STATEMENT OF CORPORATE INTENT 2019-20

Prepared by the Directors and Management of Sunwater Limited for shareholding Ministers

The Honourable Cameron Dick MP Treasurer, Minister for Infrastructure and Planning

The Honourable Dr Anthony Lynham MP Minister for Natural Resources, Mines and Energy

Commercial-in-Confidence This document contains confidential information relating to the business affairs of Sunwater Limited. Release of its content is subject to the provisions of the Right to Information Act 2009. Any unauthorised disclosure of material contained in this document may diminish the commercial value of that information and may have an adverse impact on the business, commercial and financial affairs of Sunwater Limited Contents

• Performance Agreement • Key Performance Indicators • Response to Shareholders’ Expectations • Key Assumptions and Risks • Capital Expenditure • Capital Structure • Community Service Obligations • Statement of Compliance • Forecast Financial Position • Attachments 1. Corporate Entertainment 2. Employment and Industrial Relations Plan

2 Performance Agreement

In accordance with Chapter 1, Part 3, Section 7 of the GOC Act, the Statement of Corporate Intent represents a formal performance agreement between the Board of Sunwater Limited (Sunwater) and its shareholding Ministers with respect to the financial and non-financial performance targets specified for the financial year. The Statement of Corporate Intent represents agreement to the major activities, objectives, policies, investments and borrowings of Sunwater for 2019-20.

This Statement of Corporate Intent is consistent with Sunwater’s 2019 – 2024 Corporate Plan, submitted to shareholding Ministers and agreed in accordance with Chapter 3, Part 7 of the GOC Act.

In signing this document, the Board of Sunwater undertakes to achieve the targets proposed in the Statement of Corporate Intent for 2019-20.

Major changes to key assumptions that underpin the performance outcomes detailed in this Statement of Corporate Intent, and which come to the Board's attention during the year, will be brought to the attention of shareholding Ministers. Any modifications to this Statement of Corporate Intent will be dealt with in accordance with the GOC Act.

This Statement of Corporate Intent is signed by the Chairman on behalf of all the directors in accordance with a unanimous decision of the Board of Sunwater.

The Hon Cameron Dick MP Treasurer, Minister for Infrastructure and Planning

The Hon Dr Anthony Lynham MP Minister for Natural Resources, Mines and Energy Date 04/09/2020

Ms Leith Boully Chairman, Sunwater Limited Date 17/07/2020 Key performance indicators Performance in 2019-20 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. Progress of implementing strategy will also be reported through Quarterly Scorecards and presentations. Full Year Corporate non-financial measures Q1 Q2 Q3 Q4 2019-20 A Safe High-Performance Culture Total Recordable Injury Frequency Rate (TRIFR) [Employees and Contractors] #/million hours worked <4.5 - - - <4.5 Lost Time Recordable Injury Frequency Rate (LTIFR) [Employees and Contractors] #/million hours worked 0 0 0 0 0 Employee Engagement >50% - - - >50% Compliance with Environmental Standards & Laws No material breaches No material breaches No material breaches No material breaches No material breaches A Sustainable Business Fairbairn Spillway Improvement Project– Stage 2 Delivery to SSB1 Delivery to SSB Delivery to SSB Delivery to SSB Delivery to SSB Spillway Improvement Project – Stage 3 Completion to SSB Delivery to SSB Delivery to SSB Delivery to SSB Completion to SSB Burdekin Falls Dam Improvement Project DBC2 in progress DBC in progress DBC in progress DBC in progress DBC in progress Improvement Project Delivery to SSB DBC in progress DBC approved Delivery to SSB Delivery to SSB Improvement Project PBC3 approved PBC in progress PBC in progress PBC approved DBC in progress Improvement Project PBC in progress PBC in progress PBC in progress PBC in progress PBC in progress Paradise Dam Improvement Project DBC in Progress DBC in progress DBC in progress DBC in progress DBC in progress Flood Repair Delivery to SSB PBC approved DBC approved Delivery to SSB Delivery to SSB Rookwood Weir Project Delivery to SSB Delivery to SSB Delivery to SSB Delivery to SSB Delivery to SSB Supportive Stakeholders Unplanned Customer Supply Interruptions that materially impact operations <12 <4 <3 <3 <2 Community interactions 2 open days Rating >44 - 1 open day Rating >4 - 1 open day Rating >4 Customer engagement/advocacy5 – Irrigation >=10.4 - - - >=10.4 Customer engagement/advocacy5 – Urban >=67.5 - - - >=67.5 Customer engagement/advocacy5 – Industrial >=34.0 - - - >=34.0 Commercially Focused Operations $/ML % reduction on prior year’s actual [direct cost/ allocation] 6 <2% 0.5% 0.5% 0.5% 0.5%

1. SSB = Scope Schedule and Budget 2. DBC = Detailed Business Case 3. PBC = Preliminary Business Case 4. Open day ratings is out of a possible rating of 5 and represents the attendees’ experience on the day and whether they learnt something new 5. The customer advocacy score is based on industry standard and is a measure of the net number of customers who have indicated that they would speak favourably about Sunwater less those who have indicated that they will not 6. Represents the operating cost per Megalitre of water allocation and the target is to reduce this cost per ML by the % indicated 4 Key performance indicators (continued)

Full Year Budget Budget Budget Budget Actual Budget Forecast Corporate financial measures Budget Q1 Sep 19 Q2 Dec 19 Q3 Mar 20 Q4 Jun 20 2017-18 2018-19 2018-19 2019-20 Shareholder Return Benchmarks

