SYDNEY WATER ANNUAL REPORT 2002 ‘Water is life, and it sustains our lives. It is precious, because it is finite.’*

The finite supply of water is central to the long-term development of Sydney and its surrounding areas of the Blue Mountains and the Illawarra. It is an issue for us all to think about.

Over the next 20 years it is likely that Sydney’s population will increase by around 700,000. Where these people live and the water services they require are critical issues for Sydney’s sustainable water supply.

Sydney Water customers have been supportive of the need to conserve water. As our population grows, careful water use will become even more important. How far will customers go to willingly conserve their water?

How much water should be retained for supplementing river flows? Our understanding of this issue is growing and it is likely we will need to provide more water for our rivers in the future.

* Chairman, Sydney Water in a speech to the Committee for Economic Development of Australia (CEDA), July 2002. The impact of global warming is beginning to become evident, with indications that there is the potential for climate changes to further limit the amount of available water.

Wastewater is the water we return to the environment after treatment at a sewage treatment plant. The quality of treated wastewater affects the quality of our rivers, harbours and beaches. Pollution of the environment is unacceptable.

Treated adequately, wastewater or even stormwater could be seen as an alternative supply for industry, our rivers and even some non-drinking household uses like watering the garden. The cost of treatment and customers’ willingness to pay for this are also key issues determining when and where recycling can be applied.

Some answers will lie in new technologies for sewage treatment and water collection and treatment. Are customers ready to adopt new technologies? Will communities accept that the same technologies won’t work for everyone?

At the heart of these issues is the fact that public health should never be compromised. Whether it is safe drinking water or a safe living environment, these are non-negotiable issues in balancing our future water needs. 2 LETTER TO THE SHAREHOLDING MINISTERS Gabrielle Kibble Y A havethe by to andcertified beensubmitted Annual Report, the of whichform part The Financial Statements for 2001–02, R the Annual 1989and the Stateof OwnedCorporations Act was prepared inaccordance 24A withSection The AnnualReport presentation to Parliament. C SYDNEY WAT SYDNEY We RE Dear Treasurer andMinister SY 1 Farrer Place Governor Macquarie Tower Level 33 Treasurer Special MinisterofState andAssistant The HonJJ DellaBoscaMLC SY 1 Farrer Place Governor Macquarie Tower Level 33 the Executive of Council and Vice President Tr The HonMichaelEganMLC OCTOBER 2002 MANAGING DIRECTORMANAGING Alex Walker C ours sincerely HAIRMAN OF HAIRMAN BOARD THE roain oeigteya ne 0Jn 02 for coveringthe year ended30June2002, orporation, prs(tttr ois c 1984. (Statutory Bodies) Act eports uditor-General ofNew South Wales. aue,Ministerfor State Development easurer, DNEY NSWDNEY 2000 NSWDNEY 2000 PORT OF PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2002 PORT FOR OFPERFORMANCE 30JUNE THE YEAR ENDED

are pleased to submit the Annual Report of Sydney of Water theAnnualReport to submit are pleased ER ANNUAL REPORTER ANNUAL 2002 160 127 147 IBC 28 26 24 18 16 85 39 36 34 32 30 27 87 97 8 7 6 5 4 3 3 2 PERFORMANCE INDICATORSPERFORMANCE STANDARDS OPERATING PERFORMANCE LICENCE CORPOR SUMMARY OFOPERATIONS REVIEW M MINISTERS LETTERSHAREHOLDING TO THE FINANCIAL STATEMENTSFINANCIAL AW STATEMENTSFINANCIAL AUSTRALI SEL UNIT TRUST STATEMENTS FINANCIAL (SEL) ANNUAL REPORT ENVIRONMENTALSPECIAL LEVY UNIT TRUST SY – COMPLETED AND RESEARCH MAJOR AND RESEARCH MAJOR – CONTINUING R MAJOR WORKS PROGRESS IN PRINCIPAL STATISTICS REFORM – PROCUREMENT – LEAKAGE REDUCTION BE – BOTANY MANAGEMENT WETLANDS MOUNTAINS – BLUE STREAMS PROTECT ENVIRONMENT THE WATER– DRINKING QUALITY SEWERAGE – BUNDEENA–MAIANBAR SCHEME PROTECT HEALTH PUBLIC CA – QUALITY PRODUCTS – DELIVER RELIABLE, – IMPROVE CUSTOMER SERVICES A GROW BE AND – LEARN, HIGHLIGHTS FINANCIAL CHAIRMAN FROM THE – DRAINAGE –SE – WATER ABOUT SYDNEY WATER OFOPERATIONSAREA MAP OBJECTIVES VALUES, VISION, CORPORAT CONTENTS DIRECTORY – SHORTENED FORMS INDEX STATUTOR REVIEW PERFORMANCE FINANCIAL – ORGANISATIONAL CHART M BO – ATTENDANCE AT AND BOARD COMMITTEES– BOARD – CORPORATE GOVERNANCE REPORT DIRECTORS’ See casestudyonpage21. program. ongoing management bySydneysupported Water’s ofwhichis importance the natural eco-system, the area’s of an integral part are TheWetlands environment. the diverse nature ofSydney’s Sy towardsBotany Wetlands the from The viewnorth CO ESEARCH AND DEVELOPMENTESEARCH AND DEVELOPMENT ACTIVITIES DEVELOPMENT ACTIVITIES INNOVATION SERVICES AND BUSINESS SUCCESSFUL CO ANAGING DIRECTOR’SANAGING REPORT – ANAGEMENT BIOGRAPHIES ANAGEMENT BIOGRAPHIES DNEY WATERDNEY STATEMENTS FINANCIAL

SE STUDIES dney Cityclearlyillustrates ARD MEMBERS ARD A SUCCESSFUL BUSINESS A SUCCESSFUL BUSINESS T INTERNATIONAL PTY LTD VER WERAGE MMITTEE MEETINGS 2001–02 MMITTEE MEETINGS ATE ATE AN WATERLTDPTY TECHNOLOGIES Y AND STATISTICALY AND INFORMATION E PROFILE PLAN KEY 3 CORPORATE PROFILE ‘A around Sydney.’ f health andwellbeing ofmorethan g * 1989. State Owned Corporations Act Sydneythe 1994and WaterNew South operatesWales. the Sydney under Water Act Sy 3,556 employees. of dedicationtalent and Sy (including capitalcontributions) annually. r Sy the Illawarra. wa Sy SY in their contributionin to itssuccess. takeserves andwhosepeople pride the communities of it and support ev achieves world in classperformance To V sosbeadascesu uies Sydney Water’stotal revenue esponsible andasuccessfulbusiness. isinexcess of$1.5billion DNEY WATERDNEY 2002 REPORT ANNUAL himn ynyWtri peht EA July2002. Sydney Waterto CEDA, inaspeech Chairman, dney Water is a statutory State Owned Corporation, fully owned by the peopleof fullyownedby dney Water isastatutory State OwnedCorporation, dney Water achievesthis byutilisingassetsinexcess the of$14billionandemploying while beingecologically dney Waterto excel aims inproviding qualityproducts andservices, providing drinkingwater, water provider services inAustralia, dney Waterthe largest is rtigi os enjoysthetrust does, it erything

our millionpeoplewholive inand be awater providerthat services twtradsm trwtrsrie opol nSde,theBlueMountainsand stewater and somestormwaterto peopleinSydney, services ision ccess to adequateccess suppliesofsafe, ood qualitywaterthe to isessential CA DELIVER QUALITY R achieving itsvision. organisation andare coreto Sy V AND CHANGE AND BE BE ESPECT PEOPLE dney Water’sthe underpin values

RE WILLING TO LEARN, SHARE SHARE TOLEARN, WILLING OPEN AND HONEST OPEN AND alues

FOR THE ENVIRONMENT FOR THE * BE PROTECTENVIRONMENT THE PROTECT HEALTH PUBLIC principal objectives. Sy Objectives dney Waterthree has equal,

A SUCCESSFUL BUSINESS M

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AREA OF OPERATIONS Broken Bay Palm Beach

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K Campbelltown ra o • More than o w r n e s o m e r 1,300 million litres iv g o u R r W n o e of wastewater g G Lake Burragorang are collected and Helensburgh treated each day by Stanwell Park Sydney Water. Cat ara R ct Co ive rd r ea r u e x v R • More than i i R er v v e i r 28 million litres R W ver ollo illy i of wastewater are nd R

n recycled each day Wollongong vo n A from Sydney Water’s a Coniston e p sewage treatment e N plants. Mittagong W Lake Illawarra ingecarribee River Shellharbour

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Area of Operations

Area of Operations

4 SYDNEY WATER ANNUAL REPORT 2002 5 ABOUT SYDNEY WATER SYDNEY WAT SYDNEY 1,561,833 withsewerage properties facilities. peoplein estimated population of4,024,441 Wo Nepean; Avon; Cordeaux; Cataract; dams: Wa Wa the Grosetributaries of Riverthe Fish and River supplies drawn fromthe Hawkesbury River, the Shoalhaventhe and Woronora –withminor sy Wa The SCA draws itsbulkwater supplyfor Sydney Wa Wa wa Allmajor into fulloperation on2July1999. Ca The SCA wasthe Sydney establishedby Water Authority (SCA). fromthe Sydney Catchment Sy filtrationto provide plants the services. 146 water pumpingstations and10water reservoirs, 259 service of water mains, Sy WATER within itsarea ofoperations. people in1,610,098 properties estimated population of4,145,429 Sy 026421412 427 414 415 434 417 394 412 456 624,261 624,880 601,760 599,692 619,779 588,142 550,476 569,326 623,419 2002 2001 2000 1999 1998 1997 1996 1995 1994 WA Sy SEWERAGE and StanhopeGardens. Rouse Hill homesinKellyville, to 4,500 flowing withrecycled water now 2001, in August R F tryFls alw;andsomeminorstorages. Tallowa; itzroy Falls; ueHl eyldwtrpoetwas launched ouse Hillrecycled water project tm h pe een the Warragamba, the UpperNepean, stems – dney Water provides sewerageto an services dney Water buys water fortreatment dney Water utilises20,587 kilometres T cmn aaeetAt1998andcame Act Management tchment ter supplydamspreviously ownedbySydney ER CONSUMPTION AT 30 JUNE DURING YEAR DURING ER CONSUMPTION AT 30JUNE e sdanfo trgsa ninemajor ter isdrawn from storages at ter SupplyScheme. ter’s area from catchments onfour mainriver ter (includingSydney’s mainsourceofwater, rragamba Dam) were transferred tothe SCA. r nr;Wraab;Wingecarribee; Warragamba; onora; ER ANNUAL REPORTER ANNUAL 2002 dney Water supplieswaterto an UNIYCNUE PERCAPITA CONSUMPTION QUANTITY CONSUMED (MEGALITRES) of sewers. stationsejection anduses22,626kilometres 663sewage pumpingand plants, treatment Sydney Water operates 30sewage total, In W Shellharbourand Kembla, Port Bombo, Bellambi, plantsat to coastal sewagetreatment The Illawarra isserved byfive systems draining Malabar. at plant sewage treatment and Western Suburbssystemthe coastal and plants drain tothe Southern sewage treatment GlenfieldandLiverpool Fairfield, and Winmalee. Warragamba Marys, St Rouse Hill, Riverstone, Pi Penrith, Victoria, Mt Hornsby, West Heights, Ca West The inlandsystems are Blackheath, W Southernand Suburbs, Northern are Bondi, The maincoastal systemsthe Sydney in basin plants. to inlandsewagetreatment plantsand17draining sewagetreatment 10drainingto coastal 27 sewerage systems, The greater Sydney region isserved by of stormwater channels. through 486kilometres442,375 properties Sy DRAINAGE ct ollongong. senSbrs Cronulla and Warriewood. estern Suburbs, dney Water provides drainage facilitiesto dn ateHl,Gebok Hornsby Glenbrook, Castle Hill, mden, on, Quakers Hill, Richmond, North Richmond, North Richmond, Quakers Hill, on, PER DAY (LITRES) Sydney Water’s commitment to provide sustainable water services to the growing populations of Sydney, the Blue Mountains and the Illawarra is ingrained in Sydney Water’s corporate objectives, values and culture.

As pressures on our water resources mount, Sydney Water is responding with strategies and programs to protect the environment, protect public health and guarantee the long-term stewardship of these resources through successful business operations.

WaterPlan 21 is Sydney Water’s long-term strategy for sustainable water services. During the year, this plan underwent a comprehensive review to provide clear priorities and goals for the next 20 years. These goals are delivered through Sydney Water’s five-year Corporate Plan, Environment Plan and Drinking Water Quality Management Plan and a range of asset plans.

The Managing Director’s Report on page eight provides a detailed review of Sydney Water’s performance against the Corporate Plan’s 2001–02 objectives. It outlines advancement in each of the plan’s strategic directions: learning and growth, customer service, product and service delivery, and innovation.

This progress has resulted in some significant achievements being recognised during the year. In April 2002, the results of Sydney Water’s dedication to safe, clean, drinking water were endorsed by its operating licence regulator, the Independent Pricing and Regulatory Tribunal (IPART). In its operational audit report for 2000–01, IPART found that the water quality supplied by Sydney Water is generally of an excellent standard and complies with the health-related requirements of the Australian Drinking Water Guidelines and the aesthetic requirements of NSW Health.

The environmental improvements resulting from Sydney Water’s capital works program were also widely acknowledged in 2001–02 with the Environment Protection Authority reporting consistently clean beaches and evidence of a resurgence of marine life within and around the Harbour.

FROM THE FROM CHAIRMAN During the year Sydney Water invested around $500 million in capital works. The majority of this investment has focussed on improvements in the sewerage system. In 2002, Sydney Water customers reported a marked increase in their satisfaction with sewerage services, bringing it in line with water quality satisfaction for the first time.

In 2002, a new customer contract was established which provides enhanced customer protection, while enabling Sydney Water to deliver a quality service and meet customers’ increasing service expectations. This contract was finalised after extensive consultation with customers and community groups.

The Board of Sydney Water takes particular pride in supporting the community. In 2001–02, Sydney Water’s sponsorship program continued to provide $1 million of support to local organisations. Its education program was expanded with the launch of new schools initiatives and the Every Drop Counts program received Board approval to expand its water conservation activities in 2002–03.

Finally, as the financial statements and financial performance review commencing on page 36 show, Sydney Water also delivered a strong result, exceeding the profit before income tax forecast and meeting the target for reduced controllable operating costs.

I would like to thank my colleagues on the Board and the management and staff of Sydney Water for the achievements of the year. I note also the planned departure of Dr Judy Messer from the Board in November 2002. I thank her for her valuable service over a long period of time and her commitment to pursuing environmental improvements, innovation and sustainability.

I commend the 2002 Annual Report to you and encourage you to also view Sydney Water’s other reports including its ‘Towards Sustainability Report’, which can be found on the website www.sydneywater.com.au

Gabrielle Kibble CHAIRMAN OF THE BOARD

6 SYDNEY WATER ANNUAL REPORT 2002 CONTROLLABLE OPERATING RETURN ON NET OPERATING CAPITAL EXPENDITURE ($M) COSTS ($M OF 2001–02) ASSETS (PERCENTAGE)

500 3.0 600

2.5 500 400

2.0 400

300

1.5 300

200

1.0 200 FINANCIAL HIGHLIGHTS

100 0.5 100

0 0 0 2000–01 2000–01 2001–02 1997–98 2000–01 2001–02 1998–99 1999–00 2001–02 1997–98 1998–99 1999–00 1996–97 1996–97 1998–99 1999–00

Controllable Operating Costs per Property Labour Costs 2001–02 Target • Continuing business reform • Return on net operating • Sydney Water continued its assisted in meeting the assets dipped marginally in substantial and ambitious ambitious three-year cost 2001–02, impaired by program of capital works reduction target set in external superannuation required to meet customer 1998–99, with controllable impacts beyond Sydney and regulatory expectations operating costs per property Water’s control. for maintaining and now standing 23 per cent improving service levels. lower than in the base year.

CONSOLIDATED FINANCIAL PERFORMANCE IN BRIEF 2001–02 2000–01 Total revenue before capital contributions $1,356.0m $1,319.2m Total expenses $1,202.7m $1,170.3m Profit before capital contributions $153.3m $148.9m Profit after capital contributions $334.5m $283.5m Profit after income tax and capital contributions $183.1m $163.2m Recommended dividend $110.0m $53.4m Debt: equity 19% 18% Return on net operating assets 2.3% 2.4%

7 SYDNEY WATER ANNUAL REPORT 2002 SUMMARY REVIEW OF OPERATIONS The 2001–02 financial year was highlighted by the integration of Sydney Water’s subsidiary, Australian Water Technologies Pty Ltd (AWT).

The two organisations, of roughly 2,000 staff apiece, came together on 1 July 2001. The aim was to increase Sydney Water’s productivity and quality of service by improving processes, avoiding duplication and leveraging the combined attributes, capabilities and knowledge of both organisations.

One year on, Sydney Water is well on its way to delivering the improvements sought by this initiative.

AWT continues to develop profitable business opportunities, but now equal importance is being given to building Sydney Water’s own skills and knowledge through these partnering arrangements.

Within Sydney Water, other integration milestones have included centralising shared services, improving the delivery of the capital works program and optimising asset management operations.

It’s been a good start and the early results have supported the decision to bring these two organisations together. For the staff of AWT and Sydney Water, I would like to recognise the adjustments they have made and thank them for their support and contributions over the year.

Integration has expanded the potential of Sydney Water by combining the experience and talent of both organisations. The way Sydney Water now works as one united organisation underpins many recent achievements. It is also the foundation for Sydney Water’s future success.

‘Sydney Water’s corporate objectives are to protect public health, protect the environment and be a successful business.’

Sydney Water’s corporate objectives are to protect public health, protect the environment and to be a successful business. Sydney Water’s planning framework has been structured to support these objectives.

Setting Sydney Water’s long-term direction is WaterPlan 21, a high-level strategy for integrated water services. The Corporate Plan is a rolling five-year plan to deliver programs either identified within or derived from WaterPlan 21.

MANAGING DIRECTOR’S REPORT REPORT MANAGING DIRECTOR’S The Corporate Plan promotes four strategic directions, to deliver world class performance in integrated water services: • learn, grow and be a successful business • improve customer services • deliver reliable, quality products and services • innovation.

The Corporate Plan also establishes annual performance measures which, when reviewed, provide a clear picture of the year’s achievements as well as further opportunities for improvement.

This report reviews Sydney Water’s performance by reporting against the Corporate Plan for the 2001–02 financial year.

8 SYDNEY WATER ANNUAL REPORT 2002 LEARN, GROW AND BE A SUCCESSFUL BUSINESS Sydney Water is also in the process of developing a long-term Sydney Water is an organisation whose people take pride in Asset Renewal Strategy for all its STPs and WFPs. This their contribution to its success. In 2001–02, Sydney Water strategy covers the whole-of-life costs for major assets concentrated on creating a learning environment and within each plant over the next 30 years. It takes into putting in place better systems so that staff could achieve account the current condition of the equipment, expected the best possible results with the available resources. working life and replacement costs. Procurement, work scheduling, asset and financial management processes were made more efficient and Further work is in progress to also assess the condition of integrated, while a more supportive and safe working other assets including pipes. The complexity of this project environment was fostered for all staff. has caused some delays, however, it is expected to be completed by June 2003.

Commercial Performance Despite rising regulatory and statutory costs, Sydney Water maintained its sound financial position in 2001–02. Profit ‘Profit before income tax rose by 18 per cent before income tax rose by 18 per cent to $335 million, exceeding the profit budget of $312 million. This result was to $335 million…’ boosted by increased capital contributions due to higher than budgeted levels of growth in the Sydney basin. Learning Total operating expenditure was above the budgeted One of the major objectives of the ‘learn, grow and be a target as a result of significantly higher than forecast successful business’ strategic direction is to develop superannuation expenses, as advised by Sydney Water’s leadership and management capabilities and build a culture superannuation administrators. This reflects poor investment that reflects Sydney Water’s values. In 2001–02 three key performance by the relevant superannuation funds and initiatives were implemented to achieve this goal: higher than anticipated actuarial reassessments of the gross liability. However, after removing the year-on-year • People Management Program focusing on the key skills and variations for superannuation and other employee knowledge required to manage effectively within the provisions, Sydney Water has successfully met its reduction culture of Sydney Water. In 2001–02, 94 per cent of people target for controllable costs. managers attended the program • Project Management Program was developed specifically Controllable operating expenditure per property was for Sydney Water. It teaches project management targeted to fall by 23 per cent in real terms by the year fundamentals, develops project leadership and team 2001–02 (from the 1998–99 base year). Sydney Water management skills and promotes an understanding of achieved this target due to redesigned business processes, the importance of community consultation and better procurement practices, rationalisation of corporate environmental management and internal support services and lower labour-related costs • Focusing on Customers Program looks at the customer as a result of initiatives including the voluntary exit program. service culture within Sydney Water. It addresses issues The progressive implementation of Sydney Water’s Strategic such as defining customer service excellence and the Property Plan in 2001–02 involved the selling of properties systems and processes needed to develop excellent surplus to Sydney Water’s operational needs. Initiatives are customer service skills and behaviours. identified in the annual Property Disposal Program. Sales of $50 million were achieved in 2001–02 and $45 million Performance Agreements has been targeted in 2002–03. The Plan also involves the The implementation of individual performance relocation of Sydney Water’s Head Office to Parramatta by agreements aims to align individual efforts, priorities and 2005 and the concurrent sale of the Bathurst Street Head work performance with Sydney Water’s corporate direction Office complex. and strategy. The majority of Sydney Water staff have performance agreements in place and management will Sydney Water is responsible for maintaining the reliability increase the number of performance agreements in place and performance of over $14 billion worth of infrastructure. in 2002–03. In 2001–02, Sydney Water invested $556 million in the capital program to ensure that asset performance was not only maintained but improved. Successful delivery of this Occupational Health and Safety (OHS) massive capital works program reflects the implementation Sydney Water is committed to the health, safety and welfare of procurement reforms such as the bundling of major of employees and contractors and any other people who projects and relationship-based contracts. Capital expenditure may be affected by Sydney Water’s activities. Safety is for the year exceeded budget by $46 million or around not negotiable. 9 per cent owing largely to accelerated delivery of key projects. Sydney Water’s safety performance remained relatively stable over the year. The number of lost time injuries fell by six to a Asset Management total of 76, however, the Lost Time Injury Frequency Rate Sydney Water’s approach to asset management is in line (LTIFR) increased from 11.9 at the end of 2000–01 to 12.3 with the NSW Government’s Total Asset Management at the end of 2001–02. This is a disappointing result and Manual. This approach links Sydney Water’s corporate Sydney Water is focussing its efforts on initiatives and planning and asset planning processes. programs to again get LTIFRs on a downward trend and achieve its goal of zero lost time injuries by 2005–06. As part of a program to develop comprehensive plans for all assets, Facility Plans have been developed for all Sewage Treatment Plants (STPs) and are nearing completion for Water Filtration Plants (WFPs). The Facility Plans outline investments (over five and 20-year windows) that should be made to meet community health and environmental requirements. The growth and improvement components of the Facility Plans have been completed.

