RAND WATER ANNUAL REPORT 2023

Consolidated Annual Financial Statements for the year ended 30 June 2023

Board Report 8. Financial Performance

2023 Actual

2022 Restated Actual

2021 Restated Actual

2020 Actual

2019 Actual

Revenue

R’m

19 578

17 661

16 556

16 424

15 539

Net income

R’m

3 536

3 462

3 295

3 831

3 549

Property, plant and equipment

R’m

29 478

28 276

26 536

23 645

21 799

Capital expenditure

R’m

1 942

2 230

3 390

2 486

1 671

Interest bearing borrowings R’m

4 385

4 384

4 384

4 327

4 389

Accumulated reserves

R’m

35 679

32 156

28 747

25 535

21 644

Potable water bulk tariff

R/kl

11,6200

10,6800

10,0900

10,0900

9,3158

Net finance income

R’m

892

569

363

421

142

The Group achieved growth of 10.9% in revenue to R19.6 billion (2022:R17.7 billion), underpinned by 8.8%% tariff increase,and 1.6% increase in sales volumes. Profitability remains hindered by the deterioration in the credit quality of some customers. These contributed to the shrinkage in EBITDA by 2.5% and marginal increase of 2.1% in net income to R3.54 billion (2022 R3.46 billion).

The rising cost of raw water remains a persistent challenge. That is further exacerbated by the continuous increase in input costs of purifying and distribution of water such as energy and chemicals, putting strain on targeted margins.

Total capital expenditure including borrowing costs declined by 13% to R1.9 billion compared to R2.2 billion in the prior year, owing to the critical changes in the regulatory environment, which resulted in not enough awards of contracts made for capital projects for the period under review. Net finance income increased by 57% to R892 million for the year under review. This is attributable to interest rate hike implemented by the South African Reserve Bank and additional investment in bonds. • Rand Waters water demand management initiative, aimed at reducing municipality demand through identifcation of leaks in their reticulation systems and; • The COVID‑19 pandemic increased household demand for potable water but this was insufficient to cover the loss of demand from industrial customers and mines that were closed during the lockdown and operating at 50% respectively.

165