Financial Measures

1. Sunwater is forecast not to achieve the Equity Shareholder Value benchmark for FY20 due to asset impairment related to the Dam Improvement Program 5 Sunwater 2019-20 Strategic Work Programs & Link to Shareholder Expectations PURPOSE DELIVERING WATER FOR PROSPERITY

COMMERCIALLY FOCUSED SUNWATER A SAFE HIGH-PERFORMANCE A SUSTAINABLE BUSINESS SUPPORTIVE STAKEHOLDERS OPERATIONS STRATEGIC GOALS CULTURE

Customer Engagement/ Advocacy Financial performance to budget Lost Time Injury Frequency Rate Return on Average Assets (ROAA)

PERFORMANCE Total Recordable Injury Frequency Rate Equity shareholder value (ESV) Community Interaction and Engagement Compliance with environmental standards MEASURES & REPORTING Early engagement with shareholders on Employee Engagement Dam Improvement Program delivery to scope Average price of water delivered per ML growth opportunities through gated approval schedule and budget and achievement of risk (direct cost/ allocation) reduction process

o Maintain an efficient and effective Dam o Provide a safe workplace o Take a customer-centric approach to Improvement Program (DIP) that protects o Consider shareholder and customer value providing fit-for-purpose and efficient o Cascade our purpose, shareholder communities and maintains the life of the in all decision making water services expectations and strategic goals assets o o Act transparently in its dealings with Deliver fit-for-purpose infrastructure and throughout Sunwater to ensure effort is o Ensure investment in dam upgrades are shareholders, stakeholders and water services to regional , efficient, targeted and aligned to deliver compliant with regulatory and legislative customers consistent with its company objects and SHAREHOLDER on our CP and SCI and meet customer requirements and guidelines. This includes o Engage proactively with the communities approved CP and SCI expectations o EXPECTATIONS working with Building Queensland on that may be affected by the operation Operate within the capital structure o Act transparently in its dealings with business cases that demonstrate Sunwater's and management of its assets agreed with shareholding Ministers in the shareholders, stakeholders and customers preferred solution is the most cost-effective. o Work with shareholders, stakeholders CP and SCI o Recognise that Sunwater whilst operating o and customers on the development of Act commercially and work with commercially at all times it provides an o Develop a growth strategy, and focus on pricing and other policy reforms for shareholding Ministers to implement important community service through its opportunities that increase shareholder regional bulk water supply and other directions where services are to be water assets for the benefit of regional value and deliver net economic benefits to water services provided at or below cost economies Queensland.

SWP 4 SWP 5 SWP 1 SWP 2 SUNWATER STRATEGIC Customer Centric Value Improvement WORK PROGRAMS Culture Asset Portfolio Optimisation

SWP 3 SWP 6 Growth & Major Infrastructure Sunwater Digital 6 Projects (including DIP) Key assumptions and risks

Budget Budget Key assumptions 2018-19 2019-20

Economic Indices

CPI % 2.5% 2.5% The key assumptions underpinning Sunwater’s strategic plan and financials for 2019-20 include: Wage Growth EA % (plus increments applicable) 3.0% 3.0% • Irrigation revenue assumption for FY20 is consistent with government policy Wage Growth IEC % 2.5% 2.6% and existing price path arrangements

Cost of Debt • Industrial revenue assumptions for FY20 is consistent with that used for FY19 Budget Dividend Payout Ratio 1 100% 100% • For FY20 the irrigation and urban CSOs reflect the amounts agreed with Other DNRME Consistent with government price path Consistent with government price path Irrigation Revenue • Rookwood Weir project assumed to be undertaken on a fee for service arrangements arrangements basis. Timing consistent with communication with Shareholding departments In line with current contractual In line with current contractual Industrial revenue arrangements arrangements • . Insurance costs (decrease)/increase (9%) 13% • . Electricity Cost Inflation 6.7% 0%

FTEs 412 4422 • Dam Improvement Program schedule is based on the Portfolio Risk Emerald assumed to occur on 30 June Assessment conducted in October 2018 2019 St George and Theodore assumed to LMA • occur The effects of AASB16 Leases have been incorporated As customer vote has not yet occurred, Eton has not been removed from budget • The key risks which may impact Sunwater’s ability to deliver its financials for WACC 2019-20 are included on the following two pages

7 Key assumptions and risks

The Key Risks facing Sunwater for 2019-20 include*: 2011 Class Action

Judgement is expected for the Class Action prior to 30 June 2019. No amount has been included in the forecast for FY19 or FY20 for any adverse judgement. 1

Dam Improvement Program Delivery given continual updates to risk assessments and wet weather

Sunwater’s Dam Improvement Program (DIP) is a critical and complex program that seeks to ensure regional bulk water assets are maintained in accordance with State and national standards, risk are appropriately mitigated, and community safety outcomes are delivered in Sunwater’s portfolio and involves spillway repairs, wall strengthening and drainage improvements to the Paradise, Fairbairn, Burdekin Falls, Teemburra, Coolmunda, Wuruma and Leslie over the next five-year period. The risk reduction plan and program is a result of the Sunwater Portfolio Risk Assessment, last completed in October 2018. This risk assessment can change as new issues are identified or updated information becomes available which can impact the schedule, scope and budget for the DIP. For example, in 2018, new information assessed Beardmore Dam to become third on the list of priorities due to it being assessed as having the highest annual probability of failure within the DIP, due to the potential for backward erosion of foundation material into the Thuraggi Outlet Channel. This project has been factored into the schedule of work and will not have a significant impact on the timing of other DIP projects. The program can also change subject to wet weather disruption and is based 2 on the business delivering the required projects as soon as reasonably practicable. In general terms, higher risks projects require more resources and take longer to complete.

