RAND WATER ANNUAL REPORT 2023

Consolidated Annual Financial Statements for the year ended 30 June 2023

Notes to the Consolidated Annual Financial Statements 42. Financial instruments (Continued)

Recoverable projects customers

This class of customers comprises of other services as aligned to the Water Services Act ‑ Section 30(2) activities where the Group acts as an implementing agent for those activities or a principal, those services includes: • Construction projects • Operating and maintenance • Training and consulting

The Group does not require new and existing customers to provide security for recoverable project services.

Other receivables

Other receivables comprise mainly lease receivables and sundry receivables. There are no significant balances with specific repayment terms. No security is held in respect of these balances and no interest has been charged on overdue balances. Long outstanding debt or amounts handed over for debt collection were considered for impairment.

Credit monitoring

The Group has well‑established credit control procedures to monitor activity on customer accounts and allow for remedial action, should the customer not comply with payment terms. The Group’s standard payment terms are 30 days from the date of invoice. The collection and revenue management strategy, which focuses on non‑performing customers, continues to be implemented. The strategy entails the implementation of water demand management initiatives to assist municipalities with water losses, input into the customers’ turnaround plans, and stepping up water disconnections and limitations for customers to improve payment levels. Interventions include among others: • Offering relief programmes and entering into special payment arrangements. • Process mapping in ensuring compliance to Promotion of Administrative Justice Act and Intergovernmental Relations Framework Act before exercising our right to restrict, interrupt or terminate supply for nonpayment of services. • Enforcing Debt Settlement Agreement with acceleration clauses to court proceedings. • Request intervention from Stakeholders like Department of Co‑operative Governance and Traditional Affairs, Department of Water and Sanitation, National Treasury and other government departments where no recovery plan can be presented and agreed upon between Rand Water and the municipality. • Robust legal recovery process wherein we are pursuing the attachment of assets. • Active engagement with customers and inter‑governmental forums like Multi ‑Disciplinary Revenue Committee (MDRC). Loans receivable Loans receivable consist of micro loans granted to qualifying employees. These loans are unsecured however the credit quality of the loan book has been assessed as a low risk by reference to historical default rates, as loan repayments are deducted directly from the employees’ salaries. Employees are also required to take out an insurance policy which covers the balance due to the Group in the instance of death, disability or retrenchment. Rand Water is registered with the National Credit Regulator (NCR) as credit provider in terms of Section 40 of the National Credit Act 34 of 2005.

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