RAND WATER ANNUAL REPORT 2023

Consolidated Annual Financial Statements for the year ended 30 June 2023 Notes to the Consolidated Annual Financial Statements 4. Property, plant and equipment (Continued)

Impairment and reversal of impairment

The carrying amounts of non‑financial assets within the scope of IAS 16 are reviewed annually and monitored quarterly and adjusted (if required) and at each reporting date to determine whether there is any indication of impairment. These assets are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

The resumption of assets under construction projects has translated in projects reaching specific milestones in the current year, with a number of key strategic plant achieving beneficial use.

As at 30 June 2023, an impairment loss of R44.2 million (2022: R7.8 million; 2021: R6.0 million) with respect to damaged and vandalised transformers and cathodic protection units for the protection of the pipeline infrstructure have been identified, with R24 million of these items completely vandanlised and had to be impaired.

These assumptions and estimates were arrived at after wide consultation with subject matter experts.

During the 2022 reporting period, the fabrication pipe plant (Emhlangeni) was assessed for continued future operations. Due to the ailing infrastructure of the existing workshop and capacity problems due to constant equipment breakdowns, a decision was taken to discontinue this operation. The structures have been subsequently impaired and the movable equipment, redistributed or motivated for disposal. During the year under review, Rand Water disposed of these assets and other redundant or damaged pipes via the open auction process.

There were no further indicators that triggered the impairment of property, plant and equipment items during the 2023 financial year.

Transfers

Transfers includes the transfer of assets between property, plant and equipment, non‑current assets held for sale and/or intangible assets.

In addition, transfers include movements between assets under construction of completed assets into the different classes of property, plant and equipment and intangible assets.

With the normalising of the infrastructure development implementation, the organisation has managed to continue with the construction of critical infrastructure to ensure that the organisation continues to meet its service delivery mandate to ensure that operational integrity is maintained and to continue with the uninterrupted supply of potable water. As of 30 June 2023 R2.26 billion of these assets have achieved beneficial use and started depreciating.

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