In FY20 Sunwater will continue construction activities for Stages 2 and 3 of the Fairbairn Dam Spillway Improvement Project and progress Burdekin Falls Dam, Teemburra Dam, Leslie Dam, Coolmunda Dam and through Sunwater’s gated project approval process. Paradise Dam Safety has also presented an emerging risk which may impact Sunwater achieving its FY20 objectives as a result of a recent independent review of the stability of the Paradise Dam monoliths under flood loading has been assessed as higher than prior assessments. Sunwater is undertaking further investigations including geotechnical investigations and review of design assumptions, engagement of Technical Review Panel (experts) to independently review and validate the recent dam stability analysis, review of warnings and triggers as identified in the Emergency Action Plan, and review of potential short term or other risk mitigation options pending results above,

*Refer to the 2019-2024 Corporate Plan for more comprehensive discussion on longer term risks 8 Key assumptions and risks

The Key Risks facing Sunwater for 2019-20 include*:

Undertaking our Digital Program driven by a need to replenish technology and systems while carrying out business as usual activities and managing change

This impacts the business from achieving its strategic goals as processes are largely manual and time intensive, critical information is difficult to find, strategic insights for business growth and customer relationship management are difficult to establish. Mitigating this risk requires significant financial investment and associated change management activities along with focusing on business as usual activities.

In response, Sunwater Digital is a core Strategic Work Program that seeks to drive Innovation, Collaboration and Efficiency. We describe a target state of information being digital from source, secure and trusted. We 3 envisage real-time data from sensors, meters and gauges combined with mobile platforms for information capture and distribution. We expect this information to flow and systems to integrate to enable rich visualization of scheme performance to drive data-driven decision and reduce operational costs.

Our digital journey is defined by a capability build across different business streams informing the Digital Enterprise Business Systems program of work. However, we also recognise that we must focus on core projects to build a solid platform for the future solutions. The ‘hopper’ or funnel technique is used to manage the tension between desire to improve and capacity to deliver.

The peak investment in FY20 establishes the Financial and Asset Management Systems project and baseline solutions for SCADA and Water data as well as embedding the Electronic Document Management System for records management. Future years move to a more sustainable level of ongoing investment as projects are justified on a clear business case around reducing cost, reducing risk and improving customer experience. Solution delivery will be grounded in good governance with clear accountabilities, agreed principles and a common process.

Additional key risks that may impact Sunwater delivering on its financial performance targets include: 4 • Impact of IGEM review recommendation related costs regarding NQ Monsoon event • Higher Insurance costs due to market conditions • Unplanned flood repair work

*Refer to the 2019-2024 Corporate Plan for more comprehensive discussion on longer term risks 9 Major Projects expenditure

SUNWATER May Final Statement of Corporate Intent CONSOLIDATED GROUP Significant Projects Budget Budget Budget Budget Budget

Capital or Approval Approval Cumulative Project Description Expense Funding status Conv. $000 Pre 2020 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2020 $000 $000 $000 $000 $000 $000 $000 Infrastructure service contracts - project list Subtotal DIP - Fairbairn Dam - Spillway Improvements & RectificationExpense Un-funded A Nominal $ 123,000 74,875 27,784 5,967 7,615 7,148 7,054 Subtotal DIP - Fairbairn Dam - Spillway Chute Gravity Side Walls Capital Un-funded A Nominal $ 37,000 21,013 22,256 6,994 6,357 5,010 3,894 Subtotal DIP - Paradise Dam - Spillway Improvement Capital Un-funded D Nominal $ 12,079 4,808 7,410 2,251 1,541 1,267 2,351 Subtotal DIP - Burdekin Falls Dam - Spillway & Saddle Dam ImprovementCapital Un-funded D Nominal $ 12,895 6,778 6,072 623 2,114 2,373 962 Subtotal DIP - Teemburra Dam - Improvement Capital Un-funded D Nominal $ 920 862 1,434 233 620 220 362 Subtotal DIP - Leslie Dam - Improvement Capital Un-funded D Nominal $ 790 790 2,789 396 363 494 1,536 Subtotal DIP - Coolmunda Dam Capital Un-funded D Nominal $ - 110 834 160 143 197 334 Subtotal Dam Repair - Installation of a filter zone Thuraggi Capital Funded D Nominal $ 4,874 3,674 1,289 1,289 - - - Subtotal Flood Repair - Fred Haigh Downstream Scour Expense Funded D Nominal $ - 200 1,387 207 163 215 802

Nominal $ 191,558 113,110 71,257 18,122 18,915 16,924 17,296 Project approval status A - Shareholding Minister (SHM) approved A Nominal $ 95,888 50,040 12,961 13,972 12,159 10,948 B - Board approved - yet to be approved by SHM B Nominal $ ------C - Board approved - does not require SHM approval C Nominal $ ------D - Yet to be Board approved D Nominal $ 17,222 21,217 5,160 4,943 4,766 6,348 E - Does not require Board or SHM approval E Nominal $ ------Nominal $ 113,110 71,257 18,122 18,915 16,924 17,296

Funding summary Funded Nominal $ 3,874 2,677 1,497 163 215 802 Un-funded Nominal $ 109,236 68,580 16,625 18,752 16,710 16,494 Yet to be board approved projects have a partial board approval to complete the Business Case. Nominal $ 113,110 71,257 18,122 18,915 16,924 17,296

10 Development Projects

SUNWATER May Final Statement of Corporate Intent Development Projects Budget Budget Budget Budget

Capital or Approval Cumulative Project description Expense status Funding Pre 2020 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2020

