Rand Water | Integrated Annual Report 2025

INTEGRATED ANNUAL REPO

Consolidated Annual Financial Statements for the year ended 30 June 2025

In order to attain its strategic intent, Rand Water has set the following strategic objectives, which will focus and direct the business activities of the entity over the financial period: • Achieve operational integrity and use best fit technology; • Achieve a high-performance culture; • Positively engage stakeholder base; • Achieve growth; • Maintain financial health & sustainability. Challenging Economic Environment Rand Water is operating under mounting economic pressure due to escalating input costs and deteriorating payment performance by key customers. The rising costs of energy, chemicals, and labour which are core inputs required for the pumping, treatment, and distribution of water have significantly increased the organisation’s operational expenditure. These cost pressures are compounded by high levels of non-revenue water (NRW), including water losses from leaks, theft, and unbilled consumption, which continue to erode the financial sustainability within the bulk water value chain. Additionally, Rand Water faces a growing liquidity challenge driven by the escalation of debtor days. Many municipalities are unable to pay for bulk water on time due to their own financial constraints. The delayed payments have resulted in billions of rands in outstanding debt, limiting Rand Water’s ability to reinvest in critical infrastructure, maintain service levels, and implement efficiency improvements. The combination of rising operating costs, persistent NRW, and delayed municipal payments is placing severe strain on the utility’s financial position. In this environment, Rand Water’s capacity to sustainably deliver reliable water services to both residents and industries is being tested. Immediate interventions to address municipal debt recovery, reduce NRW, and contain escalating cost drivers are essential to preserve the operational resilience and financial health of the organisation. Overall Performance Rand Water remains proud of its ability to fulfil its mandate of providing a continuous supply of potable water, despite numerous challenges and unplanned emergencies including, but not limited to, the vandalism of critical infrastructure. The entity continues to achieve full compliance with the SANS 241 Composite Indicator, specifically in terms of acute health microbiological compliance, acute and chronic health chemical compliance, operational compliance, and aesthetic compliance. This is a testament to Rand Water’s commitment to delivering high-quality water to its consumers. Beyond its core mandate, Rand Water continues to demonstrate its role as a responsible and engaged corporate citizen. The entity consistently meets its B-BBEE targets, fulfils its corporate social investment commitments, and provides support to local municipalities in line with its developmental objectives. Financially, Rand Water has managed to maintain its income margin targets, reflecting sound financial management practices that underpin the long-term sustainability and viability of the organisation. Only three (3) Key Performance Indicators were not achieved for the year under review namely debtor days, percentage completion of projects and repeat audit findings. This performance has been achieved despite operating in an increasingly hostile environment, shaped by both global and domestic economic challenges, including rising input costs. Rand Water remains focused on identifying and mitigating key risks to ensure the continued resilience and sustainability of the Group. In addition, Rand Water acknowledges the importance of strict compliance with all governance, statutory, and regulatory requirements and remains committed to adapting and aligning with evolving legal and regulatory frameworks in support of transparent, accountable operations.

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Rand Water | Integrated Annual Report 2025