YARRA VALLEY

ANNUAL 20 

REPORT 9

WATER 20 1 YARRA VALLEY WATER 2 ANNUAL REPORT 2019-20

OUR PURPOSE TO SUPPORT THE HEALTH AND WELLBEING OF OUR CUSTOMERS, AND CREATE A BRIGHTER FUTURE FOR COMMUNITIES AND THE NATURAL ENVIRONMENT

ACKNOWLEDGEMENT OF TRADITIONAL OWNERS Yarra Valley Water proudly acknowledges Australia’s first peoples and the people of the Kulin Nations as the original custodians of the land and water on which we rely and operate. We pay our deepest respects to their Elders past, present and emerging. We acknowledge the continued cultural, social and spiritual connections that Aboriginal and Torres Strait Islander peoples have with the lands and waters, and recognise and value that the Traditional Owner groups have cared for and protected them for thousands of generations. We also recognise and value the continuing rich cultures and contribution of Aboriginal and Torres Strait Islander people and communities to the Victorian community.

Cover image, PeopleImages, istock photo, uploaded 2019. Photos in this report may have been taken prior to the coronavirus (COVID-19) pandemic. YARRA VALLEY WATER ANNUAL REPORT 2019-20 3

OUR ASSETS

10,163 9,943 602 KM OF WATER MAINS KM OF SEWER MAINS KM OF RECYCLED WATER MAINS 44 65 3 WATER SERVICE WATER PUMPING CLASS A RECYCLED RESERVOIRS STATIONS WATER PLANTS

137 104 10 WATER PRESSURE SEWAGE PUMPING SEWAGE TREATMENT REDUCING STATIONS STATIONS PLANTS

BILLION IN WASTE TO ENERGY INFRASTRUCTURE FACILITY $5.3 AND OTHER ASSETS 1

KEY STATISTICS 2M 781,288 58,228 POPULATION SERVED RESIDENTIAL PROPERTIES BUSINESS CUSTOMERS YARRA VALLEY WATER 4 ANNUAL REPORT 2019-20

Merri Creek, Brunswick. Image taken March, 2018. YARRA VALLEY WATER ANNUAL REPORT 2019-20 5

CONTENTS

INTRODUCTION 6

About us 8 1 A message from the Chair and the Managing Director 10 Our strategic context 12

2019-20 HIGHLIGHTS 16

Key initiatives 18 2 Overview of 2019-20 performance 38

DELIVERING VALUE 42 3 OUR LEADERSHIP 44 OUR PEOPLE AND CULTURE 56

LIVEABILITY OUTCOMES 64

Resilient and liveable cities and towns 65

Customer and community outcomes 70

Water for Aboriginal cultural, spiritual and economic values 73

ENVIRONMENTAL OUTCOMES 76

Climate adaptation 76

Bulk entitlements report 78

Greenhouse gas emissions and net energy consumption 80

Other statutory obligations 82

OUR PERFORMANCE 84 4 FINANCIAL REPORT 90 5 DISCLOSURE INDEX 146 YARRA VALLEY WATER 6 ANNUAL REPORT 2019-20

INTRODUCTION

Ceres Nursery, Brunswick. Image taken March, 2017. YARRA VALLEY WATER ANNUAL REPORT 2019-20 7

1 INTRODUCTION

Ceres Nursery, Brunswick. Image taken March, 2017. 1 YARRA VALLEY WATER 8 ANNUAL REPORT 2019-20 INTRODUCTION

ABOUT US

Yarra Valley Water delivers essential water and sanitation services to two million people. We are one of Australia’s largest water utilities with more than 30 per cent of Victoria’s population relying on us 24/7.

We manage $5.3 billion worth of We have a globally recognised culture and a highly assets across more than 4000 square engaged workforce. In 2019-20 our staff maintained their focus on our purpose: to provide exemplary water kilometres. Our service area covers most and sanitation services that contribute to the health and of Melbourne’s northern and eastern wellbeing of current and future generations. We’ve now suburbs, stretching from Wallan in the completed our 2020 Strategy and are preparing to launch north to Warburton in the east. our 2030 Strategy to steer us through the next decade. We are a statutory corporation, incorporated under We’re future-focused and continually work to anticipate the Water Act 1989, and our activities are overseen by the changing needs of our customers and stay ahead an independent Board of Directors appointed by the of evolving community expectations. We’re shifting to a Victorian Government. regenerative approach in our work to actively contribute to the improvement of the environment we rely on. Our obligations regarding the performance of our functions and the exercise of our statutory powers are We buy bulk water from Melbourne Water which we defined in the Statement of Obligations, issued by the supply to customers. We also take their sewage away. Minister for Water in accordance with Section 4I (2) of Most is sent to Melbourne Water’s Eastern or Western the Water Industry Act 1994. We are required to monitor treatment plants. The rest is treated at our 10 regional compliance with the obligations set out in the statement, treatment plants, several of which produce recycled water report on non-compliance and take remedial action in for use in homes and public spaces. Recycled water is relation to non-compliance. a key initiative to help save precious drinking water and maintain a secure water supply – and we continue to focus During the 2019-20 financial year, we were accountable on expanding its use in the community. to the Minister for Water, the Hon Lisa Neville MP. The Essential Services Commission (ESC) is our economic We generate our own renewable energy from food waste regulator. The ESC’s role includes regulating prices, at our waste to energy plant in Wollert, which now service standards and market conduct across the operates at full capacity. We also create solar energy at Victorian water industry. our staff carpark in Mitcham and at three of our sewage treatment plants.

We’re now planning new ways to generate more clean, green energy, including the establishment of a second waste to energy facility in Melbourne’s east to ensure we meet our target of generating 100 per cent of our own energy needs through renewable energy by 2025. YARRA VALLEY WATER ANNUAL REPORT 2019-20 9

1 INTRODUCTION

Image taken March, 2018. YARRA VALLEY WATER 10 ANNUAL REPORT 2019-20 INTRODUCTION

A MESSAGE FROM THE CHAIR AND THE MANAGING DIRECTOR

We are pleased to present Yarra Valley Water’s Annual Report for the financial year ending 30 June 2020, in accordance with the Financial Management Act 1994.

This year was shaped by the Another major focus for us this year has been powerfully unprecedented challenges of coronavirus completing our 2020 strategy while also switching gears to develop our strategic approach for the next decade. (COVID-19) and Australia’s catastrophic Our new 2030 Strategy will see us continue to transform bushfires. During this extraordinary around customers, help communities thrive and elevate period in history, we’ve worked harder our environmental focus, driven by an exceptional than ever to deliver on our customer organisational culture. Being safe and efficient and commitments and obligations. delivering on the United Nations Sustainable Development Goals also underpin our future direction.

Responding to coronavirus changed the way we work. We made good progress against 2019-20 performance We moved swiftly to manage the impacts and ensure the targets despite challenging and uncertain times. These continued supply of our essential water and sanitation targets are guided by the Statement of Obligations, services. This included protecting our people by moving policy directions set out in the State Government’s Water most offsite to work from home in early March and for Victoria policy and Letter of Expectations, our 2020 participating in an industry-wide response to support Strategy and Price Determination customer commitments. those who needed to continue working in the community. Priority areas in 2019-20 included developing strategies Our customers are at the centre of everything we do to manage the ongoing customer and financial risks and we also reacted quickly and compassionately to the associated with coronavirus, expanding our recycled sudden increase in people who were financially impacted water network, trialling digital meters, planning for our by coronavirus. We’re acutely aware of the ongoing second waste to energy facility to support our emissions hardship facing many of our customers - both residential reduction strategy and keeping bills flat. We’ve also and commercial - and we’re offering extra support and continued to focus on deepening our connection with flexibility to help them manage their bills. We also worked customers, undergoing digital transformation to improve to reassure the community that their water remains safe service response and overall customer experience. to drink and to raise awareness of damaging fatbergs caused by non-flushable products entering the sewer We’re proud to have developed our Stretch Reconciliation system during nationwide toilet paper shortages. Looking Action Plan this year as part of our ongoing journey ahead we will continue to carefully manage the impacts of towards reconciliation and creating a spiritually, socially coronavirus on our customers and our business, and have and emotionally safe workplace for Aboriginal and Torres robust plans in place to manage a gradual transition to new ways of working when the time is right. YARRA VALLEY WATER ANNUAL REPORT 2019-20 11

Strait Islander peoples. Our work this year also focused on We also aim to reduce service failures year on year so expanding partnerships and collaboration with Traditional customers enjoy uninterrupted supply. We have a target of Custodians to deliver water for Aboriginal cultural, less than 0.96 per cent of customers experiencing three or 1 spiritual and economic value. more unplanned water or sewerage service interruptions INTRODUCTION a year. This target is based on a rolling five-year average Other highlights for the year included: to minimise the impact of annual weather variations. This • $246M invested in water and sewerage infrastructure year, due to our service response work and favourable to improve services and support growth weather, 0.91 per cent of customers experienced three or more water and sewerage interruptions. This equates to • Launching community engagement to advance plans 0.98 per cent on a rolling five-year average, which is just for an underground recycled water facility to service shy of our annual target. Doncaster residents and local parks • Exceeding customer satisfaction targets and our Overall water use decreased this year, but we’ll keep Customer Care Team being recognised as world working to reduce consumption, developing alternative leaders, winning both Australian and International water sources for non-drinking purposes and using Service Excellence awards in 2019 technology to identify and fix more leaks in the network. • Leading development of Make Every Drop Count, the While total water use per capita was 5 per cent lower water industry’s first major water saving campaign for than last year, it was 2 per cent higher than our target. a decade We’ll continue working with the other Melbourne water corporations and creating new strategies to drive positive • Installing 800 digital meters in a successful trial that behaviour change. identified 230 water leaks, saving our customers almost $80,000 and about 150,000 bathtubs of water We outperformed our financial targets this year with in the first six months a net profit after tax of $104.4 million. This result was • Our food waste to energy facility being recognised with driven by developer growth related activities, including top industry accolades, winning both the national and new customer contributions, additional revenue from state Infrastructure Project Innovation Awards at the other products and services, operating efficiencies and Australian Water Association awards lower interest rates on borrowings. This result has flowed through as an increased community dividend back to the • Exceeding our target for timely restoration of water and State of Victoria. sewerage services – we restored services within four hours for 95.1 per cent of customers against a target of We want to acknowledge everyone in our team for their 91.1 per cent. This January, for the fourth consecutive dedication and commitment to achieving our purpose. A month, we achieved 100 per cent customer satisfaction high-performing culture is the key to accomplishing great rate with our service faults response – a record result things and we thank our people and partners who help for our business us deliver our services every day as we work towards a • 83 per cent of staff completed a Pulse survey in May sustainable and prosperous future for all. Our Board’s with 97 per cent of respondents saying they had governance and leadership is also critical to our success confidence in our response to coronavirus and we thank our members for their insight and diligence this year. 2019-20 was the second year of our current Price Submission in which we commit to achieving an ambitious As we celebrate the successful completion of our 2020 set of seven key service outcomes over five years. In a Strategy and look towards 2030, we’re excited about the world-leading innovation, we voluntarily committed to new possibilities for Yarra Valley Water to help shape a give money back to customers each year via a community healthy and prosperous future for Victoria. rebate if we did not meet a target in a given year. We‘re proud to have met five of the seven stretch outcomes our customers say they expect and value. In line with our promise, we’ll return $3 million to customers this year. Sue T O’Connor We recognise the challenge of achieving all our Chair ambitious targets, particularly in the context of a warming and drier climate. We’ve identified where we need to do more around service reliability and water conservation awareness. Patrick J McCafferty Managing Director YARRA VALLEY WATER 12 ANNUAL REPORT 2019-20 INTRODUCTION

OUR STRATEGIC CONTEXT

We exist to provide exemplary water and sanitation services that contribute to the health and wellbeing of current and future generations.

This is underpinned by our strategic commitments:

THE WAY WE WORK WE PROVIDE WE MAKE EVERY ENABLES EXTRAORDINARY EXEMPLARY SERVICE CENT COUNT PERFORMANCE

WE ARE SAFE WE WORK IN HARMONY  WE SUPPORT THRIVING WITH THE ENVIRONMENT COMMUNITIES

Together with our seven Price Submission customer We are further guided by the Victorian Government’s service commitments, these aim to deliver extraordinary Letter of Expectations, which focuses on: results for our customers, stakeholders, owners and staff, as well as the broader community. • climate change • customer and community outcomes In recent years, we have also focused on examining • water for Aboriginal cultural, spiritual and how we contribute to society in both positive and economic values negative ways. We measured that contribution not only in financial terms, but also using the principles of integrated • resilient and liveable cities and towns reporting through our second Planet, People, Prosperity • leadership and culture sustainability report. It assesses our impact in terms of • financial sustainability human, social and environmental capital. • recognising recreational values.

These values and outcomes align well with our strategic commitments. YARRA VALLEY WATER ANNUAL REPORT 2019-20 13

SUSTAINABLE DEVELOPMENT GOALS 1 INTRODUCTION

SEE NEXT PAGE FOR MINISTER’S OUR PURPOSE OVERVIEW OF SUSTAINABLE LETTER OF DEVELOPMENT GOALS EXPECTATIONS AND STRATEGY

CLIMATE CHANGE PRICE SUBMISSION CUSTOMER CUSTOMER AND COMMITMENTS COMMUNITY OUTCOMES

WATER FOR ABORIGINAL CULTURAL, SPIRITUAL AND CUSTOMERS EXPECT CUSTOMERS VALUE ECONOMIC VALUES SAFE DRINKING FAIR ACCESS RESILIENT AND LIVEABLE WATER AND ASSISTANCE CITIES AND TOWNS FOR ALL

RELIABLE WATER WATER AVAILABILITY LEADERSHIP AND SEWERAGE AND CONSERVATION AND CULTURE SERVICES

TIMELY RESPONSE MODERN FLEXIBLE FINANCIAL AND RESTORATION SERVICE SUSTAINABILITY

CARE FOR AND RECREATIONAL PROTECT THE VALUES ENVIRONMENT

THE SUSTAINABLE DEVELOPMENT GOALS The United Nations’ Sustainable Development Goals We play a fundamental role in the liveability and (SDGs) are a universal call to action to end poverty, prosperity of Melbourne, through the provision of protect the planet and ensure all people enjoy peace safe, reliable drinking water and sewerage services, and prosperity. Yarra Valley Water was the first water and by making investment decisions that optimise corporation to sign up to the SDGs, which provide value and resilience for the community, including the lens for us to ensure our work is contributing future generations. to a healthy and sustainable future where no one is left behind. Our roles and responsibilities also extend into other realms, including the impact on the environment from our operations, our impact on household affordability, and our contribution to addressing inequality. YARRA VALLEY WATER 14 ANNUAL REPORT 2019-20 INTRODUCTION

PRICE SUBMISSION SUSTAINABLE OUR STRATEGY CUSTOMER COMMITMENTS LETTER OF EXPECTATIONS DEVELOPMENT GOALS

• Safe drinking water • Water quality complaints • Reliable water • Customer satisfaction and sanitation WE PROVIDE • Billing payment issues EXEMPLARY • Timely response SERVICE and restoration • Modern flexible service

• Care for and protect • Emission reductions the environment • Adaptation to climate • Water availability and change and variability WE WORK IN HARMONY WITH conservation • Integrated water THE ENVIRONMENT management • Water efficiency

• Fair access and • Customer assistance for all community engagement • Payment management WE SUPPORT THRIVING and hardship COMMUNITIES • Engagement of Aboriginal communities • Engagement of Traditional Owners • Aboriginal inclusion plan

• Diversity and inclusion • Board performance review THE WAY WE WORK ENABLES EXTRAORDINARY PERFORMANCE

• Water bills • Financial indicators WE MAKE EVERY CENT COUNT

• Health and safety

WE ARE SAFE YARRA VALLEY WATER ANNUAL REPORT 2019-20 15

1 INTRODUCTION

Image taken January, 2019. YARRA VALLEY WATER 16 ANNUAL REPORT 2019-20

2019-20 HIGHLIGHTS

Image taken March, 2018. YARRA VALLEY WATER ANNUAL REPORT 2019-20 17

2 2019-20 HIGHLIGHTS

Image taken March, 2018. 2 YARRA VALLEY WATER 18 ANNUAL REPORT 2019-20 2019-20 HIGHLIGHTS

WE PROVIDE EXEMPLARY SERVICE

Our customers are at the centre of everything we do and we aim to deliver an exceptional experience every time they need us.

OUR APPROACH KEY INITIATIVES Caring for customers and responding to SAFE DRINKING WATER their needs is central to our commitment Safe drinking water is our number one priority and we to provide exemplary service. This take a proactive approach to ensure we provide our approach is more integral than ever customers with a reliable, high-quality and pleasant- as the financial impact of coronavirus tasting supply. We’re proud of our record in achieving continues to affect many Victorians. 100 per cent compliance with the Safe Drinking Water regulations. Our customer research consistently shows high satisfaction with the quality of our drinking water. We aim to fix faults and service interruptions promptly In 2019-20 we achieved 92 per cent customer satisfaction. and ensure all interactions with customers are positive and constructive. We listen to our customers, surveying We have a comprehensive drinking water risk thousands this year to better understand their needs and management plan and continually monitor and sample tailor our services. our systems to ensure the integrity and quality of our water supply. We maintain pristine drinking water through We’re also planning for population growth and hotter, drier a modern, fit-for-purpose chlorination system and real weather to ensure we can continue providing our essential time monitoring sensors. Every year an independent services while supporting our customers with stable bills laboratory collects and tests more than 7000 water and help for those most vulnerable. samples gathered from customers’ taps in 32 separate water quality zones. We’re also trialling real-time monitoring sensors in our Class A recycled water areas. 100% COMPLIANCE WITH THE SAFE DRINKING WATER REGULATIONS. YARRA VALLEY WATER ANNUAL REPORT 2019-20 19

RESPONDING TO CORONAVIRUS (COVID-19) During 2019-20 we continued our work to upgrade high failure areas of the network, and: We responded swiftly to the challenges posed by • Renewed 47km of poor performing water mains coronavirus. Our focus is firmly on ensuring the safety and wellbeing of our people, continuing our essential • Renewed 49km of poor performing sewer pipes work safely in the community and reassuring customers • Inserted 650 water valves and 221 new hydrants to that our vital water and sewerage services will continue reduce unplanned service interruptions uninterrupted. • Inspected 178km of sewerage pipes to assess their We swiftly implemented a series of strategies to support condition and identify blockage risks our work: • Inspected 1813 house connection sewer branches to assess the integrity of pipes • Transitioned more than 90 per cent of our workforce to 2 safely work from home • Renewed 2247 house connection sewer branches 2019-20 HIGHLIGHTS • Created processes to ensure our people and TIMELY RESPONSE AND RESTORATION contractors on the frontline were protected as essential workers. This included ensuring they had We understand our customers’ frustration if we don’t access to personal protective equipment and practised respond quickly when their service is interrupted and physical distancing. They were also equipped with we’ve worked to lift customer satisfaction across all field documentation so they could safely go about their work work. We aimed to restore water and sewerage within • Collaborated with the broader sector to ensure we four hours for 91.1 per cent of customers. We exceeded worked together to safeguard the supply of water and our aim this year with the target being met for 95.1 per sewerage services for all Victorians cent of customers. We have an ongoing water and sewer mains renewal program targeting high failure areas of • Communicated to customers to reassure them their the network to ensure we continue to maintain reliable water was safe to drink, that our essential staff water supply. were working safely in the community to ensure the continued supply of our vital services We ramped up our summer readiness campaign in • We enhanced our already robust customer 2019 in anticipation of increased burst and leaks due to support programs for customers experiencing forecasts of a long, hot season. Dry, hot weather makes financial difficulties our infrastructure more susceptible to faults as the ground shifts and causes pipe breakages. This year’s • Surveyed staff in May to check how our people were campaign included extra crews to respond when needed feeling about our response to coronavirus. Results and increased community engagement to raise awareness were overwhelmingly positive, with 97 per cent of and improve understanding of the challenges we face respondents saying they had confidence in Yarra Valley in summer. Water. In addition, 95 per cent felt their wellbeing was supported and we were proactive in responding to This year we rolled out a hydrant capping program to customers in need reduce unplanned supply interruptions. Capping our hydrants means we don’t have to switch off water to RELIABLE WATER AND SEWERAGE customers when we need to do hydrant maintenance SERVICES work. We redesigned our cap in partnership with the Metropolitan Fire Brigade (MFB). Our design makes it We aim to reduce service failures year on year so easier for the MFB to remove the cap and access the customers enjoy uninterrupted supply. We have a target of water network quickly if needed. We’re also trialling other less than 0.96 per cent of customers experiencing three or innovative technologies in this space to save water and more unplanned water or sewerage service interruptions potentially reduce costs. a year. This target is based on a rolling five-year average to minimise the impact of annual weather variations. This year, due to our service response work and favourable weather, 0.91 per cent of customers experienced three or more water and sewerage interruptions. This equates to 0.98 per cent on a rolling five-year average. As this is just shy of our annual target, we will return $1.5 million to customers via 2020-21 prices as promised. YARRA VALLEY WATER 20 ANNUAL REPORT 2019-20 2019-20 HIGHLIGHTS

WE PROVIDE EXEMPLARY SERVICE CONTINUED

REFRESHED FAULTS MAP MODERN FLEXIBLE SERVICE We updated our online Faults Map to include an We’re committed to providing great customer service additional layer of information to improve its accuracy every time a customer needs us. We’ve achieved and usefulness to customers and ensure its accessibility significant improvements in customer satisfaction across for people with disabilities. The map was accessed over all field work including renewals, where we have focused 54,120 times in the nine months to April 2020, providing on improved communications and site restoration. our customers with information about reported faults, supply interruptions and planned network improvements. We’ve had high customer satisfaction across fault call We also sent more than 129,000 SMSs to customers to let handing and fault repair. In December, 89.9 per cent of them know about interruptions to their water supply in the calls were answered within 30 seconds (against a target same period. Work is also underway to review all our field of 80 per cent). In January, for the fourth consecutive communications to ensure they are clear and accessible month, we achieved a record 100 per cent customer for our customers. satisfaction rate with our service faults response. Our customers value our modern flexible service and our BEST PRACTICE COMPLAINTS HANDLING ability to anticipate and adapt to their needs, especially We encourage our customers to tell us about their in times of uncertainty. Our people pride themselves on experiences and make it easy for them to lodge a their compassion and care for customers, especially those complaint. We use complaints to identify and fix experiencing vulnerability. We’re proud to report that 87 problems with our services, processes and practices per of customers said they were satisfied with their most and to advocate for change, for the benefit of all our recent interaction this year, against a target of 86 per cent. customers. Our approach aligns with the Australian and Our Customer Care is recognised as world-leading. We New Zealand Standard for complaint handling. While this won the Customer Service Institute of Australia’s leads to higher recorded complaint volumes than most Customer Service Organisation of the Year Award organisations would recognise, we believe it is appropriate (Government/Not for Profit) at the 2019 Australian to be conservative and ensure any potential expressions Service Excellence Awards. We subsequently won the of dissatisfaction with our service are captured so that international award. we can use these for insights to drive improvements in service. CUSTOMER EXPERIENCE JOURNEY This year, through the Water Services Association of MAPPING Australia, we spearheaded the establishment of a national Through our commitment to Customer Experience working group which is working towards a uniform (CX), we have identified more than 90 unique task- approach to complaints that aligns with this best practice based journeys to better understand what customers standard. Senior managers from water corporations experience when they contact us. These journeys track around Australia are represented on the group, which how customers interact with us, such as when they need meets regularly to advance towards a consistent industry- to pay a bill, report a fault or ask for help to understand wide approach to the classification of complaints, leading their bill. Mapping these journeys has identified pain points to better outcomes for more customers. for both customers and staff, revealing service gaps as well as improvement and innovation opportunities. Tracing these customer experiences has allowed us to update systems, processes and communications to ensure we’re meeting expectations. YARRA VALLEY WATER ANNUAL REPORT 2019-20 21

DIGITAL TRANSFORMATION CARING FOR COMMERCIAL CUSTOMERS We’re updating a number of systems and processes We have sharpened our lens on business customers, with to elevate our service responsiveness and customer our Commercial Customer Team providing exceptional experience in line with our 2030 strategic ambitions. This services and experiences for this valued cohort. The digital transformation will make interactions smoother team also supports our specialist business relationship for both customers and staff. It will also ensure we can managers, skilled in water efficiency, who work with high- leverage data by connecting core systems together. value commercial customers to tailor services and cost- saving solutions that support their operations. Our new Customer Experience Digital Platform (CXDP) will deliver ongoing improvements to simplify and speed We streamlined our one-stop shop customer service up customer interactions. This will allow staff and this year, aligning all our commercial and trade waste customers to see the same information via a single user- information into the one system, resulting in a better 2 friendly interface and provide staff with a more complete customer experience. 2019-20 HIGHLIGHTS customer history. The team has also worked to improve our service to We also plan to deliver a new Distribution Management Water Carters, resulting in a record $1.4 million revenue System which will provide a holistic operational view of this year, despite the impact of coronavirus and wetter our assets and enable us to acquire and analyse data from conditions in February and March. a large number of network sensors, providing us with near real time visibility of our assets, so we can be more RESPONDING TO CORONAVIRUS (COVID-19) responsive. This project will also support the rollout of Coronavirus has had a mixed impact on our business digital meters. customers, many of whom have found themselves in hardship and needing help. Others at the opposite DIGITAL WATER METERS end of the spectrum faced a hike in demand for their Our digital metering trial started in Vermont South in products and needed to manufacture more, resulting 2019 and has been highly successful. We installed meters in higher water use. As part of our response to those at almost 800 properties, allowing us to quickly detect in financial difficulty we developed a range of relief hidden water leaks and notify customers so they could packages including deferred bill payments and payment resolve problems with their household plumbing and extensions. We also waived trade waste fees for appliances, avoiding bill shock. vulnerable small businesses, such as cafes, affected by coronavirus restrictions. Within the first nine months we had identified 230 leaks with almost 90 per cent promptly repaired by TRADE WASTE customers. This saved customers more than $76,000 and the equivalent of about 150,000 bathtubs of water. We We introduced a bigger and better trade waste system this surveyed customers involved in the trial and 88 per cent year. The system is designed to make it clearer and easier reported satisfaction with their meter upgrade experience. for frontline staff to service our trade waste customers and deliver efficiency gains. We made changes to our trade Digital meters are a smart solution which allows us waste billing process to improve response times. to manage our water more sustainably. This is more important than ever as Melbourne’s population grows INDUSTRY PARTNERSHIPS AND and the city gets hotter and drier, placing extra strain on ENGAGEMENT water storages. We are members of various industry groups, including Customers with digital meters can monitor their daily the Australian Industry Group, Victorian and Melbourne water use online and through our new Daily Drop mobile Chambers of Commerce and NORTH Link. We leverage phone app which allows them to compare their usage these memberships to create connections with businesses with similar households in their area and provides them and government representatives. with targeted tips on ways they can save water around the home. They will also receive SMS alerts regarding Through our waste to energy facility, we have continued to potential leaks on their property. grow our engagement in the waste and resource recovery industry. We’re active members of the Waste Management and Resource Recovery Association of Australia and the Australian Organics Recycling Association. YARRA VALLEY WATER 22 ANNUAL REPORT 2019-20 2019-20 HIGHLIGHTS

WE WORK IN HARMONY WITH THE ENVIRONMENT

We rely on a healthy environment and working in harmony with nature is key to our purpose.

OUR APPROACH KEY INITIATIVES We know our customers value our work ENERGY caring for and protecting the environment. Providing water and sewerage services is both energy- We pride ourselves on our eco-friendly intensive and costly – which impacts both our finances business practices, including providing and the environment – and we’re committed to innovate water for environmental and cultural to reduce our ecological footprint. This includes installing flows, meeting ambitious emissions solar panels at our Mitcham head office and several sewage treatment plants, our waste to energy facility at reduction targets and generating our Wollert and membership of Zero Emissions Water, which own clean, green energy. sources energy at a cheaper wholesale rate from a large solar farm in north-west Victoria. Thanks to our concerted Our goal is to ensure our environmental impact never efforts, we’re on track to achieve our aspirations to exceeds the carrying capacity of nature and we pursue a generate all our own clean energy by 2025 and reduce restorative approach. We’re also embedding the United our greenhouse gas emissions (direct and indirect) by at Nations’ 17 Sustainable Development Goals into our work. least 64 per cent by mid-2025 (against the business as usual baseline). As we prepare to embark on our 2030 Strategy, we are now focusing on taking our commitments a step further, Highlights this year include: shifting from a restorative approach to a regenerative one. This means we will aim to create socially and • Completing a feasibility study into creating a large- environmentally healthy ecosystems where we work, scale 500 kW floating solar system at our Wallan making sure we leave things in a better state than they Treatment Plant that will not only produce renewable were before we were there. This marks an even stronger energy, but will also reduce algal growth in a Class B commitment to environmental values as we work towards storage lagoon that feeds our recycled water plant a better future for generations to come. • Developing a concept to install ground mounted solar systems at five more sites to increase solar energy production YARRA VALLEY WATER ANNUAL REPORT 2019-20 23

2 Waste to Energy Facility, Wollert. Image taken August, 2017. 2019-20 HIGHLIGHTS

WASTE TO ENERGY We also focused on reducing service vulnerabilities, developing a partnership with the Bureau of Meteorology We’re proud to be industry leaders in the challenge to and holding climate outlook workshops each quarter to reduce waste. Our waste to energy facility continues to help prepare resources for the following three months. showcase innovative waste management, winning both national and state Infrastructure Project Innovation Awards In the wake of last summer’s devastating bushfires, we at the Victorian and Australian Water Association Awards began reviewing our emergency management plans with in 2019. a climate lens. We assessed our asset vulnerabilities to climate change in the high-fire risk Healesville region and The plant operated at full capacity this year, diverting shared findings with stakeholders. We are incorporating 31,000 tonnes of waste from landfill and reducing findings in our risk assessment and renewals programs. greenhouse gas emissions. This year the facility generated eight times more renewable energy than it consumed. As part of our collaborative planning approach we It met 21.5 per cent of our total electricity demand and completed organisational resilience benchmarking returned a total energy benefit of $803,377. Coronavirus (receiving the highest Australian water utility score) and has had minimal impact on our operations due to food have been reviewing our governance, risk, and evaluation manufacturing continuing to be an important part of the processes to ensure we are aligned with the recent economy at this time. Department of Environment, Land, Water and Planning (DELWP) guidelines on Managing Climate Risk. We also We are now planning to build a second facility in Melbourne’s continued working in partnership with DELWP and the east, with public consultation expected to begin in August. other water authorities on the Victorian Climate Change This new facility will be larger, capable of processing up Adaptation Action Plan, extensive long-term water to 150 tonnes of waste a day to create 33,000 kWh of planning and other industry collaborations. renewable energy. It will generate a further 30 per cent of our energy needs. The two facilities will ultimately meet more than half of our overall energy requirements. WATER SECURITY Significant societal challenges - climate variability, rapid CLIMATE RESILIENCE PLANNING population growth and environmental degradation - all have the potential to affect our ability to deliver services. In 2019-20 we continued to implement our Climate We’re strongly focused on water security work to ensure Resilience Plan, which sets out our response to the we continue to meet growing demand in the face of a hotter impacts of climate change and supports long-term climate, lower inflows to storages and population growth. planning for an uncertain future. Desalinated water makes an essential contribution to As part of this work, we successfully piloted adaptive Melbourne’s water security as it is a rainfall-independent planning in the Upper Merri Creek Place-based Plan and source of supply capable of producing about one third of in the Northern Growth Corridor Treatment Strategy. Melbourne’s annual demand. In 2019-20 the Victorian This process is now embedded in Place-based Planning Desalination Project delivered 125 GL (125 billion litres) of Guidelines for the organisation. water into Melbourne’s water storages - its biggest order yet. YARRA VALLEY WATER 24 ANNUAL REPORT 2019-20 2019-20 HIGHLIGHTS

WE WORK IN HARMONY WITH THE ENVIRONMENT CONTINUED

RECYCLED WATER This work will deliver multiple benefits including improvements to water quality, stormwater harvesting for Developing recycled water infrastructure is crucial to sporting grounds, urban cooling, passive recreation and long term water security. Our planning includes increased indigenous cultural heritage. This pilot project has involved reliance on recycled water and stormwater and a focus significant public consultation and partner collaboration on raising community awareness around its use. This year and, due to its innovative approach and potential benefits, we provided Class A Recycled Water to 4592 properties as received grant funding from the State Government’s part of our ongoing program to deliver recycled water to Integrated Water Management Fund to augment partner customers, including 100,000 new homes in Melbourne’s financial contributions. Northern Growth Corridor.

We’re also implementing plans to build an underground WATER CONSERVATION recycled water treatment plant to service more than 5000 This year we led development of the Make Every Drop properties at Doncaster Hill, a large infill development Count water conservation campaign, a collaborative in Melbourne’s north east. We updated our plans this program between Melbourne’s water corporations to raise year after consultation with the North East Link Project awareness and encourage people to save water. (NELP) determined that Eram Park in Box Hill North was no longer a suitable site for an underground facility. The campaign, which included TV and print advertising We’re now in the process of a comprehensive community and a dedicated website with water-saving tips, was engagement process to build the facility underground at designed to help Victorians reduce their household water Tram Road Reserve, which runs alongside the Eastern use and support the Victorian Government’s overarching Freeway in Doncaster. The facility will supply homes with T155 objective. water for gardens, toilets and laundries, saving 2.5 million Post-campaign research found Make Every Drop Count litres of drinking water and demonstrating how we can exceeded expectations against key performance metrics, build resilience into our communities. The project also has leading to an increase in public awareness of water supply the potential to provide a drought-proof supply of recycled issues. Consideration for reducing water usage has also water to local parks and sports fields. We’ve worked increased, with 64 per cent of people now saying they closely with the Manningham community on this project, are likely to try to reduce their water use over the next hosting local information sessions to explain our plans and 12 months. increase knowledge about the benefits of recycled water. We’re now in the initial stages of exploring other ways We’re pursuing new ways of expanding recycled water we can make every drop count including a fun new use as well as other alternate water sources. We’re customer campaign to encourage households to be currently working with farmers in the Coldstream area to more water conscious. investigate the feasibility of establishing a recycled water scheme supplied by our Lilydale Sewage Treatment Plant to supply up to 1000 megalitres to local vineyards and crop farmers.

We’ve partnered with Maroondah Council and Melbourne Water to progress a project to revitalise Tarralla Creek in Croydon. YARRA VALLEY WATER ANNUAL REPORT 2019-20 25

COMMUNITY SEWERAGE IWM sub-catchment planning framework will support the growth of community-centric, water-sensitive public Many homes in northern and eastern Melbourne were built spaces, where people are invested in solutions to the before sewerage infrastructure was available and are still water challenges facing our rapidly growing city. using outdated and inefficient septic tanks to manage their wastewater. We have an extensive community sewerage The Upper Merri Creek pilot, which incorporates the program to replace these outdated systems, which northern growth area, is the first predominantly greenfield pose a risk to environmental and human health. Work is sub-catchment to apply this approach. A key aspect of currently underway in Monbulk, Park Orchards, The Patch, the work is a Cultural Flows Assessment currently being Launching Place, Sassafras, Eltham, Olinda, Sherbrooke completed by the Wurundjeri Water Unit. The assessment and Kallista. In 2019-20 we connected 579 properties to will provide a statement of the Wurundjeri’s spiritual, the sewerage system as part of our goal to service about cultural, environmental, social and economic vision to 2

11,000 properties through the program by 2033. be incorporated into the planning of the sub-catchment. 2019-20 HIGHLIGHTS We spent time on Country with the Wurundjeri team as INTEGRATED WATER MANAGMENT they completed the assessment, which was a fantastic Integrated Water Management (IWM) is a coordinated knowledge sharing exercise. The content of the Upper approach to managing water and other resources to Merri Creek Cultural Flows Assessment is central to the support sustainable, connected communities. It involves sub-catchment planning process and an important step in communities and organisations working together to make demonstrating effective inclusion of Aboriginal people in the most of public resources and maximising economic water governance. and social value to create a happy and healthy society. We’re now connecting with stakeholders to begin work We’re now expanding our IWM work to include a in the sub-catchment areas of Gardiners Creek (covering placemaking approach. This involves looking at the infill areas in Blackburn, Box Hill and Hawthorn) and needs of specific sub-catchments, rather than adopting Koonung Creek (incorporating Doncaster Hill, Bolin Bolin a one-size-fits-all solution to urban resource planning. wetland in Bulleen and areas affected by the North East This approach means our customers will have a Link project). We’ll proactively work with communities to voice in helping to develop their community, including plan the evolution of these important areas. management of drinking water, stormwater, recycled water and sewerage services. Placemaking using an YARRA VALLEY WATER 26 ANNUAL REPORT 2019-20 2019-20 HIGHLIGHTS

WE SUPPORT THRIVING COMMUNITIES

We’re committed to helping our community thrive and prosper so we can keep customers in good hands.

