstanding during the period. Our historical shares outstanding reflectthe series of stock split and recapitalization transactions that effectively resulted in a 2,607-for-1 stock split assumingit occurred as of the beginning of the periods presented prior to our initial public offering and that there were21,849,343 common shares outstanding during all of the periods presented prior to our initial public offering.

U.S. GAAP As of March 31,(Dollars in thousands) 2009(1) 2008(2) 2007(3)

Condensed consolidated balance sheet data: Cash and cash equivalents $ 30,317 $ 52,696 $ 27,194 Total assets 546,951 531,664 493,402 Current liabilities 107,399 48,951 72,502 Long term debt, net of current portion 162,224 190,306 245,151 Minority interest 40,183 20,301 15,176 Shareholders’ equity 144,137 175,397 67,340

(1) Servicomunal and Servilampa acquired in June 2008 and Zhumadian acquired in July 2008 are all reflected in ourbalance sheet data as of March 31, 2009. Our acquisition of a 49% share of Yancheng acquired in April 2008 isaccounted for as an equity method investment.

(2) Siza Water was acquired in May 2007 and is reflected in our balance sheet data as of March 31, 2008.

(3) Our Panamanian project was acquired in June 2006 and is reflected in our balance sheet data as of March 31, 2007.Our first four Chinese projects were acquired in November 2006 and are reflected in our balance sheet data as ofMarch 31, 2007. Pre-Heat Limited was acquired in February 2007 and is reflected in our balance sheet data as ofMarch 31, 2007.

The numerator for the purposes of calculating net profit per share under U.S. GAAP is as follows:

U.S. GAAP For the For the Aggregated period period for the year Year Year April 1, June 26, ended ended ended 2006 to 2006 to March 31, March 31, March 31, June 25, March 31, 2007(Dollars in thousands) 2009(1) 2008(2) 2006 2007(3) (Unaudited)(3)(4)

Net income in accordance withU.S. GAAP $22,316 $11,437 $3,658 $4,289 $7,947

(1) Our 49% interest in a water company in Yancheng, China was acquired on April 29, 2008 and our share of resultsfrom the operation is reflected in our statement of income data from that date as part of our share of net profit ofequity method investments. In June 2008 we acquired Servicomunal and Servilampa in Chile and results of theseoperations are reflected in our statement of income data from June 27, 2008. In July 2008, we acquired a 51%interest in a water company in Zhumadian, China. The results of this operation have been included in ourconsolidated statement of income from July 23, 2008.

(2) Siza Water was acquired in May 2007 and is reflected in our statement of income data from May 3, 2007.8


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(4) The aggregated results for the year ended March 31, 2007 are non-GAAP measures representing an aggregation ofour audited results for the period April 1, 2006 to June 25, 2006 prior to the acquisition by Biwater of Nuon’s 50%share in us, and our audited results for the period June 26, 2006 to March 31, 2007. See Note 28 “Summary ofdifferences between accounting policies generally accepted in The Netherlands and in the United States of America”to our consolidated financial statements.

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Many factors could materially adversely affect our business, financial condition or results of operations. These risksinclude those described below and may include additional risks and uncertainties not presently known to us or that wecurrently deem immaterial.

These risks should be read in conjunction with the other information in this report.

Risks relating to our business

The current credit crisis and unfavorable general economic and market conditions may negatively affect ourliquidity, business, and results of operations, and may affect a portion of our client base, subcontractors andsuppliers.

There is a correlation between improved economic conditions, and the consequential higher standards of living, and theconsumption of water. Therefore, global and regional economic downturns could have an adverse effect on ourbusinesses and financial condition by reducing the need for improved water services. The effect of the continued creditcrisis and related turmoil in the global financial system on the economies in which we operate, our clients, oursubcontractors, our suppliers and us cannot be predicted.

Many lenders and institutional investors have reduced and, in some cases, ceased to provide funding to borrowers.Continued disruption of the credit markets could adversely affect our clients or our own borrowing capacity, which supportthe continuation and expansion of our projects, and could result in contract cancellations or suspensions, project delays,payment delays or defaults by our clients. Our ability to expand our business would be limited if, in the future, we wereunable to access or increase our existing credit facilities on favorable terms or at all. These disruptions could negativelyaffect our liquidity, business and results of operations.

If we are unable to identify suitable project opportunities, win bids for, or effectively negotiate the terms of,those opportunities, our growth prospects will be reduced.

Our growth strategy depends upon our success in identifying and winning new projects. There can be no assurance thatwe will be able to identify suitable project opportunities. In addition, we may not be able to negotiate successfully terms ofprojects that we have decided to pursue. Factors that could adversely affect our ability to negotiate successfully the termsof such projects include competition from other bidders and resistance to private-sector involvement in the water sectorfrom non-governmental organizations or other third parties. We face competition in winning long-term contracts to providewater and wastewater services from larger, multinational

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companies as well as from local companies focusing on particular markets. From time to time, our competitors may targetlower rates of return in an effort to expand market share or enter new markets. Our opportunities to acquire, own andoperate projects under perpetual licenses may be limited by resistance from non-governmental organizations or otherthird parties to private-sector involvement. Our growth prospects will be reduced to the extent projects are not available onterms that are suitable to us.

Our financial performance could be impacted by the unwillingness of Instituto de Acueductos y AlcantarilladosNacionales (IDAAN) to pay amounts owed.

In certain of our territories of operation we provide bulk water to only a single customer and as such we are heavily reliantupon such customer’s ability or willingness to pay amounts owed. For instance, as at March 31, 2009 IDAAN, the nationalwater authority representing the State of Panama, owes $7.1 million to APSA, our Panamanian subsidiary which haspassed its contractual due date for payment. This sum relates to increases to our water rate in Panama. These paymentsare unpaid at the date of this report even though by board resolution dated July 10, 2008, IDAAN resolved to approvethese rate increases and confirmed that IDAAN would apply to the Panamanian Government for extra funding to pay forthe rate increases.

If we are unable to obtain government or public-sector client approval of our requests for rate increases, ourprofitability may suffer.

Our ability to meet our financial objectives is dependent upon the rates we charge our customers. These rates generallyare subject to periodic approval by government regulators or our public-sector clients. Obtaining approval for rateincreases can be time-consuming and costly. The organizations that must approve our rates may change their rules andpolicies, particularly when there are changes in their personnel for any reason, including changes in governmentadministration. The risk of these kinds of policy changes is greater in emerging markets than in developed markets.Although the contracts and regulations we operate under usually contain provisions to address material, unexpectedevents, these provisions usually require us to seek regulatory or client approval before we can raise our rates in responseto increased expenses. We may face difficulties in obtaining approval to raise rates such as we have experienced in ourprojects in Indonesia and The Philippines. There could be a significant gap between the timing of increased expenses andour ability to recover those expenses. In extreme cases, a lack of approval for rate increases may result in the project nolonger being viable, which could lead to its termination and write-off. There may also be a significant delay betweenapproval of a rate increase and the ability of the client to pay the increased rates as we are experiencing in our project inPanama where the full contractual rate is now being paid but an amount in arrears remains unpaid (see Item 4“Information on the Company”). We can provide no assurances with respect to future rate increases that may be approvedby our clients and regulators or that any such increases will be sufficient to ensure profitability with respect to the affectedoperations.

Our recent acquisitions and strategic investments and any future acquisitions or investments may have anadverse effect on our ability to manage our business and may subject us to unforeseen liabilities.

Selective acquisitions and strategic investments, such as our recent acquisitions of:

• a 49% stake in Yancheng China Water Company, an equity joint venture in Yancheng City, China;

• 100% of the share capital of Servicomunal S.A. and Servilampa S.A. in Chile; and

• a 51% stake in Zhumadian China Water Company, an equity joint venture in Zhumadian City, Henan Province,China,

as described in Item 4. “Information on the Company—History and Development of the Company,” form part of ourstrategy to further expand our business. Such companies may not be as successful as they have been in the past, and/ormay also not perform as well as we expect. Moreover, the integration of such companies into our operations has requiredsignificant attention from our management. Acquisitions expose us to potential risks, including risks associated with theassimilation of new operations, services and personnel, unforeseen or hidden liabilities, the diversion of resources fromour existing businesses, the inability to generate sufficient revenues to offset the costs and expenses of acquisitions andpotential loss of, or harm to, relationships with employees and content providers as a result of integration of newbusinesses. The acquisition of any company could also subject us to unforeseen liabilities arising from the acquisitionitself or the operations of the company or both.

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Any pending or future acquisitions we decide to undertake involve risks.

An important element of our growth strategy is the acquisition or the development of water and wastewater projects. Thenegotiation of potential acquisitions and development of new projects could require us to incur significant costs andexpose us to significant risks, including the following:

• risks relating to the condition of assets acquired when we are awarded a new project, in particular the undergroundassets that are used in distributing water or in collecting wastewater, for which we take operational responsibility andwhich may not be in the condition as represented to us, as we experienced with the acquisition and ultimate disposal ofour former water project in Belize;

• operating risks, including environmental problems, shortages of materials and unavailability of skilled labor;

• risks that potential acquisitions may require the disproportionate attention of our senior management, which coulddistract them from the management of our existing projects; and

• risks related to our ability to hire or retain experienced personnel, including immigration restrictions, something we arepresently experiencing in China.

These acquisitions could result in dilutive issuance of our equity securities, incurrence of debt and contingent liabilities,fluctuations in quarterly results and acquisition-related expenses.

Some or all of these items could also have a material adverse effect on our business and our ability to finance ouroperations. The businesses and other assets we acquire in the future may not achieve revenue and profitability that justifyour investment and any difficulties we encounter in the integration process could interfere with our operations and reduceoperating margins.

Our operating costs could be significantly increased in order to comply with new or stricter regulatorystandards imposed by governmental agencies and we could be negatively affected by other potentialgovernmental actions and regulations.

Water and wastewater service providers are generally subject to regulation by water, environmental and health and safetyregulators. Regulations may relate to, among other things, standards and criteria for drinking water quality and forwastewater discharges, customer service and service delivery standards, waste disposal and raw water abstraction limitsand charges. Accordingly, we are often required to obtain environmental permits from governmental agencies in order tooperate our facilities. We cannot assure you that we have been or will be at all times in compliance with these laws,regulations and permits. Our costs of complying with, or discharging our responsibility under past, current and futuregovernmental laws and regulations may adversely affect our business or results of operations. If we violate or fail tocomply with these laws, regulations or permits, we could be fined or otherwise sanctioned by regulators and ouroperations could be curtailed or shut down, and we could be exposed to claims by third parties resulting fromnon-compliance. In addition, our failure to comply with such laws, regulations and permits may constitute a breach of ourcontracts. These laws and regulations are complex and change frequently and these changes may cause us to incurcosts in connection with the remediation of actions that were lawful at the time they were taken. We may incur highercosts than expected in any particular period and we may not be immediately able to pass those increased costs along toour customers through rate increases.

Any government that regulates our operations may enact legislation or adopt new regulations that could have an adverseeffect on our business, including the following:

• restricting foreign ownership or investment, such as by requiring local investment as in The Philippines or byencouraging local investment as in South Africa, or otherwise affecting the capital structure of our subsidiaries;

• providing for the expropriation of our assets by the government;

• providing for changes to water and wastewater quality standards;

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• requiring cancellation or renegotiation of, or unilateral changes to, agreements relating to our provision of water andwastewater services;

• restricting our ability to terminate our services to customers who owe us money for services previously provided, as isthe situation facing our U.K. and South African project companies;

• promoting an increase of competition among water companies within our designated service areas, such as Ofwat haspromoted in England and Wales;

• requiring the provision of water or wastewater services at no charge or at reduced prices, such as in South Africa whereall domestic customers are eligible to receive approximately 1,600 gallons of water per month without charge;

• adverse changes in tax, legal or regulatory requirements, including environmental regulations and changes that imposeadditional costs on our operations;

• changes in the charges made for raw water abstraction, as is being attempted in Panama;

• prohibiting or restricting the payment of dividends or the flow of funds to foreign investors; and

• causing currency exchange fluctuations or devaluations, such as in Mexico in 1994 and in Indonesia in 1997.

Unfavorable currency exchange rate fluctuations may negatively affect the reported results of our operations.

The majority of our revenue, expenses, assets and liabilities are recorded in currencies other than the U.S. Dollar, eventhough our financial results are reported in U.S. Dollars. To prepare our consolidated financial statements, we translatethose revenue, expenses, assets and liabilities into U.S. Dollars. Accordingly, increases and decreases in the value of theU.S. Dollar as compared to other currencies will affect the value of these items in our consolidated financial statements,even if their value has not changed in their original currency. See Item 5 “Operating and Financial Review and Prospects”.

Contamination to our water supply may result in disruption in our services and litigation that could adverselyaffect our business and financial condition.

Our water supplies are subject to contamination, including contamination from naturally-occurring compounds, chemicalsand pollution resulting from man-made sources and terrorist attacks. If our water supply is contaminated, we may have tointerrupt the use of that water supply until we are able to substitute the flow of water from an uncontaminated source. Inaddition, we may incur significant costs in order to treat the contaminated source through expansion of our currenttreatment facilities or the use of treatment facilities operated by others or the development of new treatment methods. Thecosts associated with a contaminated water source could be significant. We could also be held liable for consequencesarising out of human exposure to hazardous substances in our water supplies or other environmental damage and ourinsurance policies may not be sufficient to cover the costs of these claims. If we are unable to substitute water supplyadequately from an uncontaminated source or treat the contaminated water in a cost-effective manner, our business andfinancial condition may be adversely affected through a decline in revenue or higher operating costs.

If the raw water that we use or the untreated wastewater that we receive is not within quality parametersdefined in our contract or license, our operations may be negatively affected.

We can treat raw water to produce potable water and can treat wastewater to produce treated effluent only to the extentthat the parameters of the raw water or untreated wastewater are within the limits defined by our contract or licensebecause these limits will have determined the treatment processes that we incorporated in our water or wastewatertreatment plant. If the raw water we use or untreated wastewater we receive have quality parameters that are outside thedefined limits, our treatment processes may not be fully effective and therefore the water or the treated effluent producedmay not satisfy the requisite standards. If we experience this problem, we may need to invest in the construction ofadditional treatment facilities and we may also be penalized by the regulator or by our client for supplying substandardservices.

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We depend substantially on a limited number of key personnel who would be difficult to replace. If we lose theservices of these individuals, our business will be adversely affected.

Our continued growth and success depend in large part on the managerial and technical skills of the members of oursenior management, particularly our Chief Executive Officer. Most of our executive officers, including our Chief ExecutiveOfficer, are subject to written employment contracts, but these contracts do not contain non-compete provisions. Any lossof services of any of those individuals would negatively affect our business by harming our ability to pursue our growthstrategy and to continue to oversee the improvement of our existing operations.

Adverse economic conditions could adversely affect our business, financial condition and growth potential.

We are sensitive to economic conditions in each of the markets where we provide water and wastewater services,including the United Kingdom, which represented 51% of our revenue during fiscal year 2009. There is a positivecorrelation between improved economic conditions, and the consequential higher standards of living, and theconsumption of water. Therefore, global or regional economic downturns, such as the current worldwide economic crisis,could have an adverse effect on our business and financial condition by reducing the need for improved water services. Inaddition, increases in the local rates of inflation or the cost of electricity where we operate may result in an increase in ouroperating costs, which may not be immediately and fully recoverable in our rates. If worldwide economic conditions fail toimprove or worsen, our expected growth may be adversely affected.

If we are unable to manage the risks associated with operations in emerging markets, our business, financialcondition and results of operations may be adversely affected.

We operate in several emerging markets. There are a number of risks in doing business in those markets, including thefollowing:

• an unfavorable political or economic environment, including rates, duties, exchange controls, expropriation, importcontrols and other trade barriers;

• unexpected legal or regulatory changes and the associated cost of compliance, such as South Africa’s introduction of a“free basic water” policy in 2000, which had a material adverse effect on the results of our South African operations;

• protests relating to the provision of, or charges associated with, the supply of water and wastewater services by aforeign private company, as we have experienced in the past in Indonesia and South Africa;

• a heightened risk of terrorist threats or attacks that affect our ability to meet our service obligations;

• longer accounts receivable payment cycles and greater difficulties in collecting accounts receivable, as we areexperiencing in Panama and with some of our poorer customers in the townships surrounding Nelspruit, South Africa;

• the loss of grants that may be provided by governments, such as those currently provided to our project in South Africain order to assist in the provision of water and wastewater services to the communities unable to pay for our services;

• difficulties in attracting and retaining qualified management and employees or rationalizing our workforce;

• recessionary trends, inflation and instability of the financial markets;

• potentially adverse tax consequences, including regulations relating to transfer pricing and withholding taxes onremittances, dividends and other payments by our subsidiaries and joint ventures; and

• arbitrary decisions to attempt to terminate our contracts without cause, as we have experienced in our former project inMexico.

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If we are unable to successfully manage the risks inherent in our international activities, our business, financial conditionand results of operations may be adversely affected through declining operating margins and, in extreme cases, changesthat result in a project no longer being viable, which could lead to its termination and write-off.

Lower than expected population growth or migration can adversely affect our business and growthopportunities.

Population growth and migration of people from rural to urban areas contribute significantly to demand for investment inwater and wastewater infrastructure. If population growth and migration do not meet or exceed expected levels,governments may not direct significant resources into urban water and wastewater infrastructure. In addition, if populationdoes not grow as we expect in the areas supplied by our existing projects, particularly in our projects in China, SouthAfrica, The Philippines and Indonesia, the results of our operations may be adversely affected.

We provide bank guarantees and other forms of financial security to our public-sector clients that could bedrawn on by our clients or potential clients if we do not meet certain obligations.

Under the terms of some of our bidding processes, agreements with our clients and loan agreements, we provide financialguarantees, usually in the form of bank guarantees, or deposits to ensure our performance of certain obligations. AtMarch 31, 2009, we had guarantees totaling $12.5 million. If we fail to perform certain obligations to the satisfaction of theparty that holds the guarantee or deposit, our client or lender may take the benefit of the guarantee or deposit.

If we are required to make unexpected payments to any pension plans applicable to our employees or theemployees of Biwater, our financial condition may be adversely affected.

Our employees at our operations in the United Kingdom, Indonesia and The Philippines participate in defined benefitpension plans, and such plans, together with a pre-existing pension liability incurred upon acquisition of our subsidiary inZhumadian, China, reported a net pension obligation of $10.3 million as of March 31, 2009, as calculated under DutchGAAP. We may assume other obligations under defined benefit pension plans as a result of our acquisition of newprojects. Changes in actuarial estimates and assumptions can increase our reported pension plan expenses andliabilities, and in certain circumstances we may be required to increase the actual cash payments we make under theseplans.

We are also contingently liable for Biwater’s obligations under its defined benefit pension plan in the United Kingdombecause we are considered “connected or associated with” Biwater under U.K. pension legislation. As at January 29,2008, which is the most recent date for which this calculation is required to be made available, Biwater’s U.K. definedbenefit pension plan was underfunded on a full buy-out basis, as determined under the U.K. pension statute, by£96.3 million ($138.0 million). At the same date, our U.K. defined benefit pension plan was underfunded on a full buy-outbasis by £7.1 million ($10.2 million).

We could also be required at any time to make accelerated payments up to the full buy-out deficit in the trust (includingthe deficit with respect to Biwater’s plan as well as the deficit with respect to our plan), which would likely be far higherthan the normal ongoing funding cost of the plan, if we receive a “Contribution Notice” or a “Financial Support Direction”from the U.K. Pensions Regulator. For a description of the circumstances in which we may receive a Contribution Noticeor a Financial Support Direction, see Item 7 “Major Shareholders and Related Party Transactions — Related partytransactions — U.K. defined benefit pension plan”.

Our financial condition will be adversely affected to the extent that we are required to make any additional payments toany relevant defined benefit pension plans in excess of the amounts assumed in our current plans. Our reported results ofoperations and financial condition will be adversely affected to the extent we must report higher pension plan expensesunder Dutch GAAP or U.S. GAAP.

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If we are unable to arrange financing for projects on suitable terms, our business and growth will be adverselyaffected.

The construction or acquisition and operation of our water and wastewater projects could require us to incur significantcash expenditures. Our ability to arrange financing for projects on suitable terms and our access to, and cost of, capitaldepend upon numerous factors, including the following:

• general economic and market conditions, which have been particularly adverse in recent months due to the worldwideeconomic crisis;

• the availability of credit from multilateral funding agencies, commercial banks and other financial institutions, which hasbeen challenging in light of the current general economic and market conditions;

• interest rates;

• the perceived credit quality of our client;

• investor confidence in our business;

• the perceived quality of our existing projects and prospective projects;

• the amount of equity that we contribute to a project company;

• restrictions in our debt instruments;

• the funding status of our defined benefit pension plans;

• our reputation and success on existing projects; and

• tax and securities laws. .

In addition, if our shareholders’ preemptive rights are not waived, then the existence of those rights may delay our abilityto raise capital through equity issuances. If we cannot secure financing on terms that are suitable to us, our business andgrowth will be adversely affected because we may not be able to undertake projects that we otherwise would undertake.

We rely upon long-term licenses from governments and contracts with our public-sector clients to providewater and wastewater services, and these licenses and contracts may not be renewed, may be cancelled ormay be renegotiated on terms less satisfactory to us.

We presently operate under long-term licenses from, and contracts with, governmental agencies and other public-sectorclients. Most of the longer-term licenses and contracts are subject to periodic renegotiation of rates and other materialterms. Our regulator’s or public-sector client’s inability or unwillingness to perform its obligations under the license orcontract, as we are experiencing in our project in Panama or have experienced in our former project in Belize, may impairthe profitability of these projects and the value of the investments that we have made. In addition, disputes that we mayhave with our public-sector client or regulator may adversely affect our contract negotiations or could lead to terminationof our license. Upon expiration, these arrangements may not be renewed or may be renewed on less favorable terms, andthe terms and conditions of these arrangements following any renegotiation may not be as favorable to us as the termsand conditions in effect prior to those changes.

Our results of operations could be adversely affected by a disruption in the provision of services by thirdparties.

We depend upon third parties to perform their contractual obligations with us. In particular, we often rely upon third partiesto perform maintenance work associated with our water pipelines and to supply adequate electricity to operate ourfacilities. To the extent that adequate maintenance is not performed on our pipelines or the supply of electricity to ourfacilities is interrupted or proves unreliable, our ability to operate our facilities may be affected.

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Our business is subject to seasonal fluctuations and other weather conditions, which could adversely affectsupply of and demand for our water services and our results of operations.

We depend on an adequate water supply to meet the present and future needs of our customers. Whether we have anadequate water supply depends upon a variety of factors, including:

• rainfall;

• the capacity of, and the amount of water stored in, our reservoirs;

• underground water supply from which well water is pumped;

• changes in the amount of water used by our customers; and

• water quality.

In particular, drought conditions, such as experienced by our project in South Africa from October 2003 until May 2004,could interfere with our sources of water supply and could adversely affect our ability to supply water in sufficientquantities to our existing and future customers. An interruption in our water supply or restrictions on water usage duringdrought conditions or other legal limitations on water use could result in decreased customer billing and lower revenues.This could also cause increases in capital expenditures needed to build infrastructure to secure alternative water sources.Customers may use less water even after a drought has ended because of conservation patterns developed during thedrought. Lower water use for any reason could lead to lower revenue.

Also, demand for water is seasonal. Demand for our water tends to be greater during the drier months at our variousoperations, which in the South Coast area of the United Kingdom are generally the warmer summer months due to theinflux of tourists and increased usage for watering, landscaping, baths, showers and swimming pools.

Throughout the year, demand at our various locations will vary with temperature and rainfall levels. In the event thattemperatures during the typically warmer months are cooler than normal, or if there is more rainfall than normal, thedemand for our water may decrease, which would adversely affect our revenue.

In countries with colder climates at certain times of the year, water main pipes are more likely to burst, which can lead toloss of supply to customers for periods of time resulting in reduced revenue and an increase in operating costs as theservice problems are remedied.

Any of these factors could adversely affect our results of operations.

Strikes or work stoppages could adversely affect our operations.

Approximately one-third of our employees in the United Kingdom and 65% of our employees in South Africa, representingapproximately 15% of our total workforce, belong to labor unions. Disputes with regard to the terms of employment ofthese workers or our potential inability to negotiate acceptable wages and benefits with these unions in the future couldresult in, among other things, strikes, work stoppages or other slowdowns by the affected workers. Our relations with ouremployees may not remain positive, and union organizers could be successful in future attempts to organize at some ofour other operations. If our workers were to be involved in a strike, work stoppage or other slowdown, or other employeeswere to become unionized or the terms and conditions in future labor agreements were renegotiated, we could experiencea significant disruption of our operations and higher ongoing labor costs.

Our relationships with our project partners may not be successful, which could adversely affect our businessand the implementation of our growth strategy.

In certain markets, we depend on relationships with partners and co-investors to provide local expertise, developrelationships with public-sector clients, participate in the management of existing projects and identify projectopportunities. Some of these relationships are either required by local regulation such as in The Philippines or

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encouraged by a central government such as in South Africa. Changes in project scope, local political or economicconditions or a partner’s financial condition may result in termination of the relationship and may require us to buy or sell aportion of the remaining interests in the project. Also, disagreements between us and our partners and co-investors mayaffect the operations of our subsidiaries and joint ventures, such as we are experiencing in our project in The Philippines.See Item 8 “Financial Information —Legal proceedings”. These disagreements may also adversely affect our ability toreceive dividend payments and/or management fees from our projects such as we have experienced in The Philippines. Ifthese relationships are not successful, our business and growth may be adversely affected and the value of your sharesmay decline.

If our project companies are unable to pay the principal of and interest on their indebtedness as they come dueor they default under certain other provisions of their loan documents, their indebtedness could be acceleratedand our results of operations and financial condition could be adversely affected.

A default by one of our project companies under the terms of its loan agreements could restrict its ability to make capitalexpenditure, dividends or other distributions. In addition, the failure by one of our project companies to meet its obligationsunder its indebtedness could affect its ability to negotiate subsequent rate increases. A default could lead to accelerationof the indebtedness, foreclosure proceedings and the possible loss of our investment in that project company. Theinability of one or more of our project companies to perform on their indebtedness obligations may adversely affect ourability to bid successfully or obtain financing for new projects.

We cannot control our joint venture companies and our partners may be able to require us to contributeadditional capital in them.

We have made in the past, and may make in the future, direct or indirect joint venture investments in other companies.We currently have joint venture investments in our project companies in Indonesia and The Philippines and in Yancheng,China. We do not control these joint venture companies, and the business decisions of these companies may not be inour best interests. Some of these investments may require ongoing expenditures and we may be required to meet capitalcalls in order to maintain our level of equity investment. If we do not make these additional investments when we areobligated to do so, our ownership interest may be diluted. In addition, if the value of these strategic investments declines,we may be subject to losses that will adversely affect our results of operations and financial condition.

Cascal N.V. is a holding company with no independent operations. Our ability to meet our obligations,including servicing our debt, and pay dividends depends upon the performance of our subsidiaries and thecompanies in which we have joint venture investments, their ability to make distributions to us, and onstatutory restrictions.

As a holding company, Cascal N.V. depends on the earnings and cash flows of, and dividends, distributions, loans and/oradvances from, our subsidiaries and companies in which we have joint venture investments to generate the fundsnecessary to meet certain of our obligations, including servicing the borrowings under our revolving loan facility, and paydividends. Our ability to pay dividends will be subject to our future results of operations, financial condition, liquidity needsand capital resources. In addition, the payment of dividends, distributions, loans or advances to Cascal N.V. or one of ourintermediate holding companies by our subsidiaries and companies in which we have joint venture investments could besubject to contractual restrictions, such as the terms of their financing arrangements, as well as legal restrictions, such asstatutory restrictions and the fiduciary duties owed by the directors of these subsidiaries and companies in which we haveor may have joint venture investments. Limitations on the payment of dividends, distributions, loans or advances to theholding company are common in the early years of our ownership or investment in a particular project. The payment ofdividends is further subject to the provisions of Dutch law, including a provision that eligible profits may only be distributedto the extent shareholders’ equity is not reduced below the amount of the fully paid-up share capital and the reserves thatmust be maintained by law or under our Articles of Association. See Item 8 “Financial Information— Dividend policy”. As aresult, we can offer no assurances that we will be able to pay dividends in the amounts and at the times that ourshareholders expect.

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Our projects are subject to risks that could disrupt the services that we provide.

We currently operate in seven countries and if we achieve our growth plans we will extend the geographical scope of ouroperations. Our facilities and operations could be damaged or disrupted by a natural disaster, war, political unrest,terrorist activity or public health concerns. A major catastrophe, such as an earthquake, hurricane, tsunami, flood, volcaniceruption or other natural disaster at any of our sites, or significant political unrest, war or terrorist activities in any of theareas where we conduct operations, could result in a prolonged interruption of or disruption to the services we provide toour customers. Insurance coverage relating to these risks may be insufficient or unobtainable on commercially reasonableterms. We may not be able to provide our services in the manner required by our customers if any of the foregoing occurs,resulting in damage to our reputation and lower revenue and profits.

Risks relating to our relationship with the Biwater Group

Biwater is in a position to control matters requiring a shareholder vote, and this ownership concentration mayadversely affect the market price of our shares as well as the ability of our other shareholders to influencematters subject to a shareholder vote.

Biwater owns, directly or indirectly, approximately 58% of our outstanding common shares. Biwater has initially elected aboard of directors whose members will serve staggered terms on a “classified” board, but we cannot assure you thatBiwater will continue to support the election of a “classified” board in the future. Biwater as a majority shareholder may atany time vote to eliminate the “classified” board provisions in our governing documents and vote to remove anysubsequently elected director without cause.

Biwater has sufficient voting power to call an extraordinary meeting of shareholders, and as a result of its majorityownership of our shares, to take certain actions, including the following:

• remove and elect at least a majority of our directors (including the filling of any vacancies), subject to Biwater’sagreement that it will not vote to remove without cause a member of our board of directors elected to serve on the“classified” board;

• effect certain amendments to our Articles of Association and other governing documents, including the prospectiveelimination of our “classified” board;

• control our decisions regarding debt incurrence, stock issuance and the declaration and payment of dividends;

• control our management; and

• approve or reject any merger, consolidation or sale of substantially all of our assets or any other transaction requiringshareholder approval.

This concentration of ownership of our shares could delay or prevent mergers, tender offers or other purchases of ourshares, and other transactions that require shareholder approval which could deprive holders of our shares of theopportunity to earn a premium for the sale of the shares. Therefore, this concentration of ownership may adversely affectour share price. As a result of its ownership, Biwater may have the ability to control all matters submitted for a shareholdervote. Biwater may choose to vote in a manner that the other owners of our shares do not consider to be in their bestinterest. In addition, we have been informed that, as of March 31, 2009, 100% of the shares of Biwater were beneficiallyowned by Adrian White and his family and family interests (70%) and Leslie Jones and his family and family interests(30%). Any significant change in Biwater’s ownership structure could have a material effect on the manner in whichBiwater exercises its voting power.

Future sales by our existing shareholder of a substantial number of our shares in the public market couldadversely affect the price of our shares.

If our existing shareholder sells, or indicates an intention to sell, a substantial number of our shares the market price ofour shares could fall. We cannot provide any assurance as to whether or not Biwater will determine to sell any or all of ourshares that it holds, or the timing of any such sale by Biwater. For example, Biwater currently operates a defined benefitpension plan in the United Kingdom that currently has a substantial funding deficit. Biwater may choose to dispose ofmore of our shares in the future in order to fund part or all of this pension funding deficit.

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Biwater has pledged all of its ownership interest in us as security for its borrowings under its credit arrangements and tosecure its obligations under its pension plan. If Biwater fails to repay its borrowings or deficit funding obligations orotherwise fails to meet its obligations under its pension plan on a timely basis, the lenders and/or pension trustees couldenforce their rights under their respective pledge or otherwise and may choose to sell, or cause Biwater to sell, theseshares. Any disposal may adversely affect our share price and may impair our ability to raise additional capital through thesale of our equity securities. In addition, the potential availability for sale of our shares, or the perception by the marketthat such sales could occur, could adversely affect the prevailing market price of our shares. In the event that Biwatersells some or all of its shares to another party, our other shareholders will not have the right to participate in the sale.

We are party to various agreements with Biwater, and we do not know if we may have been able to obtainbetter terms from third parties and we may not be able to replace them with equally-favorable arrangements.

We have agreements with Biwater for services relating to real estate, human resources, information technology, publicrelations and payroll. These agreements were put in place upon our formation in 1999 and have not been substantivelymodified since then. We have not attempted to negotiate similar agreements with unaffiliated parties and do not knowwhether unaffiliated parties would have entered into these agreements with us on more or less favorable terms. If theseagreements were terminated for any reason, we cannot assure you that we could enter into equally-favorable agreementswith unaffiliated parties. Our inability to replace these agreements on equally-favorable terms could reduce ourprofitability.

In the future, Biwater may compete against us in water and wastewater projects.

Biwater has agreed in writing that it will refer long-term water and wastewater project opportunities to us for ourconsideration prior to considering the project for its own portfolio. This agreement terminates upon the earlier of threeyears after the closing of our initial public offering or Biwater owning less than 15% of our common shares. Followingtermination of this agreement, Biwater may elect to compete against us for such project opportunities.

Risks relating to our shares

The market price of our common shares has fluctuated widely and the market price of our common shares mayfluctuate in the future.

The market price of our common shares has fluctuated widely since we became a public company in January 2008 andmay continue to do so as a result of many factors, including our perceived prospects, the prospects of our competition andof the water industry in general, differences between our actual financial and operating results and those expected byinvestors and analysts, changes in analysts’ recommendations or projections, changes in general valuations forcompanies in the water industry, changes in general economic or market conditions and broad market fluctuations.

There may not be an active market for our common shares, which may cause our common shares to trade at adiscount and make it difficult to sell the common shares you purchase.

We cannot assure you that an active trading market for our common shares will be sustained. We cannot assure you ofthe price at which our common shares will trade in the public market in the future or that the price of our shares in thepublic market will reflect our actual financial performance. You may not be able to resell your common shares at or abovetheir current market price. Additionally, a lack of liquidity may result in wide bid-ask spreads, contribute to significantfluctuations in the market price of our common shares and limit the number of investors who are able to buy the commonshares.

Future sales of our common shares could cause the market price of our common shares to decline.

The market price of our common shares could decline due to sales of a large number of shares in the market, includingsales of shares by our large shareholders, or the perception that these sales could occur. These sales, or the perceptionthat these sales could occur, could also make it more difficult or impossible for us to sell equity securities in the future at atime and price that we deem appropriate to raise funds through future offerings of common shares.

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Biwater Investments Limited owns approximately 58.5 % of our common shares. We have entered into a registrationrights agreement with Biwater that entitles it to have all of its remaining shares registered for sale in the public market. Inaddition, these shares could be sold into the public market pursuant to Rule 144 under the Securities Act of 1933, asamended, or the Securities Act, subject to certain volume, manner of sale and notice requirements. Sales or the possibilityof sales of substantial amounts of our common shares by Biwater in the public markets could adversely affect the marketprice of our common shares.

You may not receive dividends because our board of directors could, in its discretion, depart from or changeour dividend policy at any time.

We are not required to pay dividends, and our shareholders will not be guaranteed, or have contractual or other rights, toreceive dividends. Our board of directors may decide at any time, in its discretion, to decrease the amount of dividends,otherwise change or revoke our dividend policy or discontinue entirely the payment of dividends. For example, our boardof directors could depart from or change our dividend policy if it were to determine that we had insufficient cash to takeadvantage of other opportunities, such as the acquisition or development of new projects. If we do not pay dividends, forwhatever reason, your shares could become less liquid and their market price could decline.

If our current resources are insufficient to accomplish our growth strategy, we may seek to sell debt securitiesor additional equity securities, which could adversely affect your investment.

If the resources available to us are insufficient to satisfy our cash requirements, we may seek to sell additional equity ordebt securities or obtain additional credit arrangements. The sale of additional equity securities would result in the dilutionof the ownership interest of our shareholders prior to that issuance. The incurrence of additional indebtedness wouldresult in increased debt service obligations and could result in operating and financial covenants that would restrict someor all of our operations. Either of these could adversely affect your investment.

We may be unable to establish or maintain an effective system of internal control over financial reporting, andas a result we may be unable to accurately report our financial results or prevent fraud.

We are subject to provisions of the Sarbanes-Oxley Act. Section 404 of the Sarbanes-Oxley Act requires that we include areport from management on our internal control over financial reporting in our annual reports on Form 20-F. In addition,our independent registered public accounting firm must attest to, and report on, the effectiveness of our internal controlover financial reporting. Our management has concluded that we have one material weakness in our internal control overfinancial reporting as of March 31, 2009. Management’s assessment of internal control over financial reporting hasrevealed a single material weakness in the operating effectiveness of our completeness control over the identification ofmaterial differences between our primary Dutch GAAP and US GAAP. See Item 15. Controls andProcedures-Management’s Report on Internal Control over Financial Reporting for more information regarding thematerial weakness and management’s plans to remediate the weakness. If this material weakness in our internal controlover financial reporting is not remediated in the future our consolidated financial statements could contain a material error.

In the future, our management may conclude once more that our internal control is not effective. Moreover, even if ourmanagement concludes in the future that our internal control is effective, our independent registered public accountingfirm may disagree. If our independent registered public accounting firm is not satisfied with our internal control overfinancial reporting or the level at which our internal control over financial reporting is designed, documented, operated orreviewed, or if the independent registered public accounting firm interprets the requirements, rules or regulationsdifferently than we do, then they may issue an adverse or qualified opinion.

Any of these outcomes could result in a loss of investor confidence in the reliability of our audited consolidated financialstatements, which could materially and adversely affect the trading price of our common stock. Our reporting obligationsas a public company will continue to place a significant strain on our managerial, operational and financial resources andsystems for the foreseeable future.

Our obligations and other undertakings associated with being a public company will require significant resources andmanagement attention.

We operated as a private company from our inception until completion of our initial public offering. Upon completion of our initialpublic offering, we became subject to the reporting requirements of the Securities Exchange Act of 1934 and the other rules andregulations of the Securities and Exchange Commission. We also became subject to supervision by the Netherlands Authority for theFinancial Markets (Stichting Autoriteit

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Financiële Markten, or AFM) under the Dutch Act on the Supervision of Financial Reporting (Wet toezicht financiëleverslaggeving). We have dedicated and will continue to dedicate a significant amount of time and resources to ensurecompliance with these regulatory requirements. In addition, upon completion of the offering we became subject to thelisting requirements of the New York Stock Exchange.

The growth of our business may place a significant strain on our management, personnel, systems and resources.Continued growth may also require expansion of our procedures for monitoring and ensuring our compliance withapplicable regulations, particularly due to our international portfolio of projects and the complexity of accounting foracquisitions in different countries. We will work with our legal, accounting and financial advisors to identify any areas inwhich changes should be made to our financial and management control and reporting systems to manage our growthand our obligations as a public company. We will evaluate areas such as corporate governance, corporate control,internal audit, disclosure controls and procedures and financial reporting and accounting systems. Although we will makeany changes we believe are necessary, including to remedy any significant deficiencies or material weaknesses in ourinternal control over financial reporting that are discovered in the future, we may not be successful in implementing allnecessary changes. As a result, these and other measures we may take may not be sufficient to allow us to satisfy ourobligations as a public company. Any failure to produce and file or furnish financial reports on a timely and reliable basismay adversely affect the market value of our common shares.

We may adopt additional equity-based compensation plans that may adversely affect our shares by diluting theinvestment of shareholders.

In the future, we may adopt additional equity-based compensation plans that may adversely affect our shares by dilutingthe investment of shareholders. We expect in the future to implement equity-based compensation plans.

Shares eligible for future sale may adversely affect our share price.

Sales of substantial amounts of our shares in the public market, or the perception that these sales may occur, could causethe market price of our shares to decline. This could also impair our ability to raise additional capital through the sale ofour equity securities. These sales also might make it more difficult for us to sell equity or equity-related securities in thefuture at a time and price that we deem appropriate, and this may impair our ability to raise additional capital. By virtue ofa resolution passed at the Company’s annual general meeting on August 7, 2008, we are authorized to issue up to100,000,000 common shares free from rights of pre-emption to existing shareholders, of which 30,566,007 commonshares are issued and outstanding. See Item 3 “Key Information — Risk factors — Risks relating to our relationship withthe Biwater Group — Future sales by our existing shareholder of a substantial number of shares in the public marketcould adversely affect the price of our shares.” Shares sold in our initial public offering are generally eligible for resale inthe public market without restrictions, and the shares owned by our affiliated shareholders may also be sold in the publicmarket in the future, subject to Rule 144 restrictions. We cannot predict the size of future issuances of our shares orequity-related securities or the effect, if any, that future sales and issuances of our shares or equity-related securitieswould have on the market price of our shares.

You will not be able to trade our shares on any exchange outside the United States.

Our shares are listed only in the United States on the New York Stock Exchange and we have no plans to list our sharesin any other jurisdiction. As a result, a holder of our shares outside the United States may not be able to effecttransactions in our shares as readily as the holder could if our shares were listed on an exchange in that holder’s homejurisdiction.

You may have difficulty protecting your rights as a shareholder and in enforcing civil liabilities because we area Dutch public limited liability company.

Our offices and all of our assets are located outside the United States. In addition some of the members of our board areresidents of, and most of their assets are located in, jurisdictions outside the United States. As a result, it may be difficultfor you to serve process on us or these persons within the United States. It may also be difficult for you to enforce a U.S.court judgment against us or those persons because there is no treaty on the reciprocal recognition and enforcement ofjudgments in civil and commercial matters between the United States and The Netherlands. This

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can include actions under the U.S. securities laws. In addition, it may be difficult for you to enforce, in original actionsbrought in courts in jurisdictions located outside the United States, liabilities under the U.S. securities laws.

Your rights and responsibilities as a shareholder will be governed by Dutch law and will differ in somerespects from the rights and responsibilities of shareholders under U.S. law, and your shareholder rightsunder Dutch law may not be as clearly established as shareholder rights are established under the laws ofsome U.S. jurisdictions.

Our corporate affairs are governed by our Articles of Association and by the laws governing companies incorporated inThe Netherlands. The rights of our shareholders and the responsibilities of members of our board of directors under Dutchlaw may not be as clearly established as under the laws of some U.S. jurisdictions. In the performance of its duties, ourboard of directors is required by Dutch law to consider the interests of Cascal, its shareholders, its employees and otherstakeholders in all cases with reasonableness and fairness. Also, as a Dutch company, we are not required to solicitproxies or prepare proxy statements for general meetings of shareholders. Dutch law does not have a regulatory regimefor U.S.-style proxy solicitations and, even though Dutch law accommodates voting by proxy, the solicitation of proxies isnot a widely used business practice in The Netherlands.

In addition, the rights of holders of common shares and many of the rights of shareholders as they relate to, for example,the exercise of shareholder rights, are governed by Dutch law and our Articles of Association and differ from the rights ofshareholders under U.S. law. For example, Dutch law does not grant appraisal rights to a company’s shareholders whowish to challenge the consideration to be paid upon a merger or consolidation of the company.

The provisions of Dutch corporate law and our Articles of Association have the effect of concentrating control over certaincorporate decisions and transactions in the hands of our board. As a result, holders of our shares may have more difficultyin protecting their interests in the face of actions by members of the board of directors than if we were incorporated in theUnited States.

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Item 4. Information on the Company

A. History and Development of the Company

History

Cascal N.V is a public limited company with a stock market listing on the New York Stock Exchange (ticker symbol“HOO”). Biwater Investments Limited, a member of the Biwater Group owns approximately 58% of our outstandingcommon shares as of March 31, 2009.

We began our business in 1989 as the United Kingdom privatized its water industry. From our stable base in the UnitedKingdom, we expanded internationally throughout the 1990s as other governmental entities around the world soughtprivate-sector involvement in their water industry, adding new projects to our portfolio between 1992 and 2002. Cascalwas incorporated under the laws of The Netherlands on March 23, 1999 as a private limited liability company. InOctober 1999, Biwater transferred our business into Cascal. In April 2000, Cascal became a 50-50 joint venture when n.v.Nuon, or Nuon, an energy company based in The Netherlands, acquired a 50% equity interest in Cascal from Biwater.Nuon’s subsequent change in global strategy impaired our ability to acquire new projects. On June 26, 2006, Biwaterreacquired Nuon’s interest in us and since then we have acquired five new projects. On January 23, 2008, our Articles ofAssociation were amended to convert us from a private limited liability company (besloten vennootschap met beperkteaansprakelijkheid) to a public limited liability company (naamloze vennootschap).

Our principal executive offices are located at Biwater House, Station Approach, Dorking, Surrey RH4 1TZ, UnitedKingdom, +44 (0) 1306 746080, and our registered address is Suite 6.1.24, Atrium, Strawinskylaan 3105, 1077 ZX,Amsterdam, The Netherlands. Our statutory seat (statutaire zetel) is Amsterdam, The Netherlands. Our internet addressis www.cascal.co.uk. The information contained in our web site does not form part of this annual report.

Recent developments, acquisitions and divestments

On May 3, 2007, we acquired a 73.4% interest in Siza Water, a water and wastewater services company in South Africafor approximately $2.9 million. For its fiscal year ended December 31, 2006, this company’s revenue and operating profitwere approximately $5.5 million and $1.3 million, respectively. The financial statements from which the revenue andoperating profit were derived were prepared in accordance with South African generally accepted accounting principles.This acquisition has been accounted for as a business combination and is included in our results of operations fromMay 3, 2007 and is included in our balance sheet at March 31, 2008.

On January 8, 2008, we agreed to an early termination of our operation and maintenance contract in Mexico. This earlytermination is reflected in our financial statements and associated footnotes. The results from the operation in Mexicoduring the year ended March 31, 2008 are shown as a discontinued operation. We received a termination fee of MXP10.5 million ($1.0 million) and after the costs of termination and receipts for sale of assets made a profit before tax ontermination of MXP 1.0 million ($0.1 million).

On January 23, 2008, we completed a recapitalization and stock split that required the following steps to be carried out:

• Issuance of remaining 11,620 authorized shares having a par value of EUR 5 per share to our existing shareholder inexchange for cash of EUR 58,100. This action increased the total shares issued to 20,000;

• A split of each issued share having a par value of EUR 5 into 10 shares with a par value of EUR 0.5, thereby increasingthe number of issued shares from 20,000 with a par value of EUR 5 to 200,000 having a par value of EUR 0.50; and

• Issuance of 21,649,343 new shares having a par value of EUR 0.50 each by transferring the corresponding aggregatepar value from share premium to issued share capital.

The result of these steps was to have outstanding 21,849,343 shares with a par value of EUR 0.50 each prior to our initialpublic offering.

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Comparative earnings per share information presented in this annual report has been calculated using a weightedaverage number of shares of 21,849,343 prior to our initial public offering. The comparative share capital and sharepremium balances have also been revised to reflect this stock split in the periods presented prior to our initial publicoffering.

The result of these actions was an effective stock split of 2,607-for-1 prior to the Company’s initial public offering.

In addition, transfers were made from unallocated results and retained earnings to share premium in amounts of a positive$16 million and a deficit of $29 million, respectively, in order to eliminate the June 30, 2007 net deficit of $13 million.

On January 29, 2008, we priced our initial public offering on the New York Stock Exchange which resulted in the issuanceof a further 8,710,000 shares to bring the total shares outstanding to 30,559,343 immediately following the initial publicoffering. On the same date there was a further issuance of 6,664 shares to directors of the Company bringing the totalshares outstanding to 30,566,007.

The initial public offering generated proceeds from primary shares issued of $97.2 million after underwriters’ discount. Anamount of $75.7 million was applied on February 5, 2008 to repay in full the balance of GBP 38 million on the facility thatwas drawn in June 2006 at the time that Cascal N.V.’s ownership reverted 100% to Biwater.

On April 29, 2008 our subsidiary China Water acquired a 49% stake in an equity joint venture in Yancheng City, China.The new joint venture company, Yancheng China Water Company commenced operations on May 1, 2008, for a period of30 years. In addition to a number of industrial and commercial enterprises, the Yancheng China Water Company providespotable water services to a residential population of approximately 600,000. Yancheng City is situated on the easternseaboard of Jiangsu province, and is approximately 250 miles northeast of Shanghai.

On June 12, 2008, we entered into an amended and restated facility agreement with HSBC Bank Plc whereby our existingrevolving credit facility with HSBC was increased from $30 million to $70 million. Of this amount, (a) $60 million is arevolving loan facility intended for financing acquisitions, for general corporate purposes and working capital and to paytransaction expenses, and (b) $10 million continues to be a guarantee facility intended to be used to provide guaranteesto replace existing ones, and to issue new or renewed guarantees on behalf of certain subsidiaries. For further detail seeItem 5 “Operating and Financial Review and Prospects — Liquidity and capital resources”. This credit facility wasamended and restated on June 26, 2009 for a period of two years ending June 30, 2011. The terms of the amended andrestated facility are similar to those that governed the previous facility with the exception of the arrangement fee andinterest margin, both of which have been increased in line with current trends in the corporate lending market. Seecomments in this section below.

On June 27, 2008 the Group acquired 100% of the share capital of Servicomunal S.A. and Servilampa S.A. in Chile.Servicomunal and Servilampa provide both water and wastewater services under perpetual regulated concessioncontracts.

On July 23, 2008 we acquired a 51% stake in an equity joint venture in Zhumadian City, Henan Province, China. The newjoint venture company, Zhumadian China Water Company, partners China Water with the Zhumadian Bangye WaterGroup, and commenced operations on July 23, 2008. The new equity joint venture will complete the construction of anadditional 26 million gallons per day water treatment plant and associated infrastructure. The Zhumadian China WaterCompany will provide water services to a service area with a population of approximately 400,000, which includes a largenumber of industrial and commercial users.

On September 15, 2008 our wholly owned South African subsidiary Cascal Operations (Pty) Limited purchased theremaining 10% of its Greater Nelspruit Utility Company (Pty) (“Nelspruit”) concession project from Sivukile Investments(Pty) Limited.

On February 23, 2009 we completed a reorganization of our subsidiary companies incorporated in the United Kingdom.The reorganization sought to optimize the servicing of external debt and the return of capital to shareholders. In executingthis reorganization, Cascal has settled an inter-company debt that had given rise to

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significant foreign exchange gains and losses reported in the consolidated statements of income for current and priorperiods. Accordingly, in future periods, the foreign exchange gains and losses reported in the consolidated statements ofincome are expected to be much smaller.

On June 26 , 2009, we entered into an amended and restated facility agreement with HSBC Bank Plc whereby ourrevolving credit facility was extended in duration until June 30, 2011. Its terms are similar to those that governed the creditfacility it is replacing with the exception of the arrangement fee and interest margin, both of which have been increased inline with current trends in the corporate lending market. For further detail see Item 5 “Operating and Financial Review andProspects — Liquidity and capital resources”.

B. Business Overview

Overview

We provide water and wastewater services to our customers in seven countries: the United Kingdom, China, South Africa,Chile, Indonesia, Panama and The Philippines. In a typical water project, we collect raw water from surface andgroundwater sources, treat the water to meet the required quality standards and then supply the treated water through adistribution network to our customers’ premises. In a typical wastewater project, we collect the wastewater from ourcustomers’ premises, treat the wastewater to meet the required standards and return the treated water to theenvironment. We provide these services under long-term contracts or licenses that typically give us the exclusive right toprovide our services within a defined territory. Our customers are predominantly homes and businesses representing atotal population of approximately 4.3 million. Demand for our water tends to be greater during the drier months at ourvarious operations, which in the South Coast area of the United Kingdom are generally the warmer summer months dueto the influx of tourists and increased usage for watering, landscaping, baths, showers and swimming pools. Throughoutthe year, demand at our various locations will vary with temperature and rainfall levels.

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Principal geographic markets

The following table illustrates the services provided and an approximate breakdown of our revenue by the countries inwhich we currently operate and have operated for each of the last three fiscal years followed by a description of ouroperations in those geographical markets.

Dutch GAAP Revenue for fiscal year (Dollars in thousands) ended March 31, Country Type(s) of service 2009 2008 2007

United Kingdom(1) Water $ 83,643 $ 94,791 $ 75,705 South Africa(2) Water and wastewater 20,340 21,673 13,766 Indonesia(3) Water 12,999 11,356 11,062 China(4) Water 20,929 10,023 2,924 Chile(5) Water and wastewater 11,343 7,593 6,393 Panama(6) Water 10,691 8,780 6,165 The Philippines(7) Water and wastewater 2,881 2,861 2,359 Holding companies(8) Management and service fees 570 700 193

Total continuing operations $ 163,396 $ 157,777 $ 118,567 Discontinued operations(9) Water and wastewater — 2,865 3,136

Total $ 163,396 $ 160,642 $ 121,703

(1) Includes revenue from Pre-Heat acquisition from February 1, 2007.

(2) Represents 100% of the revenue derived from our Nelspruit project, in which we had a 90% interest up to August 21,2008 and a 100% interest thereafter, and includes 100% of the revenue from Siza Water, in which we have a 73.4%interest, from May 3, 2007, the date of its acquisition.

(3) Represents our portion of the revenue from this country derived from our 50% interest in our larger project and our40% interest in our smaller project, which revenue is proportionally consolidated in our financial statements inaccordance with Dutch GAAP.

(4) Represents 100% of the aggregate revenue of our holding company, in which we own an 87% interest, from the dateof its acquisition, November 15, 2006. Includes revenue from the four originally acquired projects from November 15,2006, our share of revenue from our subsidiary holding company’s 49% interest in Yancheng from April 29, 2008 andrevenue from our acquisition of a 51% interest in a water company in Zhumadian from July 23, 2008.

(5) Includes revenue from our acquisition of Servicomunal and Servilampa from June 27, 2008.

(6) Our Panamanian project was acquired in June 2006 and is reflected in our statement of income data from June 26,2006.

(7) Represents our portion of the revenue from this country derived from our 30% interest in our project, which revenueis proportionally consolidated in our financial statements in accordance with Dutch GAAP.

(8) Represents management and service fees not eliminated through consolidation, including services provided toBiwater and the portion of management fees we charge our joint venture companies attributable to the interests inthese companies that we do not own, as well as our central overhead costs.

(9) Represents revenue from our operation in Mexico prior to its early termination in January 2008.

United Kingdom (Bournemouth & West Hampshire Water/water)

We conduct our operations in the United Kingdom through BWH Group Limited (which we refer to herein as “BWHGroup”). BWH Group’s principal subsidiary is Bournemouth & West Hampshire Water Plc, a licensed provider of waterservices under the United Kingdom’s Water Act 1989, which we refer to herein as “Bournemouth.” As this project resultedfrom a privatization, Bournemouth owns all of the plant and facilities that it uses to supply water to its customers.Bournemouth operates in a defined service area as the exclusive network water supplier subject to a 25-year license(which has a “rolling” termination date and is therefore perpetual) or until one or more specified events occur, such as aserious breach of duty under the law or the license. The project provides water services only and does not provide anywastewater services to its customers.

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Bournemouth’s service area is located in England’s South Coast region and is bordered on the south by the EnglishChannel. The most significant urban center in Bournemouth’s area is the coastal city of Bournemouth, where the project isheadquartered. From the city of Bournemouth, the service area extends east through the western part of the county ofHampshire to the outskirts of the city of Southampton, west through the eastern part of the county of Dorset to theoutskirts of the town of Poole and north to include the southernmost portion of the county of Wiltshire. The year-roundpopulation of Bournemouth’s service area is approximately 430,000, but the area attracts a significant number of touristsduring the summer as a result of its beaches and relatively mild climate. Bournemouth’s activities are comprised ofregulated and unregulated activities.

Regulated activities. Bournemouth’s regulated operations, which consist of water extraction, treatment, storage anddelivery to its customers, contributed 75% of Bournemouth’s total revenue in fiscal year 2009.

Non-regulated activities. Bournemouth owns harbor moorings, fishery rights and land, which have been historically tied toits business by virtue of riparian ownership. Bournemouth also conducts certain limited businesses serving primarily ascomplements to its regulated operations. They consist of a range of home and commercial service businesses, includingplumbing, central heating and drainage installation and maintenance service and emergency plans. BWH Group alsoowns Pre-Heat Limited, a business that supplies gas installation and maintenance services in the South of England andcomplements the AquaCare service business. With effect from April 1, 2009, the main home and commercial servicebusinesses AquaCare and Pre-Heat, have been transferred to a new subsidiary of BWH Group, BWH Enterprises Limited.

South Africa (Silulumanzi and Siza Water/water and wastewater)

Silulumanzi. We conduct our largest operations in South Africa through the Greater Nelspruit Utility Company, or GNUC,which operates under the name Silulumanzi. Since August 21, 2008 we have owned a 100% interest in Silulumanzi,following the purchase of the 10% shareholding owned by Sivukile Investments (Pty) Ltd., or Sivukile, a blackempowerment enterprise.

In 1999, Silulumanzi entered into a 30-year water and wastewater concession agreement with a local municipality, theGreater Nelspruit Transitional Local Council, now known as the Mbombela Local Municipality, or MLM. Pursuant to theconcession agreement, Silulumanzi operates in a defined service area where it leases MLM’s assets and provides waterand wastewater services. Due to the expansion of the municipal boundaries since 1999, MLM provides water andwastewater services to its customers living outside Silulumanzi’s service area.

Silulumanzi’s service area includes the city of Nelspruit, which is the regional capital of Mpumalanga Province in thenortheastern part of the country near the Kruger National Park, and some outlying township and “peri-urban” areasoutside Nelspruit. The townships are densely populated, middle- and low-income planned tenement communities and theperi-urban areas are generally poorer, more sparsely populated, unplanned developments. The total population ofSilulumanzi’s service area is estimated to be 350,000, with approximately 40,000 people living in Nelspruit andapproximately 310,000 estimated to be living in the townships and peri-urban areas. Virtually every household inNelspruit, most of the households in the townships, and a small percentage of customers in the peri-urban areas havedirect connections to Silulumanzi’s water and wastewater networks. The remaining customers in the townships andperi-urban areas rely on public standpipes for their water, and for some customers water is available only on alternatedays. The peri-urban areas, which developed informally and without urban planning, do not have a wastewaterinfrastructure. One of MLM’s goals in seeking private-sector involvement in the provision of water and wastewaterservices was to improve the delivery of those services outside the Nelspruit city limits.

Siza Water. On May 3, 2007, we acquired a 73.4% interest in Siza Water, the company that has responsibility forproviding water and wastewater services to the Dolphin Coast region near Durban. We acquired 58.4% of the shares fromFinagestion, a subsidiary of the French group Bouygues, and 15% of the shares equally from three South African BlackEconomic Empowerment (BEE) groups. Of the remaining shares, 23% are held by Metropolitan Life Limited (a SouthAfrican insurance company) and 3.6% by an Employee Share Trust. Ownership of each 10% of shares entitles the holderto appoint one director to the board of Siza Water. As the principal shareholder we can appoint an “extra” director. Allboard decisions are taken by simple majority.

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In 1999, Siza Water entered into a 30-year water and wastewater concession agreement with a local municipality, theBorough of Dolphin Coast, now known as Ilembe District Municipality, or IDM. Pursuant to the concession agreement,Siza Water operates in a defined service area where it leases IDM’s assets and provides water and wastewater services.

Siza Water’s service area includes the coastal town of Ballito and some outlying township areas, which are approximately25 miles north of Durban. The project provides water and wastewater services to a population of approximately 50,000, ofwhich about half are served through direct connections and about half are served through standpipes.

Indonesia (ATB and ATS/water)

We principally conduct our Indonesian operations through PT Adhya Tirta Batam, or ATB, a 50-50 joint venture betweenus and PT Bangun Cipta Kontractor, or BCK, an Indonesian construction company. The joint venture was formed in 1995to operate a 25-year water concession serving the island of Batam. Initially we and BCK each owned 45% of ATB, andanother Indonesian company owned the remaining 10%. In 2002, the current shareholders bought out equally the interestof the third shareholder and have since each owned a 50% stake in the project. The concession was awarded to ATB bythe Batam Industrial Development Authority, or BIDA, an organization appointed by the government and charged withoverseeing the development of Batam Island. BIDA is ATB’s counterparty to the concession agreement and is directlyresponsible for approving ATB’s rates.

ATB’s service area covers all of Batam Island, which is located approximately 10 miles off the coast of Singapore.According to information published by the Batam Demography and Settlements Office, the population of the island hasincreased dramatically from approximately 196,000 in 1995 to approximately 900,000 in December 2008. In May 2008 weannounced that ATB was to make an additional investment to construct a new water treatment plant in Duriangkang,located on Batam Island. The new construction is the third stage in the development of an integrated Duriangkang potablewater system and followed the completion of earlier modules built in 2001 and 2004. The new treatment plant will have acapacity of 11.5 million gallons per day, sufficient to serve a population of almost 200,000, and commenced operations inmid 2009.

We believe the population will continue to grow and reach 1,200,000 in the next five years. Batam Island’s populationgrowth is primarily linked to the industrial growth of the island driven by competitive labor costs, tax concessions and theproximity of Singapore.

Under the terms of the joint venture, ATB has a board of executive directors comprised of four individuals, with Cascaland BCK each appointing two directors. We appoint ATB’s President Director, who has a casting vote on the board. ATBalso has a board of commissioners, consisting of three appointees by each of the shareholders and one appointee who isjointly appointed. The board of commissioners meets annually and must approve extraordinary transactions such as theterms of new bank loans. In addition, shareholders’ approval, by a 75% majority vote, is required in order for ATB toamend its articles of association, to merge its business with another business, or to dispose of assets.

In Indonesia, we also own 40% of PT Adhya Tirta Sriwijaya, or ATS, another Indonesian company that has a concessionto provide water services to the district of Sukarame, an area adjacent to the City of Palembang with a population ofapproximately 160,000. ATS currently provides water services to approximately 30,000 people. This company has twoother shareholders, one of which is BCK, which owns a 40% interest, and the third shareholder, PT Prambanan Dwipaka,an Indonesian construction company, owns a 20% interest. During each of the last three fiscal years, ATS comprised lessthan 5% of the aggregate revenue and operating profit of our Indonesian operations.

China (Zhumadian, Yancheng, Fuzhou, Yanjiao, Qitaihe and Xinmin/water)

On November 15, 2006, we acquired an 87% interest in The China Water Company Limited, or China Water, a watercompany that held majority interests in four water projects in China. We acquired our interests from RWE Thames Water,which owned 48.8% of China Water, Sime Darby, which owned 33%, and two additional shareholders that collectivelyowned 5.2%. The remaining 13% of the shares in China Water is held by the Kadoorie

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group, a Hong Kong-based group with interests in infrastructure and hotels, through their subsidiary, Waterloo IndustrialLimited, or Waterloo. China Water is governed by a five-person board of directors, four of whom are appointed by us withthe remaining director appointed by Waterloo. Substantially all board decisions are taken either by majority or 70% vote,with unanimous board approval only required for decisions that affect the constitution of China Water, such as reducing itscapital or amending its Articles of Association.

China Water owns majority interests of between 72% and 94% in these four Chinese projects. Each of these projectsconsists of a cooperative joint venture between China Water and the local water supply company. These four China Waterprojects, Fuzhou, Yanjiao, Xinmin and Qitaihe, supply water in the eastern regions in China. The term of each of theseprojects was for a period of 25 years or greater at the time of commencement. Under the cooperative joint ventureagreements, the projects’ profits are not always shared in proportion to the relative ownership interests. Furthermore, thecooperative joint venture contracts and articles of association allow China Water to appoint the senior management teamin each of the businesses. China Water also appoints a majority of the directors of these companies, where all decisionsare taken by majority vote, other than certain decisions that require unanimous approval, such as approvals for mergersand increases in capital. China Water typically receives a higher share of the profits in the early years of the cooperativejoint venture and a lower proportion in the later years. China Water receives cash payments for depreciation pro rata to itsownership.

On April 29, 2008 we announced that our subsidiary China Water had acquired a 49% stake in an equity joint venture inYancheng City, Jiangsu Province, China. The new joint venture company, Yancheng China Water Company, whichpartners China Water with the Municipality of Yancheng, commenced operations on May 1, 2008, for a period of 30 years.In addition to a number of industrial and commercial enterprises, the Yancheng China Water Company provides potablewater services to a residential population of approximately 600,000. Yancheng City is situated on the eastern seaboard ofthe Jiangsu Province, and is approximately 250 miles northeast of Shanghai.

On July 23, 2008 we acquired a 51% stake in an equity joint venture in Zhumadian City, Henan Province, China. The newjoint venture company, Zhumadian China Water Company, partners China Water with the Zhumadian Bangye WaterGroup, and commenced operations on July 23, 2008. The new equity joint venture will complete the construction of anadditional 26 million gallons per day water treatment plant and associated infrastructure representing a total investment ofapproximately $42 million. The Zhumadian China Water Company provides potable water services to a population ofapproximately 400,000 which includes a large number of industrial and commercial users.

Chile (Servicomunal, Servilampa, Aguas Santiago, Aguas Chacabuco and Bayesa/water and wastewater)

We have a number of operations in Chile’s capital, Santiago, and in northern Chile in and around the city of Antofagasta,a city with a population of approximately 350,000. Our pre-existing operations in Santiago supply water and wastewaterservices to a population of approximately 13,000 within both the “urban areas” and the non-urban “expansion areas” ofSantiago. In the “urban areas” we operate through Aguas Santiago S.A., or Aguas Santiago, and in the “expansion areas”we operate through Aguas Chacabuco S.A., or Aguas Chacabuco.

On June 27, 2008 we acquired 100% of the share capital of Servicomunal S.A. and Servilampa S.A. Both companiesprovide water and wastewater services under perpetual regulated concession contracts. Servicomunal S.A., servesapproximately 80,000 people in the Colina district of Santiago and Servilampa S.A., serves approximately 20,000 peoplein the Lampa district of Santiago.

Our operations in northern Chile, which treat the city of Antofagasta’s wastewater and sell the treated effluent to anindustrial user in the mountains outside the city, are operated by Bayesa S.A.

We own 100% of all our Chile based companies and manage them on a consolidated basis through our wholly ownedChilean holding company, Cascal S.A., from its head office in Santiago.

Santiago. The Santiago area comprises officially designated (i) “urban areas,” in which services provided by AguasSantiago, Servicomunal and Servilampa are regulated by the national regulator, the Superintendent of Sanitary

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Services, or SISS, and (ii) “expansion areas” of the city that are designated as non-urban and in which services providedby Aguas Chacabuco are subject to private contracts with the individual housing developments.

Aguas Santiago operates in relatively affluent urban areas in the north eastern part of Santiago pursuant to 8 separatecontracts. Servicomunal and Servilampa operate in urban areas to the north of the capital. In total we have elevencontracts covering operations in the “urban areas” under a perpetual license, which are effectively privatizations, and wehave 15 contracts covering operations in the “expansion areas,” substantially all of which are perpetual. Servicomunal,Servilampa and Aguas Santiago own all of the infrastructure assets used in the provision of their services, and AguasChacabuco owns substantially all of the infrastructure assets used in the provision of its services.

Northern Chile. Bayesa provides wastewater services to the city of Antofagasta, located in northern Chile’s arid miningregion. In 1994, Bayesa entered into a 30-year BOOT contract with ECONSSA, the state-owned company that isresponsible for providing water and wastewater services in this region. During the first years of the contract, Bayesarehabilitated and upgraded a wastewater treatment plant on the Pacific shoreline on the outskirts of the city andconstructed a collector system along the coastal area to connect to this plant. The facilities currently serve the city’spopulation of approximately 350,000.

Under the terms of the BOOT contract, Bayesa has the right to sell Antofagasta’s treated effluent subject to the paymentof a royalty to ECONSSA. It currently sells treated effluent to Xstrata, a global diversified mining company, under a22-year supply agreement it entered into with Xstrata in 2002. Pursuant to this agreement, Bayesa delivers bulk effluentfrom the treatment plant in Antofagasta to Xstrata’s copper smelting plant in La Negra, a largely industrial area locatedinland from Antofagasta beyond the coastal mountains. Bayesa’s obligations under the agreement included arranging forthe plan, design and construction of the pumping and piping infrastructure to transport the treated effluent from thetreatment plant to Xstrata’s facility, located approximately 25 miles away while elevating it from a few feet above sea levelto approximately 2,000 feet above sea level. Unlike most BOOT contracts, Bayesa owns in perpetuity the physical assetsand attendant rights-of-way extending from its treatment plant in Antofagasta up to the boundary of Xstrata’s property.

The agreement has a take-or-pay term obligating Xstrata to purchase from Bayesa at least 685,000 gallons per day oftreated effluent. Bayesa currently supplies Xstrata with up to 2 million gallons per day. In addition, the agreement permitsBayesa to sell any excess capacity from its plant to other customers, subject to the payment of a royalty to Xstrata andsubject to Bayesa’s obligation to maintain certain reserve capacity for Xstrata’s use. To that end Bayesa currently suppliesa total of approximately 306,000 gallons per day of treated effluent to small farms, local businesses and the municipality inthe coastal area of Antofagasta adjacent to the treatment plant.

Panama (Aguas de Panama/water)

We operate in Panama through our wholly owned subsidiary Aguas de Panama, SA, or Aguas de Panama, which weacquired on June 26, 2006 from Biwater. Aguas de Panama entered into a construction period plus 30-year take-or-payBOOT contract in April 1998 with the Instituto de Acueductos y Alcantarillados Nacionales, or IDAAN, Panama’s nationalwater authority. Aguas de Panama has been selling bulk water to IDAAN pursuant to the agreement since theconstruction phase of the project was completed in September 2002.

The service areas supplied are the districts of La Chorrera, Arraijan and Capira located west of the Panama Canal inPanama City. Aguas de Panama delivers bulk potable water to IDAAN’s distribution network, which then distributes thewater to its customers. A population of approximately 300,000 is served by this bulk water. The BOOT agreement has atake-or-pay term that requires IDAAN to purchase a minimum of 20 million gallons of water per day.

During the last two and a half years, APSA has applied for increases to the price payable for the water in accordance withthe applicable escalation formula in the contract. By board resolution dated July 10, 2008, IDAAN resolved to approvethese rate increases and confirmed that it would need to apply to the Panamanian Government for a supplementarybudget in order to be able to settle the associated invoices and that this process would take until December 2008.

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In respect of the period from September 2006 to December 2008, APSA has only received payments in respect of thebase price for the water (excluding rate increases). However, the invoices representing the rate escalation which in totalamount to approximately US$7.1 million, have been formally approved by IDAAN but remain outstanding.

APSA has however received full payment at the contractual price for the water supplied since the start of calendar year2009, which is consistent with the fact that the amounts shown on the unsettled invoices are not in dispute but rather thePanamanian government appears to be delaying payment of the amount in arrears for unspecified reasons. See Item 8“Financial Information — Legal Proceedings” for a summary of the pending arbitration with IDAAN.

The Philippines (Subicwater/water and wastewater)

We conduct our operations in the Philippines through Subic Water & Sewerage Company Inc., or Subicwater, a jointventure with our local partners (i) DMCI Project Developers, Inc., or DMCI, a Filipino construction group, (ii) the Subic BayMetropolitan Authority, or SBMA, a government corporation, and (iii) Olongapo City. We own 30% of Subicwater, DMCIowns 40%, SBMA owns 20% and Olongapo City currently owns 10%.

Subicwater was formed in 1996 to undertake what we believe was the first privatized water and sewerage system projectin The Philippines. In 1996 Subicwater entered into a 25-year concession agreement, pursuant to which Subicwaterleases existing water and wastewater assets from SBMA and Olongapo City. The concession may be extended anadditional 25 years at the option of Subicwater.

We estimate that Subicwater serves a population of approximately 220,000 covering most of the populated areasurrounding Subic Bay, a bay on the west coast of the island of Luzon, about 60 miles northwest of Manila Bay. This areaincludes Olongapo City and the Subic Bay Freeport Zone, an industrial and commercial area that was formerly a U.S.Navy base.

Subicwater has had difficulty in the past in raising rates as a result of disputes with SBMA and Olongapo City, whichreplaced Olongapo City Water District as a shareholder of Subicwater. More recently, most of those disputes have beensubstantially resolved, resulting in significant improvements to Subicwater’s profitability and cash flow. The only remainingdispute is the City’s claim. See Item 8 “Financial Information — Legal Proceedings”.

Recent negotiations resulted in an amendment to the franchise agreement being signed in October 2008. This resulted ina rate increase in December 2008 and there will be automatic inflationary increases in July 2009 and July 2010. Atriennial review has replaced the original annual review and milestones for target shareholders’ returns on equity are setforth in the new agreement.

Subicwater is governed by a seven-person board of directors with three directors appointed by DMCI, two directorsappointed by us and one director appointed by each of SBMA and Olongapo City. Subicwater’s day-to-day operations aremanaged by a Filipino general manager who is also one of our two nominated directors. Major corporate acts, such asmergers or the creation of bonded indebtedness, require unanimous approval by the board of directors and the approvalof the holders of 85% of the outstanding shares of Subicwater.

Seasonality

Demand for water is seasonal. Demand for our water tends to be greater during the drier months at our variousoperations, which in the South Coast area of the United Kingdom are generally the warmer summer months due to theinflux of tourists and increased usage for watering, landscaping, baths, showers and swimming pools. Throughout theyear, demand at our various locations will vary with temperature and rainfall levels. In the event that temperatures duringthe typically warmer months are cooler than normal, or if there is more rainfall than normal, the demand for our water maydecrease, which would adversely affect our revenue. In countries with colder climates at certain times of the year, watermain pipes are more likely to burst, which can lead to loss of supply to customers for periods of time resulting in reducedrevenue and an increase in operating costs as the service problems are remedied.

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Raw materials

Our most significant raw material cost is electricity, which our project companies purchase from local electric utilitiesserving the respective project area, except for our U.K. project company, which may purchase electricity from suppliers ina deregulated market. Other raw materials on which we depend include raw water, which we abstract in accordance withthe provisions of our contracts and applicable regulations, chemicals to treat the water and wastewater, meteringequipment and other materials to support our delivery network such as pipes. With the exception of electricity and our rawwater, substantially all of the raw materials used in our business are available from multiple sources in sufficient qualityand quantity. From time to time, we may experience shortages of electricity or outages that may affect our operations.

Competition

We generally do not compete directly with other water and wastewater companies within our licensed areas because weare typically granted rights of exclusivity to a defined service territory. However, in the United Kingdom five customers inour service territory are eligible to purchase their water from other companies as a result of a change in law that permitscustomers purchasing more than 13.2 million gallons of water per year to choose suppliers. Only one of these fivecustomers is electing to do so.

In the United Kingdom, we periodically bid for the contractual right to supply water to our largest customer to whomBournemouth has provided water since 1956. This customer accounted for 9% of Bournemouth’s revenue for fiscal year2009, and despite being located in another water company’s service territory, we believe its demand cannot be completelysatisfied solely by one water company (whether the other water company or us). In the United Kingdom, we indirectlycompete with other water companies to the extent that the regulator compares our performance with their performances inapproving our price limits during the regulator’s periodic reviews and in reviewing any requests for changes in our ratesbetween regularly scheduled reviews.

In bidding for new projects, we compete with a small number of global companies that operate throughout the world aswell as focused regional firms. The larger companies that we compete with include Veolia Environnement and SuezEnvironnement, which have a significant international presence. Other companies that we compete with include SAUR,Gelsenwasser, RWE, Aqualia and Agbar. In Asia, Salcon, Ranhill and several Singaporean-based companies areentering the market and are becoming active in China.

We compete for new projects and new customer accounts on the basis of price, quality, expertise, reputation, clientconfidence and industry experience.

Government Regulation

General. Water and wastewater service providers are generally subject to regulation by water, environmental and healthand safety regulators. Regulations imposed upon these service providers may relate to, among other things:

• rates, including those applicable to particular types of customers;

• water quality and related customer service standards, including timing, method and collection of payments as well ascomplaint procedures;

• water supply, including standards to meet all reasonable demands for water;

• delivery standards, including water pressure and establishment of new connections;

• waste disposal;

• raw water abstraction, including method, amount and charges;

• the requirement to maintain assets and to ensure that water and wastewater services are not interrupted;

• the provision of water without charge for fire protection and other municipal uses and to consumers who may be entitledto receive water without charge;

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• competition; and

• controls that may apply during droughts.

From time to time, these regulations change or are replaced by different regulations that affect service providers Breachesof these regulations can result in a variety of sanctions, which differ by jurisdiction, including warnings, criminalprosecution, financial penalties, and orders to make emergency improvements. Sanctions may also include a temporaryshutdown, the revocation of the right to operate or the order to sell the business to another service provider.

In addition to regulation by governmental entities, operations of a service provider may also be affected by civic orconsumer advocacy groups. These organizations provide a voice for customers at local and national levels tocommunicate their service priorities and concerns. Although these organizations may lack regulatory or enforcementauthority, they may be influential in achieving service quality and rate improvements for customers.

Rate regulation. The rates that a service provider may charge are typically approved by a government regulator or by themunicipality or city council acting in that capacity. In assessing the viability of a project, a service provider must ensurethat there is an effective framework for adjusting rates to reflect changes in revenue and costs, while the regulator,municipality or city council must ensure that the service provider has the ability to provide services to its customers to therequired standard and does not abuse its position as the exclusive provider of those services. The techniques that havebeen established as a framework to adjust rates fall into two general categories: rate adjustment by formula and by rate ofreturn, as described below.

Rate adjustment by formula. In many projects (particularly BOOT and operation and maintenance projects), theadjustment of rates is controlled by a formula that is documented in the service provider contract or license or inapplicable regulations. The formula provides a mechanism for the service provider to adjust rates to recover changes in itscost base and, because it is based on an agreed formula, rate adjustments are less likely to be challenged or modified bythe regulator or public-sector client.

A rate adjustment formula effectively creates an index of the significant costs (e.g., electricity, labor, chemicals andfinancing costs) weighted in proportion to the total operating costs of the service provider.

Published indices or cost ratios are selected for each cost component to provide the most appropriate adjustmentmechanism. It is typical for the weighting of the cost components in the formula to be reevaluated at intervals of time totake account of significant changes to the costs of the service provider. Typically, rates are adjusted annually under thisapproach, and the rate indices are assessed and re-weighted every five years. For example, our projects in Panama andnorthern Chile are subject to rate adjustment by formula.

Rate adjustment by rate of return. The alternative to rate adjustment by formula is to base the calculation of rates on atargeted rate of return. Under this method, a comprehensive financial model or business plan is prepared initially by theservice provider to reflect the expected cash flows of the project or business over the contract period. The financial modelor plan incorporates the revenue and cost base of the project, including an assumed level of capital expenditures believedto be necessary to achieve specified performance targets and goals and regulatory standards reflected in the model orplan, such as service levels and delivery standards, and calculates the rate adjustment necessary to support the projectand provide for the targeted rate of return. The model or plan is reviewed by the regulator, which may engage third-partiessuch as independent engineering and accounting firms to assist in the review, and typically is discussed between theregulator and service provider before the regulator finally approves the rates. In connection with a new project, it iscommon for the financial model or business plan to be submitted to the client as a part of the bid submission and tobecome part of the contract documentation for the project. Through the life of the project, the model assumptions aresubmitted to the regulatory body responsible for setting rates and these assumptions are used to underpin the regulatoryfinancial model and ultimately produce the rates to be charged over the next regulatory period. For example, our project inIndonesia is subject to rate adjustment by rate of return with yearly reviews and our project in the United Kingdom issubject to rate adjustment by rate of return with five-year reviews (in each case, subject to any interim determination).

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Although these various rate adjustment mechanisms provide a substantial degree of predictability to our future revenuefrom our rate-regulated projects, these mechanisms do not necessarily ensure that we will always fully recover ouroperating costs or capital investments.

Environmental and water quality regulation. In addition to regulation with respect to rates charged to customers, serviceproviders are also subject to various environmental and water quality regulations relating to, among other things, theabstraction of raw water from local sources, the quality of potable water and the discharge of treated wastewater into theenvironment. In the event these standards are not satisfied, regulators may have the ability to reduce rates, imposepenalties, commence legal proceedings, modify or shut down operations or terminate the service provider’s license. Theregulators generally require monitoring and reporting on a regular basis and can make scheduled and unscheduled siteinspections.

Regulation-United Kingdom

Regulators. The Bournemouth operations are subject to regulation principally by Ofwat, which regulates prices of waterand standards of water service; the Environment Agency, which regulates the water environment and water abstractions;and the Drinking Water Inspectorate, which monitors and enforces compliance with statutory drinking water standards andprovides information to the public on drinking water quality. Ofwat is an independent body governed by a board of eightmembers. The Bournemouth operations are also affected by European Union directives, including the Drinking WaterDirective, which identifies standards of water quality for consumption purposes, and the Water Framework Directive, thegoal of which is to balance environmental, social and economic needs across all inland and coastal waters. Both of thesedirectives have been enacted in the United Kingdom. Bournemouth does not anticipate that it will be materially affected bythe implementation of these directives in the United Kingdom in the near future because it already meets most of thedrinking water standards and the enhanced Water Framework Directive standards do not place significant burdens onwater companies. The environmental systems that Bournemouth has in place are designed to comply with all currentrelevant requirements of both the European Union and the United Kingdom.

The economic aspects of the water industry in England and Wales are principally regulated by Ofwat under the provisionsof the U.K.’s Water Industry Act 1991. Ofwat’s primary duty is to ensure the “financeability” of the companies it regulates,allowing companies a projected rate of return sufficient, for an efficient company, to finance their operations and attractthe capital necessary for investments in infrastructure required to meet environmental and other regulatory standards.

Rates. As a service provider, Bournemouth is subject to comprehensive review of its operations by Ofwat every five years,at the conclusion of which Ofwat determines price limits for the following five-year period under a “rate of return”methodology. Bournemouth’s rates are set at these periodic reviews and may also be adjusted at interim reviews thatBournemouth or Ofwat may initiate under certain circumstances. If Bournemouth is not satisfied with the outcome of therate determination process, it can appeal Ofwat’s determination to the U.K.’s Competition Commission.

The most recent Ofwat review occurred in late 2004, when Ofwat awarded Bournemouth an average annual rate increaseof 3.1% above inflation for fiscal years 2006 through 2010, with rate changes of 15.9%, 2.2% and 1.6% above inflation infiscal years 2006, 2007 and 2008, respectively, followed by rate changes of 0.6% and 2.4% below inflation in fiscal years2009 and 2010. The relatively large increase allowed for in fiscal year 2006 reflects changes in Bournemouth’s operatingcosts, principally increases in the cost of energy, local taxes, abstraction charges, pension costs and an increase in theallowed rate of return for this review period. The process for the next review started in the second half of 2008 whenBournemouth submitted to OFWAT a draft business plan for the fiscal years 2011 through 2015. Following commentsfrom Ofwat, customer representative bodies and other stakeholders, Bournemouth has submitted a final business plan toOfwat in April 2009. Ofwat is scheduled to publish a draft determination of the rate adjustments in July 2009.Bournemouth and other stakeholders can make representations to Ofwat on the draft determination and then Ofwat willpublish its final determination in November 2009 which will be implemented effective April 1, 2010.

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In fiscal year 2009, Bournemouth’s rates were 13% below the national average, and Bournemouth’s rates are expected tobe 17% below the national average for fiscal year 2010. Bournemouth believes that its ability to keep operating expensesbelow industry averages is an important and positive factor in the Ofwat review process.

Bournemouth’s rate of return in any particular period may vary from the expected rate of return based upon its ability tomanage costs while achieving performance targets. These fluctuations from the expected rate of return will be taken intoaccount during the next periodic review and may also be factored into any interim determination. For example, ifBournemouth is able to meet its performance targets without spending the amount that was assumed to be necessary tospend on capital expenditures to achieve these targets, then Bournemouth may realize a higher rate for that particularperiod. However, Bournemouth could be adversely affected in the next rate review due to the resulting lower regulatedasset value, which is a key component used to calculate the new rates.

In addition to periodic reviews, either Ofwat or Bournemouth may call for an interim review of its rates under certaincircumstances and the license sets forth a detailed formula for calculating the allowable amounts in this situation. Thereare two different types of interim determinations. First, Bournemouth may seek an interim rate adjustment if it isunderperforming its projected five-year rate of return due to certain factors that are identified by the regulator, whichcurrently include items such as bad debt, inaccurate assumptions relating to the effects of metering, changes in law (suchas the Traffic Management Act, which may require service providers to pay local governments for access to work oninfrastructure beneath highways) or abstraction charges. Second, Bournemouth may seek a rate adjustment through a“substantial effects” clause in its license, which permits rate modification due to significant changes in revenue or costsbeyond management’s direct control. The latter type of adjustment is subject to a higher threshold of materiality in orderfor a service provider to be able to seek a rate adjustment. As part of these interim reviews, Ofwat may offset proposedincreases in the rates based on other performance factors.

Although all of Bournemouth’s rates are set using the same basic approval process, rates are calculated separately fordifferent classes of customers. Currently, approximately 49% of Bournemouth’s domestic customers do not have metersinstalled in their homes, while the balance receive metered water. A customer in the former group will receive billscalculated on the historic ratable value of the customer’s property, while a customer in the latter group will receive a billcalculated based on the customer’s metered water usage.

As mentioned above, Bournemouth is subject to environmental regulation, including with respect to the abstraction ofwater. In 2002, Bournemouth began to conduct studies in response to concerns that its abstractions from the River Avoncould have a detrimental effect on the river’s salmon population and other species and habitats. The findings of the initialstudies were inconclusive, so Bournemouth has agreed with the Environment Agency and English Nature, the U.K.government agency that promotes the conservation of wildlife and the environment, to continue the studies into thecurrent rate review period of fiscal years 2006 to 2010. Although the River Avon is Bournemouth’s primary water source,accounting for approximately 86% of the raw water it currently abstracts, and material limitations on its right to abstractwater from the River Avon would require it to develop alternative water supplies, Bournemouth does not believe that itswater operations will be materially affected in the near future as a result of these studies.

Regulatory Outlook. Ofwat has stated its desire to increase competition among water companies throughout England andWales. As an example, since December 2005, consumers of water in excess of 13.2 million gallons per year are nowpermitted to purchase water from other suppliers. Although five customers within Bournemouth’s service area meet thiscriterion, only one of these customers is electing to do so. However, we cannot give any assurances as to how this andother policies aimed at increasing competition could affect us in the future. In March 2007, Ofwat announced a review ofits policies regarding competition because it has not been satisfied with the pace of change following the change in itsrules in December 2005, and in July 2007 Ofwat issued a paper soliciting public comment on measures that could betaken to attempt to enhance competition. These measures include adopting a new access pricing system that betterreflects the costs of access to the existing distribution network for new companies entering the market and recommendinga significant one-off reduction in the current eligibility threshold of 13.2 million gallons of water per year. The Ofwat paperalso considers major changes to the industry by separating the different parts of water supply services to open them up tocompetition (e.g. separating water treatment and distribution), by extending competition to household customers, and byextending competition in the production and abstraction of water.

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In February 2008 the U.K. Government commissioned Professor Martin Cave to undertake a review of competition andinnovation in water markets in England and Wales. Professor Cave’s final report about competition and innovation inwater markets in the U.K. contains a number of recommendations for the U.K. water industry.

His proposals for competition in upstream markets (abstraction and discharge rights) could have a significant effect on thelong-term structure of the U.K. water industry, as could his proposals on separating the retail distribution business fromthe water network business.

The U.K. government is expected to issue a consultation document on a package of competition measures before thesummer recess in 2009 to allow enabling legislation to be included in the final Floods and Water Management Bill. Wecannot predict whether legislation containing these provisions will be enacted, and if so what effect the legislation willhave on our business.

Regulation — South Africa

Regulators. Our South African operations are subject to regulation principally by the local municipality (MLM forSilulumanzi and IDM for Siza Water), which is permitted to contract water and wastewater services to a private-sectorprovider; DWAF, which is responsible for establishing public policy regarding South Africa’s water and forestry resourcesand has primary responsibility for water services policy; and the Department of Provincial and Local Government, whichdevelops and monitors implementation of national policies and legislation with respect to provinces and local government.

Rates for Silulumanzi. Rate revisions occur at five-year intervals, and MLM formally approves the revised rates under a“rate of return” methodology in accordance with procedures set forth in the concession agreement. Between five-yearreviews, rates are adjusted annually in accordance with an escalation formula based on costs and specified in thecontract. In addition to five-year reviews and annual escalations, the rates must be renegotiated if certain contingenciesoccur, such as material government action, drought or other events beyond our control. In limited cases, such as anincrease in the price of water supplied by MLM, Silulumanzi may be able to raise rates immediately and unilaterally,provided that it substantiates the need for the rate increase with expert analyses and reports.

The concession agreement requires Silulumanzi and MLM to seek ways in which future capital expenditures or operatingcosts of Silulumanzi can be reduced in order to minimize future rate increases for disadvantaged customers, withoutprejudice to Silulumanzi’s returns. Consistent with those principles, MLM is currently providing to Silulumanzi operationaland capital investment grants funded by the national government to subsidize the cost of providing water and wastewaterservices to disadvantaged customers.

MLM and Silulumanzi have entered into two supplementary agreements since the concession began. The firstsupplementary agreement, which was signed in August 2003, reduced the annual lease payments for the concessionassets, the concession fee and certain electricity charges payable by Silulumanzi and increased the grants Silulumanzireceives. These changes were designed to compensate Silulumanzi for lost revenue associated with the ministerial order,which entitled each domestic customer to receive the first approximately 1,600 gallons of water per month free of charge.The second supplementary agreement, which was signed in May 2005, memorialized the results of the first five-yearperiodic review. The agreement further reduced Silulumanzi’s lease payments for the concession assets and furtherincreased the grants to Silulumanzi, which MLM provides through funding from the national government. The agreementalso included an approximately 15% increase in average rates in January 2005, followed by additional annual rateincreases of 3% plus inflation in July of each year for the balance of the current five-year period. These changes weredesigned to help fund the additional capital expenditures and enhanced service performance levels to which Silulumanziconsented at the review. Silulumanzi’s next five-year periodic review is scheduled for late 2009, with new rates to beeffective in July 2010.

We believe that Silulumanzi’s rate structure results, at most water consumption levels, in a lower monthly charge than thecomparable water companies in South Africa used to benchmark our rates.

Rates for Siza Water. Siza Water’s rates are adjusted annually in accordance with an escalation formula specified in thecontract. The concession agreement provides for a review of rates every five years to account for changes and

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future developments and provides for IDM to approve revised rates under a “rate of return” methodology. The most recentfive-year rate review occurred in 2004, and resulted in a new investment plan and some revision to the rate structure withno effect on the company’s revenue. A five-year rate review is currently taking place.

Regulatory Outlook. We are not aware of any regulatory changes that will have a material effect on our South Africanoperations in the near future.

Regulation -Indonesia

Regulators. ATB’s operations are subject to regulation principally by BIDA, which was established by the nationalgovernment to manage the overall development of Batam Island. BIDA’s primary duty in respect of water is to manage theraw water catchment areas and to ensure through ATB the supply of potable water to Batam Island. In 2005, BPPSPAMwas established as a national advisory agency of the Indonesian government to oversee the water industry.

Rates. ATB’s rates are based on a rate of return methodology. ATB is subject to an annual review of its operations andsubmits annual financial statements and a long-term business plan to BIDA. In recent years, the local mayor andparliament have also been consulted in the establishment of applicable rates. ATB’s rates differentiate significantlybetween categories of customers, with non-residential rates being higher than residential rates. In the event that wecannot agree on the rates, an expert may be appointed to resolve the dispute, followed by arbitration under the Board ofIndonesian National Arbitration. As part of its rate structure, ATB pays to BIDA raw water abstraction fees, lease fees forthe use of the assets and a concession fee calculated as 15% of ATB’s dividend paid to its shareholders for the previousyear. After significant delays, the rate application has been reviewed by BPPSPAM and approved by BIDA afterconsultation with PEMKO, the elected local government on Batam Island.

Regulatory Outlook. Batam Island was legally declared a Free Trade Zone in late 2008. BIDA will be restructured andrenamed to reflect the Free Trade Zone status of Batam but its authority and responsibility with respect to the regulation ofATB and development of Batam infrastructure are not expected to change. Recently ATB and BIDA have agreed to begina process to review the concession contract, which provides that any successor to BIDA will be bound by the terms of theagreement, to determine what changes (if any) will be required to reflect the proposed restructuring of BIDA. We cannotpredict what effect, if any, it will have on ATB’s operations.

Regulation -China

Regulators. China Water is principally subject to regulation by SEPA, the State Environmental Protection Administration ofChina, through its provincial or city bureaus, with respect to water quality; the Urban Water Supply Pricing AdministrativeMeasures issued by the State Development and Reform Commission (SDRC), with respect to the pricing of water supply;and the Ministry of Construction with respect to construction activity.

Rates. The underlying methodology that determines the rates for the Chinese projects and by which the initial rates wereset is a rate of return methodology. These initial rates are then subsequently adjusted by formula. Either party has theoption to pursue the rebasing of the rates using the rate of return methodology with any subsequent adjustments againbeing made by formula.

The adjustments by formula are achieved by making an application to the Price Bureau, the local institution controllingprices under the SDRC, in the city where the project is located. The application for a rate adjustment and the subsequentregulatory process recognizes the changes in the service provider’s operating costs and also the capital expenditures thatit needs to incur. Most projects in China do not specify the intervals that must elapse between applications for a rateadjustment.

Regulatory Outlook. We are not aware of any regulatory changes that will have a material effect on our China operationsin the near future.

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Regulation-Chile

Regulators. The operations of Servicomunal, Servilampa and Aguas Santiago are principally subject to regulation bySISS, whose main function is to set rates for the provision of water and wastewater services, monitor compliance withapplicable law and ensure that environmental regulations relating to the treatment of wastewater are satisfied. SISS seeksto ensure that the drinking water is provided to residents (i) at or above the requisite quality levels, (ii) in sufficient quantityand (iii) at rates that are appropriate and sustainable in the long-term. Aguas Chacabuco and Bayesa are regulated by theterms of their contracts with their customers. All our businesses are also subject to environmental monitoring by CONAMA(La Comisión Nacional del Medio Ambiente), the national environmental agency and to water quality monitoring byServicio Nacional de Salud, the public health body.

Rates in Santiago. The operations of Servicomunal, Servilampa and Aguas Santiago are subject to a review of ratesevery five years by SISS on the basis of a “rate of return” methodology. The results of the rate review for our recentlyacquired businesses, Servicomunal and Servilampa, was announced on March 2, 2009. Servicomunal has been awardeda 5% rate increase with effect from June 2009. This will be followed by a further 6% real rate increase at the end of 2010,following the construction of a new wastewater treatment plant. Servilampa has been awarded a 10% rate increase witheffect from June 2009. Servicomunal, Servilampa and Aguas Santiago may automatically increase or decrease ratesbetween five-year rate reviews to recover interim changes in costs of greater than 3%, based on an agreed indexationpolynomial. Changes in costs are measured by changes in consumer and wholesale price indices. The rates for theoperations of Aguas Chacabuco are not regulated by SISS. Rates for these operations are established by contract andare subject to an escalation formula based on inflation plus, depending on the contract, up to an additional 8% every threeyears.

Rates in Antofagasta. The rates Bayesa charges in these projects are specified by contract and are adjusted on the basisof a formula methodology. In the 30-year BOOT contract with ECONSSA, the rates are denominated in Unidad deFomento, which is a specific Chilean currency principally used for business transactions that is designed to eliminate theeffect of inflation, and in the BOOT contract with Xstrata, the rates are denominated in U.S. Dollars with an index linked tochanges in consumer and wholesale price indices as well as power costs due to the high level of pumping involved.

Regulatory Outlook. We are not aware of any regulatory changes that will have a material effect on our Chilean operationsin the near future.

Regulation-Panama

Regulators. Aguas de Panama is principally subject to regulation by IDAAN regarding rates and water quality. IDAAN isthe state-owned water company responsible for countrywide water supply and, in particular, for improving the availabilityof water, strengthening the distribution system and maintaining the existing infrastructure with the flexibility to engage incontracts with private water suppliers.

Rates. The agreement with IDAAN applies a “rate adjustment by formula” methodology. The contract provides for anincrease in rates according to a specific contractual formula that takes account of the operating costs, including interestcosts, of Aguas de Panama. The unit sale price of the water delivered is the price initially proposed in the contract for theproject, as adjusted by this formula. See Item 4B “Information on the Company — Business Overview — Panama (Aguasde Panama/Water)” for a summary of APSA’s applications for price increases.

Either party to the agreement may request an adjustment to the unit sale price of water if a change in one or morevariable costs would result in a change in the unit sale price of at least 3% under the formula. In addition, Aguas dePanama may request a revision as a result of changes in either the quality of raw water or the regulations governing thequality of the treated water.

Between June 2004 and October 2007, we have received monthly invoices from the Panama Canal Authority (ACP), thegovernmental body responsible for the administration, maintenance, use and conservation of the Panama Canal basin’swater resources. These invoices purportedly represent charges for our abstraction of raw water. As of March 31, 2009,the aggregate amount claimed by ACP under these invoices is approximately $0.9 million, including interest. The lastinvoice received was dated October 2007 and the last account statement received was dated September 2007. Since thatdate, we have not received any further invoices or account statements. We have not paid these invoices because we donot believe ACP has the authority to determine these rates unilaterally. ACP has

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not pursued collection of the invoices, and if ACP pursues collection we intend to defend its claim vigorously, and if we donot prevail we intend to seek a rate adjustment from IDAAN to cover these costs.

The 30-year agreement provides Aguas de Panama with the option, which must be exercised one year prior to the end ofthe term, to renew the agreement for an additional term of 10 years if an agreement is reached as to the unit sale price ofwater for the extended term. See Item 8 “Financial Information — Legal Proceedings — Arbitration with IDAAN —Panama” for a summary of the arbitration proceedings to commence in respect of IDAAN’s invocation of the contractualprovision for early termination of the concession contract in Panama.

Regulatory outlook. We are not aware of any regulatory changes that will have a material effect on Aguas de Panama’soperations in the near future.

Regulation-The Philippines

Regulators. Subicwater’s operations are subject to regulation principally by SBWRB, appointed in 2001 to replace theoriginal regulator SBMA. Subicwater also has to comply with national legislation regarding water abstraction, which ismonitored by the National Water Resources Board, and environmental approvals, which are subject to regulation by theDepartment of Environment and Natural Resources.

Rates. Subicwater’s rates are adjusted based on a rate of return methodology with an annual review of rates. Following itsappointment in 2001, SBWRB approved a staggered rate increase of 55%, in part to mitigate the effect of earlier years inwhich no rate increases were approved. This increase raised the average price of water for a domestic customer from 9Pesos to 14 Pesos per 1,000 liters. Further increases were granted in 2003 and 2004 as part of the changes to theconcession contract in 2004, bringing the average price of water for a domestic customer to 20 Pesos per 1,000 liters. InJuly 2006, SBWRB approved an average rate increase of 9% but SBMA opposed this decision. The matter went toadjudication as provided for under the concession agreement, and in January 2007 the adjudicator reinstated the 9% rateincrease. The 2007 rate application was denied by the regulator. Since then we have agreed to some changes to theconcession agreement. The concession agreement now provides for a detailed contract review with public hearings everythree years, which led to an increase of 8.4% from October 1, 2008, together with automatic increases from July 1 in thefollowing two years.

Regulatory Outlook. We are not aware of any regulatory changes that will have a material effect on Subicwater’soperations in the near future.

Patents and Proprietary Technology

Biwater and Cascal have entered into reciprocal license agreements that grant a worldwide royalty-free license to use thename and related trademarks of the other party until such time as Biwater owns less than 15% of the issued sharedcapital of Cascal. Under each license agreement, the respective licensee has undertaken the usual and customaryobligations of a licensee with respect to the use of the name and trademarks, including indemnification for losses anddamages arising out of use of the name or trademarks.

