Statement of Corporate Intent

STATEMENT OF CORPORATE INTENT

2018‐19

Prepared by the Directors and Management of SunWater Limited for shareholding Ministers:

The Hon. Jacklyn Trad MP Deputy Premier, Treasurer and Minister for Aboriginal and Torres Strait Islander Partnerships The Hon. Dr Anthony Lynham MP Minister for Natural Resources, Mines and Energy

Performance Agreement SunWater’s Statement of Corporate Intent (SCI) outlines the key performance indicators, targets and other corporate measures that have been agreed for implementation in 2018‐2019, being year one of SunWater’s 2019 to 2023 five‐year corporate plan. The SCI also identifies the measures of success that will be applied in evaluating achievement against identified deliverables and goals. This SCI is consistent with SunWater’s 2019 to 2023 Corporate Plan (CP). In signing this document and in line with the draft Shareholder Mandate, the SunWater Board undertakes to ensure that the document, and all associated reports to shareholding Ministers, are prepared with accuracy and timeliness and that all reasonable efforts are made to achieve the targets proposed for 2018‐2019. Major changes to key assumptions and outcomes detailed in this SCI, and which come to the SunWater Board’s attention during the year, will be brought to the attention of shareholding Ministers. Any modifications to this SCI will be dealt with in accordance with the GOC Act. This SCI is signed by the Chairman on behalf of all the Directors in accordance with a unanimous decision of the SunWater Board.

HON. JACKLYN TRAD Date Treasurer and Minister for Trade and Investment

HON. DR ANTHONY LYNHAM Date Minister for Natural Resources, Mines and Energy

31 May 2018 MS. LEITH BOULLY Date Chairman SunWater Limited

The Statement of Corporate Intent meets all legislated requirements under Part 8 of the Government Owned Corporations Act 1993.

Commercial in Confidence This document contains confidential information relating to the business affairs of SunWater Limited. It is in the public interest to ensure that this document is not disclosed to third parties. This document contains information that the disclosure of which could reasonably be expected to prejudice the commercial, professional or financial affairs of SunWater; the trade secrets or business affairs of SunWater; the commercial activities of SunWater; and the deliberative processes of government (see Schedule 4, Part 3 Right to Information Act 2009)

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PERFORMANCE AGREEMENT ...... 2

BUSINESS OVERVIEW...... 4

SHAREHOLDERS’ STRATEGIC EXPECTATIONS ...... 6

STRATEGIC ROADMAP | FY19 ...... 9

BUSINESS PERFORMANCE ...... 10

BUSINESS CHALLENGES ...... 11

KEY ASSUMPTIONS FOR 2018‐2019 SCI ...... 12

KEY PERFORMANCE INDICATORS ...... 14

FINANCIAL STATEMENTS ...... 16

ADDITIONAL REQUIREMENTS ...... 20

APPENDICES 21

APPENDIX A: STRATEGIC ROADMAP WITH INITIATIVES ...... 22

APPENDIX B: SPONSORSHIPS, ADVERTISING, CORPORATE ENTERTAINMENT, DONATIONS AND OTHER ...... 23

APPENDIX C: EMPLOYMENT & INDUSTRIAL RELATIONS PLAN ...... 24

APPENDIX D: WEIGHTED AVERAGE COST OF CAPITAL ...... 28

APPENDIX E: CONSOLIDATED FINANCIAL STATEMENTS ...... 29

APPENDIX F: DEFINITIONS ...... 32

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2018‐19 Statement of Corporate Intent

Business Overview With a focus on total water solutions, SunWater has developed and now manages a regional network of bulk water supply infrastructure that spans across Queensland to support around 5,000 customers across the mining, power generation, industrial, local government and irrigated agriculture sectors supported by 400 staff in the regions and Brisbane office.

> 200 regionally based

(Replacement value)

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2018‐19 Statement of Corporate Intent

Spread from as far north as Mareeba, west to Mount Isa and south to St George and Goondiwindi, our water storage and distribution network includes:

This proven infrastructure development and management experience has led to our expansion into a national water solutions provider that offers innovative ways of securing water for the future and offering business a sustainable solution for asset growth and management.

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2018‐19 Statement of Corporate Intent

Shareholders’ Strategic Expectations On 10 May 2018, SunWater received shareholding Ministers’ expectations regarding strategic direction and performance of the business, as well as areas of potential growth and development of SunWater (Strategic Expectations). Those expectations and SunWater’s response are set out below. Shareholder Expectation SunWater Response  Operate its water supply schemes so they  SunWater remains focused on continuous improvement in the perform effectively and efficiently to efficiency and effectiveness of its Water Supply Schemes and has deliver financial, social and economically increased stakeholder and customer engagement sustainable benefits for Queensland  SunWater’s strategic objective of ensuring Commercially Focused while Improving the value of Shareholder Operations is underpinned by a number of initiatives to drive investments and deriving stable and efficiency including improving Water Ordering compliance in a appropriate cash returns number of schemes, continually reviewing operational and cost  Identify operational efficiencies that will efficiency of services provided, particularly by the Brisbane office result in improved financial performance  Local Management Arrangements (LMA) is a key focus area and the while continuing to focus on efficient and business is looking to identify further efficiency opportunities as effective delivery of bulk water outside of the quantum and timing of LMA transfers of distribution schemes South East Queensland is realised.  Engage at the earliest opportunity with  Sunwater remains committed to engaging with shareholding shareholding Ministers and shareholding Ministers and shareholding departments on a ‘no surprises’ and departments on key financial and collaborative, proactive approach operational issues affecting SunWater’s  In addition to the primary shareholding Minister contacts of the business based on a ‘no surprises’ Chief Executive Officer and the Chief Financial Officer, Sunwater approach has retained a stakeholder relations team committed to proactively communicating issues that may affect Sunwater's business, its customers and the communities surrounding our operations  One of SunWater’s four strategic goals is Supportive Stakeholders which is focused on true engagement with all of our stakeholders.  Ensure a clear linkage between the Financial, Operational and Strategic Key Performance Indicators are initiatives and strategies outlined in the directly generated from monthly and quarterly business performance Corporate Plan and the key financial and reports as well as strategic work programs and initiatives in SunWater’s non‐financial targets specified in the Strategic Plan and 5 Year Corporate Plan. Statement of Corporate Intent (SCI)  Ensure performance payment All corporate performance targets are linked to the Corporate SCI with arrangements for chief and senior a clear definition of expectations and deliverables over and above executive officers are clearly linked to Business as Usual. the achievement of corporate targets as set out in the SCI  Focus on delivering commercial SunWater recently implemented a new structure to enable a more operations and financial outcomes but efficient, high performing customer and regionally focused business. not at the expense of the efficient and The restructure relocated 6 Project Manager Delivery positions for non reliable operation and maintenance of routine maintenance to the regions and created two additional Area water supply infrastructure and delivery Manager positions to ensure regional accountability and improved of capital projects customer engagement.

