Rand Water | Integrated Annual Report 2025

INTEGRATED ANNUAL REPO

Consolidated Annual Financial Statements for the year ended 30 June 2025

3.13 Revenue from contracts with customers (continued)

Price adjustments: Price adjustments can result from settlement arrangements with customers, which may impact on the revenue that the entity recognises. These settlement arrangements refer to those that reflect that the entities ability and intent may not be probable. Step 2: Identify the performance obligation in the contract The entity supplies water and installation of services, which together are distinct performance obligations. These services are supplied together. Step 3: Determine transaction price Amounts payable are identified in terms of the contract and are driven by the agreed terms between the entity and the customer. Installation services are charged once off as capital contribution and are established per contract. Sale of potable water is in respect of units of water supplied and the gazetted price for the area of service and type of customer. Where the units of water supplied cannot be reliably measured due to inherent uncertainties in the business activities, the entity recognises revenue at the best estimate of the expected future benefit which is the average meter reading for the past 3 months, while the units of water consumed are verified/investigated. The inherent uncertainties in the business activities, which may result from: • Meter inaccuracies • Mechanical faults Upon identification of the cause of the suspected meter inaccuracies or mechanical faults the average reading is updated and a catchup reflecting the over/under recognition of revenue for the period is recognised. Such revenue is recognised in the period where the uncertainty is resolved as a variable consideration. The related receivable is amended in the same period as a change in estimate, therefore accounted for prospectively. Step 4: Allocate the transaction price to the performance obligations in the contract The transaction price for installation services are charged as capital contribution and are established per contract. The transaction price for sale of potable water is in respect of units of water consumed and the gazette price for the area of service and type of customer. The allocation of the payment shall be applied to the capital first before interest. The transaction price for installation services are charged as capital contribution and are established per contract. Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation. The revenue from the sale of potable water is recognised over time, as the customer simultaneously receives and consumes the benefits provided by Rand Water as the performance obligation is fulfilled. Revenue from the sale of potable water is recognised over time at the metering point, this is the point where the units of water supplied to the customer for a specific period is read for billing purposes, and recognised as revenue. This is performed at an agreed point in time during a calendar month period.

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Rand Water | Integrated Annual Report 2025