9 SYDNEY WATER ANNUAL REPORT 2002 10 MANAGING DIRECTOR’S REPORT CONTINUED SYDNEY WAT SYDNEY operational employeesthis program. hadattended of 80percent the year, the endof By strong safety culture. safety affectingto developtogether behaviours a andwork take personalresponsibility for identify workplacerisks, Wa Sydney of part program isanimportant The ‘Be Safe Mate’ inplace. be put any corrective necessary measures can safetytrendsthat so allows detailedanalysisofhealthand across Sydney It Water. Thissystemcaptures allhealthandsafety incidents 2002. w Recording System TheSydney Watersystem manual. Incident createdto increase familiaritythe OHSmanagement with To practical ofasafe aspects workenvironment. the to helpmanagers implement aims Safe It Workplace’. Program entitled ‘Leading andManaginga Management module was developed anddeliveredthe People within training aone-day During2001–02, healthy workplace. willmaintain asafe and standards andproceduresthat Thesystemimplements eliminate workplaceinjuries. the strategyto of System isakey part Management E etcsoes highstandards. customers’ meet to deliver and the ability aqualityservice limiting without provides bettercustomerprotection The revised contract under whichSydney Water provides itsproducts andservices. w Sydney Water’sgroups andstakeholders, CustomerContract Af Review Customer Contract customer feedback. andresearchto gainvaluabletechnology through delivery service improvementsto customercommunication, Sydney Waterthe year, During focussed ondelivering c isto improve andtrust of achieving this support A key component the community. of itscustomersand Sy IMPROVE CUSTOMER SERVICES in divisionalplansfor 2002–03. ‘ arethe through beingpursued These opportunities The GSA detailedavariety for ofopportunities improvement. performance improvement. and practices withafocus oncontinuous development Sy TheGSA enabled andstaff. supervisors middle managers, involving seniormanagersandrepresentative groups of Wa theAustralian QualityCouncil helpedSydney In late 2001, Achieving Our Vision civn u iin rjc.Poetinitiatives are detailed Project project. Achieving Our Vision’ ommunication betweencustomersandstakeholders. stablishing aneffective Occupational HealthandSafety as also finalised during the yearas alsofinalisedduring andwas deployed inJuly as revised in 2001–02. The contract sets out the terms the setsout Thecontract as revised in 2001–02. e xesv oslainwt utmr,community ter extensive consultation withcustomers, dney Water’s success depends on the support and trust and dney Water’sthe support successdependson dney Waterto evaluate the organisation’s management

upr hstann,anonlinelearningprogram was training, this support e’ aeyatvte.B aeMt’helpsemployees Safe Mate’ ter’s safety activities.‘Be e odc uddsl seset(GSA) project guidedselfassessment a ter conduct ER ANNUAL REPORTER ANNUAL 2002 Sft sntnegotiable.’ ‘Safety isnot r e Sy C willalsoinclude It in regardsto products andprocesses. issues, This Council willfocus anddevelopment ongrowth the trialled in a newmodelisbeing Western region. The CustomerCouncils are currently beingreviewed and the community. may impact that Aesthetics Guidelinesandotherissues implementationthe new of Trade the WaterWaste policy, policies, CustomerService revision, Customer Contract WaterPlan 21review, PrioritySewerage Program, Strategy, the Rouse Illawarra HillRecycled WastewaterWater Scheme, the CustomerCouncilsthe yeardiscussed by during included Issues serves. the communities it to with aninsight Thecouncils provide Sydney Waterthe majorregions. each of Sy Knowing OurCustomers 1996–2002 1996–2002 T provider. of10asservice of 7.7 out Customersgive Sydney Water arating of10in2002. 6.9 out reaching rating hasincreased slightly, The overalltrust ratings have remainedthe year. steadyduring trust Most service-related ofSydney aspects Water’s business. environmental andcustomer a range ofpublichealth, the annualResidentialincluded in CustomerSurvey explore measures Trust trust. is continuingto buildcustomers’ customerresearch hasshownSydney Water recent The most provided.services measures customersatisfactionthe products and with also It needsandexpectations. into customers’ insight Sy Customer Research 02adcnb iwdi ula www.sydneywater.com.au 2002 andcanbeviewedinfullat on1April cameinto effect The revised CustomerContract • • • • Ke egional CustomerCouncils. RUST SYDNEY IN WATER ASANORGANISATION –AVERAGE RATINGS xpanded focus could deliverthe samebenefitsinother ouncil memberswithmorethese areas. specificskillsin AVERAGE SCORE clarification ofpipemaintenance responsibilities. limits ondisconnections r rebate of and clarification andimprovement anddisconnection debt incorporation ofSydney Water’s Code ofPractice on dney Water will be looking at this model to seeifits thismodel dney Water willbelookingat times ayear six in dney Water’s CustomerCouncils meet dney Water’s customerresearch program provides edress provisions ra fipoeeti h otatinclude: the contract in y areas ofimprovement 10 1 2 3 4 5 6 7 8 9 9619 9819 0020 2002 2001 2000 1999 1998 1997 1996 7.3 ‘’– – ‘DON’T TRUST‘TRUST AT(‘1’ ALOT’) ALL’;‘10’ 7.0 7.1 6.1 6.7 6.7 6.9 PERCENTAGE OF CUSTOMERS WHO ARE VERY OR QUITE SATISFIED Customer Billing WITH THE QUALITY OF THEIR TAP WATER 1993–2002 Sydney Water has been developing and has partially 100 implemented new customer information and billing systems 90 (CIBS) with the goal of enhancing customer service and 80 billing processes. 70 60 This is a major project involving integration with a number 50 of Sydney Water’s corporate information systems. 40 Delivery of the main CIBS solution will be significantly later 30 than originally planned and has incurred additional costs. 20 Additional experts were brought in during the year to 10 supplement the project team and the project is being closely 0 monitored by the executive and Board. 19931994 1995 1996 19971998 1999 20002001 2002

Quite satisfied Very satisfied Total satisfied The main CIBS solution involving the core billing engine and interfaces is, at September 2002, due to be implemented during the second half of 2002–03.

PERCENTAGE OF CUSTOMERS WHO ARE VERY OR QUITE SATISFIED WITH SYDNEY’S SEWERAGE SYSTEM 1993–2002

100 90 ‘Sydney Water’s customer research 80 program provides insight into customers’ 70 60 needs and expectations.’ 50 40 30 Services Delivery 20 The first major stage of the CIBS project, e-Developer, has 10 been deployed and is providing customers with a choice of 0 external suppliers for electronic lodgement services for new 19931994 1995 1996 19971998 1999 2000 20012001 2002 connections. There are currently 20 service providers online Quite satisfied Very satisfied Total satisfied and they have received approximately 97 per cent of the applications handled by e-Developer.

Sydney Water has a number of service channels that make it Note: From 1993–1995 the question was worded: How easier for customers to do business. The range of service satisfied are you with the treatment of sewage before its channels has been strengthened with the implementation of disposal into the environment? From 1996–2001 the Quick Check and Property Link. Quick Check uses plumbing question was worded: How satisfied are you with the sewage supply stores as agents to deliver information and services treatment system? In 2001–02 the question was worded: required by plumbers, builders and other trade customers. How satisfied are you with Sydney’s sewerage system? The Property Link service allows solicitors and conveyancers In 2002, for the first time, satisfaction levels with Sydney access to relevant Sydney Water information online. Research Water’s two core services were almost identical. Customers’ shows that over 60 per cent of customer applications are satisfaction with water quality has plateaued at 81 per cent, now being submitted via these service channels. The range while satisfaction with the sewerage system has increased, of options for customers paying bills has been increased with so that in June 2002, 82 per cent of customers were satisfied the implementation of electronic bill presentation and with the system. The considerable increase in satisfaction payment and an option for B-Pay. Other improvements with the sewerage system could be attributed to the include an update to Sydney Water’s Internet site with new various initiatives in this area including SewerFix, the sections on water conservation and recycling for business Priority Sewerage Program, Illawarra Wastewater Strategy, and development servicing plans. continued clean beach publicity and the recent Wastewater Education Campaign. As part of Sydney Water’s commitment to improve customer service, the performance of the Call Centre is regularly Positive Relationships with Stakeholders compared with other organisations. Independent surveys Sydney Water is committed to building strong, enduring indicate that the Call Centre’s performance regularly beats relationships with stakeholders. Significant resources have industry standards. Sydney Water is looking at new call been committed to understanding stakeholders’ views in centre management technologies that can maintain and order to plan products and services more effectively. Annual, improve service as Sydney Water’s customer base grows. independent surveys of NSW Health and the Environment Protection Authority (EPA) showed their satisfaction with Sydney Water’s performance had improved, when compared CALL CENTRE GRADE OF SERVICE 2001–02 to the previous year. 100 95 In 2001–02, similar surveys were instigated with the 90 National Parks and Wildlife Service and the Independent 85 Pricing and Regulatory Tribunal (IPART). The results of these 80 surveys are now the benchmark for improving relationships with these stakeholders. 75 70 65 60 55 50 Jul 01 Aug 01 Sep 01 Oct 01 Nov 01 Dec 01 Jan 02 Feb 02 Mar 02 Apr 02 May 02 Jun 02

General Faults Target

11 SYDNEY WATER ANNUAL REPORT 2002 12 MANAGING DIRECTOR’S REPORT CONTINUED SYDNEY WAT SYDNEY systems during2001–02. accreditation wasthese management maintained onall ov water of quality andforthe management filtration plant eachwater of assurance systemsforthe management the introduction hasbeen ofquality Another key element in Australia andoverseas. through collaborationand withmajorresearch organisations bothwithinSydney Water This research isbeingcarriedout into drinkingwater andrelated processes. development the keyOne of the planisresearch elements of and e Theplanwas developed following healthguidelines. current w Thisplan Plan(1999–2004). Drinking Water Management throughthe ongoingimplementationthe five-yearmade of progress further was the year, During drinking water quality. E quickly andeffectivelythe satisfactionto ofNSW Health. wa Somelocalised NSWto have Health harmedpublichealth. there were nodrinkingwater qualityincidents considered by Thisyear, they canassessanyso potential publichealthrisk. r Sydney Water alsohasinplaceasystemfor quickly Health. results areto NSW reported All drinkingwatertest quality carried out. wa minorimprovementsThe auditorsalsosuggested the in of addingmorethe monitoringprogram.to flexibility the possibility and on laboratory qualityassurance reports, f Thesewerethe recording associated with and management. improving administrative ofwater aspects quality madeanumberofrecommendations for report The audit the aestheticrequirementsand ofNSW Health. r ex wa the foundthat for 2000–01 report The Operational Audit Sy Memorandum ofUnderstandingbetweenNSW Healthand r the toassesscompliance with IPART, licence regulator, onbehalfofNSW HealthandSydney Water’s operatingout auditsare carried Each year independent and NewZealand. A National HealthandMedicalResearch Councilthe and the by set the Australian Drinking Water Guidelines(1996), Sy Meeting HealthGuidelines products andservices. r itsassetsand of movedto improve the management Sydney Water has Asaresult, issues develops globally. social andenvironmental to informationaccess oneconomic, Customer andregulator expectations continueto increase as Sy QUALITY PRODUCTS SERVICES AND DELIVER RELIABLE, lo-po vnsadicdns aaeetfollow-up management ollow-up ofevents andincidents, eporting watereporting qualityeventsto NSW orincidents Health equirementsthe Australian of Drinking Water Guidelines equirements ofSydney Water’s Operatingthe Licenceand integrated esourcesto provide inorder sustainable, xtensive publicconsultation andadvicefrom NSW Health. c er Sydney Waterach year, continuesthe process ofimproving rclueadRsuc aaeetCouncil ofAustralia griculture andResource Management as designed to ensureas designed Sydney Water continuesto satisfy dney Water. dney Water isrequired byitsOperatingto meet Licence does. dney Water it strivesto beworldclassineverything eln standardthe health-related andcomplies with cellent rtewoewtrspl ytm International the wholewaterer supplysystem. y water quality sampling, analyses and reporting are analysesandreporting y water qualitysampling, ter qualityeventsthese were didoccurand resolved ter qualitysuppliedbySydney Water isgenerally ofan ER ANNUAL REPORTER ANNUAL 2002 TeOeainlAdtrpr for 2000–01 report ‘The Operational Audit 2002–03. c Thisprogram willprovide the GerringongandGerroa areas. Sy had connected. c the newsystemcould to connections that owners property Sydney Water notifiedallresidentsIn March 2002, and sewage seepinginto surrounding watercourses eachyear. treated 3million litres ofpartially about system willprevent thereticulated sewerage isanticipatedthat It the area. in systems and overflowsthe many from septicandpump-out byreducing sewage run-off Hackingenvironment the Port publichealthand Bundeena–Maianbar andwillhelpprotect 1,190lotsin The $33millionschemewillservice level.tertiary transferredthe upgradedto Cronulla STPtreated and to a WastewaterMaianbar. from Bundeena andMaianbarisnow a newsewerage systemforthe villagesofBundeenaand of Sydney Water completed development In December2001, of$71million. estimated cost an Stage 2isscheduledfor completion byJune2007at the Nationalnegotiations Parks with and Wildlife Service. andafter statement original environmental impact Vi Blackheath andMount families inMedlowBath, to 1,427 the schemeprovidesStage 2of reticulated sewerage services 2002. the endofAugust sewerage by services c this stageisnearing Construction on Katoomba. North to 1,600 familiessewerage betweenHazelbrook services and Stage1($36.3million)willprovide reticulated $100 million. ofover acost two stagesat isbeingcompleted in The project for future generations. Mountains environment water qualityandpreservethe pristineBlue protect to helping provideto over sewerage services 3,000 families, TheBlueMountains sewerage schemewill properties. Sy Provisionto Un-sewered ofSewerage Areas Services wa wa Abrochure summarising other results quarterly. reported updated onSydney with Water’s websitesixdays aweek, The resultstesting are and Giardia ofCryptosporidium tests forpesticides aswell andGiardia. Cryptosporidium microbiological andchemicals including physical, ev wa ev a comprehensivetests water monitoringplan qualityat Each year, qualitywaterto customers. issupplied the best Sy oneof All water suppliesare filtered anddisinfected at provide safe andhealthy drinkingwaterto allcustomers. Sy Drinking Water Quality–Continuous Improvement ST the Winmalee at Katoomba North fortreatment tunnel at standard…’ Sy f onnections for 2,500un-seweredonnections in properties afurther ommence andbyJune2002morethan 350properties to have expectedompletion withallproperties to access udta thewater qualitysuppliedby that ound c dney Water isalso providing reticulatedto sewerservices dney Water isprovidingto un-sewered sewerage services dney only Water’s 10water filtrationto ensure plantsthat to dney Water isuncompromising initscommitment r ot.Tsigcvr pt 0dfeetparameters Testing coversto 70different up month. ery testing Theplanincludes the water stageof ery supply. P. ter bills. their tocustomerswith ter qualityperformance issent ter samplesfrom overtaps across Sydney 600household toria and transferstoria and allsewagethe existingthrough flows dney Water isgenerally ofanexcellent This optionwas employed following publicdisplaythe of SewerFix Program SERVICE CONTINUITY YEAR TO DATE NUMBER OF PROPERTIES AFFECTED BY PLANNED AND UNPLANNED SHUTDOWNS A key component of Sydney Water’s management of the sewerage system is the SewerFix program, designed to 40,000 reduce leaks and overflows. Through the program Sydney 35,000 Water cleans and repairs sewers across the network. 30,000 Trenchless technologies are used where possible to minimise the impact on the local community. 25,000 20,000 In 2001–02 Sydney Water invested $38.5 million completing: 15,000 • relining of 135 kilometres of sewer mains 10,000 • grouting 2 kilometres of sewer mains

AR TO DATE PROPERTIES AFFECTED PROPERTIES DATE TO AR 5,000 • grouting 1,680 private sewers YE 0 • removal of tree roots and silt from 209 kilometres of pipes Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun • smoke testing 2,083 properties for illegal stormwater Planned > 5hrs Target Unplanned > 5hrs Target connections to sewers.

An additional 445 kilometres of sewer main were also systematically cleaned of tree roots and silt, as part of other WaterPlan 21 and Ecologically Sustainable Development operational projects. Sydney Water is committed to operating in line with the principles of ecologically sustainable development (ESD). The number of sewer chokes per 100 kilometres of sewerage As a result, ESD principles are embodied in WaterPlan 21, main fell in 2001–02. Sydney Water is aiming to achieve less Sydney Water’s long-term strategy for the provision of than 30 sewer chokes per 100 kilometres and zero pumping sustainable water services for Sydney, the Blue Mountains station overflows in dry weather by 2006. and the Illawarra.

Water Infrastructure Performance WaterPlan 21 was reviewed in 2001–02 to examine the In 2001–02, Sydney Water met its annual water main sustainability of current services, identify ways to improve renewal budget, spending $54 million renewing 70 that sustainability and to better integrate water, sewerage kilometres of water main. This program aims to reduce the and stormwater services. number of water main breaks and leaks per 100 kilometres The key issues identified by the review were: to less than 25 a year by 2006. Sydney Water is on track to achieve this target after bettering the 2001–02 interim • the need for further action to reduce demand for potable target of 40 breaks and leaks. water and manage the supply-demand balance • the impact of integration of environmental flows into Maintenance water management on the Hawkesbury–Nepean Sydney Water continued its investment in better • stormwater management and the potential implications infrastructure with an extensive program of preventative of the NSW Cabinet’s in-principle decision to establish the maintenance. In addition to reactive maintenance, all Trunk Drainage Authority in Sydney Water planned maintenance was completed according to schedule. • the impact of population growth with a further 700,000 A project to improve scheduling and work allocation is people expected in Sydney over the next 20 years. currently under way. The Water Services division, which is responsible for much of Sydney Water’s maintenance WaterPlan 21 encapsulates these key issues. It sets directions activities, continues to identify and introduce new plant and to position Sydney Water as a world class service provider equipment to improve productivity, enhance quality and enjoying the trust of the community it serves. improve safety conditions. Sydney Water’s five-year Environment Plan encompasses During the year Sydney Water purchased 27 major the environmental aspects of WaterPlan 21 and sets targets excavation equipment items worth $2.1 million and paid and timetables for achieving environmental objectives. $2.4 million for customised jetter vehicles to replace Each October, Sydney Water’s ‘Towards Sustainability Report’ outdated rodding equipment for cleaning sewers and details its performance against these criteria and a clearing chokes in sewer pipes. comprehensive suite of ESD and environmental indicators.

The jetter vehicles incorporate new technologies that kill The Towards Sustainability Report can be viewed at roots at the time of the choke clearance. This will cut the www.sydneywater.com.au ongoing number of chokes, helping Sydney Water reach its choke reduction target. The EPA’s licence conditions for the operation of Sydney Water’s sewerage system form an important part of the These initiatives have benefited Sydney Water customers, as Environment Plan. Sydney Water has had Environment evidenced by improved ratings on all major customer service Protection licences for its Sewage Treatment Systems (STS) measures over the past year; reduced maintenance response since May 2000. The 27 STS licences cover the sewage times, fewer customer complaints and fewer properties treatment plants and the sewerage pipe network. affected by planned and unplanned shutdowns. In 2001–02, Sydney Water met the majority of the requirements of these licences.

13 SYDNEY WATER ANNUAL REPORT 2002 14 MANAGING DIRECTOR’S REPORT CONTINUED in 2002. to launchonwww.sydneywater.com.auwhich isexpected the Everyto including enhancements Drop Counts website, initiatives andeducation programs during2002–03, Sy • SYDNEY WAT SYDNEY co c licence of sewerage systemperformance into relevant to progressively incorporatethe improved understanding Sy andNovemberOctober 2001. the licencevariationsincluded in the EPA issuedby in At their aquatic recreationaltiming of location and activities. the they canuseindetermining timely mannerwhich a Wa ov weather sewage andwet detailsofdry Since December2000, Assurance Program. NSWthe ShellfishQuality Healthand Beachwatch, notifications areto localCouncils, alsomade licences, the asspecifiedin Where appropriate, the EPA. to been made over 600notifications have the licenceswereSince issued, planning andcompliance reporting. of and overallthe modelsasanintegral acceptance of part Sy toboth this process, Thelearningobtainedin (SCAMPs). plans management asset produce sewerage catchment detailed localisedsewerage reticulation computerto models of trunk hydraulicthe development computer modelsand The year inreviewthe sewerageto alsosawenhancements • • • • • have included: Major program initiatives in2001–02 329 lcdin2010–11. and targets of364lcdin2004–05 demand management thelong-term tomeet target withperformance on 1990–91 since Thisrepresents areduction ofover 18percent (lcd). C c with continualthe gainsbeingmadeineducating The Every Drop Counts (EDC)program continued in2001–02 Wa environmental benefits. they arelicences so more practicable anddeliver even greater niin n eae olto euto rgas This onditions andrelated Pollution Reduction Programs. ommunity about the importance ofdemandmanagement. the importance ommunity about onsumption in 2001–02 was 412litres percapitaday onsumption in2001–02 r W 20 millionlitres perday (ML/d) recycling schemefrom Kemblato commission a Port withBHP agreement K withrecycled homesin waterto 4,500 nowflowing 2001, R sectors and government commercial targeting industrial, and customersupport) business water efficiency program (includingwater audits wa r homes –over 40,000 werethe year installedduring appliancesincustomers’ installation ofwater efficient r wa andrepairto preventactive leakdetection ofpipes leakagethe water reduction in through distributionsystem dney Water isimplementing additionalwater conservation dney Water hasbeenworkingcooperativelythe EPA with hasincreasedthe confidencedney in, Waterthe EPA, and n erflows reachingerflows waters have beenpostedonSydney eduction in the amount of water of drawn from Avon Dam. the amount in eduction esidential outdoorwater efficiency programto support esidential indoorwater efficiency program including ueHl eyldwtrpoetwas launchedinAugust ouse Hillrecycled water project lyil,Rouse HillandStanhopeGardens ellyville, Sy e’ est.Thisprovides customerswithinformation in ter’s website. ter Conservation andRecycling Strategy iuu mrvmn processto refinethe isexpected tinuous improvement logn T n20,wihwl eutina20ML/d whichwillresult ollongong STP in2004, ter conservationthrough bettergardening practices ter loss nyWtrssgeto,thiswebnotification wasdney Water’s suggestion, ER ANNUAL REPORTER ANNUAL 2002 ‘Sydney Water continuesto have oneof aktplace. market groupsto achievethe goalofcreating asustainablebiosolids regulators andotherinterest blenders, together processors, The Taskforce was establishedinFebruary 2001andbrings Sy to generate green energy. the coming year Sydney Watertrial usingbiosolids to plans In technologies for biosolidsprocessing andbeneficialuse. Sydney In 2001–02 Water continuedto investigate new weather situations. Parkesto handleprolonged wet at was alsobuilt product storage facility for storing8,000tonnes oflimeamended ST Shellharbour at A covered biosolidsstorage facility was built stabilisation. to grade allbiosolids A can potentially process almost Sydney Watertwo newfacilities, Withthese high quality. HeadSTPThe North alreadythis to produces biosolids they canbeusedinareas ofagriculture andforestry. that so These facilities improve willfurther the qualityofbiosolids tonnes. 1,000capacity byafurther product Itsintroduction willincrease biosolidsstorage end of2002. W processing biosolidsfrom allHawkesbury–Nepean STPs and Thisfacility willbecapableof of$21million. estimated cost facility Marys isnearingcompletion withan The St tonnes. product f c w The Malabarfacilitytonnes perday capacity) (of100dry STPs. Marys MalabarandSt biosolids stabilisation facilities at the yearDuring workwas progressed onnewgrade A in 2001–02. biosolidswere of usedbeneficially Morethan 99percent fo and horticulture the agriculture, with partnerships high recycling performance hasbeenachievedthrough sixyears consistently Overthe past programsthe world. in successfulbiosolidsrecycling to havethe most oneof Sydney of wastewater. Water continues from thetreatment results richorganicthat matter Biosolids arethe nutrient Biosolids Management PERCENTAGE BENEFICIALLY BIOSOLIDS OFCAPTURED USED programsthe world.’ in successfulbiosolidsrecycling the most 100 acility biosolidsstorage capacitywillincrease by2,500 misoigtil.With the commissioning of this ommissioning trials. 10 20 30 40 50 60 70 80 90 sbita otof$15millionandisundergoing acost at as built 0 r arriewood STPthe to becommissioned andisexpected by dney Waterthe NSW isamemberof Biosolids Taskforce. ihacpct f80tne.Acontingency biosolids tonnes. P withacapacityof800 estry industries. estry

1995–96

1996–97

1997–98

1998–99

1999–00

2000–01

2001–02 BIOSOLIDS USAGE TO MARKET SECTOR FOR YEAR ENDING 30 JUNE 2002 • contract with the Pollution Control Department in Thailand to advise on trade waste discharges and to determine the capacity of the wastewater treatment at Samut Prakarn to receive and treat various pollutants.

Sydney Water’s grease trap waste system monitors and licenses the removal and disposal of waste from businesses’ grease traps and plays a major role in preventing pollution. AWT sells this system to external markets as Wastesafe®. AWT has recently made a number of improvements to the Wastesafe® product including upgrading the database, providing Internet access to client reports and improving pit/tank identification.

Rehabilitation 1% Landfill 1% The latest client to adopt Wastesafe® is Toowoomba City Composting 19% Agriculture 79% Council in Queensland. The Wastesafe® product will also be marketed in New Zealand through AWT NZ, and AWT is considering options to market the system in Hong Kong. INNOVATION Innovation is the key to world class performance in any field. In Conclusion Sydney Water recognises it needs to continually innovate The business of Sydney Water is a complex and important in order to meet increasing customer and regulatory one. The changes and improvements put in place over the expectations. In 2001–02, innovation was designated as a past year have strengthened the organisation and enhanced key strategic direction across every aspect of the business. its ability to deliver world class water, wastewater and stormwater services. Sydney Water looks forward to building The aim of the innovation program is to ensure Sydney Water on these achievements over the coming year by throwing the has the ability to capture, nurture and manage the spotlight on activities to further improve customer service. implementation of new ideas. During 2001–02 the innovation program: Although providing great customer service is integral to • developed a definition of innovation for Sydney Water – Sydney Water’s operations every day, every year, the focus for ‘innovation is the successful implementation of new ideas’ 2002–03 will be on initiating activities that go beyond • developed an innovation framework and strategy that normal practices and create a platform for continuous identified the key processes and organisational issues that improvement in customer service for coming years. need to be addressed to make Sydney Water a truly innovative organisation • focussed on educating staff about innovation and on recognising innovation that already is happening. Alex Walker The focus on innovation will continue in 2002–03 with new MANAGING DIRECTOR innovation programs to be implemented in a ‘Year of Innovation’ in 2003–04. A knowledge management strategy is also being developed and a comprehensive portfolio of projects implemented to meet future business needs.