Nominal $ $000 $000 $000 $000 $000 $000

Development project list

Rookwood Weir Project Expense A Funded 38,788 67,596 9,053 10,107 15,833 32,603 Burdekin Haughton Channel Capacity Upgrade Expense E Funded 1,459 709 750 0 0 Mareeba Efficiency Improvements Capital C Un-funded 1,952 5,972 1,233 889 2,068 1,782 Mareeba Efficiency Improvements Expense C Funded 4,100 1,025 1,025 1,025 1,025 Burdekin Falls Dam Raising Capital C Un-funded 2,248 3,393 161 528 735 1,971

42,988 82,520 12,180 13,298 19,661 37,381

Summary by approval status A - shareholding minister (SHM) approved A - 67,596 9,053 10,107 15,833 32,603 B - board approved - yet to be approved by SHM B - - C - board approved - does not require SHM approval C - 13,465 2,418 2,442 3,828 4,778 D - yet to be board approved D - - E - CEO approval E - 1,459 709 750 - - - 82,520 12,180 13,298 19,661 37,381

Summary by expense type Capital Capital - 9,365 1,393 1,417 2,803 3,753 Expense Expense - 73,155 10,787 11,882 16,858 33,628 - 82,520 12,180 13,298 19,661 37,381

Summary by funding Funded Funded - 73,155 10,787 11,882 16,858 33,628 Un-funded Un-funded - 9,365 1,393 1,417 2,803 3,753 - 82,520 12,180 13,298 19,661 37,381

11 Capital expenditure

SUNWATER LIMITED SUNWATER LIMITED FINANCIAL MODEL - Version 2011.00 FINANCIAL MODEL - Version 2011.00 May Final Statement of Corporate Intent May Final Statement of Corporate Intent Budget Report - Capital Expenditure Report - Capital Expenditure Unit 2019-20 PROFIT CENTRE REPORT - includes capitalised interest SUMMARY REPORT - includes capitalised interest Budget SUNWATER - PARENT Unit 2019-20 A - Infrastructure - Bulk Water $000 45,019 269 - ICT $000 1,510 B - Infrastructure - Irrrigation Systems $000 2,072 273 - ICT Project Delivery $000 11,197 C - Infrastructure - Industrial Pipelines $000 4,160 520 - $000 100 540 - Eton $000 155 D - Infrastructure - Development Projects $000 - 640 - Operations EGM $000 600 E - Feasability Projects $000 9,365 670 - Townsville $000 198 F - Non-infrastructure $000 14,360 722 - Moranbah $000 128 Consolidated Group Total $000 74,976 ABB - Burdekin WS $000 6,435 AIE - Burdekin IS $000 483 BBB - Bundaberg WS $000 407 BBU - Upper Burnett WS $000 109 BCT - Tarong Pipeline $000 412 • Bulk water capital expenditure primarily relates to the Dam Improvement BIG - Bundaberg IS $000 584 Program and refurbishment refer major projects report page 10 IBS - St George WS $000 1,515 IBT - Macintyre Brook WS $000 897 IBU - Upper Condamine WS $000 2,850 • Feasibility projects include the Burdekin Haughton Channel Capacity KBB - Bowen Broken WS $000 249 upgrade and the Sunwater component of NWIDF funded projects KBP - Pioneer WS $000 1,539 KCB - Burdekin Moranbah Pipeline $000 2,461 • Non-infrastructure capital expenditure primarily relates to investment in the KCC - Collinsville Pipeline $000 115 KIA - Eton IS $000 514 Digital Enterprise Business System program of work and in particular $8.8M LBC - Callide WS $000 365 has been forecast for FY20 to replace the existing Finance and Asset LBN - Nogoa WS $000 22,351 Management Systems, with the remaining amount allocated to baseline LBT - Three Moon WS $000 181 LCS - Stanwell Pipeline $000 178 solutions for SCADA and water data and embedding the Electronic MIM - Mareeba IS $000 398 Document Management System for records management and other smaller Service contracts and resource centres less than $100k $000 1,268 projects 299 - Major Projects - Feasabilities $000 9,365 SunWater - Parent 66,567 • Shareholding Ministers’ approval is required for investments over $40M. Burnett Water Pty Ltd Shareholding Ministers are notified for investments over $10M. $000 7,678 Eungella Water Pipeline Pty Ltd $000 458 North West Qld Water Pipeline Pty Ltd $000 273 12 SunWater - Consolidated Group $000 74,976 Capital structure

Borrowings Facility 2018-19 2019-20 Change 1 Portfolio-linked Loan 284.1 284.1 -

There is no change to borrowings assumed for FY20 and Sunwater is forecast to maintain its existing credit rating in compliance with the requirement to maintain an investment grade credit rating. DIP costs incurred in FY20 are funded by surplus cashflows which has an adverse impact on the Equity Shareholder Value shareholder return benchmark in that FY20 ESV is budget to be lower than 2018-19 forecast ESV

In line with the requirements for GOCs, Sunwater is scheduled to have an external credit rating review during FY20

13 Community Service Obligations

Community Service Obligations assumed for FY20 are as follows:

• Irrigation CSO of $2M for FY20 in line with advice from DNRME. Currently revenue from irrigators (both from customers and via the CSO) do not cover the operational costs that Sunwater incurs in delivering services to these customers. The assumed CSO of $2M results in a funding shortfall and therefore lower return to shareholders of $8.5M (pre tax) for FY20 for schemes where current pricing does not recover the costs of services provided

• No Urban CSO for the Cloncurry pipeline has been assumed in FY20 – this assumption represents a shortfall and therefore lower return to shareholders of $6.1M (pre tax) compared to the cost of delivering this service

14 Statement of Compliance

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).

