RAND WATER ANNUAL REPORT 2023

Consolidated Annual Financial Statements for the year ended 30 June 2023

Calculation of recoverable amount Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre‑tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash‑generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash‑generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss. Reversal of impairment When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash‑generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash‑generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss. 3.9 Non‑current assets held‑for‑sale and disposal groups Non‑current assets and disposal groups are classified as held‑for‑sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Events or circumstances may extend the period to complete the sale beyond one year from date of classification due to events or circumstances beyond managements control and where Rand Water remains committed to its plan to sell the assets (or disposal group). Non‑current assets (and disposal groups) classified as held‑for‑sale are measured at the lower of their carrying amount and fair value less costs to sell. A non‑current asset is not depreciated (or amortised) while it is classified as held‑for‑sale, or while it is part of a disposal group classified as held‑for‑sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held‑for‑sale are recognised in profit or loss. Summary of Principal Accounting Policies and Significant Judgements 3.8 Impairment (Continued) Short‑term service benefits Short‑term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under the short term cash bonus incentive if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. Post‑employment benefits The Group operates defined contribution plans for the benefit of its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. 3.10 Employee benefits

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