NAMAKWA WATER BOARD

1
NAMAKWA WATER BOARD

• ANNUAL REPORT 2008

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BACKGROUND

• The Namakwa Water Board provides potable water to
  Nama Khoi Municipality De Beers Namaqualand
  Mines.
• The area of responsibility included the towns of
  Steinkopf, Okiep, Concordia, Carolusberg,
  Nababeep, Springbok and the mining communities at
  the De Beers Namaqua mines
• The area of responsibility is in the arid north
  western part of the Northern Cape were the Orange
  River is the only sustainable source of water.
• Pumping water from the Orange River is costly
  because of distance and elevation to be pumped

3
ACHIEVEMENTS CHALLENGES

• Challenges
• -The Municipality do not have the capacity to
  take over the Water Board (Section 78
  investigation funded by DWAF).
• The Board not able to pay creditors.
• Various pipeline failures occurred due to age of
  infrastructure resulting in communities left
  without potable water. (Dec07 Concordia 4 days)
• Achievements
• Temporary appointment of consultants to perform
  managerial duties June08
• Omissions reported by Auditors resolved
• Involve various stakeholders in seeking
  resolution to financial crises of Board eg. DG
  ,Department of Water Affairs, MEC for Local
  Government Northern Cape Province, District
  municipality, Customers
• Received operational grant from disaster fund
  (Namaqua District Municipality)

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REPORT OF INDEPENDENT AUDITORS

• Unqualified Opinion
• In our opinion the financial statements present
  fairly, in all material respects, the financial
  position of the entity at 30 June 2008 and the
  results of its operations and cash flows for the
  year ended in accordance with IFRS.
•  
• Emphasis Of Matter
• Without qualifying our opinion, we draw attention
  to note 11 to the financial statements which
  indicates the existence of a material uncertainty
  which may cast significant doubt on the entitys
  ability to continue as a going concern.
• Report On Other Legal And Regulatory Requirements
• In accordance with our responsibilities in terms
  of sections 44 (2) and 44 (3) of the Auditing
  Profession Act, we report that we have identified
  certain unlawful acts or omissions committed by
  persons responsible for the management of Namakwa
  Water Board which constitute reportable
  irregularities in terms of the Auditing
  Profession Act, and have reported such matters to
  the Independent Regulatory Board for Auditors.

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PERFORMANCE SUMMARY

• Board made a loss of R 17 mil 2008 vs. profit of
  R 2,6 mil 2007(R 12 mil remission of debt
  included in 2007)
• Operating loss of R 1,4 mil 2008 profit of R
  3,9 mil 2007 mainly due to increase in salaries
  operational cost write down of debts asset
  scrapping
• Debtors decreased by R 1,5 mil(R0,698 non
  recoverable written off)
• Creditors Increased by R0,8 mil (Mainly Raw water
  purchased from Water Affairs)
• Relook at accounting policy resulting in non Cash
  based funds written off to provide a more
  realistic view of entity.

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FINANCIAL PERFORMANCE 2007/2008
INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE
2008
NOTES 2008 R 2007 R


Revenue 9 639 834.25 9 620 144.94
Other Income 3 58 449.52 4 405 391.55
Administration Expenses ( 362 961.47 ) ( 370 012.55 )
Other Operational Expenses ( 24 007 428.08 ) ( 21 363 315.44 )
Financing Costs ( 2 408 082.03 ) ( 2 293 354.74 )

Loss before remission of debt ( 17 080 187.81 ) ( 10 001 146.24 )
Remission of debt - 12 630 579.69

