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)

3.13 Revenue from contracts with customers (continued)

Non-potable Water

Revenue is recognised when the recognition criteria as defined in IFRS 15 is met. The Group recognises over time, at the abstraction point, the sum of the cost of raw water at the gazette price and a recovery of direct expenses incurred for the abstraction of the raw water for the rights shared with Rand Water and a management fee of 10%. Rand Water recognises revenue from the Vaalkop scheme based on an annual calculated recovery rate. The recovery rate is applied consistently for the current financial period to which it relates. The recovery rate represents the recovery of cost incurred to operate and maintain the scheme, for the benefit of the specific group of customers. The recovery rate is assessed annually, and an over/under recovery component is built into the next financial year, depending on the determined recovery rate as compared to actual costs incurred. Revenue from the sale of water is recognised in profit or loss at the point where the customer obtains control, which is at the metering point in terms of IFRS 15. The IFRS 15 revenue recognition model is similar to potable water in steps 1, 3, 4 and 5. Step 1: Identify the contract with a customer An entity will recognise revenue at a point in time (when control transfers) if performance obligations in a contract do not The Group recognises revenue over time, at the abstraction point, the sum of the cost of raw water at the gazette price and a recovery of direct expenses incurred for the abstraction of the raw water for the rights shared with Rand Water and a management fee of 10%. Rand Water recognises revenue from the Vaalkop scheme based on an annual calculated recovery rate. The recovery rate is applied consistently for the current financial period to which it relates. The recovery rate represents the recovery of cost incurred to operate and maintain the scheme, for the benefit of the specific group of customers. The recovery rate is assessed annually, and an over/under recovery component is built into the next financial year, depending on the determined recovery rate as compared to actual costs incurred. Step 3: Determine the transaction price The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods to a customer. Under the terms of the arrangement, the Group will sell water at fixed prices, which is reviewed during each year of the contract term. Step 4: Allocate transaction price to the performance obligations in the contract The promise to transfer water to the customer represents one performance obligation that is satisfied over time; The transaction price is allocated to each performance obligation based on the relative standalone selling prices of the goods being provided to the customer. To do so, the Group determines the standalone selling price ("SSP") at contract inception of the distinct good underlying each performance obligation in the bundled arrangement and allocate the transaction price in proportion to those standalone selling prices. As the Group frequently sells water on a standalone basis in the normal course of its operations, the price it charges for water when it sells to similar customers is the best evidence of the SSP. As a result, the Group is not required to estimate or derive the SSP of water; rather, it uses those SSPs for purposes of allocating the transaction price. meet the criteria for recognition of revenue over time. Step 2: Identify the performance obligation in the contract

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Rand Water | Integrated Annual Report 2025