OUR APPROACH KEY INITIATIVES We’re passionate about taking a RESPONDING TO CORONAVIRUS (COVID-19) sustainable approach to everything we We’ve always strived to put the customer at the centre of do and working to support health and all we do and customer care is in our DNA. The impact of prosperity for all. coronavirus took our focus to new levels with a significant increase in customers impacted in some way by seeking Our customers tell us they value our role in contributing assistance. to Melbourne’s liveability and promoting social inclusion, financial resilience and equality. We are committed to Building on our existing hardship programs for residential providing inclusive services and caring for the most customers, we adapted rapidly to implement additional vulnerable people in society. The impact of coronavirus levels of support, update programs and introduce new has made this commitment more vital than ever. training to ensure we could meet the changing needs of our customers – many of whom are experiencing vulnerability We also acknowledge and recognise the continuing rich for the first time. This included introducing an additional cultures and contributions of Aboriginal and Torres Strait specially trained team to support customers impacted by Islander peoples to the land and waterways on which we coronavirus and temporarily pausing standard collection rely. We’re committed to working with local Traditional activities whilst we developed new strategies and products Custodians to ensure their ongoing contribution to land to deal with this newly vulnerable cohort of customers. and water management continues, as we plan for the future together. As well as an increase in residential hardship cases, our Commercial Services team is also working with an unprecedented number of business customers experiencing hardship. We have created a new hardship program to support commercial customers, which includes flexible payment terms. We implemented Victorian Government guidelines to support small businesses through faster processing of invoices to ensure quicker payments to our suppliers. YARRA VALLEY WATER ANNUAL REPORT 2019-20 27

We have also been working closely with community The appointment of active Aboriginal leaders to our Board organisations providing frontline support, including - Karen Milward in 2017 and Ian Hamm in 2019 - brings emergency relief networks, family violence organisations a wealth of experience and knowledge to help guide and community centres. To help support the work of our work to reduce inequality and support sustainable emergency relief centres and community organisations economic outcomes for Aboriginal and Torres Strait we’ve delivered funding and material aid – including Islander peoples and businesses. distributing an existing stock of toilet paper and providing hand sanitiser. We have signed up to the Racism. It Stops With Me campaign developed by the Australian Human Rights Commission as part of our work to help make the ADVANCING SUSTAINABLE DEVELOPMENT community a better place by taking a stand against GOALS racism. This campaign has clear links to our Diversity 2

We’re committed to advancing the United Nation’s 17 and Inclusion Strategy and aligns with the work of the 2019-20 HIGHLIGHTS Sustainable Development Goals and we’re proud to report Reconciliation and Cultural Diversity working groups. on our progress each year. This year we took our reporting approach a step further to meet the Global Reporting WATERCARE Initiative Standards, which represent world’s best practice Customers tell us they value us supporting people in sustainability reporting. in financial hardship to ensure we provide fair access Our second Planet, People, Prosperity report outlines our and assistance for everyone. This support is vital as social and environmental commitments and tracks how we manage the ongoing impact of coronavirus on our we’re working towards creating a more sustainable and residential and business customers. Since March we’ve prosperous future for everyone. We focused our work in had over 6000 customers tell us they’ve been impacted 10 key areas most relevant to our business, identified in some way by coronavirus. We’ve created a specialist through reviewing global and local trends and talking team to help them through our tailored support options. to our customers, staff, community and partners. Our We’ve had a 12 per cent increase in customers accessing comprehensive report won a Silver Award at the 2020 WaterCare and are currently helping more than 8500 Australasian Reporting Awards. customers through the program. This number continues to grow through the ongoing impacts of coronavirus and RECONCILIATION as we connect with more customers through community organisations, emergency relief providers and other We launched our Reconciliation Action Plan in 2016 and trusted partners. since then we’ve seen an increase in cultural awareness among staff, built a culturally safer and more diverse In 2019-20 we engaged over 46,000 customers through workplace and fostered meaningful new partnerships our WaterCare programs and campaigns and met our with Victorian Aboriginal business owners. primary target – that 89 per cent of customers who have accessed our services believe we help customers This year we developed our Stretch Reconciliation Action experiencing difficulty paying for their water and sewerage Plan 2020-23, which marks a significant next step on our services. We have also reached more than 49,000 path to reconciliation. Created through a collaborative customers to promote our support programs with the process led by our Reconciliation Working Group and objective of improving awareness and access to the Leadership Committee, it reinforces our commitment to programs – particularly for at-risk parts of the community. building and strengthening respectful relationships with Traditional Owners in our shared role as water custodians. Accessibility and awareness are essential to full We continue to work closely with the Water Units of participation and inclusion and we use partnerships and Wurundjeri and Bunurong, evolving to a more proactive networking to spread the word about our supportive and strategic approach focusing on early engagement services and programs. This year staff attended about 50 and supporting their aspirations in relation to Country. events and conferences to highlight our support services, This includes ongoing cultural flows assessments, targeting at-risk customers in culturally and linguistically strengthening our cultural heritage management diverse communities, those experiencing family violence practices and collaborating to explore business or financial vulnerability or people transitioning through development opportunities. different stages of life. YARRA VALLEY WATER 28 ANNUAL REPORT 2019-20 2019-20 HIGHLIGHTS

WE SUPPORT THRIVING COMMUNITIES CONTINUED

Key initiatives this year included:

• Participating in a wide range of community events and OVERALL THIS YEAR: networks to raise awareness of our Watercare program amongst groups such as new migrants, new families and the elderly WE SUPPORTED • Partnering with councils, early learning centres and maternal child health centres to reach new mothers with information about our financial support options, 11,501 through our Waterbabies book • Presenting WaterCare to culturally and linguistically CUSTOMERS – 5% MORE THAN diverse communities at various seminars for THE SAME TIME LAST YEAR organisations working with refugees, migrants and asylum seekers • Developing new communication materials using Aboriginal artwork and imagery that can be easily WE WORKED WITH MORE THAN identified by our local Aboriginal and Torres Strait Islander communities • Piloting different strategies to raise awareness 7400 amongst those who are eligible to register for a concession rebate. We estimate there are about NEW CUSTOMERS 120,000 properties in our service area that may EXPERIENCING DIFFICULTY be eligible for concession rates, but have not registered their details with us. This work could help make bills more affordable and manageable for vulnerable customers • Providing training in cultural competency and disability awareness to ensure staff understand the barriers that 90% different customers may face in engaging with us OF CUSTOMERS MET THEIR • Partnering with AFL Outer East, Eastern Health and AGREED PAYMENT PLANS Sports and Life Training to deliver the Leading the Change program. This program provided over 40 sessions on respectful relationships and mental health to sports clubs across the Shire of Yarra Ranges, engaging 1000 players on key messages around the WE SUCCESSFULLY prevention of violence against women, mental health TRANSITIONED OVER and drug use

FAMILY VIOLENCE RESPONSE 4807 About one in four of women are affected by family violence and we’re committed to doing all we can to CUSTOMERS TO protect vulnerable customers. This includes having safety MAINSTREAM PAYMENTS flags on customer bills as an extra layer of protection for people experiencing family violence. This means their accounts are locked down and managed by staff who are YARRA VALLEY WATER ANNUAL REPORT 2019-20 29

aware of their personal circumstances. It helps to prevent and encouraging consumption of tap water. More than perpetrators from using account information against 50 cafés, bars and businesses have already signed up to former partners. the “Refillers Welcome” movement to help encourage Australians to ditch plastic and make the switch to This year our family violence response was recognised in tap water. the Essential Services Commission’s 2019 Better Practice Guide, a handbook to help water and energy businesses SOCIAL PROCUREMENT implement safe and effective family violence strategies. The guide highlights various aspects of our work, including We developed our first social and sustainable procurement our commitment to training and the ways our WaterCare strategy this year so we can make sure we use our team provide customised solutions to people experiencing purchasing power to create social and environmental family violence. benefits over and above the value of the goods and services 2

we need to source. This new approach will also ensure 2019-20 HIGHLIGHTS THRIVING COMMUNITIES PARTNERSHIP we support social enterprises and maximise economic opportunities for Aboriginal and Torres Strait Islander We are the host and a founding member of the Thriving businesses. We have tailored our systems to provide Communities Partnership (TCP), a voluntary cross-sector direct links to external social enterprises and Aboriginal collaboration working to ensure everyone in Australia businesses as relevant procurement opportunities arise and has access to essential services, including water. TCP we are engaging and training staff in our new approach. continues to expand and build capability, bringing together over 250 organisations from all sectors including water, We’re also focused on supporting suppliers and contractors energy, banking, telecommunications and community who share our commitment to environmental and social sectors. TCP has developed support tools to address goals so that together we can help make a difference to the issues such as family violence and cognitive disability, lives of people, as well as the health of our planet. helping businesses ensure fair access to their services. Our Financial Inclusion Action Plan continues to drive our TCP’s flagship project is development of the One Stop work to ensure everyone has a fair go. We’re seeking new One Story Hub. The Hub will provide a single-entry point ways of supporting vulnerable groups in the community for people experiencing vulnerability to ensure they have through our supply chain and other partners. Our new social access to all the services they need without having to tell procurement strategy and systems will help deliver on their story multiple times to different organisations. Our these strategic goals. ongoing support for TCP ensures that people in difficult circumstances are not left behind when it comes to having HUMAN RIGHTS AND MODERN SLAVERY fair access to the modern services they need to thrive in This is the first year of reporting under the Modern contemporary Australia. Slavery Act 2018. We have completed a state industry- wide supply chain risk assessment with the Victorian AFFORDABILITY STUDY Procurement Working Group and identified key human We completed a research project to learn more about the rights and modern slavery risks that we will focus on. impact of water bills on household budgets. This project This work was a collaborative effort between 10 Victorian involved measuring affordability to enable us to better water corporations and identified risks around cleaning understand the circumstances of customers experiencing and maintenance, construction and offshore engineering financial stress. The findings give us new insight into the services. We’re reforming tender processes and contract areas impacted by affordability and an opportunity to clauses to address modern slavery issues through our investigate ways we can further shape our programs and procurement processes and, through the working group, services to help customers who need support. identifying and developing industry-wide approaches to managing these risks. CHOOSE TAP Internally we also conducted our first human rights review, Choose Tap is a national partnership of water retailers, identifying the most important human rights areas we can initiated by Yarra Valley Water to achieve better outcomes impact. Collaboratively across our business we developed for communities and the environment. This year we drove a set of principles to guide our approach to human rights, development of a new Choose Tap campaign encouraging and the gaps and opportunities for us to address. We’re businesses to provide free tap water refills to people with using this information to revise our corporate risk register their own water bottles as a way of reducing plastic waste and it’s helped inform our new strategy. YARRA VALLEY WATER 30 ANNUAL REPORT 2019-20 2019-20 HIGHLIGHTS

THE WAY WE WORK ENABLES EXTRAORDINARY PERFORMANCE

We are nothing without our people and we pride ourselves on our constructive culture and positive high-performing team.

Staff event. Image taken November, 2018. YARRA VALLEY WATER ANNUAL REPORT 2019-20 31

OUR APPROACH OUR VALUES As part of our focus on developing our 2030 Strategy, We are a warm and welcoming workplace we undertook a comprehensive and inclusive process which celebrates diversity, gender to define our values. Led by our Executive team, we equality, individuality and entrepreneurial worked with more than 150 staff across all levels of the spirit. We foster a psychologically safe organisation to develop a set of values to encapsulate and trusting environment which gives what’s important to us and guide our work for the future. Our values focus on putting people first, having a “make people permission to try new things and it happen” attitude and being brave in our approach. We’ll allows our constructive culture to thrive. work as one team and concentrate our efforts on what really matters so we make a positive impact for our We make conscious decisions to ensure that our workforce 2 customers, communities, partners and the planet. Our 2019-20 HIGHLIGHTS reflects the richly diverse community we serve, actively values will be part of our new 2030 Strategy and will seeking out potential candidates from key diversity groups become guiding principles to how we work. using targeted advertising.

In 2019 we accepted our fourth Human Synergistic DIVERSTY AND INCLUSION Organisations Cultural Inventory Sustainability Award, which Our Diversity and Inclusion Strategy articulates our recognises our ability to sustain our constructive culture as commitment to implement programs, practices, measures measured through the Organisational Culture Inventory. and targets that attract and retain a diverse workforce. The strategy has four key areas of focus – reflecting the community, gender balance, Aboriginal and Torres Strait KEY INITIATIVES Islander participation and workforce flexibility. RESPONDING TO CORONAVIRUS (COVID-19) We are developing an accessibility action plan to ensure our workplace and services are accessible to people with Coronavirus changed the way we work. Most of our disability. In 2019 we also piloted disability awareness workforce moved offsite to work from home in early March training through Scope, an organisation which supports and quickly adapted to delivering our services remotely. people with physical and intellectual disabilities. This We created new processes for staff and contractors who training, which will be ongoing, will skill staff to improve remained on the frontline to ensure they were able to safely their understanding of the needs of people living with go about their work. They practised physical distancing to disability and increase our capability to meet their needs. protect themselves, customers and the broader public. Supporting employment pathways is a key part of our We set up new ways for staff to stay connected, including a reconciliation commitment and we are committed to new social channel on our intranet and a virtual parenting increasing the number of Aboriginal and Torres Strait team group to support staff juggling the unprecedented Islander employees at Yarra Valley Water. We’re building demands of home schooling while working from home. Staff on our efforts to create a culturally safe working space also had increased access to support through our Employee and help position the water industry as an employer of Assistance Program, including real time SMS counselling. choice. As well as our ongoing relationship with AFL SportsReady, we’ve strengthened our recruitment We conducted a staff survey in early May to check how processes to make them more accessible for Aboriginal our people were feeling about our response to coronavirus and Torres Strait Islander applicants. About 1 per cent of and identify if we could do more to support them. We had employees identify as Aboriginal or Torres Strait Islander. a very strong response with 641 people completing the survey – an 83 per cent participation rate. Results were overwhelmingly positive, with 97 per cent saying they had confidence in Yarra Valley Water managing the impact of coronavirus. In addition, 95 per cent felt their wellbeing was supported and we were proactive in responding to customers in need. YARRA VALLEY WATER 32 ANNUAL REPORT 2019-20 2019-20 HIGHLIGHTS

THE WAY WE WORK ENABLES EXTRAORDINARY PERFORMANCE CONTINUED

We have invested in leadership development of Aboriginal staff members, with our Manager of Integrated Water Management Sub-Catchment Planning undertaking the Emerging Indigenous Executive Leadership Program AS OF 30 JUNE 2020, run through UNSW and the Australian Graduate School of Management. THE PROPORTION OF

We have several staff working groups to ensure we are WOMEN AT YARRA promoting an inclusive and culturally safe workplace for VALLEY WATER IS: everyone. In 2019 our Gender Balance Working Group launched YVW Women, a network designed to create a safe environment to empower female employees through support and mentoring. The network is fostering valuable connections, allowing women to share knowledge, experiences, and resources. 62% YVW Women’s executive sponsor, our Chief Financial FEMALE DIRECTORS Officer, Natalie Foeng, has also been selected as a member of the Insight – Executive Leadership for Women in Water Program this year. This Department of Environment, Land, Water and Planning (DELWP) initiative focuses on creating gender equity across the water industry and supporting women who want to lead at the 57% highest level. Insight focuses on self-development and FEMALE EXECUTIVE learning and aims to bring together an intellectually rich group of women to create a collaborative and supportive peer network. In addition, Natalie, along with our Growth Futures General Manager, Chris Brace, is also involved in the complementary Bridging the Gap program. This program aims to bring male and female colleagues together to develop strategies to bridge gender gaps at 45% executive level across the water sector. Together, these FEMALE PEOPLE two programs aim to build a critical mass of engaged, informed leaders - both men and women - to drive cultural LEADERS change to ensure gender equity at leadership level across the water industry. 50% FEMALE WORKFORCE OVERALL YARRA VALLEY WATER ANNUAL REPORT 2019-20 33

Pride in Water March, Image taken February, 2020.

PRIDE IN WATER PARTNERING FOR PROSPERTY In 2019 we proudly pioneered Pride In Water, a ground- We’re proud to be part of a utility twinning program breaking industry network which aims to create a more which helps Indonesian water authorities provide clean 2 welcoming and inclusive water industry for lesbian, gay, water and sanitation to millions of people. The federally 2019-20 HIGHLIGHTS bisexual, transgender, intersex and queer (LGBTIQ+) funded Australia-Indonesia Water Utility Improvement staff, contractors and customers. This initiative now has Program (WUIP) is facilitated by the Australian Water the support of all 19 Victorian water corporations along Association and the Indonesian Water Supply Association. with VicWater and DELWP and is growing on a national It pairs selected Australian water utilities with Indonesian basis. It has grown through our commitment to culture counterparts to help address Indonesia’s water service and wellbeing, which has allowed our LGBTIQ+ working challenges and strengthen international ties. group to thrive and expand its work. We believe everyone has the right to feel valued, included and safe at work and, In September we visited Jakarta to attend the Indonesia through partnership and collaboration, Pride in Water will Water and Wastewater Expo and Forum and take part help build a more inclusive water industry. in site visits and activities to better understand the challenges facing our twin, the Balinese-based PERUMDA GRADUATE DEVELOPMENT PROGRAM Air Minum Tirta Sanjiwani. We shared our expertise around issues such as water quality, non-revenue water, Our Graduate Development Program includes a proactive gender equality and social inclusion. Our discussions and recruitment strategy which helps us attract the best learnings will inform the development of a WUIP action emerging new talent in the industry. It’s part of a plan to address these critical issues. We also hosted a broader water sector effort to attract and retain high- contingent of Balinese staff at our Mitcham head office to achievers through the Melbourne Metro Water Graduate demonstrate our work in action. Partnership. This collaboration with City West Water, South East Water and Melbourne Water helps enhance Apart from helping to improve basic water and sanitation our own program and build awareness of opportunities services for Indonesia’s people, our involvement delivers across the sector. The partnership won the Will Spensley on our commitment to the United Nations’ Sustainable Memorial Award for Innovation - Public Sector for the joint Development Goals (SGDs), advancing equality and graduate program at the 2019 Australian Association of prosperity in a neighbouring part of the world. It also Graduate Employers Awards. creates an opportunity for our people to develop their skills working across diverse cultures and build new professional relationships in Australia and beyond. YARRA VALLEY WATER 34 ANNUAL REPORT 2019-20 2019-20 HIGHLIGHTS

WE MAKE EVERY CENT COUNT

We aim to deliver fair and reasonable prices and make investment decisions that achieve community value.

OUR APPROACH include extending the length of or deferring payment arrangements, utilisation of government programs such as We aim to keep customer bills as low as concessions and utility relief grants, waiving of some trade possible while generating a return to the waste fees for small businesses and pricing adjustments. State of Victoria. Our focus has been to ensure that customers know that we understand these are challenging times and We plan our investments carefully and make decisions to we are focused on the delivery of appropriate and achieve community value and intergenerational equity. supportive programs. By optimising operating and capital expenditure and We are actively managing our financial risks wherever identifying new revenue streams, we can continue to possible and working closely with the Government on the deliver high-quality, affordable services. potential financial impacts of coronavirus on the short and The impact of coronavirus on our financial situation long-term financial position of the company. has been closely monitored with a strong focus on supporting our customers through this challenging period. We’ve implemented initiatives and support programs to assist both residential and business customers. These

Wollert Treatment Plant, Image taken September, 2018. YARRA VALLEY WATER ANNUAL REPORT 2019-20 35

KEY INITIATIVES By the start of 2023-24, we will have delivered opportunities for significant productivity gains consistent KEEPING CUSTOMER BILLS LOW with our stretch targets in our Price Submission. We are pleased to continue to meet our commitment of CYBER SECURITY flat bills for the community with a slight reduction in the average annual bill for 2020-21. This has been achieved We’ve updated our Cyber Security Plan to ensure that through a combination of control in operating expenditure, all our information and systems are protected from the lower debt costs and reduced desalination costs. We have threat of cyber attack. This rolling three-year plan, to also been actively collaborating with Melbourne Water on be fully implemented by 2021, follows a structured and its price submission given that around 54 per cent of our proactive approach to cyber security risk management. customer’s bill reflects Melbourne Water’s bulk charges. It will deliver enhanced cyber safety practices across 2

the organisation and ensure ongoing compliance with 2019-20 HIGHLIGHTS PRODUCTIVITY legal, regulatory and contractual requirements. It also focuses on creating a heightened sense of awareness so To ensure we continue to keep customer bills as low every employee understands their cyber security roles as possible we set an annual 2.5 per cent productivity and responsibilities. target as part of our Price Submission commitment. We continue to focus strongly on the delivery of ongoing Highlights include: cost efficiencies throughout the business through the • All servers and desktops are now protected by the exploration of opportunities including process and market leader in endpoint security technology improvements. We continue to closely monitor and manage our operating expenditure to ensure that we • A marked increase in cyber security awareness across minimise the long-term impact on customer bills. the organisation • Implementation of a solution to monitor the security We’re: posture of our vendors and service providers. • Working actively in the major operating expenditure areas of the business to identify and deliver initiatives CAPITAL EXPENDITURE which will align with our strategy and drive down our Capital expenditure in 2019-20 was $333.6 operating costs without impacting service delivery million, primarily to renew and upgrade water and • Establishing IT infrastructure that provides a platform sewer infrastructure. to enable the delivery of long-term productivity savings We completed the Epping Branch Sewer Merri Creek Main • Understanding the cost drivers and structure across all and Kalkallo Creek Branch Sewer Stage 1E projects this areas of the business to help identify potential areas of year, extended our recycled and drinking water network productivity exploration by 37.7km and our sewerage network by 181km to provide • Ensuring that any benefits achieved from the delivery essential services to new customers. of initiatives are captured and maintained Our Portfolio Management Office has led to improved • Ensuring that the savings we target are able to cover governance and ensures all our processes and systems any cost increases incurred above inflation are in line with industry best practice. It’s part of our • Minimising the cost impact of increased growth work to embed a more disciplined approach to project and change in infrastructure caused by evolving forecasting, scheduling and reporting to drive performance expectations and climate variability. and efficiencies across the organisation. We will continue to benchmark our performance through the Water Services Association of Australia, which confirms our efficiency levels are at best practice. We'll also continue to improve our data analytic capabilities through exploration of systems including procurement, billing and maintenance. We’ll also leverage government 37.7KM and industry relationships to actively identify and explore opportunities. These partnerships provide us with insights EXTENSION TO OUR RECYCLED AND about where to focus our efforts for the largest reward. DRINKING WATER NETWORK YARRA VALLEY WATER 36 ANNUAL REPORT 2019-20 2019-20 HIGHLIGHTS

WE ARE SAFE

The safety and wellbeing of our people is paramount – nothing is more important than arriving home from work safe and sound.

OUR APPROACH 3.1 as at 30 June 2020. This has consistently reduced from 3.7 in August 2019. We continue to provide We work to ensure safety is always top ongoing targeted training for our people, and education of mind for every single person who and information internally and externally to improve performance. works for Yarra Valley Water. We focus on leadership, systems and capability, and The SIFR for monitor contractors (contractors working on empowering our people to protect their sites under their own control) is 17.8 as at 30 June 2020 and has steadily reduced since October 2019 (from 21.1). own safety and wellbeing. We’re implementing a range of campaigns to improve performance. The target of 5.0 was not achieved this year. We’re increasing our proactive approach to safety, benchmarking our performance against the Water Our new information sharing approach is raising awareness Services Association of Australia’s Health and Safety among all contractors of any incidents that may pose Maturity Model, a framework to advance health and safety potential risks. We have also introduced role-based, culture and performance in the water industry. targeted safety leadership training for all people managers to increase knowledge around risk management and legal obligations, including the impact of new industrial KEY INITIATIVES manslaughter legislation which took effect on July 1, 2020. SAFETY PERFORMANCE We’ve introduced pilot lead indicators and increased our focus on hazard reporting - particularly hazards, incidents There was one lost time injury (LTI) for a contractor on a and near misses that have a higher potential for injury. We worksite under our control this year. The significant injury are also progressing our Safe and Well strategy focused frequency rate (SIFR) for staff remains at 2.0, however the on growing our proactive and integrated approach to SIFR for Yarra Valley Water and contractors working on safety, and deepening our wellbeing work. sites under YVW control (managed contractors) is

8 25 7 20 6

5 15 4 10 3 2 5 1 Number of Lost Time InjuryNumber of Lost (LTI)

0 0 (SIFR) Rate Significant Injury Frequency 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

LTI- Contractor LTI-YVW & Managed SIFR- Contractor SIFR-YVW & Managed YARRA VALLEY WATER ANNUAL REPORT 2019-20 37

OTHER KEY SAFETY PERFORMANCE INDICATORS 2017-18 2018-19 2019-20 Number of reported hazards/incidents for the 5.10 10.71 5.55 year per 100 full time equivalent staff members Number of ‘lost time’ standard claims for the - - - year per 100 full time equivalent staff members Average cost per claim for the year $275,951 - - Outstanding claim cost $275,951 - - 2 NEW STANDARDS SAFETY APP 2019-20 HIGHLIGHTS We continue to focus on our transition to the new ISO In 2019 we introduced a new Safety Mobility App to 45001 Occupational Health and Safety Management provide real-time safety alerts and simplify our reporting Systems certification standard to bring our policies and systems and procedures. The app, which was rolled out procedures in line with international best practice. We after a successful small-scale trial, allows users in the expect to achieve full compliance by November 2020, field to report safety hazards and incidents and complete well before the effective date of March 2021. fatigue assessments, helping to increase safety literacy We’ve also been preparing for the new Environment across the entire business. Protection Amendment Act 2018, which takes effect on July 1 2021. This new environmental approach SAFETY CULTURE SURVEY increases our focus on prevention by taking steps to Safety culture is measured using the Global Safety eliminate or reduce risks of harm to human health and Index (GSI). We maintained strong results in this year’s the environment. A road map has been developed to survey, achieving 74.1 overall. This result places us within undertake a review of our impacts and aspects register, a ‘Sustainable’ Safety Culture Level. We’ll continue to undertake environmental risk assessments to identify work to strengthen our focus on safety through our gaps and develop projects to meet compliance. This is 2030 Strategy. supported by a roll out of information sessions across the business to explain the legislative changes. Management Commitment 100 MENTAL HEALTH AND WELLBEING Work Environment Communication 80 As well as physical safety, we continue to explore new 60 initiatives to support mental health and wellbeing. In October we celebrated National Safety and Wellbeing 40 Personal Month to encourage all staff to focus on positive safety and Appreciation 20 Safety as wellbeing initiatives in our workplace. Highlights included of Risk a Priority a fun and inclusive Diversity Day event showcasing all the initiatives that make our workplace so inclusive and a personal mental health presentation by a leading mental Safety Rules health advocate Wayne Schwass. Personal and Procedures Priorities

Involvement Supportive Environment

2012 benchmark 2020 YARRA VALLEY WATER 38 ANNUAL REPORT 2019-20 2019-20 HIGHLIGHTS

OVERVIEW OF 2019-20 PERFORMANCE

PRICE SUBMISSION CUSTOMER COMMITMENTS

OUTCOME MEASURE TARGET RESULT

1 APRIL 2019 – 31 MARCH 2020 SAFE DRINKING WATER Compliance with Safe Drinking Water 100% 100% Regulations 2015 RELIABLE WATER AND Customers who experience three or <0.96% 0.98% SEWERAGE SERVICES more unplanned water interruptions or three or more sewerage service interruptions in 12 months (five-year rolling average) TIMELY RESPONSE AND Customers whose interrupted service >91.1% 95.1% RESTORATION (water and sewerage) has been restored within four hours FAIR ACCESS AND ASSISTANCE Customers who, having accessed its 89% 90% FOR ALL support programs, believe Yarra Valley Water helps customers experiencing difficulty paying for their water and sewerage services WATER AVAILABILITY AND Total water usage (litres/per person/ 217 221 CONSERVATION per day) MODERN FLEXIBLE SERVICE Customers who are satisfied with their 86% 87% most recent interaction CARE FOR AND PROTECT Reduction in carbon emissions 14.5% 14.7% THE ENVIRONMENT (cumulative) (baseline is 34,083 tonnes CO2e in 2016-17) YARRA VALLEY WATER ANNUAL REPORT 2019-20 39

FINANCIAL SUMMARY Yarra Valley Water recorded a net profit after tax of consultation between the Board, the Water Minister and $104.4 million in 2019-20. The net profit after tax result the Treasurer of Victoria. is slightly lower than the 2018-19 result. The additional profit above budget was generated primarily as a result of During 2019-20 total assets have increased by $197.3 the following: million due primarily to the growth in infrastructure, property, plant and equipment. • Additional revenue from developer related activity levels including developer contributed assets Total liabilities increased by $229.4 million in 2019-20 associated with higher acceptance of works and new largely as a result of additional borrowings of $273.7 customer contributions million which were used to fund payments to the Government, operating costs and capital investments 2 • Operating expenditure savings achieved from for our water and sewerage infrastructure. 2019-20 HIGHLIGHTS efficiencies delivered across a range of areas including maintenance, information technology, operations and We have been closely monitoring the impacts of land tax coronavirus on our financial position through ongoing • Lower finance charges due to savings in interest analysis of cashflow, debtors, revenues and our key rates due to low rates in the market and a lower than financial sustainability metrics. We’ve worked with budgeted Financial Accommodation Levy rate external economic and social experts to help us better understand the potential financial impacts on Capital expenditure of $333.6 million was incurred during our business. We’ve also actively engaged with the 2019-20 primarily to renew, augment and upgrade water Government and regulator on our forecast financial and sewer infrastructure. We focus on the efficient and position. We remain financially sustainable in the short effective use of capital expenditure to deliver planned and medium term with access to funding from the outcomes in accordance with our approved price submission. Government. Our financial results are forecast to reduce in 2020-21 due to the impacts of coronavirus followed by A final dividend of $60.6 million for the 2018-19 financial a recovery to our previous performance over the next two year and an interim dividend of $3.5 million for 2019-20 to four years. was paid during the year. The amount of the final dividend for the year ended 30 June 2020 will be determined after

Merri Creek, Brunswick. Image taken March, 2018. YARRA VALLEY WATER 40 ANNUAL REPORT 2019-20 2019-20 HIGHLIGHTS

OVERVIEW OF 2019-20 PERFORMANCE CONTINUED

FIVE-YEAR FINANCIAL SUMMARY

2020 2019 2018 2017 2016 STATEMENT OF COMPREHENSIVE INCOME $’000 $’000 $’000 $’000 $’000

Service and usage revenue 952,783 957,613 936,265 886,081 907,953

Other revenue 190,791 166,440 110,532 103,262 114,414

Total revenue 1,143,574 1,124,053 1,046,797 989,343 1,022,367

Operating and other expenses 747,486 724,304 684,073 676,265 715,774

Depreciation and amortisation 114,505 107,486 107,843 96,872 97,490

Finance costs 132,886 132,207 130,127 127,440 123,942

Total expenses 994,877 963,997 922,043 900,577 937,206

Profit before income tax 148,697 160,056 124,754 88,766 85,161

Income tax (44,299) (48,356) (36,252) (27,202) (26,247)

NET PROFIT AFTER TAX 104,398 111,700 88,502 61,564 58,914

2020 2019 2018 2017 2016 BALANCE SHEET $’000 $’000 $’000 $’000 $’000

Current assets 166,412 171,358 196,849 184,292 188,616

Non-current assets 5,151,903 4,949,698 4,769,483 4,546,209 4,350,521

Total assets 5,318,315 5,121,056 4,966,332 4,730,501 4,539,137

Current liabilities 505,071 505,272 477,154 424,582 370,903

Non-current liabilities 3,211,136 2,981,543 2,814,871 2,681,759 2,612,419

Total liabilities 3,716,207 3,486,815 3,292,025 3,106,341 2,983,322

NET ASSETS 1,602,108 1,634,241 1,674,307 1,624,160 1,555,815 YARRA VALLEY WATER ANNUAL REPORT 2019-20 41

RETURN ON EQUITY (%) RETURN ON AVERAGE ASSETS (%)

8 8

6 6.75 6.45 6 5.79 5.37 5.26 5.39 4 4 4.70 4.66 3.83 3.87 2 2

0 0 2015-16 2016-17 2017-18 2018-19 2019-20 2015-16 2016-17 2017-18 2018-19 2019-20 2 Return on equity decreased in 2019-20 primarily due to Return on assets has decreased in 2019-20 primarily due 2019-20 HIGHLIGHTS lower profit after tax. The result was driven by an increase to growth in the average assets value associated with the in wholesale costs and a reduction to revenue with lower 2019-20 capital works program. customer demand (usage charges) as a result of the higher rainfall experienced in 2019-20 and coronavirus impacting revenues from the commercial sector.

GEARING RATIO (%) INTEREST BEARING DEBT TO ASSETS NET PROFIT AFTER TAX ($M)

60 120 111.70 51.35 54.59 100 47.83 47.84 48.61 104.39 40 80 88.50 60 58.91 61.56 20 40 20 0 0 2015-16 2016-17 2017-18 2018-19 2019-20 2015-16 2016-17 2017-18 2018-19 2019-20 Gearing ratio has increased in 2019-20 due to an Net profit after tax has decreased in 2019-20 due to an increase in borrowing levels to fund capital and increase in wholesale costs and a reduction to revenue operating payments. with lower customer demand (usage charges) as a result of the higher rainfall experienced in 2019-20 and coronvirus impacting revenues from the commercial sector.

INTEREST COVER TIMES CAPITAL EXPENDITURE ($M)

4 400

3 300 333.62 312.77 282.26 2.50 2.62 2.61 261.58 2 2.19 2.41 200 233.88

1 100

0 0 2015-16 2016-17 2017-18 2018-19 2019-20 2015-16 2016-17 2017-18 2018-19 2019-20

Interest cover ratio in 2019-20 reduced primarily due to Capital expenditure increased in 2019-20 across a range lower cash receipts from customers and higher income of programs including sewer main renewals, community tax paid due to an increase in our tax instalment rate and sewerage, water and sewer growth works and major project payment of the final 2018-19 tax return. strategy to meet our customer service level targets. YARRA VALLEY WATER 42 ANNUAL REPORT 2019-20

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Image taken February, 2019. YARRA VALLEY WATER ANNUAL REPORT 2019-20 43

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Image taken February, 2019. 3 YARRA VALLEY WATER 44 ANNUAL REPORT 2019-20 DELIVERING VALUE

OUR LEADERSHIP

ORGANISATIONAL CHART

BOARD OF DIRECTORS

MANAGING DIRECTOR

Pat McCafferty

SERVICE DISTRIBUTION GROWTH PEOPLE, RETAIL STRATEGY & FINANCIAL & CORPORATE FUTURES SERVICES FUTURES PERFORMANCE SERVICES COMMUNITY CORPORATE SECRETARY & CULTURE SERVICES Glenn Wilson Dona Chris Brace Amy Singe Steve Lennox Tiffany White Natalie Foeng Lisa Anelli Tantirimudalige (acting)

A HIGH STANDARD OF CORPORATE GOVERNANCE The Yarra Valley Water Board has overall responsibility We are committed to ensuring a robust Corporate for corporate governance including: Governance Framework is in place and reviewing the framework regularly to ensure it aligns with best practice. • setting the strategic direction • establishing goals for management and monitoring This section sets out the main Corporate Governance practices in place during the 2019-20 financial year. • the achievement of these goals • monitoring the business’ performance. YARRA VALLEY WATER ANNUAL REPORT 2019-20 45

The Yarra Valley Water Board comprises eight independent non-executive Directors and one executive Director, with the non-executive Chair and non-executive Directors appointed by the Minister for Water.