 Safely and appropriately managing the  SunWater has an established Dam Safety Policy that outlines the safety risks associated with its dams in a business requirements in managing the safety risks associated with manner consistent with the its dams. This policy is reviewed regularly to ensure SunWater is requirements of the Water Supply managing its’ obligations. (Safety and Reliability) Act 2008 and associated relevant guidelines

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2018‐19 Statement of Corporate Intent

Shareholder Expectation SunWater Response  Engage collaboratively with shareholding • SunWater has developed strong relationships with our shareholding departments to develop the most departments, we will continue to engage on scoping options and effective approach to funding and development, considering both budget, risk and stakeholder financing SunWater’s DSIP by working management. with shareholding departments to • SunWater has developed strong relationships with our shareholding develop options for our consideration departments, we will continue to engage with them on a regular basis to provide project status updates, with a key emphasis on  Engage early with shareholding scope, cost and time. SunWater has a collaborative relationship with departments to ensure they are well the Dam Regulator, and actively involve this department in the informed of any changes to the DSIP, participation of key DSIP project activities, including design/technical including where SunWater has achieved reviews and on‐site construction inspections savings through prudent management of • SunWater is a key stakeholder in the development of DSIP business scope and cost cases led by Building Queensland. The value add that SunWater  Engage effectively with Building provides relates to the operating and design principles, aligning to Queensland to develop DSIP business the risk management profile of the business and ensuring value for cases that clearly demonstrate that money outcomes are achieved. recommended solutions optimise value for money for the State.  Engage with shareholding departments • SunWater has actively participated in the development of the on the development of irrigation pricing Department’s pricing policy as articulated in Irrigation Pricing Referral policy, specifically in relation to the rural and Direction Notice and will continue to provide feedback to help irrigation price review for the period 1 ensure that the notice, once finalised, is consistent with the July 2019 to 30 June 2024 Government’s objectives for the upcoming price review. SunWater  Support progression of the Local will also work with customers to ensure that they understand the Management Arrangements project for notice and are able to participate constructively in the review SunWater’s channel irrigation schemes • SunWater has a dedicated LMA project team that is committed to the LMA process and provides support and information to DNRME and  Engage with relevant stakeholders and the LMA Boards. SunWater will continue to seek opportunities to shareholding departments to develop an facilitate the LMA transition where Boards elect to proceed. acceptable and agreed resolution for SunWater will keep Shareholders informed on progress SunWater’s urban bulk water customer • SunWater has already consulted with stakeholders and shareholding pricing. departments on the principles underpinning urban bulk water pricing. SunWater will continue to engage with its urban customers and the LGAQ throughout the process and will keep the shareholder departments informed.  Lead the development of an integrated • SunWater is completing a 20‐year Asset and Resource Portfolio strategy to better use latent capacity of Strategy, which in 2018 will deliver a risks and opportunities existing assets (including pricing to diagnostic, an outline of existing services, and a solutions blueprint. support the use of latent capacity, The blueprint will outline currently considered solutions to deliver making water products better suit sustainable value in the long term, while maximising asset and business needs and removing resources potential, including water products and efficiency constraints) initiatives. SunWater has also completed a deep dive on long term customer scenarios and relevant opportunities for one of our regions.  Lead the development of options for • In order to provide options to support the government’s objectives SunWater to support the Government’s for regional economic development, as well as support DNRME objectives for regional economic prioritisation of bulk water supply infrastructure proposals of development economic value:  Support the Department of Natural o SunWater is developing an early stage opportunities and Resources, Mines and Energy (DNRME) identification framework to consistently screen and to coordinate the prioritisation of bulk prioritise initiatives based on preliminary financial and water supply infrastructure proposals economic benefits identifiable at early project definition that have significant economic benefits stage to the State and for which State o SunWater updated its 2018 to 23 Business Development government funding may be requested Strategic Plan with focus areas and activities to deliver initiatives of financial and economic value

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2018‐19 Statement of Corporate Intent

Shareholder Expectation SunWater Response  Continue to work closely with • The collaboration between DNRME and SunWater has directly shareholding departments on proposals resulted in feasibility funding for studies in the Burdekin and submitted for funding under the Bundaberg schemes, and more recently in $14.6M in capital funding Australian Government’s National Water for water efficiency projects in Mareeba and Emerald. SunWater Infrastructure Development Fund recognises and values the partnership that has been established with (NWIDF) DNRME and will continue to work collaboratively in an effort to secure future federal funding opportunities for the benefit of water  Seek opportunities to leverage core users in Queensland capabilities (such as offering services in • SunWater 2018‐23 Business Development Strategic Plan identified water engineering consulting or facilities the attractiveness of focus areas that leverage existing strengths, and management) and to develop new activities to realise them. These focus areas range from existing revenue streams to replace or enhance offerings and competencies for new customers and markets, to new existing revenue. offerings for existing customers, including consulting, facilities management and efficiency initiatives • SunWater will continue to leverage its core skill sets to develop new supply opportunities and develop new revenue streams accordingly, noting that SunWater will not seek to become a consulting company per se, but rather offer its services on a paid basis as a lead into opportunities to develop new assets or secure new supply customers.

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2018‐19 Statement of Corporate Intent

Strategic Roadmap | FY19 Each year when we review our strategy we update our Roadmap to help focus on the priorities for the next 12 months that contribute to achieving our strategic goals. For FY19 we have identified 14 strategic work programs which are key building blocks to achieve our strategic goals:

Strategic Actions 2018‐2019 SCI Period SunWater will continue focusing on delivering its strategic objectives, with a focus in the SCI period being the implementation of initiatives that support:  Customer Satisfaction  Efficient Business Operations & Project Delivery  Bulk Water Irrigation Price Path Customer Consultation  Leadership Development and Cultural Change. We will achieve this by focusing our efforts on achieving our four strategic goals reflected in the above roadmap. Key milestones for implementation of these strategic actions will be tracked through quarterly reports to shareholders and are set out on page 12 of this SCI. A more detailed roadmap of initiatives that underpin our strategic actions is set out in Appendix A.

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2018‐19 Statement of Corporate Intent

Business Performance FY2019 budgeted NPAT is slightly higher than FY2018 NPAT, notwithstanding lower EBITDA given lower impairment (FY2018 impairment expense of $39.2m compared to FY2019 impairment expense of $25.3m). FY2019 Forecast EBITDA of $142m (FY2018 Budget $141m) key changes are reflected in the graph below and primarily driven by:

Please note green represents items that positively impact EBITDA, red items negatively impact EBITDA

 Increased Water Revenue ($3.7m favourable) – CPI and other pass‐through charges to current contracted amounts and contract renegotiations offset by a reduction in revenue from LMA transfers for St George (30 June 18) and Theodore (30 September 18)  Reduced Grant Funding ($5.1m unfavourable) – reduction in NWIDF projects year on year. There is a relative reduction to direct costs as a result Lower CSOs ($9.5m unfavourable) – primarily lower irrigation Community Service Obligation (CSO) have been budgeted in FY2019 based on amount approved

 Non‐operating revenue ($1.3m favourable) – predominantly due to increased interest revenue  Direct Costs ($8.6m favourable) – o Main impact for reduction in direct costs is the change to schedule for Fairbairn Stage 2 to synchronise with Fairbairn Stage 3 to optimise constructability and mitigate risk o Reduction in NWIDF direct costs (as above), reduction in direct costs for St George and Theodore LMA (as per above) and reduction in flood repair expenditure.  Reduced Salary and Wages (net of capitalisation) ($3.3m favourable) ‐ in line with the current organisational restructure (to drive efficiencies) representing lower FTE and salary and wages, partly offset by increased labour costs with EA 3% increase and band increments. Also lower due to St George and Theodore LMA salary and wage costs being transferred with LMA  Reduction in Corporate and Administration costs ($2.7m favourable) – forecasted savings of insurance and other St George and Theodore LMA reductions  Increase to net overheads ($4.6m unfavourable) – reduced overhead and indirect costs being charged to capital and provisioned projects.