(Loss)/Surplus for the year ( 17 080 187.81 ) 2 629 433.45
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STATEMENT OF FINANCIAL POSITION(BALANCE SHEET)
NOTES 2008 R 2007 R
ASSETS
Non-Current Assets
Property, Plant and Equipment 5 82 919 280.16 96 233 514.00
Current Assets 3 254 125.88 4 921 006.56
Fixed Investments 6 654 652.17 604 409.59
Trade and other Debtors 7 2 599 473.71 4 152 080.22
Cash and Cash Equivalents - 164 516.75
Total Assets 86 173 406.04 101 154 520.56
EQUITY AND LIABILITIES
Funds and Reserves 73 270 971.31 90 364 267.96
Retained Income 3 039 266.57 6 113 655.35
Non-Distributable Reserves 76 310 237.88 84 250 612.61
Revaluation Reserve 76 310 237.88 76 568 346.72
Maintenance Fund - 7 384 185.29
Retainer Fees Special Fund - 298 080.60
Total Liabilities 12 902 434.73 10 790 252.60
Non-Current Liabilities
Long Term Loans 8 10 672 586.78 10 403 049.98
Current Liabilities 2 229 847.95 387 202.62
Trade and other Creditors 9 1 224 482.42 387 202.62
Bank Overdraft 1 005 365.53 -
Total Equity and Liabilities 86 173 406.04 101 154 520.56
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CASH GENERATED BY OPERATIONS
2008 R 2007 R
(Loss)/Surplus for the Year (17 080 187.81) 2 629 433.45
Adjustments for
Depreciation 12 025 018.00 12 243 089.00
Interest Received (50 242.58) (600 983.66)
Interest Paid 2 408 082.03 2 293 354.74
Remission of Debt - (12 630 579.69)
Assets Scrapped 1 269 997.00 -
Operating income before changes in working capital (1 427 333.36) 3 934 313.84
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STRATEGIC PLAN 2009/2011

• The strategic goal for the Board is to get out of
  its current cash flow crisis and to become self
  sustainable. This will be attain by
• Secure short term financial assistance
• Reduce cost of operations
• Reach agreement with Municipality to take over
  distribution
• Recovery of actual cost of service
• Remission of Debt - Water Affairs loan
• Reach agreement with DBSA for rescheduling of
  loan
• Secure funding for urgent capital replacement

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CAPITAL EXPENDITURE PRIORITIES 2009/2011

• The Flocculation dosing pumps, Lime feeders and
  Chlorinators are all defect, which is directly
  impacting the quality of water and the health of
  operators.
• Urgent replacement required of 26km section of
  the main pipeline between Vrieskloof and Okiep.
  The lining of the pipeline has broken up, causing
  corrosion and blockading of the pipeline and
  frequent pipeline failures, resulting in the
  community been left without potable water.
• Replacement required of 9 km section of the
  pipeline between Okiep and Nababeep. The pipeline
  has reach the end of its economical life and
  leaks occur on the line. As this line is not
  accessible by road, maintenance cannot be carried
  out on the line.
• Replacement required of 5 km section of the
  pipeline between Okiep and Carolusberg. The
  pipeline has reach the end of its economical life
  and leaks occur on the line.
• Replacement required of 9 km section of the
  pipeline between Okiep and Concordia. The
  pipeline is use to pump water under high pressure
  and has reach the end of its economical life.
• The Metering equipment to measure extraction and
  distribution needs to be replace as meters is not
  working. This is also necessary to determine
  water losses and leaks on pipelines.
• The communication and telemetric control between
  reservoirs and pump stations which is needed to
  monitor reservoirs levels and communication
  between operators need to be replace or upgraded
  to ensure reservoirs levels are monitor
  accurately and pumps are activate in correct
  sequence to prevent pipeline burst.
• Other short term replacement that needs to be
  made includes
• The housing for operators have not been
  maintained properly and needs upgrading to
  repairs insure the availability of personnel.
• Two vehicles for technical and repair personnel
  needs to be replaced urgently.
• The Lifting equipment on the trucks used to
  transport pumps pipes need to be repaired as it
  not safe or effective currently.
• Access roads especially for the Nababeep pipeline
  needs to be upgraded as the pipeline is not
  accessible for repairs.