BOARD The Managing Director is appointed by the Board in accordance with the Water Act 1989. Our Directors have a wide range of backgrounds and bring an appropriate ROB SKINNER AM – DEPUTY CHAIR mix of skills and experience to the Board. BE (Hons), MSc, FIEAust, MAICD Rob Skinner became a Director on 1 October 2015. He is a Professorial Fellow at the Monash Sustainable 3 DELIVERING VALUE DELIVERING Development Institute, Chair of WaterAid Australia and WaterAid International, Deputy Chair of Co-operative Research Centre For Water Sensitive Cities, Chair of Victorian IWM Reference Group, Lead Chair of the SUE O’CONNOR – CHAIR DELWP’s Integrated Water Management Forums and Chair BAppSc, GDipBus Mgt, FAICD of SDG6 Working Group. He is also a Distinguished Fellow of the International Water Association (IWA). Sue became a Director and Chair of Yarra Valley Water on 1 October 2015. She has been a Non-Executive Director/ Rob was Managing Director at Melbourne Water from Chair for over ten years. 2005 to 2011, and Chief Executive Officer of the City of Kingston from 1996 to 2005. Sue is a Director of Mercer Superannuation, ClimateWorks Australia, Treasury Corporation of Victoria, Kordia Over the past 20 years, Rob has been on a number of Group Limited and Bush Heritage Australia. Sue is also boards and involved in numerous advisory panels and a member of the Leadership Oversight Committee reviews related to water policy and strategy in Victoria for the Women in Water Leadership Program and an and elsewhere. advisory committee member of the Monash Sustainable Development Institute. She was previously Chair of YMCA Committee membership: Victoria and a Director and Deputy Chair of Goulburn • Service, Community, Assets and Regulation Valley Water (2008-2015). Committee – Chair Sue brings to the Board table over 25 years of senior • Risk Management and Audit Committee leadership experience of successfully growing and • Hazelwynde Steering Committee. transforming customer focused, technology dependent businesses operating in disrupted markets. This included 13 years at Telstra Corporation where she successfully led the establishment of a number of new businesses and completion of major cross-company transformation programs.

Committee membership:

• Hazelwynde Steering Committee - Chair • Service, Community, Assets and Regulation Committee • Risk Management and Audit Committee • Leadership, Culture and Diversity Committee. YARRA VALLEY WATER 46 ANNUAL REPORT 2019-20 DELIVERING VALUE

OUR LEADERSHIP CONTINUED

IAN HAMM VICTORIA MARLES MAICD FIPAA BA, Dip Ed, Dip Arts (Dramatic Arts), LLB (Hons), LLM, FAICD Ian Hamm became a Director of Yarra Valley Water on 1 October 2019. Victoria Marles became a Director on 1 October 2017.

Ian is currently the Chair of First Nations Foundation Victoria is the Chief Executive Officer of Trust for Nature (National), Connecting Home Ltd (Stolen Generations (Victorian Conservation Trust) and is currently the Service), the Community Broadcasting Foundation Chair of the Abbotsford Convent Foundation and the and the Koorie Heritage Trust, Non-Executive Director Consumer Action Law Centre. She has practised as a of Aboriginal Housing Victoria Ltd, National Trust of lawyer in the private, not for profit and public sectors in Australia (Vic), Australian Red Cross, Inclusive Australia, media/communications and consumer complaints law. Community First Development (formerly Indigenous Victoria has held the positions of Chief Executive Officer Community Volunteers), Killara Foundation, and of the Legal Services Board (Victoria), Legal Services Holmesglen TAFE. Ian is also a sessional member of Commissioner (Victoria), Deputy Telecommunications Planning Panels Victoria and the Australian Financial Industry Ombudsman and has been a trustee of the Complaints Authority. Victorian Arts Centre Trust.

Ian has had a wide level of exposure to Policy Victoria brings to the Board extensive knowledge in Development and Program Management at executive the areas of natural resource management, climate level through his work with the Federal Government change adaption, biodiversity conservation/offsets and (Office of Aboriginal and Torres Strait Islander Health) consumer law. and the Victorian Government (Department of Justice, Committee membership: Department of Planning and Community Development, Department of Economic Development, Jobs, Transport • Risk Management and Audit Committee and Resources). Ian was also previously the President of • Service, Community, Assets and Regulation the Western Region Football League, one of the major Committee. Australian Football leagues in Melbourne.

Committee membership:

• Risk Management and Audit Committee • Service, Community, Assets and Regulation Committee. YARRA VALLEY WATER ANNUAL REPORT 2019-20 47

KAREN MILWARD VICTOR PERTON GAICD BEc, LLB, LLM, Dip Chinese Law, GAICD

Karen Milward became a Director on 1 October 2017. Victor Perton became a Director of Yarra Valley Water on 1 October 2015. Karen is the owner of Karen Milward Consultancy Services and is currently the Chair of Mullum Mullum Indigenous Victor is the founder of the Australian Leadership Gathering Place, Kinaway Chamber of Commerce Victoria Project and the Author of “The Case for Optimism: Ltd, Community First Development (formerly Indigenous The Optimists' Voices”. 3

Community Volunteers), and Deputy Chair Major Transport VALUE DELIVERING Infrastructure Authority - Aboriginal Advisory Council. His experience in governance includes service on Boards including that of the Transport Accident Karen was formerly the Deputy Chair of First Nations Commission, the Global Integrity Summit, the Australian Foundation, a Director of Aboriginal Housing Victoria and Centre for Financial Studies and patron of the Digital was a Member of the Visitor Economy Ministerial Advisory Leadership Institute. Committee and Small Business Ministerial Council. He has chaired public sector inquiries and committees Karen brings to the Board extensive experience in working on technology, justice, equal opportunity, regulatory with Aboriginal and Torres Strait Islander communities, efficiency, subordinate legislation and several other topics. having worked on complex projects commissioned by public His current work includes advice on optimistic leadership, sector agencies responsible for policies, programs and Australian leadership, integrity and strategy. services impacting on Aboriginal communities and also having served on numerous committees and reference Victor brings 18 years’ experience as a Parliamentarian, groups, including Ken Wyatt’s Local and Regional Voice to practice as a barrister, mediator, arbitrator, businessman, Parliament Group, Victorian Aboriginal Economic Board and private sector board service and mentor. He is a former the Premier’s Aboriginal Advisory Council. Commissioner to the Americas promoting foreign direct investment in Victoria, supporting Victorian exporters, Committee membership: building global supply chains and expatriate and alumni networks. • Leadership, Culture and Diversity Committee • Service, Community, Assets and Regulation Committee membership: Committee. • Service, Community, Assets and Regulation Committee • Hazelwynde Steering Committee • Leadership, Culture and Diversity Committee. YARRA VALLEY WATER 48 ANNUAL REPORT 2019-20 DELIVERING VALUE

OUR LEADERSHIP CONTINUED

ANITA ROPER HELEN THORNTON FAIM, GAICD BEc, CA, GAICD

Anita Roper became a Director of Yarra Valley Water on Helen Thornton became a Director of Yarra Valley Water 1 October 2015. on 1 October 2015.

Anita is currently Deputy Chair of the Stroke Association Helen has more than 30 years’ experience in finance roles of Victoria and Independent Director of the Aluminium across a wide range of industries. Helen is currently a Stewardship Initiative. She previously served as a Member non-executive director and Deputy Chair of the Treasury of the Board of Inquiry into the Hazelwood Coal Mine Fire Corporation of Victoria. She is also a Director of ISPT and has served on numerous boards, councils and working Pty Ltd, Ansvar Insurance, Austin Health and Legal groups including as a non-executive director of Pacific Practitioners Liability Committee. Hydro, Director of the Fitzroy Football Club, member of the Victorian Public Sector Commission Advisory Helen was previously Deputy Chair of Zoos Victoria and Board, member of AngloGold Ashanti’s Global Panel on a non-executive director of Big Sky Building Society and Sustainability and Board Member of the Women’s Network Rural Finance Corporation. for a Sustainable Future. A Chartered Accountant, Helen has extensive experience Anita has over 30 years’ experience in senior management in finance, governance, audit and risk management. She roles working with business, government, communities has held senior roles in Deloittes, KPMG, BHP Ltd and and multilateral agencies in Australia, Canada, UK and the BlueScope Steel Ltd where she was responsible for the USA. Her executive career spans the private and public global risk management function. sectors, including Chief Executive Officer at Sustainability Committee membership: Victoria and Global Director of Sustainability with Alcoa in New York. • Risk Management and Audit Committee – Chair • Hazelwynde Steering Committee Committee membership: • Service, Community, Assets and Regulation • Leadership, Culture and Diversity Committee – Chair Committee. • Service, Community, Assets and Regulation Committee. YARRA VALLEY WATER ANNUAL REPORT 2019-20 49

DIRECTORS WHO RETIRED DURING THE YEAR ERIC SJERP BSc (Geol. Geog.), MEIANZ, MAICD PAT MCCAFFERTY – MANAGING DIRECTOR BBus (Acc), Exec. MBA, GAICD, FWCLP, FIWA Eric became a Director of Yarra Valley Water on 1 October 2015. Pat McCafferty was appointed Managing Director of Yarra Valley Water on 1 July 2014. Eric is an Environmental Scientist with over 25 years’ professional experience throughout Australia and In a career spanning over 30 years in the water industry, Malaysia. He is currently Managing Director and Principal Pat has extensive experience across the water sector Consultant of Ethos NRM, specialising in ecological impact and held General Manager roles at Yarra Valley Water assessment, environmental approvals and strategic 3 from 2001, covering a wide range of strategic leadership natural resource management. VALUE DELIVERING positions, including planning, regulation, finance and operations. Eric brought considerable governance experience having served on numerous other boards, including East He has also worked in the USA water sector and advised Gippsland Water, Southern Rural Water, East Gippsland the Australian Federal Government as part of the National Environmental Sustainability Advisory Board, East Water Initiative. Gippsland Catchment Management Authority Lands Advisory Committee, Within Australia and the East Pat is Chair of the Water Services Association of Australia Gippsland TAFE Industry Advisory Committee. Eric (Australia’s peak body for major urban water utilities) and had also previously served as Executive Officer of the Chair of the Thriving Communities Partnership (a cross Gippsland Lakes Management Council. sector collaboration to improve support for vulnerable customers of essential services). Pat is also a member of the Monash Infrastructure Advisory Council and a member of the Leadership Oversight Committee for the Women in Water Leadership Program (a Water for Victoria initiative).

Committee membership:

• Leadership, Culture and Diversity Committee • Hazelwynde Steering Committee • Service, Community, Assets and • Regulation Committee. YARRA VALLEY WATER 50 ANNUAL REPORT 2019-20 DELIVERING VALUE

OUR LEADERSHIP CONTINUED

BOARD CHARTER For the first time, included in the review was individual Director evaluations, using peer feedback on each Board The Board Charter sets out clearly the members contribution to the Board with suggested areas role, responsibilities and powers of the to further leverage their strengths and round out their Board and incorporates all aspects of contribution to the Board. Board governance. The review process involved a one on one interview with each Director and the consultant and for each Director CODE OF CONDUCT complete a questionnaire followed by a whole of Board round table discussion on the findings and improvement The Board has adopted a Directors’ Code of Conduct opportunities drawn from the questionnaire. The results based on the minimum standards of behaviour that from the review described the Board to be purpose-led support the Corporation’s cultural aspirations and the and high performing with genuine interest in maintaining Victorian Public Sector Commission’s Directors’ Code of a strong reputation for success and leadership in the Conduct which articulates the duties of Directors. industry. The results were strong across all surveyed topics with positive commentary regarding the way DECLARATION OF PRIVATE INTERESTS the Board and Executives interact to drive outcomes, All Directors have completed a declaration of alignment on strategic priorities and a thorough approach private interests. to managing risk and business performance.

All executives, senior managers, officers and contractors/ The review identified some potential opportunities for consultants with delegation to approve expenditure exploration by the Board with such opportunities aimed at in excess of $20,000 have completed a declaration of further elevating the Board’s performance. private interests. INDUCTION AND TRAINING INDEPENDENT PROFESSIONAL ADVICE The Board has adopted a training and development The Board has adopted a number of measures to ensure policy for Directors. This policy facilitates appropriate that independent judgement is achieved and maintained. training and development opportunities for Directors to enable them to fulfil their role, broaden their knowledge Directors are entitled to seek independent professional and share this knowledge with the rest of the Board. All advice on matters relating to the business of Yarra Valley newly appointed Directors are required to undertake an Water at Yarra Valley Water’s expense, subject to the prior induction program to help them understand their role and approval of the Chair. encourage fulfilment of their Board responsibilities.

No Director exercised this right during the year. The induction program includes an overview of the Yarra Valley Water business, the water industry and the linkages BOARD PERFORMANCE REVIEW with Government. In accordance with the Board Policy, an externally Directors also attend seminars and other events to facilitated Performance Review of the Board was broaden their exposure to water industry issues and conducted in May 2020. The objective of the review was initiatives including the VicWater Directors Development continuous governance improvement – identifying board Program held earlier this year. performance improvement opportunities and governance framework gaps focusing on effective performance. In addition, given the organisation is embarking on a new era of Strategy a further objective of the review was to delve into the effectiveness of the Board’s leadership for the future operating environment including the evolving external environment. YARRA VALLEY WATER ANNUAL REPORT 2019-20 51

LEARNING AND DEVELOPMENT water so we can build better, respectful relationships In 2019-20 the Directors undertook a number of activities between ourselves and the Aboriginal Community. to support their ongoing learning and development, During the year the Board undertook Aboriginal Cultural including exposure to senior management presentations Awareness training as part of its work towards achieving and external presentations from water and non-water the business’s aspiration to be a culturally confident representatives. These presentations focused on learning organisation. about various operations of the business, topics that In 2019-20 the business embarked on setting the direction informed the strategic direction of the business and to of the development of the 2030 strategy, in partnership ensure the Directors are continually mindful of their with the Executive. This was a first for the current Board obligations regarding key safety risks. Some noteworthy which had inherited the previous strategy. This was a learning and development opportunities undertaken by the significant opportunity for the Board to fulfil its primary Board during the year are discussed further below. responsibility to set the organisation's strategic direction With the recent introduction of new laws passed by the and provide valuable insight and foresight to shape a new Victorian Parliament in November 2019 related to the era for the business. Workplace Safety Legislation Amendment (Workplace Directors' development took a different meaning this Manslaughter and Other Matters) Bill 2019, the Board year as coronavirus saw a shift to a more agile way of was provided training on the amendments and discharging operating. The Board continues to evaluate what they its roles and responsibilities in order to continue its have done well in this new way of working, with many of oversight role. the learnings that have come through in responding to 3 One of the key components of our Reconciliation Action coronavirus as we transition back and move forward as a VALUE DELIVERING Plan is the recognition that the business is on a continuous modern, flexible and resilient organisation. journey, learning about Aboriginal people’s histories, culture and their connection to Community, Country and

BOARD COMMITTEES The Board has established four Committees of Directors to assist with carrying out its responsibilities and to allow detailed consideration of complex issues. Each Board Committee has its own terms of reference, which set out the Committee’s objectives, duties and responsibilities, composition, meetings, authority and reporting responsibilities. All matters of safety and wellbeing are discussed at Board level.

The Committees are as follows:

RISK MANAGEMENT AND The Risk Management and Audit Committee assists the Board in fulfilling its duties AUDIT COMMITTEE and responsibilities relating to risk management, the effectiveness of internal controls and the accounting and reporting practices of the business, reviewing financial reports and overseeing the audits conducted by the internal and external auditors.

LEADERSHIP, CULTURE AND The Leadership, Culture and Diversity Committee assists the Board in reviewing DIVERSITY COMMITTEE strategies and policies to ensure critical actions and plans are in place to implement and develop the business’ people and culture, the adequacy of the Executive Remuneration Framework, the Management Succession Plan and the business’ Diversity Policy, Strategy and Action Plans.

SERVICE, COMMUNITY, ASSETS The Service, Community, Assets and Regulation Committee assists the Board with AND REGULATION COMMITTEE oversight to ensure the business is currently meeting customer needs, community expectations and regulatory obligations. It also provides insight and has oversight of the business’ future plans to meet customer needs, engage with community and address regulatory requirements.

HAZELWYNDE STEERING The Hazelwynde Steering Committee assists the Board with strategic oversight and COMMITTEE expert input into progressing the Hazelwynde Project including independent expert advice in relation to greenfield development, stakeholder management and best practice project governance. YARRA VALLEY WATER 52 ANNUAL REPORT 2019-20 DELIVERING VALUE

OUR LEADERSHIP CONTINUED

Directors’ attendance at Board and Committee meetings – 1 July 2019 to 30 June 2020

SERVICE, LEADERSHIP, RISK COMMUNITY, ASSETS CULTURE AND MANAGEMENT AND REGULATION DIVERSITY HAZELWYNDE BOARD & AUDIT COMMITTEE COMMITTEE STEERING MEETINGS COMMITTEE MEETINGS MEETINGS COMMITTEE2 S O’Connor 15 of 15 4 of 4 4 of 4 3 of 3 4 of 4 R Skinner 14 of 15 3 of 4 4 of 4 - 4 of 4 I Hamm1 12 of 12 2 of 2 2 of 2 - - V Marles 15 of 15 4 of 4 4 of 4 - - K Milward 12 of 15 - 4 of 4 2 of 3 - V Perton 15 of 15 - 3 of 4 2 of 3 4 of 4 A Roper 15 of 15 - 4 of 4 3 of 3 - E Sjerp2 1 of 1 - - - - H Thornton 15 of 15 4 of 4 4 of 4 - 4 of 4 P McCafferty3 15 of 15 - 4 of 4 3 of 3 4 of 4

1 I Hamm appointed as of 1 October 2019 2 E Serp retired as of 30 September 2019 3 P McCafferty is not a member of the Risk Management and Audit Committee however attends in his capacity as Managing Director. YARRA VALLEY WATER ANNUAL REPORT 2019-20 53

OUR LEADERSHIP TEAM STEVE LENNOX General Manager Retail Services PAT MCCAFFERTY BBus (Acc), CPA, ACIS, AGIA Managing Director Steve is responsible for customer BBus (Acc), Exec. MBA, operations. GAICD, FWCLP, FIWA He leads a group that delivers meter reading, billing As Managing Director, Pat is also a management, debt collection, customer care centre member of the Board. operations and commercial and development services, Refer to details in the Board section. along with the development and implementation of support programs for customers in financial difficulty. CHRIS BRACE Steve has wide ranging experience in the water sector General Manager Growth Futures across a number of disciplines at senior leadership level BE (Chem), BS, GCert (Man) including finance, technology and operations. Chris is responsible for the provision of water and sewerage services to new AMY SINGE customers. General Manager People, Performance and Culture A key focus for his function is partnering with the BCom/LLB, GDipLegalPrac community to develop new urban water futures that 3 DELIVERING VALUE DELIVERING generate greater shared benefits for all stakeholders. Amy is responsible for developing and implementing the human resources He is accountable for the procurement of new strategy for the business, including workplace planning, infrastructure to service growth as well as the delivery of organisational culture, capability development and diversity. major upgrade projects for existing infrastructure. She is also responsible for developing and maintaining Chris has extensive experience in water and sanitation systems for recruitment, onboarding, succession planning engineering and growth servicing. He has held a series of and performance management. technical and senior leadership roles across all aspects of the asset lifecycle. Amy has extensive experience as a People and Culture executive and in senior leadership roles across a number NATALIE FOENG of industries spanning the water sector, transport, hospitality, sports, retail, pharmaceutical and FMCG. Chief Financial Officer BCom (Acc), CA, GAICD DONA TANTIRIMUDALIGE Natalie leads Finance and Corporate General Manager Distribution Services Services. This remit includes providing BEng (Hons), M. Public Policy and business partnering support on key Management, MAICD, MIWA strategic projects across the organisation as well as seamless financial planning, management accounting, Dona currently holds one non-Executive statutory accounting and treasury and taxation support, Director role in a not-for-profit all of which are focused on the financial sustainability of organisation and is the President of the Institute of Water the organisation and delivering exceptional outcomes for Administration. customers and the community. Dona is responsible for managing our water, recycled She also leads various critical support functions for the water and sewerage infrastructure to ensure it delivers organisation such as payroll, procure to pay, risk and our desired customer service levels and meets applicable compliance, property and facilities management. environmental performance standards. She is primarily responsible for optimisation of the existing infrastructure Natalie has extensive experience as a finance networks, maintenance and renewal of infrastructure, and executive and in senior leadership roles across the safety and quality for Yarra Valley Water. water sector and retail, consumer products and telecommunications industries. Dona has extensive experience across the water industry and not-for-profit sectors as an executive, senior leader, and Board Director, across a variety of functions including strategic planning, asset management, customer service delivery, compliance, and transformation. YARRA VALLEY WATER 54 ANNUAL REPORT 2019-20 DELIVERING VALUE

OUR LEADERSHIP CONTINUED

TIFFANY WHITE LISA ANELLI Acting General Manager, Strategy Corporate Secretary and Community BCom (Acc), CA, GAICD BA (EngLit), MA (Comms), GradDip (Project Management) Lisa is responsible for ensuring compliance with statutory and Tiffany is responsible for providing regulatory requirements and governance strategy leadership and programs that achieve greater related administrative tasks of the Board and the customer and community connection and value. organisation. This includes supporting the effective and efficient operation of the Board and providing advice Her role includes long-term strategy development, and support on governance issues to the Board and business planning, pricing and economic regulatory the organisation. affairs, corporate sustainability, strategic research, marketing and customer programs, community inclusion and engagement, communication and stakeholder engagement. She also represents the business in water LEADERSHIP TEAM MEMBERS WHO industry policy and reform activities. DEPARTED THE BUSINESS DURING Tiffany has been a strategic communications and THE YEAR corporate affairs professional for over 25 years, with extensive experience in senior leadership roles across a DAVID SNADDEN range of sectors, including health, water, local government General Manager Strategy and Community and tertiary education. BE (Civil), MBA, GAICD

GLENN WILSON On 10 June 2020 David resigned from the business after 25 years. Prior to leaving, David in his role as General General Manager Service Futures Manager Strategy and Community was instrumental in BE (Civil), BBus (Admin) leading the business to develop its 2030 Strategy.

Glenn is responsible for transforming our David has contributed to the business’s success on many core products and services – ultimately levels and has been an integral part of the Executive leading to productivity, customer leadership team for 13 years. This has included being experience and/or employee experience benefits. This a champion for our culture, taking a leading role in our work is led by our Customer Experience practice, involves strategic direction, and bringing the community lens business process design, and is enabled through a range to the fore. In his earlier days, he was heavily involved of information and operational technologies. in the shifts we made in our care for the natural He is also accountable for our technology function which environment and managing our infrastructure to achieve supports day to day business operations as well as our exceptional customer outcomes, especially during the range of digital customer offerings. millennium drought.

Glenn has over 20 years' experience in the water industry and in senior leadership roles across a range of functions including strategic asset planning, asset operations and maintenance, and technology. YARRA VALLEY WATER ANNUAL REPORT 2019-20 55

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Wallan Sewerage Treatment Plant, Image taken September, 2018. YARRA VALLEY WATER 56 ANNUAL REPORT 2019-20 DELIVERING VALUE

OUR PEOPLE AND CULTURE

We believe that a great culture delivers great outcomes. Over the last decade, we have developed a high performance culture, high levels of employee engagement and effective workplace practices.

ORGANISATIONAL CULTURE • The People Matter Survey undertaken by the Victorian Public Sector Commission. In 2019 Yarra Valley Water Our culture provides the foundation for employee engagement levels were above benchmarked a high-performing workplace where organisations and all other participants from the Victorian public sector we collaborate with partners and • The Culture Amp platform, which we used to measure stakeholders to deliver exceptional employee engagement and make sure people felt safe outcomes for our customers and during coronavirus restrictions. We received a 97 per the environment. cent confidence score, indicating that employees felt supported and confident in our proactive response Creating this constructive workplace culture requires to coronavirus a holistic approach, encompassing all aspects of the employment life cycle, such as recruitment, FAIR TREATMENT AT WORK communication, role clarity, recognition, development, We aim to create a vibrant culture achieving exceptional equity and leadership. Our focus on culture and business outcomes and successful partnerships through engagement ensures we employ the right staff and highly capable and engaged people. We're committed to provide them with clear direction and challenging work. providing fair and equitable treatment for everyone in the It also enables, performance through strong leadership workplace including partners, contractors, work experience and honest feedback, and provides ongoing development students, suppliers and agents, both on and off site. through targeted learning opportunities. We do not tolerate discrimination and take a proactive We're committed to continually developing our approach to ensure reasonable and proportionate achievement oriented culture to create the best measures are in place to monitor and improve practices possible outcomes for our community. We use several and behaviours. All employees are required to comply internationally recognised benchmarking tools to track our with relevant federal and state legislation that establishes progress and develop targeted strategies to improve our grounds on which discrimination is illegal including culture and engagement including: the Acts relating to Occupational Health and Safety, • The Human Synergistics’ Leadership Impact and Life Equal Employment Opportunity, Discrimination and Styles Inventory, 360-degree feedback tools that Human Rights. Employees are also required to complete measure managers’ overall effectiveness and the ways discrimination awareness training which is renewed every their managerial approaches affect the behaviours and two years. performance of those around them. These tools help us align our management and leadership practices with the organisation’s overall vision, strategy and values YARRA VALLEY WATER ANNUAL REPORT 2019-20 57

RECRUITMENT Over 50 per cent of candidates shortlisted for technical and leadership roles are women. This is due to managers We're committed to applying merit and equity principles and the recruitment team adjusting their approach to when appointing staff. The selection processes ensure shortlisting, as well as changes to our job advertisement that applicants are assessed and evaluated fairly and and careers’ website. The proportion of women in senior equitably on the basis of key selection criteria and other leadership positions include: accountabilities without discrimination. • Directors – 62.5 per cent female DIVERSITY AND INCLUSION • Executive leadership team – 57.1 per cent female The diversity of our people is fundamental to our business • People leadership – 45.3 per cent female performance. Our Diversity and Inclusion Strategy • Overall workforce – 50.6 per cent female. aims to build an inclusive workplace that reflects the community it serves. Strategic initiatives have been implemented to ensure cultural diversity is a core component of our employee We are in the second year of the Diversity to Inclusion base to ensure we truly reflect our community. At Yarra Strategy 2019-22 and well on the way to creating a truly Valley Water: inclusive organisation. • 28 per cent of employees weren’t born in Australia In 2019 we launched: • 52 per cent of employees have one or both parents • Pride at YVW – a network that fosters connections who weren’t born in Australia between staff to share their lived experiences, create 3

• 27 per cent of employees speak another language VALUE DELIVERING opportunities for learning and gather people together other than English conversationally to celebrate days of significance for the LGBTIQ+ community We're also committed to providing employment • YVW Women – a network that supports, mentors, opportunities for Aboriginal peoples and will continue empowers and recognises female staff to take action to ensure we have a culturally safe environment and promote the attraction and retention of We initiated and launched Pride In Water, a cross sector Aboriginal and Torres Strait Islander staff. pride network aimed at creating a more welcoming and inclusive water industry for lesbian, gay, bisexual, About 1 per cent of our workforce identifies as Aboriginal transgender, intersex and queer (LGBTIQ+) staff, or Torres Strait Islander, based on our Diversity Census. contractors and customers. We have created an Aboriginal and Torres Strait Islander The Gender Equality Act 2020 will play a key role in employment and learning strategy that spans the entire shaping our gender equality work to ensure we have an employment lifecycle including staff development. This inclusive workplace. As we move in to the next phase in includes leadership training for key Aboriginal staff and the continuous journey of diversity to inclusion we have a strengthening the cultural safety of our organisation. roadmap of programs, policies, measures and targets that Our culturally specific Employee Assistance Program for reflect the community we serve. This strategy will see Aboriginal and Torres Strait Islander employees and their us continue to develop, expand and embrace our diverse families provides additional support when needed. workforce and broader community through the Board With these support structures in place, we partnered with endorsed vision: AFL Sportsready and undertook a trainee program - this We stand for a fair and equitable society. program was so successful that the trainee was offered a role at the end of their traineeship and continues to be We embrace diversity and inclusion in employed within the business. Recently we appointed everything we do, as we strive to reflect two cadets and look forward providing meaningful the community we serve. employment opportunities whilst they undertake their studies.

We've also taken a number of steps to increase our presence at Aboriginal and Torres Strait Islander career fairs and events and to highlight the water industry as a supportive and culturally safe place to work. YARRA VALLEY WATER 58 ANNUAL REPORT 2019-20 DELIVERING VALUE

OUR PEOPLE AND CULTURE CONTINUED

Our first Reconciliation Action Plan identified the It includes Aboriginal and Torres Strait Islander staff and opportunity to discuss the inclusion of criteria for external representatives. The Committee’s purpose is to director appointments that takes account of the diverse ensure ongoing collaboration, capacity and relationship community we serve, including Aboriginal and Torres building at a senior level within the organisation with Strait Islander peoples. representatives from Victorian Aboriginal communities, and their active involvement in assessing the overall Ian Hamm, a Yorta Yorta man, was recently appointed direction and effectiveness of outcomes being achieved. to our Board. Ian brings a wealth of knowledge and experience and is currently the Chair of First Nations WE ARE SAFE Foundation (National), Connecting Home Ltd (Stolen Generations Service), the Community Broadcasting We're committed to the safety and wellbeing of our Foundation, the Koorie Heritage Trust, Non-Executive staff, partner organisations and members of the public. Director of Aboriginal Housing Victoria Ltd, National Our safety commitment, We are Safe, is embedded in Trust of Australia (Vic), Australian Red Cross, Inclusive everything we do. Australia, Indigenous Community Volunteers, Killara Our safety outcomes are: Foundation, and Holmesglen TAFE. • Safety exists as each person’s responsibility Karen Milward continues to serve on our Board, after her appointment in 2017-18. She is a Yorta Yorta woman and • We make our workplaces safe a strong advocate for developing culturally appropriate • We carry out our work without harming ourselves solutions to issues facing Aboriginal and Torres Strait or others Islander peoples. These safety outcomes are supported by our We are Our Reconciliation Leadership Committee is a key Safe behaviour statement, compliance with occupational element of our governance for delivering our RAP actions. health and safety legislation and our accredited Safety Management System.

Image taken August, 2017. YARRA VALLEY WATER ANNUAL REPORT 2019-20 59

EMPLOYMENT DATA The following table discloses the head count and full-time equivalent (FTE) staff of all active Yarra Valley Water employees employed in the last full pay period in June 2020. FULL PART FTE FULL PART FTE TIME TIME CASUAL TOTAL 2019-20 TIME TIME CASUAL TOTAL 2018-19 GENDER Male 361 12 14 387 377.0 329 13 10 352 340.6 Female 257 105 24 386 343.7 235 102 14 351 312.5 TOTAL 618 117 38 773 720.7 564 115 24 703 653.1 AGE 15-24 21 7 27 55 37.7 18 5 17 40 25.4 25-34 189 15 3 207 200.8 184 20 4 208 200.1 35-44 184 45 5 234 219.7 158 45 2 205 190.9 45-54 141 30 1 172 163.3 122 28 1 151 141.3 55-64 68 16 - 84 80.0 68 13 - 81 78.4 3 65+ 15 4 2 21 19.2 14 4 - 18 17.0 VALUE DELIVERING TOTAL 618 117 38 773 720.7 564 115 24 703 653.1 CLASSIFICATION Executive 7 - - 7 7.0 9 - - 9 9.0 Senior manager1 34 - - 34 34.0 31 - - 31 31.0 Administration and 577 117 38 732 679.7 524 115 24 663 613.1 field staff2 TOTAL 618 117 38 773 720.7 564 115 24 703 653.1

1 A senior manager, acting as an executive under long-term arrangements, has been reported in their substantive/contracted role 2 Two administrative and field staff, acting as senior managers under long-term arrangements, have been reported in their substantive/ contracted role

Staff levels changed over the course of the year with roles insourced from external contractors to lower overall costs, additional customer service staff recruited to service growing work volumes and vacancies filled from the previous year. The following table discloses the annualised total salary (excluding super) for senior employees, categorised by classification. The salary amount is reported as the full-time annualised salary.

INCOME BAND (SALARY EXCLUDING SUPERANNUATION) EXECUTIVE SENIOR MANAGER $160,000 - $179,000 - 11 $180,000 - $199,999 - 19 $200,000 - $219,999 - 2 $220,000 - $239,999 - 1 $240,000 - $259,999 - - $260,000 - $279,999 4 1 $280,000 - $299,999 2 - $380,000 - $399,999 - - $400,000 - $419,999 1 - TOTALS 7 34 YARRA VALLEY WATER 60 ANNUAL REPORT 2019-20 DELIVERING VALUE

OUR PEOPLE AND CULTURE CONTINUED

CORPORATE INFORMATION INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) EXPENDITURE For the 2019-20 reporting period, Yarra Valley Water had a total ICT expenditure of $56.146 million, details shown below:

BUSINESS AS USUAL (BAU) NON BAU BAU ICT TOTAL NON BAU OPERATIONAL CAPITAL ICT EXPENDITURE ICT EXPENDITURE EXPENDITURE EXPENDITURE DEPRECIATION $’000 $’000 $’000 $’000 $’000 15,498 40,648 159 17,680 22,809

CONSULTANCY EXPENDITURE The following is a summary of consultancy expenditure incurred by Yarra Valley Water during 2019-20.

Details of consultancies (valued at less than $10,000) In 2019-20 Yarra Valley Water engaged five consultancies where the total fees payable to the consultants were less than $10,000. Total expenditure incurred during the reporting period in relation to these consultants was $44,654 (GST exclusive).

Details of consultancies (valued at $10,000 or greater) In 2019-20 Yarra Valley Water engaged 20 consultancies where the total fees payable to the consultants were $10,000 or greater. Total expenditure incurred during the reporting period in relation to these consultants was $2,369,225 (GST exclusive).

Details of individual consultancies are outlined on our website.

GOVERNMENT ADVERTISING EXPENDITURE In 2019-20, Yarra Valley Water participated in a Melbourne wide water efficiency campaign `Make Every Drop Count' to raise awareness of and influence water use behaviours in the community.

The campaign ran between December 2019 and March 2020, with Yarra Valley Water's share of the campaign comprising:

Media advertising $374,857 Creative and campaign development $120,143 Research and evaluation $20,000 Print and collateral - Other campaign costs - Total campaign costs $515,000 YARRA VALLEY WATER ANNUAL REPORT 2019-20 61

LEGISLATIVE COMPLIANCE professional privilege; personal information about other people; and information provided in-confidence. Privacy and Data Protection Act 2014 The Act specifies that Freedom of Information (FOI) Yarra Valley Water falls into the definition of a Victorian requests should be processed within 30 days. In some Public Sector agency under section 13 of the Privacy and cases, this time may be extended. Data Protection Act 2014 (Vic), and consequently complies with the Act. If an applicant is not satisfied by a decision made by Yarra Valley Water, they have the right to seek a review As the holder of our customers’ confidential and by the Office of the Victorian Information Commissioner personal information, we are conscious of the need to (OVIC) within 28 days of receiving a decision letter. ensure that this information is protected, and to prevent any unauthorised access to, and improper use of, that Making a request information. FOI requests can be lodged online at ovic.vic.gov.au In respect to the Notifiable Data Breach Scheme, we're An application fee of $29.60 applies. Access charges may legally obliged to disclose privacy breaches related to Tax also be payable if the document pool is large, and the File Numbers (TFN). search for material is time consuming.

A Privacy Policy and Code of Practice are in place for Access to documents can also be obtained through a our employees, contractors and agency staff to ensure written request to Yarra Valley Water’s FOI team, as customer information is protected. detailed in s17 of the Freedom of Information Act 1982. 3 Public Interest Disclosure Act 2012 When making a FOI request, applicants should ensure VALUE DELIVERING requests are in writing, and clearly identify what We have procedures in place to help employees and documents or materials are being sought. contractors understand the requirements and obligations under the Public Interest Disclosure Act 2012, and to FOI requests should be addressed to: facilitate making and handling disclosures and notifying such disclosures to the Independent Broad-based Anti- Frank Portelli Manager, Risk and Corporate Services Yarra corruption Commission. These procedures are available to Valley Water Private Bag 1 Mitcham, Victoria, 3132 the public on our website. General enquiries relating to FOI can be made by calling us on (03) 9872 2634 between 8.30am and 4.30pm, Freedom of Information Act 1982 Monday to Friday. The Freedom of Information Act 1982 (the Act) gives the public a right to access documents held by us. The Freedom of Information statistics purpose of the Act is to extend as far as possible the During 2019-20, we received 17 applications. All requests right of the community to access information held by were received from the general public. We made 17 FOI government departments, local councils, Ministers and decisions this year. Full access to all documents was other bodies subject to the Act. provided in response to all requests. The average time An applicantcan apply for access to documents both taken to finalise requests was 30 days. No requests were created by us or supplied to us by an external organisation subject to a complaint/internal review by OVIC and none or individual. This includes maps, films, microfiche, were appealed. photographs, computer printouts, computer discs, tape recordings and videotapes.

