ANNUAL REPORT PRESENTATION

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ANNUAL REPORT PRESENTATION

• Celebrating a decade of water services delivery
  in a democracy

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ANNUAL REPORT H KASAN
TARIFFS K NAICKER
WATER BOARD ACCOUNTABILITY P CAMAY
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CONTENT

• Rand Water profile
• Customer Sales profile
• Sales trend
• Cost of raw water
• Projected input costs vs CPIX
• Gross profit
• Profitability

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CONTENTCONT

• Value creation
• Return on assets
• Business performance Indicators
• Performance Highlights
• Social responsibility trend
• Future developments
• Decade of Service Delivery - Review

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Rand Water profile

• Largest water utility in Africa
• Bulk water supply increase to 3 414 M? /d
  (3340M? /d 2003)
• Supplies 12 million people daily
• Sole area of service 18 000 km²
• 13 000 km² joint area of service with other Water
  Boards

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Rand Water profilecont

• Turnover R3 258 bn ( R2 884 bn 2003)
• Assets R5 232 bn (R4 892bn 2003)
• Staff employed 3 097 (3 108 2003)
• Corporate ISO 9001 2000 accredited
• All plants ISO 14001 accredited

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CUSTOMER SALES PROFILE
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SALES TREND
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COST OF RAW WATER
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PROJECTED INPUT COSTS VS CPIX
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GROSS PROFIT
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PROFITABILITY
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VALUE CREATION
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RETURN ON ASSETS

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PROFITABILITY

• Why generate large surplus (profit) ?
• Capital investment planned for next 5 years
  R2,5 billion
• To access funds (debt) at lowest cost to fund
  capital investment
• No loans from government
• No guarantees from government
• Ensure sustainability
• Not profiteering but recovering cost of capital

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BUSINESS PERFORMANCE INDICATORS
KPI Unit 2001 2002 2003 2004
Profit Margin 3,8 7,8 9,7 11.5
Net income per Employee R 000 25.83 62.30 90.44 121.08
Interest cover X 1,6 2.1 2.8 3.6
Return on Assets 5.1 7.5 9.0 9.9
Ave costs of capital 13.45 13.00 13.00 12.00
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BUSINESS PERFORMANCE INDICATORSCONT
KPI Unit 2001 2002 2003 2004
Debt/Equity 99 98 84 69
Credit Rating AA AA AA AA
Assets T/O Ratio X 0.6 0.6 0.7 0.8
Current Ratio X 1.1 1.2 1.5 1.8
Operational costs/kl sold Cents 90 98.9 98 106
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BUSINESS PERFORMANCE INDICATORS
Employee Productivity Ratios 2001 2002 2003 2004
Employees 3249 3105 3108 3097
K? sold 1,097,437,836 1,147,865,347 1,216,342,585 1,252,828,263
K? per employee 337,777 369,683 391,359 404,530
Revenue R000 2,180,150 2,480,727 2,884,405 3,258,055
Income per employee R000 671,02 798,95 928,06 1052,00
Profit per employee R000 25.83 62.30 90.44 121.08
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PEFORMANCE HIGHLIGHTS
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• Surplus R375 million
• Revenue R3 258 million
• Cash generated from operations
• Increase in sales

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9,1
2,2
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PERFORMANCE HIGHLIGHTScont
2003
2004

• Customer SLA evaluation
• Customer Satisfaction Index
• Training spend ( as of Total Payroll)
• Designated groups at management
• BEE spend

89
88
77
77
6,6
7
60
64
42,3
46
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SOCIAL RESPONSIBILITY TREND
Categories 2002 2003 2004
Schools Programme R445 692 R615 503 R639 279
Health HIV/Aids 485 002 505 248 R637 652
Community Development R325 125 R361 435 R548 055
CBPD ( Part sourced externally) R18 824 178 R16 281 989 R14 840 968
Foundation N/A N/A R3 000 000
Total Spent R20 079 992 R17 764 175 R19 665 954
Jobs created 435 648
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FUTURE DEVELOPMENTS

• RAND WATER SERVICES
• Providing water services value adding to
  municipalities in South Africa
• Back-up supply for SASOL R40 million pipeline
• NEPAD initiatives

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FUTURE DEVELOPMENTScont

• INFRASTRUCTURE PROJECTS
• BRAKFONTEIN/RUSTENBURG 80 KM PIPELINE R450
  million currently doing environmental impact
• WESTERN HIGHVELD REGION PROJECT
• R113 million of which R40 million is from Rand
  Water

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FUTURE DEVELOPMENTSCONT.

• A total of R2,5 billion capital investment is
  planned over the next 5 years
• R962 million in infrastructure development
  projects in progress

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DECADE OF SERVICE DELIVERY - REVIEW
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DECADE OF SERVICE DELIVERY

• Participated in Presidential Lead projects
  Winterveldt, Bushbuckridge (R142m)
• The project facilitated supply through 3 500
  communal standpipes benefiting approximately 1
  million people
• R215 million worth of projects implemented by
  CBPD
• Winterveldt sanitation project more than 2 540
  toilets for Winterveldt built (R8,3m) benefiting
  25 000 people

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DECADE OF SERVICE DELIVERY

• Integrated Water Demand Management Interventions
  R60 million
• Established Rand Water Services Pty (Ltd)
• Launched Rand Water Foundation
• Significant Transformation within the
  organization
• Designated group Management level
• 64 (33 2000)
• Women representation in management, professional
  and supervisory 28,2 (22 2000)

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RAND WATER IS

• IZANDLA ZIYAGAZANA

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Tariff Setting Accountability

• Rand Water
• Water Affairs Forestry Portfolio Committee
• October 2004

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ISSUES

• Municipal Financial Management Act 6 months
  advance notice
• National Treasury SALGA 40 days for
  consideration
• Bulk Water Supply Contract prior consultation
  and information sharing
• Core/Primary activity vs. non-core

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ISSUES Core vs. Non-core

• CORE
• Bulk Water
• Bulk Sanitation
• Rand Water Board

• NON-CORE
• Retail Water
• Community Projects
• Business Devt.
• Farm Operations
• Pipe Manufacturing
• Rand Water Services (Pty) Ltd

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PROCESS

• Aug. 2004
• Sept. 2004
• Sept. 2004
• Oct. 2004
• Oct. 2004
• Dec. 2004
• Dec. 2004
• March 2005

• DWAF raw water pricing
• Board prelim. approval
• Customer Consultation Information Sharing
• Board prelim. approval
• Submission to Treasury and SALGA
• Board final approval
• Customer Notification
• Parliamentary approval

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THANK YOU