15 Forecast Financial Position

SUNWATER LIMITED CONSOLIDATED GROUP Actual Budget Forecast Budget Budget Budget Budget Budget P&L - Cost Type View 2017-18 2018-19 2018-19 2019-20 Q1 Q2 Q3 Q4

Operating revenue Water charges • Irrigation 59,646 60,449 67,987 61,257 14,621 16,271 15,047 15,319 • Industrial 175,322 176,428 178,802 181,797 45,407 46,243 45,111 45,035 • Urban 13,422 12,951 13,606 13,251 3,314 3,343 3,308 3,286 Drainage 1,470 1,071 1,220 803 201 201 201 201 Electricity generation 197 526 1,026 631 158 158 158 158 Government transactions • CSO - irrigation 3,161 1,809 2,172 1,968 492 492 492 492 • CSO - urban 5,845 5,972 5,946 - - - - - • CSO - other - 318 ------• Grants & subsidies 2,648 6,159 53,018 71,696 10,078 11,132 16,858 33,628 Water entitlement / trading 15,532 14,919 15,919 16,782 4,196 4,196 4,196 4,196 Consulting 1,037 324 5,282 1,748 783 823 70 73 • FY19 forecast NPAT of $48M is $3M higher than FY19 Facilities management 6,505 8,398 8,525 5,698 1,409 1,394 1,323 1,573 Other 853 379 2,380 873 218 218 218 218 budget reflecting higher revenue and a lower 285,637 289,703 355,883 356,504 80,875 84,469 86,982 104,177 Employee costs impairment expense, partially offset by repairs Salaries & wages (36,541) (39,570) (42,023) (43,942) (11,449) (10,737) (10,491) (11,265) Employee related expenses - statutory (11,356) (12,568) (13,363) (14,076) (3,539) (3,547) (3,325) (3,665) expense provisions relating to Fairbairn and Fred Employee related expenses - non-statutory (9,275) (2,737) (2,706) (2,733) (674) (674) (674) (709) Staff contractors (6,527) (2,808) (2,707) (4,518) (1,138) (1,138) (1,121) (1,121) Haigh dams (63,698) (57,682) (60,799) (65,269) (16,801) (16,097) (15,611) (16,760) Costed labour 6,741 8,952 8,610 5,697 1,443 1,429 1,280 1,545 (56,957) (48,730) (52,189) (59,571) (15,358) (14,668) (14,330) (15,215) Direct costs • FY20 Budget NPAT of $48M is $3M (6%) higher than Accommodation & travel (1,168) (2,098) (2,103) (2,114) (518) (528) (517) (551) Contractors (44,577) (31,537) (97,790) (80,143) (12,965) (15,545) (19,741) (31,893) FY19 Budget NPAT reflecting industrial and irrigation Depreciation - infrastructure (33,684) (34,066) (35,857) (37,774) (9,288) (9,288) (9,241) (9,958) Electricity (36,397) (36,321) (40,669) (34,986) (8,226) (9,600) (8,520) (8,640) revenue growth and CPI indexation on other Materials (4,015) (12,332) (7,541) (23,620) (3,662) (4,120) (5,554) (10,284) Plant, equipment & vehicles (5,602) (6,772) (6,823) (4,030) (881) (896) (910) (1,343) revenues (125,443) (123,126) (190,783) (182,669) (35,539) (39,977) (44,483) (62,670) Corporate & administration costs Insurance, legal & administration costs (15,628) (16,588) (17,024) (19,288) (4,756) (4,756) (4,785) (4,992) Depreciation - non infrastructure (4,143) (3,827) (3,207) (6,266) (1,565) (1,565) (1,556) (1,580) • Total revenue and operating expenditure is impacted Occupancy costs (6,747) (7,554) (7,162) (2,894) (719) (718) (717) (741) Other asset costs (189) (128) (368) (349) (88) (90) (90) (81) by forecast costs relating to the Rookwood Weir (26,707) (28,097) (27,761) (28,798) (7,129) (7,128) (7,147) (7,394) project costs Overheads & indirect costs 11,839 11,732 10,724 8,104 2,060 2,068 1,792 2,184

Total operating costs (197,268) (188,221) (260,009) (262,934) (55,967) (59,704) (64,168) (83,095)

Operating profit (loss) 88,369 101,483 95,874 93,570 24,909 24,765 22,814 21,083

Asset (impairment) revaluation (17,267) (25,336) (15,482) (12,565) (3,508) (3,660) (3,660) (1,736) Non-operating revenue 2,110 2,436 2,695 2,999 877 751 672 699 Financing charges (15,775) (14,353) (14,408) (15,846) (3,990) (3,990) (3,990) (3,876)

Profit (loss) before taxation - PBT 57,437 64,230 68,679 68,158 18,288 17,866 15,835 16,170 Taxation (17,776) (19,269) (20,833) (20,448) (5,486) (5,359) (4,750) (4,853) Profit (loss) after taxation - PAT 39,661 44,961 47,846 47,711 12,803 12,506 11,085 11,317 Dividends (39,661) (44,900) (47,800) (47,700) - - - (47,700) Retained profit (loss) for the period (0) 61 46 11 12,803 12,506 11,085 (36,383) Financial model version - 2011.00