New Markets and Products Australian Water Technologies Pty Ltd (AWT) continues to investigate new products, services and approaches to delivery. AWT provides service to new and existing clients, with the benefit of complete access to all of the knowledge and expertise within Sydney Water. This relationship not only benefits AWT clients but will contribute to the positive development of Sydney Water by exposing its people to a diverse range of commercial challenges outside its area of operations.

Highlights in 2001–02 included: • contract to develop a customer complaints system for the Sydney Catchment Authority (SCA) along with a six-month extension to the current hydrometrics and dam monitoring contracts. AWT is also managing the bulk of SCA’s analytical and water quality monitoring work • benthos (macro-invertebrate) study for Hunter Water Corporation • new projects resulting from the Cooperative Alliance Agreement between the Fiji Government and Sydney Water – these activities will focus on institutional strengthening and technology development

15 SYDNEY WATER ANNUAL REPORT 2002 16 CORPORATE PLAN KEY PERFORMANCE INDICATORS SYDNEY WAT SYDNEY business successful and bea L ST services and products quality r Deliver Innovation services customer Improve DIRECTION eliable, an grow earn, RATEGIC ER ANNUAL REPORTER ANNUAL 2002 safety culture. workers andcontractors bybuildingapositive Provide asafe andhealthy workplacefor lives Sydney Water’s values.and buildaculturethat capabilities Develop leadershipandmanagement Tr Pricing andRegulatory Tribunal (IPART) and Independent Productivity improvementsto meet Wa Integrate Sydney Water andAustralian f R assetsandimprove operations. Protect infrastructure. Protect the environment. R Upgrade water services. wa maintain bio-diversity andensure environment, the protect quality, drinking waterthe highest of the delivery ofwaterManage to provide services customers andotherstakeholders. to addvaluethe community,and usesideas to generates that Create abusinessenvironment Provide innovative andproducts. services Build strong sustainablestakeholder relationships. rangethe service andreliability.understanding of and Create andsustainhighlevelstrust of delivering Sydney Water’s products andservices. Improve customerandcommunity satisfaction by r andcommunity needsare Ensure customers’ needs andexpectations. andcommunity Better understandcustomers’ PLAN OBJECTIVE 2001–02 PLAN or newassets. eflected inSydneyeflected Water’s products andservices. educe waterto delaythe need demand educe leakage ofwastewater into easury requirements.easury terways are clean andsafe for recreation. ter Technologies. Increasethe regulator’s satisfaction –NSW Health. Increasethe regulator’s satisfaction –EPA. Improvethe Call Centre grade by2002. ofservice by2003. Increasetrust customer (R2andR3)by2002. Introduce CIBS by2003. products andservices Increase customersatisfaction withwastewater by2003. products andservices Increase customersatisfaction withwater L Program. Management Pa Program. Management to complete Project managers Identified project Pe C Shareholder Value Added(SVA) vSVA Budget. C organisations by2006. C C Co R Increase biosolidsrecycling by2006. (litres/person/day) l/cd by2006. R Planned maintenance completed. plans developed by2002. Asset by2006. serviced Backlog numberofproperties chokes per100kilometres by2006. sewers, R ov R theSewerFix annualprogram. Meet thewater mainannualrenewals program. Meet by 2006. Wa ESDindicators. Progress against water theNHMRC qualityrating by2006. Meet Re Increase revenue from newmarkets andproducts. andendorseframework. Document MEASURE s Time Frequency Injury Rate (LTIFR). ost educe corporate overheads by2002. educe the averageeduce dailypercapitaconsumption weatherthe numberofdry overflowseduce from the numberofpumpingstations which educe ost per property onparwithsimilar perproperty ost (SCI). orporate Intent apital expenditure. ash distributionvSCI. erflow in dry weather indry by2006. erflow rf r view WaterPlan21. nt ticipation byallseniormanagersinPeople ter mainbreaks andleaks per100kilometres ormance agreements inplaceby2002. r lal prtn otvSaeetof vStatement ollable operating cost PERFORMANCE AT JUNE 2002 COMMENT

Achieved Three year 23 per cent operating cost reduction target met due to redesigned business processes, improved procurement, rationalisation of corporate and internal support services, and lower labour costs as a result of initiatives including the voluntary exit program. Achieved

On schedule

$213.4 million Shareholder value added and cash distribution exceeded expectations delivering a strong result.

$54.4 million $556.2 million 58% Growing as an organisation by developing the skills and capabilities of the workforce through performance management systems. 62% Part of Sydney Water’s leadership strategy that focuses on the key skills and knowledge required to effectively manage people in the current and future culture of Sydney Water. 94% Provides participants with an understanding of the fundamentals of project management, the contribution of community consultation and environment management, project leadership and managing teams. 12.3 LTIFR Zero lost time injuries by 2005–06. Sydney Water is committed to the health, safety and welfare of all employees, contractors or any other people affected by our work sites. Safety is not negotiable.

81% Customer satisfaction with water products and services remained steady.

82% Customer satisfaction with wastewater products and services improved significantly on the previous year.

R2 implemented The first major stage of the CIBS project, e-Developer, has been deployed and is providing customers with a choice of external suppliers for electronic lodgement services for new connections. R3 scheduled for 2003 The main CIBS solution involving the core billing engine and interfaces is, at September 2002, due to be implemented during the second half of 2002–03. 6.9 out of 10 Customer trust increased from 6.7 the previous year to levels similar to those before the 1998 water crisis.

90% The Call Centre has experienced excellent results following management actions to address high staff turnover that was causing staff shortages and associated training issues. 6.8 out of 10 Improvements in regulator satisfaction will continue with, in addition to the current process, the development of stakeholder relationship plans to focus on maintaining and improving the relationship. 8.2 out of 10

Framework approved by Innovation is the key to world class performance in all our activities from the services we provide, how we Executive April 2002 deliver those services and to the way we run our business. In 2001–02, Sydney Water won new work in Thailand, and with Toowoomba City Council, Hunter Water and the Sydney Catchment Authority.

Achieved The review examined the sustainability of services, ways to improve sustainability and how to provide integrated water, sewerage and stormwater services.

99.3% Water quality performance continues to be the best in the country achieving full compliance against the 1996 Australian Drinking Water Guidelines. Ongoing water quality initiatives will ensure the continued delivery of exceptional water quality. Sydney Water’s progress against the ESD indicators is reported through the Towards Sustainability Report, which will be published in October 2002. This report is being prepared following consultation with stakeholders and regulators. 37 Customer service to be improved through the continued reduction of main breaks and leaks.

In 2001–02, $53.8 million was spent renewing 70.5 kilometres of main. The SewerFix program aims to reduce the leaking of sewage into the environment in dry weather and excess stormwater entry. In 2001–02, $38.5 million was invested in relining and grouting of mains, removal of tree roots and silt, and comprehensive smoke testing for illegal stormwater connections to sewers. A further $68 million was spent on the SewerFix pumping stations upgrade program. 41

68

Un-reticulated sewerage systems pose public health and environmental risks. Sydney Water, between 2001–06 will sewer 7,100 properties. This program will provide for a further 2,500 properties in 2002–03. Achieved Sydney Water’s approach to asset management in line with NSW Government’s Total Asset Management Manual. This approach links Sydney Water’s corporate and asset planning processes. 97% In addition to reactive maintenance, Sydney Water conducted an extensive program of preventative maintenance. All planned maintenance was completed bar 3 per cent, where there were delays due to safety concerns and resource issues which are now rectified. 412 l/cd Promote best use of water through Every Drop Counts programs and recycled water.

99% Organic material collected during wastewater treatment is then recycled as biosolids, mainly for use in agriculture.

17 SYDNEY WATER ANNUAL REPORT 2002 protect public health

In December 2001, Sydney Water completed Horizontal directional drilling techniques new sewerage and upgraded water supply were used to install submarine pipelines under systems to service Bundeena and Maianbar. Port Hacking to minimise environmental Wastewater from the two villages is now disturbance. Compared with surface transferred to the upgraded Cronulla STP and excavation, directional drilling reduces treated to a tertiary level. potential damage to the environment, provides better protection from external damage and The $33 million scheme has been designed to minimises disruption to surface land uses. service 1,190 lots in Bundeena and Maianbar and will help protect public health and the The Bundeena and Maianbar villages showed Port Hacking environment by reducing sewage great interest in the scheme. During the run-off and overflows from septic and pump- project, Sydney Water conducted over out systems in the area. The reticulated 60 information sessions for the community. sewerage system has the potential to prevent Regular and ongoing communication ensured about 3 million litres of partially treated that residents were aware of the issues that sewage from seeping into watercourses had the potential to affect them. Information each year. was provided through letterbox drops, community newsletters, fact sheets and This impressive scheme involved the via Sydney Water’s website. construction of approximately 32 kilometres of sewerage reticulation, six sewage pumping In March 2002, Sydney Water notified all stations, a water pumping station, three residents and property owners that pipelines under Port Hacking (2.8 kilometres connections to the new system could in total) and a 3.4-kilometre sewer main commence. By June 2002, more than along a major residential street. 350 properties had connected to the system. BUNDEENA–MAIANBAR SCHEME SEWERAGE

18 THE NEW SEWERAGE SCHEME IN BUNDEENA AND MAIANBAR WILL IMPROVE THE RECREATIONAL WATER QUALITY OF THE AREA (FAR LEFT).

TO ENSURE THE HIGHEST QUALITY OF WATER IS DELIVERED TO THE CUSTOMER, SAMPLING TAKES PLACE AT EVERY STAGE OF THE WATER SUPPLY SYSTEM (THIS PAGE). A key goal for Sydney Water each year Arrangements have been made to extend is to continue improving the quality of the scope of the current system to cover drinking water. Sydney Water is committed the recycled water supply at Rouse Hill and to providing safe and healthy drinking other key issues of water continuity and water that meets or exceeds the 1996 pressure. Quality Assurance Services is Australian Drinking Water Guidelines and conducting the first full certification audit other regulatory requirements. of the extended ‘Water Product’ system to the latest revision of the ISO Quality In 2001, Sydney Water’s Pathogen Management System Standard Laboratory gained accreditation from (ISO 9002-2000) in September 2002. the National Association of Testing Authorities (NATA) for its revised testing The new Water Product Quality and analysis regime for Cryptosporidium Management System will promote a and Giardia. The new testing regime greater understanding of Sydney Water’s improves quality control and is aligned entire water supply system, the PERCENTAGE OF SAMPLES CONTAINING NO TOTAL COLIFORMS

DRINKING WATER QUALITY DRINKING WATER with the methods used in the United assessment of risks that can compromise 100 States and United Kingdom. delivery of quality water, and the 99 99.1 99.2 implementation of ongoing control 98 Sydney Water’s Drinking Water Quality 98.4 measures to manage all aspects of water 97 97.9 97.8 Management System embodies the supply to customers. 96 essential management and operational 95 1996 Australian Drinking Water processes required to meet this Sydney Water also provides a framework Guidelines Compliance Level 94 commitment. It was initially certified to for continued good administrative and International Standards Organisation (ISO) operational management of its water 93 9002 in June 2000, and has since filtration plants. All plants operated by 92 undergone several external audits to Sydney Water (and three ‘build-own-operate’ 91 ensure certification is maintained. Sydney contractors) are quality certified to 90 Water believes this system effectively and international standards. 1997–98 1998–99 1999–00 2000–01 2001–02 efficiently manages and improves drinking water quality from catchment to tap.

19 SYDNEY WATER ANNUAL REPORT 2002 protect the environment

Sydney Water is progressively upgrading Sydney Water now plans further the Blue Mountains sewerage system to improvements to the Blue Mountains prevent sewage-related pollution from sewerage system so that even more entering sensitive mountain streams. streams will benefit. Three more, smaller LEVEL OF ECO-SYSTEM HEALTH IN More than $360 million has been spent STPs are to be decommissioned and BLUE MOUNTAIN CREEK planning, designing, building and their flows transferred to larger, 9.0 Wentworth Falls tunnelling to create a sewerage existing facilities. Sewage Treatment Plant Decommissioned system that is more sympathetic to the Today, Blue Mountains waterways are Blue Mountains environment and its 8.0 again populated by the macro- spectacular waterways. Clean invertebrates that normally flourish in Water In 1980, the Blue Mountains sewerage pristine streams. The return of these 7.0 system was in such poor condition that creatures is a biological indicator that Possible management was transferred to Sydney the water quality and general health Mild Water. The system had struggled to cope of the streams has increased markedly. 6.0 Organic Pollution with rapid population growth in the area This recovery is remarkable given and was polluting many streams. Probable the extent of the pollution problem 5.0 Moderate Sydney Water has improved many aspects and the sensitivity of the environment. Organic of the Blue Mountains sewerage system. The Blue Mountains was recently Pollution An especially significant advance is the awarded World Heritage status – 4.0

NS STREAMS Probable

I diversion of sewage flow to the Winmalee worldwide recognition of the need to Severe Organic STP in the lower Blue Mountains where it protect and nurture this unique area. Pollution is treated to a tertiary standard. Sydney Sydney Water is proud to have left 3.0 Water built a 30-kilometre tunnel from an environmental legacy that will Winmalee to Katoomba to intercept flows benefit residents and visitors to this Spring 01 Spring 95 Spring 96 Spring 97 Spring 98 Spring 99 Spring 00 utumn 01 utumn 02 utumn 96 utumn 97 utumn 98 utumn 99 utumn 00 A A from many of the decommissioned STPs. beautiful part of Australia. A A A A A BLUE MOUNTA BLUE

20 CAPTURING MACRO- INVERTEBRATES TO DETERMINE THE HEALTH OF BLUE MOUNTAINS STREAMS (FAR LEFT).

ACTIVE MANAGEMENT OF THE BOTANY WETLANDS INVOLVES MONITORING AQUATIC PLANT LIFE (THIS PAGE). The Botany Swamps scheme was created in When European Carp were imported illegally the 1850s, when drought and population to Australia around 1960, their numbers increases forced Sydney to seek a reliable new expanded rapidly. These bottom feeders can water supply. Water was pumped from a series tolerate a wide range of environmental of low dams in Botany to the reservoir at conditions and thrive in water of relatively Crown Street. By the late 1860s, however, the poor quality. As they feed they disturb Botany supply began to deplete and an sediments, resuspending pollutants and alternative water source was found. nutrients which contribute to algal blooms. Today, the Botany Swamps are known as the By the end of 2001–02, more than 3,100 Carp Botany Wetlands and are part of Sydney City’s had been captured in the wetlands. stormwater system, receiving run-off from As part of the rehabilitation strategy, Sydney urban and industrial areas. Water introduced 5,000 native Australian Bass to the wetlands in 1998. Monitoring such Active management of the wetlands began in species provides a measure of the health of the the early 1990s. In 1996, Sydney Water began system because the fish are highly sensitive to a five-year program to rehabilitate them. pollutants. Recently caught specimens have It has since spent more than $1 million on been found to be in excellent condition and the program, building a gross pollutant trap, have grown from the size of a little finger to an running weed management trials, installing a average length of more than 20 centimetres. macrophyte pond, removing European Carp, and dredging. BOTANY WETLANDS MANAGEMENT BOTANY A current problem for the wetlands is blue- green algae, blooms of which have been occurring since 1994. Sydney Water has been carefully monitoring the problem, and established a European Carp eradication program in 1996 in an attempt to solve it.

21 SYDNEY WATER ANNUAL REPORT 2002 be a successful business

Reducing the amount of water leaking from ‘hear’ water escaping. As at June 2002, Sydney Water’s pipes has many benefits. 20 megalitres per day (Ml/d) of leaks had It trims operating costs, provides energy been detected from 4,027 kilometres of savings, lowers greenhouse gas emissions and water mains using acoustic techniques – a improves Sydney Water’s ability to meet further 2,500 kilometres of mains will be customers’ future demands. surveyed during the remainder of 2002 • pressure management – installation of Active leakage control work was also part of automatic pressure reduction valves in Sydney Water’s strategy to reduce controllable delivery mains in high-pressure zones operating costs by 23 per cent by June 2002. • asset management – use of appropriate pipe So far, the program has cost around materials, operating procedures and renewal $2.8 million and the value of the water and systems to reduce breaks energy saving is conservatively estimated at around $4.3 million. • speed – commitment to quality repairs of visible leaks as soon as practicable. By 2011, Sydney Water aims to reduce per capita daily use of water drawn from all Water loss from leakage in Sydney Water’s sources by 35 per cent from a 1991 baseline. systems is approximately 176 Ml/d. Since 1991, overall per capita consumption has The Leakage Reduction Program aims to been trimmed by around 18 per cent – and the reduce this by 28.8 Ml/d by the end of Leakage Reduction Program has also 2004–05. Progress towards achieving this contributed significantly to this result. target is ahead of schedule and could be achieved as early as June 2003. Sydney Water Sydney Water employs four strategies to is committed to continually improve its reduce leaks: Leakage Reduction Program to further • active control – identified high leakage zones optimise the performance of the system in are surveyed using acoustic techniques to order to conserve this precious resource. LEAKAGE REDUCTION LEAKAGE

22 ACOUSTIC TECHNIQUES ARE USED TO IDENTIFY LEAKS IN THE WATER SUPPLY SYSTEM (FAR LEFT).

SYDNEY WATER CONTRACTORS WORKING UNDER AN ALLIANCE CONTRACT ON A SEWERFIX PUMPING STATION UPGRADE (THIS PAGE). As part of an ongoing commitment to improve and achieve productivity improvements. the procurement of goods and services, Sydney These include further contract aggregation Water has implemented a variety of reforms. or bundling, rationalisation of supply In December 2001, for example, the Board of arrangements, improvements in procurement Directors approved a strategy to improve the practices and greater use of online delivery of the capital works program. This procurement. Electronic Funds Transfer (EFT) strategy adopted revised review and approval will be progressively implemented to enable procedures for major capital contracts with a timely processing of supplier payments. As focus on relationship contracting; an well, a purchase card system will be introduced innovative way of sharing the financial risk to improve the management of high-volume, involved in large capital works projects. low-value purchases. Sydney Water expects these changes to deliver cost savings of The SewerFix Pumping Stations Program and around $13 million while ensuring probity PROCUREMENT REFORM the remaining Stage One schemes in the is maintained. Priority Sewerage Program are now being delivered via performance-based relationship These reform initiatives will benefit Sydney contracts. In future years, other relationship Water by reducing procurement risk, contracts will be built around capital works streamlining tender assessment times and programs and the bundling of major projects. processes and by promoting auditable and transparent decision making. The initiatives New guidelines have also been developed to also support the work of the New South Wales improve the criteria for evaluating tenders and Government Procurement Council, which is weighting. These guidelines promote leading the implementation of the consistency in procurement and enable the Government’s ‘Smarter Buying for publication of criteria and weighting at the Government’ strategy. time of tender. A detailed analysis of Sydney Water’s procurement expenditure has identified further opportunities to streamline processes

23 SYDNEY WATER ANNUAL REPORT 2002 24 OPERATING LICENCE PERFORMANCE STANDARDS 100%. Licence requirement: R R Pe CUSTOMER SERVICE properties. than 25,000 – less Licence requirement affected. properties 18,486 Pe SEWAGE OVERFLOWS properties. than 15,000 – less Licence requirement affected. 3, Pe WA than 32,000.– less Licence requirement 19,342. interruptions: Planned than 35,000.– less Licence requirement 15,770. interruptions: Unplanned Pe WAT c for Aesthetic, 99.79%. Health: Pe WAT SYDNEY WAT SYDNEY ag fsse n niomna tnad ntedlvr fsrie.Sde ae’ is Licencecommenced in1995andwas Sydney Water’sa range ofsystemandenvironmentalthe delivery standards in ofservices. first The Governor ofNSW grantsthe Operating to Sydney Licence TheLicencerequires SydneyWater forterms offiveWater years. to c OPERATING STANDARDS PERFORMANCE LICENCE AT 2002 30JUNE n rvosclna er.Ifrainfrpeiu aedrya efrac saalbeo eus from Sydney InformationWater. for previous calendaryear performance isavailable onrequest and previous calendaryears. r The performance was basedonacalendaryear basis. Previously, 10 requires onafinancialyearto bereported performance basis. ThenewOperating Licen wastewater tocontinue andstormwaterthe endof2004. until providing services water, allowingit in 2000, eporting performance means Sydney Water is unable to provide a direct comparison between performance from the 2000–01 financial comparison betweenperformancethe 2000–01 from performance meansSydneyeporting Waterto provide isunable adirect mlac:99.91%. ompliance: qie oie 99.10% equired notice: 99.99% esponse: 9 rf rf rf rf rf 73 properties T ormance summary ormance summary ormance summary ormance summary ormance summary ER PRESSURE ER CONTINUITY ER QUALITY ER ANNUAL REPORTER ANNUAL 2002 c an effective customer andmaintain service ex Sy properties. customers’ w To standards. agreed pressure of drinkingwaterto To standards. wa supply ofdrinking To Operating Licence. r in compliancethe with the public members of customers andother drinking waterto its by supplyingsafe To OBJECTIVE equirementsthe of mlitsystem. omplaint astewater from dney Waterwill

cel incustomer effectively transport provide asupply provide acontinuous rtc publichealth protect ter to agreed ex ov weather uncontrolled sewage r number ofprivate properties the year, inany report that Sy designated low-pressure areas. to include is properties The numberofreportable year. inareport properties exceed 15,000 should not 15metres head least tap ofat wa receiving continuous not are reported as system that c The numberofproperties osntexceed 32,000. does not supply exceeding five hours w affected byaplannedand are reported as system that c number ofproperties the year, inany report that Sy ex ex off ofwater supply shut affected byanunplanned are reported as system that c number ofproperties the year, inany report that Sy wa to planned interruptions industrial customersof to commercialnotice and customers andseven days notice to residential To daysto writtencomplaints. f telephone orface-to-made by working days for complaints PERFORMANCE REQUIREMENT LICENCE r Customer complaintsto f the NSWspecified by Minister aesthetic guidelinevalues guideline valuesthe and Guidelines relatingto health A and ARMCANZ 1996 To c,andwithinfive working ace, or Health. eported asaffectedeported bydry eceive aresponsetwo within onnected to onnected Sydney Water’s onnected to itswater onnected supply to itswater onnected supply ustralian Drinking Water re htoff ofwater arned shut nyWtrms ensure dney Watermust nyWtrms ensure dney Watermust ensure dney Watermust

ceed 25,000. ceed 35,000. ceeding five hoursdoesnot erflow incidents doesnot erflow rvd tlattwodays least provide at c e rsuea themain ter pressure at ter orsewage services. omply with the NHMRC omply with just short of the 48hours required. of short just thenotice given fell operational constraints, Dueto notified within thetime required. not timeframespecified –1,011 were properties didreceivethe anoticewithin interruption, wereto receive entitled anoticeof 110,681that (99.10percent) ofproperties the 12months ending30June2002, In detailed investigation. naturethe complaints of required more The complex within thetime required. respondedto Three complaints were not r 50,053 (99.994percent) complaints were the 12months ending30June2002, In r performance andprovided anautomatic Sy uncontrolled sewage overflow. r private 18,486 were properties 30 June2002, r Sy h tnadwsntachieved. the standard was not performance andprovided arebate where c Sy the allowable standard of15,000. 15 metresthis was head– wellbelow instance/s ofwater pressurethan less experienced properties an 3,973 2002, the 12months ending30June asin target, Sy hour orplannedgreaterthan five hours. unplanned disruptionsgreaterthan one r Sy f Sy found Operating Licence audit The 2000–01 off. shut were19,342 properties affected byaplanned off and affected byanunplannedshut targets asonly15,770 were properties Sy two years. microbiological performance overthe past in improvement to asignificant led operation has and water filtration plant Improvements indisinfection management the aestheticqualitycompliance. determine v guideline therelevant met 99.79 percent these, Of characteristics during2001–02. were conducted for health-related around 36,175separate analyses Overall, Health requires compliance. aesthetic characteristics for whichNSW quality characteristics monitored andforthe delivery systemsfor allhealth-related water guideline valuesthe 14water ineachof Sy or the wateror continuity standard. esponded to within the required time. achieved. ebate wherethe standard was not asaffectedeported weather bydry the 12months ending asin equirement, ebate to allcustomersexperiencingebate mlit,continuedto monitorsystem omplaints, le Asimilarcalculation wasto used alue. dney Water continuedto monitorits itsOperating Licence dney Water met dney Water respondedto allcustomer itsOperating Licence dney Water met dney Water provides anautomatic dney Water isachieving fullcompliance itsOperating Licence dney Water met dney Waterthe health complied with change in omply with

r ce Part enewed y ear TRENDS STRATEGIES FOR THE FUTURE

Overall the results show a continuing The Operational Audit Report for 2000–01 found that the water quality supplied by excellent drinking water quality performance Sydney Water is generally of an excellent standard and complies with the health-related for the year, with continuing improvement in requirements of the 1996 Australian Drinking Water Guidelines and the aesthetic trends on microbiological safety, disinfection requirements of NSW Health. by-products and cleanliness of the water The audit report made a number of recommendations for improving administrative aspects and a reduction in drinking water quality of water quality management. These were associated with the recording and follow-up of customer complaints. events and incidents, management follow-up on laboratory quality assurance reports, and the possibility of adding more flexibility to the monitoring program. The auditors also suggested minor improvements in the way water quality sampling, analyses and reporting are carried out. Sydney Water is continuing to implement the actions in the five-year Drinking Water Quality Improvement Plan. Optimisation of water filtration plant performance is also under way. The main focus for the distribution system is on disinfection management.