The Act allows Yarra Valley Water to refuse access, either fully or partially, to certain documents or information. Examples of documents that may not be accessed include: cabinet documents; some internal working documents; law enforcement documents; documents covered by legal YARRA VALLEY WATER 62 ANNUAL REPORT 2019-20 DELIVERING VALUE

OUR PEOPLE AND CULTURE CONTINUED

Building Act 1993 IN 2019-20: We own government buildings located at Lucknow Number of major works projects 1 Street, Mitcham and is consequently required to include undertaken by Yarra Valley Water a statement on its compliance with the building and (greater than $50,000) maintenance provisions of the Building Act 1993 in relation to its buildings. We require that appropriately Number of building permits, Nil building permits qualified consultants and contractors to be engaged for occupancy permits or Nil occupancy permit all proposed works on land controlled by Yarra Valley certificates of final inspection Nil certificates of Water and we require their work and services to comply issued in relation to buildings occupancy with current building standards. All consultants and owned by the entity contractors are expected to have appropriate mechanisms Number of emergency orders Nil emergency orders in place to ensure compliance with the Building Act and building orders issued in Nil building orders 1993, Building Regulations 2018 and the National relation to buildings Construction Code. Number of buildings that have Nil buildings brought Our Facilities Department is responsible for mandatory been brought into conformity into conformity testing of emergency and exit lighting and lift equipment with building standards during in accordance with relevant standards, monthly, quarterly the reporting period and bi-annual inspection and preventative maintenance of mechanical services and monthly and annual fire service audits. These inspections inform the works program which Disclosure of major contracts is delivered annually through existing maintenance. A major contract is a contract entered into during the reporting period valued at $10 million or more (excluding GST).

Yarra Valley Water awarded one major contract during 2019-20, to the Broadspectrum (Australia) Pty Ltd and Jaydo Construction Pty Ltd Joint Venture for the construction of the Lockerbie main sewer. The contract was valued at $59 million (excluding GST). YARRA VALLEY WATER ANNUAL REPORT 2019-20 63

Local Jobs First Policy Disclosures Other information Yarra Valley Water implements the Local Jobs First Policy The following information is available from Yarra Valley in accordance with the Local Jobs First Act 2003. Water on request, subject to the Freedom of Information Act 1982: During 2019-20, we commenced 11 Local Jobs First Standard or Strategic projects where a Local Industry • a statement that declarations of pecuniary interests Development Plan (LIDP) was required. The value of these have been duly completed by all relevant officers projects totalled $181.8 million and they were all located • details of shares held by any senior officer as nominee in metropolitan Melbourne. or held beneficially in a statutory authority or authority The outcomes expected from implementing the Local • details of publications produced by the entity about Jobs First -VIPP to these projects are: itself, and how these can be obtained • details of changes in process, fees, charges, rates and • an average of 93.1 per cent local content commitment levies charged by the entity • a total of 128 jobs (annualised employee equivalent • details of any major external reviews carried out on [AEE]) were committed, including creating 21 new jobs the entity and retaining 107 jobs (AEE) • details of major research and development activities • a total of seven positions for apprenticeships/trainees undertaken by the entity were committed • details of overseas visits undertaken including a The Major Projects Skills Guarantee has been applied summary of the objectives and outcomes of each visit 3 to one project. A total of 6495 hours are committed to • details of major promotional, public relations and VALUE DELIVERING be completed by apprentices, trainees or cadets on this marketing activities undertaken by the entity to develop project and a total of 1.5 opportunities for apprentices, community awareness of the entity and its services trainees or cadets has been created by this project. • details of assessments and measures undertaken During 2019-20, we completed three Local Jobs First to improve the occupational health and safety of Standard or Strategic projects that required either a VIPP employees plan or a LIDP. The value of these projects totalled $88 • a general statement on industrial relations within million and all were all located in metropolitan Melbourne. the entity and details of time lost through industrial The outcomes from implementing the Local Jobs First accidents and disputes -VIPP to these projects were: • a list of major committees sponsored by the entity, the purposes of each committee and the extent to which • an average of 87.4 per cent local content commitment the purposes have been achieved was achieved • details of all consultancies and contractors including: • a total of 194 jobs (AEE) were achieved, including − consultants/contractors engaged creating 30 new jobs and retaining 164 jobs (AEE) − services provided • a total of five positions for apprenticeships/ trainees were achieved, all of which were retained − expenditure committed to for each engagement. apprentices/trainees FINANCIAL MANAGEMENT COMPLIANCE For these commenced and completed projects, there were ATTESTATION STATEMENT 436 small to medium sized businesses engaged as either the principal contractor or as part of the supply chain. I Sue O’Connor, on behalf of the Responsible Body, certify that Yarra Valley Water has no Material Compliance Competitive Neutrality Policy Deficiency with respect to the applicable Standing Directions under the Financial Management Act 1994 Competitive neutrality seeks to enable fair competition and Instructions. between government and private sector business. Any advantages or disadvantages that a government business may experience, simply as a result of government ownership should be neutralised.

Yarra Valley Water continues to comply with the Sue T O’Connor requirements of the Competitive Neutrality Policy. Chair YARRA VALLEY WATER 64 ANNUAL REPORT 2019-20 DELIVERING VALUE

LIVEABILITY OUTCOMES

Yarra Valley Water exists to enhance the liveability of our community, now and in the future.

Ceres Nursery, Brunswick. Image taken March, 2017. YARRA VALLEY WATER ANNUAL REPORT 2019-20 65

RESILIENT AND LIVEABLE CITIES • Reimagining Taralla Creek • Monash National Employment and Innovation Cluster AND TOWNS IWM strategy Our purpose is to support the health and • Doncaster Hill Recycled Water Project wellbeing of our customers, and create a • Improving Sanitation through onsite brighter future for communities and the Wastewater Management natural environment. We're proud of our • Stormwater Harvesting - Monbulk Recreation Reserve role in helping to make Melbourne one of • Wallan Restorative Project – native vegetation the world's most liveable cities. regeneration initiative • Whittlesea Community Farm PLACEMAKING THROUGH INTEGRATED • Merri Creek emergency management and pollution WATER MANAGEMENT (IWM) event mitigation works Water is essential for liveability. The impact of climate In April 2020 we supported the adoption of clear change and increased urban density will require effective measures that support the Strategic Directions management of localised flooding and impacts of Statements (SDSs) for the five Metropolitan IWM forums stormwater runoff - particularly during more frequent across Melbourne. This was the culmination of many high intensity rainfall events. Access to cool, green open months of collaboration through the IWM forums and spaces will also be essential to support wellbeing as working groups, with our inputs primarily relating to the 3 fewer homes will have private garden space. Providing Yarra catchment, and, to a lesser extent, the Maribyrnong VALUE DELIVERING an urban form with green open space has proven health and Dandenong catchments. We're now working to build and economic benefits. The design of our local areas these measures into our planning and reporting processes. plays a key role in a community's connectedness and resilience during times of stress. Through our integrated WATER USE, CONSERVATION water management (IWM) planning work we are AND EFFICIENCY continuing to ensure our role in the placemaking and We are operating in a drying climate, with the challenge of urban development planning processes across Melbourne population growth, so water efficiency is more important addresses these challenges. than ever. We have had a relatively stable level of per With community-based participation at its centre, capita usage over the past five years which is comparable we're striving to ensure planning processes incorporate with the metropolitan average. We continue to promote IWM to harness water's role in supporting the creation sensible and efficient use of water through the Target 155 of quality public spaces that contribute to people's program, our schools’ education programs where we help health, happiness and wellbeing. This includes working schools and early learning centres integrate water as a closely with Traditional Owner groups to ensure their topic into the curriculum for educators and students, by requirements and vision for water management in each implementing the Schools Water Efficiency Program, and area is embedded in the planning process. continuing to assist businesses and councils to become more water efficient and explore alternative sources. We During 2019-20, we worked on a range of IWM approaches support our customers and the community to use water as part of a broader sub-catchment place-based planning sensibly for the things that they value. approach. This included participation in the Maribyrnong, Yarra and Dandenong IWM Forums, specifically through Melbourne's water industry is working together to secure these projects: water supplies for the next 50 years. This approach is captured in the ‘Water for a Future–Thriving Melbourne’ • IWM Servicing Scheme for Moonee Ponds Creek document which provides the common elements of • Northern Recycled Water Trunk Main investigation the Urban Water Strategies of Yarra Valley Water, – with potential to connect Yarra Valley Water and City West Water and South East Water, Melbourne Western Water recycled water supply networks Water’s Melbourne Water System Strategy and the joint • Collaborative sub-catchment IWM planning framework action of supporting the efficient use of water across - Upper Merri Creek IWM pilot project the community. • Coldstream recycled water scheme YARRA VALLEY WATER 66 ANNUAL REPORT 2019-20 DELIVERING VALUE

LIVEABILITY OUTCOMES CONTINUED

In 2019-20 we worked with the Department of Under the WaterCare support program, we offer water Environment, Land, Water and Planning (DELWP), and audits – directly to residential customers experiencing Victorian water corporations to launch the industry's first vulnerability or hardship (Community Rebate Program major water saving campaign since the implementation – CRP) and via not-for-profit community housing (the of Target 155 during the Millennium Drought. The Make Community Housing Retrofit Program – CHRP). Both Every Drop Count campaign, under the banner of Target these programs are funded by DELWP on an annually 155, aims to appeal to people's sense of community and reviewed basis, and we also contribute an additional love of water whilst providing a `nudge' to think about $100,000 funding to the CRP program each year. their personal water use. The objective of the CRP program is to support customers We remain focused on targeting efficient water use to gain greater control over their bills by addressing behaviours to ensure we make the most of our state's leaks or inefficient appliances. We organise the plumber precious water supplies. We continue to promote the on behalf of the customer (with their agreement) where efficient and sensible use of water through: they are unable to afford the cost of a plumber, and pay the plumber directly, to avoid out of pocket costs for • Water efficiency and behaviour change programs such the customer. There is strong demand for this program, as Make Every Drop Count and Target 155, a voluntary with the allocated funding spent each year it has run. program that encourages Melbourne households to use The number of customers assisted depends on the level a maximum of 155 litres of water per person per day of funding. The program has been very well received • Developing materials and products to educate children by the community sector with 417 customers assisted both in the classroom and at home about how they can in 2019-20. use water efficiently • Encouraging schools to participate in the Schools The CHRP program has a similar objective, however Water Efficiency Program (SWEP), a Victorian targets emergency and community housing across the Government initiative that enables schools to track and Melbourne metropolitan areas (serviced by Yarra Valley manage their water consumption Water, City West Water and South East Water) that are owned or managed by community welfare agencies. The • Assisting businesses and local councils to become objective is to support their ability to effectively support more water efficient and explore alternative water vulnerable customers via their core business rather than sources – this includes promoting a water efficiency unnecessarily high bills. The program has been very well benchmarking website for businesses received by the community sector. • Engaging customers around water efficiency through bills, social media, videos, sponsorships, local media Beyond water efficiency, these programs also enable and website content, including the Target 155 program customers experiencing vulnerability and hardship to take action to reduce their water use, and in turn, have greater • Preparing a pilot program to encourage customers to control of their bill. install water efficient showerheads in their homes

Besides water conservation, extensive customer research has told us that our customers want us to focus our efforts on improving and innovating when it comes to alternative sources of water, such as stormwater and recycled water. We have a continued focus on alternative water sources and are actively participating in the government’s Integrated Water Management forums. YARRA VALLEY WATER ANNUAL REPORT 2019-20 67

WATER CONSUMPTION REPORT 2019-20

NUMBER OF CUSTOMERS (AS AT 30 JUNE 2020) Residential customers 781,288 Non-residential customers 58,228 TOTAL 839,516

DRINKING WATER VOLUME (ML)1 Residential customers 115,297 Non-residential customers 28,220 (1) TOTAL 143,517

Average annual drinking water consumption2 142,725

RECYCLED WASTEWATER VOLUME (ML) Residential customers 336 Non-residential customers 1,087 3 (2) Total 1,423 VALUE DELIVERING

(1)+(2) TOTAL CONSUMPTION (ML)3 144,940

NON-REVENUE WATER (ML) Leakage 6,151 Bursts 3,584 Other 3,184 (3) Total 12,919 (1)+(2)+(3) TOTAL WATER ALL SOURCES (ML) 157,859

1 Includes a small amount of unchlorinated water supplied directly from aqueducts. 2 Average customer usage calculated over five years from 2015-16 to 2019-20. 3 Total consumption does not include water sourced from rainwater tanks or from greywater reuse.

250 244 246 237 230 217 210 200 200 207 186 164 166 168 166 150 157 164 161 160 161 159 152 147 153

100

50

0 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 The above figures include an estimate for customer usage for Quarter 4 (April – June 2020) which was not available at the time of preparing this report. Water consumption for residential and non-residential customers during the April to June quarter is expected to be impacted by coronavirus. The scale of the impact will be known in October when the Quarter 4 billing cycle is complete. YARRA VALLEY WATER 68 ANNUAL REPORT 2019-20 DELIVERING VALUE

LIVEABILITY OUTCOMES CONTINUED

DROUGHT RESPONSE REPORT ANNUAL REPORTING OF MAJOR The metropolitan water retailers have prepared common NON-RESIDENTIAL WATER USE Drought Preparedness Plans (incorporating a Drought Response Plan) based around an adaptive framework REQUIREMENT 1: NUMBER OF CUSTOMERS to manage water shortages and potential use of four WHO FALL WITHIN EACH RANGE levels of water restrictions to control the use of drinking water outdoors. (Section 122ZJ of the Water Act 1989)

During 2019-20, there was no requirement for drought Table 1: Customer by volume range preparedness measures. In March 2020, the Minister for Water announced a 125GL desalinated water order. VOLUMETRIC RANGE – NUMBER OF Permanent Water Use Rules continued to apply for the ML PER YEAR CUSTOMERS whole of 2019-20. Equal to or greater than 100ML and 13 CORPORATE WATER CONSUMPTION less than 200ML The amounts in the table below represent consumption Equal to or greater than 200ML and 1 at our Mitcham office excluding any treatment plants or less than 300ML other work sites. Equal to or greater than 300ML and 2 less than 400ML Total water consumption for 2019-20 3,350.2kL Equal to or greater than 400ML and - Number of FTE staff on site 734 less than 500ML Average water use per employee 4.56kL Equal to or greater than 500ML and 1 (kL per employee) less than 750ML Total office space 10,000m2 Equal to or greater than 750ML and - less than 1,000ML Average water use per m2 0.34kL Greater than 1,000ML 2 TOTAL NUMBER OF CUSTOMERS 19 YARRA VALLEY WATER ANNUAL REPORT 2019-20 69

REQUIREMENT 2: NAMING OF MAJOR WATER RECYCLING WATER USERS AND WHETHER OR NOT This year we produced 11,606ML of recycled water at our THEY PARTICIPATE IN WATER EFFICIENCY sewage treatment plants of which 3,666ML or 31.6 per PROGRAMS cent was reused. (Section 122ZJ of the Water Act 1989) We constructed 70km of recycled water mains and connected 5346 properties to Class A recycled water. This Table 2: Names of major customers and their brings the total number of connected properties to 31,671. participation in water efficiency programs We continued to lead a recycled water industry working STATUS OF CUSTOMERS’ group, allowing for collaboration and alignment between PARTICIPATION IN WATER EFFICIENCY Victorian water corporations. We also worked hand-in- NAME OF CUSTOMER PROGRAM hand with our regulators to revise the existing recycled water guidelines, to reduce barriers to recycled water A & K Obaidi Pty Ltd Yes use, while continuing to protect public health and the Austin Hospital Yes environment to the highest possible standard. Bertocchi Smallgoods Yes Water recycling continues to be a key component of our Chadstone Shopping Centre Yes integrated water cycle management servicing strategy for the Northern Growth Corridor, and new estates in Chiquita Mushrooms Pty Ltd Yes the eastern suburbs. Public open space irrigation, and 3 Colonial Farm Yes providing recycled water to all homes via a third pipe VALUE DELIVERING system for toilet flushing, garden watering and laundry Continental Poultry Pty Ltd Yes use, provides significant efficiency and environmental CSL Behring Pty Ltd Yes benefits to the entire community. Eastland Shopping Centre Yes WATER QUALITY Huhtamaki Australia Pty Ltd Yes During 2019-20, we maintained our commitment to provide Lang Tech Bottling Pty Ltd Yes safe, high-quality drinking water. This year we received 5.0 Latrobe University Yes complaints for every 1000 customers, against our target Monash University Yes of 3.2 complaints. Coronavirus restrictions meant more customers were working from home, which led to a higher Peters Ice Cream Yes than usual number of complaints reported for individual day Premo Fresh Yes time water quality events. Sorbent Paper Company Yes We continue to work to reduce the impact of water quality Pty Ltd changes on our customers, including keeping customers The Glen Shopping Centre Yes informed about operational changes to their water supply, targeted cleaning of 500km of water mains using a Visy Packaging Properties Yes combination of cleaning methods, and installing additional Pty Ltd particle dispersion devices around our network. Visy Paper Coolaroo Yes We achieved 92 per cent customer satisfaction with the Westfield Doncaster Yes overall quality of drinking water provided.

To build business knowledge and support large water users to adopt local water solutions, we coordinate and facilitate seminars, undertake site visits at various businesses (exploring process and procedural improvements), and document case studies that share 92% the learnings of others’ achievements in this area. CUSTOMER SATISFACTION ACHIEVED Furthermore, all large water users have access to a WITH THE OVERALL QUALITY OF national benchmarking website to compare their water DRINKING WATER PROVIDED consumption with others in similar industries. YARRA VALLEY WATER 70 ANNUAL REPORT 2019-20 DELIVERING VALUE

LIVEABILITY OUTCOMES CONTINUED

CUSTOMER AND COMMUNITY AFFORDABILITY AND ASSISTANCE OUTCOMES PROGRAMS Melbourne’s water bills are currently the lowest in CUSTOMER AND COMMUNITY Australia for all capital cities. We have an important role ENGAGEMENT in sustaining Victoria’s productivity and a responsibility to deliver our services as efficiently as possible. In doing this Acting with transparency and openness is central to we strive to relieve the pressure on household budgets our engagement approaches. We place a high priority and to ensure that the cost of water and sanitation on ensuring timely communication and creating services does not impact the competitiveness of our mutually beneficial relationships with our customers business customers. Because most of our investment and stakeholders. This provides important feedback to decisions are long term we have an obligation to make assist us in our decision making and planning and builds financial decisions that optimise community value and confidence and trust in the work we do. intergenerational equity.

In 2019-20 our Community Engagement team supported There was strong feedback from customers during our 46 significant infrastructure projects, frequently in Price Submission process that they didn’t want water bills challenging locations or environmentally sensitive areas. to increase, though they valued increased service levels To build deeper engagement capabilities across the over a bill decrease. Nearly all customers told us that business, we've started trialling a new approach this year, small annual bill changes are better than a single large embedding three Community Engagement specialists change. As a result, we devised a price path for the five- within key project teams. We've also established a year period of flat or below inflation annual bill increases. community engagement framework so staff working on significant infrastructure projects are guided in best In 2019-20, the typical annual residential bill (based on practice engagement and communication. 150kL consumption per annum) was $1064 - an increase from 2018-19 of $5 or 0.5 per cent. For homes with 200kL consumption per annum, the 2019-20 bill is $1257 - an increase from 2018-19 of $8 or 0.6 per cent, primarily due to desalinated water costs.

Despite this, keeping on top of bills remains a challenge for many Victorians. We continue to evolve our programs to support customers who are experiencing vulnerability and who find it difficult to pay their water bill.

We are also committed to improving awareness of our programs among groups with a higher risk of vulnerability (such as Victorians from culturally and linguistically diverse backgrounds, concession card holders and those accessing emergency relief) and offer tailored support for these people.

Coronavirus has led to a significant increase in customers seeking support. We've built on the strength of our existing Watercare program to rapidly respond and we're continually reviewing our processes as the situation evolves. YARRA VALLEY WATER ANNUAL REPORT 2019-20 71

Key elements of our response include: COMMUNITY INCLUSION • Temporarily pausing standard collection activities while We are developing a holistic, integrated approach to we developed new strategies and products to deal with ensure all areas of our business operate with common newly vulnerable customers. Although standard debt principles of community inclusion. collection would never apply to customers experiencing hardship, we were especially conscious of the adverse Our Community Inclusion Division aims to embed impacts during this difficult time better inclusion practice across the business, including • Immediately ceasing restrictions and lifting them customers, staff and our supply chain. This builds on our where they had been applied strong foundation of supporting customers experiencing vulnerability, by looking at all areas of the business • Training our team to help customers through our through the lens of community and financial inclusion. tailored support options, supplementing our specialised hardship case management team. This included a This includes: focus on maximising concession registration and Utility • building strong relationships with community Relief Grant (URG) applications, as well as options such stakeholders to support the evolution of our programs as payment extensions and adjustments to tariff to reflect higher usage due to lockdown • promoting community inclusion principles within the business to strengthen, influence and guide our policy • Introducing new measures for our customers to self- and practices serve on our website including waiving trade waste fees for six months to ease the pressure on small to • co-creating programs and action plans that enable medium businesses like cafes and restaurants pathways for inclusion and addressing socioeconomic 3 and inclusion barriers to the way we work and our VALUE DELIVERING • Introducing new support options for commercial services customers impacted by coronavirus, including waiving trade waste fees for businesses such as cafes • developing an approach for measurement, evaluation and restaurants and reporting • Ensuring our call centre staff could safely work deliver our services from home. This included monitoring THRIVING COMMUNITY PARTNERSHIP the wellbeing of our staff interacting with people The Thriving Communities Partnership (TCP) grew out of experiencing hardship and vulnerability Yarra Valley Water’s vulnerability roundtable, where we • Adapting our engagement strategy – moving away from hosted 130 representatives from business, government face to face engagement and using virtual meetings, agencies and the community sector to address some of calls and a stakeholder newsletter to stay in touch. We the complex issues within our community – by moving also offered some immediate material assistance to from talk to action on tackling vulnerability. TCP is now a frontline providers - including deliveries of toilet paper separate not-for-profit company limited by guarantee. It's and hand sanitiser – to keep us connected and show a cross-sector collaboration with the goal that everybody our support for their vital work has fair access to the modern essential services they need to thrive in contemporary Australia, including utilities, By the end of June 2020, we had 8784 customers being financial services, telecommunications and transport. managed within our Watercare Customer Support Team, which is 35 per cent higher than June 2019. TCP now has over 250 organisations participating across Australia and is currently hosted by Yarra Valley Water. In addition: As Australia has faced the impact of bushfires and • 5163 customers have told us they are impacted by coronavirus, TCP has played a pivotal role in bringing coronavirus (across a total of 7262 accounts - 5216 organisations together to collaborate in how to best residential and 2046 commercial) respond to these and other challenges. In particular, TCP's • In June 2020, we processed 1287 applications for new Navigating COVID Together webinar series is bringing URGs - the highest number we've ever seen (after the leaders together across sectors to discuss the different previous high of 873 in May) impacts of coronavirus on our community and share learnings. • The total number of URGs granted for 2019-20 was $2.7m, benefitting 5043 customers • We've seen a significant increase in customers registering for concessions • At 30 June 2020, 49,073 instalment plan arrangements were in place YARRA VALLEY WATER 72 ANNUAL REPORT 2019-20 DELIVERING VALUE

LIVEABILITY OUTCOMES CONTINUED

FAMILY VIOLENCE • Partnering with AFL Outer East, Eastern Health and Sports and Life Training to deliver the “Leading the We have a well established practice around supporting Change” program, which provided over 40 sessions customers and staff experiencing family violence. This on respectful relationships and mental health to 12 includes the use of `safety flags' to identify and provide football and netball clubs across the Yarra Ranges greater safety to people at risk of family violence and training for our customer support team to help them • Sharing our family violence journey with the water assist customers who may be affected by family violence. industry nationally and internationally through the We also internally promote our proactive family violence OzWater conference. policies to all staff. In 2019-20, we continued to provide training for all new COMMUNITY SERVICE OBLIGATIONS starters and managers, and worked with Uniting to update our training material to ensure it remains relevant. We In addition to our own assistance programs, many also carried out family violence refresher training for customers are eligible for support via government our customer-facing staff with specialist family violence initiatives and programs. In 2019-20, the amount of service, EDVOS. This builds on the baseline training assistance provided to customers in these programs we provided to all staff, and ensures that staff are as increased. This was partially due to a significant equipped as they can be to safely and respectfully respond increase in customers seeking support as well as the to someone who may disclose family violence to them. implementation of targeted programs to increase the This training was particularly timely given the significant number of eligible concessions registered. increase in rates of family violence due to coronavirus.

We continue to be actively involved in raising awareness COMMUNITY SERVICE 2019-20 2018-19 2017-18 and collaborating with other organisations to strengthen OBLIGATIONS $’000 $’000 $’000 and evolve our collective responses to family violence. Provision of concessions 51,299 49,229 49,563 Some examples from 2019-20 include: to pensioners • Providing case studies for the Essential Services Rebates paid to not-for- 1,263 1,235 1,295 Commission's Better Practice Guide, designed to profit organisations under help water and energy businesses implement safe the Water and Sewerage and effective family violence strategies. The guide Rebate Scheme highlights various aspects of our work, including our Utility relief grant 2,701 1,377 1,128 commitment to training and the way our WaterCare payments team case manage and provide customised solutions to people experiencing family violence Water concessions for 18 16 18 • Participating in the Essential Services Commission's life support machines – Better Practice workshop and sharing our work with No haemodialysis To Violence, Victoria's peak body for men's behaviour TOTAL 55,281 51,857 52,004 change. This work developed training for staff to help build capability to safely and effectively engage with customers who use violence and understand how we can play a positive role on their path to change • Participating in a range of activities supporting action against family violence, including the Walk against Family Violence and other events during the 16 Days of Activism against Gender-Based Violence. • Actively working with different networks to promote our family violence supports for customers and to collaborate on strengthening response and prevention YARRA VALLEY WATER ANNUAL REPORT 2019-20 73

PROVISION OF CONCESSIONS WATER FOR ABORIGINAL TO PENSIONERS CULTURAL, SPIRITUAL AND Customers who hold either a Pension Concession Card, a Gold Repatriation Health Care Card for All Conditions ECONOMIC VALUES or a Health Care Card are entitled to pay a concessionary We proudly acknowledge the Traditional Owners of the amount instead of the full balance outstanding on their land and waterways on which we work and live, we accounts. When a customer pays this lesser amount, pay respects to Elders past, present and emerging. We the difference is billed to and paid by the Department recognise and value traditional responsibilities in caring for of Human and Health Services (DHHS). water and land. We also value the continuing rich cultures and contribution of Aboriginal and Torres Strait Islander REBATES PAID TO NOT-FOR-PROFIT peoples and communities to the Victorian community. ORGANISATIONS UNDER THE WATER AND SEWERAGE REBATE SCHEME ABORIGINAL INCLUSION PLAN/ Customers who are not-for-profit entities are entitled to RECONCILIATION ACTION PLAN pay a concessionary amount instead of the full balance We launched our first Reconciliation Action Plan (RAP) outstanding on their accounts. When a customer pays this in April 2017. Since then, the RAP has provided the lesser amount, the difference is billed to and paid by the cornerstone of our commitment to make a meaningful State Revenue Office. contribution towards reconciliation and also Aboriginal and Torres Strait Islander affairs. The RAP outlines 3 UTILITY RELIEF GRANT SCHEME the overall, holistic approach that we committed to; to VALUE DELIVERING The Utility Relief Grant scheme provides assistance for strengthen how we engage and work with Aboriginal and residential customers unable to pay their utility accounts Torres Strait Islander peoples, organisations and Traditional due to a temporary financial crisis. Customers need to Custodian groups. The focus of our current plan has been demonstrate that unexpected hardship has left them on foundational measures, of building relationships and seriously short of money so that they cannot pay their capability and deepening our understanding of how we can utility account without assistance. meaningfully contribute to reconciliation. We have learnt a lot over this period including the WATER CONCESSIONS FOR LIFE SUPPORT fundamental importance of long-term, committed MACHINES – HAEMODIALYSIS relationships. These build trust and our understanding in The State Government of Victoria provides a rebate for how we can contribute through listening and responding customers required to use a dialysis/life support machine to the needs and aspirations of Aboriginal community at home, to compensate for water use and sewage organisations and Traditional Custodians. We have gained disposal charges relating to its use. a better understanding of the mutual capability and capacity building that is required to achieve inclusion of The rebate amount is determined by DHHS based on the inherent rights of Traditional Custodians, enabling the estimated annual water usage of a dialysis machine full participation by Aboriginal and Torres Strait Islander (168kL). This rebate is in addition to any other pension or peoples within the water sector. concession entitlements. Our second RAP received conditional endorsement from Reconciliation Australia in June 2020. Our new vision for reconciliation will guide this next phase of our commitment: Our vision for Reconciliation is that all who live on this land acknowledge our shared history and move forward, together, in a respectful way. YARRA VALLEY WATER 74 ANNUAL REPORT 2019-20 DELIVERING VALUE

LIVEABILITY OUTCOMES CONTINUED

CROSS-CULTURAL TRAINING To mark our signing up to the Racism. It Stops With Me campaign, we held screenings of The Final Quarter, A key part of our RAP is to engage employees in cultural and throughout NAIDOC Week 2019 we ran short films learning opportunities to increase understanding and profiling Aboriginal and Torres Strait Islander peoples and appreciation of Aboriginal and Torres Strait Islander businesses to showcase and celebrate cultural diversity. cultures, histories and achievements. We have developed A number of staff have also had the opportunity to attend a cultural learning strategy that outlines our approach to the Koori Court, to gain an appreciation and understanding build cross-cultural awareness and capability. It identifies of some of the barriers that our customers face. the different training needs for specific parts of the business – including formal and informal training opportunities. Our internal communications include regular stories relating to Aboriginal and Torres Strait Islander culture, As we have begun to work more closely with Wurundjeri, history, achievements and current issues. As we go Bunurong and Boon Wurrung peoples, there have been forward, our focus is on building our understanding of a range of opportunities for informal learning, including shared history and the impact this has on the present. our understanding of Traditional Custodian aspirations Our new Strategy has been guided and influenced by and inherent rights in water planning and management. Aboriginal philosophies, and this will continue to provide As we continue to build on how we work together, these opportunities for staff to engage and learn. opportunities enable us to develop our understanding of their histories, current focus and aspirations. Our second Cultural Flows breakfast, featuring Aboriginal presenters ENGAGEMENT OF ABORIGINAL who work in the National Cultural Flows Project, was well COMMUNITIES supported, both in attendance and with engagement with Our RAP includes a commitment to support procurement Traditional Owners. opportunities that will effectively engage with Aboriginal and Torres Strait Islander businesses. To date 162 staff have completed full-day cultural awareness training since 2015-16. This covers history We have relationships with a number of Aboriginal and from an Aboriginal perspective, Aboriginal people Torres Strait Islander businesses which provide cultural and communities today and mechanisms to support awareness training, stationery supplies (with a Supply engagement. This training has been extremely well Nation certified supplier), photography, graphic design and received, and provides a good basis for our staff to build other consultancy services. their awareness and capability to engage further and understand broader issues related to reconciliation. Developing staff capacity in social procurement has been This training is supported by a short cultural induction identified as an area for development. We are memers delivered to our Customer Care centre staff and a broader of the Kinaway Aboriginal Chamber of Commerce, which internal communications program relating to the RAP, has provided training and helped connect our business sharing stories and information about Aboriginal peoples, with relevant Victorian Aboriginal and Torres Strait culture and histories. We have worked with Melbourne Islander businesses. Our Aboriginal Partnerships Manager Water on their online cultural learning program, which will attended the World Indigenous Business Development be a very valuable resource for our staff going forward. forum in October 2019 as part of a Kinaway study tour. The forum provided valuable opportunities to expand our This formal learning is supplemented by other relationships and networks and learn from Aboriginal opportunities for cross-cultural learning throughout the organisations from around the world. year. For example, during NAIDOC Week 2019, employees attended the annual Victorian NAIDOC March from Fitzroy We launched our Sustainable and Social Procurement to Federation Square and had the great opportunity to Strategy (2019-20), which guides us to pursue attend the state NAIDOC Ball. opportunities for Aboriginal and Torres Strait Islander businesses to supply us with goods and services. This is in line with our Reconciliation Action Plan actions and refers to the Victorian Government's Aboriginal Procurement Strategy and Social Procurement Framework. In implementing this strategy, we incorporated known YARRA VALLEY WATER ANNUAL REPORT 2019-20 75

Aboriginal and Torres Strait Islander businesses into our Additionally we have provided support for Bunurong's procurement system, which flags relevant procurement Country Plan, in partnership with South East Water categories to help make staff aware of opportunities and we're working with Wandoon Estate at Coranderrk to engage them. The strategy will be updated yearly in to provide an environmentally sustainable wastewater accordance with the Social Procurement Framework. treatment option.

We have undertaken a number of activities to support We strengthened our approach to cultural heritage Aboriginal Community Controlled Organisations and will management planning and delivery, through increased continue to expand this work. Staff have volunteered to engagement with contractors and repatriation. Within our assist Aboriginal Housing Victoria with an annual family Donvale sewerage project, we uncovered more than 2700 day event. We also provided Choose Tap bottles for the Aboriginal stone artefacts, believed to be up to 4000 years children's showbags and we support Belgrave's Survival old. Throughout this project we have worked closely with Day event. the Wurundjeri Woi-wurrung Cultural Heritage Aboriginal Corporation, including reburying the artefacts and holding ENGAGEMENT OF TRADITIONAL OWNERS a smoking ceremony. This enables us to demonstrate greater respect and maximise opportunities for learning During 2019-20 we significantly strengthened the level and reflection on the history within our service area. of engagement with Traditional Custodians across Melbourne. This continues to influence our work, helping to reshape the narrative around water and planning and future decision-making. We're finalising 3 the cultural flows assessment for the Upper Merri Creek VALUE DELIVERING sub-catchment, which outlines and provides for future inherent water rights for Wurundjeri Woi-Wurrung.

Staff event for Reconciliation Week. Image taken July, 2019. YARRA VALLEY WATER 76 ANNUAL REPORT 2019-20 DELIVERING VALUE

ENVIRONMENTAL OUTCOMES

CLIMATE ADAPTATION Climate change projections from the Bureau of • Obtaining an independent assessment of our approach Meteorology predict a hotter and drier climate over the to managing climate risk based on the 2019 DELWP long term, lower stream flows to our reservoirs and guidelines for board members and executives. greater variability, including an increased number of storm Implemented recommendations, such as including events. These challenges will require new approaches in cumulative risks, transitional risks and opportunities the way we provide our services and we are committed to in our strategic risk assessment, building more being forward thinking and customer focused in how we consistency across our long-term strategies and face these challenges. strengthening our governance and reporting

The Stockholm Resilience Centre planetary boundaries • Embedding adaptive planning in our business processes, model defines a `safe operating space for humanity'. We including our Place-Based Planning Guidelines and our now know that humanity is overstepping four of the nine Servicing Strategy Guidelines, in addition to our servicing boundaries we rely on including nitrogen and phosphorous strategy for the Northern Growth Corridor flows and climate change. Recognising this, we are • Applying results from our vulnerability analysis to working towards a regenerative approach, which partners our Asset Management Framework, including how people and their places to help both thrive. we can incorporate climate hazards and adaptive capacity in our risk assessments, how we can provide Therefore, we have embraced the Victorian Government’s decision support structures in our renewals planning, vision for long-term water management in developing our and how we can build a greater understanding of our 50-year Urban Water Strategy: interdependencies with other service utilities We will manage water to support a • Holding quarterly seasonal outlooks with the Bureau of Meteorology to enable operational staff to prepare for healthy environment, a prosperous the likely weather patterns in the upcoming season economy and thriving communities, now • Supporting actions arising from DELWP's Pilot and in the future. Water Sector Climate Change Adaptation Action Plan, including Project Control Board member for Our 50-year Urban Water Strategy and Drought the development of the Adaptation Business Case Preparedness Plan apply the Department of Environment, Guidelines, contributing to the Scenario Planning Land, Water and Planning's guidelines for forecasting the Guidelines, contributing to the development of impacts of climate change on water supplies, and we have catchment targets in the IWM forums, participating in monitored progress against these. the water grid stress test, and contributing to industry Consideration of climate change impacts has also been knowledge sharing embedded in the Melbourne Sewerage Strategy, in the Through these actions we have embedded climate change scenarios explored and in the adaptive planning responses considerations more deeply into our decision making developed during implementation. processes across our asset planning, water and sewerage Our Climate Resilience Plan outlines our approach to resource planning and product delivery functions. We further integrate climate change adaptation into our have also worked closely with industry colleagues to decision making across the business. In 2019-20 we ensure our actions are aligned with broader adaptation implemented key actions from this plan, including: actions undertaken across the industry. The following table outlines how each of the key actions in our Climate Resilience Plan relates to core functional areas. YARRA VALLEY WATER ANNUAL REPORT 2019-20 77

CORE FUNCTIONAL AREAS INTERDEPENDENCIES PRODUCT DELIVERY SOURCE WATERS & & WATERS SOURCE ENVIRONMENT BUILT ASSETS BUILT CUSTOMER & & CUSTOMER WORKPLACE DEMANDS PEOPLE & NATURAL NATURAL ACTIONS ACTION TIMEFRAME

3 DELIVERING VALUE DELIVERING ENHANCE ADAPTIVE PLANNING Scenario based modelling Medium term X X X Pilot adaptive planning Short term X X X X X Embed adaptive planning Long term X X X X x REDUCE SERVICE VULNERABILITIES Asset vulnerability Medium term X X X assessment Contingency planning Short term X X X X support Emergency management Short term X X X X responses FOSTER COLLABORATIVE PARTNERSHIPS Climate change resilience Short term X benchmarking Partner with DELWP Ongoing X Develop industry and Ongoing X X X X X X customer partnerships YARRA VALLEY WATER 78 ANNUAL REPORT 2019-20 DELIVERING VALUE

ENVIRONMENTAL OUTCOMES CONTINUED

BULK ENTITLEMENTS REPORT Yarra Valley Water holds Bulk Entitlements to the water resources of the Greater Yarra River — Thomson Basin and to the Victorian Desalination Project. In addition, we hold Bulk Entitlements in the River Murray and Goulburn System of up to 25,000ML annually of water savings, as a result of investment in Goulburn-Murray Water’s (GMW) Connections Project.