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2018‐19 Statement of Corporate Intent

Business Challenges

Dam Safety Improvement Program

Investment in Business Systems and Processes Antiquated and inefficient Information Technology (IT) systems impact business efficiency. Investing in infrastructure to update these IT systems to support the business operations is a key focus in the SCI period and the 5‐year Corporate Plan.

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2018‐19 Statement of Corporate Intent

Key Assumptions for 2018‐2019 SCI Indicator Assumption o Irrigation rates will be in accordance with the 2017 Queensland Competition Authority (QCA) prices indexed by 2.5% p.a. plus the $2 ramp where it was already in place for the 2017 year given the existing extended price path policy decision. Usage will be aligned with the QCA usage assumptions Revenue o Industrial water pricing reflects contractual arrangements o Urban water pricing increases in line with CPI increases only o Irrigation CSOs $2.1m (irrigation), in line with approval in FY2018 for an extension of current price path o Urban CSOs as agreed with DNRME ($6.0m pa for Cloncurry pipeline) Insurance recovery proceeds are only reflected when received and only allocated Other Revenue when the claim is finalised o Inflation SUNWATER LIMITED FINANCIAL MODEL - Version V 1941.00 Draft SCI & CP Economic and Other Data 2019

INFLATION FACTORS (%) Percentage C1 - Labour 3.00 Operating Expenses C2 - Electricity 6.70 C3 - Contractors - commercial 2.50 C4 - Contractors - other 2.50 C5 - Materials - construction 2.50 C6 - Materials - chemicals - acrolein 0.00 C7 - Materials - other 2.50 C8 - Other costs - CPI 2.50 C9 - Plant, equipment & vehicles 2.50

CPI 2.5% o 3.0% annual increase for EA (plus increments applicable to EA determined on an individual basis per salary bands) o 2.5% annual increase average across all IEC staff Wage Growth o Agreed efficiency savings continue to be targeted and will be reviewed as part of the next EA negotiation (EA due for renewal 1 July 2018) o Staff recruitment and training costs also included in overall costs

o Routine: based on QCA 2017 cost base plus CPI of 2.5% QCA Targets o Non‐routine: drawn from annuity calculation provided by QCA

Debt No additional drawdowns of current debt levels of $284m Dividend 100% adjusted NPAT assumed paid as per Dividend Policy Local Management Two LMA transitions are assumed to take place, with St George (30 June 18) and Arrangements Theodore (30 September 2018) o Approximately $53m DSIP expenditure to progress preliminary business cases Dam Safety Improvement (PBC) and detailed design and construction for Stage 3 at Fairbairn Dam Program o DISP costs essentially impaired in the year incurred given DSIP costs are not recovered from customers under existing pricing policy and contracts

Expenditure of $17.3m for Non DSIP related strategy implementation costs for renewals, project management framework, customer engagement, QCA price path Non DSIP project costs and digital systems upgrades, of which $5.3m is expensed with remainder capitalised

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2018‐19 Statement of Corporate Intent

Indicator Assumption o Reduction in employment costs ($1.58m pa ) with lower FTEs as a result of the Efficiency Savings recent organisational restructure, partially offset by EA increases o Targeted reduction savings forecast in annual insurance premiums Expenses for make good and Brisbane office move of $600k in addition to current premises at Turbot Street rent assumed till May 2019. New office assumed from Office Relocation Dec 2018 and the accounting impacts for new leasing standard AASB 16 have not been reflected in these numbers. Reduced net rental expense results in future years Legal costs of $100k pa only have been assumed in relation to the class action (Oct 2018) as the legal costs of the defence are being paid for directly by the Primary Legal Expenses Insurers QBE pursuant to the terms of the insurance policy, on the basis that public liability claim FTEs 412.4 Electricity Increase of 6.7%

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2018‐19 Statement of Corporate Intent

Key Performance Indicators Performance in 2018‐2019 will be assessed against the financial and non‐financial key performance indicators that have been agreed with shareholders. Achievements against agreed measures and targets will be reported through Quarterly Scorecard reports and directly through quarterly and annual presentations to shareholder representatives. In addition, progress of implementing strategy will be reported through Quarterly Scorecards and presentations.

Financial model version - V 1945.00 Operational & Strategic Key Performance Indicators | 2018‐2019 SCI Strategic Objective Target FY2018/19 Q1 Sept Q2 Dec Q3 Mar Q4 Jun A Sustainable Business PBC – SW Burdekin Falls Dam Improvement Program Hydrology Board DBC outcome Commence Paradise Dam Improvement Program DBC Budget to SHM BQ led DBC Preliminary Commence Burdekin Falls Dam Raising Business BQ led DBC Case Business Business Burdekin Falls Dam Hydro Case Case to SHM Complete Construction Construction Construction Construction Fairbairn Dam Improvement Program Stage 2 & 3 Stage 2 & 3 Stage 2 & 3 Stage 2 & 3 Preliminary Leslie Dam Improvement Program Business Case ‐ SW Preliminary Teemburra Dam Improvement Program Business Case ‐ SW Commercially focused Operations Water Delivered ML 267 396 310 281

Distribution System Efficiency % >77 >77 >77 >77

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2018‐19 Statement of Corporate Intent

Strategic Objective Target FY2018/19 Q1 Sept Q2 Dec Q3 Mar Q4 Jun Energy Pump Efficiency KWh/ML/m 3.6 <3.6 <3.6 <3.6

New QCA Price Path QCA Final New Price submission submission Path for new price to QCA approval adopted path Existing QCA Targets ‐ Controllable Met Met Met Met Enterprise Agreement Productivity Targets Met Met Met Met Business Case Plan implemented within budget per Enterprise Business Systems ERP milestones Supportive Stakeholders # Material Environmental Non‐ 0 0 0 0 compliances (#/customer) Unplanned Customer Supply <4 <3 <3 <2 Interruptions Business Theodore Emerald Schemes impact Successful LMA Transition 30 Sept 31 Dec analysis High Performance Culture >20% Employee Satisfaction (OCI % Improvement Survey) on prior year Total Recordable Injury #/million Frequency Rate (TRIFR) hours <5 <5 <5 <5 [Employees & Contractors] worked Lost Time Recordable Injury #/million Frequency Rate (LTIFR) hours 0 0 0 0 [Employees & Contractors] worked High Potential Incidents # qtr <13 <13 <13 <13 (energy released)

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2018‐19 Statement of Corporate Intent

