Rand Water | Integrated Annual Report 2025

INTEGRATED ANNUAL REPO

Consolidated Annual Financial Statements for the year ended 30 June 2025

3.1 Basis of consolidation (continued)

ii) Structured entities A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. The accounting treatment for the structured entity is as defined under the subsidiary’s in (i) above as the Group has control over that structured entity. The consolidated financial statements present the financial position and changes therein, operating results and cash flow information of the Group. The Group comprises Rand Water and its subsidiaries.

Investment in subsidiaries

Rand Water has two subsidiaries over which the Group has control. These entities are the Rand Water Foundation (RWF) and the Rand Water Services (Proprietary) Limited (RWS).

Rand Water Foundation The Group sponsored the formation of a structured entity, specifically Rand Water Foundation (RWF).

The main objective of RWF is to co-ordinate, administer and manage Rand Water’s Corporate Social Investment resources by undertaking community development projects in partnership with various donors and stakeholders. RWF operations are fully funded by Rand Water and all activities must be in line with its approved mandate. Management has applied their judgements in its assessment of the substance of the relationship between the Group and RWF, and concluded that the structured entity is controlled by the Group, as such RWF has been consolidated into the financial statements of the Group. Rand Water Services (Pty) Ltd RWS a wholly owned subsidiary of RW. The Board made a decision to resuscitate the entity and commence operations in the year ended 30 June 2025. The investment in RWS is carried at cost less any accumulated impairment in RW's separate annual financial statements. The investment is tested for impairment on an annual basis and where indicators are present that reflect an impairment. RW accounts for the impairment as a reduction in the value of the investment through profit or loss. 3.2 Property, plant and equipment The cost of an item of property, plant and equipment is recognised as an asset when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Property, plant and equipment is initially measured at cost. Cost includes all of the expenditure which is directly attributable to the acquisition or construction of the asset, including the capitalisation of borrowing costs on qualifying assets and adjustments in respect of hedge accounting, where appropriate. Property, plant and equipment are subsequently stated at cost, net of accumulated depreciation and / or accumulated impairment losses, if any. Such cost includes the cost of replacing parts of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Owned assets

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Rand Water | Integrated Annual Report 2025