16 Forecast Financial Position

SUNWATER LIMITED CONSOLIDATED GROUP Actual Budget Forecast Budget Budget Budget Budget Budget P&L - Cost Type View 2017-18 2018-19 2018-19 2019-20 Q1 Q2 Q3 Q4 EXCLUDING ROOKWOOD PROJECT Operating revenue Water charges • Irrigation 59,646 60,449 67,987 61,257 14,621 16,271 15,047 15,319 • Industrial 175,322 176,428 178,802 181,797 45,407 46,243 45,111 45,035 • Urban 13,422 12,951 13,606 13,251 3,314 3,343 3,308 3,286 Drainage 1,470 1,071 1,220 803 201 201 201 201 Electricity generation 197 526 1,026 631 158 158 158 158 Government transactions • CSO - irrigation 3,161 1,809 2,172 1,968 492 492 492 492 • CSO - urban 5,845 5,972 5,946 - - - - - • CSO - other - 318 ------• Grants & subsidies 2,648 6,159 53,018 4,100 1,025 1,025 1,025 1,025 Water entitlement / trading 15,532 14,919 15,919 16,782 4,196 4,196 4,196 4,196 Consulting 1,037 324 5,282 1,748 783 823 70 73 Facilities management 6,505 8,398 8,525 5,698 1,409 1,394 1,323 1,573 Other 853 379 2,380 873 218 218 218 218 • FY19 forecast NPAT of $48M is $3M higher than FY19 285,637 289,703 355,883 288,907 71,822 74,363 71,148 71,574 Employee costs budget reflecting higher revenue and a lower Salaries & wages (36,541) (39,570) (42,023) (43,942) (11,449) (10,737) (10,491) (11,265) Employee related expenses - statutory (11,356) (12,568) (13,363) (14,076) (3,539) (3,547) (3,325) (3,665) impairment expense, partially offset by repairs Employee related expenses - non-statutory (9,275) (2,737) (2,706) (2,733) (674) (674) (674) (709) Staff contractors (6,527) (2,808) (2,707) (4,518) (1,138) (1,138) (1,121) (1,121) expense provisions relating to Fairbairn and Fred (63,698) (57,682) (60,799) (65,269) (16,801) (16,097) (15,611) (16,760) Costed labour 6,741 8,952 8,610 10,570 2,591 2,601 2,574 2,805 Haigh dams (56,957) (48,730) (52,189) (54,698) (14,210) (13,496) (13,037) (13,956) Direct costs Accommodation & travel (1,168) (2,098) (2,103) (1,914) (473) (474) (468) (499) Contractors (44,577) (31,537) (97,790) (34,210) (7,587) (8,756) (8,855) (9,013) • FY20 Budget NPAT of $48M is $3M (6%) higher than Depreciation - infrastructure (33,684) (34,066) (35,857) (37,774) (9,288) (9,288) (9,241) (9,958) Electricity (36,397) (36,321) (40,669) (34,986) (8,226) (9,600) (8,520) (8,640) FY19 Budget NPAT reflecting industrial revenue Materials (4,015) (12,332) (7,541) (12,920) (2,561) (3,269) (3,329) (3,761) Plant, equipment & vehicles (5,602) (6,772) (6,823) (3,880) (859) (863) (878) (1,281) growth and CPI indexation on other revenues (125,443) (123,126) (190,783) (125,686) (28,994) (32,250) (31,290) (33,152) Corporate & administration costs Insurance, legal & administration costs (15,628) (16,588) (17,024) (19,288) (4,758) (4,753) (4,779) (4,999) Depreciation - non infrastructure (4,143) (3,827) (3,207) (6,266) (1,565) (1,565) (1,556) (1,580) Occupancy costs (6,747) (7,554) (7,162) (2,894) (719) (717) (716) (741) Other asset costs (189) (128) (368) (349) (92) (91) (88) (78) (26,707) (28,097) (27,761) (28,798) (7,134) (7,126) (7,139) (7,398)

Overheads & indirect costs 11,839 11,732 10,724 13,844 3,337 3,427 3,368 3,712

Total operating costs (197,268) (188,221) (260,009) (195,338) (47,001) (49,444) (48,099) (50,794)

Operating profit (loss) 88,369 101,483 95,874 93,570 24,822 24,918 23,050 20,780

Asset (impairment) revaluation (17,267) (25,336) (15,482) (12,565) (3,508) (3,660) (3,660) (1,736) Non-operating revenue 2,110 2,436 2,695 2,999 873 748 676 702 Financing charges (15,775) (14,353) (14,408) (15,846) (3,990) (3,990) (3,990) (3,876)

Profit (loss) before taxation - PBT 57,437 64,230 68,679 68,158 18,197 18,016 16,075 15,870 Taxation (17,776) (19,269) (20,833) (20,448) (5,458) (5,404) (4,823) (4,762) Profit (loss) after taxation - PAT 39,661 44,961 47,846 47,711 12,739 12,612 11,253 11,107 Dividends (39,661) (44,900) (47,800) (47,700) - - - (47,700) Retained profit (loss) for the period (0) 61 46 11 12,739 12,612 11,253 (36,593) Financial model version - 2011.00

17 Forecast Financial Position

SUNWATER LIMITED CONSOLIDATED GROUP Actual Budget Forecast Budget Budget Budget Budget Budget BALANCE SHEET 2017-18 2018-19 2018-19 2019-20 Q1 Q2 Q3 Q4

Current Assets Cash 25,883 22,701 30,432 33,195 113,973 73,831 86,063 33,195 Advance to Queensland Treasury 55,303 59,327 92,146 56,633 12,322 12,408 12,495 56,633 Receivables 10,910 10,065 8,752 8,650 12,338 12,505 11,815 8,650 Accrued revenue 18,768 16,524 17,543 16,753 17,217 17,028 16,724 16,753 Inventories 6,829 2,501 6,965 7,104 6,953 6,941 6,928 7,104 Other 2,437 2,702 2,460 5,125 3,107 3,761 4,421 5,125 120,130 113,821 158,299 127,461 165,909 126,473 138,447 127,461 Non Current Assets Property, Plant & Equipment 866,037 851,726 843,563 876,407 851,608 859,270 866,321 876,407 Intangibles 14,787 16,939 14,786 14,786 14,786 14,786 14,786 14,786 Deferred tax assets 20,918 10,088 19,761 13,317 19,481 16,953 15,554 13,317 901,742 878,752 878,111 904,511 885,875 891,009 896,662 904,511

