Rand Water | Integrated Annual Report 2025

INTEGRATED ANNUAL REPO

Consolidated Annual Financial Statements for the year ended 30 June 2025

3.6 Financial instruments (continued)

The classification of the Group's financial asset is based on the business model and the cash flow characteristics and shall be measured either at: a) amortised cost; b) fair value through other comprehensive income; or c) fair value through profit or loss. The Group recognises expected credit losses on all financial assets as listed below The Group's financial assets comprise of: a) Cash and cash equivalents b) Trade and other receivables c) Investment in bonds d) Term deposit investments e) Loans receivable The Group shall classify financial liabilities at amortised cost except for: a) financial liabilities at fair value through profit or loss and derivatives that are liabilities, which shall be subsequently measured at fair value; b) financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies; c) financial guarantee contracts; and d) commitments to provide a loan at a below-market interest rate. The Group's financial liabilities comprise of: The Group does not have embedded derivatives and or hybrid contracts, and shall test against the definition of such financial instruments when such contracts are entered into, and the principles of IFRS 9, IFRS 7 and IAS 32 shall be adopted. The Group further does not have equity instruments other than those that relates to the shares held in its subsidiary Rand Water Services, these instruments are dealt with under IFRS 10: Consolidated Financial Statements, are eliminated upon consolidation. The specific accounting policies for the classification, recognition and measurement of each type of financial instrument held by the Group are presented below: a) Interest bearing borrowings b) Trade and other payables

Financial assets at amortised cost

Cash and cash equivalents

Cash and cash equivalents comprise of cash at bank and on hand (petty cash), call deposits, fixed deposits, notice deposits, treasury bills, promissory notes, investments in money market instruments with financial institutions and other financial instruments that are readily convertible to a known amount of cash with an original maturity of less than three months from date of acquisition.

Term deposit investment

Term deposit investments comprise of fixed deposits, promissory notes deposits, treasury bills and other financial instruments with an original maturity of greater than 3 months at the acquisition.

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Rand Water | Integrated Annual Report 2025