Rand Water | Integrated Annual Report 2025

INTEGRATED ANNUAL REPO

Consolidated Annual Financial Statements for the year ended 30 June 2025

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGEMENTS

1. Summary of principal accounting policies and significant judgements

The principal accounting policies applied in the preparation of these consolidated and separate annual financial statements are set out below. The audited consolidated annual financial statements were authorised by the Board on 31 October 2025. 1.1 Basis of preparation The Group applied provisions of Directive 12: The selection of an appropriate reporting framework by public entities and elected to prepare the consolidated annual financial statements in accordance to IFRS Accounting Standards. The annual financial statements have been prepared in accordance with the historical cost convention, except for certain financial instruments, which are measured at fair value. The annual financial statements are prepared on the basis that the Group will continue to be a going concern. Notwithstanding, the current economic climate coupled with the geopolitical issues, the Board is satisfied to report that Rand Water remains financially viable in terms of the Water Services Act section 34 (2)(a)-(e), and is of the opinion that it has adequate resources to sustain its liquidity, debt, operational and investment needs for the next twelve months to medium term. The Group utilises the accrual basis of accounting method by recording revenue when it is earned and expenses when they are incurred. The following summary of principal accounting policies and methods of computation were applied by the Group in the preparation of the annual financial statements for the financial year ended 30 June 2025. The annual financial statements are presented in Rand thousands; all values are rounded to the nearest thousand Rand, The annual financial statements are prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB) and the Financial Reporting Pronouncement as issued by the Financial Reporting Standards Council and are consistent with those applied in the previous consolidated annual financial statements. The Group's annual financial statements for the financial year ended 30 June 2025 comply with the Water Services Act, No. 108 of 1997 (WSA), the Public Finance Management Act, No. 1 of 1999 (PFMA), and where applicable, the South African Companies Act, No. 71 of 2008 and JSE Debt and Specialist Securities Listings Requirements. The Group complies to Treasury Regulations, Practice Notes, relevant interpretations, circulars, Instruction notes and guidelines as issued by the National Treasury. 1.3 New and amended IFRS Accounting Standards and Interpretations in issue but not yet effective IFRS 18 Presentation and Disclosure in Financial Statements The new standard, IFRS 18, replaces IAS 1 Presentation of Financial Statements while carrying forward many of the requirements in IAS 1 effective on or after 1 January 2027 with earlier application permitted. IFRS 18 introduces new requirements to: • present specified categories and defined subtotals in the statement of profit or loss; • provide disclosures on management-defined performance measures (MPMs) in the notes to the financial statements; and • improve aggregation and disaggregation. The amendment has been reviewed and the impact on Rand Water and its subsidiaries is assessed as medium, as the Group will need to continuously review and ensure that material accounting policy that influence decision making is correctly and appropriately included. except where otherwise indicated. 1.2 Statement of compliance

213

Rand Water | Integrated Annual Report 2025