TOTAL ASSETS 1,021,872 992,573 1,036,410 1,031,971 1,051,784 1,017,482 1,035,109 1,031,971

Current Liabilities Payables 24,985 34,603 32,684 35,672 34,210 37,835 46,334 35,672 Provision - dividends 39,661 44,900 47,800 47,700 47,800 - - 47,700 Provisions - other 39,372 4,535 55,041 32,471 26,958 28,738 30,777 32,471 Provision - taxation 2,809 - - - 3,082 1,589 1,510 - Other ( including deferred revenue ) 27,319 31,078 9,709 13,844 10,743 11,777 12,811 13,844 134,145 115,116 145,234 129,687 122,793 79,939 91,431 129,687 Non Current Liabilities Borrowings 284,146 284,162 284,146 284,146 284,146 284,146 284,146 284,146 Provisions - other 1,254 1,246 1,254 1,254 25,655 18,799 11,943 1,254 Deferred tax liabilities 7,619 9,371 10,410 18,380 11,025 13,840 15,763 18,380 Other ( including deferred revenue ) 144,413 137,203 137,203 138,036 137,411 137,620 137,828 138,036 437,432 431,982 433,013 441,816 458,237 454,404 449,680 441,816

TOTAL LIABILITIES 571,576 547,099 578,247 571,502 581,030 534,343 541,111 571,502

NET ASSETS 450,295 445,474 458,163 460,469 470,755 483,138 493,998 460,469

Shareholders Equity Contributed equity 245,553 240,588 241,157 241,157 241,157 241,157 241,157 241,157 Retained profits 204,742 204,887 217,006 219,312 229,597 241,982 252,841 219,312 Attributable to owners of SunWater Limited 450,295 445,474 458,163 460,469 470,754 483,139 493,998 460,469 TOTAL SHAREHOLDERS EQUITY 450,295 445,474 458,163 460,469 470,754 483,139 493,998 460,469 Financial model version - 2011.00

18 Forecast Financial Position

SUNWATER LIMITED CONSOLIDATED GROUP Actual Budget Forecast Budget Budget Budget Budget Budget CASH FLOW 2017-18 2018-19 2018-19 2019-20 Q1 Q2 Q3 Q4

Cash flows from operating activities Inflows: • Receipts from customers 295,815 269,187 290,207 278,742 65,826 71,541 69,336 72,039 • CSO, government grant & deferred income receipts 10,170 14,258 61,136 73,664 10,570 11,624 17,350 34,120 • Interest received 183 ------Outflows: - - - - - • Payments to suppliers and employees (206,412) (174,890) (197,179) (245,200) (49,710) (52,578) (52,111) (90,800) • Taxation - external (13,770) (11,556) (24,929) (6,033) (1,508) (1,508) (1,508) (1,508) 85,985 97,000 129,234 101,173 25,177 29,078 33,067 13,851 Cash flow from investing activities - - - - - Inflows: - - - - - • Proceeds from sale of property, plant & equipment 4 266 (3,429) - - - - - • Return of advance to Queensland Treasury 11,067 36,000 - 80,000 80,000 - - - • Interest received 1,524 598 704 2,434 668 653 573 540 Outflows: - - - - - • Purchase of property, plant & equipment (46,939) (61,492) (33,040) (74,976) (18,787) (18,557) (17,890) (19,742) • Advance to Queensland Treasury (66,369) (25,000) (35,000) (44,000) - - - (44,000) (100,713) (49,627) (70,765) (36,542) 61,881 (17,903) (17,317) (63,203) Cash flow from financing activities - - - - - Inflows: - - - - - • Proceeds from borrowings ------• Repayment of loans advanced (0) ------• Proceeds from increase in contributed equity ------Outflows: - - - - - • Interest paid (14,228) (14,261) (14,260) (14,069) (3,517) (3,517) (3,517) (3,517) • Repayment of borrowings (16) ------• Dividends to owners of SunWater Limited - (35,600) (39,661) (47,800) - (47,800) - - • Dividends to non controlling interests in subsidiaries ------(14,244) (49,861) (53,921) (61,869) (3,517) (51,317) (3,517) (3,517) - - - - - Increase (decrease) in cash balance (28,972) (2,488) 4,549 2,762 83,541 (40,142) 12,233 (52,869) Cash balance brought forward 54,855 25,189 25,883 30,432 30,432 113,973 73,831 86,063 Cash balance carried forward 25,883 22,701 30,432 33,195 113,973 73,831 86,063 33,195 Financial model version - 2011.00 19 Attachments

1. Corporate Entertainment 2. Employment and Industrial Relations Plan

20 1. Corporate Entertainment

21 Attachment 1 | Corporate Entertainment

Table 1 – Sponsorship, advertising, corporate entertainment, donations and other activities – details of individual expenditure items 2017-18 2018-19 2019-20 Activity 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 80,000 80,000 TOTAL (1) 55,000 90,000 90,000 Advertising Water safety advertising campaign 220,000 210,000 210,000 School Safety Program 30,000 25,000 40,000 Total over $5,000 250,000 235,000 250,000 Other (total) below $5,000 0 20,000 20,000 TOTAL (2) 250,000 255,000 270,000 Corporate entertainment Staff awards ceremony 13,000 10,000 10,000 Office Christmas Celebration 16,000 13,000 13,000 Total over $5,000 29,000 23,000 23,000 Other (total) below $5,000 31,500 31,500 21,900 TOTAL (3) 60,500 54,500 44,900 Donations TOTAL (4) 0 0 0 Strategic community and stakeholder engagement activities Total over $5,000 Statewide Dam Education Campaign 900,000 200,000 230,000 IGEM Education Campaign 250,000 100,000 0 Other (total) below $5,000 0 20,000 0 TOTAL (5) 1,150,000 320,000 230,000 Total (1)+(2)+(3)+(4)+(5) 1,515,500 719,500 634,900 Table 2 – Corporate Entertainment: Details of Total forecast Expenditure under $5,000 per event 2017-18 2018-19 2019-20 Activity Budget Budget Budget ($) ($) ($) Corporate entertainment Staff functions 20,000 20,000 10,400 Stakeholder and Community Engagement 11,500 11,500 11,500 Total under $5,000 31,500 31,500 21,900