Sydney Water has continued to achieve full The compliance requirement for water continuity now contains two specific components, compliance with the Operating Licence planned or warned and unplanned or reactive interruptions to service. The performance requirement for water continuity over the standard for each is markedly more stringent than it has been in the past – amended from seven years of the annual independent audit. the previous 95 per cent or approximately 81,650 properties – to not more than 35,000 (unplanned), and 32,000 (planned) respectively.

Sydney Water has continued to achieve full In August 2001, the Board of Directors approved an $8 million, five-year, water pressure compliance with the Operating Licence improvement program for 3,070 customers, in specific urban and rural pressure problem requirement for water pressure over the areas. The program will deliver improved water pressure to properties that currently seven years of the annual independent audit. experience recurrent or continuous pressures below the Operating Licence minimum performance standard. Other capital works projects are also identified on a needs basis.

Sydney Water has achieved full compliance Sydney Water will continue to progressively implement the 20-year $2 billion SewerFix with the Operating Licence requirement for program. The first five years of the program (until 2005) is focused on dry weather overflows sewage surcharges over the seven years of from leakage, chokes and pumping stations across all catchments, and wet weather overflows the annual independent audit. in the Blue Mountains and Sydney Harbour. Works being undertaken to reduce dry weather overflows are targeted at achieving the Environment Protection Licence target of less than 60 overflows per 100 kilometres of mains.

Sydney Water has achieved its commitment Following requests from the Minister, Sydney Water is collecting data on a range of extra to improving customer service since the customer service indicators. The results of these indicators will be reported in 2003. commencement of the Operating Licence.

25 SYDNEY WATER ANNUAL REPORT 2002 FOR THE YEAR ENDED 30 JUNE 2002

2002 2001

WATER Estimated population supplied at 30 June 4,145,429+ 4,029,796 • By gravitation 530,469 517,527 • By pumped or boosted water 3,614,960 3,512,269 Properties with a water main available at 30 June 1,610,098* 1,581,855 Number of reservoirs in service 259 263 Max day capacity of system (megalitres per day) 4,120 4,580 Water filtration plant capacity (megalitres per day) 4,014 3,988 Quantity of water (potable and non-potable) consumed (megalitres) 624,261 624,880 Per capita consumption per day (litres) (based on average population for period) 412++ 427 Average day’s (potable) consumption (megalitres) 1,673## 1,674

PRINCIPAL STATISTICS PRINCIPAL Maximum day’s consumption (megalitres) 2, 455ML/d 2,582 ML/d on 2 January 2002 on 24 January 2001 Minimum day’s consumption (megalitres) 1,371 ML/d 1,294 ML/d on 27 August 2001 on 7 May 2001 Number of pumping stations in service at 30 June 146 143 Water mains laid during year (kilometres) • Potable 131 96 • Recycled 25 29 • Total 156 125 Water mains disused during year (kilometres) 57 7 Water mains renewed during year (kilometres) 40.4 63.2 Length of water mains in operation at 30 June (kilometres) • Potable 20,348 20,272 • Recycled 239 200 • Total 20,587 20,472 Number of meters in operation at 30 June 1,216,290 1,195,320

SEWER Estimated population with facilities at 30 June 4,024,441+ 3,904,423 Properties for which a sewer was available at 30 June 1,561,833* 1,534,093 Sewers laid during year (kilometres) 141 168 Sewers disused during year (kilometres) 11 4 Sewers renewed during year (kilometres) 135 175 Total length of sewers under Sydney Water control at 30 June (kilometres) 22,626 22,438 Number of pumping stations in service at 30 June • Reticulation 659 651 • Effluent 45 • Total 663# 656

DRAINAGE Stormwater channels under Sydney Water control at 30 June (kilometres) 486 489 Properties with drainage available at 30 June 442,375 441,000 Annotations

All population figures are sourced from Planning NSW.

* Number calculated using a methodology developed by Water Services Association of Australia, which records the number of individual property connections to a Sydney Water water main. ++ Per capita consumption is based on average population for the financial year ie, average of population as at 30 June 2001 and 30 June 2002, which equals 4,078,965. This estimate was calculated using population projections supplied by Planning NSW. + These figures relate to population and properties serviced by Sydney Water only. # Includes pumping stations within treatment plants. ## This does not include water supplied to BHP. Sydney Water reused 29.9 ML/d of effluent for various agricultural, residential and commercial uses.

26 SYDNEY WATER ANNUAL REPORT 2002 AT 30 JUNE 2002 CURRENT FORECAST EXPENDITURE TO ESTIMATE AS AT COMPLETION 30 JUNE 2002 30 JUNE 2002 DATE AS AT $MILLIONS $MILLIONS 30 JUNE 2002

Blue Mountains Sewerage – Stage 2 3.8 71.2 Dec 2007 Bondi STP – Reliability Improvement and Modernisation Program 2.9 95.0 Dec 2006 Coalcliff, Stanwell Park, Stanwell Tops and Otford Sewerage 2.2 18.0 Dec 2003 Critical Water Main Program 1.3 36.3 Jun 2005 Customer Information and Billing System (CIBS) 52.2 68.3 Sep 2002* Gerringong–Gerroa Sewerage Scheme 50.5 55.0 Sep 2002 IICATS Wastewater 33.4 54.0 Dec 2004 Illawarra Wastewater Strategy 32.0 197.0 Jan 2005 North Head STP Upgrade 3.7 225.0 Dec 2007 Penrith STP Amplification Stage 8 1.2 30.0 Dec 2003 Rouse Hill STP Amplification Stage 1 Phase 2 14.5 16.0 Dec 2002 SCADA – Treatment Plants 38.7 93.5 Dec 2005 Overflow Abatement Program 135.5 1,025.0 ongoing St Mary’s Lime Stabilised Grade A Biosolids Facility 17.3 21.0 Dec 2002 SWSOOS Trunk Sewer Risk Reduction Program (Stage 1) 32.1 53.1 Jun 2004 The Oaks–Oakdale Sewerage Scheme 9.4 39.1 Jun 2003 MAJOR WORKS IN PROGRESS WORKS MAJOR Upper Georges River Wastewater Strategy 4.6 277.0 Jun 2008 Water Meter Replacement Program 33.6 90.0 ongoing West Camden STP Amplification and Upgrade 0.6 40.0 Jun 2004

* Since 30 June 2002, the forecast completion date has been revised to the second half of 2002–03.

27 SYDNEY WATER ANNUAL REPORT 2002 28 RESEARCH AND DEVELOPMENT ev removal ofmanganesefrom drinkingwater and by-products, control ofdisinfection filtration plants andreuse plants, water included optimisation ofdisinfection processes at Theseprojects to improvingthe efficiency ofexisting assets. contribution madeasignificant optimisationthat projects Internal alsoincludedanumberofprocess R&Dactivities r co andnewsewer solutions, wastewatertreatment effective, willexamine alternative cost that Galston HighSchool systemat on-sitewastewatertreatment These includeapilot anumberofinnovative R&Dprojects were initiated. This year, wastewater andstormwater services. and methodsinwater, practice systems best and develop innovativetechnologies, Sydney Water investedto research $3.8million In 2001–02, • • • • Sy balanced portfolio alignedwithbusinessneeds. R&Dexpenditureto delivertargeted a is and ensurethat the initiativeto improveThe aimof is outcomes from projects process. implementation ofanimproved R&Dmanagement r of Sydney WaterThis year, centralisedthe management SYDNEY WAT SYDNEY dc h otofsewermaintenance andrehabilitation. the cost educe (R&D) andcommenced esearch anddevelopment distribution systems. maintenance costs ofunderground water andwastewater r processes treatment efficiency ofexisting water filtration andwastewater the environment ofourbusinesson and reducethe impact wa reduce delivering innovativethat products andservices know-how andcapability generating newknowledge, fundamental research aimedat nrsrcue–poet ie tincreasingthe capability, infrastructure –projects aimedat the optimising –projects aimedat technology process –projects aimedatsustainable products andservices discovery –longer-term strategic research projects and dney Water’s R&Dportfolio consists offour focus areas: aluation ofonlineinstrumentation for wastewater plants. a dcn iko alr n euigivsmn and educing riskoffailure andreducing investment igtcnlg hthasthe potential to significantly that ting technology e sg,provide alternative ways ofdelivering services ter usage, ER ANNUAL REPORTER ANNUAL 2002 organic wastes. to produce renewabletechnologies and from energy ofprocessing organic wastes to reducethe cost technologies Thisresearch includes use ofrenewable resources. the andpromote environment the to protect technologies Research Foundationto explore (USA) innovative Environment andPollution Controlthe and Water Management Sy r example ofcollaborativein Sydney Water andare anexcellent areto optimiseexisting nowbeinguseddistributionsystems Themodels the deliveredand modifications on water quality. upgrades plant ofwatertreatment theimpact to predict and improve bothdesignandoperation ofdistributionsystems to tools computer-based of management development R the yearDuring Sydney Water workedthe Cooperative with R&D projects. Wa projects provides strong value for money andallows Sydney Collaboration for some andecologicalservices protection. wastewater trendsemerging inproviding drinkingwater, practice and international best knowledgeabout capabilities, r Sy sac htdelivers practicalto Sydney outcomes Water.that esearch esearch organisationsto worldclassR&D andgainsaccess esearch Centre (CRC) for the on Water Qualityand Treatment dney Water for alsoworkedthe CRC closelywith Waste dney Water contributesto national andinternational ter to add value to the development of itsowninternal of the development to addvalueto ter CONTINUING MAJOR RESEARCH AND DEVELOPMENT ACTIVITIES

ACTUAL EXPENDITURE ESTIMATED DESCRIPTION 2001–02 COST TO DATE FINAL COST

Modelling dissolved organic carbon removal 76,528 76,528 105,500 Physical and chemical effects on distribution system bio-films and incorporated pathogens 230,399 554,281 593,173 Optimisation of chlorine residual in a distribution system 46,219 316,400 330,000 Consolidation of management tools for distribution systems 104,029 104,000 377,000 Surface chemistry of Cryptosporidium and testing of Cryptoblast™ 117,983 117,983 264,020 Molecular markers for Cryptosporidium 28,778 137,000 167,000 Discriminating sources of faecal pollution through proteomic analysis 59,053 60,000 69,240 Real time polymerase chain reaction for Legionella, viruses and protozoa 30,000 30,000 317,000 Development of application system for an innovative sewer repair technology 187,500 187,500 250,000 Online instrumentation for process control for sewage treatment plants 11,965 11,965 90,000 Rouse Hill sewage treatment plant pathogen monitoring – phase 2 11,464 11,464 240,000 Evaluation of online instruments for process control on chloramination in distribution networks 17,182 18,000 60,000 Guidelines for optimising and control of Granulated Activated Carbon at North Richmond water filtration plant 25,730 25,730 30,000 Manganese and enhanced organic carbon removal pilot plant study at Illawarra water filtration plant 139,500 252,000 276,000 Optimise the management of manganese removal to avoid dirty water 30,035 30,035 40,000 Review and evaluation of options for organic carbon removal 11,935 11,935 50,000 Characterisation and minimisation of disinfection by-products in the Prospect water filtration plant 2,000 99,000 150,000 Effect of biological activity on filters 13,800 157,800 210,000 Demonstration of an innovative community-based water cycle management system 56,226 56,226 498,000 Kogarah town centre smart metering 5,850 5,850 75,000 Indicators of recycled water contamination in Rouse Hill’s potable water system 26,647 26,647 43,500 Modelling of sulphide generation and control 60,694 60,694 180,000 Physical model – Remote Operated Vehicle inspection methodology for deepwater ocean outfalls 109,248 109,248 169,248 Treat and discharge project for overflow alleviation (TADPOAL) 93,000 93,000 2,000,000 American Water Works Association Research Foundation 144,368 ongoing ongoing Water Services Association of Australia 158,979 ongoing ongoing CRC for waste management and pollution control 400,000 ongoing ongoing CRC for water quality and treatment 757,740 ongoing ongoing Water Environment Research Foundation 93,600 ongoing ongoing

COMPLETED MAJOR RESEARCH AND DEVELOPMENT ACTIVITIES IN 2001–02

ACTUAL EXPENDITURE TO EXPENDITURE DESCRIPTION 30 JUNE 2001 2001–02 FINAL COST

Microbiological indicators – implication of World Health Organisation approach 50,400 38,600 89,000 Freshwater Beach integrated water management no expenditure 100,000 100,000 Evaluation of benefits of enhanced energy efficiency motors within Sydney Water operations no expenditure 28,443 28,443 Scoping study into potential for small scale hydro-electric generation within water distribution systems no expenditure 26,000 26,000 Investigation of commercial air diffusers 11,500 11,088 22,588 Storm flow treatment to enhance disinfection – stage 1 38,729 52,297 91,026

29 SYDNEY WATER ANNUAL REPORT 2002 30 DIRECTORS’ REPORT To • • • theBoard includesDirectors withseparate in: expertise that appointments tothe Board are to be made tothe intent that Wa the Sydney 5Aof Section its voting Shareholder Ministers. The ChairmanandDirectors ofSydney Water are appointed by Board ofDirectors. of Sydney Water arethe authorityofits madebyorunder C the State Owned 20Lof UnderSection environment. thecommunity and businesses, on individuals, Sy decisionsmadewithin the very natureBy ofitsactivities, CO SYDNEY WAT SYDNEY • • • • • • which include: meets regularly andperforms anumberofspecificfunctions theBoard ofDirectors In exercising itsmanagerialpowers, RESPONSIBILITIES DUTIES AND DIRECTORS’ the Board on21September2001. to appointed andMrRalph Kelly was Board on7September2001; andMsAlisonPeters werethe to appointed Mr JimGrant a maximumofnineappointed Directors. v at theBoard operated, the yearDuring ending30June2002, to 10 members. ofup The Board ofSydney Water may consist BOARD MEMBERSHIP appointment. uponexpirationterm of ofhis/her immediate reappointment re there isaregular Thisensuresthat Directors are staggered. of Expiration datesterms ofappointment forthe Director. for each Ministers haveterms ofappointment regardthe to voting the Shareholder When makingappointments, Appointment. of fixedterm prescribed inanInstrument C The Directors. of changed procedure for retirement amendments relatesto a the significant Oneof 2001. The Constitution ofSydney Water was amendedinNovember to bepubliclyadvertised. the Board membership of alsorequires nominations for the Act 5Aof Section widely, rostms withaminimumofsixappointed Directors and times, arious roain c 99 alldecisionsrelatingthe operationto 1989, orporations Act onstitution nowprovides forto beappointed Directors for a to whichSydney Water isexposed. the principalrisks of effective monitoringandmanagement and performance, management Ministers the votingto Shareholderperformance andreporting re making where appropriate, financialmatters and, significant and overall strategic directions public health. the environmentprotection of business management nuigta systemsare inplacewhichfacilitatethe that ensuring approving delegations ofauthorityandreviewing regularly monitoringfinancial adopting budgets, majorcapitalexpenditure and approving majordecisions, approvingthe annualCorporate Plan plans management goals, setting andadoptingobjectives, iwo or opsto.Directors are eligiblefor view ofBoard composition. nyWtrhv h aaiyt aeasgiiatimpact dney Water haveto havethe capacity asignificant

nueta Board composition andcandidacyissourced ensurethat ter Act 1994 (the Act) imposesastatutory requirement 1994(theAct) ter Act c RP ommendations to the votingto ommendations Shareholder Ministers ORATE GOVERNANCE ER ANNUAL REPORTER ANNUAL 2002 • • • Sy 1989requires Directors of the State OwnedCorporations Act C The dutiesofDirectors ofSydney Water are derivedthe under • • At • • • criminal offences. available for finesandpenaltiesfor Insurance cover isnot improper useofinformationto gainanadvantage. orposition e thecover doesnot However, the DeedofIndemnity. augments ThePolicy underpinsand Directors andOfficers asindividuals. The cover providedthe Policy by isforthe protection of liability(thePolicy). andOfficers’ Directors’ Sy involving lackofgoodfaith. ofconduct liability arisesout extendtocircumstances where the The indemnitywillnot 3 2 1 proceedings providedthat: and expenses incurred indefending criminalorcivil to beindemnifiedforDirectorsthem entitles liabilityfor costs TheDeedofIndemnitygrantedthe to Directors. to allcurrent Ministers have approvedthe granting ofaDeedIndemnity v indemnified bySydney Waterthe approval onlywith the of Directors may be the Constitution, and Act the SOC Under IN the affairs to ofSydney Water.the relationthe interest of and the interest of givethe nature detailsof andextent must relatesthe affairsto ofSydney Suchnotice Water. that matter ina givethey have noticeif amaterial personalinterest theDirectors are requiredto In avoiding conflicts ofinterest, tn hrhle iitr.Thevoting Shareholder oting Shareholder Ministers. tn odlbrt cso ru rdsoet,including to deliberatextend offraud acts ordishonesty, mo a n ne ttt.I atclr Schedule10of Inparticular, ommon Lawandunderstatute. htmay already exist that nomto,and information, as awhole odn uhadrcosi,and holding suchadirectorship, be expected fromtheirskillandexperience someoneof o tomaketheir Director’s improper useof positionor not c ngo at n ntebs interests ofSydney Water ingoodfaiththe best andin act exe av oaodcnlcso neetanddiscloseconflicts ofinterest to avoid conflicts ofinterest to exercise reasonable care anddiligence the exercise honestlyin their powersasaDirector of to act opeetislettrading. insolvent to prevent ihrw eoejdeet orrelief granted. isotherwise withdrawn before judgement; theDirector are the proceedings against or is acquitted; the Director or isgiven infavourthe Director; of judgement Sy of Sydney Water h rceig r o ruh gis theDirector by against brought the proceedings are not the liabilitiesrelatethe Director’sto positionasaDirector dney Water: nyWtrmitisaplc fisrnei epc of dney Water maintains apolicyofinsurance inrespect DEMNITIES AND INSURANCE AND DEMNITIES C oid conflicts ofinterest. dney Water orany ofitssubsidiaries mo a,theDirectors are requiredto: ommon Law, rc s uhadge fsiladcr smgtreasonably ise suchadegree ofskillandcare asmight BOARD COMMITTEES The Public Health, Research and Development Committee reviews, analyses and reports to the Board on public health The Board made use of the following Committees throughout matters related to incident management, drinking water the year. These Committees met on a regular basis: quality, wastewater, effluent reuse and waste product • Audit and Risk Management management. The Committee also monitors and reports on • Environment the research and development policy, strategy and program. • Public Health, Research and Development The Remuneration Committee provides advice on the • Remuneration appropriateness of remuneration of senior officers of Sydney • Strategic Property Planning. Water while considering the achievements of corporate The Audit and Risk Management Committee assists the Board targets and relevant market-based salary comparisons. of Directors in progressing their corporate governance The Strategic Property Planning Committee oversees the responsibilities by ensuring effective systems and controls are development of Sydney Water’s Strategic Property Disposal in place for the management of major risks. The Committee Plan and Accommodation Strategy. also monitors the management of ethics, compliance with The Board also established a Key Performance Indicators relevant statutes and law generally, special projects or Committee which meets as required and is responsible for investigations and financial matters. the development of key performance indicators for the The Environment Committee reviews, analyses and reports on Managing Director and evaluates progress against key relevant environmental issues associated with the result areas. development and implementation of due diligence in Sydney Water including ecologically sustainable development principles, regulatory requirements, demand management, reuse, energy efficiency, greenhouse gas emissions, cultural and natural assets and operational impacts on the environment.

ATTENDANCE AT BOARD AND COMMITTEE MEETINGS 2001–02 The number of Directors’ meetings, including Committee meetings, held in the period each Director held office during the year ended 30 June 2002 and the number of meetings attended (in brackets) are set out in the following table.

PUBLIC HEALTH, AUDIT AND RISK RESEARCH AND STRATEGIC PROPERTY BOARD OF DIRECTORS MANAGEMENT ENVIRONMENT REMUNERATION DEVELOPMENT PLANNING MEETINGS COMMITTEE MEETINGS COMMITTEE MEETINGS COMMITTEE MEETINGS COMMITTEE MEETINGS COMMITTEE MEETINGS DIRECTOR NO. HELD (ATTENDED) NO. HELD (ATTENDED) NO. HELD (ATTENDED) NO. HELD (ATTENDED) NO. HELD (ATTENDED) NO. HELD (ATTENDED)

G. Kibble 12 (12) 5 (4) – 2 (2)C 4 (4) 9 (9) A. Walker 12 (12) 5 (5)# 6 (6) 2 (2) 4 (4) 9 (9) P. Baume 12 (12) –––4 (4)C – J. Grant * 9 (9) 3 (3) 5 (4) – – – R. Kelly ** 8 (8) –––3 (2)7 (7) G. McCully 12 (12) – 6 (5) 2 (2) – 9 (9)C J. Messer 12 (12) – 6 (6)C –4 (4) – A. Peters * 9 (9) – 5 (4) – – 8 (7) J. Priest 12 (11) 5 (5)C –––9 (7)

* Commenced as Directors on 7 September 2001 ** Commenced as Director on 21 September 2001 #Attended in ex-officio capacity C Chairman of the Committee

31 SYDNEY WATER ANNUAL REPORT 2002 BOARD MEMBERS BOARD

MRS GABRIELLE KIBBLE AO MR ALEX WALKER THE HON EMERITUS MR JIM GRANT CHAIRMAN MANAGING DIRECTOR PROFESSOR PETER BAUME FCA, FAICD BA,DTCP, FRAPI, BE, BA, FIE AUST AO, MB BS, MD (SYD), D SC HC UNSW HON D LITT (USQ), FRACP, FRACGP, FAFPHM

A non-executive Director Managing Director of Sydney A non-executive Director A non-executive Director of Sydney Water since Water since November 1998. of Sydney Water since of Sydney Water since November 1997 and A member of the September 1998. Chairman September 2001. A member Chairman since September Environment Committee; of the Public Health, of the Environment and the 1998. Chairman of the Public Health, Research and Research and Development Audit and Risk Management Remuneration Committee. Development Committee; Committee. A Director of Committees. A Director of A member of the Public Strategic Property Planning the subsidiary company the subsidiary company Health, Research and Committee; and Australian Water Australian Water Development Committee; Remuneration Committee. Technologies Pty Ltd since Technologies Pty Ltd. Audit and Risk Management An ex-officio member of the April 2001. Mr Grant acts as a Committee; and Strategic Audit and Risk Management Chairman of BCB Services consultant to a number of Property Planning Committee. A Director of the Pty Ltd; Chairman of the companies. Mr Grant is the Committee. Director of subsidiary company NSW Health Sentinel Events Chairman of Midware the subsidiary company Australian Water Review Committee; Limited; a Director of Arab Australian Water Technologies Pty Ltd. Chancellor of the Australian Bank Australia Limited; and Technologies Pty Ltd and A Director of Water Services National University; the Royal Institute for Deaf Chairman of this subsidiary Association of Australia. Emeritus Professor of and Blind Children. Mr Grant from April 2001. Until 1998, Mr Walker was Community Medicine at is a Fellow of the Institute of Director of Sydney Airports the Chief Executive Officer the University of NSW. Chartered Accountants in Corporation; Australian of Integral Energy. Professor Baume is a Australia and a Fellow of the Commercial Disputes Centre Governor of the Foundation Australian Institute of Ltd; Bankstown, Camden and for Development Company Directors. Hoxton Park Airports Cooperation; and member Corporation; Sydney Olympic of the Editorial Board of Park Authority; War Widows Australian Health Review. Guild of NSW; GP Health An Honorary Research Limited; and Questacon. Associate, Social Policy Deputy Chancellor and Research Centre, University Trustee of the University of New South Wales. of Western Sydney. A Fellow Professor Baume was a of the Royal Australian Commissioner of the Planning Institute. Australian Law Reform Commission. Former Head of School of Community Medicine at University of New South Wales; Federal Minister for Aboriginal Affairs; Federal Minister for Education; Federal Minister Assisting for National Development and Energy; Federal Minister for Health and Senator for New South Wales.