Financial Statements

Consolidated Income Statement

SUNWATER LIMITED Budget : 2018-19 CONSOLIDATED GROUP Q1 Q2 Q3 Q4 2018-19 2016-17 2017-18 2017-18 CONSOLIDATED INCOME Unit Sept Dec Mar Jun Budget Actual Budget Forecast Operating revenue Water charges • Irrigation $000 14,693 15,665 14,422 15,668 60,449 63,220 59,580 60,443 • Industrial $000 44,648 44,280 43,762 43,738 176,428 171,320 173,912 172,802 • Urban $000 3,309 3,290 3,192 3,161 12,951 12,756 12,521 12,594 • Revenue transfers $000 - - - - - 0 - - Drainage $000 278 264 264 264 1,071 1,421 1,413 1,471 Electricity generation $000 132 132 132 132 526 1 494 585 Government transactions • CSO - irrigation $000 511 433 433 433 1,809 3,716 10,970 2,843 • CSO - urban $000 1,493 1,493 1,493 1,493 5,972 5,870 6,270 5,845 • CSO - other $000 80 80 80 80 318 - 318 318 • Grants & subsidies $000 524 950 1,800 2,886 6,159 902 11,248 4,333 Water entitlement / trading $000 3,730 3,730 3,730 3,730 14,919 15,438 14,701 15,001 Consulting $000 83 81 78 81 324 1,595 422 421 Facilities management $000 2,280 2,178 2,003 1,938 8,398 5,286 8,153 8,439 Other $000 97 94 94 94 379 1,831 473 370 $000 71,856 72,669 71,482 73,696 289,703 283,355 300,478 285,465 Employee costs Salaries & wages $000 (10,280) (9,788) (9,376) (10,125) (39,570) (36,349) (39,902) (47,695) Employee related expenses - statutory $000 (3,153) (3,194) (2,953) (3,268) (12,568) (11,150) (12,670) (9,512) Employee related expenses - non-statutory $000 (685) (684) (684) (684) (2,737) (3,534) (2,363) (1,474) Staff contractors $000 (699) (710) (688) (710) (2,808) (4,825) (5,547) (5,419) $000 (14,817) (14,376) (13,701) (14,787) (57,682) (55,858) (60,483) (64,101) Costed labour $000 2,199 2,200 2,129 2,424 8,952 4,821 8,421 8,814 $000 (12,619) (12,176) (11,572) (12,363) (48,730) (51,037) (52,062) (55,287) Direct costs Accommodation & travel $000 (537) (524) (511) (527) (2,098) (1,405) (2,421) (1,808) Contractors $000 (7,601) (8,316) (7,784) (7,836) (31,537) (50,069) (46,845) (36,493) Depreciation - infrastructure $000 (8,137) (8,132) (7,992) (9,804) (34,066) (33,827) (34,549) (33,446) Electricity $000 (8,600) (10,058) (8,816) (8,847) (36,321) (31,961) (36,531) (35,475) Materials $000 (2,854) (3,098) (2,839) (3,542) (12,332) (3,919) (5,631) (6,384) Plant, equipment & vehicles $000 (1,761) (1,652) (1,700) (1,660) (6,772) (5,180) (6,017) (5,008) $000 (29,490) (31,779) (29,641) (32,216) (123,126) (126,361) (131,995) (118,613) Corporate & administration costs Insurance, legal & administration costs $000 (4,105) (4,178) (4,087) (4,218) (16,588) (14,709) (20,114) (19,023) Depreciation - non infrastructure $000 (975) (960) (941) (951) (3,827) (4,127) (5,859) (3,393) Occupancy costs $000 (1,721) (1,717) (2,312) (1,803) (7,554) (6,805) (7,035) (6,212) Other asset costs $000 (28) (31) (34) (35) (128) (701) (269) (949) $000 (6,830) (6,886) (7,374) (7,006) (28,097) (26,343) (33,277) (29,577)

Overheads & indirect costs $000 2,862 2,880 2,730 3,261 11,732 7,830 16,355 15,458 Total operating costs $000 (46,077) (47,961) (45,858) (48,325) (188,221) (195,911) (200,979) (188,019)

Operating profit (loss) $000 25,780 24,707 25,624 25,371 101,483 87,444 99,499 97,446 Asset (impairment) revaluation $000 - - - (25,336) (25,336) (25,763) (39,237) (34,008) Non-operating revenue $000 643 593 584 617 2,436 4,570 1,232 2,247 Financing charges $000 (3,582) (3,582) (3,582) (3,606) (14,353) (15,199) (14,893) (14,709) Profit (loss) before taxation - PBT $000 22,840 21,718 22,626 (2,954) 64,230 51,053 46,601 50,976 Taxation $000 (6,852) (6,515) (6,788) 886 (19,269) (15,005) (13,980) (15,293) Profit (loss) after taxation - PAT $000 15,988 15,202 15,838 (2,068) 44,961 36,048 32,621 35,684 Dividends $000 - - - (44,900) (44,900) - (32,600) (35,600) Retained profit (loss) for the period $000 15,988 15,202 15,838 (46,968) 61 36,048 21 84

Notes Taxation Current tax - external $000 (4,866) (3,801) (4,858) 1,969 (11,556) (13,817) (9,463) (12,609) Deferred tax liability - (increase) decrease $000 (614) (818) (600) (322) (2,354) 497 5,702 5,318 Deferred tax asset - increase (decrease) $000 (1,373) (1,897) (1,329) (760) (5,359) (1,685) (10,220) (8,003) Total $000 (6,852) (6,515) (6,788) 886 (19,269) (15,005) (13,980) (15,293)

Financial model version - V 1945.00

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2018‐19 Statement of Corporate Intent

Consolidated Balance Sheet

SUNWATER LIMITED Budget : 2018-19 CONSOLIDATED GROUP Q1 Q2 Q3 Q4 2018-19 2016-17 2017-18 2017-18 BALANCE SHEET Unit Sept Dec Mar Jun Budget Actual Budget Forecast

Current Assets Cash $000 23,755 17,631 19,069 22,701 22,701 54,855 24,041 25,189 Advance to Queensland Treasury $000 78,073 60,506 70,895 59,327 59,327 - - 68,658 Receivables $000 14,017 13,822 13,343 10,065 10,065 7,793 10,115 10,181 Accrued revenue $000 14,313 14,175 13,855 16,524 16,524 14,531 16,311 13,204 Inventories $000 2,440 2,428 2,415 2,501 2,501 2,404 2,254 2,452 Other $000 2,668 2,672 2,675 2,702 2,702 6,576 2,801 2,664 $000 135,266 111,234 122,254 113,821 113,821 86,159 55,522 122,348 Non Current Assets Property, Plant & Equipment $000 859,176 864,282 869,894 851,726 851,726 882,339 883,214 858,125 Intangibles $000 16,939 16,939 16,939 16,939 16,939 16,939 20,166 16,939 Deferred tax assets $000 14,074 12,177 10,848 10,088 10,088 23,449 14,085 15,446 $000 890,188 893,398 897,681 878,752 878,752 922,727 917,465 890,510

