Presentation to Parliamentary Presentation to Parliamentary Portfolio Committee on Water Portfolio Committee on Water

Affairs and ForestryAffairs and Forestry

LEPELLE NORTHERN WATER

19th MARCH 2007

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STRUCTURE OF STRUCTURE OF PRESENTATIONPRESENTATION

•Area of supply

•Background

•Achievements

•Market development

•Challenges

• Way forward

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AREA OF SUPPLYAREA OF SUPPLY

The Board will be expanding into all Water

Service Authorities – to capture 100% market share

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AREA OF SUPPLYAREA OF SUPPLY Cont… Cont…

SCHEME NAME SOURCE CUSTOMER CAPACITY

Phalaborwa Lepelle (Olifants) River       Ba-Phalaborwa Municipality.      Mines.

 150 ML/Day

Politsi Makgobaskloof Dam       Greater Letaba Municipality.

7 ML/Day 

Modjadji Modjadji Dam       Greater Letaba Municipality.

3 ML/Day

Nkowankowa Letaba River       Tzaneen Municipality 24 ML/Day

Ebenezer Ebenezer Dam       Tzaneen Municipality.      Polokwane Municipality

 48 ML/Day

Olifantspoort Lepelle (Olifants) River       Polokwane Municipality.      Capricorn District.

 30 ML/Day

Doorndraai Doorndraai Dam       Mokgalakwena Municipality.

12 ML/Day

Flag Boshielo Flag Boshielo Dam       Greater Sekhukhune 8 ML/Day

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BackgroundBackground(Recent appointments)(Recent appointments)

• New board appointed in December 2006• CE appointed Feb 2007• CFO appointed March 2007• Recruitment of GM Operations to be

finalised April 2007

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ACHIEVEMENTSACHIEVEMENTS

Financial Performance

2004

R’000

2005

R’000

2006

R’000

Revenue 159,757 159,761 179,656

Cost of Sales

27,956 26,789 41,684

Operating expenditure

64,169 63,414 73,386

Surplus for the year

37,064 45,314 73,942

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ACHIEVEMENTSACHIEVEMENTS

Financial Performance

2004

R’000

2005

R’000

2006

R’000

Net interest paid

20,364 7,113 (15,804)

Accumulated reserves

(24,236) (5,064) 50,460

Long term loans

297,477 274,478 44,491

Average tariff

1,919 2,072 2,163

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ACHIEVEMENTSACHIEVEMENTS

Business Performance

2004

Actual

2005

Actual

2006

Actual

Gross Margin %

83% 83% 77%

Current Ratio

1.84 1.74 2.11

Return on Assets %

9.1% 9.1% 10.0%

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ACHIEVEMENTSACHIEVEMENTS

Business Performance

2004

Actual

2005

Actual

2006

Actual

Debt-equity ratio

116.6% 102.5% 39.9%

Asset turnover

0.21 0.21 0.28

WACC % 20.4% 24.0% 42.3%

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MARKET DEVELOPMENTMARKET DEVELOPMENT

WATER SERVICE AUTHORITY % MARKET STATUS

Capricorn District Municipality 14% Negotiations are at an advanced stage. Conclusion by January 2007.

Polokwane Local Municipality 10% Agreement of 25 years has been entered into on 01 February 2005

Mopani District Municipality 22% Negotiations are at an advanced stage. Conclusion by March 2007.

Greater Sekukhune District Municipality

22% Appointment has been confirmed, finalizing the term of the contract.

Vhembe District Municipality 25% Negotiations are at an advanced stage. Conclusion by January 2007.

Mokgalakwena Local Municipality 6% Agreement of 30 years has been entered into on 01 May 2003.

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CHALLENGESCHALLENGES

- Rehabilitation and refurbishment of infrastructure.- Continuous increase in demand for water.- Outstanding debts (Ba-Phalaborwa) - Protracted section 78 process- Capacity constraints

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WAY FORWARDWAY FORWARD

- Improved governance- Improvement and expansion of infrastructure- Implement turn-around strategy for Ba-Phalaborwa- Finalise population of the structure- Finalise outstanding Service Level Agreements with

WSA’s- Improve relations with all stakeholders in the sector

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THANK YOU