32 SYDNEY WATER ANNUAL REPORT 2002 MR RALPH KELLY MR GARRY McCULLY DR JUDY MESSER MS ALISON PETERS MR JOHN PRIEST B.COM, MBA, FSIA, FAICD MRAPI, MIMM, MICMA BA (HONS) PHD LLB, B.COM B.BUS, FCPA, FAICD

A non-executive Director A non-executive Director of A non-executive Director A non-executive Director A non-executive Director of Sydney Water since Sydney Water since March of Sydney Water since of Sydney Water since of Sydney Water since September 2001. Mr Kelly is 1999. Chairman of the December 1994. Formerly September 2001. A member September 1998. Chairman a member of the Public Strategic Property Planning a Director of the Water of the Environment of the Audit and Risk Health, Research and Committee; member of the Board from October 1988 to Committee and Strategic Management Committee Development and Strategic Environment Committee December 1994. Chairman Property Planning and member of the Property Planning and Remuneration of the Environment Committee. A Director of Strategic Property Planning Committees. A Director Committee. Mr McCully Committee and member the subsidiary company Committee. A Director of of the subsidiary company, is also a Special Environment of the Public Health, Australian Water the subsidiary company Australian Water Levy Trust member. Research and Development Technologies Pty Ltd. Australian Water Technologies Pty Ltd. A Director of the subsidiary Committee. A Director of Technologies Pty Ltd since Ms Peters is the Deputy company Australian Water the subsidiary company April 2001. Experienced in corporate Assistant Secretary Technologies Pty Ltd since Australian Water finance advice, Mr Kelly is (Community Affairs) for Mr Priest is currently April 2001. Technologies Pty Ltd since a Director in the Corporate the Labor Council and the Chairman of Macquarie April 2001. Advisory and Equities Mr McCully has been the National Chairperson of the Corporate division of Westpac General Manager of Honorary Chairperson of the Australian Services Union. Telecommunications Ltd and Institutional Bank. He is Hawkesbury City Council Nature Conservation Council Ms Peters is also a member Council Member also a Director of Ausflag since 1985. A member of of NSW from 1984 to 1994, the NSW Co-operatives of the Australian Graduate Limited; Visy Industrial the University of Western and 1997 to 2000. Currently, Council and the NSW Privacy School of Management. Packaging Holdings Pty Ltd; Sydney Council; the Royal Dr Messer is the Honorary Advisory Committee and a Mr Priest is also a Fellow of and Sydney Gateway Group Australian Planning Vice Chairperson of the Director of United Way. the Australian Institute of Pty Ltd. Mr Kelly is a Fellow Institute; the Local Nature Conservation Company Directors. Formerly of the Securities Institute of Government Managers Council; honorary Director of Coca-Cola Amatil Limited, Australia and a Fellow of the Australia; and the of Land for Learning Pty held the positions of Australian Institute of International City Managers’ Limited; member of the Executive Director, Chief Company Directors. Association. Mr McCully is a IUCN Commission on Financial Officer and life member of Curtin Environmental, Economic Director of Corporate University Alumni. and Social Policy; and Development. Mr Priest member of the NSW State was also a non-executive Wetlands Advisory Director of Prudential Committee. A former Insurance Corporation and member of the following Woolmark Company. Committees: Murray Lower Darling Community Reference Committee; Menindee Lakes Advisory Committee; Barwon Darling River Management Committee; the Australian Museum Trust; and the Rural Fire Services Advisory Council. A member of the Australian Institute of Company Directors.

33 SYDNEY WATER ANNUAL REPORT 2002 34 MANAGEMENT BIOGRAPHIES Engineering (Civil). HehasaBachelorof Solutionsdivision. the Asset lead changed General Managerroles whenhemovedto across r He wasGreater then promoted tothe Western Regions. Wa and asaministerialpolicyadviserbefore becomingtheBulk heworked incorporate planning engineering background, R R Engineering (Mechanical). HehasaBachelorof division. Management the Asset hemovedto lead across InJuly2000, in1999. Distribution, andbecameGeneral Manager, Distribution business, to Wastewaterthe newlyformed DistributionManagerin W rolesthe within movedto operation on andmanagement then He theMalabarSTP. branch andat plant workshops, maintenance water planning, workingindesign, he started Inacareer spanning25years withSydney engineer. Water, P P (MarineEcology). andaPHD (Microbiology) aMastersofScience She hasaBachelorofScience(Biology) Institute forthe University MarineScienceand ofSydney. theAustralian CSIRO, Shehasheldpositionsat marine waters. coral reef andAntarctic ecological processes inurbancoastal, Wa to workingfor Prior Sydney andInnovation. Environment shewas appointed General Manager, InJuly2001, Change. Strategy and andGeneral Manager, Planning, and Asset Product Group Manager, CleanWaterwaysProgram, Manager, Herpositionshave includedEnvironmental strategic planning. and subsequently moving into environmental management Judi joinedSydney Water in1990asamarinescientist, andInnovation Environment General Manager, Judi Hansen, Society ofCertified Practising Accountants. Administration Degree andisaFellowthe Australian of He hasaDiplomainCommerce andaMasterofBusiness the Commonwealthnumber ofpositionswithin Public Sector. andhelda BoardMaritime Services ofNewSouth Wales, similar roles with The University ofNewSouth Walesthe and y Wa to joiningSydneyJohn joinedSydney Prior Water in2000. Finance General Manager, John Kitney, (Public Management). Sector Bachelor ofSocial Work andaMastersinManagement C role asGeneral Manager, she wasto hercurrent appointed InMay 1999, the water into inquiry crisis. Government the Corporation’sand alsomanaged the responseto Regulation andCompliance, Group Environment, Manager, shewas appointed General In1998, and executive support. regulatory compliance standards ofservice, the areas ofpolicy, E Sydney Water wasthe as role at Herfirst and policyofficer. community worker asacaseworker, and inlocalgovernment Wa to joiningSydneyAngela joinedSydney Prior Water in1990. and Corporate Secretary CorporateAffairs Manager, General Angela Tsoukatos, SYDNEY WAT SYDNEY l fGnrlMngro rnWtr nArl20,Ron ole ofGeneral Managerof TransWater. InApril2000, aswt ainlRi oprto t.Pirt htheheld that to Prior ears withNational Rail Corporation Ltd. aul joinedSydney Watertrainee in1978asa mechanical hi far die.Shehasheldmany challengingroles in thnic Affairs Adviser. u rea,GnrlMngr se Management Asset General Manager, aul Freeman, on hasbeenwithSydney WithWater his for over 30years. nQil eea aae,AstSolutions Asset General Manager, on Quill, orporate Affairs Shehasa andCorporate Secretary. seae ramn uies Hewas promoted in1998 business. astewater Treatment ter ManagerandRegional Managerfor Illawarrathe and workingon herbackground was inacademicresearch, ter, the roleter heheldofChiefFinancial Officer for seven sector, the non-government Angelaheldpositionsin ter, ER ANNUAL REPORTER ANNUAL 2002 Diploma ofHydraulic Engineering. Sy appointed General Managerforthe newAWT divisionin hewas On1July2001, BusinessDevelopment. Manager, the role inAWTtook he ofGeneral In November 2001, job inAWT was asGeneral ManagerofEngineering. Hisfirst Public of Works. the NSWEngineer with Department Wa Wa the Jeff was aConsulting Managerfor Unisearch at in 1997, to joiningAustralianPrior Water Technologies PtyLtd (AWT) AWT division General Manager, Jeffrey Wilson, Masters ofBusinessAdministration. Sy Water hewas appointed General at Services Manager, 2001, InJuly NetworkServices. April 2000asGeneral Manager, Co S Pu positions including Water ManagerGreater Western Region, hehasheldseniormanagement Since1990, maintenance. hy the andhasworked insystemplanning, engineering cadet Michael joinedSydney Water 1975asacivil inJanuary Water Services Michael Keelan, Ec HehasaBachelorof in shippingandrelated industries. mainly BoardServices andadecadeasunionofficial spent theMaritime included IndustrialRelations Managerat organisation’s Hisotherpositionshave Personnel Manager. Hewasthe also plants. programthe sewagetreatment in managinganextensive change then project designing and Hepreviously worked for Sydney Watermanagement. the company’sworld andled safety andenvironment ofinternationalaspects mergersthe andacquisitionsaround the humanresource healsomanaged P&O, At in Australia. f Hisprevious role was asDirector ofHR inJuly2001. Quality, Ian joinedSydney People and Water asGeneral Manager, People andQuality General Manager, Ian Grey, in Accounting. She hasaBachelorofBusinessandGraduate Diploma Board. QueenslandElectricity SouthEast finance roles at and Legal AidBrisbane, Corporate at Services Manager, General Powerlink Queensland, and Administration at Finance Her otherpositionshave includedGeneral Manager, r beingGeneral Manager recent themost Melbourne, Sy e andbrings20years of inSeptember2001, Services, Denise joinedSydney Customer Water asGeneral Manager, CustomerServices General Manager, Denise Dawson, rPOPrs hr ewsivle ihwtrrn reform where hewas involved withwaterfront or P&OPorts, esponsible for Full Retail Contestability andGas). (Electricity se evcsadBsns eeomn and andBusinessDevelopment ystem Services xperience in the electricity industry. Prior to joining Prior industry. the electricity xperience in onomics andaMastersofCommerce (IndustrialRelations). dney HehasaBachelorofEngineeringand Water. dney HehasaCivilEngineeringDegree anda Water. UnitedEnergy dney sheheldanumberofroles at Water, ruislbrtr,construction andoperations and draulics laboratory, r mnctosMngr itiuin HejoinedAWT in Distribution. mmunications Manager, ter andCoastal StudiesPtyLtd and asaSupervising General Managerfor Australianter Research Laboratory, hs n eieyBekhog aae,Manager chase andDelivery Breakthrough Manager, BOARD OF DIRECTORS

MANAGING DIRECTOR ALEX WALKER

CUSTOMER SERVICES WATER SERVICES ASSET MANAGEMENT ASSET SOLUTIONS

DENISE DAWSON MICHAEL KEELAN PAUL FREEMAN RON QUILL • Customer service/ • Mechanical and electrical • Asset management, • Capital works program call centre maintenance planning and maintenance • Design • Billing and revenue • Civil maintenance • Network planning • Survey and operations • Community consultation • Construction • Procurement and contract • Urban development • Training • Water treatment and management services operations • Wastewater source control • Wastewater treatment and operations

ORGANISATIONAL CHART ORGANISATIONAL • Demand management • Residuals management • Customer research and marketing • Streamwatch

ENVIRONMENT FINANCE CORPORATE AFFAIRS PEOPLE AND QUALITY AWT AND INNOVATION

JUDI HANSEN JOHN KITNEY ANGELA TSOUKATOS IAN GREY JEFF WILSON • Strategic planning • Business planning • Strategic relations • Organisation development • Business and product • Research and development • Shared services • Regulatory affairs • Learning and growth development • Innovation • Financial management • Communications • Employee relations • External contracts • Environment planning • Treasury • Corporate secretary • Safety • Non-regulated sales and marketing and management • Economic services • Board relations • Occupational risk • AWT and subsidiaries • Information technology • Pricing • Emergency risk management • Workers compensation • Analytical laboratories • Property • Security • Quality • Science and technology • Group financial control • Audit • Health • Risk and insurance • Legal • Procurement policy

35 SYDNEY WATER ANNUAL REPORT 2002 36 FINANCIAL PERFORMANCE REVIEW co Thesolidresults were foundedthe on financial position. Sy Ag SYDNEY WAT SYDNEY co C the baseyear.than in lower 23 percent with controllable operating costs nowstanding perproperty in 1998–99, set reduction target ambitious three-year cost assistedSydney during 2001–02 Waterthe inmeeting C efficiently ascomparable entities. as least operate at this end, to and be asuccessfulbusiness, Wa Thisreflects oneofSydney more effective organisation. y r millionand$91.2million, were $53.4 made during2001–02 payments tax equivalent cashdividendandincomeActual million. $103.4 totalled payablethe result on tax equivalent The income operating result. dividend of$110.0the 2001–02 millionon The Directors have recommendedto shareholders anafter-tax DISTRIBUTION • an increaseto shareholder value addedof$54million, taxes were $10millioninproperty • removeda further from • core salesrevenue of$1,168.9millionwas abovetarget after before million, tax expense income of$334.5 • profit The key featuresthe year of were: OPERATING PERFORMANCE maintaining andimproving levels. service meeting customerandregulatory expectations for towards step further capital projects providing asignificant the year During $556millionwas invested in levels. service r y Wa Sydney substantial andambitiousprogram ofcapitalworks. yearthe continuation saw ofSydney The 2001–02 Water’s e for controllable targets reduction were met operating cost re strong financialperformance werethe ongoingbusiness Furtherthe contributingto temperatures anddrierweather. with increased water usagesalesreflecting higheraverage together involvingthan expectedgrowth, property higher largely driventhan anticipated bybetter income, service Thiswas Managed profitabilitytarget. exceeded the SCI c superannuation expense of$101millionin2001–02, these was of a Thecombined effect managers. the superannuation performance by funds’ poor investment reassessmentsactuarial the gross liabilityandrelatively of Thisdeterioration arose from superannuation administrators. Sydney Water’s asadvisedbyPillar Administration, position, r superannuation expense, than forecast significantly higher occurredto a theSCI due against This reduced result of$199.0million. target (SCI) Corporate of Intent Statement the 2001–02 is below r Thisresult was $153.3million. pre-tax operating profit Excluding capitalcontributions of$181.2million, million. setvl.Ti iiedpyetwasthe previous paidon Thisdividend payment espectively. egulatory expectations for maintaining andimproving adeteriorationeflecting inSydney Water’s superannuation but the previous on year's result epresents animprovement ompared with $12 million included in the SCI target. omparedthe SCI with$12millionincludedin ear’s (2000–01) operatingear’s result. (2000–01) customerand ear innewinfrastructure requiredto meet xpenditures. noiae r-a prtn rftafter capital onsolidated pre-tax operating profit continuing businessreform this objective, with onsistent r pricing structure billsinaccordance withcontinuing reformthe of customers’ beforetax was $153.3million profit Excluding capitalcontributions, $1,202.7 million. total expenses from deducting of ordinary activities f dney to maintainWater itssound continued in2001–02 n n fetn h mrvmn inmanagedprofitability. the improvement eflecting is abackground ofrisingregulatory andstatutory costs, ainst r rcse,esrn htSydney Water’s ambitious that ensuring orm processes, e’ he rnia betvs en h eurmn to the requirement being ter’sthree principalobjectives, ter hasbeeninvesting onaverage halfabilliondollarsper iun rv omk ynyWtramr fiin and tinuing driveto make Sydney Water amore efficient tributions and income tax for 2001–02 totalled $334.5 tax fortributions andincome 2001–02 ER ANNUAL REPORTER ANNUAL 2002 T of itsowninternal Treasury and T-Corp’s HourGlassMedium 30June 2002–managedbyacombination $127 millionasat Sy ex the occursagainst benchmarking Additionally, Hourglass. theNSW Treasury Corporation (T-Corp)performance against Tr withNSW Consistent within anappropriate riskprofile. expense andminimiseinterest to maximiseinvestment the valuethe objective ofprotectingthe Corporation of and Sy TREASURY T are beyondthe control ofSydney Water (see that impacts excludingthe superannuation targets were comfortably met, Wa reflecting adeterioration inSydney superannuation expense, than forecastthe significantlyadversely higher by impacted was targets performance for the SCI 2001–02 of Achievement divisional budgets. targets areturn driventhrough in Sydney down Water in agreed bySydney These Water anditsvoting shareholders. specifiescommercialThe annualSCI targets performance ST • Sydney Water hassewered anumberofpriorityareas and C forServices Sydney Water Corporation andGosford City July 1997–Determination ofPricingBacklogSewerage • Developer charges for water andsewerage are services from 2000. 1October City Council and Wyong Shire Council –Developer Charges Sy ynyWtrhsstpie o t oewtr sewerage and pricesfor itscore water, • Sydney Water hasset 2000 1 October and Drainage –medium-termpricepath Services from Sy are asfollows: their implementationthe Corporation, by to Sydney determinations applying and Water, The current whetherany of suchrecommendation hasbeen • a statement ofhowany suchdetermination• particulars hasbeen the following manner: re A aGovernment 1992, of the IPART 18(4)of Under Section Act and stormwater services. the pricesfordetermines Sydney Water’s sewerage core water, Pricing andRegulatory which Tribunal ofNSW (IPART), this revenue of isregulatedthe Independent by 90 percent ex was achieved onarevenue basein The operating result PRICING erm Facility. ables 2and3for results). ouncil. gency which is the subject of adetermination of or the subject gency whichis priority sewerage program. determination andcontinuesto progress the Government’s pricesforthese areas inaccordancethe 1997 with sought Sy Developer Plansbeingavailable Service the publicon to calculated inlinewithIPART’s withallcurrent methodology, at ofcharges canbeaccessed Thefulllist determined byIPART. charges inaccordancethe maximumpricesas with trade aswell waste andmiscellaneous drainage services, implemented. been hasnot thereason why it ifnot, implemented and, and implemented, auygieie,Sydney Water benchmarks guidelines, easury itsinvestment c AT nyWtrhda netetportfolio ofapproximately dney Water hadaninvestment dney Water managesitsfinancialassetsandliabilitieswith nyWtrCroain utrWtrCroain Gosford Hunterdney WaterWater Corporation, Corporation, dney Water Corporation Sewerage –Pricesof Water Supply, eso 13blinbfr aia otiuin.Morethan cess of$1.3billionbefore capitalcontributions. ternal UBS Compositeternal UBS Index. medto fteTiua,i orpr compliance in isto report ommendation of the Tribunal, e’ ueanainpsto,a icse ale.AllSCI asdiscussedearlier. ter’s superannuation position, nyWtrsItre site. dney Water’sInternet www EMENT OFCORPORATE (SCI) INTENT .sydneywater.com.au Investment Income earned by Sydney Water in 2001–02 Management Program is based on and complies with the totalled $4.9 million, whilst a fixed interest return of 5.86 per Australian and New Zealand Standard (AS/NZS 4360:1999). cent was achieved. The performance of the Corporation's The major risks are reported to the Executive and the Audit manager exceeded both the market-based UBS benchmark and Risk Management Committee. The process of updating and the T-Corp Hour Glass benchmark for the year. The the corporate risks involves updating the divisional risk average return achieved by the internal Treasury Manager on matrices and consolidating the information into a Corporate specific funds compared to the benchmarks is shown in Risk Matrix. Each General Manager has accountability for Table 4. mitigation strategies for the key risks pertaining to their Sydney Water has financial liabilities of approximately division. $2 billion, which have been built up over time mostly to fund The Risk Management Program continues to be enhanced capital investments. The internal Treasury Manager through the integration of key functions and processes to undertakes management of the portfolio and the bulk of achieve a better understanding of Sydney Water’s risks. An transactions are effected through T-Corp. Financial liabilities integral part is the integration of Corporate Risk Management were managed to minimise risk against volatility in financial and Sydney Water’s Corporate Plan and operating plans. markets, protect the value of Sydney Water’s equity, and Sydney Water continues to monitor changes in the operating minimise the cost of these liabilities. environment to identify and manage potential risks. During the year, new loans totalling $166 million were raised INSURANCE at an average interest rate of 4.59 per cent. The debt portfolio mix as at 30 June 2002 comprised 72 per cent fixed and 28 Sydney Water has an extensive insurance program that covers per cent floating rate exposure. Active management of the its assets (water and sewer mains), liabilities and works under debt portfolio resulted in better performance than construction. Insurance is used as a key risk mitigation benchmark on a nominal cost basis, whilst marginally behind strategy. In addition, excess of loss workers’ compensation on a generalised (market value) cost basis. The benchmark insurance is placed as part of Sydney Water’s self-insurance portfolio is constructed and maintained in accordance with requirements. Despite the most difficult market conditions in NSW Treasury guidelines. Comparative performance is shown decades, Sydney Water was able to maintain its risk financing in Table 5. protection as several of its main policies came up for renewal during the year. This was, however at an increased cost in line SOCIAL PROGRAM ACTIVITIES with market trends. During the year, Sydney Water undertook a number of non- Sydney Water had a number of policies that involved the commercial social program activities at the direction of the participation of HIH Insurance. Sydney Water replaced HIH’s NSW Government and received full reimbursement from the capacity with other insurers following their provisional 2001–02 State Budget for all costs so incurred. Total liquidation last year and is assessing its level of exposure. reimbursement in excess of $78 million related to the Additionally, Sydney Water has substantial insurance claims following activities: outstanding with HIH, with avenues being explored to enable • the provision of rebates for pensioners and low income recovery through HIH facultative reinsurance arrangements. households ($66.0 million) 2002–03 BUDGET OUTLOOK • the exemption from charges for certain classes of properties ($8.7 million) The 2002–03 Budget (see Table 6) reflects financial performance targets that continue to encompass cost • the provision of reticulated sewerage services to high reduction initiatives with the objective of enhancing Sydney priority areas ($2.9 million) Water’s financial position and maintaining a satisfactory • Blue Mountains septic pumpout service ($0.8 million). return to the shareholders. Revenue in 2002–03 reflects the RISK MANAGEMENT final year of IPART’s current medium-term price path, which imposes real price reductions on Sydney Water. Sydney Water recognises that it faces a broad range of external, commercial, operational, project specific and other The 2002–03 Budget seeks to balance the financial risks that can potentially impact on the performance of the performance objective with the need to improve performance Corporation. These can affect the value of Sydney Water and to meet customer and community expectations for quality, its ability to deliver products, Corporate Plan and Statement value and protection of public health and the environment. of Corporate Intent outcomes. Sydney Water’s Risk

TABLE 1: PERFORMANCE IN BRIEF FOR THE GROUP

1998–99 1999–00 2000–01 2001–02 $M $M $M $M

Consolidated operating profit (before tax and capital contributions) 73.6 184.3 148.9 153.3 Capital expenditure 410.8 523.8 432.1 556.2 Total assets 13,278.3 13,053.3 13,471.0 14,251.4 Debt outstanding 1,738.5 1,730.6 1,867.5 2,030.3

TABLE 2: STATEMENT OF CORPORATE INTENT 2001–02

SCI TARGET RESULT*

Operating profit (before capital contributions and income tax) $199m $153.3m Return on net operating assets 2.8% 2.3% Interest cover 2.3 2.1 Debt to equity 0.19 0.19 Dividend to Shareholders $60m $110m Capital expenditure $510m $556.2m

* Includes superannuation impacts 37 SYDNEY WATER ANNUAL REPORT 2002 38 FINANCIAL PERFORMANCE REVIEW CONTINUED bfr aia otiuin)133190-45.7 199.0 -1.5 153.3 10.7 14.3 6.4 574.1 645.2 4.9 584.8 659.5 Operating profit (before capitalcontributions) Operating profit Depreciation Other income income Investment Usage charges charges Service Operating income TA SYDNEY WAT SYDNEY C beforetax andcapitalcontributions Profit T T Other income andusagerevenueService TA offunds Generalised cost offunds Nominal cost valuation Market TA Fix C T (a Borrowing expense Depreciation Operating expenses prtosadsrie 3. 5. 86.8 750.0 836.8 F Operations andservices Operating expenditure TA otal expenses otal income otal Capital Works Program nnigcags107184-17.7 158.4 140.7 inancing charges apital investment ash f B B B B e aia otiuin)34532322.2 312.3 334.5 ter capitalcontributions) ed interest LE 3: SCI BUDGET RESULT BUDGET SCI 2001–02 LE 3: LE 6: 2002–03 BUDGET OUTLOOK BUDGET 2002–03 LE 6: DEBT PORTFOLIO MIX2001–02 LE 5: E4 AVERAGE ONINVESTMENT RETURNS LE 4: ER ANNUAL REPORTER ANNUAL 2002 CORPORAT ,0. ,9. 10.6 1,294.2 1,304.8 ,5. ,9. 56.3 1,095.2 1,151.5 AC 5. 1. 45.8 510.4 556.2 7. 8. -12.8 186.8 174.0 .%4 4.7% 5 SWC 566. -12.9 68.5 55.6 TU 9 .%5.8% 5.5% .9% ION HOUR GLASS UBS COMP. UBS GLASS HOUR ION $M AL BUDGET AL BUDGET VARIANCE

