Rand Water | Integrated Annual Report 2025

INTEGRATED ANNUAL REPO

Consolidated Annual Financial Statements for the year ended 30 June 2025

NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

42.Financial instruments (continued)

Rand Water continues to work closely with the Department of Cooperative Governance and Traditional Affairs, Department of Water and Sanitation, National Treasury, other government departments and other relevant stakeholders to resolve the systemic challenges which have given rise to municipal arrear debt.

Customer debt

Rand Water is exposed to credit risk resultant by the total customer debt that continues to escalate consistently, amounting to R4.7 billion at year ending 30 June 2025 (2024: R4.4 billion). Rand Water has also been experiencing delayed collections of debt specifically at year-end which is subsequently recovered within the month of July in the new financial year. Figures in Rand thousands 2025 2024 Net debt per province Gauteng 4 183 049 3 954 848 Mpumalanga 332 843 332 015 Free State/Other 79 379 61 752 North West 91 390 99 171 4 686 661 4 447 786 The top 5 non-performing or defaulting municipalities owe a combined total of R5.3 billion (2024: R3.8 billion) for long outstanding arrear debt. Figures in Rand thousands 2025 2024 Municipality 1.Emfuleni Local Municipality 1 799 599 1 103 370 2.Merafong City Local Municipality 1 372 874 980 125 3.Govan Mbeki Local Municipality 816 843 794 372 4.Randwest City Local Municipality 850 506 542 460 5.Victor Khanye Local Municipality 480 107 412 051 5 319 929 3 832 378 At year-end, a total of seven municipalities had long-outstanding arrear debt. This number has shown a marginal increase in recent years, demonstrating the continuing challenge of delayed collections from municipal customers failing to settle their accounts within the agreed payment terms. The Group has classified customers performance and its analyses as it observes the discipline in customer's payment behavior and patterns by ensuring that payments are made on or before the due date and managing their accounts and the aging thereof.

Performing Customers

Under-performing Customers

Non-performing Customers Relates to those trade receivables that are 90 days and beyond. Constant engagement is required for these receivables to rectify the status.

Relates to those trade receivables that service their debt within the contractual terms. These customers maintain their debt aging levels below 45 days.

Relates to those trade receivables that do not service their debt within the contractual terms. These receivables either pay late or make part payments on the debt when it falls due but maintain their debt aging below 75 days.

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Rand Water | Integrated Annual Report 2025