RAND WATER ANNUAL REPORT 2023

Consolidated Annual Financial Statements for the year ended 30 June 2023

Board Report 9. Business performance

2023 Actual

2022 Restated Actual

2021 Restated Actual

2020 Actual

2019 Actual

Net income margin Gross income margin Income per employee Average cost of capital Debt‑equity ratio Return on assets Assets to sales ratio

% %

18,10 30,80

19,60 30,50

19,90 34,40

23,40 34,40

22,80 35,65

R’000

1 012,24

991,19

943,26

1 077,43

1 026,34

%

9,47 0,12 6,20 1,63 2,37

9,47 0,14 7,40 1,71 2,78

9,47 0,15 8,30 1,66 2,52

9,93 0,17

9,93 0,20

Times

%

10,80

11,70

Times Times

1,49 1,79

1,50 1,94

Current ratio

The net income margin and return on assets remain under pressure as they decline to 18.1% (2022: 19.6%) and 6.2% (2022: 7.4%) respectively. The contractions reflect the significant impact of high utility prices, and series of events that have disrupted supply of chemicals to global markets amid strong demand, leading to record high chemical costs. Arrear debt have also increased drastically resulting from defaulting Municipal customers and that led to significant increase in our provision for expected credit losses. The Group has issued unsecured bonds to the amount of R4.4 billion as at 30 June 2023 under the registered ZAR10 billion Domestic Medium Term programme (DMTN). Funds have been set aside for the ultimate redemption of the RW23 in December this year. In the midst of increases in accumulated reserves the borrowings remain unchanged. The Group reported a reduction in the debt equity ratio from 0.14 to 0.12 as a result. The income per employee improved marginaly by 2.1% primarily attributable to slight increase in headcount. The current ratio decreased to 2.37 attributale to increased creditors book. Included in payables is the current portion of RW23 interest bearing borrowings. 10. Operational performance

2023 Actual

2022 Restated Actual

2021 Restated Actual

2020 Actual

2019 Actual

Volume sold (including consumption accrued to 30 June) (Average mgl/day)

4 717

4 642

4 588

4 535

4 696

Number of employees at year end

3 493

3 437

3 563

3 561

3 458

The average mgl/day of water volumes sold increased by 1.6% to 4 717 mgl/day (2022: 4 642 mgl/day). This is mainly as a result of an increase in demand for non‑potable water.

The staff complement remained fairly constant at a marginal increase of 1.6% in the current year. Following the Voluntary Separation Dispensation that occurred at the beginning the financial year ended 2022 that resulted in the retirement of 151 employees, and non‑critical vacancies remain unfilled.

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