Rand Water | Integrated Annual Report 2025

INTEGRATED ANNUAL REPO

FINANCIAL PERFORMANCE OVERVIEW Rand Water demonstrated resilient financial performance in a challenging macroeconomic environment. Subdued GDP growth, persistent inflation, elevated electricity costs, and global tensions contributed to market volatility and a weaker rand, yet we navigated these storms with disciplined financial stewardship and a clear focus on sustaining essential service delivery and value creation. REVENUE AND TARIFF DYNAMICS Revenue grew 5% to R22,922 million (2024: R21,815 million), underpinned by a cost-reflective tariff increase of 4.9%. This tariff strategy balanced affordability with the imperative to fund maintenance, renewal, and capital projects necessary for reliable service delivery. IFRS 15 revenue recognition benefited from proactive debt management and robust revenue governance, resulting in a net recognition of revenue of R114.5 million (2024: R65.4 million) which previously could not be recognised. This demonstrates our ability to adapt revenue processes to evolving conditions while protecting earnings integrity. Potable water sales volumes experienced a marginal decline of 0.1%, as we invested in infrastructure maintenance and ongoing demand-management interventions. Despite volume pressures, revenue resilience was supported by disciplined pricing and targeted revenue optimisation. GROSS INCOME AND PROFITABILITY Gross income rose to R7,267 million (FY2024: R6,956 million), with the gross income margin at 31.7% (FY2024: 31.9%), comfortably above the 30% target. This reflects our ability to sustain profitability amidst rising input costs and volatility in water sourcing and energy. The resilience in gross income generation supported a positive trajectory in net income, underscoring our capacity to balance capital investments, maintenance programmes, and Net income grew by 1.81% to R4.64 billion (2024: R4.56 billion), yielding a net income margin of 20.3% (FY2024: 20.9%). This outcome highlights disciplined cost containment, prudent financial management, and increased net finance income from strategic investments, enabling ongoing investments to support our strategic growth initiatives while preserving profitability. TARIFFS AND THE PATH FORWARD To sustain ongoing operations and capital renewal needs, a tariff increment of 4.9% was implemented for 2025 (2024: 9.2%), with a planned 14.3% increase approved for 2026. The trajectory reflects anticipated raw water cost escalations and the sustainability of operations, while maintaining affordability and access to a very valuable product for our customers. Looking ahead, Rand Water remains committed to disciplined cost management, targeted investments in infrastructure renewal, and revenue optimisation to maintain resilience in the face of evolving regulatory, macroeconomic, and market dynamics. operating costs with revenue optimisation. NET INCOME AND MARGIN

Revenue

11%

22 922

11%

21 815

19 578

17 661

16 556

7%

5%

1%

2025

2024

2023

2022

2021

Revenue

Revenue Growth %

Gross Income

7 267

6 956

34.4%

6 034

5 693

5 380

31.9%

31.7%

30.5%

30.8%

2025

2024

2023

2022

2021

Gross Income-Rm

Gross Income Margin %

Net Income

20,91%

19,90%

20,26%

19,60%

18,10%

3 295

3 462

3 535

4 561 4 644

2023

2024

2022

2025

2021

Net Income-Rm Net Income Margin %

Tarriff Increment

4.9%

2024 9.2%

2025

93

Rand Water | Integrated Annual Report 2025