Rand Water | Integrated Annual Report 2025

Consolidated Annual Financial Statements for the year ended 30 June 2025

NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

42.Financial instruments (continued)

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Other social and political factors;

• The Group has well-established credit control procedures for predictable customers that monitor activities on customer accounts and allow for remedial action should the customer not comply with payment terms. These procedures include an internal collection processes i.e., following up with the customer either telephonically, emails, text and/or in person; negotiations of mutually acceptable payment arrangements and the issuing of notices of disconnection of water supply and letters of demand. Non-payment can result in disconnection, limitation of water supply and/or the customer accounts being suspended or closed. Legal collection processes are pursued after the 60 days' overdue period except for the municipal customers which follow the Intergovernmental Relations Framework Act process and Promotion of Administrative Justice Act, 3 of 2000 ("PAJA"). New non-municipal customers are required to provide security equivalent to the exposure of the estimated maximum cost, which constitutes the cost of water supply, operating cost and administration fee at the commencement of the supply agreement. The level of security is reviewed if a customer defaults on their payment obligation or requires additional water supply capacity. All new high-risk customers will preferably be on prepayment terms. The following strategies are currently in operation in high risk areas of non-paying customers with varying levels of success: • Constant engagement with the customer. • Disconnections/limitations of water supply within the legislative prescripts • Payment arrangements that can be made a court order • Robust legal recovery process • Analysis and early identification of defaulting trend and active monitoring • Reassessment of security deposits and bank guarantees • Efficient internal processes, for example system automation of credit collections such as automated notices and letters of demand • Escalation for intervention for defaulting customers The Group's decision to impair overdue amounts is assessed on the probability of recovery based on the individual customer's credit risk profile and on the credit profile of the customer portfolio.

The Group’s main classes of trade receivables are: • Potable water customers • Non-potable water customers • Recoverable projects customers • Other trade receivables customers

Potable water customers

This transaction relates to the abstraction, pumping, treatment and distribution of purified water supplied to customers of Rand Water within the Group's service area in return for a gazetted tariff based on the customer's consumption. Water supply agreements are entered into with key customers who comprise municipalities and non-municipal customers (mines, industries and households). Their payment terms are 30 days from invoice date and they are individually assessed for impairment.

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Rand Water | Integrated Annual Report 2025