Rand Water | Integrated Annual Report 2025

Consolidated Annual Financial Statements for the year ended 30 June 2025

NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

36.Going Concern (continued)

• The operational and financial risks of the Group have been reviewed to determine their impact on the business under various conditions. Mitigating initiatives, strategies, and controls are in place as reflected in the business and risk management plans of the Group and the Business Units. • The Group has implemented a system to closely monitor the recovery of debt to mitigate the increasing levels of overdue balances which are primarily driven by the constrained position of municipalities and the broader economic envirionment. A multi-pronged strategy has been adopted which includes an aggressive collection strategy; intensified collaboration with stakeholders such as Provincial Treasury and Cooperative Governance and Traditional Affairs (CoGTA), as well as customer relief programmes designed to encourage early settlement of both historical and current debt. The Group remains committed to achieving positive results through these new solutions, partnerships and collaboration efforts to address the challenges posed by persistent munipal payment pressures. • The Group's solvency and liquidity have been assessed by the Board, and the Board is satisfied that these meet the going concern assertion. This is evidenced by the improvement in accumulated reserves of 12.1% compared to the previous financial year and the improvement in gearing ratio to 7.00%, which is well within the set corporate target of =<15%. In addition, both the interest cover and cash interest cover ratios remain above the target of 3.0 times. The Board also assesses the cash flow forecasts on a quarterly basis, which continue to indicate that the Group will be able to meet its obligations as they fall due; and • The Group achieved a return on average assets of 9.00% ,compared to 9.90% in the prior financial year mainly as a result of an accelerated improvement in net income generation by 1.81% principally driven by tariff driven revenue growth, recognition of revenue relating to prior periods which previously could not be recognised according to IFRS 15 recognition criteria, decrease in the expected credit losses recognised in the current periods as a result of improved recovery rates of non-performing customers in comparison with a slower rate of growth in total assets of 15.31% which is attributable to increase in cash & cash equivalents.

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Rand Water | Integrated Annual Report 2025