AC T VL AAE BENCHMARK IVELY MANAGED $2,114.8m $2,041.2m $2,114.8m 5 .8 9.09% 6.78% 8%5.78% .83% 6 4.6% .6% 1,242 1,324 1,142 535 182 188 808 146 $M 82 SYDNEY WATER CORPORATION FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2002

40 STATEMENTS OF FINANCIAL PERFORMANCE 41 STATEMENTS OF FINANCIAL POSITION 42 STATEMENTS OF CASH FLOWS NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 43 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES 49 2 PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE 52 3 TAXATION 54 4 CASH ASSETS 55 5 RECEIVABLES 55 6 INVENTORIES 55 7 OTHER ASSETS 56 8 OTHER FINANCIAL ASSETS 57 9 PROPERTY, PLANT AND EQUIPMENT 61 10 PAYABLES 61 11 INTEREST-BEARING LIABILITIES 63 12 PROVISIONS 63 13 CONTRIBUTED EQUITY 63 14 RESERVES 64 15 RETAINED PROFITS 64 16 OUTSIDE EQUITY INTERESTS 64 17 TOTAL EQUITY RECONCILIATION 64 18 NOTES TO THE STATEMENTS OF CASH FLOWS 66 19 COMMITMENTS 69 20 EMPLOYEE ENTITLEMENTS 70 21 CONSULTANTS 70 22 PARTICULARS IN RELATION TO CONTROLLED ENTITIES 72 23 AUDITORS’ REMUNERATION 73 24 DIRECTORS’ REMUNERATION 74 25 RELATED PARTY TRANSACTIONS 75 26 ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE 80 27 AMOUNTS PAYABLE/RECEIVABLE IN FOREIGN CURRENCIES 81 28 SEGMENT REPORTING 81 29 CONTINGENT LIABILITIES 81 30 EVENT SUBSEQUENT TO BALANCE DATE 82 DIRECTORS’ DECLARATION 83 INDEPENDENT AUDIT REPORT

39 SYDNEY WATER ANNUAL REPORT 2002 40 STATEMENTS OF FINANCIAL PERFORMANCE T nraei se eauto eev 14 exchange differencetranslation on of financial Net revaluation reserve Increase inasset e rft183,088 183,088 CORPORATION THE 2(b) entity the parent attributableto membersof profit CONSOLIDATED Net profit Net 3(a) income tax expense tax expenseIncome relating to ordinary activities Borrowing costs expense ex E Re FOR 2002 THE YEAR 30JUNE ENDED ST SY ST SYDNEY WAT SYDNEY 335,307 the following on pages. out set the Financial of Statem 334,548 The Statements ofFinancial Performanceto andforming areto bereadthe Notes part inconjunction with transactions withownersas 14 and recognised inequity directly a T statements ofself-sustaining foreign operations income tax expense from before ordinaryactivities Profit rftfrom after ordinaryactivities related Profit otal changes in equity other than those resultingthan fromotal changes inequityother tlrvne,expenses andvaluation adjustments otal revenues, xpenses from ordinary activities, ttributable to members of the parent entity entity the parent to membersof ttributable AT ART STATEMENTS OFAUDITED FINANCIAL DNEY DNEY WATER CORPORATION ITS AND CONTROLLED ENTITIES ldn orwn ot xes 2(b) cluding borrowing costs expense v ne rmodnr ciiis2(a) enues from ordinary activities EMENTS OF FINANCIAL PERFORMANCE PERFORMANCE EMENTS OFFINANCIAL ER ANNUAL REPORTER ANNUAL 2002 NOTE 15 17 (1,061,962) 1,537,231 (151,460) (140,721) 335,328 518,395 183,088 $’000 2002 (21) (1,021,259) 1,453,783 (149,013) (120,293) 163,218 163,218 163,218 283,511 171,822 171,829 335,040 $’000 2001 (7) (1,058,084) 1,573,242 (148,927) (140,730) 374,428 335,328 335,328 225,501 225,501 225,501 56 0 $’000 ,829 2002 – ents (1,000,057) 1,429,798 (114,702) (149,095) 165,944 165,944 165,944 165,944 171,906 171,906 280,646 337,850 $’000 2001 – 41 STATEMENTS OF FINANCIAL POSITION netre 6 Inventories urn a ses3(b) taxassets Current R Co EQUITY R SYDNEY WAT SYDNEY rvsos12 12 N TO TO Provisions 3(c) TO 7 Provisions TO TO Deferred tax assets R ASSETS NON-CURRENT TO Other C ASSETS CURRENT AS ST SY usd qiyitrss16 the following on pages. out set the Financial of Statement The Statements ofFinancial Positionto andforming areto bereadthe Notes part inconjunction with TOT Outside equityinterests T R 11(a) Interest-bearing liabilities LIABILITIES NON-CURRENT 8 Other financialassets eerdtxlaiiis3(e) Deferred tax liabilities rpry ln n qimn 9(a) andequipment plant Property, Pay LIABILITIES CURRENT neetbaiglaiiis11(a) Interest-bearing liabilities urn a iblte 3(d) taxliabilities Current tlprn niyitrs 11,338,245 interest entity otal parent sre 14 eserves eceivables 5 cials5 eceivables tie rft 15 etained profits s ses4 ash assets AT TAST 11,338,334 ET ASSETS DNEY DNEY WATER CORPORATION ITS AND CONTROLLED ENTITIES

AT n T T T T T T be 10 ables EMENTS OF FINANCIAL POSITIONEMENTS OFFINANCIAL LLAIIIS2,913,084 AL EQUITY 2,421,416 491,668 14,251,418 AL LIABILITIES LIABILITIES AL NON-CURRENT 13,999,741 LIABILITIES AL CURRENT 251,677 AL ASSETS ASSETS AL NON-CURRENT ASSETS AL CURRENT rbtdeut 13 tributed equity

30 JUNE 2002 30 JUNE ER ANNUAL REPORTER ANNUAL 2002 NOTE 17 13,899,399 11,338,334 3, 2,102,121 7,4 149,890 166,691 108,354 199,259 242,059 120,036 757,182 33,613 58,955 19,669 49,305 4 81,148 72,709 1,298 $’000 2002 961 89 89 9 C ONSOLIDATED THE CORPORATION THE ONSOLIDATED 13,236,782 13,470,990 10,929,850 10,929,850 10,929,850 13,103,748 3, 2,541,140 1,940,929 7, 2,147,419 124,940 234,208 673, 108,354 148,308 191,699 130,403 393,721 117,253 53,861 34,717 82,398 62,337 81,550 36,902 50,636 $’000 2001 732 188 25 – – 14,246,664 13,899,203 11,335,100 11,335,100 11,335,100 13,999,790 2,421,271 2,911,564 3, 2,102,121 7,4 754,039 151,325 119,891 108,354 166,650 199,259 242,144 490,293 246,874 75,406 59, 33,613 19,649 41, 72,707 47 $’000 ,886 2002 494 132 455 – – – s 13,431,183 13,431,183 10,884,271 10,884,271 10,884,271 13,093,072 13,227,701 2,104,229 2,104,229 3, 2,546,912 1,940,929 7, 203,482 103,198 103,198 148,285 108,354 442,683 122,813 259,233 112,136 627,632 31,431 31,431 53,872 82,851 29,587 80,449 31,050 37,464 $’000 2001 10 – – – 42 STATEMENTS OF CASH FLOWS Infrastructure Agreement Pa Security andotherdepositsreleased te amnsfrpoet,patandequipment plant Other payments for property, L ln n qimn 18(f) andequipment plant Pa E Security andotherdepositsreceived 22(c) received from controlled entity Share capitalrepayment Other financingpayments f R Outflows C e nrae(erae ncs ed28,650 increase (decrease) incashheld Net Proceeds from issueofsharesto outsideequity CORPORATION THE Income tax paid CONSOLIDATED Income tax received C Inflows CA FOR 2002 THE YEAR 30JUNE ENDED ST SY e ahue nfnnigatvte (43,293) WAT SYDNEY the following on pages. out set the Financial of Statements The Statements ofCash Flowsto andforming areto bereadthe Notes part inconjunction with CA balances ofcashheldinforeign currencies 22(d) cashusedinfinancingactivities Net Dividend paid (388,983) 22(d) interests incontrolled entity Proceeds from borrowings Inflows CA cashusedininvesting activities Net interests ofcontrolled entity 18(a) receipts from maturedterm investments long Net cashprovided byoperating activities Net received Interest Dividend received C f C ln n qimn 2(a) L Other capitalcontributions received C andequipment plant Other proceeds from saleofproperty, C Outflows R Outflows Pa Borrowing costs paid nto ahdsoe)22(d) 18(f) tocontrolled entities equipment and plant Proceeds from saleofproperty, ofcashdisposed) (net Proceeds from saleofcontrolled entity received Interest Inflows CA rsca rgas2a,2(c) 2(a), or socialprograms rtase fbsnse 18(f) or transfer of businesses oan providedto outsideequity a eamn received from controlled entities oan repayment ffe epayment of capitalcontributions of epayment epayment of borrowings of epayment ash at the beginning of the financial year thebeginning of ash at s eepsfrsca rgas2(a) ash receipts for socialprograms ash received from controlled entities ash receiptsthe course inofoperations ptlcnrbtosrcie o oilporm 2(a) apital contributions received for socialprograms ash paymentsthe course ofoperations in AT DNEY DNEY WATER CORPORATION ITS AND CONTROLLED ENTITIES yment of obligation of underRouse Hill yment yments to controlledyments entities for property, mn ocnrle niisfrtase fbsnse 18(f) tocontrolled entities fortransfer ofbusinesses yment SH FLOWS FROM OPERATING ACTIVITIES SH AT OF YEAR END FINANCIAL THE THE SH FLOWS ACTIVITIES FROM FINANCING SH FLOWS FROM INVESTING ACTIVITIES EMENTS OFCASH FLOWS ct of exchange ratethe fluctuations on ER ANNUAL REPORTER ANNUAL 2002 18(b) 18(a) 18(a) NOTE 1,293,897 1,369,778 213,382 908,852 5 529,017 156,112 140,034 46 170,000 170,089 817,624 24,407 45,883 73,290 53,353 06,582 22,324 91,228 16,700 50 60,474 3,466 2,806 2,539 2,308 5 1,378 2,591 0 $’000 ,985 ,926 ,646 2002 690 11 89 89 – – – – – – – – – 1,278,520 1,356,270 (125,220) (369,392) 504,543 904,252 144,321 144,321 135,151 269,541 162,544 420,482 113,752 103,704 452,018 790,500 (42,594) 44,450 64,820 73,340 54,086 36,292 22,324 59,177 12,016 4 4, 3 1,291 5, 2,002 $’000 ,319 ,391 2001 117 755 19 98 – – – – – – – – – – – 1,024,591 1,277,477 1,477,080 (391,274) 213,437 452,489 884,563 212,231 603,505 156,167 47 170,000 170,000 (43,437) 24,407 55,430 44,581 84,598 81,410 45,883 45,243 73,290 53,353 99,470 56, 20,300 16,700 27,465 60,474 17,778 8,288 2,806 2,308 2,539 1,378 9,047 $’000 2002 053 322 – – – – – – – – 1,244,700 1,346,044 (125,181) (336,369) 785,408 244,250 924,971 144,321 144,321 405,447 266,692 269,502 162,505 416,125 113,715 103,704 421,073 7 (40,477) 44,450 15,619 25,848 73,340 54,086 41,816 36,292 59,177 10,400 27,465 11,742 67 5 1,291 2,598 1,985 5, 2,002 $’000 ,942 ,397 2001 699 755 – – – – – – – SYDNEY WATER CORPORATION AND ITS CONTROLLED ENTITIES NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2002 1STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (c) RECEIVABLES Sydney Water Corporation is a NSW statutory State-owned Trade and other receivables are recorded in the Statements corporation established on 1 January 1999 following the of Financial Position at amounts due. Provisions for doubtful enactment of the Water Legislation Amendment (Drinking debts are maintained in respect of the closing balance of Water and Corporate Structure) Act 1998 and legislative rating debtors and other debtors in order to reflect the amendments to the Sydney Water Act 1994. In this financial recoverability which is expected in respect of those debtors report, Sydney Water Corporation will be referred to as existing as at balance date. The balances of these provisions “the Corporation”. Its subsidiary company Australian Water are established after due consideration of factors such as past Technologies Pty. Ltd. will be referred to as “the subsidiary recoverability experience and prevailing economic conditions. company” and the economic entity comprising the Known bad debts are written off against the provisions as Corporation and its controlled entities will be collectively and when determined. (Refer also Notes 2(b) and 5). referred to as “the consolidated entity”. On 1 July 2001, all of the subsidiary company’s businesses in Australia were (d) INVESTMENTS transferred to, and integrated with, the Corporation as part Investments with a maturity date within the ensuing of the consolidated entity’s ongoing restructuring to improve 12 months are recorded within Cash Assets under efficiency and effectiveness of processes and functions. Current Assets in the Statements of Financial Position The subsidiary company now only focuses on marketing the while those with a maturity date beyond 12 months Corporation’s expertise in water and water-related services in are recorded within Other Financial Assets under the Water industry to external customers, both domestically Non-Current Assets. Valuations for all investments and overseas. It is no longer a service provider to the are carried out annually as at balance date. Corporation and, accordingly, is a significantly different company to that which existed up to 30 June 2001. Details Financial Assets in respect of this integration are provided in Notes 18(f), 20, Current Investments are recorded at the lower of cost and 22(c) and 25(b) in this financial report. market value. Non-Current Investments, other than funds The financial report covers the financial performance of the invested in the NSW Treasury Corporation’s "Hour Glass" Corporation and the consolidated entity for the period Facility, are recorded at the lower of cost and recoverable 1 July 2001 to 30 June 2002 and the financial position as amount. In respect of marketable securities, recoverable at 30 June 2002. The comparative figures cover the financial amount is determined as the market value of each class of performance of both the Corporation and the consolidated investment held as at balance date. Market values for these entity for the period 1 July 2000 to 30 June 2001 and the investments are determined on the basis of discounted cash financial position as at 30 June 2001. Where appropriate, flows using valuation rates supplied by independent market comparative figures have been reclassified for the purpose sources. (Refer Notes 4 and 8). In the case of funds invested in of consistency in presentation. Except where otherwise the NSW Treasury Corporation’s "Hour Glass" Facility, the book indicated, amounts are rounded to the nearest $’000. value recorded is the market value. Changes in this market The significant policies that have been adopted in the value during the reporting period are brought to account in preparation of the financial report are detailed below: accordance with revised Australian Accounting Standard AASB 1041 “Revaluation of Non-Current Assets”, issued in July 2001. Revaluation increments for the “Hour Glass” Facility are taken (a) BASIS OF PREPARATION directly to the Asset Revaluation Reserve. Revaluation The financial report is a general purpose financial report that decrements are only taken to the Asset Revaluation Reserve has been prepared in accordance with applicable Accounting to the extent that a credit balance still exists in the Reserve, Standards, Urgent Issues Group Consensus Views and other otherwise they are recognised as an expense in the mandatory and statutory reporting requirements including Statements of Financial Performance. (Refer Notes 2 and 14). Part 3 of the Public Finance and Audit Act 1983 and the Where part or all of the “Hour Glass” investment has been associated requirements of the Public Finance and Audit withdrawn from the Facility and realised, the relevant portion Regulation 2000. in the Asset Revaluation Reserve is transferred directly to In respect of the requirements of Part 3 of the Public Retained Profits. (Refer Notes 14 and 15). Finance and Audit Act 1983, the NSW Treasurer has Controlled Entities granted an exemption from preparing manufacturing and trading statements to allow disclosure in accordance Investments in controlled entities are recorded in the with that required for reporting entities under Australian Corporation’s Statement of Financial Position at the lower of Accounting Standards and other mandatory professional cost and recoverable amount. Recoverable amount is normally reporting requirements. determined as the value of the net assets of the consolidated entity in which the controlled entity is the parent entity. The financial report has been prepared in accordance with However, where there is an agreed consideration value for the the historical cost convention, except for certain non-current disposal of a controlled entity, then that value is the assets that are recorded at valuation.

NOTES TO AND FORMING PART OF THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES recoverable amount. Where recoverable amount exceeds cost, The accounting policies have been consistently applied by the Corporation’s investment is recorded at cost. Where the entities in the consolidated entity and are consistent recoverable amount is below cost, the difference is recorded with those adopted for the previous financial year. as a provision for loss on investment in the Corporation’s Statement of Financial Performance and Statement of (b) PRINCIPLES OF CONSOLIDATION Financial Position. (Refer Notes 2(b) and 8). Where the The financial report of the consolidated entity includes the agreed consideration value for the disposal of a controlled financial report of the Corporation, being the parent entity, entity is lower than its net assets, the difference is recorded and its controlled entities. Where an entity either begins or as a provision for loss on realisable value in the consolidated ceases to be controlled during the financial year, the results entity’s Statement of Financial Performance and Statement are included only from the date control commences or up of Financial Position. (Refer Notes 2(b), 8 and 12). to the date control ceases. The balances and effects of transactions between entities in the consolidated entity have been eliminated.

43 SYDNEY WATER ANNUAL REPORT 2002 1STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES cash flows discounted to their present values. (Refer Note 9). continued Where the relevant valuation methods result in values that are lower than recoverable amount, the carrying amount is (e) INVENTORIES the valuation (see below). Where the relevant valuation methods result in values that are higher than recoverable Inventories include a variety of items on hand including amount, the carrying amount is the recoverable amount. stock, stores and materials and work in progress held as inventory for external construction and consulting contracts. System Assets (Refer Note 6). The Corporation has completed Phases 1 and 2 of its asset Stock, Stores and Materials valuation project. Phase 1 involved the valuation of System assets at estimated written down current replacement cost These items have been arrived at by actual count, weight or based on estimates of modern engineering equivalent measurement and are valued at the lower of cost and net replacement asset values (MEERA) on a whole of facility basis. realisable value using the ‘first-in first-out’ basis of valuation In adopting the MEERA valuation methodology, the for the purposes of determining cost. Corporation is complying with NSW Treasury policy to adopt Work in Progress Held as Inventory the transitional provisions of revised Australian Accounting Where the consolidated entity has entered into consulting Standard AASB 1041 “Revaluation of Non-Current Assets” contracts with external clients, costs incurred where the which are applicable to public sector entities. Under these related revenues remain unrecognised are recorded as work transitional provisions, public sector entities may elect to in progress held as inventory. adopt, instead of fair value, the same revaluation basis as the preceding reporting period, while the relationship between Where the consolidated entity has entered into construction fair value and the existing valuation basis in the NSW public contracts with external clients, work in progress held as sector is being further examined. It is expected, however, that inventory is recorded at cost plus attributable profit to date in most instances the current valuation methodology based on the value of work completed, less progress billings adopted by the Corporation will approximate fair value. and provision for foreseeable losses. Where applicable, such losses are provided for as soon as they are identified. Cost Valuations for system assets are carried out annually, effective includes all costs directly related to specific contracts and from 1 July each financial year. Comprehensive valuations of an allocation of appropriate overhead expenses. system assets are carried out on a progressive cycle not exceeding five years. Valuations carried out during the Where the outcome of a contract cannot be reliably intervening years of the progressive cycle are carried out estimated, contract costs are expensed as incurred. Where it using an index based on the movements in prices for is probable that the costs will be recovered, revenue is only construction materials and average weekly earnings. Assets recognised to the extent of costs incurred. acquired after the annual revaluation have a value that Profit is recognised on an individual construction contract equates to the Directors’ valuation for the year. basis using the percentage of completion method when the Phase 2 of the Corporation’s asset valuation project, which stage of contract completion can be reliably determined, costs involved the determination of asset values on a segmented to date can be clearly identified and reliable estimates can be basis, was completed during the 1999-00 financial year. made for total contract revenues to be received and costs to complete. Profit recognition does not normally commence Asset lives and depreciation are currently based on the until a contract is at least 30% complete and where the assumption of normal wear and tear rather than condition- value of work undertaken exceeds $1,000. based. However, Phase 3 of the Corporation’s asset valuation project, which involves condition-based assessments of asset The stage of completion is measured by reference to an lives, is currently in progress and may impact on asset values assessment of costs incurred to date as a percentage of and depreciation charges for system assets. Condition estimated total costs for each contract. assessments are being carried out progressively. Assessments of water mains, waste water mains and other system assets (f) PROPERTY, PLANT AND EQUIPMENT are scheduled for completion in the next financial year. Acquisitions and Capitalisation Land, Buildings and Easements All items of property, plant and equipment acquired by Land and improvements with potential for alternative use are NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES the consolidated entity are recorded initially at the cost of valued at estimated market values determined and acquisition and are subsequently revalued in accordance with reassessed by registered valuers employed by the Corporation the consolidated entity’s revaluation policies (see Asset or independent valuers on a three yearly cycle. Land that is Valuations below). Cost is determined as the fair value of the integral to the Corporation’s system assets is valued at the assets given up at the date of acquisition plus costs incidental rateable land value as determined by the Valuer-General. to the acquisition. Items costing $5,000 or more individually Easements, which are an interest in property, are valued every and having a minimum expected working life of three years three years by registered valuers employed by the Corporation are capitalised. In the case of network assets including water using a mass appraisal methodology based on the effect of meters, all expenditures are capitalised regardless of cost. the easement on the relevant properties. These three yearly In respect of system assets constructed by the consolidated valuations are used to value easements acquired during the entity for its own use, cost includes materials used in intervening years. Changes in easement values are effective construction, direct labour and an appropriate proportion of from 1 July each financial year and are stated at Directors’ overheads. Borrowing costs are also capitalised to the cost of valuation applicable to the year concerned. constructed system assets where applicable. (Refer Note 1(k)). Plant and Equipment, Computers and Water Meters System assets are capitalised as completed assets when each facility, or operating unit within a facility, becomes operational Plant and equipment, including plant, vehicles and computers and available for use. Where such assets are handed over by are recorded at the cost of acquisition. Water meters are subdivider/developers, they are initially recorded at the recorded at estimated cost of acquisition including handling Corporation’s estimate of the sub-contractor’s cost, which and installation. Experience has shown that after taking into in effect represents replacement cost as at the date account depreciation, the resulting net book value in respect of acceptance. of plant and equipment closely represents market value. Revaluations of property, plant and equipment do not Asset Valuations take into account the potential impact of capital gains tax The valuation basis for each class of property, plant and on the grounds that such assets are an integral part of the equipment is detailed below. The carrying amounts of classes consolidated entity’s operations and there is no intention to of property, plant and equipment do not exceed recoverable sell the assets unless they become surplus to requirements. amount. Recoverable amount is determined using relevant

44 SYDNEY WATER ANNUAL REPORT 2002 1STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (g) MAINTENANCE EXPENDITURE continued All maintenance expenditure, whether it is of a regular, For each class of property, plant and equipment subject to routine and ongoing nature or material and cyclical in nature, valuation, revaluation increments are credited to the Asset is charged to the Statements of Financial Performance as an Revaluation Reserve in the Statements of Financial Position. operating expense as and when incurred. Where a revaluation decrement reverses a revaluation increment previously credited to, and which is still in the (h) RESTORATION COSTS balance of, the Asset Revaluation Reserve, the revaluation Restoration costs are those costs incurred for the purpose of decrement is debited to that Reserve. In other cases, the restoring property, plant and equipment to its original state decrement is recognised as an expense in the Statements of after a period of activity. Such costs are recognised on an Financial Performance. Revaluation increments and decrements accrual basis as either operating expenses or as capital are offset against one another within a class of property, plant expenditure as applicable over the period of activity. and equipment, but not otherwise. (Refer Note 14). Leased Assets (i) PAYABLES Leases of property, plant and equipment where the Liabilities are recorded in the Statements of Financial Position Corporation or its controlled entities assume substantially for amounts to be paid in the future for goods or services all the risks and benefits of ownership are classified as received by the consolidated entity, whether or not billed. finance leases. Other leases are classified as operating leases. These liabilities are recognised when the goods or services Finance leases are capitalised. Where property, plant and have been received and an obligation to make future equipment is acquired by means of finance leases, the payments arises. (Refer Note 10). present value of the minimum lease payments is recognised as an asset at the beginning of the lease term. Amortisation (j) LOANS AND ADVANCES of the asset is on a straight line basis over the term of the Loans and advances are recorded at their face value. lease or, where it is likely the consolidated entity will retain Any discounts or premiums taken up on new loans raised ownership of the asset, the expected useful life of the on the consolidated entity’s behalf by the NSW Treasury leased asset. A corresponding liability is also established Corporation are deferred and amortised to the Statements and each lease payment is allocated between the liability of Financial Performance in accordance with Australian and interest expense. Accounting Guidance Release AAG 10 “Measurement of Payments made under operating leases are representative of Monetary Assets and Liabilities”. The deferred discounts or the pattern of benefits derived from the leased assets and premiums are applied against the face value of the loans accordingly they are charged to the Statements of Financial and the adjusted amount is recorded in the Statements Performance in the periods in which they are incurred. of Financial Position. Gains or losses arising from debt restructuring are immediately brought to account in the Depreciation and Amortisation Statements of Financial Performance in accordance with Items of property, plant and equipment, including buildings Australian Accounting Guidance Release AAG 11 “Debtor’s and leasehold property but excluding freehold land and Accounting for Debt Restructuring”. (Refer Note 11). easements, are depreciated/amortised on a straight line basis over their estimated useful lives, making allowance where (k) BORROWING COSTS appropriate for residual values. The lives are reviewed from Interest and other borrowing costs are expensed as incurred time to time, taking into account commercial and technical in the Statements of Financial Performance unless they relate obsolescence, expected normal wear and tear, but excluding to qualifying assets, in which case they are capitalised as part assessments of asset condition (see above under Asset of the cost of those assets. Qualifying assets are assets that Valuations). The normal life expectancies of major asset generally take more than 12 months to get ready for their categories are as follows:– intended use or sale. Capitalisation of borrowing costs is NUMBER OF YEARS undertaken where a direct relationship can be established Dams (non-catchment) 200 between the borrowings and the relevant projects giving rise to qualifying assets. Typically, these are projects whose annual Canals and Tunnels 150 budgeted expenditure is approximately $5 million or greater. Major pipelines (above ground) 150 Where funds are borrowed specifically for the acquisition, Weirs 100 construction or production of a qualifying asset, the amount Submarine Outfalls 100 of borrowing costs capitalised is net of any interest earned on those borrowings. Where funds are borrowed generally, Water Mains 75 to 150 borrowing costs are capitalised using a weighted average. Waste Water Mains 120 to 150 (Refer Note 2(b)). Stormwater Drains 150 Buildings 50 to 100 (l) DERIVATIVE FINANCIAL INSTRUMENTS Water and Waste Water Pumping Stations, The consolidated entity enters into a variety of derivative Water and Waste Water Treatment Plants, Reservoirs: financial instruments to manage its exposure to interest rate and foreign exchange rate risk. These instruments Civil component (excluding Reservoirs) 100 include interest rate swaps, forward interest rate contracts, Civil component (Reservoirs only) 150 forward foreign exchange contracts, bond options and Electrical component 30 interest rate futures. (Refer Note 26). Mechanical component 40 Electronic component 15 Working Plant and Equipment 3 to 14 Work in Progress is not depreciated until the assets are brought into service and available for use. Partially capitalised assets attract depreciation only after they have been commissioned.