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C. Organizational Structure

Corporate Structure

Cascal N.V. is a holding company with no business operations of its own. Cascal N.V.’s operating subsidiaries are eitherdirectly owned or indirectly owned through intermediate holding companies. The following table identifies the companiesthat are either directly or indirectly owned by Cascal N.V. together with their domicile and proportion of issued capital heldas at the date of filing this annual report. Proportion of issuedCompany Domicile capital heldBWH Investments BV The Netherlands 100%(23)BWH Holdings (South Africa) BV The Netherlands 100%(23)Cascal Holdings Limited United Kingdom 100%(24)Cascal Investment Limited United Kingdom 100%(1)Cascal Services Ltd United Kingdom 100%BWS Finance Ltd United Kingdom 100%Cascal Ltd United Kingdom 100%(21)Bournemouth & West Hampshire Water Group Ltd United Kingdom 100%Bournemouth & West Hampshire Holdings Ltd United Kingdom 100%Bournemouth & West Hampshire Water Plc United Kingdom 100%Bournemouth Water Plc United Kingdom 99%(2)West Hampshire Water Plc United Kingdom 99%(3)Bournemouth Water Ltd United Kingdom 100%West Hampshire Water Ltd United Kingdom 100%Bournemouth & West Hampshire Enterprise Limited United Kingdom 100%Mill Stream Insurance Limited United Kingdom 100%Aquacare (BWHW) Ltd United Kingdom 100%(22)Pre-Heat Limited United Kingdom 100%(4)Cascal Investments (China) Limited United Kingdom 100%(28)Cascal (Chile) S.A. Chile 100%(5)Aguas Santiago S.A. Chile 100%(5)Servicios y Construcciones Biwater S.A. Chile 100%(5)Inversiones Libardon S.A. Chile 100%(5)Aguas Chacabuco S.A. Chile 100%(5)Aguas de Quetena S.A. Chile 100%(5)Bayesa S.A. Chile 100%(5)Cascal BV (Chile) Limitada Chile 100%(5)(6)Inversiones Cascal S.A. Chile 100%(5)Inversiones Aguas del Sur Limitada Chile 100%(5)Aguas de la Portada S.A. Chile 100%(5)(6)Servicomunal S.A. Chile 100%(5)(25)Servilampa S.A. Chile 100%(5)(25)Belize Water Services Ltd Belize 83%(7)Biwater Ingeniera y Proyectos S.A. de C.V. Mexico 100%(5)(8)Agua Mexicana y Operaciones S.A. de C.V. Mexico 100%(5)(8)Cascal Operations (Pty) Limited South Africa 100%The Greater Nelspruit Utility Company (Pty) Ltd South Africa 100%(10)Siza Water Company (Proprietary) Limited South Africa 73.42%(11)P.T. Adhya Tirta Batam Indonesia 50%(5)(9)P.T. Adhya Tirta Sriwijaya Indonesia 40%(5)(9)Subic Water & Sewerage Company Inc. Philippines 30%(9)Aguas de Panama, S.A. Panama 100%(1)The China Water Company Limited Cayman Islands 87%(12)The China Water Company (Xinmin) Limited British Virgin Islands 87%(12)(13)The China Water Company (Yanjiao) Limited British Virgin Islands 87%(12)(13)(18)The China Water Company (Qitaihe) Limited British Virgin Islands 87%(12)(13)The China Water Company (Fuzhou) Limited British Virgin Islands 87%(12)(13)(18)The China Water Company (Mauritius) Limited Mauritius 87%(12)(13)(18)CWC Water Management Company Limited British Virgin Islands 87%(12)(13)(18)China Water Company (Fuzhou) Limited Hong Kong 87%(13)China Water Company (Yanjiao) Limited Hong Kong 87%(13)China Water Company (Zhumadian) limited Hong Kong 87%(13)China Water Company (Yancheng) Limited Hong Kong 87%(13)Fuzhou CWC Water Company Limited People’s Republic of China 62.64%(12)(14)(Shenyang) Xinmin CWC Water Company Limited People’s Republic of China 79.09%(12)(15)


Sanhe Yanjiao CWC Water Company Limited People’s Republic of China 82.08%(12)(16)Qitaihe CWC Water Company Limited People’s Republic of China 79.09%(12)(17)Yancheng China Water Company Limited People’s Republic of China 42.63%(9)(19)(20)Zhumadian China Water Company Limited People’s Republic of China 44.37%(26)(27)

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(2) Company changed name to Alderney Water Plc in January 2006 and was dissolved in February 2006.

(3) Company changed name to Knapp Mill Water Plc in January 2006 and was dissolved in February 2006.

(4) Acquired on February 1, 2007.

(5) Indicates a December 31 reporting date has been used for consolidation into our March 31 results, and hence theresults of these companies are incorporated with a three-month lag.

(6) Companies were dissolved in November 2004.

(7) Interests were divested in October 2005.

(8) Operations were terminated in January 2008.

(9) Jointly controlled entities, reported in these financial statements under the proportional consolidation method.

(10) Includes a 52% interest owned by Cascal Operations (Pty) Limited.

(11) Acquired on May 3, 2007.

(12) Acquired on November 15, 2006.

(13) 100% of issued capital held by The China Water Company Limited.

(14) 72% of issued capital held by The China Water Company (Fuzhou) Limited.

(15) 90.91% of issued capital held by The China Water Company (Xinmin) Limited.

(16) 94.34% of issued capital held by The China Water Company (Yanjiao) Limited.

(17) 90.91% of issued capital held by The China Water Company (Qitaihe) Limited.

(18) In the process of being dissolved/wound up.

(19) Acquired on April 29, 2008.

(20) 49% of issued share capital held by China Water Company (Yancheng) Limited.

(21) Company changed its name from Biwater Capital plc to Cascal Plc on September 26, 2007. Re-registered as CascalLimited on April 21, 2009.

(22) Company formed on March 4, 2008.

(23) Companies liquidated on March 31, 2009.

(24) Company formed on September 25, 2009.

(25) Acquired on June 27, 2008.

(26) Acquired on July 23, 2008.

(27) 51% of issued share capital held by China Water Company (Zhumadian) Limited.

(28) Company formed on May 5, 2009.

D. Property, plants and equipment

Our main property, plants and equipment are the facilities and infrastructure used to perform the water and wastewateractivities described in Item 4 “Information on the Company — Business Overview” which also describes the environmentalissues that may affect our utilization of the assets. Financial information on our assets including assets held under lease,in the course of construction and properties encumbered by mortgage is shown in Note 6 “Tangible fixed assets” to ourconsolidated financial statements. A summary of the facilities by each major geographical operation is outlined below.

United Kingdom (Bournemouth & West Hampshire Water/water)

• Facilities: Seven water treatment facilities and 20 service reservoirs providing short-term local storage with a totalcapacity of approximately 54 million gallons.

• Delivery network: Approximately 1,700 miles of underground pipes, with approximately 194,000 connections over anarea of approximately 400 square miles.

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South Africa (Silulumanzi /water and wastewater)

• Water facilities: Three water treatment facilities plus 52 service reservoirs that provide short-term local water storagewith a total capacity of approximately 32 million gallons. Silulumanzi also purchases bulk treated water from MLM toservice some of the township and peri-urban areas.

• Wastewater facilities: Four wastewater treatment facilities with a total capacity of approximately 11 million gallons perday.

• Delivery network: Approximately 520 miles of underground water pipes, with approximately 61,000 connections over anarea of approximately 55 square miles, and approximately 340 miles of wastewater pipes.

South Africa (Siza Water/water and wastewater)

• Delivery network: Approximately 110 miles of potable water transmission and distribution pipes, together with fivepumping stations.

• Wastewater facilities: Two wastewater treatment facilities, with a total capacity of approximately four million gallons perday.

• Wastewater network: Approximately 75 miles of sewer with 20 pumping stations.

Indonesia (ATB and ATS/water)

• Facilities: Seven water treatment facilities, plus 13 service reservoirs providing short-term local water storage with atotal capacity of 9.5 million gallons.

• Delivery network: Approximately 430 miles of underground pipes, with approximately 145,000 connections over an areaof 160 square miles. Since 2003, ATB has averaged over 1,000 new connections per month.

China (Zhumadian, Yancheng, Fuzhou, Yanjiao, Qitaihe and Xinmin/water)

• Delivery network: The concession in Fuzhou has approximately 60 miles of distribution network. Yancheng hasapproximately 180 miles of delivery network. Network assets related to the operations in the other three cities areowned by the local municipalities. Zhumadian has 83 miles of distribution network.

• Water facilities: Yancheng has three water treatment facilities with a total capacity of approximately 52 million gallonsper day. Zhumadian has two water treatment facilities with a total capacity of approximately 48 million gallons per day.Fuzhou and Yanjiao both operate two water treatment facilities while Qitaihe and Xinmin have one each.

Chile (Servicomunal, Servilampa, Aguas Santiago, Aguas Chacabuco and Bayesa/water and wastewater)

• Water facilities: Relies exclusively on boreholes in high quality underground aquifers needing minimal treatment.

• Water delivery network: As the boreholes are generally relatively close to the customers, these networks consistgenerally of short length, medium to small diameter pipework and pumping stations.

• Wastewater facilities: Approximately 30% of the wastewater we collect is treated by small local treatment plants ownedby us and approximately 70% is routed to an established treatment plant in an adjacent concession area and is treatedfor us on a subcontract basis. In the case of Servicomunal we operate aerated lagoons for treating the sewage of thetown of Colina.

Panama (Aguas de Panama/water)

• Facilities: Single potable water treatment facility at Laguna Alta, with a treated water storage tank and a gravity pipelinefrom this plant that connects into the IDAAN distribution system.

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• Delivery: The treated water is delivered to IDAAN at a measuring and quality monitoring station locatedapproximately 6 miles from the treatment plant.

The Philippines (Subicwater/water and wastewater)

• Water facilities: Four water treatment facilities plus 25 service reservoirs providing short-term local water storage witha total capacity of 10.6 million gallons.

• Water network: Approximately 220 miles of transmission and distribution pipes with approximately 32,000 watersupply connections over an area of approximately 70 square miles.

• Wastewater facilities: Five wastewater treatment facilities.

• Wastewater network: Approximately 50 miles of sewer, with 25 pumping stations.

The nature of our business means there is an ongoing level of expansion, improvement or upgrading of property, plantsand equipment, particularly in respect of infrastructure to ensure that our projects can continue to deliver high qualitywater and wastewater services especially in areas with substantial population growth. In addition there are alsooccasional projects to deliver significant capacity expansion of water and/or wastewater facilities. For instance on May 28,2008 we announced that our 50% joint venture in Indonesia was making an additional $6 million investment to constructan additional module at its water treatment plant at Duriangkang, located on Batam Island. This new construction is thethird stage in the development of an integrated Duriangkang potable water system and follows the completion of the firsttwo modules built in 2001 and 2004. The new module has a capacity of 11.5 million gallons per day, sufficient to serve apopulation of almost 200,000, and commenced operations in mid-2009. Our subsidiary serving the city of Zhumadian,China has recently completed the construction of a new water treatment plant, and associated infrastructure, with acapacity of 26 million gallons per day.

Item 4A. Unresolved Staff Comments

Not applicable.

Item 5. Operating and Financial Review and Prospects

A. Operating results

The following discussion contains forward looking statements that are based upon our current expectations and is relatedto future events and our future financial performance, which involve risks and uncertainties. Our actual results and thetiming of events could differ materially from those anticipated in these forward looking statements as a result of manyfactors, including those set forth under Item 3 “Key Information — Risk Factors” and “Forward-looking statements”.

The following discussion contains information about our results of operations, financial condition, liquidity and capitalresources that we have prepared in accordance with Dutch GAAP. For a discussion of the differences between U.S.GAAP and Dutch GAAP as well as a reconciliation of our results in Dutch GAAP to U.S. GAAP, see “Reconciliation ofDutch GAAP to U.S. GAAP” below and Note 28 “Summary of differences between accounting policies generally acceptedin The Netherlands and in the United States of America” to our consolidated financial statements.

Overview

We provide water and wastewater services to our customers in seven countries: the United Kingdom, South Africa,Indonesia, China, Chile, Panama and The Philippines. In a typical water project, we collect raw water from surface andgroundwater sources, treat the water to meet the required quality standards and supply the treated water through adistribution network to our customers’ premises. In a typical wastewater project, we collect the wastewater from ourcustomers’ premises, treat the wastewater to meet the required standards and return the treated water to the

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environment. We provide these services under long-term contracts or licenses that typically give us the exclusive right toprovide our services within a defined territory. Our customers are predominantly homes and businesses representing atotal population of approximately 4.3 million.

Factors affecting our results of operations

The principal factors that affect our results of operations include:

• Global financial crisis. A majority of the countries in which we operate have observed some slowing down in the rateof growth of their economies as a result of the financial crisis. This has had a limited effect on our results for fiscalyear 2009 through a combination of lower demand from some of our industrial consumers and some lengthening ofthe working capital cycle as a small proportion of customers take longer to settle their water charges.

• Rates. The rates we charge our customers for water and wastewater services are calculated using either a formulaor on a rate of return basis, depending on the project. The methodology used to fix and adjust rates is set forth in thelong-term contract or license governing each of our operations and may also be subject to external regulation. Thecontracts or licenses and applicable regulations generally also set out the procedures for periodic or interim reviewsof the rates that we charge our customers. Rate reviews may result in either increases or decreases in the rates wecharge. For our regulated businesses in the United Kingdom, South Africa and Chile, our rates are generally set inadvance for the next five-year period, subject to possible changes through interim reviews. In specific circumstances,interim determinations have been granted by the U.K. regulator when water companies’ input costs or revenue havevaried by an unusually high amount during the five-year review period. If the conclusion of the rate review process isdelayed, we may not achieve the revenue we anticipate in any particular period.

• Volume. Approximately 70% of our revenue in fiscal year 2009 was derived from customers whose invoices werebased upon the volume of water consumed and, where relevant, the wastewater discharged for treatment. Thebalance of our revenue was not dependent upon volume but was principally based on the rateable value of thecustomers’ properties. There is a relationship between population growth and demand for water and wastewaterservices, so when population increases or decreases in one of our service areas then demand will generally increaseor decrease. Demand for water and wastewater services is similarly influenced by macroeconomic factors such asrising standards of living, level of economic activity and urbanization. Demand also fluctuates due to seasonalinfluences, typically decreasing during the wetter times of the year and increasing during the drier times of the year.Therefore, demand may increase or decrease relative to historical averages when traditional weather patternsdeviate from their historical cycles.

• Electricity. The base operating costs of our business are largely fixed and substantially predictable from one period tothe next. We are, however, a large consumer of electrical power, which is used to operate our treatment plants andpumping stations. Accordingly, our operating costs increase when prices of electricity for industrial users increase. Ingeneral, we must wait until the next regulatory rate review before being able to pass on some, or all, of this increasedcost to our customers.

• Regulatory changes. The provision of water and wastewater services is subject to substantial regulation. Asdiscussed above, regulations limit the rates we may charge our customers and prescribe the conditions under whichrates may be increased or decreased. Because our results of operations depend substantially on the rates that wecharge our customers for water and wastewater services, changes in the regulations governing these rates mayaffect our results. Our operations are also subject to environmental and health and safety regulations, such asregulations governing the quality of the drinking water that we supply to our customers and the regulations governingthe treated wastewater that we discharge into the environment. Compliance with these regulations imposes costs onour operations, and changes in these regulations can substantially increase or decrease these costs.

• Acquisitions and dispositions. Our portfolio of projects may change as we acquire or develop new projects or disposeof others. These changes affect the comparability of our results of operations from period to period. Failure to acquireor develop new projects would limit our future growth.

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• Currency exchange. We report our financial results in U.S. Dollars but conduct substantially all of our business in thelocal currencies of the countries in which we operate. The assets and liabilities of our operations are translated at therate of exchange prevailing at the respective fiscal year ended March 31. Exchange differences resulting fromsettlement and translation of monetary assets and liabilities are charged or credited to the exchange rate results inthe statement of income. Revenue and expenses are recognized at the average rate for the year. Therefore, ourreported results of operations are affected by translation risk due to fluctuations in currency exchange rates. SeeNote 2 “Accounting policies” to our consolidated financial statements. For a table that provides the period-end andaverage exchange rates for our local currencies against one U.S. Dollar, see Note 4 “Exchange rates” to ourconsolidated financial statements.

More detail on the factors affecting our business on a project-specific basis is provided below.

• United Kingdom. Our U.K. operations are affected by the increased demand during the summer months arising fromthe influx of tourists to the coastal resort town of Bournemouth and surrounding areas.

Our U.K. results of operations are also subject to costs associated with the provision of defined benefit pensions tomost of our U.K. employees, together with former employees and pensioners. The accounting expense recorded forproviding these benefits is determined by a professionally qualified independent actuary and relies on the interactionof several key assumptions, some of which are highly susceptible to macroeconomic influences such as interestrates. See Note 13 “Provisions & deferred revenue” to our consolidated financial statements.

Operating results in the United Kingdom are also dependent on the conclusions of the periodic review process of theU.K. regulator. The most recent periodic rate review in the United Kingdom occurred in late 2004, when Ofwatapproved an average annual rate increase of 3.1% above inflation for fiscal years 2006 through 2010, with ratechanges of 15.9%, 2.2% and 1.6% above inflation in fiscal years 2006, 2007 and 2008 respectively, followed by ratechanges of 0.6% and 2.4% below inflation in fiscal years 2009 and 2010. The process for the next review started inthe second half of 2008 when Bournemouth submitted to OFWAT a Draft Business Plan for the fiscal years 2011through 2015. Following comments from Ofwat, customer representative bodies and other stakeholders,Bournemouth submitted a Final Business Plan to Ofwat in April 2009. Ofwat will publish a Draft Determination of theannual rate increases in July 2009. Bournemouth and other stakeholders can make representations to Ofwat on theDraft Determination prior to Ofwat publishing its Final Determination in November 2009. The price limits containedtherein will be implemented as from April 1, 2010.

Effective February 1, 2007 we acquired Pre-Heat Limited, a gas heating installation and maintenance business thatcomplements our existing U.K. non-regulated business.

• South Africa. Both of our South African operations are affected by the increased demand during thesummer months starting in October primarily due to additional usage for watering gardens. Other factorsinfluencing the results of operations of our Nelspruit subsidiary include our ability to progressively changethe attitudes of some of our customers toward payment for the water services they receive. In Nelspruit,we also receive government grants for both operating expenses and capital expenditures, which aredesigned to help lower the rates charged to customers and finance the supply of water to certainlow-income consumers who do not have the resources to pay for water services. As a result of our firstperiodic review in Nelspruit in 2005, the amount of government grants we receive increased. The reviewalso resulted in an approximately 15% increase in average rates in 2005, followed by additional annualrate increases of 3% plus inflation for the remainder of the period. Our next five-year periodic review inNelspruit is scheduled for late 2009, to be effective in July 2010. In common with our Nelspruit subsidiary,Siza Water receives government grants for operating expenses, which are designed to help lower therates charged to customers. Siza Water also receives contributions to capital expenditures from third partydevelopers.

• Indonesia. Our larger joint venture project in Indonesia is based on Batam Island, which has witnessedstrong population growth in recent years in response to the industrialization of many areas of the island.This population growth and the additional new connections to our network have a significant effect on ourrevenue in Indonesia. This project encountered significant delays in reaching an agreement on its mostrecent rate increase, which became effective from January 2008.

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• China. We acquired our first four China projects in November 2006. Our Chinese operations have experiencedsteady growth in the volume of water supplied, which has been driven by economic and population growth as well asthe gradual closure of private wells historically used by industry. On April 29, 2008 our subsidiary China Wateracquired a 49% stake in an equity joint venture in Yancheng, China. The new joint venture company, YanchengChina Water Company commenced operations on May 1, 2008, for a period of 30 years. In addition to a number ofindustrial and commercial enterprises, the Yancheng China Water Company provides potable water services to aresidential population of approximately 600,000. Yancheng is situated on the eastern seaboard of Jiangsu province,and is approximately 250 miles northeast of Shanghai. On July 23, 2008 we acquired a 51% stake in an equity jointventure in Zhumadian City, Henan Province, China. The new joint venture company, Zhumadian China WaterCompany, partners China Water with the Zhumadian Bangye Water Group, and commenced operations on July 23,2008. The existing water supply assets of the Zhumadian Bangye Water Group were transferred to the new jointventure company and China Water injected approximately $18.8 million in consideration for its 51% of the equity.The new equity joint venture is expected to complete soon the construction of an additional 26 million gallons per daywater treatment plant and associated infrastructure representing a total investment of approximately $42 million. TheZhumadian China Water Company provides water services to a population of approximately 400,000 which includesa large number of industrial and commercial users.

• Chile. On June 27, 2008 we acquired 100% of the share capital of Servicomunal S.A. and Servilampa S.A.Servicomunal and Servilampa provide both water and wastewater services under perpetual regulated concessioncontracts. These operations will provide greater efficiencies and economies of scale when combined with our existingoperations in Chile. The results of the rate review for our newly acquired businesses were announced on March 2,2009. Servicomunal has been awarded a 5% rate increase with effect from June 2009. This will be followed by afurther 6% real rate increase at the end of 2010, following the construction of a new wastewater treatment plantrepresenting an estimated investment of approximately $8 million, which is expected to be financed through acombination of operating cash flow and local debt. Servilampa S.A., has been awarded a 10% rate increase witheffect from June 2009. The results of operations located in northern Chile are influenced by the volume of treatedeffluent that our customer, Xstrata, purchases in a given month. With effect from September 2007, we increased therate per cubic meter that we charge Xstrata by $0.11. Thereafter, our rates are adjusted by reference to anindexation formula designed to reflect movements in the operation’s key input costs. The monthly volume of effluentused by Xstrata has historically been steady although it is linked to the activity levels at its copper smelting plant.

• Panama. We acquired our Panamanian project in June 2006. During the last two and a half years, APSA has appliedfor increases to the price payable for the water in accordance with the applicable escalation formula in the contract.By board resolution dated July 10, 2008, IDAAN resolved to approve these rate increases and confirmed that it wouldneed to apply to the Panamanian Government for a supplementary budget in order to be able to settle the associatedinvoices and that this process would take until December 2008. In respect of the period from September 2006 toDecember 2008, APSA has only received payments in respect of the base price for the water (excluding rateincreases). However, the invoices representing the rate escalation which in total amount to approximatelyUS$7.1 million, have been formally approved by IDAAN but remain outstanding. APSA has however received fullpayment at the contractual price, inclusive of rate increases, for the water supplied since the start of calendar year2009, which is consistent with the fact that the amounts shown on the unsettled invoices are not in dispute but ratherthe Panamanian government appears to be delaying payment of the amount in arrears for unspecified reasons. SeeItem 8 “Financial Information — Legal Proceedings” for a summary of the arbitration with IDAAN. Our Panamanianproject has benefited from a 100% tax exemption during its first five years of operation, which was reduced to 75% inSeptember 2007 for an additional five years and then to 50% thereafter.

• The Philippines. Our joint venture in The Philippines has had difficulty in the past in raising rates as a result ofdisputes with SBMA and Olongapo City, which are two of our three joint venture partners in this project. Morerecently, most of those disputes have been substantially resolved, resulting in significant improvements toSubicwater’s profitability and cash flow. The only remaining dispute is Olongapo City’s claim. See Item 8 “FinancialInformation — Legal Proceedings”. Recent negotiations resulted in an amendment to the franchise agreement beingsigned in October 2008. This resulted in a rate increase in December 2008 and there will be automatic

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inflationary increases in July 2009 and July 2010. A triennial review has replaced the original annual review andmilestones for target shareholders’ returns on equity are set forth in the new agreement.

Transactions affecting comparability of periods

The comparability of our results of operations during the periods presented has been affected by transactions that haveoccurred since March 31, 2006.

United Kingdom. On February 1, 2007, we acquired 100% of Pre-Heat Limited, a business that supplies gas installationand maintenance services in the South of England and that complements our existing U.K. non-regulated business, for atotal consideration of £4.6 million ($8.9 million), which consisted of initial consideration of £3.5 million ($6.9 million) pluscontingent and deferred consideration of £1.0 million ($1.9 million) plus costs of £0.1 million ($0.1 million). This acquisitionhas been accounted for as a business combination and has been included in our results of operations from February 1,2007.

Belize. In October 2005, we sold our interest in Belize Water Services to the Government of Belize. We had initiallyacquired an 83% interest in Belize Water Services in 2001 and sold that interest back to the Government of Belize for anet cash payment of $14.9 million and a deferred payment in the form of four promissory notes totaling $9.9 million. Inaddition, we received $2.4 million from the Government of Belize as compensation for costs and $1.5 million under theterms of an arrangement we put in place to mitigate our risks associated with the project.

The first three of these four promissory notes matured on October 3, 2006, October 3, 2007 and October 3, 2008,respectively, and were paid in full on time, along with payment of accrued interest on all of the notes. The final notematures on October 3, 2009, and we have taken steps to mitigate our credit risk exposure to the Government of Belizewith respect to 90% of the note’s principal amount plus accrued interest.

Chile. On June 27, 2008 we acquired 100% of the share capital of Servicomunal S.A. and Servilampa S.A. forapproximately CHP 9.8 billion ($18.6 million) and CHP 0.8 billion ($1.6 million), respectively. These acquisitions wereaccounted for as business combinations and have been included in our results of operations from June 27, 2008 and areincluded in our balance sheet at March 31, 2009.

Panama. In June 2006, we acquired Biwater’s 100% interest in Aguas de Panama, which supplies bulk potable water inpart of Panama City, for $14.3 million. This acquisition has been accounted for as a transfer of a business under commoncontrol using existing carrying values and we have included it in our consolidated balance sheet and our results ofoperations from June 26, 2006. Biwater currently incurs the raw and auxiliary materials and other external operating costsand the staff costs associated with our Panamanian project. These costs are recharged to our Panamanian projectcompany in accordance with the terms of an operation and maintenance sub-contract that our Panamanian projectcompany entered into with Biwater in July 2000. The recharged amount is reported within “other operating charges” in ourconsolidated statements of income.

China. On November 15, 2006, we acquired for a total consideration of $25.1 million an 87% interest in The China WaterCompany Limited, a company that we fully consolidate, and at the date of its acquisition by us owned majority interests infour water projects in China. Prior to our acquisition, China Water rationalized its portfolio by selling three projects. Thisacquisition has been accounted for as a business combination and has been included in our results of operations fromNovember 15, 2006. On April 29, 2008 China Water acquired a 49% share in a new equity joint venture with theGovernment of Yancheng for delivery of water services to Yancheng City for approximately $28.7 million. Yancheng hasbeen accounted for as a joint venture and under Dutch GAAP China Water’s share of its results has been included in ourresults of operations from April 29, 2008 and China Water’s share of its assets and liabilities has been included in ourbalance sheet at March 31, 2009. On July 23, 2008 China Water acquired a 51% interest in a water company inZhumadian City. The new company, Zhumadian China Water Company, formally commenced operations on July 23,2008. The acquisition is accounted for as a business combination and has been included in our results of operations fromJuly 23, 2008 and is included in our balance sheet at March 31, 2009.

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South Africa. On May 3, 2007, we acquired a 73.4% interest in Siza Water, a water and wastewater services company inSouth Africa, for approximately $2.9 million. This acquisition has been accounted for as a business combination and hasbeen included in our results of operations from May 3, 2007.

Mexico. Our results of operations during the periods presented have been affected by the early termination of ouroperation and maintenance contract in Mexico in January 2008. This is accounted for in the year ended March 31, 2008and in all periods presented the results of Mexico are shown as discontinued operations. We received a termination fee ofMXP 10.5 million ($1.0 million) and after the costs of termination and receipts for sale of assets made a profit before taxon termination of MXP 1.0 million ($0.1 million). The costs associated with the winding up and eventual liquidation of ourMexican subsidiaries during fiscal year 2009 have been included in the consolidated statement of income under gain ondisposal / termination of subsidiary.

Holding Companies. On February 23, 2009 we completed a reorganization of our group structure which included theincorporation of a new company, Cascal Holdings Limited, in the United Kingdom. The reorganization will optimize theservicing of external debt and the return of capital to shareholders by way of dividend. In executing this reorganization, wesettled an inter-company debt that has given rise to significant foreign exchange gains and losses reported in theconsolidated statements of income for prior periods. The reorganization is also intended to address aspects of theunderlying inefficiencies within our tax structure, which manifest themselves in terms of the consolidated effective tax rateat levels considerably higher than the statutory rates of 25.5% and 28% in The Netherlands and United Kingdom,respectively. While the effect of the reorganization on the results for the year ended March 31, 2009 will be limited due tothe date of its completion, in future periods the foreign exchange gains and losses reported in the consolidated statementsof income are expected to be much smaller and the consolidated effective tax rate is expected to decline towards the levelof the aforementioned statutory rates.

Nuon. On June 26, 2006, Biwater reacquired the 50% interest in us held by Nuon, thereby becoming our soleshareholder. We incurred debt totaling £38.0 million ($69.7 million), the proceeds of which, together with another$17.3 million of our existing cash resources, were used to make an $87.0 million pro rata distribution to Biwater and Nuonthat facilitated Biwater’s purchase of the shares owned by Nuon for $43.2 million. As a result of Biwater’s acquisition, wehave undertaken a fair value exercise, which resulted in changes to the value of 50% of certain assets and liabilities bythe difference between their fair market value as of June 26, 2006 and their book value as of that date as required underU.S. GAAP. This revaluation is for U.S. GAAP purposes only and is not accounted for under Dutch GAAP.

Subsequent events

On June 26, 2009, we entered into an amended and restated facility agreement with HSBC Bank Plc in respect of ourexisting $70 million credit facility with HSBC. Of this amount, (a) $60 million is a revolving loan facility intended forfinancing acquisitions, for general corporate purposes and working capital and to pay transaction expenses, and (b)$10 million is a guarantee facility intended to be used to provide guarantees to replace existing ones, and to issue new orrenewed guarantees on behalf of certain subsidiaries. The amended and restated facility has a term of two years endingJune 30, 2011 and its terms are similar to those that governed the credit facility it is replacing with the exception of thearrangement fee and interest margin, both of which have been increased in line with current trends in the corporatelending market. For further detail see Item 5 “Operating and Financial Review and Prospects — Liquidity and capitalresources”.

Critical accounting policies and estimates

We prepare our consolidated financial statements in accordance with Dutch GAAP.

As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable basedupon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities atthe date of the financial statements and the reported amounts of revenue and expenses during the periods presented.

On an ongoing basis, we evaluate these estimates using historical experience, consultation with experts and othermethods considered reasonable in the particular circumstances. Actual results may differ significantly from the

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estimates, the effect of which is recognized in the period in which the facts that give rise to the revision become known.

Our accounting policies are detailed in the notes to our consolidated financial statements. The following paragraphs detailthe policies that we believe have the most significant effect on our results of operations under Dutch GAAP.

Consolidation principles

Controlled companies. Our consolidated financial statements include companies over which we exercise direct or indirectcontrol as a consequence of our possession of a majority of the voting rights, or whose financial and operating activitieswe can otherwise control through our responsibility for the conduct of their central management. In accordance with DutchAccounting Standards Board Guidelines on Annual Reporting (GAR) 217 (revised), we fully consolidate all of ourbusinesses except our joint ventures in Indonesia and The Philippines. Controlling interests in businesses acquired fromthird parties are consolidated using the purchase accounting rules contained in Dutch GAAP. The assets and liabilitiesacquired and non-cash consideration, if any, are accounted for at their fair values. To the extent that the fair value of theconsideration exceeds those of the assets and liabilities in aggregate, goodwill is recognized. Goodwill arising onconsolidation is amortized over its useful economic life, up to a maximum of 20 years. Conversely, when the fair value ofthe consideration is less than the assets and liabilities in aggregate, negative goodwill is recorded on the consolidatedbalance sheet and is amortized over its useful economic life. The critical estimates that we are required to make involvethe application of valuation principles to the assets and liabilities of the business being acquired, a process that requiresspecialized knowledge and techniques because underground infrastructure represents a substantial component of ourasset base.

Joint ventures. An entity qualifies as a joint venture if its participants jointly exercise control under a collaborative (jointventure) agreement. Joint control exists when none of the participants can, in substance, control the entities financial andoperating policies unilaterally. However, joint control does not require a 50-50 interest. Dutch Accounting Standards BoardGAR 215 permits participating interests in joint ventures to be consolidated proportionally as an alternative to using theequity method. Under the proportional consolidation method we combine our pro rata share, generally based on ourownership percentage, of each joint venture’s revenue and expenses, assets and liabilities and cash flows on aline-by-line basis with similar items in our financial statements. We proportionally consolidate our businesses in Indonesiaand The Philippines and have proportionally consolidated our Yancheng project in China from April 29, 2008, the date ofits acquisition. The critical judgment that we must make in this regard is the assessment of whether the criteria fordemonstrating joint control are met.

Revenue recognition

We recognize revenue in the period in which the water is supplied or our services are rendered. In order to satisfy thisrequirement the following criteria must be met:

• it is probable that the economic benefits of the transaction will flow to the subsidiary or joint venture concerned;

• the revenue can be measured reliably; and

• where applicable, the costs (both incurred to date and expected future costs) can be identified and can be measuredreliably.

For our rate-regulated water and wastewater service operations, we issue bills and recognize revenue in accordance withour entitlement to receive revenue in line with the limits established by the periodic regulatory price review processes. Forwater and wastewater customers with water meters, the amount of the receivable billed depends upon the volumesupplied, including an estimate of the sales value of units supplied between the date of the last meter reading and the endof the fiscal period. Meters are read on a cyclical basis and we recognize revenue for unbilled amounts based onestimated usage from the last billing through to the end of the fiscal period. The estimated usage is based on historicaldata, judgment and assumptions; actual results could differ from these estimates, which would result in revenue beingadjusted in the period that the revision to the estimates is determined. For customers who do not have a meter, theamount of the receivable billed depends upon the rateable value of the property, as assessed by an independent ratingofficer.

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Revenue received in advance of performance is recorded as deferred revenue. When performance occurs, the deferredrevenue is released and simultaneously reported as revenue. This situation primarily arises in the United Kingdom, whereapproximately 44% of our billing is based on historic property values.

Grants, contributions and service connection fees receivable in respect of infrastructure assets relating to either: (i) aspecific extension to the supply network, usually associated with a development of new commercial or residential propertyfor which the subsidiary or joint venture has assumed, or will assume, an obligation to provide water and/or wastewaterservices; or (ii) a more general expansion of overall network capacity in light of extensions made, or being made, theretoare accounted for at fair value as deferred revenue, which amount is then credited to revenue in the statement of incomeon a straight line basis over a period that will match them with the costs they are intended to compensate, such periodbeing equal to the shorter of the estimated useful economic lives of the related infrastructure assets or the remaining termof the related customer arrangement.

Certain of our subsidiaries engage in infrastructure construction projects that can last more than twelve months. Revenuefrom such construction contracts is recognized on final completion of the contract. Costs incurred during construction arerecognized as work in progress until construction is complete.

Bad debts

At each balance sheet date, we evaluate the collectability of trade receivables and record provisions for doubtfulreceivables based on experience. These provisions are based on, among other things, comparisons of the relative age ofaccounts and consideration of actual write-off history. The actual level of receivables collected may differ from theestimated levels of recovery, which could affect our results of operations positively or negatively. As of March 31, 2009,our gross trade receivables were $32.0 million and the provision for doubtful receivables was $4.0 million. The criticaljudgments that we are called upon to exercise with respect to bad debts are generally related to the circumstancessurrounding the recognition of the receivable and an estimate of its collectability, which leads to our determination of thepotential need to make a provision against its carrying value in our financial statements.

Long lived assets

Intangible assets and tangible fixed assets are amortized or depreciated over their useful lives. Useful lives are estimatedbased on management’s assessment of the period during which the assets will generate revenue and are periodicallyreviewed for their continued appropriateness and are adjusted as necessary. Due to the long lives of such assets,changes to their estimated useful lives can result in significant variations in the carrying value.

We critically assess the impairment of fixed assets whenever events or changes in circumstances indicate that thecarrying value may not be recoverable. Under Dutch GAAP, all intangible fixed assets having a useful life of more than20 years are tested annually for impairment. Important factors that could trigger an impairment review for those assets notsubject to annual testing include the following:

• significant underperformance relative to historical or projected future results of operations;

• significant changes in the manner of the use of the acquired assets or the strategy for the overall business; and

• significant negative industry or economic trends.

The complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent in theapplication of our fixed asset accounting estimates affect the amounts reported in our financial statements, especially ourestimates of the expected useful economic lives and the carrying values of those assets. If our business conditions weredifferent, or if we used different assumptions in the application of this and other accounting estimates, it is likely thatmaterially different amounts would be reported in our financial statements.

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Pensions

We operate defined benefit pension plans in the United Kingdom and much smaller similar plans in our joint venturebusinesses in The Philippines and Indonesia. Costs relating to these pension plans are accounted for using a method thatrelies on actuarial estimates and assumptions to arrive at costs and liabilities for inclusion in our financial statements.These assumptions include:

• the discount rates used to calculate a present value of the plan’s obligations to make pension payments to itsmembers at dates in the future;

• assumed rates of return on the various asset categories in which the plan’s assets are invested;

• salary increases in order to measure the expected annual earnings of members at their normal retirement dates; and

• mortality rates as a means of estimating how long a member’s pension entitlement will need to be paid.

We review our actuarial assumptions on an annual basis and make modifications to them when we deem it appropriate todo so. While management believes that the actuarial assumptions are appropriate, any significant changes to those usedin connection with the U.K. plan could materially affect both our balance sheet and statement of income and result in anincrease in our statement of income charge in relation to pensions in future years, and as a consequence affect the assetor liability reflected on our balance sheet.

Our pension expenses in fiscal years 2007, 2008 and 2009 were $1.8 million, $1.7 million and $1.1 million, respectively.Our pension expenses in fiscal years 2007, 2008 and 2009 are based on a changed accounting policy in accordance withDutch Accounting Standards Board GAR 271 (revised) as explained in Note 13 “Provisions & deferred revenue” to ourconsolidated financial statements. We expect this change in accounting policy to increase the volatility of our pensioncosts and therefore to lead to greater period-to-period change in our staff costs.

We estimate that the effect of a 0.5% increase or decrease in the discount rate on the net periodic pension expense forthe year ended March 31, 2009 would be $0.1 million and $1.0 million, respectively and the effect of a 0.5% increase ordecrease in the expected long term return on plan assets would be $0.2 million and $1.1 million, respectively.

In addition we have liabilities under a pre-existing defined benefit pension plan in connection with our recently acquiredsubsidiary in Zhumadian, China. Under this plan there are retired and semi-retired employees for which there is a pensionliability. However no future liabilities can accrue in connection with current non-retired employees or any new employees.The liability will be discharged over time out of cash resources and there are no plan assets.

Deferred tax

Deferred tax assets and liabilities are recognized with respect to temporary differences between the tax bases of assetsand liabilities and their carrying amounts in the consolidated financial statements, for example as a result of different ratesof depreciation being applied to tangible fixed assets for tax compliance and financial reporting purposes. Deferred taxassets and liabilities are calculated based on the tax rates in effect at the year-end date or future applicable rates, insofaras these are already decreed by law.

In this regard, we are required to make a judgment as to the value of any deferred tax assets to be recognized for losscarry-forwards. Deferred tax assets amounting to $15.6 million have been recognized on the balance sheet as ofMarch 31, 2009. The deferred tax assets recognized in respect of tax losses are regarded as more likely than not to berecoverable against future forecast taxable profits. Deferred tax assets have not been recognized as of March 31, 2009 inrespect of tax losses with a total value of $34.3 million, $13.8 million of which are Dutch losses.

We were required to revalue our deferred tax balances in China in light of new profit tax rates passed into law with the TaxReform Act in March 2007. This had the one-time effect of increasing the net profit of China Water for the period fromNovember 15, 2006 to March 31, 2007 by $1.3 million. Similarly we were required to revalue our deferred tax balances inthe United Kingdom, which has the one time effect of increasing net profit for the year

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ended March 31, 2008 by $2.2 million. Additionally a change in the system of tax allowances for industrial buildings in theUnited Kingdom has caused the recording of a deferred tax liability and corresponding charge to the statement of incomeof $4.1 million for the year ended March 31, 2009.

Currency

The functional currency of each of our subsidiaries and joint ventures is generally the currency of the country in which itoperates. However, the determination of the appropriate currency requires the use of judgment and we also consider cashflow indicators, sales price indicators, sales market indicators, expense indicators, financing indicators and inter-companytransactions and arrangement indicators in assessing the functional currency of Cascal N.V. on a consolidated basis. As aresult of this assessment, Cascal N.V.’s functional currency is the U.S. Dollar and given the international nature of ouroperations, management has chosen the U.S. Dollar as our reporting currency.

Presentation of financial information

• Our consolidated financial statements are prepared based on a March 31 fiscal year end. However, our operations inIndonesia, Chile and Mexico, prior to its early termination, have a December 31 fiscal year end. For these entities, wehave reported the results for the twelve months ended December 31 as if such twelve month period ended on thefollowing March 31, with appropriate adjustments made for any material event that occurred subsequent toDecember 31 but on or prior to March 31 for each such entity, such as the early termination of our operation andmaintenance contract in Mexico in January 2008. Our operations in Panama, China and South Africa (Siza Water)also have a fiscal year end of December 31, but their results have been reflected in our consolidated financialstatements based on the actual calendar months in which the results occurred following their acquisition.

• Our participating interests in our joint ventures in Indonesia, The Philippines and Yancheng, China have beenproportionally consolidated on a line-by-line basis in the statements of income and cash flows and on the balancesheet.

• We report our financial results in U.S. Dollars but conduct substantially all of our business in the local currencies ofthe countries in which we operate. The assets and liabilities of our foreign operations are translated at the rate ofexchange prevailing at the balance sheet date. Revenue and expenses are recognized at the average rate for theyear. Therefore, our reported results of operations are affected by translation risk due to fluctuations in currencyexchange rates. Transactions denominated in currencies other than the U.S. Dollar during a reporting period, suchas the purchase price we paid to complete an acquisition, are recognized in our consolidated financial statements atthe exchange rate in effect on the transaction date. See Note 2 “Accounting policies” to our consolidated financialstatements.

• We present our country-by-country comparative period information both on an “as reported” basis and on a constantexchange rate basis. The constant exchange rate basis uses the same exchange rates that were used in the laterperiod to translate results for the earlier period. This presentation enables our management and investors to focus onthe actual changes in the results of operations from period to period without the effects of movements in exchangerates. Unless specifically stated otherwise, all of the textual discussion of our country-by-country comparative periodinformation is presented on a constant exchange rate basis.

• Our discontinued operations consist of our Belize subsidiary that was disposed of on October 3, 2005 and ourMexican operation and maintenance operation contract that was the subject of an early termination in January 2008.

• Earnings per share information presented in our audited consolidated financial statements for comparative periodsprior to our initial public offering has been calculated using a weighted average number of shares of 21,849,343because on January 23, 2008 we completed a recapitalization and stock split that required the following steps to becarried out:

• Issuance of remaining 11,620 authorized shares having a par value of €5 per share to our existing shareholderin exchange for cash of €58,100. This action increased the total shares issued to 20,000;

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• A split of each issued share having a par value of €5 into 10 shares with a par value of €0.50, thereby increasingthe number of issued shares from 20,000 with a par value of €5 to 200,000 having a par value of €0.50; and

• Issuance of 21,649,343 new shares having a par value of €0.50 each by transferring the correspondingaggregate par value from share premium to issued share capital.

The result of these steps was to have outstanding 21,849,343 shares with a par value of €0.50 each prior to our initialpublic offering.

In addition, transfers were made from unallocated results and retained earnings to share premium in amounts of a positive$16 million and a deficit of $29 million, respectively, in order to eliminate the June 30, 2007 net deficit of $13 million.

Results of operations — fiscal year periods

The following table sets forth our statement of income data as a percentage of revenue for the periods presented as wellas showing the percentage change on a year-to-year basis: Year Year Year ended Percentage ended Percentage ended Dutch GAAP March 31, change March 31, change March 31, (Dollars in thousands) 2009 2008-2009 2008 2007-2008 2007 Revenue $ 163,396 1.7% $ 160,642 32.0% $ 121,703 Raw and auxiliary materials and

other external costs 42,041 19.5 35,188 47.7 23,821 Staff costs 33,735 (1.8) 34,348 40.6 24,431 Depreciation and amortization of

intangible and tangible fixedassets and negative goodwill 22,968 0.8 22,786 26.7 17,980

Profit on disposal of intangible andtangible fixed assets(1) (688) 8.1 (749) 24.3 (989)

Other operating charges(2) 28,563 1.8 28,060 44.3 19,446 Incremental offering-related costs — n/a 767 (5.2) 809

Total operating expenses 126,619 5.2 120,400 40.8 85,498

Operating profit 36,777 (8.6) 40,242 11.2 36,205 (Loss)/Gain on disposal of

subsidiary(3) (68) n/a 1,691 n/a — Exchange rate results(4) 9,975 n/a (2,381) 64.9 (6,782)Interest income 2,751 (6.3) 2,935 9.2 2,687 Interest expense (16,319) (19.4) (20,238) 23.4 (16,397)

Profit before taxation 33,116 48.8 22,249 41.6 15,713 Taxation (14,263) 46.8 (9,716) 39.9 (6,944)Minority interest (1,012) 7.1 (945) 25.5 (753)

Net profit $ 17,841 54.0% $ 11,588 44.6% $ 8,016

(1) The profit in fiscal year 2009 is derived from sales of property and other assets, surplus to the needs of our U.K.project company. The profit in fiscal year 2008 is derived from sales of property, surplus to the needs of our U.K.project company. The profit in fiscal year 2007 arose mainly from a $0.8 million profit realized by our U.K. projectcompany on its sale of a section of river bed.

(2) Other operating charges include professional fees, insurance, operating lease payments, travel expenses,management fees and bad debts.

(3) Represents gains from our Belize subsidiary that was disposed of on October 3, 2005 and the early termination ofour operation in Mexico in January 2008.

(4) Currency exchange differences resulting from settlement and translation of monetary assets and liabilities arecharged or credited to the exchange rate results line of our statement of income. See Note 2 “Accounting policies” toour consolidated financial statements.

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Geographical revenue and operating profit

The following table identifies our revenue by country by dollar amount and as a percentage of revenue from continuingoperations for fiscal years 2007, 2008 and 2009. This table and the subsequent tables reflect the primary segments thatmanagement has identified for reporting purposes under Dutch GAAP. The discontinued operations represent the resultsof our operations in Mexico, which were subject to an early termination agreement in January 2008. Revenue by country (as reported) Percentage Percentage Percentage of 2009 of 2008 of 2007 total total total revenue revenue revenue Year ended from Year ended from Year ended from Dutch GAAP March 31, continuing March 31, continuing March 31, continuing (Dollars in thousands) 2009 operations 2008 operations 2007 operations United Kingdom(1) $ 83,643 51.2% $ 94,791 60.1% $ 75,705 63.8%South Africa(2) 20,340 12.5 21,673 13.7 13,766 11.6 Indonesia 12,999 8.0 11,356 7.2 11,062 9.3 China(3) 20,929 12.8 10,023 6.4 2,924 2.5 Chile(4) 11,343 6.9 7,593 4.8 6,393 5.4 Panama(5) 10,691 6.5 8,780 5.6 6,165 5.2 The Philippines 2,881 1.8 2,861 1.8 2,359 2.0 Holding companies 570 0.3 700 0.4 193 0.2

Total continuingoperations $ 163,396 100.0% $ 157,777 100.0% $ 118,567 100.0%

Discontinuedoperations(6) — 2,865 3,136

Total $ 163,396 $ 160,642 $ 121,703

(1) Includes revenue attributable to our Pre-Heat Limited operations from February 1, 2007, the date of acquisition.

(2) Includes revenue of Siza Water from May 3, 2007.

(3) Represents revenue of our first four Chinese projects from November 15, 2006, our 49% share of revenue from ourjoint venture in Yancheng from April 29, 2008 and revenue from Zhumadian from July 23, 2008, being the respectivedates of their acquisition.

(4) Includes revenue from Servicomunal and Servilampa from June 27, 2008, the date of their acquisition.

(5) Represents revenue from June 26, 2006.

(6) Represents the early termination of our operation in Mexico in January 2008.54


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The following table identifies our operating profit by country by dollar amount and as a percentage of operating profit fromcontinuing operations for fiscal years 2007, 2008 and 2009. Operating profit by country (as reported) Percentage Percentage Percentage of 2009 total of 2008 total of 2007 total operating operating operating profit profit profit Year ended from Year ended from Year ended from Dutch GAAP March 31, continuing March 31, continuing March 31, continuing (Dollars in thousands) 2009 operations 2008 operations 2007 operations United Kingdom(1) $ 23,866 64.9% $ 31,894 80.2% $ 29,264 81.9%South Africa(2) 5,736 15.6 5,934 14.9 3,756 10.5 Indonesia 4,612 12.5 3,250 8.1 3,515 9.8 China(3) 2,495 6.8 438 1.1 318 0.9 Chile(4) 1,177 3.2 (47) (0.1) (488) (1.4)Panama(5) 4,542 12.4 3,683 9.3 3,071 8.6 The Philippines 1,192 3.2 1,162 2.9 915 2.6 Holding companies (6,843) (18.6) (6,529) (16.4) (4,615) (12.9)

Total continuingoperations $ 36,777 100.0% $ 39,785 100.0% $ 35,736 100.0%

Discontinuedoperations(6) — 457 469

Total $ 36,777 $ 40,242 $ 36,205

(1) Includes operating profit attributable to our Pre-Heat Limited operations from February 1, 2007, the date ofacquisition.

(2) Includes operating profit of Siza Water from May 3, 2007.

(3) Represents operating profit of our first four Chinese projects from November 15, 2006, our 49% share of operatingprofit from our joint venture in Yancheng from April 29, 2008 and operating profit from Zhumadian from July 23, 2008,being the respective dates of their acquisition.

(4) Includes operating from Servicomunal and Servilampa from June 27, 2008, the date of their acquisition.

(5) Represents operating profit from June 26, 2006.

(6) Represents the early termination of our operation in Mexico in January 2008.

Fiscal year 2008 compared to fiscal year 2009

Revenue Year ended Percentage March 31, Change change Year ended Year ended 2008 at 2008-2009 2008-2009 March 31, March 31, constant at constant at constant Dutch GAAP 2009 as 2008 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom $ 83,643 $ 94,791 $ 79,807 $ 3,836 4.8%South Africa(1) 20,340 21,673 17,835 2,505 14.0 Indonesia 12,999 11,356 10,151 2,848 28.1 China(2) 20,929 10,023 10,852 10,077 92.9 Chile (3) 11,343 7,593 6,849 4,494 65.6 Panama 10,691 8,780 8,780 1,911 21.8 The Philippines 2,881 2,861 2,742 139 5.1 Holding companies 570 700 575 (5) (0.8)

Total continuing operations $ 163,396 $ 157,777 $ 137,591 $ 25,805 18.8%

Discontinued operations-Mexico — 2,865 2,578 (2,578) n/a Exchange rate effect 20,473

Total $ 163,396 $ 160,642 $ 160,642

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(1) Includes results of operations of Siza Water from May 3, 2007.

(2) Includes our share of results from Yancheng from April 29, 2008 and results of operations from Zhumadian fromJuly 23, 2008.

(3) Includes results of operations from Servicomunal and Servilampa from June 27, 2008.

Our revenue from continuing operations increased by $25.8 million from fiscal year 2008 to fiscal year 2009 at constantexchange rates due primarily to our recent acquisitions.

• China. The $10.1 million increase was mainly due to the inclusion of our share of revenue from April 29, 2008following the acquisition of a 49% interest in the Yancheng joint venture and revenue from our acquisition ofZhumadian from July 23, 2008. These acquisitions account for $9.5 million of the increase, with the remaindercoming from a combination of rate and volume increases in our pre-existing operations in China.

• Chile. Of the $4.5 million increase in revenue, $1.9 million originates from our pre-existing operations and is theresult of inflation-base rate increases and higher volume sold. The remainder relates to the contribution made byServicomunal and Servilampa, which we acquired on June 27, 2008 and which we consolidate with a three monthlag due to having non-coterminous year ends.

• United Kingdom. The $3.8 million increase was primarily due to the effect of our scheduled rate increase of 3.68%together with a $2.7 million increase from our non-regulated business.

• Indonesia. The $2.8 million increase resulted from the effect of the 20% increase implemented in December 2007,together with increased water demand caused by continued population growth.

• South Africa. A majority of the $2.5 million increase in revenue is the result of a 10.0% rate increase implemented byour Nelspruit subsidiary and increases of 6% and 9% for water and sewerage rates respectively implemented by SizaWater, all with effect from July 2008, along with continued growth in the number of connections offset in part by adecrease in consumption observed toward the end of the calendar year 2008.

• Panama. The $1.9 million increase in revenue from our Panama operation is due to $0.5 million additional revenuerecognized following our client’s approval of a rate increase applied for in May 2007, along with the effect of anadditional $1.4 million from rate increases taking effect from April 1, 2008 and September 1, 2008.

Raw and auxiliary materials and other external costs Year ended Percentage March 31, Change change Year ended Year ended 2008 at 2008-2009 2008-2009 March 31, March 31, constant at constant at constant Dutch GAAP 2009 as 2008 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom $ 19,680 $ 18,161 $ 15,290 $ 4,390 28.7%South Africa(1) 6,079 6,017 4,952 1,127 22.8 Indonesia 4,593 4,300 3,844 749 19.5 China(2) 6,417 2,340 2,537 3,880 152.9 Chile(3) 4,474 2,799 2,525 1,949 77.2 Panama 9 38 38 (29) (76.3)The Philippines 789 844 809 (20) (2.5)Holding companies — — — — n/a


Discontinued operations—Mexico — 689 620 (620) n/a Exchange rate effect 4,573

Total $ 42,041 $ 35,188 $ 35,188

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Our raw and auxiliary materials and other external costs from continuing operations increased by $12.0 million at constantexchange rates, in large part due to the recent acquisitions.

• United Kingdom. The $4.4 million increase was primarily due to the increased electricity prices ($2.8 million) incurredby our regulated business along with volume related increases in material costs incurred by our non-regulatedbusiness and general cost inflation.

• China. The $3.9 million increase is primarily due to the inclusion of $3.2 million with respect to our share of results ofYancheng from April 29, 2008 and the inclusion of results from Zhumadian from July 23, 2008. The remainder of theincrease originates from our pre-existing operations in China and most notably relates to the cost of electricity.

• Chile. Of the $1.9 million increase $1.1 million is attributable to our acquisition of Servicomunal and Servilampa,which we acquired on June 27, 2008 and which we consolidate with a three-month lag due to havingnon-coterminous year ends. Of the remainder, $0.3 million is a reflection of increased prices paid for electricity by ourpre-existing Chilean operations.

• South Africa. The $1.1 million increase is due mainly to a $0.2 million increase in bulk and raw water, a $0.2 millionincrease in the cost of fuel and power and a $0.1 million increase in the cost of chemicals together with the effects ofgeneral cost inflation.

• Indonesia. The $0.7 million increase is due largely to increased fuel, power and maintenance costs.

Staff costs Year ended Percentage March 31, Change change Year ended Year ended 2008 at 2008-2009 2008-2009 March 31, March 31, constant at constant at constant Dutch GAAP 2009 as 2008 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom $ 15,812 $ 17,835 $ 15,016 $ 796 5.3%South Africa (1) 5,297 5,473 4,504 793 17.6 Indonesia 1,459 1,428 1,276 183 14.3 China(2) 5,691 2,585 2,693 2,998 111.3 Chile(3) 1,734 1,455 1,313 421 32.1 Panama(4) — — — — n/a The Philippines 328 323 309 19 6.1 Holding companies 3,414 4,576 3,852 (438) (11.4)



Total $ 33,735 $ 34,348 $ 34,348




(4) Biwater incurs these staff costs, which are recharged to us and reported within other operating charges.57


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Our staff costs from continuing operations increased by $4.8 million from fiscal year 2008 to fiscal year 2009 at constantexchange rates primarily due to the recent acquisitions.

• China. The $3.0 million increase was primarily due to the inclusion of $2.4 million related to our share of staff costsincurred by the Yancheng joint venture and staff costs of the Zhumadian subsidiary from their dates of acquisition.

• United Kingdom. The $0.8 million increase was primarily due to an annual salary review of 4.5% with effect fromApril 1, 2008, together with additional pension costs and the effect of increased activity in our non-regulatedbusinesses.

• South Africa. The $0.8 million increase was due to annual salary review increases of 8% and 11.5% in ourNelspruit and Siza Water subsidiaries respectively, combined with increases staff numbers in our Nelspruitsubsidiary, which was partly offset by a one-time reduction of $0.2 million in expatriate costs related to payrolltaxes.

• Chile. The $0.4 million increase in staff costs is due to the contribution of Servicomunal and Servilampa, which weacquired on June 27, 2008 and which we consolidate with a three-month lag due to having non-coterminous yearends.

• Holding companies. The $0.4 million decrease represents a $0.3 million reduction in staff bonuses due to bonusesin connection with our initial public offering in the year ended March 31, 2008 and a $0.1 million reduction incontract staff.

Depreciation and amortization of intangible and tangible fixed assets and negative goodwill Year ended Percentage March 31, Change change Year ended Year ended 2008 at 2008-2009 2008-2009 March 31, March 31, constant at constant at constant Dutch GAAP 2009 as 2008 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom $ 13,534 $ 15,672 $ 13,195 $ 339 2.6%South Africa(1) 1,311 1,247 1,026 285 27.8 Indonesia 877 883 789 88 11.2 China(2) 3,464 1,451 1,571 1,893 120.5 Chile(3) 2,342 2,096 1,891 451 23.8 Panama 833 833 833 — n/a The Philippines 247 219 210 37 17.6 Holding companies 360 339 330 30 9.1



Total $ 22,968 $ 22,786 $ 22,786




Our depreciation and amortization of intangible and tangible fixed assets and negative goodwill from continuing operationsincreased by $3.1 million from fiscal year 2008 to fiscal year 2009 at constant exchange rates, partly due to the recentacquisitions.

• China. The $1.9 million arises from the inclusion of depreciation and amortization of $2.7 million from ourYancheng joint venture and Zhumadian along with a negligible amount of acquisition goodwill amortization inrespect of Zhumadian. These amounts are offset in part by some reductions in depreciation charges related to ourpre-existing operations in China as a result of some adjustments to useful asset lives.

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• Chile. The $0.5 million increase is a result of our acquisitions of Servicomunal and Servilampa on June 27, 2008.We consolidate these subsidiaries with a three-month lag due to their having non-coterminous year ends.

• United Kingdom. The $0.3 million increase resulted from higher depreciation charges due to additions to tangiblefixed assets.

• South Africa. The $0.3 million increase resulted from higher depreciation charges related to an increase incompleted infrastructure.

(Profit)/loss on disposal of intangible and tangible fixed assets Year ended Percentage March 31, Change change Year ended Year ended 2008 at 2008-2009 2008-2009 March 31, March 31, constant at constant at constant Dutch GAAP 2009 as 2008 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom $ (742) $ (671) $ (565) $ (177) 31.3%South Africa(1) (7) (32) (26) 19 (73.1)Indonesia (13) — — (13) n/a China(2) 83 (36) (39) 122 (312.8)Chile(3) (9) (10) (9) — n/a Others — — — — n/a

Total continuing operations $ (688) $ (749) $ (639) $ (49) 7.7%

Discontinued operations — Mexico — — — — n/a Exchange rate effect (110)

Total $ (688) $ (749) $ (749)




Our profit on disposal of intangible and tangible fixed assets from continuing operations decreased by less than$0.1 million compared with the prior period.

• United Kingdom. From time to time our United Kingdom based subsidiary has opportunities to realize valuethrough disposal of land and buildings that are no longer integral to its business. Such disposals can usually beexpected to give rise to a gain on sale.

• China. The $0.1 million loss resulted from the scrapping of certain assets no longer required in the business.59


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Other operating charges and incremental offering-related costs Year ended Percentage March 31, Change change Year ended Year ended 2008 at 2008-2009 2008-2009 March 31, March 31, constant at constant at constant Dutch GAAP 2009 as 2008 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom $ 11,493 $ 11,900 $ 10,019 $ 1,474 14.7%South Africa(1) 1,924 3,033 2,496 (572) (22.9)Indonesia 1,471 1,495 1,337 134 10.0 China(2) 2,779 3,246 3,396 (617) (18.2)Chile(3) 1,625 1,300 1,173 452 38.5 Panama 5,307 4,226 4,226 1,081 25.6 The Philippines 325 313 300 25 8.3 Holding companies 3,639 2,314 1,961 1,678 85.6


Discontinued operations—Mexico — 1,000 900 (902) n/a Exchange rate effect 3,019

Total $ 28,563 $ 28,827 $ 28,827




Our other operating charges from continuing operations and incremental offering-related costs increased by $3.7 millionfrom fiscal year 2008 to fiscal year 2009 at constant exchange rates.

• United Kingdom. The $1.5 million increase was due to increased management fees of $0.3 million, bad debtcharges of $0.2 million incurred in our non-regulated business, an additional $0.2 million of compliance costs,including work in preparation for Sarbanes-Oxley Section 404 compliance, and $0.3 million of regulatory costs,together with the effects of general cost inflation.

• Holding companies. The $1.7 million increase consists of $1.0 million of professional advisors fees, a $0.3 millionincrease in compliance costs and $0.4 million of additional insurance costs.

• Panama. The $1.1 million increase reflects the higher costs of operation and maintenance of our water treatmentplant, the principal reason for which is higher unit electricity prices, together with increased legal fees.

• South Africa. The $0.6 million reduction is mainly due to reduced provisions for bad and doubtful debts togetherwith $0.3 million from the recovery of the previously fully provided balance on a loan advanced to the formerminority shareholder in our Nelspruit project.

• China. The $0.6 million decrease is due to $0.4 million in connection the appointment of a new expatriatemanaging director together with professional fees of approximately $0.9 million related to post-acquisitionintegration projects incurred during the year ended March 31, 2008. This was partly offset by $0.7 million of otheroperating charges from our share of results in Yancheng from April 29, 2008 and from Zhumadian from July 23,2008.

• Chile. The $0.5 million increase was primarily due to the inclusion of results of operations from our acquisitions ofServicomunal and Servilampa on June 27, 2008. We consolidate these subsidiaries with a three month lag due totheir having non-coterminous year ends.

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(Loss)/Gain on disposal/ termination of subsidiary Year ended Percentage March 31, Change change Year ended Year ended 2008 at 2008-2009 2008-2009 March 31, March 31, constant at constant at constant 2009 as 2008 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates Discontinued operations — Belize $ 203 $ 1,295 $ 1,295 $ (1,092) (84.3)%Discontinued operations — Mexico (271) 396 357 (628) n/a

Total continuing operations $ (68) $ 1,691 $ 1,652 $ (1,720) n/a%

Exchange rate effect 39

Total $ (68) $ 1,691 $ 1,691

• Belize. This gain arose from the receipt of principal and accrued interest due under the promissory notes issued bythe Government of Belize to secure the deferred consideration payable in connection with the sale of our interestin Belize Water Services in October 2005. The receipt of these funds enabled us to release $0.2 million to income,which amount was originally provided in the consolidated accounts for the year ended March 31, 2006 against theface value of the then remaining three promissory notes. The disposal of our business in Belize and this gain isdescribed in Note 22 “Disposal of subsidiaries” to our consolidated financial statements.

• Mexico. The loss on disposal in the year ended March 31, 2009 represents additional legal and professional costsin connection with the early termination of our operations in Mexico in January 2008.

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Interest (expense)/income and exchange rate results Year ended Percentage March 31, Change change Year ended Year ended 2008 at 2008-2009 2008-2009 March 31, March 31, constant at constant at constant Dutch GAAP 2009 as 2008 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom $ (9,731) $ (8,870) $ (7,468) $ (2,263) (30.3)%South Africa(1) (115) (1,528) (1,258) 1,143 90.9 Indonesia 14 (55) (49) 63 128.6 China(2) 301 893 904 (603) 66.7 Chile(3) (1,785) (1,097) (989) (796) (80.5)Panama (526) (851) (851) 325 38.2 The Philippines 37 28 27 10 (37.0)Holding companies 8,201 (8,113) (8,211) 16,412 n/a

Total continuing operations $ (3,604) $ (19,593) $ (17,895) $ 14,291 79.9%

Discontinued operations—Mexico 11 (91) (82) 88 n/a Exchange rate effect (1,707)

Total $ (3,593) $ (19,684) $ (19,684)




Our interest (expense)/income and exchange rate results from continuing operations changed by $14.3 million from fiscalyear 2008 to fiscal year 2009 at constant exchange rates.

• Holding companies. The $16.4 million change is primarily the result of a movement from an exchange loss of$2.3 million in the year ended March 31, 2008 to an exchange gain of $10.0 million in the year ended March 31,2009. Additionally $5.9 million of interest charges were incurred on borrowings for the year ended March 31, 2008.These borrowings were repaid in February 2008 out of the proceeds of our initial public offering. Offsetting thesereductions are the interest costs of $1.9 million that we incurred during the year ended March 31, 2009 on ourrevolving loan facility, together with $0.5 million from the amortization of arrangement fees.

• United Kingdom. Our U.K. subsidiary incurred $2.3 million of additional net interest costs during the year endedMarch 31, 2009, of which $2.1 million is due to the indexation of its long-term debt facility by reference to the U.K.retail price index.

• South Africa. The $1.1 million change is primarily due to the recognition of $0.7 million of accrued interest incomedue under the terms of a loan advanced to the former minority shareholder in our Nelspruit project company.Additionally interest expenses incurred on our South African bank borrowing decreased as a result of principalrepayments made since March 31, 2008.

• Chile. The increased net expense of $0.8 million is largely due to the $0.2 million in respect of currency conversionlosses on the Unidades de Fomento (UF), together with $0.2 million in respect of costs associated with thefinancing of our acquisitions of Servicomunal and Servilampa and a further $0.3 million of net interest expensefrom Servicomunal and Servilampa since the date of their acquisition.

• China. A reduced amount of interest income from cash deposits is the principal reason for the lower net interestincome earned by our Chinese operations during the year ended March 31, 2009 compared to the previous yearas surplus cash was used for new investments.

• Panama. The $0.3 million change is a reflection of principal repayments made since March 31, 2008 and the effectof lower variable interest rates being applied to the principal balances outstanding during the year.

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Taxation Year ended Percentage March 31, Change change Year ended Year ended 2008 at 2008-2009 2008-2009 March 31, March 31, constant at constant at constant Dutch GAAP 2009 as 2008 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates Operating companies $ (12,979) $ (7,964) $ (6,924) $ (6,055) 87.4%Holding companies (1,253) (1,395) (1,376) 123 (8.9)

Total continuing operations $ (14,232) $ (9,359) $ (8,300) $ (5,932) 71.5%

Discontinued operations—Belize (69) — — (69) n/a Discontinued operations—Mexico 38 (357) (322) 360 n/a Exchange rate effect 1,094

Total $ (14,263) $ (9,716) $ (9,716)

The overall effective tax rates for fiscal years 2008 and 2009 were 43.7% and 43.1%, respectively. The change ineffective tax rates was significantly influenced by:

• United Kingdom. The U.K. subsidiary’s effective tax rate was 59.2% for fiscal year 2009 compared to 20.3% in theprior period. The increase is due primarily to a change in the system of tax allowances for industrial buildingswhich has generated a one-time deferred tax charge to the statement of income of $4.1 million in the year endedMarch 31, 2009. During the year ended March 31, 2008 the statement of income received a benefit of $2.2 millionarising on the change to the standard rate of income tax in the United Kingdom from 30% to 28%.

• Chile. In the year ended March 31, 2009 a one-time adjustment in the form of a $0.3 million charge was made tothe deferred tax position of our Santiago-based regulated operations with respect to its water rights portfolio.

• Holding companies. Cascal N.V. generated a pre-tax profit of approximately $9.2 million in fiscal year 2009 due toexchange rate results. This amount has been set-off in full against tax losses carried forward from fiscal year 2008,thereby benefiting our consolidated tax charge and overall effective tax rate.

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Minority interest Year ended Percentage March 31, Change change Year ended Year ended 2008 at 2008-2009 2008-2009 March 31, March 31, constant at constant at constant Dutch GAAP 2009 as 2008 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates South Africa(1) $ (420) $ (454) $ (373) $ (47) 12.6%China(2) (592) (491) (528) (64) 12.1

Total continuing operations $ (1,012) $ (945) $ (901) $ (111) 12.3%

Exchange rate effect (44)

Total $ (1,012) $ (945) $ (945)


(2) Includes results of operations from Zhumadian from July 23, 2008.

Minority interests increased by $0.1 million reflecting the increased profits in Siza Water, South Africa and the inclusion of12 months of minority share of the results of Siza Water compared to 11 months in the prior period together with theinclusion of the 49% minority shareholding in our Chinese project in Zhumadian, which we acquired on July 23, 2008.These effects were partially offset by the purchase of the 10% minority interest in our Nelspruit subsidiary in South Africain August 2008.

Net profit Year ended Percentage March 31, Change change Year ended Year ended 2008 at 2008-2009 2008-2009 March 31, March 31, constant at constant at constant Dutch GAAP 2009 as 2008 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom $ 5,762 $ 18,351 $ 15,451 $ (9,689) (62.7)%South Africa(1) 3,724 2,702 2,224 1,500 67.4 Indonesia 3,180 2,211 1,976 1,204 60.9 China(2) 1,267 191 370 897 242.4 Chile(3) (974) (1,378) (1,243) 269 21.6 Panama 3,716 2,762 2,762 954 34.5 The Philippines 1,149 1,083 1,038 111 10.7 Holding companies 105 (16,034) (15,158) 15,053 99.3


Discontinued operations—Belize 134 1,295 1,295 (1,161) (89.7)Discontinued operations—Mexico (222) 405 365 (587) n/a Exchange rate effect 2,508

Total $ 17,841 $ 11,588 $ 11,588




For the reasons set forth above, our net profit from continuing operations at constant exchange rates increased by$10.5 million.

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Fiscal year 2007 compared to fiscal year 2008

Revenue Year ended Percentage March 31, Change change Year ended Year ended 2007 at 2007-2008 2007-2008 March 31, March 31, constant at constant at constant Dutch GAAP 2008 as 2007 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom(1) $ 94,791 $ 75,705 $ 80,418 $ 14,373 17.9%South Africa(2) 21,673 13,766 13,474 8,199 60.9 Indonesia 11,356 11,062 10,980 376 3.4 China(3) 10,023 2,924 3,100 6,923 223.3 Chile 7,593 6,393 6,802 791 11.6 Panama(4) 8,780 6,165 6,165 2,615 42.4 The Philippines 2,861 2,359 2,681 180 6.7 Holding companies 700 193 435 265 60.9


Discontinued operations-Mexico 2,865 3,136 3,171 (306) (9.6)%Exchange rate effect (5,523)

Total $ 160,642 $ 121,703 $ 121,703

(1) Includes results of operations of Pre-Heat Limited from February 1, 2007.


(3) Represents results of operations of our first four Chinese projects from November 15, 2006.

(4) Represents results of operations from June 26, 2006.

Our revenue from continuing operations increased by $33.7 million from fiscal year 2007 to fiscal year 2008 at constantexchange rates due primarily to our recent acquisitions.

• United Kingdom. The $14.4 million increase was primarily due to inclusion of $8.5 million additional revenue fromthe non-regulated business we acquired on February 1, 2007 compared with the amount reported in fiscal year2007. Our revenue also improved by $4.2 million due to the effect of our scheduled rate increase of 5.47% (1.6%plus inflation), modest volume gains compared with the same period of fiscal year 2007 and an increase inrevenue from our existing non-regulated activities of $1.7 million.

• South Africa. The $8.2 million increase resulted principally from the inclusion of 11 months of revenue (amountingto $5.9 million) from the subsidiary we acquired in May 2007. An additional $2.3 million arose from a rate increaseof 7.75% implemented by our Nelspruit subsidiary with effect from August 2007, together with the full 12 months’effect of the 7.5% rate increase in July 2006 and higher volumes supplied by the business as a result of newconnections to the network.

• China. The $6.9 million increase principally reflects the inclusion of only four and a half months of revenue in fiscalyear 2007, following our acquisition of The China Water Company Limited on November 15, 2006, compared witha full year’s revenue for fiscal year 2008. In addition, all four of our mainland Chinese operations owned duringthese periods have increased their revenues in fiscal year 2008 compared with the previous period through acombination of volume growth and in some cases an inflation based rate increase as well.

• Panama. The $2.6 million increase resulted from the inclusion of 12 months of results during the year endedMarch 31, 2008 compared with only nine months during the prior period, along with the effect of our 36% rateincrease that became effective from September 1, 2006.

• Chile. The $0.8 million increase reflects volume and rate driven growth achieved by our concessions in Santiagoas well as our waste water collection and treatment operation in Antofagasta.

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Raw and auxiliary materials and other external costs Year ended Percentage March 31, Change change Year ended Year ended 2007 at 2007-2008 2007-2008 March 31, March 31, constant at constant at constant Dutch GAAP 2008 as 2007 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom(1) $ 18,161 $ 12,769 $ 13,564 $ 4,597 33.9%South Africa(2) 6,017 2,508 2,455 3,562 145.1 Indonesia 4,300 4,249 4,218 82 1.9 China(3) 2,340 803 851 1,489 175.0 Chile 2,799 2,017 2,146 653 30.4 Panama(4) 38 — — 38 n/a The Philippines 844 774 880 (36) (4.1)Holding companies — — — — n/a


Discontinued operations—Mexico 689 701 709 (20) (2.8)%Exchange rate effect (1,002)

Total $ 35,188 $ 23,821 $ 23,821




(4) Biwater incurs these raw and auxiliary materials and other external costs, which are recharged to us and reportedwithin other operating charges.

Our raw and auxiliary materials and other external costs from continuing operations increased by $10.4 million at constantexchange rates, in large part due to the recent acquisitions.

• United Kingdom. The $4.6 million increase was primarily due to the inclusion of $3.1 million of costs from thenon-regulated business that we acquired on February 1, 2007. Most of the remaining $1.5 million increase wasdue to greater use of sub-contracted materials and labor by our existing non-regulated business to support itshigher level of activity in the year ended March 31, 2008 and the increased price of electricity and general costinflation in the regulated business.

• South Africa. The $3.6 million increase was primarily due to the inclusion of 11 months of costs amounting to$3.0 million, from the subsidiary we acquired in May 2007. The balance of the overall increase, amounting to$0.6 million, is comprised of higher fuel, chemicals and power costs in the year ended March 31, 2008, increasesin charges for raw and bulk water supplied to us and increased costs related to maintenance of the network andmeter repairs and replacement.

• China. The $1.5 million increase primarily reflects the inclusion of only four and a half months of costs in fiscal year2007, following our acquisition of The China Water Company Limited on November 15, 2006, compared with a fullyear’s costs in fiscal year 2008 together with some power cost increases due to higher production volumes in fiscalyear 2008, notably in Yanjiao.

• Chile. The $0.7 million increase was primarily due to higher costs of purchasing fuel and electricity during the yearended March 31, 2008.

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Staff costs Year ended Percentage March 31, Change change Year ended Year ended 2007 at 2007-2008 2007-2008 March 31, March 31, constant at constant at constant Dutch GAAP 2008 as 2007 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom(1) $ 17,835 $ 12,267 $ 13,030 $ 4,805 36.9%South Africa (2) 5,473 3,686 3,608 1,865 51.7 Indonesia 1,428 1,243 1,234 194 15.7 China(3) 2,585 907 961 1,624 169.0 Chile 1,455 1,461 1,555 (100) (6.4)Panama(4) — — — — n/a The Philippines 323 268 304 19 6.3 Holding companies 4,576 3,939 4,183 393 9.4


Discontinued operations—Mexico 673 660 668 5 0.7%Exchange rate effect (1,112)

Total $ 34,348 $ 24,431 $ 24,431




(4) Biwater incurs these staff costs, which are recharged to us and reported within other operating charges.

Our staff costs from continuing operations increased by $8.8 million from fiscal year 2007 to fiscal year 2008 at constantexchange rates primarily due to the recent acquisitions.

• United Kingdom. The $4.8 million increase was primarily due to the inclusion of $3.7 million of additional costsfrom the non-regulated business we acquired in February 2007, with the balance due to salary rate increasesalong with $0.2 million of payments in connection with early retirement arrangements.

• South Africa. The $1.9 million increase was due to the inclusion of 11 months of costs from our recently acquiredsubsidiary amounting to $1.0 million, combined with the effect of the Nelspruit business’s annual salary increase ofapproximately 6%, the addition of one expatriate staff member to the Nelspruit senior management team inAugust 2007 and some additional costs relating to taxes and social security.

• China. The $1.6 million increase reflects the inclusion of only four and a half months’ costs in fiscal year 2007,following our acquisition of The China Water Company Limited on November 15, 2006, compared with a full year’scosts in fiscal year 2008 along with the effect of salary rate increases.

• Holding companies. The increase of $0.4 million for the year ended March 31, 2008 compared with the year endedMarch 31, 2007 results from a combination of headcount and salary rate increases. In May 2007, we appointed aFinancial Controller and Head of Financial Reporting in preparation for the initial public offering.

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Depreciation and amortization of intangible and tangible fixed assets and negative goodwill Year ended Percentage March 31, Change change Year ended Year ended 2007 at 2007-2008 2007-2008 March 31, March 31, constant at constant at constant Dutch GAAP 2008 as 2007 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom(1) $ 15,672 $ 12,590 $ 13,373 $ 2,299 17.2%South Africa(2) 1,247 801 784 463 59.1 Indonesia 883 860 854 29 3.4 China(3) 1,451 456 483 968 200.4 Chile 2,096 2,101 2,236 (140) (6.4)Panama(4) 833 625 625 208 33.3 The Philippines 219 171 194 25 12.9 Holding companies 339 328 330 9 2.7


Discontinued operations—Mexico 46 48 48 (2) (4.2)%Exchange rate effect (947)

Total $ 22,786 $ 17,980 $ 17,980





Our depreciation and amortization of intangible and tangible fixed assets and negative goodwill from continuing operationsincreased by $3.9 million from fiscal year 2007 to fiscal year 2008 at constant exchange rates, partly due to the recentacquisitions.

• United Kingdom. The $2.3 million increase resulted from incremental depreciation arising from the continuation ofcapital investment in infrastructure and plant and equipment in line with our most recent regulatory review togetherwith $0.5 million of amortization of intangible assets recognized on acquisition of the non-regulated business wepurchased in February 2007.

• China. The $1.0 million increase reflects the inclusion of only four and a half months of costs in fiscal year 2007,following our acquisition of The China Water Company Limited on November 15, 2006, compared with a full year’scharge in fiscal year 2008.

• South Africa. The $0.5 million increase was almost entirely due to the acquisition of Siza Water on May 3, 2007.

• Panama. The $0.2 million increase resulted from the inclusion of a full year’s depreciation during the 12 monthsended March 31, 2008 compared with only nine months during the prior period.

• Chile. The $0.1 million decrease resulted from our review of the useful lives of certain non-current assets and therelated adjustment to our depreciation charges in accordance with Dutch GAAP.

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(Profit)/loss on disposal of intangible and tangible fixed assets Year ended Percentage March 31, Change change Year ended Year ended 2007 at 2007-2008 2007-2008 March 31, March 31, constant at constant at constant Dutch GAAP 2008 as 2007 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom(1) $ (671) $ (981) $ (1,042) $ 371 (35.6)%South Africa(2) (32) — — (32) n/a Indonesia — (9) (9) 9 n/a China(3) (36) 3 4 (40) n/a Chile (10) (2) (2) (8) 400.0 Others — — — — n/a

Total continuing operations $ (749) $ (989) $ (1,049) $ 300 (28.6)%

Discontinued operations — Mexico — — — — n/a%Exchange rate effect 60

Total $ (749) $ (989) $ (989)




Our profit on disposal of intangible and tangible fixed assets from continuing operations decreased by $0.3 millioncompared with the prior period.

• United Kingdom. From time to time our United Kingdom based subsidiary has opportunities to realize valuethrough disposal of land and buildings that are no longer integral to its business. Such disposals can usually beexpected to give rise to a gain on sale.

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Other operating charges and incremental offering-related costs Year ended Percentage March 31, Change change Year ended Year ended 2007 at 2007-2008 2007-2008 March 31, March 31, constant at constant at constant Dutch GAAP 2008 as 2007 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom(1) $ 11,900 $ 9,796 $ 10,406 $ 1,494 14.4%South Africa(2) 3,033 3,015 2,951 82 2.8 Indonesia 1,495 1,204 1,195 300 25.1 China(3) 3,246 437 464 2,782 599.6 Chile 1,300 1,304 1,388 (88) (6.3)Panama(4) 4,226 2,469 2,469 1,757 71.2 The Philippines 313 231 263 50 19.0 Holding companies 2,314 541 591 1,031 174.5


Discontinued operations—Mexico 1,000 1,258 1,272 (272) (21.4)%Exchange rate effect (744)

Total $ 28,827 $ 20,255 $ 20,255




(4) Represents results of operations from June 26, 2006, and includes the direct and overhead costs relating to theproject.

Our other operating charges from continuing operations and incremental offering-related costs increased by $7.4 millionfrom fiscal year 2007 to fiscal year 2008 at constant exchange rates due to the recent acquisitions.

• China. The $2.8 million increase reflects the inclusion of only four and a half months of costs in fiscal year 2007,following our acquisition of The China Water Company Limited on November 15, 2006, compared with a full year’scharge in fiscal year 2008. The overall increase also includes the effect of management charges levied by Cascal,the reinforcement of business development activities and increased professional fees arising mainly frompost-acquisition integration projects.

• Panama. The $1.8 million increase was primarily due to the inclusion of 12 months of costs during the year endedMarch 31, 2008, compared with only nine months during the prior period. In addition, the year ended March 31,2008 includes approximately $0.9 million of additional costs relating to our operation and maintenancesub-contract and management support arrangements with Biwater.

• United Kingdom. The $1.5 million increase was partly attributable to the inclusion of an additional $0.7 million costsfrom the non-regulated business we acquired in February 2007. The rest of the increase resulted from a$0.2 million increase in recruitment and marketing costs incurred by our existing non-regulated business and anincrease in insurance costs of $0.2 million for our regulated water operation and an increase of $0.4 million forhigher professional fees and general cost inflation.

• Holding companies. The $1.0 million increase resulted essentially from the effect of a $1.2 million release ofprovisions for bad and doubtful debts in the year ended March 31, 2007 that were recovered from our joint venturein the Philippines.

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Gain on disposal/ termination of subsidiary Year ended Percentage March 31, Change change Year ended Year ended 2007 at 2007-2008 2007-2008 March 31, March 31, constant at constant at constant 2008 as 2007 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates Discontinued operations — Belize $ 1,295 — — $ 1,295 n/a%Discontinued operations — Mexico 396 — — 396 n/a

Total $ 1,691 — — $ 1,691 n/a%

• Belize. This gain arose from the receipt of principal and accrued interest due under the promissory notes issued bythe Government of Belize to secure the deferred consideration payable in connection with the sale of our interestin Belize Water Services in October 2005. The receipt of these funds enabled us to release $1.3 million to income,which amount was originally provided in the consolidated accounts for the year ended March 31, 2006 against theface value of the then remaining three promissory notes. The disposal of our business in Belize and this gain isdescribed in Note 22 “Disposal of subsidiaries” to our consolidated financial statements.

• Mexico. This gain arose from the early termination of our operation and maintenance contract in the city of PuertoVallarta on January 8, 2008. On early termination we received compensation from our client of $1.0 million andincurred closure costs of $0.6 million before tax. The early termination of our operation and maintenance contractin Mexico and this resultant gain is described in Note 22 “Disposal of subsidiaries” to our consolidated financialstatements.

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Interest (expense)/income and exchange rate results Year ended Percentage March 31, Change change Year ended Year ended 2007 at 2007-2008 2007-2008 March 31, March 31, constant at constant at constant Dutch GAAP 2008 as 2007 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom(1) $ (8,870) $ (7,321) $ (7,777) $ (1,093) 14.1%South Africa(2) (1,528) (1,547) (1,514) (14) 0.9 Indonesia (55) (119) (118) 63 n/a China(3) 893 90 96 797 830.2 Chile (1,097) (1,188) (1,264) 167 n/a Panama(4) (851) (756) (756) (95) 12.6 The Philippines 28 (200) (227) 255 n/a Holding companies (8,113) (9,465) (9,435) 1,322 n/a

Total continuing operations $ (19,593) $ (20,506) $ (20,995) $ 1,402 n/a%

Discontinued operations—Mexico (91) 14 14 (105) n/a%


Total $ (19,684) $ (20,492) $ (20,492)





Our interest (expense)/income and exchange rate results from continuing operations changed by $1.4 million from fiscalyear 2007 to fiscal year 2008 at constant exchange rates.

• Holding companies. The $1.3 million change essentially arises from borrowings in June 2006 in connection withBiwater’s interest in us. The overall decrease consists of a $4.1 million reduction in foreign exchange lossesincurred in connection with retranslating monetary liabilities into our reporting currency offset in part by additionalinterest expense of $1.7 million due to increased LIBOR rates in fiscal year 2008 compared with fiscal year 2007.The remaining difference of $1.1 million can be attributed to interest incurred on our new revolving credit facility,lower interest income in fiscal year 2008 as a result of smaller cash balances on hand during that period, lessinterest income earned in fiscal year 2008 on the deferred consideration receivable in connection with the sale ofour shares in Belize Water Services Limited and increased facility arrangement fees.

• United Kingdom. The $1.1 million change is primarily due to the inflation indexation applied to our U.K. projectcompany’s long term debt instrument together with lower interest income as a consequence of holding smalleraverage cash balances during the year ended March 31, 2008, following the acquisition of a non-regulatedbusiness in February 2007.

• China. The overall change of $0.8 million is mainly the result of interest earned on cash deposits and a short termloan made to Cascal N.V. which was repaid before the end of fiscal year 2008.

• Chile. The $0.2 million change is primarily due to favorable foreign exchange rate movements during fiscal year2008 together with lower interest charges resulting from our repayments of principal during the period.

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Taxation Year ended Percentage March 31, Change change Year ended Year ended 2007 at 2007-2008 2007-2008 March 31, March 31, constant at constant at constant Dutch GAAP 2008 as 2007 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates Operating companies $ (7,964) $ (7,642) $ (8,003) $ 39 n/a%Holding companies (1,395) 836 850 (2,245) n/a

Total continuing operations $ (9,359) $ (6,806) $ (7,153) $ (2,206) 30.8%

Discontinued operations—Mexico (357) (138) (139) 218 n/a%Exchange rate effect 348

Total $ (9,716) $ (6,944) $ (6,944)

The overall effective tax rates for fiscal years 2007 and 2008 were 43.7% and 42.9%, respectively. The change ineffective tax rates was significantly influenced by:

• Holding companies. Cascal N.V. incurred taxable losses of approximately $11.6 million in fiscal year 2008 that itwas unable to utilize during the period due to the absence of any other income taxable in The Netherlands. Thisamount was similar to the $11.5 million amount for fiscal year 2007. However, during fiscal year 2007 we wereable to offset a portion of these losses against deferred tax liabilities recognized in earlier years up to the fullamount of those liabilities, which was $1.7 million. The amount of deferred tax asset not recognized in the currentyear is $3.7 million.

• United Kingdom. The U.K. subsidiary’s effective tax rate was 20.3% for fiscal year 2008 compared to 29.7% in theprior period. The reduction is due primarily to the recognition in the year ended March 31, 2008 of a deferred taxcredit of $2.2 million arising from the adjustment of the tax rate used to compute the March 31, 2007 deferred taxliability in accordance with the change enacted during fiscal year 2008 that reduces the standard rate of incometax in the United Kingdom from 30% to 28% with effect from April 1, 2009.

• Chile. Our Chilean operations recorded a pre-tax loss of $1.1 million in the year ended March 31, 2008 on whichan effective tax charge of 20% has been incurred. A majority of the tax charge incurred arises from taxable foreignexchange gains on inter-company loans advanced by our Chilean intermediate holding company. Thecorresponding foreign exchange losses in our Chilean operating entities do not give rise to a similar tax credit infiscal year 2008 because we took a full valuation allowance against certain deferred tax assets relating to lossescarried forward. At March 31, 2008, we cannot anticipate being able to utilize these losses, in part because there isno mechanism whereby losses of one corporate entity can be offset against the taxable profits generated by itsaffiliates.

• China. Our Chinese subsidiary had an aggregate tax charge of $0.6 million on a pre-tax profit of $1.3 million, andan overall effective rate of 46.2%, due to the relative pre-tax profits and losses of the Chinese projects and theprofit tax and dividend withholding tax rates applicable to them, combined with the tax attributes of our CaymanIsland intermediate holding company that owns our interests in our Chinese projects.

• Panama. Our Panamanian project has benefited from a 100% tax exemption during its first five years of operation,which was reduced to 75% from October 2007. The standard rate of income tax in Panama is 30%. However,dividends paid by our Panamanian subsidiary are taxed at the standard U.K. corporate tax rate upon receipt by ourintermediate holding company and a tax charge has accordingly been calculated based on the amount ofun-remitted earnings in Panama.

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Minority interest Year ended Percentage March 31, Change change Year ended Year ended 2007 at 2007-2008 2007-2008 March 31, March 31, constant at constant at constant Dutch GAAP 2008 as 2007 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom $ — $ — $ — $ — n/a%South Africa(1) (454) (185) (181) (273) 150.8 China(2) (491) (568) (602) 111 n/a

Total continuing operations $ (945) $ (753) $ (783) $ (162) 20.7%


Total $ (945) $ (753) $ (753)


(2) Represents the results of operations of our first four Chinese projects from November 15, 2006.

Overall, minority interests increased by $0.2 million reflecting the minority shareholdings in our Chinese projects that weacquired in November 2006, along with those in both of our South African subsidiaries (including Siza Water, which weacquired in May 2007).

Net profit Year ended Percentage March 31, Change change Year ended Year ended 2007 at 2007-2008 2007-2008 March 31, March 31, constant at constant at constant Dutch GAAP 2008 as 2007 as exchange exchange exchange (Dollars in thousands) reported reported rates rates rates United Kingdom(1) $ 18,351 $ 15,425 $ 16,386 $ 1,965 12.0%South Africa(2) 2,702 1,411 1,381 1,321 95.7 Indonesia 2,211 2,350 2,331 (120) (5.1)China(3) 191 956 1,015 (824) (81.2)Chile (1,378) (2,198) (2,340) 962 41.1 Panama(4) 2,762 2,315 2,315 447 19.3 The Philippines 1,083 655 745 338 45.4 Holding companies (16,034) (13,244) (13,253) (2,781) 21.0


Discontinued operations—Belize 1,295 — — 1,295 n/a%Discontinued operations—Mexico 405 346 349 56 16.0%Exchange rate effect (913)

Total $ 11,588 $ 8,016 $ 8,016





For the reasons set forth above, our net profit from continuing operations at constant exchange rates increased by$1.3 million.

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Reconciliation of Dutch GAAP to U.S. GAAP

Our consolidated financial statements have been prepared in accordance with Dutch GAAP, which differs in certainrespects from U.S. GAAP. Reconciliations of net profit and shareholders’ equity under Dutch GAAP and under U.S. GAAPare set out below.

Net profit Aggregated For the For the for the period period year Year Year April 1, June 26, ended ended ended 2006 to 2006 to March 31, March 31, March 31, June 25, March 31, 2007 (Dollars in thousands, except share and per share data) 2009 2008 2006(1) 2007(1) (Unaudited)(2) Net profit in accordance with Dutch GAAP $ 17,841 $ 11,588 $ 3,598 $ 4,418 $ 8,016 U.S. GAAP adjustments — Goodwill amortization(b) 522 431 60 204 264 — Depreciation and amortization of fair value

adjustments pushed down into Cascal N.V.(c) 492 67 — (526) (526)— Business combinations(d) (300) (677) — 353 353 — Effects of changes in tax legislation (e) 4,088 — — — — — Tax effect of U.S. GAAP adjustments (327) 28 — (160) (160)

Net profit in accordance with U.S. GAAP $ 22,316 $ 11,437 $ 3,658 $ 4,289 $ 7,947

Net profit Continuing operations $ 22,404 $ 10,035 $ 3,596 $ 4,060 $ 7,656 Discontinued operations (88) 1,402 62 229 291

Net profit in accordance with U.S. GAAP $ 22,316 $ 11,437 $ 3,658 $ 4,289 $ 7,947

Net profit per share in accordance with U.S. GAAP

basic and diluted method(3) $ 0.73 $ 0.49 $ 0.17 $ 0.20 $ 0.37 Net profit per share—basic and diluted(3)

Continuing operations $ 0.73 $ 0.43 $ 0.17 $ 0.19 $ 0.36 Discontinued operations $ 0.00 $ 0.06 — $ 0.01 $ 0.01

Net profit per share in accordance with U.S. GAAPbasic and diluted method(3) $ 0.73 $ 0.49 $ 0.17 $ 0.20 $ 0.37 Weighted average number of shares—basic and

diluted(3) 30,566,007 23,329,982 21,849,343 21,849,343 21,849,343

(1) The dual column presentation of our fiscal year 2007 results of operations under U.S. GAAP arises from the changein basis due to the Nuon transaction.

(2) The aggregated results for the year ended March 31, 2007 is a non-GAAP measure representing an aggregation ofour audited results for the period April 1, 2006 to June 25, 2006 prior to the acquisition by Biwater of Nuon’s 50%share in us, and our audited results for the period June 26, 2006 to March 31, 2007. See Note 28 “Summary ofdifferences between accounting policies generally accepted in The Netherlands and in the United States of America”to our consolidated financial statements.

(3) Basic and diluted net profit per share is computed by dividing the net profit applicable to common shares by theweighted average number of common shares outstanding during the period. For comparative periods prior to ourinitial public offering this assumes that the series of stock split and recapitalization transactions that effectivelyresulted in a 2,607-for-1 stock split occurred as of the beginning of those periods and that there were 21,849,343common shares outstanding during all of the comparative periods presented prior to our initial public offering.

Shareholders’ equity As of March 31, As of March 31, (Dollars in thousands, except per share data) 2009 2008 Shareholders’ equity in accordance with Dutch GAAP $ 118,214 $ 136,726 U.S. GAAP adjustments — Pensions(a) 412 13,140 — Goodwill amortization 1,643 1,787 — Fair value adjustments pushed down to Cascal N.V(c) 26,998 35,790 — Business combinations(d) 1,036 463 — Effects of changes in tax legislation (e) 3,465 — — Tax effect of U.S. GAAP differences (7,631) (12,509)

Shareholders’ equity in accordance with U.S. GAAP $ 144,137 $ 175,397

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The numerator for the purposes of calculating net profit per share under U.S. GAAP is as follows: Aggregated for the For the periods year ended Year ended Year ended April 1, 2006 to June 26, 2006 to March 31,U.S. GAAP March 31, March 31, June 25, March 31, 2007(Dollars in thousands) 2009 2008 2006(1) 2007(1) (Unaudited)(2)Net profit in accordance with

U.S. GAAP $22,316 $11,437 $3,658 $4,289 $7,947

(1) The dual column presentation of our fiscal year 2007 results of operations under U.S. GAAP arises from the changein basis due to the Nuon transaction.

(2) The aggregated results for the year ended March 31, 2007 is a non-GAAP measure representing an aggregation ofour audited results for the period April 1, 2006 to June 25, 2006 prior to the acquisition by Biwater of Nuon’s 50%share in us, and our audited results for the period June 26, 2006 to March 31, 2007. See Note 28 “Summary ofdifferences between accounting policies generally accepted in The Netherlands and in the United States of America”to our consolidated financial statements.

(a) Pensions

We account for the costs of pensions under the rules set forth in Dutch GAAP.

On April 1, 2005, we adopted the new Dutch GAAP basis of accounting for pension costs, GAR 271, which follows theguidance set out in International Accounting Standards (IAS) 19 Employee Benefits. At the date of adoption, we recordedthe unfunded pension benefit obligation, in accordance with the transition rules under Dutch GAAP, which do not requirecomparative periods to be restated for the effects of this change.

Under U.S. GAAP, we adopted SFAS No. 87 “Employers’ Accounting for Pensions,” as of April 1, 2004, the beginning ofthe first period for which the reconciliation between the Dutch GAAP and U.S. GAAP bases of reporting was presented.The transition rules permitted for foreign private issuers like us result in the unfunded pension benefit obligation,calculated in accordance with U.S. GAAP, being recognized as a liability on that date.

Under both Dutch GAAP and U.S. GAAP, defined benefit pension costs are determined on a systematic basis over thelength of employee service. However, prior to April 1, 2005, the rules under Dutch GAAP were less prescriptive than U.S.GAAP in respect of the actuarial assumptions that must be used and the allocation of costs to accounting periods. DutchGAAP previously permitted the annual pension cost to be calculated based upon contributions payable by the sponsoringemployer into the fund. Furthermore, the actuarial valuation under U.S. GAAP had to be carried out on an annual basis,whereas a triennial valuation was required for Dutch GAAP purposes.

From April 1, 2005, the pension accounting rules for determining net periodic cost to be charged to the statement ofincome under Dutch GAAP are generally consistent with those that have been applied throughout the periods presentedunder U.S. GAAP. Both Dutch GAAP and U.S. GAAP now require each significant assumption to determine annualpension cost to be a best estimate with respect to that individual assumption. For example, the discount rate used shouldbe that for ‘AA’ rated bonds with a similar maturity to the pension obligations, and the value of the plan’s assets should bebased upon market values at each balance sheet date.

Under Dutch GAAP, we recorded a liability before deferred taxation in respect of our U.K. defined benefit pension plan of$14.1 million and $8.8 million as of March 31, 2008 and 2009 respectively. Under U.S. GAAP, we have calculated apension liability of $0.4 million and $8.1 million as of March 31, 2008 and 2009 respectively, in respect of the samepension plan. Of the difference between Dutch GAAP and U.S. GAAP, defined benefit pension liabilities of $13.7 millionas of March 31, 2008 and $0.7 million as of March 31, 2009, $0.5 million and $0.4 million, respectively, have beenrecognized in U.S. GAAP financial statements on push down of fair values recognized in the Nuon transaction describedin note (c) below. Our equity method investments in Indonesia and The Philippines each operate a defined benefitpension plan and together with a pre-existing pension liability on acquisition of our subsidiary in Zhumadian, China, theaggregate liabilities as of March 31, 2008 and 2009 were

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$0.1 million and $1.5 million, respectively, under Dutch GAAP. In accordance with U.S. GAAP, the pension costs of ourU.K. defined benefit pension plan have been presented in accordance with the requirements of SFAS 87 and SFAS132(R). See Note 28(a) “Summary of differences between accounting policies generally accepted in The Netherlands andin the United States of America — Pensions” to our consolidated financial statements.

We estimate that the effect of a 0.5% increase or decrease in the discount rate on the net periodic pension expense forthe year ended March 31, 2009 would be $0.2 million and $1.0 million, respectively and the effect of a 0.5% increase ordecrease in the expected long term return on plan assets would be $0.1 million and $1.0 million, respectively. Theseassets are managed by professional investment managers. The primary objective is long term growth of assets in order tomeet present and future obligations.

(b) Goodwill amortization

Under Dutch GAAP, goodwill is presumed to have a finite useful economic life of 20 years or less. Accordingly, goodwillarising upon an acquisition is amortized over 20 years for Dutch GAAP reporting purposes. The requirements of SFAS142 specify that goodwill arising from business combinations is not subject to annual amortization for reporting under U.S.GAAP. For U.S. GAAP reporting purposes, goodwill arising upon an acquisition is “pushed down” into the books of theacquired business. Push-down accounting is not permitted under Dutch GAAP.

