Rand Water | Integrated Annual Report 2025

INTEGRATED ANNUAL REPO

COST OPTIMISATION During the financial year, Rand Water confronted global economic headwinds and persistent inflationary pressures that pushed up operating costs. In response, we focussed on disciplined cost-optimisation strategies and implemented innovative measures to protect service continuity, safeguard financial strength, and create long-term value for our stakeholders. The result is a more efficient cost base that supports our essential mission while leaving room for investment in growth-enhancing projects.

-0.6% From FY2024

+11.8% From FY2024

+4.1% From FY2024

Energy

Water Purchase

Chemicals

The total cost of water purchases declined by 0.6% to R7.58 billion (FY2024: 5.9%), while purchased volumes were down 1.4%. This reflects strategic procurement, efficiency in consumption, and a focus on reducing non-revenue water (NRW) where it matters most. NRW improved to 6.8% of total water purchases, down from 7.8% in FY2024. While water losses remain a risk, our ongoing projects, such as Project 1600, which monitor municipal performance to cap demand and drive efficiency, continue to yield tangible gains. Looking ahead, the planned Satellite Leak Detection initiative will further curb leaks, strengthen network monitoring, and enhance overall system efficiency, contributing to sustainable water security.

Energy costs rose by 11.8% (FY2024: 18.6%), mainly driven by tariff increases of 12.72% from Eskom and municipali ties, as well as by the structure of energy pricing. Despite higher unit costs, overall energy consumption was modestly lower year-on-year due to extended outages and planned maintenance that reduced pumping activity. Occasional demand spikes, such as pumping to booster sites during peak tariff periods, were observed but had only a limited impact on overall efficiency. Our ongoing focus on energy optimisation, including demand-manage ment initiatives and targeted investments in efficiency, supports resilience and cost discipline

Chemical costs increased by 4.1% (FY2024: -1.7%), driven by higher dosages and upward supplier prices. Elevated raw water colour levels after heavy inflows and the reopening of the Lesotho Highlands tunnel led to higher organic coagulant requirements and increased chlorine use. In response, Rand Water is advancing a chemical optimisation programme to improve dosing efficiency, reduce waste, and stabilise future costs while maintaining water quality and safety.

Labour Costs rose by 10.2% (2024: 12.1%), reflecting our continued focus on filling key vacancies and on performance-based incentives. These steps support our ability to deliver reliable service and maintain a motivated, skilled team aligned with bargaining council agreements. Operational Costs , including expected credit losses, rose 17.5% to R1.6 billion (FY2024: R1.3 billion), driven by debt management refinements, software modernisation, and capacity-building. Cost pressures were partly offset by disciplined savings in travel and accommodation, prudent insurance management, and timing adjustments on selected projects, preserving liquidity for priority initiatives. This balanced approach, combined with tight cost control and targeted investment, maintains service delivery, supports essential infrastructure, and builds future capacity. By converting pressures into productivity gains through efficiency, more innovative procurement, and focused reinvestment, Rand Water strengthens financial resilience and reinforces stakeholder confidence. .

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Rand Water | Integrated Annual Report 2025