45 SYDNEY WATER ANNUAL REPORT 2002 1STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Where the purchase or sale transaction is terminated early, continued the exchange differences are recorded in the Statements of Financial Performance as at the date of termination. Hedges At balance date, any gain or loss is recognised in the All non-specific hedge transactions are initially recorded at Statements of Financial Performance on an accrual basis. the relevant rate at the date of the transaction. Hedges outstanding at balance date are valued at the rates ruling Bond Options on that date and any gains or losses are brought to account Bond options are based on notional principal amounts and in the Statements of Financial Performance. Costs or gains therefore are not recognised in the Statements of Financial arising at the time of entering into the hedge are deferred Position. Upon maturity, the option either lapses or an and amortised over the life of the hedge. underlying physical transaction is negotiated in accordance Where hedge transactions are designated as a hedge of with the terms and conditions of the original contract. the purchase or sale of goods or services or an anticipated Option premiums payable are recognised in the Statements interest transaction, gains or losses arising up to the date of Financial Performance if the option lapses or if the option of the anticipated transaction, together with any costs or is exercised and the option premium is not material. If the gains arising at the time of entering into the hedge, are option is exercised and the option premium payable is deferred and included in the measurement of the material, it is deferred and amortised over the life of the transaction. Any gains or losses on the hedge transaction negotiated physical transaction. At balance date, any gain or after that date are brought to account in the Statements loss is recognised in the Statements of Financial Performance of Financial Performance. on an accrual basis. Where a hedge transaction is terminated early and the Interest Rate Futures anticipated transaction is still expected to occur, the deferred Interest rate futures are based on notional principal gains and losses that arose on the hedge prior to its amounts and therefore are not recognised in the Statements termination continue to be deferred and are included in the of Financial Position. Gains or losses on closed out futures measurement of the purchase or sale or interest transaction positions are recognised in the Statements of Financial when it occurs. Where a hedge transaction is terminated early Performance upon closure. At balance date, any gain or because the anticipated transaction is no longer expected to loss is recognised in the Statements of Financial occur, deferred gains and losses that arose on the hedge prior Performance on an accrual basis. to its termination are included in the Statements of Financial Performance for the period. (m) EMPLOYEE ENTITLEMENTS Where a hedge is redesignated as a hedge of another All liabilities for employee entitlements (including on-costs) transaction, gains and losses arising on the hedge prior to its which are expected to be paid by the consolidated entity for redesignation are only deferred when the original anticipated services provided by employees to balance date are fully transaction is still expected to occur. Where the original provided for in the Statements of Financial Position. anticipated transaction is no longer expected to occur, any gains or losses relating to the hedge instrument are included Liabilities for wages and salaries, annual leave, non-vesting in the Statements of Financial Performance for the period. sick leave (where future takings are expected to exceed future entitlements) and other current employee entitlements are Gains and losses that arise prior to and upon the maturity of self-assessed and are calculated at nominal amounts based transactions entered into under hedge rollover strategies are on current remuneration rates existing at balance date. The deferred and included in the measurement of the hedged liability for long service leave which is expected to be settled anticipated transaction if the transaction is still expected to within twelve months of balance date is calculated at the occur. If the anticipated transaction is no longer expected to nominal amount based on current remuneration rates occur, the gains and losses are recognised immediately in the existing at balance date. The liability for long service leave Statements of Financial Performance. which is expected to be settled beyond twelve months of Interest Rate Swaps balance date is discounted using the rates attaching to national government securities at balance date which Interest rate swaps are based on notional principal amounts most closely match the terms to maturity of the liability. and therefore are not recognised in the Statements of The liability for long service leave is actuarially calculated.

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES Financial Position. Interest payments and receipts are netted on the due date and recognised in the Statements of Calculations in respect of the total liability for Financial Performance. Between interest payment due dates, superannuation are based on actuarial advice with the these amounts are recognised in the Statements of Financial exception of the First State Superannuation Scheme, which Performance on an accrual basis. is calculated as a percentage of salaries. The superannuation liability recorded in the Statements of Financial Position is Forward Interest Rate Contracts determined as the difference between the gross liability Forward interest rate contracts are based on notional actuarially calculated (or self-assessed in the case of both the principal amounts and therefore are not recognised in First State Superannuation Scheme) and the Stake (ie. the the Statements of Financial Position. Upon maturity, the amount funded) in the respective superannuation schemes. difference between the contract price and the current market (Refer Note 20). price is calculated and the resulting payment or receipt A liability for redundancy payments is recorded in the is recognised in the Statements of Financial Performance. Statements of Financial Position where such obligations At balance date, any gain or loss is recognised in the have emerged during the reporting period but are not Statements of Financial Performance on an accrual basis. payable until after balance date. The liability is based on Forward Foreign Exchange Contracts the payments expected to be made as a result of planned restructures that have been formally advised to employees Forward foreign exchange contracts are based on notional and unions. principal amounts and therefore are not recognised in the Statements of Financial Position. Upon maturity, the difference between the contract price and the current market price is calculated and the resulting payment or receipt is recognised in the Statements of Financial Performance. Exchange differences on forward foreign exchange contracts used to hedge the purchase or sale of specific goods and services are deferred and included in the measurement of the purchase or sale when it takes place.

46 SYDNEY WATER ANNUAL REPORT 2002 1STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Goods and Services Tax continued In relation to the Goods and Services Tax (“GST”), revenues, expenses and assets are recognised net of the amount of GST (n) INSURANCE except where the amount of GST incurred by the Corporation The Corporation holds a group self-insurer’s licence for as a purchaser is not recoverable from the Australian Taxation workers’ compensation that applies to the Corporation and its Office. In such cases, the GST incurred is recognised as part of wholly-owned subsidiaries based in NSW. Other entities in the the cost of acquisition of an asset or as part of an item of consolidated entity that are based outside of NSW obtain expense. Receivables and payables are stated with the their own insurance cover for workers’ compensation. amount of GST included. Cash flows are included in the The Corporation also retains insurance policy excesses in Statements of Cash Flows on a gross basis and are classified respect of its public liability and industrial special risk policies. as operating activities. The liability for workers’ compensation recorded in the Statements of Financial Position is actuarially assessed and (p) REVENUE RECOGNITION includes an estimate for incurred but not reported losses. Rendering of Services The liability for the insurance policy excesses in respect of Sales revenue from the rendering of services is recognised on both public liability and industrial special risk insurance an accrual basis and comprises Service charges, Usage charges, exposures is internally assessed on the basis of actual claims Ancillary services and Sundry revenue. Service Charges existing as at balance date. constitute a fixed charge to customers covering the cost of making the Corporation’s water, waste water and stormwater (o) TAXATION services available. Usage Charges reflect revenue derived from Income Tax the consumption and use made of the Corporation’s water, waste water and trade waste services. Ancillary services are The Corporation and its controlled entities in Australia are those provided to customers for water, waste water and subject to notional taxation in accordance with the State stormwater related services including building approvals and Owned Corporations Act 1989. An ‘equivalent’ or ‘notional the provision of information such as plans and diagrams. income tax’ is payable to the NSW Government through the Sundry revenue comprises any other revenue raised for Office of State Revenue. Taxation liability is assessed services provided by the consolidated entity. according to the National Tax Equivalent Regime (“NTER”) that replaced the former State Tax Equivalent Regime of the Sale of Goods NSW Treasury from 1 July 2001. The NTER closely mirrors the Revenue from the sale of inventory items is recognised when Commonwealth Income Tax Assessment Act 1936 (as the control of the items passes to the purchaser. amended) and is administered by the Australian Taxation Office. The consolidated entity adopts the liability method Investment Revenue of tax-effect accounting under the current Australian Interest revenue is recognised in the Statements of Financial Accounting Standard AAS 3 “Accounting for Income Performance when receivable. The profit or loss on disposal of Tax (Tax-Effect Accounting)”. Tax-effect accounting is also investments is calculated as the difference between the used to recognise tax liabilities or assets arising in carrying amount of the investment at the time of the overseas tax jurisdictions through the consolidated disposal and the proceeds on disposal and is recorded in the entity’s overseas operations. Statements of Financial Performance in the period of disposal. Income tax expense is calculated on the Profit from ordinary Dividend Revenue activities adjusted for permanent differences between taxable income and accounting profit. The tax effect of Dividend revenue is recognised in the Corporation’s timing differences, which arise from items being brought to Statement of Financial Performance when the dividend is account in different periods for income tax and accounting proposed by the controlled entity. purposes, is carried forward in the Statements of Financial Disposals of Property, Plant and Equipment Position as a deferred tax asset (future income tax benefit) or a deferred tax liability (provision for deferred income tax). The profit or loss on disposal of property, plant and Future income tax benefits are not brought to account equipment is calculated as the difference between the unless realisation of the asset is assured beyond reasonable carrying amount of these assets at the time of disposal and doubt. Future income tax benefits relating to entities in the proceeds on disposal and is recorded in the Statements the consolidated entity with tax losses are only brought of Financial Performance in the period of disposal. Profits or to account when their realisation is virtually certain. losses arising from the sale of properties are recognised (Refer Note 3). in the Statements of Financial Performance when contracts are exchanged. From 1 July 2003, a revised Australian Accounting Standard AAS 3 “Income Taxes” will become operative that will replace Social Program Reimbursements the current method of tax-effect accounting mentioned The Corporation provides a number of non-commercial above. The revised Standard will require a new approach in social programs at the direction of the NSW Government. calculating and recognising income tax expense, deferred tax These include pensioner rebates, properties exempt from assets and deferred tax liabilities and may have a significant service and usage charges and capital expenditures for impact on the Statements of Financial Performance and specific projects. Statements of Financial Position when it becomes operative. The Corporation seeks full cost reimbursement for all Land Tax and Sales Tax social programs provided at the request of the NSW Notional land tax is recorded in the Statements of Financial Government which result in costs and/or revenues foregone Performance as an operating expense when incurred. for the Corporation. Where the portfolio Minister, with the Notional sales tax previously paid in relation to motor approval of the NSW Treasurer, directs the Corporation to vehicles and computers that are leased by the Corporation undertake activities of a non-commercial or social nature in was recorded initially as a prepayment and is recognised the public interest under Sections 20N or 20P of the State as an operating expense in the Statements of Financial Owned Corporations Act 1989, the Corporation may seek Performance over the term of the lease. reimbursement of costs incurred in complying with such a direction. Contributions by the NSW Government for social programs are separately disclosed in Note 2(a).

47 SYDNEY WATER ANNUAL REPORT 2002 1STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (s) MAJOR SERVICE AGREEMENTS FOR FILTERED WATER continued AND TRANSFER OF SEWAGE Developer Contributions The Corporation has service agreements with the owner/operators of Water Filtration Plants at Prospect, Developer contributions may take a variety of forms, including Macarthur, Woronora and Illawarra for the supply of filtered both monetary and non-monetary resources, and include water to the Corporation. These agreements are for 25 years advances received free of repayment obligation towards the and require the Corporation to pay the owners a tariff for construction of assets and assets which are acquired at no the service provided. The tariff comprises two components: cost. These contributions may be made by the NSW an availability charge and a usage charge. Government, public sector agencies or private sector entities. They are recorded as revenue in the Statements of Financial The accounting treatment adopted by the Corporation in Performance in accordance with Urgent Issues Group Abstract respect of these agreements is to record the entire tariff as 11 “Accounting for Contributions of, or Contributions for the an expense when incurred in the Statements of Financial Acquisition of, Non-Current Assets”. (Refer also Note 2(a)). Performance. The tariff expense for the financial year is Developer contributions in the form of cash are recognised disclosed in Note 2(b). Since the Corporation considers when received. Developer contributions in the form of assets these agreements to be service agreements that are equally are recognised upon certification by the Corporation that the proportionately unperformed, no assets or liabilities are assets are ready for acceptance. required to be recognised in the Statements of Financial Position. Further, the agreements are neither leases as defined in Australian Accounting Standard AAS 17 “Leases”, (q) FOREIGN CURRENCY nor are they similar to finance leases as the Corporation is Transactions not the user of the assets and the majority of risks and Foreign currency transactions are translated to Australian benefits lie with the owners, not the Corporation. currency at the rates of exchange ruling at the dates of the This accounting treatment was supported by two of the transactions. Amounts receivable and payable in foreign then Big 5 leading international accounting firms in 1995, currencies at balance date are translated at the rates of and was confirmed by another of the then Big 5 international exchange ruling on that date. Exchange differences relating accounting firms during the previous financial year. The NSW to amounts payable and receivable in foreign currencies Treasury also supports the Corporation’s accounting are brought to account in the Statements of Financial treatment. Full disclosure of the Corporation’s commitments Performance in the financial year in which the exchange in respect of these agreements is shown in Note 19(d). rates change. The Corporation also has a service agreement for the transfer of sewage by way of a tunnel in the Blue Mountains. The term Hedges of the agreement is for 35 years, with the Corporation having The accounting policy for hedges is set out in Note 1(l). an option to extend to 50 years. A tariff is payable to the owner over the term of the agreement. Payments are made Translation Of Controlled Foreign Entities quarterly and are indexed with movements in Average Weekly The Statements of Financial Position of self-sustaining Ordinary Time Earnings (AWE). At the end of the agreement, overseas controlled entities are translated at the rates of the asset constructed under this scheme will ultimately exchange ruling at balance date. The Statements of Financial transfer to the Corporation at a nominal consideration of $1. Performance of those entities are translated at a weighted Accordingly, it is considered that the Corporation controls the average for the financial year. Exchange differences arising on relevant asset and that the future payments to be made to translation are taken directly to the Foreign Currency the owner are in substance for the acquisition of the asset. Translation Reserve. (Refer Note 14). Hence the accounting treatment adopted for this agreement is to record the capitalised cost of the physical asset as an (r) SPECIAL ENVIRONMENTAL PROGRAM asset of the Corporation and to record the future tariff A Special Environmental Levy (SEL) was introduced in the payments to be made to the owner as a liability in the 1989-90 financial year by the NSW Government as a five Statements of Financial Position. (Refer Note 11(a)). year program of raising funds to improve the environment generally and in particular, the quality of the harbour, beaches

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES and rivers in Sydney, Illawarra and the Blue Mountains. It was previously administered by the former Water Board and the former Sydney Water Corporation Limited. All funds raised under the program are to be spent on approved environmental expenditure projects of a capital and/or operating nature by the Corporation. Unexpended SEL Program funds are held by a formal Trust known as the Special Environmental Levy (SEL) Unit Trust. This Trust is administered by two Trustees who are Directors of the Corporation and two independent Trustees. A casting vote is held by the Minister for Information Technology, Minister for Energy, Minister for Forestry and Minister for Western Sydney.While the Corporation does not have control over the voting, it is the beneficiary in terms of income and capital distributions in respect of expenditure undertaken on behalf of the people of Sydney, Illawarra and the Blue Mountains and, as such, the Trust is included in the consolidated entity’s Financial Statements. (Refer Note 18(e)). The unexpended SEL Program funds held by the Trust are recorded by the Corporation as capital units within Cash Assets, as part of Current Investments, in the Corporation’s Statement of Financial Position. (Refer Note 4). As the Corporation incurs expenditure on approved environmental projects, the Trust reimburses the Corporation by distributing its investment income and also by redeeming the capital units held by the Corporation.

48 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

2PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE Profit from ordinary activities before income tax expense has been arrived at after including the following revenue and expense items:

(a) REVENUES FROM ORDINARY ACTIVITIES Revenues from core operating activities: Sales revenue from rendering of services: Service charges 584,088 565,743 584,088 565,743 Usage charges 584,848 576,202 584,848 576,202 1,168,936 1,141,945 1,168,936 1,141,945 Revenues from other than core operating activities: Sales revenue from rendering of services: Ancillary services 31,543 30,264 31,543 30,264 Sundry revenue 19,513 43,393 13,214 19,505 51,056 73,657 44,757 49,769 Interest revenue from investments: Controlled entities – – 708 1,581 Other parties 4,918 9,032 2,112 5,035 4,918 9,032 2,820 6,616 Other gains (losses) from investments 60 246 (113) 246 Interest revenue from overdue accounts 1,306 1,421 1,306 1,421 Rents 8,450 7,555 8,450 7,555 Gross proceeds from sale of non-current assets 18(b) 45,883 12,016 45,883 14,340 NSW Government contributions for social programs # 78,343 37,048 78,343 37,048 Commonwealth Government grants – 5 – – Contributions for capital works by developers ## 18(b), 19(g) 178,279 170,858 178,279 170,858 Dividend revenue: Controlled entities – – 44,581 – Total Revenues from ordinary activities 1,537,231 1,453,783 1,573,242 1,429,798

# This amount comprised contributions of $75.405 million (2001: $73.340 million) in respect of pensioner and other rebates and $2.938 million (2001: $36.292 million repayment to the NSW Government) in respect of capital works social programs. (Refer also Note 2(c)).

## This amount is net of the amount provided of $9.500 million (2001: $46.950 million) in respect of the Corporation’s obligation under the Rouse Hill Infrastructure Agreement.

49 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

2PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE continued

(b) EXPENSES FROM ORDINARY ACTIVITIES Employee-related expenses 342,204 349,666 340,392 182,830 Purchases of bulk water from Sydney Catchment Authority 122,775 119,853 122,775 119,853 Tariff expenses for Water Filtration Plant service agreements 90,833 90,904 90,833 90,904 Contractor services expenses 113,578 117,774 111,969 246,442 Depreciation and amortisation expenses 18(b) 173,976 182,248 173,878 179,092 Materials, plant and equipment expenses 43,363 42,112 43,241 14,615 Environment Protection Authority licence fees 24,578 27,809 24,578 27,654 Electricity and other energy expenses 23,054 22,353 23,040 21,838 Written down value of assets disposed of and written off 54,335 38,832 54,335 40,999 Other expenses from ordinary activities 73,266 29,708 73,043 75,830 1,061,962 1,021,259 1,058,084 1,000,057 Borrowing costs expense 18(b) 140,721 149,013 140,730 149,095 Total Expenses from ordinary activities 1,202,683 1,170,272 1,198,814 1,149,152 Additional disclosures for specific items are as follows: Superannuation expense (revenue): Defined benefit schemes 100,123 53,756 100,123 34,367 Defined contribution schemes 4,940 4,795 4,916 2,341 Total superannuation expense (revenue) 105,063 58,551 105,039 36,708 Less capitalised superannuation expense 4,027 2,309 4,027 437 Superannuation expense (revenue) 2(c), 20 101,036 56,242 101,012 36,271 Depreciation of: System assets 154,663 161,364 154,663 161,364 System buildings 535 480 535 383 Market buildings* 490 504 490 504 Plant and equipment 2,499 8,164 2,449 5,811 Water meters 7,186 5,799 7,186 5,799 Computer equipment 8,718 10,008 8,670 9,045 Total depreciation 174,091 186,319 173,993 182,906 Less capitalised depreciation expense 622 4,554 622 4,297 Net depreciation expense for property,

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES plant and equipment 173,469 181,765 173,371 178,609 Amortisation of: Leased assets capitalised 472 471 472 471 Leasehold property 35 12 35 12 Total amortisation expense 507 483 507 483 Total amount charged for depreciation, amortisation of assets 173,976 182,248 173,878 179,092

* Includes depreciation expense of $0.124 million (2001: $0.124 million) for assets leased to external parties under operating leases by the Corporation.

50 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

2PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE continued Operating lease rental expenses: Minimum lease payments 23,242 23,975 23,092 10,657 Write-off of work in progress 3,087 776 3,087 776 Write-down of Inventories – 223 – 223 Loss (Gain) on disposal of property, plant and equipment* 5,365 26,040 5,365 25,883

* The amount for the previous financial year included an amount of $14.456 million relating to tunnel boring machines used for the Northside Storage Tunnel project. This amount was capitalised as part of the cost of that project.

Amounts set aside (net expense) to provide for: Employee entitlements and on-costs 121,920 81,120 121,620 47,620 Insurance 24,784 36,728 24,784 37,696 Bad and doubtful debts 601 401 276 54 Restoration of leased premises 247 232 – – Obligation in respect of Rouse Hill Infrastructure Agreement 2(a), 19(g) 9,500 46,950 9,500 46,950 Loss on realisable value of controlled entity 22(d) (817) 915 – – 156,235 166,346 156,180 132,320 Borrowing costs expense: Total interest expenses 140,244 145,217 140,244 145,217 Other finance charges 11,755 14,188 11,764 14,270 Total borrowing costs 151,999 159,405 152,008 159,487 Less capitalised borrowing costs expense 1(k) 11,278 10,392 11,278 10,392 Borrowing costs expense 140,721 149,013 140,730 149,095

(c) INDIVIDUALLY SIGNIFICANT ITEMS INCLUDED IN PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE Superannuation expense (revenue) 2(b), 20 101,036 56,242 101,012 36,271 Repayment to NSW Government for social program capital contributions in respect of sewerage backlog projects # 2(a) – 36,292 – 36,292

# The amount in the previous financial year refers to an amount that was repaid to the NSW Government following the issue of the Pricing Determination by the Independent Pricing and Regulatory Tribunal during that financial year. This Determination allowed a price pass-through in respect of backlog sewerage projects at Picton, Bundeena/Maianbar and for the Winmalee Waste Water Treatment Plant Amplification. The amount repaid represented the amount of social program capital contributions previously received by the Corporation over a number of years for these projects which was consequently determined to be in excess of the NSW Government’s agreed commitment towards their funding.