(c) Fair value adjustments pushed down into Cascal N.V.

For U.S. GAAP purposes, the acquisition by Biwater of the 50% of our shares previously owned by Nuon has beenaccounted for in accordance with SFAS No. 141, “Business Combinations” (“SFAS 141”) and Staff Accounting Bulletin(SAB) Topic 5-J, “Push Down Basis of Accounting Required in Certain Limited Circumstances,” with “push-down”accounting applied to the 50% of the assets not already owned by Biwater. As a result, we have undertaken a purchaseprice allocation exercise, which has resulted in changes to the values of certain assets and liabilities by an amountrepresenting 50% of the difference between their fair value as of June 26, 2006 and their book value as of that date asrequired under U.S. GAAP. This “push-down” exercise is not permitted under Dutch GAAP. The total purchase price hasbeen allocated to the tangible and intangible assets acquired and liabilities assumed based upon management’sestimates of fair values which include the findings set out in third party valuation reports on long-lived tangible andintangible assets.

(d) Business combinations

Partial acquisitions

Under Dutch GAAP, GAR 216, all assets and liabilities of a business acquired in a transaction in which less than 100% ofa business’ equity are acquired (“partial acquisitions”) are recognized at fair value. Under U.S. GAAP, SFAS 141,“Business Combinations,” the portion of assets and liabilities attributable to minority interests in partial acquisitions areaccounted for at book value. The acquisition of 87% of The China Water Company, 73.4% of Siza Water and 51% ofZhumadian in China accordingly result in different values recognized as of the date of acquisition and subsequently indifferent depreciation and amortization charges between Dutch and U.S. GAAP.

Negative goodwill

Additionally, the acquisition of China Water has given rise under Dutch GAAP, GAR 216, to negative goodwill, which isrecognized as a liability on the balance sheet and amortized over the average estimated useful life of assets to which thenegative goodwill relates. No deferred tax is recorded in respect of negative goodwill. Under U.S. GAAP, SFAS 141requires any excess of the fair value of assets and liabilities acquired over the purchase price to be allocated to certainnon-current non-monetary assets acquired; our accounting policy under U.S. GAAP is to allocate such amounts to assetson a relative fair value basis. The allocation of that excess gives rise to temporary differences for U.S. GAAP, on whichdeferred taxes are recorded. Also under SFAS 141 negative goodwill has arisen on the acquisitions of Siza Water andServilampa and also within the acquired equity method investment of Yancheng, China. For Dutch GAAP reportingpurposes this negative goodwill has been accounted for as an impairment of the assessed fair values of the assetsacquired (based on the projected future cash flows of the business concerned) and

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has been allocated initially to intangible fixed assets and then where applicable against tangible fixed assets. Under U.S.GAAP the negative goodwill has been allocated proportionately to non-monetary, non-current assets. This has given riseto differences in the value of tangible and intangible assets and associated depreciation and amortization chargesbetween Dutch GAAP and U.S. GAAP.

Compensation arising on acquisition of subsidiary

Consideration payable to the former owners of the Pre-Heat business contingent on its post-acquisition results is partiallydependent on the continued employment of those individuals. Under Dutch GAAP this element has been treated asconsideration for the acquisition of the business and included in goodwill. Under U.S. GAAP guidance contained in EITF95-8, “Accounting for contingent consideration paid to the shareholders of an acquired enterprise in a purchase businesscombination,” this element has been treated as compensation for the individuals and will be recognized over the two-yearperiod of employment on which such payments partially depend. The former owners have received the full consideration.However as this amount remains part of the goodwill balance being amortized under Dutch GAAP an ongoing GAAPdifference will continue until the goodwill has been fully amortized.

(e) Effects of changes in tax legislation

During the year ended March 31, 2009 a change to tax law in the United Kingdom was enacted, the effect of which is toremove an entitlement to tax depreciation on an asset category referred to as “Industrial Buildings.”

Under the provisions of Dutch GAAP this change gives rise to a one-time charge to deferred tax because the abolishing ofthe entitlement to tax deprecation reduces the tax base of the assets to zero, with immediate effect. This is the accountingconsequence of the future tax deductions available in respect of those assets being reset to zero because of thelegislative change that has been implemented.

For US GAAP, a different accounting treatment follows from interpretation of FASB Statement No. 109, Accounting forIncome Taxes. This treatment freezes the tax basis of the assets at their amounts on the date of the change to the law.The justification for this interpretation is that there is a future tax benefit available on sale or abandonment of the asset inthe form of a deduction from sale proceeds, or as a capital loss, that equates to the un-depreciated cost for tax purposes.

The principal point of difference between the Dutch and US GAAP approaches is that the former anticipates the value ofthe asset being recovered through its continuing use, while the latter is predicated on value recovery through sale.Consequently, on conversion from Dutch GAAP to US GAAP the above mentioned one-time deferred tax liability hasbeen reversed in full.

(f) Differences in presentation

Equity method investments. Under Dutch GAAP, our share of joint venture net profits has been proportionallyconsolidated on a line-by-line basis in the statements of income and cash flows and on the balance sheet. Under U.S.GAAP, our share of joint venture net profits would be included within the single line item “Share of net profit of equitymethod investments.” Investments in joint ventures are classified in the single line item “Investment in equity methodinvestments” on the balance sheet under U.S. GAAP. The difference in presentation has no effect on either net profit orshareholders’ equity for either period presented.

Other. In addition to the differences in accounting for our joint ventures, there are also differences between Dutch GAAPand U.S. GAAP relating to the presentation of our statement of cash flows, capital leases, discontinued operations andlong-term borrowings. For a description of these differences, see Note 28 “Summary of differences between accountingpolicies generally accepted in The Netherlands and in the United States of America — (f) Differences of presentation” toour consolidated financial statements. Also, there are several line item differences between our Dutch GAAP and U.S.GAAP statements of income. Staff costs, loss/(profit) on disposal of intangible and tangible fixed assets, other operatingcharges and incremental offering-related costs in our Dutch GAAP statement of income are all included in the operationsand maintenance line item within costs and expenses in our U.S. GAAP statement of income. Exchange rate results in ourDutch GAAP statement of income are included in other income/(expense) in our U.S. GAAP statement of income.

B. Liquidity and capital resources

From its formation through fiscal year 2009, Cascal N.V. has generated positive consolidated cash flows from operatingactivities, which have supported our ongoing development and capital investment programs. In general, net cash flowsfrom operations are applied to capital expenditure projects locally and the payment of debt service on project-levelfinancing facilities. Thereafter, free cash can be distributed in accordance with the terms of the concession, contracts andlocal regulations applicable to our subsidiaries and joint venture companies, to the extent not otherwise restricted by ourcredit arrangements. There are legal, contractual and economic restrictions on the ability of our project companies totransfer funds to us in the form of cash dividends, particularly with respect to our U.K. and Panama operations. We do notbelieve such restrictions will have a material adverse effect on our ability to meet our cash obligations.

Our long-term capital requirements will be influenced by our ability to identify, tender and secure new businessopportunities in the coming years. With our experience of structuring the financing of new projects in such a way as tocreate the most appropriate balance between flexibility, currency matching, recourse and the overall cost of capital, we


anticipate being able to fulfill such requirements for capital as and when they might arise.

On November 2, 2007, we entered into a $30 million credit facility with HSBC Bank Plc. Of this amount, (a) $20 million is arevolving loan facility intended for general corporate purposes, reducing less efficient existing group debt, repayment of aloan from The China Water Company Limited, repayment of an inter-company loan granted by

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Bournemouth & West Hampshire Water plc and for general working capital purposes, and (b) $10 million is a guaranteefacility intended to be used to provide guarantees to replace existing ones, and to issue new or renewed guarantees onbehalf of certain subsidiaries. Following the completion of our initial public offering in February 2008, the revolving loanfacility bears interest at a rate based on one, two, three or six month U.S. Dollar LIBOR plus a margin that increases inmultiple steps beginning from 0.80% per annum if the ratio of the Company’s and its subsidiaries’ net borrowings toEBITDA is less than 1:1 up to 1.75% per annum if that ratio is greater than 3.5:1. The term of this facility was due toexpire on March 31, 2010 but was replaced by an amended and restated facility from June 12, 2008 as described in theparagraph below within this section beginning with the words “Since completing our initial public offering”.

For purposes of the determination of the margin, “net borrowings” means total borrowings less cash and cash equivalentinvestments and “EBITDA” means our total consolidated operating profit before taking into account net interest expense;tax; profits (or losses) attributable to minority interests in any member of our group; any share of the profit of anyassociated company or undertaking, except for dividends or other profit distributions (net of tax) received in cash by anymember of our group; all extraordinary and exceptional items; and exchange rate gains (or losses) arising due to theretranslation of balance sheet items and mark-to-market adjustments on currency swaps; after excluding (to the extentincluded) any gains or losses on the disposal or revaluation of assets (other than in the ordinary course of trading); afteradding any business interruption loss incurred which is covered by insurance and which is not added back to the totalconsolidated operating profit of our group in accordance with the applicable accounting principles; and after adding backall amounts provided for depreciation and amortization (including acquisition goodwill).

The unused commitment fee on the revolving loan facility is equal to the product of the applicable margin and 30% perannum. The borrowings are required to be repaid at the end of each interest period. The guarantee facility has aguarantee fee that is set at the same rate as the interest margin. The facilities are secured by, among other things,guarantees and indemnities from several of our subsidiary companies.

This credit facility contains a number of financial covenants (including maintenance tests) and operating covenants,including a restriction on incurring indebtedness. This credit facility also requires written consent of HSBC Bank Plc for theacquisition of a new project where the total acquisition price (including debt of the acquired company) exceeds$40 million.

In addition, as we continue to expand our portfolio of water and wastewater projects, we will experience increased capitalexpenditure requirements along with a need to finance a larger overall amount of working capital.

In general, our operating cash flows are both stable and predictable based on the forward visibility of revenue producedby our rate-regulated water and wastewater projects combined with well-established and efficient processes for collectingpayment in most of our operations. When evaluating new business opportunities, we take care to understand the workingcapital cycle and the operating cash flow requirements of the new businesses.

Since completing our initial public offering in February 2008 we have been able to accelerate the progression of ourgrowth strategy in terms of the number of new projects and corporate acquisition opportunities that we are working on andtheir respective stages of completion. As a consequence, our requirement for further growth capital presented itselfseveral months earlier that we expected it to. To address this need on June 12, 2008, we entered into an amended andrestated facility agreement with HSBC Bank Plc whereby our existing revolving credit facility with HSBC was increasedfrom $30 million to $70 million. Of this amount, (a) $60 million is a revolving loan facility intended for financingacquisitions, for general corporate purposes and working capital and to pay transaction expenses, and (b) $10 millioncontinues to be a guarantee facility intended to be used to provide guarantees to replace existing ones, and to issue newor renewed guarantees on behalf of certain subsidiaries. The revolving loan facility bears interest at a rate based on one,two, three or six month U.S. Dollar LIBOR plus a margin that increases in multiple steps and is calculated by establishingthe ratio of net borrowings to EBITDA as follows: Where the ratio of net borrowings to EBITDA for Cascal N.V is: Margin (percent per annum)(a) More than 3.0:1 2.00 (b) Between 2.5:1 and 3.0:1 1.75 (c) Between 2.0:1 and 2.5:1 1.50 (d) Less than 2.0:1 1.25

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For purposes of the determination of the margin, “Net Borrowings” means total borrowings less cash and cash equivalentinvestments and “EBITDA” means our total consolidated operating profit before taking into account net interest expense;tax; profits (or losses) attributable to minority interests in any member of our group; any share of the profit of anyassociated company or undertaking, except for dividends or other profit distributions (net of tax) received in cash by anymember of our group; all extraordinary and exceptional items; and exchange rate gains (or losses) arising due to theretranslation of balance sheet items and mark-to-market adjustments on currency swaps; after excluding (to the extentincluded) any gains or losses on the disposal or revaluation of assets (other than in the ordinary course of trading); afteradding any business interruption loss incurred which is covered by insurance and which is not added back to the totalconsolidated operating profit of our group in accordance with the applicable accounting principles; and after adding backall amounts provided for depreciation and amortization (including acquisition goodwill).

On June 26, 2009, we entered into an amended and restated facility agreement with HSBC Bank Plc in respect of ourexisting $70 million credit facility with HSBC. Of this amount, (a) $60 million is a revolving loan facility intended forfinancing acquisitions, for general corporate purposes and working capital and to pay transaction expenses, and (b)$10 million is a guarantee facility intended to be used to provide guarantees to replace existing ones, and to issue new orrenewed guarantees on behalf of certain subsidiaries. The amended and restated facility has a term of two years endingJune 30, 2011. The revolving loan component of the facility bears interest at a rate based on one, two, three or six monthU.S. Dollar LIBOR plus a margin that increases in multiple steps and is calculated by establishing the ratio of netborrowings to EBITDA as follows: Where the ratio of net borrowings to EBITDA for Cascal N.V is: Margin (percent per annum)(a) More than 3.5:1 4.50 (b) Between 3.0:1 and 3.5:1 4.00 (c) Between 2.5:1 and 3.0:1 3.50 (d) Between 2.0:1 and 2.5:1 3.00 (e) Less than 2.0:1 2.50

For purposes of the determination of the margin, “Net Borrowings” means total borrowings less cash and cash equivalentinvestments and “EBITDA” means our total consolidated operating profit before taking into account net interest expense;tax; profits (or losses) attributable to minority interests in any member of our group; all extraordinary and exceptionalitems; and exchange rate gains (or losses) arising due to the retranslation of balance sheet items and mark-to-marketadjustments on currency swaps; after excluding (to the extent included) any gains or losses on the disposal or revaluationof assets (other than in the ordinary course of trading); after adding any business interruption loss incurred which iscovered by insurance and which is not added back to the total consolidated operating profit of our group in accordancewith the applicable accounting principles; and after adding back all amounts provided for depreciation and amortization(including acquisition goodwill).

On the date of the amendment and restatement becoming effective we drew the full $60 million available under revolvingloan facility in order to repay the $60 million drawn under previous facility.

As of March 31, 2008 and 2009, we had $59.3 million and $37.8 million of cash respectively. These balances included$4.9 million and $3.1 million respectively, of cash that was subject to restriction by agreement with our bankers, both inaccordance with the operation of our borrowing facilities and to collateralize performance bonds and other guaranteesgiven on our behalf. These funds were primarily placed in short-term money market deposits with several well known,low-risk banks.

During fiscal year 2009 we distributed $5.5 million to shareholders compared with $4.0 million during fiscal year 2008.During fiscal year 2009 our subsidiaries distributed $0.4 million to the holders of minority interests in their issued sharecapital compared to $0.5 million during fiscal year 2008.

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The following table summarizes our cash flows for our fiscal years 2007, 2008 and 2009: Year Year Year ended ended ended March 31, March 31, March 31,Dutch GAAP 2009 2008 2007Cash flow from (used in) operating activities $ 42.7 million $ 48.1 million $ 30.5 million Cash flow from (used in) investing activities (100.6) million (30.2) million (52.9) million Cash flow from (used in) financing activities 40.5 million 7.9 million (20.5) million

Operating activities

Operating cash flow decreased by $5.4 million during fiscal year 2009 relative to fiscal year 2008 due mainly to a$7.8 million less favorable movement in working capital and a lower operating profit after adjusting for non-cash items of$3.5 million, partly offset by reduced payments of tax and net interest of $5.9 million.

Operating cash flow increased by $17.6 million during fiscal year 2008 relative to fiscal year 2007, primarily due to ahigher operating profit, increased depreciation and amortization expense, favorable overall working capital movements,increased third party contributions to capital expenditure and lower net foreign exchange losses offset in part by higher taxpayments. The favorable movements in working capital arose mainly from reduced levels of other debtors (inclusive ofdeferred costs relating to our initial public offering) offset in part by increased trade debtors and lower accrued liabilities.

Investing activities

Cash flow used in investing activities increased by $70.4 million during fiscal year 2009 relative to fiscal year 2008. Thisincrease reflects the $58.3 million cash outflow used in acquiring our share of the Yancheng joint venture in China and oursubsidiaries, Zhumadian in China and Servicomunal and Servilampa in Chile. Additionally there was a $11.6 millionincrease in cash used to purchase tangible fixed assets that was partially offset by a $0.6 million increase in cashproceeds from disposals of tangible fixed assets.

Cash flow used in investing activities decreased by $22.7 million during fiscal year 2008 relative to fiscal year 2007. Thisincrease was primarily attributable to the purchase consideration, net of cash acquired, that we paid to acquire ourinterests in Aquas de Panama S.A. ($10.4 million), China Water ($10.9 million) and Pre-Heat Limited ($5.4 million) infiscal year 2007 offset in part by higher capital expenditure. Capital expenditure, net of disposal proceeds increased by$4.5 million in fiscal year 2008 relative to fiscal year 2007. The largest capital expenditures during fiscal year 2007 weremade by our project companies in the United Kingdom ($23.3 million) and South Africa ($6.4 million).

Financing activities

Overall, net cash inflow from financing activities was $40.5 million during fiscal year 2009 compared to an inflow of cash of$7.9 million during fiscal year 2008. This $32.6 million change represents a net $44.3 million cash inflow from debt financecompared to $69.4 outflow million in the comparative 12 month period. Offsetting this was the absence of a $86.2 millioncash inflow from the issue of shares in connection with our initial public offering in the year ended March 31, 2008. Inaddition, $7.9 million less cash was used in settling bank overdrafts during the year ended March 31, 2009 compared tothe previous year. Furthermore, $1.3 million less cash was generated by our subsidiary, China Water, which issuedshares to its 13% minority shareholder in fiscal year 2008. Additionally, the distribution of $5.5 million made toshareholders on September 30, 2008 was $1.5 million more than in the comparative period.

Net cash from financing activities increased by $28.4 million during fiscal year 2008 relative to fiscal year 2007, dueprimarily to $16.8 million of new borrowings and $3.3 million of proceeds of issuing shares to minority interests in ChinaWater in fiscal year 2008. In fiscal year 2008 we also repaid $7.7 million of bank overdrafts and distributed $4.0 million toour shareholder. In fiscal year 2007, we took on new borrowings amounting to $70.8 million and returned $87.0 million toour shareholders in June 2006 in order to facilitate Biwater’s acquisition of our shares previously owned by Nuon, followedby a further distribution to Biwater of $5.6 million.

Capital expenditures

Our capital expenditures take one of two principal forms. First, we make direct investments in the undergroundinfrastructure and aboveground treatment and pumping facilities upon which our existing businesses rely in order todeliver their services to the end-users. Second, we make equity investments in new concessions and contracts, either

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as a result of a corporate acquisition or a successful competitive bid. In our statement of cash flows, our total capitalexpenditure includes our investment in tangible fixed assets, our investment in intangible fixed assets and our restrictedcash balances.

We anticipate our investment in tangible fixed assets to increase in future years in line with commitments under ourexisting concession and contract terms and as a result of our plans to grow our business through the addition of newconcessions and contracts to the present portfolio. Our U.K. subsidiary has presented a capital investment plan to theregulator which calls for approximately £11 million ($15.8 million) of total investment in tangible fixed assets after thirdparty contributions each year until fiscal year 2015. The South African business expects an average annual investment intangible fixed assets of approximately Rand 25 million ($2.6 million) after third party contributions until fiscal year 2011.Our Indonesian joint venture expects to invest an average of Rupiah 65 billion ($5.6 million) each year during the sameperiod. The other businesses in our portfolio have only very modest capital expenditure plans for the coming years withthe exception of the construction of a wastewater treatment plant in our Servicomunal project company in Chile, which isexpected to cost approximately $10 million and be under construction during fiscal year 2011.

Our subsidiaries in the United Kingdom, Chile, China and South Africa receive contributions to capital expenditure frommunicipalities and private developers which take the form of either cash or assets in return for which the subsidiaryconcerned takes on an obligation to provide water and wastewater services to customers in future years. In our DutchGAAP consolidated financial statements these contributions receivable are reported as deferred revenue under “deferredrevenue” on our balance sheet.

Investment in tangible fixed assets by our existing concessions and contracts is expected to be funded out of operatingcash flow and third party contributions, together with locally sourced debt finance.

External investment in tangible fixed assets arising as a consequence of the addition of new concessions is expected tobe funded by free cash flow returned to the holding companies in the form of dividends or inter-company loan repaymentstogether with such third party debt or equity capital as prevailing market conditions will enable the company to accessfrom time to time.

Total investment in tangible fixed assets for fiscal year 2009 was $47.9 million. Our total investment in tangible fixedassets related to continuing operations for our most recent three fiscal years were as follows: Year ended Year ended Year ended March 31, March 31, March 31,Dutch GAAP 2009 2008 2007Total investment in tangible fixed assets(1) (3) $ 47.9 million $ 34.4 million $ 29.1 million

Contributions receivable(2) 8.2 million 12.8 million 5.5 million

Total investment in tangible fixed assets, net 39.7 million 21.6 million 23.6 million

(1) Before deduction of any relevant contributions from third parties.

(2) Contributions to capital expenditure received in the form of cash or assets.

(3) Year ended March 31, 2009 includes $9.1 million in respect of a new water treatment plant under construction by ourZhumadian subsidiary.

Related party transactions

We have relationships with our majority shareholder, Biwater. For a description of the related party transactions, seeItem 7 “Major Shareholders and Related Party Transactions” and Note 27 “Related party transactions” to our consolidatedfinancial statements.

Credit arrangements and loan facilities

The following sets out the key terms of our more significant credit arrangements and loan facilities; as of our most recentcovenant compliance reporting dates, we were in compliance with all material covenants contained in these creditarrangements and loan facilities:

The Netherlands

On November 2, 2007, the Company entered into a $30 million credit facility with HSBC Bank Plc. Of this amount,$20 million is a revolving loan facility intended for general corporate purposes, reducing less efficient existing group debt,repayment of a loan from The China Water Company Limited, repayment of an inter-company loan granted byBournemouth & West Hampshire Water plc and for general working capital purposes, together with a $10 millionguarantee facility intended to be used to provide guarantees to replace existing ones, and to issue new or

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renewed guarantees on behalf of certain subsidiaries. Following the completion of our initial public offering inFebruary 2008, the revolving loan facility bears interest at a rate based on one, two, three or six month U.S. Dollar LIBORplus a margin that increases in multiple steps beginning from 0.80% per annum if the ratio of the Company’s and itssubsidiaries’ net borrowings to EBITDA is less than 1:1 up to 1.75% per annum if that ratio is greater than 3.5:1. The termof this facility was due to expire on March 31, 2010 but was replaced by an amended and restated facility from June 12,2008, also with a March 31, 2010 maturity date. This amended and restated facility was amended and restated itself onJune 26, 2009. This latest amendment and restatement has a two year term ending June 30, 2011 and its revolving loancomponent bears interest at a rate based on one, two, three or six month U.S. Dollar LIBOR plus a margin that increasesin multiple steps beginning from 2.50% per annum if the ratio of the Company’s and its subsidiaries’ net borrowings toEBITDA is less than 2.0:1 up to 4.50% per annum if that ratio is greater than 3.5:1. For further details see Item 5“Operating and Financial Review and Prospects — Liquidity and capital resources”. As at March 31, 2009 we had drawndown the full $60 million available under the amended and restated revolving loan facility, which continues to be theposition as of the date of this filing.

United Kingdom

In April 2005, our U.K. project company entered into a loan arrangement under which it borrowed £65 million($124.4 million) under an aggregate £500 million facility provided by Artesian Finance II plc (Artesian), a listed entityestablished by The Royal Bank of Scotland to provide financing for U.K. water companies. Principal and interestpayments are multiplied by an index based on inflation. Therefore, the principal amount of the facility will increase over thelife of the loan. As of March 31, 2009 the outstanding balance of the loan was £74.5 million ($106.8 million). The rest ofthe Artesian facility is available to other U.K. water companies, but we are only responsible for the repayment of amountsassociated with our borrowings and not the borrowings of the other participating water companies. To finance its lendingto U.K. water companies, Artesian issues long-dated bonds in an aggregate principal amount equal to 1.061 times theprincipal amount of borrowings under the facility, and Financial Security Assurance (UK) Ltd. guarantees the payment ofthe scheduled capital and interest on the Artesian bonds. Our borrowings under this facility bear interest at a rate of3.084% per year, payable on March 31 and September 30 of each year. One hundred percent of the principal amount ofour borrowings is due on September 30, 2033. This loan by Artesian, and other loans to our U.K. subsidiary, areguaranteed and secured pursuant to a security trust and intercreditor deed, which provides a security interest in the entireproperty, assets, rights and undertakings of our U.K. project company to the extent permitted by the Water Industry Act1991 and our license. The agent bank for the Artesian facility is The Royal Bank of Scotland.

South Africa

On August 10, 2000, our Nelspruit project company entered into a loan agreement with Development Bank of SouthernAfrica under which it borrowed Rand 71.4 million ($11.5 million) under two term loans, the proceeds of which are to beused to finance infrastructure development over a period of 20 years. The loans bear interest at a fixed rate of 13.08%and the interest is payable quarterly in arrears. The initial loan, which is in a principal amount of Rand 48.5 million($7.4 million), is repayable in 60 consecutive quarterly installments of equal amounts that commenced on December 31,2005. The final payment is due on September 30, 2020. The additional loan, which is in a principal amount ofapproximately Rand 22.9 million ($3.7 million), is also repayable in 60 consecutive quarterly installments of equal amountscommencing on December 31, 2005 with the final payment also due on September 30, 2020. The aggregate amountoutstanding on these loans at March 31, 2009 was Rand 54.9 million ($5.8 million).

The loans are secured through the issue of “A” preference shares of our Nelspruit project company to the security trusteeof the Development Bank of South Africa loan facility. According to the shareholders’ agreement, the holder of the “A”preference shares shall be entitled to all of the surplus assets of our Nelspruit project company in priority to any paymentin respect of any of its other shares, only to the extent due to the holder under the facility agreement and subject to itsterms, in the event of a winding-up or liquidation of the company.

Siza Water, which we acquired on May 3, 2007 has a bank loan outstanding in the amount of Rand 15.4 million($1.6 million) at March 31, 2009. The loan bears interest at a fixed rate of 12.61% per annum. Quarterly capital

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repayments of Rand 0.7 million ($0.1 million) commenced on February 6, 2008 and end on November 6, 2017. The loanis secured by a bank guarantee.

China

Our joint venture company serving the city of Zhumadian has a loan for RMB 178 million ($26.0 million) from ZhumadianCity Investment Company Limited (ZCIC), which acts on behalf of the ultimate lender Sate Development Bank (SDB). Thisloan was originally arranged by our minority shareholder in Zhumadian and then, as part of the joint venture agreement,all rights and obligations attaching to the loan were transferred to our joint venture company, the Zhumadian China WaterCompany Limited. The loan was provided for the specified purpose of part-financing the construction of number 2 watertreatment plant and related infrastructure. The term of the loan is 12 years from June 15, 2006 with a two-year graceperiod that ended on June 14, 2008. Capital to be repaid during the year ending March 31, 2010 amounts to RMB5 million ($0.7 million). Interest is charged at the rate announced by SDB plus 0.5%.

Panama

In April 2003, our Panamanian project company entered into a loan agreement with International Finance Corporation, amember of the World Bank, under which it borrowed an aggregate of $16 million under a $6 million term loan and a$10 million term loan. The proceeds of these loans were used to refinance shareholder bridge financing used to financethe construction of a bulk water supply facility in Panama. The term loans bear interest at a rate based on one, two, threeor six month LIBOR plus a margin of 4.0% and 3.75%, respectively. The principal of the $6 million loan is repayable in 19semi-annual payments ranging from $250,000 to $389,000, with the final principal payment scheduled to be paid onOctober 15, 2012. The principal of the $10 million loan is repayable in 15 semi-annual payments ranging from $410,000 to$810,000, with the final principal payment scheduled to be paid on October 15, 2010. As of March 31, 2009, theaggregate amount outstanding on these loans was $6.4 million.

The loans are secured by, among other things, an assignment by our Panamanian project company of its right, title andinterest in its assets, a hypothecation of the concession agreement between the project company and IDAAN, a pledge ofthe shares of the project company by Cascal Investment Limited, and a mortgage on the bulk water supply facility. Theloans are currently guaranteed by Biwater

Other credit arrangements

Many of our project companies also are a party to various credit arrangements and loan facilities with local lenders inthose jurisdictions. For a description of our long term liabilities, see Note 14 “Long term liabilities” to our consolidatedfinancial statements.

C. Research and development. Patents and licenses etc.

We have not undertaken research and development activities for the periods presented and own no patents or licenses.

D. Trend information

Significant trends are discussed in Item 5 “Operating and Financial Review and Prospects — Operating results”.

E. Off-balance sheet arrangements

We do not currently have any off-balance sheet transactions or investments in special-purpose entities whose purpose isto facilitate off-balance sheet transactions.

Under the terms of some of our bidding processes, agreements with our clients and loan agreements, we provide financialguarantees, usually in the form of bank guarantees, or deposits to ensure our performance of certain obligations. SeeNote 17 “Contingent liabilities and commitments” to our consolidated financial statements for a more detailed descriptionof these guarantees, including the duration and maximum potential payments arising under these arrangements.

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We have caused letters of credit to be issued in the amount of GBP 8.6 million (USD 12.3 million) as at March 31, 2009 infavor of the trustees of the Water Company Section of our U.K. defined benefit pension plan. In May 2009 and based onthe latest actuarial valuation as at January 29, 2008, which showed a deficit on the Water Company Section of GBP7.1 million, the trustees have agreed to reduce the letter of credit to GBP 7.1 million (USD 10.2 million). Under anagreement entered into with Biwater and the trustees, we may need to increase further the amount of the letter of credit tocover any increase in the plan-specific deficit of the Water Company Section determined as of our initial public offering, upto a maximum amount of GBP 10.0 million (USD 19.9 million).

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F. Tabular disclosure of contractual obligations

The following table sets forth our current ongoing contractual obligations and commercial commitments as of March 31,2009: Payment due by period Dutch GAAP Fiscal year Fiscal year Fiscal year Fiscal year Fiscal year After fiscal (Dollars in thousands) Total 2010 2011 2012 2013 2014 year 2014 Long-term debt(1) 161,894 6,104 6,099 4,720 6,270 4,262 134,439 Capital lease

(finance lease)obligations 6,944 922 985 944 983 997 2,113

Interest on long-termdebt and capitalleases(2) 47,718 7,149 6,712 6,250 5,642 5,222 16,743

Total long-term debtand capital leaseobligations 216,556 14,175 13,796 11,914 12,895 10,481 153,295

Operating leaseobligations 1,861 416 223 91 88 88 955

Pensionobligations(3) 23,500 2,350 2,350 2,350 2,350 2,350 11,750

Total contractualobligations 241,917 16,941 16,369 14,355 15,333 12,919 166,000

(1) Long-term debt includes £74.5 million ($106.8 million) relating to a loan from Artesian Finance plc as described inNote 14 “Long term liabilities” to our consolidated financial statements. This loan is due for payment onSeptember 30, 2033. The principal amount of the loan increases by the U.K. Retail Price Index (RPI) each year. Inthe financial statements the indexed principal as of March 31, 2009 is the recorded liability and is included in thecontractual obligations table. The estimated final value of payment in 2033 is $195.6 million, assuming the RPIcontinues to increase each year at an estimated long term rate of 2.5%.

(2) Interest is calculated on fixed interest rates where these are indicated by the financing agreement. Where rates arevariable based on an index or base rate such as LIBOR interest is calculated assuming the index or base rateremains at the level as of March 31, 2009 during the life of the financing agreement.

(3) The pension obligations are based upon current contributions and contributions designed to address our U.K. definedbenefit plan deficit. After fiscal year 2014, pension obligations include current contributions and contributionsdesigned to address our U.K. defined benefit plan deficit for only an additional 5-year period. The plan actuary mayrecommend to the plan trustees amended contribution rates at the next triennial review scheduled for March 31,2010. The plan trustees and Cascal will then agree on amendments to the contribution rates.

We have contractual obligations to make future payments on debt and lease agreements. Additionally, in the normalcourse of business, we enter into contractual arrangements where we commit to future purchases of services fromunaffiliated and related parties. In addition, we have entered into long-term contracts with electricity suppliers; however,these contracts are not take-or-pay arrangements and can be terminated and are therefore not reflected in this table.

Long-term debt includes the total amount outstanding under long term financing arrangements and is more fully discussedin Note 14 “Long term liabilities” to our consolidated financial statements.

Capital lease obligations include the amounts owed to third parties in connection with facilities, equipment and machineryacquired under capital leases. Operating lease obligations are more fully discussed in Note 17 “Contingent liabilities andcommitments” to our consolidated financial statements.

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G. Safe Harbor

All information that is not historical in nature and is disclosed under this Item 5 “Operating and Financial Review andProspects” is deemed to be a forward-looking statement. See “Forward-looking statements”.

Item 6. Directors, Senior Management and Employees

A. Directors and senior management

The following table sets forth information for the current executive and non-executive directors and executive officers ofCascal N.V. The address for our directors and executive officers is c/o Cascal N.V., Biwater House, Station Approach,Dorking, Surrey RH4 1TZ, U.K. Director ExpirationName Age Position since of director term

Larry Magor 54 Director, Chairman April 2000 2011 Stephane Richer 51 Chief Executive Officer and Director May 2002 2010 Steve Hollinshead 48 Chief Financial Officer — —Jonathan Lamb

41

General Counsel & CompanySecretary

—

—

Brian Winfield 58 Chief Growth Officer — —Charles Auster 57 Non-executive Director January 2008 2009 Willy Biewinga 56 Non-executive Director January 2008 2010 Mitchell Sonkin 56 Non-executive Director January 2008 2009 Michael Wager 57 Non-executive Director January 2008 2011

Larry Magor, Director and Chairman. Mr. Magor is the Chief Executive Officer of Biwater and has been a member of theCascal Supervisory Board since its formation in 2000. Mr. Magor was an Executive Director of Biwater from 2006 to 2009,the Chief Executive of Biwater from 2002 to 2006 and the Finance Director for Biwater from 1998 to 2002. Mr. Magor wasthe Finance Director of Biwater Industries, a manufacturing subsidiary of Biwater from 1995 to 1998. Prior to joiningBiwater, Mr. Magor was the Financial Controller of Corah Plc from 1992 to 1994, a fabric and garment manufacturer, andfrom 1990 to 1992 the Finance Director of Burlington International Group Plc, a footwear manufacturer. From 1979 to1990, Mr. Magor served in various divisions of Courtaulds, the large textile group, holding the position of FinancialDirector of its Aristoc division from 1987 to 1990. Mr. Magor is a Fellow of the U.K. Institute of Chartered ManagementAccountants (FCMA).

Stephane Richer, Chief Executive Officer and Director. Mr. Richer has been our Chief Executive Officer since May 2002.From 1999 to 2002, Mr. Richer was Vice President—Operations for Veolia Water, a major international water company,and a member of its International Executive Committee and its Tender Review Committee. From 1996 to 1999, Mr. Richerwas Managing Director of United Water International, a joint venture company of Veolia Water and Thames Water inAdelaide, Australia, established to deliver the largest outsourcing contract in Asia-Pacific. From 1992 to 1995, Mr. Richerwas Group Operations Manager for Three Valleys Water, Veolia’s largest U.K. water only company. Mr. Richer wasManaging Director of Compagnie des Eaux de la Banlieue du Havre, one of Veolia’s subsidiaries from 1989 to 1992.Mr. Richer is an engineer and holds a Ph.D. from Ecole Nationale des Ponts et Chaussées (Paris, France).

Steve Hollinshead, Chief Financial Officer. Mr. Hollinshead has been our Chief Financial Officer since February 2006.From 2003 to 2005, Mr. Hollinshead served with the SGB Group, a wholly owned subsidiary of Harsco Corporation,initially as Regional Finance Director and subsequently as Divisional Finance Director. From 2000 to 2002Mr. Hollinshead was Chief Financial Officer for Wijsmuller Group, a marine services company that was subsequentlyacquired by AP Moller Group. Mr. Hollinshead was the Finance Director for the Marine Division of Ocean Group from1998 to 2000. From 1983 to 1998, Mr. Hollinshead served with Coopers & Lybrand (now part ofPricewaterhouseCoopers), including two years in its New Jersey practice. Mr. Hollinshead is a Fellow of the Institute ofChartered Accountants in England and Wales.

Jonathan Lamb, General Counsel & Company Secretary. Mr. Lamb has been our General Counsel and CompanySecretary since May 2008. Mr. Lamb joined us from Antilles UK, an asset management company where he performed thesame role. From 2002 to 2006 Mr. Lamb was the General Counsel & Company Secretary of Amarin

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Corporation plc a biotechnology company then listed on NASDAQ, AIM and ILEX. From 2000 to 2002 Mr. Lamb was atShire Pharmaceuticals Group plc, where he served in Shire’s legal division. Prior to his position in Shire, Mr. Lamb was apartner at Gosschalks, an English firm of solicitors, where he specialized in corporate and business law. Mr. Lamb is aqualified solicitor and is a member of the England & Wales Law Society.

Brian Winfield, Chief Growth Officer. Dr. Winfield has been our Chief Growth Officer since 2005. From 1997 to 2005,Dr. Winfield was a Director of Biwater Plc responsible for Biwater’s design and construction subsidiaries in Asia andAfrica. Dr. Winfield was the Business Development Director for Biwater Supply Limited, a Biwater subsidiary, from 1992 to1997 and from 1985 to 1992 was a Director of Biwater International, also a Biwater subsidiary. Both of these companieswere involved in international water contracting and international water privatization. Dr. Winfield is a Fellow of the U.K.Chartered Institution of Water and Environmental Management and is also a Fellow of the Royal Society of Chemistry.

Charles Auster. Mr. Auster is currently Managing Partner of Auster Capital Partners, a private equity firm specializing ininvestments in middle market enterprises. Mr. Auster sits on the board of a number of companies, and is currentlyChairman of the Board of Globalpack (Global Packaging Corporation N.V.) and a Senior Advisor to Yorkville Advisors,LLC. From 2001 through 2007 Mr. Auster was a partner of One Equity Partners, the private equity arm of JP MorganChase, which manages $8 billion of capital for direct investments in corporate transactions and leveraged buyouts. Priorto joining OEP, from 2000 to 2001, Mr. Auster was President and Chief Executive Officer and a member of the Board ofDirectors of NASDAQ-listed Infocrossing Inc., a provider of IT outsourcing services. He was a founder, and from 1997 to2000 was formerly the Executive Vice President and Chief Operating Officer and a member of the board of directors, ofNASDAQ-listed IXnet, Ltd., a network provider of communication services offering an international voice, data and IPextranet for the financial services community. From 1995 to 1997, Mr. Auster was President and Chief Executive Officerand a member of the board of directors of Voyager Networks, Inc., a New York based Internet, server-hosting anddata-networking company. From 1997 to 1999 Mr. Auster was Executive Vice President and a member of the Board ofDirectors of AmeriTrade, Inc. an international trade and investment banking firm that helps U.S. companies structure,finance and manage overseas transactions. Currently, Mr. Auster serves as Co-Chairman Emeritus of the Board ofTrustees of L’Enfant Trust in Washington, D.C., and is the Chair of the Advisory Board of the Entrepreneurial LeadershipCenter at Tufts University. Mr. Auster graduated from Tufts University with Highest Honors in Economics and holds a J.D.with Honors from the George Washington University, National Law Center.

Willy A. Biewinga. From 1986 to 2005, Mr. Biewinga was a partner of Deloitte & Touche in its Amsterdam office, where heprovided auditing and consulting services for enterprises in the trade, industry and the financial services sector. He was amember of the Dutch Executive Board of Deloitte & Touche from 1994 to 2005 and was its Chief Executive Officer from2000 to 2005. From 2002 to 2005, Mr. Biewinga was a member of the Management Committee of Deloitte China. From1998 to 2005, he was a member of the Global Executive Group of Deloitte Touche Tohmatsu. From 2000 to 2004, he wasa member of the Board of Directors of Deloitte & Touche CIS. From 1992 to 1994, Mr. Biewinga was the Office ManagingPartner of the Amsterdam Office of Deloitte & Touche. He was a member of the Executive Committee of the Employers’Association VNO/NCW from 2002 until 2005. He is a member of the Board of Trustees of the graduate and post-graduateAccountancy Studies program at the Free University of Amsterdam in the Netherlands. Mr. Biewinga completedPostgraduate Accountancy Studies in 1979. He received a Master Degree in Business Economics from the University ofGroningen.

Mitchell Sonkin. Since 2004, Mr. Sonkin is the Executive Vice President and Chief Portfolio Officer of MBIA Inc., a leadingfinancial guarantor and provider of specialized financial services, as well as the head of its Insured Portfolio Managementunit. He is also a member of the Board of MBIA Insurance Corporation and Capital Markets Assurance Corporation.Before joining MBIA, Mr. Sonkin was a senior partner at the international law firm King & Spalding in its New York office,where he was co-chair of King & Spalding’s Financial Restructuring Group and a member of the firm’s Policy Committee.From 1990 to 2001, he was senior partner and co-chair of the Financial Restructuring Department at the law firm ofCadwalader, Wickersham & Taft in its New York office. Mr. Sonkin is a cum laude graduate of the Temple UniversityCollege of Liberal Arts, where he earned a bachelor’s degree in Political Science and currently serves as the chairman ofthe Board of Visitors. He received a J.D. from the Syracuse University College of Law, where he is a member of the Boardof Advisors.

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Michael Wager. Mr. Wager is a partner with Squire, Sanders & Dempsey L.L.P., global law firm based in the firm’sCleveland and New York offices; he has been with the firm since 2005. He served as Chairman of the Board of theCleveland-Cuyahoga County Port Authority from January 2008 until January 2009. From 2000 to 2005, Mr. Wager servedas the chairman of JRM Group LLC, a Cleveland-based private equity firm. From 1981 through 2000, Mr. Wager wasengaged in the private practice of law with law firms based in New York and Cleveland. He received a J.D. from New YorkUniversity School of Law, an M.A. from Columbia University and a B.A. from The American University. Squire, Sanders &Dempsey L.L.P provides legal services to us and we understand from time to time it provides legal services to Biwaterand its affiliates.

There is no family relationship between any director or executive officer and any other director or executive officer.

B. Compensation

Our director who serves as chief executive officer does not receive compensation for his service as member of our boardof directors. Directors who are not officers or employees receive $80,000 per annum. Each of these directors may elect toapply up to 25% of his annual director’s fee to the purchase of our shares based on the then-current market price. A travelallowance is payable and calculated by reference to the duration of travel necessary to attend board or committeemeetings. Where Cascal business and travel requirements during a year exceed 17 days, the travel allowance per trip is$3,000 per trip of between 3-12 hours of air travel and $7,500 per trip for trips in excess of 12 hours of air travel.

For the year ended March 31, 2009, all of our directors and senior management as a group received total compensationof U.S $1.9 million.

There are no sums set aside or accrued by us for pension, retirement or similar benefits although we do makecontributions to certain of our employees’ and officers’ pensions during the term of their employment with us.

The annual compensation paid to the members of our Board of Directors for services in all capacities during the yearended March 31, 2009 was as follows. Name Salary and/or fees Pension Contributions Performance related compensation (1) Number of stock options granted

Larry Magor $ 80,000 — — — Stephane

Richer $ 548,456 $ 39,063 $ 128,313 — Charles Auster $ 80,000 — — — Willy Biewinga $ 80,000 — — — Mitchell Sonkin $ 80,000 — — — Michael Wager $ 80,000 — — —

Total $ 948,456 $ 39,063 $ 128,313 —

(1) Performance related compensation is in respect of a bonus paid in relation to the Company’s performance in the yearended March 31, 2008.

2008 Long Term Incentive Plan

Prior to the listing of our shares, our board of directors and shareholder adopted the 2008 Long Term Incentive Plan(“LTIP”). The purpose of the LTIP is to provide market-competitive levels of remuneration, to recruit and retain qualifiedemployees and to align the interests of executives with the interests of shareholders over a long term period. The LTIPbecame effective for eligible employees from the beginning of our fiscal year 2009.

The LTIP provides for the grant to our employees of bonus awards (“Awards”), a certain percentage of which will bepayable annually depending on the achievement of performance-based criteria. Annual payments of the applicablepercentage of an Award will be payable in cash, subject to tax and social security withholdings as required, with eachparticipant having the option to use up to 25% of any bonus payable to purchase our shares at the then-current marketprice. The shareholder has authorized up to 120,000 shares to be issued under this plan; under Dutch law, shareholderapproval is not required for the issuance of equity compensation to persons other than our directors.

Eligibility: All Cascal employees are eligible to receive Awards under the LTIP.

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Our board of directors has the right to amend the terms and conditions of the LTIP, subject to shareholder approval wherechanges are material, or terminate the LTIP at any time.

In the event of a recapitalization of the capital stock of Cascal N.V., our board of directors will adjust the terms of anAward, to provide for, as far as possible, equivalent terms.

Structure of the Bonus Awards: Awards are determined by reference to a fixed percentage of an eligible employee’s basesalary at the date of the Award, which other than in exceptional circumstances will not exceed 100% of salary each year.

Timing of Grant and Performance Period of Awards: Our board of directors may grant Awards under the LTIP on anannual basis advised by and at the recommendation or proposal of the Nomination and Compensation Committee. Thefirst Awards under the LTIP were made in June 2008 and shall be payable following the end of our fiscal years 2009, 2010and 2011 based on performance benchmarks relating to fiscal year 2008. Awards are subject to such three-yearperformance period (“Performance Period”).

Performance Criteria: The degree to which any amount under an Award is paid is conditional upon the satisfaction ofperformance elements (each an “Element”), which will be determined by our board of directors at the beginning of thePerformance Period.

Two performance Elements will apply to awards under the LTIP.

The first Element is the absolute appreciation in Cascal N.V.’s share price over the Performance Period. Seventy-fivepercent (75%) of any Award will be conditioned on the level of achievement with respect to such share price appreciationElement. Share price appreciation will be calculated by reference to growth from the end of fiscal year 2008 to the end ofeach of fiscal years 2009, 2010 and 2011.

The second Element is the growth in earnings per share over the Performance Period. Twenty-five percent (25%) of anyAward will be conditioned on the level of achievement with respect to such earnings per share Element. Earnings pershare will be determined under Dutch GAAP and will be calculated by reference to growth in the period between the endof fiscal year 2008, on a pro-forma basis as determined by our board of directors and the end of each of fiscal years 2009,2010 and 2011.

Calculation and Form of Annual Payment under Awards: Depending upon the level of achievement of each of theperformance Elements, each recipient of a Award will receive a payment amount up to:

(i) a maximum of 25% of each Element after 12 months from the commencement of the Performance Period,

(ii) a maximum of 25% of each Element after 24 months from the commencement of the Performance Period, and

(iii) a maximum of 50% of each Element after 36 months from the commencement of the Performance Period.

Cumulative Re-Test Opportunity: If a participant receives less than the maximum annual payment available under theexecutive’s Award for a particular Element in a particular year, the participant will have an opportunity to receive theamount of any shortfall in subsequent years within the Performance Period based on the level of achievement in thosesubsequent years.

Transferability of Awards: Unless our board of directors determines otherwise, our LTIP does not allow for the transfer ofawards other than by will or by the laws of descent and distribution, and only the participant may make an election duringhis or her lifetime.

Pro Rata Payments in Connection with a Termination Event: If a participant’s employment ceases due to a TerminationEvent (as described below) during the Performance Period, the participant shall receive only a pro rata payment of theamount that would have been payable with regard to the Award at the end of the annual period in

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which the Termination Event occurs had the participant’s employment not ceased. Such pro rata payment shall be madeonly with regard to the annual period in which the Termination Event occurred and not with respect to any further annualperiods remaining within the Performance Period.

Any such pro rata payment of a bonus will be paid, in the normal course, after the year end and in cash only. Our board ofdirectors may in its discretion determine to make any such pro rata payment earlier subject to its assessment of the extentto which the Elements have been satisfied.

For the purposes of the LTIP, a Termination Event is defined as:

• injury or disability (evidenced to the satisfaction of our board of directors);

• death;

• redundancy (within the meaning of the U.K. Employment Rights Act 1996 or any equivalent legislation in relevantjurisdiction);

• retirement at contractual retirement age including late retirement;

• actual retirement before the participant’s contractual normal retirement age with the consent of the company thatemploys the participant;

• the company with which the participant holds office or employment by virtue of which he is eligible to participate inthe LTIP ceasing to be a member of the Cascal group;

• transfer to a Biwater company; or

• any other reason which our board of directors considers reasonable.

If the employment of a participant terminates or is terminated for any reason other than a Termination Event (e.g.dismissal or resignation), then the participant’s Awards will terminate and shall not be payable for the annual period inwhich the termination occurs or any future year remaining within the Performance Period unless otherwise determined byour board of directors.

Adjustments upon Merger or Change in Control: If a general offer is made to acquire the whole or part of the issued sharecapital as a result of which the offeror gains control of us, then our board of directors in its absolute discretion maydetermine that any unpaid bonus shall be calculated to the date on which control passes based upon the process asdetailed above, but having regard to the shortened period, and shall be paid as soon as practical to the participant afterthe change of control and in no event longer than 30 days after the change of control.

In September 2008, we entered into change of control agreements with a number of senior managers. These agreementsprovide for payment of certain compensation to include a lump sum of up to 150% of annual base salary and up to 150%of the prior year’s bonus. in the event that:

• an executive’s employment is terminated within one year from the date of such change of control; or

• the executive serves notice of termination of his contract of employment more than three months and less thannine months after the change of control;

and where such termination is not for cause (e.g. breach of contract, act of dishonesty, material violation of a law, rule).

C. Board practices

Board of Directors

Our board of directors is comprised of six directors, consisting of one executive director (Mr. Richer) and fivenon-executive directors, to serve terms which expire in three separate years in a manner similar to a “classified” board.Directors are elected to serve three-year terms, except that the terms of Messrs. Auster and Sonkin will expire at theannual shareholders’ meeting in 2009, the terms of Messrs. Biewinga and Richer will expire at the annual

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shareholders’ meeting in 2010 and the terms of Messrs. Magor and Wager will expire at the annual shareholders’ meetingin 2011. A director may be re-elected to serve for an unlimited number of terms. As a result of the staggered terms, not allof our directors will be elected in any given year.

The directors are appointed by the general meeting of shareholders by the vote of a majority of the votes cast.Shareholders may at any time remove or suspend a director by the vote of a majority of the votes cast at a generalmeeting of shareholders. Notwithstanding the foregoing, Biwater has agreed not to attempt to remove without cause anydirector that has been elected to serve a term on a “classified” board; however, Biwater, as a majority shareholder, may atany time vote to eliminate the “classified” board provisions in our governing documents and remove any subsequentlyelected director without cause.

All of our directors, except Messrs. Magor and Richer, are independent under applicable New York Stock Exchange listingstandards.

Executive and Non-Executive Directors

Non-Executive Directors and Executive Director

We have a board consisting of one executive director, and five non-executive directors. The responsibilities of theseexecutive and non-executive directors are set forth in our board rules, a copy of which is posted on our web site.

The primary responsibility of the executive director is to manage Cascal N.V. The primary responsibility of thenon-executive directors is to supervise the policies of the executive director and the affairs of Cascal and its affiliatedenterprises. In addition, the non-executive directors shall assist the executive director by providing advice.

Resolutions of the board of directors or any of its committees shall be adopted by a majority of the votes cast.

Service contracts

None of our directors have service contracts which provide for benefits upon termination of employment.

Committees of the board of directors

Audit Committee

Our Audit Committee reports to the board regarding the appointment by the shareholders of our independent publicaccountants, the scope and results of our annual audits, compliance with our accounting and financial policies andmanagement’s procedures and policies relative to the adequacy of our internal accounting controls. The Audit Committeealso is responsible for the oversight of our relationship with Biwater, including the approval of the terms and conditions oftransactions between Biwater and us. The members of the Audit Committee are Messrs. Biewinga, Sonkin and Auster , all of whom are independent in accordance with New York Stock Exchange listing standards and the independencerequirements required by law. The chairman and financial expert of the Audit Committee is Mr. Biewinga.

Mr. Magor served as a member of the Audit Committee during the fiscal year ended March 31, 2009, having relied on anexemption under NYSE Rules until the date of his resignation on January 27, 2009. Mr. Auster replaced Mr. Magor andwas appointed to the Audit Committee on January 27, 2009.

Nomination and Compensation Committee

The Nomination and Compensation Committee is responsible for advising the board of directors with respect tonominating directors and establishing criteria for selecting and evaluating board members and management, as well as forreviewing the performance and preparing proposals to the board of directors for the compensation of the Chief ExecutiveOfficer and our other senior executive officers. The members of this committee are Messrs. Wager (Chairman), Austerand Sonkin.

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Mr. Magor served as a member of the Nomination and Compensation Committee until the date of his resignation onJanuary 27, 2009. Mr. Sonkin replaced Mr. Magor and was appointed to the Nomination and Compensation Committee onJanuary 27, 2009.

The Sarbanes-Oxley Act of 2002, New York Stock Exchange listing standards and Dutch Corporate GovernanceCode

The Sarbanes-Oxley Act of 2002, as well as related rules subsequently implemented by the SEC, requires foreign privateissuers, including us, to comply with various corporate governance practices. In addition, the New York Stock Exchangehas amended the requirements for its listed companies. We have taken and intend to take all actions necessary for us tomaintain compliance as a foreign private issuer with the applicable corporate governance requirements of theSarbanes-Oxley Act, the rules adopted by the SEC and the listing standards of the New York Stock Exchange. All of ourdirectors are independent under the listing standards of the New York Stock Exchange except Messrs. Magor and Richer.Furthermore, as a Dutch company listed on a government-recognized stock exchange, we are required either to apply theprovisions of the Dutch Corporate Governance Code as released in 2003 or explain any deviation in our Dutch annualreport. We have not applied a number of the Dutch best practice provisions, and instead we are complying with a numberof the corporate governance rules of the New York Stock Exchange because our shares have been listed on the NewYork Stock Exchange since January 29, 2008. Information regarding significant differences in our corporate governancepractices from those followed by domestic companies under New York Stock Exchange listing standards is available onour website at www.cascal.com.

Obligations of board members to disclose holdings

Pursuant to Dutch securities laws, members of our board of directors and any other person who has managerial orco-managerial responsibilities, the authority to make decisions affecting our future developments and business prospectsand who has regular access to inside information relating, directly or indirectly, to our company, must give written notice tothe Netherlands Authority for the Financial Markets (Stichting Autoriteit Financiële Markten, or AFM), by means of astandard form, of any transactions conducted on their own account relating to our shares or in securities whose value isdetermined by the value of our shares.

Also, certain persons who are closely associated with members of our board of directors or any of the other personsdescribed above are required to notify the AFM of any transactions conducted on their own account relating to the sharesor in securities whose value is determined by the value of the shares. Persons who are closely associated with anotherperson are: (i) the spouse of such other person or any partner considered by national law as equivalent to the spouse orsuch other person, (ii) dependent children of such other person, (iii) other relatives who have shared such person’shousehold for at least one year at the relevant transaction date, and (iv) any legal person, trust or partnership whosemanagerial responsibilities (among other things) are discharged by a person referred to under (i), (ii) or (iii) above.

The AFM must be notified within five days following the relevant transaction date. Under certain circumstances,notification may be postponed until the date the value of the transactions amounts to €5,000 or more per calendar year.Non-compliance with the notification obligations under the Dutch securities laws can lead to criminal fines, administrativefines, imprisonment or other sanctions.

The AFM keeps a public registry of and publishes all notifications made pursuant to Dutch securities laws.

Because we are a foreign private issuer, our directors and executive officers are not subject to short-swing profit andinsider trading reporting obligations promulgated by the SEC.

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D. Employees

The following table sets forth the average number of people employed by us for the periods presented: Year ended Year ended Year ended March 31, March 31, March 31, 2009 2008 2007

United Kingdom 334 312 262 South Africa 288 245 221 Indonesia 405 397 395 China 1,102 256 259 Chile 106 52 52 Panama (1) — — — The Philippines 136 147 155 Holding companies 23 19 16

Continuing operations 2,394 1,428 1,360 Discontinued operations (Belize) — — — Discontinued operations (Mexico) — 19 20

Total 2,394 1,447 1,380

(1) An average of 23 employees worked on this project in the year ended March 31, 2009 but as they are all employed byBiwater under a contract arrangement they are excluded from this table.

As of March 31, 2009, we had the following number of employees in the following functional areas: As of March 31, 2009

Water and wastewater operations 939 Technical services 361 Customer services 442 Finance and commercial 372 Management and other 280

Total employees 2,394

We consider our relations with our employees to be good. Approximately one-third of our employees in the UnitedKingdom and 65% of our employees in South Africa belong to labor unions.

E. Share ownership

The share ownership of Cascal N.V.’s Board of Directors as at June 23, 2009 was as follows. All share data relates to theCompany’s common shares. Cascal N.V does not operate a stock option plan. Number of shares Percentage ofName owned outstanding shares

Larry Magor 4,166 *Stephane Richer 4,000 *Charles Auster 28,000 *Willy Biewinga — *Mitchell Sonkin 2,666 *Michael Wager 33,216 *

Total 72,048 *

* Less than 1% of outstanding shares

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Item 7. Major Shareholders and Related Party Transactions

A. Major shareholders

The following table sets forth to the best of our knowledge, as of March 31, 2009, certain information regarding beneficialownership of our shares by each person or entity known by us to own beneficially more than 5% of outstanding commonshares. Name of beneficial owner(1) Number of Shares Percentage of Shares

5% Shareholders: Biwater and beneficial owners (2)(3)(4)(5)( 6) 18,065,243 59%Baron Capital (7) 2,223,149 7%Pictet Asset Management SA 1,529,537 5%

(1) Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment powerwith respect to the securities.

(2) Biwater Investments Limited has pledged all of its ownership interest in us as security for borrowings under certaincredit arrangements made available to Biwater, and a second pledge as security for its funding deficit with respect toBiwater’s defined benefit pension plan.

(3) By virtue of a Schedule 13G filing with the SEC we are aware that as of December 31, 2008 Biwater Investments Ltdheld 17,868,543 common shares of the Company; Perry Nominees Limited, as nominees for Lloyds TSB PrivateBanking re White Family Pension Trust held 174,800 common shares; and Adrian Edwin White held 21,900 commonshares in the Company. We have been informed that Biwater BV owns 100% of Biwater Investments Ltd, BiwaterOverseas Limited owns 100% of Biwater BV, and Biwater plc owns 100% of Biwater Overseas Limited. Biwater plc isowned 70% by the family interests of Adrian Edwin White and 30% by the family interests of Leslie Jones.

(4) Biwater has the same voting rights as our other shareholders. However, since Biwater is our majority shareholder itmay significantly influence all matters that are submitted to a vote of our shareholders, including election and removalof directors and approval of extraordinary business combinations. Biwater has agreed in writing that it will not vote toremove without cause a member elected to serve a term on the “classified” board of directors.

(5) Biwater owned 100% of our shares prior to our initial public offering.

(6) Biwater’s address is Biwater House, Station Approach, Dorking, Surrey RH4 1TZ, United Kingdom.

(7) By virtue of a Schedule 13G filing with the SEC we are aware that Baron Capital Group, Inc; BAMCO, Inc; andRonald Baron held 2,223,149 common shares in Cascal as at December 31, 2008.

(8) By virtue of a Schedule 13G filing with the SEC we are aware that Pictet Asset Management SA 1,529,537 commonshares in Cascal as at December 31, 2008.

B. Related party transactions

Biwater Group overview

The Biwater Group is a leading water and wastewater business that develops and delivers solutions and services to awide client base around the world. Established in 1968, Biwater has grown from its construction and manufacturingfoundations in the United Kingdom to encompass the full spectrum of water and wastewater services, including water andwastewater treatment; membrane technology and desalination; water infrastructure investment and operation; water assetmanagement and consultancy; and water leisure facilities design and construction. Biwater has offices in over 20countries and has projects in over 30 countries.

Our role in the Biwater Group

Although we operate independently from Biwater, our relationship with the Biwater Group provides us with benefits.Biwater constructed and operated certain of our projects prior to their transfer of ownership to us and Biwater sharesmarket information with us. In addition, Biwater provides us with certain services including human resources, payrollprocessing and information technology as described further below. Our Audit Committee is responsible for the oversight ofour relationship with Biwater, including the approval of terms and conditions of transactions between Biwater and us.

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Purchase of Panama

In June 2006, we acquired Biwater Supply Limited (now renamed Cascal Investment Limited) from Biwater for$14.3 million. Of this consideration, $1.8 million was a deemed distribution to Biwater. In connection with the acquisition,Biwater also undertook to cause the transfer of its operation and maintenance sub-contract for the Panamanian project toCascal, and Cascal and Biwater agreed to approach the lender to the Panamanian project with a request for Cascal toreplace Biwater as guarantor of a loan to Aguas de Panama, the principal amount outstanding on which amounts to$6.4 million at March 31, 2009, and related obligations. Given the recent difficulties in Panama the International FinanceCorporation has declined to transfer the guarantee to Cascal. With effect from April 1, 2007, we and Biwater haveconfirmed the arrangement provided at the time of the acquisition and agreed that the direct costs of the operation andmaintenance sub-contract, including local taxes, will be reimbursed by us and have also agreed to share the services ofthe local senior management at a cost to be agreed upon. For the year ended March 31, 2009, we have incurred anamount of $12,000 per month for these management services.

Services and supplies provided by Biwater to us

Selling, general and administrative services. We have entered into service agreements with Biwater on an arms-lengthbasis for the provision of professional services to assist, improve and support us with the expansion of our activities.Under these agreements, Biwater provides:

• human resources services;

• payroll processing;

• public relations; and

• information technology services.

The agreements have been entered into separately between Biwater and certain of our subsidiaries. The fees for theseservices are invoiced to us quarterly in advance and settled within 30 days of receipt of invoice. Our total fees paid toBiwater under the services agreements during fiscal years 2007, 2008 and 2009 were $0.2 million, $0.2 million, and$0.2 million respectively.

Historically we have occupied office space and purchased related services from Biwater. The total accommodation costsand other compensation paid to Biwater under these agreements during fiscal years 2007, 2008 and 2009 were$0.3 million, $0.1 million, and $0.1 million respectively.

Vendor supplies. In addition to the service and rental agreements described above, we often solicit bids for variousservices and supplies from outside vendors, including Biwater. From time to time Biwater’s bid is selected and wepurchase services and supplies from Biwater. The total amounts paid to Biwater pursuant to such bids during fiscal years2007, 2008, and 2009 were $1.6 million, $0 million, and $0 million respectively.

We also reimburse Biwater for an allocated portion of the premium payable to an unrelated third-party insurer for our jointproperty, public liability and professional indemnity insurance coverage at our shared headquarters facility in Dorking.During each of the three fiscal years ended March 31, 2009, the average premium amount reimbursed by us wasapproximately $20,000 annually.

Governance fees. Historically, we paid supervisory board fees to supervisory board members designated by Biwater. Thetotal amounts of supervisory board fees paid to Biwater in fiscal years 2007 and 2008 were $0.1 million and $0 millionrespectively. We no longer have a supervisory board following our conversion from a private limited liability company to apublic limited liability company.

Lease. We currently lease office space in Amsterdam pursuant to a lease agreement and Biwater leases the adjoiningspace under a separate lease. However, if Biwater’s lease ends at any time and for any reason, we are required toassume Biwater’s space and our rent will increase accordingly until our lease is terminated in accordance with its terms.The annual rent provided for under the lease agreement is approximately €30,000 ($42,000), for which we and Biwaterare each principally responsible for one half.

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Costs of our initial public offering. During the period April 1, 2008 and June 6, 2008, Biwater paid us at total of $5.1 millionto cover its share of the costs of our initial public offering. Biwater’s share of the total costs was in the same proportion asthe number of shares it offered for sale at the time of our initial public offering relative to the total number of shares listed,including any over-allotments.

Miscellaneous. From April 2004 to June 2006, Biwater reimbursed us for, or paid directly, the substantial majority of ourbusiness development costs. The total amounts paid by Biwater during the fiscal years 2007 and 2008 were $0.1 millionper year. The amount paid in part of 2007 included the compensation paid to our Chief Growth Officer. In preparation forour initial public offering, Biwater incurred certain transaction related costs on our behalf prior to acquiring the balance ofour shares from Nuon in June 2006. These costs totaled $1.0 million and were not recognized in our financial statements.In addition, members of our management have served as directors of Biwater subsidiaries. From 2006 to July 2007 ourChief Executive Officer, and from 2003 to July 2007 our Chief Growth Officer, each served as a director of Biwater Gauff(Tanzania), a Biwater subsidiary that owns a 51% interest in City Water Services, a Biwater joint venture that providedwater and wastewater services in the city of Dar es Salaam, Tanzania from August 2003 until its assets were seized bythe Tanzanian government in May 2005. Our Chief Executive Officer has also served as non-executive chairman of theboard of this joint venture from 2005 to July 2006. Our Chief Growth Officer also served as a director of BiwaterInternational Ltd. from 2002 (prior to his appointment as our Chief Growth Officer) to August 2006. Also, $1.0 million waspaid on our behalf by Biwater and subsequently refunded to Biwater to facilitate the purchase of China Water. Duringfiscal year 2009, Biwater has reimbursed us for $160,000 of the expense we have incurred on its behalf with respect to acorporate transaction it was considering.

U.K. defined benefit pension plan

Our U.K. defined benefit pension plan is part of the Biwater Retirement and Security Scheme (BRASS). There are twosub-funds established within BRASS. Biwater’s defined benefit plan sub-fund is referred to as the Main Section and ourdefined benefit plan sub-fund is referred to as the Water Company Section. Although the Water Company Sectionconstitutes a separate sub-fund, it is established under the same documentation that governs the Main Section, and it isadministered by the same trustees as the Main Section. We have been informed by Biwater that as of January 29, 2008the BRASS Main Section was underfunded on a full buy-out basis, as determined under the U.K. pension statute, by£96.3 million ($138.0 million). At the same date, the Water Company Section was underfunded on a full buy-out basis by£7.1 million ($10.2 million). Since March 31, 2006, we have made an additional special contribution of £3.0 million to ourdefined benefit pension plan. Biwater used a portion of the proceeds received by it from its sale of shares in our initialpublic offering to make a £10.0 million ($19.9 million) payment to the trustees of its U.K. defined benefit pension plan.Effective upon the admission to trading of our shares on the New York Stock Exchange, the trustees have agreed withBiwater to terminate their right to merge the Water Company Section and the Main Section.

Also, we could be required to make accelerated payments up to the full buy-out deficit in BRASS, which would likely be farhigher than the normal ongoing funding of the plan, if we receive a “Contribution Notice” or “Financial Support Direction”from the U.K. Pensions Regulator.

The U.K. Pensions Regulator may issue a Contribution Notice to us in connection with any event occurring after April 27,2004, if the U.K. Pensions Regulator believes we have been involved in an act, or failure to act, which had the effect ofbeing materially detrimental to a plan’s ability to pay current and future benefits (a “Triggering Event”). We potentially haveContribution Notice exposure to the Main Section, as well as the Water Company Section, in relation to any TriggeringEvents in which we have been involved because Biwater owns more than one-third of our shares outstanding and we aretherefore considered to be “connected or associated with” Biwater under the U.K. pension statute. Although we believethat we have not been involved in any Triggering Event relating to any act or failure to act by either Biwater or us andtherefore are not presently liable to receive a Contribution Notice, the U.K. Pensions Regulator takes a broad view of itspowers and may take a view different than ours; it could issue a Contribution Notice in connection with actions or failuresto act that it believes constitute a Triggering Event within 6 years of the Triggering Event. In the case of our involvement ina future transaction that arguably would constitute a “Triggering Event,” Biwater or we could elect to seek “clearance” ofthe transaction from the U.K. Pensions Regulator. The clearance process can result in the receipt of confirmation that theU.K. Pensions Regulator would

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not impose a Contribution Notice in respect of the potential Triggering Event, although the U.K. Pensions Regulator couldimpose financial obligations in connection with the grant of clearance, such as requiring us to make additional paymentsto BRASS or to put in place guarantees for the benefit of BRASS. For example, the additional contribution we made to ourdefined benefit plan in the first quarter of our fiscal year 2007 and the additional contribution that Biwater made to itsdefined benefit pension plan from the proceeds of our initial public offering were determined in connection with a requestfor and grant of clearance relating to Biwater’s purchase of Nuon’s interest in our shares.

We may also receive a Financial Support Direction from the U.K. Pensions Regulator that would require us to providefinancial support to BRASS, for example by way of guarantee, or by making a payment up to the full buy-out deficit ofBRASS, if the U.K. Pensions Regulator believes either Biwater or another Group company is “insufficiently resourced” asdefined under the U.K. pension statute. An employer is “insufficiently resourced” if its fair market value, when consideredalong with the fair market value of other companies connected or associated with the employer, is less than 50% of its fullbuy-out deficit. The U.K. Pensions Regulator can consider issuing a Financial Support Direction to persons connected orassociated with an employer within a U.K. defined benefit pension plan up to twenty four months after the date that theconnection or association is ended. Under current law, we will be considered to be a person connected or associated withBiwater at least until such time as Biwater owns less than one-third of our shares outstanding or we are no longer undercommon control with Biwater. The U.K. Pensions Regulator may give “clearance” in respect of Financial SupportDirections in situations involving a company’s termination of a connection or association with an employer.

When deciding whether it would be reasonable to serve a Contribution Notice or Financial Support Direction on us for asituation involving Biwater, the U.K. Pensions Regulator would take into account various factors set out in the U.K.pension statute. These factors include our relationship with Biwater (and the fact that we do not control Biwater reducesour risk of receiving a Contribution Notice or Financial Support Direction) and our connection or involvement with BRASS.With respect to a possible Financial Support Direction, the U.K. Pensions Regulator would also take into account thevalue of the benefits that we had received from Biwater, and with respect to a possible Contribution Notice, the U.K.Pensions Regulator would also take into account our involvement in the act or failure to act that resulted in the TriggeringEvent.

Credit arrangements

On June 28, 2006, we entered into an intercompany loan agreement with Biwater pursuant to which we agreed to provideto Biwater a loan facility in the maximum aggregate principal amount of £3.5 million ($6.6 million). Loans made pursuantto the loan agreement bear interest at 5% per annum. Principal in the amount of £3.5 million was drawn under the loanfacility on June 28, 2006. A principal repayment of £0.8 million ($1.6 million) was made on November 9, 2006. FromJune 28, 2006 through September 30, 2006, we accrued £46,000 ($85,000) of interest receivable on this loan. Theremaining balance of the principal amount of £2.7 million ($5.1 million) plus accrued interest was repaid in full prior toMay 31, 2007 in accordance with the terms of the amended loan agreement. On April 30, 2007, we entered into anintercompany loan agreement with Biwater pursuant to which we agreed to borrow from Biwater a loan in the maximumaggregate principal amount of $2.7 million, to be used to partially finance the acquisition of Siza Water in South Africa.This loan bore interest at 2% over the Federal Reserve Funds rate per annum. The principal in the amount of $2.7 millionwas repaid on May 26, 2007. On June 21, 2007, we loaned Biwater $0.4 million and £150,000 ($0.3 million) interest free,$0.4 million of which was repaid on June 28, 2007 and the balance of which was repaid on July 11, 2007.

On September 22, 2006, we advanced $8 million to Biwater in anticipation of paying a dividend based on our fiscal year2006 results. Biwater returned $2.4 million to us on November 9, 2006. We declared and paid a dividend in the amount of$5.6 million in fiscal year 2007, and we credited the outstanding amount of the advance against that dividend.

On September 14, 2007, we obtained a Rand 17.7 million ($1.9 million) guarantee from a third party financial institutionand used it to secure a loan made by another third party financial institution to one of our South African subsidiaries. Theguarantee was issued under a Biwater credit facility and enabled us to obtain a release of cash collateral that had beenpreviously provided by us to secure that loan. We used the cash collateral to make interest payments due inSeptember 2007 on debt incurred in June 2006 to facilitate Biwater’s acquisition of Nuon’s interest

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in us. On September 14, 2008 we replaced the Biwater guarantee with an instrument issued under our HSBC creditfacility.

Non-compete agreement

Prior to our initial public offering, we entered into a non-compete agreement with Biwater pursuant to which Biwater hasagreed that it will refer future long-term water and wastewater project opportunities to Cascal for its consideration beforeBiwater considers the project for its own portfolio. This agreement will terminate upon the earlier of three years after theclosing of our initial public offering or Biwater owning less than 15% of our common shares. Following termination of thisagreement, Biwater may elect to compete against us for such project opportunities. This agreement will not restrictBiwater’s design, engineering, constructing or consulting activities.

Registration rights

Biwater have certain registration rights with respect to our shares arising out of the arrangement for our initial publicoffering in January, 2008.

Demand Registration Rights. The registration rights agreement provides that we can be required to effect two additionalregistrations of our shares upon the request of Biwater. We are required to pay the registration expenses in connectionwith each demand registration. We may decline to honor any of these demand registrations if the size of this offering doesnot reach a defined threshold or if we effected a registration within the preceding six months. If we furnish to Biwater aboard resolution stating that in the good faith judgment of the board it would be significantly disadvantageous to us for aregistration to be filed or maintained effective, we will be entitled to withdraw (or decline to file) such registration statementfor a period not to exceed 90 days.

Piggyback Registration Rights. In addition to our obligations with respect to demand registrations, if we propose to registerany of our securities, other than a registration (1) relating to equity securities in connection with employee benefit plans,(2) in connection with an acquisition by us of another entity or (3) pursuant to a demand registration, we will give Biwaterthe right to participate in such registration. Expenses relating to these registrations are required to be paid by us. If amajority of the underwriters selected by us in a piggyback registration advise us that the number of securities offered tothe public needs to be reduced, first priority for inclusion in the piggyback registration will be given to us.

Tax indemnity

Between the time Biwater reacquired Nuon’s 50% interest in us and the closing of our initial public offering, our U.K.subsidiaries have been part of the Biwater Group for U.K. corporate income tax purposes. As a result, most of ourpayments for U.K. corporate tax due on our U.K. taxable trading profits for fiscal year 2007 and all of our payments forU.K. corporate tax due on our U.K. taxable trading profits for fiscal year 2008 through the date of the closing of our initialpublic offering have been paid to Biwater rather than to the U.K. tax authorities, as Biwater had available U.K. tax lossesto offset some of those profits in that fiscal year. Biwater has indemnified us for the corporate tax and interest if the use ofthe losses is challenged.

Trademark license

Biwater and Cascal have entered into reciprocal license agreements that grant a worldwide royalty-free license to use thename and related trademarks of the other party until such time as Biwater owns less than 15% of the issued share capitalof Cascal. Under each license agreement, the respective licensee has undertaken the usual and customary obligations ofa licensee with respect to the use of the name and trademarks, including indemnification for losses and damages arisingout of use of the name or trademarks.

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Item 8. Financial Information

A. Consolidated Statements and Other Financial Information

See our consolidated financial statements beginning at page F-1.

Legal proceedings

We are involved in lawsuits from time to time, including lawsuits that we have relating to our acquisitions and disputes withgovernment agencies that regulate our business. There are no material legal proceedings pending or, to our knowledge,threatened, against us. The following is a description of some of the proceedings in which we are currently involved or inwhich we have been involved in the last two years.

Current legal proceedings

Dispute with Olongapo City in The Philippines

This involves the claim of the City of Olongapo City (City) against Subicwater for the payment of the obligations of theformer Olongapo City Water District (OCWD) to the City in the amount of Pesos 136 million. Subicwater’s position is thatthe City’s demand is without any basis and not valid in law, and that it has no legal obligation to accede to it.

As background, one of the original shareholders in Subicwater was OCWD, which originally held 10% of the shares ofSubicwater. OCWD was the owner of a number of the facilities taken over by Subicwater when it commenced operationsand which were the subject of a lease agreement between OCWD and Subicwater. Subicwater was formed based on therepresentations made by OCWD in the Joint Venture Agreement to the effect that its statements of financial condition asof December 31, 1994 presented fairly the financial condition of OCWD as of that date and there was no disclosure thatOlongapo City and OCWD had been in dispute over amounts owed by OCWD to Olongapo City prior to the award of theconcession. In June 1997, OCWD was dissolved and its position as a shareholder in Subicwater was assumed by theCity. In addition to the 10% shareholding in Subicwater, the City also became the lessor in place of OCWD under thelease of project assets to Subicwater. Since then the City has consistently continued to act as a shareholder in Subicwaterand has appointed directors of Subicwater, who have attended board meetings.

However, despite the fact that it exercised its right as a shareholder in Subicwater, the City subsequently contended that itprefers to be a creditor of Subicwater (as opposed to a shareholder) and claimed the old disputed OCWD amounts fromSubicwater.

On July 2003, the City obtained a writ of execution from the local court against OCWD, which both the city and the localcourt contend is also Subicwater. Subicwater, through counsel, moved to quash this writ on the ground that it is not aparty to the case. The local court denied this, which prompted Subicwater to elevate the case to the Court of Appeals.

In a decision dated July 20, 2005, the Court of Appeals granted Subicwater’s petition for certiorari and set aside the localcourt’s orders as well as the writ of execution for being issued without jurisdiction. The City filed a motion forreconsideration that was denied by the Court of Appeals. On March 17, 2006, a petition for certiorari was filed by the Cityto the Supreme Court, to which Subicwater filed its comment. The parties subsequently filed their respective memoranda.The petition remains pending.

In November 2004 the Mayor of Olongapo City offered to negotiate a resolution to this dispute but withdrew this offer inDecember 2004. The company’s lawyers will continue to vigorously defend its position that Subicwater has no legalobligation to accede to the City’s claim and believe that its case will prevail on the merits. In the event Olongapo City wereto succeed with this claim, then Subicwater would pursue the issue through the annual rate review process and eventuallymay be able to recover some or all of the consequential costs. With interest and penalties, the amount of Olongapo City’sclaim against Subicwater as of March 31, 2009 is approximately Peso 2.5 billion ($52.1 million).

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Arbitration with IDAAN-Panama

On February 25, 2008 IDAAN initiated a process to invoke the contractual provision for early termination of the contractwith payment of compensation, and sought APSA’s cooperation to achieve a fair outcome. Under the terms of thecontract, the compensation payable represents the non-amortized value of the investment together with the present valueof the future earnings over the whole duration of the contract. In September 2008, IDAAN, submitted a request forarbitration to the Centre of Conciliation and Arbitration of Panama in accordance with the terms of the contract. Thearbitration will be conducted with three arbitrators. Each party has chosen one arbitrator and the Chairman has beenchosen. The arbitration will take place in Panama under the UNCITRAL rules. The termination compensation has beencalculated at approximately $23 million by IDAAN and approximately $59 million by APSA.

Investigation by the KPPU

Adhya Tirta Batam, the Group’s 50% joint venture on the island of Batam in Indonesia has been subject to aninvestigation by the KPPU, the Business Competition Supervisory Commission. It was asserted that ATB acted in ananti-competitive manner, and potentially in breach of monopoly powers, by failing to connect certain new properties to thewater network. On October 14, 2008 the KPPU found against ATB. ATB appealed against this decision and, onFebruary 4, 2009, the district court ruled in favor of ATB and overturned the original decision by the KPPU. The KPPUsubsequently appealed against the district court decision and ATB is currently awaiting the appeal court’s decision.

Dividend Policy

Our board of directors may establish reserves out of our annual profits. The holders of common shares have discretion asto the use of that portion of our annual profits remaining after the board of directors establishes these reserves. On therecommendation of the board of directors, the general meeting of shareholders may resolve at the annual generalmeeting that we pay dividends out of our share premium account or out of any other reserve available for shareholderdistributions under Dutch law. We may not pay dividends if the payment would reduce shareholders’ equity to an amountless than the aggregate fully paid-up share capital plus the reserves that have to be maintained by law or our Articles ofAssociation. The amounts available for dividends will be determined based on the statutory accounts of Cascal N.V.prepared under Dutch law, which may differ from our consolidated financial statements.

Although laws vary from state to state within the United States, uncollected dividends and shares may be consideredabandoned property under the laws of a shareholder of record’s state of residence after a period of time, ranging fromthree years to five years, has passed since that shareholder’s last contact with our transfer agent. If a shareholder ofrecord does not claim dividends from our transfer agent within the applicable time period, our transfer agent, inaccordance with applicable state law, will transfer the amount of the unclaimed dividend and the related shares to thetreasury of that shareholder’s state of residence as reflected in the transfer agent’s records, which may not be thatshareholder’s actual state of residence. Amounts paid to a state treasury in this manner will not be repaid to us, andwhether or not that shareholder is subsequently permitted to recover the property from the state treasury will depend onthat state’s law. Under Dutch law, and as our Articles of Association do not provide otherwise, a shareholder may remainentitled to collect cash dividends or other distributions from us until five years after the date on which the dividend ordistribution became due and payable.

The timing and amount of future dividend payments will be at the discretion of our board of directors. The decision to paydividends will depend on a variety of factors, including our earnings, prospects and financial condition, capital investmentrequired to implement our strategy for growth and expansion, other capital expenditure requirements, payment of financialobligations, our generation of cash from operations and general business conditions, legal restrictions and such otherfactors as our board of directors considers relevant. As a holding company, our ability to pay dividends depends primarilyon the receipt of dividends and distributions from our subsidiaries and joint ventures. If we pay dividends, we expect todeclare dividends in U.S. Dollars.

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B. Significant Changes

The following discussion should be read in conjunction with our discussion of the evolution of our business, our financialcondition, our results of operations and a comparison of our operating results and financial condition in preceding periodsincluded in Item 5 “Operating and Financial Review and Prospects”.

Since the date of our consolidated financial statements, we have pursued our strategic goals to achieve organic growth,obtain new contracts and enter into new partnerships and alliances. The following are the most significant developmentsin our businesses since March 31, 2009:

We completed the renewal of our $60 million revolving loan facility on June 26, 2009 with the same lender for a period oftwo years ending June 30, 2011. The terms of the renewed facility are similar to those under which the previous facilitywas granted with the exception of the arrangement fee and interest rate margin, both of which have been increased in linewith current trends in the corporate lending market. See — Item 5 “Operating and Financial Review and Prospects —Liquidity and capital resources”. The revolving loan facility was fully utilized at March 31, 2009 and this continues to be theposition at the date of this filing.

Item 9. The Offer and Listing

A. Offer and Listing Details

The following table sets forth the range of high and low closing sale prices for our shares for the periods indicated, asreported on the New York Stock Exchange. These prices do not include retail mark-ups, markdowns, or commissions. Asthe company listed its shares on January 29, 2008 only certain limited information can be provided. US$ US$ High LowFiscal Year Ended

March 31, 2008 (from January 29, 2008) 12.22 11.09 March 31, 2009 14.30 2.12

Quarterly Fourth Quarter Fiscal Year 2008 (from January 29, 2008 through March 31, 2008) 12.22 11.09 First Quarter Fiscal Year 2009 14.30 9.95 Second Quarter Fiscal Year 2009 13.02 9.00 Third Quarter Fiscal Year 2009 10.68 3.89 Fourth Quarter Fiscal Year 2009 4.73 2.12 First Quarter Fiscal Year 2010 (through June 30, 2009) 4.00 2.69

Monthly January 2009 4.65 3.97 February 2009 4.73 3.05 March 2009 3.61 2.12 April 2009 3.31 2.69 May 2009 3.92 3.17 June 2009 (through June 30, 2009) 4.00 3.13

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B. Plan of distribution

Not applicable.

C. Markets

Our initial public offering took place on January 29, 2008. Our stock is traded on the New York Stock Exchange, under thesymbol “HOO.” The New York Stock Exchange is the only exchange or other regulated market on which the shares ofCascal N.V. are traded.

D. Selling shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the issue

Not applicable.

Item 10. Additional Information

A. Share capital

Not applicable.

B. Memorandum and articles of association

See section entitled “Description of Capital Stock” contained within the Company’s Registration Statement on Form F-1/A,File No.333-148508, filed with the Securities and Exchange Commission on January 25, 2008.

C. Material contracts

We are party to material contracts. Copies of these agreements are filed or incorporated by reference as exhibits to thisannual report, and are described elsewhere in this annual report.

D. Exchange controls

Under existing laws of The Netherlands, there are no exchange controls applicable to the transfer to persons outside ofThe Netherlands of dividends or other distributions with respect to, or of the proceeds from the sale of, shares of a Dutchcompany.

E. Taxation

Taxation in The Netherlands

General

The information set out below is a general summary of the material Dutch tax consequences in connection with theacquisition, ownership and transfer of our common shares. The summary does not purport to be a comprehensivedescription of all the Dutch tax considerations that may be relevant for a particular holder of the common shares, who maybe subject to special tax treatment under any applicable law and this summary is not intended to be applicable in respectof all categories of holders of the common shares.

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In particular, this summary is not applicable in respect of any holder who is treated as a resident of The Netherlands forDutch tax purposes.

The summary is based upon the tax laws of The Netherlands as in effect on the date of this annual report, as well asregulations, rulings and decisions of The Netherlands and its taxing and other authorities available on or before such dateand now in effect. All of the foregoing is subject to change, which could apply retroactively and could affect the continuingvalidity of this summary. As this is a general summary, we recommend that investors or shareholders consult with theirown tax advisers as to the Dutch or other tax consequences of the acquisition, ownership and transfer of the commonshares, including, in particular, the application to their particular situations of the tax considerations discussed below.

The following summary does not address the tax consequences arising in any jurisdiction other than The Netherlands inconnection with the acquisition, ownership and transfer of the common shares.

Dividend withholding tax

General

We do not describe the tax consequences for a holder of the common shares who benefits from the participationexemption or participation credit, as set out in the Dutch Corporate Income Tax Act 1969 (Wet op devennootschapsbelasting 1969), regarding the dividends received on the common shares.

Dividends paid on the common shares to a holder of such shares are generally subject to a withholding tax of 15%imposed by The Netherlands. The term “dividends” for this purpose includes, but is not limited to:

• distributions in cash or in kind, deemed and constructive distributions, and repayments of paid-in capital notrecognized for Dutch dividend withholding tax purposes;

• liquidation proceeds, proceeds of redemption of shares or, generally, consideration for the repurchase of shares inexcess of the average paid-in capital recognized for Dutch dividend withholding tax purposes;

• the par value of shares issued to a shareholder or an increase of the par value of shares, as the case may be, to theextent that it does not appear that a contribution to the capital recognized for Dutch dividend withholding taxpurposes was made or will be made; and

• partial repayment of paid-in capital, recognized for Dutch dividend withholding tax purposes, if and to the extent thatthere are net profits (zuivere winst), within the meaning of the Dutch Dividend Withholding Tax Act 1965 (Wet op dedividendbelasting 1965), unless the general meeting of our shareholders has resolved in advance to make such arepayment and provided that the par value of the shares concerned has been reduced by a corresponding amount byway of an amendment of our Articles of Association.

Generally we are responsible for the withholding of dividend withholding tax at source; the dividend withholding tax will notbe for our account.

Subject to certain exceptions under Dutch domestic law, our company may not be required to transfer to the Dutch taxauthorities the full amount of Dutch dividend withholding tax in respect of dividends distributed by our company, if ourcompany has received a profit distribution from a qualifying foreign subsidiary, which distribution is exempt from Dutchcorporate income tax and has been subject to a foreign withholding tax of at least 5%. The amount that does not have tobe transferred to the Dutch tax authorities can generally not exceed the lesser of (i) 3% of the dividends distributed by ourcompany and (ii) 3% of the profit distributions our company received from qualifying foreign subsidiaries in the calendaryear in which our company distributes the dividends (up to the moment of such dividend distribution) and the two previouscalendar years. Further limitations and conditions apply.

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Non-resident of The Netherlands (including but not limited to U.S. Shareholders)

Subject to the Dividend Stripping Rules that are described at the end of this subparagraph we note the following. Withrespect to a holder of the common shares, who is not treated as a resident of The Netherlands for purposes of Dutchtaxation (a “Non-Resident of The Netherlands”) and who is considered to be a resident of The Netherlands Antilles orAruba under the provisions of the Tax Convention for the Kingdom of The Netherlands (Belastingregeling voor hetKoninkrijk), or who is considered to be a resident of a country other than The Netherlands under the provisions of adouble taxation convention The Netherlands has concluded with such country, the following may apply. Such shareholdermay, depending on the terms of and subject to compliance with the procedures for claiming benefits under the TaxConvention for the Kingdom of The Netherlands or such double taxation convention, be eligible for a full or partialexemption from or a reduction or refund of Dutch dividend withholding tax. In addition, subject to certain conditions andbased on Dutch legislation implementing the Parent Subsidiary Directive (Directive 90/435/EEG, as amended) anexemption from Dutch dividend withholding tax will generally apply to dividends distributed to certain qualifying entitiesthat are resident in another European Union member state.

A holder of common shares who is considered to be a resident of the United States under the 1992 Double TaxationTreaty between the U.S. and The Netherlands, as amended most recently by the Protocol signed March 8, 2004 (the“Treaty”), who is liable to U.S. income tax and who is entitled to the benefits of the Treaty—pursuant to article 26 of theTreaty—with respect to the income and capital gains in respect of the common shares (such holder of common shareshereinafter: a “U.S. Shareholder”), will generally be entitled to a reduction in the Dutch withholding tax on dividends suchU.S. Shareholder beneficially owns, either by way of a full or partial exemption at source or by way of a full or partialrefund, as follows:

• if the U.S. Shareholder is an exempt pension trust as described in article 35 of the Treaty, or an exempt organizationas described in article 36 of the Treaty, the U.S. Shareholder will be exempt from Dutch dividend withholding tax;

• if the U.S. Shareholder is a company which holds directly at least 80% of the voting power for at least one yearwithout interruption in our company and certain other conditions are met, the U.S. Shareholder will be subject to 0%Dutch dividend withholding tax;

• if the U.S. Shareholder is a company which holds directly at least 10% of the voting power in our company andcertain other conditions are met, the U.S. Shareholder will be subject to Dutch dividend withholding tax at a rate notexceeding 5%; and

• in all other cases, the U.S. Shareholder will be subject to Dutch dividend withholding tax at a rate not exceeding 15%.

With respect to a U.S. Shareholder that is an exempt pension trust, company or other organization as described in article35 of the Treaty or an exempt trust, company or other organization as described in article 36 of the Treaty and that is thebeneficial owner of portfolio dividends paid on the common shares we note the following:

• A U.S. Shareholder that is an exempt pension trust, company or other organization as described in article 35 of theTreaty should claim a full relief at source from or refund of Dutch dividend withholding tax by timely completing,dating, signing and filing Form IB 96 USA in accordance with the instructions on that form and accompanied by therequired certificate (form 6166 or equivalent).

• A U.S. Shareholder that is an exempt trust, company or other organization as described in article 36 of the Treatyshould claim a refund of Dutch dividend withholding tax by timely completing, dating, signing and filing Form IB 95USA in accordance with the instructions on that form.

A holder of the common shares, who is the recipient of dividends (the “Recipient”) may not be eligible for a full or partialexemption from, reduction or refund of Dutch dividend withholding tax if it is not considered the beneficial owner of thedividends. This may arise where, as a consequence of a combination of transactions, a person other than the Recipientwholly or partly benefits from the dividends, whereby such person retains, directly or indirectly, an interest in the shares onwhich the dividends were paid and is entitled to a credit, reduction or refund of dividend withholding tax that is less thanthat of the Recipient (“Dividend Stripping Rules”).

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Taxes on income and capital gains

General

The description of taxation set out in this section of this annual report is not intended for any:

• direct or indirect holder of the common shares, who is an individual if the income or capital gains derived from thecommon shares are attributable to employment activities the income from which is taxable in The Netherlands or ifthe common shares, as should be assumed on the basis of the relevant facts and circumstances, also form acompensation for activities in the Netherlands of the individual or an affiliated person;

• holder of the common shares, who is an individual and who holds, or is deemed to hold a substantial interest in ourcompany (as defined below);

• holder of the common shares, who is an entity that is a resident of The Netherlands and that is not subject to or isexempt, in whole or in part, from Dutch corporate income tax;

• holder of the common shares, who is an entity for which the income or capital gains derived in respect of thecommon shares are exempt under the participation exemption or are subject to the participation credit system (as setout in the Dutch Corporate Income Tax Act 1969); or

• holder of the common shares, who is an investment institution (beleggingsinstelling) as defined in article 28 of theDutch Corporate Income Tax Act 1969.

Generally a holder of common shares will have a substantial interest in our company (a “Substantial Interest”) if he holds,alone or together with his partner, whether directly or indirectly, the ownership of, or certain other rights over, sharesrepresenting 5% or more of our total issued and outstanding capital (or the issued and outstanding capital of any class ofshares), or rights to acquire shares, whether or not already issued, that represent at any time 5% or more of our totalissued and outstanding capital (or the issued and outstanding capital of any class of our shares) or the ownership of, orcertain other rights over, profit participating certificates that relate to 5% or more of our annual profit and/or to 5% or moreof our liquidation proceeds. A holder of the common shares will be deemed to have a Substantial Interest in our companyif certain relatives of that holder or of his partner have a Substantial Interest in our company. If a holder of common sharesdoes not have a Substantial Interest, a deemed Substantial Interest will be present if (part of) a Substantial Interest hasbeen disposed of, or is deemed to have been disposed of, on a non-recognition basis.

Non-residents of The Netherlands (including, but not limited to, U.S. Shareholders)

A Non-Resident of The Netherlands who holds the common shares is generally not subject to Dutch income or corporateincome tax (other than dividend withholding tax described above) on the income and capital gains derived from thecommon shares, provided that:

• such Non-Resident of The Netherlands does not derive profits from an enterprise or deemed enterprise, whether asan entrepreneur (ondernemer) or pursuant to a co-entitlement to the net worth of such enterprise (other than as anentrepreneur or a shareholder) which enterprise is, in whole or in part, carried on through a permanent establishmentor a permanent representative in The Netherlands and to which enterprise or part of an enterprise, as the case maybe, the common shares are attributable or deemed attributable;

• in the case of a Non-Resident of The Netherlands that is an entity, it does not have a Substantial Interest or deemedSubstantial Interest in our company, or if such holder does have such Substantial Interest, it forms part of the assetsof an enterprise;

• in the case of a Non-Resident of The Netherlands who is an individual, such individual does not derive income orcapital gains from the common shares that are taxable as benefits from “miscellaneous activities” in The

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Netherlands (resultaat uit overige werkzaamheden in Nederland), including, but not limited to activities in theNetherlands with respect to the common shares that exceed normal asset management; and

• such Non-Resident of The Netherlands is not entitled to a share in the profits of and does not have co-entitled to thenet worth of an enterprise effectively managed in The Netherlands, other than by way of the holding of securities orthrough an employment contract, to which enterprise the common shares or any payment in respect of the commonshares are attributable.

Gift, estate or inheritance taxes

No Dutch gift, estate or inheritance tax will arise on the transfer of the common shares by way of gift by or on the death ofa holder thereof, unless:

• the holder is or is deemed to be a resident of The Netherlands for the purpose of the relevant provisions; or

• the transfer is construed as an inheritance or bequest or as a gift made by or on behalf of a person who, at the timeof the gift or death, is or is deemed to be a resident of The Netherlands for the purpose of the relevant provisions; or

• the common shares are attributable to an enterprise or part of an enterprise which is, in whole or in part, carried onthrough a permanent establishment or a permanent representative in The Netherlands; or

• the holder of such common shares is entitled to a share in the profits of an enterprise effectively managed in TheNetherlands, other than by way of the holding of securities or through an employment contract, to which enterprisesuch common shares are attributable.

For purposes of Dutch gift, estate and inheritance tax, an individual who is of Dutch nationality will be deemed to be aresident of The Netherlands if he has been a resident in The Netherlands at any time during the ten years preceding thedate of the gift or his death. For purposes of Dutch gift tax, an individual who is not of Dutch nationality will be deemed tobe resident of The Netherlands if he has been a resident in The Netherlands at any time during the twelve monthspreceding the date of the gift. A gift by a person not resident in The Netherlands will be construed as a transfer madeupon the death of such person, if such person dies while being a resident of The Netherlands within 180 days of the gift.

Value-added tax

There is no Dutch value-added tax payable in respect of payments in consideration for the sale of the common shares(other than value added tax on fees payable in respect of services not exempt from Dutch value added tax).

Other taxes and duties

There is no Dutch registration tax, capital tax, customs duty, stamp duty or any other similar tax or duty other than courtfees payable in The Netherlands by a holder of the common shares in respect of or in connection with the execution,delivery and enforcement by legal proceedings (including any foreign judgment in the courts of The Netherlands) of thecommon shares.

Residence

A holder of the common shares will not become or be deemed to become a resident of The Netherlands solely by reasonof holding the common shares.

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Taxation in the United States

The following discussion, subject to the limitations and qualifications therein, applies to the material U.S. federal taxconsequences of the acquisition, ownership and disposition of our common shares.

This section summarizes the material U.S. federal income tax consequences to beneficial holders of common shares.This summary addresses only the U.S. federal income tax considerations for holders that hold our common shares ascapital assets. This summary does not address all U.S. federal income tax matters that may be relevant to a particularholder of common shares. Each holder of common shares should consult a professional tax advisor with respectto the tax consequences of an investment in the common shares. This summary does not address tax considerationsapplicable to a holder of common shares that may be subject to special tax rules including, without limitation, thefollowing:

• financial institutions;

• insurance companies;

• dealers or traders in securities or currencies;

• tax-exempt entities;

• regulated investment companies;

• persons that will hold the common shares as part of a “hedging” or “conversion” transaction or as a position in a“straddle” for U.S. federal income tax purposes;

• persons who hold the common shares through partnerships or other pass-through entities;

• holders that own (or are deemed to own) 10% or more of the voting shares of the relevant issuer or guarantor; and

• holders that have a “functional currency” other than the U.S. dollar.

Further, this summary does not address alternative minimum tax consequences or the indirect effects on the holders ofequity interests in a holder of common shares.

This summary is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury regulationsand judicial and administrative interpretations, in each case as currently in effect and available. All of the foregoing issubject to change, which change could apply retroactively and could affect the tax consequences described below.

Each holder of common shares should consult its own tax advisor with respect to the U.S. federal, state, local and foreigntax consequences of acquiring, owning or disposing of the common shares.

For the purposes of this summary, a “U.S. holder” is a beneficial owner of common shares that is, for U.S. federal incometax purposes:

• a citizen or resident of the United States;

• a corporation, or other entity that is treated as a corporation for U.S. federal income tax purposes, created ororganized in or under the laws of the United States or any state of the United States (including the District ofColumbia);

• an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

• a trust, if a court within the United States is able to exercise primary supervision over its administration and one ormore U.S. persons have the authority to control all of the substantial decisions of such trust.

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If a partnership holds common shares, the tax treatment of a partner will generally depend upon the status of the partnerand upon the activities of the partnership. Partners of partnerships holding common shares should consult their taxadvisors. A non-U.S. holder is a beneficial owner of common shares that is not a U.S. holder.

U.S. federal income tax consequences to U.S. holders

Distributions. Subject to the discussion under “Passive Foreign Investment Company Considerations” below, the grossamount of any distribution (including any amounts withheld in respect of Dutch withholding tax) actually or constructivelyreceived by a U.S. holder with respect to common shares will be taxable to the U.S. holder as a dividend to the extent ofour current and accumulated earnings and profits as determined under U.S. federal income tax principles. The U.S. holderwill not be eligible for any dividends received deduction in respect of the dividend otherwise allowable to corporations.Distributions in excess of earnings and profits will be non-taxable to the U.S. holder to the extent of, and will be appliedagainst and reduce, the U.S. holder’s adjusted tax basis in the common shares. Distributions in excess of earnings andprofits and such adjusted tax basis will generally be taxable to the U.S. holder as capital gain from the sale or exchange ofproperty. We do not maintain calculations of our earnings and profits under U.S. federal income tax principles. If we do notreport to a U.S. holder the portion of a distribution that exceeds earnings and profits, the distribution will generally betaxable as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capitalgain under the rules described above. The amount of any distribution of property other than cash will be the fair marketvalue of that property on the date of distribution.