TOTAL ASSETS $000 1,025,454 1,004,632 1,019,934 992,573 992,573 1,008,886 972,986 1,012,858

Current Liabilities Payables $000 36,008 40,037 42,545 34,603 34,603 24,922 34,476 35,476 Borrowings $000 - - - - - 1,015 - - Provision - dividends $000 35,600 - - 44,900 44,900 - 32,600 35,600 Provisions - other $000 23,375 18,180 13,548 4,535 4,535 52,463 20,735 25,900 Provision - taxation $000 1,977 2,889 4,858 (0) - - - - Other ( including deferred revenue ) $000 29,682 30,496 31,316 31,078 31,078 26,967 24,418 29,080 $000 126,641 91,601 92,267 115,116 115,116 105,367 112,229 126,056 Non Current Liabilities Borrowings $000 284,162 284,162 284,162 284,162 284,162 283,147 285,701 284,162 Provisions - other $000 (1,387) (1,387) (1,387) 1,246 1,246 1,246 1,237 1,246 Deferred tax liabilities $000 7,631 8,449 9,049 9,371 9,371 12,335 10,282 7,017 Other ( including deferred revenue ) $000 142,611 140,808 139,006 137,203 137,203 151,779 144,569 144,569 $000 433,016 432,031 430,829 431,982 431,982 448,507 441,790 436,993

TOTAL LIABILITIES $000 559,657 523,632 523,096 547,099 547,099 553,874 554,018 563,049 NET ASSETS $000 465,798 481,000 496,838 445,474 445,474 455,012 418,968 449,810

Shareholders Equity Contributed equity $000 244,984 244,984 244,984 240,588 240,588 250,270 250,270 244,984 Retained profits $000 220,814 236,016 251,854 204,887 204,887 204,742 168,698 204,826 TOTAL SHAREHOLDERS EQUITY $000 465,798 481,000 496,838 445,474 445,474 455,012 418,968 449,810 Financial model version - V 1945.00 Consolidated Cashflow Statement

SUNWATER LIMITED Budget : 2018-19 CONSOLIDATED GROUP Q1 Q2 Q3 Q4 2018-19 2016-17 2017-18 2017-18 CASH FLOW Unit Sept Dec Mar Jun Budget Actual Budget Forecast

Cash flows from operating activities Inflows: • Receipts from customers $000 63,576 69,653 68,050 67,907 269,187 298,225 271,542 273,172 • CSO, government grant & deferred income rece $000 2,607 2,955 3,805 4,891 14,258 9,586 28,807 13,340 • Interest received $000 - - - - - 129 - - Outflows: • Payments to suppliers and employees $000 (42,171) (40,603) (39,576) (52,540) (174,890) (181,330) (193,442) (171,009) • Taxation - external $000 (2,889) (2,889) (2,889) (2,889) (11,556) (31,918) (9,463) (10,355) $000 21,124 29,116 29,390 17,369 97,000 94,693 97,444 105,148 Cash flow from investing activities Inflows: • Proceeds from sale of property, plant & equipm $000 4,662 - - (4,396) 266 258 - (644) • Return of advance to Queensland Treasury $000 6,000 18,000 - 12,000 36,000 - - - • Interest received $000 170 123 159 146 598 4,772 714 998 Outflows: • Purchase of property, plant & equipment $000 (14,825) (14,198) (14,546) (17,923) (61,492) (45,572) (74,660) (51,911) • Advance to Queensland Treasury $000 (15,000) - (10,000) - (25,000) - - (67,800) $000 (18,993) 3,925 (24,387) (10,172) (49,627) (40,542) (73,946) (119,356) Cash flow from financing activities Inflows: • Proceeds from borrowings $000 - - - - - 40,000 - - Outflows: • Interest paid $000 (3,565) (3,565) (3,565) (3,565) (14,261) (14,506) (14,999) (15,458) • Repayment of borrowings $000 - - - - - (1,548) - - • Return of contributed equity $000 - - - - - (130,000) - - • Dividends to owners of SunWater Limited $000 - (35,600) - - (35,600) (159,009) (37,900) - $000 (3,565) (39,165) (3,565) (3,565) (49,861) (265,063) (52,899) (15,458)

Increase (decrease) in cash balance $000 (1,434) (6,124) 1,438 3,632 (2,488) (210,912) (29,402) (29,666) Cash balance brought forward $000 25,189 23,755 17,631 19,069 25,189 265,768 53,443 54,855 Cash balance carried forward $000 23,755 17,631 19,069 22,701 22,701 54,855 24,041 25,189 Financial model version - V 1945.00

Commercial in confidence Final to Shareholding Ministers, 31 May 2018 Page 17 of 32

2018‐19 Statement of Corporate Intent

Dam Safety Improvement Program & Capital Projects SunWaterSunwater will comply with the Queensland Government’s Investment Guidelines for Government Owned Corporations and will provide early notification to shareholding Ministers of significant expenditure and revenue contracts when their total value equals or exceeds $10m, have public policy implications or involve third parties (associated joint ventures or similar such agreements. Notification of capital projects between $10m and $40m will be reported through the quarterly report to shareholding Ministers. Further, all projects above $50m will go through BQ business cases, being based on P90 level of confidence. Correspondence will be sent to shareholding Ministers seeking approval for capital projects of $40m or greater. SunWater will advise of projects nearing the $10m and $40m thresholds through quarterly reporting. SunWater will also comply with relevant BQ requirements.

version - V 1945.00

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2018‐19 Statement of Corporate Intent

Earliest 2018‐2019 targeted Shareholder Project Status Budget Construction Approval Received Start Date Projects Over $100 million | BQ led Business Case Upon finalisation of Preliminary Business Case, Paradise Dam 2020 BQ led BC, targeted will commence BQ led DSIP Sept 2019 business case in 2018/19 Fairbairn Dam DSIP Spillway Improvements BQ business case completed and In construction Approved in prior year ‐ Rectification‐ Stages 1 and 2

BQ led business case Upon finalisation of Burdekin Falls commenced in 2018/19 and Dec 2020 BQ led BC, targeted Dam DSIP on hold whilst further Sept 2019 evaluation undertaken Projects Less Than $100 million | BQ Review of Business Case None Projects Over $10 million Fairbairn Dam Late 2018 DSIP Spillway Preliminary Business Case subject to Not yet notified Chute and Side 2018 PRA Walls –Stage 3 Mareeba Earliest Efficiency targeted Design/Construction Phase Improvements construction (NWIDF) date Dec 2018 Earliest Emerald Channel targeted Relining Project Design/Construction Phase construction (NWIDF) date Q1 2019 Leslie Dam DSIP Concept Teemburra Dam Concept DSIP

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2018‐19 Statement of Corporate Intent

Additional Requirements Subject to the Directors meeting their fiduciary duties, the SunWater Board and its subsidiaries will comply with all Policies, Guidelines and Directives as advised by shareholding Ministers from time to time. SunWater has adopted the recommendations in the Corporate Governance Guidelines for Government Owned Corporations (February 2009). The SunWater Board also undertakes to continually monitor and review its corporate governance arrangements to reflect good practice, having regard to the guidelines. The Board will ensure SunWater takes full responsibility, within any constraints associated with shareholders’ policy requirements, to ensure prudent financial practices will be applied both within the Corporation and within its Subsidiaries (whether fully controlled or otherwise). Without limiting the obligations imposed on the Board and the CEO by the Government Owned Corporations Act 1993 (Qld) (GOC Act) and, where applicable, the Corporations Act 2001 (Cth), this includes a commitment to:  Abide by the Code of Practice for Government Owned Corporations’ Financial Arrangements (Code of Practice), as issued by the Queensland Government  Establish, maintain and implement appropriate financial risk management practices and policies required and as specified in the Code of Practice. SunWater’s overall debt will be managed to ensure that a BBB+ credit rating, or other rating as directed or constrained by shareholders’ policy requirements, is maintained.

