Rand Water | Integrated Annual Report 2025

GOING CONCERN Financial Fortitude: A demonstrated blueprint for resilience

Rand Water maintained its status as a going concern in a volatile environment due to its balance sheet resilience and stability. While global tensions and rising input costs posed challenges, we have fortified our finances through disciplined governance, proactive planning, and collaborative partnerships with key authorities. The Board remains confident in meeting our obligations over the next twelve months and beyond, aligned with the Water Services Act and our long-term capital and service commitments. Financial Stability and Revenue Strategy: disciplined pricing, sustainable growth • Our revenue strategy centres on securing cost-reflective tariffs in the face of rising input costs where we are price-takers. A 4.9% tariff increase demonstrates prudent cost control and a sober discipline in balancing affordability with the funding needs of renewal and maintenance. • This tariff path reflects careful calibration to support ongoing operations, accelerated asset renewal, and reliable revenue collection, even amidst municipal collection challenges. • Looking ahead, a 14.3% tariff increase for the following year has been approved, driven in part by anticipated royalty charges on raw water purchases. This trajectory is designed to sustain service delivery, fund critical infrastructure, and protect long term affordability for customers. Liquidity Management and Funding Access: buffers, flexibility, and readiness • We maintain a liquidity buffer of R2.2 billion, reinforced by committed facilities of R1.5 billion to safeguard operations under pressured conditions and ensure continuity of service. • Access to the R 10 billion Domestic Medium-Term Note programme, with R6.8 billion headroom, provides capital-raising flexibility for CAPEX and resilience-enhancing projects without compromising financial integrity. Operational Efficiency and Cost Management: turning cost pressures into competitiveness • Despite year-on-year increases in raw water, energy, and chemicals, we relentlessly pursue efficiency gains to curb the impact of rising prices. We constrain controllable costs within CPI trajectories and prioritise expenditures where external pressures are highest. • Robust scenario planning and cost-reflective tariff reviews are used to maintain financial viability while delivering reliable service. Debt Recovery and Financial Controls: strengthening cash flows through collaboration • Our debt-recovery efforts have yielded improvements in collections and reduced expected credit losses, supported by multi channel strategies and customer-centric approaches. • Ongoing collaboration with COGTA and DWS is essential to address municipal liquidity challenges, unlock liquidity, and strengthen revenue certainty across the water value chain. Stress Testing, Solvency, and Liquidity: disciplined foresight • A comprehensive five-year scenario analysis, conducted annually, tests economic assumptions, strategic priorities, and investment viability. These insights inform prudent investment decisions within the board’s risk appetite. • Our solvency and liquidity indicators reflect a strengthened position: accumulated reserves up, gearing within target bands (7%), interest cover well above 3 times, and a return on average assets around 9%, all signalling durable capacity to adapt and invest. Outlook • Rand Water’s governance, financial prudence, and operational excellence equip us to navigate uncertainties while preserving service quality, enabling community impact, and sustaining long-term value for stakeholders.

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Rand Water | Integrated Annual Report 2025