Under the Code, certain dividends received by individual U.S. holders after December 31, 2002, will generally be subjectto a maximum income tax rate of 15% (the prior maximum income tax rate on dividends received by individuals was 35%).This reduced income tax rate is only applicable to dividends paid by “qualified foreign corporations” and only with respectto shares held by a qualified U.S. holder (i.e., an individual) for a minimum holding period (generally, 61 days during the121-day period beginning 60 days before the ex-dividend date). We should be considered a qualified foreign corporationunder the Code. Accordingly, dividends paid by us to individual U.S. holders on shares held for the minimum holdingperiod may be eligible for a reduced income tax rate. The reduced tax rate for qualified dividends is scheduled to expireon December 31, 2010, unless further extended by Congress. Each U.S. holder should consult its own tax advisorconcerning whether dividends received by them qualify for the reduced rate.

The amount of any distribution paid in a currency other than U.S. dollars (a “foreign currency”) including the amount of anywithholding tax thereon, will be included in the gross income of a U.S. holder in an amount equal to the U.S. dollar valueof the foreign currencies calculated by reference to the exchange rate in effect on the date of actual or constructivereceipt, regardless of whether the foreign currencies are translated into U.S. dollars. If the foreign currencies aretranslated into U.S. dollars on the date of receipt, a U.S. holder generally should not be required to recognize foreigncurrency gain or loss in respect of the dividend. If the foreign currencies received in the distribution are not translated intoU.S. dollars on the date of receipt, a U.S. holder will have a basis in the foreign currencies equal to its U.S. dollar value onthe date of receipt. Any gain or loss on a subsequent conversion or other disposition of the foreign currencies will betreated as ordinary income or loss.

Dividends received by a U.S. holder with respect to common shares will be treated as foreign source income for thepurposes of calculating that holder’s foreign tax credit limitation. Subject to certain conditions and limitations, and subjectto the discussion in the next paragraph, any Dutch income tax withheld on dividends may be deducted from taxableincome or credited against a U.S. holder’s U.S. federal income tax liability. The limitation on foreign taxes eligible for theU.S. foreign tax credit is calculated separately with respect to specific classes of income. For this purpose, dividendsdistributed by us generally will constitute “passive category income.” In the case of some U.S. holders, dividendsdistributed by us may constitute “general category income.” In certain circumstances, a U.S. holder may be unable toclaim foreign tax credits for foreign taxes imposed on a dividend if the U.S. holder (1) has not held the common shares forat least 16 days in the 31-day period beginning 15 days before the ex-dividend date, during which it is not protected fromrisk of loss; or (2) is obligated to make payments related to the dividends. Under the Code, the amount of the qualifieddividend income paid by us to a U.S. holder that is subject to the reduced dividend income tax rate and that is taken intoaccount for purposes of calculating the U.S. holder’s U.S. foreign tax credit limitation must be reduced by the “ratedifferential portion” of such dividend (which, assuming a U.S. holder in the highest income tax bracket, would generallyrequire a reduction of the dividend amount by

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approximately 57.14%). Each U.S. holder should consult its own tax advisor regarding the implication of the newU.S. tax legislation on the calculation of U.S. foreign tax credits.

In general, upon making a distribution to shareholders, we are required to remit all amounts withheld as Dutch dividendwithholding tax to Dutch tax authorities and, in such circumstances, the full amount of the taxes so withheld wouldgenerally (subject to certain limitations and conditions) be eligible for the U.S. holder’s foreign tax deduction or credit asdescribed above. The Dutch dividend withholding tax may not be creditable against a U.S. holder’s U.S. federal incometax liability, however, to the extent that we are allowed to reduce the amount of dividend withholding tax to be paid to theDutch tax authorities with respect to dividend distributions out of dividends received from qualifying non-Dutchsubsidiaries that have been subject to a foreign withholding tax of at least 5%. The reduction reduces the amount ofdividend withholding tax that we are required to pay to the Dutch tax authorities but does not reduce the amount of tax weare required to withhold from dividends paid to U.S. holders. In these circumstances, it is likely that the portion of dividendwithholding tax that we are not required to pay to the Dutch tax authorities with respect to dividends distributed to U.S.holders would not qualify as a creditable tax for U.S. foreign tax credit purposes. U.S. holders are urged to consult theirtax advisers regarding the general creditability or deductibility of Dutch withholding taxes.

A distribution of additional common shares to U.S. holders with respect to their common shares that is made as part of apro rata distribution to all shareholders generally will not be subject to U.S. federal income tax unless U.S. holders canelect that the distribution be payable in either additional common shares or cash. We expect that U.S. holders would havethis option upon each distribution. Accordingly, a distribution of additional common shares to U.S. holders with respect totheir common shares where U.S. holders may elect that distribution to be payable in additional common shares or cashwill be taxable under the rules described above.

Sale or Other Disposition of Shares. Subject to the discussion under “Passive Foreign Investment CompanyConsiderations” below, a U.S. holder will generally recognize gain or loss for U.S. federal income tax purposes upon thesale or exchange of common shares in an amount equal to the difference between the U.S. dollar value of the amountrealized from such sale or exchange and the U.S. holder’s tax basis for those common shares. This gain or loss willgenerally be a capital gain or loss and will generally be treated as from sources within the United States. U.S. holdersshould consult their own tax advisors with respect to the treatment of capital gains (which may be taxed at lowerrates than ordinary income for taxpayers who are individuals, trusts or estates that have held the commonshares for more than one year) and capital losses (the deductibility of which is subject to limitations).

If a U.S. holder receives foreign currency upon a sale or exchange of common shares, gain or loss, if any, recognized onthe subsequent sale, conversion or disposition of such foreign currency will be ordinary income or loss, and will generallybe income or loss from sources within the United States for foreign tax credit limitation purposes. However, if such foreigncurrency is translated into U.S. dollars on the date received by the U.S. holder, the U.S. holder generally should not berequired to recognize any gain or loss on such conversion.

When a U.S. holder’s basis in the common shares includes any amount recognized under the passive foreign investmentcompany (PFIC) rules (described below) and the U.S. holder recognizes a loss on the transaction with respect to suchamounts that exceeds certain specified thresholds, the U.S. holder may be required to specifically disclose certaininformation with respect to the transaction on its tax return under recently issued tax disclosure regulations. U.S. holdersshould consult their own tax advisors as to the applicability of these disclosure regulations.

Redemption of Common Shares. The redemption of common shares by us should be treated as a sale of the redeemedshares by the U.S. holder (which is taxable as described above under “Sale or Other Disposition of the Common Shares”)or, in certain circumstances, as a distribution to the U.S. holder (which is taxable as described above under“Distributions”).

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Passive Foreign Investment Company Considerations. A corporation organized outside the United States generally will beclassified as a PFIC for U.S. federal income tax purposes in any taxable year in which, after applying certain look-throughrules, either: (1) at least 75% of its gross income is passive income, or (2) on average at least 50% of the gross value ofits assets is attributable to assets that produce passive income or are held for the production of passive income. Inarriving at this calculation, we must also include a pro rata portion of the income and assets of each corporation in whichwe own, directly or indirectly, at least a 25% interest, as determined by the value of such corporation. Passive income forthis purpose generally includes dividends, interest, royalties, rents and gains from commodities and securitiestransactions. Based on our estimated gross income, the average value of our gross assets, and the nature of the activebusinesses conducted by our “25% or greater” owned subsidiaries, we do not believe that we will be classified as a PFICin the current taxable year. Our status in any taxable year will depend on our assets and activities in each year andbecause this is a factual determination made annually at the end of each taxable year, there can be no assurance that wewill not be considered a PFIC for any future taxable year. If we were treated as a PFIC in any year during which a U.S.holder owns common shares, certain adverse tax consequences could apply, including an increase in the U.S. federalincome tax rate from a maximum income tax rate of 15% to 35% for dividends received by U.S. individual holders if weare a PFIC in our taxable year in which we pay the dividend or the preceding taxable year. U.S. holders should consulttheir own tax advisors with respect to any PFIC considerations.

Backup Withholding and Information Reporting. Generally, a “backup” withholding tax of up to 28% and informationreporting requirements will apply to dividends paid on our common shares to a non-corporate U.S. holder who fails toprovide a correct taxpayer identification number and other information or fails to comply with certain other requirements.The proceeds from a sale of our common shares by a U.S. holder will be subject to U.S. backup withholding tax andinformation reporting unless the U.S. holder has provided the required certification or has otherwise established anexemption.

A U.S. holder can establish an exemption from the imposition of backup withholding tax by providing a duly completedInternal Revenue Service Form W-9 to its broker or paying agent, reporting its taxpayer’s identification number (which, inthe case of an individual, is the individual’s social security number) or by otherwise establishing its corporation or exemptstatus.

Any amounts withheld under the backup withholding rules from a payment to a U.S. holder will be allowed as a refund or acredit against the U.S. holder’s U.S. federal income tax, provided that the required information is furnished to the InternalRevenue Service. U.S. holders should consult their own tax advisors with respect to their qualification forexemption from backup withholding and the procedure for obtaining such an exemption.

F. Dividends and paying agents

Not applicable.

G. Statement by experts

Not applicable.

H. Documents on display

You may read and copy our registration statement and its exhibits and reports and other information we furnish to or filewith the SEC at the SEC’s Public Reference Room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. You mayobtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, theSEC maintains an Internet web site at www.sec.gov, from which you can electronically access our registration statementand its exhibits and reports and other information. You may also inspect our materials at the offices of the New York StockExchange, 20 Broad Street, New York, New York 10005.

I. Subsidiary information

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Item 11. Quantitative and Qualitative Disclosures About Market Risk

The following discussion addresses our exchange rate risk, our interest rate risk and our commodity price risk. Foradditional information with respect to our market risk, see Note 16 “Financial instruments and risks” to our consolidatedfinancial statements.

Exchange rate risk

Our reporting currency is the U.S. Dollar, but we conduct substantially all of our business in the local currencies of thecountries in which we operate. For this reason, we are exposed to risk from exchange rate fluctuations when ourrevenues, expenses, assets and liabilities are translated from local currencies to U.S. Dollars.

We are not parties to any arrangements to hedge our exposure to exchange rate risks. However, wherever possible weincur liabilities in the same currency in which the business unit incurring the liability receives its revenue. When liabilitiesare not denominated in the functional currency of the relevant business unit, exchange rate exposure is mitigated throughcontractual or negotiated rate increases and may further be mitigated by entering into currency swaps on a selectedbasis.

However, in June 2006 we took a different approach when drawing £38 million of term loans to be used to finance aportion of the distribution to shareholders in connection with Biwater’s acquisition of Nuon’s interest in us. Managementtook into account the effect that a strengthening of the British Pound sterling would have on the value of the profitsreported by our U.K. project company in U.S. Dollar terms as well as the net equity in our U.K. project company, both ofwhich would increase under such circumstances. These term facilities were drawn by our U.K. project company and ourU.K. management services subsidiary and immediately loaned to us as British Pound sterling-denominated inter-companyloans. In November 2006, our U.K. project company lent us a further £4 million in connection with the acquisition of ourChina projects in connection with the acquisition of our China projects, which was fully repaid in December 2007.

We report our financial position and results of operations in U.S. Dollars and are therefore required by Dutch GAAP andU.S. GAAP to retranslate these monetary liabilities at the period end exchange rate each time we prepare a balance sheetand to report the differences on retranslation in our statement of income for the period then ended.

Principally because the British Pound sterling generally weakened against the U.S. Dollar since the middle of the secondquarter of our fiscal year 2009, we are reporting foreign exchange gains in our consolidated statement of income for fiscalyear 2009 in the amount of $10.0 million.

Our financial results are currently mainly exposed to gains or losses arising from fluctuations in the translation of ourunderlying local currency revenue into U.S. Dollars. Exchange differences resulting from settlement and translation ofmonetary assets and liabilities are charged or credited to the exchange rate results in the statement of income. A 10%average decrease in the value of the U.S. Dollar in fiscal year 2009 would have resulted in an $15.3 million and $3.7million increase in revenue and operating profit, respectively. A 10% average increase in the value of the U.S. Dollar infiscal year 2009 would have resulted in a $15.3 million and $3.9 million decrease in revenue and operating profit,respectively. In addition, as of March 31, 2009, 70% of our long term debt was denominated in British pounds and theremaining 30% in other currencies. Accordingly, our future financial results will be subject to fluctuation caused bychanges in the value of the British Pound sterling and other currencies when we settle these debt obligations.

Interest rate risk

We are exposed to interest rate risk on the interest-bearing receivables (primarily comprised of securities and cash atbank and in hand) and interest-bearing long-term and current liabilities.

We are exposed to the consequences of variable interest rates on receivables and liabilities. In relation to fixed-rateliabilities, we are exposed to market values. We have not entered into any derivative contracts to hedge the interest-raterisk on receivables.

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We are exposed to interest rate risk with respect to our variable rate long term borrowings. Based on our gross variableinterest expense for fiscal year 2009, a 10% relative increase in our variable interest rates would have resulted in anapproximate increase of $0.3 million in our gross interest expense based on the variable rate long term borrowings inexistence as at March 31, 2009. With respect to certain fixed-rate liabilities owed to financial institutions, we havesometimes entered into interest rate swap agreements through which we effectively received fixed payments, and paidvariable ones. We have not been party to any interest rate swap arrangement since the sale of our wastewater treatmentplant in Mexico in October 2004.

As of March 31, 2009, $106.8 million of our debt was index-linked to a U.K. inflation index so we have an exposure to U.K.inflation rates. However, we have a natural hedge for most of this exposure because the inflation index used by thelenders is the same index used by Ofwat to increase annually the rates of our U.K. project company and the underlyingregulatory value of the fixed assets of our U.K. project company, although there may be up to a six-month lag between theapplication of a change in the index in connection with the debt and the application of a change in the index to our rates.

Commodity price risk

Electrical power is a key input cost to our businesses. Our U.K. operations endeavor to limit the downside risk of shortterm increases in electricity prices by participating with other large electricity purchasers to increase purchasing powerwith electricity suppliers and also to make forward purchases, or to fix price limits that will trigger forward purchases, forup to one year. We do not have any commodity hedges in place at present nor have we had any commodity hedges inplace in the past. Based on our results for fiscal year 2009, a 10% increase in electricity costs in our continuing operationswould result in an approximate increase of $1.4 million in raw and auxiliary materials and other external costs.

Item 12. Description of Securities Other than Equity Securities

Not applicable.

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

There have been no defaults, dividend arrearages and delinquencies during the periods covered by this annual report.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

A-D. None

E. Use of proceeds

Not applicable.

Item 15. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed inour reports filed pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported withinthe time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated tothe management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timelydecisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, managementrecognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonableassurance of achieving the desired control objectives. In addition, the design of any control system is based in part uponcertain assumptions about the likelihood of future events. Our disclosure controls and procedures are designed to providereasonable assurance of achieving their objectives.

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As of March 31, 2009, we carried out an evaluation, under the supervision and with the participation of the management,including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation ofour disclosure controls and procedures. Based on the foregoing, the Chief executive Officer and the Chief FinancialOfficer concluded that the Company’s disclosure controls were not effective due to the material weakness describedbelow.

Management performed additional analysis and other procedures to ensure that our financial statements contained withinthis annual report on Form 20-F were prepared in accordance with Dutch GAAP, and where relevant US GAAP.

Accordingly, notwithstanding the material weakness described below, we believe our financial statements included in thisannual report on Form 20-F fairly present in all material respects our financial position, results of operations and cashflows for the periods presented in accordance with Dutch GAAP and where relevant US GAAP.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for thecompany. Internal control over financial reporting is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance withaccounting principles generally accepted in the Netherlands and the United States of America. Our Company’s internalcontrol over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that,in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our Company;(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with accounting principles generally accepted in the Netherlands and the United States ofAmerica, and that receipts and expenditures of our Company are being made only in accordance with authorizations ofmanagement and directors of our Company; and (iii) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition, use, or disposition of our Company’s assets that could have a material effect on thefinancial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detectmisstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controlsmay become inadequate because of changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate. Management conducted an evaluation of the effectiveness of internal control over financialreporting based on the framework in Internal Control—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO). This Annual Report includes an attestation report of our registeredpublic accounting firm regarding internal control over financial reporting.

Material weakness

A material weakness is a control deficiency, or combination of control deficiencies in internal control over financialreporting such that there is a reasonable possibility that a material misstatement of the annual financial statements will notbe prevented or detected on a timely basis.

Management’s assessment of internal control over financial reporting has revealed a single material weakness in theoperating effectiveness of our completeness control over the identification of material differences between our primaryDutch GAAP and US GAAP.

The breakdown in the operation of management’s control process occurred in respect of a single GAAP difference relatedto the deferred tax treatment of a specific change to tax legislation in the United Kingdom that was enacted during theyear ended March 31, 2009. Specifically, management’s control process failed to identify, by appropriate enquiry of thirdparty advisors, an interpretation of FASB Statement 109 Accounting for Income Taxes that would have confirmed a needto introduce a new, and material, item into the US GAAP reconciliation and related disclosures that appear at note 28, toour consolidated financial statements for the year ended March 31, 2009.

Management intends to remediate this control breakdown by a more regular and systematic engagement with its thirdparty advisors in future periods.

Scope

Management has excluded Yancheng China Water Company Limited, Zhumadian China Water Company Limited,Servicomunal S.A. and Servilampa S.A. from its assessment of internal control over financial reporting as of March 31,2009 because they were acquired by the Company in purchase business combinations during the fiscal year.

Changes in Internal Control over Financial Reporting

During our fiscal year ended March 31, 2009 management has worked on a number of projects whose objectives were tomake improvements to our internal control over financial reporting by the end of the fiscal year. A significant number ofthese improvement projects involved the design of key controls, the operational effectiveness of which has subsequentlybeen tested either by a member of the management team who is independent of the control process, or by internal audit.Furthermore, many of these improvements to our internal control over financial reporting were implemented during thefourth quarter of our fiscal year 2009. It is important that they become part of our monthly, quarterly and annual reportingprocedures that management follow when preparing financial statements for future periods. We intend to monitor this with


the assistance of internal audit during our fiscal year 2010.

Item 15T. Controls and Procedures

Not applicable

Item 16A. Audit Committee Financial Expert

The board of directors has determined that Mr. Willy A. Biewinga is the financial expert serving on our audit committee asdescribed under Item 6 “Directors, Senior Management and Employees — Board practices”.

Mr. Biewinga is independent under applicable New York Stock Exchange listing standards.

Item 16B. Code of Ethics

We have adopted a written Code of Ethics that applies to all employees and executive officers, including our ChiefExecutive Officer and Chief Financial Officer. A copy of our Code of Ethics is available for review on our web site(www.cascal.co.uk).

Item 16C. Principal Accountant Fees and Services

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Fees and services rendered ($’000) 2009 2008

Audit Fees 1,393 1,265 Audit-Related Fees 265 305 Tax Fees 971 163 All Other Fees 343 1,231

Audit-Related Fees consist of reviews of quarterly financial statements.

Tax Fees consist of tax advisory, tax compliance and tax return preparation and review.

Other Fees consist of work on SEC and other external non-regulatory reporting requirements, audits required byregulatory bodies and other non-audit and non-tax professional advice.

We have established a policy addressing the independence of our external auditors and the provision of services by ourexternal auditors. In monitoring the extent of non-audit services that the external auditors can provide we aim to reducethe potential for their independence and objectivity to become compromised.

Our external auditors may only provide certain permissible audit services, audit related services and non-audit servicesthat have been pre-approved by the Audit Committee.

The Audit Committee has granted general pre-approval to all permissible services to be provided by the Company’sexternal auditors not in excess of $150,000 in aggregate in any fiscal year and that do not exceed $30,000 per individualservice provided.

The Audit Committee must specifically pre-approve all services in excess of these amounts. Certain permissible auditservices, audit related services and non-audit services that our Audit Committee may pre-approve pursuant to this policyhave been set out below.

Each year the Audit Committee shall review the list of permissible pre-approved services and may make additions to ordeletions from it.

Permissible audit services include:

• Statutory audits or financial audits for subsidiaries or jointly controlled entities, including issuing the opinion forCompany reporting purposes and on the statutory financial statements;

• Audit of the financial statements contained in our annual report on Form 20-F, and other services associated withSEC registration statements, periodic reports and other documents filed with the SEC; and

Permissible audit related services include:

• Review of quarterly financial statements for submission to the SEC under Form 6-K

• Accounting consultations on matters not reflected in the Company’s financial statements;

• Participate at workshops, seminars and conferences organized by management to consider recent developmentsin GAAP;

• Provision of accounting technical publications, including copies of the current edition of the firm’s Manual ofAccounting;

• Audits on divestments and acquisitions;

• Employee benefit plan audits;

• Internal control reviews; and115


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• Accounting and fraud investigation.

Permissible non-audit services include:

• Audit of special purpose financial statements prepared for submission to independent regulators of oursubsidiaries or jointly controlled entities.

• Tax compliance, planning and related implementation advice;

• Due diligence assistance relating to acquisitions and/or disposals; and

• Due diligence other than in respect of acquisitions.

In the event that services to be provided by the external auditor do not fit within the various pre-approved services underthis policy, the service in question is to be brought to the attention of the Chief Financial Officer, in writing. The ChiefFinancial Officer will then seek pre-approval from the Chairman of the Audit Committee.

Our Audit Committee was formed following the completion of our initial public offering in January 2008. Since our initialpublic offering all fees to be paid to and services to be performed by our external auditors have been approved by theAudit Committee. Prior to the Audit Committee’s establishment the fees and services provided by our external auditorswere approved by our Chief Executive Officer and Chief Financial Officer in consultation with other members of ourprevious Supervisory Board.

Item 16D. Exemptions from the Listing Standards for Audit Committees

During the fiscal year ended March 31, 2009 we relied on an exemption from the independence standards for a minority ofthe members of our Audit Committee (Mr. Larry Magor), which exemption continued for one (1) year from the effectivedate of our registration statement on January 28, 2008. Such reliance did not materially adversely affect the ability of ourAudit Committee to act independently. Mr. Magor resigned from the Audit Committee on January 27, 2009.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

No purchases of equity securities have been made by us or any affiliated purchasers in the periods presented in thisannual report.

Item 16F. Change in Registrant’s Certifying Accountant

Not applicable.

Item 16G. Corporate Governance

Cascal is a company organized under the laws of The Netherlands and qualifies as a foreign private issuer listed on theNew York Stock Exchange (“NYSE”). Under the NYSE corporate governance rules as set forth in the NYSE Manual listingstandards, foreign private issuers such as Cascal are permitted to follow home country corporate governance practices incertain circumstances in lieu of the NYSE corporate governance rules followed by U.S. domestic companies. Under theNYSE corporate governance rules, however, Cascal is required to disclose any significant differences between thecorporate governance practices that it follows under the laws of The Netherlands and those followed by U.S. domesticcompanies under NYSE listing standards. Although Cascal has substantially followed the corporate governanceprovisions of Section 303A of the NYSE Manual, the corporate governance practices under the laws of The Netherlandsare different from the corporate governance practices that U.S. companies are required to follow under NYSE listingstandards, as set forth in Section 303A of the NYSE Manual.

The following discussion summarizes such differences:116


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Under Dutch law, the general meeting of shareholders is entitled to appoint and remove Cascal’s independent registeredpublic accounting firm although our audit committee is directly responsible for the recommendation of the appointmentand compensation of the independent registered public accounting firm and oversees and evaluates the work of ourindependent registered public accounting firm.

In addition, under NYSE listing standards, shareholders of U.S. corporations must be given the opportunity to vote onequity compensation plans and material revisions thereto, with limited exceptions set forth in the NYSE rules, including anexception for foreign private issuers such as Cascal, who follow the laws of the country of organization. Under Dutch law,a policy for remuneration of the members of our board must be adopted by the general meeting of shareholders. Our 2008Long Term Incentive Plan, described in Item 6 “Directors, Senior Management and Employees — Compensation”, wasapproved and adopted by our sole shareholder.

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PART III

Item 17. Financial Statements

We furnish financial statements pursuant to Item 18.

Item 18. Financial Statements

Our consolidated financial statements are included at the end of this annual report at pages F-1 to F-71.

Item 19. Exhibits Exhibit Number Description 1.1 Articles of Association. (1) 2.1 Specimen Share Certificate. (1) 4.1.1

Instrument of Appointment by the Secretary of State for the Environment of The Bournemouth and DistrictWater Company (now Bournemouth & West Hampshire Water Plc) as a water undertaker under the WaterAct of 1989. (2)

4.1.2

Water Industry Act 1991 Section 13 Modifications of the Conditions of Appointment of Bournemouth andWest Hampshire Water plc, effective April 1, 2005. (2)

4.1.3

Water Act 2003, Modification of the Conditions of Appointment of All Water and Sewerage Undertakersand All Water Undertakers, effective September 15, 2005. (2)

4.1.4

Water Act 2003, Section 37(4) and (5), Modification of Condition N of the Conditions of Appointment ofEvery Water Undertaker and Every Water and Sewerage Undertaker in England and Wales, effectiveOctober 1, 2005. (2)

4.1.5


4.1.6

Water Industry Act 1991, Section 13(1) Modification of the Conditions of Appointment of Bournemouth andWest Hampshire Water plc, effective December 15, 2006. (2)

4.1.7


4.2.1

Share Purchase Agreement, dated June 27, 2006, between Biwater Plc, Adrian Edward White, andCascal B.V. (2)

4.2.2

Supplement dated November 23, 2006, to the Share Purchase Agreement, dated June 27, 2006, betweenBiwater Plc, Adrian Edward White, and Cascal B.V. (2)

4.2.3

Addendum dated November 2, 2007, to Share Purchase Agreement, dated June 27, 2006, betweenBiwater Plc, Adrian Edwin White and Cascal B.V. (2)

4.3

Amended and Restated Secured Index-Linked Term Facility Agreement £65,000,000 Facility Agreement,dated April 20, 2005, made between Bournemouth & West Hampshire Water PLC, Bournemouth & WestHampshire Water Holdings Limited, Artesian Finance II PLC, Bournemouth Water PLC, West HampshireWater PLC, and The Royal Bank of Scotland PLC, acting as Agent and as Index Calculation Agent. (2)

4.4.1

£10,110,000 Term and Letter of Credit Facility Agreement, dated June 21, 2006, made between CascalServices Limited and The Royal Bank of Scotland PLC, as original Lender, Issuing Bank, Arranger andAgent. (2)

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Exhibit Number Description 4.4.2

Amendment Agreement, dated June 29, 2007, relating to the £10,110,000 Term and Letter of CreditFacility Agreement, dated June 21, 2006, between Cascal Services Limited and The Royal Bank ofScotland PLC, acting as the sole Lender, Issuing Bank, Arranger and Agent. (2)

4.4.3

Subordination Agreement, dated June 29, 2007, among Cascal Services Limited, as Borrower, The RoyalBank of Scotland, as the Senior Creditor, and Biwater Capital PLC, as the Junior Creditor. (2)

4.5

£32,690,000 Subordinated Secured Term and Letter of Credit Facility Agreement, dated June 21, 2006,made between Bournemouth & West Hampshire Water Plc, The Royal Bank of Scotland PLC, asarranger, The Financial Institution listed in Schedule 1, as lender, The Royal Bank of Scotland PLC, asissuing bank, The Royal Bank of Scotland PLC, as agent of the other Facility Parties, and Cascal B.V. (2)

4.6.1

Secured Term Loan Facility Agreement, dated August 10, 2000, between The Greater Nelspruit UtilityCompany (Proprietary) Limited, The Development Bank of Southern Africa Limited, and Nedbank Limited.(2)

4.6.2

Amendment, dated August 4, 2005, to the Secured Term Loan Facility Agreement, dated August 10,2000, between The Greater Nelspruit Utility Company (Proprietary) Limited, The Development Bank ofSouthern Africa Limited, and Nedbank Limited. (2)

4.7

Agreement Relating to Registration Rights and Other Matters between Biwater Investments Limited andCascal B.V., dated as of January 1, 2008. (2)

4.8

Non-compete, Confidentiality and Director Non-Removal Agreement between Biwater plc and CascalB.V., dated as of January 3, 2008. (2)

4.9

Operations and Maintenance Agreement, dated July 6, 2000, by and between Aguas De Panama, S.A.and Biwater International Limited. (2)

4.10.1

Fortis Letter of Guarantee of Loan Agreement between Siza Water Company (Proprietary) Limited andBiwater PLC, dated September 14, 2007. (2)

4.10.2

Deed of Indemnity, dated November 16, 2007, by Cascal B.V. for the benefit of Biwater Plc, in relation toLetter of Guarantee issued by Fortis Bank S.A./N.V., dated September 14, 2007. (2)

4.11.1 Amsterdam Letter Lease, dated September 26, 2006, between Equity Trust Co. N.V. and Cascal B.V. (2) 4.11.2

Side Agreement, dated October 3, 2006, between Cascal B.V. and Biwater Contracting B.V. relating toAmsterdam office lease. (2)

4.12 Intercompany Loan Agreement between Biwater PLC and Cascal B.V., dated April 30, 2007. (2) 4.13 Intercompany Loan Agreement between Cascal B.V. and Biwater PLC, dated June 21, 2007. (2) 4.14

Intercompany Loan Agreement between Cascal Services Limited and Biwater PLC, dated June 21, 2007.(2)

4.15

Intercompany Loan Agreement between Biwater B.V. and Cascal B.V., dated December 21, 2007, relatingto the Deed of Priorities, dated November 16, 2007, between Biwater, Cascal and HSBC Bank plc. (1)

4.16.1 Intercompany Loan Agreement between Cascal B.V. and Biwater PLC, dated June 28, 2006. (2) 4.16.2

Amendment No. 1 to the Intercompany Loan Agreement, dated December 13, 2006, between Cascal B.V.and Biwater Plc. (2)

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Exhibit Number Description 4.16.3

Amendment No. 2 to the Intercompany Loan Agreement, dated April 12, 2007, between Cascal B.V. andBiwater PLC. (2)

4.17.1

Loan Agreement, dated April 11, 2003, between Aguas de Panama, S.A. and International FinanceCorporation. (2)

4.17.2

Amendment and Waiver Agreement No. 1 to Loan Agreement, dated June 27, 2003, between Aguas dePanama, S.A. and International Finance Corporation. (2)

4.17.3

Amendment Agreement No. 2 to Loan Agreement, dated October 28, 2003, between Aguas de Panama,S.A. and International Finance Corporation. (2)

4.17.4

Deed of Indemnity, dated November 16, 2007, by Cascal B.V. for the benefit of Biwater Plc, in relation toGuarantee and Share Retention Agreement between Aguas de Panama S.A. and International FinanceCorporation, dated April 11, 2003. (2)

4.18

Services Agreement between Biwater International Limited and Cascal Services Limited, dated October 1,2006. (2)

4.19 Office Sharing Agreement between Biwater Plc and Cascal Services Limited, dated October 1, 2006. (2) 4.20

Agreement for Office Space for Cascal Manager in Biwater Eko Activ Office in Sofia Bulgaria, datedDecember 5, 2007. (2)

4.21.1

Fifth Definitive Trust Deed and Rules of Biwater Retirement and Security Scheme, Ex-WCAPS Edition,dated April 1, 2003, among Biwater Plc and the Trustees. (2)

4.21.2 Biwater Retirement and Security Scheme, Deed of Correction, dated May 14, 2003. (2) 4.21.3 Biwater Retirement and Security Scheme, Deed of Alteration, dated June 24, 2003. (2) 4.21.4 Biwater Retirement and Security Scheme, Deed of Alteration, dated September 29, 2003. (2) 4.21.5 Biwater Retirement and Security Scheme, Deed of Alteration, dated September 30, 2003. (2) 4.21.6 Biwater Retirement and Security Scheme, Deed of Alteration, dated July 9, 2004. (2) 4.21.7

Biwater Retirement and Security Scheme, Deed of Adherence in respect of Farrer Consulting Limited,dated May 10, 2006. (2)

4.21.8 Biwater Retirement and Security Scheme, Deed of Alteration, dated January 18, 2008. (1) 4.21.9 Biwater Retirement and Security Scheme, Deed of Agreement, dated January 23, 2008. (1) 4.22 Name License between Biwater plc and Cascal N.V., dated as of November 1, 2007. (2) 4.23 Name License between Cascal N.V. and Biwater plc, dated as of November 1, 2007. (2) 4.24 2008 Long Term Incentive Plan. (2) 4.25 2008 Non-Executive Director Share Ownership Plan. (2) 4.26

Amendment and Restatement Agreement, dated June 12, 2008, for Cascal N.V. arranged by HSBC BankPLC as Arranger, Agent, Security Agent, and Issuing Bank (relating to a Facility Agreement originallydated June 25, 2007, as amended and restated on November 2, 2007 and as further amended onNovember 19, 2007). (3)

4.27 Fee Letter, dated as of August 10, 2007, to Cascal B.V. from Biwater Plc. (2) 4.28 Amendment and Restatement Agreement, dated June 28, 2009, for Cascal N. V. arranged by HSBC Bank

PLC as Arranger, Agent, Security Agent, and Issuing Bank (relating to a Facility Agreement originally


dated June 25, 2007, as amended and restated on November 2, 2007, as further amended on November19, 2007, as further amended and restated on June 12, 2008 and as further amended on February 23,2009).

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Exhibit Number Description6.1 Statement Regarding Computation of Per Share Earnings. 8.1 Subsidiaries of Cascal. 12.1 Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act. 12.2 Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act. 13.1

Certification furnished pursuant to Rule 13a-14(b) of the Securities Exchange Act (such certificate is notdeemed filed for purpose of Section 18 of the Securities Exchange Act and is not deemed to beincorporated by reference into any filing under the Securities Act or the Securities Exchange Act).

13.2

Certification furnished pursuant to Rule 13a-14(b) of the Securities Exchange Act (such certificate is notdeemed filed for purpose of Section 18 of the Securities Exchange Act and is not deemed to beincorporated by reference into any filing under the Securities Act or the Securities Exchange Act).

(1) Incorporated by reference to our Registration Statement on Form F-1/A, File No. 333-148508, filed with the SEC onJanuary 23, 2008.

(2) Incorporated by reference to our Registration Statement on Form F-1, File No. 333-148508, filed with the SEC onJanuary 7, 2008.

(3) Incorporated by reference to our Annual Report on Form 20-F, filed June 25, 2008.121


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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused andauthorized the undersigned to sign this annual report on its behalf. CASCAL N.V.

By: /s/ Stephane Richer Name: Stephane Richer Date: July 1, 2009 Chief Executive Officer

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Index to Consolidated Financial Statements Contents PageCascal N.V. Report of Independent Registered Public Accounting Firm F-2Consolidated Balance Sheets as at March 31, 2008 and 2009 F-3Consolidated Statements of Income for the Three Years Ended March 31, 2009 F-4Consolidated Statements of Changes in Shareholders’ Equity for the Three Years Ended March 31, 2009 F-5Consolidated Statements of Cash Flows for the Three Years Ended March 31, 2009 F-6Notes to the Consolidated Financial Statements F-7

F-1


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Report of Independent Registered Public Accounting Firm

To the board of directors and shareholders of Cascal N.V.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income,changes in shareholders’ equity and cash flows present fairly, in all material respects, the financial position of Cascal N.V.and its subsidiaries and joint ventures at March 31, 2009 and March 31, 2008 and the results of their operations and theircash flows for each of the three years in the period ended March 31, 2009, in conformity with accounting principlesgenerally accepted in The Netherlands. Also in our opinion, the Company did not maintain, in all material respects,effective internal control over financial reporting as of March 31, 2009, based on criteria established in Internal Control —Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO) because a material weakness in internal control over financial reporting related to the operating effectiveness ofthe completeness control over the identification of material differences between accounting principles generally acceptedin The Netherlands and accounting principles generally accepted in the United States of America, existed as of that date.A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such thatthere is a reasonable possibility that a material misstatement of the annual or interim financial statements will not beprevented or detected on a timely basis. The material weakness referred to above is described in Item 15, Controls andProcedures. We considered this material weakness in determining the nature, timing, and extent of audit tests applied inour audit of the March 31, 2009 consolidated financial statements, and our opinion regarding the effectiveness of theCompany’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.The Company’s management is responsible for these financial statements, for maintaining effective internal control overfinancial reporting and for its assessment of the effectiveness of internal control over financial reporting included inmanagement’s report referred to above. Our responsibility is to express opinions on these financial statements and on theCompany’s internal control over financial reporting based on our audits (which was an integrated audit in the period endedMarch 31, 2009). We conducted our audits in accordance with the standards of the Public Company Accounting OversightBoard (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement and whether effective internal control over financialreporting was maintained in all material respects. Our audits of the financial statements included examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principlesused and significant estimates made by management, and evaluating the overall financial statement presentation. Ouraudit of internal control over financial reporting included obtaining an understanding of internal control over financialreporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. Our audits also included performing such other proceduresas we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Accounting principles generally accepted in The Netherlands vary in certain significant respects from accountingprinciples generally accepted in the United States of America. Information relating to the nature and effect of suchdifferences is presented in Note 28 to the consolidated financial statements.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal control over financial reporting includes those policies andprocedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements in accordance with generally accepted accountingprinciples, and that receipts and expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (iii) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,projections of any evaluation of effectiveness to future periods are subject to the risk that controls may becomeinadequate because of changes in conditions, or that the degree of compliance with the policies or procedures maydeteriorate. We do not express an opinion or any other form of assurance on management’s statement referring to howthe Company intends to remediate the material weakness.

As described in management’s report referred to above, management has excluded Yancheng China Water CompanyLimited, Zhumadian China Water Company Limited, Servicomunal S.A. and Servilampa S.A. from its assessment ofinternal control over financial reporting as of March 31, 2009, because they were acquired by the Company in purchasebusiness combinations during the fiscal year.

As described in Note 1 to the consolidated financial statements, these financial statements have been prepared for thepurposes of an annual U.S. Securities and Exchange Commission filing and do not represent the Statutory Annual Report& Accounts of the Company as of March 31, 2009 or for any of the periods presented as required under the NetherlandsCivil Code.


The Hague, 1 July 2009

PricewaterhouseCoopers Accountants N.V.

/s/ W. H. Jansen RA

W. H. Jansen RA

The accompanying notes form an integral part of these consolidated financial statements.F-2


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Consolidated Balance Sheets March 31, March 31,Amounts expressed in thousands of USD Notes 2009 2008Assets Fixed Assets Intangible fixed assets 5 42,860 18,424 Tangible fixed assets 6 397,593 366,357 Financial fixed assets 7 19,298 26,685

459,751 411,466

Current Assets Stocks and work in progress 8 5,901 2,083 Debtors 9 51,350 54,474 Cash at bank and in hand 10 34,678 54,380

91,929 110,937

Total Assets 18 551,680 522,403

Shareholders’ Equity & Liabilities Shareholders’ equity 118,214 136,726 Minority shareholders’ interest 11 35,080 16,101

Group Equity 153,294 152,827

Negative goodwill 12 1,210 1,232 Provisions 13 60,328 65,677 Deferred revenue 13 51,708 60,664 Long term liabilities 14 161,812 190,190 Current liabilities 15 123,328 51,813

Total Liabilities 18 398,386 369,576

Total Shareholders’ Equity and Liabilities 551,680 522,403



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Consolidated Statements of Income Amounts, except share and per Year ended March 31, 2009 Year ended March 31, 2008 Year ended March 31, 2007share amounts, expressed in Continuing Discontinued Continuing Discontinued Continuing Discontinued thousands of USD Notes Operations Operations Total Operations Operations Total Operations Operations TotalRevenue 18 163,396 — 163,396 157,777 2,865 160,642 118,567 3,136 121,703

Operating Expenses Raw and auxiliary materials and

other external costs 42,041 — 42,041 34,499 689 35,188 23,120 701 23,821 Staff costs 18,19 33,735 — 33,735 33,675 673 34,348 23,771 660 24,431 Depreciation and amortization

of intangible and tangiblefixed assets and negativegoodwill 18,20 22,968 — 22,968 22,740 46 22,786 17,932 48 17,980

Profit on disposal of intangibleand tangible fixed assets (688) — (688) (749) — (749) (989) — (989)

Other operating charges 28,563 — 28,563 27,060 1,000 28,060 18,188 1,258 19,446 Incremental offering-related

costs — — — 767 — 767 809 — 809

126,619 — 126,619 117,992 2,408 120,400 82,831 2,667 85,498 Operating Profit 18 36,777 — 36,777 39,785 457 40,242 35,736 469 36,205

(Loss)/Gain on disposal /termination of subsidiary 22 — (68) (68) — 1,691 1,691 — — —

Net Financial Income andExpense

Exchange rate results 9,975 — 9,975 (2,267) (114) (2,381) (6,778) (4) (6,782)Interest income 18 2,740 11 2,751 2,839 96 2,935 2,652 35 2,687 Interest expense 18 (16,319) — (16,319) (20,165) (73) (20,238) (16,380) (17) (16,397)

(3,604) 11 (3,593) (19,593) (91) (19,684) (20,506) 14 (20,492)

Profit before Taxation 33,173 (57) 33,116 20,192 2,057 22,249 15,230 483 15,713 Taxation 18,23 (14,232) (31) (14,263) (9,359) (357) (9,716) (6,806) (138) (6,944)

Profit after Taxation 18,941 (88) 18,853 10,833 1,700 12,533 8,424 345 8,769 Minority Interest 11 (1,012) — (1,012) (945) — (945) (753) — (753)

Net Profit 18 17,929 (88) 17,841 9,888 1,700 11,588 7,671 345 8,016

Earnings per share — Basicand Diluted 25 0.59 (0.01) 0.58 0.42 0.07 0.49 0.36 0.01 0.37

Weighted average number ofshares — Basic and Diluted 25 30,566,007 30,566,007 30,566,007 23,329,982 23,329,982 23,329,982 21,849,343 21,849,343 21,849,343



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Consolidated Statements of Changes in Shareholders’ Equity

The changes in shareholders’ equity are summarized as follows: Issued Common Shares Unallocated share Share premium Currency Retained results Amounts expressed in thousands of USD capital account translation earnings for the year TotalBalance at March 31, 2006 13,226 113,855 7,132 (41,908) 26,734 119,039

Appropriation of prior year’s result — — — 13,003 (13,003) — Distributions to shareholders — (86,400) (595) — (7,402) (94,397)Net result for the year — — — — 8,016 8,016 Currency translation 1,321 (1,316) 5,894 — (5) 5,894

Net movement for the year 1,321 (87,716) 5,299 13,003 (12,394) (80,487)

Balance at March 31, 2007 14,547 26,139 12,431 (28,905) 14,340 38,552

Appropriation of prior year’s result — — — — — — Issue of shares 6,466 98,218 — — — 104,684 Costs of share issue — (18,503) — — — (18,503)Distributions to shareholders — (4,000) — — — (4,000)Transfer of reserves — (12,804) — 28,905 (16,101) — Net result for the year — — — — 11,588 11,588 Currency translation 3,207 (1,266) 2,464 — — 4,405

Net movement for the year 9,673 61,645 2,464 28,905 (4,513) 98,174

Balance at March 31, 2008 24,220 87,784 14,895 — 9,827 136,726

Appropriation of prior year’s result — — — 4,326 (4,326) — Distributions to shareholders — — — — (5,502) (5,502)Net result for the year — — — — 17,841 17,841 Currency translation (3,929) — (26,922) — — (30,851)

Net movement for the year (3,929) — (26,922) 4,326 8,013 (18,512)

Balance at March 31, 2009 20,291 87,784 (12,027) 4,326 17,840 118,214

The issued share capital and share premium account balances in the above table reflect the retroactive effect of therecapitalization and stock split as shown in note 29 for the relevant comparative periods.

The authorized share capital of the Company as at March 31, 2009 amounts to EUR 50 million (USD 66.4 million) andconsists of 100,000,000 common shares of EUR 0.50 (USD 0.66) each. Issued share capital amounts to EUR 15.3 million(USD 20.3 million) and consists of 30,566,007 common shares with a nominal value of EUR 0.50 (USD 0.66) each. Sharecapital denominated in Euros has been translated into US Dollars using the year end exchange rates set out in note 4 tothese financial statements. For distributions per share see note 26 to these consolidated financial statements.

The currency translation account records the effect of exchange rates on the reported results and shareholders’ equity ofsubsidiaries and joint ventures when converted from their functional currency into the Group’s reporting currency.



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Consolidated Statements of Cash Flows Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007Cash Flow from Operating Activities Net profit 17,841 11,588 8,016 Adjustments for: Minority interest 1,012 945 753 Taxation 14,263 9,716 6,944 Depreciation and amortization of intangible and tangible fixed

assets and negative goodwill 22,968 22,786 17,980 Profit on disposal of intangible and tangible fixed assets (688) (749) (989)Interest income (2,751) (2,935) (2,687)Interest expense 16,319 20,238 16,397 Exchange rate results (9,975) 2,381 6,782 (Loss)/Gain on disposal/termination of subsidiary 68 (1,691) — Changes in provisions 5,033 6,038 (1,286)Changes in stocks and work in progress (2,754) 170 (421)Changes in debtors (144) 2,897 (14,331)Changes in current liabilities (4,539) (2,774) 6,842 Changes in long term debtors — (687) (81)Interest received 2,820 1,967 1,574 Interest paid (9,951) (14,595) (10,912)Tax paid (6,810) (7,193) (4,081)

42,712 48,102 30,500

Cash Flow from Investing Activities Purchases of intangible fixed assets (136) (148) (270)Purchases of tangible fixed assets (45,927) (34,370) (29,108)(Increase)/Decrease in restricted cash balances (49) 269 (1,048)

Total capital expenditure (46,112) (34,249) (30,426)

Proceeds from disposals of intangible fixed assets — 4 — Proceeds from disposals of tangible fixed assets 1,690 1,081 1,720

Total proceeds from disposals of fixed assets 1,690 1,085 1,720

Purchase of joint ventures and subsidiaries, net of cash (58,333) 395 (26,692)Proceeds from disposal/termination of subsidiaries, net of cash 2,164 2,599 2,480

(100,591) (30,170) (52,918)

Cash Flow from Financing Activities Issue of shares (net of costs of issue) — 86,181 — Issue of shares to minority shareholder in China Water 1,972 3,311 — New loans 57,234 16,833 70,809 Loans repaid (12,931) (86,185) (6,075)Changes in bank overdrafts 201 (7,693) 7,400 Distributions made to shareholders (5,502) (4,000) (92,612)Dividend paid to minority interests (434) (513) —

40,540 7,934 (20,478)

Total Cash Flow (17,339) 25,866 (42,896)

Exchange and translation differences on cash at bank and inhand (2,363) 193 2,046

(19,702) 26,059 (40,850)

Cash at bank and in hand at beginning of period 54,380 28,321 69,171

Cash at bank and in hand at end of period 34,678 54,380 28,321



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Notes to the Consolidated Financial Statements

1—General

Activities

The activities of Cascal N.V. (the “Company”), its subsidiaries and joint ventures (together, the “Group”) involved theprovision of high quality water and wastewater services to customers in seven countries. These services are providedunder long term contracts or licenses that typically give the Group the exclusive right to provide its services within adefined geographical area. The Group’s most significant geographical area of operations is the United Kingdom.

Group structure

From April 1, 2008 until March 31, 2009 42% of the Company’s stock has been publicly traded with the remainder ownedby Biwater Investments Limited.

Functional and reporting currency

The functional currency of each subsidiary and joint venture is generally the currency of the country in which it operates.However management also considers cash flow indicators, sales price indicators, sales market indicators, expenseindicators, financing indicators and inter-company transactions and arrangement indicators in assessing the functionalcurrency of its operations. As a result of this assessment, the Company’s functional currency is the US Dollar (“USD”) andgiven the international nature of the Group’s operations, the directors have chosen the USD as the Group’s reportingcurrency.

Basis of presentation

These consolidated financial statements have been prepared in accordance with the statutory provisions of Part 9, Book2, of the Dutch Civil Code and the firm pronouncements in the Dutch Accounting Standards as used by the DutchAccounting Standards Board (Dutch GAAP). They do not represent the Statutory Annual Report & Accounts of theCompany as of March 31, 2009 or for any of the periods presented (see note 3).

Certain amounts have been reclassified within the comparative periods so as to be consistent with the current period’spresentation.

Prior year comparison

These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of consolidation

The consolidated financial statements of the Company include those companies, referred to as subsidiaries, in which it,directly or indirectly, has an interest of more than 50% of the voting rights and can exercise control, or subsidiaries whosefinancial and operating activities it can otherwise control. Subsidiaries’ assets, liabilities and results are consolidated infull. Minority interests in Group equity and Group profit are disclosed separately.

Participating interests in joint ventures are accounted for by proportional consolidation. The Group combines its share ofthe joint ventures’ individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similaritems in the consolidated financial statements. An entity qualifies as a joint venture if its participants jointly exercise controlunder a collaborative agreement.

Inter-company transactions, profits and balances between Group companies are eliminated in full for subsidiaries andproportionally in the case of joint ventures.

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The consolidated financial statements are based upon a March 31 fiscal year end. Certain of the subsidiary and jointventure companies, for local statutory and regulatory reasons, have an annual reporting date of December 31. Each yearthe directors consider whether transactions recorded by these entities during the three months ended March 31 couldcause a material distortion of the Group’s financial position or results of operations. Whenever this possibility existsadjustments are made to the consolidated financial statements in order to correct the distortion that would otherwise bepresent. Adjustments were made regarding the early termination of our operation and maintenance contract in Mexico inJanuary 2008 in the year ended March 31, 2008.

The consolidated financial statements comprise Cascal N.V. together with the following subsidiary companies andparticipating interests in joint ventures: Proportion of issuedCompany Domicile capital heldBWH Investments BV The Netherlands 100%(23)BWH Holdings (South Africa) BV The Netherlands 100%(23)Cascal Holdings Limited United Kingdom 100%(24)Cascal Investment Limited United Kingdom 100%(1)Cascal Services Ltd. United Kingdom 100%BWS Finance Ltd. United Kingdom 100%Cascal Plc United Kingdom 100%(21)Bournemouth & West Hampshire Water Group Ltd. United Kingdom 100%Bournemouth & West Hampshire Holdings Ltd. United Kingdom 100%Bournemouth & West Hampshire Water Plc United Kingdom 100%Bournemouth Water Plc United Kingdom 99%(2)West Hampshire Water Plc United Kingdom 99%(3)Bournemouth Water Ltd. United Kingdom 100%West Hampshire Water Ltd. United Kingdom 100%Bournemouth & West Hampshire Enterprise Limited United Kingdom 100%Mill Stream Insurance Limited United Kingdom 100%Aquacare (BWHW) Ltd. United Kingdom 100%(22)Pre-Heat Limited United Kingdom 100%(4)Cascal (Chile) S.A. Chile 100%(5)Aguas Santiago S.A. Chile 100%(5)Servicios y Construcciones Biwater S.A. Chile 100%(5)Inversiones Libardon S.A. Chile 100%(5)Aguas Chacabuco S.A. Chile 100%(5)Aguas de Quetena S.A. Chile 100%(5)Bayesa S.A. Chile 100%(5)Cascal BV (Chile) Limitada Chile 100%(5)(6)Inversiones Cascal S.A. Chile 100%(5)Inversiones Aguas del Sur Limitada Chile 100%(5)Aguas de la Portada S.A. Chile 100%(5)(6)Servicomunal S.A. Chile 100%(5)(25)Servilampa S.A. Chile 100%(5)(25)Belize Water Services Ltd. Belize 83%(7)Biwater Ingeniera y Proyectos S.A. de C.V. Mexico 100%(5)(8)Agua Mexicana y Operaciones S.A. de C.V. Mexico 100%(5)(8)Cascal Operations (Pty) Limited South Africa 100%The Greater Nelspruit Utility Company (Pty) Ltd South Africa 100%(10)Siza Water Company (Proprietary) Limited South Africa 73.42%(11)P.T. Adhya Tirta Batam Indonesia 50%(5)(9)P.T. Adhya Tirta Sriwijaya Indonesia 40%(5)(9)Subic Water & Sewerage Company Inc. Philippines 30%(9)Aguas de Panama, S.A. Panama 100%(1)The China Water Company Limited Cayman Islands 87%(12)The China Water Company (Xinmin) Limited British Virgin Islands 87%(12)(13)The China Water Company (Yanjiao) Limited British Virgin Islands 87%(12)(13)(18)The China Water Company (Qitaihe) Limited British Virgin Islands 87%(12)(13)The China Water Company (Fuzhou) Limited British Virgin Islands 87%(12)(13)(18)The China Water Company (Mauritius) Limited Mauritius 87%(12)(13)(18)CWC Water Management Company Limited British Virgin Islands 87%(12)(13)(18)China Water Company (Fuzhou) Limited Hong Kong 87%(13)China Water Company (Yanjiao) Limited Hong Kong 87%(13)China Water Company (Zhumadian) Limited Hong Kong 87%(13)China Water Company (Yancheng) Limited Hong Kong 87%(13)


Fuzhou CWC Water Company Limited People’s Republic of China 62.64%(12)(14)(Shenyang) Xinmin CWC Water Company Limited People’s Republic of China 79.09%(12)(15)Sanhe Yanjiao CWC Water Company Limited People’s Republic of China 82.08%(12)(16)Qitaihe CWC Water Company Limited People’s Republic of China 79.09%(12)(17)Yancheng China Water Company Limited People’s Republic of China 42.63%(9)(19)(20)Zhumadian China Water Company Limited People’s Republic of China 44.37%(26)(27)

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(21) Company changed its name from Biwater Capital plc on September 26, 2007.


(23) Liquidated on March 31, 2009.

(24) Incorporated on September 25, 2008.




Acquisition and divestment of Group companies

The results and separately identifiable assets and liabilities of acquired companies are consolidated from the date that acontrolling interest is established.

Group companies continue to be consolidated up to the date of disposal, which is the date when the Group’s controllinginterest is relinquished.

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Purchases of a business from a third party are treated as business combinations, and accounted for at fair value. The fairvalue of the separable tangible and intangible assets acquired, less the fair value of liabilities acquired, is compared withthe fair value of the consideration given, and any excess of consideration over and above the fair value of net assetsacquired is accounted for in local currency as goodwill, which is included in intangible fixed assets and is then amortizedover its useful economic life, up to a maximum of 20 years.

Common control transactions are recorded at predecessor cost, reflecting the transferor’s carrying amount of the assetsand liabilities transferred.

Cash flow statement

The cash flow statement has been prepared using the indirect method. Cash at bank and in hand is comprised of cash atbanks and in hand together with deposits with an original maturity of three months or less.

Cash flows reported in foreign currencies have been translated at the average exchange rate for the relevant year.Differences due to movements in exchange rates between the average rate and the closing rate for each period, andbetween the closing rates for the current and preceding period, are shown separately in the cash flow statement.

Receipts and payments of interest and corporate income tax are included in the cash flow from operating activities.Dividends paid to shareholders and minority interests are included in the cash flow from financing activities.

Investments or divestments of Group companies are recognized at acquisition cost or disposal proceeds, less cash andcash equivalents in the acquired or divested company at the date of the transaction.

Restricted cash is cash subject to restrictions by agreement with the Group’s banks, both in accordance with the operationof the Group’s borrowing facilities and to collateralize bonds and other guarantees given on behalf of the Group. In thecash flow statement such cash inflows or outflows are recorded within investing activities.

2—Accounting policies

Use of estimates

The preparation of financial statements requires the directors to exercise judgment and make estimates in determining theamounts to be reported in respect of assets and liabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expenses during the reporting period. Such judgmentsand estimates are continually evaluated and are based on historical experience and other factors, including expectationsof future events that are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved inmaking these judgments and estimates, subsequent outcomes could differ from the reported amounts derived from them.

Revenue recognition

For water and wastewater customers with water meters, the amount of the receivable billed depends upon the volumesupplied, including an estimate of the sales value of units supplied between the date of the last meter reading and the endof the fiscal period. Meters are read on a cyclical basis and the Company recognizes revenue for unbilled amounts basedon estimated usage from the last billing through to the end of the fiscal period. The estimated usage is based on historicaldata, judgment and assumptions; actual results could differ from these estimates, which would result in revenue beingadjusted in the period that the revision to the estimates is determined. For customers who do not have a meter, theamount of the receivable billed depends upon the rateable value of the property, as assessed by an independent ratingofficer.

Revenue received in advance of performance is recognized as deferred revenue. When performance occurs, the deferredrevenue is released and simultaneously reported as revenue. This situation primarily arises in the United Kingdom, whereapproximately 44% of the billing is based on property values and billed periodically throughout the year.

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Bad debts

At each balance sheet date, the Company evaluates the collectability of trade receivables and records provisions fordoubtful receivables based on experience. These provisions are based on, among other things, comparisons of therelative age of accounts and consideration of actual write-off history. The actual level of receivables collected may differfrom the estimated levels of recovery, which could affect the Company’s results of operations positively or negatively.

Long lived assets

Due to the long lives of such assets, changes to their estimated useful lives can result in significant variations in thecarrying value.

The Company critically assesses the impairment of fixed assets whenever events or changes in circumstances indicatethat the carrying value may not be recoverable. Under Dutch GAAP, all intangible fixed assets having a useful life of morethan 20 years are tested annually for impairment. Important factors that could trigger an impairment review for thoseassets not subject to annual testing include the following:

• significant underperformance relative to historical or projected future results of operations;

• significant changes in the manner of the use of the acquired assets or the strategy for the overall business; and

• significant negative industry or economic trends.

The complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent in theapplication of the Company’s fixed asset accounting estimates affect the amounts reported in the financial statements,especially the Company’s estimates of the expected useful economic lives and the carrying values of those assets. If thebusiness conditions were different, or if different assumptions were used in the application of this and other accountingestimates, it is likely that materially different amounts would be reported in the Company’s financial statements.

Pensions

The Company reviews its actuarial assumptions on an annual basis and makes modifications to them when it isappropriate to do so. While management believes that the actuarial assumptions are appropriate, any significant changesto those used in connection with the United Kingdom plan could materially affect both the balance sheet and statement ofincome and result in an increase in the statement of income charge in relation to pensions in future years, and as aconsequence affect the asset or liability reflected on the balance sheet.

Deferred tax

The Company is required to make a judgment as to the value of any deferred tax assets to be recognized for losscarry-forwards. Deferred tax assets amounting to USD 15.6 million have been recognized on the balance sheet as ofMarch 31, 2009. The deferred tax assets in respect of tax losses are regarded as more likely than not to be recoverableagainst future forecast taxable profits.

Revenue recognition

The Group’s services consist of the provision of water and wastewater treatment.

Revenue comprises the value of the water supplied and other services performed. Revenue is reported net of valueadded tax and foreign sales tax and after elimination of inter-company sales.

Revenue is recognized in the period in which the water is supplied or the services are rendered. In order to satisfy thisrequirement the following criteria must be met:

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• It is probable that the economic benefits of the transaction will flow to the subsidiary or joint venture concerned; and

• The revenue can be measured reliably; and

• Where applicable, the costs (both incurred to date and expected future costs) can be identified and can be measuredreliably.

For variable billing arrangements that depend on the volume supplied or processed, revenue is recognized by referenceto the actual supply or processing carried out. Approximately 70%, by value, of the Group’s customers are charged fortheir water and/or wastewater based on a measured volume. The remainder are charged based on an assumed volumethat is derived from the rateable value of their properties. Revenue includes an estimate of the sales value of water and/orwastewater services supplied to the customers between the date of the last volume reading and the period end, based onthe agreed rate arrangement and historical usage patterns.

In concession areas and long-term contracts where the collection of receivables is not reasonably probable, revenue isnot recognized until such time as the customer pays for the services received.

For arrangements involving a fixed annual or periodic payment from the customer that is not dependent upon the volumeof water supplied or treated, revenue is recognized on a straight line basis over the term of the related arrangement.

Revenue arising from transactions involving an exchange of non-monetary assets is recorded in the statement of incomebased on the fair value of the non-monetary asset that the Group has surrendered.

Grants, contributions and service connection fees receivable in respect of infrastructure assets relating to either: (i) aspecific extension to the supply network, usually associated with a development of new commercial or residential propertyfor which the subsidiary or joint venture has assumed, or will assume, an obligation to provide water and/or wastewaterservices; or (ii) a more general expansion of overall network capacity in light of extensions made, or being made, theretoare accounted for at fair value as deferred revenue, which amount is then credited to revenue in the statement of incomeon a straight line basis over a period that will match them with the costs they are intended to compensate, such periodbeing equal to the shorter of the estimated useful economic lives of the related infrastructure assets or the remaining termof the related customer arrangement.

Certain of our subsidiaries engage in infrastructure construction projects that can last more than twelve months. Revenuefrom such construction contracts is recognized on final completion of the contract. Costs incurred during construction arerecognized as work in progress until construction is complete.

Revenue is recognized by the Group’s unregulated contracting business in the United Kingdom based on the applicationof schedules of rates to the number of installations certified as complete.

General principles of valuation

Assets and liabilities are stated at the amounts at which they were acquired or incurred, or fair value if lower.

Tangible fixed assets

Tangible fixed assets are stated at cost, including directly attributable expenses, less depreciation charged on a straightline basis over their estimated useful economic lives. Directly attributable expenses include the following categories:employment costs incurred in implementing capital works projects, asset commissioning and installation costs and interestcharged during the assets’ construction phase.

Other than freehold land, tangible fixed assets are depreciated in order to allocate their cost, less their residual values, ona straight line basis over a period equal to the shorter of their estimated useful economic life, or the remaining term of theconcession or contract in which they are used. Most of the Group’s tangible fixed assets have

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no residual value. The estimated useful economic lives over which the assets used in the Group’s business are beingdepreciated are as follows:

Infrastructure—8 to 100 years

Land and buildings—5 to 75 years

Plant and equipment—4 to 40 years

Fixtures and fittings—3 to 7 years

The remaining useful economic lives of assets acquired in business combinations are assessed at the acquisition date.

For its existing water infrastructure assets, the Group operates a policy of continuous replacement and renewal, andundertakes periodic reassessments of the condition and remaining lives of its networks, based on which the directors mayrevise their estimate of the allocation periods used for financial reporting purposes.

Assets in the course of construction are included at cost, including directly attributable costs, within the asset category towhich they relate. Depreciation will commence when the asset is brought into service.

Assets financed in whole, or in part, by contributions from third parties such as land and property developers are includedat their fair value. The related contributions to cost are included in deferred revenue and subsequently amortized on astraight line basis over the shorter of the estimated useful economic life of the asset concerned, or the remaining term ofthe related water/wastewater contract or concession, commencing from the period when the asset is brought into use.

At the balance sheet date, the Group undertakes an annual reassessment of whether there are any indications that atangible fixed asset, or group of assets, could be subject to impairment. If there are such indications, the recoverableamount of the asset concerned is estimated. If this is not possible, the recoverable amount of the cash-generating unit towhich the asset belongs is identified. An asset is subject to an impairment provision if its book value is higher than itsrecoverable amount; the recoverable amount is the higher of the net realizable value through sale, or the value to thebusiness from continued use. The net realizable value is determined by reference to current conditions in an activemarket. The value to the business from continued use is determined by using a discounted expected cash flow model.

An impairment provision, calculated as the difference between book value and the recoverable amount, is recognized asan expense.

Reversals of impairments are accounted for in a similar manner to the initial impairment. If it is established that apreviously recognized impairment no longer applies or has declined, the increased carrying amount of the asset inquestion is not set higher than the carrying amount that would have been determined had no asset impairment beenrecognized.

Where there is a legal obligation on the Group to remove or retire an asset, the present value of the expected costs ofdisposal are recorded as part of the cost of the asset, together with the recognition of the future liability. The costs areincluded in the periodic depreciation charge for the asset, based on its useful economic life. At March 31, 2008 and 2009the Group had no material legal or contractual obligations of this type.

Intangible fixed assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable netassets of the acquired subsidiary or joint venture at the date of acquisition. Goodwill is initially recorded at cost and thensubsequently amortized on a straight line basis over its estimated useful economic life up

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to a maximum of 20 years. The useful economic life is greater than 5 years as the businesses acquired are operatinglonger term contracts and concessions.

Where the cost of an acquisition is lower than the net amount of the fair value of the Group’s share of identifiable assetsacquired, the difference (i.e. negative goodwill) is separately reported on the face of the consolidated balance sheet.Negative goodwill is initially recorded at cost and then subsequently amortized over the estimated useful economic life ofthe relevant non-current non-monetary assets to which it relates.

Other intangible assets

Within other intangible assets there are customer contracts recorded at fair value and amortized over the useful economiclife of those agreements. The useful economic lives of those contracts and agreements range from 4 to 30 years.

Water rights

Water rights are capitalized at an amount equal to their historical cost and are subsequently amortized over theirestimated useful economic lives. Notwithstanding that a majority of the Group’s water rights are perpetual, the directorshave assessed their useful economic lives for amortization purposes as being 30 years by reference to the lives of thetangible assets through which the water is distributed. Water rights are subject to an annual impairment review.

The process for determining whether an impairment charge should be recorded in respect of the Group’s goodwill andwater rights is similar to that used for tangible fixed assets and involves an independent appraisal of the water rights’ netrealizable value.

Financial fixed assets

Amounts receivable, including promissory notes, included in financial fixed assets are recorded at fair value, lessprovisions where appropriate.

Other long term financial fixed assets are reported at the lower of cost or net realizable value.

Impairment of non-current assets

At the balance sheet date, the Group undertakes an annual reassessment of whether there are any indications thatnon-current assets could be subject to impairment. If there are such indications, the recoverable amount of the assetconcerned is estimated. If this is not possible, the recoverable amount of the cash-generating unit to which the assetbelongs is identified. An asset is subject to an impairment provision if its book value is higher than its recoverable amount;the recoverable amount is the higher of the net realizable value through sale, or the value to the business from continueduse. The net realizable value is determined by reference to current conditions in an active market. The value to thebusiness from continued use is determined by using a discounted expected cash flow model.

An impairment provision, calculated as the difference between book value and the recoverable amount, is recognized asan expense.

Reversals of impairments are accounted for in a similar manner to the initial impairment. If it is established that apreviously recognized impairment no longer applies or has declined, the increased carrying amount of the asset inquestion is not set higher than the carrying amount that would have been determined had no asset impairment beenrecognized.

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Stocks and work in progress

Stocks for own use and resale

Raw materials and consumables are carried at the lower of cost, using the FIFO (‘first in, first out’) method, or netrealizable value if lower. Net realizable value represents the estimated selling price less directly attributable sellingexpenses.

Work in progress

Work in progress is valued at production cost, being direct cost of materials and labor, directly attributable work contractedout and other external expenses together with an allocation of indirect fixed and variable overhead costs attributable to theproduction process.

Certain of our subsidiaries engage in infrastructure construction projects which can last more than twelve months.Revenue from such construction contracts is recognized on final completion of the contract. Costs incurred duringconstruction are recognized as work in progress until construction is complete.

Debtors

Trade debtors are included in the financial statements at the fair value of the amount receivable, usually the face value,and subsequently at amortized cost. A provision is made for doubtful debts when there is objective evidence that theGroup will not be able to collect all amounts due according to the original terms of receivables. When the amount providedis then subsequently collected, the related provision is released. If the amount provided proves to be uncollectible, thereceivable and the related provision are both written off. No provision is made where the overdue debt is being recoveredunder a payment plan and the customer is complying with the terms of that plan.

Cash at bank and in hand

Cash at bank and in hand is comprised of cash at banks and in hand together with deposits with an original maturity ofthree months or less. Bank overdrafts are shown within current liabilities. Restricted cash, which is cash subject torestrictions by agreement with the Group’s lenders, is deducted from cash at bank and in hand and is included in eitherfinancial fixed assets or debtors depending on the terms and length of restriction.

Minority interests

Minority interests as a component of Group equity are presented at the amount of the minorities’ net investment in theGroup companies concerned. If the relevant Group company has a negative net equity value, this negative amount is notallocated to the minority interests, unless those minority shareholders are obligated to contribute their proportional shareof the deficit and have the means to do so. Otherwise, only after the net equity value of the Group company once morebecomes positive will its results be recognized in minority interests.

Shareholders’ equity

Specific incremental costs directly attributable to the purchase, sale and/or issue of new shares are charged against thegross proceeds of the offering, net of relevant corporate income tax effects. However, incremental management salariesor other incremental general and administrative or recurring expenses are not allocated as costs of the offering andexpensed as incurred. Deferred share issue costs that are incurred prior to the raising of additional equity are included inprepayments.

Provisions

Provisions are made for legally enforceable or constructive obligations that exist at the balance sheet date, thesettlements of which are likely to require an outflow of resources, the extent of which can be reliably estimated.

Provisions are measured at nominal value based on the directors’ best estimate of the amounts required to settle theobligations as at the balance sheet date.

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Insurance

Certain of the Group’s insurance is handled by its captive insurance company, Mill Stream Insurance Limited. It accountsfor all insurance business on an annual basis and the net consolidated result is dealt with as part of operating expenses inthese financial statements. Insurance premiums in respect of risks not retained by the Group’s captive insurance companyare charged to the statement of income in the period to which they relate.

Pension costs

The Group operates both defined benefit and defined contribution pension plans. Contributions made to the definedcontribution plans are treated as an expense in the year to which the contributions relate. Payments in advance or arrearsare shown as a prepayment or an accrual.

The defined benefit plans provide pension benefits to employees or former employees upon reaching retirement age, theamount of which depends on age, compensation and years of service.

The pension provision carried in the balance sheet at March 31, 2009 is the present value of pension benefit obligationsunder the defined benefit plans, net of the fair value of the plans’ assets against which unrecognized actuarial gains andlosses and unrecognized past service costs are set. The pension provision is measured annually by independentactuaries using the actuarial method known as the “Projected Unit Credit” method. The present value of the obligation iscomputed by discounting estimated future cash flows, using interest rates available from high quality corporate bondshaving a term consistent with the term of the related pension obligation.

Actuarial gains and losses arising from changes in actuarial assumptions exceeding 10% of the higher of pension benefitobligations and the fair value of plan assets at the beginning of the financial year are credited or charged to the statementof income over the expected average remaining service lives of the employees concerned. Actuarial gains and losseswithin this 10% corridor are not recognized, as they are regarded as falling within the level of normal variations expectedin the assets and liabilities of a pension plan.

Unrecognized past service costs are taken directly to the statement of income unless the changes in the pension plandepend on the employees affected remaining in service for a specific period (the qualifying period). In that case, the pastservice costs are recognized on a straight line basis over the qualifying period.

In addition the Group has liabilities under a pre-existing defined benefit pension plan in connection with its recentlyacquired subsidiary in Zhumadian, China. Under the plan there are retired and semi-retired employees for which there is apension liability. However no future liabilities can accrue in connection with current non-retired employees or any newemployees. The liability will be discharged over time out of cash resources and there are no plan assets.

Income taxes

The Group tax charge includes both current and deferred taxes.

Current tax is calculated based on the taxable profit in each period.

Changes in deferred tax assets/liabilities are also accounted for as part of the overall charge to taxation.

Deferred tax assets and liabilities are recognized in respect of temporary differences between the tax bases of assets andliabilities and their carrying amounts in the consolidated financial statements.

Deferred tax assets and liabilities are calculated based on the ruling tax rates as at the year end date or future applicablerates, insofar as these are already decreed by law or substantially enacted.

Deferred tax assets, including those arising from losses carried forward, are recorded to the extent that it is more likelythan not that future taxable profits will be available to offset the losses.

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Deferred tax is provided on temporary differences arising on investments in subsidiaries and joint ventures, except wherethe timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporarydifference will not reverse in the foreseeable future.

Deferred tax liabilities are reported within provisions and deferred tax assets are reported, net of provisions, as financialfixed assets. Deferred tax assets and liabilities are reported at nominal value.

Long term borrowings

Long term borrowings are recorded at the amount received adjusted for any premium or discount. The transaction costsare those expenses directly incurred in raising the financing. The difference between the carrying value and the ultimateredemption value, together with the interest payable, is recognized as the effective interest cost in the statement ofincome over the term of the borrowing.

Interest on borrowings is capitalized to the extent it relates to financing required while an asset is in the course ofconstruction. The interest to be capitalized is calculated based on the interest payable on loans specifically taken out tofinance the construction phase, and on the weighted average interest rates applying to loans outstanding, though notspecifically arranged for the purpose of the asset’s construction, in proportion to the asset’s cost and period ofconstruction.

Accounting for leases

Finance leases

Where the Group leases certain tangible fixed assets and has substantially assumed the risks and rewards of ownershipof these assets, the lease is accounted for as a finance (or capital) lease. At inception of the lease contract, the assets arecapitalized in the balance sheet at their fair values, or the present value of the guaranteed minimum lease payments iflower. Lease payments are split on an annuity basis between capital redemption and interest, based on the marginal costof borrowing of the Group company that leases the asset. The lease obligations, excluding the interest element, arereported as long term liabilities, except for the amount due within 12 months of the balance sheet date, which is reportedin current liabilities. The interest component of the lease payment is charged to the statement of income. Leased assetsare depreciated over their remaining useful economic lives or the lease term, if shorter.

Operating leases

Lease contracts that do not substantially transfer the risks and rewards of ownership of the assets to the Group areclassified as operating leases. Payments due under operating leases, including scheduled rent increases, but net of anyreimbursements received from the lessor, are recognized on a straight line basis in the statement of income over the termof the contract, including any rent-free period. Rentals that are contingent on some future event or index are recognizedwhen their payment becomes probable.

Derivative financial instruments and hedging

The Group may, from time to time, enter into certain derivative financial instruments. The Group has not designated any ofthese as hedging instruments. Instruments that are designated as derivatives will be recognized in the balance sheet atfair value. Fair value is the amount at which the derivative could be settled between a willing buyer and seller in an arm’slength transaction. In general, changes in the fair values of derivatives that are effective as hedges are matched in eitherthe statement of income or shareholders’ equity with the changes in the underlying asset or liability or cash flows that areattributable to the hedged risk. Changes in the fair value of derivatives that are not effective as hedges are recognizeddirectly in the statement of income. At March 31, 2009 and at March 31, 2008 the Group had no such derivative contractsoutstanding.

Contract acquisition costs

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Staff costs

Regular payments

Salaries, wages and social security costs are charged to the statement of income when due, and in accordance withemployment contracts and obligations.

End of contract costs

Costs for making staff redundant at the end of fixed duration contracts or concessions are accrued over the life of thecontract, based on an estimate of the ages, length of service and salaries of the staff affected at the date that the contractor concession is due to come to an end.

Share issue costs

Expenses directly related to the purchase, sale and/or issue of new shares are charged directly to shareholders’ equity,net of relevant corporate income tax effects. Share issue costs incurred prior to the raising of additional equity aredeferred and included in prepayments.

Finance costs

Interest paid and received is recognized on a time-weighted basis, taking account of the effective interest rate of theassets and liabilities concerned. When recognizing interest paid, allowance is made for transaction costs on loansreceived.

Foreign currency translation

Transactions, receivables and payables

Transactions denominated in foreign currencies during the reporting period are recognized in the financial statements atthe exchange rate prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies aretranslated at the rate of exchange prevailing at the balance sheet date.

Exchange differences resulting from settlement and translation of monetary assets and liabilities are charged or creditedto the exchange rate results in the statement of income.

Translation differences related to long term intra-Group loans that are not repayable in the foreseeable future are treatedas giving rise to an increase or decrease in net investments in foreign operations, and are recorded in equity as acomponent of the non-distributable reserve for translation differences.

Exchange rate differences arising on foreign currency borrowings by the Group that are entered into to finance the netinvestment in a foreign participation are also recognized in the non-distributable translation differences reserve insofar assuch loans effectively hedge the exchange rate exposure on that net investment.

Group companies

The assets and liabilities of operations included in the consolidated financial statements in foreign currencies aretranslated at the rate of exchange prevailing at the balance sheet date. Income and expenses are translated at theaverage rate for the year. The resulting translation differences are taken to the non-distributable translation differencesreserve within shareholders’ equity.

Discontinued operations

A Group company or its operations is categorized as a discontinued operation when the following criteria are satisfied:F-18


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• It is being disposed of substantially in its entirety, such as by way of single sale transaction; or

• It is being disposed of piecemeal, such as by selling off its assets and settling its liabilities individually; or

• It is being terminated through abandonment.

In addition, it must represent a separate major line of business or geographical area of operations and be capable ofbeing distinguished from the rest of the Group both operationally and for financial reporting purposes. Categorization as adiscontinued operation occurs at the earlier of the date that a binding sale agreement is entered into or the entity’smanagement has both approved a detailed, formal plan and made an announcement of the plan.

Note 22 to these financial statements includes the disclosures required under Dutch GAAP relating to discontinuedoperations.

In addition, the Company has retrospectively presented in the statement of income the results of discontinued operationsrelating to the disposal of Belize Water Services Limited, Biwater Ingeniera y Proyectos S.A. de C.V. and the terminationof operations by Agua Mexicana y Operaciones S.A. de C.V.

Dividend distribution

Dividend distribution to the Company’s shareholders is recognized as a liability in the Group’s financial statements in theperiod in which the dividends are approved by the Company’s shareholders.

Recent accounting pronouncements

Dutch GAAP:

The following important changes have been made to the guidelines in the 2008 edition of the Dutch Accounting Standardsand become mandatory for the Company’s financial year ending March 31, 2010, the effects of which on the Company’saccounting policies have been considered by the directors:

Subsequent events — If the balance sheet is prepared before profit appropriation, then any dividends to be paid onpreferred shares and any additions to the legal reserves will not be deducted from the share premium reserve or otherreserves, but rather presented separately as a (negative) part of the equity. DAS 160);

Mergers and acquisitions — The option to recognize the part of negative goodwill that has no relation to expectedlosses corresponding to the chosen handling of positive goodwill, directly to equity or the result, is no longer applicable.Only the amount by which this part of goodwill exceeds the fair value of the identified non-monetary assets can berecognized directly to the result. (DAS 216);

Work in progress — This Standard is fully revised. Although the changes with respect to the contents are small, it isexpressed more clearly that work in progress is not a part of inventory, but should be presented as a separate line itembetween inventory and receivables. This balance sheet item is the result of the recognition of project revenues and—costs in the income statement. The new standard also better connects to the recognition of revenues from renderingof services according to standard 270 Profit and loss statement. Under certain conditions the new Standard 221 is alsoapplicable to property development. (DAS 221);

Share based payments — Up to edition 2007, the standards contain limited conditions with regard to share option plansfor personnel. The new standard 275 deals with share based payments for personnel as well as other share basedpayments. Detailed guidance on recognition, presentation and disclosure of these payments is included. (DAS 275);and

Changes in Dutch Accounting Standard 271 on pensions — ‘RJ-Uiting 2008-6’ on changes in Dutch AccountingStandard 271 (RJ 271.3) with regard to pension accounting has been published on December 22, 2008. The ‘Uiting’contains the text of RJ 271.3 including the changes that have been proposed earlier in ‘RJ-Uiting 2008-3’.

The ‘Uiting’ announces that late January 2009 a new draft standard on pension accounting will be published. This draftstandard will mean an important change in pension accounting. The pension obligations of an entity towards employeeswill be the basic principle for pension accounting and the distinction between defined contribution and defined benefitplans will disappear.

These standards will become mandatory for the Company’s financial year ending March 31, 2010.F-19


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3—Statutory Annual Report & Accounts

These consolidated financial statements have been prepared in accordance with accounting principles generally acceptedin The Netherlands (Dutch GAAP). This is the same basis of presentation as the Statutory Annual Report and Accounts.However these consolidated financial statements do not represent the Statutory Annual Report & Accounts of theCompany as of March 31, 2009 or for any of the periods presented.

4—Exchange rates

The following table provides the year end and average exchange rates for the currencies as included in the table againstone US Dollar. Average Average Average As at year ended As at year ended As at year ended March 31, March 31, March 31, March 31 March 31, March 31, 2009 2009 2008 2008 2007 2007Euro 0.753 0.708 0.631 0.705 0.751 0.779 British Pound 0.698 0.592 0.503 0.498 0.510 0.529 Chilean Peso 582.250 556.860 436.850 502.325 539.370 534.488 Mexican Peso 14.103 12.035 10.667 10.832 10.928 10.953 South African

Rand 9.510 8.718 8.127 7.174 7.286 7.022 Indonesian

Rupiah 11,555.000 10,260.000 9,205.000 9,171.000 9,118.000 9,102.769 Philippine

Peso 48.325 46.135 41.770 44.217 48.070 50.246 Chinese Yuan 6.834 6.871 7.012 7.448 7.734 7.897

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5—Intangible fixed assets Amounts expressed in thousands of USD Goodwill Water rights Other TotalNet book value at March 31, 2007

At cost 5,342 14,548 3,851 23,741 Accumulated amortization (1,995) (4,264) (336) (6,595)

3,347 10,284 3,515 17,146

Changes during the year:

Additions 12 — 148 160 Amortization (431) (510) (640) (1,581)Currency translation differences—cost 59 3,414 409 3,882 Currency translation differences—amortization (23) (1,077) (83) (1,183)

(383) 1,827 (166) 1,278

Net book value at March 31, 2008

At cost 5,413 17,962 4,408 27,783 Accumulated amortization (2,449) (5,851) (1,059) (9,359)

2,964 12,111 3,349 18,424


Acquisition of minority interests, joint ventures andsubsidiaries (notes 11, 24 and 25) 5,026 3,685 22,480 31,191

Additions 118 — 18 136 Amortization (522) (485) (1,074) (2,081)Currency translation differences—cost (1,160) (4,836) (737) (6,733)Currency translation differences—amortization 93 1,482 348 1,923

3,555 (154) 21,035 24,436


At cost 9,397 16,811 26,169 52,377 Accumulated amortization (2,878) (4,854) (1,785) (9,517)

6,519 11,957 24,384 42,860

The period of amortization for goodwill is between 15 and 20 years.

The period of amortization for water rights is 30 years.

The period of amortization for other intangible fixed assets is between 4 and 40 years. Within other intangible assets thereare concession and customer contracts recorded at fair value and amortized over the useful economic life of thoseagreements. The useful economic lives of those contracts and agreements range from 4 to 30 years.

Other intangible fixed assets includes an amount of USD 1.0 million at March 31, 2009 (2008: USD 1.4 million) in respectof payments made by Aguas Santiago S.A. between 1999 and 2003 to another water company operating in Santiago forthe right to inter-connect with the latter’s sewerage main network. This right lasts in perpetuity and continues to be used.The right is being amortized for financial statement purposes over an estimated useful economic life of 40 years.

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6—Tangible fixed assets Land and Plant and Fixtures Amounts expressed in thousands of USD buildings Infrastructure equipment & fittings TotalNet book value at March 31, 2007

At cost 74,646 205,857 169,318 11,330 461,151 Accumulated depreciation (13,087) (37,748) (67,681) (8,515) (127,031)

61,559 168,109 101,637 2,815 334,120


Acquisition of subsidiaries — 11,357 342 35 11,734 Additions (note 18) 2,010 20,144 10,298 1,918 34,370 Disposals (104) — (213) (96) (413)Depreciation (1,610) (5,685) (12,708) (1,255) (21,258)Other 20 (176) 77 76 (3)Currency translation

differences—cost 2,202 2,809 4,982 182 10,175 Currency translation

differences—depreciation (254) (872) (1,108) (134) (2,368)

2,264 27,577 1,670 726 32,237



63,823 195,686 103,307 3,541 366,357


Acquisition of joint ventures andsubsidiaries (notes 24 and 25) 15,370 73,473 4,086 140 93,069

Additions (note 18) 3,690 27,870 14,966 1,342 47,868 Disposals (426) (168) (372) (36) (1,002)Depreciation (2,140) (7,551) (10,083) (1,168) (20,942)Reclassifications — cost(1) 9,686 3,778 (12,131) (520) 813 Reclassifications — depreciation(1) (3,346) (2,526) 4,644 415 (813)Other (1) 2 (9) 25 17 Currency translation

differences—cost (19,018) (59,829) (46,885) (3,615) (129,347)Currency translation

differences—depreciation 4,114 11,936 22,786 2,737 41,573

7,929 46,985 (22,998) (680) 31,236



71,752 242,671 80,309 2,861 397,593

(1) Management has reviewed asset categories as part of the Group’s preparations for compliance with Section 404 ofthe Sarbanes-Oxley Act and as a result certain tangible fixed assets have been reclassified during the period.

Net Book Value of Assets subject to Finance Leases Land and Plant and Fixtures Amounts expressed in thousands of USD buildings Infrastructure equipment & fittings TotalNet book value at March 31, 2008

At cost 2,199 4,756 18,410 390 25,755 Accumulated depreciation (324) (751) (8,439) (386) (9,900)

1,875 4,005 9,971 4 15,855


At cost — 2,974 13,170 296 16,440 Accumulated depreciation — (251) (6,261) (279) (6,791)


— 2,723 6,909 17 9,649

During the year the Group sold some assets in secondary rental for a nominal amount, and then purchased them back fora similar nominal amount. The book values have been reclassified from leased assets to owned assets.

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Assets in course of Construction Land and Plant and Fixtures Amounts expressed in thousands of USD buildings Infrastructure equipment & fittings Total Net book value at March 31, 2008 1,978 10,129 3,555 493 16,155

Net book value at March 31, 2009 272 44,758 395 — 45,425

During the year ended March 31, 2009 the Group recorded revenue of approximately USD 37 thousand (2008: USD0.2 million) from a non-monetary transaction entered into in 1995 for the purposes of acquiring a raw water storagereservoir. The income and the asset obtained are recorded at the fair value of the non-monetary goods surrendered. Thetransaction has now concluded.

During the year ended March 31, 2009 an amount of USD 0.1 million (2008: USD 0.5 million, 2007: USD 0.3 million) wascapitalized in respect of interest incurred during construction of tangible fixed assets. As at March 31, 2009, interesttotaling USD 5.0 million (2008: USD 4.9 million) has been capitalized.

No freehold properties at March 31, 2009 are encumbered with mortgages.

The Group has no material asset retirement obligations.

7—Financial fixed assets Long term Deferred Restricted Amounts expressed in thousands of USD debtors tax assets cash balances TotalBalance at March 31, 2007 3,997 18,977 5,198 28,172

Less: Short term portion (20) (171) (1,600) (1,791)

Long term portion 3,977 18,806 3,598 26,381

Changes during the year: Acquisition of subsidiaries — 190 — 190 Additions 68 — 1,342 1,410 Redemptions (2,505) — (1,600) (4,105)Deferred taxes charged in the statement of

income — (1,547) — (1,547)Decrease in provision 1,295 — — 1,295 Currency translation difference 138 1,234 (11) 1,361

Balance at March 31, 2008 2,993 18,854 4,929 26,776 Less: Short term portion (27) (64) — (91)

Long term portion 2,966 18,790 4,929 26,685

Changes during the year: Acquisition of joint ventures and subsidiaries

(notes 24 and 25) — 1,107 — 1,107 Additions 24 — 98 122 Redemptions — — (1,104) (1,104)Deferred taxes charged in the statement of

income — (818) — (818)Decrease in provision 248 — — 248 Transfer to short term debtors (2,232) — — (2,232)Currency translation difference (156) (3,569) (846) (4,571)

Balance at March 31, 2009 877 15,574 3,077 19,528 Less: Short term portion — (67) (163) (230)

Long term portion 877 15,507 2,914 19,298

For more details on the Group’s deferred tax assets see note 23.

Long-term debtors include USD 0.2 million (2008: USD 0.3 million) receivable from land developers in Santiago, Chile.These amounts become due prior to the new developments being connected to the water and sewerage infrastructure.

In prior periods presented long term debtors included the long term portion of the promissory notes with an aggregatenominal value of USD 2.5 million each due from the Government of Belize in respect of the sale of Belize Water ServicesLimited. One promissory note matures at each of the first four anniversary dates of the completion of

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the sale of the Company’s shares in Belize Water Services Limited. The promissory notes are being held to maturity andare recorded in these financial statements at their face value less provision, plus accrued interest. The promissory notesbear interest at 10% per annum. In total, four promissory notes were issued, each with nominal value of USD 2.5 million.The first three of these promissory notes have matured and been settled on time and in full. As at March 31, 2009 the oneremaining note is included in current assets together with accrued interest on the remaining note as of the balance sheetdate and no balances in connection with the promissory notes remain in long term debtors.

8—Stocks and work in progress March 31, March 31,Amounts expressed in thousands of USD 2009 2008Raw materials and consumables 2,115 2,025 Work in progress 3,727 58 Finished products and goods for resale 59 —

5,901 2,083

At March 31, 2009 work in progress is mainly comprised of costs on long term construction projects in China.

9—Debtors March 31, March 31,Amounts expressed in thousands of USD 2009 2008Trade debtors(1) 31,975 33,587 Provision for bad & doubtful debts (4,012) (3,028)

Trade debtors, net 27,963 30,559

Receivables from affiliated companies* 1,352 6,411 Income taxes 2,342 — Other taxes and social security 1,924 1,625 Promissory notes 2,356 2,729 Other debtors 4,873 3,142 Prepayments 10,540 10,008

51,350 54,474

* Affiliated companies are companies in the Biwater Group.

Prepayments includes USD 4.1 million (2008: USD 5.3 million) that falls due after more than 12 months from the balancesheet date.

Promissory notes is comprised of the nominal value, USD 2.5 million, of a note that is due to mature on October 3, 2009together with accrued interest thereon issued by the Government of Belize. Such interest amounted to USD 0.1 million atMarch 31, 2009.

(1) Trade debtors at March 31, 2009 includes an amount of USD 7.1 million (March 31, 2008: USD 3.7 million) that isreceivable by Aguas de Panama S.A. and relates to the cumulative incremental revenue arising from rate increasesthat came into effect on September 1, 2006, May 1, 2007, April 1, 2008 and September 1, 2008. The client hasapproved these rate increases and accordingly the existence of the amounts outstanding is not under challenge.Management considers this amount to be recoverable in full notwithstanding the present delay in their payment.

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Provision for Bad and Doubtful Debts Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007Opening Balance 3,028 1,952 1,730 Amounts provided during the period 1,016 1,491 2,105 Acquisition of subsidiaries 1,594 — — Write off of amounts previously provided (982) (261) (1,828)Currency translation differences (644) (154) (55)

Closing Balance 4,012 3,028 1,952

10—Cash at bank and in hand March 31, March 31,Amounts expressed in thousands of USD 2009 2008Cash at bank and in hand 22,999 22,284 Short term deposits 14,160 36,914 Less: Restricted cash balances (See note 7.) (3,077) (4,929)Other cash equivalents—liquidity fund 596 111

34,678 54,380

Of the cash held on deposit, USD 3.1 million (2008: USD 4.9 million) was subject to restriction by agreement with theGroup’s bankers, both in accordance with the operation of the Group’s borrowing facilities and to collateralizeperformance bonds and other guarantees given on behalf of the Group. Of this amount, USD 2.9 million (2008: USD4.9 million) was not available for use by the Group for more than 12 months after the balance sheet date. The Group’sbankers have a legal right of set off in respect of the monies held on deposit.

The cash at bank and in hand is available on demand. The short term deposits mature within 3 months.

11—Minority shareholders’ interest March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007Balance at beginning of period 16,101 10,568 84 Changes during the year: Minority interest in subsidiary acquired during the year 16,826 976 9,667 Issue of shares 1,972 3,311 — Share of profits 1,012 945 753 Dividends paid and payable (434) (513) — Purchase of minority interest (548) — — Currency translation differences 151 814 64

Balance at end of period 35,080 16,101 10,568

On November 15, 2006, the Group acquired 87% of The China Water Company Limited. At March 31, 2007, 2008 and2009 minority shareholders’ interest includes 13% of the net assets of China Water. In addition, there are minorityshareholdings in a number of China Water’s subsidiaries.

The minority interest acquired during the year ended March 31, 2008 represents the minority interest in the Company’s73.4% owned subsidiary, Siza Water Company (Proprietary) Limited, which was acquired on May 3, 2007.

The USD 3.3 million issue of shares during the year ended March 31, 2008 represents an increase in share capital of theGroup’s 87% owned subsidiary, The China Water Company Limited. The increased share capital was subscribed by allshareholders on a pro rata basis. The USD 3.3 million amount represents the minority interest in this share issue.

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The minority interest arising from acquisition of subsidiaries in the year ended March 31, 2009 relates to the acquisition ofa 51% shareholding in a newly incorporated subsidiary providing water services to the inhabitants of Zhumadian, China(see note 25).

The USD 2.0 million issue of shares during the year ended March 31, 2009 represents an increase in share capital of theGroup’s 87% owned subsidiary, The China Water Company Limited. The increased share capital was subscribed by allshareholders on a pro rata basis. The USD 2.0 million amount represents the minority interest in this share issue.

On August 21, 2008 Cascal Operations (Pty) Limited (COPS), a South African subsidiary of the Company, purchased the10% minority shareholding in The Greater Nelspruit Utility Company (Pty) Ltd (GNUC) held by Sivukile Investments (Pty)Ltd. (Sivukile), a black empowerment enterprise for 8.4 million Rand (USD 1.0 million). USD 0.9 million of thisconsideration was in settlement of an outstanding loan together with accrued interest from COPS to Sivukile with theremainder paid in cash. The difference between the purchase consideration and the book value of the share of net assetsacquired by COPS from Sivukile, amounting to USD 0.5 million, has been added to goodwill and is included in note 5.GNUC operates our concession agreement in Nelspruit, South Africa and is now a 100% subsidiary of the Group.

12—Negative goodwill March 31, March 31, March 31, Amounts expressed in thousands of USD 2008 2008 2007 Balance at beginning of period 1,232 1,167 — Acquisition of subsidiaries — — 1,163 Amortization (55) (52) (18)Currency translation differences 33 117 22

Balance at end of period 1,210 1,232 1,167

The negative goodwill arose from the Company’s acquisition of 87% of The China Water Company Limited onNovember 15, 2006. The period of amortization for this negative goodwill is between 19 and 28 years.

13—Provisions & deferred revenue Pension Deferred Deferred Other Amounts expressed in thousands of USD provisions tax liabilities revenue provisions Total Balance at March 31, 2007 15,163 50,856 47,249 — 113,268

Acquisition of subsidiaries — 1,401 — — 1,401 Contributions receivable — — 12,762 — 12,762 Employer contributions payable (2,287) — — — (2,287)Charged/(credited) to statement of income 1,089 (1,605) (1,547) — (2,063)Currency translation differences 202 858 2,200 — 3,260

Balance at March 31, 2008 14,167 51,510 60,664 — 126,341

Acquisition of subsidiaries 1,386 6,105 — 18 7,509 Contributions receivable — — 8,186 — 8,186 Employer contributions payable (1,894) — — — (1,894)Charged/(credited) to statement of income 329 6,199 (1,592) 5 4,941 Currency translation differences (3,696) (13,801) (15,550) — (33,047)

Balance at March 31, 2009 10,292 50,013 51,708 23 112,036

Pension provisions

Cascal operates a defined benefit pension plan in the United Kingdom which offers both pensions in retirement and deathbenefits to members. Pension benefits are related to the member’s final salary at retirement and their length of service.This plan has been closed to new participants since February 17, 2003. Contributions to the plan for the year endingMarch 31, 2010 are expected to be GBP 1.6 million (USD 2.4 million). The pension plan currently provides that pensionsare indexed on the basis of inflation.

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The Group also operates smaller defined pension plans in its proportionately consolidated operations in Indonesia andThe Philippines. Additionally the Group has liabilities under a pre-existing defined benefit pension plan in connection withits recently acquired subsidiary in Zhumadian, China. Under the plan there are retired and semi-retired employees forwhich there is a pension liability. However no future liabilities can accrue in connection with current non-retired employeesor any new employees. The liability will be discharged over time out of cash resources and there are no plan assets.

A full actuarial valuation of the U.K. plan was carried out as at January 29, 2008 and has been updated to March 31, 2008and March 31, 2009 by a qualified independent actuary. The principal assumptions used by the actuary were as follows: As at March 31, 2008Discount rate 6.70%Rate of salary increase 4.95%Rate of increase to pensions in payment 3.45%Rate of inflation 3.45%

The assumptions used in determining the overall expected return of the plan have been set with reference to yieldsavailable from government bonds and appropriate risk margins.

The assets invested in the plan and their expected returns were: Long term rate of Value at return expected at March 31, 2008 March 31, 2008 USD '000sEquities & Property 7.45% 45,740 Gilts 4.45% 35,950 Corporate Bonds 6.85% 22,250 Cash 5.25% 3,988

107,928

The actual return on plan assets during the year ended March 31, 2008 was USD 2.2 million.F-27


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The pension obligations can be analyzed as follows: Year ended March 31, 2008 Amounts expressed in thousands of USD U.K. Other Total Obligations for: Pension benefits (14,056) (111) (14,167)

Movements in the pension provision for defined benefit plansare as follows:

At April 1, 2007 (14,975) (188) (15,163)

Attributed pension costs for defined benefit plans (1,052) (37) (1,089)Pension contributions paid 2,281 6 2,287 Currency translation differences (310) 108 (202)

At March 31, 2008 (14,056) (111) (14,167)

Related deferred tax asset At April 1, 2007 4,493 38 4,531

Movement during the year (655) 4 (651)Currency translation differences 98 (20) 78

At March 31, 2008 3,936 22 3,958

The pension benefits obligation as at March 31, 2008 can beanalyzed as follows:

Present value of pension benefit obligation (108,316) (212) (108,528)Fair value of plan assets 107,928 98 108,026

Present value of pension benefit obligation not funded by plan assets (388) (114) (502)Unrecognized actuarial (gains)/losses (13,805) (45) (13,850)Currency translation differences 137 48 185

Net pension benefit obligation (14,056) (111) (14,167)

Pension cost in the statement of income can be analyzed asfollows:

Pension benefits accrued in the year (1,263) (18) (1,281)Interest attributed (6,253) (21) (6,274)Expected return on plan assets 6,464 3 6,467 Recognized past service costs — (1) (1)

Pension costs of defined benefit plans (1,052) (37) (1,089)Pension contributions to defined contribution plans (295) (326) (621)

Total pension costs (1,347) (363) (1,710)

As at March 31, 2009Discount rate 6.50%Rate of salary increase 4.30%Rate of increase to pensions in payment 2.80%Rate of inflation 2.80%

The discount rate assumption was chosen with reference to the yield on the iBoxx AA Sterling rated over 15 year bondindex as at March 31, 2009. Allowance has been made for the fact that the duration of this bond index was shorter thanthe duration of the plan’s liabilities of approximately 17 years.