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2018‐19 Statement of Corporate Intent

Appendices

Appendix A SunWater Limited | FY19 Strategic Roadmap with Initiatives 22

Appendix B Sponsorships, Advertising, Corporate Entertainment, Donations and Other 23

Appendix C Employment and Industrial Relations Plan 24

Appendix D Weighted Average Cost of Capital 28

Appendix E Consolidated Financial Statements 29

Appendix D Definitions 32

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APPENDIX A: STRATEGIC ROADMAP WITH INITIATIVES

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APPENDIX B: Sponsorships, Advertising, Corporate Entertainment, Donations and Other

Table 1 ‐ Sponsorship, advertising, corporate entertainment, donations and other activities – details of individual expenditure items Activity 2016‐17 2017–18 2018–19 Budget Budget Budget ($) ($) ($) Sponsorship ANCOLD Conference 10,000 10,000 10,000 Total over $5,000 10,000 10,000 10,000 Other (total) below $5,000 45,000 45,000 80,000 TOTAL (1) 55,000 55,000 90,000 Advertising Water safety advertising campaign 250,000 220,000 210,000 School Safety Program 30,000 30,000 25,000 Total over $5,000 280,000 250,000 235,000 Other (total) below $5,000 ‐ ‐ 20,000 TOTAL (2) 280,000 250,000 255,000 Corporate entertainment Staff awards ceremony 13,000 13,000 10,000 Brisbane Office Christmas Celebration 13,502 16,000 13,000 Total over $5,000 26,502 29,000 23,000 Other (total) below $5,000 35,998 31,500 31,500 TOTAL (3) 62,500 60,500 54,500 Donations TOTAL (4) ‐ ‐ ‐ Strategic community and stakeholder engagement activities Total over $5,000 Statewide Dam Education Campaign ‐ 900,000 200,000 IGEM Education Campaign ‐ 250,000 100,000 Other (total) below $5,000 ‐ 20,000 TOTAL (5) 13,000 1,150,000 320,000 Total (1)+(2)+(3)+(4)+(5) 410,500 1,515,500 719,500

Table 2 – Corporate Entertainment: Details of Total Forecast Expenditure under $5,000 per event

Activity 2017‐18 2018–19 2018–19 Budget No. of Budget ($) activities ($) Corporate entertainment Staff functions 20,000 50 20,000 Stakeholder and Community 11,500 6 11,500 Engagement Total under $5,000 31,500 56 31,500

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APPENDIX C: Employment & Industrial Relations Plan

Category Assumptions

 SunWater’s E&IR philosophy and direction is aligned with SunWater’s Strategic Roadmap  SunWater is a Government Owned Corporation (GOC), and is governed by federal industrial E&IR Philosophy/ relations legislation, including the Fair Work Act 2009 (Cwth) Direction  SunWater is subject to the provisions of the Government Owned Corporations Wages and Industrial Policy 2015.

SunWater Enterprise Agreement Re‐Negotiation The current SunWater Enterprise Agreement 2015‐2018 will expire on 30 June 2018. The Agreement will be re‐negotiated in accordance with approved strategy and further in accordance with the GOC Wages and Industrial Policy 2015. Major Projects SunWater’s workforce is ideally placed to react to both internally or externally driven opportunities as they present. Some of the key initiatives planned for the next ten years that will impact on the size, composition and capacity of SunWater’s workforce include significant dam upgrade safety improvement projects with prioritisation to the following sites:  Paradise Dam  Boondooma Dam  Fairbairn Dam  Burdekin Falls Dam SunWater is developing a strategic workforce plan to ensure SunWater has the optimum workforce Significant and mix and builds the right capability to deliver these major projects per the business cases. Emerging Issues Local Management Arrangements Work continues on supporting the potential transition of six of the eight irrigation schemes identified for Local Management Arrangements (LMA). Lower Mary and Bundaberg have advised the Government that they will not be progressing with LMA. St George have approved LMA and SunWater will transfer assets on 30 June 2018. Currently three of the four remaining schemes are under legal due diligence investigation following in‐principle agreement with the Government’s terms:  Theodore  Eton  Emerald The Interim Boards for the Burdekin‐Haughton and Mareeba‐Dimbulah schemes have revised their business proposals and resubmitted to Government for consideration. Theodore is anticipated to transition 30 September 2018. Consultation with affected employees is ongoing and being conducted in an open and transparent manner.

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Category Assumptions

SunWater employees (other than those on individual employment contracts) are covered by employment conditions contained in the Enterprise Agreement. The Agreement contains conditions of employment that are not less than the National Employment Standards (NES) and/or the underpinning Modern Award (Water Industry Award).

Relevant industrial instruments are as follows:

Award/Agreement Scope Reference Expiry Date SunWater Enterprise Covers all SunWater AG2015/6073 Nominal expiry date Agreement (2015‐ employees as per 30 June 2018 2018) classification schedule of the Agreement Employment Individual Employment Offered to employees N/A N/A Conditions Contracts SW08 and above Fair Work Act 2009 All employees N/A N/A (Cwth) Water Industry Award All employees MA 000113 N/A

 SunWater regularly monitors amendments to the FWA, Modern Industry Award and NES to ensure compliance with relevant legislation. The nominal expiry date for the current SunWater Enterprise Agreement 2015‐2018 is 30 June 2018 (AG2015/6073).  SunWater will renegotiate the EA in accordance with the GOC Wages Policy.  Maximum 2.5% total fixed remuneration increase assumed for IEC employees based on market movement and performance.

 No forced redundancies will occur without the written approval of shareholding Ministers. Where redundancies do proceed, current entitlements for termination of employees covered by the SunWater Enterprise Agreement 2015‐2018 include: o Minimum four (4) weeks’ pay or three (3) weeks’ pay per year of service, with a proportionate amount for an incomplete year of service. The maximum redundancy Redundancy payment will be equivalent to fifty‐two (52) weeks’ pay Provisions o An incentive payment of eight (8) weeks’ pay to depart by the date nominated by SunWater and o Long Service Leave payment of 1.3 weeks at the ordinary time rate for each completed year of service and a proportionate amount for an incomplete year of service, less any Long Service Leave already taken or paid out.

 Superannuation contributions are made on behalf of eligible employees into an approved fund in accordance with the federal Superannuation Guarantee Charge Amendment Act 2002. Superannuation  As SunWater subscribes to the government‐wide superannuation fund, QSuper, it does not have access to any surplus or any current exposure to any shortfall from the defined benefit fund.

