RAND WATER BOARD - Availability of Consolidated Interim Financial Statements - Rand Water

Availability of Consolidated Interim Financial Statements - Rand Water

RAND WATER
(Rand Water is established in terms of the Water Services Act,
1997 (the “Act”). Through the Department of Water and Sanitation
and duly represented by the Minister of Water and Sanitation, the
Government of the Republic of South Africa is the sole shareholder
of Rand Water. In terms of the Act, Rand Water's primary activity
is the provision of bulk water supply services (potable bulk water
and sanitation services) within the predetermined service area.)

(“Rand Water”)
Bond Issuer Code: BIRW

Availability of Consolidated Interim Financial Statements

Noteholders are advised that Rand Water’s Consolidated Interim
Financial Statements for the period ended 31 December 2021 have been
made available on its website on the following link:

[https://www.randwater.co.za/Pages/Investor-Relations.aspx]


During the preparation of the Consolidated Interim Financial
Statements for the period ended 31 December 2021, the following
restatements which are in accordance with the Consolidated Annual
Financial Statements for the 30 June 2021, were made to the interim
results for the period ended 31 December 2020, as detailed in note
20 and 21.

Assets Under Construction

During the 20/21 financial year, the organisation embarked on a
review of Assets Under Construction (AUC). It aimed to assess costs
relating to AUC against the recognition criteria of IAS 16 and future
economic benefits, as initially assessed by management. The results
proved the presence of the following transactions: investigation
costs such as pre-design, infrastructure condition assessments,
project management fees, and repairs and maintenance of bulk water
infrastructure. These were subsequently corrected and led to the
interim results as previously reported for 31 December 2020 being
restated.

Meter Installations

The organisation performed a compliance review to IFRS which
included the application of IFRS 15 principles pertaining to
transactions entered with customers. Rand Water customers are
required to pay a non-refundable fee relating to the installation
of water meters. These transactions were treated as a recoverable
project by Rand Water, and revenue was recognised similar to the
agent principle. This correction of the error has resulted in the
recognition of deferred income, which is released into profit or
loss aligned to the useful life of the related asset.

Realisation of Intragroup profits

Due to the divisionalisation of Rand Water Services and staff
movement, key information supporting a historical reported
unrealised revenue of R40 million from upstream transactions could
not be sourced. This unrealised revenue was previously eliminated
at gross, and the intragroup profits were never matched to the
related usage of the constructed assets, therefore never realised
within the Group. The unrealised profits were assessed by
management, and there was no objective information in support of
such unrealised revenue. Management utilised their best estimate to
determine how much of the intragroup profits should be realised.
The adjustment of the group pro-forma journal was therefore
implemented.

Borrowing Costs

The organisation changed its accounting policy regarding the
treatment of borrowing costs capitalised to ensure that the
financial statements provide reliable and more relevant information
about the transaction. The Group previously capitalised borrowing
costs at a gross rate and has now adopted the interest expense
calculated using the effective interest method to conform with IFRS
9.



Debt Sponsor
The Standard Bank of South Africa Limited

31 March 2022


For further information please contact:

Keletso Moloi       SBSA                    011 721 8043
Lucky Ncobela       Rand Water              083 212 0706

Rand Water information:
522 Impala Road, Glenvista, 2058, Johannesburg, Gauteng, South
Africa
PO Box 1127, Johannesburg, 2000
Tel: +27 11 682 0343
www.randwater.co.za

Date: 31-03-2022 04:45:00
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