The assets invested in the plan and their expected returns were: Long term rate of Value at return expected at March 31, 2009 March 31, 2009 USD '000s Equities 8.40% 21,378 Property 6.90% 5,479 Gilts 4.30% 22,706 Corporate Bonds 6.60% 15,818 Cash 4.60% 1,052

66,433

The actual return on plan assets during the year ended March 31, 2009 was a loss of USD 9.1 million.F-28


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The pension obligations can be analyzed as follows: Year ended March 31, 2009 Amounts expressed in thousands of USD U.K. Other Total Obligations for: Pension benefits (8,828) (1,464) (10,292)

Movements in the pension provision for defined benefit plans areas follows:

At April 1, 2008 (14,056) (111) (14,167)

Pension liability acquired (see note 25) — (1,386) (1,386)

Attributed pension costs for defined benefit plans (904) (38) (942)Pension contributions paid 1,880 14 1,894 Movement in actuarial position 558 55 613 Currency translation differences 3,694 2 3,696

At March 31, 2009 (8,828) (1,464) (10,292)

Related deferred tax asset At April 1, 2008 3,936 22 3,958

Movement during the year (430) (21) (451)Currency translation differences (1,034) (1) (1,035)

At March 31, 2009 2,472 — 2,472

The pension benefits obligation as at March 31, 2009 can beanalyzed as follows:

Present value of pension benefit obligation (74,497) (1,634) (76,131)Fair value of plan assets 66,433 192 66,625

Present value of pension benefit obligation not funded by plan assets (8,064) (1,442) (9,506)Unrecognized actuarial (gains)/losses (764) (22) (786)Currency translation differences — — —

Net pension benefit obligation (8,828) (1,464) (10,292)

Pension cost in the statement of income can be analyzed asfollows:

Pension benefits accrued in the year (525) (25) (550)Interest attributed (6,020) (20) (6,040)Expected return on plan assets 5,641 7 5,648 Net actuarial gains/(losses) recognized in the year 558 55 613

Pension costs of defined benefit plans (346) 17 (329)Pension contributions to defined contribution plans (298) (441) (739)

Total pension costs (679) (389) (1,068)

In addition to the defined benefit pension plans described above, Group companies in the United Kingdom, South Africaand China operate defined contribution plans for their employees’ benefit. Contributions to these plans are charged in thestatement of income in the year that they become due and payable. The cost of providing these benefits in the year endedMarch 31, 2009 was USD 0.5 million (2008: USD 0.6 million; 2007: USD 0.4 million). There have been no significantchanges to the defined contribution plans during the period affecting comparability.

Deferred Revenue

Deferred revenue arises in respect of contributions to capital expenditure received from developers in the UnitedKingdom, Chile, China and South Africa where consideration is received in the form of cash or assets in return for whichthe relevant Group company takes on an obligation to provide water and wastewater services to customers in futureyears.

Deferred revenue is recognized over periods ranging between 10 and 80 years.F-29


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14—Long term liabilities Unsecured Secured Financial Amounts expressed in thousands of USD bank loans bank loans leases Other TotalBalance at March 31, 2007 21,841 216,978 12,032 821 251,672

Less: Short term portion — (4,879) (1,683) (41) (6,603)

Long term portion 21,841 212,099 10,349 780 245,069

Changes during the year: Acquisition of subsidiaries — 4,392 — — 4,392 New loans 8 16,500 278 47 16,833 Interest added to loan balance — 5,299 — — 5,299 Repayment of loans (406) (62,713)(1) (1,888) (98) (65,105)Transfer to current liabilities (21,080) — — — (21,080)Other — 2 (2) — — Currency translation differences 684 4,037 125 120 4,966

Balance at March 31, 2008 1,047 184,495 10,545 890 196,977 Less: Short term portion — (5,340) (1,400) (47) (6,787)


Changes during the year: Acquisition of subsidiaries 20,214 7,725 — — 27,939 New loans 8,718 48,130 396 — 57,244 Interest added to loan balance — 6,005 — — 6,005 Repayment of loans — (11,673) (1,270) — (12,943)Transfer to current liabilities — (60,000)(2) — — (60,000)Currency translation differences (198) (43,405) (2,727) (54) (46,384)

Balance at March 31, 2009 29,781 131,277 6,944 836 168,838 Less: Short term portion (1,518) (4,539) (922) (47) (7,026)


(1) GBP 28 million (USD 55.7 million) of this amount represents a loan balance repaid to The Royal Bank of Scotland byBournemouth & West Hampshire Water on June 29, 2007. On the same day, The Royal Bank of Scotland advancedthe same amount to Cascal Services Limited as a short term loan. This short term loan was subsequently repaidbefore the end of the fiscal year with proceeds from the Company’s initial public offering. The original GBP 28 millionloan repaid had interest payable at LIBOR plus 1.5% for the first year increasing to LIBOR plus 2.0% for the secondyear and then to LIBOR plus 2.5% for the third year until maturity.

(2) This represents the balance of our revolving loan facility which was due to expire on March 31, 2010. This loanfacility has been amended and restated as described in note 30.

The long term liabilities at March 31, 2009 are repayable as follows: Unsecured Secured Financial Amounts expressed in thousands of USD bank loans bank loans leases Other TotalYear ending March 31, 2011 1,463 4,532 985 104 7,084 Year ending March 31, 2012 1,463 3,166 944 91 5,664 Year ending March 31, 2013 2,927 3,252 983 91 7,253 Year ending March 31, 2014 2,927 1,244 997 91 5,259 Due after 5 years 19,483 114,544 2,113 412 136,552

The long term liabilities at March 31, 2009 are denominated in the following currencies: Unsecured Secured Financial Amounts expressed in thousands of USD bank loans bank loans leases Other TotalUS Dollar (USD) — 3,954 — — 3,954 British Pounds (GBP) 234 106,827 5,584 72 112,717 South African Rand (ZAR) — 6,885 438 — 7,323 Unidades de Fomento (UF) 685 8,512 — — 9,197 Chinese Yuan (RMB) 27,344 — — — 27,344 Other — 560 — 717 1,277

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UF refers to Unidades de Fomento as used in Chile as an inflation-adjusted currency, used principally for businesstransactions.

The long term liabilities at March 31, 2009 relate to loans and other payables that have: Unsecured Secured Financial Amounts expressed in thousands of USD bank loans bank loans leases Other TotalFixed interest rates 919 122,785 2 789 124,495 Floating interest rates 27,344 3,953 6,020 — 37,317

28,263 126,738 6,022 789 161,812

Average interest rates applied during theyear 7.93% 8.05% 7.29% 0.00% 7.88%

The fair value of the long term loans with fixed interest rates amount to USD 109.4 million as at March 31, 2009.

On November 2, 2007, we entered into a $30 million credit facility with HSBC Bank Plc. Of this amount, (a) $20 millionwas a revolving loan facility intended for general corporate purposes, reducing less efficient existing group debt,repayment of a loan from The China Water Company Limited, repayment of an inter-company loan granted byBournemouth & West Hampshire Water plc and for general working capital purposes, and (b) $10 million was a guaranteefacility intended to be used to provide guarantees to replace existing ones, and to issue new or renewed guarantees onbehalf of certain subsidiaries. Following the completion of our initial public offering in February 2008, the revolving loanfacility bears interest at a rate based on one, two, three or six month U.S. Dollar LIBOR plus a margin that increases inmultiple steps beginning from 0.80% per annum if the ratio of the Company’s and its subsidiaries’ net borrowings toEBITDA is less than 1:1 up to 1.75% per annum if that ratio is greater than 3.5:1. The term of this facility was due toexpire on March 31, 2010 but was replaced by an amended and restated facility from June 12, 2008, which increased thefacility to $70 million of which $60 million was a revolving loan facility intended for general corporate purposes . Thisamended and restated facility was amended and restated itself on June 26, 2009 with the amount of the facilityunchanged. This latest amendment and restatement has a two year term ending June 30, 2011 and its revolving loancomponent bears interest at a rate based on one, two, three or six month U.S. Dollar LIBOR plus a margin that increasesin multiple steps beginning from 2.50% per annum if the ratio of the Company’s and its subsidiaries’ net borrowings toEBITDA is less than 2.0:1 up to 4.50% per annum if that ratio is greater than 3.5:1. This loan requires several financialcovenants to be tested on a quarterly basis. For further details see Item 5 “Operating and Financial Review and Prospects— Liquidity and capital resources”.

On April 20, 2005 the Group’s UK subsidiary, Bournemouth & West Hampshire Water Plc (BWHW), took out a GBP65 million (USD 124.4 million) index-linked long-dated loan from Artesian Finance Plc. The loan is due for repayment onSeptember 30, 2033. The interest rate is fixed at 3.084% for the duration of the loan and interest is payable every sixmonths on September 30 and March 31. The principal amount of the loan increases by the United Kingdom Retail PriceIndex (RPI) each year, with the indexation being charged to the statement of income as part of the overall financeexpense. The Artesian Finance Plc loan agreement imposes financial covenants concerning the regulated business’s netdebt as a percentage of its regulated capital value. If this percentage exceeds the level permitted by the terms of the loan,BWHW forgoes its ability to make dividend distributions until the percentage is brought back below the permitted level. Asat March 31, 2009 the outstanding balance of the loan was GBP 74.5 million (USD 106.8 million). This loan requiresseveral financial covenants to be tested on a semi-annual basis, most notably net debt (as defined in the loandocumentation) to regulated capital value.

BWHW is also party to a 20-year capital lease of which GBP 4.4 million (USD 6.3 million) was outstanding at March 31,2009. Repayments of principal and interest are made annually and commenced in January 1998. Interest is based on thethree month variable rate of LIBOR.

BWHW has perpetual debentures outstanding for GBP 86,000 (USD 123,000) at 4% per annum and GBP 77,000 (USD110,000) at 5% per annum.

Long-term liabilities as at March 31, 2007 included an amount of GBP 38 million (USD 74.5 million), which was borrowedby the Group from The Royal Bank of Scotland in June 2006. The original loan consisted of two tranches, the first for GBP28 million on which interest is payable at a rate of LIBOR plus 1.5%, increasing to 2.0% during the second year and thento 2.5% until maturity, and a second tranche for GBP 10 million, which bears interest at LIBOR plus 2.0%, increasing to2.75% for the next nine months and then to 3.5% until maturity. Both tranches were drawn on June 22, 2006 and hadoriginal terms of three and two years, respectively. The GBP 28 million tranche was repaid by Bournemouth & WestHampshire Water on June 29, 2007, the same day The Royal Bank of Scotland

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advanced the same amount to Cascal Services Ltd. These amounts were repaid using proceeds from the Company’sinitial public offering.

The Group’s South African subsidiary, The Greater Nelspruit Utility Company (Pty) Limited (GNUC), has two loans fromDevelopment Bank of Southern Africa (DBSA) the aggregate amount of which at March 31, 2009 was Rand 54.9 million(USD 5.8 million). The loans were arranged to finance infrastructure development over a 20-year period. Both loans bearinterest at a fixed rate of 13.08% per annum and the interest is payable quarterly in arrears. The initial loan is repayable insixty consecutive quarterly installments, which commenced on December 31, 2005 following a five-year grace period. Thefinal payment is due on September 30, 2020. The additional loan is also repayable in sixty quarterly installmentsbeginning December 31, 2005 with the final payment under this loan agreement also due on September 30, 2020. TheDBSA loans are secured on GNUC’s “A” preference shares.

The Company’s subsidiary, Siza Water Company (Proprietary) Limited, has a bank loan outstanding in the amount of ZAR15.4 million (USD 1.6 million) at March 31, 2009. The loan bears interest at a fixed rate of 12.61% per annum. Quarterlycapital repayments of ZAR 0.7 million (USD 0.1 million) commenced on February 6, 2008 and end on November 6, 2017.The loan is secured by a guarantee of ZAR 17.7 million (USD 1.9 million) provided by HSBC.

On January 13, 2004, one of the Group’s wholly owned subsidiaries in Chile entered into a loan facility with Banco BICEin the principal amount of UF 258,339 (USD 8.8 million). The loan bears interest at a fixed rate of 6.49% per annum and ispayable in equal monthly installments of UF 3,176 (USD 0.1 million), with the final payment due on January 13, 2013. Theloan is secured by accounts receivable due from a major customer. As of March 31, 2009, the outstanding principalbalance was UF 136,170 (USD 4.9 million).

On November 28, 2002 another of the Company’s Chilean subsidiaries obtained a loan from Banco de Chile in theprincipal amount of UF 114,075 (USD 3.8 million). The loan bears interest at a fixed rate of 6.50% per annum and ispayable in equal monthly installments of UF 1,188 (USD 50,000) plus interest, with the final payment due on June 5,2011. The loan is guaranteed by another one of Cascal’s Chilean subsidiaries. As of March 31, 2009, the outstandingprincipal balance was UF 35,648 (USD 1.3 million). The subsidiary that obtained this loan is no longer operating andconsequently the entire outstanding principal is shown in the short term portion as Banco BICE can ask for full repaymentunder the terms of the loan agreement. Currently, there is no indication from Banco BICE that it will ask for full repaymentand payments are being made as described above.

The Chilean investment holding company also has a fixed interest loan from Aguas y Ecologia, which was drawn onJune 30, 2001 in the amount of UF 18,788 (USD 0.6 million) with interest. The loan bears interest at 7.24% per annum,which is paid annually. As of March 31, 2009, the outstanding principal balance was UF 2,087 (USD 0.1 million). Capital isrepaid annually with the final payment due on June 30, 2009. The loan is secured on the investment in the Chileansubsidiary that provides wastewater services in Northern Chile. The outstanding balance is all shown in current liabilities.

Aguas Santiago in Chile has unsecured obligations to developers under reimbursable funds arrangements, for a total ofUF 18,578 (USD 0.7 million) at an average interest rate of 4.00% with a maturity date of October 2020.

Servicomunal in Chile has unsecured obligations to developers under reimbursable funds arrangements, for a total of UF111,362 (USD 4.0 million) at an average interest rate of 4.34% with various different maturity dates.

Servilampa in Chile has unsecured obligations to developers under reimbursable funds arrangements, for a total of UF26,625 (USD 1.0 million) at an average interest rate of 5.50% with various different maturity dates.

Zhumadian in China has an unsecured loan with a principal amount of RMB 178 million, which has a principal outstandingas at March 31, 2009 of RMB 163 million (USD 23.9 million). The loan has a variable interest rate which has averaged8.33% since the acquisition of Zhumadian and is repayable over 12 years.

The Group’s Indonesian joint venture, PT Adhya Tirta Batam (ATB), has a term loan from CIMB NIAGA Bank. Thebalance outstanding at March 31, 2009 was IDR 12,800 million (USD 1.1 million). The loan was originally drawn in theamount of IDR 40,000 million (USD 3.5 million).

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The loan is secured by assignment of certain fixed and current assets of the company, assignment of insurances and aright to step-in to the company’s management under an event of default.

On April 11, 2002 the Group’s Panamanian subsidiary, Aguas de Panama, S.A., entered into a term loan facility withInternational Finance Corporation. The facility consists of two loans. USD 6 million was advanced under Loan A and USD10 million under Loan B. Capital repayments under both loans commenced during the year ended March 31, 2005.Annual repayments of capital are currently scheduled at USD 2.4 million in aggregate for both loans. As of March 31,2009 the aggregate capital outstanding amounted to USD 6.4 million. Interest is calculated based on LIBOR together withthe relevant spread. As of March 31, 2009 the interest rate was 8.378% for Loan A and 8.127% for Loan B. The loans aresecured by a combination of a share pledge contract assignments and a mortgage in favor of the lender.

15—Current liabilities March 31, March 31,Amounts expressed in thousands of USD 2009 2008Current installments of long term liabilities 7,026 6,787 Short term loans (1) 61,867 2,323 Bank overdrafts 192 — Trade creditors 10,445 11,678 Amounts payable to affiliated companies 128 1,997 Income taxes payable 5,401 4,351 Other taxes and social security 1,022 640 Accruals 7,636 13,589 Deferred income 9,564 4,841 Capital expenditure creditors 9,521 — Other creditors 10,526 5,607

123,328 51,813

(1) This represents the balance of our revolving loan facility which was due to mature on March 31, 2010. This loanfacility has been amended and restated as described in note 30.

Security has been provided in respect of the current installments of long term liabilities and bank overdrafts by a chargeover short term deposits, trade debtors and stocks. The short term bank loans incur interest at a weighted average rate of2.7% per annum.

The Group has undrawn lines of credit as follows:

BWHW has a GBP 5 million (USD 7.2 million) overdraft facility with Lloyds TSB Bank Plc, which was in place at March 31,2008 and 2009. At March 31, 2009 the undrawn amount of the facility was GBP 5 million (USD 7.2 million) (2008: GBP5 million). Its availability is next scheduled for review on March 31, 2010, when it is expected to be renewed onsubstantially the same terms.

The Group’s Chilean subsidiaries, Bayesa S.A., Aguas Santiago S.A. and Aguas de Quetena S.A., have credit linesavailable with Banco BICE, BCI and Banco de Chile totalling CHP 176 million (USD 0.3 million).

The Group’s Indonesian joint venture company, PT Adhya Tirta Batam (ATB), has an overdraft facility (100%) of IDR6,000 million (USD 0.5 million). At March 31, 2009, the overdraft balance was IDR Nil (USD Nil).

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16—Financial instruments and risks

The Company is exposed to both interest rate risk and currency risk.

Concentration of credit risk

The Group is subject to credit risk through trade and long term debtors. Credit risk with respect to trade debtors isminimized because of the large number of low value, geographically dispersed customers to whom the Group provides itsservices. At March 31, 2009 Aguas de Panama S.A. is owed USD 7.1 million that is overdue (see note 9). Other than thisbalance there was no single customer or group of customers who, if unable to pay the amount they owe to the Group,would have a material adverse effect on consolidated liquidity, financial position and results of operations.

Short term cash deposits are placed with high quality creditworthy financial institutions.

Interest risk rate

The Group’s interest rate risk arises from long term borrowings. Borrowings issued at variable rates expose the Group tocash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. Theexposure to cash flow interest rate risk is limited through entering into interest swaps on a selective basis to increase andextend the amount of borrowings subject to fixed rates of interest. No interest rate swaps exist at March 31, 2009.

Currency risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,primarily with respect to the US Dollar and the British Pound. Currency risks arise from the following sources:

• Transactional exposure;

• Translational exposure from investments in foreign entities;

• Exposure from non-functional currency denominated debt.

In each of the Group’s operations, a majority of revenues are earned and costs defrayed in the same local currencythereby mitigating transactional exposures to movements in currency translation rates. Any significant remainingtransactional exposures can then be managed using derivative instruments. Translation exposures on equity investmentsin foreign entities are not currently hedged. Debt financing of subsidiaries is generally arranged in the functional currencyof the borrowing entity. If the financing currency is not the functional currency, the exposure to fluctuations may bemitigated through contractual or negotiated rate increases and may be further mitigated by entering into currency swapson a selective basis.

An exception to this practice was the GBP 38 million (USD 75.5 million) that the Group borrowed from Royal Bank ofScotland in June 2006 in order to partially finance the USD 86.4 million distribution from share premium to shareholderson June 26, 2006. In using British Pounds to finance a US Dollar-denominated transaction, management took intoaccount the effect that a strengthening of the British Pound would have on the value of the profits reported by our UKproject company in US Dollar terms as well as the net equity in our UK project company, both of which would increaseunder such circumstances. Due to the strengthening of the British Pound against the USD during the ensuing period,unrealized foreign exchange losses amounting to USD 1.0 million have been recorded in the consolidated statement ofincome for the year ended March 31, 2008 as a result of retranslating this monetary liability using the period endexchange rate. The GBP 38 million was repaid before the end of the fiscal year 2008 using proceeds from the Company’sinitial public offering.

Fair value of financial assets and liabilities

The fair values of cash, and other current assets and liabilities that will be realized in cash in the short term, areconsidered to be equal to their carrying values because of their short term durations. The carrying values of long termliabilities with floating rates of interest attached are similarly assumed to reflect fair values because the interest ratere-prices on a regular basis to reflect market rates.

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17—Contingent liabilities and commitments

Amounts due under non-cancelable operating leases in effect at March 31, 2008 and 2009 amount to: Year ended Year ended March 31, March 31,Amounts expressed in thousands of USD 2009 2008Due within one year 416 722 Due after 1 year 223 670 Due after 2 years 91 293 Due after 3 years 88 225 Due after 4 years 88 215 Due after 5 years 955 2,897

1,861 5,022

Operating lease rentals of USD 0.5 million for the year ended March 31, 2009 (2008: USD 1.1 million, 2007: USD0.6 million) are reported in raw materials and other operating charges. Commitments for capital expenditure at March 31,2009 total USD 43.9 million. In addition, in the ordinary course of business, the Group has committed itself to capitalexpenditure programs as a term of concession agreements and plans presented to the water regulatory authorities.

Certain subsidiaries and joint ventures are the subject of claims and other proceedings. Such matters typically involveddisputes between the relevant Group company and its clients arising from the parties’ interpretation of contractualconditions and obligations. The directors and their legal counsel believe that the subsidiaries and joint ventures concernedhave valid defenses and intend to contest such claims and proceedings vigorously. As at March 31, 2009, no loss amounthas been accrued because a loss is not considered probable or estimable.

At March 31, 2009, the Company has granted guarantees, performance and bid bonds amounting to USD 12.5 million(2008: USD 26.2 million).

The defined benefit pension plan in the United Kingdom that is referred to in note 13 is part of the Biwater Retirement andSecurity Scheme (BRASS). There are two sub-funds established within BRASS. The Cascal sub-fund is called the WaterCompany Section and the other sub-fund is called the Main Section and is the United Kingdom defined benefit pensionplan for Biwater Plc and a number of its United Kingdom subsidiaries. Although the Water Company Section constitutes aseparate sub-fund, it is established under the same documentation that governs the Main Section and shares the sametrustees. Effective upon the admission to trading of our shares on the New York Stock Exchange, the trustees haveagreed with Biwater to terminate their right to merge the Water Company Section and the Main Section. The Main Sectionwas under-funded on a full buy-out basis, as determined under the United Kingdom pension statute which is different fromDutch GAAP and US GAAP, by GBP 96.3 million (USD 138.0 million) as at the last valuation for these purposes, whichwas at January 28, 2008.

One of the Group’s joint venture companies—Subicwater—is involved in a dispute with one of its minorityshareholders—Olongapo City Government, or Olongapo City—in relation to amounts due to Olongapo City fromOlongapo City Water District from whom the original concession was obtained. Such amounts are in relation to periodsprior to the Subicwater concession. Subicwater originally entered into the concession based on the understanding that allprior obligations of OCWD had been settled under the terms of an agreement between Olongapo City and OCWD enteredinto in November 1997. Olongapo City subsequently contended that it would prefer to be a creditor of Subicwater (asopposed to a shareholder) and receive the old disputed OCWD amounts from Subicwater. However, Olongapo City hassubsequently continued to act as a shareholder in Subicwater and has appointed directors of Subicwater, who haveattended board meetings. Olongapo City obtained a Writ of Execution from the local courts in July 2003. In October 2003Subicwater filed a Motion for Reconsideration by the local courts, which was rejected. In December 2003 Subicwatersucceeded in obtaining an injunction from the Court of Appeals that prevented the local courts and Olongapo City fromenforcing the Writ of Execution. In March 2006 Olongapo City appealed to the Supreme Court. Subicwater will continue tovigorously defend its position and believes that it will prevail on the merits. With interest, the amount of Olongapo City’sclaim is approximately USD 52.1 million as of March 31, 2009.

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Adhya Tirta Batam, the Group’s 50% joint venture on the island of Batam in Indonesia, has been subject to aninvestigation by the KPPU, the Business Competition Supervisory Commission. It was asserted that ATB acted in ananti-competitive manner, and potentially in breach of monopoly powers, by failing to connect certain new properties to thewater network. On October 14, 2008 the KPPU found against ATB. ATB appealed against this decision and, onFebruary 4, 2009, the court ruled in favor of ATB and overturned the original decision by the KPPU. The KPPUsubsequently appealed against the district court decision and ATB is currently awaiting the appeal court’s decision.

The Group has caused letters of credit to be issued in the amount of GBP 8.6 million (USD 12.3 million) as at March 31,2009 in favor of the trustees of the Water Company Section of the U.K. defined benefit pension plan. In May 2009 andbased on the latest actuarial valuation as at January 29, 2008, which showed a deficit on the Water Company Section ofGBP 7.1 million, the trustees have agreed to reduce the letter of credit to GBP 7.1 million (USD 10.2 million). Under anagreement entered into with Biwater and the trustees, the Group may need to increase further the amount of the letter ofcredit to cover any increase in the plan-specific deficit of the Water Company Section determined as of the initial publicoffering, up to a maximum amount of GBP 10.0 million (USD 19.9 million).

18—Segmental disclosures

Reportable segments

In the tables that follow the directors have presented their segmental disclosures of the Group’s financial position andresults of operations. The tables reflect the eight primary reportable segments that management has identified forreporting under Dutch GAAP. The primary geographic segments shown in the tables below are a reflection of theoperational management structure within the Group, whereby each country has a Chief Executive Officer and a ChiefFinancial Officer who are responsible for and required to report on the activities and financial position in their respectiveterritories. Management of the Company also undertakes its monthly review of financial and non-financial performance ofthe project portfolio on a country-by-country basis. Management evaluates segment performance primarily based on netprofits. Revenues for each geographic segment are based on the location of the relevant operation, which will not bematerially different to the location of the third-party customer. In addition, those geographic segments that have beenidentified as discontinued operations have likewise been classified as such in accordance with the requirements of DutchAccounting Standards Board Guideline 345.


In the tables that follow, Belize Water Services Limited was disposed of during the year ended March 31, 2006 and theoperations of Biwater Ingeniera y Proyectos S.A. de C.V. and Agua Mexicana y Operaciones S.A. de C.V. were subject toan early termination in the year ended March 31, 2008. These subsidiaries represent the discontinuance of separatemajor lines of business that can be distinguished both operationally and for financial reporting purposes.

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Revenue—geographical analysis Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007United Kingdom 83,643 94,791 75,705 South Africa 20,340 21,673 13,766 Indonesia 12,999 11,356 11,062 China 20,929 10,023 2,924 Chile 11,343 7,593 6,393 Panama 10,691 8,780 6,165 The Philippines 2,881 2,861 2,359 Holding Companies 2,980 5,304 3,912

Less: Inter-segment sales (2,410) (4,604) (3,719)

Continuing Operations 163,396 157,777 118,567

Discontinued Operations Mexico — 2,865 3,136

163,396 160,642 121,703

Inter-segment sales principally relate to management and technical services charged by the holding companies to theoperating segments. Such charges are determined based on arm’s length agreements between the entities concernedand are designed to enable the holding companies to recover the relevant costs that they have incurred together with areasonable profit element thereon.

The table below analyzes total revenue between that derived from the Group’s regulated and unregulated activities. Year ended Year ended Year ended March 31, March 31, March 31,Revenue — Regulated and unregulated 2009 2008 2007Regulated 131,050 133,190 107,202 Unregulated 32,346 27,452 14,501

163,396 160,642 121,703

Operating profit—geographical analysis Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007United Kingdom 23,866 31,894 29,264 South Africa 5,736 5,934 3,756 Indonesia 4,612 3,250 3,515 China 2,495 438 318 Chile 1,177 (47) (488)Panama 4,542 3,683 3,071 The Philippines 1,192 1,162 915 Holding Companies (6,843) (6,529) (4,615)


Discontinued Operations Mexico — 457 469

36,777 40,242 36,205

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Total assets—geographical analysis Year ended Year ended March 31, March 31,Amounts expressed in thousands of USD 2009 2008United Kingdom 224,131 299,873 South Africa 39,665 38,321 Indonesia 11,246 9,566 China 165,388 59,485 Chile 64,417 50,980 Panama 30,531 27,447 The Philippines 4,689 4,979 Holding Companies 11,519 30,171

Continuing Operations 551,586 520,822

Discontinued Operations Mexico 94 1,581

551,680 522,403

Total tangible and intangible fixed assets — geographical analysis Year ended Year ended March 31, March 31,Amounts expressed in thousands of USD 2009 2008United Kingdom 198,281 263,853 South Africa 27,025 24,322 Indonesia 7,687 6,621 China 130,443 22,637 Chile 52,613 41,980 Panama 19,722 20,555 The Philippines 2,962 2,758 Holding Companies 1,720 2,055


Discontinued Operations Mexico — —

440,453 384,781

Additions to tangible fixed assets—geographical analysis Year ended Year ended March 31, March 31,Amounts expressed in thousands of USD 2009 2008United Kingdom 23,610 23,335 South Africa 7,702 6,448 Indonesia 3,596 811 China (1) 10,455 422 Chile 1,622 2,879 Panama — — The Philippines 853 416 Holding Companies 30 58


Discontinued Operations Mexico — 1

47,868 34,370

Excluding tangible fixed assets added through acquisitions of subsidiaries.

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Total liabilities —geographical analysis Year ended Year ended March 31, March 31,Amounts expressed in thousands of USD 2009 2008United Kingdom 196,930 258,302 South Africa 29,476 29,283 Indonesia 3,911 2,534 China 60,613 6,001 Chile 30,273 33,974 Panama 7,796 10,792 The Philippines 1,605 2,167 Holding Companies 67,652 26,292


Discontinued Operations Mexico 130 231

398,386 369,576

Staff costs—geographical analysis Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007United Kingdom 15,812 17,835 12,267 South Africa 5,297 5,473 3,686 Indonesia 1,459 1,428 1,243 China 5,691 2,585 907 Chile 1,734 1,455 1,461 Panama(1) — — — The Philippines 328 323 268 Holding Companies 3,414 4,576 3,939



33,735 34,348 24,431

(1) An average of 23 employees worked on this project in the year ended March 31, 2009 but, as they are all employedby Biwater under a contract arrangement, their costs are excluded from this table.

The average number of people employed by the Group during the year ended March 31, 2009 was 2,394 (2008: 1,447,2007: 1,380) and can be segmented as follows:

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Staff numbers—average Year ended Year ended Year ended March 31, March 31, March 31, 2009 2008 2007United Kingdom 334 312 262 South Africa 288 245 221 Indonesia 405 397 395 China 1,102 256 259 Chile 106 52 52 Panama(1) — — — The Philippines 136 147 155 Holding Companies(2) 23 19 16



2,394 1,447 1,380

(1) An average of 23 employees worked on this project in the year ended March 31, 2009 but, as they are all employedby Biwater under a contract arrangement, they are excluded from this table.

(2) Average number of employees in the Netherlands during the year ended March 31, 2009 was 0 (2008: 0, 2007: 0)

Depreciation and amortization—geographical analysis Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007United Kingdom (13,534) (15,672) (12,590)South Africa (1,311) (1,247) (801)Indonesia (877) (883) (860)China (1) (3,464) (1,451) (456)Chile (2,342) (2,096) (2,101)Panama (833) (833) (625)The Philippines (247) (219) (171)Holding Companies (360) (339) (328)

Continuing Operations (22,968) (22,740) (17,932)

Discontinued Operations Mexico — (46) (48)

(22,968) (22,786) (17,980)

(1) Includes amortization of negative goodwill.

Interest income—geographical analysis Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007United Kingdom 707 1,043 433 South Africa 1,057 379 62 Indonesia 50 33 23 China 356 442 138 Chile 68 6 — Panama — 9 29 The Philippines 37 31 18 Holding Companies 465 896 1,949


Discontinued Operations Mexico 11 96 35

2,751 2,935 2,687

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Interest expense—geographical analysis Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007United Kingdom (10,438) (11,536) (11,429)South Africa (1,172) (1,715) (1,322)Indonesia (36) (88) (142)China (151) (1) — Chile (892) (687) (891)Panama (526) (860) (785)The Philippines — (5) (220)Holding Companies (3,104) (5,273) (1,591)


Discontinued Operations Mexico — (73) (17)

(16,319) (20,238) (16,397)

Tax expense—geographical analysis Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007United Kingdom (8,373) (4,671) (6,518)South Africa (1,477) (1,249) (613)Indonesia (1,446) (985) (1,046)China (937) (649) 1,117 Chile (366) (233) (522)Panama (300) (70) — The Philippines (80) (107) (60)Holding Companies (1,253) (1,395) 836


Discontinued Operations Belize (69) — — Mexico 38 (357) (138)

(14,263) (9,716) (6,944)

Net profit—geographical analysis Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007United Kingdom 5,762 18,351 15,425 South Africa 3,724 2,702 1,411 Indonesia 3,180 2,211 2,350 China 1,267 191 956 Chile (974) (1,378) (2,198)Panama 3,716 2,762 2,315 The Philippines 1,149 1,083 655 Holding Companies 105 (16,034) (13,243)


Discontinued Operations Belize 134 1,295 — Mexico (222) 405 345

17,841 11,588 8,016

Exchange rate results of USD 6.8 million and USD 2.4 million have been charged and USD 10.0 million have beencredited in arriving at net profit for the years ended March 31, 2007, 2008 and 2009, respectively.

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19—Staff costs Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007Wages and salaries 31,565 32,228 22,763 Social charges 3,381 2,703 1,815 Pension charges 1,068 1,710 1,780 Staff redundancy costs 109 46 178 Capitalized own cost (2,388) (2,339) (2,105)

33,735 34,348 24,431

The compensation paid to the members of the Board of Directors for services in all capacities during the year endedMarch 31, 2009 was as follows. Performance related Number of stock optionsName Salary and/or fees Pension Contributions compensation (1) grantedLarry Magor $ 80,000 — — — Stephane Richer $548,456 $39,063 $128,313 — Charles Auster $ 80,000 — — — Willy Biewinga $ 80,000 — — — Mitchell Sonkin $ 80,000 — — — Michael Wager $ 80,000 — — — Total $948,456 $39,063 $128,313 —

(1) Performance related compensation is in respect of a bonus paid in relation to the Company’s performance in the yearended March 31, 2008.

The Company operates a Long-Term Incentive Plan (LTIP) for the benefit of eligible directors, officers and employees.Each LTIP runs for a period of three years. The amounts awarded are based on share price performance and earningsper share growth over a measurement period of 12 months. Awards are settled by the Company in cash. During the yearended March 31, 2009 an amount of USD 0.03 million was charged to staff costs in the statement of income in respect ofthis first year of the first LTIP’s operation.

20—Depreciation and amortization of intangible and tangible fixed assets Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007Amortization of intangible fixed assets 2,081 1,579 1,097 Depreciation of tangible fixed assets 20,942 21,213 16,853 Amortization of negative goodwill (55) (52) (18)


Discontinued Operations — 46 48

22,968 22,786 17,980

The aggregate amortization expense for intangible assets, for each of the next five years, is estimated to beapproximately USD 2.1 million.

21—Audit fees

The principal accountant fees and services for the fiscal years 2009 and 2008 are shown below. Fees and services rendered ($’000) 2009 2008

Audit Fees 1,393 1,265 Audit-Related Fees 265 305 Tax Fees 971 163 All Other Fees 343 1,231

Audit-Related Fees consist of reviews of quarterly financial statements.

Tax Fees consist of tax advisory, tax compliance and tax return preparation and review.

Other Fees consist of work on SEC and other external non-regulatory reporting requirements, audits required byregulatory bodies and other non-audit and non-tax professional advice.

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22—Disposal of subsidiaries

On October 3, 2005 the Group sold its 83% interest in Belize Water Services Limited to the Government of Belize. Of thetotal purchase consideration given by the Government of Belize, amounting to USD 28.8 million, USD 9.9 million wasdeferred. This deferred consideration was originally secured by four promissory notes issued by the Government of Belizewith a face value USD 2.5 million each, with one promissory note maturing at each of the first four anniversary dates ofthe completion of the above mentioned disposal. Each note bears interest at a rate of 10% per annum. On October 3,2008 the third of the four promissory notes matured and was duly paid, together with accrued interest, by the Governmentof Belize to the Group. In light of this event the Company has released USD 0.2 million to income, which amount wasoriginally provided in the consolidated accounts for the year ended March 31, 2006 against the face values of the thenremaining three promissory notes. The amount provided was charged against the gain on disposal reported in theconsolidated accounts for the year ended March 31, 2006 and so its release has been similarly classified in thesefinancial statements.

On January 8, 2008, the Company agreed to an early termination of its operation and maintenance contract in Mexico. Asa result of this agreement the operations of Mexico have been shown as discontinued in the years ended March 31, 2009,2008 and 2007. The Company received a termination fee before tax of 10.5 million (USD 1.0 million) and after the costs oftermination and receipts for sale of assets made a profit before tax on termination of MXP 1.0 million (USD 0.1 million).

23—Taxation

Profit before taxation for both continuing and discontinued operations in the consolidated statements of income consists ofthe following: Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007Profit before taxation:

The Netherlands 9,244 (14,313) (14,183)International 23,872 36,562 29,896

Total profit before taxation 33,116 22,249 15,713

Current tax The Netherlands 477 399 28 International 6,738 9,033 5,230

Total 7,215 9,432 5,258

Deferred taxation: The Netherlands 533 266 (1,535)International 6,484 (339) 3,221

Total 7,017 (73) 1,686

Continuing Operations 14,232 9,359 6,806 Discontinued Operations 31 357 138

Total tax expense 14,263 9,716 6,944

Cash payments for taxation were USD 4.1 million, USD 7.2 million and USD 6.8 million for the years ended 2007, 2008and 2009 respectively. The table below presents the overview of the tax effect on income and on equity. Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007Income taxes—analysis of total income taxes

Income from continuing operations 14,232 9,359 6,806 Discontinued operations 31 357 138

Income taxes recognized in the statement of income 14,263 9,716 6,944 Tax effect of change in accounting policy — — — Retranslation of foreign currency assets and liabilities (10,232) (376) 3,216

Total 4,031 9,340 10,160

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Income taxes—analysis of income taxes attributable to continuing operations Year ended March 31, 2009Amounts expressed in thousands of USD Netherlands International Total

Current 477 6,738 7,215 Deferred 533 6,484 7,017

Total 1,010 13,222 14,232

Year ended March 31, 2008 Netherlands International Total

Current 399 9,033 9,432 Deferred 266 (339) (73)

Total 665 8,694 9,359

Year ended March 31, 2007 Netherlands International Total

Current 28 5,230 5,258 Deferred (1,535) 3,221 1,686

Total (1,507) 8,451 6,944

The table below presents the movements in the net deferred tax position. Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007

Income taxes-analysis of total deferred tax Origination and reversal of temporary differences exclusive of

items below 4,961 (1,799) (145)Acquisition of subsidiaries 4,998 1,211 188 Prior year adjustments 29 — 246 Adjustments for rate changes 38 (2,243) (1,314)Changes in tax legislation (1) 4,088 — — Increases in deferred tax assets not recognized 620 4,521 2,952 Decreases in deferred tax assets not recognized (2,716) (537) (53)Tax effect of change in accounting policy — — — Retranslation of foreign currency assets and liabilities (10,232) (376) 3,216

Total 1,786 777 5,090

(1) Relates to a change in the system of tax allowances for industrial buildings in the United Kingdom which has causedthe recording of a deferred tax liability and corresponding charge to the statement of income.

The following is a reconciliation of the statutory corporate tax rate in The Netherlands with the effective rate as apercentage of profit before taxation for both continuing and discontinued operations, as reported in the consolidatedstatements of income: Year ended Year ended Year endedAmounts expressed in thousands of USD (except where stated) March 31, 2009 March 31, 2008 March 31, 2007Income before tax 33,116 22,249 15,713 Dutch average standard rate 25.5% 25.5% 28.6% Income before tax at standard rate 8,445 25.5% 5,673 25.5% 4,494 28.6%

Disallowed expenditure 1,991 6.0 624 2.8 716 4.6 Non-taxable income (291) (0.9) (340) (1.5) (62) (0.4)Prior period adjustments 155 0.5 24 0.1 (93) (0.6)Changes in tax rates 38 0.1 (2,182) (9.8) (1,314) (8.3)Changes in tax legislation (1) 4,088 12.3 Increases in deferred tax assets not recognized 620 1.9 4,521 20.3 2,952 18.8 Decreases in deferred tax assets not recognized (2,716) (8.2) (537) (2.4) (53) (0.3)Inflation adjustment (347) (1.0) (354) (1.6) (263) (1.7)Effect of overseas tax rates (170) (0.5) 1,530 6.9 462 2.9 Deferred tax on un-remitted foreign earnings 2,146 6.5 654 2.9 — — Other, net 304 0.9 103 0.5 105 0.6

Total tax charge 14,263 43.1% 9,716 43.7% 6,944 44.2%

(1)


Relates to a change in the system of tax allowances for industrial buildings in the United Kingdom which has causedthe recording of a deferred tax liability and corresponding charge to the statement of income.

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The tables below present an overview of the nature of the balance sheet amounts (recognized and unrecognized andspecified per balance sheet item). Year ended Year endedAmounts expressed in thousands of USD March 31, 2009 March 31, 2008Income taxes-balance sheet analysis Total deferred tax assets

Current 67 1,605 Non-current 26,708 32,424

Deferred tax assets not recognized Current — (1,541)Non-current (11,201) (13,634)

Net deferred tax assets Current 67 64 Non-current 15,507 18,790

Deferred tax liabilities Current (1,211) (1,486)Non-current (48,802) (50,024)

Total deferred tax (34,439) (32,656)

Year ended Year ended March 31, 2009 March 31, 2008Amounts expressed in thousands of USD Recognized Unrecognized Recognized UnrecognizedIncome taxes-analysis of deferred tax

balances Assets

Intangibles 94 1,260 263 1,679 Property, plant and equipment 5,222 1,323 4,613 1,844 Pension liabilities 2,617 — 4,684 — Provisions 368 — 232 — Deferred revenue 5,427 — 6,968 — Losses carried forward 1,328 7,527 1,703 10,209 Financial fixed assets 63 1,091 84 1,443 Current assets 67 — 42 — Finance lease obligations 162 — 149 — Long term liabilities 58 — 111 — Other, net 168 — 5 —

15,574 11,201 18,854 15,175

Liabilities Intangibles (5,017) (902) Property, plant and equipment (36,152) (43,694) Provisions (184) (643) Financial fixed assets (10) (18) Current assets (1,211) (1,486) Long term liabilities (338) (410) Investments in affiliates (5,142) (4,357) Other, net (1,959) —

Net deferred tax liabilities (50,013) (51,510)

Net deferred tax position (34,439) (32,656)

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Year ended Year ended March 31, 2009 March 31, 2008Amounts expressed in thousands of USD Current Non-current Current Non-currentIncome taxes-analysis of deferred tax balances

by jurisdiction United Kingdom — (30,759) — (34,698)South Africa (1,211) (851) (1,463) (1,008)China 33 120 — 3,468 Indonesia — 172 — 271 Chile 34 (430) 41 1,188 Mexico — — — — The Netherlands — (1,547) — (1,014)Panama — — — 559

Total income taxes (1,144) (33,295) (1,422) (31,234)

Tax loss carryforwards Amounts expressed in thousands of USD The Netherlands UK Chile China TotalMarch 31, 2008 Tax loss carryforwards 25,415 3,500 22,176 2,385 53,476

Tax effect 6,479 980 3,770 683 11,912 Deferred tax assets not recognized (5,814) (980) (2,732) (683) (10,209)

Deferred tax asset recognized 665 — 1,038 — 1,703

March 31, 2009 Tax loss carryforwards 13,800 2,525 22,776 3,024 42,125

Tax effect 3,519 707 3,872 756 8,854 Deferred tax assets not recognized (3,519) (707) (2,544) (756) (7,526)

Deferred tax asset recognized — — 1,328 — 1,328

Except for The Netherlands, the tax losses carried forward at March 31, 2009 do not expire at a future date, rather theyremain available indefinitely to be set off against future taxable profits of the Group company to which they belong.

For The Netherlands, losses can be carried forward for 9 years from the date losses were incurred with the exception thatlosses incurred in 2002 and earlier can be carried forward only until the end of 2011.

Roll forward of deferred tax assets not recognized Amounts expressed in thousands of USD Balance at March 31, 2006 3,058 Prior year adjustments 552 Increases in deferred tax assets not recognized 2,952 Decreases in deferred tax assets not recognized (53)Acquisition of subsidiary 1,806 Amounts recorded in equity on retranslation of foreign currency balances 132

Balance at March 31, 2007 8,447

Prior year adjustments 1,546 Increases in deferred tax assets not recognized 4,521 Decreases in deferred tax assets not recognized (537)Amounts recorded in equity on retranslation of foreign currency balances 1,198


Prior year adjustments (92)Increases in deferred tax assets not recognized 620 Decreases in deferred tax assets not recognized (2,716)Amounts recorded in equity on retranslation of foreign currency balances (1,786)


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In assessing the recoverability of deferred tax assets, management considers whether it is more likely than not that someportion or all of the deferred tax assets will not be recovered. The ultimate recovery of deferred tax assets is dependentupon the generation of future taxable income during the periods in which those temporary differences become deductible.Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planningstrategies in making this assessment. In order to fully recover both recognized and unrecognized deferred tax assets, theCompany would need to generate future taxable income of approximately USD 119.3 million in future periods. Pre-taxprofits for the years ended March 31, 2007, 2008 and 2009 were USD 15.7 million, USD 22.2 million and USD33.1 million, respectively.

Based upon the level of historical taxable income and projections for future taxable income over the periods in which thedeferred tax assets are deductible, management believes it is more likely than not that the Company will recover thebenefits of these deductible differences to the extent deferred tax assets have been recognized at March 31, 2008 and2009. The amount of the deferred tax asset considered recoverable, however, could be reduced in the near term ifestimates of future taxable income during the carryforward period are reduced.

Subsequently recognized tax benefits relating to unrecognized deferred tax assets as of March 31, 2009 would beallocated to the consolidated statement of income.

24—Acquisition of interest in joint venture

On April 29, 2008 the Group completed the acquisition of a 49% interest in a new equity joint venture with theGovernment of Yancheng for delivery of water services to Yancheng City for RMB 200.6 million (USD 28.7 million). Theequity joint venture has a 30-year concession to deliver water services to a population of more than 600,000 in YanchengCity. The acquisition of the interest in the equity joint venture supports the Company’s strategy of expansion of itsoperations in China.

The acquired business contributed revenue of USD 5.5 million and net profit of USD 0.2 million to the Group for the periodfrom April 29, 2008 to March 31, 2009. If the acquisition had occurred on April 1, 2008, unaudited Group revenue wouldhave been USD 163.9 million, unaudited net profit would have been USD 17.9 million and there would have been anegligible increase in unaudited earnings per share for the year ended March 31, 2009. If the acquisition had occurred onApril 1, 2007 unaudited Group revenue would have been USD 166.6 million, unaudited net profit would have been USD11.9 million and there would have been a USD 0.01 increase in unaudited earnings per share for the year ended March31, 2008.

Details of net assets acquired and goodwill based on the Company’s purchase price allocation are as follows: Amounts expressed in thousands of USD

Purchase consideration: — Cash paid 28,660 — Direct costs relating to the acquisition 46

Total consideration 28,706 Fair value of net assets acquired (28,706)

Goodwill —

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The assets and liabilities arising from the acquisition are as follows: Acquiree’s carryingAmounts expressed in thousands of USD Fair value amount

Cash and cash equivalents 12,768 12,768 Property, plant and equipment (note 6) 42,699 30,962 Financial fixed assets (note 7) 567 127 Intangible fixed assets 33,704 — Inventories 2,425 6,506 Receivables 2,762 3,680 Payables (23,962) (26,195)Provisions and deferred revenue (note 13) (8,422) — Long term liabilities (3,957) (4,622)

Net assets 58,584 23,226

Share of net assets acquired 28,706

Purchase consideration paid in cash (28,706)Cash and cash equivalents in joint venture acquired 6,256

Cash outflow on acquisition (22,450)

The intangible fixed assets acquired represent the concession right acquired recorded at fair value. This concession rightwill be amortized over its useful life of 30 years.

25 — Acquisition of subsidiaries

On May 3, 2007 the Group acquired 73.42% of the share capital of Siza Water Company (Proprietary) Limited for Rand20.4 million (USD 2.9 million). Siza Water provides water and wastewater services to the inhabitants of Ballito, a townclose to Durban in South Africa, under a concession contract with Ilembe District Council. The acquisition of Siza Watersupports the Company’s growth strategy in territories where it already has established operations in place.

The acquired business contributed revenues of USD 5.9 million and net profit of USD 0.6 million to the Group for theperiod from May 3, 2007 to March 31, 2008. If the acquisition had occurred on April 1, 2007, Group revenue would havebeen USD 161.1 million, net profit would have been USD 11.7 million and there would have been a negligible increase inearnings per share for the year ended March 31, 2008.




Goodwill —

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The assets and liabilities arising from the acquisition are as follows: Acquiree’s Fair carryingAmounts expressed in thousands of USD value amountCash and cash equivalents 3,291 3,291 Property, plant and equipment (note 6) 11,734 10,940 Inventories 142 142 Receivables 1,072 1,072 Payables (6,765) (6,765)Long term liabilities (4,374) (3,940)Other provisions (18) —Deferred revenue — (2,642)Net deferred tax liabilities (notes 7 and 13) (1,211) (331)

Net assets 3,871 1,767 Minority interests (976)

Net assets acquired 2,895

Purchase consideration paid in cash (2,895)Cash and cash equivalents in subsidiary acquired 3,291

Cash inflow on acquisition 396

The deferred revenue is in the form of third party contributions toward the cost of infrastructure assets.

On June 27, 2008 the Group acquired 100% of the share capital of Servicomunal S.A. for CHP 9.8 billion (USD18.6 million). Servicomunal provides water and wastewater services under a perpetual regulated concession contract. Theacquisition of Servicomunal supports the Company’s growth strategy in territories where it already has establishedoperations in place and when combined with existing operations in Chile will provide greater efficiencies and economies ofscale.

The acquired business contributed revenue of USD 2.1 million and net profit of USD 0.1 million to the Group for the periodfrom June 27, 2008 to December 31, 2008. The results of Chilean entities are incorporated into our consolidated resultswith a three-month lag due to having non-coterminous year ends. If the acquisition had occurred on April 1, 2008,unaudited Group revenue would have been USD 164.5 million, unaudited net profit would have been USD 17.9 millionand there would have been a negligible increase in unaudited earnings per share for the year ended March 31, 2009. Ifthe acquisition had occurred on April 1, 2007 unaudited Group revenue would have been USD 163.8 million, unauditednet profit would have been USD 11.8 million and there would have been a USD 0.01 increase in unaudited earnings pershare for the year ended March 31, 2008.




Goodwill 3,287

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The assets and liabilities arising from the acquisition are as follows: Acquiree’s carrying Amounts expressed in thousands of USD Fair value amount

Cash and cash equivalents 1,442 1,442 Property, plant and equipment (note 6) 13,504 6,203 Financial fixed assets (note 7) 68 68 Intangible fixed assets 3,685 1,019 Receivables 3,249 2,911 Payables (308) (307)Provisions and deferred revenue (note 13) (1,820) — Long term liabilities (4,145) (4,545)Short term portion of long term liabilities (387) (387)

Net assets 15,288 6,404




The intangible fixed assets acquired represent the water rights acquired recorded at fair value. These water rights will beamortized over their useful life of 30 years.

On June 27, 2008 the Group acquired 100% of the share capital of Servilampa S.A. for CHP 0.8 billion (USD 1.6 million).Servilampa provides water and wastewater services under a perpetual regulated concession contract. The acquisition ofServilampa supports the Company’s growth strategy in territories where it already has established operations in place andwhen combined with existing operations in Chile will provide greater efficiencies and economies of scale.

The acquired business contributed revenue of USD 0.4 million and net loss of USD 0.1 million to the Group for the periodfrom June 27, 2008 to December 31, 2008. The results of Chilean entities are incorporated into our consolidated resultswith a three-month lag due to having non-coterminous year ends. If the acquisition had occurred at the beginning of fiscalyear 2009, unaudited Group revenue would have been USD 163.6 million, unaudited net profit would have been USD17.8 million and there would have been a negligible decrease in unaudited earnings per share for the year endedMarch 31, 2009. If the acquisition had occurred on April 1, 2007 unaudited Group revenue would have been USD 161.2million, unaudited net profit would have been USD 11.5 million and there would have been a negligible decrease inunaudited earnings per share for the year ended March 31, 2008.




Goodwill —

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Cash and cash equivalents 1,670 1,670 Property, plant and equipment (note 6) 3,669 2,311 Financial fixed assets (note 7) 9 9 Intangible fixed assets — 343 Receivables 216 182 Payables (2,572) (2,570)Provisions and deferred revenue (note 13) (158) — Long term liabilities (1,192) (1,072)Short term portion of long term liabilities (80) (80)

Net assets 1,562 793



Cash inflow on acquisition 108

On July 23, 2008 the Group completed the acquisition of a 51% interest in a water company in Zhumadian City, China forRMB 127.5 million (USD 18.8 million). The new company, Zhumadian China Water Company, formally commencedoperations on July 23, 2008 having previously received its business license from the Zhumadian municipal government onJune 19, 2008. The acquisition supports the Company’s strategy of expansion of its operations in China.

The acquired business contributed revenue of USD 4.0 million and net profit of USD 0.2 million to the Group for the periodfrom July 23, 2008 to March 31, 2009. If the acquisition had occurred on April 1, 2008, unaudited Group revenue wouldhave been USD 165.4 million, unaudited net profit would have been USD 17.9 million and there would have been anegligible increase in unaudited earnings per share for the year ended March 31, 2009. If the acquisition had occurred onApril 1, 2007 unaudited Group revenue would have been USD 166.6 million, unaudited net profit would have been USD11.9 million and there would have been a USD 0.01 increase in unaudited earnings per share for the year ended March31, 2008.




Goodwill 1,252

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Cash and cash equivalents — — Property, plant and equipment (note 6) 54,973 62,559 Financial fixed assets (note 7) 752 — Intangible fixed assets 5,965 — Inventories — — Receivables 2,517 2,517 Payables (8,269) (8,269)Provisions and deferred revenue (note 13) (1,386) — Long term liabilities (20,214) (20,214)

Net assets 34,338 36,593

Share of net assets acquired 17,512

Purchase consideration paid in cash (18,764)Cash and cash equivalents in joint venture acquired —


The intangible fixed assets acquired represent the concession right acquired recorded at fair value. This concession rightwill be amortized over its useful life of 30 years.

26—Earnings per share Amounts, except share and per share amounts, Year ended Year ended Year endedexpressed in thousands of USD March 31, 2009 March 31, 2008 March 31, 2007Total basic and diluted earnings per share 0.58 0.49 0.37

Continuing Operations 0.59 0.42 0.36

Discontinued Operations (0.01) 0.07 0.01

Weighted average number of shares (note 28) 30,566,007 23,329,982 21,849,343

Profit from continuing operations 17,929 9,888 7,671

Profit from discontinued operations (88) 1,700 345

Total net profit 17,841 11,588 8,016

—Distributions per share Amounts, except share and per share amounts, Year ended Year ended Year endedexpressed in thousands of USD March 31, 2009 March 31, 2008 March 31, 2007Distributions paid per share 0.18 0.17 4.32

Weighted average number of shares 30,566,007 23,329,982 21,849,343

Total distributions made 5,502 4,000 94,397

27—Related party transactions

During the comparative period covered by these consolidated financial statements, the Company was a joint venturebetween Biwater Plc and n.v. Nuon up to and including June 25, 2006. From June 26, 2006 until the Company’s initialpublic offering on January 29, 2008 the Company was a wholly owned subsidiary of Biwater Plc. The Company operatedautonomously, with regular reports to, and oversight from, the Supervisory Board. Agreement of the sums due to or fromeach of the joint venture partners in respect of the items listed below was subject to scrutiny to ensure that all prices wereset on an arm’s length basis. Management believes that the terms of the arrangements between the entities wereconsistent throughout the periods presented.

The Group paid directors’ fees to Biwater Plc amounting to USD 0 (2008: USD 0, 2007: USD 77,000). These fees formedpart of other operating charges in the consolidated statement of income.

The Group purchased equipment and services from subsidiaries of Biwater Plc totaling USD 0.5 million (2008: USD0.5 million, 2007: USD 1.6 million). The remaining USD 0.5 million forms part of other operating charges. The Group wascharged interest by the Biwater group totaling USD 0 (2008: USD 23,000, 2007: USD 0).

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The Group invoiced USD 0.4 million (2008: USD 5.4 million, 2007: USD 0.4 million) to Biwater Plc for services rendered.The USD 0.4 million is a credit to other operating charges.

As at March 31, 2009 the Group had outstanding amounts payable to Biwater Plc and its subsidiaries of USD 0.1 million(2008: USD 2.0 million). These amounts are shown as amounts payable to affiliated companies in current liabilities. (Seenote 15.)

As at March 31, 2009 the Group had outstanding amounts receivable from Biwater Plc and its subsidiaries of USD1.4 million (2008: USD 6.4 million, 2007: USD 5.8 million). These amounts are shown as receivables from affiliatedcompanies in debtors (See note 9.)

During the year ended March 31, 2009, the Company’s subsidiary, Aguas de Panama, S.A., purchased operation andmaintenance services from Biwater International Limited’s Panama branch amounting to USD 4.6 million.

28— Summary of differences between accounting policies generally accepted in The Netherlands and in theUnited States of America

The accompanying consolidated financial statements have been prepared in accordance with Dutch GAAP, which differsin certain respects from accounting principles generally accepted in the United States of America (US GAAP).Reconciliations of net profit and shareholders’ equity under Dutch GAAP with the corresponding amounts under US GAAPare set out below.

Effect on net profit of differences between Dutch and US GAAP For the periods Year ended Year ended April 1, 2006 June 26, 2006Amounts, except share and per share amounts, March 31, March 31, to toexpressed in thousands of USD Note 2009 2008 June 25, 2006 March 31, 2007 Net profit in accordance with Dutch

GAAP 17,841 11,588 3,598 4,418 US GAAP adjustments

—Pensions (a) — — — — —Goodwill amortization (b) 522 431 60 204 —Effects of fair value adjustments pushed

down into Cascal N.V. (c) 492 67 — (526)—Business combinations (d) (300) (677) — 353 —Effects of changes in tax legislation (e) 4,088 — — — —Tax effect of US GAAP differences (327) 28 — (160)

Net profit in accordance with US GAAP 22,316 11,437 3,658 4,289

Net profit may be analyzed as follows: Continuing operations 22,404 10,035 3,596 4,060 Discontinued operation (88) 1,402 62 229

Net profit in accordance with US GAAP 22,316 11,437 3,658 4,289

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Net profit per share

Basic and diluted net profit per share is computed by dividing the net profit applicable to common shares by the weightedaverage of common shares outstanding during the period.

A reconciliation of the numerator for the purposes of calculating net profit per share under US GAAP is as follows: For the periods Year ended Year ended April 1, 2006 June 26, 2006 March 31, March 31, to toAmounts expressed in thousands of USD 2009 2008 June 25, 2006 March 31, 2007Net profit in accordance with US GAAP 22,316 11,437 3,658 4,289

Net profit (loss) per share inaccordance with US GAAP basicand diluted method (USD) Continuing operations 0.73 0.43 0.17 0.19 Discontinued operations 0.00 0.06 — 0.01

0.73 0.49 0.17 0.20 Number of shares—Basic and

diluted 30,566,007 23,329,982 21,849,343 21,849,343

Effect on shareholders’ equity of significant differences between Dutch and US GAAP As at As at March 31, March 31, Note 2009 2008Shareholders’ equity in accordance with Dutch GAAP 118,214 136,726 US GAAP adjustments

—Pensions (a) 412 13,140 —Goodwill amortization (b) 1,643 1,787 —Fair value adjustments pushed down to Cascal N.V. (c) 26,998 35,790 —Business combinations (d) 1,036 463 —Effects of changes in tax legislation (e) 3,465 — —Tax effect of US GAAP differences (7,631) (12,509)

Shareholders’ equity in accordance with US GAAP 144,137 175,397

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Changes in shareholders’ equity Year ended Year ended Year endedAmounts expressed in thousands of USD March 31, 2009 March 31, 2008 March 31, 2007The reconciliation of the movements in shareholders’ equity

is as follows: Opening shareholders’ equity—in accordance with US

GAAP 175,397 67,340 119,414 Net income for the period April 1, 2008 to March 31, 2009 22,316 — — Net income for the period April 1, 2007 to March 31, 2008 — 11,437 — Net income for the period April 1, 2006 to June 25, 2006 — — 3,658 Net income for the period June 26, 2006 to March 31, 2007 — — 4,289

Foreign exchange For the period April 1, 2008 to March 31, 2009 (40,377) — — For the period April 1, 2007 to March 31, 2008 — 8,019 — For the period April 1, 2006 to June 25, 2006 — — 1,351 For the period June 26, 2006 to March 31, 2007 — — 5,297

Pension movements For the period April 1, 2008 to March 31, 2009 (1) (7,697) — — For the period April 1, 2007 to March 31, 2008 (1) — 6,420 — Issue of shares — 104,684 — Costs of issue — (18,503) — Distributions to shareholders (5,502) (4,000) (93,802)Fair value adjustments pushed down to Cascal N.V. — — 24,188 Cumulative adjustment on adoption of SFAS 158 (net of tax

effect of USD 1,265 ) — — 2,945

Total movements (31,260) 108,057 (52,074)

Closing shareholders’ equity—in accordance with USGAAP 144,137 175,397 67,340

(1) Represents actuarial gains/(losses) on pensions.

Significant differences between Dutch and US accounting principles

(a) Pensions

The Group accounts for the costs of pensions under the rules set out in Dutch GAAP.

On April 1, 2005, the Group adopted for the first time the new Dutch GAAP basis of accounting for pension costsGuideline 271, which follows the guidance set out in IAS 19 Employee Benefits. At the date of adoption, the Grouprecorded the unfunded pension benefit obligation.

Under US GAAP, the Group adopted SFAS 87 Employers’ Accounting for Pensions as at April 1, 2004. The transitionrules permitted for foreign private issuers resulted in the unfunded pension benefit obligation, calculated in accordancewith US GAAP, being recognized as a liability on that date.

Under both Dutch and US GAAP, defined benefit pension costs are determined on a systematic basis over the length ofemployee service. However, prior to April 1, 2005, the rules under Dutch GAAP were less prescriptive than US GAAP inrespect of the actuarial assumptions that must be used and the allocation of costs to accounting periods. Dutch GAAPpreviously permitted the annual pension cost to be calculated based upon the contributions payable by the sponsoringemployer into the fund. Furthermore, the actuarial valuation under US GAAP had to be carried out on an annual basis,whereas a triennial valuation was required for Dutch GAAP purposes.

From April 1, 2005 the pension accounting rules for determining net periodic cost to be charged to the statement ofincome under Dutch GAAP are generally consistent with those which have been applied throughout the periods presentedunder US GAAP. Both GAAP bases now require each significant assumption to determine annual pension cost to be abest estimate with respect to that individual assumption. For example, the discount rate used should be

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that for ‘AA’ rated bonds with a similar maturity to the pension obligations, and the value of the plan’s assets should bebased upon market values at each balance sheet date.

Effective March 31, 2007, the Company adopted the recognition and disclosure provisions of FASB Statement No. 158,“Employers’ Accounting for Defined Benefit Pension and Other Post Retirement Plans” (SFAS 158). SFAS 158 requirescompanies to recognize the funded status of defined benefit pension and other post retirement plans as a net asset orliability and to recognize changes in that funded status in the year in which the changes occur through othercomprehensive income to the extent those changes are not included in the net periodic cost. The funded status reportedon the balance sheet as of March 31, 2007 under SFAS 158 was measured as the difference between the fair value ofplan assets and the benefit obligation. The incremental effect of applying SFAS 158 on the Company’s financial positionas of March 31, 2007 was as follows: Before application After applicationAmounts expressed in thousands of USD of SFAS 158 Adjustments of SFAS 158Other assets 17,199 (1,265) 15,934 Total long term assets 390,042 (1,265) 388,777 Total assets 494,667 (1,265) 493,402 Other liabilities 15,333 (4,218) 11,115 Shareholder’s equity 70,292 (2,952) 67,340 Total liabilities and shareholders’ equity 494,667 (1,265) 493,402

The recognition provisions of SFAS 158 had no effect on the statements of income for the periods presented.

Under Dutch GAAP, the Group recorded a liability before deferred taxation in respect of its UK defined benefit pensionplan of USD 8.8 million as at March 31, 2009 (USD 14.1 million as at March 31, 2008). Under US GAAP, the Group hascalculated a pension liability of USD 8.1 million as at March 31, 2009 (liability of USD 0.4 million as at March 31, 2008) inrespect of the same pension plan. Of the difference between Dutch GAAP and US GAAP defined pension liabilities ofUSD 0.7 million as of March 31, 2009, USD 0.4 million has been recognized in US GAAP financial statements on pushdown of fair values recognized in the Nuon transaction described in note (c) below. The Group’s equity methodinvestments in Indonesia and The Philippines both operate defined benefit pension plans and together with a pre-existingpension liability on acquisition of our subsidiary in Zhumadian, China, the aggregate liabilities at March 31, 2009 underDutch GAAP were USD 1.5 million. The following disclosures related to the UK plan have been presented in accordancewith the requirements of SFAS 158 and SFAS 132(R) in the following tables: For the periods April 1, 2006 June 26, 2006 to toAmounts expressed in thousands of USD 2009 2008 June 25, 2006 March 31, 2007Pension expense Service cost 525 1,263 345 1,018 Interest cost 6,020 6,253 1,351 4,212 Expected return on plan assets (5,641) (6,464) (1,344) (4,225)

Net periodic pension expense 904 1,052 352 1,005

Amounts expressed in thousands of USD March 31, 2009 March 31, 2008Change in benefit obligation Benefit obligation at beginning of year 108,316 117,925 Service cost 525 1,263 Interest cost 6,020 6,253 Plan participants’ contributions 748 614 Benefits paid (5,649) (5,546)Net actuarial (gain)/loss (5,841) (13,948)Effect of foreign currency (29,622) 1,755

Benefit obligation at end of year 74,497 108,316

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Amounts expressed in thousands of USD March 31, 2009 March 31, 2008Change in plan assets Fair value of plan assets at beginning of year 107,928 106,904 Employer contributions 1,880 2,281 Plan participants’ contributions 748 614 Benefits paid (5,649) (5,546)Actual return on plan assets (10,354) 2,183 Effect of foreign currency (28,120) 1,492

Fair value of plan assets at end of year 66,433 107,928

Amounts expressed in thousands of USD March 31, 2009 March 31, 2008Funded status Fair value of plan assets 66,433 107,928 Benefit obligation (74,497) (108,316)

Funded status and net amount recognized (8,064) (388)

Amounts expressed in thousands of USD March 31, 2009 March 31, 2008Change in accrued pension costs Accrued pension costs at beginning of year (388) (11,021)Employer contributions 1,880 2,281 Net periodic pension cost April 1, 2008 to March 31, 2009 (904) — Net periodic pension cost April 1, 2007 to March 31, 2008 — (1,052)Effect of foreign currency 1,505 (263)

Accrued pension costs at end of year 2,093 (10,055)Recognition of actuarial gains/(losses) (10,157) 9,667

Accrued pension costs at end of year (8,064) (388)

Future benefit payments

The expected benefit payments for the UK defined benefit plan over the next ten years are as follows: Amounts expressed in thousands of USD 2010 5,515 2011 5,669 2012 5,828 2013 5,991 2014 6,159 2015—2019 33,479

Net periodic pension expense assumptions

The actuarial assumptions used to determine the net periodic pension expense for the years ended March 31 were asfollows: 2009 2008 2007Discount rate 6.50% 6.70% 5.25%Expected long term return on plan assets 6.39% 6.25% 6.00%Rate of salary increase 4.30% 4.95% 4.65%

Defined benefit pension obligation assumptions

The actuarial assumptions used to determine the defined benefit pension obligation at March 31 were as follows: 2009 2008Discount rate 6.50% 6.70%Rate of salary increase 4.30% 4.95%Rate of pension increase 2.80% 3.45%

It is estimated that the effect of a 0.5% increase or decrease in the discount rate on the net periodic pension expense forthe year ended March 31, 2009 would be USD 0.2 million and USD 1.0 million, respectively and the effect of a

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0.5% increase or decrease in the expected long term return on plan assets would be USD 0.1 million and USD 1.0 million,respectively. These assets are managed by professional investment managers. The primary objective is long term growthof assets in order to meet present and future obligations.

The trustee’s policy is to invest in a broad range of assets. The target allocation of funds is: index-linked governmentsecurities (35%); equity shares (30%); corporate bonds (25%); and commercial property (10%).

The plan assets were invested as follows: March 31, March 31, Amounts expressed in thousands of USD 2009 % 2008 %Equity and properties — — 45,740 42.4%Equities 21,378 32.2% — — Property 5,479 8.2% — — Gilts 22,706 34.2% 35,950 33.3%Corporate bonds 15,818 23.8% 22,250 20.6%Cash 1,052 1.6% 3,988 3.7%

66,433 100% 107,928 100%

Contributions to the plan for the year ending March 31, 2010 are expected to be USD 2.4 million.

(b) Goodwill amortization

Under Dutch GAAP goodwill is presumed to have a finite useful economic life of 20 years or less. Accordingly, goodwillarising on consolidation is amortized over 20 years for Dutch GAAP reporting purposes. In accordance with therequirements of SFAS 142, goodwill arising from business combinations is not subject to annual amortization for reportingunder US GAAP. For US GAAP reporting purposes, goodwill arising on consolidation is “pushed down” into the books ofthe acquired business. Push down accounting is prohibited under Dutch GAAP.

(c) Fair value adjustments pushed down into Cascal N.V.

For US GAAP purposes, the acquisition by Biwater of the 50% of the Company’s shares previously owned by Nuon hasbeen accounted for in accordance with SFAS No. 141, “Business Combinations” (“SFAS 141”) and Staff AccountingBulletin (SAB) Topic 5-J, “Push Down Basis of Accounting Required in Certain Limited Circumstances,” with “push-down”accounting applied to the 50% of the assets not already owned by Biwater. As a result, the Company has undertaken apurchase price allocation exercise, which has resulted in changes to the values of certain assets and liabilities by anamount representing 50% of the difference between their fair value as of June 26, 2006 and their book value as of thatdate as required under US GAAP. This “push-down” exercise is not permitted under Dutch GAAP. The total purchaseprice has been allocated to the tangible and intangible assets acquired and liabilities assumed based upon management’sbest estimates of fair values which include the findings set out in third party valuation reports on long-lived tangible andintangible assets.

There are differences between Dutch GAAP and US GAAP due to the effects of push down accounting. As push downaccounting results in different carrying values for the assets and liabilities under US GAAP as fair values are pushed downand the income statement charges differs as the fair value adjustments pushed down are being depreciated andamortized. The effect on the income statement will be affected by disposal of assets or as assets become fullydepreciated. The effect on the income statement in the year ended March 31, 2009 was USD 0.5 million (2008: USD0.4 million, 2007: USD 0.1 million).

Furthermore, in the year ended March 31, 2007 an adjustment for a gain on sale of a riverbed for USD 0.6 million (2008:USD 0, 2009: USD 0) was posted. The book value of the riverbed for Dutch GAAP was nil whereas for US GAAPpurposes, due to the push down accounting, the book value was uplifted to fair value effecting negligible US GAAP profitson sale. The Dutch GAAP profits were eliminated.

In the year ended March 31, 2008 the operations in Mexico were terminated. The disposal of an individual asset (acustomer relationship intangible) created a loss of USD 0.3 million (2009: USD 0, 2007: USD 0) which was included forUS GAAP profits but not for Dutch GAAP profits as the fair value uplift from the push down only affected US GAAP profits.

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The effects of the above were posted to the “Effect of fair value adjustments pushed down into Cascal N.V” line in thereconciliation. The 2007 period covers only nine months of the prior year.

The following table summarizes the effects of the Company’s purchase price allocation as at June 26, 2006 and the effecton net profit for the year ended March 31, 2009. Effect on net profit Effect on Effect on for the period 50% of net profit net profit from difference for the year for the year June 26, between Assumed ended ended 2006 to fair and economic March 31, March 31, March 31,(Dollars in thousands) book values life (Years) 2009 2008 2007Property, plant and

equipment: —Freehold land (not

depreciating) (i) 15,821 n/a n/a n/a n/a —Other (i) (13,621) 2-44 1,633 1,771 477 Intangible assets: —Customer relationships (ii) 840 3-17 (65) (525) (126)—Brand names and

trademarks (iii) 92 3 (33) (34) (24)—Water rights (iv) 4,644 22 (187) (224) (168)—License and concession

agreements (v) 4,393 14-23 (244) (251) (186)Other assets 21 3 (6) (6) (6)Long-term debt (vi) (1,130) 3-28 12 12 9 Pension obligations (vii) 547 15 (36) (36) (27)Deferred revenue (viii) 20,526 17-50 (555) (616) (456)

Pre-tax effect of“push-down”accounting* 32,133 519 91 (507)

Deferred taxes on aboveitems, net (ix) (7,945) (206) (39) 138

Total effect of “push-down”accounting 24,188 313 52 (369)

Book value of assetsand liabilities at 50% 62,212

Consideration 86,400

* Included within the effect on net profit for the year ended March 31, 2009 is USD 27,000 (2008: USD 24,000, 2007:USD 19,000) in connection with the “push-down” accounting effect relating to equity method investments which isreclassed into share of net profit of equity method investments in the U.S. GAAP statement of income.

(i) Property, plant and equipment have been valued on a depreciated replacement cost basis. Depreciated replacementcost has been determined by first establishing the Replacement Cost New (“RCN”), which is the cost to replace theasset with like utility using current material and labor rates and therefore establishes the highest amount a prudentinvestor would be prepared to pay. RCN was determined by applying an inflation-based index to historical amountscontained within the Company’s records. Adjustments have then been made to the RCN to reflect a loss in value dueto physical deterioration, functional obsolescence and economic obsolescence, as appropriate, in order to reach afair value based on depreciated replacement cost. Depreciation is calculated based on the remaining estimateduseful economic life of the asset.

(ii) Customer relationships have been valued by reference to the present value of the operating cash flows that theygenerate over their term, taking into account the probability of their renewal. Included within the net profit effect forthe year ended March 31, 2008 is the loss of the customer relationship intangible asset upon termination ofoperations in Mexico in January 2008. This intangible asset was created as part of the purchase price allocation forthe acquisition by Biwater of the 50% of the Company’s shares previously owned by Nuon. This intangible asset didnot exist under Dutch GAAP. The loss of this intangible asset reduced net profit for the year ended March 31, 2008by USD 0.3 million.

(iii) Brand names and trademarks have been valued using the relief from royalties approach, which reflects value byestimating the savings that are realized by the owner of the brand or trademark relative to the amount that anunrelated party could expect to have to pay as a percentage of revenue for their use. This approach requires anassessment to be made of the amount that a third party would be prepared to pay (as a percentage of revenues) foruse of the brand name or trademark in question.


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(iv) Water rights relate solely to the Company’s Chilean operations and have been valued using data from anindependent valuation firm based on their market price estimated by reference to the values at which similar assetshave changed hands in arm’s length transactions between willing buyers and sellers.

(v) License and concession agreements have been valued using an income-based methodology that uses discountedcash flows. The operating cash flows attributable to each license or concession are calculated by chargingappropriate costs to the identifiable revenue stream. These cash flows represent a return on all of the assetsemployed in their generation. In order to separately value the licenses and concessions, the value and the requiredreturn for other identifiable assets must be determined. These contributory asset charges represent the fair returnrequired on all assets that are necessary for the realization of the cash flows and as such are made for all assetsthat contribute to the cash flows in line with their contribution. Charges for use of contributory assets have beencalculated, in the aggregate, for the use of net working capital, fixed assets and an assembled work force. Thecontributory asset charges are deducted from the cash flows calculating the net present value attributable to eachlicense or concession. Estimates have been made of the useful economic lives of individual licenses andconcessions based on the period over which the asset is expected to contribute directly or indirectly to the futurecash flows of the entity. A license or concession is amortized over that lifetime.

(vi) The adjustment to the carrying value of long term debt principally relates to the UK Artesian loan, the outstandingprincipal of which was GBP 74.5 million (USD 106.8 million) as at June 30, 2006. This loan bears interest at a rate of3.08% and the principal sum accretes by the UK Retail Price Index (RPI) each year until repaid. The loan is due forrepayment in 2033. The fair value of the loan has been calculated based on an assumed current real market rate forsuch a loan of 2.98% and average annual increases in RPI over the term of the loan of 2.64%, giving a nominalinterest rate at which to discount the cash flows related to the loan of 5.62%. Adjustments to the carrying values ofother long term debt have given rise to both increases and decreases in the carrying amounts of that debt.

(vii) The pension adjustment relates to the recognition of 50% of the actuarial gains and losses previously unrecognizedunder SFAS No. 87, “Employer’s Accounting for Pensions.”

(viii) In the Company’s historical financial statements, certain monies received from land and property developers inconnection with the design, construction and connection of infrastructure have been deferred and are beingrecognized as revenue in the statement of income on a straight-line basis over the lives of assets used in the relatedwater supply arrangements. As part of the purchase price allocation pushed down to the Company relating to theacquisition of 50% of the Company’s shares by Biwater, no amount of purchase price has been allocated to thesedeferred revenue balances pursuant to the guidance contained in Emerging Issues Task Force (EITF) IssueNo. 01-3, “Accounting in a Business Combination for Deferred Revenue of an Acquiree.” That guidance states thatdeferred revenue in a business combination should be recognized at fair value. In the case of the deferred revenuebalances in the historical financial statements of the Company, the legal obligation to supply water arises from thelicense or concession in the relevant jurisdiction and those obligations are taken into account when determining forpurchase price allocation purposes the value of the relevant license or concession (which give rise to a right tosupply water at a regulated price) and the related infrastructure assets needed to access the cash flows arising fromthat right.

(ix) Deferred taxes have been calculated on the push-down adjustments above using the enacted tax rates in thejurisdictions to which the push-down adjustments relate. In determining this adjustment, management has takenaccount of the effect of additional taxable temporary differences on future taxable income, which could be used torecover deferred tax assets against which a full valuation allowance has been recorded in the historical financialstatements.

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(d) Business combinations

Partial acquisitions

Under Dutch GAAP, GAR 216, all assets and liabilities of a business acquired in a transaction in which less than 100% ofa business’s equity is acquired (“partial acquisitions”) are recognized at fair value. Under US GAAP, SFAS 141, “BusinessCombinations,” the portion of assets and liabilities attributable to minority interests in partial acquisitions are accounted forat book value. The acquisition of 87% of The China Water Company, the 73.4% of Siza Water and the 51% acquisition ofZhumadian in China accordingly result in different values recognized as of the date of acquisition and thereafter indifferent depreciation and amortization charges under Dutch GAAP and US GAAP. The effects of this difference onrecorded values of tangible and intangible fixed assets, deferred taxes and minority interests are reflected in the USGAAP condensed consolidated balance sheet and statement of income presented below. For the period ending March 31,2009 the effect on the US GAAP profit arising from different depreciation charges was a reduced charge of USD0.1 million (2008: increased charge of USD 0.3 million). The effect on minority interests was to reduce minority interest inthe income statement under US GAAP by USD 0.3 million for the period ending March 31, 2009 (2008: USD 0.3 million).The effect on US GAAP shareholders’ equity was an increase of USD 2.0 million at March 31, 2009 (increase of USD1.2 million at March 31, 2008).

Additionally, Zhumadian has been consolidated under US GAAP as a variable interest entity using FIN 46(R)“Consolidation of Variable Interest Entities”. This conclusion has been reached taking into account the rights ascribed tothe Group’s 51% holding in Zhumadian through the shareholders’ agreement and articles of association, the purpose forwhich the joint venture was formed and the nature of the risks of the entity. The Group has not provided financial or othersupport to Zhumadian that it was not contracted or expected to provide. The Group owns 51% of Zhumadian, has amajority on the board of directors and is responsible for the day-to-day operations of the joint venture. The entity isfinanced in proportion to the shareholdings of the joint venture partners in conjunction with a third party unsecured loanthat is being used to finance a new water treatment plant. As at March 31, 2009 the summarized balance sheet ofZhumadian was as follows. Amounts expressed in thousands of USD 2009Non-current assets 69,806 Current assets 8,577 Non-current liabilities (32,611)Current liabilities (11,292)Shareholders’ equity as reported 34,480

There are no restrictions on the use of the assets and no direct relationships between individual assets and liabilities.

The consolidation of Zhumadian under FIN 46(R) does not create a difference between US GAAP and Dutch GAAP asZhumadian is also consolidated under Dutch GAAP.

Negative goodwill

Additionally, the acquisition of China Water has given rise under Dutch GAAP, GAR 216, to negative goodwill, which isrecognized as a liability on the balance sheet and amortized over the average estimated useful life of assets to which thenegative goodwill relates. No deferred tax is recorded in respect of negative goodwill. Under US GAAP, SFAS 141requires any excess of fair value of assets and liabilities acquired over the purchase price to be allocated to certainnon-current non-monetary assets acquired; the Group’s accounting policy under US GAAP is to allocate such amounts toassets on a relative fair value basis. The allocation of that excess gives rise to temporary differences for US GAAP, onwhich deferred taxes are recorded. The effect of the negative goodwill difference has resulted in no difference in incomefrom continuing operations. Also under SFAS 141 negative goodwill has arisen on the acquisitions of Siza Water andServilampa and also within the acquired equity method investment of Yancheng, China. This negative goodwill has beenconsidered as an impairment of asset values and under Dutch GAAP has been allocated initially to intangible fixed assetsand then where applicable against tangible fixed assets. Under US GAAP the negative goodwill has been allocatedproportionately to non-monetary, non-current assets. This has given rise to differences in the value of tangible andintangible assets and associated depreciation and amortization charges between Dutch GAAP and US GAAP.

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Compensation arising on acquisition of subsidiary

Consideration of up to GBP 0.8 million (USD 1.5 million) payable to the former owners of the Pre-Heat businesscontingent on its post-acquisition results was dependent on the continued employment of those individuals. Under DutchGAAP, this element has been treated as consideration for the acquisition of the business and included in goodwill. UnderUS GAAP guidance contained in EITF 95-8, “Accounting for contingent consideration paid to the shareholders of anacquired enterprise in a purchase business combination,” this element has been treated as compensation for theindividuals and will be recognized over the two-year period of employment on which such payments initially depend. Thetotal effect on net profit is to decrease net profit by USD 0.7 million (2008: decrease by 0.7 million) and decreaseshareholders’ equity by USD 0.9 million (2007: decrease by 0.7 million). The former owners have received the fullconsideration of GBP 0.8 million. However an ongoing GAAP difference will continue until the goodwill has been fullyamortized because this amount remains part of the goodwill balance being amortized under Dutch GAAP.

(e) Effects of changes in tax legislation

During the year ended March 31, 2009 a change to tax law in the United Kingdom was enacted, the effect of which is toremove an entitlement to tax depreciation on an asset category referred to as “Industrial Buildings.”

Under the provisions of Dutch GAAP this change gives rise to a one-time charge to deferred tax because the abolishing ofthe entitlement to tax deprecation reduces the tax base of the assets to zero, with immediate effect. This is the accountingconsequence of the future tax deductions available in respect of those assets being reset to zero because of thelegislative change that has been implemented.

For US GAAP, a different accounting treatment follows from interpretation of FASB Statement No. 109, Accounting forIncome Taxes. This treatment freezes the tax basis of the assets at their amounts on the date of the change to the law.The justification for this interpretation is that there is a future tax benefit available on sale or abandonment of the asset inthe form of a deduction from sale proceeds, or as a capital loss, that equates to the un-depreciated cost for tax purposes.

The principal point of difference between the Dutch and US GAAP approaches is that the former anticipates the value ofthe asset being recovered through its continuing use, while the latter is predicated on value recovery through sale.Consequently, on conversion from Dutch GAAP to US GAAP the above mentioned one-time deferred tax liability hasbeen reversed in full.

(f) Differences of presentation

The Group presents its consolidated profit and loss account in accordance with Dutch GAAP. This presentation differs incertain respects from that which is required under US GAAP. The following condensed consolidated statement of incomeand condensed consolidated balance sheet present the results and financial position of the Group as determined underUS GAAP. Dutch GAAP does not require a consolidated statement of comprehensive income, which is required under USGAAP and is presented below as well.

Condensed consolidated balance sheet: Amounts expressed in thousands of USD March 31, 2009 March 31, 2008Current assets: Cash and cash equivalents 30,317 52,696 Restricted cash balances 163 — Accounts and other receivables 48,458 53,325 Inventory 1,606 1,839

Total current assets 80,544 107,860

Property plant and equipment 381,551 365,774 Goodwill, net 6,308 2,558 Intangible assets, net 22,876 25,911 Investment in equity method investments 41,484 12,387 Restricted cash balances 2,914 4,929 Other assets 11,274 12,245

Total long term assets 466,407 423,804 Total assets 546,951 531,664

Current liabilities 107,399 48,951 Deferred income taxes 51,747 56,897 Deferred income 36,060 39,374 Long term debt, net of current portion 162,224 190,306 Other liabilities 5,201 438 Minority interest 40,183 20,301

Shareholders’ equity 144,137 175,397


Total liabilities and shareholders’ equity 546,951 531,664

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Condensed consolidated statement of income: For the periods Year ended Year ended April 1, 2006 June 26, 2006 March 31, March 31, to toAmounts expressed in thousands of USD 2009 2008 June 25, 2006 March 31, 2007Revenue

Regulated 110,848 116,345 20,786 70,217 Unregulated 30,658 26,789 2,096 11,788

Total 141,506 143,133 22,882 82,005 Costs and expenses:

Raw and auxiliary materials 35,139 31,176 4,710 15,036 Operations and maintenance 57,450 56,863 7,673 29,652 Depreciation and amortization 17,829 19,671 3,695 13,131

Income from continuing operations 31,088 35,423 6,804 24,186 Interest income 2,619 2,768 860 1,745 Interest expense 16,183 20,062 2,157 13,852 Other income (expense) 9,975 (2,266) (696) (6,083)

Income from continuing operations beforeincome taxes 27,499 15,863 4,811 5,996

Taxation (8,904) (8,532) (1,908) (4,146)Share of net profit of equity method investments 4,496 3,348 714 2,335 Minority interest in continuing operations (687) (644) (21) (125)

Net income from continuing operations 22,404 10,035 3,596 4,060

Discontinued operations(1) Profit/(Loss) from operations 11 (60) 77 329 Gain on disposal of operations in Belize 203 1,295 — — (Loss)/Gain on termination of operations in

Mexico (271) 396 — — Income tax charge (31) (229) (15) (100)

Net income from discontinued operations (88) 1,402 62 229

Net income 22,316 11,437 3,658 4,289

(1) Includes results from the early termination of our operation in Mexico in January 2008 and gains on disposal of ouroperation in Belize.

Consolidated statement of comprehensive income: Other TotalAmounts expressed in thousands of USD Net profit for comprehensive comprehensivePeriod the year income incomeYear ended March 31, 2009 22,316 (48,074) (25,758)Year ended March 31, 2008 11,437 14,439 25,876 April 1, 2006 through June 25, 2006 3,658 1,351 5,009 June 26, 2006 through March 31, 2007 4,289 5,297 9,586

Cash flow

The consolidated statements of cash flow presented under Dutch GAAP have been prepared in accordance with DutchAccounting Standards Board Guideline 360. There are certain differences with regard to the classification of items withinthe statements of cash flow.

In accordance with Dutch GAAP and US GAAP, cashflows are prepared separately for operating activities, investingactivities and financing activities. Under Dutch GAAP and US GAAP, cash at bank and in hand is comprised of cash atbanks and in hand together with deposits with an original maturity of three months or less. Cash at bank and in hand doesnot include bank overdrafts, the changes in which amounts are reported in cashflow from financing activities.

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The Dutch GAAP statements of cash flow include the Group’s proportionate share of the cash flows of joint venturecompanies that are accounted for on a proportional consolidation basis. Under US GAAP, only cash remitted from suchjoint venture companies is included within the cash flow statement within cash flows from operating activities.

Summary consolidated statement of cash flow: For the periods Year ended Year ended April 1, 2006 June 26, 2006 March 31, March 31, to toAmounts expressed in thousands of USD 2009 2008 June 25, 2006 March 31, 2007Cash flow from operating activities 10,285 46,313 240 29,014 Cash flow from investing activities (73,291) (28,943) (5,663) (46,171)Cash flow from financing activities 41,899 8,528 (1,002) (19,476)

Total cash flow (21,107) 25,898 (6,425) (36,633)Exchange and translation differences on cash

and cash equivalents (1,272) (396) 1,120 861 (22,379) 25,502 (5,305) (35,772)

Cash at bank and in hand at beginning ofperiod 52,696 27,194 68,271 62,966

Cash at bank and in hand at end of period 30,317 52,696 62,966 27,194

Investment in equity method investments

Under Dutch GAAP, the Group’s share of joint ventures’ net profits has been proportionally consolidated on a line-by-linebasis in the statement of income and in the balance sheet. Under US GAAP, all of these amounts would be includedwithin the single line item “Share of net profit of equity method investments” in the consolidated statement of income.Investments in joint ventures are classified in the single line item “Investment in equity method investments” in theconsolidated balance sheet. This difference in presentation has no effect on either net profit or shareholders’ equity forany of the periods presented.

The tables below summarize the financial statements of each of three equity method investments that are the subject ofthis difference in presentation:

Summarized financial information for joint venture companies, presented in accordance with Dutch GAAP Company name Country of incorporation PT Adhya Tirta Batam PT Adhya Tirta Sriwijaya Subic Water Yancheng China Water Co}Percentage of equity held Indonesia Indonesia Philippines ChinaYear of incorporation 50% 40% 30% 49%Balance Sheet information 1995 2000 1996 2008Amounts expressed in As at March 31* As at March 31* As at March 31 As at March 31thousands of USD 2009 2008 2009 2008 2009 2008 2009 2008Non-current assets 15,586 12,899 355 429 11,320 10,776 76,255 — Current assets 6,318 5,021 389 409 4,314 5,821 15,713 — Non-current liabilities (1,110) (115) (14) (52) (2,370) (2,808) — — Current liabilities (6,644) (4,217) (170) (191) (4,515) (4,414) (31,752) — Shareholders’ equity as

reported 14,150 13,588 560 595 8,749 9,375 60,216 —

Group proportion ofshareholders’ equity 7,075 6,794 224 238 2,625 2,813 29,506 —

Net carrying value inGroup financialstatements 7,075 6,794 224 238 2,625 2,813 29,506 —

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Statement of income information: Amounts expressed in As at March 31* As at March 31* As at March 31 As at March 31thousands of USD 2009 2008 2007 2009 2008 2007 2009 2008 2007 2009 2008 2007Net revenue 25,218 22,001 21,526 976 889 747 9,604 9,535 7,863 11,160 — — Costs and expenses (17,342) (16,003) (15,265) (701) (651) (575) (4,954) (5,196) (5,110) (7,498) — — Depreciation and

amortization (1,692) (1,704) (1,654) (81) (77) (61) (822) (730) (569) (3,340) — —

Net income as reported 6,184 4,294 4,607 194 161 111 3,828 3,609 2,184 322 — —

Group proportion of netincome 3,092 2,147 2,304 78 64 44 1,148 1,083 655 158 — —

Net income included inGroup financialstatements 3,092 2,147 2,304 78 64 44 1,148 1,083 655 158 — —

PT Adhya Tirta Batam and Subic Water paid USD 1.6 million and USD 1.1 million, respectively, to the Company in theyear ended March 31, 2008.

* Based on results as at December 31.

Capital leases

The table below sets out the total minimum lease payments under finance (capital) lease arrangements that the Grouphad entered into as at the respective balance sheet dates: Year ended March 31,Amounts expressed in thousands of USD 2009Due within one year 990 Due after 1 year 1,030 Due after 2 years 971 Due after 3 years 997 Due after 4 years 1,005 Due after 5 years 2,496

Total minimum lease payments 7,489 Less: amounts representing interest at rates ranging from 6.8 % to 14.8% (545)

Present value of net minimum capital lease payments 6,944 Less: current installments of obligations under capital leases (922)

Obligations under capital leases, excluding current installments 6,022


As discussed in note 22 to these consolidated financial statements, Belize Water Services Limited, Biwater Ingeniera yProyectos S.A. de C.V. and Agua Mexicana y Operaciones S.A. de C.V. are presented as discontinued operations. Therequirements under US GAAP that have to be satisfied in order that an operation can be categorized as discontinued aredifferent to those that apply under Dutch GAAP. As a result, Aguas de Quetena S.A., which is not a discontinuedoperation for Dutch GAAP is classified as such under the provisions of US GAAP. The effect of this changedcategorization for US GAAP is shown in the tables in this note 28 under the statement of income heading “discontinuedoperations.”

Long-term borrowings

At note 2 to these consolidated financial statements it is explained that transaction costs incurred directly as a result ofraising the financing are deducted from the normal amount received and then recognized as part of the effective interestcost in the statement of income over the term of the borrowing. Under US GAAP, such transaction costs are reported inprepayments and then charged to the statement of income over the term of the borrowing in the same way as called forby Dutch GAAP. The impact of this reclassification between long term liabilities and prepayments is included in the tablein this note 28.

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(g) Deferred tax

Items in the reconciliations to US GAAP of shareholders’ equity and net profit relating to income taxes comprise the taxeffects of other adjustments. Under both Dutch GAAP and US GAAP, deferred taxes are accounted for on temporarydifferences between the book and tax bases of assets and liabilities. Under Dutch GAAP, deferred tax assets arerecognized to the extent that it is more likely than not that sufficient future taxable income will be available against whichto recover those assets. Under US GAAP however, deferred tax assets are recognized in full and a related valuationallowance set up unless it is more likely than not that future taxable income will be available against which to recoverthose assets. This difference has no effect on net profit or shareholders’ equity as it does not give rise to a difference inthe amount of deferred tax assets for which a benefit has been recognized. The analysis of “unrecognized deferred taxassets” in note 23 accordingly also presents the extent of valuation allowances deemed to be necessary in respect ofdeferred tax assets recorded under Dutch GAAP.

(h) FIN 48

Effective April 1, 2007, the Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN48), Accounting for Uncertainty in Income Taxes, an interpretation of SFAS 109, Accounting for Income Taxes, andsupplemented by FASB Financial Staff Position FIN 48-1, Definition of Settlement in FASB Interpretation No. 48, issuedMay 2, 2007.

The Company recorded no effect on the liability for unrecognized tax benefits as of April 1, 2007 on the adoption of FIN48. As of April 1, 2008 and March 31, 2009, the gross amount of unrecognized tax benefits was USD 0.7 million and USD1.5 million. The total amount of unrecognized tax benefits as of April 1, 2008 and March 31, 2009 that, if recognized,would affect the effective tax rate is USD nil and USD 1.5 million. Based on conditions existing as April 1, 2008, therecognition of the unrecognized tax benefits would increase a loss carry-forward against which deferred tax asset a fullvaluation allowance would be required, whereas at March 31, 2009 the unrecognized tax benefits would lead to areduction in current taxes payable.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. TheCompany had USD nil in interest and penalties related to unrecognized tax benefits accrued as of April 1, 2008 andMarch 31, 2009.

The Company anticipates that it is reasonably possible that the total amount of unrecognized tax benefits could decreaseby up to USD 1.5 million by the end of fiscal year 2010 due to audit settlements.

As of March 31, 2009 the following tax years remain subject to examination for the major jurisdictions where the Companydoes business: Jurisdiction Open tax years

The Netherlands 2002-2008 United Kingdom 2006-2008 South Africa 2004-2008 Indonesia 2001-2008 China 2004-2008 Chile 1998-2008

(i) Condensed financial information of Cascal N.V.

These condensed financial statements are presented in accordance with Dutch GAAP. Under the rules of Dutch GAAP,the parent company carries its net investment in subsidiary and other Group companies at an amount equal to their netasset values at the relevant period end. Such net investments are reported within financial fixed assets.

USD 35.2 million was received by the Company as dividends from subsidiaries and joint ventures in the year endedMarch 31, 2009 (2008: USD 2.7 million, 2007: USD 1.8 million). USD 2.2 million of this amount came from investments inwhich the Company has a stake of 50% or less.

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Table of Contents

Balance Sheet March 31, March 31,Amounts expressed in thousands of USD 2009 2008Assets: Fixed Assets Financial fixed assets 174,409 180,076

174,409 180,076

Current Assets Debtors 10,963 8,640 Cash at bank and in hand 4,603 11,077

15,566 19,717

Total Assets 189,975 199,793

Shareholders’ Equity & Liabilities: Shareholders’ equity 118,214 136,726 Provisions 1,547 1,014 Long term liabilities 9,228 22,751 Current liabilities 60,986 39,302

Total Shareholders’ Equity & Liabilities 189,975 199,793

Statement of Income Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007Net Revenue 517 54 37 Operating Expenses Staff costs 367 — — Other operating charges 3,788 4,965 3,580

4,155 4,965 3,580

Operating Loss (3,638) (4,911) (3,543)

Net Financial Income and Expense Loss on disposal of subsidiary (45) — — Share of net profit of consolidated and proportionally consolidated

investments 9,604 26,568 20,687 Exchange rate results 10,628 (2,328) (6,416)Interest income 5,635 468 1,120 Interest expense (3,336) (7,544) (5,339)

22,531 17,164 10,052

Profit before Taxation 18,848 12,253 6,509 Taxation (1,010) (665) 1,507

Net Profit 17,838 11,588 8,016

The stand alone financial statements of the Company include the following significant amounts that are eliminated onconsolidation:

• Financial fixed assets of USD 172,728 in 2009 (2008: USD 167,042, 2007: USD 126,766)

• Debtors of USD 9,313 (2008: USD 542, 2007: USD 57)

• Long term liabilities of USD 9,228 (2008: USD 6,251, 2007: USD 85,315)

• Current liabilities of USD 10 (2008: USD 35,696, 2007: USD 24,882)

• Interest income of USD 5,571 (2008: USD 226, 2007: USD 0)

• Interest expense of USD 0 (2008: USD 6,551, 2007: USD 4,876)

• Share of net profits of consolidated and proportionally consolidated investments of USD 9,604 (2008: USD 21,513,2007: USD 17,754)

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Statement of Cash Flows Year ended Year ended Year ended March 31, March 31, March 31,Amounts expressed in thousands of USD 2009 2008 2007Cash Flow from Operating Activities Net profit 17,838 11,588 8,016 Adjustments for: Share of net profit of consolidated and proportionally

consolidated investments (9,604) (26,568) (20,687)Loss on disposal of subsidiary 45 — — Tax charge 1,010 665 (1,507)Interest expense 3,336 7,544 5,339 Interest income (5,635) (468) (1,120)Exchange rate results (10,628) 2,328 6,416 Interest paid (2,847) (279) — Interest received 187 271 1,120 Tax paid (132) (141) — Changes in provisions — — — Changes in debtors 4,624 1,833 (9,868)Changes in current liabilities 4,994 3,816 17,370 Changes in long term debtors 326 (11,003) (19,144)

3,514 (10,414) (14,065)

Cash Flow from Investing Activities Acquisition of subsidiaries — (2,895) (14,340)Acquisition of intangible assets (44) Advances to group companies (52,760) — 1,785 (Increase)/Decrease in restricted cash balances (19) 1,583 1,368

Total capital expenditure (52,823) (1,312) (11,187)

Proceeds from disposal of subsidiary (45) — —

(52,868) (1,312) (11,187)

Cash Flow from Financing Activities New loans 49,977 16,500 80,027 Issue of shares (net of costs) — 86,181 — Loans repaid (3,500) (80,623) — Dividends received 2,038 2,701 1,808 Distributions made to shareholders (5,502) (4,000) (93,802)

43,013 20,759 (11,967)

Total Cash Flow (6,341) 9,033 (37,219)

Exchange and translation differences on cash at bank and inhand (133) (113) 518

(6,474) 8,920 (36,701)

Cash at bank and in hand at beginning of period 11,077 2,157 38,858

Cash at bank and in hand at end of period 4,603 11,077 2,157

Statement of Changes in Shareholders’ Equity.

The changes in shareholders’ equity can be seen in the consolidated statement of changes in shareholders’ equity above.

Summary of differences between Dutch GAAP and US GAAP

The differences between Dutch GAAP and US GAAP that would affect net income and shareholders’ equity of theCompany are the same as those outlined above in relation to the consolidated financial statements.

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(j) Recently issued US GAAP accounting standards

SFAS 141 (revised 2007)—In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations.”SFAS 141(R) will change how business acquisitions are accounted for and will affect financial statements both on theacquisition date and in subsequent periods. SFAS 141(R) will become effective for the Group for any acquisitionscompleted after April 1, 2009. Management has evaluated the possible affects of SFAS 141(R) and will apply itsprovisions as appropriate to acquisitions completed after April 1, 2009.