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Type of Employment (FTEs) and Workforce Planning July 2018 2018‐ Forecast 2019 Forecast Employment category: Permanent full time 258 248 Permanent part time 3 3 Temporary full time 24 35 Temporary part time 1 Senior Executive Contract 7 7 Other contract 115 115 Apprentices (in‐house) Cadets 1 1 Trainees (in‐house) Casual employees Total directly employed workforce 409 409 Apprentices (group) 2 3 Trainees (group) Contractor employees (trade/technical/ops) 13 Contractor employees (professional/ administrative/ clerical) Labour hire (trade/technical) Labour hire (professional/ administrative/ clerical) s457 temporary visa Total workforce 424 412

Employment figures are based on:  Assumption that St George and Theodore with transition to LMA  Resourcing plans to be determined to account for FTE impacts for further LMA transitions FY20 and beyond, and  No inclusion of FTEs for DSIP project related personnel in above figures. Labour cost for major projects included in total project costs. Resourcing plans will be developed to understand impact to FTE numbers post FY20. FTEs shown are reflective of budgets and equate to average numbers of FTEs over the relevant year. Reporting SunWater will provide regular reports on the implementation and progress of the productivity initiatives included in SunWater’s Enterprise Agreement to shareholding Ministers through its Quarterly Scorecard Reports. The reports will highlight any significant divergences from the plan and the background/content for the variances. The following table provides an overview of the agreed Productivity Savings Targets and actual/forecast performance. Table – Productivity Savings Targets Enterprise Agreement Productivity Initiative - Savings Targets Total 3 # Description 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 2018 2019 2020 years

1Productivity savings (yet to be finalised as part ($000's) 78 74 71 83 306 621 945 1,872 of the EA negotiation process)

Total Savings 78 74 71 83 306 621 945 1,872

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Consultation The Office of Industrial Relations were consulted during the development of this Employment and Industrial Relations Plan, in accordance with s149 of the Government Owned Corporations Act 1993. Issues raised during these consultations have been given consideration in the preparation of this plan.

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APPENDIX D: Weighted Average Cost of Capital

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APPENDIX E: Consolidated Financial Statements Consolidated financial statements are made of up of SunWater (the parent entity) and its four wholly owned subsidiaries.

Consolidated Group ‐ Income Statement SUNWATER LIMITED Budget : 2018-19 CONSOLIDATED GROUP Q1 Q2 Q3 Q4 2018-19 2016-17 2017-18 2017-18 CONSOLIDATED INCOME Unit Sept Dec Mar Jun Budget Actual Budget Forecast

Operating revenue Water charges • Irrigation $000 14,693 15,665 14,422 15,668 60,449 63,220 59,580 60,443 • Industrial $000 44,648 44,280 43,762 43,738 176,428 171,320 173,912 172,802 • Urban $000 3,309 3,290 3,192 3,161 12,951 12,756 12,521 12,594 • Revenue transfers $000 - - - - - 0 - - Drainage $000 278 264 264 264 1,071 1,421 1,413 1,471 Electricity generation $000 132 132 132 132 526 1 494 585 Government transactions • CSO - irrigation $000 511 433 433 433 1,809 3,716 10,970 2,843 • CSO - urban $000 1,493 1,493 1,493 1,493 5,972 5,870 6,270 5,845 • CSO - other $000 80 80 80 80 318 - 318 318 • Grants & subsidies $000 524 950 1,800 2,886 6,159 902 11,248 4,333 Water entitlement / trading $000 3,730 3,730 3,730 3,730 14,919 15,438 14,701 15,001 Consulting $000 83 81 78 81 324 1,595 422 421 Facilities management $000 2,280 2,178 2,003 1,938 8,398 5,286 8,153 8,439 Other $000 97 94 94 94 379 1,831 473 370 $000 71,856 72,669 71,482 73,696 289,703 283,355 300,478 285,465 Employee costs Salaries & wages $000 (10,280) (9,788) (9,376) (10,125) (39,570) (36,349) (39,902) (47,695) Employee related expenses - statutory $000 (3,153) (3,194) (2,953) (3,268) (12,568) (11,150) (12,670) (9,512) Employee related expenses - non-statutory $000 (685) (684) (684) (684) (2,737) (3,534) (2,363) (1,474) Staff contractors $000 (699) (710) (688) (710) (2,808) (4,825) (5,547) (5,419) $000 (14,817) (14,376) (13,701) (14,787) (57,682) (55,858) (60,483) (64,101) Costed labour $000 2,199 2,200 2,129 2,424 8,952 4,821 8,421 8,814 $000 (12,619) (12,176) (11,572) (12,363) (48,730) (51,037) (52,062) (55,287) Direct costs Accommodation & travel $000 (537) (524) (511) (527) (2,098) (1,405) (2,421) (1,808) Contractors $000 (7,601) (8,316) (7,784) (7,836) (31,537) (50,069) (46,845) (36,493) Depreciation - infrastructure $000 (8,137) (8,132) (7,992) (9,804) (34,066) (33,827) (34,549) (33,446) Electricity $000 (8,600) (10,058) (8,816) (8,847) (36,321) (31,961) (36,531) (35,475) Materials $000 (2,854) (3,098) (2,839) (3,542) (12,332) (3,919) (5,631) (6,384) Plant, equipment & vehicles $000 (1,761) (1,652) (1,700) (1,660) (6,772) (5,180) (6,017) (5,008) $000 (29,490) (31,779) (29,641) (32,216) (123,126) (126,361) (131,995) (118,613) Corporate & administration costs Insurance, legal & administration costs $000 (4,105) (4,178) (4,087) (4,218) (16,588) (14,709) (20,114) (19,023) Depreciation - non infrastructure $000 (975) (960) (941) (951) (3,827) (4,127) (5,859) (3,393) Occupancy costs $000 (1,721) (1,717) (2,312) (1,803) (7,554) (6,805) (7,035) (6,212) Other asset costs $000 (28) (31) (34) (35) (128) (701) (269) (949) $000 (6,830) (6,886) (7,374) (7,006) (28,097) (26,343) (33,277) (29,577)

Overheads & indirect costs $000 2,862 2,880 2,730 3,261 11,732 7,830 16,355 15,458 Total operating costs $000 (46,077) (47,961) (45,858) (48,325) (188,221) (195,911) (200,979) (188,019)

Profit (loss) before taxation - PBT $000 22,840 21,718 22,626 (2,954) 64,230 51,053 46,601 50,976 Taxation $000 (6,852) (6,515) (6,788) 886 (19,269) (15,005) (13,980) (15,293) Profit (loss) after taxation - PAT $000 15,988 15,202 15,838 (2,068) 44,961 36,048 32,621 35,684 Dividends $000 - - - (44,900) (44,900) - (32,600) (35,600) Retained profit (loss) for the period $000 15,988 15,202 15,838 (46,968) 61 36,048 21 84

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Consolidated Group ‐ Statement of Financial Position SUNWATER LIMITED Budget : 2018-19 CONSOLIDATED GROUP Q1 Q2 Q3 Q4 2018-19 2016-17 2017-18 2017-18 STATEMENT OF FINANCIAL POSITION Unit Sept Dec Mar Jun Budget Actual Budget Forecast