GREATER YARRA SYSTEM VICTORIAN – THOMSON RIVER DESALINATION GOULBURN RIVER REPORTING OBLIGATION POOL 1, 2 PROJECT 4 SYSTEM 7, 8 MURRAY 13, 14 The volume of water taken by Clause 16.1 (a) Clause 13.1 (a) Clause 14.1 (b) 0ML Yarra Valley Water in 2019-20 156,409ML 0ML 11ML 9,10 Annual water allocation made Clause 16.1 (b) Clause 13.1 (a) Clause 14.1 (c) Clause 11.1 (a) available to Yarra Valley Water 187,850ML 44,961ML 5 7,132ML 5,219ML Share of storage volume at 30 Clause 16.1 (b) Clause 13.1 (a) 5,502ML 11 3,771ML 15 June 2020 for carryover 132,610ML 44,961ML Compliance with the Clause 16.1 (c) Yes N/A N/A N/A entitlement volume Any assignment of water Clause 16.1 (d) Nil Clause 13.1 (b) Nil Clause 14.1 (d)12 Clause 11.1 (b) allocation or temporary/ Net 8,620ML Net 6,565ML 16, 17 permanent transfers of the Clause 14.1 (e) Nil Clause 11.1 (c) Nil bulk entitlement Approval, amendment and Clause 16.1 N/A N/A N/A implementation of approved (e) Continued metering program implementation 3 Any amendment to the Clause 16.1 (f) Nil Clause 13.1 (c) Nil Clause 14.1 (f) Nil Clause 11.1 (d) Nil bulk entitlement Any new bulk entitlement Clause 16.1 (g) Nil Clause 13.1 (d) Nil Nil Nil granted to Yarra Valley Water Compliance with the bulk N/A Clause 13.1 N/A N/A entitlement (e) Continued compliance 6 Any failures to comply with any Clause 16.1 (h) Nil Clause 13.1 (f) Nil Clause 14.1 (g) Nil Clause 11.1 (e) Nil provision of the bulk entitlement Any difficulty experienced Clause 16.1 (i) Nil Clause 13.1 (g) Nil Clause 14.1 (h) Nil Clause 11.1 (f) Nil in complying with the bulk entitlement and if so, any remedial action taken or proposed YARRA VALLEY WATER ANNUAL REPORT 2019-20 79

NOTES FOR COMPLIANCE WITH BULK ENTITLEMENTS GREATER YARRA SYSTEM – 10. Compliance with the combined annual diversion limit THOMSON RIVER POOL of 75,000ML for the holders of Bulk Entitlement (Goulburn System – City West Water) Order 2012, Bulk 1. Yarra Valley Water holds the following Bulk Entitlement (Goulburn System – South East Water) Entitlement to the Greater Yarra System – Thomson Order 2012 and Bulk Entitlement (Goulburn System River Pool. Bulk Entitlement (Greater Yarra System – – Yarra Valley Water) Order 2012 is assessed using Thomson River Pool – Yarra Valley Water) Order 2014 the actual measured annual diversion. Diversions are – WSE000081 (previously BEE072377). subject to clause 6.1 of Yarra Valley Water’s Statement 2. The metropolitan retailers make water available in of Obligations (System Management). Tarago Reservoir to Gippsland Water under a Bulk 11. Yarra Valley Water's commencement volume on Water Supply Agreement. This is used by Gippsland 1 July 2019 was 7,001ML. At 30 June 2020, Yarra Water to supplement their Tarago Bulk Entitlement Valley Water held 5,502ML. during periods of high demand. Yarra Valley Water provided 87.6ML under the Agreement in 2019-20. Yarra 12. Yarra Valley Water has in place water management Valley Water also made available water to Goulburn strategies to manage water allocation holdings in the Valley Water, under a Water Supply Agreement, to help River Murray and Goulburn System to maximise the secure water supplies for Kilmore. In 2019-20 Yarra value of the resources held to their customers and Valley Water provided 63.12ML in July and August. minimise the risk of spilling water allocation. These strategies include the transfer of allocations between 3. Continued compliance with approved metering 3 Bulk Entitlement Allocation Accounts and trading VALUE DELIVERING program through Bulk Water Supply Agreement water allocations. Net total trade out was 8,620ML. between Melbourne Water and Yarra Valley Water and Melbourne Water’s System Management Rules. RIVER MURRAY VICTORIAN DESALINATION PROJECT 13. Yarra Valley Water holds the following Bulk Entitlements to the River Murray. Bulk Entitlement 4. Yarra Valley Water holds the following Bulk (River Murray – Yarra Valley Water) Order 2012 – Entitlement to the Victorian Desalination Project. Bulk WSE000145 (previously BEE072242). Entitlement (Desalinated Water – Yarra Valley Water) Order 2014 – WSE000054 (previously BEE050816). 14. Yarra Valley Water's Bulk Entitlements in the River Murray provide for the progressive annual assignment 5. The Hon Lisa Neville MP, Minister for Water, of entitlement volumes as water saving works announced a 125GL desalinated water order for the and measures from GMW's Connections Project 2019-20 year, of which Yarra Valley Water's share is are completed. The 2019-20 entitlement volume 47,459ML. 2,501ML of this order was delivered into was 9,072.9ML (4,477.4ML in Zone 6 (Vic Murray - Melbourne's water supply system in June 2019. The Dartmouth to Barmah) and 4,595.5ML in Zone 7 (Vic remaining volume was delivered across 2019-20. Murray - Barmah to SA Border). 6. Compliance with our Desalinated Water long term 15. Yarra Valley Water's commencement volume on average diversion limit of 56,951ML is assessed using 1 July 2019 was 5,116ML (2,594ML in Zone 6 and a 5-year rolling average diversion. 2,522ML in Zone 7). At 30 June 2020, Yarra Valley GOULBURN SYSTEM Water held 3,771ML (1,683ML in Zone 6 and 2,088ML in Zone 7). 7. Yarra Valley Water holds the following Bulk Entitlement to the Goulburn System. Bulk 16. Yarra Valley Water has in place water management Entitlement (Goulburn System – Yarra Valley Water) strategies to manage water allocation holdings in the Order 2012 – WSE000010 (previously BEE072239). River Murray and Goulburn System to maximise the value of the resources held to their customers and minimise the 8. Yarra Valley Water’s Bulk Entitlements in the risk of spilling water allocation. These strategies include Goulburn System provide for the progressive annual the transfer of allocations between Bulk Entitlement assignment of entitlement volumes as water saving Allocation Accounts and trading water allocations. works and measures from GMW’s Connections Project are completed. The 2019-20 entitlement 17. Net total trade out for River Murray system was volume was 11,927.1ML. 6,564.5ML (3,494.5ML in Zone 6 and 3,070ML in Zone 7). 9. 11ML of the bulk entitlement was used to maintain the operational capacity of the North-South Pipeline and keep the pipeline charged for fire-fighting purposes, as allowed under clause 6.1 (b) of the Statement of Obligations (System Management). YARRA VALLEY WATER 80 ANNUAL REPORT 2019-20 DELIVERING VALUE

ENVIRONMENTAL OUTCOMES CONTINUED

GREENHOUSE GAS EMISSIONS AND NET ENERGY CONSUMPTION We pledged to reduce our greenhouse gas (GHG) Reduction credits. Further, we are working with our emissions by 64 per cent by 1 July 2025. This partners and suppliers to encourage them to reduce their commitment is necessary as we operate against a emissions year on year. backdrop of population growth and increased demand for our services. To measure our performance, we set a target We rely on electricity to pump and treat water and of emitting no more than 29,149 tCO2-e (tonnes of carbon wastewater as well as power our head office. We currently dioxide equivalents) in 2019-20. operate close to 400 network connection points that use electricity and this carbon-intensive consumption We achieved our target mostly through increased is the largest source of our emissions. We continue to renewable energy use - reporting 29,050 tCO2-e for look for additional ways to be more efficient, reduce the financial year. To achieve net zero emissions for the consumption where possible and source our electricity eleventh year in a row, we offset the reported emissions from renewable generators. through a voluntary surrender of Certified Emission

PROGRESS TOWARDS 2025 GREENHOUSE GAS EMISSIONS TARGET

40000

35000

30000

25000

20000

15000

10000

5000

0 2011-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 BASELINE TARGET

ACTUAL GHG EMISSIONS PROJECTED GHG EMISSIONS YARRA VALLEY WATER ANNUAL REPORT 2019-20 81

GREENHOUSE GAS EMISSIONS (t CO2e) 2019-20 RESULT 2019-20 PROJECTED SCOPE 1 SCOPE 2 EMISSIONS EMISSIONS EMISSIONS TOTAL VARIANCE NOTES Water treatment and supply 8,500 - 8,398 8,398 -1.20% - Sewage collection, treatment 19,400 4,326 15,176 19,502 0.53% - and recycling Transport 1,100 1,004 - 1,004 -8.73% 1 Other (eg. office) 149 146 - 146 -2.01% - TOTAL GHG EMISSIONS 29,149 5,476 23,574 29,050 -0.34% Offsets retired – self generated ------NET EMISSIONS 29,149 5,476 23,574 29,050 -0.34%

NOTES 1 Response to coronavirus, particularly working from home directives, has reduced transport related emissions. 3 DELIVERING VALUE DELIVERING TOTAL ENERGY USE

PERFORMANCE INDICATOR 2018-19 RESULT (MWH) 2019-20 RESULT (MWH) NOTES Water treatment and supply 8,496 8,233 - Sewage collection, treatment and 17,753 19,254 1 recycling Transport - - - Other (eg. office) 1,485 1,313 2 TOTAL 27,734 28,800

NOTES 1 Increased energy associated with commissioning of new assets, including the Craigieburn Hub flow control facility and increase demand required to operate our Waste to Energy facility at capacity. 2 Response to coronavirus, particularly working from home directives, has reduced energy consumption at our head office.

RENEWABLE ENERGY We aspire to generate 100 per cent of our energy needs Solar systems at our head office and three sewage from renewable sources by 2025. This year, almost 35 treatment plants produced 800 MWh of renewable per cent of our electricity needs were supplied from electricity for the year. We consumed 92 per cent renewable sources. 24.5 per cent came from our waste to (734MWh) of this renewable energy onsite, with the energy facility, which operating at near capacity generated surplus 8 per cent exported to the grid. 7,047 MWh of renewable energy. 42 per cent of this was used to run the facility and the adjacent sewage treatment This year our head office was 100 per cent powered by plant leading to a 2,993 tCO2-e reduction in emissions renewable energy, with 27 per cent coming directly from compared to sourcing this electricity from the grid. our solar carpark and the rest being sourced from the grid by utilising exports from our waste to energy facility. YARRA VALLEY WATER 82 ANNUAL REPORT 2019-20 DELIVERING VALUE

ENVIRONMENTAL OUTCOMES CONTINUED

In the coming year we hope to deliver a cutting edge We're investigating how we could use electrolysers to floating solar system at our Wallan treatment plant that produce sustainable oxygen and hydrogen. This would will not only produce renewable energy but assist in the increase the efficiency of wastewater treatment and production of recycled water by reducing algal growth in produce a commercially viable renewable fuel that the feed stock water stored in our lagoon. We have also could potentially replace diesel or natural gas in various started planning our second Waste to Energy Plant to be applications. located at our Lilydale Sewage Treatment Plant.

TOTAL RENEWABLE ELECTRICITY USE

PERFORMANCE 2018-19 RENEWABLE 2019-20 RENEWABLE INDICATOR ELECTRICITY USED (MWH) ELECTRICITY USED (MWH) NOTES Solar 227 734 1 Hydroelectric - - - Wind - - - Biogas 2,142 2,934 2 Greenpower - - - Other 4,726 6,399 3 TOTAL 7,095 10,067 - Percentage renewable electricity % 25.58% 34.96% -

NOTES 1 Solar systems installed at head office and three sewage treatment plants (produced and consumed behind the meter) 2 ReWaste facility (produced and consumed behind the meter) 3 Renewable electricity sourced from the grid that includes voluntary contributions and mandatory participation in the Large-scale Renewable Energy Target (LRET)

councils and other water utilities on a project by project OTHER STATUTORY OBLIGATIONS basis to determine how best to conserve Victoria’s VICTORIAN BIODIVERSITY STRATEGY biodiversity. We liaise directly with DELWP on ongoing growth and development of all native offset areas Yarra Valley Water follows the directive of ‘Victoria’s established as part of these projects. Native Vegetation Management: A Framework for Action’, which was developed as an offset measure to VICTORIAN WATERWAY MANAGEMENT support the Victorian Biodiversity Strategy. We work with multidisciplinary companies and involve ecologists early in STRATEGY the preliminary design phase of projects to complete them Yarra Valley Water strives to deliver our services in a more sustainable manner. This includes conducting within the carrying capacity of nature and reducing our complete risk assessments, life-cycle analyses, net- environmental footprint is a priority. gain assessments and offset management plans, and To improve waterway health, we continued to manage our preliminary flora and fauna options assessments. nitrogen discharges to Port Phillip Bay in accordance with We liaise with stakeholders such as the Department of our self-imposed nitrogen cap of 87 tonnes. In 2019-20, Environment, Land, Water and Planning (DELWP) local our discharge was 66.5 tonnes. YARRA VALLEY WATER ANNUAL REPORT 2019-20 83

To comply with river and aquifer health requirements While the new regulations focus predominantly on a risk- as per our Statement of Obligations, we undertook based approach to environmental harm, the regulations regular (weekly, monthly) sampling at each of our still maintain a wet weather compliance standard sewage treatment plants to ensure they comply with (18.1 per cent Annual Exceedance Probability). Work our Environment Protection Authority Victoria (EPA) has progressed on a number of projects to minimise or Corporate Licence Requirements. eliminate non-compliant spills. We have:

In 2019-20 we also prepared to transition to the new • Completed options assessment and feasibility Environment Protection Authority Victoria legislation assessment for the Darebin Creek branch sewer and corresponding license reform that is occurring by upgrade completing: • Completed a number of inflow reduction projects to • desktop risk assessments of all waterway discharges reduce frequency and volume of wet weather spills in • commencing detailed Ecological Risk Assessments Coldstream, Blackburn North and the Darebin Creek (ERAs) for those deemed to be high risk discharges Catchment • gap analysis to the new Environment Protection Act • Completed functional design for Burwood East General Environmental Duties requirements sewer duplication • Construction of the Scotchmans Creek hydraulic The findings from these ERAs will form the basis for capacity upgrade project. compliance criteria for our new license. A summary of our sewage treatment plants’ performance is reported In addition, we partnered with Monash University and to the EPA on an annual basis. Additionally, water quality other authorities in research initiatives designed to 3 DELIVERING VALUE DELIVERING and flow data relating to waterways is reported to the determine key threats to urban waterways. The first, Essential Services Commission, the National Pollutant which is in the closing stages, is a QRMA which is Inventory and the Bureau of Meteorology. focused on determining the sources of risks to public health within urban waterways. The second, which is at STATE ENVIRONMENT PROTECTION POLICY the grant application stage, has a more holistic focus of (WATERS) determining a framework for understanding, reducing and communicating risks in receiving waterways. Both During 2019-20 YVW played an active role engaging in will play a key role in informing our risk assessments and the development of the subordinate legislation for the decision making going forward. new EPA Act – which will supersede the existing SEPP (Waters). The new act, and its associated legislation, We also continued to construct new sewerage is a shift towards a prevention-based approach to infrastructure for previously unsewered areas as part of environmental protection (rather than enforcement the Community Sewerage Program. based). The Community Sewerage Program provides wastewater As such, we have been focusing on undertaking a gap services to areas that are deemed by local councils to analysis between our existing practices and the draft have a high risk of environmental impact to waterways legislation requirements as well as completing risk and public health. The areas contain a large number of assessments for all relevant sewerage aspects (dry failing septic systems and properties unable to contain weather spills, wet weather spills, odour, noise etc). wastewater within property boundaries.

During the past year we delivered the following projects During 2019-20, we continued to provide reticulated to reduce the impacts of sewer overflows and to align our sewerage services to parts of Donvale, Park Orchards, practices with the Sewerage Management Guidelines: Yarra Junction, Kallista and The Patch while also • Construction of the Roycroft Avenue emergency relief commencing construction works for similar reticulation structure (ERS) projects in Wesburn, Don Valley and Launching Place. We also continued to plan for new sewerage services • Construction of the Great Ryrie Street ERS in Eltham South and in the Dandenong Ranges at • Construction of three ERS screens to reduce impacts Sherbrooke and Monbulk. to waterways from wet weather spills • Commenced procurement for deployment of monitoring at critical locations within the sewer network • Completed several hydraulic options assessments that will progress into design in 2020-21 YARRA VALLEY WATER 84 ANNUAL REPORT 2019-20 DELIVERING VALUE

OUR PERFORMANCE

FINANCIAL PERFORMANCE INDICATORS VARIANCE 2019-20 2018-19 2019-20 TO PRIOR VARIANCE PERFORMANCE INDICATOR TARGET RESULT RESULT YEAR NOTES TO TARGET NOTES F1 Cash interest cover 2.06 times 2.61 times 2.41 times - 7.7% - 17.0% 1b Cashflow from operations before net interest and tax payments / net interest payments F2 Gearing ratio 53.38% 51.35% 54.59% 6.3% - 2.3% - Total debt (including finance leases) / total assets *100 F3 Internal financing ratio 18.15% 39.29% 17.59% -55.2% 2a -3.1% - (Net operating cash flow – dividends) / capital expenditure *100 F4 Current ratio 0.44 0.40 0.39 -2.5% - -11.4% 3b (Current assets / current liabilities) excluding longterm employee provisions and revenue in advance F5 Return on assets 4.55% 5.79% 5.39% -6.9% - 18.5% 4b Earnings before net interest and tax / average total assets *100 F6 Return on equity 4.24% 6.75% 6.45% -4.4% - 52.1% 5b Net profit after tax / average total equity *100 F7 Earnings before interest, tax, 32.66% 35.56% 34.64% -2.6% - 6.1% - depreciation and amortisation Earnings before interest, tax, depreciation and amortisation / total revenue *100

VARIANCE EXPLANATIONS 1b Higher net operating cash flows due to additional receipts generated contract liabilities and the holding of short-term borrowings as a primarily from additional customer contributions and other revenue. result of the lower interest rates experienced in the market. We also had lower than planned operational payments as a result of 4b Higher revenues primarily from developer related activities and savings achieved in cloud based payments, maintenance, operations other revenue. We also achieved savings in operating expenses and land tax,. Savings were also achieved in interest payments due due to efficiency initiatives and finance charges due to market to prevailing market conditions resulting in lower interest rates on conditions resulting in low interest rates on new borrowings. The new borrowings. average asset value was impacted by $103.4 million decrease as 2a The difference between this year’s and last year’s result is primarily part of the 30 June 2020 infrastructure valuation. due to lower receipts from customers, higher 2018-19 final dividend 5b Higher profit after tax due to additional revenue from developer payment and higher capital payments due to growth in the capital related activities and other revenue. We also achieved savings in program required to meet our price submission commitments. operating expenses due to efficiency initiatives and finance charges 3b Current assets were below budget due to lower opening trade due to market conditions resulting in low interest rates on new debtors resulting from improved debt collection activity in 2018- borrowings and the financial accommodation levy rate on new 19. Current liabilities were higher than budget due to additional borrowings being lower than budgeted. YARRA VALLEY WATER ANNUAL REPORT 2019-20 85

WATER AND SEWERAGE SERVICE PERFORMANCE INDICATORS

VARIANCE 2019-20 2018-19 2019-20 TO PRIOR VARIANCE PERFORMANCE INDICATOR TARGET RESULT RESULT YEAR NOTES TO TARGET NOTES

SS1 Containment of sewer spills 97.7% 97.0% 99.0% 2.1% - 1.3% - Sewer spills from reticulation and branch sewers (priority 1 and 2) contained within 5 hours / total sewer spills from reticulation and branch sewers

SS2 Sewer spill interruptions 83.8% 84.8% 93.0% 9.7% 6a 11.0% 6b Number of residential sewage customers affected by sewerage interruptions restored within 4 hours

WS1 Unplanned water supply 0.015% 0.036% 0.037 % 2.8% - 146.7% 7b interruptions 3 Number of customers receiving VALUE DELIVERING > 5 unplanned interruptions in the year / total number of water (residential and business) customers *100

WS2 Interruption time 104.4 95 105.9 11.5% 8a 1.4% - Average duration of unplanned minutes minutes minutes water supply interruptions

WS3 Restoration of unplanned 96.0% 97.9% 97.7% -0.2% - 1.8% - water supply Unplanned water supply interruptions restored within 5 hours / total unplanned water supply interruptions * 100

VARIANCE EXPLANATIONS

6a & 6b The favourable results are due to a strong focus on 8a The increase is a result of our focus on partnering with local this KPI by our maintenance partner and the delivery of councils to minimise the need, when possible, to remove trees improvements to work procedures which has been driven as a result of asset failure within our network. This strategy by access to improved data quality. increases the water off duration time as we engage with the 7b We experienced results consistent with 2018-19 in the council to identify the appropriate action to be undertaken. actual number of customers experiencing >5 water supply interruptions, however it was significantly higher than the target. The customers affected were within five separate, large water supply isolation areas. We are continuing to implement our tactical plan to proactively manage customers with > 4 interruptions and deliver the high priority initiatives to improve future performance. We are continuing to invest in water main renewals, as well as programs to reduce the number of properties impacted by any single interruption such as the valve insertion program, valve proving program and the missing hydrant program. YARRA VALLEY WATER 86 ANNUAL REPORT 2019-20 DELIVERING VALUE

CUSTOMER RESPONSIVENESS PERFORMANCE INDICATORS

VARIANCE 2019-20 2018-19 2019-20 TO PRIOR VARIANCE PERFORMANCE INDICATOR TARGET RESULT RESULT YEAR NOTES TO TARGET NOTES CR1 Water quality complaints 3.20 4.95 5.03 1.6% - 57.2% 9b Number of complaints per 1,000 customers

CR2 Sewerage service 0.90 0.70 0.76 8.6% 10a -15.6% 10b quality complaints Number of complaints per 1,000 customers

CR3 Sewerage odour complaints 0.22 0.18 0.18 0% - -18.2% 11b Number of complaints per 1,000 customers

CR4 Billing and account complaints 3.40 3.20 2.02 -36.9% 12a -40.6% 12b Number of complaints per 1,000 customers

VARIANCE EXPLANATIONS

9b We have continued to implement improvements to the 11b We have continued to improve our processes including accuracy of our water quality complaint reporting to ensure all the proactive monitoring and treating problem areas has incidents are captured. We have also experienced an increase resulted in a better performance level than targeted. in complaints from March 2020 due to more customers being 12a & 12b The favourable performance is a result of improved home due to coronavirus and noticing localised maintenance processes and a strong customer focus on the handling water related quality issues. of billing and account complaints. Changes to the 10a We have experienced a slight increase in sewer service management of customer complaints included identifying complaints (536 cases in 2018-19 compared with 594 cases in and actioning the cause of dissatisfaction. 2019-20), spread across a number of categories. 10b We have delivered improvements in our maintenance contractors' response times and rectification works which has reduced complaint volumes.

ENVIRONMENTAL PERFORMANCE INDICATORS

VARIANCE 2019-20 2018-19 2019-20 TO PRIOR VARIANCE PERFORMANCE INDICATOR TARGET RESULT RESULT YEAR NOTES TO TARGET NOTES

E1 Effluent re-use volume (end use) 28.8 % 33.6% 31.6 % -6.0% 13a 9.7% 13b

E2 Total net CO2 emissions 0 0 0 0% - 0% - Includes accredited sequestration activities and offset schemes

VARIANCE EXPLANATIONS 13a Higher rainfall levels in 2019-20 compared with 2018-19 resulted unnecessary potable water usage. All Class A recycled water in lower reuse and outdoor irrigation requirements. treatment plants are now operational, with production volumes 13b On-site reuse schemes are implemented to ensure we avert the continuing to improve. Although volumes of reuse has increased need to carry out emergency discharge to waterways. Reuse within over time and is better than the target in 2019-20 it is weather onsite Sewage Treatment Plant processes are continuing to avoid dependent which causes variations year on year. YARRA VALLEY WATER ANNUAL REPORT 2019-20 87

CERTIFICATION OF PERFORMANCE REPORT FOR 2019-20 We certify that the accompanying Performance Report of Yarra Valley Water Corporation in respect of the 2019-20 financial year is presented fairly in accordance with the Financial Management Act 1994.

The Performance Report outlines the relevant performance indicators for the financial year as determined by the Minister for Water and as set out in the 2019-20 Corporate Plan, the actual and comparative results achieved for the financial year against predetermined performance targets and these indicators, and an explanation of any significant variance between the actual results and performance targets and/ or between the actual results in the current year and the previous year.

As at the 28th day of August 2020, we are not aware of any circumstances that would render any particulars in the Performance Report to be misleading or inaccurate. 3 DELIVERING VALUE DELIVERING Sue T O’Connor Chair

Patrick J McCafferty Managing Director

Natalie Foeng Chief Financial Officer YARRA VALLEY WATER 88 ANNUAL REPORT 2019-20 DELIVERING VALUE

AUDITOR'S REPORT

Independent Auditor’s Report To the Board of the Yarra Valley Water Corporation

pinion I have audited the accompanying performance report of the Yarra Valley Water Corporation (the corporation) for the year ended 30 June 2020, which comprises the:

• financial performance indicators • water and sewage service performance indicators • customer responsiveness performance indicators • environmental performance indicators • certification of performance report. In my opinion, the performance report of the Yarra Valley Water Corporation in respect of the year ended 30 June 2020 presents fairly, in all material respects, in accordance with the performance reporting requirements of Part 7 of the Financial Management Act 1994.

sis or I have conducted my audit in accordance with the Audit Act 1994 which incorporates pinion the Australian Standards on Assurance Engagements. I further describe my responsibilities under that Act and those standards in the Auditor’s Responsibilities for the Audit of the performance report section of my report. My independence is established by the Constitution Act 1975. My staff and I are independent of the corporation in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to my audit of the performance report in Victoria and have also fulfilled our other ethical responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

ords The Board is responsible for the preparation and fair presentation of the responsiiities performance report in accordance with the performance reporting requirements of or te the Financial Management Act 1994, and for such internal control as the Board perorne determines is necessary to enable the preparation and fair presentation of the report performance report that is free from material misstatement, whether due to fraud or error.

YARRA VALLEY WATER ANNUAL REPORT 2019-20 89

Auditor’s As reuired the Audit At resonsiilit is to eress an oinion on the rsosiiitis erforance reort ased on the audit oecties for the audit are to otain or t udit o reasonale assurance aout hether the erforance reort as a hole is free fro t ror material misstatement, whether due to fraud or error, and to issue an auditor’s rort reort that includes oinion easonale assurance is a high leel of assurance ut is not a guarantee that an audit conducted in accordance ith the Australian Standards on Assurance Engageents ill alas detect a aterial isstateent hen it eists isstateents can arise fro fraud or error and are considered aterial if indiiduall or in the aggregate the could reasonal e eected to influence the decisions of users taen on the asis of this erforance reort. As art of an audit in accordance ith the Australian Standards on Assurance Engageents eercise rofessional udgeent and aintain rofessional 3 DELIVERING VALUE DELIVERING sceticis throughout the audit also

• identif and assess the riss of aterial isstateent of the erforance reort hether due to fraud or error design and erfor audit rocedures resonsie to those riss and otain audit eidence that is sufficient and aroriate to roide a asis for oinion he ris of not detecting a aterial isstateent resulting fro fraud is higher than for one resulting fro error as fraud a inole collusion forger intentional oissions isreresentations or the oerride of internal control • otain an understanding of internal control releant to the audit in order to design audit rocedures that are aroriate in the circustances ut not for the urose of eressing an oinion on the effectieness of the cororation’s internal control • ealuate the oerall resentation structure and content of the erforance reort including the disclosures and hether the erforance reort reresents the underling eents and results in a anner that achiees fair resentation counicate ith the Board regarding aong other atters the lanned scoe and tiing of the audit and significant audit findings including an significant deficiencies in internal control that identif during audit

EBE Paul artin Seteer 00 s delete or te Auditorenerl o itori

YARRA VALLEY WATER 90 ANNUAL REPORT 2019-20

FINANCIAL REPORT

Image taken March, 2018. YARRA VALLEY WATER ANNUAL REPORT 2019-20 91

4 FINANCIAL REPORT 4 YARRA VALLEY WATER 92 ANNUAL REPORT 2019-20 FINANCIAL REPORT

DIRECTORS' REPORT FOR THE YEAR ENDED 30 JUNE 2020

The Directors of Yarra Valley Water CAPITAL REPATRIATION Corporation present their report for the There is no capital repatriation for the year ended 30 June financial year ended 30 June 2020. 2020. A capital repatriation of $23.87 million for the year ended 30 June 2019 was paid on 28 June 2019. DIRECTORS REVIEW OF OPERATIONS Directors in office during the financial year were as During the 2020 financial year, Australia was impacted follows. Directors were in office for the entire period, by coronavirus. This resulted in lockdown restrictions unless otherwise stated. within our region including the closure of schools, Sue Therese O’Connor Chair gyms, playgrounds, restaurants and many businesses. Robert Clive Skinner Deputy Chair Employees were moved to work from home where possible and all residents of Victoria were asked to remain Patrick John McCafferty Managing Director home, leaving only for activities deemed essential. As Victor John Perton a result, we saw a shift in how our water and sewerage Anita Michele Roper services were used, with a smaller proportion of our total Helen Lynette Thornton water demand coming from non-residential customers due to the decrease in demand from business customers Karen Milward impacted by restrictions, as well as increased working Victoria Fay Marles from home and remote learning. Ian Hamm (appointed 1 October 2019) We waived trade waste fees for six months to ease the Eric Sjerp (retired 30 September 2019) pressure on vulnerable small to medium businesses Particulars of the Directors’ and Corporate Secretary’s and accelerated our payment terms with them, provided qualifications, experience and special responsibilities are greater support to customers under our hardship set out in the Delivering Value - Our Leadership section programs and assisted our staff in their transition to work of this Annual Report. from home. We're proactively managing the implications of coronavirus and will continue to maintain our essential DIRECTORS’ ATTENDANCE AT MEETINGS services. Our financial sustainability is supported by the Victorian Government. The number of Directors’ meetings and Board Committee meetings held, and the number of meetings attended by Further detail on our operations during the year ended each of the Directors during the financial year is set out 30 June 2020 and the results of those operations are in the Delivering Value - Our Leadership section of this contained in this Annual Report. Annual Report. STATE OF AFFAIRS PRINCIPAL ACTIVITIES There were no significant changes in our state of affairs The principal activities during the course of the financial during the year ended 30 June 2020. year were providing retail water supply and sewerage For a discussion of the program and initiatives we rolled services and collecting trade waste within the Yarra Valley out this year, refer to the 2019-20 Highlights section in Water district. this Annual Report. There were no significant changes in the nature of these activities during the year.

DIVIDENDS The amount of the final dividend for the year ended 30 June 2020 will be determined after consultation between the Board, the Minister for Water and the Treasurer of Victoria. An interim dividend of $3.5 million for the year ended 30 June 2020 was paid on 30 June 2020. A final dividend of $60.6 million for the year ended 30 June 2019 was paid on 30 October 2019. YARRA VALLEY WATER ANNUAL REPORT 2019-20 93

EVENTS SUBSEQUENT TO BALANCE DIRECTORS’ DEEDS SHEET DATE Yarra Valley Water has entered into a Deed with each Since 30 June 2020 to the date of this report, coronavirus Director under which it is required to provide access to lockdown restrictions in Yarra Valley Water's district have its books and to maintain insurance coverage for at least been lifted and subsequently reintroduced. Staff continue seven years after the Director ceases to be a Director. to work from home in line with health guidelines and many businesses continue to be impacted in their ability INSURANCE OF OFFICERS to operate. We expect to continue to see an increased During the financial year, we paid premiums in respect number of customers accessing our hardship programs of contracts to insure Directors, former Directors and and increasing older debt balances. Officers of Yarra Valley Water against certain liabilities.

We anticipate that we will see greater impacts of Some of the contracts of insurance prohibit disclosure coronavirus in our financial statements in 2020-21. of the nature of the liabilities insured and the amount of Restrictions were considered in the preparation of our the premium. 2019-20 financial statements.

Except as provided above, no matter or circumstance has ROUNDING OF AMOUNTS TO NEAREST arisen that, in the opinion of the Directors, has significantly THOUSAND DOLLARS affected or may significantly affect the operations of Yarra The amounts in this Financial Report and the Annual Valley Water, the results of those operations, or Yarra Report have been rounded to the nearest thousand Valley Water’s state of affairs in future financial years. dollars, unless otherwise stated. ENVIRONMENTAL REGULATION This Financial Report is made in accordance with a resolution of the Directors of Yarra Valley Water on 28 Yarra Valley Water’s operations are subject to August 2020. environmental regulation. We hold a Corporate Licence issued by the Environment 4 Protection Authority Victoria (EPA) under the Environment FINANCIAL REPORT Protection Act 1970 (Vic). The licence imposes conditions relating to discharges, reporting obligations and other Sue T O’Connor matters concerning the operation of seven sewage Chair treatment plants.

During the 2020-19 financial year, Yarra Valley Water complied with all conditions of the EPA’s Corporate Licence, except for an odour complaint relating to Brushy Patrick J McCafferty Creek sewage treatment plant (STP) received from the Managing Director EPA on 22 December 2019. Investigations confirmed the vent stack at the STP as the source of the odour issue and remedial works were undertaken. The EPA provided advice in writing in February 2020 that they had assessed Yarra Valley Water’s response to the odour breach and had found that Yarra Valley Water were taking reasonable steps to investigate the source of the odour and implementing actions as a result.

Yarra Valley Water maintains an Environment Management System certified to ISO 14001: (2015).