SFAS 160—In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated FinancialStatements.” SFAS 160 will require all entities to report non-controlling interests in subsidiaries as equity in theconsolidated financial statements. SFAS 160 will be effective for us from April 1, 2009. SFAS 160 requires retroactiveadoption of the presentation and disclosure requirements for existing minority interests. All other requirements of SFAS160 will be applied prospectively. Management has evaluated the possible affects of SFAS 160 and will apply itsprovisions as appropriate effective from April 1, 2009.

SFAS 165—In May 2009, the FASB issued SFAS No. 165, “Subsequent events”. SFAS 165 requires disclosure of thedate through which subsequent events have been evaluated and whether that date is the date the financial statementswere issued or were available to be issued. SFAS 165 will be effective for us for our financial statements for the yearending March 31, 2010. Management has evaluated the possible affects of SFAS 165 and will apply its provisionsbeginning with our financial statements for the year ended March 31, 2010.

29—Recapitalization, stock split and initial public offering

On January 23, 2008 the Company completed a recapitalization and stock split that required the following steps to becarried out:

• Issuance of remaining 11,620 authorized shares having a par value of EUR 5 per share to our existing shareholder inexchange for cash of EUR 58,100. This action increased the total shares issued to 20,000;

• A split of each issued share having a par value of EUR 5 into 10 shares with a par value of EUR 0.50, therebyincreasing the number of issued shares from 20,000 with a par value of EUR 5 to 200,000 having a par value of EUR0.50; and

• Issuance of 21,649,343 new shares having a par value of EUR 0.50 each by transferring the corresponding aggregatepar value from share premium to issued share capital.

The result of these steps was to have outstanding 21,849,343 shares with a par value of EUR 0.50 each prior to the initialpublic offering.

Earnings per share information presented for periods prior to the Company’s initial public offering has been calculatedusing a weighted average number of shares of 21,849,343. The share capital and share premium balances have alsobeen revised to reflect this stock split in the comparative periods presented.

The result of these actions is an effective stock split of 2,607-for-1 prior to the Company’s initial public offering.

In addition, transfers were made from unallocated results and retained earnings to share premium in amounts of a positiveUSD 16 million and a deficit of USD 29 million, respectively, in order to eliminate the June 30, 2007 net deficit of USD13 million.

On January 29, 2008, the Company priced its initial public offering on the New York Stock Exchange which resulted in theissuance of a further 8,710,000 shares to bring the total shares outstanding to 30,559,343 immediately following the initialpublic offering. On the same date there was a further issuance of 6,664 shares to directors of the Company bringing thetotal shares outstanding to 30,566,007.

The initial public offering generated proceeds from primary shares issued of USD 97.2 million after underwriters’ discount.An amount of USD 75.7 million has been applied on February 5, 2008 to repay in full the balance of GBP

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38 million on the facility that was drawn in June 2006 at the time that Cascal N.V.’s ownership reverted 100% to Biwater.

30—Subsequent events

On June 26 , 2009, we entered into an amended and restated facility agreement with HSBC Bank Plc in respect of ourexisting $70 million credit facility with HSBC. Of this amount, (a) $60 million is a revolving loan facility intended forfinancing acquisitions, for general corporate purposes and working capital and to pay transaction expenses, and (b)$10 million is a guarantee facility intended to be used to provide guarantees to replace existing ones, and to issue new orrenewed guarantees on behalf of certain subsidiaries. The amended and restated facility has a term of two years endingJune 30, 2011 and its terms are similar to those that governed the credit facility it is replacing with the exception of thearrangement fee and interest margin, both of which have been increased in line with current trends in the corporatelending market. For further detail see Item 5 “Operating and Financial Review and Prospects — Liquidity and capitalresources”.

F-70


Exhibit 4.28

EXECUTION VERSION

AMENDMENT AND RESTATEMENT AGREEMENT

Dated 26 June 2009

for

CASCAL N.V.as the Borrower

arranged byHSBC BANK PLC

as Arranger

and

HSBC BANK PLCacting as Agent

and

HSBC BANK PLCacting as Security Agent

and

HSBC BANK PLCacting as Issuing Bank

RELATING TO A FACILITY AGREEMENT ORIGINALLY DATED 25 JUNE 2007, AS AMENDED AND RESTATED ON 2NOVEMBER 2007, AS FURTHER AMENDED ON 19 NOVEMBER 2007, AS FURTHER AMENDED AND RESTATED

ON 12 JUNE 2008 AND AS FURTHER AMENDED ON 23 FEBRUARY 2009

Ref: Philip Spittal/Nicholas Zaklama

Linklaters LLP


CONTENTS

CLAUSE PAGE 1. Definitions and interpretation 1 2. Conditions precedent 2 3. Representations 2 4. Amendment and restatement 2 5. Accession of Additional Borrower and Additional Guarantor 3 6. Transaction expenses 4 7. Fees 4 8. Miscellaneous 4 9. Governing law 4

THE SCHEDULES SCHEDULE PAGE SCHEDULE 1 The Guarantors 5 SCHEDULE 2 Conditions Precedent 6 SCHEDULE 3 Form of Amended Agreement 9

(i)


THIS AGREEMENT is dated 26 June 2009 and made between:

(1) CASCAL N.V. (“CNV”);

(2) THE COMPANIES listed in Schedule 1 as guarantors (the “Guarantors”);

(3) CASCAL INVESTMENTS (CHINA) LIMITED (“CICL”);

(4) CASCAL HOLDINGS LIMITED (the “Additional Borrower”);

(5) HSBC BANK PLC as mandated lead arranger (the “Arranger”);

(6) HSBC BANK PLC as lender (the “Original Lender”);

(7) HSBC BANK PLC as facility agent of the other Finance Parties (the “Agent”);

(8) HSBC BANK PLC as security agent for the Secured Parties (the “Security Agent”); and

(9) HSBC BANK PLC as issuer of the Bank Guarantee (the “Issuing Bank”).

WHEREAS

(A) The Parties (as defined below) entered into a US$30,000,000 facility agreement originally dated 25 June 2007, asamended and restated on 2 November 2007, as further amended on 19 November 2007, as further amended andrestated on 12 June 2008 and as further amended on 23 February 2009 (the “Original Facility Agreement”).

(B) CNV now wishes to, and the Finance Parties have agreed to, amend and restate the Original Facility Agreement.

(C) The Parties now wish, therefore, to enter into this Agreement to record their agreement to the terms set out below.

IT IS AGREED as follows:

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions

In this Agreement:

"Amended Agreement” means the Original Facility Agreement, as amended and restated in the form set out inSchedule 3 (Form of Amended Agreement).

“Amendment Fee Letter” means the fee letter dated on or before the date of this Agreement between CNV and theAgent.

“DOLI Comfort Letter” means the comfort letter relating to directors; and officers; liability insurance dated on orbefore the date of this Agreement between CNV and the Arranger.

“Effective Date” means the date specified as the “Effective Date” in the notification by the Agent under Clause 2(Conditions Precedent) or such other date as CNV and the Agent may agree.

“Hedging Side Letter” means the side letter dated on or before the date of this Agreement between CNV, CHL andthe Arranger in connection with certain hedging arrangements.

“New Finance Documents” means this Agreement, the Amended Agreement, the New Security Documents theHedging Side Letter, the DOLI Comfort Letter, the Syndication Side Letter and the Amendment Fee Letter and anyother document designated as such by the Agent and CNV.

1


“New Security Documents” means, together, the documents listed in paragraph 3 of Schedule 2 (ConditionsPrecedent).

“Party” means a party to this Agreement.

“Syndication Side Letter” means the syndication letter dated on or before the date of this Agreement betweenCNV and the Arranger.

1.2 Incorporation of defined terms

(a) Unless a contrary indication appears, a term defined in the Amended Agreement has the same meaning in thisAgreement.

(b) The principles of construction set out in the Amended Agreement shall have effect as if set out in this Agreement.

1.3 Clauses

In this Agreement any reference to a “Clause”, or a “Schedule” is, unless the context otherwise requires, a referenceto a Clause of or a Schedule to this Agreement.

1.4 Third Party Rights

A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 toenforce or to enjoy the benefit of any term of this Agreement.

1.5 Designation

In accordance with the Original Facility Agreement, CNV and the Agent designate each of the New FinanceDocuments as a Finance Document under the Amended Agreement.

2. CONDITIONS PRECEDENT

The provisions of Clause 4 (Amendment and Restatement) shall be effective only once the Agent has received allthe documents and other evidence listed in Schedule 2 (Conditions Precedent) in form and substance satisfactoryto the Agent. The Agent shall notify CNV and the Lenders promptly upon being so satisfied.

3. REPRESENTATIONS

3.1 Obligor’s Representations

Each Obligor makes the Repeating Representations, and the representations and warranties in clause 20.7 (Nofiling or stamp taxes), 20.14 (Security) and 20.21 (Shares) of the Original Facility Agreement, by reference to thefacts and circumstances then existing:

(a) on the date of this Agreement; and

(b) on the Effective Date,

but as if references in clause 20 (Representations) of the Original Facility Agreement to “this Agreement” areinstead references to this Agreement and, on the Effective Date, references to the Amended Agreement and thisAgreement.

3.2 Additional Borrower’s Representations

The Additional Borrower makes the Repeating Representations and the representations and warranties in clauses20.7 (No filing or stamp taxes) of the Amended Agreement on the Effective Date to each Finance Party, byreference to the facts and circumstances then existing on the Effective Date but as if references in clause 20(Representations) of the

2


Amended Agreement to “this Agreement” are instead references to the Amended Agreement and this Agreement.

3.3 CICL’s Representations

CICL makes the Repeating Representations and the representations and warranties in clauses 20.7 (No filing orstamp taxes) of the Amended Agreement on the Effective Date to each Finance Party, by reference to the facts andcircumstances then existing on the Effective Date but as if references in clause 20 (Representations) of theAmended Agreement to “this Agreement” are instead references to the Amended Agreement and this Agreement.

4. AMENDMENT AND RESTATEMENT

4.1 Amendment and Restatement

With effect from the Effective Date, the Original Facility Agreement shall be amended and restated in the form setout in Schedule 3 (Form of Amended Agreement).

4.2 Continuing obligations

The provisions of the Original Facility Agreement and the other Finance Documents shall, save as amended by thisAgreement, continue in full force and effect.

4.3 Confirmation of Guarantee and Indemnity

Each Guarantor confirms that the provisions of the guarantee and indemnity contained in clause 19 (Guarantee andIndemnity) of the Original Facility Agreement shall continue and remain in full force and effect on and after theEffective Date and shall extend to the obligations of the Obligors under the Finance Documents as amended andrestated by this Agreement.

5. ACCESSION OF ADDITIONAL BORROWER AND ADDITIONAL GUARANTOR

5.1 Accession of Additional Borrower

With effect from the Effective Date:

(a) the parties to the Original Facility Agreement agree that the Additional Borrower shall become an additionalBorrower;

(b) the Additional Borrower agrees to become an additional Borrower and agrees to be bound by the terms of theAmended Agreement as if it were a Borrower; and

(c) all references to a “Borrower” in the Amended Agreement shall be construed to include the AdditionalBorrower.

5.2 Accession of Additional Guarantor

With effect from the Effective Date:

(a) the parties to the Original Facility Agreement agree that CICL shall become an Additional Guarantor;

(b) CICL agrees to become an Additional Guarantor and agrees to be bound by the terms of the AmendedAgreement, pursuant to clause 27.2 (Additional Guarantors) of the Amended Agreement; and

(c) all references to a “Guarantor” in the Amended Agreement shall be construed to include CICL.3


5.3 CICL Administrative Details

CICL’s address and fax number (and the department or officer, if any, for whose attention the communication is tobe made) for any communication or document to be made or delivered under or in connection with the FinanceDocuments is that identified with its name below or any substitute address, fax number or department or officer asCICL may notify to the Agent by not less than five Business Days’ notice.

6. TRANSACTION EXPENSES

CNV shall promptly on demand reimburse the Agent, the Arranger, the Security Agent and the Issuing Bank for theamount of all costs and expenses (including legal fees) reasonably incurred by the Agent, the Arranger, the SecurityAgent and the Issuing Bank in connection with the negotiation, preparation, printing and execution of thisAgreement and any other documents referred to in this Agreement.

7. FEES

CNV shall pay to the Agent any fees due to be paid on the Effective Date in accordance with the terms of theAmendment Fee Letter.

8. MISCELLANEOUS

8.1 Incorporation of terms

The provisions of clause 36 (Notices) and clause 43 (Enforcement) of the Original Facility Agreement shall beincorporated into this Agreement as if set out in full in this Agreement and as if references in those clauses to “thisAgreement” are references to this Agreement.

8.2 Counterparts

This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatureson the counterparts were on a single copy of this Agreement.

9. GOVERNING LAW

This Agreement and any non-contractual obligations arising out of or in connection with it are governed by Englishlaw.

This Agreement has been entered into on the date stated at the beginning of this Agreement.4


SCHEDULE 1

THE GUARANTORS Registration NumberName of Guarantor Jurisdiction of Incorporation (or equivalent, if any) BWS Finance Limited England and Wales 05471977 Cascal Holdings Limited England and Wales 06707340 Cascal Investments Limited England and Wales 02215221 Cascal Services Limited England and Wales 03757398

5


SCHEDULE 2

CONDITIONS PRECEDENT

1. Obligors

(a) A copy of the constitutional documents of each Obligor (in relation to CNV, its deed of incorporation, articles ofassociation and recent extract from the Dutch trade register (handelsregister)) or a certificate of an authorisedsignatory of a relevant Obligor certifying that the constitutional documents previously delivered to the Agent for thepurposes of the Original Facility Agreement have not been amended and remain in full force and effect as at theEffective Date.

(b) A copy of a resolution of the board of directors or equivalent body of each Obligor:

(i) approving the terms of, and the transactions contemplated by, the New Finance Documents to which it is aparty and resolving that it execute the New Finance Documents to which it is a party;

(ii) authorising a specified person or persons to execute the New Finance Documents to which it is a party on itsbehalf;

(iii) authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices(including, if relevant, any Utilisation Request) to be signed and/or despatched by it under or in connectionwith the New Finance Documents to which it is a party; and

(iv) in relation to CNV:

(A) stating that entering into the New Finance Documents to which it is a party is allowed by CNV’s articlesof association, and serves the best interest of CNV within the meaning of section 2:7 Dutch Civil Code(or equivalent legislation in its Relevant Jurisdiction if applicable), in form and substance acceptable tothe Agent;

(B) including a confirmation that it does not have a works council (ondernemingsraad); and

(C) confirming that there is no conflict of interest or, if there is, that the general meeting of shareholders hasnot appointed any other person to act for CNV with regard to the transaction.

(c) A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above.

(d) A certificate of an authorised signatory of the relevant Obligor certifying that each copy document relating to itspecified in this Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the EffectiveDate.

(e) A copy of a resolution signed by all the holders of the issued shares in each Obligor (except CNV), approving theterms of, and the transactions contemplated by, this Agreement.

2. CICL

(a) A copy of the constitutional documents of CICL.

(b) A copy of a resolution of the board of directors CICL:6


(i) approving the terms of, and the transactions contemplated by, the New Finance Documents to which it is aparty and resolving that it execute the New Finance Documents to which it is a party;

(ii) authorising a specified person or persons to execute the New Finance Documents to which it is a party on itsbehalf; and

(iii) authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices tobe signed and/or despatched by it under or in connection with the New Finance Documents to which it is aparty.

(c) A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above.

(d) A certificate of an authorised signatory of CICL certifying that each copy document relating to it specified in thisSchedule 2 is correct, complete and in full force and effect as at a date no earlier than the Effective Date.

(e) A copy of a resolution signed by all the holders of the issued shares in CICL, approving the terms of, and thetransactions contemplated by, the New Finance Documents to which CICL is party.

3. Principal Documents

Copies of each New Finance Document duly signed or executed and delivered by the parties to those documents,including the following new security documents (the “New Security Documents”):

(a) an English law share charge relating to the entire issued share capital of CHL executed by CNV in favour of theSecurity Agent for and on behalf of the Finance Parties;

(b) an English law accounts charge relating to the Collection Account executed by CNV in favour of the Security Agentfor and on behalf of the Finance Parties;

(c) an English law accounts charge relating to the Operating Account executed by CNV in favour of the Security Agentfor and on behalf of the Finance Parties;

(d) an English law accounts charge relating to the Prepayment Account executed by CNV in favour of the SecurityAgent for and on behalf of the Finance Parties;

(e) an English law fixed and floating document executed by CHL in favour of the Security Agent for and on behalf of theFinance Parties;

(f) an English law fixed and floating document executed by CICL in favour of the Security Agent for and on behalf ofthe Finance Parties; and

(g) an English law accounts charge executed by CIL in favour of the Security Agent for and on behalf of the FinanceParties.

4. Legal Opinions

(a) A legal opinion of Linklaters LLP, London, English legal advisers to the Arranger, the Security Agent and the Agentin England, substantially in the form distributed to the Original Lenders prior to signing this Agreement.

7


(b) A legal opinion of Linklaters LLP, Amsterdam, Dutch legal advisers to the Arranger, the Security Agent and theAgent in England, substantially in the form distributed to the Original Lenders prior to signing this Agreement.

5. Other documents and evidence

(a) A copy of the revised Forecast Model.

(b) A copy of the revised Group Structure Chart initialled by CNV.

(c) Evidence that the fees, costs and expenses (including legal fees) due from CNV pursuant to Clause 6 (Transactionexpenses) and Clause 7 (Fees) of this Agreement and clause 13 (Fees) of the Amended Agreement (as applicable)have been paid.

(d) A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to benecessary or desirable (if it has notified CNV accordingly) in connection with the entry into and performance of thetransaction contemplated by the New Finance Documents or for the validity and enforceability of the New FinanceDocuments.

(e) Evidence satisfactory to the Agent that each Lender has carried out and is satisfied it has complied with allnecessary “know your customer” or other similar checks in respect of CICL under all applicable laws and regulationspursuant to the transactions contemplated in the Finance Documents and New Finance Documents.

8


SCHEDULE 3

FORM OF AMENDED AGREEMENT9


US$70,000,000

FACILITY AGREEMENT

dated 25 June 2007as amended and restated on 2 November 2007, as further amended on 19 November 2007,as further amended and restated on 12 June 2008, as further amended on 23 February 2009

and as further amended and restated on 26 June 2009

for

CASCAL N.V.CASCAL HOLDINGS LIMITED

as Borrowers

arranged byHSBC BANK PLC

as Mandated Lead Arranger

with

HSBC BANK PLCacting as Agent

and

HSBC BANK PLCacting as Security Agent

and

HSBC BANK PLCacting as Issuing Bank

Ref: Philip Spittal/Nicholas Zaklama


CONTENTS CLAUSE PAGE

SECTION 1INTERPRETATION

1 Definitions and Interpretation 1

SECTION 2THE FACILITIES

2 The Facilities 22 3 Purpose 23 4 Conditions of Utilisation 23

SECTION 3UTILISATION

5 Utilisation — Revolving Facility Loans 26 6 Utilisation — Bank Guarantee 27 7 Bank Guarantee 30

SECTION 4REPAYMENT, PREPAYMENT AND CANCELLATION

8 Repayment of Revolving Facility Loans and Bank Guarantees 34 9 Prepayment and Cancellation 34

SECTION 5COSTS OF UTILISATION

10 Interest 41 11 Interest Periods 42 12 Changes to the Calculation of Interest 42 13 Fees 43

SECTION 6ADDITIONAL PAYMENT OBLIGATIONS

14 Tax Gross Up and Indemnities 45 15 Increased Costs 49 16 Other Indemnities 50 17 Mitigation by the Lenders 51 18 Costs and Expenses 52

SECTION 7GUARANTEE AND SECURITY

19 Guarantee and Indemnity 54

SECTION 8REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

20 Representations 58 21 Information Undertakings 64 22 Financial Covenants 69 23 General Undertakings 73 24 CHL Additional Covenants and Undertakings 79 25 Events of Default 80

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CLAUSE PAGE

SECTION 9CHANGES TO PARTIES

26 Changes to the Lenders 85 27 Changes to the Obligors 88

SECTION 10THE FINANCE PARTIES

28 Role of the Agent and the Arranger 90 29 Role of the Security Agent 95 30 Expenses 100 31 Order of Application 100 32 Conduct of Business by the Finance Parties 100 33 Sharing among the Finance Parties 101

SECTION 11ADMINISTRATION

34 Payment Mechanics 103 35 Set-Off 105 36 Notices 106 37 Calculations and Certificates 107 38 Partial Invalidity 108 39 Remedies and Waivers 108 40 Amendments and Waivers 108 41 Counterparts 109 42 Confidentiality 109

SECTION 12GOVERNING LAW AND ENFORCEMENT

43 Governing Law 114 44 Enforcement 114

THE SCHEDULES SCHEDULE PAGE SCHEDULE 1 The Original Parties 115 SCHEDULE 2 Conditions Precedent 117 SCHEDULE 3 Requests 127 SCHEDULE 4 Mandatory Cost Formulae 129 SCHEDULE 5 Form of Transfer Certificate 132 SCHEDULE 6 Form of accession Letter 135 SCHEDULE 7 Form of Compliance Certificate 137 SCHEDULE 8 Timetables 139 SCHEDULE 9 Security Agency Provisions 141 SCHEDULE 10 Existing Indebtedness 145 SCHEDULE 11 Existing Security 150

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THIS AGREEMENT is dated 25 June 2007, as amended and restated on 2 November 2007, as further amended on 19November 2007, as further amended and restated on 12 June 2008, as further amended on 23 February 2009, and asfurther amended and restated on 26 June 2009 and made between:

(1) THE COMPANIES listed in Part I of Schedule 1 as borrowers (The Original Obligors) as borrowers (the“Borrowers”);

(2) THE COMPANIES listed in Part I of Schedule 1 (The Original Obligors) as original guarantors (the “OriginalGuarantors”);

(3) HSBC BANK PLC as mandated lead arranger (the “Arranger”);

(4) THE FINANCIAL INSTITUTIONS listed in Part II of Schedule 1 (The Original Obligors) as lenders (the “OriginalLenders”);

(5) HSBC BANK PLC as facility agent of the other Finance Parties (the “Agent”);

(6) HSBC BANK PLC as security agent for the Finance Parties (the “Security Agent”); and

(7) HSBC BANK PLC as issuer of the Bank Guarantee (the “Issuing Bank”).

IT IS AGREED as follows:

SECTION 1INTERPRETATION

1 DEFINITIONS AND INTERPRETATION

1.1 Definitions

In this Agreement:

“Acceleration Date” means the date (if any) on which the Agent gives a notice under Clause 25.21 (Acceleration);

“Accession Letter” means a document substantially in the form set out in Schedule 6 (Form of Accession Letter);

“Accounting Group” means CNV, its Subsidiaries and its Joint Ventures.

“Accounting Month” means each period of approximately thirty days ending on the last day of each calendarmonth in any financial year of CNV;

“Accounting Quarter” means each period of three Accounting Months ending on 31 March, 30 June, 30September and 31 December in any financial year of CNV;

“Additional Cost Rate” has the meaning given to it in Schedule 4 (Mandatory Cost formulae);

“Additional Guarantor” means a company which becomes an Additional Guarantor in accordance with Clause 27.2(Additional Guarantors) ;

“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or anyother Subsidiary of that Holding Company;

“Agreed Form” means, in relation to a document, that:1


(a) it is in a form initialled by or on behalf of CNV and the Agent on or before the signing of this Agreement for thepurposes of identification; or

(b) if not falling within paragraph (a), it is in form and substance satisfactory to the Agent (acting reasonably) andinitialled by or on behalf of the Agent for the purposes of identification;

“Amendment Agreement 1” means an amendment and restatement agreement dated 12 June 2008 madebetween, amongst others, CNV as borrower, the Original Lenders, the Agent and the Security Agent;

“Amendment Agreement 2” means the amendment and restatement agreement dated ___ June 2009 madebetween, amongst others, CNV as borrower, the Original Lenders, the Agent and the Security Agent;

“Amendment Agreements” means each of Amendment Agreement 1 and Amendment Agreement 2;

“Amendment Date 1” means the date on which the Agent notifies CNV and Lenders that each of the conditionsprecedent under Amendment Agreement 1 have been satisfied pursuant to Clauses 2 (Conditions Precedent) and 4(Amendment and Restatement) of Amendment Agreement 1;

“Amendment Date 2” means the date on which the Agent notifies the Borrowers and Lenders that each of theconditions precedent under Amendment Agreement 2 have been satisfied pursuant to Clauses 2 (ConditionsPrecedent) and 4 (Amendment and Restatement) of Amendment Agreement 2;

“Applicable Accounting Principles” means Dutch GAAP and practices and financial reference periods used in theOriginal Financial Statements;

“Applicable Rate” means in relation to any overdue amount, the rate which would have been payable if theoverdue amount had, during the period of non-payment, constituted a Revolving Facility Loan in US Dollars of theoverdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably);

“Artesian Facilities” means any of the facilities entered into between BWH plc and The Royal Bank of Scotlandand which are novated to Artesian Finance plc or Artesian Finance II plc as part of the securitisation programme forraising funds for BWH plc;

“Authorisation” means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation orregistration;

“Availability Period” means, in relation to the Facilities, the period from and including the date of this Agreement toand including the date falling one Month prior to the Termination Date (or, if applicable, the Extension Date);

“Available Commitment” means, in relation to a proposed Utilisation under a Facility, a Lender’s Commitmentunder that Facility minus:

(a) the amount of its participation in any outstanding Utilisations; and

(b) in relation to any proposed Utilisation, the amount of its participation in any Utilisations that are due to bemade on or before the proposed Utilisation Date;

other than that Lender’s participation in any Utilisations that are due to be repaid or prepaid on or before theproposed Utilisation Date;

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“Available Facility” means, in relation to a Facility, the aggregate for the time being of each Lender’s AvailableCommitment in respect of that Facility;

“Bank Guarantee” means a bank guarantee substantially in an Agreed Form;

“Base Currency” means United States dollars;

“Base Currency Amount” means, in relation to a Guarantee Facility Utilisation, the amount specified in theUtilisation Request delivered by either Borrower for that Guarantee Facility Utilisation (or, if the amount requested isnot denominated in the Base Currency, that amount converted into the Base Currency at the Lender’s Spot Rate ofExchange on the date which is three Business Days before the Utilisation Date or, if later, on the date the Lenderreceives the Utilisation Request) adjusted to reflect any repayment;

“Break Costs” means the amount (if any) by which:

(a) the interest (excluding the Margin) which a Lender should have received for the period from the date ofreceipt of all or any part of its participation in a Revolving Facility Loan, a Bank Guarantee or an Unpaid Sumto the last day of the current Interest Period in respect of that Revolving Facility Loan, Bank Guarantee orUnpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that InterestPeriod;

exceeds:

(b) the amount which that Lender would be able to obtain by placing an amount equal to the principal amount orUnpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a periodstarting on the Business Day following receipt or recovery and ending on the last day of the current InterestPeriod;

“BSTID” means the Borrower Security Trust and Intercreditor Deed dated 20 April 2005 as amended by a deed ofamendment and restatement dated 30 April 2008;

“Budget” means the initial budget of CNV in the Agreed Form;

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business inLondon and New York;

“Business Plan” means the business plan in relation to an acquisition for which the Total Consideration exceedsUS$40,000,000 prepared by CNV and in the Agreed Form;

“BWH Group” means BWH Group Limited;

“BWH Holdings” means Bournemouth & West Hampshire Water Holdings Group Limited;

“BWH plc” means Bournemouth & West Hampshire Water plc;

“Calculation Date” means the last day of an Accounting Quarter;

“Capital Expenditure” means any expenditure which should in accordance with the Applicable AccountingPrinciples be treated as capital expenditure in the audited consolidated financial statements of the Group;

“Cash” means any credit balance on any deposit, savings, current or other account, and any cash in hand, which is:

(a) freely withdrawable on demand;3


(b) not subject to any Security (other than pursuant to any Security Document);

(c) denominated and payable in freely transferable and freely convertible currency; and

(d) capable of being remitted to an Obligor in the United Kingdom;

“Cash Equivalent Investments” means:

(a) securities with a maturity of less than 12 months from the date of acquisition issued or fully guaranteed or fullyinsured by the Government of the United States or any member state of the European Union which is rated atleast A-1 by Standard & Poor’s Ratings Group or P-1 by Moody’s Investors Service, Inc.;

(b) commercial paper or other debt securities issued by an issuer rated at least A-1 by Standard & Poor’s RatingsGroup or P-1 by Moody’s Investors Service, Inc. and with a maturity of less than 12 months; and

(c) certificates of deposit or time deposits of any commercial bank (which has outstanding debt securities ratedas referred to in paragraph (b)) and with a maturity of less than three months,

in each case not subject to any Security or Quasi Security (other than pursuant to any SecurityDocument), denominated and payable in freely transferable and freely convertible currency and theproceeds of which are capable of being remitted to an Obligor in the United Kingdom;

“Cash Flow” has the meaning given to it in Clause 22.5 (Definitions);

“Charged Assets” means the assets over which Security is expressed to be created pursuant to anySecurity Document;

“Chargor” means any person expressed to create Security pursuant to any Security Document;

“Chief Financial Officer” means Steve Hollinshead and any replacement chief financial officer (orequivalent officer, as appropriate) from time to time of CNV;

“CIL” means Cascal Investments Limited (formerly Biwater Supply Limited);

“CNV” means Cascal N.V.;

“Collection Account” means the account of CNV with HSBC Bank plc, account number 67634020 withsort code 400515, Account Title: Cascal N.V. Collection Account or such other account as CNV, the Agentand the Security Agent may from time to time agree in writing;

“Collection Date” has the meaning given to it in Clause 9.10 (Collection Account);

“Commitment” means a Guarantee Facility Commitment or a Revolving Facility Commitment;

“Compliance Certificate” means a certificate substantially in the form set out in Schedule 7 (Form ofCompliance Certificate);

“Confidential Information” means all information relating to the Borrowers, any Obligor, the Group, theFinance Documents or a Facility of which a Finance Party becomes aware in its capacity as, or for thepurpose of becoming, a Finance Party or which is received by

4


a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or aFacility from either:

(a) any member of the Group or any of its advisers; or

(b) another Finance Party, if the information was obtained by that Finance Party directly or indirectly from anymember of the Group or any of its advisers,

in whatever form, and includes information given orally and any document, electronic file or any other way ofrepresenting or recording information which contains or is derived or copied from such information butexcludes information that:

(i) is or becomes public information other than as a direct or indirect result of any breach by that FinanceParty of Clause 42 (Confidentiality);

(ii) is identified in writing at the time of delivery as non-confidential by any member of the Group or any ofits advisers; or

(iii) is known by that Finance Party before the date the information is disclosed to it in accordance withparagraphs (a) or (b) above or is lawfully obtained by that Finance Party after that date, from a sourcewhich is, as far as that Finance Party is aware, unconnected with the Group and which, in either case,as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subjectto, any obligation of confidentiality;

“Confidentiality Undertaking” means a confidentiality undertaking substantially in the form agreed between CNVand the Arranger on or prior to the date of this Agreement or in any other form agreed between CNV and the Agent;

“CSL” means Cascal Services Limited;

“CWC” means The China Water Company Limited;

“Debt Service” has the meaning given to it in Clause 22.5 (Definitions);

“Default” means an Event of Default or any event or circumstance specified in Clause 25 (Events of Default) whichwould (with the lapse of time, the giving of notice, the making of any determination under the Finance Documents orany combination of any of the foregoing) be an Event of Default;

“Default Interest Rate” means a rate which, subject to Clause 10.3(b), is the sum of:

(a) the Applicable Rate; and

(b) one per cent. per annum;

“Discharge Date” means the date on which the Security Agent is satisfied that all obligations under the FinanceDocuments have been fully and irrevocably paid and discharged and all commitments of the Finance Parties underthis Agreement have expired or been cancelled;

“Disruption Event” means either or both of:

(a) a material disruption to those payment or communications systems or to those financial markets which are, ineach case, required to operate in order for payments to be made in connection with the Facilities (orotherwise in order for the

5


transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by,and is beyond the control of, any of the Parties; or

(b) the occurrence of any other event which results in a disruption (of a technical or systems-related nature) tothe treasury or payments operations of a Party preventing that, or any other Party:

(i) from performing its payment obligations under the Finance Documents; or

(ii) from communicating with other Parties in accordance with the terms of the Finance Documents,

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations aredisrupted;

“Dormant Company” means a company:

(a) which has been dormant since its incorporation or since the end of its previous financial year (and for thispurpose “dormant” has the meaning given to it in Section 249 AA(4) of the Companies Act 1985 with regard tofinancial years beginning before 6 April 2008 and Section 1169 of the Companies Act 2006 for financial yearsbeginning on and after 6 April 2008); and

(b) which holds no shares in any other person (other than another Dormant Company);

“Dutch Company” means any Obligor or any Subsidiary of such Obligor incorporated in the Netherlands;

“Dutch Financial Supervision Act” means the Dutch Financial Supervision Act (Wet op het financieel toezicht)dated 28 September 2006 published in the Dutch government gazette nr. 475 on 31 October 2006, as amendedfrom time to time;

“Dutch GAAP” means generally accepted accounting principles, standards and practices in the Netherlands;

“Dutch Guarantor” means any Guarantor incorporated in the Netherlands;

“Dutch Obligor” means any Obligor incorporated in the Netherlands;

“EBITDA” has the meaning given to it in Clause 22 (Financial covenants);

“English Companies” means each Obligor and its Subsidiaries incorporated in England and Wales;

“Environment” means living organisms including the ecological systems of which they form part and the followingmedia:

(a) air (including air within natural or man-made structures, whether above or below ground);

(b) water (including territorial, coastal and inland waters, water under or within land and water in drains andsewers); and

(c) land (including land under water);

“Environmental Law” means all laws and regulations of any relevant jurisdiction which:

(a) have as a purpose or effect the protection of, and/or prevention of harm or damage to, the Environment;6


(b) provide remedies or compensation for harm or damage to the Environment; or

(c) relate to Hazardous Substances or health and safety matters;

“Environmental Licence” means any Authorisation required at any time under Environmental Law;

“€” or “Euro” means the single currency unit of the Participating Member States;

“Event of Default” means any event or circumstance specified as such in Clause 25 (Events of Default);

“Existing Indebtedness” means the Financial Indebtedness of the Group evidenced by the agreements set out inSchedule 10 (Existing Indebtedness) in the form they are in on the date of this Agreement without any furtherincrease or other amendment that could result in increased liability, obligations or Financial Indebtedness for therelevant Group Member;

“Existing Security” means any Security granted pursuant to the agreements set out in Schedule 11 (ExistingSecurity) in the form they are in on the date of this Agreement without any further amendment;

“Extension Date” means 30 June 2012;

“Facility” means the Revolving Facility or the Guarantee Facility;

“Facility Office” means the office or offices notified by a Lender to the Agent in writing on or before the date itbecomes a Lender (or, following that date, by not less than five Business Days’ written notice) as the office oroffices through which it will perform its obligations under this Agreement;

“Fee Letter” means the letter dated on or about the date of this Agreement between the Arranger, the Agent, theSecurity Agent and CNV setting out the fees referred to in Clause 13 (Fees);

“Final IPO Date” means 28 February 2008 or such other date that the Lenders may agree with CPV;

“Finance Document” means this Agreement, the Amendment Agreements, each Accession Letter, each SecurityDocument, the Fee Letter, each Transfer Certificate, each New Finance Document and any other documentdesignated as such by the Agent and CNV;

“Finance Party” means each of the Agent, the Arranger, the Issuing Bank, the Lenders and the Security Agent;

“Financial Indebtedness” means any indebtedness for or in respect of:

(a) moneys borrowed and debit balances at banks or other financial institutions;

(b) any acceptance under any acceptance credit or bill discounting facility (or dematerialised equivalent);

(c) any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;7


(d) the amount of any liability in respect of any lease or hire purchase contract which would, in accordance withthe Applicable Accounting Principles, be treated as a finance or capital lease;

(e) receivables sold or discounted (other than any receivables to the extent they are sold on a non-recoursebasis);

(f) any amount raised under any other transaction (including any forward sale or purchase agreement) havingthe commercial effect of a borrowing;

(g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in anyrate or price (and, when calculating the value of any derivative transaction, only the marked to market valueshall be taken into account);

(h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter ofcredit or any other instrument issued by a bank or financial institution in respect of an underlying liability of anentity which is not a member of the Group which liability would fall within one of the other paragraphs of thisdefinition;

(i) the amount of any liability in respect of any credit for goods and services raised in the ordinary course of tradeoutstanding for more than 90 days after its customary date of payment; and

(j) the amount of any liability in respect of any guarantee for any of the items referred to in paragraphs (a) to (i);

“Forecast Model” means a forecast model in an Agreed Form breaking down for a two year period the amount andsource of revenue flowing into the Collection Account or the Operating Account and the amount and the beneficiaryof outgoings made out of the Operating Account which shall be used by the Agent and the Lender(s) amongst otherthings to assess and measure the anticipated cashflows of CNV during the term of the Facility;

“GAAP” means:

(a) in relation to the consolidated financial statements of the Group, Dutch GAAP; and

(b) in relation to any member of the Group, generally accepted accounting principles, standards and practices inits jurisdiction of incorporation;

“Group” means CNV and its Subsidiaries for the time being;

“Group Structure Chart” means the group structure chart provided on the date of this Agreement or any revisedformat presented thereafter;

“Guarantee Facility” means the guarantee facility made available under this Agreement as described in paragraph(b) of Clause 2.1 (The Facilities);

“Guarantee Facility Commitment” means:

(a) in relation to an Original Guarantee Facility Lender, the amount in the Base Currency set opposite its nameunder the heading “Guarantee Facility Commitment” in Part I of Schedule 1 (The Original Parties) and theamount of any other Guarantee Facility Commitment transferred to it under this Agreement; and

8


(b) in relation to any other Guarantee Facility Lender, the amount in the Base Currency of any Guarantee FacilityCommitment transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement;

“Guarantee Facility Lender” means:

(a) any Original Guarantee Facility Lender; and

(b) any bank, financial institution, trust, fund or other entity which has become a Guarantee Facility Lender inaccordance with Clause 26 (Changes to the Lenders),

which in each case has not ceased to be a Guarantee Facility Lender in accordance with this Agreement;

“Guarantee Facility Utilisation” means a Bank Guarantee or a Bid Bond Utilisation;

“Guarantor” means an Original Guarantor or an Additional Guarantor;

“Hazardous Substance” means any waste, pollutant, contaminant or other substance (including any liquid, solid,gas, ion, living organism or noise) that may be harmful to human health or other life or the Environment or anuisance to any person or that may make the use or ownership of any affected land or property more costly;

“Holding Company” means, in relation to a company, corporation or other legal entity, any other company,corporation or other legal entity in respect of which it is a Subsidiary;

“Income Tax Act” means the Income Tax Act 2007;

“Initial Utilisation Date” means the date on which the initial Utilisation under the Facilities is, or is to be, made;

“Insolvency Event” means the occurrence of any of the events described in Clause 25.7 (Insolvency Proceedings)in relation to a member of the Group other than an Obligor;

“Insurance Proceeds” has the meaning given to it in Clause 9.5 (Mandatory prepayment — Insurance Proceeds);

“Intellectual Property” means all trade marks, service marks, trade names, domain names, logos, get-up, patents,inventions, registered and unregistered design rights, copyrights, topography rights, database rights, rights inconfidential information and know-how, and any associated or similar rights anywhere in the world, which it now orin the future owns or (to the extent of its interest) in which it now or in the future has an interest (in each casewhether registered or unregistered and including any related licences and sub-licences of the same granted by it orto it, applications and rights to apply for the same);

“Interest Period” means, in relation to a Revolving Facility Loan or a Bank Guarantee, each period determined inaccordance with Clause 11 (Interest Periods) and, in relation to an Unpaid Sum, each period determined inaccordance with Clause 10.3 (Default interest);

“Intragroup Debt” means all present and future moneys, debts and liabilities due, owing or incurred by any memberof the Group to any other member of the Group (in each case, whether alone or jointly, or jointly and severally, withany other person, whether actually or contingently and whether as principal, surety or otherwise);

“IPO” means initial public offering of no less than 20 per cent. of the shares of CNV;9


“Joint Venture” means any joint venture entity, whether a company, unincorporated firm, undertaking, joint venture,association, partnership or any other entity;

“Lender’s Spot Rate of Exchange” means the Lender’s spot rate of exchange for the purchase of the relevantcurrency with the Base Currency in the London foreign exchange market at or about 11:00 a.m. on a particular day.;

“Lender” means a Revolving Facility Lender or a Guarantee Facility Lender;

“Liabilities” of a Chargor means all present and future moneys, debts and liabilities due, owing or incurred by it toany Finance Party under or in connection with any Finance Document (in each case, whether alone or jointly, orjointly and severally, with any other person, whether actually or contingently and whether as principal, surety orotherwise);

“LIBOR” means, in relation to any Revolving Facility Loan:

(a) the applicable Screen Rate; or

(b) (if no Screen Rate is available for US Dollars or Interest Period of that Revolving Facility Loan) the arithmeticmean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted bythe Reference Banks to leading banks in the London interbank market,

as of the Specified Time on the Quotation Day for the offering of deposits in the currency of that Revolving FacilityLoan and for a period comparable to the Interest Period for that Revolving Facility Loan;

“Liquidation Proceeds” has the meaning given to it in Clause 9.6 (Mandatory prepayment — LiquidationProceeds);

“Majority Guarantee Facility Lenders” means, at any time, a Guarantee Facility Lender or Guarantee FacilityLenders whose Available Commitments under the Guarantee Facility and participations in the Bank Guarantee thenoutstanding aggregate more than 66

2/3 per cent. of the outstanding Bank Guarantee;

“Majority Lenders” means, at any time, a Lender or Lenders whose Available Commitments and participations inthe Utilisations then outstanding aggregate more than 66

2/3 per cent. of the Available Facilities and all the

Utilisations then outstanding. For the purpose of this definition, the provisions of Clause 8.2 (Reduction of RevolvingFacility and Guarantee Facility) shall not apply;

“Majority Revolving Facility Lenders” means, at any time, a Revolving Facility Lender or Revolving FacilityLenders whose Available Commitments under the Revolving Facility then outstanding aggregate more than 66

2/3

per cent. of the Available Facility under the Revolving Facility then outstanding;

“Mandatory Cost” means the percentage rate per annum calculated by the Agent in accordance with Schedule 4(Mandatory Cost formulae);

“Margin” means the following margin which shall apply to each relevant Interest Period: Margin (per cent.Where the ratio of Net Borrowings to EBITDA for CNV is: per annum)(a) More than 3.5:1 4.50 (b) Between 3.0:1 and 3.5:1 4.00

10


Margin (per cent.Where the ratio of Net Borrowings to EBITDA for CNV is: per annum)(c) Between 2.5:1 and 3.0:1 3.50 (d) Between 2.0:1 and 2.5:1 3.00 (e) Less than 2.0:1 2.50

provided that:

(a) if any change in margin occurs on a day which is not a Business Day, the revised margin shall applyfrom the Business Day following the date on which the change of margin occurs; and

(b) the margin shall be the highest applicable rate above on and from the date on which:

(i) an Event of Default occurs and is outstanding unless otherwise waived by the Agent; or

(ii) CNV fails to deliver a Compliance Certificate to the Agent pursuant to Clause 21.3 (ComplianceCertificate/Provisional Compliance); and

“Margin Adjustment Dates” means the dates on which the Margin changes as set out in the definition of Margin;

“Material Adverse Effect” means a material adverse effect on or material adverse change in:

(a) the financial condition, assets or business of any Obligor or any Regulated Subsidiary or the consolidatedfinancial condition, assets or business of an Obligor and any Regulated Subsidiary;

(b) the ability of any Obligor to perform and comply with its material obligations under any Finance Document;

(c) the validity, legality or enforceability of any Finance Document; or

(d) the validity, legality or enforceability of any Security expressed to be created pursuant to any SecurityDocument or on the priority and ranking of any of that Security;

“Month” means a period starting on one day in a calendar month and ending on the numerically corresponding dayin the next calendar month, except that:

(a) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day inthat calendar month in which that period is to end if there is one, or if there is not, on the immediatelypreceding Business Day; and

(b) if there is no numerically corresponding day in the calendar month in which that period is to end, that periodshall end on the last Business Day in that calendar month;

The above rules will only apply to the last Month of any period;

“Net Sale Proceeds” has the meaning given to it in Clause 9.4 (Mandatory prepayment — Net Sale Proceeds);11


“New Finance Documents” has the meaning given to it in Amendment Agreement 2;

“New Revolving Facility Transfer Amount” means an amount equal to the Lender’s Revolving FacilityCommitment on the date on which the New Revolving Commitment Lender accedes to this Agreement pursuant toClause 5.5(b)(i) minus US$50,000,000;

“Non-Consenting Lender” has the meaning given to it in Clause 9.13 (Replacement of a Non-Consenting Lenderor Non-Funding Lender);

“Non-Funding Lender” has the meaning given to it in Clause 9.13 (Replacement of a Non-Consenting Lender orNon-Funding Lender);

“Obligor” means the Borrowers and each Guarantor;

“OFWAT” means the Water Services Regulation Authority;

“Operating Account” means the account of CNV with HSBC Bank plc account number 39632130 with sort code400515, Account Title: Cascal N.V. — Operating Account or such other account as CNV, the Agent and theSecurity Agent may from time to time agree in writing;

“Optional Currency” means a currency (other than the Base Currency) which complies with the conditions set outin Clause 4.5 (Conditions relating to Optional Currencies);

“Original Financial Statements” means:

(a) in relation to CNV, the special purpose audited consolidated financial statements of the Group for the financialyear ended March 2007; and

(b) in relation to each Original Obligor other than CNV, its audited financial statements for its financial year endedMarch 2007;

“Original Guarantee Facility Lender” means a Lender listed in Part II of Schedule 1 (The Original Parties) ashaving a Guarantee Facility Commitment;

“Original Obligor” means CNV or an Original Guarantor;

“Original Parent” means Biwater B.V.;

“Original Revolving Facility Lender” means a Lender listed in Part II of Schedule 1 (The Original Parties) ashaving a Revolving Facility Commitment;

“Original Total Commitments” means the aggregate of the Total Revolving Facility Commitments and the TotalGuarantee Facility Commitments prior to the Amendment Date 1;

“Participating Member State” means any member state of the European Communities that adopts or has adoptedthe Euro as its lawful currency in accordance with legislation of the European Community relating to Economic andMonetary Union;

“Party” means a party to this Agreement;

“Perfection Requirements” means the making of the appropriate registrations, filings or notifications of the SecurityDocuments or any other applicable jurisdiction-specific perfection requirements as specifically contemplated by anylegal opinion delivered pursuant to Clause 4 (Conditions of Utilisation) or Clause 27 (Changes to the Obligors);

“Permitted Acquisition” means an acquisition by any Obligor of any business or all or part of the issued sharecapital of a limited liability company where:

12


(a) the total consideration (including associated costs and expenses and any Financial Indebtedness remainingin the acquired company or business at the date of acquisition) (the “Total Consideration”), does not exceedor is equal to US$40,000,000 (or its equivalent in another currency or currencies);

(b) where the Total Consideration does exceed US$40,000,000 (or its equivalent in another currency orcurrencies) and the Agent, upon written request by the relevant Obligor, accompanied by a Business Plan,consents to such acquisition,

provided that

(i) no Event of Default is continuing on the closing date for that acquisition or would occur as a result ofthat acquisition;

(ii) the acquired company carries on, or the business is, a business substantially the same as that carriedon by the Group; and

(iii) if that acquisition is of all of the issued share capital of a limited liability company, the relevant Obligorsupplies to the Agent in sufficient copies for all the Lenders a copy (if any) of:

(A) the most recent annual audited financial statements of that company (consolidated if it hasSubsidiaries); and

(B) the most recent management accounts of that company (consolidated if it has Subsidiaries); or

(c) such acquisition is made with the prior written consent of the Agent;

“Permitted Disposal” means the sale, lease, transfer or other disposal:

(a) of trading stock by any member of the Group in the ordinary course of trading of the disposing entity;

(b) of assets in exchange for other assets comparable or superior as to type, value and quality;

(c) of assets by an Obligor or a Regulated Subsidiary to another Obligor or Regulated Subsidiary provided thatthe Security Agent is satisfied that the Finance Parties will enjoy the same or equivalent Security over thoseassets;

(d) where the aggregate consideration receivable does not exceed US$100,000 (or its equivalent in anothercurrency or currencies) in any financial year of CNV;

(e) made on arm’s length terms in the ordinary course of trade or in connection with arm’s length transactionsentered into for a bona fide commercial purpose in furtherance of the business;

(f) made with the prior written consent of the Agent; or

(g) the surrender or disposal of tax credits, losses, relief or allowances between any member of the Group that isdone on arms length terms for bona fide commercial purposes and for full value;

“Permitted Financial Indebtedness” means:

(a) any Financial Indebtedness arising under any Finance Document;

(b) any Financial Indebtedness that is Existing Indebtedness;13


(c) any Financial Indebtedness arising under a Permitted Loan or a Permitted Guarantee; or

(d) any Financial Indebtedness incurred with the prior written consent of the Agent;

“Permitted Guarantee” means:

(a) any guarantee arising under the Finance Documents;

(b) any guarantee that is Existing Indebtedness;

(c) any guarantee issued by a member of the Group which is not an Obligor or Regulated Subsidiary (as the casemay be) in respect of the Financial Indebtedness of another member of the Group which is not an Obligor orRegulated Subsidiary (as the case may be);

(d) any guarantee issued by a member of the Group which is not an Obligor or Regulated Subsidiary (as the casemay be) in respect of the Financial Indebtedness of an Obligor or Regulated Subsidiary (as the case may be);or

(e) any guarantee issued with the prior written consent of the Agent;

“Permitted Loan” means any loan made by an Obligor to another Obligor or made by a member of the Group whichis not an Obligor to another member of the Group provided that such money shall be subordinated to thisAgreement;

“Permitted Payment” means the following payments that can be made provided no Default is existing:

(a) the Obligors and the Regulated Subsidiaries shall be permitted to downstream to Group companies any newmoney provided that such money shall be subordinated to this Agreement; or

(b) the Obligors and the Regulated Subsidiaries will be permitted to inject funds into other Obligors or RegulatedSubsidiaries for the purpose of curing any default (howsoever defined) of an Obligor or a RegulatedSubsidiary on terms acceptable to the Lenders and subject to an appropriate threshold to be agreed with theLenders;

“Permitted Security” means:

(a) any lien arising by operation of law and in the ordinary course of trading and not as a result of any default oromission by any member of the Group;

(b) any retention of title arrangements and rights of set-off arising in the ordinary course of trading with suppliersof goods to any member of the Group and not as a result of any default or omission by any member of theGroup;

(c) any Security or Quasi Security created pursuant to any Finance Document;

(d) any Security or Quasi Security that is Existing Security; or

(e) any Security or Quasi Security granted with the prior written consent of the Agent;

“PMP” means a professional market party (professionele marktpartij) within the meaning of the Dutch FinancialSupervision Act;

“Prepayment Account” means the account of CNV with HSBC Bank plc, account number 67634039 with sort code400515, Account Title: Cascal N.V. — Prepayment Account or such

14


other account as CNV, the Agent and the Security Agent may from time to time agree in writing;

“Prepayment Date” has the meaning given to it in Clause 9.8 (Prepayment Account);

“Prepayment Proceeds” means Insurance Proceeds, Liquidation Proceeds, Termination Proceeds and Net SaleProceeds which are credited to the Prepayment Account;

“Prepayment Receipt Date” has the meaning given to it in Clause 9.8 (Prepayment Account);

“Proceeds” means all income, dividends, receivables and other payments other than Prepayment Proceedsflowing, directly and indirectly, to CNV from its Subsidiaries or third parties and which are credited to the CollectionAccount or the Operating Account in accordance with the Forecast Model;

“Proportion” has the meaning given to it in Clause 6.1(a)(ii) (Utilisation — Bank Guarantee);

“Quasi Security” means a transaction under which any member of the Group will:

(a) sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to orre-acquired by any other member of the Group;

(b) sell, transfer or otherwise dispose of any of its receivables on recourse terms;

(c) enter into any arrangement under which money or the benefit of a bank or other account may be applied,set-off or made subject to a combination of accounts; or

(d) enter into any other preferential arrangement having a similar effect,

in circumstances where the arrangement or transaction is entered into primarily as a method of raising FinancialIndebtedness or of financing the acquisition of an asset;

“Quotation Day” means, in relation to any period for which an interest rate is to be determined two Business Daysbefore the first day of that period, unless market practice differs in the Relevant Interbank Market for a currency, inwhich case the Quotation Day for that currency will be determined by the Agent in accordance with market practicein the Relevant Interbank Market (and if quotations for that currency and period would normally be given by leadingbanks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days);

“Receipt Date” has the meaning given to it in Clause 9.10 (Collection Account);

“Recent Acquisitions” means the purchase by the Borrower or by any of its direct or indirect Subsidiaries of eachof:

(a) 100 per cent. of the issued share capital of Servilampa S.A.;

(b) 100 per cent. of the issued share capital of Servicomunal S.A.;

(c) 51 per cent. of the issued share capital EJV Company in relation to the acquisition of the concession toprovide water to the Zhumadian region of the Henan Province in the People’s Republic of China (the“Zhumadian Concession”).

“Reference Banks” means, in relation to LIBOR and Mandatory Cost, the principal London offices of Lloyds TSBplc, HSBC Bank plc and Citibank, N.A. or such other banks as may be appointed by the Agent in consultation withCNV;

15


“Refinancing” means any refinancing, regearing, deferral, restructuring, rescheduling, repayment or extension ofany existing debt by any Obligor or any Subsidiary thereof;

“Registration Rights Agreement” means an agreement dated 1 January 2008 relating to registration rights andother matters and made between CNV and Biwater Investments Limited;

“Regulated Subsidiary” means each of BWH Holdings and BWH plc and any of their Subsidiaries or, incircumstances where the business operations of either BWH Holdings and BWH plc are transferred to anothermember of the Group or are being carried out by another member of the Group, that member of the Group;

“Related Fund” means, in relation to a trust, fund or other entity, another trust, fund or other entity which is:

(a) regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities orother financial assets; and

(b) has the same fund manager or asset manager or is owned by the same person as the first trust, fund or otherentity;

“Relevant Interbank Market” means the London interbank market;

“Relevant Jurisdiction” means, in relation to an Obligor:

(a) its jurisdiction of incorporation;

(b) any jurisdiction where any asset subject to or intended to be subject to a Security Document is situated;

(c) any jurisdiction where it conducts its business; and

(d) the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it;

“Relevant Period” has the meaning given to it in Clause 22.5 (Definitions);

“Renewal Request” has the meaning given in Clause 6.1(a)(iii);

“Repayment Date” means in relation to a Revolving Facility Loan, the last day of the Interest Period applicable tothat Revolving Facility Loan;

“Repeating Representations” means each of the representations set out in Clause 20.1 (Status) to Clause 20.6(Governing law and enforcement), Clause 20.8 (No default) to Clause 20.13 (No proceedings pending orthreatened), Clause 20.15 (Legal and Beneficial Ownership) to Clause 20.17 (Environmental Laws and Licences),Clause 20.18 (Group Structure) to Clause 20.19 (No Financial Indebtedness, Guarantees or Security) and Clause20.21 (Intellectual Property) to Clause 20.26 (Insurances);

“Representative” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian;

“Reservations” means any general principles of law limiting the obligations of any Obligor which are specificallyreferred to in any legal opinion delivered pursuant to Clause 4 (Conditions of Utilisation) or Clause 27 (Changes tothe Obligors);

“Revolving Facility” means the revolving credit facility made available under this Agreement as described inparagraph (a) of Clause 2.1 (The Facilities)

16


“Revolving Facility Commitment” means:

(a) in relation to an Original Revolving Facility Lender, the amount set opposite its name under the heading“Revolving Facility Commitment” in Part II of Schedule 1 (The Original Parties) and the amount of any otherRevolving Facility Commitment transferred to it under this Agreement; and

(b) in relation to any other Revolving Facility Lender, the amount of any Revolving Facility Commitmenttransferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement;

“Revolving Facility Lender” means:

(a) any Original Revolving Facility Lender; and

(b) any bank, financial institution, trust, fund or other entity which has become a Revolving Facility Lender inaccordance with Clause 26 (Changes to the Lenders),

which in each case has not ceased to be a Revolving Facility Lender in accordance with this Agreement;

“Revolving Facility Loan” means a loan made or to be made under the Revolving Facility or the principal amountoutstanding for the time being of that Revolving Facility Loan;

“Rollover Loan” means one or more Revolving Facility Loan(s):

(a) made or to be made on the same day that one or more maturing Revolving Facility Loan(s) is or are due to berepaid;

(b) the aggregate amount of which is equal to or less than the maturing Revolving Facility Loan(s);

(c) in the same currency as the maturing Revolving Facility Loan(s); and

(d) made or to be made to the same Borrower for the purpose of refinancing the maturing Revolving FacilityLoan(s);

“Screen Rate” means in relation to LIBOR, the British Bankers Association Interest Settlement Rate for US Dollarsand period, displayed on the appropriate page of the Reuters screen. If the agreed page is replaced or serviceceases to be available, the Agent may specify another page or service displaying the appropriate rate afterconsultation with CNV and the Lenders;

“Secondary Equity Offering” means a secondary public offering of shares of CNV;

“Secondary Proceeds” means all income, dividends, receivables received by CNV, its Subsidiaries or Affiliates inrelation to the completion of the Secondary Equity Offering . net of all costs, fees and expenses incurred inconnection with the Secondary Equity Offering;

“Security” means a mortgage, charge, pledge, lien or other security interest securing any obligation of any personor any other agreement or arrangement having a similar effect;

“Security Documents” means:

(a) the documents listed in paragraph 2 of Sections A and B of Part II and, (if applicable) paragraph 13 of Part IIIof Schedule 2 (Conditions precedent); and

17


(b) any other security document that may at any time be given as security for any of the Liabilities pursuant to orin connection with any Finance Document;

“Security Property” means any property secured pursuant to a Security Document;

“Specified Time” means a time determined in accordance with Schedule 8 (Timetables);

“£” or “Sterling” means the lawful currency of the United Kingdom;

“Subsidiary” means in relation to any company, corporation or other legal entity, (a “holding company”), acompany, corporation or other legal entity:

(a) which is controlled, directly or indirectly, by the holding company;

(b) more than half the issued share capital of which is beneficially owned, directly or indirectly, by the holdingcompany; or

(c) which is a subsidiary of another Subsidiary of the holding company,

and, for this purpose, a company or corporation shall be treated as being controlled by another if that othercompany or corporation is able to determine the composition of the majority of its board of directors or equivalentbody;

“Syndication Side Letter” has the meaning given to it in Amendment Agreement 2;

“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty orinterest payable in connection with any failure to pay or any delay in paying any of the same);

“Taxes Act” means the Income and Corporation Taxes Act 1988;

“Termination Date” means 30 June 2011 in relation to the Revolving Facility and 30 June 2011 or such earlier datearising pursuant to Clause 6.7 (Renewal of a Bank Guarantee) in relation to the Guarantee Facility;

“Termination Proceeds” has the meaning given to it in Clause 9.7 (Mandatory prepayment — TerminationProceeds);

“Total Commitments” means, subject to Clause 5.5 (Additional Uncommitted Revolving Facility Commitments), theaggregate of the Total Revolving Facility Commitments and the Total Guarantee Facility Commitments, beingUS$70,000,000 on Amendment Date 2;

“Total Guarantee Facility Commitments” means the aggregate of the Guarantee Facility Commitments, beingUS$10,000,000 on Amendment Date 2;

“Total New Revolving Facility Commitments” means an amount of up to US$75,000,000;

“Total Revolving Facility Commitments” means, subject to Clause 5.5 (Additional Uncommitted Revolving FacilityCommitments), the aggregate of the Revolving Facility Commitments, being US$60,000,000 at Amendment Date 2;

“Transfer Certificate” means a certificate substantially in the form set out in Schedule 5 (Form of TransferCertificate) or any other form agreed between the Agent and the Borrowers;

“Transfer Date” means, in relation to a transfer, the later of:

(a) the proposed Transfer Date specified in the Transfer Certificate; and18


(b) the date on which the Agent executes the Transfer Certificate;

“Unpaid Sum” means any sum due and payable but unpaid by an Obligor under the Finance Documents;

“US Dollar” and “US$” mean the lawful currency of the United States of America;

“Utilisation” means a Revolving Facility Loan or a Guarantee Facility Utilisation;

“Utilisation Date” means the date on which a Utilisation is, or is to be, made;

“Utilisation Request” means (in relation to a Revolving Facility Loan) a notice substantially in the form set out inPart I of Schedule 3 (Requests) or (in relation to a Bank Guarantee) a notice substantially in the form set out inPart II of Schedule 3 (Requests);

“VAT” means value added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similarnature;

1.2 Construction

(a) Unless a contrary indication appears, any reference in this Agreement to:

(i) the “Agent”, the “Arranger”, any “Finance Party”, the “Issuing Bank”, any “Lender”, any “Obligor”, any“Party”, any “Finance Party” or the “Security Agent” shall be construed so as to include its successors intitle, permitted assigns and permitted transferees;

(ii) “assets” includes present and future properties, revenues and rights of every description;

(iii) a Borrower providing “cash cover” for the Bank Guarantee means that Borrower paying an amount in USDollars to an interest-bearing account in its name and the following conditions are met:

(A) the account is with the Security Agent;

(B) withdrawals from the account may only be made to pay a Finance Party amounts due and payable to itunder this Agreement in respect of that Bank Guarantee until no amount is or may be outstandingunder that Bank Guarantee; and

(C) if the Security Agent or that Borrower have executed a security document over that account, in formand substance satisfactory to the Security Agent with which that account is held, creating a first rankingsecurity interest over that account;

(iv) the “equivalent” in any currency (the “first currency”) of any amount in another currency (the “secondcurrency”) shall be construed as a reference to the amount in the first currency which could be purchasedwith that amount in the second currency at the Agent’s spot rate of exchange for the purchase of the firstcurrency with the second currency in the London foreign exchange market at or about 11:00 a.m. on aparticular day (or at or about such time and on such date as the Agent may from time to time reasonablydetermine to be appropriate in the circumstances);

(v) “guarantee” means any guarantee, bond, indemnity or similar assurance against loss, or any obligation,direct or indirect, actual or contingent, to purchase or

19


assume any indebtedness of any person or to make an investment in or loan to any person or to purchaseassets of any person where, in each case, such obligation is assumed in order to maintain or assist the abilityof such person to meet its indebtedness;

(vi) a “Finance Document” or any other agreement or instrument is a reference to that Finance Document orother agreement or instrument as amended, novated, supplemented, extended, restated (howeverfundamentally and whether or not more onerously) or replaced and includes any change in the purpose of,any extension of or any increase in any facility or the addition of any new facility under that FinanceDocument or other agreement or instrument;

(vii) “indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment orrepayment of money, whether present or future, actual or contingent;

(viii) a “person” includes any individual, firm, company, corporation, government, state or agency of a state or anyassociation, trust, joint venture, consortium or partnership (whether or not having separate legal personality);

(ix) a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having theforce of law) of any governmental, intergovernmental or supranational body, agency, department orregulatory, self-regulatory or other authority or organisation;

(x) a Borrower “repaying” or “prepaying” a Bank Guarantee means:

(A) that Borrower providing cash cover for that Bank Guarantee;

(B) the maximum amount payable under the Bank Guarantee being reduced in accordance with its terms;or

(C) the Issuing Bank being satisfied that it has no further liability under that Bank Guarantee,

and the amount by which a Bank Guarantee is repaid or prepaid under Clauses 1.2(a)(x)(A) and 1.2(a)(x)(B)is the amount of the relevant cash cover or reduction;

(xi) “shares” or “share capital” includes equivalent ownership interests (and “shareholder” and similarexpressions shall be construed accordingly);

(xii) a claim being made under a Bank Guarantee, or such a claim being paid by the Issuing Bank, shall include areference to the inclusion of any amount due (actually or contingently) from the Issuing Bank under that BankGuarantee in any account taken for the purposes of Rule 4.90 or Rule 2.85 of the Insolvency Rules 1986 inthe insolvency proceedings of the beneficiary of that Bank Guarantee or any other person.

(xiii) a provision of law is a reference to that provision as amended or re-enacted; and

(xiv) a time of day is a reference to London or New York time.

(b) Section, Clause and Schedule headings are for ease of reference only.

(c) Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or inconnection with any Finance Document has the same meaning in that Finance Document or notice as in thisAgreement.

20


(d) A Default or an Event of Default is “continuing” if it has not been remedied or waived.

1.3 Third Party Rights

A person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or toenjoy the benefit of any term of this Agreement.

1.4 Dutch Companies

In this Agreement, where it relates to a Dutch Company, a reference to:

(a) a winding-up, administration or dissolution includes a Dutch entity being:

(i) declared bankrupt (failliet verklaard); or

(ii) dissolved (ontbonden);

(b) a moratorium includes surseance van betaling and granted a moratorium includes surseance verleend;

(c) insolvency includes a bankruptcy and moratorium;

(d) a trustee in bankruptcy includes a curator;

(e) an administrator includes a bewindvoerder;

(f) “security right” includes any mortgage (hypotheek), pledge (pandrecht), retention of title arrangement(eigendomsvoorbehoud), right of retention (recht van retentie), right to reclaim goods (recht van reclame),and, in general, any right in rem (beperkt recht), created for the purpose of granting security(goederenrechtelijk zekerheidsrecht);

(g) an attachment includes a beslag; and

(h) a subsidiary includes a dochtermaatschappij as defined in Article 2:24a of the Dutch Civil Code.21


SECTION 2THE FACILITIES

2 THE FACILITIES

2.1 The Facilities

Subject to the terms of this Agreement:

(a) the Revolving Facility Lenders make available to the Borrowers a revolving term facility in an aggregateamount equal to the Total Revolving Facility Commitments; and

(b) the Guarantee Facility Lenders make available to the Borrowers a Multicurrency revolving Guarantee Facilityin an aggregate amount equal to the Total Guarantee Facility Commitments.

2.2 Finance Parties’ rights and obligations

(a) The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party toperform its obligations under the Finance Documents does not affect the obligations of any other Party under theFinance Documents. No Finance Party is responsible for the obligations of any other Finance Party under theFinance Documents.

(b) The rights of each Finance Party under or in connection with the Finance Documents are separate and independentrights and any debt arising under the Finance Documents to a Finance Party from an Obligor shall be a separateand independent debt.

(c) A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under theFinance Documents.

2.3 Obligors’ agent

(a) Each Obligor (other than CNV) irrevocably appoints CNV to act on its behalf as its agent in relation to the FinanceDocuments and irrevocably authorises:

(i) CNV on its behalf to supply all information concerning itself contemplated by this Agreement to the FinanceParties and to give and receive all notices, consents and instructions, to agree, accept and execute on itsbehalf all documents in connection with the Finance Documents (including amendments and variations of andconsents under any Finance Document) and to execute any new Finance Document and to take such otheraction as may be necessary or desirable under or in connection with the Finance Documents; and

(ii) each Finance Party to give any notice, demand or other communication to that Obligor pursuant to theFinance Documents to CNV.

(b) Each Obligor (other than CNV) confirms that:

(i) it will be bound by any action taken by CNV under or in connection with the Finance Documents; and

(ii) each Finance Party may rely on any action purported to be taken by CNV on behalf of that Obligor.22


2.4 Acts of CNV

(a) The respective liabilities of each of the Obligors under the Finance Documents shall not be in any way affected by:

(i) any actual or purported irregularity in any act done, or failure to act, by CNV;

(ii) CNV acting (or purporting to act) in any respect outside any authority conferred upon it by any Obligor; or

(iii) any actual or purported failure by, or inability of, CNV to inform any Obligor of receipt by it of any notificationunder the Finance Documents.

(b) In the event of any conflict between any notices or other communications of CNV and any other Obligor, those ofCNV shall prevail.

3 PURPOSE

3.1 Purpose

(a) Each Borrower shall apply all amounts borrowed by it under the Revolving Facility:

(i) towards financing the consideration payable by that Borrower for the Recent Acquisitions (and the relevantBorrower irrevocably authorises and directs the Agent to make the payments to the relevant recipients on itsbehalf);

(ii) for general corporate purposes and working capital; and

(iii) the transaction expenses incurred by that Borrower and/or each Finance Party in connection with the FinanceDocuments and a Recent Acquisition.

(b) Each Borrower shall apply all amounts borrowed by it under the Guarantee Facility to enable the Issuing Bank toissue Bank Guarantees to replace certain existing guarantees issued on behalf of operating Subsidiaries of CNVwhich are currently secured with cash, to issue new Bank Guarantees, to renew Bank Guarantees or for such otherpurpose as the Agent may agree.

(c) No amount borrowed under the Facilities shall be applied in any manner that may be illegal or contravene anyapplicable law or regulation in any relevant jurisdiction concerning financial assistance by a company for theacquisition of or subscription for shares or concerning the protection of shareholders’ capital.

3.2 Monitoring

No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

4 CONDITIONS OF UTILISATION

4.1 Signing conditions precedent

This Agreement shall not be effective unless the Agent has received all of the documents and other evidence listedin Part I of Schedule 2 (Conditions precedent) in form and substance satisfactory to the Agent. For the avoidance ofdoubt, the Agent has notified CNV and Lenders that the conditions precedent in Part I of Schedule 2 (Conditionsprecedent) have been satisfied.

23


4.2 Initial conditions precedent relating to Utilisation before Amendment Date 1

A Borrower may not deliver a Utilisation Request unless on or before Amendment Date 1, the Agent has received allof the documents and other evidence listed in:

4.2.1 Section A of Part II of Schedule 2 (Conditions precedent) in form and substance satisfactory to the Agent;and

4.2.2 Section B of Part II of Schedule 2 (Conditions precedent) in form and substance satisfactory to the Agent

For the avoidance of doubt, the Agent confirms that the conditions precedent in Sections A and B of Part II ofSchedule 2 (Conditions precedent) have been satisfied.

4.3 Further conditions precedent

The Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) and Clause 6.6 (Issue of a BankGuarantee) if on the date of the Utilisation Request and on the proposed Utilisation Date:

(a) in the case of a Rollover Loan, no Event of Default is continuing or would result from the proposed RevolvingFacility Loan and, in the case of any other Revolving Facility Loan, no Default is continuing or would resultfrom the proposed Revolving Facility Loan; and

(b) in the case of any initial Utilisation, the representations and warranties set out in Clause 20 (Representations)which are made or deemed to be made on the date of the initial Utilisation Request and the Initial UtilisationDate in accordance with Clause 20.28 (Times when representations made) are true and, in the case of anyother Utilisation, the Repeating Representations are true.

4.4 Maximum number of Utilisations

No Borrower may deliver a Utilisation Request if as a result of the proposed Utilisation:

(a) more than ten Revolving Facility Loans would be outstanding; or

(b) more than ten Guarantee Facility Utilisations would be outstanding.

4.5 Conditions relating to Optional Currencies

A currency will constitute an Optional Currency in relation to a Guarantee Facility Utilisation or Revolving FacilityUtilisation if:

(a) it is for Sterling or Euros or any other currency approved by the Lenders on or prior to receipt by the Lendersof the relevant Utilisation Request for that Guarantee Facility Utilisation or Revolving Facility Utilisation (asapplicable); and

(b) it is readily available in the amount required and freely convertible into the Base Currency in the RelevantInterbank Market on the Quotation Day and the Utilisation Date for that Guarantee Facility Utilisation orRevolving Facility Utilisation (as applicable).

4.6 Unavailability of a currency

If before 3.00 p.m. on any Quotation Day:24


(a) the Optional Currency requested is not readily available to the Lenders in the amount required; or

(b) compliance with the Lenders’ obligation to make a Guarantee Facility Utilisation in the proposed OptionalCurrency would contravene a law or regulation applicable to it,

the Lenders will give notice to the Borrowers to that effect by 5:00 p.m. on that day. In this event, the Lenders will berequired to make the Guarantee Facility Utilisation available in the Base Currency (in an amount equal to the BaseCurrency Amount).

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SECTION 3UTILISATION

5 UTILISATION — REVOLVING FACILITY LOANS

5.1 Delivery of a Utilisation Request

Each Borrower may utilise the Revolving Facility by way of a Revolving Facility Loan by delivery to the Agent of aduly completed Utilisation Request not later than the Specified Time.

5.2 Completion of a Utilisation Request

(a) Each Utilisation Request for a Revolving Facility Loan is irrevocable and will not be regarded as having been dulycompleted unless:

(i) it specifies that it is for a Revolving Facility Loan;

(ii) it identifies the relevant Borrower;

(iii) the proposed Utilisation Date is a Business Day within the Availability Period applicable to the RevolvingFacility;

(iv) the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount);

(v) the proposed Interest Period complies with Clause 11 (Interest Periods); and

(vi) it specifies the account and bank (which must be in the principal financial centre of the country of the currencyof the Utilisation in which banks are open for general business on that day or London) to which the proceedsof the Utilisation are to be credited.

(b) Only one Revolving Facility Loan may be requested in each Utilisation Request.

5.3 Currency and amount

(a) The currency specified in a Utilisation Request must be US Dollars.

(b) The amount of the proposed Revolving Facility Loan must be a minimum of US$1,000,000 (or, if in an OptionalCurrency, an amount equivalent to US$1,000,000 when converted pursuant to paragraph (b) of Clause 4.5(Conditions relating to Optional Currencies) for the Revolving Facility or in each case, if less, the Available Facility.

5.4 Lenders’ participation

(a) If the conditions set out in this Agreement have been met, each Lender participating in the Revolving Facility shallmake its participation in each Revolving Facility Loan under the Revolving Facility available by the Utilisation Dateof that Revolving Facility Loan through its Facility Office.

(b) The amount of each Lender’s participation in each Revolving Facility Loan will be equal to the proportion borne byits Available Commitment to the Available Facility immediately prior to making the Revolving Facility Loan.

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5.5 Additional Uncommitted Revolving Facility Commitments

(a) Subject to Clauses 5.5(b) to (e), the Borrowers shall have the option to increase the Total Revolving FacilityCommitments to an amount up to the Total New Revolving Facility Commitments.

(b) The Borrowers may only exercise their option pursuant to Clause 5.5(a) if:

(i) a bank or other financial institution (the “New Revolving Commitment Lender”) accedes by way of aTransfer Certificate to this Agreement as a New Lender pursuant to Clause 26.1 (Assignments and transfersby the Lenders);

(ii) the Lenders’ Revolving Facility Commitment is reduced to a maximum amount of US$50,000,000 by way of atransfer of the New Revolving Facility Transfer Amount pursuant to Clause 26 (Changes to Lenders) in a formacceptable to the Lenders and Part II of Schedule 1 (The Original Parties) shall be considered to be amendedaccordingly;

(iii) subject to the terms and limitations of paragraph 6 of the Syndication Side Letter, it pays:

(A) a participation fee to the New Revolving Commitment Lender in an amount to be agreed between theBorrowers, the New Revolving Commitment Lender and the Lenders; and

(B) a placement fee to the Lenders in an amount to be agreed between the Borrowers and the Lenders.

(c) If the conditions set out in Clause 5.5(b) have been met, each Lender (including the New Revolving CommitmentLender) participating in the Revolving Facility shall make its participation under the Revolving Facility available bythe Utilisation Date through its Facility Office.

(d) The amount of each Lender’s (including the New Revolving Commitment Lender) participation in each RevolvingFacility Loan will be equal to the proportion borne by its Available Commitment to the Available Facility immediatelyprior to making the Revolving Facility Loan.

(e) The Lenders shall be entitled, with the consent of the Borrowers, to make such changes to any fees, interest orMargin payable under this Agreement as are necessary to ensure that the New Revolving Commitment Lenderaccedes to this Agreement as a New Lender.

(f) The Lenders agree only to approach a potential New Revolving Commitment Lender following consultation with theBorrowers.

6 UTILISATION — BANK GUARANTEE

6.1 General

(a) In this Clause 6 (Utilisation — Bank Guarantee) and Clause 7 (Bank Guarantee):

(i) “Expiry Date” means, for a Bank Guarantee, the last day of its Term;

(ii) “Proportion” means, in relation to a Lender in respect of a Bank Guarantee, the proportion (expressed as apercentage) borne by that Lender’s Available Commitment under the Guarantee Facility to the AvailableFacility under the

27


Guarantee Facility immediately prior to the issue of that Bank Guarantee, adjusted to reflect any assignmentor transfer under this Agreement to or by that Lender;

(iii) “Renewal Request” means a written notice delivered to the Agent in accordance with Clause 6.7 (Renewal ofa Bank Guarantee); and

(iv) “Term” means each period determined under this Agreement for which the Issuing Bank is under a liabilityunder a Bank Guarantee.

(b) Any reference in this Agreement to:

(i) the Interest Period of a Bank Guarantee will be construed as a reference to the Term of that Bank Guarantee;

(ii) an amount borrowed includes any amount utilised by way of Bank Guarantee;

(iii) a Utilisation made or to be made to a Borrower includes a Bank Guarantee issued on its behalf;

(iv) a Lender funding its participation in a Utilisation includes a Lender participating in a Bank Guarantee;

(v) amounts outstanding under this Agreement include amounts outstanding under or in respect of any BankGuarantee; and

(vi) an outstanding amount of a Bank Guarantee at any time is the maximum amount that is or may be payable bya Borrower in respect of that Bank Guarantee at that time.

(c) Clause 5 (Utilisation — Revolving Facility Loans) does not apply to a Utilisation by way of Bank Guarantee.

(d) In determining the amount of the Available Facility and a Lender’s Proportion of a proposed Bank Guarantee for thepurposes of this Agreement the Available Commitment of a Lender will be calculated ignoring any cash coverprovided for an outstanding Bank Guarantee.

6.2 Guarantee Facility availability

(a) An amount of the Guarantee Facility not exceeding the Available Facility may be utilised by way of Bank Guarantee.

(b) If any Bank Guarantee is denominated in an Optional Currency, the Agent shall at regular intervals after the date ofthe Bank Guarantee recalculate the Base Currency Amount of that Bank Guarantee by notionally converting into theBase Currency the outstanding amount of that Bank Guarantee on the basis of the Agent’s Spot Rate of Exchangeon the date of calculation.

(c) The Borrowers shall, if requested by the Agent under Clause 6.2(b), ensure that within three Business Dayssufficient Guarantee Facility Utilisations are prepaid to prevent the Base Currency Amount of the Guarantee FacilityUtilisations exceeding the Total Guarantee Facility Commitments following any adjustment to a Base CurrencyAmount under Clause 6.2(b).

6.3 Delivery of a Utilisation Request for Bank Guarantee

A Borrower may request a Bank Guarantee to be issued by delivery to the Agent of a duly completed UtilisationRequest not later than the Specified Time.

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6.4 Completion of a Utilisation Request for Bank Guarantee

Each Utilisation Request for a Bank Guarantee is irrevocable and will not be regarded as having been dulycompleted unless:

(a) it specifies that it is for a Bank Guarantee;

(b) the proposed Utilisation Date is a Business Day within the Availability Period applicable to the GuaranteeFacility;

(c) the currency and amount of the Bank Guarantee comply with Clause 6.5 (Currency and amount);

(d) the form of Bank Guarantee is attached;

(e) the Expiry Date of the Bank Guarantee falls on or before the Termination Date (or, if applicable, the ExtensionDate) applicable to the Guarantee Facility or as otherwise consented to by the Agent;

(f) the Term of the Bank Guarantee shall be 12 months or as otherwise consented to by the Agent;

(g) the delivery instructions for the Bank Guarantee are specified; and

(h) the identity of the beneficiary of the Bank Guarantee is a beneficiary approved by the Issuing Bank and all theGuarantee Facility Lenders.

6.5 Currency and amount

(a) The currency specified in a Utilisation Request for a Bank Guarantee must be the Base Currency or an OptionalCurrency.

(b) The amount of the proposed Bank Guarantee must be such that its Base Currency Amount is less than or equal tothe Available Commitment for the Guarantee Facility.

6.6 Issue of Bank Guarantee

(a) If the conditions set out in this Agreement have been met, and subject to Clause 6.8 (Issuing Bank right of refusal),the Issuing Bank shall issue a Bank Guarantee on the Utilisation Date.

(b) The Issuing Bank will only be obliged to comply with Clause 6.6(a) if on the date of the Utilisation Request orRenewal Request and on the proposed Utilisation Date:

(i) in the case of a Bank Guarantee renewed in accordance with Clause 6.7 (Renewal of a Bank Guarantee), noEvent of Default is continuing or would result from the proposed Utilisation and, in the case of any otherUtilisation, no Default is continuing or would result from the proposed Utilisation; and

(ii) the Repeating Representations are true.

(c) The amount of each Guarantee Facility Lender’s participation in each Bank Guarantee will be equal to itsProportion.

(d) The Agent shall notify the Issuing Bank and each Guarantee Facility Lender of the details of the requested BankGuarantee and its participation in that Bank Guarantee by the Specified Time.

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6.7 Renewal of a Bank Guarantee

(a) A Borrower may request any Bank Guarantee issued on its behalf be renewed by delivery to the Agent of aRenewal Request by the Specified Time.

(b) The Finance Parties shall treat any Renewal Request in the same way as a Utilisation Request for a BankGuarantee except that the conditions set out in Clauses 6.7(d) and 6.7(g) shall not apply.

(c) The terms of each renewed Bank Guarantee shall be the same as those of the relevant Bank Guaranteeimmediately prior to its renewal, except that:

(i) its amount may be less than the amount of the Bank Guarantee immediately prior to its renewal; and

(ii) its Term shall start on the date which was the Expiry Date of the Bank Guarantee immediately prior to itsrenewal, and shall end on the proposed Expiry Date specified in the Renewal Request.

(d) If the conditions set out in this Agreement have been met, (and subject to Clause 6.8 (Issuing Bank right of refusal))the Issuing Bank shall amend and re-issue any Bank Guarantee pursuant to a Renewal Request.

6.8 Issuing Bank right of refusal

(a) The Agent has the right at any time to refuse to renew or issue a Bank Guarantee and require the Borrowers to finda replacement bank to provide a replacement bank guarantee as soon as possible but in any event no later than30 days prior to the Expiry Date of the existing Bank Guarantee.

(b) The Borrowers hereby agrees to provide a replacement bank guarantee in accordance with Clause 6.8(a).

7 BANK GUARANTEE

7.1 Immediately payable

If a Bank Guarantee or any amount outstanding under a Guarantee is expressed to be immediately payable, theBorrowers shall repay or prepay that amount immediately.

7.2 Claims under a Bank Guarantee

(c) The Borrower irrevocably and unconditionally authorises the Issuing Bank to pay any claim made or purported to bemade under a Bank Guarantee requested by it and which appears on its face to be in order (a “claim”).

(d) The Borrowers shall immediately on demand pay to the Agent for the Issuing Bank an amount equal to the amountof any claim under that Bank Guarantee.

(e) The Borrowers acknowledge that the Issuing Bank:

(i) is not obliged to carry out any investigation or seek any confirmation from any other person before paying aclaim; and

(ii) deals in documents only and will not be concerned with the legality of a claim or any underlying transaction orany available set-off, counterclaim or other defence of any person.

30


(f) The obligations of a the Borrowers under this Clause 7.2 will not be affected by:

(i) the sufficiency, accuracy or genuineness of any claim or any other document; or

(ii) any incapacity of, or limitation on the powers of, any person signing a claim or other document.

7.3 Indemnities

(a) The Borrowers shall immediately on demand indemnify the Issuing Bank against any cost, loss or liability incurredby the Issuing Bank (otherwise than by reason of the Issuing Bank’s gross negligence or wilful misconduct) in actingas the Issuing Bank under any Bank Guarantee requested by a Borrower.

(b) Each Guarantee Facility Lender shall (according to its Proportion) immediately on demand indemnify the IssuingBank against any cost, loss or liability incurred by the Issuing Bank (otherwise than by reason of the Issuing Bank’sgross negligence or wilful misconduct) in acting as the Issuing Bank under any Bank Guarantee (unless the IssuingBank has been reimbursed by an Obligor pursuant to a Finance Document).

(c) If any Guarantee Facility Lender is not permitted (by its constitutional documents or any applicable law) to complywith Clause 7.3(b), then that Lender will not be obliged to comply with Clause 7.3(b) and shall instead be deemed tohave taken, on the date the Bank Guarantee is issued (or if later, on the date the Lender’s participation in the BankGuarantee is transferred or assigned to the Guarantee Facility Lender in accordance with the terms of thisAgreement), an undivided interest and participation in the Bank Guarantee in an amount equal to its Proportion ofthat Bank Guarantee. On receipt of demand from the Agent, that Guarantee Facility Lender shall pay to the Agent(for the account of the Issuing Bank) an amount equal to its Proportion of the amount demanded.

(d) The Borrowers shall immediately on demand reimburse any Guarantee Facility Lender for any payment it makes tothe Issuing Bank under this Clause 7.3 in respect of that Bank Guarantee.

(e) The obligations of each Guarantee Facility Lender under this Clause are continuing obligations and will extend tothe ultimate balance of sums payable by that Guarantee Facility Lender in respect of any Bank Guarantee,regardless of any intermediate payment or discharge in whole or in part.

(f) The obligations of any Guarantee Facility Lender under this Clause will not be affected by any act, omission, matteror thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause(without limitation and whether or not known to it or any other person) including:

(i) any time, waiver or consent granted to, or composition with, any Obligor, any beneficiary under a BankGuarantee or other person;

(ii) the release of any other Obligor or any other person under the terms of any composition or arrangement withany creditor of any member of the Group or any other person;

(iii) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up orenforce, any rights against, or security over assets of, any Obligor, any beneficiary under a Bank Guaranteeor other person or any non-

31


presentation or non-observance of any formality or other requirement in respect of any instrument or anyfailure to realise the full value of any security;

(iv) any incapacity or lack of power, authority or legal personality of or dissolution or change in the members orstatus of an Obligor, any beneficiary under a Bank Guarantee or any other person;

(v) any amendment (however fundamental) or replacement of a Finance Document, any Bank Guarantee or anyother document or security;

(vi) any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document, anyBank Guarantee or any other document or security; or

(vii) any insolvency or similar proceedings.

7.4 Rights of contribution

No Obligor will be entitled to any right of contribution or indemnity from any Finance Party in respect of anypayment it may make under this Clause 7.

7.5 Role of the Issuing Bank

(a) Nothing in this Agreement constitutes the Issuing Bank as a trustee or fiduciary of any other person.

(b) The Issuing Bank shall not be bound to account to any Lender for any sum or the profit element of anysum received by it for its own account.

(c) The Issuing Bank may accept deposits from, lend money to and generally engage in any kind of bankingor other business with any member of the Group or any other person.

(d) The Issuing Bank may rely on:

(i) any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

(ii) any statement made by a director, authorised signatory or employee of any person regarding any matterswhich may reasonably be assumed to be within his knowledge or within his power to verify.

(e) The Issuing Bank may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors orother experts.

(f) The Issuing Bank may act in relation to the Finance Documents through its personnel and agents.

(g) The Issuing Bank is not responsible for:

(i) the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by theIssuing Bank, the Agent, the Security Agent, the Arranger, an Obligor or any other person given in or inconnection with any Finance Document; or

(ii) the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any otheragreement, arrangement or document entered into, made or executed in anticipation of or in connection withany Finance Document.

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7.6 Exclusion of liability

(a) Without limiting Clause 7.6(b), the Issuing Bank will not be liable for any action taken by it under or in connectionwith any Finance Document, unless directly caused by its gross negligence or wilful misconduct.

(b) No Party (other than the Issuing Bank) may take any proceedings against any officer, employee or agent of theIssuing Bank in respect of any claim it might have against the Issuing Bank or in respect of any act or omission ofany kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agentof the Issuing Bank may rely on this Clause.

7.7 Credit appraisal by the Lenders

Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection withany Finance Document, each Guarantee Facility Lender confirms to the Issuing Bank that it has been, and willcontinue to be, solely responsible for making its own independent appraisal and investigation of all risks arisingunder or in connection with any Finance Document, including but not limited to, those listed in Clauses 28.14(a) to(d).

33


SECTION 4REPAYMENT, PREPAYMENT AND CANCELLATION

8 REPAYMENT OF REVOLVING FACILITY LOANS AND BANK GUARANTEES

8.1 Repayment of Revolving Facility Loans

Each Borrower shall repay each Revolving Facility Loan on the relevant Repayment Date.

8.2 Repayment of Bank Guarantees

(a) Subject to paragraph (b) of this Clause 8.2, each Borrower shall repay each Bank Guarantee requested by thatBorrower on the Termination Date or the Extension Date should the Borrowers successfully apply to the Agent toextend the term of the Facilities pursuant to Clause 8.3 (Extension Date).

(b) Where the Agent has agreed that the Expiry Date for a Bank Guarantee shall extend beyond the Termination Date(or, if applicable the Extension Date) the relevant Borrower shall provide full cash cover on terms acceptable to theAgent by the Termination Date (or, if applicable the Extension Date) until the Expiry Date and shall repay any suchBank Guarantee on the Expiry Date.

(c) For the avoidance of doubt, in relation to this Clause 8.2 (Repayment of Bank Guarantees) only, the term ‘repay’shall mean the cancellation of a Bank Guarantee in accordance with its terms or as otherwise agreed between theBorrowers and the Agent.

8.3 Extension Date

(a) The Borrowers may apply to the Agent in writing no later than 60 days after the first anniversary of AmendmentDate 2 for approval from the Agent (acting on the instructions of the Lenders) to extend the term of the Facilities tothe Extension Date. For the avoidance of doubt, CHL expressly authorises CNV to act on its behalf with regard tothe delivery of any written application pursuant to this Clause 8.3.

(b) The Agent (acting on the instructions of the Lenders, acting in their absolute discretion) may approve or decline anywritten application made by the Borrowers (or CNV for itself and on behalf of CHL) pursuant to paragraph (a) of thisClause 8.3.

(c) If the Agent (acting on the instructions of the Lenders) agrees to extend the term of the Facilities Date to theExtension Date pursuant to this Clause 8.3, the Borrowers shall pay an extension fee to be agreed between theBorrowers and the Agent (on the instructions of the Majority Lenders) at the time such approval is agreed.

9 PREPAYMENT AND CANCELLATION

9.1 Illegality

If it becomes unlawful in any applicable jurisdiction for a Lender or the Issuing Bank to perform any of its obligationsas contemplated by this Agreement or to fund or maintain its participation in any Utilisation:

(a) that Lender or the Issuing Bank shall promptly notify the Agent upon becoming aware of that event;

(b) upon the Agent notifying the Borrowers:34


(i) the Commitment of that Lender will be immediately cancelled; and/or

(ii) the Issuing Bank shall not be obliged to issue any Bank Guarantee;

(c) each relevant Borrower shall use its best endeavours to procure the release of any outstanding BankGuarantee;

(d) the Guarantee Facility shall cease to be available for the issue of a Bank Guarantee;

(e) each Borrower shall:

(i) repay that Lender’s participation in the Utilisations made to it on the last day of the Interest Period foreach Utilisation occurring after the Agent has notified the Borrowers or, if earlier, the date specified bythe Lender in the notice delivered to the Agent (being no earlier than the last day of any applicablegrace period permitted by law); and

(ii) repay that Lender’s participation in or, as the case may be, the Issuing Bank’s maximum contingentliability under any Bank Guarantee requested by the Borrowers on the Expiry Date of that BankGuarantee or, if earlier, the date specified by the Lender or, as the case may be, the Issuing Bank in thenotice delivered to the Agent (being no earlier than the last day of any applicable grace period permittedby law).

9.2 Voluntary cancellation

The Borrowers may, if they give the Agent not less than 10 Business Days’ (or such shorter period as the MajorityLenders may agree) prior notice, cancel the whole or any part (being a minimum amount of US$1,000,000) of anAvailable Facility and, for the avoidance of doubt, CHL expressly authorises CNV to act on its behalf with regard togiving any such notice pursuant to this Clause 9.2. Any cancellation under this Clause 9.2 in respect of any Facilityshall reduce the Commitment of each Lender rateably under that Facility.

9.3 Voluntary prepayment of Revolving Facility Loans

A Borrower may if it gives the Agent not less than 5 Business Days’ (or such shorter period as the MajorityRevolving Facility Lenders may agree) prior notice, prepay the whole or any part of a Revolving Facility Loan (but ifin part, being an amount that reduces the amount of the Revolving Facility Loan by a minimum amount ofUS$1,000,000) and, for the avoidance of doubt, prepayments under this Clause 9.3 shall include any interestaccrued on the amount prepaid (subject to Break Costs) without penalty.

9.4 Mandatory prepayment — Net Sale Proceeds

(a) In this Clause 9.4:

“Net Sale Proceeds” means the cash or cash equivalent proceeds (including, when received, the cash or cashequivalent proceeds of any deferred consideration, whether by way of adjustment to the purchase price orotherwise, and any amount received in repayment of any Intragroup Debt) received by a member of the Group inconnection with the sale, transfer or other disposal by any member of the Group of an asset exceeding US$100,000(or its equivalent in another currency or currencies) after deducting:

(i) fees and transaction costs properly incurred in connection with that sale, transfer or disposal; and35


(ii) Taxes paid or reasonably estimated by a Borrower to be payable (as certified by that Borrower to the Agent)as a result of that sale, transfer or disposal.

(b) Each Obligor shall ensure and shall procure that each of its Subsidiaries shall ensure that any Net Sale Proceedsare paid into the Prepayment Account for application in accordance with Clause 9.9 (Application of Proceeds).

(c) Each Obligor shall comply with Clause 9.4(b) except that: a Regulated Subsidiary shall only have to comply to theextent that it is permitted to do so pursuant to the terms of the BSTID.

9.5 Mandatory prepayment — Insurance Proceeds


“Insurance Proceeds” means any proceeds (other than in relation to third party liabilities that are actually applied tomeet such liabilities or in relation to consequential loss policies that are actually applied to cover operating losses,loss of profits or business interruption or circumstances where the proceeds received are reinvested in assetscomparable or superior as to type value or quality) exceeding US$100,000 (or its equivalent in another currency orcurrencies) received by any member of the Group under or pursuant to any insurance policy (or equivalent) after thedate of this Agreement.

(b) Each Obligor shall ensure and shall procure that each of its Subsidiaries shall ensure that any Insurance Proceedsare paid into the Prepayment Account for application in accordance with Clause 9.9 (Application of Proceeds)except that a Regulated Subsidiary shall only have to comply to the extent that it is permitted to do so pursuant tothe terms of the BSTID.

9.6 Mandatory prepayment — Liquidation Proceeds


“Liquidation Proceeds” means the cash or cash equivalent proceeds (including, when received, the cash or cashequivalent proceeds of any deferred consideration, whether by way of adjustment to the purchase price orotherwise) received by a member of the Group in connection with an Insolvency Event after deducting fees andtransaction costs properly incurred in connection with that Insolvency Event.

(b) Each Obligor shall ensure and shall procure (subject to applicable laws and regulations) that each of its Subsidiariesshall ensure that any Liquidation Proceeds (or an equal amount) are paid into the Prepayment Account forapplication in accordance with Clause 9.9 (Application of Proceeds).

(c) Clause 9.6(b) shall apply to a Regulated Subsidiary to the extent that it is permitted to do so pursuant to the termsof the BSTID.

9.7 Mandatory prepayment — Termination Proceeds


“Termination Proceeds” means the cash or cash equivalent proceeds (including, when received, the cash or cashequivalent proceeds of any deferred consideration) received by a member of the Group in connection with atermination payment, however defined, made in relation to any agreements, financial or otherwise, entered into byan Obligor and its

36


Subsidiary thereof, after deducting any amounts required to be utilised by the relevant Obligor or Subsidiary thereof.

(b) Each Obligor shall ensure and shall procure that their Subsidiaries shall ensure that any Termination Proceeds (oran equal amount) are paid into the Prepayment Account for application in accordance with Clause 9.10 (Applicationof Proceeds).

(c) Clause 9.7(b) shall apply to a Regulated Subsidiary to the extent that it is permitted to do so pursuant to the termsof the BSTID.

9.8 Prepayment Account

(a) Each Obligor shall ensure and procure that each of its Subsidiaries shall ensure that all Prepayment Proceeds (oran equal amount) are paid directly into (or as soon as practicable after receipt are transferred into) the PrepaymentAccount.

(b) Within five Business Days after the date (the “Prepayment Receipt Date”) on which any such PrepaymentProceeds have been received by any member of the Group (or have become Prepayment Proceeds), CNV shallnotify the Agent of the Prepayment Receipt Date, the amount in US Dollars equal or equivalent to thosePrepayment Proceeds and the proposed date of prepayment of those Prepayment Proceeds (the “PrepaymentDate”) (which must be at least five Business Days after the date of that notice).

(c) No amount may be withdrawn or transferred from the Prepayment Account except:

(i) to make the prepayments required under Clause 9.11 (Application of Proceeds); or

(ii) with the prior consent of all the Lenders.

(d) CNV hereby irrevocably authorises the Agent to procure the withdrawal of amounts credited to thePrepayment Account and apply such amounts against cancellations and prepayments which are dueunder this Agreement in accordance with Clause 9.11 (Application of Proceeds).

9.9 Operating Account

(a) Each Obligor shall ensure and procure each of its Subsidiaries shall ensure that all Proceeds are paid inaccordance with the Forecast Model directly into (or as soon as practicable after receipt are transferredinto the Operating Account but in any event no later than the subsequent Repayment Date.

(b) CNV may continue to make withdrawals from the Operating Account in accordance with the ForecastModel until the occurrence of a Default.

(c) After the occurrence of a Default, CNV hereby irrevocably authorises the Agent to procure the transfer ofall amounts in the Operating Account to the Collection Account or to procure the withdrawal of suchamounts and apply such amounts against repayments, cancellations and prepayments which are dueunder this Agreement in accordance with Clause 9.11 (Application of Proceeds).

9.10 Collection Account

(a) Each Obligor shall ensure and procure that each of its Subsidiaries shall ensure that all Proceeds are paidin accordance with the Forecast Model directly into (or as soon as practicable after receipt are transferredinto) the Collection Account but in any event no later than the subsequent Repayment Date.

37


(b) No amount may be withdrawn or transferred from the Collection Account except:

(i) to make the payments required under Clause 9.11 (Application of Proceeds); or

(ii) with the prior consent of all the Lenders.

(c) CNV irrevocably authorises the Agent to procure the withdrawal of amounts credited to the Collection Account andapply such amounts against cancellations, repayments and prepayments which are due under this Agreement inaccordance with Clause 9.11 (Application of Proceeds).

(d) Within five Business Days after the date (the “Receipt Date”) on which any Proceeds have been received by anymember of the Group (or have become Proceeds), CNV shall notify the Agent of the Receipt Date, the amount inUS Dollars equal or equivalent to those Proceeds and, if CNV elects to prepay, the proposed date of prepayment ofthose Proceeds (the “Collection Date”) (which must be at least five Business Days after the date of that notice).

9.11 Application of Proceeds

(a) Any Proceeds, Prepayment Proceeds and, after the occurrence of an Event of Default, the monies standing to thecredit of the Operating Account shall be applied in the following order, in each case until the relevant Utilisations orother liabilities have been satisfied in full:

(i) first, in prepayment and permanent reduction pro rata of the Revolving Facility Loans;

(ii) second, in cancellation pro rata of any Available Commitment under the Revolving Facility; and

(iii) third, to provide cash cover for any Bank Guarantee issued under the Guarantee Facility.

(b) Any Proceeds, Prepayment Proceeds and monies standing to the credit of the Operating Account, to be applied inrepayment and prepayment of any Revolving Facility Loan under Clause 9.11(a) shall be applied on the earlier ofthe Prepayment Date, the Collection Date and the Repayment Date relating to that Revolving Facility Loan.

