RAND WATER ANNUAL REPORT 2023

Balance Sheet Risk Management

Sustainable and Resilient Balance Sheet

Credit Risk Management

Liquidity & Funding Risk Management

Asset & Liability Management

Managing risk emanating from IAS 19 Post-Retirement Medical Benefit and the Rehabilitation provision of the Panfontein Sludge Disposal sites through matching of related assets.

Operational and capital expenditure sustained through a robust liquidity and Cash flow management. Future capital expenditure projects supported by approved borrowing limits and surplus funds.

Addressing Municipal Debt through: • Active Stakeholder Engagement. • Reinforcing our debt collection strategies, including legal recourse mechanisms. • Diverse collection strategies.

Maintaining Rand Water’s Credit Rating.

Credit Risk Management The financial health of our customers remains a crucial concern for the organisation. The Group continues to closely monitor the situation in particular the overdue debt mainly from municipalities placed under administration (section 139 of MFMA) and those that have been downgraded by the rating agencies. We remain committed to achieving positive results from the new solutions, partnerships, and collaborations with partners such as Provincial and National Treasury, and Cooperative Governance and Traditional Affairs (CoGTA). Credit management remains a critical aspect for the organisation to achieve some of its strategic and operational objectives. Through constant monitoring and robust collection solutions employed, the organisation remains positive in curbing the escalating debt and non-payment from the non-performing municipalities. The Days Sales Outstanding (DSO) to 109 days (FY2022: 77 days), mainly due to the top three (3) metropolitan municipalities who failed to honour their obligation increased as at 30 June 2023 and payment was received in early July 2023 after the end of the reporting period. In the year under review, the Group’s top three (3) municipal customers were not spared from the impact of the unstable economic conditions and increased unemployment which impacted negatively on the liquidity of the metropolitan authorities.

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