Further particulars of specific environmental performance measures are set out in the Delivering Value - Environmental Outcomes and Our Performance sections of this Annual Report. YARRA VALLEY WATER 94 ANNUAL REPORT 2019-20 FINANCIAL REPORT

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2020

2020 2019 NOTE $’000 $’000

Revenue

Service and usage revenue 2.1 952,783 957,613

New customer contributions by developers 2.1 36,505 32,204

Developer contributed assets 2.1 85,598 83,603

Other revenue 2.1 63,015 46,592

Other income 2.2 5,673 4,041

Total revenue 1,143,574 1,124,053

Expenses

Bulk water and sewerage expenses 3.1 (541,363) (522,119)

Contract expenses 3.1 (56,090) (58,718)

Salary and employee benefits expense 3.2.1 & 3.2.3 (52,710) (51,432)

Environmental contribution 8.2 (42,855) (42,855)

Depreciation 4.2 (94,174) (87,755)

Amortisation 4.3 (20,331) (19,731)

Finance costs 6.1.2 (132,886) (132,207)

Other expenses 3.1 (54,468) (49,180)

Total expenses (994,877) (963,997)

Profit before income tax 148,697 160,056

Income tax expense 8.1 (44,299) (48,356)

NET PROFIT AFTER TAX 104,398 111,700

OTHER COMPREHENSIVE INCOME

Decrease from revaluation of infrastructure assets 4.2 (103,396) (127,587)

Increase from revaluation of buildings 4.2 297 -

Defined benefit superannuation plan actuarial loss 9.2 (373) (2,098)

Deferred income tax on items of other comprehensive income 8.1 31,041 38,906

Other comprehensive income, net of tax (72,431) (90,779)

TOTAL COMPREHENSIVE INCOME 31,967 20,921

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes. YARRA VALLEY WATER ANNUAL REPORT 2019-20 95

BALANCE SHEET AS AT 30 JUNE 2020

2020 2019 NOTE $’000 $’000 ASSETS Current assets Cash 6.2 2,211 1,036 Receivables 5.1 159,741 165,777 Other non-financial assets 5.2 4,460 4,545 Total current assets 166,412 171,358 Non-current assets Infrastructure, property, plant and equipment 4.2 4,980,611 4,772,209 Intangible assets 4.3 166,763 171,818 Defined benefit superannuation asset 3.2.3.2c 4,529 5,671 Total non-current assets 5,151,903 4,949,698 TOTAL ASSETS 5,318,315 5,121,056 LIABILITIES Current liabilities Contract liabilities 5.4 58,433 56,208 Current tax payable 8.1 3,609 22,614 Provisions - employee benefits 3.2.2 22,083 20,268 Other provisions 5.5 9,464 4,629 Lease liabilities 5.6 & 6.1 2 - 4 FINANCIAL REPORT Payables 5.3 111,521 113,446 Borrowings 6.1 299,959 288,107 Total current liabilities 505,071 505,272 Non-current liabilities Contract liabilities 5.4 450 - Provisions - employee benefits 3.2.2 2,602 1,882 Lease liabilities 5.6 & 6.1 13 - Deferred tax liabilities 8.1 604,871 638,261 Borrowings 6.1 2,603,200 2,341,400 Total non-current liabilities 3,211,136 2,981,543 Total liabilities 3,716,207 3,486,815 NET ASSETS 1,602,108 1,634,241 EQUITY Contributed equity 9.1 420,967 420,967 Retained earnings 9.2 438,321 398,284 Asset revaluation surplus 9.3 742,820 814,990 TOTAL EQUITY 1,602,108 1,634,241

The above Balance Sheet should be read in conjunction with the accompanying notes. YARRA VALLEY WATER 96 ANNUAL REPORT 2019-20 FINANCIAL REPORT

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2020

ASSET CONTRIBUTED RETAINED REVALUATION EQUITY EARNINGS SURPLUS TOTAL NOTE $’000 $’000 $’000 $’000 Balance as at 1 July 2018 444,832 332,152 904,301 1,681,285 Net profit after tax - 111,700 - 111,700 Other comprehensive income, net of tax 9.2 & 9.3 - (1,468) (89,311) (90,779) Capital repatriation 9.1 (23,865) - - (23,865) Dividends paid 9.2 - (44,100) - (44,100) BALANCE AS AT 30 JUNE 2019 420,967 398,284 814,990 1,634,241 Net profit after tax - 104,398 - 104,398 Other comprehensive income, net of tax 9.2 & 9.3 - (261) (72,170) (72,431) Dividends paid 9.2 - (64,100) - (64,100) BALANCE AS AT 30 JUNE 2020 420,967 438,321 742,820 1,602,108

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes. YARRA VALLEY WATER ANNUAL REPORT 2019-20 97

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2020

2020 2019 NOTE $’000 $’000 Cash flow from operating activities Receipts from customers 1,025,576 1,050,775 Payments to suppliers and employees (737,407) (750,216) Goods and services tax refunded (net) 32,930 42,021 Income tax paid (65,651) (43,109) Interest and other costs of finance paid (133,126) (131,153) Interest received 95 13 Net cash inflow from operating activities 6.2.1 122,417 168,331

Cash flows from investing activities Proceeds from sale of infrastructure, property, plant and equipment 874 992 Payments for acquisition of infrastructure, property, plant and equipment (321,167) (301,550) Payments for acquisition of intangible assets (11,303) (15,654) Net cash outflow from investing activities (331,596) (316,212)

Cash flows from financing activities Refinancing of borrowings - inflow 466,852 367,642 4 FINANCIAL REPORT Refinancing of borrowings - outflow (193,200) (152,300) Developer security deposits 850 554 Principal element of lease payments (48) - Dividends paid 9.2 (64,100) (44,100) Capital repatriation 9.1 - (23,865) Net cash inflow from financing activities 210,354 147,931 Net increase in cash held 1,175 50 Cash at beginning of year 1,036 986 CASH AT END OF YEAR 6.2 2,211 1,036

The above Cash Flow Statement should be read in conjunction with the accompanying notes. YARRA VALLEY WATER 98 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

1. ABOUT THIS REPORT FUNCTIONAL AND PRESENTATION CURRENCY INTRODUCTION All amounts are presented in Australian dollars, unless otherwise stated, and have been rounded to the nearest This section outlines the framework underpinning these thousand dollars or, in other cases, to the nearest dollar. financial statements. CLASSIFICATION BETWEEN CURRENT STRUCTURE AND NON-CURRENT 1.1 Basis of accounting In the determination of whether an asset or liability is 1.2 Impact of coronavirus on the 2019-20 current or non-current, consideration is given to the time Financial Report when each asset or liability is expected to be realised or paid. The asset or liability is classified as current if it is 1.1 BASIS OF ACCOUNTING expected to be turned over within the next 12 months. ACCOUNTING ESTIMATES This financial report is a general purpose financial report, consisting of Statement of Comprehensive Income, We evaluate estimates and makes judgements which Balance Sheet, Statement of Changes in Equity and are incorporated in the financial report based on historical Cash Flow Statement and notes accompanying these knowledge and the best available current information. statements for the period ending 30 June 2020. The Estimates assume a reasonable expectation of future general purpose financial report has been prepared events and are based on current trends and economic data in accordance with Australian Accounting Standards, obtained both externally and within Yarra Valley Water. Interpretations and other authoritative pronouncements The significant judgements made in preparing these of the Australian Accounting Standards Board, the financial statements are disclosed in the notes where requirements of the Financial Management Act 1994 amounts affected by those judgements are disclosed. and applicable Ministerial Directions. Actual results may differ from these estimates.

The financial report has been prepared on an accrual and The most significant accounting estimates undertaken in going concern basis and is prepared on a historical cost preparing this financial report relate to: convention, except for infrastructure, property, plant and • accrued water usage and sewage disposal charges – equipment, and the defined superannuation asset which notes 2.1 and 5.1 have been measured at fair value. • the timing of satisfaction of performance obligations The financial report of Yarra Valley Water Corporation, and their associated transaction price, impacting: as an individual reporting entity for the year ended 30 − new customer contributions– note 2.1 June 2020, was authorised for issue in accordance with a resolution of the Directors on 28 August 2020. − developer contributed assets – note 2.1 − other revenue – note 2.1 ACCOUNTING POLICIES − unearned income – note 5.4 Accounting policies are applied in a manner which • assumptions on the likely tenure of existing staff, ensures that the resulting financial information satisfies pattern of leave taken, future salary movements and the concepts of relevance and reliability, thereby ensuring future discount rates, impacting: that the substance of the underlying transactions or − employee benefit provisions – note 3.2.2 other events is reported. The accounting policies have − defined benefit superannuation fund – note 3.2.3.2 been consistently applied, unless otherwise stated. Refer to note 5.6 for the transition to AASB 16 Leases. • asset residual values and useful lives – notes 4.2 No transitional adjustments were required. and 4.3 • asset impairment – notes 4.2 and 4.3 • other provisions – note 5.5 YARRA VALLEY WATER ANNUAL REPORT 2019-20 99

• lease liabilities and right of use assets, determining To offer relief to customers, trade waste contract fees whether the arrangement is in substance a short-term were waived for vulnerable small businesses for six arrangement and estimating the discount rate when months. We also accelerated our payment terms to small not implicit in the lease – note 5.6 and medium size businesses, provided greater support to • contingent assets and liabilities – note 7.3 customers under our hardship programs and assisted our staff in their transition to work from home. • fair value of infrastructure, property, plant and equipment – note 7.4 IMPACT ON THE FINANCIAL REPORT • deferred tax – note 8.1. Management have assessed the impact of coronavirus on the financial report. The areas affected are listed below. 1.2 IMPACT OF CORONAVIRUS ON Further information has been documented where relevant THE 2019-20 FINANCIAL REPORT under the respective note referred to: • Note 2.1 – Revenue from contracts with customers BACKGROUND • Note 2.3 – Commitments for lease and licence receivables On 16 March 2020, an initial state of emergency was declared in Victoria to deal with the spread of coronavirus. • Note 3.2.1 – Employee benefits – Statement of The State Government has implemented a number Comprehensive Income of measures to reduce the spread of the virus. These • Note 3.2.2 – Employee benefits – Balance Sheet measures included bans on public gatherings, rules on • Note 3.2.3.2 – Defined benefit superannuation assets social distancing and unnecessary personal travel and • Note 4.2 – Infrastructure, Property Plant and instructions for individuals to work from home where Equipment possible. While the initial state of emergency was lifted and certain restrictions eased, in July 2020 the State • Note 5.1 – Receivables Government reintroduced stricter measures as cases of • Note 5.3 – Payables coronavirus began to increase and in August 2020 declared • Note 6 – Financing our operations a state of disaster with further restrictions introduced. • Note 7.2 – Financial risk management objectives 4 and policies FINANCIAL REPORT IMPACT ON CUSTOMERS • Note 7.4 – Fair value Many businesses remain closed or limited in their • Note 9.7 – Ex-gratia expenses operations, and as a result overall economic activity continues to be down on pre-coronavirus levels. Several • Note 9.9 – Events subsequent to balance sheet date sectors could not sustain current levels of employment. Many employees were left either unemployed or on a GOING CONCERN reduced wage as supressed economic activity endures. We are managing the implications of coronavirus and will We have seen an increased number of customers continue to maintain our essential services. The impact is accessing our hardship programs and increasing not expected to have a material impact on our ability to older debt balances. The Commonwealth and State continue as a going concern. Our financial sustainability governments have implemented plans to assist these is supported by the Victorian Government. affected individuals and businesses. YARRA VALLEY WATER 100 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

Trade waste charges are recognised as revenue at a point 2. FUNDING DELIVERY OF in time when the service delivery period ends. Volume OUR SERVICES meters are read, and appropriate charges levied per trade waste agreements. Meters are read on a cyclical basis with accounts sent on a quarterly basis. INTRODUCTION The payment in advance by customers of accounts is This section provides additional information about how classified as contract liabilities, refer note 5.4. Service we are funded and the accounting policies that are and usage revenue is impacted by our Arrange and Save relevant for understanding the items recognised in the Program, refer note 9.7. As result of coronavirus, refer financial statements. note 1.2, we saw a shift in how our water and sewerage services were used, with a smaller proportion of our total STRUCTURE water demand coming from nonresidential customers 2.1 Revenue from contracts with customers due to the decrease in demand from business customers 2.2 Other income impacted by restrictions, as well as increased working from home and remote learning. Whilst the impact has 2.3 Commitments for lease and licence receivables been minimal in the current financial year, the impact may 2.1 REVENUE FROM CONTRACTS be more visible in the next financial year. WITH CUSTOMERS NEW CUSTOMER CONTRIBUTIONS (NCC) New customer contributions represent charges applicable SERVICE AND USAGE 2020 2019 when a customer builds or develops a property and REVENUE $’000 $’000 connects to our water supply and sewerage infrastructure. Fixed service charges 403,292 396,359 These contributions help pay for shared infrastructure and are recognised as revenue at the point in time when Water usage charges 403,974 416,014 we've met the performance obligations associated with Sewage disposal charges 121,350 120,598 the contribution. Performance obligations are typically recognised as being met by issuing of a Statement of Trade waste charges 24,167 24,642 Compliance (our consent for the relevant council to continue TOTAL 952,783 957,613 processing a developer’s application) or connection to services. Payments in advance are classified as contract Water and sewerage service charges (fixed service liabilities, refer note 5.4. charges) are billed quarterly in advance and recognised as DEVELOPER CONTRIBUTED ASSETS (DCA) revenue over time as the customer receives access to our services. Service charges represent charges for access to Revenue from developer contributed assets arise where the water supply and sewerage systems. developers pay for the cost of constructing new assets and subsequently gift these assets to us. We maintain Water usage charges and sewage disposal charges these assets in perpetuity. Revenue is recognised at are recognised as revenue over time as the customer the point in time when we've met the performance simultaneously receives and consumes the services obligations associated with the asset. Performance provided. As meter reading is cyclical, an estimate is obligations are recognised as being met by issuing of made at the end of the accounting period for water usage a Statement of Compliance or Acceptance of Works and sewage disposal by customers, refer note 5.1. This (our acknowledgement that the assets are operational) estimate is determined based on bulk water purchases depending upon the developer’s application and specific from Melbourne Water less the estimated non-revenue, performance obligations. This non-cash revenue is including bursts and leaks, water required for operational recorded as developer contributed assets. DCAs awaiting use, firefighting, unauthorised consumption/theft and Statement of Compliance are classified as contract meter inaccuracies. liabilities, refer note 5.4.

We measure the income by assessing the value of the works using a schedule of rates. YARRA VALLEY WATER ANNUAL REPORT 2019-20 101

2020 2019 OTHER REVENUE $’000 $’000 Other products and services 21,719 15,287 Park and drainage collection fees 8,552 7,768 Information statements and applications 4,981 4,817 Water trading 8,767 4,083 Waste to energy 2,612 2,716 Recoverable works 10,290 9,183 Other 6,094 2,738 TOTAL 63,015 46,592

Other revenue items are recognised on an accrual basis. time that the volume of water is deducted from our account and transferred to the account of the purchaser. Other products and services relate to various plumbing services including new meter connections and recycled Waste to energy revenue is generated from our waste to water inspection fees. Revenue is recognised at the point energy plant which converts organic waste into renewable in time when we've met the performance obligations energy. Revenue is recognised at a point in time, when we associated with the products and services, for example, accept the waste into our facility. issue of Statement of Compliance or installing a new Recoverable works relates to revenue generated from water meter. third parties reimbursing us for works we have carried out Park and drainage collection fees relate to billing and on their behalf. These works are a mixture of operating collection administration fees from both Melbourne expenditure and capital items. We recognise the revenue 4 FINANCIAL REPORT Water and the Department of Environment, Land, Water at the point in time that the works are completed. and Planning for revenue collected from customers on Other revenue is predominately generated from fire their behalf. service revenue, council hydrant maintenance, legal Water trading revenue relates to sales of water allocation in settlement and sales of assets. northern Victoria. We recognise the revenue at the point in YARRA VALLEY WATER 102 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

2020 2019 REVENUE FROM CONTRACTS WITH CUSTOMERS $’000 $’000 Total revenue recognised over time 928,616 932,973 Total revenue recognised at point in time 209,285 187,039 TOTAL 1,137,901 1,120,012

2.2 OTHER INCOME

2020 2019 NOTE $’000 $’000 Lease and licence income 1,883 2,882 Interest income 95 13 Impairment writeback 4.2 & 7.4.1 3,695 1,146 TOTAL 5,673 4,041

Other income, is revenue that is not arising from contracts with customers. It is recognised on an accrual basis. Income from leases and licences is recognised in net profit in the Statement of Comprehensive Income on a straight-line basis over the agreement term. YARRA VALLEY WATER ANNUAL REPORT 2019-20 103

2.3 COMMITMENTS FOR LEASE AND LICENCE RECEIVABLES

The following table summarises the lease and licence receivables contracted for at balance date but not provided in the financial statements. Revenue for leases and licences, where substantially all risks and benefits remain with the lessors or licensors, are recognised as revenue in the periods in which they are incurred. The commitments recorded below are at their nominal value and are inclusive of GST.

We have non-cancellable agreements with various utility bodies whom use our land and buildings to house their telecommunication infrastructure. In addition to these agreements, we also have a small number of agreements with non-utility bodies which use our sites for a variety of purposes. In line with government policy introduced as a response to coronavirus, refer note 1.2, we've offered to waive the rent for our non-utility leaseholders from 1 January to 31 December 2020. Our financial statements for the financial year ended 30 June 2020 has assumed that all non-utility lease holders and licence holders will access this benefit and we have included this assumption in the disclosure below. As a result receivables no later than one year, has been reduced by approximate $0.1 million.

2020 2019 NON-CANCELLABLE LEASE AND LICENCE RECIEVABLES $’000 $’000 No later than one year 1,501 2,050 Later than one year and no later than five years 4,535 3,290 Later than five years 6,715 4,797 TOTAL (GST INCLUSIVE) 12,751 10,137

4 FINANCIAL REPORT YARRA VALLEY WATER 104 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

3. THE COST OF DELIVERING OUR SERVICES

INTRODUCTION Contract expenses This section provides additional information about how Contract expenses include costs such as maintenance our funding is applied and the accounting policies that are contracts, software licences and various other contracts relevant for understanding the items recognised in the which are expensed in the reporting period in which they financial statements. are incurred.

STRUCTURE 2020 2019 3.1 Summary of other expenses incurred in the delivery OTHER EXPENSES NOTE $’000 $’000 of our services Billing and revenue 8,495 9,026 3.2 Our People collection costs

3.2.1 Employee benefits – Statement of Information technology 5,486 5,400 Comprehensive Income costs 3.2.2 Employee benefits – Balance Sheet Electricity 4,868 5,501 3.2.3 Superannuation 3.3 Other commitments payable Consulting services 4,330 3,853 3.4 Remuneration of auditors Government taxes, fees 2,068 3,070 and contributions

3.1 SUMMARY OF OTHER EXPENSES Impairment write down 4.2 & 4,713 85 INCURRED IN THE DELIVERY OF of assets to recoverable 7.4.1 OUR SERVICES amount Bad and doubtful debts 5.1.2 5,959 2,417 Bulk water and sewage charges are levied by Melbourne Water for water we buy and for sewage treated at Deferred property 5.1.2 167 3,985 Melbourne Water’s treatment plants. Variable charges are debt forgiveness levied in arrears and are payable on a weekly basis. Fixed Write off / disposal 4.2 911 2,076 charges are levied once a month and are payable on the of assets fifteenth of the month to which they refer. Any variable charges that remain outstanding at the end of the period Other expenses 17,471 13,767 are accrued. TOTAL 54,468 49,180

BULK WATER AND 2020 2019 SEWERAGE EXPENSES $’000 $’000 Billing and revenue collection costs Billing and revenue collection costs include printing, Variable bulk water and 74,891 72,964 postage and collection fees which are expensed in the sewerage expenses reporting period in which they are incurred. Fixed bulk water and 466,472 449,155 sewerage expenses Other expenses

TOTAL 541,363 522,119 Other expenses includes legal, insurance, materials, transport and other expenses.

YARRA VALLEY WATER ANNUAL REPORT 2019-20 105

3.2 OUR PEOPLE Employment on-costs such as payroll tax, workers’ compensation and superannuation are not employee 3.2.1 EMPLOYEE BENEFITS – STATEMENT benefits however contribute to the cost of employment provisions. They are disclosed separately as a component OF COMPREHENSIVE INCOME of the provision for employee benefits when the Employee expenses include all costs related employment to which they relate has occurred. to employment including wages and salaries, superannuation, fringe benefits tax, leave entitlements, Unconditional long service leave termination payments and WorkCover premiums. In Unconditional long service leave (LSL) is disclosed as a addition to the standard leave entitlements of our current liability – even where we do not expect to settle employees under legislation, our staff were provided the liability within 12 months because we don’t have with access to additional leave to support them with the unconditional right to defer the settlement of the coronavirus. This leave covered staff should they contract entitlement should an employee elect to take leave within coronavirus, be caring for family with coronavirus or who 12 months. were forced to take on additional caring commitments during this time. The components of this current LSL liability are measured at:

3.2.2 EMPLOYEE BENEFITS – • undiscounted value – if we expect to wholly settle BALANCE SHEET within 12 months A provision is recognised for benefits accruing to • present value – if we don't expect to wholly settle employees in respect of annual leave and long service within 12 months. leave when it is probable that settlement will be required and the liability is capable of being reliably measured. Conditional long service leave Conditional LSL is disclosed as a non-current liability. Wages and salaries, annual leave and sick leave There is an unconditional right to defer the settlement of Liabilities for wages and salaries (including non-monetary the entitlement until the employee has completed seven benefits, annual leave and on-costs) are recognised years of service. This non-current long service leave is 4 FINANCIAL REPORT as part of the employee benefit provision as current measured at present value. liabilities, because we do not have an unconditional right to defer settlements of these liabilities. The liability for As a result of coronavirus travel restrictions, refer note salaries and wages are recognised in the balance sheet 1.2, staff have taken less leave resulting in an increase in at remuneration rates which are current at the reporting leave provisions at 30 June 2020. date. As we expect the liabilities to be wholly settled within 12 months of the reporting date, they are measured at an undiscounted amount.

The annual leave liability is classified as a current liability and measured at an undiscounted amount for those entitlements expected to be wholly settled within 12 months. Annual leave that is expected to be settled after 12 months is measured as the present value of estimated future cash flows.

No provision has been made for sick leave as all sick leave is non-vesting and it is not considered probable that the average sick leave taken in the future will be greater than the benefits accrued in the future. As sick leave is non-vesting, an expense is recognised in the Statement of Comprehensive Income as it is taken. YARRA VALLEY WATER 106 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

2020 2019 EMPLOYEE BENEFITS $’000 $’000

CURRENT LIABILITIES - PROVISIONS

Annual leave

Unconditional and expected to settle within 12 months 2,280 1,557

Unconditional and expected to settle after 12 months 3,829 3,477

Long service leave

Unconditional and expected to settle within 12 months 360 69

Unconditional and expected to settle after 12 months 12,986 12,749

Provision for on-costs

Unconditional and expected to settle within 12 months 373 234

Unconditional and expected to settle after 12 months 2,255 2,182

TOTAL 22,083 20,268

NON-CURRENT LIABILITIES - PROVISIONS

Employee benefits - long service leave 2,300 1,663

On-costs 302 219

TOTAL 2,602 1,882

RECONCILIATION OF MOVEMENT IN ON-COST PROVISION

Opening balance at 1 July 2,635 2,429

Additional provision 1,252 1,435

Amounts utilised during year (876) (935)

Effect of changes in discount rate and remeasurement (81) (294)

CARRYING AMOUNT AT 30 JUNE 2,930 2,635

Reconciliation of on-cost provision relates to the sum of current $2,628,000 (2019: $2,416,000) and non-current $302,000 (2019: $219,000) on-costs. YARRA VALLEY WATER ANNUAL REPORT 2019-20 107

3.2.3 SUPERANNUATION

3.2.3.1 Accumulation plans The plan’s Trustee is responsible for the governance of Contributions to the accumulation plans are expensed as the plan and has a legal obligation to act solely in the the contributions are paid or become payable. best interest of plan beneficiaries. The Trustee has the following roles: 3.2.3.2 Defined benefit superannuation asset • administration of the plan and payment to the A liability or asset in respect of the defined benefit beneficiaries from plan assets when required in superannuation plan is recognised in the Balance Sheet accordance with the plan rules and is measured as the present value of the defined • management and investment of the plan assets benefit obligation at the reporting date, plus unrecognised actuarial gains (less unrecognised actuarial losses) less • compliance with superannuation law and other the fair value of the superannuation fund’s assets at that applicable regulations date. The present value of the defined benefit obligation The prudential regulator, the Australian Prudential is based on expected future payments to the reporting Regulation Authority (APRA), licences and supervises date, calculated annually by independent actuaries using regulated superannuation plans. the projected unit credit method. Consideration is given to the expected future wage and salary levels, experience of There were no plan amendments affecting the defined employee departures and periods of service. benefits payable, curtailments or settlements during the year. Actuarial gains and losses are recognised immediately in other comprehensive income. b. Description of risks a. Superannuation plan information There are a number of risks to which the plan exposes Yarra Valley Water. The more significant risks relating to For employees who are members of the Equipsuper the defined benefits are: Superannuation Fund defined benefit plan, an agreed percentage of salaries is contributed to the fund as • Investment risk – The risk that investment returns will be lower than assumed and we will need to increase 4 recommended by an actuary. FINANCIAL REPORT contributions to offset the shortfall. Coronavirus, refer Defined benefit members receive lump sum benefits on note 1.2, has increased the risk of lower investment retirement, death, disablement and withdrawal. Some income on bonds and equity due to the downturn in the defined benefit members have the option of a pension economy. benefit in certain circumstances. The defined benefit • Salary growth risk – The risk that wages or salaries section of the plan is closed to new members. All new (on which future benefit amounts will be based) will members of the fund receive accumulation only benefits. rise more rapidly than assumed, increasing defined The Superannuation Industry (Supervision) Act 1993 (SIS) benefit amounts and thereby requiring additional governs the superannuation industry and provides the employer contributions. framework within which superannuation plans operate. • Legislative risk – The risk that legislative changes The SIS regulations require an actuarial valuation to be could be made which increase the cost of providing performed for each defined benefit superannuation plan the defined benefits. every three years, or every year if the plan pays defined • Pension risk – The risk that a greater proportion benefit pensions unless an exemption has been obtained. of eligible members will elect to take a pension We value our plan annually. benefit, which is generally more valuable than the corresponding lump sum benefit. Secondly, if a member elects to take a pension, the risks are the pensioner mortality will be lighter than assumed or pension increases will be greater than assumed.

The plan assets are invested by the Trustee in the Defined Benefit and Cash investment options. The assets are diversified within these investment options and therefore the plan has no significant concentration of investment risk. YARRA VALLEY WATER 108 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 c. Reconciliation of assets and obligations

FAIR VALUE OF DEFINED BENEFIT NET DEFINED PLAN ASSETS OBLIGATION BENEFIT ASSET $’000 $’000 $’000

Opening balance at 1 July 2018 37,496 (29,179) 8,317

Current service cost - (733) (733)

Interest income / (expense) 918 (733) 185

Actuarial return on plan assets less interest income 925 - 925

Contributions by plan participants 197 (197) -

Actuarial losses arising from changes in financial assumptions - (2,998) (2,998)

Actuarial losses arising from liability experience - (25) (25)

Benefits paid (3,652) 3,652 -

Taxes, premiums and expenses paid (148) 148 -

CLOSING BALANCE AT 30 JUNE 2019 35,736 (30,065) 5,671

Current service cost - (833) (833)

Interest income / (expense) 439 (375) 64

Actuarial return on plan assets less interest income 459 - 459

Contributions by plan participants 194 (194) -

Actuarial losses arising from changes in financial assumptions - (412) (412)

Actuarial losses arising from changes in demographic - (999) (999) assumptions

Actuarial gains arising from liability experience - 579 579

Benefits paid (4,601) 4,601 -

Taxes, premiums and expenses paid (120) 120 -

CLOSING BALANCE AT 30 JUNE 2020 32,107 (27,578) 4,529

Superannuation defined benefit expense is included in salary and employee benefits expense and is represented by the sum of current service cost, interest income and interest expense $769,000 (2019: $548,000).

The asset ceiling has no impact on the net defined benefit liability / (asset). The asset ceiling is the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. d. Fair value plan assets as at 30 June 2020 Investment funds are measured using significant observable inputs – Level 2. YARRA VALLEY WATER ANNUAL REPORT 2019-20 109

e. Plan assets

2020 2019 % %

Australian equity 12 10

International equity 16 16

Fixed income 12 16

Property 5 6

Growth alternatives 11 12

Defensive alternatives 13 9

Cash 31 31

TOTAL 100 100

Asset allocation as at 30 June 2020 is currently unavailable. Asset allocation at 31 May 2020 has been used. f. Fair value of Yarra Valley Water’s own financial instruments The fair value of plan assets includes no amounts relating to:

• any of Yarra Valley Water’s own financial instruments • any property occupied by, or other assets used by Yarra Valley Water g. Actuarial assumptions to determine defined benefit cost and obligation 4 FINANCIAL REPORT DEFINED BENEFIT COST DEFINED BENEFIT OBLIGATION 2020 2019 2020 2019

Discount rate 1.30% 2.60% 0.80% 1.30%

Expected salary increase rate 4.60% 4.60% 4.25% 4.60% h. Sensitivity analysis The defined benefit obligation as at 30 June 2020 under several scenarios is presented below.

DISCOUNT RATE SALARY RATE 0.5% PA 0.5% PA 0.5% PA 0.5% P. BASE CASE LOWER HIGHER LOWER HIGHER

Discount rate - per annum 0.80% 0.30% 1.30%

Salary increase rate - per annum 4.25% 3.75% 4.75%

Defined benefit obligation ($’000) 1 27,578 28,845 26,388 26,539 28,661

1 Includes contribution tax provision.

The defined benefit obligation has been recalculated by changing the assumptions as outlined above, whilst retaining all other assumptions.

No asset and liability matching strategies have been adopted by the plan. YARRA VALLEY WATER 110 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 i. Funding arrangements 3.3 OTHER COMMITMENTS PAYABLE The Equipsuper Contribution and Funding Policy provides for a review of the financial position of the plan each Payments for licenses where substantially all the risks six months, as at 30 June and 31 December, with Yarra and benefits remain with the licensor are charged as Valley Water’s contribution rate comprising a long-term expenses in the period in which they are incurred. contribution rate and an adjustment to meet the financial objective of a Funding Ratio of 104 per cent. 2020 2019 $’000 $’000 The Target Funding Ratio reflects the proportion of salary related benefits and the allocation to ‘growth’ assets Not later than one year 55 36 for the plan. The Funding Ratio is the ratio of assets to accrued liabilities, being the greater of vested benefits and Later than one year and not 28 78 the present value of past membership benefits. later than five years

Where the Funding Ratio is greater than 100 per cent, Greater than five years 33 4 the financing objective is to achieve the Target Funding TOTAL (GST INCLUSIVE) 116 118 Ratio over five years. Where the Funding Ratio is less than 100 per cent the primary financing objective is to achieve 100 per cent over three years and the Target Funding Contractual commitments are disclosed in note 4.5 Ratio over five years. and environmental contributions in note 8.2 .

In the most recent review of the financial position as at 31 December 2019, the actuary recommended continuing 3.4 REMUNERATION OF AUDITORS our contribution rate of nil. The next review of the plan's financial position and our contribution rate is due at 30 June 2020. This review will occur post 30 June once the 2020 2019 $’000 $’000 required information becomes available. Financial statements - 149 145 We continue to contribute salary sacrifice contributions at Victorian Auditor-General’s the required rates for accumulation members. Office j. Expected contributions Internal audit - Pitcher 344 279 Employer contributions for the financial year ending Partners 30 June 2021 are expected to be nil. TOTAL 493 424 k. Maturity profile of defined benefit obligations The weighted average duration of the defined benefit Disclosure only includes auditors involved in the audit of financial statements or financial controls. obligation as at 30 June 2020 is seven years (2019: seven years).

$’000

30 June 2021 1,810

30 June 2022 1,869

30 June 2023 1,942

30 June 2024 2,297

30 June 2025 2,511

Following five years 11,315 YARRA VALLEY WATER ANNUAL REPORT 2019-20 111

4. KEY ASSETS AVAILABLE TO SUPPORT OUTPUT DELIVERY

INTRODUCTION STRUCTURE We control infrastructure and other assets that are 4.1 Total infrastructure, property, plant and equipment: utilised in fulfilling its objectives and conducting our carrying amount activities. They represent the key resources that have 4.2 Reconciliation of movements in carrying values of been entrusted to us to be utilised for delivery of infrastructure, property, plant and equipment those outputs. 4.3 Intangible assets 4.4 Net gain / loss on disposal of non-current physical assets 4.5 Contractual commitments payable

4.1 TOTAL INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT: CARRYING AMOUNT

GROSS CARRYING ACCUMULATED NET CARRYING AMOUNT DEPRECIATION AMOUNT

2020 2019 2020 2019 2020 2019 $’000 $’000 $’000 $’000 $’000 $’000

At fair value 4 Infrastructure 4,245,100 3,890,500 - - 4,245,100 3,890,500 FINANCIAL REPORT

Land 424,344 410,871 - - 424,344 410,871

Buildings 35,392 36,599 - (3,848) 35,392 32,751

Plant and equipment 49,774 52,891 (20,094) (26,809) 29,680 26,082

Leasehold improvements 63 - - - 63 -

At cost

Right of use asset 63 - (44) - 19 -

Capital works in progress 246,013 412,005 - - 246,013 412,005

TOTAL 5,000,749 4,802,866 (20,138) (30,657) 4,980,611 4,772,209 YARRA VALLEY WATER 112 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

4.2 RECONCILIATION OF MOVEMENTS IN CARRYING VALUES OF INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT

CAPITAL PLANT AND LEASEHOLD RIGHT OF USE WORKS IN INFRASTRUCTURE LAND BUILDINGS EQUIPMENT IMPROVEMENTS ASSETS PROGRESS TOTAL $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Balance at 3,817,200 408,968 32,573 19,730 - - 299,631 4,578,102 1 July 2018

Additions ------411,525 411,525

Transfers 284,773 1,903 1,570 10,905 - - (299,151) -

Write off / (1,156) - - (920) - - - (2,076) disposal of assets

Depreciation (82,730) - (1,392) (3,633) - - - (87,755)

Revaluation (127,587) ------(127,587) decrease recognised in equity

CARRYING 3,890,500 410,871 32,751 26,082 - - 412,005 4,772,209 AMOUNT AT 30 JUNE 2019

Additions ------407,604 407,604

Transfers 545,823 15,581 90 9,389 63 63 (571,009) -

Write off / (109) - - (802) - - - (911) disposal of assets

Depreciation (87,718) - (1,423) (4,989) - (44) - (94,174)

Impairment - (2,108) 3,677 - - - (2,587) (1,018) (writedown) / writeback of assets to recoverable amount

Revaluation (103,396) - 297 - - - - (103,099) increase / (decrease) recognised in equity

CARRYING 4,245,100 424,344 35,392 29,680 63 19 246,013 4,980,611 AMOUNT AT 30 JUNE 2020 YARRA VALLEY WATER ANNUAL REPORT 2019-20 113

Initial recognition Depreciation Infrastructure, property, plant and equipment are The depreciable amount of all non-current physical assets, measured initially at cost and subsequently revalued at excluding freehold land and Crown land, is depreciated on a fair value less accumulated depreciation and impairment straight-line basis over their useful lives, commencing from losses, where applicable. Where an asset is acquired for the time the asset is held ready for use. The useful lives, no or nominal cost, the cost is its fair value at the date which are consistent with the prior period other than right of acquisition. The cost of constructed non-financial of use assets and leasehold improvement assets (see note physical assets includes the cost of all materials used in 5.6) used for each class of depreciable assets, are: construction, direct labour on the project and appropriate proportion of variable and fixed overheads. CLASS OF FIXED ASSET USEFUL LIFE Subsequent measurement Buildings 5 to 100 years

Infrastructure, property, plant and equipment are Infrastructure: subsequently measured at fair value less accumulated Main structure 50 to 100 years depreciation and impairment. Fair value is determined with Other 3 to 30 years regard to the asset’s highest and best use (considering legal or physical restrictions imposed on the asset, public Plant and equipment 2 to 25 years announcements or commitments made in relation to the Leasehold improvements 10 years intended use of the asset) and is summarised by asset category. Refer note 7.4 for fair value disclosures. Right of use assets 1 to 10 years

Revaluations The cost of a leasehold improvement and right of use In measuring the fair values of non-financial assets, we asset is capitalised and depreciated over the shorter of the engage independent valuers for scheduled valuations estimated remaining term of the lease or their estimated every five years or earlier if interim indices suggest there useful lives. has been a material movement. Infrastructure assets are The assets’ residual values and useful lives are reviewed measured at fair value every year. and adjusted if appropriate, at each Balance Sheet date. 4 FINANCIAL REPORT Revaluations are performed with sufficient regularity so There have been no changes to asset category useful lives that the carrying amounts do not differ materially from as at 30 June 2020. those that would be determined using fair values at the end of the reporting period. Impairment of non-financial assets Infrastructure, property, plant and equipment and Revaluation increments are credited directly to equity in intangible assets with finite useful lives are assessed the asset revaluation surplus, except where a revaluation annually for indications of impairment. Whenever there decrement for that class of asset was previously is an indication of impairment, the assets concerned are recognised as an expense. The increment is recognised tested as to whether their carrying value exceeds their as revenue up to the value of the previous expense. Any recoverable amount. excess is recognised in the assets’ revaluation surplus. Where an asset’s carrying value exceeds its recoverable Revaluation decrements are recognised immediately as an amount, an impairment loss is recognised in net profit in expense, except where a revaluation increment for that class the Statement of Comprehensive Income for the excess of asset was previously recognised in the asset revaluation amount, except to the extent that the write-down reverses reserve. The decrement is recognised as a debit in the an asset revaluation reserve amount applicable to that asset revaluation surplus up to the value of the previous asset. The recoverable amount of assets held primarily to decrement. Any excess is recognised as an expense. generate net cash inflows is measured at the higher of the Revaluation increases and revaluation decreases relating present value of future cash flows expected to be obtained to individual assets within a class of infrastructure, from the asset and fair value less costs to sell. property, plant and equipment are offset against one Other than the impairment write downs already another within that class but are not offset in respect of recognised within this note in the financial statements, assets in different classes. there are no material indicators of impairment at the time Assumptions in respect of revaluations can be found in note financial statements were authorised for issue. 7.4. Refer note 1.2 in respect of the impact of coronavirus. YARRA VALLEY WATER 114 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