9.12 Right of replacement of a single Lender or Issuing Bank

If:

(a) any sum payable to any Lender or Issuing Bank by an Obligor is required to be increased under Clause14.2(c) (Tax gross-up); or

(b) any Lender or Issuing Bank claims indemnification from the Borrowers under Clause 14.3 (Tax indemnity) orClause 15.1 (Increased costs),

the Borrowers may, whilst the circumstance giving rise to the requirement or indemnification continues:

(i)

(A) (if the circumstance relates to a Lender) arrange for the transfer of the whole (but not part only) of thatLender’s Commitment and participations in the Utilisations to a new or existing Lender willing to acceptthat transfer

38


and acceptable to the Borrowers and the remaining Lenders of the relevant Facility; or

(B) (if the circumstance relates to the Issuing Bank) arrange for the cancellation of its appointment asIssuing Bank and the appointment of a new Issuing Bank acceptable to the Borrowers and the Lendersand the transfer of any contingent liability of the Issuing Bank to the new Issuing Bank; or

(ii)

(A) (if the circumstance relates to a Lender) with the prior consent of all the other Lenders, give the Agentnotice of cancellation of the Commitment of that Lender and its intention to procure the repayment ofthat Lender’s participation in the Utilisations granted by that Lender, whereupon the Commitment of thatLender shall immediately be reduced to zero; or

(B) (if the circumstance relates to the Issuing Bank) give the Agent notice of cancellation of its appointmentas Issuing Bank and its intention to procure either the reduction of the Issuing Bank’s contingent liabilityunder any Bank Guarantee to zero or the provision of full cash cover in respect of the Issuing Bank’smaximum contingent liability under each outstanding Bank Guarantee.

On the last day of each Interest Period which ends after the Borrowers have given notice under thisparagraph (ii) (or, if earlier, the date specified by the Borrowers in that notice), the Borrowers shall repay thatLender’s participation in that Utilisation granted by that Lender or, as the case may be, provide full cash coverin respect of any Bank Guarantee issued by the Issuing Bank.

9.13 Replacement of a Non-Consenting Lender or Non-Funding Lender

(a) In this Clause 9.13 and Clause 9.14 (Replacement of Lender);

(i) “Non-Consenting Lender” means any Lender which does not agree to consent, waiver or amendment if:

(A) the Borrowers or the Agent have requested a consent under or waiver or amendment of any provisionof any Finance Document;

(B) that consent, waiver or amendment requires the agreement of all the Lenders; and

(C) the Majority Lenders have agreed to that consent, waiver or amendment.

(ii) “Non-Funding Lender” means:

(A) any Lender which has failed to make or participate in any Utilisation as required by this Agreement; or

(B) any Lender which has given notice to the Borrowers or the Agent that it does not intend to make orparticipate in any Utilisation as required by this Agreement or has repudiated its obligation to do so.

(b) If:

(i) any Lender becomes a Non-Consenting Lender; or

(ii) any Lender becomes a Non-Funding Lender,39


the Borrowers or the Majority Lenders may, if it gives or, as the case may be, they give the Agent and that Lendernot less than 30 days’ prior notice, arrange for the transfer of the whole (but not part only) of that Lender’sCommitment and participations in the Utilisations to a new or existing Lender willing to accept that transfer andacceptable to the Borrowers and the remaining Lenders of the relevant Facility.

9.14 Replacement of a Lender

The replacement of a Lender pursuant to Clause 9.12 (Right of replacement of a single Lender or Issuing Bank) orClause 9.14 (Replacement of a Non-Consenting Lender or Non-Funding Lender) shall be subject to the followingconditions:

(a) no Finance Party shall have any obligation to find a replacement Lender;

(b) any replacement of a Non-Consenting Lender must take place no later than 180 days after the earlier of(A) the date the Non-Consenting Lender notified the Agent of its refusal to agree to the relevant consent,waiver or amendment and (B) the deadline (being not less than 30 days after the Lender received the requestfor the relevant consent, waiver or amendment) by which the Non-Consenting Lender failed to reply to thatrequest.

(c) any Lender replaced pursuant to Clause 9.12 (Right of replacement of a single Lender or Issuing Bank) orClause 9.12 (Replacement of a Non-Consenting Lender or Non-Funding Lender) shall not be required torefund, or to pay or surrender to any other Lender, any of the fees or other amounts received by that Lenderunder any Finance Document; and

(d) any replacement pursuant to Clause 9.12 (Right of replacement of a single Lender or Issuing Bank) or Clause9.13 (Replacement of a Non-Consenting Lender or Non-Funding Lender) of a Lender which is the Agent shallnot affect its role as the Agent.

9.15 Restrictions

(a) Any notice of cancellation or prepayment given by any Party under this Clause 9 shall be irrevocable and, unless acontrary indication appears in this Agreement, specify the date or dates upon which the relevant cancellation orprepayment is to be made and the amount of that cancellation or prepayment.

(b) Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and,subject to any Break Costs, without premium or penalty.

(c) Unless a contrary indication appears in this Agreement, any part of the Revolving Facility which is prepaid may bereborrowed in accordance with the terms of this Agreement.

(d) No Borrower shall repay or prepay all or any part of the Utilisations or cancel all or any part of the Commitmentsexcept at the times and in the manner expressly provided for in this Agreement.

(e) Unless a contrary indication appears in this Agreement, no amount of the Total Commitments cancelled under thisAgreement may be subsequently reinstated.

(f) If the Agent receives a notice under this Clause 9 it shall promptly forward a copy of that notice to either theBorrowers or the affected Lender, as appropriate.

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SECTION 5COSTS OF UTILISATION

10 INTEREST

10.1 Calculation of interest

The rate of interest on each Revolving Facility Loan for each Interest Period is the percentage rate per annumwhich is the aggregate of the applicable:

(a) Margin;

(b) LIBOR; and

(c) Mandatory Cost, if any.

10.2 Payment of interest

The Borrower to which a Revolving Facility Loan has been made shall pay accrued interest on that RevolvingFacility Loan on the last day of each Interest Period (and, if the Interest Period is longer than six Months, on thedates falling at six monthly intervals after the first day of the Interest Period).

10.3 Default interest

(a) If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrueon the overdue amount from the due date up to the date of actual payment (both before and after judgment) at theDefault Interest Rate. Any interest accruing under this Clause 10.3 shall be immediately payable by the Obligor ondemand by the Agent.

(b) If any overdue amount consists of all or part of a Revolving Facility Loan which became due on a day which was nota Repayment Date relating to that Revolving Facility Loan:

(i) the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of thecurrent Interest Period relating to that Revolving Facility Loan; and

(ii) the rate of interest applying to the overdue amount during that first Interest Period shall be the sum of one percent. and the rate which would have applied if the overdue amount had not become due.

(c) Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end ofeach Interest Period applicable to that overdue amount but will remain immediately due and payable.

10.4 Notification of rates of interest

The Agent shall promptly notify the relevant Lenders and the relevant Borrower of the determination of a rate ofinterest under this Agreement.

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11 INTEREST PERIODS

11.1 Selection of Interest Periods

(a) A Borrower may select an Interest Period for a Revolving Facility Loan in the Utilisation Request for that RevolvingFacility Loan.

(b) Subject to this Clause 11 at any time during the Availability Period, a Borrower may select an Interest Period of one(1), two (2), three (3) or six (6) Months or any other period agreed between that Borrower and the Agent (acting onthe instructions of all the Lenders participating in the relevant Revolving Facility Loan).

(c) An Interest Period for a Revolving Facility Loan shall not extend beyond the Termination Date (or, if applicable, theExtension Date) applicable to the Revolving Facility.

(d) A Revolving Facility Loan has one Interest Period only.

11.2 Non-Business Days

If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead endon the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

12 CHANGES TO THE CALCULATION OF INTEREST

12.1 Absence of quotations

Subject to Clause 12.2 (Market disruption), if LIBOR is to be determined by reference to the Reference Banks but aReference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable LIBORshall be determined on the basis of the quotations of the remaining Reference Banks.

12.2 Market disruption

(a) If a Market Disruption Event occurs in relation to a Revolving Facility Loan for any Interest Period, then the rate ofinterest on each Lender’s share of that Revolving Facility Loan for the Interest Period shall be the percentage rateper annum which is the sum of:

(i) the Margin;

(ii) the rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due tobe paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the costto that Lender of funding its participation in that Revolving Facility Loan from whatever source it mayreasonably select; and

(iii) the Mandatory Cost, if any, applicable to that Lender’s participation in the Revolving Facility Loan.

(b) In this Agreement “Market Disruption Event” means:

(i) at or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not available andnone or only one of the Reference Banks supplies a rate to the Agent to determine LIBOR for US Dollars andInterest Period; or

(ii) before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receivesnotifications from a Lender or Lenders (whose

42


participations in a Revolving Facility Loan exceed 35 per cent. of that Revolving Facility Loan) that the cost toit of obtaining matching deposits in the Relevant Interbank Market would be in excess of LIBOR.

12.3 Alternative basis of interest or funding

(a) If a Market Disruption Event occurs and the Agent or the Borrowers so require, the Agent and theBorrowers shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing asubstitute basis for determining the rate of interest.

(b) Any alternative basis agreed pursuant to Clause 12.3(a) shall, with the prior consent of all the Lenders andthe Borrowers, be binding on all Parties.

12.4 Break Costs

(a) Each Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Partyits Break Costs attributable to all or any part of a Revolving Facility Loan or Unpaid Sum being paid by thatBorrower on a day other than the Repayment Date for that Revolving Facility Loan or Unpaid Sum.

(b) Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificateconfirming the amount of its Break Costs for any Interest Period in which they accrue.

13 FEES

13.1 Commitment fee

(a) Subject to this Clause 13.1, CNV shall pay to the Agent (for the account of each Lender) a fee in USDollars computed on a daily basis at an annual percentage rate (such rate being equal to 50 per cent. ofthe applicable Margin on such day) on that Lender’s Available Commitment under each Facility.

(b) The commitment fee is payable on the last day of each successive period of three Months from the date ofthis Agreement until the Termination Date (or, if applicable, the Extension Date) and, if cancelled, for all ofthe cancelled amount of the relevant Lender’s Commitment at the time the cancellation is effective.

13.2 Structuring fee

CNV shall pay to the Arranger a structuring fee in the amount and at the times agreed in the Fee Letter.

13.3 Agency fee

CNV shall pay to the Agent (for its own account) an agency fee in the amount and at the times agreed inthe Fee Letter.

13.4 Security Agent’s fee

CNV shall pay to the Security Agent (for its own account) an agency fee in the amount and at the timesagreed in the Fee Letter.

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13.5 Fee payable in respect of Bank Guarantee

(a) Each Borrower shall pay to the Issuing Bank any applicable fronting fee in respect of any Bank Guaranteerequested by it on the outstanding amount of any Bank Guarantee (after deducting from such amount the amount ofthe Issuing Bank’s (or its Affiliate’s) participation, if any, in such Bank Guarantee) from the period of its issue until itsExpiry Date.

(b) Each Borrower shall pay to the Agent (for the account of any Guarantee Facility Lender) a guarantee fee in USDollars computed on a daily basis at an annual percentage rate (such rate being equal to the applicable Margin) onthe outstanding amount of any Bank Guarantee requested by it for the period from the issue of that Bank Guaranteeuntil its Expiry Date. This fee shall be distributed according to each Lender’s Proportion of that Bank Guarantee.

(c) The fee on a Bank Guarantee shall be payable on the first day of each successive period of three Months (or suchshorter period as shall end on the Expiry Date for that Bank Guarantee) starting on the date of issue of that BankGuarantee.

(d) If a Borrower’s cash covers any part of a Bank Guarantee then:

(i) the fronting fee payable to the Issuing Bank and the guarantee fee payable for the account of each GuaranteeFacility Lender shall continue to be payable until the expiry of the Bank Guarantee;

(ii) that Borrower will be entitled to withdraw the interest accrued on the cash cover to pay those fees.

13.6 Payment of fees

(a) The Borrowers (as applicable) shall pay the fees set out in Clause 13.1 (Commitment fees) and Clause 13.5 (Feepayable in respect of Bank Guarantee) to the Agent’s bank account pursuant to Clause 34.1 (Payments to Agent).

(b) Any other fees shall be paid in accordance with the terms of the Fee Letter.44


SECTION 6ADDITIONAL PAYMENT OBLIGATIONS

14 TAX GROSS UP AND INDEMNITIES

14.1 Definitions

(a) In this Agreement:

“Protected Party” means a Finance Party which is or will be subject to any liability, or required to makeany payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed forthe purposes of Tax to be received or receivable) under a Finance Document.

“Qualifying Lender” means:

(i) in relation to a Tax Deduction in respect of Tax imposed by the United Kingdom, a Lender (other than aLender within sub-paragraph (ii) which is beneficially entitled to interest payable to that Lender in respect ofan advance under a Finance Document and is:

(A) a Lender:

1. which is a bank (as defined for the purpose of section 879 of the Income Tax Act) making anadvance under a Finance Document; or

2. in respect of an advance made under a Finance Document by a person that was a bank (asdefined for the purpose of section 879 of the Income Tax Act) at the time that that advance wasmade,

and which is within the charge to United Kingdom corporation tax as respects any payments of interestmade in respect of that advance; or

(B) a Lender which is:

1. a company resident in the United Kingdom for United Kingdom tax purposes;

2. a partnership each member of which is:

(a) a company so resident in the United Kingdom; or

(b) a company not so resident in the United Kingdom which carries on a trade in the UnitedKingdom through a permanent establishment and which brings into account in computingits chargeable profits (for the purposes of section 11(2) of the Taxes Act) the whole of anyshare of interest payable in respect of that advance that falls to it by reason of sections 114and 115 of the Taxes Act;

3. a company not so resident in the United Kingdom which carries on a trade in the United Kingdomthrough a permanent establishment and which brings into account interest payable in respect ofthat advance in computing the chargeable profits (for the purposes of section 11(2) of the TaxesAct) of that company; or

(C) a Treaty Lender with respect to the United Kingdom;45


(ii) in relation to a Tax Deduction in respect of Tax imposed by the Netherlands:

(A) a Lender; or

(B) a Treaty Lender with respect to the Netherlands;

(iii) a building society (as defined for the purpose of section 880 of the Income Tax Act.

“Tax Confirmation” means a confirmation by a Lender that the person beneficially entitled to interest payable tothat Lender in respect of an advance under a Finance Document is either:

(i) a company resident in the United Kingdom for United Kingdom tax purposes; or

(ii) a partnership each member of which is:

(A) a company so resident in the United Kingdom; or

(B) a company not so resident in the United Kingdom which carries on a trade in the United Kingdomthrough a permanent establishment and which brings into account in computing its chargeable profits(for the purposes of section 11(2) of the Taxes Act) the whole of any share of interest payable inrespect of that advance that falls to it by reason of sections 114 and 115 of the Taxes Act; or

a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through apermanent establishment and which brings into account interest payable in respect of that advance in computingthe chargeable profits (for the purposes of section 11(2) of the Taxes Act) of that company.

“Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.

“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a FinanceDocument.

“Tax Payment” means either the increase in a payment made by an Obligor to a Finance Party under Clause 14.2(Tax gross-up) or a payment under Clause 14.3 (Tax indemnity).

“Treaty Lender” means, in respect of a jurisdiction, a Lender entitled under the provisions of a double taxationtreaty to receive payments of interest from a person resident in that jurisdiction without a Tax Deduction (subject tothe completion of any necessary procedural formalities.)

“UK Non-Bank Lender” means:

(i) where a Lender becomes a Party on the day on which this Agreement is entered into, a Lender listed inSchedule 1 (The Original Parties); and

(ii) where a Lender becomes a Party after the day on which this Agreement is entered into, a Lender which givesa Tax Confirmation in the Transfer Certificate which it executes on becoming a Party.

(b) Unless a contrary indication appears, in this Clause 14 a reference to “determines” or “determined” means adetermination made in the absolute discretion of the person making the determination.

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14.2 Tax gross-up

(a) Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction isrequired by law.

(b) The Borrowers shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there isany change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. Similarly, a Lender shall notifythe Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives suchnotification from a Lender it shall notify the Borrowers and that Obligor.

(c) If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligorshall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the paymentwhich would have been due if no Tax Deduction had been required.

(d) An Obligor is not required to make an increased payment to a Lender under Clause 14.2(c) for a Tax Deduction inrespect of Tax imposed on a payment of interest on a Loan, if on the date on which the payment falls due:

(i) the payment could have been made to the relevant Lender without a Tax Deduction if it was a QualifyingLender, but on that date that Lender is not or has ceased to be a Qualifying Lender other than as a result ofany change after the date it became a Lender under this Agreement in (or in the interpretation, administration,or application of) any law or Treaty, or any published practice or concession of any relevant taxing authority;or

(ii)

(A) the relevant Lender is a Qualifying Lender solely under sub-paragraph (i)(B) of the definition ofQualifying Lender;

(B) an officer of HM Revenue & Customs has given (and not revoked) a direction (a “Direction”) undersection 931 of the Income Tax Act (as that provision has effect on the date on which the relevantLender became a Party) which relates to that payment and that Lender has received from that Obligoror the Borrowers a certified copy of that Direction; and

(C) the payment could have been made to the Lender without any Tax Deduction in the absence of thatDirection; or

(iii) the relevant Lender is a Qualifying Lender solely under sub-paragraph (i)(B) of the definition of QualifyingLender and it has not, other than by reason of any change after the date of this Agreement in (or in theinterpretation, administration or application of) any law, or any published practice or concession of anyrelevant taxing authority, given a Tax Confirmation to the Borrowers; or

(iv) the relevant Lender is a Treaty Lender and the Obligor making the payment is able to demonstrate that thepayment could have been made to the Lender without the Tax Deduction had that Lender complied with itsobligations under Clause 14.2(g).

(e) If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any paymentrequired in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

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(f) Within thirty days of making either a Tax Deduction or any payment required in connection with that Tax Deduction,the Obligor making that Tax Deduction shall deliver to the Agent for the Finance Party entitled to the paymentevidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable)any appropriate payment paid to the relevant taxing authority.

(g) A Treaty Lender and each Obligor which makes a payment to which that Treaty Lender is entitled shall co-operatein completing any procedural formalities necessary for that Obligor to obtain authorisation to make that paymentwithout a Tax Deduction.

(h) A UK Non-Bank Lender which becomes a Party on the day on which this Agreement is entered into gives a TaxConfirmation to the Borrowers by entering into this Agreement.

(i) A UK Non-Bank Lender shall promptly notify the Borrowers and the Agent if there is any change in the position fromthat set out in the Tax Confirmation.

14.3 Tax indemnity

(a) The Borrowers shall (within three Business Days of demand by the Agent) pay to a Protected Party an amountequal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly)suffered for or on account of Tax by that Protected Party in respect of a Finance Document.

(b) Clause 14.3(a) shall not apply:

(i) with respect to any Tax assessed on a Finance Party:

(A) under the law of the jurisdiction in which that Finance Party is incorporated or, if different, thejurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or

(B) under the law of the jurisdiction in which that Finance Party’s Facility Office is located in respect ofamounts received or receivable in that jurisdiction,

if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sumdeemed to be received or receivable) by that Finance Party; or

(ii) to the extent a loss, liability or cost:

(A) is compensated for by an increased payment under Clause 14.2 (Tax gross-up); or

(B) would have been compensated for by an increased payment under Clause 14.2 (Tax gross-up) but wasnot so compensated solely because one of the exclusions in Clause 14.2(d) applied.

(c) A Protected Party making, or intending to make, a claim under Clause 14.3(a) shall promptly notify the Agent of theevent which will give, or has given, rise to the claim, following which the Agent shall notify the Borrowers.

(d) A Protected Party shall, on receiving a payment from an Obligor under this Clause 14.3, notify the Agent.

14.4 Tax Credit

If an Obligor makes a Tax Payment and the relevant Finance Party determines that:48


(a) a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part, or to thatTax Payment; and

(b) that Finance Party has obtained, utilised and retained that Tax Credit,

the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after thatpayment) in the same after-Tax position as it would have been in had the Tax Payment not been required to bemade by the Obligor.

14.5 Stamp taxes

The Borrowers shall pay and, within three Business Days of demand, indemnify each Finance Party against anycost, loss or liability that Finance Party incurs in relation to all stamp duty, stamp duty land tax, registration andother similar Taxes payable in respect of any Finance Document.

14.6 Value added tax

(a) All amounts set out, or expressed to be payable under a Finance Document by any Party to a Finance Party which(in whole or in part) constitute the consideration for VAT purposes shall be deemed to be exclusive of any VATwhich is chargeable on such supply, and accordingly, subject to Clause 14.6(c), if VAT is chargeable on any supplymade by any Finance Party to any Party under a Finance Document, that Party shall pay to the Finance Party (inaddition to and at the same time as paying the consideration) an amount equal to the amount of the VAT (and suchFinance Party shall promptly provide an appropriate VAT invoice to such Party).

(b) If VAT is chargeable on any supply made by any Finance Party (the “Supplier”) to any other Finance Party (the“Recipient”) under a Finance Document, and any Party (the “Relevant Party”) is required by the terms of anyFinance Document to pay an amount equal to the consideration for such supply to the Supplier (rather than beingrequired to reimburse the Recipient in respect of that consideration), such Party shall also pay to the Supplier (inaddition to and at the same time as paying such amount) an amount equal to the amount of such VAT. TheRecipient will promptly pay to the Relevant Party an amount equal to any credit or repayment from the relevant taxauthority which it reasonably determines relates to the VAT chargeable on that supply.

(c) Where a Finance Document requires any Party to reimburse a Finance Party for any costs or expenses, that Partyshall also at the same time pay and indemnify the Finance Party against all VAT incurred by the Finance Party inrespect of the costs or expenses to the extent that the Finance Party reasonably determines that neither it nor anyother member of any group of which it is a member for VAT purposes is entitled to credit or repayment from therelevant tax authority in respect of the VAT.

15 INCREASED COSTS

15.1 Increased costs

(a) Subject to Clause 15.3 (Exceptions) the Borrowers shall, within three Business Days of a demand by the Agent, payfor the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of itsAffiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or applicationof) any law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement.

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(b) In this Agreement “Increased Costs” means:

(i) a reduction in the rate of return from the Facility or on a Finance Party’s (or its Affiliate’s) overall capital;

(ii) an additional or increased cost; or

(iii) a reduction of any amount due and payable under any Finance Document,

which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to thatFinance Party having entered into its Commitment or funding or performing its obligations under any FinanceDocument.

15.2 Increased cost claims

(a) A Finance Party intending to make a claim pursuant to Clause 15.1 (Increased costs) shall notify the Agent of theevent giving rise to the claim, following which the Agent shall promptly notify the Borrowers.

(b) Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming theamount of its Increased Costs.

15.3 Exceptions

(a) Clause 15.1 (Increased costs) does not apply to the extent any Increased Cost is:

(i) attributable to a Tax Deduction required by law to be made by an Obligor;

(ii) compensated for by Clause 14.3 (Tax indemnity) (or would have been compensated for under Clause 14.3(Tax indemnity) but was not so compensated solely because any of the exclusions in Clause 14.3(b) applied);

(iii) compensated for by the payment of the Mandatory Cost; or

(iv) attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.

(b) In this Clause 15.3, a reference to a “Tax Deduction” has the same meaning given to the term in Clause 14.1(Definitions).

16 OTHER INDEMNITIES

16.1 Currency indemnity

(a) If any sum due from an Obligor under the Finance Documents (a “Sum”), or any order, judgment or awardgiven or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which thatSum is payable into another currency (the “Second Currency”) for the purpose of:

(i) making or filing a claim or proof against that Obligor; and

(ii) obtaining or enforcing an order, judgment or award in relation to any litigation or arbitrationproceedings,

that Obligor shall as an independent obligation, within three Business Days of demand, indemnify eachFinance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of theconversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the

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First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at thetime of its receipt of that Sum.

(b) Each Obligor waives any right it may have in any jurisdiction to pay any amount under the FinanceDocuments in a currency or currency unit other than that in which it is expressed to be payable.

16.2 Other indemnities

The Borrowers shall (or shall procure that an Obligor will), within three Business Days of demand, indemnify eachFinance Party against any cost, loss or liability incurred by that Finance Party as a result of:

(a) the occurrence of any Event of Default;

(b) a failure by an Obligor to pay any amount due under a Finance Document on its due date, including withoutlimitation, any cost, loss or liability arising as a result of Clause 33 (Sharing among the Finance Parties);

(c) funding, or making arrangements to fund, its participation in a Utilisation requested by a Borrower in aUtilisation Request but not made by reason of the operation of any one or more of the provisions of thisAgreement (other than by reason of default or negligence by that Finance Party alone); or

(d) a Utilisation (or part of a Utilisation) not being prepaid in accordance with a notice of prepayment given by aBorrower or as required by this Agreement.

16.3 Indemnity to the Agent and the Security Agent

The Borrowers shall promptly indemnify the Agent and the Security Agent against any cost, loss or liability incurredby the Agent and the Security Agent (acting reasonably) as a result of:

(a) investigating any event which it reasonably believes is a Default; or

(b) acting or relying on any notice, request or instruction which it reasonably believes to be genuine,correct and appropriately authorised.

17 MITIGATION BY THE LENDERS

17.1 Mitigation

(a) Each Finance Party shall, in consultation with the Borrowers, take all reasonable steps to mitigate anycircumstances which arise and which would result in any amount becoming payable under or pursuant to, orcancelled pursuant to, any of Clause 9.1 (Illegality), Clause 14 (Tax gross-up and indemnities) or Clause 15(Increased costs) including (but not limited to) transferring its rights and obligations under the Finance Documents toanother Affiliate or Facility Office.

(b) Clause 17.1(a) does not in any way limit the obligations of any Obligor under the Finance Documents.51


17.2 Limitation of liability

(a) The Borrowers shall indemnify each Finance Party for all costs and expenses reasonably incurred by that FinanceParty as a result of steps taken by it under Clause 17.1 (Mitigation).

(b) A Finance Party is not obliged to take any steps under Clause 17.1 (Mitigation) if, in the opinion of that FinanceParty (acting reasonably), to do so might be prejudicial to it.

18 COSTS AND EXPENSES

18.1 Transaction expenses

The Borrowers shall promptly on demand pay the Agent, the Security Agent and the Arranger the amount of allreasonable costs and expenses (including legal fees) incurred by any of them in connection with the negotiation,preparation, printing, execution and syndication of:

(a) this Agreement and any other documents referred to in this Agreement; and

(b) any other Finance Documents executed after the date of this Agreement.

18.2 Amendment costs

If an Obligor requests an amendment, waiver or consent, the Borrowers shall, within three Business Days ofdemand, reimburse the Agent and the Security Agent for the amount of all costs and expenses (including legal fees)reasonably incurred by the Agent or the Security Agent in responding to, evaluating, negotiating or complying withthat request or requirement.

18.3 Enforcement costs

The Borrowers shall, within three Business Days of demand, pay to each Finance Party the amount of all costs andexpenses (including legal fees) incurred by that Finance Party in connection with the enforcement of, or thepreservation of any rights under, any Finance Document.

18.4 Transaction undertaking to pay

(a) The Borrowers undertake to pay each Finance Party within three Business Days of demand an amount equal to anyliability, damages, loss, cost or expense (including legal fees, costs and expenses) reasonably incurred by thatFinance Party or any of its Affiliates or any of its (or its Affiliates’) directors, officers, employees or agents (each a“Relevant Party”) arising out of, in connection with or based on any actual or potential action, claim, suit,investigation or proceeding arising out of, in connection with or based on:

(i) the use of proceeds of any Revolving Facility Loan; or

(ii) the use of any Bank Guarantee,

except to the extent finally judicially determined to have resulted from the gross negligence or wilful misconduct ofthat Relevant Party.

(b) The Borrowers undertake to pay each Finance Party, within three Business Days of demand, an amount equal toany cost or expense (including legal fees, costs and expenses) incurred by any Relevant Party in connection withinvestigating, preparing,

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pursuing or defending any action, claim, suit, investigation or proceeding arising out of, in connection with or basedon any of the above, whether or not pending or threatened.

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SECTION 7GUARANTEE AND SECURITY

19 GUARANTEE AND INDEMNITY

19.1 Guarantee and indemnity

Each Guarantor irrevocably and unconditionally jointly and severally:

(a) guarantees to each Finance Party punctual performance by each other Obligor of all that Obligor’s obligationsunder the Finance Documents;

(b) undertakes with each Finance Party that whenever another Obligor does not pay any amount when due underor in connection with any Finance Document, that Guarantor shall immediately on demand pay that amountas if it was the principal obligor; and

(c) agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid orillegal, it will, as an independent and primary obligation, indemnify that Finance Party immediately on demandagainst any cost, loss or liability it incurs as a result of an Obligor not paying any amount which would, but forsuch unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the datewhen it would have been due. The amount payable by a Guarantor under this indemnity will not exceed theamount it would have had to pay under this Clause 19 if the amount claimed had been recoverable on thebasis of a guarantee.

19.2 Continuing guarantee

This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligorunder the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.

19.3 Reinstatement

If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any security forthose obligations or otherwise) is made by a Finance Party in whole or in part on the basis of any payment, securityor other disposition which is avoided or must be restored in insolvency, liquidation or otherwise, without limitation,then the liability of each Guarantor under this Clause 19 will continue or be reinstated as if the discharge, release orarrangement had not occurred.

19.4 Waiver of defences

The obligations of each Guarantor under this Clause 19 will not be affected by an act, omission, matter or thingwhich, but for this Clause 19, would reduce, release or prejudice any of its obligations under this Clause 19 (withoutlimitation and whether or not known to it or any Finance Party) including:

(a) any time, waiver or consent granted to, or composition with, any Obligor or other person;

(b) the release of any other Obligor or any other person under the terms of any composition or arrangement withany creditor of any member of the Group or any other person;

54


(c) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up orenforce, any rights against, or security over assets of, any Obligor or other person or any non-presentation ornon-observance of any formality or other requirement in respect of any instrument or any failure to realise thefull value of any security;

(d) any incapacity or lack of power, authority or legal personality of or dissolution or change in the members orstatus of an Obligor or any other person;

(e) any amendment, novation, supplement, extension, restatement (however fundamental and whether or notmore onerous) or replacement of any Finance Document or any other document or security including anychange in the purpose of, any extension of or any increase in any facility or the addition of any new facilityunder any Finance Document or other document or security;

(f) any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document orany other document or security; or

(g) any insolvency or similar proceedings.

19.5 Immediate recourse

Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on itsbehalf) to proceed against or enforce any other rights or security or claim payment from any person before claimingfrom that Guarantor under this Clause 19. This waiver applies irrespective of any law or any provision of a FinanceDocument to the contrary.

19.6 Appropriations

Until all amounts which may be or become payable by the Obligors under or in connection with the FinanceDocuments have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:

(a) refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party(or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in suchmanner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall beentitled to the benefit of the same; and

(b) hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of anyGuarantor’s liability under this Clause 19.

19.7 Deferral of Guarantors’ rights

Until all amounts which may be or become payable by the Obligors under or in connection with the FinanceDocuments have been irrevocably paid in full and unless the Agent (or, as the case may be, the Security Agent)otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of itsobligations under the Finance Documents or by reason of any amount being payable, or litigation arising under thisClause 19:

(a) to be indemnified by an Obligor;

(b) to claim any contribution from any other guarantor of any Obligor’s obligations under the Finance Documents;55


(c) to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of theFinance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or inconnection with, the Finance Documents by any Finance Party;

(d) to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform anyobligation, in respect of which any Guarantor has given a guarantee, undertaking or indemnity under Clause19.1 (Guarantee and indemnity);

(e) to exercise any right of set-off against any Obligor; and/or

(f) to claim or prove as a creditor of any Obligor in competition with any Finance Party.

If a Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit,payment or distribution to the extent necessary to enable all amounts which may be or become payable to theFinance Parties by the Obligors under or in connection with the Finance Documents to be repaid in full on trust forthe Finance Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct forapplication in accordance with Clause 34 (Payment mechanics) of this Agreement.

19.8 Release of Guarantors’ right of contribution

If any Guarantor (a “Retiring Guarantor”) ceases to be a Guarantor in accordance with the terms of the FinanceDocuments for the purpose of any sale or other disposal of that Retiring Guarantor then on the date such RetiringGuarantor ceases to be a Guarantor:

(a) that Retiring Guarantor is released by each other Guarantor from any liability (whether past, present or futureand whether actual or contingent) to make a contribution to any other Guarantor arising by reason of theperformance by any other Guarantor of its obligations under the Finance Documents; and

(b) each other Guarantor waives any rights it may have by reason of the performance of its obligations under theFinance Documents to take the benefit (in whole or in part and whether by way of subrogation or otherwise) ofany rights of the Finance Parties under any Finance Document or of any other security taken pursuant to, orin connection with, any Finance Document where such rights or security are granted by or in relation to theassets of the Retiring Guarantor.

19.9 Additional security

This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now orsubsequently held by any Finance Party

19.10 Limitations

The guarantee of any Guarantor giving a guarantee other than in respect of its Subsidiary is subject to thefollowing limitations:

(a) The guarantee of any Guarantor incorporated in England shall be deemed to be given only to the extent that itwould not result in this guarantee constituting unlawful financial assistance within the meaning of Section 151of the Companies Act 1985

(b) The guarantee of any Dutch Guarantor shall be deemed to have been given only to the extent that suchguarantee does not violate the prohibition on financial

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assistance contained in Sections 2:98c and 2:207c of the Dutch Civil Code (Burgerlijk Wetboek).

(c) The guarantee of any Additional Guarantor is subject to any limitations relating to that Additional Guarantorset out in any relevant Accession Letter.

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SECTION 8REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

20 REPRESENTATIONS

Each Obligor shall make the representations and warranties set out in this Clause 20 on the date set out in Clause20.28 (Times when representations made) in relation to itself and each of its Subsidiaries unless otherwise stated inthis Agreement.

20.1 Status

(a) It and each of its Subsidiaries is duly incorporated and validly existing under the law of its jurisdiction ofincorporation.

(b) Otherwise as specifically notified by the Borrowers to the Agent in writing, it and each of its Subsidiaries has thepower to own or utilise the assets necessary to carry out its business and carry on its business as it is being, and isproposed to be, conducted.

20.2 Binding obligations

The obligations expressed to be assumed by it in each Finance Document to which it is or will be a party are legal,valid, binding and enforceable, subject to:

(a) any applicable Reservations; or

(b) in the case of any Security Document, any applicable Perfection Requirements.

20.3 Non-conflict with other obligations

The entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not andwill not:

(a) conflict with:

(i) any law or regulation applicable to it;

(ii) its or any of its Subsidiaries’ constitutional documents; or

(iii) any agreement or instrument binding upon it or any of its Subsidiaries or any of its or any of itsSubsidiaries’ assets or constitute a default or termination event (however described), in each case tothe extent that it would reasonably be expected to have a Material Adverse Effect;

(b) (except as provided in any Security Document or to the extent Permitted Security) result in the existence of,or oblige it or any of its Subsidiaries to create any Security over it or any of its Subsidiaries assets.

20.4 Power and authority

It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into,performance and delivery of, the Finance Documents to which it is or will be a party and the transactionscontemplated by those Finance Documents.

20.5 Validity and admissibility in evidence

All Authorisations required:58


(a) to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documentsto which it is a party and the transactions contemplated by the Finance Documents;

(b) to make the Finance Documents to which it is a party admissible in evidence in its Relevant Jurisdictions,subject to any applicable Reservations; and

(c) to enable it to create the Security purported to be created by it pursuant to any Security Document and,subject to any applicable Reservations, to ensure that such Security has the priority and ranking it isexpressed to have,

have been obtained or effected and are in full force and effect, save for complying with any applicable PerfectionRequirements, or will have been obtained or effected and will be in full force and effect before the first UtilisationRequest.

20.6 Governing law and enforcement

Subject to any applicable Reservations:

(a) the choice of law specified in each Finance Document as the governing law of each Finance Document will berecognised and enforced in its Relevant Jurisdictions; and

(b) any judgment obtained in England in relation to a Finance Document (or in the jurisdiction of the governinglaw of that Finance Document) will be recognised and enforced in its Relevant Jurisdictions and, in relation toa Finance Document governed by a law other than English law, in the jurisdiction of the governing law of thatFinance Document.

20.7 No filing or stamp taxes

Subject to any applicable Reservations under the law of its Relevant Jurisdictions it is not necessary that theFinance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction or that anystamp, registration, notarial or similar taxes or fees be paid on or in relation to the Finance Documents or thetransactions contemplated by the Finance Documents.

20.8 No default

(a) No Event of Default is continuing or would reasonably be expected to result from the making of any Utilisation or theentry into, performance of, or any transaction contemplated by, any Finance Document.

(b) No other event or circumstance is outstanding which constitutes (or which would, with the lapse of time, the givingof notice, the making of any determination under the relevant document or any combination of the foregoing,constitute) a default or termination event (however described) under any other agreement or instrument which isbinding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject which wouldreasonably be expected to have a Material Adverse Effect.

20.9 No breach of law

It has not (and none of its Subsidiaries has) breached any law or regulation which breach has, or would reasonablybe expected to have, a Material Adverse Effect.

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20.10 Representation in relation to Forecast Model

(a) Any factual information provided by or on behalf of any member of the Group for the purposes of the ForecastModel was true and accurate in all material respects as at the date it was provided or as at the date (if any) atwhich it is stated.

(b) The financial projections contained in the Forecast Model have been prepared on the basis of recent historicalinformation and on the basis of reasonable assumptions.

(c) Nothing has occurred or been omitted from the Forecast Model and no information has been given or withheld thatresults in the information contained in the Forecast Model being untrue or misleading in any material respect.

20.11 Financial statements

(a) Its Original Financial Statements prepared in accordance with the Applicable Accounting Principles consistentlyapplied.

(b) Its Original Financial Statements fairly represent its financial condition and operations as at the end of and for therelevant financial year.

(c) There has been no material adverse change in its assets, business, financial condition (or, in the case of CNV, theassets, business or financial condition of the Group) since the date to which its Original Financial Statements werelast audited.

(d) The financial year end of the Group and each member of the Group is March other than members incorporated inChile, Mexico, Panama, Indonesia, the Cayman Islands and China (including the Hong Kong SpecialAdministrative Region) for whom the financial year end is December.

20.12 Pari passu ranking

Subject to any applicable Reservations without limiting Clause 20.14 (Security), its payment obligations under theFinance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinatedcreditors, except for obligations mandatorily preferred by law applying to companies generally.

20.13 No proceedings pending or threatened

(a) No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency (including anyarising from or relating to Environmental Law) which, if adversely determined, would reasonably be expected tohave a Material Adverse Effect have been started or (to the best of its knowledge and belief) threatened against itor any of its Subsidiaries, nor are there any circumstances to the best of its knowledge and belief likely to give riseto any such litigation, arbitration or administrative proceedings.

(b) No labour disputes which would reasonably be expected to have a Material Adverse Effect have been started or (tothe best of its knowledge and belief) threatened against it or any of its Subsidiaries, nor are there anycircumstances to the best of its knowledge and belief likely to give rise to any such disputes.

20.14 Security

(a) Subject to any applicable Perfection Requirements, each Security Document creates (or, once entered into, willcreate) in favour of the Security Agent for the benefit of the Finance

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Parties, the Security which it is expressed to create fully perfected and, subject to any applicable Reservations, withthe ranking and priority it is expressed to have.

(b) The constitutional documents of any Obligor do not and would not restrict or inhibit in any manner any transfer ofany shares of any member of the Group (other than, for the avoidance of doubt, any share transfer restrictionsprovided for in the constitutional documents of CNV) which are expressed to be (or are required by this Agreementto be or become) subject to any Security under any Security Document.

20.15 Legal and beneficial ownership

It is the absolute legal and beneficial owner of all the assets over which it purports to create Security pursuant toany Security Document, free from any Security, other than Permitted Security.

20.16 Assets

It and each of its Subsidiaries has good and marketable title to, or valid leases or licences of, or is otherwiseentitled to use (in each case, on arm’s length terms), all material assets necessary for the conduct of its businessas it is being, and is proposed to be, conducted.

20.17 Environmental Laws and Licences

It and each of its Subsidiaries has:

(a) complied with all Environmental Laws to which it may be subject;

(b) all Environmental Licences required in connection with its business; and

(c) complied with the terms of those Environmental Licences,

in each case where failure to do so would reasonably be expected to have a Material Adverse Effect.

20.18 Group Structure

The Group Structure Chart shows:

(a) each member of the Group and any person in whose shares any member of the Group has an interest (andthe percentage of the issued share capital held, and whether legally or beneficially, by that member), as at thedate of this Agreement; and

(b) the jurisdiction of incorporation or establishment of each person shown in it.

20.19 No Financial Indebtedness, Guarantees or Security

(a) No Obligor nor any Regulated Subsidiary has any Financial Indebtedness other than Permitted FinancialIndebtedness and Existing Indebtedness.

(b) No Obligor nor any Regulated Subsidiary has issued any guarantee other than a Permitted Guarantee.

(c) No Security or Quasi Security exists over all or any of an Obligor’s or a Regulated Subsidiary’s assets other thanPermitted Security.

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20.20 Shares

(a) The shares of any member of the Group which are expressed to be (or are required by this Agreement to be orbecome) subject to any Security under any Security Document are issued, fully paid, non-assessable, freelytransferable (which, in the case of CNV, shall be to the extent permitted under the laws of the Netherlands) andconstitute shares in the capital of limited companies, and there are no moneys or liabilities outstanding or payablein respect of any such share.

(b) Other than in relation to Permitted Financial Indebtedness and the Registration Rights Agreement, there are noagreements in force or corporate resolutions passed which require or might require the present or future issue orallotment of any share capital of any member of the Group (including any option or right of pre emption, conversionor exchange).

(c) The shares of any member of the Group which are expressed to be (or are required by this Agreement to be orbecome) subject to any Security under any Security Document constitute all the share capital of the relevantmember of the Group.

20.21 Intellectual Property

Each member of the Group owns or has licensed to it on arm’s length terms all material Intellectual Property for theconduct of its business as it is being, and is proposed to be, conducted.

20.22 Solvency

(a) No Obligor is insolvent or unable to pay its debts (including subordinated and contingent debts), nor could it bedeemed by a court to be unable to pay its debts within the meaning of:

(i) (in the case of a company incorporated in England or Wales) Section 123(1)(e) or 123(2) of the InsolvencyAct 1986; or

(ii) (in the case of any other company) the law of the jurisdiction in which it is incorporated,

nor, in any such case, will it become so in consequence of entering into any Finance Document, and/or performingany transaction contemplated by any Finance Document.

(b) No Obligor has taken any corporate action nor have any legal proceedings or other procedure or step been taken,started or threatened in relation to anything referred to in Clause 25.7 (Insolvency proceedings).

20.23 Taxes

(a) Each member of the Group has paid all Taxes required to be paid by it within the time period allowed for paymentwithout incurring any penalties for non payment other than any Taxes:

(i) being contested by it in good faith and in accordance with the relevant procedures;

(ii) which have been disclosed to the Arranger and for which adequate reserves are being maintained inaccordance with GAAP;

(iii) where payment can be lawfully withheld and will not result in the imposition of any penalty nor in any Securityranking in priority to the claims of any Finance Party

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under any Finance Document or to any Security created under any Security Document; and

(iv) which are owed by members of the Group (excluding Obligors and Regulated Subsidiaries) where theaggregate amount of unpaid Taxes in a financial year across the Group (excluding Obligors and RegulatedSubsidiaries) is less than US$50,000.

(b) It is not, and will not apply to be, a member of a group (as such group is defined pursuant to the provisions of theValue Added Tax Act 1994) which includes any person which is not a member of the Group.

20.24 Centre of main interests and establishments

For the purposes of The Council of the European Union Regulation No. 1346/2000 on Insolvency Proceedings (the“Regulation”), its centre of main interest (as that term is used in Article 3(1) of the Regulation) is situated in itsjurisdiction of incorporation and it has no “establishment” (as that term is used in Article 2(h) of the Regulation) inany other jurisdiction.

20.25 Pensions

(a) Other than as specifically notified by the Borrowers to the Agent in writing, no Obligor nor any RegulatedSubsidiary has any material liability in respect of any pension scheme and there are no circumstances which wouldgive rise to such a liability.

(b) Each Obligor and each Regulated Subsidiary is in compliance in all material respects with all applicable materiallaws and material contracts relating to and the governing provisions of the pension schemes maintained by or forthe benefit of any member of the Group and/or any of its employees.

20.26 Insurances

(a) The insurances required by Clause 23.20 (Insurance) are in full force and effect as required by this Agreement.

(b) No event or circumstance has occurred, and there has been no failure to disclose a fact, which would entitle anyinsurer to reduce or avoid its liability under any such insurance where such event, circumstance or failure wouldreasonably be expected to have a Material Adverse Effect.

20.27 Documents

(a) The documents provided to the Agent under Clause 4.2 (Initial conditions precedent) or Clause 27 (Changes to theObligors) are true, complete and accurate and in full force and effect, in each case as at the date any suchdocuments are provided to the Agent.

(b) Any certified copy of a document provided to the Agent under Clause 4.2 (Initial conditions precedent relating toUtilisation before Amendment Date 1) or Clause 27 (Changes to the Obligors) is a true, complete and accuratecopy of the original document and the original document was in full force and effect, in each case as at the dateany such document is provided to the Agent.

20.28 Times when representations made

(a) The representations and warranties set out in this Clause 20 are:63


(i) made by each party as set out in Clause 20(a) (Representations) on the date of this Agreement;

(ii) deemed to be made by each party as set out in Clause 20(a) (Representations) on the date of the initialUtilisation Request and the Initial Utilisation Date by reference to the facts and circumstances then existing.

(b) The Repeating Representations (and, in the case of Clause 20.28(b)(ii), the representations and warranties set outin Clause 20.5 (Validity and admissibility in evidence) and Clause 20.7 (No filing or stamp taxes)) are deemed to bemade by each party as set out in Clause 20 (Representations) on:

(i) the date of each Utilisation Request, the first day of each Interest Period and each Calculation Date; and

(ii) in the case of an Additional Guarantor, the day on which the company becomes (or it is proposed that thecompany becomes) an Additional Guarantor.

in each case by reference to the facts and circumstances then existing.

20.29 Dutch Obligors

No works council (ondernemingsraad) has the right to give advice in relation to the entry into and performance ofthis Agreement.

21 INFORMATION UNDERTAKINGS

The undertakings in this Clause 21 remain in force from the date of this Agreement for so long as any amount isoutstanding under the Finance Documents or any Commitment is in force.

21.1 Financial statements

CNV shall supply to the Agent in sufficient copies for all the Lenders as soon as the same become available, but inany event within 90 days after the end of each of its financial years:

(a) its audited consolidated financial statements for that financial year as set out in its annual reportdelivered to the Securities and Exchange Commission on Form 20-F; and

(b) the audited financial statements of each Obligor (other than CNV) for that financial year.

21.2 Quarterly financial statements

(a) CNV shall supply to the Agent in sufficient copies for all the Lenders as soon as the same become available, but inany event within 90 days after the end of each Accounting Quarter its consolidated financial statements for thatAccounting Quarter.

(b) Each set of quarterly financial statements delivered pursuant to Clause 21.2(a) shall include:

(i) a consolidated profit and loss account for the relevant Accounting Quarter and a consolidated cash flowstatement and profit and loss account for the financial year to date;

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(ii) a consolidated balance sheet as at the end of the relevant Accounting Quarter;

(iii) a comparison of actual performance with the performance projected by the Budget for the relevant AccountingQuarter and for the financial year to date;

(iv) a statement of Capital Expenditure, investments, acquisitions and disposals made during the relevantAccounting Quarter and during the financial year to date; and

(v) a schedule showing the effect of excluding the proportionate consolidation of associated companies on thequarterly financial statements as allowed under Dutch GAAP but not permitted under U.S. GAAP.

21.3 Compliance Certificate/Provisional Compliance

(a) CNV shall supply to the Agent in sufficient copies for all the Lenders on each Accounting Quarter a ComplianceCertificate signed by its Chief Financial Officer and one director of CNV which shall:

(i) confirm that all financial covenants have been complied with under all Existing Indebtedness; and

(ii) set out (in reasonable detail, including separate identification of the Capital Expenditure incurred in relation toZhumadian Concession since the end of the previous Accounting Quarter) computations as to compliancewith Clause 22 (Financial covenants) as at the date at which those financial statements were drawn upattaching the financial statements delivered pursuant to Clause 21.1 (Financial statements) or quarterlyaccounts delivered pursuant to Clause 21.2 (Quarterly financial statements) and shall be reported on byCNV’s auditors in the form agreed by CNV and all the Lenders before the date of this Agreement.

(b) CNV shall also supply to the Agent, in sufficient copies for all the Lenders, as soon as practicable following the lastday of the most recent Accounting Quarter but in any event within 35 days of that date, provisional confirmations asto compliance with Clause 22 (Financial covenants) accompanied by calculations based on the accounting recordsof the Group (including, without limitation, for the most recent Accounting Quarter) and detailing any reasonableestimates that may have been necessary to undertake such calculations.

21.4 Forecast Model confirmation and financial projections

CNV shall supply to the Agent in sufficient copies for all the Lenders on each Accounting Quarter a certificatesigned by its Chief Financial Officer and one director of CNV which shall:

(a) confirm that the Forecast Model remains correct, complete and in full force and effect as at thedate of the most recent Accounting Quarter or contain a revised Forecast Model that has beenagreed in advance with the Lenders which shall contain CNV’s forecast for its future cashflows;

(b) provide financial projections for the twelve month period following the date of the applicableAccounting Quarter demonstrating that CNV is able to comply with the provisions of Clause 22(Financial Covenants) with the exception of Clause 22.1(d);

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(c) provide financial projections for the twelve month period following 31 March each year demonstrating CNV isable to comply with the provisions of Clause 22.1(d); and

(d) provide an estimated value of the Capital Expenditure that will be incurred by the Group during the threemonth period following the date of the applicable Accounting Quarter.

21.5 Forecast Model

(a) CNV shall notify the Agent when it is necessary to amend the Forecast Model and shall present the revisedForecast Model with any relevant documentation or evidence explaining the basis for the revision.

(b) The Agent shall confirm in writing to CNV if it accepts the revised Forecast Model presented to the Agent pursuantto Clause 21.4(a) and, as of the date of such confirmation, the revised Forecast Model shall apply.

21.6 Group Structure Chart

CNV shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests) a copy of the GroupStructure Chart on a quarterly basis and at any time that the structure of the Group changes.

21.7 Requirements as to financial statements

(a) Each set of financial statements delivered by CNV pursuant to Clause 21.1 (Financial statements) shall be certifiedby a director of CNV as fairly representing its (or, as the case may be, its consolidated) financial condition andoperations as at the end of and for the period in relation to which those financial statements were drawn up.

(b) CNV shall procure that each set of financial statements of an Obligor (other than CNV) delivered pursuant to Clause21.1 (Financial statements) is prepared using GAAP, accounting practices and financial reference periodsconsistent with those applied in the preparation of the Original Financial Statements for that Obligor (other thanCNV) unless, in relation to any set of financial statements, it notifies the Agent that there has been a change inGAAP, the accounting practices or reference periods and its auditors (or, if appropriate, the auditors of that Obligor)deliver to the Agent:

(i) a description of any change necessary for those financial statements to reflect the GAAP, accountingpractices and reference periods upon which that Obligor’s Original Financial Statements were prepared; and

(ii) sufficient information, in form and substance as may be reasonably required by the Agent, to enable theLenders to determine whether Clause 22 (Financial covenants) has been complied with and make anaccurate comparison between the financial position indicated in those financial statements and that Obligor’sOriginal Financial Statements.

Any reference in this Agreement to those financial statements shall be construed as a reference to those financialstatements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.

(c) If CNV notifies the Agent of a change in accordance with Clause 21.7(b) the Borrowers and the Agent shall enterinto negotiations in good faith with a view to agreeing any

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amendments to this Agreement which are necessary as a result of the change. To the extent practicable theseamendments will be such as to ensure that the change does not result in any material alteration in the commercialeffect of the obligations in this Agreement. If any amendments are agreed they shall take effect and be binding oneach of the Parties in accordance with their terms.

21.8 Information: miscellaneous

The Borrowers shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests):

(a) all documents dispatched by the Borrowers to its shareholders (or any class of them) or its creditors generallyat the same time as they are dispatched;

(b) promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedingswhich are current, threatened or pending against any member of the Group, and which might, if adverselydetermined, have a Material Adverse Effect; and

(c) promptly, such further information regarding the financial condition, business and operations of any memberof the Group as any Finance Party (through the Agent) may reasonably request.

21.9 Notification of default

(a) Each Obligor shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly uponbecoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided byanother Obligor).

(b) Promptly upon a request by the Agent, the Obligor shall supply to the Agent a certificate signed by two of itsdirectors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing,specifying the Default and the steps, if any, being taken to remedy it).

21.10 Use of websites

(a) The Borrowers may satisfy its obligation under this Agreement to deliver any information in relation to thoseLenders (the “Website Lenders”) who accept this method of communication by posting this information onto anelectronic website designated by the Borrowers and the Agent (the “Designated Website”) if:

(i) the Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication ofthe information by this method;

(ii) both the Borrowers and the Agent are aware of the address of and any relevant password specifications forthe Designated Website; and

(iii) the information is in a format previously agreed between the Borrowers and the Agent.

If any Lender (a “Paper Form Lender”) does not agree to the delivery of information electronically then the Agentshall notify the Borrowers accordingly and the Borrowers shall supply the information to the Agent (in sufficientcopies for each Paper Form Lender) in paper form. In any event the Borrowers shall supply the Agent with at leastone copy in paper form of any information required to be provided by it.

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(b) The Agent shall supply each Website Lender with the address of and any relevant password specifications for theDesignated Website following designation of that website by the Borrowers and the Agent.

(c) The Borrowers shall promptly upon becoming aware of its occurrence notify the Agent if:

(i) the Designated Website cannot be accessed due to technical failure;

(ii) the password specifications for the Designated Website change;

(iii) any new information which is required to be provided under this Agreement is posted onto the DesignatedWebsite;

(iv) any existing information which has been provided under this Agreement and posted onto the DesignatedWebsite is amended; or

(v) the Borrowers become aware that the Designated Website or any information posted onto the DesignatedWebsite is or has been infected by any electronic virus or similar software.

If the Borrowers notify the Agent under Clause 21.10(c)(i) or Clause 21.10(c)(v), all information to be provided bythe Borrowers under this Agreement after the date of that notice shall be supplied in paper form unless and untilthe Agent and each Website Lender is satisfied that the circumstances giving rise to the notification are no longercontinuing.

(d) Any Website Lender may request, through the Agent, one paper copy of any information required to be providedunder this Agreement which is posted onto the Designated Website. The Borrowers shall comply with any suchrequest within ten Business Days.

21.11 “Know your customer” checks

(a) If:

(i) the introduction of or any change in (or in the interpretation, administration or application of) any law orregulation made after the date of this Agreement;

(ii) any change in the status of an Obligor after the date of this Agreement; or

(iii) a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to aparty that is not a Lender prior to such assignment or transfer,

obliges the Agent or any Lender (or, in the case of Clause 21.11(a)(iii), any prospective new Lender) to comply with“know your customer” or similar identification procedures in circumstances where the necessary information is notalready available to it, each Obligor shall promptly upon the request of the Agent or any Lender supply, or procurethe supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or onbehalf of any Lender) or any Lender (for itself or, in the case of the event described in Clause 21.11(a)(iii), on behalfof any prospective new Lender) in order for the Agent, such Lender or, in the case of the event described in Clause21.11(a)(iii), any prospective new Lender to carry out and be satisfied it has complied with all necessary “know yourcustomer” or other similar checks under all applicable laws and regulations pursuant to the transactionscontemplated in the Finance Documents.

(b) Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation andother evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and besatisfied it has complied with all necessary “know

68


your customer” or other similar checks under all applicable laws and regulations pursuant to the transactionscontemplated in the Finance Documents.

(c) CNV shall, by not less than 10 Business Days’ prior written notice to the Agent, notify the Agent (which shallpromptly notify the Lenders) of its intention to request that one of its Subsidiaries becomes an Additional Obligorpursuant to Clause 27 (Changes to the Obligors).

(d) Following the giving of any notice pursuant to Clause 21.11(c), if the accession of such Additional Obligor obligesthe Agent or any Lender to comply with “know your customer” or similar identification procedures in circumstanceswhere the necessary information is not already available to it, CNV shall promptly upon the request of the Agent orany Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested bythe Agent (for itself or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender)in order for the Agent or such Lender or any prospective new Lender to carry out and be satisfied it has compliedwith all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuantto the accession of such Subsidiary to this Agreement as an Additional Obligor.

22 FINANCIAL COVENANTS

22.1 Financial condition

CNV shall ensure that:

(a) the ratio of EBITDA to Net Interest Expense for each Relevant Period ending on an Calculation Date will notbe less than a ratio of 3:1;

(b) subject to Clauses 22.3 (Exceptions) and 22.4 (Net Borrowings to EBITDA Ratio Reduction), the ratio of NetBorrowings to EBITDA for each Relevant Period ending on a Calculation Date will not exceed the ratio of4.0:1;

(c) the ratio of Net Senior Borrowings to RAV for each Relevant Period ending on that Calculation Date will notexceed the ratio of 1.1:1;

(d) the ratio of Cash Flow to Debt Service for each Relevant Period ending on 31 March and 30 September ofeach financial year will not be less than 1.0:1; and

(e) the ratio of Net Interest Expense to EBITDA of the English Companies for each Relevant Period ending on aCalculation Date will not be less than a ratio of 2.5:1.

22.2 Financial covenant calculations

(a) Capital Expenditure, Cash Flow, Debt Service, EBITDA, Interest Expense, Net Borrowings, Net Interest Expense,RAV, Total Borrowings and Working Capital shall be calculated and interpreted on a consolidated basis inaccordance with the Applicable Accounting Principles (for the avoidance of doubt applying (except in the case ofRAV) the principle of proportional consolidation of joint venture companies allowed under Dutch GAAP) and shall beexpressed in US Dollars.

(b) Capital Expenditure, Cash Flow, EBITDA, Interest Expense, Net Interest Expense and Working Capital shall bedetermined from the financial statements of the Accounting Group and Compliance Certificates delivered underClause 21.1 (Financial statements) and Clause 21.3 (Compliance Certificate/Provisional Compliance). For theavoidance of doubt,

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such determinations shall be made by applying the principle of proportional consolidation of joint venture companiesas allowed under Dutch GAAP.

(c) For the purpose of this Clause 22, no item shall be included or excluded more than once in any calculation.

22.3 Exceptions

Subject to Clause 22.4 (Net Borrowings to EBITDA Ratio Reduction), if certain payments due to Aguas de PanamáS.A. (as reflected in the Forecast Model) are not received by 1 December 2009, the Lenders agree that the ratio ofNet Borrowings to EBITDA will be amended for Relevant Period ending on 31 December 2009 only to a ratio whichshall not exceed 4.25:1.

22.4 Net Borrowings to EBITDA Ratio Reduction

(a) If CNV completes the Secondary Equity Offering prior to the Termination Date (or, if applicable, the ExtensionDate), CNV shall ensure that sufficient Secondary Proceeds are used promptly, but in any event no later than 5Business Days after receipt of the Secondary Proceeds by CNV, it Subsidiaries or Affiliates, to prepay the Facilitiesto reduce the ratio of Net Borrowings to EBITDA (the “Reduced Leverage Ratio”) so that, for each Relevant Periodending on a Calculation Date, the Reduced Leverage Ratio will not exceed 3.25:1.

(b) The provisions of paragraph (a) of this Clause 22.4 shall apply on and from the date on which the reduction in theReduced Leverage Ratio occurs until the Termination Date (or, if applicable, the Extension Date).

22.5 Definitions

In this Clause 22:

“Cash Flow” means, in relation to any Relevant Period, EBITDA for that Relevant Period adjusted:

(a) by deducting any increase or adding any decrease in Working Capital during that Relevant Period;

(b) by deducting amounts paid during the Relevant Period by the Accounting Group in respect of CapitalExpenditure net of contributions receivable from third parties other than Capital Expenditure to the extentfunded from Net Sale Proceeds, net equity proceeds, Liquidation Proceeds, amounts utilised from thisRevolving Facility Loan relating to the Zhumadian Concession, amounts funded by CWC’s joint venturepartner in relation to the purchase of Zhumadian Concession, by reference to that partner’s percentageinterest in the equity share capital of the joint venture company to which the Zhumadian Concession isgranted, Termination Proceeds or Insurance Proceeds, other than the proceeds of any insurance policy inrelation to business interruption loss which are added back to the total consolidated operating profit of theAccounting Group in accordance with the Applicable Accounting Principles, permitted to be applied for thatpurpose under this Agreement;

(c) by deducting amounts paid during the Relevant Period by the Accounting Group in cash in respect of Tax;70


(d) by excluding any other non-cash items taken into account in calculating EBITDA (other than to the extentalready taken into account in movements in Working Capital);

(e) for the cash effect of extraordinary and exceptional items, to the extent that cash was actually received orexpended during the Relevant Period;

(f) by adding the aggregate amount received during the Relevant Period by the Accounting Group in cash inrespect of any rebate of Tax;

(g) by deducting the cost of acquisition of any shares or businesses to the extent not included in EBITDA;

(h) by adding the net proceeds of any sale, lease, transfer or other disposal of assets received during thatRelevant Period (after deducting the amount of any such proceeds required to be applied in prepaymentunder Clause 9.6 (Mandatory prepayment — Net Sale Proceeds); and

(i) by deducting the amount of any dividends or other profit distributions paid in cash by CNV during thatRelevant Period which are received by CNV by way of capital equity investment in CNV.

“Debt Service” means, in relation to any Relevant Period, the aggregate of:

(a) Net Interest Expense for that Relevant Period; and

(b) scheduled repayments, and any other scheduled payments in the nature of principal, payable by theAccounting Group in that Relevant Period in respect of Financial Indebtedness:

(i) excluding repayments under the Revolving Facility where such amount remains available to be drawnunder the Revolving Facility;

(ii) including all capital payments falling due in relation to any lease that would be treated as a financelease or a capital lease under the Applicable Accounting Principles; and

(iii) excluding any Financial Indebtedness between any members of the Accounting Group.

“EBITDA” means, in relation to any Relevant Period, the total consolidated operating profit of the Accounting Groupfor that Relevant Period:

(a) before taking into account:

(i) Net Interest Expense;

(ii) Tax;

(iii) profits (or losses) attributable to minority interests in any member of the Accounting Group;

(iv) all extraordinary and exceptional items; and

(v) exchange rate gains (or losses) arising due to the re-translation of balance sheet items andmark-to-market adjustments on currency swaps;

(b) after excluding (to the extent included) any gains or losses on the disposal or revaluation of assets (other thanin the ordinary course of trading);

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(c) after adding any business interruption loss incurred which is covered by insurance and which is not addedback to the total consolidated operating profit of the Accounting Group in accordance with the ApplicableAccounting Principles; and

(d) after adding back all amounts provided for depreciation and amortisation (including acquisition goodwill).

“Interest Expense” means, in relation to any Relevant Period, the aggregate amount of interest and any otherfinance charges (whether or not paid, payable or capitalised, but for the avoidance of doubt, excluding indexation ofthe Artesian Facility for that relevant Period) accrued by the Accounting Group in that Relevant Period in respect ofTotal Borrowings including:

(a) the interest element of leasing and hire purchase payments;

(b) commitment fees, commissions, structuring fees and guarantee fees; and

(c) prepayment fees,

adjusted by:

(i) adding back the net amount payable (or deducting the net amount receivable) by members of the AccountingGroup in respect of that Relevant Period under any interest or (so far as they relate to interest) currencyhedging arrangements; and

(ii) excluding any structuring fees in respect of the Facilities.

“Net Borrowings” means, as at any particular time, Total Borrowings less Cash and Cash Equivalent Investmentsat that time.

“Net Interest Expense” means, in relation to any Relevant Period, Interest Expense for that Relevant Period lessinterest income of the Accounting Group in respect of that Relevant Period to the extent received by a member ofthe Accounting Group in cash.

“Net Senior Borrowings” means as at any particular time, Total Borrowings less:

(a) Cash and Cash Equivalent Investments at that time;

(b) Intragroup Debt; and

(c) the amount of cash held by a member of the Accounting Group as collateral for any Financial Indebtednessfalling within the definition of Total Borrowings and which, if released from such collateral arrangements wouldconstitute Cash Flow of an Obligor or Regulated Subsidiary.

“Regulated Asset Value” or “RAV” means the regulatory asset base of BWH plc most recently published byOFWAT for the applicable Financial Year end, adjusted for inflation to that Financial Year end, based on the bestavailable information and provided that where a draft OFWAT determination is available, the figures set out in suchdraft OFWAT determination shall be used, adjusted for inflation, unless otherwise agreed by the Agent.

“Relevant Period” each twelve (12) month period ending on a Calculation Date.

“Total Borrowings” means, as at any particular time, the aggregate outstanding principal, capital or nominalamount (and any fixed or minimum premium payable on prepayment or redemption) of the Financial Indebtednessof members of the Accounting Group.

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For this purpose, any amount outstanding or repayable in a currency other than US Dollars shall on that day betaken into account in its US Dollars equivalent at the rate of exchange that would have been used had an auditedconsolidated balance sheet of the Accounting Group been prepared as at that day in accordance with theApplicable Accounting Principles.

“Working Capital” means, at any time, the current assets of the Accounting Group being realisable within one year(other than Cash and Cash Equivalent Investments) less current liabilities due within one year (other than FinancialIndebtedness).

23 GENERAL UNDERTAKINGS


Authorisations and compliance with laws

23.1 Authorisations

(a) Each Obligor shall promptly obtain, comply with and do all that is necessary to maintain in full force and effect (andsupply certified copies to the Agent of) any Authorisation required under any applicable law or regulation of aRelevant Jurisdiction to:

(i) enable it to perform its obligations under the Finance Documents;

(ii) ensure the legality, validity, enforceability or admissibility in evidence in the Relevant Jurisdictions of anyFinance Documents; and

(iii) enable it to carry on its business as it is being conducted from time to time if failure to obtain, comply with ormaintain any such Authorisation would reasonably be expected to have a Material Adverse Effect.

(b) Each Obligor shall ensure that the Perfection Requirements are complied with promptly and in any event before thefinal date on which it is necessary to carry out any such Perfection Requirement in order to achieve the relevantperfection, protection or priority of any Security Document.

23.2 Compliance with laws

Each Obligor shall comply in all respects with all laws to which it may be subject, if failure so to comply wouldreasonably be expected to have a Material Adverse Effect.

23.3 Environmental Laws and Licences

Each Obligor shall:

(a) comply with all Environmental Laws to which it may be subject;

(b) obtain all Environmental Licences required in connection with its business; and

(c) comply with the terms of those Environmental Licences,

in each case where failure to do so would reasonably be expected to have a Material Adverse Effect.73


23.4 Taxes

(a) Each Obligor shall pay all Taxes required to be paid by it within the time period allowed for payment withoutincurring any penalties for non payment other than any penalties incurred as a result of any late filing which wouldlead any Obligor to incur a penalty of not more than £1,000.

(b) Clause 23.4(a) does not apply to any Taxes:

(i) being contested by the relevant member of the Group in good faith and in accordance with the relevantprocedures;

(ii) which have been disclosed in its financial statements and for which adequate reserves are being maintainedin accordance with GAAP; and

(iii) where payment can be lawfully withheld and will not result in the imposition of any penalty nor in any Securityranking in priority to the claims of any Finance Party under any Finance Document or to any Security createdunder any Security Document.

(c) No Obligor may change its residence for Tax purposes without the consent of the Agent, such consent not to beunreasonably withheld or delayed.

23.5 Capitalisation

Each Obligor shall ensure that, at all times after the Initial Utilisation Date or, if later, the date it becomes a Party, ithas sufficient equity to be and remain in compliance with all thin capitalisation rules applicable to it.

Restrictions on business focus

23.6 Merger

(a) No Obligor shall enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction (withoutthe consent of the Agent, such consent not be unreasonably withheld).

(b) Clause 23.6(a) does not apply to any amalgamation, demerger, merger, consolidation or corporate reconstructionwhich is a Permitted Acquisition.

23.7 Change of business

Each Obligor shall ensure that no substantial change is made to the general nature of the business of any Obligoror any Regulated Subsidiary taken as a whole from that carried on by the Group at the date of this Agreement(except with respect to any Regulated Subsidiary to the extent permitted under the BSTID).

Restrictions on dealing with assets and Security

23.8 Assets

Each Obligor shall maintain in good working order and condition (ordinary wear and tear excepted) all its assetsnecessary for the conduct of its business as conducted from time to time.

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23.9 Pari passu

Each Obligor shall ensure that its obligations under the Finance Documents rank at all times at least pari passu inright of priority and payment with the claims of all its other unsecured and unsubordinated creditors, except forobligations mandatorily preferred by law applying to companies generally.

23.10 Negative pledge

(a) No Obligor shall create or permit to subsist any Security or Quasi Security except for Security or Quasi Securitywhich is Permitted Security over any of its assets in favour of any person who is not an Obligor except to the extentarising under Clause 18 of the general terms and conditions (algemene bankvoorwaarden) of any member of theDutch Bankers’ Association (Nederlandse Vereniging van Banken) or any similar term applied by a financialinstitution in the Netherlands pursuant to its general terms and conditions.

(b) Neither CNV nor CSL shall create or permit to subsist any Security or Quasi Security over their respective sharesin the entire issued share capital of Cascal S.A.

23.11 Disposals

(a) Subject to Clause 9.6 (Mandatory prepayment — Net Sale Proceeds), no Obligor shall enter into a singletransaction or a series of transactions (whether related or not and whether voluntary or involuntary) to sell, lease,transfer or otherwise dispose of any asset.

(b) Clause 23.11(a) does not apply to any sale, lease, transfer or other disposal which is a Permitted Disposal.

23.12 Arm’s length terms

No Obligor shall enter into any contract or arrangement with or for the benefit of any other person (including anydisposal to that person) other than in the ordinary course of business, for full market value and on arm’s lengthterms.

Restrictions on movement of cash — cash out

23.13 Loans or credit

(a) No Obligor shall be a creditor in respect of any Financial Indebtedness.

(b) Clause 23.13(a) does not apply to Financial Indebtedness which is a Permitted Loan, Permitted Indebtedness orExisting Indebtedness.

23.14 Guarantees

(a) No Obligor shall issue or allow to remain outstanding any guarantee in respect of any liability or obligation of anyperson.

(b) Clause 23.14(a) does not apply to any guarantee which is a Permitted Guarantee.

23.15 Restricted payments

(a) No Obligor shall pay, repay or prepay any principal, interest or other amount on or in respect of, or redeem,purchase or defease, any Financial Indebtedness except in relation to Permitted Financial Indebtedness orExisting Indebtedness.

(b) Each Obligor (other than CNV) shall be permitted and shall (and each Obligor shall procure that each of itsSubsidiaries shall):

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(i) declare, pay or make any dividend or other payment or distribution of any kind on or in respect of any of itsshares in compliance with its obligations under this Agreement and in accordance with the Forecast Model;

(ii) ensure that, once any dividend is declared, the applicable dividend owing to its Group member shareholder ispaid directly to the account of that Group member shareholder;

(iii) reduce, return, purchase, repay, cancel or redeem any of its shares in compliance with its obligations underthis Agreement and in accordance with the Forecast Model,

subject in each case to:

(A) legal and regulatory constraints;

(B) working capital requirements of that Obligor or its Subsidiaries;

(C) any required reinvestment in the Group (provided that the Borrowers have given notice to the Agent of theirintentions); and

(D) any applicable currency restrictions.

(c) CNV shall be permitted and shall:

(i) declare, pay or make any dividend or other payment or distribution (the “Distribution”) of any kind on or inrespect of any of its shares in compliance with its obligations under this Agreement provided always that(X) such Distribution is made out of available cashflow and (Y) CNV provides the Agent with evidencesatisfactory to the Agent (acting on the reasonable instructions of the Lenders) of available cashflow to pay ormake such Distributions and CNV’s ability to comply with the requirements of Clause 22 (FinancialCovenants) for a period of 12 months following the declaration of such Distribution; and

(ii) reduce, return, purchase, repay, cancel or redeem any of its shares in compliance with its obligations underthis Agreement and in accordance with the Forecast Model.

(d) No Obligor shall enter into any agreements that shall in any way impair the ability of any Subsidiary to paydividends or other upstream payments.

(e) Clauses 23.15(a) to (d) do not apply to payments which constitute Permitted Payments

23.16 Existing Finance Documents

For the avoidance of doubt, nothing in the Finance Documents operates to restrict or otherwise prevent a memberof the Group from doing anything, taking any action or exercising any right under any document evidencingPermitted Financial Indebtedness and nothing permitted to be done under the any document evidencing PermittedFinancial Indebtedness shall be in contravention of the Finance Documents.

Movement of cash — cash in

23.17 Financial Indebtedness

(a) No Obligor shall incur (or agree to incur) or allow to remain outstanding any Financial Indebtedness.76


(b) Clause 23.17(a) does not apply to Financial Indebtedness that is Permitted Financial Indebtedness or ExistingIndebtedness.

(c) CNV shall ensure that on the Initial Utilisation Date all existing debt (including any undrawn facilities), except forExisting Indebtedness and Permitted Financial Indebtedness, is prepaid, repaid or cancelled in full and anySecurity in relation to it is released.

23.18 Issue of shares

(a) No Obligor shall:

(i) issue any share to any person; or

(ii) grant to any person any conditional or unconditional option, warrant or other right to call for the issue orallotment of, subscribe for, purchase or otherwise acquire any share of any member of the Group (includingany right of pre-emption, conversion or exchange), or alter any right attaching to any share capital of anymember of the Group.

(b) Clause 23.18(b) does not apply to the Registration Rights Agreement.

Miscellaneous

23.19 Security and guarantees

(a) CNV shall:

(i) promptly notify the Agent if:

(A) any new member of the Group is incorporated;

(B) any member of the Group ceases to be a Dormant Company; or

(C) any business that is material in the context of the business of the member of the Group that acquiresthat business is acquired; and

(ii) within 30 days of request by the Agent (acting reasonably), ensure that the relevant member of the Group will:

(A) become an Additional Guarantor; and

(B) execute (or, as the case may be, procure the execution of) Security Document(s), in form andsubstance satisfactory to the Security Agent, in respect of that member of the Group, its business or itsassets in favour of the Finance Parties to secure all of the obligations of the Obligors under the FinanceDocuments.

(b) Each Obligor shall, at its own expense, promptly take all such action as the Agent or the Security Agent mayrequire:

(i) for the purpose of perfecting or protecting any of the Finance Parties’ rights under, and preserving theSecurity intended to be created or evidenced by, any of the Finance Documents; and

(ii) for the purpose of facilitating the realisation of any of that Security,

including the execution of any transfer, conveyance, assignment or assurance of any asset and the giving of anynotice, order or direction and the making of any registration which the Agent or the Security Agent may reasonablyrequire.

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(c) No Obligor shall do, or consent to the doing of, anything which might prejudice the validity, enforceability or priorityof any of the Security created pursuant to the Security Documents.

23.20 Insurance

(a) Each Obligor shall maintain insurances on and in relation to its business and assets with reputable independentunderwriters or insurance companies against those risks, and to the extent, usually insured against by prudentcompanies located in the same or a similar location and carrying on a similar business required by applicable lawor by contract;

(b) Each Obligor shall promptly pay premiums and do all things necessary to maintain insurances required of it byClause 23.20(a).

23.21 Pensions

(a) CNV shall ensure that all pension schemes maintained or operated by or for the benefit of any Obligor orRegulated Subsidiary and/or any of its employees:

(i) are maintained and operated in all material respects in accordance with all applicable laws and contracts andtheir governing provisions; and

(ii) are funded substantially in accordance with the governing provisions of the scheme with any funding shortfalladvised by actuaries of recognised standing being rectified in accordance with those governing provisions.

(b) CNV shall promptly notify the Agent of any material change in the rate of contributions to any pension schemesreferred to in Clause 23.21(a) paid or recommended to be paid (whether by the scheme actuary or otherwise) orrequired (by law or otherwise).

23.22 Financial assistance

Each Obligor shall ensure that all payments between members of the Group, and any Security created pursuant toany Finance Document by any member of the Group, are made or created in compliance with any applicable lawor regulation in any relevant jurisdiction concerning financial assistance by a company for the acquisition of orsubscription for shares or concerning the protection of shareholders’ capital.

23.23 Bank accounts

(a) CNV shall only maintain the Prepayment Account, the Collection Account, the Operating Account and accountswith ABN Amro in the Netherlands for the purpose of receiving funds in Euro for VAT recoveries.

(b) CNV shall transfer sums to the Operating Account from any account held with ABN Amro referred to in Clause23.23(a) to ensure the balance of such account shall never exceed €10,000.

23.24 Acquisitions and investments

(a) No Obligor shall (and each Obligor shall ensure that its Subsidiaries shall not):

(i) invest in or acquire any share in, or any security issued by, any person, or any interest therein or in the capitalof any person, or make any capital contribution to any person, or form any person (or agree to do any of theforegoing); or

(ii) invest in or acquire any business or going concern, or the whole or substantially the whole of the assets orbusiness of any person, or any assets that constitute a

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division or operating unit of the business of any person (or agree to do any of the foregoing).

(b) Clause 23.24(a) does not apply to any acquisition or investment or capital contribution which is a PermittedAcquisition.

23.25 Registration Rights Agreement

CNV shall use its commercially reasonable efforts to satisfy its obligation to effect any demand registration(s)pursuant to the Registration Rights Agreement to enable Biwater Investments Limited to sell shares in CNV inaccordance with, and subject to, the terms and conditions of the Agreement.

24 CHL ADDITIONAL COVENANTS AND UNDERTAKINGS


24.1 Compliance with other financing obligations

(a) CHL shall use its best endeavours to ensure that BWH Group procures that the Regulated Subsidiaries shallcomply with their respective obligations under the BSTID.

(b) CHL shall use its best endeavours to ensure that BWH Group procures that the Regulated Subsidiaries do givenotice to the Agent immediately upon becoming aware of the occurrence of any default, or event of default thatoccurs in relation to the BSTID.

24.2 No amendment, waiver and consent

(a) CHL shall use its best endeavours to ensure that BWH Group procures that the Regulated Subsidiaries do notagree to amend, vary, waive or give any consent in relation to any provision of the BSTID without the prior writtenconsent of the Agent and the Lenders such consent not to be unreasonably withheld or delayed.

(b) CHL shall use its best endeavours to ensure that BWH Group procures that the Regulated Subsidiaries give noticeto the Agent immediately upon becoming aware of any such proposed amendment, variation, waiver and consent.

24.3 Regulated Subsidiary compliance with Forecast Model

CHL shall use its best endeavours to ensure the BWH Group procures (subject to applicable laws and regulations)that each of the Regulated Subsidiaries pays CHL all monies owing to it and shall take such steps, and shallensure that the Regulated Subsidiaries take such steps, as otherwise may be required to comply with eachObligor’s obligations under the Finance Documents to the extent permitted under the BSTID.

24.4 BWH Group as holding company

CHL shall use its best endeavours to ensure that:

(a) BWH Group shall not carry on any business, own any asset or incur any liability other than holding the entireissued share capital of Bournemouth & West Hampshire Water Holdings Limited; and

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(b) BWH Group procures that Bournemouth & West Hampshire Water Holdings Limited shall not carry on anybusiness, own any asset or incur any liability other than holding the entire issued share capital of BWH plc aspermitted by the BSTID.

25 EVENTS OF DEFAULT

Each of the events or circumstances set out in this Clause 25 is an Event of Default (save for Clause 25.21(Acceleration)).

25.1 Non-payment

An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at andin the currency in which it is expressed to be payable unless:

(a) its failure to pay is caused by:

(i) administrative or technical error; or

(ii) a Disruption Event;

(b) payment is made within in the case of Clause 25.1(a)(i), three (3) Business Days of its due date for amountscorresponding to principal and five (5) Business Days of its due date for amounts corresponding to Interest.

25.2 Financial covenants

Any requirement of Clause 22 (Financial covenants) is not satisfied. 25.3 Other obligations

(a) Any person (other than a Finance Party) does not comply with Clause 23.6 (Merger), Clause 23.9 (Pari passu),Clause 23.10 (Negative pledge), Clause 23.11 (Disposals), Clause 23.13 (Loans or credit), Clause 23.14(Guarantees), Clause 23.15 (Restricted payments), Clause 23.17 (Financial Indebtedness), Clause 23.18 (Issue ofshares), and Clause 23.19 (Security and guarantees) and Clause 24 (CSL Additional Covenants and Undertakings).

(b) Any Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause25.1 (Non-payment), Clause 25.2 (Financial covenants) and Clause 25.3(a)) unless the failure to comply is capableof remedy and is remedied within thirty (30) days of the Agent giving notice to the Borrowers or the relevantBorrower becoming aware of the failure to comply.

25.4 Misrepresentation

(a) Any representation or statement made or deemed to be made by an Obligor in the Finance Documents or any otherdocument delivered by or on behalf of any Obligor under or in connection with any Finance Document is or provesto have been incorrect or misleading when made or deemed to be made unless the facts or circumstancesunderlying the misrepresentation are capable of remedy and are remedied within thirty (30) days of the Agent givingnotice to the Borrowers or the relevant Borrower becoming aware of the misrepresentation.

(b) Any misrepresentation made in relation to a Subsidiary of an Obligor that is not a Regulated Subsidiary, will onlyconstitute an Event of Default under this Clause 25.4 if such misrepresentation is considered by the Lenders tohave a Material Adverse Effect.

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25.5 Cross default

(a) Any Financial Indebtedness of any Obligor or any member of the Group (other than a Regulated Subsidiary) orunder any Permitted Financial Indebtedness and/or under the Existing Indebtedness is not paid when due nor withinany originally applicable grace period.

(b) Any Financial Indebtedness of any Obligor or any member of the Group (other than a Regulated Subsidiary) orunder any Permitted Financial Indebtedness and/or under the Existing Indebtedness is declared to be or otherwisebecomes due and payable prior to its specified maturity as a result of an event of default (however described).

(c) Any commitment for any Financial Indebtedness of any Obligor or any member of the Group (other than aRegulated Subsidiary) or under any Permitted Financial Indebtedness and/or under the Existing Indebtedness iscancelled or suspended by a creditor of any member of the Group as a result of an event of default (howeverdescribed).

(d) Any creditor of any Obligor or any member of the Group (other than a Regulated Subsidiary) or under PermittedFinancial Indebtedness and/or under the Existing Indebtedness becomes entitled to declare any FinancialIndebtedness of any member of the Group due and payable prior to its specified maturity as a result of an event ofdefault (however described).

(e) No Event of Default shall occur under this Clause 25.5, if the aggregate amount of Financial Indebtedness oramount committed for Financial Indebtedness is less than US$2,000,000.

25.6 Insolvency

(a) Any Obligor is unable or admits inability to pay its debts as they fall due, suspends, or threatens to suspend, makingpayments on any of its debts (or any class of them) or, by reason of actual or anticipated financial difficulties,commences negotiations with one or more of its creditors (or any class of them) (other than the Lenders) with aview to rescheduling any of its indebtedness or any Dutch Obligor or Subsidiary incorporated in the Netherlandsgives notice under section 36(2) of the Dutch 1990 Tax Collection Act (Invorderingswet 1990).

(b) The value of the assets of any Obligor is less than its liabilities (taking into account contingent and prospectiveliabilities).

(c) A moratorium is declared in respect of any indebtedness of any Obligor.

25.7 Insolvency proceedings

(a) Any corporate action, legal proceedings or other procedure or step is taken in relation to:

(i) the suspension of payments, (including without limitation any emergency regulations (noodregeling)) amoratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way ofvoluntary arrangement, scheme of arrangement or otherwise) of any Obligor;

(ii) a composition, compromise, assignment or arrangement with any creditor of any Obligor;81


(iii) the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager or othersimilar officer in respect of any Obligor or any of its assets; or

(iv) the enforcement of any Security over any assets of any Obligor,

or any analogous procedure or step is taken in any jurisdiction.

(b) Clause 25.7(a) shall not apply to:

(i) any corporate action, legal proceedings or other procedure or step which is part of a solvent reorganisation ofany Obligor permitted under this Agreement; or

(ii) any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 14 daysof commencement and prior to its advertisement.

25.8 Creditors’ process

Any expropriation, attachment, sequestration, distress or execution (including by way of executory attachment(executioriaal beslag) or interlocutory attachment (conservatoir beslag) or any analogous process in anyjurisdiction affects any asset or assets of an Obligor having an aggregate value of US$500,000 (or its equivalent inanother currency or currencies) and is not discharged within 15 Business Days.

25.9 Ownership

Any Obligor (other than CNV) is not or ceases to be directly or indirectly a Subsidiary of CNV.

25.10 Unlawfulness

It is or becomes unlawful for any Obligor to perform any of its obligations under the Finance Documents.

25.11 Repudiation

Any Obligor repudiates a Finance Document or evidences an intention to repudiate a Finance Document.

25.12 Security and guarantees

Any Security Document or any guarantee in or any subordination under any Finance Document is not in full forceand effect or any Security Document does not create in favour of the Security Agent for the benefit of the FinanceParties, the Security which it is expressed to create fully perfected and with the ranking and priority it is expressedto have in a manner and to an extent reasonably considered by the Majority Lenders to have a Material AdverseEffect.

25.13 Constitutional documents

Any constitutional document of any Obligor or any Regulated Subsidiary is terminated, or is amended in a way, orany consent or waiver is given in respect of any such document, which might be material to the interests of theFinance Parties under the Finance Documents.

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25.14 Cessation of business

Any Obligor or any Regulated Subsidiary suspends or ceases (or threatens to suspend or cease) to carry on all ora material part of its business.

25.15 Nationalisation

Any step is taken by any person with a view to the seizure, compulsory acquisition, expropriation or nationalisationof all or any of the shares, or all or any material part of the assets of any Obligor or any Regulated Subsidiary.

25.16 Audit qualification

(a) The auditors qualify their report on any audited consolidated financial statement of any Obligor or any RegulatedSubsidiary or any audited financial statement of any Obligor or any Regulated Subsidiary.

(b) Clause 25.16(a) shall only apply to the Regulated Subsidiaries to the extent it does not contradict the provisions ofthe BSTID.

25.17 Litigation

Any litigation, arbitration, proceeding or dispute is started or threatened or there are any circumstances likely togive rise to any litigation, arbitration, proceeding or dispute, in each case which is reasonably likely to be adverselydetermined and would reasonably be expected to have a Material Adverse Effect.

25.18 Material adverse change

The Majority Lenders determine that a Material Adverse Effect exists, has occurred or might reasonably beexpected to occur.

25.19 Operations of Subsidiaries

Notice of or actual termination, suspension, cancellation or revocation of the licence, concession, or authority tooperate the principal business of any Obligor.

25.20 Cross Default with BSTID

The occurrence of an Acceleration Event (as defined in the BSTID).

25.21 Acceleration

On and at any time after the occurrence of an Event of Default the Agent may, and shall if so directed by theMajority Lenders, by notice to the Borrowers:

(i) cancel the Total Commitments whereupon they shall immediately be cancelled;

(ii) declare that all or part of the Utilisations, together with accrued interest, and all other amounts accrued oroutstanding under the Finance Documents be immediately due and payable, whereupon they shall becomeimmediately due and payable;

(iii) declare that all or part of the Utilisations be payable on demand, whereupon they shall immediately becomepayable on demand by the Agent on the instructions of the Majority Lenders;

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(iv) declare that full cash cover in respect of any Bank Guarantee is immediately due and payable, whereupon itshall become immediately due and payable;

(v) require the Borrowers to find a replacement bank to issue a replacement bank guarantee as soon as possiblebut in any event no later than 30 days prior to the Expiry Date of the existing Bank Guarantee; and/or

(vi) declare that full cash cover in respect of each or any Bank Guarantee is payable on demand, whereupon itshall immediately become payable on demand by the Agent on the instructions of the Majority Lenders.

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SECTION 9CHANGES TO PARTIES

26 CHANGES TO THE LENDERS

26.1 Assignments and transfers by the Lenders

Subject to this Clause 26, a Lender (the “Existing Lender”) may:

(a) assign any of its rights; or

(b) transfer by novation any of its rights and obligations,

to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or establishedfor the purpose of making, purchasing or investing in loans, securities or other financial assets provided that thevalue of the rights assigned or transferred is a least €50,000 (or its equivalent in other currencies) or the assigneeor transferee otherwise qualifies as a PMP (the “New Lender”).

26.2 Conditions of assignment or transfer

(a) The consent of CNV is required for an assignment or transfer by an Existing Lender, unless the assignment ortransfer is to another Lender or an Affiliate of a Lender.

(b) The consent of the Issuing Bank is required for any assignment or transfer by an Existing Lender of any of its rightsand/or obligations under the Guarantee Facility.

(c) The consent of CNV to an assignment or transfer must not be unreasonably withheld or delayed. CNV will bedeemed to have given its consent five Business Days after the Existing Lender has requested it unless consent isexpressly refused by CNV within that time.

(d) The consent of CNV to an assignment or transfer must not be withheld solely because the assignment or transfermay result in an increase to the Mandatory Cost.

(e) An assignment will only be effective on:

(i) receipt by the Agent of written confirmation from the New Lender (in form and substance satisfactory to theAgent) that the New Lender will assume the same obligations to the other Finance Parties as it would havebeen under if it was an Original Lender; and

(ii) the performance by the Agent of all necessary “know your customer” or other similar checks under allapplicable laws and regulations in relation to such assignment to a New Lender, the completion of which theAgent shall promptly notify to the Existing Lender and the New Lender.

(f) If:

(i) a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes itsFacility Office; and

(ii) as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor wouldbe obliged to make a payment to the New Lender or Lender acting through its new Facility Office underClause 14 (Tax gross-up and indemnities) or Clause 15 (Increased costs),

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then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment underthose Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Officewould have been if the assignment, transfer or change had not occurred. This paragraph (f) shall not apply inrespect of an assignment or transfer made in the ordinary course of the primary syndication of the Facilities.

(g) Each New Lender, by executing the relevant Transfer Certificate, confirms, for the avoidance of doubt, thatthe Agent has authority to execute on its behalf any amendment or waiver that has been approved by or onbehalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on whichthe transfer or assignment becomes effective in accordance with this Agreement and that it is bound by thatdecision to the same extent as the Existing Lender would have been had it remained a Lender.

26.3 Assignment or transfer fee

The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for itsown account) a fee of $3,000 to the Agent.

26.4 Limitation of responsibility of Existing Lenders

(a) Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty andassumes no responsibility to a New Lender for:

(i) the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any otherdocuments;

(ii) the financial condition of any Obligor or other person;

(iii) the performance and observance by any Obligor or other person of its obligations under the FinanceDocuments or any other documents; or

(iv) the accuracy of any statements (whether written or oral) made in or in connection with any FinanceDocument or any other document,

and any representations or warranties implied by law are excluded.

(b) Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

(i) has made (and shall continue to make) its own independent investigation and assessment of thefinancial condition and affairs of each Obligor and its related entities in connection with its participationin this Agreement and has not relied exclusively on any information provided to it by the Existing Lenderor any other Finance Party in connection with any Finance Document; and

(ii) will continue to make its own independent appraisal of the creditworthiness of each Obligor and itsrelated entities and any other person whilst any amount is or may be outstanding under the FinanceDocuments or any Commitment is in force.

(c) Nothing in any Finance Document obliges an Existing Lender to:

(i) accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferredunder this Clause 26; or

(ii) support any losses directly or indirectly incurred by the New Lender by reason of the non-performanceby any Obligor or other person of its obligations under the Finance Documents or otherwise.

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26.5 Procedure for transfer

(a) Subject to the conditions set out in this Clause 26 a transfer is effected in accordance with Clause 26.5(c) when theAgent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the NewLender. The Agent shall, subject to Clause 26.5(b), as soon as reasonably practicable after receipt by it of a dulycompleted Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered inaccordance with the terms of this Agreement, execute that Transfer Certificate.

(b) The Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the NewLender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under allapplicable laws and regulations in relation to the transfer to such New Lender.

(c) On the Transfer Date:

(i) to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights andobligations under the Finance Documents each of the Obligors and the Existing Lender shall be released fromfurther obligations towards one another under the Finance Documents and their respective rights against oneanother under the Finance Documents shall be cancelled (being the “Discharged Rights and Obligations”);

(ii) each of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rightsagainst one another which differ from the Discharged Rights and Obligations only insofar as that Obligor andthe New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;

(iii) the Agent, the Arranger, the Security Agent, the New Lender, the Lenders and the Issuing Bank shall acquirethe same rights and assume the same obligations between themselves as they would have acquired andassumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumedby it as a result of the transfer and to that extent the Agent, the Arranger, the Security Agent, the Issuing Bankand the Existing Lender shall each be released from further obligations to each other under the FinanceDocuments; and

(iv) the New Lender shall become a Party as a “Lender”.

26.6 Copy of Transfer Certificate to Borrowers

The Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate, send to theBorrowers a copy of that Transfer Certificate.

26.7 Disclosure of information

Any Lender may disclose to any of its Affiliates and:

(a) any other person to (or through) whom that Lender assigns or transfers (or may potentially assign or transfer)all or any of its rights and obligations under this Agreement;

(b) any other person with (or through) whom that Lender enters into (or may potentially enter into) anysub-participation in relation to, or any other transaction under which payments are to be made by referenceto, this Agreement or any Obligor;

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(c) any other person to whom, and to the extent that, information is required to be disclosed by any applicablelaw or regulation; or

(d) any other person for whose benefit that Lender charges, assigns or otherwise creates Security (or may do so)pursuant to Clause 26.8 (Assignment by way of Security),

any information about any Obligor, the Group, any other person and the Finance Documents as thatLender shall consider appropriate if, in relation to Clauses 26.7(a) and (b), the person to whom theinformation is to be given has entered into a Confidentiality Undertaking.

26.8 Assignment by way of Security

In addition to the other rights provided in this Clause 26, each Lender may, without consultation orobtaining the consent from any Obligor, at any time charge, assign or otherwise create Security in or over(whether by way of collateral or otherwise) all or any of its rights under any Finance Document to securethe obligations of that Lender, including, without limitation:

(a) any charge, assignment or other Security to secure obligations to a federal reserve or central bank; and

(b) in the case of any Lender which is a fund, any charge, assignment or other Security granted to any holders(or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as Securityfor those obligations or securities,

except that no such charge, assignment or Security shall:

(i) release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of therelevant charge, assignment or Security for the Lender as a party to any of the Finance Documents; or

(ii) require any payments to be made by an Obligor other than or in excess of, or grant to any person any moreextensive rights than those required to be made or granted to the relevant Lender under the FinanceDocuments.

26.9 Sub-participations

Any Lender may, without the consent of any Obligor, at any time sub-participate or sub-contract any of its rights orobligations under the Finance Documents.

27 CHANGES TO THE OBLIGORS

27.1 Assignments and transfer by Obligors

No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

27.2 Additional Guarantors

(a) Subject to compliance with the provisions of Clause 21.11(c) and (d), CNV may request that any of its wholly ownedSubsidiaries becomes an Additional Guarantor. That Subsidiary, and/or any Subsidiary which is required by thisAgreement to become an Additional Guarantor, shall become an Additional Guarantor if:

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(i) CNV delivers to the Agent a duly completed and executed Accession Letter; and

(ii) the Agent has received all of the documents and other evidence listed in Part III of Schedule 2 (Conditionsprecedent) in relation to that Additional Guarantor, each in form and substance satisfactory to the Agent.

(b) The Agent shall notify the Borrowers and the Lenders promptly upon being satisfied that it has received (in form andsubstance satisfactory to it) all the documents and other evidence listed in Part III of Schedule 2 (Conditionsprecedent).

27.3 Repetition of Representations

Delivery of an Accession Letter constitutes confirmation by the relevant Subsidiary that the representations andwarranties referred to in Clause 20.28(b) are true and correct in relation to it as at the date of delivery as if made byreference to the facts and circumstances then existing.

27.4 Resignation of a Guarantor

(a) The Borrowers may request that a Guarantor (other than the Borrowers) ceases to be a Guarantor by delivering tothe Agent a Resignation Letter.

(b) The Agent shall accept a Resignation Letter and notify the Borrowers and the Lenders of its acceptance if:

(i) no Default is continuing or would result from the acceptance of the Resignation Letter (and the Borrowershave confirmed this is the case); and

(ii) all the Lenders have consented to the Borrowers’ request.89


SECTION 10THE FINANCE PARTIES

28 ROLE OF THE AGENT AND THE ARRANGER

28.1 Appointment of the Agent

(a) Each other Finance Party appoints the Agent to act as its agent under and in connection with the FinanceDocuments.

(b) Each other Finance Party authorises the Agent to exercise the rights, powers, authorities and discretions specificallygiven to the Agent under or in connection with the Finance Documents together with any other incidental rights,powers, authorities and discretions.

(c) Each other Finance Party authorises each of the Agent and the Arranger to agree, accept and sign on its behalf theterms of any reliance or engagement letter in relation to any report or letter provided by any person in connectionwith the Finance Documents or the transactions contemplated in them (including any net asset letter in connectionwith financial assistance procedures).

28.2 Duties of the Agent

(a) The Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agentfor that Party by any other Party.

(b) Except where a Finance Document specifically provides otherwise, the Agent is not obliged to review or check theadequacy, accuracy or completeness of any document it forwards to another Party.

(c) If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that thecircumstance described is a Default, it shall promptly notify the Finance Parties.

(d) If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to aFinance Party (other than the Agent or the Arranger) under this Agreement, it shall promptly notify the other FinanceParties.

(e) The Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.

28.3 Role of the Arranger

Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any otherParty under or in connection with any Finance Document.

28.4 No fiduciary duties

(a) Nothing in this Agreement constitutes the Agent, or the Arranger as a trustee or fiduciary of any other person.

(b) Neither the Agent nor the Arranger shall be bound to account to any Lender for any sum or the profit element of anysum received by it for its own account.

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28.5 Business with the Group

The Agent and the Arranger may accept deposits from, lend money to and generally engage in any kind of bankingor other business with any member of the Group or any other person.

28.6 Rights and discretions of the Agent

(a) The Agent may rely on:



(b) The Agent may assume, unless it has received notice to the contrary in its capacity as agent for the Lenders, that:

(i) no Default has occurred (unless it has actual knowledge of a Default arising under Clause 25.1(Non-payment));

(ii) any right, power, authority or discretion vested in any Party or any group of Lenders has not been exercised;and

(iii) any notice or request made by a Borrower (other than a Utilisation) is made on behalf of and with the consentand knowledge of all the Obligors.

(c) The Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or otherexperts.

(d) The Agent may act in relation to the Finance Documents through its personnel and agents.

(e) The Agent may disclose to any other Party any information it reasonably believes it has received as agent underthis Agreement.

(f) Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor the Arranger isobliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law orregulation or a breach of a fiduciary duty or duty of confidentiality.

28.7 Majority Lenders’ instructions

(a) Unless a contrary indication appears in a Finance Document, the Agent shall (i) exercise any right, power, authorityor discretion vested in it as Agent in accordance with any instructions given to it by the Majority Lenders (or, if soinstructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it asAgent) and (ii) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance withan instruction of the Majority Lenders.

(b) Unless a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will bebinding on all the Finance Parties.

(c) The Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, theLenders) until it has received such security as it may require for any cost, loss or liability (together with anyassociated VAT) which it may incur in complying with the instructions.

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(d) In the absence of instructions from the Majority Lenders (or, if appropriate, the Lenders), the Agent may act (orrefrain from taking action) as it considers to be in the best interest of the Lenders.

