The main constraint on business risk profile is the lack of

Rand Water

In accordance with cheap moncler jackets mens our criteria for government related entities (GREs), our rating approach is based on our view of

role as the monopoly bulk water provider to the Gauteng region, the economic heartland of South Africa. is the country largest water board and acts in an agency capacity on behalf of the government in providing an essential commodity to municipalities, the population, and to large industrial customers. The South African government does not envisage the corporatization or privatization of any of the water boards for the foreseeable future.

link as a not for profit, fully government owned entity that performs a strategic development role and pays neither dividends nor taxes. The Department of Water Affairs (DWA), moncler outlet which owns all 14 water boards in South Africa, closely supervises and approves strategy, its budget, and its management cheap moncler jackets to ensure the implementation of government policy.

We continue to monitor the development of role and link to the government of South Africa. A change in our assessment of an certain likelihood of extraordinary government support could result in us no longer equalizing the rating on with that on the sovereign, in which case the SACP would become an increasingly important driver moncler outlet prices of the rating.

SACP of reflects our assessment of the company business risk profile and financial risk profile. The business risk profile is supported by regional monopoly position, its moncler outlet store government ownership and mandate, and its solid operational track record. The main constraint on business risk profile is the lack of independent regulation, with an annual cost recovery system that is exposed to political influence and does not always provide for full and timely cost recovery. In addition, the company has significant customer concentration.

Our view of financial risk profile reflects the company currently strong credit metrics, supported by a net cash cheap moncler coats mens balance. The implementation of a five year South African rand (ZAR) 10 billion investment program including bulk sanitation and cogeneration projects will require to raise new external debt going forward. We believe that this requirement, combined with an increase in operating costs, is likely to weaken financial profile.

S base case operating scenario

has not yet published its results for the year ended June 30, 2012, but we anticipate that moncler sale online it will have maintained profitability at the same level as the best moncler jackets year to June 30, 2011. Specifically, we anticipate that the EBITDA margin will be 13% 14% on June 30, 2012 and beyond. Our base case is mainly driven by our assumption that the regulator will set the tariff at a level that allows to uk moncler outlet cover increasing operating costs and earn a return on its capital expenditures (capex).

We understand that the 12.9% tariff increase for financial year 2011 2012 was mainly discount moncler jackets driven by the rise in energy costs, reflected in the tariff increase implemented by cheap moncler jackets womens South African power utility ESKOM Holdings Ltd. (ESKOM; SACP: foreign currency BBB+/Negative/ ) to help fund its large capex program. In addition, due to the rainfall pattern in the Gauteng region, the quality of raw water deteriorated during 2011, resulting moncler usa in a greater increase in chemical costs than previously expected by .

We anticipate that chemical costs will decline in the near future, as the quality of raw water normalizes. In addition, the company is implementing efficiency measures in order to reduce the effect of increasing energy costs. However, we believe there is a high likelihood that water tariffs will continue to increase over the coming two to three years in order to support investment plan, allowing it to offset increases in costs and new investments and to generate revenues.

We anticipate that capex will have remained significantly more than ZAR1 billion in the financial year ended June 30, 2012. A significant part of this amount relates to the augmentation and rehabilitation of infrastructure, which will ultimately result in an increase in the company asset base. is undertaking major capital cheap moncler sale investment in its existing infrastructure to address increasing demand, and expects to invest slightly over ZAR8 moncler online store billion in its core business over the next five years, to be financed by moncler outlet online its new moncler outlet woodbury domestic medium term note program and other sources of funding.

S base case cash flow and capital structure scenario

credit metrics strengthened in the financial year to June 30, 2011, as higher operating expenses were more than offset by the increase in volumes and tariffs, maintaining the company net cash position. We anticipate that cash flow and leverage ratios will weaken in financial years 2012 and 2013, as continued pressure on operating costs will combine with higher capex to generate negative free cash flows that, in turn, will erode cash balances. In the financial year ended June 30, 2011, remained cash flow positive, reporting a closing cash balance of moncler womens jackets ZAR931 million, with cash from operations of ZAR955 million monclerdownjacket .

We anticipate that credit metrics will deteriorate as the company implements its capex program. We anticipate that Standard Poor funds from operations (FFO) to adjusted debt will remain above 20%, which in our view is consistent with its SACP of However, consistently negative free operating cash flows (FFO after capex) to adjusted debt could put pressure on financial profile, weakening its SACP. projected sources of liquidity mainly operating cash flow and available bank lines exceed its projected uses by more than 1.8x over the next 12 months. Uses include committed capex and debt moncler outlet sale maturities.

This compares with our forecast that over the next 12 months, faces:

At least ZAR1 billion of capex; and

Debt maturities of ZAR208 million.

We anticipate that will require new debt funding to cover negative discretionary cash flows arising from an increase pressure on its operating margin and sustained higher capex. The equalization of the ratings is based on our belief that will continue to play uk moncler sale a role in South Africa water industry; that its ownership structure and agency function will not change; and that it has an link with the government, as the moncler sale DWA will continue to be financially supportive. In accordance with our rating methodology for GREs, moncler uk outlet the current equalization of the ratings, and the nature and domestic focus of business, we would automatically change the ratings on if we were to change those on the Republic of South Africa.

Any changes in the assumptions supporting our view of link to and role for the government of South Africa could trigger a review of our assessment of the likelihood of government support moncler outlet online . Any change in our assessment of an certain likelihood of extraordinary government support could result in us no longer equalizing the ratings on with those on the sovereign, in which case the SACP would become moncler sale outlet an increasingly important driver of the rating. In addition, a significant deterioration in SACP as a result of weakening ongoing government support through, for instance, lower than currently budgeted tariff increases, could also trigger a review of our assessment of the company role for and link with the South African government.