4.3 INTANGIBLE ASSETS

INTANGIBLE WATER WORKS IN ENTITLEMENTS SOFTWARE PROGRESS TOTAL $’000 $’000 $’000 $’000

Balance at 1 July 2018 96,917 64,733 18,475 180,125

Additions - - 11,424 11,424

Transfers - 15,654 (15,654) -

Amortisation expense - (19,731) - (19,731)

CARRYING AMOUNT AT 30 JUNE 2019 96,917 60,656 14,245 171,818

Additions - - 15,276 15,276

Transfers - 11,303 (11,303) -

Amortisation expense - (20,331) - (20,331)

CARRYING AMOUNT AT 30 JUNE 2020 96,917 51,628 18,218 166,763

Water entitlements Intangible assets with indefinite useful lives are carried We contributed $100 million towards the cost of the at cost less impairment losses, where applicable. Costs Goulburn-Murray Water Connections Project. In exchange incurred subsequent to initial acquisition are capitalised for this contribution, we're entitled to a one-ninth share when it is expected that additional future economic of the progressive water savings generated by Stage 1 of benefits will flow to us. the Connections Project (estimated to be 225 gigalitres of Internally generated intangible assets long-term water savings in total when complete in 2020- (software and intangible works in progress) 21) on an ongoing basis. Expenditure on research activities is recognised as In exchange for access to the three Melbourne an expense in the period in which it is incurred. An metropolitan water retailers’ water entitlements from internally generated intangible asset arising from a the Melbourne water supply system, four regional urban development project is recognised only if all the following water businesses (Barwon Water, South Gippsland are demonstrated: Water, Western Water and Westernport Water) made contributions of $9.3 million to the retailers, with our • the technical feasibility of completing the intangible share being $3.1 million. The investment has therefore asset so that it will be available for use or sale been recognised at its net value ($100 million less • the intention to complete the intangible asset and $3.1 million). use or sell it

Water entitlements are recognised at cost and have an • the ability to use or sell the intangible asset infinite life and are not amortised. • how the intangible asset will generate probable future economic benefits Intangible assets acquired separately • the availability of adequate technical, financial and (software and intangible works in progress) other resources to complete the development and Intangible assets acquired separately are initially to use or sell the intangible asset recognised at cost. Subsequently, intangible assets with • the ability to measure reliably the expenditure finite useful lives are carried at cost less accumulated attributable to the intangible asset during amortisation and accumulated impairment losses. its development. YARRA VALLEY WATER ANNUAL REPORT 2019-20 115

Subsequent to initial recognition, internally generated 4.4 NET GAIN / LOSS ON intangible assets are reported at cost less accumulated amortisation and impairment losses on the same basis DISPOSAL OF NON-CURRENT as intangible assets that are acquired separately. PHYSICAL ASSETS

Amortisation Gains and losses on disposals are determined by Intangible assets with finite useful lives are amortised comparing proceeds with the carrying amount. These on a straight-line basis over the asset’s useful life. gains or losses are included in net profit in the Statement Amortisation begins when the asset is available for use. of Comprehensive Income. When significant revalued That is, when it is in the location and condition necessary assets are sold, amounts included in the asset revaluation for it to be capable of operating in the manner intended surplus relating to that asset are transferred to retained by management. The amortisation period and the earnings. The surplus / deficit from ordinary activities amortisation method for an intangible asset with a finite includes the following specific net gains and expenses. useful life are reviewed at least at the end of each annual reporting period. 2020 2019 Intangible assets with indefinite useful lives are not $’000 $’000 amortised. There has been no change to useful lives Infrastructure, property, (74) (16) during the current or previous financial years. plant and equipment

TOTAL (74) (16) CLASS OF FIXED ASSET USEFUL LIFE

Software 3 to 10 years

Water entitlements indefinite 4.5 CONTRACTUAL COMMITMENTS PAYABLE Impairment Significant contractual expenditure arising from contracts 4 Intangible assets that have an indefinite useful life and are disclosed at their nominal value and inclusive of FINANCIAL REPORT intangible assets not yet available for use are tested goods and services tax. Our commitments include growth annually for impairment or more frequently if events works and mains renewals for both water and sewer. or changes in circumstances indicate that they might Total expenditure contracted for at balance date but not be impaired. provided for in the financial statements:

2020 2019 $’000 $’000

Not later than one year 292,204 232,555

Later than one year and 222,362 156,765 not later than five years

Greater than five years - 5,500

TOTAL (GST INCLUSIVE) 514,566 394,820 YARRA VALLEY WATER 116 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

5. OTHER ASSETS AND LIABILITIES

INTRODUCTION Bad debts are written off when determined uncollectable, in accordance with delegation authorities. This section sets out any other assets and liabilities that arose from our controlled operations. Statutory receivables, such as amounts owing from the State Government of Victoria and goods and services tax STRUCTURE (GST) input tax credit recoverable, are recognised and 5.1 Receivables measured similarly to contractual receivables (except for impairment), but are not classified as financial 5.1.1 Ageing analysis and impairment of instruments because they do not arise from a contract. contractual receivables 5.1.2 Reconciliation of the expected credit Accrued revenue is recognised for water usage and loss allowance sewage disposal as well as other works and services that have been rendered to balance date but not yet invoiced. 5.2 Other non-financial assets Water usage charges, sewage disposal charges, trade 5.3 Payables waste charges, recycled water charges and water trading 5.3.1 Ageing analysis of contractual payables revenue are all recognised as income when the service 5.4 Contract liabilities has been provided. An accrual is recognised to account for water and sewage services not billed at the end of 5.5 Other provisions the period. This is calculated using the volume of water 5.6 Leases purchased from Melbourne Water to the end of the period less the estimated non-revenue water.

5.1 RECEIVABLES As a result of the changed economic situation, refer note 1.2, we have seen an increase in customers accessing our Contractual receivables such as debtors and accrued hardship programs and an increase in overdue balances revenue in relation to goods and services, are classified which we have incorporated into our calculation of as financial instruments and categorised as ‘loans and expected credit loss allowance. This can be seen in the receivables’. They are initially recognised at fair value plus expected credit loss rate increases from 2019. Credit risk any directly attributable transaction costs. Subsequent to is disclosed in note 7.2. initial measurement they are measured at amortised cost using the effective interest method, less any impairment.

2020 2019 NOTE $’000 $’000

Contractual receivables

Trade receivables - debtors 83,352 80,715

Contract assets - accrued revenue 2.1 73,785 80,258

Other receivables 5,516 3,830

Less: allowance for expected credit losses 5.1.2 (7,275) (2,063)

Statutory receivables

GST receivables 4,363 3,037

TOTAL 159,741 165,777 YARRA VALLEY WATER ANNUAL REPORT 2019-20 117

5.1.1 AGEING ANALYSIS AND IMPAIRMENT OF CONTRACTUAL RECEIVABLES

1 TO 21 22 TO 61 TO 91 TO OVER 180 NOT AGED DAYS 1 60 DAYS 90 DAYS 180 DAYS DAYS TOTAL 2020 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Expected credit loss rate 3.40% 3.29% 8.66% 20.29% 32.79%

Trade debtors

Not past due - 42,558 - - - - 42,558

Past due - - 18,104 4,522 8,939 9,229 40,794

Allowance for expected credit losses - (1,449) (595) (391) (1,814) (3,026) (7,275)

NET TRADE RECEIVABLES - - 41,109 17,509 4,131 7,125 6,203 76,077 DEBTORS

Accrued revenue 73,785 - - - - - 73,785

Other receivables 9,879 - - - - - 9,879

TOTAL RECEIVABLES 83,664 41,109 17,509 4,131 7,125 6,203 159,741

2019

Expected credit loss rate 1.37% 0.78% 4.06% 10.37% 13.25%

Trade debtors Not past due - 49,034 - - - - 49,034 4 FINANCIAL REPORT Past due - - 19,317 3,127 3,737 5,500 31,681

Allowance for expected credit losses - (669) (150) (127) (387) (730) (2,063)

NET TRADE RECEIVABLES - - 48,365 19,167 3,000 3,350 4,770 78,652 DEBTORS

Accrued revenue 80,258 - - - - - 80,258

Other receivables 6,867 - - - - - 6,867

TOTAL RECEIVABLES 87,125 48,365 19,167 3,000 3,350 4,770 165,777

1 The 0 to 21 days category includes customers who have renegotiated arrangements and payment terms as a consequence of entering hardship programs.

All contractual receivables are recognised at the Loans and receivables are measured at amortised amounts receivable less any provision for impairment cost using the effective interest rate method less of receivables. Credit is generally allowed for a period any impairment. of 20 days. The collectability of debt is assessed each accounting period for usage and other charges. YARRA VALLEY WATER 118 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

5.1.2 RECONCILIATION OF THE EXPECTED CREDIT LOSS ALLOWANCE The expected credit loss allowance is calculated based on debtor days and we then apply an expected default rate based on historical bad debt write offs and forward looking estimates. 2020 2019 NOTE $’000 $’000 Opening balance 1 July (2,063) (3,059)

Write offs recognised as an expense 9.7 2,096 7,235

Net provision movements including bad debts recovered (7,308) (6,239)

CLOSING BALANCE 30 JUNE (7,275) (2,063)

5.2 OTHER NON-FINANCIAL ASSETS Other non-financial assets are predominantly made up of prepayments which represent payments in advance of receipt of goods or services or where part of the expenditure is made in one accounting period covering a term extending beyond that period. This includes insurances, IT subscription and maintenance agreements and various other subscriptions. 5.3 PAYABLES 2020 2019 $’000 $’000 Contractual payables

Trade payables 25,492 26,714

Accruals 78,179 80,017

Security deposits 7,542 6,692

Statutory payables

Tax withheld from payments 330 -

Fringe benefits tax payables / receivables (22) 23

TOTAL 111,521 113,446

Payables and accruals Trade payables and accruals are recognised for future the financial year that are unpaid, and arise when we amounts to be paid in respect of goods and services become obligated to make future payments in respect of received. The amounts are unsecured and are usually paid the purchase of those goods and services. Contractual 30 days after invoice date. As a result of coronavirus the payables are classified as financial instruments and State Government of Victoria required all public entities to categorised as financial liabilities at amortised cost. pay small to medium size businesses on shorter payment • Statutory payables relate to goods and services tax terms, refer note 1.2. This has resulted in a slightly lower and fringe benefits tax payables. Statutory payables payables balance at 30 June 2020. are recognised and measured similarly to contractual Payables consist of: payables, but are not classified as financial instruments and not included in the category of financial liabilities • Contractual payables which represent liabilities for at amortised cost, because they do not arise from goods and services provided to us prior to the end of a contract. YARRA VALLEY WATER ANNUAL REPORT 2019-20 119

5.3.1 AGEING ANALYSIS OF CONTRACTUAL PAYABLES

LESS THAN 1 1 TO 3 3 TO 12 OVER 12 NOT AGED MONTH MONTHS MONTHS MONTHS TOTAL 2020 $’000 $’000 $’000 $’000 $’000 $’000

Trade payables - 25,492 - - - 25,492

Accruals 78,157 - - - - 78,157

Other payables 7,872 - - - - 7,872

TOTAL 86,029 25,492 - - - 111,521

2019

Trade payables - 26,269 445 - - 26,714

Accruals 80,040 - - - - 80,040

Other payables 6,692 - - - - 6,692

TOTAL 86,732 26,269 445 - - 113,446

5.4 CONTRACT LIABILITIES 2020 2019 NOTE $’000 $’000 4 Current FINANCIAL REPORT

Grant income 390 896

Customers paid in advance 2.1 22,598 18,206

Unearned DCA, NCC, recoverable works and licence income 2.1 35,345 36,556

Developer contributions 100 550

Total current 58,433 56,208

Non-current

Developer contributions 450 -

Total non-current 450 -

TOTAL 58,883 56,208

2020 2019 $'000 $'000

Balance at 1 July 56,208 20,293

Revenue recognised during the reporting period (47,481) (18,360)

Increase in contract liabilities 50,156 54,275

CLOSING BALANCE AT 30 JUNE 58,883 56,208 YARRA VALLEY WATER 120 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

Government grants that reflects the time value of money and the risks specific Government grants are recognised once reasonable to the provision. assurance has been reached that we will comply with When some or all of the economic benefits required to the conditions attached to them and that the grants will settle a provision are expected to be received from a third be received. Government grants of a revenue nature are party, the receivable is recognised if it is virtually certain recognised as income over the periods necessary to match that economic benefits will be received and their amount them with related costs. Government grants related to can be measured reliably. assets are recognised in the Balance Sheet by deducting the grant in arriving at the carrying amount of the asset, The Other Provision balance includes a provision of $2.4 thereby incurring a reduced depreciation charge. million for a small cohort of commercial customers who are eligible for a service charge refund. These customers Customers paid in advance owned properties that were part of an owner's corporation Customers paid in advance represents payments received and did not have their own water/sewage connection to from customers in advance of the provision of goods or their property. services or any legal or constructive obligation required to be performed by us to settle the terms of receipt 5.6 LEASES of income. Predominately these relate to water and sewerage services. We will recognise these advance AASB 16 Leases (AASB 16) was issued in February payments once we have performed the performance 2016 and replaces AASB 17 Leases. It results in almost obligations associated with the payments. all leases being recognised on the Balance Sheet, as the distinction between operating and finance leases is Unearned DCA, NCC, recoverable works and removed for lessees. Under the new standard, an asset licence income (the right to use the leased item) and a financial liability to Unearned income represents developer contributed assets pay the obligation for lease payments are recognised. and payments received for new customer contributions, We adopted AASB 16 as at 1 July 2019 and have applied application fees and lease and licence income where the new rules on a modified retrospective basis as performance obligations associated with the payment are mandated by the Department of Treasury and Finance outstanding, refer note 2.1. (DTF) though FRD 123 Transitional requirements on the Developer contributions application of AASB 16 Leases. As a result, comparatives for the 2018-19 financial year in our 30 June 2020 Unearned developer contributions represent amounts accounts have not been restated. The transition received from developers for the reimbursement of costs adjustment to retained earnings was nil. In applying that will be incurred by us when we construct assets AASB 16 for the first time, we have applied the following to service new urban growth. These payments will be practical expedients as permitted by the standard and as recognised as revenue at the point in time that we have mandated by the DTF: completed the performance obligations agreed with • applying a single discount rate to a portfolio of leases the developer. with reasonably similar characteristics • relying on previous assessments on whether leases are 5.5 OTHER PROVISIONS onerous as an alternative to performing an impairment review – there were no onerous contracts as at Provisions are recognised when we have a present legal or 1 July 2019 constructive obligation because of past events, for which it is probable that an outflow of economic benefits will • accounting for leases with a remaining lease term result and that outflow can be reliably measured. of less than 12 months as at 1 July 2019 as short- term leases The amount recognised as a provision is the best estimate • excluding initial direct costs from the measurement of of the consideration required to settle the present the right-of-use asset at the date of initial application obligation at reporting date, taking into account the risks • using hindsight in determining the lease term where and uncertainties surrounding the obligation. Where a the contract contains options to extend or terminate provision is measured using the cash flows estimated to the lease settle the present obligation, its carrying amount is the present value of those cash flows, using a discount rate • accounting for low value leases. YARRA VALLEY WATER ANNUAL REPORT 2019-20 121

6. FINANCING OUR OPERATIONS

INTRODUCTION STRUCTURE This section provides information on the sources of 6.1 Interest bearing liabilities finance used during operations, along with interest expenses (the cost of borrowings and other information 6.1.1 Maturities of financial liabilities related to financing activities). 6.1.2 Finance costs

This section includes disclosures of balances that are 6.2 Cash flow information and balances financial instruments (such as borrowings, lease liabilities and cash balances). 6.2.1 Reconciliation of net result for the period to cash flow from operating activities Financing arrangements are impacted by market activities, with impacts on our cost of debt and the level of borrowings we require, refer note 1.2 and 7.2.

6.1 INTEREST BEARING LIABILITIES

CARRYING AMOUNT NET FAIR VALUE 2020 2019 2020 2019 $’000 $’000 $’000 $’000

Current 4 Borrowings 299,959 288,107 305,301 292,380 FINANCIAL REPORT

Lease liabilities 2 - 2 -

Total current 299,961 288,107 305,303 292,380

Non-current

Borrowings 2,603,200 2,341,400 2,952,496 2,644,673

Lease liabilities 13 - 13 -

Total non-current 2,603,213 2,341,400 2,952,509 2,644,673

TOTAL 2,903,174 2,629,507 3,257,812 2,937,053

Borrowings and lease liabilities are classified as financial Interest on borrowings is payable semi-annually and is instruments. All interest-bearing borrowings are accrued over the period it becomes due. Accrued interest initially recognised at the fair value of the consideration is recorded as part of accruals. received less directly attributable transaction costs. The measurement basis subsequent to initial recognition is The fair value of the interest-bearing financial liabilities is based on the classification of interest-bearing liabilities determined by discounting the expected future cash flows as financial liabilities at ‘amortised cost’. Amortised cost at current interest rates. is measured using the effective interest rate method. This classification is determined at initial recognition. YARRA VALLEY WATER 122 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

6.1.1 MATURITIES OF FINANCIAL LIABILITIES The following table allocates financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows.

WEIGHTED AVERAGE EFFECTIVE LESS THAN 1 TO 3 3 TO 5 OVER 5 INTEREST RATE 12 MONTHS YEARS YEARS YEARS TOTAL 2020 BORROWINGS % $’000 $’000 $’000 $’000 $’000

Fixed interest rate 3.42 158,200 488,200 540,000 1,525,000 2,711,400

Floating interest rate 0.56 141,759 50,000 - - 191,759

TOTAL 299,959 538,200 540,000 1,525,000 2,903,159

2019 BORROWINGS

Fixed interest rate 3.88 153,200 332,300 464,100 1,445,000 2,394,600

Floating interest rate 1.42 134,907 100,000 - - 234,907

TOTAL 288,107 432,300 464,100 1,445,000 2,629,507

2020 LEASE LIABILITIES

Lease liabilities 2 3 5 5 15

6.1.2 FINANCE COSTS

2020 2019 $’000 $’000

Interest on borrowings 95,236 96,811

Financial accommodation levy 37,688 35,182

Interest on leases 1 -

Other interest expense / (income) (39) 214

TOTAL 132,886 132,207

Finance costs are recognised as expenses in the period in which they are incurred. All qualifying assets (being assets that

necessarily take a substantial period of time to get ready consolidated fund in accordance with section 40N of the for their intended use or sale) are measured at fair value. Financial Management Act 1994 in respect of financial Therefore, any finance costs directly attributable to the accommodation provided to us by the State Government acquisition, construction or production of these qualifying of Victoria. assets are not required to be capitalised and will continue to be expensed in the period in which they are incurred.

The financial accommodation levy is paid into the YARRA VALLEY WATER ANNUAL REPORT 2019-20 123

6.2 CASH FLOW INFORMATION AND BALANCES

Cash and cash equivalents include cash at bank and cash on hand with original maturities of three months or less, and bank overdrafts.

2020 2019 $’000 $’000

Cash at bank 2,210 1,035

Cash on hand 1 1

TOTAL 2,211 1,036

6.2.1 RECONCILIATION OF NET RESULT FOR THE PERIOD TO CASH FLOW FROM OPERATING ACTIVITIES

2020 2019 $’000 $’000

Net profit after tax 104,398 111,700

Adjustments for non-cash items

Depreciation / amortisation 114,505 107,486

Bad debts and expected credit allowance 6,126 6,402 Write off of assets 111 2,076 4 Defined benefit superannuation plan expense 769 548 FINANCIAL REPORT

Net gain on disposal of non-current physical assets (74) (16)

Impairment writeback (building, land and land related provisions) (3,695) (1,146)

Impairment write-down 4,713 85

Developer contributed assets and other authority works (85,598) (84,503)

Changes in operating assets and liabilities

(Increase) / decrease in other current assets 85 (113)

(Increase) / decrease in GST receivables (1,326) 10,367

Decrease in trade receivables 1,236 17,265

Increase / (decrease) in accrued interest (202) 840

Increase / (decrease) in provisions 7,370 (108)

Increase in contract liabilities 2,675 35,915

Decrease in net deferred tax liabilities (33,390) (45,764)

Increase in payables 4,714 7,297

NET CASH INFLOW FROM OPERATING ACTIVITIES 122,417 168,331 YARRA VALLEY WATER 124 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

7. RISKS, CONTINGENCIES AND VALUATION JUDGEMENT

INTRODUCTION this category: We are exposed to risk from our activities and outside • cash and deposits – refer note 6.2 factors. It's also often necessary to make judgements • receivables (excluding statutory receivables) – and estimates associated with recognising and measuring refer note 5.1 items in the financial statements. This section sets out financial instrument specific information (including Financial liabilities at amortised cost are initially exposures to financial risks) as well as those items recognised on the date they are originated. They that are contingent in nature or require a higher level are initially measured at fair value plus any directly of judgement to be applied, which relate mainly to fair attributable transaction costs. Subsequent to initial value determination. recognition, these financial instruments are measured at amortised cost with any difference between the initial STRUCTURE recognised amount and the redemption value being recognised in the Statement of Comprehensive Income 7.1 Financial instrument specific disclosures over the period of the interest-bearing liability, using 7.2 Financial risk management objectives and policies the effective interest rate method. We recognised the 7.3 Contingent assets and liabilities following liabilities in this category:

7.4 Fair value • payables (excluding statutory payables) – refer note 5.3 7.4.1 Fair value - Determination of non-financial • contract liabilities – refer note 5.4 physical assets • lease liabilities – refer note 5.6 7.4.2 Fair value - Reconciliation of changes in level 3 items • borrowings – refer note 6.1 7.4.3 Fair value - Valuation techniques and significant unobservable inputs in level 3 items 7.2 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES 7.1 FINANCIAL INSTRUMENT SPECIFIC DISCLOSURES Capital risk management We control our capital structure in order to provide the Introduction State Government of Victoria with adequate returns and to Financial instruments arise out of contractual agreements ensure that it can fund its operations as a going concern. that give rise to a financial asset of one entity and a Our capital structure consists of net debt (borrowings financial liability or equity instrument of another entity as detailed in table below and offset by cash and meeting the definition of assets and liabilities under AASB bank balances - refer note 6.2) and equity (comprising 9 Financial Instruments. Due to the nature of our activities, contributed equity, asset revaluation surplus and retained certain financial assets and financial liabilities arise under earnings detailed in notes 9.1 to 9.3). statute rather than a contract (for example taxes, fines and penalties). Statutory assets and liabilities do not The only externally imposed capital requirements are that: meet the definition of financial instruments in AASB 9 • financial accommodation does not exceed the approval Financial Instruments. limits set by the Treasurer of Victoria pursuant to the Categories of financial instruments Borrowing and Investment Powers Act 1987 Loans, receivables and cash are financial instrument • with the exception of an operating account with assets with fixed and determinable payments that are not overdraft facilities, we are required to borrow quoted on an active market. These assets and liabilities exclusively with the Treasury Corporation are initially recognised at fair value plus any directly of Victoria (TCV) attributable transaction costs. Subsequent to initial These external capital requirements are incorporated into measurement, loans and receivables (net of impairment) the management of capital through the Board approved are measured at amortised cost using the effective Corporate Plan. interest method. We recognise the following assets in YARRA VALLEY WATER ANNUAL REPORT 2019-20 125

We effectively manage our capital by assessing financial Refer section 6.1.1 for maturity analysis of contractual risks and adjusting capital structure in response to financial liabilities. changes in these risks and the market. These responses include the management of debt levels. There have been INTEREST RATE SENSITIVITY 2020 2019 no changes to the strategy adopted to control capital ANALYSIS $’000 $’000 during the year. The gearing ratios for the years ended 30 + 50 basis points (909) (1,011) June 2020 and 30 June 2019 were as follows: - 50 basis points 909 1,011 2020 2019 $’000 $’000 ii. Liquidity risk Borrowings - current 299,959 288,107 Liquidity risk is the risk of not being able to meet the Borrowings - non-current 2,603,200 2,341,400 specific financial commitments including short term working capital needs and financing new and maturing Total borrowings 2,903,159 2,629,507 loans as they are required. Leases - current 2 - We manage liquidity risk by actively maintaining efficient Leases - non-current 13 - banking practices, regularly monitoring forecast and actual cash flows and ensuring adequate borrowing Total leases 15 - facilities are maintained.

Total borrowings and leases 2,903,174 2,629,507 Approval is received from the Treasurer of Victoria for Total assets 5,318,315 5,121,056 new borrowings, borrowings to refinance maturing and non-maturing loans and temporary purpose borrowing GEARING RATIO 55% 51% facilities. In assessing future requirements, the Treasurer has worked with us to understand the impact of coronavirus on our borrowing needs, refer note 1.2, Financial risks to ensure we have adequate funding. The new approved 4 The main risks we're exposed to through financial accommodation borrowing limit of $278.9 million relates FINANCIAL REPORT instruments are interest rate risk, liquidity risk and credit to the 6 month period 1 July to 31 December 2020 only. risk. These risks have been impacted by coronavirus, refer DTF have advised that a separate process will run for the note 1.2. The Board reviews and approves policies for period 1 January to 30 June 2021. managing these risks. Financing arrangements i. Interest rate risk We had access to a total of $90.55 million (2019: $60.76 Interest rate risk is the risk to earnings or capital from million) of unused borrowings approved by the Treasurer movements in interest rates. We're exposed to interest of Victoria as at 30 June 2020. We have a formal bank rate risk through our borrowing activities and changes overdraft facility with Westpac Banking Corporation. in the market in comparison to the assumptions of the Essential Services Commission’s regulatory pricing iii. Credit risk determination in relation to the cost of debt. Credit risk is the risk that a counterparty or customer will fail to meet contractual obligations. For us credit risk Interest rate exposures are also recognised in terms arises mainly from outstanding customer receivables of the change in the market value of the debt portfolio as we're legally obliged to service all customers in our which arise as a consequence of changes in market district without regard to their credit quality, refer note interest rates. 5.1.1. Whilst we have in place extensive debt collection We effectively manage interest rate risk by maintaining strategies to minimise customer credit risk and recover the debt portfolio within the strategic targets and policy outstanding receivables we have taken into account the bands that have been approved by the Board. Strategic and need for a compassionate approach due to coronavirus, tactical debt portfolio options are assessed in consultation refer note 1.2, conditions on our customers. Coronavirus with the TCV, with borrowing decisions based on future has temporarily increased our level of credit risk. borrowing requirements, treasury management policy compliance and the TCV’s market interest rate outlook. YARRA VALLEY WATER 126 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

The credit risk attributable to our deposits with TCV and other financial institutions is considered to be very low 2020 2019 due to the minor amounts involved and the contractual $’000 $’000 arrangements in place for counterparties. Water supply assets 7,638 8,405

The maximum exposure to credit risk at the reporting date Sewerage supply assets 9,849 18,451 is the carrying amount of items in the Balance Sheet. For receivables, the maximum exposure is the gross amount These reimbursements will occur upon request by the of receivables before allowing for doubtful debts. developer following the issuing of the certificate of completion as agreed in accordance with the conditions of 7.3 CONTINGENT ASSETS the agreement between us and the developer. AND LIABILITIES In addition, we have legal claims pending as a result of a small number of contractual disputes. Due to the Contingent assets and contingent liabilities are not uncertainty inherent in litigation an accurate assessment of recognised in the Balance Sheet, but are disclosed by any outcome is not possible. We're of the view that further way of a note and, if quantifiable, are measured at nominal disclosure of these disputes may prejudice our position. value. Contingent assets and contingent liabilities are presented inclusive of goods and services tax receivable We're unaware of any other material contingent liability. or payable respectively. Claims to which we are aware and which may result in a liability being incurred have been provided for as other a. Contingent assets provisions, refer note 5.5. We enter into agreements with land developers whereby assets are transferred to us at no cost. These assets 7.4 FAIR VALUE are brought to account as revenue (refer note 2.1) and capitalised. Where developers are in the process of Fair value determination requires judgement and the use building assets or are yet to commence the build of assets of assumptions. This section discloses the most significant that will be gifted to us in the future, these assets are assumptions used in determining fair values. Changes to recognised as contingent assets as we have signed an assumptions could have a material impact on our results agreement with the developer in respect of those assets. and financial position. Fair value is the price that would be received to sell an 2020 2019 asset or paid to transfer a liability in an orderly transaction $’000 $’000 between market participants at the measurement date.

Water supply assets under 20,629 32,735 All assets and liabilities for which fair value is measured construction or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, and Water supply assets 8,011 11,946 based on the lowest level inputs that are significant to the committed to fair value measurement as a whole: Sewerage supply assets under 23,991 30,042 construction • Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities Sewerage supply assets 11,778 8,451 • Level 2 – Valuation techniques for which the lowest committed to level input that is significant to the fair value measurement is directly or indirectly observable We're unaware of any other material contingent assets. • Level 3 – Valuation techniques for which the lowest b. Contingent liabilities level input that is significant to the fair value measurement is unobservable. Contingent on the completion of the contingent assets transferred from developers, we have a liability to reimburse developers for additional works constructed at our request. YARRA VALLEY WATER ANNUAL REPORT 2019-20 127

7.4.1 FAIR VALUE – DETERMINATION OF NON-FINANCIAL PHYSICAL ASSETS Our land, buildings, plant and equipment and infrastructure In accordance with AASB 13 Fair Value Measurement, our are stated at their revalued amounts, being the fair value at non-financial assets have been categorised into the three the date of revaluation, less any subsequent accumulated levels of the fair value hierarchy depending on the degree depreciation and impairment losses. This note explains the to which inputs into the fair value measurements are judgements and estimates made in determining the fair observable, and the significance of the inputs to the fair values of non-financial assets. value measurement.

FAIR VALUE LEVEL 1 LEVEL 2 LEVEL 3 AS AT 30 JUNE $’000 $’000 $’000 $’000

Infrastructure - - 3,890,500 3,890,500

Land (specialised) - - 243,105 243,105

Land (non-specialised) - 167,766 - 167,766

Buildings (market approach) - 2,128 - 2,128

Buildings (depreciated replacement cost) - - 30,623 30,623

Plant and equipment - - 26,082 26,082

CARRYING AMOUNT AT 30 JUNE 2019 - 169,894 4,190,310 4,360,204

Infrastructure - - 4,245,100 4,245,100 4 Land (specialised) - - 243,242 243,242 FINANCIAL REPORT

Land (non-specialised) - 181,102 - 181,102

Buildings (market approach) - 2,284 - 2,284

Buildings (depreciated replacement cost) - - 33,108 33,108

Plant and equipment - - 29,680 29,680

Leasehold improvements - - 63 63

CARRYING AMOUNT AT 30 JUNE 2020 - 183,386 4,551,193 4,734,579 YARRA VALLEY WATER 128 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

Infrastructure The 30 June 2020 valuation of infrastructure assets has Land – specialised / non-specialised and crown been independently provided by KPMG, using a discounted The most recent valuation of land was independently cash flow methodology to determine the fair value of determined by the Victorian Valuer-General’s Office using infrastructure. This involved discounting the forecast fair value as at 30 June 2016. In undertaking the valuation stream of cash flows of the entire business to both debt of land, the Victorian Valuer-General’s Office adopted and equity investors at a weighted average cost of capital the market based direct comparison approach, whereby (WACC), which represents an estimate of a hypothetical the properties were valued by analysing land sales in market participant’s discount rate. The valuation model: comparable proximity to the subject sites and allowing • Calculates forecast cash flows to debt and equity for shape, size, topography, location and other relevant investors over a 10-year forecast period. Cash flows factors specific to the land being valued. to debt and equity investors are those cash flows Where applicable specialised land is adjusted for available after all operating expenses (including taxes) the community service obligation (CSO) to reflect have been paid and necessary investments in working the specialised nature of the land being valued. As and fixed capital have been made adjustments to CSO are considered as significant • Calculates a terminal value at the end of the forecast unobservable inputs, specialised land would be classified period adopting the Gordon Growth methodology by as level 3 assets. applying the mid-point of the WACC, terminal growth rate and terminal cash flows. A single terminal value To the extent that non-specialised land does not contain has been adopted due to the sensitive nature of the significant, unobservable adjustments, the assets are terminal value in the model classified as level 2 under the market approach. • Arrives at an enterprise valuation by discounting the As at 30 June 2020 the fair value of land was checked cash flows to the valuation date using the selected high against indices provided by the Victorian Valuer-General’s ($4.44 billion) and low ($4.05 billion) WACC estimates Office to determine any material or exceptionally material and adopts a mid-point ($4.25 billion) movements. Whilst it is recognised that coronavirus, • Deducts non-infrastructure related assets and refer note 1.2, has increased the uncertainty around land liabilities to derive the implied water infrastructure valuation estimates, we believe the Valuer-General's asset valuation Office indices continue to provide the most appropriate measure. Land was last revalued (based on indices) as at • Includes a tax amortisation benefit (TAB) on water 30 June 2018. The cumulative movements since 30 June infrastructure assets, being an estimate of the present 2018 is less than 10 per cent, and therefore no material value of future tax amortisation benefits that may movements have been identified. be received. In including a TAB, a delay of five years is overlayed to reflect the likely timing of secondary If land was measured at historical cost, the carrying infrastructure asset sales, the impact being to reduce amount would be $74.5 million (2019: $58.4 million). the calculated TAB by approximately 25 per cent. The calculated TAB is added to the implied water Buildings – specialised / non-specialised infrastructure assets’ valuation to arrive at the total The most recent valuation of buildings was independently value of water infrastructure assets. determined by the Victorian Valuer-General's Office using Governments have recently announced measures to market value or depreciated replacement cost method on counter the spread of coronavirus. The impact of these 30 June 2016. The depreciated replacement cost method measures on future financing capacity, macro-economic is based on the replacement of buildings to a 'modern measures such as GDP, inflation and interest rates, as well equivalent' standard after applying an appropriate as supply and demand drivers is unknown at the date of depreciation rate, useful life and adjusting for condition. this report. Whilst KPMG sought to consider these issues As depreciation adjustments are considered as significant, in the valuation based on the limited information available, unobservable inputs in nature, buildings are classified as there is uncertainty as to the extent and duration of the level 3 fair value. impact of these issues on us, refer note 1.2. To the extent that non-specialised buildings do not contain Infrastructure assets are classified as level 3. There is significant, unobservable adjustments, these assets are no active market which has a significant impact on the classified as level 2 under the market approach. fair value. YARRA VALLEY WATER ANNUAL REPORT 2019-20 129

As at 30 June 2020, buildings were checked against indices provided by the Victorian Valuer-General's Office to determine any material or exceptionally material movements. Applying the indices buildings were revalued upwards at 30 June 2020 by $4 million. Whilst it is recognised that coronavirus, refer note 1.2, has increased the uncertainty around building valuation estimates, we believe the Valuer-General's Office indices continue to provide the most appropriate measure. In 30 June 2019 no adjustment was made to building values.

If buildings were measured at historical cost, the carrying amount would be $40.5 million (2019: $40.3 million).

Plant and equipment Plant and equipment are held at carrying value (depreciated cost) which approximates fair value. Unless there is market evidence that current replacement costs are significantly different from the original acquisition cost, it is considered unlikely that depreciated cost will be materially different from the existing carrying value. As at 30 June 2020 no material movements have occurred other than as disclosed in note 4.2.

