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BOTSHELO WATER

2007/08 Annual Report

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Contents1. Overview

2. Provision of Water Services

3. 2007/08 AFS

4. Intervention – Organisational Diagnosis & Turnaround Strategy

5. Conclusion

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1.Overview1.1 Operates and maintains water treatment works in Ngaka

Modiri Molema and Dr Ruth S Mompati District Municipalities in the NW Province i.t.o. Water Services Provider Agreements.

1.2 Implementing Agency of the Tswasa Water Scheme.

1.3 Governance structures are in place.

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2. Provision of Water Services

2.1 NW relies mostly on underground water.

2.2 BW operate and maintains more than 500 boreholes and six water purification plants.

2.3 Boreholes are tested according to the SANS 241 guidelines and rectifications done accordingly. Achieved 97% compliance in 2007/08.

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3.2007/08 AFS3.1 Qualified Audit Opinion:

3.1.1 Trade Payables – lack of supporting documentation. Going forward, controls in terms of the PFMA have been implemented.

3.1.2 Trade Receivables – difference between the debtors listing and the aged analysis. Subsequent reconciliations i.r.o. trade receivables have been performed to resolve the differences

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3.2007/08 AFS (Cont)3.2 Emphasis of Matter:

3.2.1 Long overdue balances owing by bulk and retail customers – debtors reconciliations have been performed and consultations have been held with major bulk customers to deal with the payment of amounts due.

3.2.2 Amounts owing to the Department of Water and Environmental Affairs for the purchases of raw

water – in discussions with the Department to resolve the matter.

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3.2007/08 AFS (Cont)3.3 Revenue – decrease of 10% from 2006/07.

3.4 Operating Expenses – increase of 30% from 2006/07 mainly due to the following:

Employee costs; Consulting & professional fees; Stock losses; Repairs & Maintenance; Telephone & fax

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4. Intervention – Organisational Diagnosis

We have identified the following areas as needing urgent attention: Understanding of the full water process; Budgeting & Cash Management; Sales & Debtors; Purchases & Creditors; Inventory, Stock & Asset Management; Supply Chain Management; Accounting Systems; Water Quality & Water Loss; Human Capital Utilisation

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4. Intervention – Turnaround Strategy

Cost Containment

Operational Efficiency

Revenue Enhancement

Business Excellence

Pillars4.1

4.2 4.3

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4. Intervention – Turnaround Strategy

4.1 Revenue Enhancement Adherence to approved policies; Debt collection strategy; Integrated financial management system; Bill all revenue streams properly & timeously; Manage timing of cash flows.

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4. Intervention – Turnaround Strategy

4.2 Cost Containment Efficient management of credit cycles; Manage budget vs actual; Review & monitoring of operating expenditure; Better utilisation of fixed assets.

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4. Intervention – Turnaround Strategy

4.3 Operational Efficiency Correct measurement of water- in and out (balance); Water loss management plan; Supply Chain control; Stores control system; Overtime control and other benefits.

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5. Conclusion

5.1 10 years of cumulative mismanagement.

5.2 Continuous oversight by the Department of Water and Environmental Affairs to support Botshelo Water to return to viability.

5.3 Since its appointment in 2007, the Board has overcome major obstacles.

THANK YOU