22 2. Employment and Industrial Relations Plan

23 Attachment 2 | Employment and Industrial Relations Plan

Category Assumptions Category Assumptions Sunwater’s E&IR philosophy and direction is aligned with Sunwater’s Strategic Roadmap, specifically the strategic goals of a safe high performance culture and Sunwater employees (other than those on individual employment contracts) are covered by E&IR Philosophy/ commercially focused operations. Sunwater is a Government Owned Corporation employment conditions contained in the Enterprise Agreement. The Agreement contains Direction (GOC), and is governed by federal industrial relations legislation, including the Fair conditions of employment that are not less than the National Employment Standards (NES) Work Act 2009 (Cwth). Sunwater is subject to the provisions of the Government and/or the underpinning Modern Award (Water Industry Award). Relevant industrial Owned Corporations Wages and Industrial Policy 2015. instruments are as follows: Enterprise Agreement Negotiations Award/Agreement Scope Reference Expiry Date As at May 2019, Sunwater is still engaged in negotiations on its Enterprise Agreement. A conciliation request has been lodged by the Australian Workers Union Sunwater Enterprise Covers all Sunwater AG2015/6073 Nominal expiry date through Fair Work . Agreement 2015- employees as per 30 June 2018 2018 (Currently classification expired and under schedule of the negotiation) Agreement

Individual Offered to employees N/A N/A Employment SW08 and above Employment Contracts Conditions Fair Work Act 2009 All employees N/A N/A (Cwth) Significant and Major Projects Sunwater is continuing to develop and improve its strategic workforce plan to ensure Water Industry All employees MA 000113 N/A Emerging Issues the business has the optimum workforce mix and builds the right capability to deliver Award on major projects identified in the Dam Improvement Program and Business growth opportunities. Many of these opportunities will be delivered through a Contractor Sunwater regularly monitors amendments to the FWA, Modern Industry Award and NES to workforce and Sunwater will manage E&IR strategy, risks and issues through ensure compliance with relevant legislation. Employee Relations Management Plans (ERMP). The nominal expiry date for the current Sunwater Enterprise Agreement 2015-2018 was 30 Local Management Arrangements June 2018 (AG2015/6073). A replacement agreement is currently being negotiated in Sunwater continue to consult with potentially impacted employees from the accordance with the GOC Wages Policy and consultation with Qld Office of Industrial potential transition of irrigation schemes identified for Local Management Relations. Arrangements (LMA). There are currently two schemes are under legal due diligence investigation following in-principle agreement with the Government’s terms: Maximum 2.6% total fixed remuneration increase assumed for IEC employees based on • Emerald market movement and performance. • Eton

24 Attachment 2 | Employment and Industrial Relations Plan (cont.)

Category Assumptions Category Assumptions

FY20 No forced redundancies will occur without the written approval of Forecast shareholding Ministers. Where redundancies do proceed, current Employment category entitlements for termination of employees covered by the Sunwater Enterprise Agreement 2015-2018 include: Permanent full time 250 Permanent part time 5.7 • Minimum four (4) weeks’ pay or three (3) weeks’ pay per year of service, Temporary full time 12 with a proportionate amount for an incomplete year of service. The Temporary part time 0.8 Redundancy maximum redundancy payment will be equivalent to fifty-two (52) weeks’ pay Provisions Senior Executive contract 8 • An incentive payment of eight (8) weeks’ pay to depart by the date Other contract 140.8 nominated by Sunwater, and Apprentices (in-house) 2

Cadets 1.2 • Long Service Leave payment of 1.3 weeks at the ordinary time rate for Employment each completed year of service and a proportionate amount for an (FTE) and Trainees (in-house) incomplete year of service, less any Long Service Leave already taken or Workforce Casual employees paid out. Planning Total directly employed workforce 420.5

Apprentices (in-house) 3

Trainees (in-house)

Superannuation contributions are made on behalf of eligible employees into Contractor employees (trade/technical/ops) 4 an approved fund in accordance with the federal Superannuation Guarantee Contractor employees (professional/administrative/clerical) 14 Charge Amendment Act 2002. Superannuation Labour hire (trade/technical) As Sunwater subscribes to the government-wide superannuation fund, Labour hire (professional/administrative/clerical) QSuper, it does not have access to any surplus or any current exposure to s457 temporary visa any shortfall from the defined benefit fund. Total workforce 441.5 This captures planned Full Time Equivalent (FTE’s) against planned positions

25 Attachment 2 | Employment and Industrial Relations Plan (cont.)

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 which is calculated on a 1.5%.

Reporting 2018/2019 FY 2019/2020 FY 2020/2021 FY Sunwater EA Efficiency Savings Target 1.5% year annum, cumulative $ 306,000.00 $ 621,000.00 $ 1,872,000.00

Tight workforce management initiatives are in progress in FY19 and the target will be achieved for FY19.

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 Consultation this plan.

26