7.4.2 FAIR VALUE – RECONCILIATION OF CHANGES IN LEVEL 3 ITEMS

LAND PLANT AND LEASEHOLD INFRASTRUCTURE (SPECIALISED) BUILDINGS EQUIPMENT IMPROVEMENTS TOTAL $’000 $’000 $’000 $’000 $’000 $’000

Balance at 1 July 2018 3,817,200 241,202 30,384 19,730 - 4,108,516

Acquisitions 284,773 1,903 1,570 10,905 - 299,151

Write off / disposal of (1,156) - - (920) - (2,076) assets Depreciation (82,730) - (1,331) (3,633) - (87,694) 4 Revaluation loss (127,587) - - - (127,587) FINANCIAL REPORT recognised in other comprehensive income

CARRYING AMOUNT AT 3,890,500 243,105 30,623 26,082 - 4,190,310 30 JUNE 2019

Acquisitions / transfers 545,823 137 90 9,389 63 555,502

Write off / disposal of (109) - - (802) - (911) assets

Depreciation (87,718) - (1,318) (4,989) - (94,025)

Impairment writeback - - 3,677 - - 3,677 of assets to recoverable amount

Revaluation gains / (loss) (103,396) - 36 - - (103,360) recognised in other comprehensive income

CARRYING AMOUNT AT 4,245,100 243,242 33,108 29,680 63 4,551,193 30 JUNE 2020 YARRA VALLEY WATER 130 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

7.4.3 FAIR VALUE – VALUATION TECHNIQUES AND SIGNIFICANT UNOBSERVABLE INPUTS IN LEVEL 3 ITEMS

SIGNIFICANT VALUATION UNOBSERVABLE RANGE SENSITIVITY OF THE TECHNIQUE INPUTS (AVERAGE) INPUT TO FAIR VALUE

LAND Market approach Community 1% to 92% A significant increase or decrease (SPECIALISED) service obligation (21%) in the community service (CSO) adjustment obligation adjustment would result in a higher or lower land valuation

$1,000 to $17,568,000 ($254,495)

INFRASTRUCTURE Income approach Weighted average 4.6% to 5.3% If the WACC had changed by +/- using a discounted cost of capital 0.25% from the year end valuation, cash flow model (WACC) the impact to the valuation would have been a decrease of $983.5 million and an increase by $1,406.4 million

Terminal value 3.50% If the terminal growth rate had growth rate changed by +/- 0.25% from the (inclusive of year end valuation, the impact to inflation) the valuation would have been an increase of $1,229.9 million and decrease by $868.2 million

Terminal value $250 million If the terminal value capex capex changed by +/- 10% the impact would be $956.3 million

Original useful life 1 to 100 A significant increase or decrease years in the estimated useful life of (59.25 years) infrastructure would result in a significantly higher or lower fair value.

PLANT AND Depreciated cost Original useful life 2 to 25 years A significant increase or decrease EQUIPMENT (deemed fair value) (4.65 years) in the useful life impacts the fair value of plant and equipment

Cost per unit $100 to A significant increase or decrease $1,600,000 in cost per unit impacts the fair ($11,400) value of plant and equipment

BUILDINGS Depreciated Cost per square $100 to A significant increase or decrease replacement cost metre $4,200 in cost per square metre impacts approach ($2,165) the fair value of buildings

Original useful life 1 to 60 years A significant increase or (28.65 years) decrease in useful life impacts the fair value of buildings YARRA VALLEY WATER ANNUAL REPORT 2019-20 131

8. STATUTORY OBLIGATIONS

INTRODUCTION 8.1 INCOME TAX This section includes disclosures in relation to our statutory obligations. We're subject to the National Tax Equivalent Regime (NTER), which is administered by the Australian Taxation STRUCTURE Office (ATO). The income tax expense for the period is the expected tax payable on the current period’s taxable 8.1 Income tax income based on the national corporate income tax rate 8.2 Environmental contributions of 30 per cent, adjusted by changes in deferred tax assets 8.3 Goods and services tax (GST) and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

The income tax expense for the financial year differs from the amount calculated on the net result. The differences are reconciled as follows: 2020 2019 INCOME TAX $’000 $’000

Statement of comprehensive income

Current income tax expense (paid or payable) 46,565 54,044

Adjustments for prior years (150) 315 Deferred income tax expense 4 FINANCIAL REPORT Temporary differences (2,116) (6,003)

INCOME TAX EXPENSE REPORTED IN THE STATEMENT OF COMPREHENSIVE INCOME 44,299 48,356

Statement of changes in equity

INCOME TAX REPORTED IN EQUITY 31,041 38,906

Tax reconciliation

Net result before income tax expense 148,697 160,056

Tax at the Australian tax rate of 30% 44,608 48,017

Adjustments for income tax of previous years (150) 315

Non-deductible expenses 15 7

Non-deductible depreciation 7 7

Assessable income (181) 10

INCOME TAX ON PROFIT BEFORE TAX 44,299 48,356

Income tax payable

CURRENT TAX PAYABLE 3,609 22,614 YARRA VALLEY WATER 132 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

Deferred tax assets and liabilities are recognised for in relation to these temporary differences if they arose temporary differences at the tax rates expected to in a transaction that at the time of the transaction did apply when the assets are recovered or liabilities are not affect either accounting profit or taxable profit or settled, based on those tax rates which are enacted or loss. Deferred tax assets are recognised for deductible substantially enacted. The relevant tax rates are applied temporary differences and unused tax losses only if it is to the cumulative amounts of deductible and taxable probable that future taxable amounts will be available temporary differences to measure the deferred tax asset to utilise those temporary differences and losses. or liability. No deferred tax asset or liability is recognised 2020 2019 $’000 $’000

DEFERRED TAX ASSETS Amounts recognised in comprehensive operating statement Provisions 12,428 8,652 Buildings future deductible amounts 1,007 2,141 Contract liability 357 1,802 TOTAL 13,792 12,595

Movements Opening balance 1 July 12,595 10,124 Credited to the comprehensive operating statement 1,197 2,471 CLOSING BALANCE AT 30 JUNE 13,792 12,595

DEFERRED TAX LIABILITIES Amounts recognised in comprehensive operating statement Property, plant and equipment (372,782) (373,703) Defined benefit superannuation asset 67 (164) Amounts recognised directly in equity Revaluation of infrastructure to fair value (189,108) (220,126) Revaluation of land to fair value (54,709) (54,709) Revaluation of buildings to fair value (705) (616) Defined benefit superannuation asset (1,426) (1,538) TOTAL (618,663) (650,856)

Movements Opening balance 1 July (650,856) (690,426) Credited / (debited) to the comprehensive operating statement 1,152 664 Credited to the comprehensive income 31,041 38,906 CLOSING BALANCE AT 30 JUNE (618,663) (650,856)

NET DEFERRED TAX LIABILITIES (604,871) (638,261) YARRA VALLEY WATER ANNUAL REPORT 2019-20 133

8.2 ENVIRONMENTAL CONTRIBUTIONS

A 2004 amendment to the Water Industry Act 1994 Our environmental contribution for each year of the fourth (the Act) provided for environmental contributions tranche was $42.86 million per year. This contribution to be paid by Victoria's water supply authorities to was recognised as an expense as incurred during the government for the purposes of funding initiatives that reporting period. seek to promote the sustainable management of water or address adverse water-related environmental impacts. We have a statutory obligation to pay an environmental The responsible Minister may make an Order for up contribution to the Department of Environment, Land, to four years that specifies the details relating to the Water and Planning of $47.43 million each year for the obligation to pay environmental contributions. The fourth period 1 July 2020 to 30 June 2024 (fifth tranche). These tranche of the environmental contribution, established contributions will be recognised as an expense during the by the Environmental Contribution Order 2016 - 2020 reporting period in which they are incurred. commenced on 1 July 2016 through to 30 June 2020.

ENVIRONMENTAL CONTRIBUTION COMMITMENTS AT BALANCE DATE NOT 2020 2019 PROVIDED FOR IN THE FINANCIAL STATEMENTS $’000 $’000

Payable

Not later than one year 47,430 42,855

Later than one year but not later than five years 142,290 -

TOTAL 189,720 42,855

4 8.3 GOODS AND SERVICES FINANCIAL REPORT TAX (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the ATO. In these circumstances, GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Balance Sheet are shown inclusive of GST. The net amount of GST receivable from or payable to the ATO is included in the Balance Sheet as part of receivables or payables, refer note 5.1 and 5.3.

Cash flows are presented in the Cash Flow Statement on a gross basis except for the GST component of investing and financing activities which are disclosed as operating cash flows. YARRA VALLEY WATER 134 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

9. OTHER DISCLOSURES

INTRODUCTION 9.5 Remuneration of executive officers This section includes additional material disclosure 9.6 Related party required by accounting standards or otherwise, for the 9.6.1 Significant transactions with government- understanding of this financial report. related entities 9.6.2 Key management personnel STRUCTURE 9.6.3 Transactions with key management personnel 9.1 Contributed equity and other related parties 9.2 Retained earnings 9.7 Ex-gratia expenditure 9.3 Asset revaluation surplus 9.8 Economic dependency 9.4 Responsible persons 9.9 Events subsequent to balance sheet date 9.4.1 Remuneration of responsible persons 9.10 Australian accounting standards issues that are not yet effective

9.1 CONTRIBUTED EQUITY

Additions to net assets which have been designated as contributions by owners are recognised as contributed equity. Other transfers that are in the nature of contributions or distributions (capital repatriation) have been recognised in contributed equity.

2020 2019 $’000 $’000

Opening balance at 1 July 420,967 444,832

Less capital repatriation - (23,865)

CLOSING BALANCE 30 JUNE 420,967 420,967

9.2 RETAINED EARNINGS

2020 2019 NOTE $’000 $’000

Opening balance at 1 July 398,284 332,152

Net profit after tax 104,398 111,700

Defined benefit superannuation plan actuarial loss1 3.2.3.2 (373) (2,098)

Net deferred tax assets recognised through retained earnings 1 112 630

Dividend paid (64,100) (44,100)

CLOSING BALANCE AT 30 JUNE 438,321 398,284

1 Defined benefit superannuation plan actuarial loss net of tax effect $261,000 (2019: $1,468,000 loss).

Dividend An obligation to pay a final dividend only arises after a formal determination is made by the Treasurer following consultation between the Board, the relevant portfolio Minister and the Treasurer. YARRA VALLEY WATER ANNUAL REPORT 2019-20 135

9.3 ASSET REVALUATION SURPLUS

The asset revaluation surplus is used to record changes in the carrying amount of fixed assets arising on revaluation. Any revaluation increment is credited to the asset revaluation surplus. A decrement would be debited to the surplus to the extent of the balance of prior increments. Any further decrements would be taken to the Statement of Comprehensive Income.

INFRASTRUCTURE LAND BUILDINGS TOTAL $’000 $’000 $’000 $’000

Balance at 1 July 2018 602,940 299,800 1,561 904,301

Revaluation, net of tax effect (89,311) - - (89,311)

BALANCE AT 30 JUNE 2019 513,629 299,800 1,561 814,990

Revaluation, net of tax effect (72,377) - 207 (72,170)

BALANCE AT 30 JUNE 2020 441,252 299,800 1,768 742,820

9.4 RESPONSIBLE PERSONS 9.4.1 REMUNERATION OF RESPONSIBLE PERSONS The relevant Minister and Yarra Valley Water directors are The Minister’s remuneration and allowance are set by the deemed to be responsible persons by Ministerial Direction Parliamentary Salaries and Superannuation Act 1968 pursuant to the provisions of the Financial Management and is reported within the Department of Parliamentary Act 1994. Services’ Financial Report. Other relevant interests are 4 FINANCIAL REPORT The responsible persons of Yarra Valley Water at any time declared in the Register of Members’ Interest which each during the financial year ended 30 June 2020 were: member of the Parliament completes.

Hon Lisa Neville MP Minister for Water The number of responsible persons from Yarra Valley Water whose remuneration was within the specified bands Sue Therese O’Connor Chair of the Board were as follows: Robert Clive Skinner Deputy Chair of the Board Patrick John McCafferty Managing Director 2020 2019 Victor John Perton Director NO. NO. Anita Michele Roper Director $10,000 - $19,999 1 - Helen Lynette Thornton Director $30,000 to $39,999 - - Karen Milward Director $40,000 to $49,999 1 - Victoria Fay Marles Director Ian Hamm Director $50,000 to $59,999 6 7 (appointed 1 October 2019) $90,000 to $99,999 1 1 Eric Sjerp Director (retired 30 September 2019) $420,000 to $429,999 1 - $450,000 to $459,999 - 1

Total number 10 9

TOTAL AMOUNT ($’000) 910 922 YARRA VALLEY WATER 136 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

9.5 REMUNERATION OF 9.6 RELATED PARTY

EXECUTIVE OFFICERS Related parties include: The number of executive officers, other than the Minister • All key management personnel and their close family and accountable officer, and their total remuneration members, and personal business interests (controlled during the period are shown in the table below. Total entities, joint ventures and entities they have significant annualised employee equivalents provide a measure influence over) of full time equivalent executive officers over the • All cabinet ministers and their close family members reporting period. • All department and public-sector entities that are controlled and consolidated into the whole of state Remuneration comprises employee benefits in all forms of consolidated financial statements consideration paid, payable or provided by the entity, or on behalf of the entity in exchange for services rendered, and • Controlled business interests. is disclosed in the following categories: All related party transactions have been entered into on • Short-term employee benefits include amounts such an arm’s length basis. as wages, salaries, annual leave or sick leave that are usually paid or payable on a regular basis, as well 9.6.1 SIGNIFICANT TRANSACTIONS WITH as allowances GOVERNMENT-RELATED ENTITIES • Post-employment benefits include pensions and other retirement benefits paid or payable on a discrete i. Department of Environment, Land, Water basis when employment has ceased and Planning • Other long-term benefits include long service leave, Under a normal commercial agency arrangement, we other long service benefit or deferred compensation bill and collect rates related to Parks Victoria services on behalf of the Minister for Water. We charge the • Termination benefits include termination of Department of Environment, Land, Water and Planning employment payments, such as severance packages for the services it provides in billing and collecting rates, and on charge costs incurred regarding supplementary 2020 2019 council valuations. We're required to pay an environmental $’000 $’000 contribution to the department, refer note 8.2. Short-term employee benefits 2,001 2,471 2020 2019 Post-employment benefits 255 195 $’000 $’000

Other long-term employment 53 58 Amounts recognised as revenue in benefits the Statement of Comprehensive Income Total amount ($’000) 2,309 2,724 Administration fees for billing and 3,368 3,506 Total number 9 8 collecting rates and reimbursement of costs of supplementary council TOTAL ANNUALISED EMPLOYEE 7 8 valuations EQUIVALENT (AEE) ¹,2 Water efficiency program funding 285 539 1 AEE is based on the time fraction worked over the reporting period. Amounts recognised as an 2 Includes executive officers, acting executive officers and those expense in the Statement of who ceased employment during the year. Comprehensive Income

Environmental contributions 42,885 42,855

Cash amounts paid during the year

Parks Victoria levy billed to 69,633 66,356 customers

AMOUNTS PAYABLE AT 30 JUNE 1,472 1,445 YARRA VALLEY WATER ANNUAL REPORT 2019-20 137

ii. Melbourne Water Corporation iv. Department of Treasury and Finance We transact solely with the Melbourne Water Corporation We pay amounts to the State Government of Victoria, for the purchase of drinking water and disposal of sewage. via the Department of Treasury and Finance. Amounts Under a normal commercial agency arrangement, we incurred were as follows: bill and collect drainage rates and charges on behalf of the Melbourne Water Corporation. We charge Melbourne 2020 2019 Water Corporation for the services we provide in $’000 $’000 billing and collecting drainage fees on its behalf, and on charge costs incurred regarding supplementary Cash payments council valuations. Dividend paid (note 9.2) 64,100 44,100 2020 2019 Capital repatriation (note 9.1) - 23,865 $’000 $’000 Amounts recognised as Amount recognised as an revenue in the Statement of expense in the Statement of Comprehensive Income Comprehensive Income

Administration fees for billing 5,162 5,416 Financial accommodation levy 37,688 35,182 and collecting drainage rates (note 6.1.2) and reimbursement of costs of supplementary council valuations Income tax equivalent (note 8.1) 44,299 48,356

Amounts recognised as an AMOUNTS PAYABLE AT 30 JUNE 13,222 31,602 expense in the Statement of Comprehensive Income v. Department of Health and Human Services Bulk water and sewerage 541,363 522,119 Customers who hold either a Pension Concession Card, wholesaler charges expense a Gold Repatriation Health Care Card for All Conditions 4 (note 3.1) FINANCIAL REPORT or a Health Care Card are entitled to pay a concessionary amount instead of the full balance outstanding on their Cash amounts paid during accounts. When a customer pays this lesser amount, the year the difference is billed to and paid by the Department of Drainage billed to customers 87,359 86,704 Health and Human Services.

AMOUNTS PAYABLE AT 10,998 9,377 30 JUNE 2020 2019 $’000 $’000

Concession amounts billed during 51,299 49,229 iii. Treasury Corporation of Victoria the year We borrow from and invest with the Treasury Corporation AMOUNTS PAYABLE AT 30 JUNE 5,196 3,533 of Victoria, refer note 6.1. The aggregate amount of borrowings payable at reporting date and the amounts of interest expense included in the determination of profit before income tax is:

2020 2019 $’000 $’000 Aggregate amount of borrowings 2,903,159 2,629,507 (note 6.1)

Interest expense (note 6.1.2) 95,236 96,811

AMOUNTS PAYABLE AT 30 JUNE 27,237 28,064 YARRA VALLEY WATER 138 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 vi. State Revenue Office corporations. The PPA contains a contract for difference Not for profit organisations that use land for the (CFD) payment mechanism in respect of electricity community’s benefit to provide outdoor sporting, cultural generated by the facility and the sale and supply of large- or recreational activities for a charitable purpose are scale generation certificates (LGCs) from the facility. The eligible for a rebate. When a customer receives a rebate PPA contains certain conditions precedent which were due and pays this lesser amount, the difference is billed to and to be satisfied during the 2019-20 financial year. paid by the State Revenue Office. The solar farm energy generator experienced a construction delay due to redesign of electrical infrastructure and a 2020 2019 connection delay relating to generator restrictions and $’000 $’000 revised connection procedures advised by the Australian Concession amounts billed during 1,263 1,235 Electricity Market Operator (AEMO). Renegotiated terms the year have resulted in an extension of the target commercial operation date to 1 October 2020 and a compensation AMOUNTS PAYABLE AT 30 JUNE 320 297 settlement to ZEW for the delay. Our share of the Amount recognised as an settlement is $217,285 which has been recognised in the expense in the Statement of Statement of Comprehensive Income as other income. Comprehensive Income At 30 June 2020, the conditions precedent in the PPA Payroll tax 3,920 3,387 are not complete, and ZEW does not have a contractual obligation for the CFD derivative. Therefore, there are no AMOUNTS PAYABLE AT 30 JUNE 309 264 other transactions to be recognised.

Upon satisfying the conditions precedent, the CFD vii. Power Purchase Agreement derivative will be recognised as a financial liability and We are one of 13 water corporation Members of Zero measured at its fair value. Subsequent changes in the Emissions Water (ZEW) Limited, a public company limited derivate’s fair value will be recognised in profit and loss. by guarantee. ZEW’s main objectives are to acquire electricity, contracts for difference and other derivative The Members’ Agreement specifies that ZEW may call on products in relation to electricity, and/or green products us to make a loan available to ZEW amounting to $124,726. from an energy and emissions reduction facility in Victoria The loan, if requested by ZEW, would meet the definition of and in turn supply these products to its members. This a financial asset as it gives rise to a contractual right for us vehicle provides the opportunity for water corporation to receive cash from ZEW at the end of the loan term. At members to collaboratively promote energy and emissions 30 June 2020, no request had been made by ZEW. reduction initiatives in Victoria and to reduce emissions. Once the facility is operational, we'll have an obligation On 30 October 2018, a Members' Agreement was entered to purchase our percentage of energy allocation under into between the water corporations and ZEW to regulate the members’ agreement. The financial impact of the their rights and obligations as members of ZEW and as Members’ Agreement with ZEW is expected to increase participants in the project. The Members’ Agreement revenue and expenses, and result in the recognition of establishes the operating activities of ZEW and the LGCs as intangible assets or assets held for sale. decision-making responsibilities of ZEW’s directors. We contribute to the administration costs of ZEW, Under the Members’ Agreement, our liability as a member currently $11,000 per annum. is limited to $10 in the event of a winding up. As required viii. Other State Government of Victoria related parties by Australian accounting standards, we’ve assessed the nature of our relationship with ZEW, and concluded that During the year we supported Thriving Communities we do not have control, joint control or significant influence Partnership (TCP), a cross-sector collaboration with over ZEW. We’ll account for our investment in ZEW as a the goal that everybody has fair access to the modern financial instrument within the scope of AASB 9 Financial essential services they need to thrive in contemporary Instruments. ZEW is a related party of Yarra Valley Water. Australia. Pat McCafferty acts as a director and we have supported TCP with their setup and administration. On 30 October 2018, ZEW entered into an 11-year power purchasing agreement (PPA) with a solar farm energy Water and sewerage services were provided to wholly generator. In relation to the PPA, ZEW will act as a central owned State Government of Victoria entities for properties intermediary between the energy generator and the water within our district under normal commercial terms and conditions. YARRA VALLEY WATER ANNUAL REPORT 2019-20 139

All other transactions with State Government of Victoria 9.7 EX-GRATIA EXPENDITURE related parties were made on normal commercial terms and conditions and have not been considered material for disclosure. 2020 2019 $’000 $’000 9.6.2 KEY MANAGEMENT PERSONNEL Hardship write-offs for 2,652 1,680 Key management personnel are those persons having customers in the Arrange and authority and responsibility for planning, directing and Save Program controlling the activities of Yarra Valley Water, directly Write-offs for disconnected 1,937 2,055 or indirectly, comprising independent directors and the customer accounts greater than Managing Director. Key management personnel (as 180 days defined in AASB 124 Related Party Disclosures) includes Bankruptcies and liquidations 28 57 the Portfolio Minister and all directors listed under responsible persons in note 9.4 who have the authority Minimum account write-offs 131 123 and responsibility for planning, directing and controlling Deferred property debt - 5,000 our activities directly or indirectly, during the financial year. forgiveness The compensation detailed below excludes the salaries Coronavirus related credit, 249 - and benefits the Portfolio Minister receives. The Minister’s rebate or relief remuneration and allowances are set by the Parliamentary TOTAL 4,997 8,915 Salaries and Superannuation Act 1968 and reported within the Department of Parliamentary Services’ financial report. All ex-gratia expenses (except hardship write-offs for customers in the Arrange and Save Program and coronavirus related credit, rebate or relief, refer note 1.2) above form part of bad and doubtful debts expense, refer note 3.1. 2020 2019 $’000 $’000 Short-term employee benefits 821 833 9.8 ECONOMIC DEPENDENCY 4 FINANCIAL REPORT Post-employment benefits 78 79 Our normal trading activities are significantly dependent on the provision of finance from the Treasury Corporation Other long-term employment 11 10 of Victoria. benefits Total amount ($’000) 910 922 9.9 EVENTS SUBSEQUENT Total number 10 9 TO BALANCE SHEET DATE TOTAL ANNUALISED EMPLOYEE 9 9 Since 30 June 2020 to the date of this report, EQUIVALENT (AEE) ¹ coronavirus lockdown restrictions in our district have 1 AEE is based on the time fraction worked over the reporting eased and re-tightened. Staff continue to work remotely period. where possible in line with health guidelines and many businesses continue to be impacted in their ability to 9.6.3 TRANSACTIONS WITH KEY operate. As a result economic activity continues to be MANAGEMENT PERSONNEL AND OTHER down on pre-coronavirus levels. We expect to continue to see an increased number of customers accessing our RELATED PARTIES hardship programs and increasing older debt balances. All key management personnel and other related party We anticipate that we will see greater impacts of transactions have been considered immaterial for disclosure. coronavirus in our financial statements in 2020-21. In this context, transactions are only disclosed when they Restrictions were considered in the preparation of our are considered necessary to draw attention to the possibility 2019-20 financial statements. that our Balance Sheet and Statement of Comprehensive No other matters or circumstance has arisen that, in the Income may have been affected by the existence of related opinion of the directors, has significantly affected or may parties, and by transactions and outstanding balances, significantly affect our operations, the results of those including commitment, with such parties. operations, or the state of affairs in future financial years. YARRA VALLEY WATER 140 ANNUAL REPORT 2019-20 FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

9.10 AUSTRALIAN ACCOUNTING STANDARDS ISSUED THAT ARE NOT YET EFFECTIVE

The Australian Accounting Standards Board has issued a list of amending standards. In general, these amending standards include editorial and reference changes that are expected to have insignificant impacts on our financials. Of these we note the following:

• AASB 2018-7 definition of material

Clarifies the definition of what is `material' to the financial statements, including adding guidance and explanations to accompany the definition. Information will be considered material if by omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. This amendment will come into effect for us on 1 July 2020.

• AASB 2020-1 classification of liabilities as current or non-current

Alters the definition of a current liability to remove the need for a right to defer settlement of a liability to be unconditional. Instead it will be sufficient for us to have the right to defer at the end of the reporting period. This amendment will come into effect for us on 1 July 2022.

There are no other standards that are not yet effective that are expected to have a material impact on the entity in the current or future reporting periods or on foreseeable future transactions. YARRA VALLEY WATER ANNUAL REPORT 2019-20 141

STATUTORY CERTIFICATION

We certify that the attached Financial Statements of Yarra Valley Water Corporation have been prepared in accordance Direction 5.2 of the Standing Directions of the Assistant Treasurer issued pursuant to the Financial Management Act 1994, applicable Financial Reporting Directions, Australian Accounting Standards including Interpretations, and other mandatory professional reporting requirements.

In our opinion, the information set out in the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and accompanying notes presents fairly the financial transactions during the year ended 30 June 2020 and financial position of Yarra Valley Water at 30 June 2020.

At the time of signing, we are not aware of any circumstance which would render any particulars included in the Financial Statements to be misleading or inaccurate.

We authorise the attached Financial Statements for issue dated at Melbourne on 28 August 2020.

Sue T O’Connor Chair 4 FINANCIAL REPORT

Patrick J McCafferty Managing Director

Natalie Foeng Chief Financial Officer YARRA VALLEY WATER 142 ANNUAL REPORT 2019-20 FINANCIAL REPORT

AUDITOR-GENERAL'S AUDIT REPORT

Independent Auditor’s Report To the Board of the Yarra Valley Water Corporation

pinion I have audited the financial report of the Yarra Valley Water Corporation (the corporation) which comprises the:

• balance sheet as at 30 June 2020 • statement of comprehensive income for the year then ended • statement of changes in equity for the year then ended • cash flow statement for the year then ended • notes to the financial statements, including significant accounting policies • statutory certification. In my opinion, the financial report presents fairly, in all material respects, the financial position of the corporation as at 30 June 2020 and its financial performance and cash flows for the year then ended in accordance with the financial reporting requirements of Part 7 of the Financial Management Act 1994 and applicable Australian Accounting Standards.

sis or I have conducted my audit in accordance with the Audit Act 1994 which incorporates the pinion Australian Auditing Standards. I further describe my responsibilities under that Act and those standards in the Auditor’s Responsibilities for the Audit of the Financial Report section of my report. My independence is established by the Constitution Act 1975. My staff and I are independent of the corporation in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to my audit of the financial report in Victoria. My staff and I have also fulfilled our other ethical responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

ter The Board is responsible for the "other information" included in the corporation’s Annual Inortion Report for the year ended 30 June 2020. The other information in the Annual Report does not include the financial report, the performance report and my auditor’s reports thereon. My opinion on the financial report does not cover the other information included in the Annual Report. Accordingly, I do not express any form of assurance conclusion thereon. In connection with my audit of the financial report, my responsibility is to read the other information when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a materially misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.

e udit Key audit matters are those matters that, in my professional judgement, were of most tters significance in my audit of the financial report of the current period. These matters were addressed in the context of my audit of the financial report as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters.

YARRA VALLEY WATER ANNUAL REPORT 2019-20 143

e udit tter o I ddressed te tter

Reenues ro serie nd use res ote – Reenue fro contracts ith custoers Reenue ro serie nd use res My key procedures included: iion  testing the operating effectiveness of key application I considered this to be a key audit matter because: controls in the billing system and key manual controls in  revenue is financially significant to the corporation the billing process  the corporation’s IT billing system and business  assessing management's model, key assumptions and rules are complex, and it uses several inputs, some inputs for estimating the value of unbilled water and from different sources sewerage services accrued revenue at 30 June 2020  a key input, customer water volume consumption,  performing substantive analytical procedures by relies on external service providers to conduct developing an expectation of usage and service charges meter readings revenue for the period based on water volumes, number of serviced properties and approved prices, compared  revenue includes a significant accrual for unbilled against the revenue recorded by the corporation water and sewerage services at year end that involves a higher degree of estimation uncertainty  reviewing the adequacy of revenue recognition and measurement policies  the applicable accounting standard AASB 15 Revenue from Contracts with Customers requires  assessing the adequacy of financial statement disclosures detailed and complex financial report disclosures. against AASB 15 Revenue from Contracts with Customers.

e ir ue estite o inrstruture ssets Note 4.1 – Total Infrastructure, property, plant and equipment ir ue estite o inrstruture ssets My key procedures included: iion  obtaining an understanding of management's approach 4 I considered this to be a key audit matter because: to estimating the fair value of infrastructure FINANCIAL REPORT  infrastructure assets are financially significant to the  assessing the competence and capability of corporation management's expert engaged to assist with the  the fair value estimate is derived from an income- valuation process based valuation approach that uses a discounted  engaging a subject matter expert to assist us in obtaining cashflow (DCF) model sufficient appropriate audit evidence, including:  the fair value estimate relies on management’s use the appropriateness of using an income-based of an external valuation expert valuation approach  the DCF model is highly complex and involves identification of any changes to the DCF model and/or significant management judgements, underpinned assumptions. by various subjective assumptions the reasonableness and consistency of all the  the calculated value is sensitive to small changes in assumptions used in the DCF model key assumptions used in the DCF model the reasonableness of all inputs used in the model,  the model's forecast period is long, and includes a with specific reference to underlying data and terminal value, which increases the difficulty in supporting documentation accurately estimating the fair value the DCF model’s computational accuracy  accounting standard AASB 13 Fair Value assessing the completeness and adequacy of the Measurement (AASB 13) and the Assistant Treasurer financial report disclosures with regard to AASB 13 issued Financial Reporting Direction 103H Non- and FRD 103H, including the significant observable financial physical assets (FRD 103H), both require and unobservable inputs utilised in the model and the extensive financial report disclosures. sensitivity analysis  evaluating our subject matter expert's workings and concluding the work was adequate for the purposes of our audit.

YARRA VALLEY WATER 144 ANNUAL REPORT 2019-20 FINANCIAL REPORT

AUDITOR-GENERAL'S AUDIT REPORT

ord’s The Board of the corporation is responsible for the preparation and fair presentation of the responsiiities financial report in accordance with Australian Accounting Standards and the Financial or te Manaement ct 14, and for such internal control as the Board determines is necessary to inni enable the preparation and fair presentation of a financial report that is free from material report misstatement, whether due to fraud or error. In preparing the financial report, the Board is responsible for assessing the corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is inappropriate to do so.

Auditor’s As required by the udit ct 14, my responsibility is to express an opinion on the financial responsiiities report based on the audit. My objectives for the audit are to obtain reasonable assurance about or te udit whether the financial report as a whole is free from material misstatement, whether due to o te inni fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is report a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:

• identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the corporation’s internal control • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board • conclude on the appropriateness of the Board’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the corporation’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the corporation to cease to continue as a going concern. • evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

3 YARRA VALLEY WATER ANNUAL REPORT 2019-20 145

Auditor’s communicate with the oard regarding, among other matters, the planned scope and timing of rsosiiitis the audit and significant audit findings, including any significant deficiencies in internal control or t udit that identify during my audit. o t ii rom the matters communicated with the oard, determine those matters that were of most rort significance in the audit of the financial report of the current period and are therefore ey audit otiud matters. I describe these matters in the auditor’s report unless law or regulation precludes public disclosure about the matter or when, in etremely rare circumstances, determine that a matter should not be communicated in the auditor’s report because the adverse consequences of doing so would reasonably be epected to outweigh the public interest benefits of such communication.

R aul artin eptember as deleate for the uditor-eneral of Victoria

4 FINANCIAL REPORT

YARRA VALLEY WATER 146 ANNUAL REPORT 2019-20

DISCLOSURE INDEX YARRA VALLEY WATER ANNUAL REPORT 2019-20 147

5 5 INDEX DISCLOSURE YARRA VALLEY WATER 148 ANNUAL REPORT 2019-20 FINANCIAL REPORT

Yarra Valley Water’s 2019-20 Annual Report is prepared in accordance with all relevant Victorian legislation and pronouncements. This index has been prepared to facilitate identification of Yarra Valley Water’s compliance with statutory disclosure requirements.

LEGISLATION DISCLOSURE REQUIREMENT PAGE

REPORT OF OPERATIONS AND ADDITIONAL INFORMATION

Charter and purpose FRD 22H Manner of establishment and the relevant Ministers 8 FRD 22H Purpose, functions, powers and duties 2-3 & 8-41 FRD 22H Key initiatives and projects 16-37 FRD 22H Nature and range of services provided 2-3 & 12-14 Management and structure FRD 22H Organisational structure 44 Financial and other information FRD 10A Disclosure index 148-149 FRD 12B Disclosure of major contracts 62 FRD 22H Five year summary of financial results 40-41 FRD 22H Employment and conduct principles 30-33 & 56-58 FRD 22H Occupational health and safety policy 36-37 & 58 FRD 22H Summary of the financial results for the year 38-41 FRD 22H Current financial year review 39 FRD 22H Significant changes in financial position during the year 92-93 FRD 22H Major changes or factors affecting performance 16-37 FRD 22H Subsequent events 93 FRD 22H Application and operation of Freedom of Information Act 1982 61-62 FRD 22H Compliance with building and maintenance provisions of Building Act 1993 62 FRD 22H Statement on Competitive Neutrality Policy 63 FRD 22H Application and operation of the Public Interest Disclosure Act 2012 61 FRD 22H Details of consultancies over $10 000 60 FRD 22H Details of consultancies under $10 000 60 FRD 22H Disclosure of government advertising expenditure 60 FRD 22H Disclosure of ICT expenditure 60 FRD 22H Statement of availability of other information 63 FRD 22H Operational and budgetary objectives and performance against objectives 38-41 & 84-87 FRD 22H Environmental performance 76-83 & 87 FRD 22H Workforce inclusion policy 30-33 & 56-58 FRD 25D Local Jobs First 63 FRD 27C Presentation and reporting of performance information 84-87 FRD 29C Workforce data disclosures 59 FRD 30D Standard requirements for the publication of annual reports entire report YARRA VALLEY WATER ANNUAL REPORT 2019-20 149

LEGISLATION DISCLOSURE REQUIREMENT PAGE

Ministerial reporting directions MRD 01 Performance reporting 84-87 MRD 02 Water consumption and drought response 67-68 MRD 03 Environmental and social sustainability reporting 64-66, 69, 72-73 & 82-83 MRD 04 Disclosure of information on bulk entitlement 78-79 MRD 05 Annual reporting of major non-residential water users 68-69 MRD 06 Greenhouse gas and energy reporting 80-82 MRD 07 Disclosure of information Climate change 76-77 Customer and community outcomes 70-73 Water for aboriginal cultural, spiritual and economic values 73-75 Resilient and liveable cities and towns 65-69 Leadership and culture 30-33, 44-59 & 73-75 Financial sustainability 84 Compliance attestation and declaration SD 5.1.4 Attestation for compliance with Ministerial standing direction 63 SD 5.2.3 Declaration in report of operations 87 FINANCIAL STATEMENTS Declaration SD 5.2.2 Declaration in financial statements 141 Other requirements under Standing Directions 5.2 SD 5.2.1(a) Compliance with Australian Accounting Standards and other authoritative pronouncements 141 SD 5.2.1(a) Compliance with Ministerial directions 141

Other disclosures as required by FRDs in notes to the financial statements FRD 03A Accounting for dividends 92 & 134 FRD 07B Early adoption of authoritative accounting pronouncements 98 FRD 11A Disclosure of ex gratia expenses 139 FRD 17B Wage inflation and discount rates for employee benefits 105-106 FRD 21C Disclosures of responsible persons, executive officers in the financial report 135-136 FRD 100A Financial reporting directions – framework entire report FRD 103H Non financial physical assets 111-115 FRD 105B Borrowings costs 121-122 5 FRD 106B Impairment of assets 111-115 INDEX DISCLOSURE FRD 109A Intangible assets 114-115 FRD 110A Cash flow statements 97 & 123 FRD 112D Defined benefit superannuation obligations 107-110 FRD 114C Financial instruments 124 FRD 119A Transfers through contributed capital 134 FRD 120N Accounting and reporting pronouncements 140 FRD 123 Transitional requirements on the application of AASB 16 Leases 120

LEGISLATION UN GLOBAL COMPACT INDEX Water Act 1989 Local Jobs First Act 2003 Please refer to our report, Planet, People, Water Industry Act 1994 Financial Management Act 1994 Prosperity, for information on how our Freedom of Information Act 1982 Public Administration Act 2004 policies, programs and actions align with the Building Act 1993 Environment Protection Act 10 principles of the UN Global Compact and 1970 (Vic) Public Interest Disclosure Act 2012 the Sustainable Development Goals (SDGs). Speak andlisten TTY/ voice calls For hearingandspeechimpairedservices 03 90464173 03 90464173 03 90464173 03 90464173

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