TOTAL ASSETS $000 1,025,454 1,004,632 1,019,934 992,573 992,573 1,008,886 972,986 1,012,858

TOTAL LIABILITIES $000 559,657 523,632 523,096 547,099 547,099 553,874 554,018 563,049 NET ASSETS $000 465,798 481,000 496,838 445,474 445,474 455,012 418,968 449,810

Consolidated Group ‐ Statement of Cash Flows SUNWATER LIMITED Budget : 2018-19 CONSOLIDATED GROUP Q1 Q2 Q3 Q4 2018-19 2016-17 2017-18 2017-18 CASH FLOW Unit Sept Dec Mar Jun Budget Actual Budget Forecast

Cash flows from operating activities Inflows: • Receipts from customers $000 63,576 69,653 68,050 67,907 269,187 298,225 271,542 273,172 • CSO, government grant & deferred income receipts $000 2,607 2,955 3,805 4,891 14,258 9,586 28,807 13,340 • Interest received $000 - - - - - 129 - - Outflows: • Payments to suppliers and employees $000 (42,171) (40,603) (39,576) (52,540) (174,890) (181,330) (193,442) (171,009) • Taxation - external $000 (2,889) (2,889) (2,889) (2,889) (11,556) (31,918) (9,463) (10,355) $000 21,124 29,116 29,390 17,369 97,000 94,693 97,444 105,148 Cash flow from investing activities Inflows: • Proceeds from sale of property, plant & equipment $000 4,662 - - (4,396) 266 258 - (644) • Return of advance to Queensland Treasury $000 6,000 18,000 - 12,000 36,000 - - - • Interest received $000 170 123 159 146 598 4,772 714 998 Outflows: • Purchase of property, plant & equipment $000 (14,825) (14,198) (14,546) (17,923) (61,492) (45,572) (74,660) (51,911) • Advance to Queensland Treasury $000 (15,000) - (10,000) - (25,000) - - (67,800) $000 (18,993) 3,925 (24,387) (10,172) (49,627) (40,542) (73,946) (119,356) Cash flow from financing activities Inflows: • Proceeds from borrowings $000 - - - - - 40,000 - - Outflows: • Interest paid $000 (3,565) (3,565) (3,565) (3,565) (14,261) (14,506) (14,999) (15,458) • Repayment of borrowings $000 - - - - - (1,548) - - • Return of contributed equity $000 - - - - - (130,000) - - • Dividends to owners of SunWater Limited $000 - (35,600) - - (35,600) (159,009) (37,900) - $000 (3,565) (39,165) (3,565) (3,565) (49,861) (265,063) (52,899) (15,458)

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Consolidated Group ‐ Equity Injections / (Withdrawals)

SUNWATER LIMITED Budget : 2018-19 CONSOLIDATED GROUP Q1 Q2 Q3 Q4 2018-19 2016-17 2017-18 2017-18 EQUITY INJECTIONS (WITHDRAWALS) Unit Sept Dec Mar Jun Budget Actual Budget Forecast

Total equity - opening $000 449,810 465,798 481,000 496,838 449,810 418,965 418,947 455,012 Adjustment to opening equity $000 - - - - - 0 - - Re-stated opening equity $000 449,810 465,798 481,000 496,838 449,810 418,965 418,947 455,012

Profit (loss) after taxation $000 15,988 15,202 15,838 (2,068) 44,961 36,048 32,621 35,684

Transactions with equity holders :- Contributed equity injection (return) $000 0 - - (4,396) (4,396) - - (5,286) Dividends to owners of SunWater Limited $000 - - - (44,900) (44,900) - (32,600) (35,600) Total equity - closing $000 465,798 481,000 496,838 445,474 445,474 455,012 418,968 449,810 Financial model version - V 1945.00

Consolidated Group – State Government Transactions

SUNWATER LIMITED Budget : 2018-19 CONSOLIDATED GROUP Q1 Q2 Q3 Q4 2018-19 2016-17 2017-18 2017-18 STATE GOVERNMENT TRANSACTIONS Unit Sept Dec Mar Jun Budget Actual Budget Forecast Received by State Government Dividends $000 - 35,600 - - 35,600 159,009 37,900 - Current tax $000 2,889 2,889 2,889 2,889 11,556 31,918 9,463 10,355 Contributed equity - returned $000 - - - - - 130,000 - - Borrowings - debt service - principal $000 - - - - - 1,548 - - Borrowings - debt service - interest $000 2,990 2,990 2,990 2,990 11,961 12,502 12,877 13,347 Borrowings - debt service - competitive neutrality fees $000 575 575 575 575 2,300 2,123 2,123 2,111 Borrowings - market realisation fees $000 ------

Paid by State Government CSO - irrigation $000 (511) (433) (433) (433) (1,809) (3,716) (10,970) (2,843) CSO - urban $000 (1,493) (1,493) (1,493) (1,493) (5,972) (5,870) (6,270) (5,845) CSO - other $000 (80) (80) (80) (80) (318) - (318) (318) Grants $000 (524) (950) (1,800) (2,886) (6,159) (902) (11,248) (4,333) Contributed equity - injected $000 ------Borrowings - advanced $000 - - - - - (40,000) - - Total $000 3,847 39,099 2,649 1,563 47,158 286,612 33,556 12,473 Financial model version - V 1945.00

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APPENDIX F: DEFINITIONS

 Customer Water Deliveries: the total volume of water measured in ML delivered to SunWater customers. Measured at the supply point  Debt to EBITDA Multiple: total debt divided by EBITDA  Distribution Yield: total dividends and capital distributions divided by the opening market value of the shareholders’ investment  Distribution System Efficiency: in an irrigation system, conveyance efficiency is the ratio between the volume of water delivered at the farm‐gate level to the volume diverted from the river to the irrigation supply network  DSIP: Dam Safety Improvement Program  EBITDA: Earnings before Interest, Tax, Impairment, Depreciation and Amortisation. Measures earnings in terms of cash‐ related items only  EBITDA including Impairment: Earnings before Interest, Tax, Depreciation and Amortisation. Measures earnings in terms of cash‐related items only and impairment  EBITDA Interest cover (times): EBITDA divided by interest expense  Environmental Non‐compliances: material con‐compliances (as defined in the QLD Environment Protection Act)  GAF: Government Advances Facility  High Potential Incident (HPI): An event that has been classified as an HPI due to the potential or actual severity (could be a near miss or actual event)  High Potential Incident (energy released): refers to a near miss or actual event that has been classified as a HPI where actual energy has been released, such as kinetic, gravity, electrical, etc  LMA: Local Management Arrangements  LTIFR: Total days of lost time for injury frequency rate  Market Gearing: ratio of debt to equity  Non‐Routine: refers to infrequent tasks and is sometimes of a more significant nature  NPAT: Net profit after tax  PRA: portfolio risk assessment  Pump Performance: pumps perform to agreed standards  P50 & P90: the statistical confidence level for an estimate (when adopting probabilistic Monte Carlo methodology)  Return on Average Shareholders’ Equity: Operating profit as a percentage of shareholders’ equity  Return on Gross Fixed Assets: EBITDA (including and excluding impairment) as a percentage of average total assets  Routine : also known as preventative or cyclical maintenance is an essential part of the on‐going care and upkeep  TRIFR: Total recordable injury frequency rate.

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