Rand Water | Integrated Annual Report 2025

INTEGRATED ANNUAL REPO

Consolidated Annual Financial Statements for the year ended 30 June 2025

3.11 Provisions and contingencies (continued)

Environmental restoration and decommissioning obligations

An obligation to incur environmental restoration, rehabilitation and decommissioning costs arises when a disturbance is caused by the development of a sludge disposal site. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalised at the start of each project, as soon as the obligation to incur such costs arises. These costs are recognised in profit or loss over the life of the operation, through the depreciation of the asset and the unwinding of the discount on the provision. Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for at its net present value and recognised in the statement of financial performance as 'water purification progresses'. Changes in the measurement of a liability relating to the decommissioning of plant or other site preparation work (that result from changes in the estimated timing or amount of the cash flow or a change in the discount rate), are added to or deducted from the cost of the related asset in the current period. If a decrease in the liability exceeds the carrying amount of the asset, the excess is recognised immediately in the statement of financial performance. If the asset value is increased and there is an indication that the revised carrying value is not recoverable, an impairment test is performed in accordance with the accounting policy set out above. 3.12 Tax The Group is tax exempt, Rand Water and Rand Water Services (Pty) Ltd, in terms of Section 10(1)(cA) of the Income Tax Act, No. 58 of 1962 and Rand Water Foundation was also approved as a non-profit organisation, and is exempt from normal income tax. 3.13 Revenue from contracts with customers The Group recognises revenue from the following major sources: • Potable Water sales relates to the abstraction, pumping, treatment and distribution of purified water to customers of Rand Water within the entity's service area in return for a gazetted tariff based on the customers' consumption. • Non-potable water sales relate to the abstraction of water from the Vaal river system by customers, to whom Rand Water has transferred part of its water rights. • Recoverable Projects sales refers to revenue derived from all other services as aligned to the Water Services Act - Section 30(2) activities - and where the entity is an implementing agent for those activities or a principal, those services may include: a) Construction projects; b) Operating and maintenance; and c) Training and consulting. Tax expenses

Potable Water

Revenue comprises the fair value of the consideration received or receivable for the sale of water or goods and rendering of services in the ordinary course of the Group’s activities. Revenue comprises primarily the net invoiced value of water sales, exclusive of third party payments, at declared tariffs arising from normal trading activities.

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Rand Water | Integrated Annual Report 2025