RAND WATER ANNUAL REPORT 2023

Consolidated Annual Financial Statements for the year ended 30 June 2023

Summary of Principal Accounting Policies and Significant Judgements

3 Annual financial statements 3.1 Basis of consolidation

The Group recognises that control is the single basis for consolidation for all types of entities in accordance with IFRS 10 Consolidated Financial Statements. The consolidated financial information includes the financial statements of the company, its subsidiaries, interest in associates and joint arrangements and structured entities.

Control

The Group, regardless of the nature of its involvement with an entity, shall determine whether it is a parent by assessing whether it controls the investee. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.

(i) Subsidiaries

Subsidiaries are entities over which the Group has control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group up until when that control ceases. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries are consistent with the policies adopted by the Group.

Investment in subsidiaries

Rand Water has two subsidiaries over which the Group has control. These entities are the Rand Water Foundation (RWF) and the Rand Water Services (Proprietary) Limited (RWS).

Rand Water Foundation

The Group sponsored the formation of a structured entity, specifically Rand Water Foundation (RWF).

The main objective of RWF is to co‑ordinate, administer and manage Rand Water’s Corporate Social Investment resources by undertaking community development projects in partnership with various donors and stakeholders. RWF operations are fully funded by Rand Water and all activities must be in line with its approved mandate. Management has applied their judgements in its assessment of the substance of the relationship between the Group and RWF, and concluded that the structured entity is controlled by the Group, as such RWF has been consolidated into the financial statements of the Group. RWS is a wholly owned subsidiary of RW. This entity has been dormant since November 2010, during the current financial year the Board made a decision to resuscitate the entity and commence operations in the new financial year ending 30 June 2024. Refer to the Board report section 2: Nature of Business for further details. The investment in RWS is carried at cost less any accumulated impairment in RW’s separate annual financial statements. The investment is tested for impairment on an annual basis and where indicators are present that reflect an impairment. RW accounts for the impairment as a reduction in the value of the investment through profit or loss. Rand Water Services (Pty) Ltd

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