(e) The Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender’s consent) in any legalor arbitration proceedings relating to any Finance Document.

28.8 Responsibility for documentation

Neither the Agent nor the Arranger:

(a) is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written)supplied by the Agent, the Arranger, an Obligor or any other person given in or in connection with anyFinance Document; or

(b) is responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document orany other agreement, arrangement or document entered into, made or executed in anticipation of or inconnection with any Finance Document.


(a) Without limiting Clause 28.9(b) (and without prejudice to the provisions of Clause 34.10(e)), the Agent will not beliable including without limitation for negligence or any other category of liability whatsoever for any action taken byit under or in connection with any Finance Document, unless directly caused by its gross negligence or wilfulmisconduct.

(b) No Party (other than the Agent) may take any proceedings against any officer, employee or agent of the Agent inrespect of any claim it might have against the Agent or in respect of any act or omission of any kind by that officer,employee or agent in relation to any Finance Document and any officer, employee or agent of the Agent may relyon this Clause.

(c) The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amountrequired under the Finance Documents to be paid by the Agent if the Agent has taken all necessary steps as soonas reasonably practicable to comply with the regulations or operating procedures of any recognised clearing orsettlement system used by the Agent for that purpose.

(d) Nothing in this Agreement shall oblige the Agent or the Arranger to carry out any “know your customer” or otherchecks in relation to any person on behalf of any Lender and each Lender confirms to the Agent and the Arrangerthat it is solely responsible for any such checks it is required to carry out and that it may not rely on any statementin relation to such checks made by the Agent or the Arranger.

28.10 Lenders’ indemnity to the Agent

(a) Subject to Clause 28.10(b), each Lender shall (in proportion to its Available Commitments and participations in theUtilisations then outstanding to the Available Facilities and all the Utilisations) indemnify the Agent, within threeBusiness Days of demand, against any cost, loss or liability including without limitation for negligence or any othercategory of liability whatsoever incurred by the Agent (otherwise than by reason of its gross negligence or wilfulmisconduct) (or in the case of any cost, loss or liability pursuant to Clause 34.10 (Disruption to Payment Systemsetc.) notwithstanding the Agent’s negligence, gross negligence or any other category of liability whatsoever but notincluding any claim based

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on the fraud of the Agent) in acting as Agent under the Finance Documents (unless it has been reimbursed by anObligor pursuant to a Finance Document).

(b) If the Available Facilities are then zero, each Lender’s indemnity under Clause 28.10(a) shall be in proportion to itsAvailable Commitments to the Available Facilities immediately prior to their reduction to zero.

28.11 Resignation of the Agent

(a) The Agent may resign and appoint one of its Affiliates acting through an office in the United Kingdom as successorby giving notice to the other Finance Parties and CNV.

(b) Alternatively the Agent may resign by giving notice to the other Finance Parties and CNV, in which case theMajority Lenders (after consultation with CNV) may appoint a successor Agent.

(c) If the Majority Lenders have not appointed a successor Agent in accordance with Clause 28.11(b) within 30 daysafter notice of resignation was given, the Agent (after consultation with CNV) may appoint a successor Agent(acting through an office in the United Kingdom).

(d) The retiring Agent shall, at its own cost, make available to the successor Agent such documents and records andprovide such assistance as the successor Agent may reasonably request for the purposes of performing itsfunctions as Agent under the Finance Documents.

(e) The Agent’s resignation notice shall only take effect upon the appointment of a successor.

(f) Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respectof the Finance Documents but shall remain entitled to the benefit of this Clause 28. Its successor and each of theother Parties shall have the same rights and obligations amongst themselves as they would have had if suchsuccessor had been an original Party.

(g) After consultation with CNV, the Majority Lenders may, by notice to the Agent, require it to resign in accordancewith Clause 28.11(b). In this event, the Agent shall resign in accordance with Clause 28.11(b).

28.12 Confidentiality

(a) In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency division whichshall be treated as a separate entity from any other of its divisions or departments.

(b) If information is received by another division or department of the Agent, it may be treated as confidential to thatdivision or department and the Agent shall not be deemed to have notice of it.

28.13 Relationship with the Lenders

(a) The Agent may treat each Lender as a Lender, entitled to payments under this Agreement and acting through itsFacility Office unless it has received not less than five Business Days’ prior notice from that Lender to the contraryin accordance with the terms of this Agreement.

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(b) Each Lender shall supply the Agent with any information required by the Agent in order to calculate the MandatoryCost in accordance with Schedule 4 (Mandatory Cost formulae).

28.14 Credit appraisal by the Lenders

Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection withany Finance Document, each Lender confirms to the Agent and the Arranger that it has been, and will continue tobe, solely responsible for making its own independent appraisal and investigation of all risks arising under or inconnection with any Finance Document including but not limited to:

(a) the financial condition, status and nature of each member of the Group;

(b) the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and any otheragreement, Security, arrangement or document entered into, made or executed in anticipation of, under or inconnection with any Finance Document;

(c) whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of itsrespective assets under or in connection with any Finance Document, the transactions contemplated by theFinance Documents or any other agreement, Security, arrangement or document entered into, made orexecuted in anticipation of, under or in connection with any Finance Document; and

(d) the adequacy, accuracy and/or completeness of any information provided by the Agent, any Party or by anyother person under or in connection with any Finance Document, the transactions contemplated by theFinance Documents or any other agreement, Security, arrangement or document entered into, made orexecuted in anticipation of, under or in connection with any Finance Document.

28.15 Reference Banks

If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be aLender, the Agent shall (in consultation with CNV) appoint another Lender or an Affiliate of a Lender to replace thatReference Bank.

28.16 Management time of the Agent

Any amount payable to the Agent under Clause 16.3 (Indemnity to the Agent and the Security Agent), Clause 18(Costs and expenses) and Clause 28.10 (Lenders’ indemnity to the Agent) shall include the cost of utilising theAgent’s management time or other resources and will be calculated on the basis of such reasonable daily or hourlyrates as the Agent may notify to the Borrowers and the Lenders, and is in addition to any fee paid or payable to theAgent under Clause 13 (Fees).

28.17 Deduction from amounts payable by the Agent

If any Party owes an amount to the Agent under the Finance Documents, the Agent may, after giving notice to thatParty, deduct an amount not exceeding that amount from any payment to that Party which the Agent wouldotherwise be obliged to make under the Finance Documents and apply the amount deducted in or towardssatisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded ashaving received any amount so deducted.

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29 ROLE OF THE SECURITY AGENT

29.1 Appointment of the Security Agent

(a) Each other Finance Party appoints the Security Agent to act as security trustee under and in connection with theFinance Documents in relation to any security interest which is expressed to be or is construed to be governed byEnglish law, or any other law from time to time designated by the Security Agent and an Obligor.

(b) Except as expressly provided in Clause 29.1(a), and without limiting or affecting Clause 29.18 (Parallel Debt), eachother Finance Party appoints the Security Agent to act as security agent under and in connection with the FinanceDocuments.

(c) Each other Finance Party authorises the Security Agent to exercise the rights, powers, authorities and discretionsspecifically given to it under or in connection with the Finance Documents together with any other incidental rights,powers, authorities and discretions.

29.2 Duties of the Security Agent

(a) The Agent shall promptly send to the Security Agent such certification as the Security Agent may require pursuantto paragraph 7 (Basis of distribution) of Schedule 9 (Security agency provisions).

(b) The duties of the Security Agent under the Finance Documents are solely mechanical and administrative in nature.

29.3 Role of the Security Agent

The Security Agent shall not be an agent or trustee of any Finance Party (save as expressly provided in anyFinance Document) or any Obligor or any other person under or in connection with any Finance Document or thisAgreement.

29.4 No fiduciary duties

(a) Nothing in this Agreement constitutes the Security Agent (except as expressly provided in Clause 29.18 (ParallelDebt) or Schedule 9 (Security agency provisions)) as a trustee or fiduciary of any other person.

(b) The Security Agent shall not be bound to account to any Finance Party for any sum or the profit element of any sumreceived by it for its own account.

29.5 Business with the Group

The Security Agent may accept deposits from, lend money to and generally engage in any kind of banking or otherbusiness with any member of the Group or any other person.

29.6 Rights and discretions of the Security Agent

(a) The Security Agent may rely on:



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(b) The Security Agent may assume, unless it has received notice to the contrary in its capacity as security trustee orsecurity agent for the Finance Parties, that:

(i) no event of default or potential event of default, however described, has occurred (unless it has actualknowledge of an event of default or potential event of default, however described, arising under Clause 25.1(Non-payment));

(ii) any right, power, authority or discretion vested in any Party or any group of Lenders or Finance Parties hasnot been exercised; and

(iii) any notice or request made by a Borrower (other than a Utilisation Request) is made on behalf of and with theconsent and knowledge of all the Obligors.

(c) The Security Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyorsor other experts.

(d) The Security Agent may act in relation to the Finance Documents through its personnel and agents.

(e) The Security Agent may disclose to any other Party any information it reasonably believes it has received asSecurity Agent.

(f) Notwithstanding any other provision of any Finance Document to the contrary, the Security Agent is not obliged todo or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation ora breach of a fiduciary duty or duty of confidentiality.

29.7 Responsibility for documentation

The Security Agent is not responsible for:

(a) the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by theSecurity Agent, an Obligor or any other person given in or in connection with any Finance Document; or

(b) the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any otheragreement, arrangement or document entered into, made or executed in anticipation of or in connection withany Finance Document.


(a) Without limiting Clause 29.8(b), the Security Agent will not be liable for any action taken by it under or in connectionwith any Finance Document unless directly caused by its gross negligence or wilful misconduct.

(b) No Party (other than the Security Agent) may take any proceedings against any officer, employee or agent of theSecurity Agent in respect of any claim it might have against the Security Agent or in respect of any act or omissionof any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee oragent of the Security Agent may rely on this Clause.

(c) The Security Agent will not be liable for any delay (or any related consequences) in crediting an account with anamount required under the Finance Documents to be paid by it if it has taken all necessary steps as soon asreasonably practicable to comply with the regulations or operating procedures of any recognised clearing orsettlement system used by it for that purpose.

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29.9 Finance Parties’ indemnity to the Security Agent

Each other Finance Party shall (in proportion to its Available Commitments and participations in the Utilisationsthen outstanding to the Available Facilities and all the Utilisations) indemnify the Security Agent, within threeBusiness Days of demand, against any cost, loss or liability incurred by the Security Agent (otherwise than byreason of its gross negligence or wilful misconduct) in acting as Security Agent under the Finance Documents(unless it has been reimbursed by an Obligor pursuant to a Finance Document).

29.10 Resignation of the Security Agent

(a) The Security Agent may resign and appoint one of its Affiliates acting through an office in the United Kingdom assuccessor by giving notice to the Finance Parties.

(b) Alternatively the Security Agent may resign by giving notice to the Finance Parties, in which case the MajorityLenders, until the Discharge Date (after consultation with CNV) may appoint a successor Security Agent.

(c) If the Majority Lenders have not appointed a successor Security Agent in accordance with Clause 29.10(b) within30 days after notice of resignation was given, the Security Agent (after consultation with CNV) may appoint asuccessor Security Agent (acting through an office in the United Kingdom).

(d) The retiring Security Agent shall make available to its successor such documents and records and provide suchassistance as its successor may reasonably request for the purposes of performing its functions as Security Agentunder the Finance Documents.

(e) The resignation notice of the Security Agent shall only take effect upon the appointment of a successor.

(f) Upon the appointment of a successor, the retiring Security Agent shall be discharged from any further obligation inrespect of the Finance Documents but shall remain entitled to the benefit of this Clause 29. Its successor and eachof the other Parties shall have the same rights and obligations amongst themselves as they would have had if suchsuccessor had been an original Party.

(g) After consultation with CNV, the Majority Lenders, until the Discharge Date, may, by notice to the Security Agent,require it to resign in accordance with Clause 29.10(b). In this event, the Security Agent shall resign in accordancewith Clause 29.10(b).

29.11 Confidentiality

(a) The Security Agent (in acting as security trustee or security agent for the Finance Parties) shall be regarded asacting through its respective security trustee or security agency division which shall be treated as a separate entityfrom any other of its divisions or departments.

(b) If information is received by another division or department of the Security Agent, it may be treated as confidentialto that division or department and the Security Agent shall not be deemed to have notice of it.

29.12 Credit appraisal by the Finance Parties

Without affecting the responsibility of any Obligor or other person for information supplied by it or on its behalf inconnection with any Finance Document, each Finance Party

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confirms to the Security Agent that it has been, and will continue to be, solely responsible for making its ownindependent appraisal and investigation of all risks arising under or in connection with any Finance Documentincluding but not limited to:

(a) the financial condition, status and nature of each member of the Group;

(b) the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any otheragreement, Security, arrangement or document entered into, made or executed in anticipation of, under or inconnection with any Finance Document;

(c) whether that Finance Party has recourse, and the nature and extent of that recourse, against any Party or anyof its respective assets under or in connection with any Finance Document, the transactions contemplated bythe Finance Documents or any other agreement, Security, arrangement or document entered into, made orexecuted in anticipation of, under or in connection with any Finance Document; and

(d) the adequacy, accuracy and/or completeness of any information provided by the Security Agent, any Party orby any other person under or in connection with any Finance Document, the transactions contemplated by theFinance Documents or any other agreement, Security, arrangement or document entered into, made orexecuted in anticipation of, under or in connection with any Finance Document.

29.13 Management time of the Security Agent

Any amount payable to the Security Agent under Clause 29.9 (Finance Parties’ indemnity to the Security Agent)and Clause 30 (Expenses) shall include the cost of utilising its management time or other resources and will becalculated on the basis of such reasonable daily or hourly rates as it may notify to the Borrowers and the Agent,and is in addition to any fee paid or payable to it under any Finance Document.

29.14 Deduction from amounts payable by the Security Agent

If any Party owes an amount to the Security Agent under the Finance Documents, the Security Agent may, aftergiving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which theSecurity Agent would otherwise be obliged to make under the Finance Documents and apply the amount deductedin or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall beregarded as having received any amount so deducted.

29.15 Security agency provisions

The provisions of Schedule 9 (Security agency provisions) shall bind each Party.

29.16 Indemnity to the Security Agent

The Borrowers shall promptly indemnify the Security Agent against any cost, loss or liability incurred by theSecurity Agent (acting reasonably) as a result of:

(a) investigating any event which it reasonably believes is an event of default or potential event ofdefault, however described; or

(b) acting or relying on any notice, request or instruction which it reasonably believes to be genuine,correct and appropriately authorised.

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29.17 Security Agent expenses

The Borrowers shall promptly on demand pay the Security Agent the amount of all costs and expenses (includinglegal fees) incurred by it in connection with the administration or release of any Security created pursuant to anySecurity Document.

29.18 Parallel Debt

(a) Each Obligor hereby irrevocably and unconditionally undertakes to pay to the Security Agent amounts equal to anyamounts owing from time to time by that Obligor to any Finance Party under any Finance Document as and whenthose amounts are due.

(b) Each Obligor and the Security Agent acknowledge that the obligations of each Obligor under Clause 29.18(a) areseveral and are separate and independent from, and shall not in any way limit or affect, the correspondingobligations of that Obligor to any Finance Party under any Finance Document (its “Corresponding Debt”) nor shallthe amounts for which each Obligor is liable under Clause 29.18(a) (its “Parallel Debt”) be limited or affected inany way by its Corresponding Debt provided that:

(i) the Parallel Debt of each Obligor shall be decreased to the extent that its Corresponding Debt has beenirrevocably paid or (in the case of guarantee obligations) discharged;

(ii) the Corresponding Debt of each Obligor shall be decreased to the extent that its Parallel Debt has beenirrevocably paid or (in the case of guarantee obligations) discharged; and

(iii) the amount of the Parallel Debt of an Obligor shall at all times be equal to the amount of its CorrespondingDebt.

(c) For the purpose of this Clause 29.18, the Security Agent acts in its own name and not as a trustee, and its claims inrespect of the Parallel Debt shall not be held on trust. The Security granted under the Finance Documents to theSecurity Agent to secure the Parallel Debt is granted to the Security Agent in its capacity as creditor of the ParallelDebt and shall not be held on trust.

(d) All moneys received or recovered by the Security Agent pursuant to this Clause 29.18, and all amounts received orrecovered by the Security Agent from or by the enforcement of any Security granted to secure the Parallel Debt,shall be applied in accordance with Clause 31.1 (Order of application).

(e) Without limiting or affecting the Security Agent’s rights against the Obligors (whether under this Clause 29.18 orunder any other provision of the Finance Documents), each Obligor acknowledges that:

(i) nothing in this Clause 29.18 shall impose any obligation on the Security Agent to advance any sum to anyObligor or otherwise under any Finance Document except in its capacity as a Senior Lender; and

(ii) for the purpose of any vote taken under any Finance Document, the Security Agent shall not be regarded ashaving any participation or commitment other than those which it has in its capacity as a Lender.

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30 EXPENSES

To the extent not already paid under another Finance Document, each Obligor will, within three Business Days ofdemand, pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by thatFinance Party in connection with the enforcement or preservation of that person’s rights against that Obligor underthis Agreement.

31 ORDER OF APPLICATION

31.1 Order of application

Subject to the rights of creditors mandatorily preferred by law applying to companies generally, the proceeds ofenforcement of the Security conferred by the Security Documents, all recoveries by the Security Agent underguarantees of the debt and all other amounts paid to the Security Agent pursuant to this Agreement shall be appliedin the following order:

(a) first, in or towards payment of any unpaid fees, costs, expenses and liabilities (including any interest thereonas provided in the Security Documents) incurred by or on behalf of the Security Agent (or any adviser,receiver, delegate, attorney or agent) and the remuneration of the Security Agent (or any adviser, receiver,delegate, attorney or agent) in connection with carrying out its duties or exercising powers or discretionsunder the Security Documents or this Agreement;

(b) second, in or towards payment to the Agent for application towards any unpaid costs and expenses incurredby or on behalf of any Finance Party in connection with such enforcement, recovery or other payment paripassu between themselves; and

(c) third, after the Discharge Date, in payment of the surplus (if any) to the relevant Obligor or other personentitled thereto.

31.2 Good discharge

An acknowledgement of receipt signed by the relevant person to whom payments are to be made under this Clause31 shall be a good discharge of the Security Agent.

32 CONDUCT OF BUSINESS BY THE FINANCE PARTIES

No provision of this Agreement will:

(a) interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner itthinks fit;

(b) oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or theextent, order and manner of any claim; or

(c) oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or anycomputations in respect of Tax.

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33 SHARING AMONG THE FINANCE PARTIES

33.1 Payments to Finance Parties

If a Finance Party (a “Recovering Finance Party”) receives or recovers any amount from an Obligor other than inaccordance with Clause 34 (Payment mechanics) and applies that amount to a payment due under the FinanceDocuments then:

(a) the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery to theAgent;

(b) the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering FinanceParty would have been paid had the receipt or recovery been received or made by the Agent and distributedin accordance with Clause 34 (Payment mechanics), without taking account of any Tax which would beimposed on the Agent in relation to the receipt, recovery or distribution; and

(c) the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent anamount (the “Sharing Payment”) equal to such receipt or recovery less any amount which the Agentdetermines may be retained by the Recovering Finance Party as its share of any payment to be made, inaccordance with Clause 34.5 (Partial payments).

33.2 Redistribution of payments

The Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it betweenthe Finance Parties (other than the Recovering Finance Party) in accordance with Clause 34.5 (Partial payments).

33.3 Recovering Finance Party’s rights

(a) On a distribution by the Agent under Clause 33.2 (Redistribution of payments), the Recovering Finance Party will besubrogated to the rights of the Finance Parties which have shared in the redistribution.

(b) If and to the extent that the Recovering Finance Party is not able to rely on its rights under Clause 33.3(a), therelevant Obligor shall be liable to the Recovering Finance Party for a debt equal to the Sharing Payment which isimmediately due and payable.

33.4 Reversal of redistribution

If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and isrepaid by that Recovering Finance Party, then:

(a) each Finance Party which has received a share of the relevant Sharing Payment pursuant to Clause 33.2(Redistribution of payments) shall, upon request of the Agent, pay to the Agent for account of that RecoveringFinance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with anamount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on theSharing Payment which that Recovering Finance Party is required to pay); and

(b) that Recovering Finance Party’s rights of subrogation in respect of any reimbursement shall be cancelled andthe relevant Obligor will be liable to the reimbursing Finance Party for the amount so reimbursed.

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33.5 Exceptions

(a) This Clause 33 shall not apply to the extent that the Recovering Finance Party would not, after making any paymentpursuant to this Clause, have a valid and enforceable claim against the relevant Obligor.

(b) A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the RecoveringFinance Party has received or recovered as a result of taking legal or arbitration proceedings, if:

(i) it notified that other Finance Party of the legal or arbitration proceedings; and

(ii) that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did notdo so as soon as reasonably practicable having received notice and did not take separate legal or arbitrationproceedings.

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SECTION 11ADMINISTRATION

34 PAYMENT MECHANICS

34.1 Payments to the Agent

(a) On each date on which an Obligor or a Lender is required to make a payment under a Finance Document, thatObligor or Lender shall make the same available to the Agent (unless a contrary indication appears in a FinanceDocument) for value on the due date at the time and in such funds specified by the Agent as being customary at thetime for settlement of transactions in the relevant currency in the place of payment.

(b) Payment shall be made to the Agent’s bank account with HSBC Bank USA, NY (Swift MRMDUS33), for the accountof HSBC Bank plc, London (swift MIDLGB22), account number 000023868 quoting “Reference Dept.716/CTLA/Cascal”.

34.2 Distributions by the Agent

Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 34.3(Distributions to an Obligor) and Clause 34.4 (Clawback), be made available by the Agent as soon as practicableafter receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, forthe account of its Facility Office), to such account as that Party may notify to the Agent by not less than fiveBusiness Days’ notice with a bank in the principal financial centre of the country of that currency (or, in relation to €,in the principal financial centre of a Participating Member State or London).

34.3 Distributions to an Obligor

The Agent may (with the consent of the Obligor or in accordance with Clause 35 (Set-off)) apply any amountreceived by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of anyamount due from that Obligor under the Finance Documents or in or towards purchase of any amount of anycurrency to be so applied.

34.4 Clawback

(a) Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged topay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able toestablish to its satisfaction that it has actually received that sum.

(b) If the Agent pays an amount to another Party and it proves to be the case that it had not actually received thatamount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by theAgent shall on demand refund the same to the Agent together with interest on that amount from the date ofpayment to the date of receipt by the Agent, calculated by it to reflect its cost of funds.

34.5 Partial payments

(a) If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligorunder the Finance Documents, the Agent shall apply that payment towards the obligations of that Obligor under theFinance Documents in the following order:

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(i) first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent, the Security Agent,the Facility Agent, the Issuing Bank, or the Arranger under the Finance Documents;

(ii) secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid underthis Agreement;

(iii) thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement and any amountdue but unpaid under Clause 7.2 (Claims under a Bank Guarantee) and Clause 7.3 (Indemnities); and

(iv) fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

(b) The Agent shall, if so directed by the Majority Revolving Facility Lenders and the Majority Guarantee FacilityLenders, vary the order set out in Clauses 34.5(a)(ii) to (iv).

(c) Clause 34(a) and (b) will override any appropriation made by an Obligor.

34.6 No set-off by Obligors

All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (andfree and clear of any deduction for) set-off or counterclaim.

34.7 Business Days

(a) Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Dayin the same calendar month (if there is one) or the preceding Business Day (if there is not).

(b) During any extension of the due date for payment of any principal or an Unpaid Sum under this Agreement interestis payable on the principal or Unpaid Sum at the rate payable on the original due date.

34.8 Currency of account

(a) Subject to Clauses 34.8(b) to (e), the US Dollar is the currency of account and payment for any sum due from anObligor under any Finance Document.

(b) A repayment of a Utilisation or Unpaid Sum or a part of a Utilisation or Unpaid Sum shall be made in the currency inwhich that Utilisation or Unpaid Sum is denominated on its due date.

(c) Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payablewas denominated when that interest accrued.

(d) Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses orTaxes are incurred.

(e) Any amount expressed to be payable in a currency other than US Dollars shall be paid in that other currency.

34.9 Change of currency

(a) Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised bythe central bank of any country as the lawful currency of that country, then:

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(i) any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, thecurrency of that country shall be translated into, or paid in, the currency or currency unit of that countrydesignated by the Agent (after consultation with the Borrowers); and

(ii) any translation from one currency or currency unit to another shall be at the official rate of exchangerecognised by the central bank for the conversion of that currency or currency unit into the other, rounded upor down by the Agent (acting reasonably).

(b) If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably andafter consultation with the Borrowers) specifies to be necessary, be amended to comply with any generallyaccepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change incurrency.

34.10 Disruption to Payment Systems etc.

If either the Agent determines (in its discretion) that a Disruption Event has occurred or the Agent is notified by aBorrower that a Disruption Event has occurred:

(a) the Agent may, and shall if requested to do so by the Borrowers, consult with the Borrowers witha view to agreeing with the Borrowers such changes to the operation or administration of theFacilities as the Agent may deem necessary in the circumstances;

(b) the Agent shall not be obliged to consult with the Borrowers in relation to any changes mentionedin Clause 34.10(a) if, in its opinion, it is not practicable to do so in the circumstances and, in anyevent, shall have no obligation to agree to such changes;

(c) the Agent may consult with the Finance Parties in relation to any changes mentioned in Clause34.10 but shall not be obliged to do so if, in its opinion, it is not practicable to do so in thecircumstances;

(d) any such changes agreed upon by the Agent and the Borrowers shall (whether or not it is finallydetermined that a Disruption Event has occurred) be binding upon the Parties as an amendmentto (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding theprovisions of Clause 40 (Amendments and Waivers);

(e) the Agent shall not be liable for any damages, costs or losses whatsoever (including, withoutlimitation for negligence, gross negligence or any other category of liability whatsoever but notincluding any claim based on the fraud of the Agent) arising as a result of its taking, or failing totake, any actions pursuant to or in connection with this Clause 34.10; and

(f) the Agent shall notify the Finance Parties of all changes agreed pursuant to Clause 34.10(d).

35 SET-OFF

A Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to theextent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to thatObligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are indifferent currencies,

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the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for thepurpose of the set-off.

36 NOTICES

36.1 Communications in writing

Any communication to be made under or in connection with the Finance Documents shall be made in writing and,unless otherwise stated, may be made by fax or letter.

36.2 Addresses

The address and fax number (and the department or officer, if any, for whose attention the communication is to bemade) of each Party for any communication or document to be made or delivered under or in connection with theFinance Documents is:

(a) in the case of each Borrower, that identified with its name below;

(b) in the case of each Lender or any other Original Obligor, that notified in writing to the Agent on or prior to thedate on which it becomes a Party; and

(c) in the case of the Agent, the Issuing Bank or the Security Agent, that identified with its name below,

or any substitute address, fax number or department or officer as the Party may notify to the Agent (or the Agentmay notify to the other Parties, if a change is made by the Agent) by not less than five Business Days’ notice.

36.3 Delivery

(a) Any communication or document made or delivered by one person to another under or in connection with theFinance Documents will only be effective:

(i) if by way of fax, when received in legible form; or

(ii) if by way of letter, when it has been left at the relevant address or five Business Days after being deposited inthe post postage prepaid in an envelope addressed to it at that address,

and, if a particular department or officer is specified as part of its address details provided under Clause 36.2(Addresses), if addressed to that department or officer.

(b) Any communication or document to be made or delivered to the Agent or the Security Agent will be effective onlywhen actually received by it and then only if it is expressly marked for the attention of the department or officeridentified with its signature below (or any substitute department or officer as it shall specify for this purpose).

(c) All notices from or to an Obligor shall be sent through the Agent.

(d) Any communication or document made or delivered to a Borrower in accordance with this Clause will be deemed tohave been made or delivered to each of the Obligors.

36.4 Notification of address and fax number

Promptly upon receipt of notification of an address and fax number or change of address or fax number pursuant toClause 36.2 (Addresses) or changing its own address or fax number, the Agent shall notify the other Parties.

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36.5 Electronic communication

(a) Any communication to be made between the Agent and a Lender under or in connection with the FinanceDocuments may be made by electronic mail or other electronic means, if the Agent and the relevant Lender:

(i) agree that, unless and until notified to the contrary, this is to be an accepted form of communication;

(ii) notify each other in writing of their electronic mail address and/or any other information required to enable thesending and receipt of information by that means; and

(iii) notify each other of any change to their address or any other such information supplied by them.

(b) Any electronic communication made between the Agent and a Lender will be effective only when actually receivedin readable form and in the case of any electronic communication made by a Lender to the Agent only if it isaddressed in such a manner as the Agent shall specify for this purpose.

36.6 English language

(a) Any notice given under or in connection with any Finance Document must be in English.

(b) All other documents provided under or in connection with any Finance Document must be:

(i) in English; or

(ii) if not in English, and if so required by the Agent, accompanied by a certified English translation and, in thiscase, the English translation will prevail unless the document is a constitutional, statutory or other officialdocument or a Security Document.

37 CALCULATIONS AND CERTIFICATES

37.1 Accounts

In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries madein the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.

37.2 Certificates and determinations

Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in theabsence of manifest error, conclusive evidence of the matters to which it relates.

37.3 Day count convention

Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculatedon the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in theRelevant Interbank Market differs, in accordance with that market practice.

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38 PARTIAL INVALIDITY

If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in anyrespect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisionsnor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way beaffected or impaired.

39 REMEDIES AND WAIVERS

No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under theFinance Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy preventany further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in thisAgreement are cumulative and not exclusive of any rights or remedies provided by law.

40 AMENDMENTS AND WAIVERS

40.1 Required consents

(a) Subject to Clause 40.2 (Exceptions) any term of the Finance Documents may be amended or waived only with theconsent of the Majority Lenders and the Borrowers and any such amendment or waiver will be binding on allParties.

(b) The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 40.

(c) Subject to Clause 40.2(e), each Obligor acknowledges that its consent is not required for any amendment or waiverpermitted by this Clause 40 which is agreed to by the Borrowers.

40.2 Exceptions

(a) An amendment or waiver that has the effect of changing or which relates to:

(i) the definition of “Majority Lenders”, “Majority Guarantee Facility Lenders” or “Majority Revolving FacilityLenders” in Clause 1.1 (Definitions);

(ii) an extension to the date of payment of any amount under the Finance Documents;

(iii) a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees orcommission payable;

(iv) an increase in or an extension of any Commitment;

(v) a change to the Borrowers or Guarantors other than in accordance with Clause 27 (Changes to the Obligors);

(vi) any provision which expressly requires the consent of all the Lenders;

(vii) Clause 2.2 (Finance Parties’ rights and obligations), Clause 9.4 (Mandatory prepayment — Net SaleProceeds) to Clause 9.11 (Application of Proceeds), Clause 26 (Changes to the Lenders), Clause 33 (Sharingamong the Finance Parties) or this Clause 40; or

(viii) the release of any Security created pursuant to any Security Document,108


shall not be made without the prior consent of all the Lenders.

(b) An amendment or waiver which relates to the rights or obligations of the Agent, the Facility Agent, the SecurityAgent, the Issuing Bank, the Arranger may not be effected without its consent.

(c) Except where the consent of all Lenders is required by any Finance Document, an amendment or waiver whichrelates solely to the rights or obligations of the Revolving Facility Lenders shall not be effective without the consentof the Majority Revolving Facility Lenders and shall not require the consent of any Guarantee Facility Lenders.

(d) Except where the consent of all Lenders is required by any Finance Document, an amendment or waiver whichrelates solely to the rights or obligations of the Guarantee Facility Lenders shall not be effective without the consentof the Majority Guarantee Facility Lenders and shall not require the consent of any Revolving Facility Lender.

(e) An amendment or waiver which relates to Clause 19 (Guarantee and indemnity) may not be effected without theconsent of the Guarantors.

41 COUNTERPARTS

Each Finance Document may be executed in any number of counterparts, and this has the same effect as if thesignatures on the counterparts were on a single copy of the Finance Document.

42 CONFIDENTIALITY

42.1 Confidential Information

Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save tothe extent permitted by Clause 42.2 (Disclosure of Confidential Information) and Clause 42.3 (Disclosure tonumbering service providers), and to ensure that all Confidential Information is protected with security measuresand a degree of care that would apply to its own confidential information.

42.2 Disclosure of Confidential Information

Any Finance Party may disclose:

(a) to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professionaladvisers, auditors, partners and Representatives such Confidential Information as that Finance Party shallconsider appropriate if any person to whom the Confidential Information is to be given pursuant to thisparagraph (a) is informed in writing of its confidential nature and that some or all of such ConfidentialInformation may be price-sensitive information except that there shall be no such requirement to so inform ifthe recipient is subject to professional obligations to maintain the confidentiality of the information or isotherwise bound by requirements of confidentiality in relation to the Confidential Information;

(b) to any person:

(i) to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rightsand/or obligations under one or more Finance Documents and to any of that person’s Affiliates, RelatedFunds, Representatives and professional advisers;

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(ii) with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, anysub-participation in relation to, or any other transaction under which payments are to be made or maybe made by reference to, one or more Finance Documents and/or one or more Obligors and to any ofthat person’s Affiliates, Related Funds, Representatives and professional advisers;

(iii) appointed by any Finance Party or by a person to whom paragraph (b)(i) or (ii) above applies to receivecommunications, notices, information or documents delivered pursuant to the Finance Documents onits behalf (including, without limitation, any person appointed under paragraph (c) of Clause 28.13(Relationship with the Lenders));

(iv) who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly orindirectly, any transaction referred to in paragraph (b)(i) or (b)(ii) above;

(v) to whom information is required or requested to be disclosed by any court of competent jurisdiction orany governmental, banking, taxation or other regulatory authority or similar body, the rules of anyrelevant stock exchange or pursuant to any applicable law or regulation;

(vi) to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or maydo so) pursuant to Clause 26.8 (Assignment by way of Security);

(vii) to whom information is required to be disclosed in connection with, and for the purposes of, anylitigation, arbitration, administrative or other investigations, proceedings or disputes;

(viii) who is a Party; or

(ix) with the consent of the Borrowers;

in each case, such Confidential Information as that Finance Party shall consider appropriate if:

(A) in relation to paragraphs (b)(i), (b)(ii) and (b)(iii) above, the person to whom the Confidential Informationis to be given has entered into a Confidentiality Undertaking except that there shall be no requirementfor a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professionalobligations to maintain the confidentiality of the Confidential Information;

(B) in relation to paragraph (b)(iv) above, the person to whom the Confidential Information is to be givenhas entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentialityin relation to the Confidential Information they receive and is informed that some or all of suchConfidential Information may be price-sensitive information; and

(C) in relation to paragraphs (b)(v), (b)(vi) and (b)(vii) above, the person to whom the ConfidentialInformation is to be given is informed of its confidential nature and that some or all of such ConfidentialInformation may be price-sensitive information except that there shall be no

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requirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in thecircumstances;

(c) to any person appointed by that Finance Party or by a person to whom paragraph (b)(i) or (b)(ii) aboveapplies to provide administration or settlement services in respect of one or more of the Finance Documentsincluding without limitation, in relation to the trading of participations in respect of the Finance Documents,such Confidential Information as may be required to be disclosed to enable such service provider to provideany of the services referred to in this paragraph (c) if the service provider to whom the ConfidentialInformation is to be given has entered into a confidentiality agreement substantially in the form of the LMAMaster Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such otherform of confidentiality undertaking agreed between the Borrowers and the relevant Finance Party;

(d) to any rating agency (including its professional advisers) such Confidential Information as may be required tobe disclosed to enable such rating agency to carry out its normal rating activities in relation to the FinanceDocuments and/or the Obligors if the rating agency to whom the Confidential Information is to be given isinformed of its confidential nature and that some or all of such Confidential Information may be price-sensitiveinformation.

42.3 Disclosure to numbering service providers

(a) Any Finance Party may disclose to any national or international numbering service provider appointed by thatFinance Party to provide identification numbering services in respect of this Agreement, the Facilities and/orone or more Obligors the following information:

(i) names of Obligors;

(ii) country of domicile of Obligors;

(iii) place of incorporation of Obligors;

(iv) date of this Agreement;

(v) the names of the Agent and the Arranger;

(vi) date of each amendment and restatement of this Agreement;

(vii) amount of Total Commitments;

(viii) currencies of the Facilities;

(ix) type of Facilities;

(x) ranking of Facilities;

(xi) Termination Date or Extension Date for Facilities;

(xii) changes to any of the information previously supplied pursuant to paragraphs (i) to (xi) above; and

(xiii) such other information agreed between such Finance Party and the Borrowers,111


to enable such numbering service provider to provide its usual syndicated loan numbering identification services.

(b) The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facilitiesand/or one or more Obligors by a numbering service provider and the information associated with each suchnumber may be disclosed to users of its services in accordance with the standard terms and conditions of thatnumbering service provider.

(c) The Borrowers represents that none of the information set out in paragraphs (i) to (xiii) of paragraph (a) aboveis, nor will at any time be, unpublished price-sensitive information.

(d) The Agent shall notify the Borrowers and the other Finance Parties of:

(i) the name of any numbering service provider appointed by the Agent in respect of this Agreement, theFacilities and/or one or more Obligors; and

(ii) the number or, as the case may be, numbers assigned to this Agreement, the Facilities and/or one ormore Obligors by such numbering service provider.

42.4 Entire agreement

This Clause 42 (Confidentiality) constitutes the entire agreement between the Parties in relation to the obligations ofthe Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previousagreement, whether express or implied, regarding Confidential Information.

42.5 Inside information

Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may beprice-sensitive information and that the use of such information may be regulated or prohibited by applicablelegislation including securities law relating to insider dealing and market abuse and each of the Finance Partiesundertakes not to use any Confidential Information for any unlawful purpose.

42.6 Notification of disclosure

Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Borrowers:

(a) of the circumstances of any disclosure of Confidential Information made pursuant to paragraph (b)(v) ofClause 42.2 (Disclosure of Confidential Information) except where such disclosure is made to any of thepersons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and

(b) upon becoming aware that Confidential Information has been disclosed in breach of this Clause 42(Confidentiality).

42.7 Continuing obligations

The obligations in this Clause 42 (Confidentiality) are continuing and, in particular, shall survive and remain bindingon each Finance Party for a period of twelve months from the earlier of:

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(a) the date on which all amounts payable by the Obligors under or in connection with this Agreement have beenpaid in full and all Commitments have been cancelled or otherwise cease to be available; and

(b) the date on which such Finance Party otherwise ceases to be a Finance Party.113


SECTION 12GOVERNING LAW AND ENFORCEMENT

43 GOVERNING LAW

This Agreement and any non-contractual obligations arising out of or in connection with it are governed by Englishlaw.

44 ENFORCEMENT

44.1 Jurisdiction

(a) The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with thisAgreement (including a dispute relating to the existence, validity or termination of this Agreement or anynon-contractual obligation arising out of or in connection with this Agreement) (a “Dispute”).

(b) The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes andaccordingly no Party will argue to the contrary.

(c) This Clause 44.1 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented fromtaking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, theFinance Parties may take concurrent proceedings in any number of jurisdictions.

44.2 Service of process

Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligorincorporated in England and Wales):

(a) irrevocably appoints CSL as its agent for service of process in relation to any proceedings before the Englishcourts in connection with any Finance Document; and

(b) agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate theproceedings concerned.

This Agreement has been entered into on the date stated at the beginning of this Agreement.114


SCHEDULE 1THE ORIGINAL PARTIES

PART ITHE ORIGINAL OBLIGORS

Registration numberName of Borrower Jurisdiction of incorporation (or equivalent, if any) Cascal N.V. The Netherlands 34112761 Cascal Holdings Limited England and Wales 06707340 Registration numberName of Original Guarantor Jurisdiction of incorporation (or equivalent, if any) BWS Finance Limited England and Wales 05471977 Cascal Holdings Limited England and Wales 06707340 Cascal Investments Limited England and Wales 02215221 Cascal Investments (China) Limited England and Wales 06894845 Cascal Services Limited England and Wales 03757398

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PART IITHE ORIGINAL LENDERS

Revolving Facility Guarantee Facility Commitment CommitmentName of Original Lender US$ US$ HSBC Bank plc 60,000,000 10,000,000

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SCHEDULE 2CONDITIONS PRECEDENT

PART ICONDITIONS PRECEDENT TO SIGNING

1 Original Obligors

(a) A copy of the constitutional documents of each Obligor (comprising for a Dutch Obligor its deeds ofincorporation and articles of association and a recent extract from the Dutch trade register(handelsregister) relating to it).

(b) A copy of a resolution of the board of directors or equivalent body of each Obligor which shall bedelivered within twenty-one (21) days of the date of this Agreement provided this is no later than the datethat the initial Utilisation Request is issued:

(i) approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a partyand resolving that it execute the Finance Documents to which it is a party;

(ii) authorising a specified person or persons to execute the Finance Documents to which it is a party on itsbehalf;

(iii) authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices(including, if relevant, any Utilisation Request) to be signed and/or despatched by it under or in connectionwith the Finance Documents to which it is a party; and

(iv) in relation to a Dutch Obligor, stating that entering into the Finance Documents is (a) allowed by that DutchObligor’s articles of association and (b) serves the (best) interest of that Dutch Obligor in the meaning ofsection 2:7 Dutch Civil Code (or equivalent legislation in its Relevant Jurisdiction if applicable), in form andsubstance acceptable to the Agent.

(c) A specimen of the signature of each person authorised by the resolution referred to in paragraph (b).

(d) A copy of a resolution signed by all the holders of the issued shares in each Guarantor, approving the terms of, andthe transactions contemplated by, the Finance Documents to which the Guarantor is a party.

(e) A certificate of each Obligor (signed by a director) confirming that borrowing or guaranteeing, as appropriate, theOriginal Total Commitments would not cause any borrowing, guaranteeing or similar limit binding on any Obligor tobe exceeded.

(f) A certificate of an authorised signatory of the relevant Obligor certifying that each copy document relating to itspecified in this Part I of Schedule 2 is correct, complete and in full force and effect as at a date no earlier than thedate of this Agreement.

(g) In respect of a Dutch Obligor, a copy of a resolution of its general meeting of shareholders and board of supervisorydirectors (if any) approving its execution and the terms of, and the transactions contemplated by, the FinanceDocuments (and addressing, if applicable, a conflict of interest and conditional approval for the transfer of votingrights on pledged shares) and of a concurring unconditional advice of any works council or union which hasadvisory rights in respect of the transactions contemplated in the Finance Documents.

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2 Fees

(a) Evidence that the Fee Letter has been duly executed by the parties to it and evidence that fees in relation to legalfees and other fees payable to any of the Finance Parties shall be paid on the Initial Utilisation Date.

(b) Evidence that the relevant fees, costs and expenses then due from CNV pursuant to Clause 13 (Fees) on the dateof signing have been paid or will be paid on or before the date of this Agreement.

3 Group Structure

(a) A copy of the Group Structure Chart initialled by CNV.

(b) A certificate of the Original Parent (signed by a director) confirming that all the shares of CNV (other than the one(1) share held by David Lawrence Magor in Biwater Overseas Limited) are held directly or indirectly by Biwater plcand which certificate shall be delivered within twenty-one (21) days of the date of this Agreement provided this is nolater than the date that the initial Utilisation Request is issued.

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PART II

CONDITIONS PRECEDENT TO UTILISATION BEFORE AMENDMENT DATE 1SECTION A

Original Obligors

1 A certificate of an authorised signatory of each Original Obligor certifying that:

(a) each copy document relating to it provided by it pursuant to Part I of Schedule 2 remains correct, completeand in full force and effect as at a date no earlier than the date of initial Utilisation; and

(b) in the case of CNV and Original Parent only and in a manner satisfactory to the Arranger, there has been nomaterial event which will affect the completion of the IPO on or before the Final IPO Date.

2 Security

(a) A copy of each of the following Security Documents duly executed by the parties to it:

(i) CNV:

(A) An English law share charge relating to the entire issued share capital of CSL granted by CNV in favourof the Security Agent for and on behalf of the Finance Parties.

(B) An English law share charge relating to the entire issued share capital of BWS Finance Limited grantedby CNV in favour of the Security Agent for and on behalf of the Finance Parties.

(C) An English law accounts charge relating to the Prepayment Account, Operating Account and CollectionAccount executed by inter alia CNV in favour of the Agent for and on behalf of the Finance Parties andSecurity Agent for and on behalf of the Finance Parties.

(ii) The Original Parent:

A Pledge (Dutch law) over the entire issued share capital of CNV, which will be a second ranking pledge, andwhich will be entered into together with (inter alia) a separate deed of priorities between Security Agent andsecurity trustee under the Biwater Facilities whereby it is agreed that any pledgee of a pledge over the sharesin CNV is entitled on a pari passu basis to enforce its rights under its respective share pledge provided thatany proceeds are distributed on a pro rata basis according to the proportion at which the debt of which thelenders under the Biwater Facilities and the Lenders under this Agreement bears to the aggregate debt underthe Biwater Facilities and this Agreement.

The Pledge shall remain in full force and effect until (a) the earlier of (i) the Final IPO Date; or (ii) such otherdate on which the IPO occurs; and (b) such other date as the Agent may agree.

(b) A copy of the shareholders’ register for each Dutch Obligor in relation to all shares in such Dutch Obligor over whichSecurity is expressed to be created.

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(c) All documentation, and/or evidence of all other steps, required to create, perfect and (where necessary) registerthose Security Documents as advised to the Security Agent by its legal advisers in each relevant jurisdiction.

(d) A copy of the constitutional documents of any member of the Group whose shares are subject to Security under anySecurity Document in the form required by the Agent, together with any resolutions of the shareholders of thatmember of the Group adopting such changes to the constitutional documents of that member of the Group as theAgent requires to, among other things, remove any restriction on any transfer of shares or voting rights attached tothe shares or partnership interests (or equivalent) in that member of the Group pursuant to any enforcement of anysuch Security Document.

Intercreditor Arrangements

3 All documentation in relation to the intercreditor arrangements in a form satisfactory to the Agent duly executed bythe parties to it including inter alia the Original Parent and CNV who shall be party to this documentation for thepurpose of acknowledging the intercreditor arrangements.

4 Legal opinions

(a) A legal opinion of Linklaters LLP, legal advisers to the Arranger, the Security Agent and the Agent in England,substantially in the form distributed to the Original Lenders prior to signing this Agreement.

(b) In the case of an Original Obligor incorporated in a jurisdiction other than England and Wales, a legal opinion of thelegal advisers to the Arranger, the Security Agent and the Agent in the relevant jurisdiction, substantially in the formdistributed to the Original Lenders prior to signing this Agreement.

(c) In the case of an Original Obligor incorporated in a jurisdiction other than England and Wales, a legal opinion of thelegal advisers to that Obligor in the relevant jurisdiction, substantially in the form distributed to the Original Lendersprior to signing this Agreement.

5 Financial information

(a) Certified copies of:

(i) the Original Financial Statements and for the Original Parent evidence that it does not need to produceannual financial statements;

(ii) the Budget of CNV dated on or about the Utilisation Date.

(b) Copy of the Forecast Model and a Compliance Certificate.

6 Group Information

(a) If relevant, a copy of the Business Plan

(b) A confirmation that the Group Structure Chart has not been amended.

7 Letter of Confirmation

A letter from the chairman of the board of directors of the Original Parent date on or near the Initial Utilisation Dateconfirming the Original Parent’s continued intention to complete the IPO on or before the Final IPO Date.

8 Other documents and evidence120


(a) Evidence that the fees, costs and expenses then due from CNV pursuant to Clause 13 (Fees) and Clause 18 (Costsand expenses) have been paid or will be paid by the Utilisation Date.

(b) Evidence that the Fee Letter has been duly executed by the parties to it.

(c) Evidence that any process agent referred to in Clause 44.2 (Service of process), if not an Original Obligor, hasaccepted its appointment.

(d) A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to benecessary or desirable (if it has notified CNV accordingly) in connection with the entry into and performance of thetransactions contemplated by any Finance Document or for the validity and enforceability of any Finance Document.

(e) An undertaking executed by a director of Biwater Capital plc that it will not require CSL to repay or settle the loanmade by Biwater Capital plc or charge any interest on the loan until all obligations under this Agreement have beendischarged in full.

(f) Any other documentation that the Agent may reasonably require on 3 days’ prior notification.121


SECTION B

1 Original Obligors

(a) A copy of the constitutional documents of each Obligor (comprising for a Dutch Obligor its deeds of incorporationand articles of association and a recent extract from the Dutch trade register (handelsregister) relating to it) or acertificate of an authorised signatory of each Obligor certifying that the constitutional documents most recentlydelivered to the Agent have not been amended and remain in full force and effect as at a date no earlier than theproposed Utilisation Date.

(b) A copy of a resolution of the board of directors or equivalent body of each Obligor:

(i) approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a partyand resolving that it execute the Finance Documents to which it is a party;

(ii) authorising a specified person or persons to execute the Finance Documents to which it is a party on itsbehalf;

(iii) authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices(including, if relevant, any Utilisation Request) to be signed and/or despatched by it under or in connectionwith the Finance Documents to which it is a party; and

(iv) in relation to a Dutch Obligor:

(A) stating that entering into the Finance Documents to which it is a party is allowed by that Dutch Obligor’sarticles of association, and serves the best interest of that Dutch Obligor in the meaning of section 2:7Dutch Civil Code (or equivalent legislation in its Relevant Jurisdiction if applicable), in form andsubstance acceptable to the Agent;

(B) including a confirmation that it does not have a works council (ondernemingsraad); and

(C) confirming that there is no conflict of interest or, if there is, that no general meeting of shareholders hasappointed any other person to act for that Dutch Obligor with regard to the transaction.

(c) A specimen of the signature of each person authorised by the resolution referred to in paragraph (b).

(d) A copy of a resolution signed by all the holders of the issued shares in each Obligor (except for CNV), approving theterms of, and the transactions contemplated by, the Finance Documents to which that Obligor is a party.

(e) A certificate of each Obligor (signed by a director) confirming that borrowing or guaranteeing, as appropriate, theTotal Commitments would not cause any borrowing, guaranteeing or similar limit binding on any Obligor to beexceeded and, in the case of CNV, attaching the most up-to-date Group Structure Chart.

(f) A certificate of an authorised signatory of the relevant Obligor certifying that each copy document relating to itspecified in this Part III of Schedule 2 is correct, complete and in full force and effect as at a date no earlier than thedate of this Agreement.

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(g) In relation to a Dutch Obligor, a copy of a resolution of its board of supervisory directors (if any) approving itsexecution and the terms of, and the transactions contemplated by, the Finance Documents (and addressing, ifapplicable, a conflict of interest and conditional approval for the transfer of voting rights on pledged shares) and of aconcurring unconditional advice of any works council or union which has advisory rights in respect of thetransactions contemplated in the Finance Documents.

2 Security

(a) A copy of each of the following Security Documents duly executed by the parties to it:

(i) CNV:

(A) An English law share charge relating to the entire issued share capital of CSL granted by CNV in favourof the Security Agent for and on behalf of the Finance Parties.

(B) An English law share charge relating to the entire issued share capital of BWS Finance Limited grantedby CNV in favour of the Security Agent for and on behalf of the Finance Parties.

(C) An English law accounts charge relating to the Prepayment Account executed by CNV in favour of theAgent for and on behalf of the Finance Parties and Security Agent for and on behalf of the FinanceParties.

(D) An English law accounts charge relating to the Operating Account executed by CNV in favour of theAgent for and on behalf of the Finance Parties and Security Agent for and on behalf of the FinanceParties.

(E) An English law accounts charge relating to the Collection Account executed by CNV in favour of theAgent for and on behalf of the Finance Parties and Security Agent for and on behalf of the FinanceParties.

(ii) CSL:

An English law all assets fixed and floating security deed executed by CSL in favour of the Security Agent forand on behalf of the Finance Parties.

(iii) CIL:

An English law accounts charge relating to CIL’s current account and US Dollar call deposit account grantedby CIL in favour of the Agent for and on behalf of the Finance Parties and the Security Agent for and onbehalf of the Finance Parties.

(b) All documentation, and/or evidence of all other steps, required to create, perfect and (where necessary) registerthose Security Documents as advised to the Security Agent by its legal advisers in each relevant jurisdiction.

3 Legal opinions

(a) A legal opinion of Linklaters LLP, legal advisers to the Arranger, the Security Agent and the Agent in England,substantially in the form distributed to the Original Lenders prior to signing this Agreement.

(b) In the case of an Original Obligor incorporated in a jurisdiction other than England and Wales, a legal opinion of thelegal advisers to the Arranger, the Security Agent and the

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Agent in the relevant jurisdiction, substantially in the form distributed to the Original Lenders prior to signing thisAgreement.

4 Financial information

Certified copies of the most up-to-date audited financial statements of each Obligor or a certificate of each Obligor(signed by a director) confirming that the audited financial statements most recently delivered to the Agent are themost up-to-date audited financial statements of that Obligor;

5 Group and Acquisition Information

(a) A copy of the business projections and/or any report prepared for the board in relation to the Recent Acquisition.

(b) A confirmation from the CNV (signed by a Director) that all legal, tax, technical, financial, environmental, insuranceand any other relevant due diligence has been completed in relation to any Recent Acquisition (to the extentapplicable).

(c) A confirmation that the Group Structure Chart has not been amended.

6 Other documents and evidence

(a) Evidence that the fees, costs and expenses then due from CNV pursuant to Clause 13 (Fees) and Clause 18 (Costsand expenses) have been paid or will be paid by the Utilisation Date.

(b) Evidence that the Fee Letter has been duly executed by the parties to it.

(c) Evidence that any process agent referred to in Clause 44.2 (Service of process), if not an Original Obligor, hasaccepted its appointment.

(e) A letter agreement relating to ancillary business from CNV to the Arranger in a form acceptable to the Arranger.

(f) A side letter from a director of CIL to the Agent and the Security Agent confirming that CIL will work in good faithwith the minority shareholder of CWC to make and file appropriate amendments to CWC’s articles of association toallow CIL to grant an English law shares charge to the Security Agent over the issued shares it holds in CWC in aform acceptable to the Agent and the Security Agent within six months of the date of such side letter.

(g) A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to benecessary or desirable (if it has notified CNV accordingly) in connection with the entry into and performance of thetransactions contemplated by any Finance Document or for the validity and enforceability of any Finance Document.

(h) Any other documentation that the Agent may reasonably require on 3 days’ prior notification.124


PART IIICONDITIONS PRECEDENT REQUIRED TO BE DELIVERED BY AN ADDITIONAL GUARANTOR

1 An Accession Letter, duly executed by the Additional Guarantor and CNV.

2 A copy of the constitutional documents of the Additional Guarantor (comprising for a Dutch Obligor its deeds ofincorporation and articles of association and a recent extract from the Dutch trade register (handelsregister) relatingto it).

3 A copy of a resolution of the board of directors or equivalent body of the Additional Guarantor:

(a) approving the terms of, and the transactions contemplated by, the Accession Letter and the FinanceDocuments and resolving that it execute the Accession Letter and each Finance Document;

(b) authorising a specified person or persons to execute the Accession Letter and each Finance Document on itsbehalf;

(c) authorising a specified person or persons, on its behalf, to sign and/or despatch all other documents andnotices to be signed and/or despatched by it under or in connection with the Finance Documents; and

(d) in relation to a Dutch Obligor, stating that entering into the Finance Documents is (a) allowed by that DutchObligor’s articles of association and (b) serves the best interest of that Dutch Obligor in the meaning ofsection 2:7 Dutch Civil Code (or equivalent legislation in its Relevant Jurisdiction if applicable), in form andsubstance acceptable to the Agent.

4 A specimen of the signature of each person authorised by the resolution referred to in paragraph 3 above.

5 In the case of an Additional Guarantor incorporated in England and Wales, or if so required by the Agent, a copy ofa resolution signed by all the holders of the issued shares of the Additional Guarantor, approving the terms of, andthe transactions contemplated by, the Finance Documents to which the Additional Guarantor is a party.

6 A certificate of the Additional Guarantor (signed by a director) confirming that guaranteeing the Total Commitmentswould not cause any guaranteeing or similar limit binding on it to be exceeded.

7 A certificate of an authorised signatory of the Additional Guarantor certifying that each copy document listed in thisPart III of Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of theAccession Letter.

8 In respect of a Dutch Obligor, a copy of a resolution of its (a) general meeting of shareholders and (b) board ofsupervisory directors (if any), approving its execution and the terms of, and the transactions contemplated by, theFinance Documents (and addressing, if applicable, a conflict of interest and conditional approval for the transfer ofvoting rights on pledged shares) and of concurring unconditional advice of any works council or union which hasadvisory rights in respect of the transactions contemplated in the Finance Documents.

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9 A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to benecessary or desirable in connection with the entry into and performance of the transactions contemplated by theAccession Letter or for the validity and enforceability of any Finance Document.

10 If available, the latest audited financial statements of the Additional Guarantor.

11 If the Additional Guarantor is incorporated in a jurisdiction other than England and Wales, a legal opinion of thelegal advisers to the Arranger, the Security Agent and the Agent in the jurisdiction in which the Additional Guarantoris incorporated.

12 If the Additional Guarantor is incorporated in a jurisdiction other than England and Wales, a legal opinion of thelegal advisers to the Additional Guarantor in the jurisdiction in which the Additional Guarantor is incorporated.

13 A copy of each Security Document creating such Security as the Agent requires, duly executed by the AdditionalGuarantor and the Security Agent (or, if appropriate, the Finance Parties).

14 All documentation, and/or evidence of all other steps, required to perfect those Security Documents as advised tothe Security Agent by its legal advisers in each relevant jurisdiction.

15 A copy of the constitutional documents of the Additional Guarantor, if its shares are subject to Security under anySecurity Document, in the form required by the Agent, together with any resolutions of the shareholders of theAdditional Guarantor adopting such changes to the constitutional documents of the Additional Guarantor as theAgent requires to, among other things, remove any restriction on any transfer of shares on voting rights attached tothe shares or partnership interests (or equivalent) in the Additional Guarantor pursuant to any enforcement of anysuch Security Document.

16 If the Additional Guarantor is incorporated in a jurisdiction other than England and Wales, evidence of compliancewith any similar or equivalent procedure for permitting financial assistance.

17 If the proposed Additional Guarantor is incorporated in a jurisdiction other than England and Wales, evidence thatthe process agent specified in Clause 44.2 (Service of process), if not a Guarantor, has accepted its appointment inrelation to the proposed Additional Guarantor.

18 Evidence satisfactory to the Agent that each Lender has carried out and is satisfied it has complied with allnecessary “know your customer” or other similar checks in respect of the Additional Guarantor under all applicablelaws and regulations pursuant to the transactions contemplated in the Finance Documents.

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SCHEDULE 3REQUESTS

PART I

UTILISATION REQUEST

REVOLVING FACILITY LOANS

From:

[Cascal N.V./Cascal Holdings Limited]

To: HSBC BANK PLC

Dated:

Dear Sirs

Cascal N.V. — US$70,000,000 Facility Agreement originally dated 25 June 2007, as amended andrestated on 2 November 2007 and as further amended on 19 November 2007 and as further amended and

restated on 12 June 2008, as further amended on 23 February 2004 and as further amended andrestated on 26 June 2009 (the “Agreement”)

1 We refer to the Agreement. This is a Utilisation Request. Terms defined in the Agreement have the same meaningin this Utilisation Request unless given a different meaning in this Utilisation Request.

2 We wish to borrow a Revolving Facility Loan on the following terms: Proposed Utilisation Date: [ ] (or, if that is not a Business Day, the next Business Day) Facility to be utilised: Revolving Facility Currency of Revolving Facility Loan: US Dollars Amount: [ ] or, if less, the Available Facility Interest Period: [ ]

3 We confirm that each condition specified in Clause 4.3 (Further conditions precedent) is satisfied on the date of thisUtilisation Request.

4 The proceeds of this Revolving Facility Loan should be credited to [account].

5 This Utilisation Request is irrevocable.

Yours faithfully

authorised signatory for [Cascal N.V./Cascal Holdings Limited]

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PART IIUTILISATION REQUEST

BANK GUARANTEE

From: [Cascal N.V./Cascal Holdings Limited]

To: HSBC Bank plc

Dated:

Dear Sirs



1 We refer to the Agreement. This is a Utilisation Request. Terms defined in the Agreement have the same meaningin this Utilisation Request unless given a different meaning in this Utilisation Request.

2 We wish to arrange for a Bank Guarantee to be issued by the Issuing Bank on the following terms: Proposed Utilisation Date: [ ] (or, if that is not a Business Day, the next Business Day) Facility to be utilised: Guarantee Facility Currency of Bank Guarantee: US Dollars Amount: [ ] or, if less, the Available Facility Beneficiary: [ ] Term or Expiry Date: [ ] Issuing Bank: HSBC Bank plc

3 We confirm that each condition specified in Clause 6.6 (Issue of Bank Guarantee) is satisfied on the date of thisUtilisation Request.

4 We attach a copy of the proposed Bank Guarantee.

5 This Utilisation Request is irrevocable.

Delivery Instructions:

[Specify delivery instructions]

Yours faithfully

authorised signatory for [Cascal N.V./Cascal Holdings Limited]

128


SCHEDULE 4MANDATORY COST FORMULAE

1 The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) therequirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authoritywhich replaces all or any of its functions) or (b) the requirements of the European Central Bank.

2 On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall calculate, as apercentage rate, a rate (the “Additional Cost Rate”) for each Lender, in accordance with the paragraphs set outbelow. The Mandatory Cost will be calculated by the Agent as a weighted average of the Lenders’ Additional CostRates (weighted in proportion to the percentage participation of each Lender in the relevant Revolving Facility Loanor Bank Guarantee) and will be expressed as a percentage rate per annum.

3 The Additional Cost Rate for any Lender lending from a Facility Office in a Participating Member State will be thepercentage notified by that Lender to the Agent. This percentage will be certified by that Lender in its notice to theAgent to be its reasonable determination of the cost (expressed as a percentage of that Lender’s participation in allRevolving Facility Loans made or any Bank Guarantee from that Facility Office) of complying with the minimumreserve requirements of the European Central Bank in respect of loans made from that Facility Office.

4 The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated bythe Agent as follows:

(a) in relation to a sterling Revolving Facility Loan or any Bank Guarantee:

per cent. per annum

(b) in relation to a Revolving Facility Loan or any Bank Guarantee in any currency other than sterling:

per cent. per annum.

Where:

(E) is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which thatLender is from time to time required to maintain as an interest free cash ratio deposit with the Bank ofEngland to comply with cash ratio requirements.

(F) is the percentage rate of interest (excluding the Margin and the Mandatory Cost and, if the Revolving FacilityLoan or any Bank Guarantee is an Unpaid Sum, the additional rate of interest specified in Clause 10.3(a))payable for the relevant Interest Period on the Revolving Facility Loan or any Bank Guarantee.

(G) is the percentage (if any) of Eligible Liabilities which that Lender is required from time to time to maintain asinterest bearing Special Deposits with the Bank of England.

129


(H) is the percentage rate per annum payable by the Bank of England to the Agent on interest bearing SpecialDeposits.

(I) is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Agentas being the average of the most recent rates of charge supplied by the Reference Banks to the Agentpursuant to paragraph 7 below and expressed in pounds per £1,000,000.

5 For the purposes of this Schedule:

(a) “Eligible Liabilities” and “Special Deposits” have the meanings given to them from time to time under orpursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;

(b) “Fees Rules” means the rules on periodic fees contained in the FSA Supervision Manual or such other law orregulation as may be in force from time to time in respect of the payment of fees for the acceptance ofdeposits;

(c) “Fee Tariffs” means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors(ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account anyapplicable discount rate); and

(d) “Tariff Base” has the meaning given to it in, and will be calculated in accordance with, the Fees Rules.

6 In application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5 per cent.will be included in the formula as 5 and not as 0.05). A negative result obtained by subtracting D from B shall betaken as zero. The resulting figures shall be rounded to four decimal places.

7 If requested by the Agent, each Reference Bank shall, as soon as practicable after publication by the FinancialServices Authority, supply to the Agent the rate of charge payable by that Reference Bank to the Financial ServicesAuthority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority(calculated for this purpose by that Reference Bank as being the average of the Fee Tariffs applicable to thatReference Bank for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of thatReference Bank.

8 Each Lender shall supply any information required by the Agent for the purpose of calculating its Additional CostRate. In particular, but without limitation, each Lender shall supply the following information on or prior to the dateon which it becomes a Lender:

(a) the jurisdiction of its Facility Office; and

(b) any other information that the Agent may reasonably require for such purpose.

Each Lender shall promptly notify the Agent of any change to the information provided by it pursuant to thisparagraph.

9 The percentages of each Lender for the purpose of A and C above and the rates of charge of each Reference Bankfor the purpose of E above shall be determined by the Agent based upon the information supplied to it pursuant toparagraphs 7 and 8 above and on the assumption that, unless a Lender notifies the Agent to the contrary, eachLender’s obligations in relation to cash ratio deposits and Special Deposits are the same as those of

130


a typical bank from its jurisdiction of incorporation with a Facility Office in the same jurisdiction as its Facility Office.

10 The Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over orunder compensates any Lender and shall be entitled to assume that the information provided by any Lender orReference Bank pursuant to paragraphs 3, 7 and 8 above is true and correct in all respects.

11 The Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on thebasis of the Additional Cost Rate for each Lender based on the information provided by each Lender and eachReference Bank pursuant to paragraphs 3, 7 and 8 above.

12 Any determination by the Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, anAdditional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive andbinding on all Parties.

13 The Agent may from time to time, after consultation with the Borrowers and the Lenders, determine and notify to allParties any amendments which are required to be made to this Schedule in order to comply with any change in law,regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authorityor the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and anysuch determination shall, in the absence of manifest error, be conclusive and binding on all Parties.

131


SCHEDULE 5FORM OF TRANSFER CERTIFICATE

To: HSBC Bank plc as Agent From: [The Existing Lender] (the “Existing Lender”) and [The New Lender] (the “New Lender”) Dated:



1 We refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have the same meaningin this Transfer Certificate unless given a different meaning in this Transfer Certificate.

2 We refer to Clause 26.5 (Procedure for transfer):

(a) The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender bynovation all or part of the Existing Lender’s Commitment, rights and obligations referred to in the Schedule inaccordance with Clause 26.5 (Procedure for transfer).

(b) The proposed Transfer Date is [ ].

(c) The Facility Office and address, fax number and attention details for notices of the New Lender for thepurposes of Clause 36.2 (Addresses) are set out in the Schedule.

(d) The New Lender agrees to be bound by the terms of the Agreement as a Lender.

3 The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out inClause 26.4(c).

4 The New Lender hereby represents and warrants that it is a professional market party (professionelemarketpartij) as set out in the Dutch Financial Supervision Act (Wet op het financieel toezicht). [Thisrepresentation shall only be given if the amount transferred is less than €50,000 (or its equivalentin foreign currency)]

5 The New Lender confirms that the person beneficially entitled to interest payable to that Lender inrespect of an advance under a Finance Document is either:

(a) a company resident in the United Kingdom for United Kingdom tax purposes; or

(b) a partnership each member of which is:

(i) a company so resident in the United Kingdom; or

(ii) a company not so resident in the United Kingdom which carries on a trade in the United Kingdomthrough a permanent establishment and which brings into account in computing its chargeable profits(for the purposes of section 11(2) of the Taxes Act) the whole of any share of interest payable in

132


respect of that advance that falls to it by reason of sections 114 and 115 of the Taxes Act;

(c) a company not so resident in the United Kingdom which carries on a trade in the United Kingdomthrough a permanent establishment and which brings into account interest payable in respect ofthat advance in computing the chargeable profits (for the purposes of section 11(2) of the TaxesAct) of that company.

[4/5]. This Transfer Certificate may be executed in any number of counterparts and this has the sameeffect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.

[5/6]. This Transfer Certificate is governed by English law.133


THE SCHEDULE

Commitment/rights and obligations to be transferred

[insert relevant details]

[Facility Office address, fax number and attention details for notices and account detailsfor payments.]

[Existing Lender] [New Lender]By: By:

This Transfer Certificate is accepted by the Agent and the Transfer Date is confirmed as

[ ].

HSBC Bank plc

By:134


SCHEDULE 6FORM OF ACCESSION LETTER

To: HSBC Bank plc as Agent From: [Subsidiary] and Cascal N.V. (“CNV”) Dated: Dear Sirs



1 We refer to the Agreement. This is an Accession Letter. Terms defined in the Agreement have the same meaning inthis Accession Letter unless given a different meaning in this Accession Letter.

2 [Subsidiary] agrees to become an Additional Guarantor and to be bound by the terms of the Agreement as anAdditional Guarantor pursuant to Clause 27.2 (Additional Guarantors) of the Agreement.

3 [Subsidiary] is a company duly incorporated under the law of [name of relevant jurisdiction].

[The guarantee of [Subsidiary] [giving a guarantee other than in respect of its Subsidiary] is subject to the followinglimitations:

(a) if [Subsidiary] is incorporated in [ ] [and is giving a guarantee other than in respect of itsSubsidiary], those limitations set out in paragraph (a) [([ ])] of Clause 19.10 (Limitations)of the Agreement, in relation to [Subsidiary];

(b) if:

(i) [Subsidiary] is incorporated in any other jurisdiction [and is giving a guarantee other than in respect ofits Subsidiary]; or

(ii) [Subsidiary] is incorporated in [ ] [or [ ]] [and is giving a guarantee other than inrespect of its Subsidiary] and limitations other than those set out in paragraph (a) [or [ ]] ofClause 19.10 (Limitations) of the Agreement are agreed in respect of [Subsidiary],

[insert guarantee limitation wording for relevant jurisdiction].]

4 CNV confirms that no Default is continuing or would occur as a result of [Subsidiary] becoming an AdditionalGuarantor under the Finance Documents nor any other existing financing arrangements.

5 [Subsidiary’s] administrative details are as follows:

Address:

Fax No:

Attention:135


6 This Accession Letter is governed by English law.

This Guarantor Accession Letter has been delivered on the date stated at the beginning of this GuarantorAccession Letter.

for and on behalf of Cascal N.V. for and on behalf of [Subsidiary]

136


SCHEDULE 7FORM OF COMPLIANCE CERTIFICATE

To: HSBC Bank plc as Agent From: Cascal N.V. Dated: Dear Sirs



1 We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the samemeaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

2 We confirm that:

(a) the ratio of EBITDA to Net Interest Expense for the Relevant Period ended on [•] (the “Calculation Date”)was [•] to 1;

(b) the ratio of Net Borrowings to EBITDA for that Relevant Period was [•] to 1 on the Calculation Date;

(c) the ratio of Net Senior Borrowings to RAV for the Accounting Period ending on the Calculation Date was [•] to1;

(d) the ratio of Cash Flow to Debt Service for that Relevant Period was [•] to 1; and

(e) the ratio of total Debt Service to EBITDA of the English Companies for the Relevant Period ending on theCalculation Date was [•] to 1.

3 We attach the financial statements delivered pursuant to paragraph (a)[(i)] of Clause 21.1 (Financial statements) orquarterly accounts delivered pursuant to Clause 21.2 (Quarterly financial statements) of the Agreement.

4 We hereby confirm that no Default is continuing.1

5 We hereby confirm that all financial covenants under all Existing Indebtedness have been satisfied for the period [•]. Signed:

CFO Director of of Cascal N.V. Cascal N.V.

1 If this statement cannot be made, the certificate should identify any Default that is continuing and the steps,if any, being taken to remedy it.

137


[insert applicable certification language] for and on behalf of [name of auditors of CNV]

138


SCHEDULE 8TIMETABLES

PART IREVOLVING FACILITY LOANS

“D —” refers to the number of Business Days before the relevant Utilisation Date/the first day of the relevant InterestPeriod. Revolving Facility Loans in US DollarsDelivery of a duly completed Utilisation Request (Clause 5.1 (Delivery of a UtilisationRequest))

D — 411:00 a.m.

(London time) Agent determines (in relation to a Utilisation) the amount of the Revolving Facility Loan, ifrequired under Clause 5.4 (Lenders’ participation) and notifies the Lenders of the RevolvingFacility Loan in accordance with Clause 5.4 (Lenders’ participation)

D — 311:00 a.m.

LIBOR is fixed

Quotation Day as of

11:00 a.m.139


PART IIBANK GUARANTEE

“D —” refers to the number of Business Days before the relevant Utilisation Date. US DollarsDelivery of a duly completed Utilisation Request (Clause 6.3 (Delivery of a Utilisation Request forBank Guarantee))

D — 411:00 a.m.

(London time) Agent determines (in relation to a Utilisation) the amount of the Bank Guarantee, if required underClause 6.6 (Issue of Bank Guarantee) and notifies the Issuing Bank and the Lenders of the BankGuarantee in accordance with Clause 6.6 (Issue of Bank Guarantee)

D — 311:00 a.m.

Delivery of a duly completed Renewal Request (Clause 6.7 (Renewal of a Bank Guarantee)).

D — 90

10:00 a.m.140


SCHEDULE 9SECURITY AGENCY PROVISIONS

1 Definitions

In this Schedule:

"Security Property” means all right, title and interest in, to and under any Security Document, including:

(i) the assets over which Security is expressed to be created pursuant to any Security Document (the “ChargedAssets”);

(ii) the benefit of the undertakings in any Security Document; and

(iii) all sums received or recovered by the Security Agent pursuant to any Security Document and any assetsrepresenting the same.

2 Declaration of trust

(a) The Security Agent and each other Finance Party agree that the Security Agent shall hold the Security Property intrust for the benefit of the Finance Parties on the terms of the Agreement.

(b) Subject to paragraph (c), paragraph (a) shall not apply to any Security Document which is expressed to be or isconstrued to be governed by any law other than English law or any other law from time to time designated by theSecurity Agent and an Obligor or any Security Property arising under any such Security Document.

(c) Paragraph (b) shall not affect or limit Clause 29.18(d) (Parallel Debt) nor the applicability of the provisions of thisSchedule with respect to any Security Document which is expressed to be or is construed to be governed by anylaw other than English law or any other law from time to time designated by the Security Agent and an Obligor orany Security Property arising under any such Security Document.

3 Defects in Security

The Security Agent shall not be liable for any failure or omission to perfect, or defect in perfecting, the Securitycreated pursuant to any Security Document, including:

(a) failure to obtain any Authorisation for the execution, validity, enforceability or admissibility in evidence of anySecurity Document; or

(b) failure to effect or procure registration of or otherwise protect or perfect any of the Security created by theSecurity Documents under any laws in any territory.

4 No enquiry

The Security Agent may accept without enquiry, requisition, objection or investigation such title as any Obligor mayhave to any Charged Assets.

5 Retention of documents

The Security Agent may hold title deeds and other documents relating to any of the Charged Assets in such manneras it sees fit (including allowing any Obligor to retain them).

141


6 Indemnity out of Security Property

The Security Agent and every receiver, delegate, attorney, agent or other similar person appointed under anySecurity Document may indemnify itself out of the Security Property against any cost, loss or liability incurred by it inthat capacity (otherwise than by reason of its own gross negligence or wilful misconduct).

7 Basis of distribution

To enable it to make any distribution, the Security Agent may fix a date as at which the amount of the Debt is to becalculated and may require, and rely on, a certificate from any Party giving details of:

(a) any sums due or owing to any Party as at that date; and

(b) such other matters as it thinks fit.

8 Rights of Security Agent

The Security Agent shall have all the rights, privileges and immunities which gratuitous trustees have or may havein England, even though it is entitled to remuneration.

9 No duty to collect payments

The Security Agent shall not have any duty:

(a) to ensure that any payment or other financial benefit in respect of any of the Charged Assets or anyDebt is duly and punctually paid, received or collected; or

(b) to ensure the taking up of any (or any offer of any) stocks, shares, rights, moneys or other propertyaccruing or offered at any time by way of interest, dividend, redemption, bonus, rights, preference,option, warrant or otherwise in respect of any of the Charged Assets or any Debt.

10 Perpetuity period

The perpetuity period for the trusts created by this Agreement shall be 80 years from this date of this Agreement.

11 Appropriation

(a) Each Party irrevocably waives any right to appropriate any payment to, or other sum received, recovered or held by,the Security Agent in or towards payment of any particular part of the Debt and agrees that the Security Agent shallhave the exclusive right to do so.

(b) Paragraph (a) will override any application made or purported to be made by any other person.

12 Investments

All money received or held by the Security Agent pursuant to this trusts in this Agreement may, in the name of, orunder the control of, the Security Agent:

(a) be invested in any investment it may select; or

(b) be deposited at such bank or institution (including itself, any other Finance Party or any Affiliate of anyFinance Party) as it thinks fit.

142


13 Suspense account

Subject to paragraph 14 (Timing of distributions), the Security Agent may:

(a) hold in an interest bearing suspense account any moneys received by it from any Party; and

(b) invest an amount equal to the balance from time to time standing to the credit of that suspense account in anyof the investments authorised by paragraph 12 (Investments).

14 Timing of distributions

Distributions by the Security Agent shall be made as and when determined by it.

15 Delegation

(a) The Security Agent may:

(i) employ and pay an agent selected by it to transact or conduct any business and to do all acts required to bedone by it (including the receipt and payment of money);

(ii) delegate to any person on any terms (including power to sub-delegate) all or any of its functions; and

(iii) with the prior consent of the Majority Lenders, appoint, on such terms as it may determine, or remove, anyperson to act either as separate or joint security trustee or security agent with those rights and obligationsvested in the Security Agent by this Agreement or any Security Document.

(b) The Security Agent will not be:

(i) responsible to anyone for any misconduct or omission by any agent, delegate or security trustee or securityagent appointed by it pursuant to paragraph (a); or

(ii) bound to supervise the proceedings or acts of any such agent, delegate or security trustee or security agent,

provided that it exercises reasonable care in selecting that agent, delegate or security trustee or securityagent.

16 Unwinding

Any appropriation or distribution which later transpires to have been or is agreed by the Security Agent to havebeen invalid or which has to be refunded shall be refunded and shall be deemed never to have been made.

17 Party

The Security Agent shall be entitled to assume that a Party is acting in a particular capacity stated in this Agreementor an Accession Deed unless notified to the contrary.

18 Disapplication

Section 1 of the Trustee Act 2000 shall not apply to the duties and powers of the Security Agent in relation to thetrusts constituted by any Finance Document save to the extent required by law. Where there are inconsistenciesbetween the Trustee Act 1925 and the Trustee Act 2000 and the express provisions of any such FinanceDocument, the provisions of such Finance Document shall, to the extent allowed by law, prevail and, in the

143


case of any such inconsistency with the Trustee Act 2000, the provisions of such Finance Document shall constitutea restriction or exclusion for the purposes of that Act.

144


SCHEDULE 10

EXISTING INDEBTEDNESS Total Currency USD Company with Commencement Lender/Security Year of Facility Balance Balance liability Date Holder Expiry Currency (000s) (000s)* (000s)* Security CommentsThird PartyFacilities

Loans andGuarantees

BOURNEMOUTH& WEST HANTS.WATER PLC

21/06/2006

RBS

2009

GBP

10,000

Subordinatedfacility -—secured(BSTID)

AcquisitionFacility usedto securePensiondeficit

GuaranteeBalance

8,600

$ 14,074


20/04/2005

RBS(‘Artesian’)

2033

GBP

65,000 (+indexation)

74,533

$121,973

Securedfacility(BSTID)

Generalfunding forBWHregulatedbusinessand used torefinancePref SharesIndex linkedwithindexationadded to


Revolving

Lloyds Bank

N/A

GBP

5,000

nil

$ nil

Unsecured

Overdraftfacility;rolled overannually on31 March


N/A

PerpetualDebentures

N/A

GBP

163

163

$ 267

Unsecured

145


Total Currency USD Company with Commencement Lender/Security Year of Facility Balance Balance liability Date Holder Expiry Currency (000s) (000s)* (000s)* Security CommentsTHE GREATER NELSPRUITUTILITY COMPANY(PROPRIETARY) LIMITED

30/09/00

DevelopmentBank ofSouthern Africa

2020

ZAR

71,351

53,709

$ 6,709

Secured on“A” preferenceshares

Used tofinanceinfrastructure

SIZA WATER

Investec

2017

ZAR

27,700

15,045

$ 1,879

Guarantee —see below

AGUAS SANTIAGO SA 28/11/02 Banco de Chile 2011 UF 114 29 $ 1,121 BAYESA

13/1/04

Banco BICE

2013

UF

258

121

$ 4,772

Accountsreceivable

AGUAS de PANAMA SA

11/4/03

IFC

2012

USD

16,000

5,153

$ 5,153

Charge overbank accountandassignment ofreceivables.Guarantee —see below

PT ADHYA TIRTA BATAM

DEC 2008

CIMB NiagaBank

2013

IDR

40,000,000

39,977,000

$ 3,958

Infrastructure,accountsreceivable,operatingaccount

Cascalconsolidates50% of thiscompany on aproportionatebasis

ZHUMADIAN CHINAWATER COMPANYLIMITED

15/6/08

Zhumadian CityInvestmentCompanyLimited

2018

RMB

178,000

173,000

$ 25,313

Unsecured

146


Total Currency USD Company with Commencement Lender/Security Year of Facility Balance Balance liability Date Holder Expiry Currency (000s) (000s)* (000s)* Security CommentsCASCAL N.V.Guarantee (forbenefit of):

Lloyds

NOTE: TO BEREPLACED BYUTILISATIONOF THEFACILITY

DBSA/NelspruitCouncil

RAND

ZAR 10,819

)Cashcollateralised

MainPerformance

)$163k GuaranteeNelspruit Council

RAND

ZAR 721

)

CustomerDeposit

) GuaranteeCASCAL BV andCascalInvestmentsLimitedGuarantee (forbenefit of):

2006

I.F.C.

$5,153

Aquas dePanama

USD

$16,000

Guarantee isunsecured

Guarantee iscurrentlyprovided byBiwater Plc butis counterindemnified byCascal BVpending transferof IFCguarantee toCascal BV

Finance Leases BOURNEMOUTH& WEST HANTS.WATER PLC

1995

W&G Leasing

2015

GBP

4,420

4,420

$7,233

Approx half paidoff within5 years

147


Total Currency USD Company with Commencement Lender/Security Year of Facility Balance Balance liability Date Holder Expiry Currency (000s) (000s)* (000s)* Security CommentsIntercompanyLoans

CASCAL S.A.

2000

Cascal N.V.

N/A

USD

N/A

24,988

$24,988

Unsecured

General facilityfor fundingChileanbusinesses

Bayesa S.A Cascal N.V. USD 379 $ 379 Cascal Operations(Proprietary)Limited

Cascal N.V.

USD

308

$ 308

Greater NelspruitUtility Co.

Cascal N.V.

USD

810

$ 810

Cascal N.V. BWSF USD 9,228 $ 9,228 BOURNEMOUTH& WEST HANTS.WATER

2007

PRE HEATLIMITED

N/A

GBP

N/A

1,317

$ 2,155

General fundingfor BWHW Plc

CASCALHOLDINGSLIMITED

2009

CASCAL N.V.

USD

$60,000

$60,000

CASCALHOLDINGS

2009

CASCAL N.V.

USD

60,000

$60,000

AGUASSANTIAGO

2008

CASCAL N.V.

USD

22,003

$22,003

148


Total Currency USD Company with Commencement Lender/Security Year of Facility Balance Balance liability Date Holder Expiry Currency (000s) (000s)* (000s)* Security CommentsCHINA WATER

2008

CASCAL N.V.

USD

7,933

$ 7,933

Shareholder loanto part fundmajor capexprojectundertaken byZhumadian EJV.Loan is downstreamed toZhumadianChina WaterCompanyLimited

CASCALHOLDINGS

2009

CASCALSERVICESLIMITED

GBP

41,359

$67,684

CASCALINVESTMENTS(CHINA) LIMITED

2009

CASCALHOLDINGSLIMITED

USD

57,957

$57,957

CASCALINVESTMENTS(CHINA) LIMITED

2009

CASCALINVESTMENTSLIMITED

USD

2,492

$ 2,492

149


SCHEDULE 11

EXISTING SECURITY Maximum Principal Loan Amount Secured Actual Outstanding Name of entity (whether or not utilised) Balance

Date creating security Security Holder Year of Expiry (in equivalent to USD) (in equivalent to USD)01/02/2007

Cascal N.V.

Lloyds Bank Plc (cashcollateral provided forguarantee facility used byCascal BV)

2008

>1 million

$163,000

11/04/2003

CIL

I.F.C. (share pledge of Aguasde Panama shares)

2012

16 million

$5.15 million

14/09/2008 Cascal N.V. Investec bank re Siza 2009 (14/09) 2.2 million $1.88 millionTotal $7.193 million01/02/2007

Cascal N.V.

Lloyds Bank Plc (cashcollateral provided forguarantee facility used byCascal BV)

2008

>1 million

$163,000

11/04/2003

CIL

I.F.C. (share pledge of Aguasde Panama shares)

2012

16 million

$5.15 million

150


CASCAL FACILITY AGREEMENT

SIGNATURE PAGE 1 The Borrowers CASCAL N.V. Address: 6.1.24, Strawinskylaan 3105 1077 ZX Amsterdam, The NetherlandsFax No: +31 2044 22384Attention: Chief Commercial Officer By: CASCAL HOLDINGS LIMITED Address: Biwater House Station Approach Dorking, Surrey RH4 1TZFax No: +44 (0)1306 746031Attention: Company Secretary By: The Guarantors BWS FINANCE LIMITED Address: Biwater House Station Approach Dorking, Surrey RH4 1TZFax No: +44 (0)1306 746031Attention: Company Secretary By:

151



SIGNATURE PAGE 2 CASCAL HOLDINGS LIMITED Address: Biwater House Station Approach Dorking, Surrey RH4 1TZFax No: +44 (0)1306 746031Attention: Company Secretary By: CASCAL INVESTMENTS LIMITED Address: Biwater House Station Approach Dorking, Surrey RH4 1TZFax No: +44 (0)1306 746031Attention: Company Secretary By: CASCAL INVESTMENTS (CHINA) LIMITEDAddress: Biwater House Station Approach Dorking, Surrey RH4 1TZ]Fax No: +44 (0)1306 746031Attention: Company Secretary By:

152



SIGNATURE PAGE 3 CASCAL SERVICES LIMITED Address: Biwater House Station Approach Dorking, Surrey RH4 1TZFax No: +44 (0)1306 746031Attention: Company Secretary By:

153



SIGNATURE PAGE 4 The Arranger HSBC BANK PLC Address: HBEU Thames Valley Corporate Banking Centre Apex Plaza Reading RG1 1AXFax No: +44 (0)8455 879489Attention: Sue Barnes, Corporate Banking Manager By: The Original Lender HSBC BANK PLC Address: HBEU Thames Valley Corporate Banking Centre Apex Plaza Reading RG1 1AXFax No: +44 (0)8455 879489Attention: Sue Barnes, Corporate Banking Manager By:

154



SIGNATURE PAGE 5 The Agent HSBC BANK PLC Address: 24th Floor 8 Canada Square London E14 5HQFax No: 020 7992 4680Attention: Corporate Trust and Loan Agency, Loans Administration By: The Security Agent HSBC BANK PLC Address: 24th Floor 8 Canada Square London E14 5HQFax No: 020 7992 4680Attention: Corporate Trust and Loan Agency, Loans Administration By: The Issuing Bank HSBC BANK PLC Address: 24th Floor 8 Canada Square London E14 5HQFax No: 020 7992 4680Attention: Corporate Trust and Loan Agency, Loans Administration By:

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SIGNATURE PAGE 1 CNV CASCAL N.V. Address: 6.1.24, Strawinskylaan 3105 1077 ZX Amsterdam, The NetherlandsFax No: 0031 2044 22384Attention: Chief Financial Officer By: /s/ Jonathan Lamb (as attorney for Cascal N.V.) The Guarantors BWS FINANCE LIMITED Address: Biwater House Station Approach Dorking, Surrey RH4 1TZFax No: +44 (0)1306 746031Attention: Company Secretary By: /s/ Steven Hollinshead CASCAL HOLDINGS LIMITED Address: Biwater House Station Approach Dorking, Surrey RH4 1TZFax No: +44 (0)1306 746031Attention: Company Secretary By: /s/ Steven Hollinshead


AMENDMENT AND RESTATEMENT AGREEMENTSIGNATURE PAGE 2

CASCAL INVESTMENTS LIMITED Address: Biwater House Station Approach Dorking, Surrey RH4 1TZFax No: +44 (0)1306 746031Attention: Company Secretary By: /s/ Steven Hollinshead CASCAL SERVICES LIMITED Address: Biwater House Station Approach Dorking, Surrey RH4 1TZFax No: +44 (0)1306 746031Attention: Company Secretary By: /s/ Steven Hollinshead The Additional Borrower CASCAL HOLDINGS LIMITED Address: Biwater House Station Approach Dorking, Surrey RH4 1TZFax No: +44 (0)1306 746031Attention: Company Secretary By: /s/ Steven Hollinshead



SIGNATURE PAGE 3 CICL CASCAL INVESTMENTS (CHINA) LIMITED Address: Biwater House Station Approach Dorking, Surrey RH4 1TZFax No: +44 (0)1306 746031Attention: Company Secretary By: /s/ Steven Hollinshead



SIGNATURE PAGE 4 The Arranger HSBC BANK PLC Address: HBEU Thames Valley Corporate Banking Centre Apex Plaza Reading RG1 1AXFax No: +44 (0)8455 879489Attention: Sue Barnes, Corporate Banking Manager By: /s/ Susan Barnes The Original Lender HSBC BANK PLC Address: HBEU Thames Valley Corporate Banking Centre Apex Plaza Reading RG1 1AXFax No: +44 (0)8455 879489Attention: Sue Barnes, Corporate Banking Manager By: /s/ Susan Barnes



SIGNATURE PAGE 5 The Agent HSBC BANK PLC Address: 24th Floor 8 Canada Square London E14 5HQFax No: 020 7992 4680Attention: Corporate Trust and Loan Agency, Loans Administration By: /s/ Jeremy Causton The Security Agent HSBC BANK PLC Address: 24th Floor 8 Canada Square London E14 5HQFax No: 020 7992 4680Attention: Corporate Trust and Loan Agency, Loans Administration By: /s/ Jeremy Causton The Issuing Bank HSBC BANK PLC Address: 24th Floor 8 Canada Square London E14 5HQFax No: 020 7992 4680Attention: Corporate Trust and Loan Agency, Loans Administration By: /s/ Susan Barnes


Exhibit 6.1

Statement Regarding Computation of Per Share Earnings

The computation of basic and diluted earnings per common share was as follows for the years ended March 31, 2009,2008 and 2007. Year ended March 31, 2009 Year ended March 31, 2008 Year ended March 31, 2007 Continuing Discontinued Continuing Discontinued Continuing Discontinued Dutch GAAP Operations Operations Total Operations Operations Total Operations Operations Total

Net Profit (USDthousands) 17,929 (88) 17,841 9,888 1,700 11,588 7,671 345 8,016

Weightedaveragenumber ofshares —Basic andDiluted 30,566,007 30,566,007 30,566,007 23,329,982 23,329,982 23,329,982 21,849,343 21,849,343 21,849,343

Earnings pershare —Basic andDiluted(USD) 0.59 (0.01) 0.58 0.42 0.07 0.49 0.36 0.01 0.37

Year ended Year ended April 1, 2006 June 26, 2006 March 31, March 31, to toUS GAAP 2009 2008 June 25, 2006 March 31, 2007Net profit (USD thousands) from

continuing operations 22,404 9,708 3,596 4,060 Net profit (USD thousands) from

discontinued operations (88) 1,700 62 229 Net profit / (loss) attributable to

common shareholders (USDthousands) 22,316 11,408 3,658 4,289 Number of shares—Basic and

diluted 30,566,007 23,329,982 21,849,343 21,849,343 Continuing operations 0.73 0.42 0.17 0.19 Discontinued operations 0.00 0.07 — 0.01 Total 0.73 0.49 0.17 0.20

On January 23, 2008 the Company completed a recapitalization and stock split that required the following steps to becarried out:

• Issuance of remaining 11,620 authorized shares having a par value of EUR 5 per share to our existing shareholderin exchange for cash of EUR 58,100. This action increased the total shares issued to 20,000.

• A split of each issued share having a par value of EUR 5 into 10 shares with a par value of EUR 0.50, therebyincreasing the number of issued shares from 20,000 with a par value of EUR 5 to 200,000 having a par value ofEUR 0.50.

• Issuance of 21,649,343 new shares having a par value of EUR 0.50 each by transferring the correspondingaggregate par value from share premium to issued share capital.

The result of these steps is to have outstanding 21,849,343 shares with a par value of EUR 0.50 each prior to the initialpublic offering.

Earnings per share information presented above for the comparative periods prior to the Company’s initial public offeringhas been calculated using a weighted average number of shares of 21,849,343 for all the comparative periods presented.


For the year ended March 31, 2009 the weighted average number of shares has been calculated as follows: Weighted number ofDescription Number of shares Number of days sharesWeighted average number of shares at

beginning of period 30,566,007 365 11,156,592,555 Weighted average number of shares for year

ended March 31, 2009 30,566,007


Exhibit 8.1

List of Subsidiaries

The following chart shows the name and country of organization of, and our percentage ownership in, each of oursubsidiaries and participating joint ventures as of March 31, 2009. Proportion of issuedCompany Domicile capital heldBWH Investments BV The Netherlands 100%(23)BWH Holdings (South Africa) BV The Netherlands 100%(23)Cascal Holdings Limited United Kingdom 100%(24)Cascal Investment Limited United Kingdom 100%(1)Cascal Services Ltd. United Kingdom 100%BWS Finance Ltd. United Kingdom 100%Cascal Ltd. United Kingdom 100%(21)Bournemouth & West Hampshire Water Group Ltd. United Kingdom 100%Bournemouth & West Hampshire Holdings Ltd. United Kingdom 100%Bournemouth & West Hampshire Water Plc United Kingdom 100%Bournemouth Water Plc United Kingdom 99%(2)West Hampshire Water Plc United Kingdom 99%(3)Bournemouth Water Ltd. United Kingdom 100%West Hampshire Water Ltd. United Kingdom 100%Bournemouth & West Hampshire Enterprise Limited United Kingdom 100%Mill Stream Insurance Limited United Kingdom 100%Aquacare (BWHW) Ltd. United Kingdom 100%(22)Pre-Heat Limited United Kingdom 100%(4)Cascal Investments (China) Limited United Kingdom 100%(28)Cascal (Chile) S.A. Chile 100%(5)Aguas Santiago S.A. Chile 100%(5)Servicios y Construcciones Biwater S.A. Chile 100%(5)Inversiones Libardon S.A. Chile 100%(5)Aguas Chacabuco S.A. Chile 100%(5)Aguas de Quetena S.A. Chile 100%(5)Bayesa S.A. Chile 100%(5)Cascal BV (Chile) Limitada Chile 100%(5)(6)Inversiones Cascal S.A. Chile 100%(5)Inversiones Aguas del Sur Limitada Chile 100%(5)Aguas de la Portada S.A. Chile 100%(5)(6)Servicomunal S.A. Chile 100%(5)(25)Servilampa S.A. Chile 100%(5)(25)Belize Water Services Ltd. Belize 83%(7)Biwater Ingeniera y Proyectos S.A. de C.V. Mexico 100%(5)(8)Agua Mexicana y Operaciones S.A. de C.V. Mexico 100%(5)(8)Cascal Operations (Pty) Limited South Africa 100%The Greater Nelspruit Utility Company (Pty) Ltd. South Africa 100%(10)Siza Water Company (Proprietary) Limited South Africa 73.42%(11)P.T. Adhya Tirta Batam Indonesia 50%(5)(9)P.T. Adhya Tirta Sriwijaya Indonesia 40%(5)(9)Subic Water & Sewerage Company Inc. Philippines 30%(9)Aguas de Panama, S.A. Panama 100%(1)The China Water Company Limited Cayman Islands 87%(12)The China Water Company (Xinmin) Limited British Virgin Islands 87%(12)(13)The China Water Company (Yanjiao) Limited British Virgin Islands 87%(12)(13)(18)The China Water Company (Qitaihe) Limited British Virgin Islands 87%(12)(13)The China Water Company (Fuzhou) Limited British Virgin Islands 87%(12)(13)(18)The China Water Company (Mauritius) Limited Mauritius 87%(12)(13)(18)CWC Water Management Company Limited British Virgin Islands 87%(12)(13)(18)China Water Company (Fuzhou) Limited Hong Kong 87%(13)China Water Company (Yanjiao) Limited Hong Kong 87%(13)


Proportion of issuedCompany Domicile capital heldChina Water Company (Zhumadian) limited Hong Kong 87%(13)China Water Company (Yancheng) Limited Hong Kong 87%(13)Fuzhou CWC Water Company Limited People’s Republic of China 62.64%(12)(14)(Shenyang) Xinmin CWC Water Company Limited People’s Republic of China 79.09%(12)(15)Sanhe Yanjiao CWC Water Company Limited People’s Republic of China 82.08%(12)(16)Qitaihe CWC Water Company Limited People’s Republic of China 79.09%(12)(17)Yancheng China Water Company Limited People’s Republic of China 42.63%(9)(19)(20)Zhumadian China Water Company Limited People’s Republic of China 44.37%(26)(27)





















(21) Company changed its name from Biwater Capital plc to Cascal Plc on September 26, 2007. Re-registered as CascalLimited on April 21, 2009.


(23) Companies liquidated on March 31, 2009.

(24) Company formed on September 25, 2009.




(28) Company formed on May 5, 2009.


Exhibit 12.1

CERTIFICATION

I, Stephane Richer, certify that:

1 I have reviewed this annual report on Form 20-F of Cascal N.V.;

2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this report;

3 Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the company as of, andfor, the periods presented in this report;

4 The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financialreporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the company, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting tobe designed under our supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this reportour conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periodcovered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurredduring the period covered by the annual report that has materially affected, or is reasonably likely to materiallyaffect, the company’s internal control over financial reporting; and

5 The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the company’s auditors and the audit committee of the company’sboard of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the company’s ability to record, process, summarizeand report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role inthe company’s internal control over financial reporting.

Date: July 1, 2009 /s/ Stephane Richer Stephane Richer Chief Executive Officer


Exhibit 12.2

CERTIFICATION

I, Steve Hollinshead, certify that:

1 I have reviewed this annual report on Form 20-F of Cascal N.V.;

2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this report;

3 Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the company as of, andfor, the periods presented in this report;

4 The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financialreporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the company, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting tobe designed under our supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this reportour conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periodcovered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurredduring the period covered by the annual report that has materially affected, or is reasonably likely to materiallyaffect, the company’s internal control over financial reporting; and

5 The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the company’s auditors and the audit committee of the company’sboard of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the company’s ability to record, process, summarizeand report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role inthe company’s internal control over financial reporting.

Date: July 1, 2009 /s/ Steve Hollinshead Steve Hollinshead Chief Financial Officer


Exhibit 13.1

CERTIFICATION PURSUANT TOSECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, Stephane Richer, Chief Financial Officer of Cascal N.V. (the “Company”), certify, pursuant to Section 906 of theSarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1) the Annual Report on Form 20-F of the Company for the annual period ended March 31, 2009 (the “Report”) fullycomplies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results ofoperations of the Company.Date: July 1, 2009 /s/ Stephane Richer Stephane Richer Chief Executive Officer


Exhibit 13.2

CERTIFICATION PURSUANT TOSECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, Steve Hollinshead, Chief Financial Officer of Cascal N.V. (the “Company”), certify, pursuant to Section 906 of theSarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1) the Annual Report on Form 20-F of the Company for the annual period ended March 31, 2009 (the “Report”) fullycomplies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results ofoperations of the Company.Date: July 1, 2009 /s/ Steve Hollinshead Steve Hollinshead Chief Financial Officer

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