Rand Water | Integrated Annual Report 2025

Consolidated Annual Financial Statements for the year ended 30 June 2025

SUMMARY OF PRINCIPAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGEMENTS (CONTINUED) 3.3 Intangible assets (continued) Acquired computer software is capitalised on the basis of the costs incurred to acquire and bring into use the specific software. Costs associated with researching or maintaining computer software programmes are recognised as an expense as incurred. Software is tested for indicators of impairment on an annual basis. If found that such indicators exist, then the recoverable amount is determined and compared with the carrying amount. An impairment loss will be recognised if the carrying amount is higher than the recoverable amount. Costs that are directly associated with the development of identifiable software products controlled by the Group, that will probably generate economic benefits beyond one year that can be measured reliably, are recognised as intangible assets. Costs include employee costs incurred as a result of developing software and an appropriate proportion of relevant overheads. The useful life of the servitudes will remain in force as long as the relevant infrastructure underlying the servitude is still in use. A servitude will only become impaired if the infrastructure i.e. pipeline to which the servitude is linked is derecognised, therefore servitudes are rights granted to the Group for an indefinite period of time. In practice, a derecognised pipeline will be refurbished or replaced by a new pipeline and therefore the likelihood of an impairment of a servitude right is remote. The estimated useful life of water use licence is estimated based on the relevant contractual agreements. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. An intangible asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal. Right of use intangible asset Where the Group receives from its executive authority a transfer of an item of property, plant and equipment to utilise in the provision or supply of goods and services to a customer, the Group recognises such transferred asset as a right of use intangible asset and measures the transferred asset on initial recognition at its fair value. Subsequent expenditure Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred. Amortisation Intangible assets with finite lives are amortised over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Intangible assets with an indefinite useful life are assessed for impairment on an annual basis. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss in the expense category consistent with the function of the

intangible assets. Asset Category Water use licence

Estimated useful life (years)

20-40

Servitudes

Indefinite

Computer software

10-30

Right of use intangible asset

3-10 years

Intangible assets under construction No amortisation The estimated useful life for the right of use intangible assets are directly linked to the useful life of the related assets.

220

Rand Water | Integrated Annual Report 2025