51 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

3TAXATION

(a) INCOME TAX EXPENSE Prima facie income tax expense calculated at 30% (2001: 34%) on the profit from ordinary activities before income tax expense 100,365 96,394 112,329 95,420 Add (less) tax effect of permanent differences: Research and development (188) (332) (188) (78) Depreciation 14,489 16,180 14,491 16,156 Superannuation adjustment (write-back) 26,169 15,313 26,169 10,768 Work in progress written off – 10 – 10 Current year tax loss – controlled entity – – – 22 Developer contributions – free assets and social programs – (41,599) – (41,599) Provision for obligation in respect of Rouse Hill Infrastructure Agreement 2,850 15,963 2,850 15,963 Disposal of assets 1,733 14,310 1,733 14,310 Non allowable items (27) (471) (53) 108 Expenses for plant and equipment 3 – – – Redundancy costs 52 – – – Realised loss (gain) on foreign exchange (14) – – – Unrealised loss (gain) on foreign exchange 8 – – – Group entities’ results not recognised for tax purposes (104) – – – Capital loss on disposal of controlled entity (1,872) – (1,872) – Workers’ compensation payments 2,977 – 2,977 – Under (Over)-provided in previous financial year 779 (244) 652 (102) Dividend rebate – – (13,375) – Restatement of deferred tax balances due to change in tax rate – 3,775 – 3,833 Future income tax benefit adjustment 4,390 994 4,296 (109) Deferred income tax liability adjustment (150) – (1,082) – Income tax expense relating to ordinary activities 18(b) 151,460 120,293 148,927 114,702 Total income tax expense relating to ordinary activities is made up of: Provision for current income tax 103,636 91,532 101,434 85,574 Provision for deferred income tax 38,486 13,587 39,442 15,960 Future income tax benefit 9,338 15,174 (9,701) 19,517

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES Tax losses from controlled entity over-provided – – – (1,484) Consideration for net transfers of tax balances from (to) controlled entities – – 17,752 (4,865) 151,460 120,293 148,927 114,702

(b) CURRENT TAX ASSETS Amounts receivable from taxation authorities in the next financial year 9 25 – –

52 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

3TAXATION continued

(c) FUTURE INCOME TAX BENEFIT Future income tax benefit comprises the estimated future benefit of the following items at the income tax rate which is expected to apply when the timing differences reverse: Provisions and employee entitlements not currently deductible 40,042 49,087 39,880 30,194 Assets depreciated – 312 – – Finance lease 13 593 13 593 Loss (gain) on investment 109 644 109 644 Anticipated receipts/expenses 1,130 – 1,130 – Unrealised loss on foreign exchange 4 – – – 41,298 50,636 41,132 31,431

(d) PROVISION FOR CURRENT INCOME TAX Movements during the financial year were as follows: Balance at beginning of year 36,902 59,192 31,050 59,191 Under (Over)-provided in previous financial year 208 2,298 81 2,319 Tax liability disposed of with sale of controlled entity (14) – – – Income tax paid (91,228) (113,752) (84,598) (113,715) Income tax received – 19 – – Current year’s income tax payable on profit from ordinary activities 103,428 89,120 101,353 83,255 Transfer of Current tax asset 2(b) 9 25 – – 49,305 36,902 47,886 31,050

(e) PROVISION FOR DEFERRED INCOME TAX Provision for deferred income tax comprises the estimated expense on the following items at the income tax rate which is expected to apply when the timing differences reverse: Accrued interest income 917 328 912 323 Prepayments 2,358 5,189 2,358 4,423 Consumable stores 148 140 148 3 Water usage – unread meters 22,739 19,586 22,739 19,586 Depreciated assets 93,734 56,157 93,734 56,114 Work in progress 140 150 – – 120,036 81,550 119,891 80,449

53 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

4CASH ASSETS

CURRENT Cash 18(a) 5,746 – – – Current investments 18(a) 75,402 53,861 75,406 53,872 81,148 53,861 75,406 53,872 Current investments comprise the following: Government and other public sector securities: At cost: Interest-bearing deposits 2,800 – 2,800 – Capital units in Special Environmental Levy Unit Trust 22(a) – – 6,258 17,812 2,800 – 9,058 17,812 Other securities: At cost: Bills of exchange 1,820 – 1,496 – Promissory notes 65,806 47,755 59,876 29,954 Interest-bearing deposits – 278 – 278 Certificates of deposit – 782 – 782 Inscribed stock 4,976 – 4,976 – 72,602 48,815 66,348 31,014 At market value: Inscribed stock – 5,046 – 5,046 – 5,046 – 5,046 Total Current investments 18(a) 75,402 53,861 75,406 53,872

SIGNIFICANT TERMS AND CONDITIONS Debentures are a corporate debt security generally issued at face value paying a fixed coupon per annum. Debentures rank ahead of preference and ordinary shareholders in their claim on assets. Typically, debentures are issued with a short to medium term to maturity of between one and three years. Bills of exchange are debt securities accepted or endorsed by a Bank. Bills of exchange are negotiable instruments, issued at a discount and generally maturing within six months. The amount paid on maturity is comprised of the original principal amount invested plus the accumulated interest thereon. Promissory notes are a negotiable corporate debt security secured solely against the assets of the issuer. Promissory notes are issued at a discount and generally mature within six months. The amount paid on maturity is comprised of the original principal amount invested plus the accumulated interest thereon.

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES Mortgage certificates are debt securities paying either a fixed or floating coupon over their term. Mortgage certificates are secured against a mortgage pool, and backed by credit enhancements in various forms. While mortgage certificates are issued with a long term to maturity of up to 30 years, the weighted average life on the security is typically somewhat shorter at about three years. Interest-bearing deposits are non-negotiable investments with banks and Government Authorities. Interest-bearing deposits are issued at face value paying a fixed interest rate over their life at maturity. Interest-bearing deposits can be issued for any duration although the consolidated entity typically holds only short dated deposits maturing within one year. Certificates of deposit are debt securities issued by a Bank at a discount. Negotiable, Convertible, and Transferable certificates of deposit are issued out to five years. The amount paid on maturity is comprised of the original principal amount invested plus the accumulated interest thereon. Floating rate notes are negotiable debt securities generally issued for three to five years where the interest rate is generally reset on a quarterly or semi-annual basis. Inscribed stock are long dated debt securities paying a semi-annual fixed coupon. Inscribed stock includes Government and Semi- Government bonds, and other securities where the stock is inscribed on a registry in the name of the owner. The original term to maturity is between one and ten years. None of the above investments are quoted on a stock exchange.

54 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

5RECEIVABLES

CURRENT Outstanding Service and Usage charges 108,622 94,375 108,622 94,375 Less: Provision for doubtful debts 613 582 613 582 108,009 93,793 108,009 93,793 Other trade debtors: Controlled entities – – 5,656 429 Other parties 8,570 11,742 2,345 1,961 Other debtors and accrued revenue: Controlled entities – – 2,215 3,995 Other parties 34,223 12,878 33,440 12,187 42,793 24,620 43,656 18,572 Less: Provision for doubtful debts 912 1,160 340 229 41,881 23,460 43,316 18,343 149,890 117,253 151,325 112,136

NON-CURRENT Loan provided to outside equity interests in controlled entity 22(d) 89 – – –

SIGNIFICANT TERMS AND CONDITIONS Trade debtors for Service and Usage charges receivable are required to be settled within 21 days. Other trade debtors receivable are generally required to be settled within 14 days. Accrued investment revenue is receivable within a maximum period of six months. The non-current loan was provided by the subsidiary company’s wholly owned controlled entity, AWT International Pty. Ltd. (“AWTI”) to the outside equity interests of its new controlled entity in Thailand in order for them to acquire the shares in the new controlled entity. (Refer also Note 22(d)). Under Thailand law, a foreign company cannot own more than 49% of the shares in a Thailand company.There is no defined period for the settlement of the loan. The process of settlement by the outside equity interests can be by way of repayment of the loan in cash or returning all of their shares to AWTI. The loan is interest-bearing at the rate of 10% per annum. The actual interest payable each financial year is dependent on whether the new controlled entity can pay a dividend to the outside equity interests to the value of 10% of their total shareholding. If the dividend payable to outside equity interests for each financial year by the new controlled entity is less than 10% of their total shareholding, the difference between the dividend payable by the new controlled entity to its outside equity interests and the 10% interest payable on the loan is waived by AWTI.

6INVENTORIES

CURRENT Stock, stores and materials – at cost 494 467 494 10 Construction work in progress held as inventory: Contract costs incurred to date – 6,825 – – Profit recognised to date – 791 – – – 7,616 – – Less: Provision for foreseeable losses – – – – – 7,616 – – Less: Progress billings – 7,460 – – Net construction work in progress – 156 – – Consulting work in progress held as inventory 467 109 – – Total Inventories 961 732 494 10 Net construction work in progress comprises: Amounts due from customers – 156 – –

7OTHER ASSETS Prepayment for over-funded superannuation schemes 20 – 33,536 – 12,893 Other prepayments 19,669 28,801 19,649 24,571 Total Other assets 19,669 62,337 19,649 37,464

55 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

8OTHER FINANCIAL ASSETS

NON-CURRENT Non-current investments 58,955 82,398 59,455 103,198 Non-current investments comprise the following: Government and other public sector securities: At cost: Inscribed stock 5,406 5,406 5,406 5,406 Shares in Australian Water Technologies Pty. Ltd. 22(a), (c) – – 500 20,800 5,406 5,406 5,906 26,206 At market value by independent valuation: Inscribed stock 7,654 5,152 7,654 5,152 NSW Treasury Corporation “Hour Glass” Facility 29,328 53,363 29,328 53,363 36,982 58,515 36,982 58,515 42,388 63,921 42,888 84,721 Other securities: At cost: Mortgage certificates 1,406 3,392 1,406 3,392 Inscribed stock 5,203 10,180 5,203 10,180 6,609 13,572 6,609 13,572 At market value: Mortgage certificates 4,998 – 4,998 – Inscribed stock 4,960 4,905 4,960 4,905 9,958 4,905 9,958 4,905 Total Non-current investments 58,955 82,398 59,455 103,198

SIGNIFICANT TERMS AND CONDITIONS The NSW Treasury Corporation “Hour Glass” Facility is a pooled investment vehicle investing in a range of cash securities, domestic and offshore fixed interest securities, domestic and offshore equities. The Facility is revalued each month to reflect changes in the value of the various financial instruments being used. There is no specific maturity date. The consolidated entity’s investment in the Facility can be realised at any time but is being held for long term requirements. Market valuations for the “Hour Glass” Facility are provided by the NSW Treasury Corporation as at each balance date. These valuations are obtained regularly throughout the year and at each balance date for inclusion in the financial report. Market values for all other investments are determined on the basis of discounted cash flows using valuation rates supplied by independent market sources. None of the above investments are quoted on a stock exchange.

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES For significant terms and conditions in respect of all investments in money market instruments other than the “Hour Glass” Facility, refer to Note 4.

56 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

9PROPERTY, PLANT AND EQUIPMENT

NON-CURRENT

(a) CARRYING AMOUNTS Land and buildings – at market value Directors’ valuation 2000 2,280 2,280 2,280 2,280 Independent valuation 2000 279,215 305,442 279,215 305,442 281,495 307,722 281,495 307,722 Less: Accumulated depreciation 752 528 752 528 280,743 307,194 280,743 307,194 Leasehold properties – at market value Directors’ valuation 2000 2,040 2,040 2,040 2,040 Less: Accumulated amortisation 47 12 47 12 1,993 2,028 1,993 2,028 Plant and equipment – at cost 27,795 51,583 27,621 27,474 Less: Accumulated depreciation 13,323 32,906 13,267 17,278 14,472 18,677 14,354 10,196 Water meters – at estimated cost 66,057 60,975 66,057 60,975 Less: Accumulated depreciation 27,453 20,268 27,453 20,268 38,604 40,707 38,604 40,707 Computer equipment – at cost 63,407 53,231 63,266 47,597 Less: Accumulated depreciation 22,475 19,703 22,412 15,204 40,932 33,528 40,854 32,393 Plant and equipment under finance leases – at capitalised cost 2,200 2,200 2,200 2,200 Less: Accumulated amortisation 1,768 1,296 1,768 1,296 432 904 432 904 System assets – at written down current replacement cost Directors’ valuation 2000 – 11,771,425 – 11,769,990 Less: Accumulated depreciation – 164,703 – 164,312 – 11,606,722 – 11,605,678 System assets – at recoverable amount Directors’ valuation 2002 12,044,116 – 12,044,116 – Less: Accumulated depreciation – – – – 12,044,116 – 12,044,116 – System land – at rateable land value Independent valuation 2000 – 308,438 – 308,438 Independent valuation 2001 321,460 – 321,460 – 321,460 308,438 321,460 308,438 Easements – at valuation of interest in property Directors’ valuation 2000 – 136,698 – 136,698 Directors’ valuation 2001 261,348 – 261,348 – 261,348 136,698 261,348 136,698 Work in progress – at cost 895,299 648,852 895,299 648,836 Total Property, plant and equipment 13,899,399 13,103,748 13,899,203 13,093,072 Assets leased to external parties under operating leases: Land and buildings 133,033 121,110 133,033 121,110 Less: Accumulated depreciation 418 418 418 418 132,615 120,692 132,615 120,692

57 SYDNEY WATER ANNUAL REPORT 2002 9PROPERTY, PLANT AND EQUIPMENT continued The second stage involved revaluing these system asset values down by $4.182 billion to their recoverable amount. After (b) LAND AND BUILDING VALUATIONS taking into consideration additions and other movements during the financial year, a further comparison was made In respect of system land, the independent valuation is the at balance date to ensure that the carrying amount of all current Valuer-General valuation, as used by local government property, plant and equipment assets other than Work in for the purpose of rating properties. progress in the Statements of Financial Position did not exceed In respect of market land and buildings, valuations are their recoverable amount of $13.004 billion as at that date. determined on the basis of the open market value of the The combined effect of all revaluation adjustments in respect properties concerned. Where an estimate can be reliably of system assets during the financial year was a net increment measured, allowance is made for the potential impact of of $208.248 million. (Refer also Note 9(e)). environmental contamination and development restrictions related to a property’s heritage significance. (d) RECOVERABLE AMOUNT Independent valuations are in accordance with the Due to the nature of Water Industry assets (in particular Corporation’s policy of obtaining a valuation of land and pipes), their recoverable amount is determined by the stream buildings every three years with effect from 1 July in the year of income that can be derived from the use of the assets of the valuation. (Refer Note 1(f)). All market land and working together as one integrated network, rather than the buildings held as at 1 July 2000 were revalued, as at that date, realisable value of the assets themselves. On this basis, the in order to commence a new three-year revaluation cycle. recoverable amount test referred to in Notes 1(f) and 9(c) was These properties will qualify for revaluation again after three calculated using relevant estimated cash flows discounted years. Properties acquired during the intervening years of the to their present value. Cash flows were estimated for a three year revaluation cycle are stated at Directors’ valuation period of 75 years, which reflects the average useful life for the financial year in which the property was acquired and of the Corporation’s assets. qualify for independent valuation after three years from 1 July of that financial year. Where system land has been Future cash inflows include Service and Usage charges, identified as being surplus to requirements, it is reclassified external sales, capital cash contributions from developers as market land. An independent valuation is subsequently and other revenue. Except for capital cash contributions undertaken with an effective date of 1 July in the financial from developers, cash inflows were projected over the next year during which the reclassification has taken place. 75 years based on a Consumer Price Index (“CPI”) of 3% per annum and expected annual growth (in properties served One property held in the asset class of market land and and usage) of 1.5% per annum. Inflows for capital cash buildings was independently valued during the current contributions from developers were increased by CPI only, financial year after it was reclassified from system land. which is considered to be representative of increases in the The property, which was sold prior to balance date, was costs of construction. valued by Kevin Gothard and Co Pty Limited. Future cash outflows for both operating and capital The Corporation has commenced a program to sell land and expenditure were projected using the CPI of 3% per buildings that are surplus to its requirements. It is expected annum and additionally, for operating expenditure, that land and buildings with a carrying amount of using a growth rate of 1.5% per annum. Any cash outflows $58.960 million (2001: $68.211 million) will be sold over for both capital and operating expenditure that relate to the next two to three financial years under this program. improving standards of service over and above that currently Capital gains tax resulting from the sale of these provided by existing assets under the Corporation’s properties is expected to approximate $6.769 million current operating licence requirements are excluded (2001: $5.159 million). This is calculated using the market from future cash outflow projections. values for these properties as at 1 July 1995 as the cost base for capital gains tax purposes, in accordance with approved The resulting net cash flow projection was then discounted grandfathering arrangements for the Corporation’s entry to its present value using a nominal discount rate of 7% after into the NTER. The capital gains tax calculation has not tax to determine the recoverable amount. been incorporated in the valuation of these properties.

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES (c) SYSTEM ASSETS The Directors’ valuation of system assets at the beginning of the financial year was carried out in two stages. The first stage involved increasing system asset values by $4.451 billion to an estimated written down current replacement cost of $16.005 billion based on the modern engineering equivalent replacement asset methodology. This was carried out by specialist engineering groups within the Corporation’s various business areas. The valuation basis and methodology was then independently reviewed and agreed by a specialist firm of consultants within the Water industry. The increase is a reflection of changes in economic factors that have impacted on cost components such as the price and choices of pipe materials, construction/ installation costs as well as restoration costs. In addition to these factors, more detailed costings have been undertaken for the revaluation so as to incorporate the Corporation’s higher standards in relation to its pipelaying and construction methods.

58 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2002 $’000 $’000

9PROPERTY, PLANT AND EQUIPMENT continued

(e) RECONCILIATION OF MOVEMENT IN CLASSES OF PROPERTY, PLANT AND EQUIPMENT Land and buildings: Balance at beginning of financial year 307,194 307,194 Disposals (39,725) (39,725) Net revaluation increments (decrements) 22,543 22,543 Depreciation expense (490) (490) Reclassification between classes (8,779) (8,779) Balance at end of financial year 280,743 280,743 Leasehold properties: Balance at beginning of financial year 2,028 2,028 Amortisation expense (35) (35) Balance at end of financial year 1,993 1,993 Plant and equipment: Balance at beginning of financial year 18,677 10,196 Acquisitions through transfer of businesses from controlled entity –7,345 Additions – other 705 631 Disposals (1,369) (1,369) Disposal of controlled entity (1,148) – Depreciation expense (2,499) (2,449) Asset valuation decrement (146) – Reclassification between classes 244 – Net foreign currency differences on translation of self-sustaining foreign operations 8– Balance at end of financial year 14,472 14,354 Water meters: Balance at beginning of financial year 40,707 40,707 Additions 8,768 8,768 Disposals (3,685) (3,685) Depreciation expense (7,186) (7,186) Balance at end of financial year 38,604 38,604 Computer equipment: Balance at beginning of financial year 33,528 32,393 Acquisitions through transfer of businesses from controlled entity – 1,686 Additions – other 15,864 15,810 Disposals (365) (365) Disposal of controlled entity (179) – Depreciation expense (8,718) (8,670) Asset valuation decrement (2) – Reclassification between classes 799 – Net foreign currency differences on translation of self-sustaining foreign operations 5– Balance at end of financial year 40,932 40,854

59 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2002 $’000 $’000

9PROPERTY, PLANT AND EQUIPMENT continued Plant and equipment under finance leases: Balance at beginning of financial year 904 904 Amortisation expense (472) (472) Balance at end of financial year 432 432 System assets: Balance at beginning of financial year 11,606,722 11,605,678 Additions 395,565 395,565 Disposals (5,620) (5,620) Net revaluation increments (decrements) 208,248 208,248 Depreciation expense (155,198) (155,198) Reclassification between classes (5,601) (4,557) Balance at end of financial year 12,044,116 12,044,116 System land: Balance at beginning of financial year 308,438 308,438 Additions 17,579 17,579 Disposals (354) (354) Net revaluation increments (decrements) (17,539) (17,539) Reclassification between classes 13,336 13,336 Balance at end of financial year 321,460 321,460 Easements: Balance at beginning of financial year 136,698 136,698 Additions 3,668 3,668 Disposals (130) (130) Net revaluation increments (decrements) 121,112 121,112 Balance at end of financial year 261,348 261,348 Work in progress: Balance at beginning of financial year 648,852 648,836 Acquisitions through transfer of businesses from controlled entity –16 Additions – other 560,359 560,359 Capitalisations (310,825) (310,825) Write-offs (3,087) (3,087) Balance at end of financial year 895,299 895,299

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES Total Property, plant and equipment 13,899,399 13,899,203

60 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

10 PAYABLES

CURRENT Trade creditors: Controlled entities – – – 27,556 Other parties 39,028 26,184 38,433 22,655 Other creditors and accrued charges: Controlled entities – – 906 61,414 Other parties 203,031 165,515 202,805 147,608 242,059 191,699 242,144 259,233

SIGNIFICANT TERMS AND CONDITIONS Trade accounts payable are normally settled within 30 days. Interest on loans and advances is generally payable within a maximum period of six months.

11 INTEREST-BEARING LIABILITIES

(a) CARRYING AMOUNTS

CURRENT Bank overdraft (see below) 18(a) 30,163 31,537 30,163 26,407 Loans and advances 11(b) 1,979 1,801 1,979 1,801 Obligation under Blue Mountains Sewage Transfer Scheme 966 909 966 909 Lease liabilities 19(f) 505 470 505 470 33,613 34,717 33,613 29,587

NON-CURRENT Loans and advances 11(b) 2,028,356 1,865,693 2,028,356 1,865,693 Obligation under Blue Mountains Sewage Transfer Scheme 73,765 74,731 73,765 74,731 Lease liabilities 19(f) – 505 – 505 2,102,121 1,940,929 2,102,121 1,940,929

SIGNIFICANT TERMS AND CONDITIONS Credit Arrangements: The Corporation has a bank overdraft facility with Citibank Limited that is used as and when required as part of its daily cash management functions, whereby the bank balance may often fluctuate from funds on deposit to an overdrawn position. (Refer also Note 18(d)). Overdraft interest is charged on the basis of Citibank Limited’s prime rate that is calculated daily and applied to overdrawn balances. The Corporation maintains no other credit facilities and cannot borrow in its own name. New borrowings for the Corporation for conversion purposes need to be arranged via the NSW Treasury Corporation. During the current financial year, the approval of the Governor of NSW was obtained for the Corporation to seek new loan funding totalling $100 million (2001: $130 million). Of this amount, $90 million (2001: $50 million) in cash was drawn down during the current financial year as well as the remaining $80 million from the previous financial year. Bank Balance: While the cash book showed an overdrawn balance of $30.163 million and cash on hand of $5.746 million for the consolidated entity (2001: $31.537 million overdrawn), and an overdrawn balance of $30.163 million for the Corporation (2001: $26.407 million overdrawn), allowing for unpresented cheques and outstanding deposits the actual balance at 30 June 2002 was $6.775 million on hand for the consolidated entity (2001: $10.938 million on hand) and $0.771 million on hand for the Corporation (2001: $4.743 million on hand).

61 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

10 PAYABLES continued Loans and Advances: Loans and advances, none of which are secured against the assets of the Corporation, comprise the following categories: Board’s loans, Commonwealth Government loans, Other advances and NSW Treasury Corporation loans. Board’s loans are comprised of loans raised prior to 1983 when the then Metropolitan Water Sewerage and Drainage Board (a predecessor entity of the Corporation) borrowed in its own name. These are “bullet” loans, on which interest is paid on a half yearly basis and the full principal is repaid on maturity. These mature within a maximum period of 12 years. During the financial year, principal repayments are refinanced through the NSW Treasury Corporation. Board’s loans outstanding at balance date totalled $6.131 million (2001: $6.658 million). Commonwealth Government loans were issued over several years to the then Metropolitan Water Sewerage and Drainage Board to fund sewerage backlog works. These loans involve the half-yearly payment of principal and interest and mature within a maximum period of 14 years. Principal repayments are not refinanced. Commonwealth Government loans outstanding at balance date totalled $49.214 million (2001: $51.015 million). Other advances comprise loan obligations assumed from the Blue Mountains and Penrith City Councils when predecessor entities of the Corporation assumed control over the water and/or waste water systems of those Councils. The majority of the outstanding loans involve the half-yearly repayment of principal and interest over the life of the loan. Some “bullet” loans remain, on which interest is paid on a half yearly basis and the full principal is repaid on maturity. These loans are very long term in nature with many extending between one year and 17 years. During the financial year, principal repayments are refinanced through the NSW Treasury Corporation. Other advances outstanding at balance date totalled $4.760 million (2001: $4.970 million). The largest category of loans outstanding is NSW Treasury Corporation loans. These are loans raised on behalf of the Corporation by the central borrowing authority, the NSW Treasury Corporation. Loans are negotiated with either a floating interest rate, in which case the rate is reset periodically in accordance with the requirements of the Corporation, or at a fixed rate where interestis paid half-yearly in arrears. All such loans are refinanced at maturity. Floating rate facilities have a duration of between one and six months, while fixed rate loans have maturities up to 10 years. NSW Treasury Corporation loans outstanding at balance date totalled $1.970 billion (2001: $1.805 billion). Obligation under Blue Mountains Sewage Transfer Scheme: Availability payments to the private sector include repayment of principal and interest calculated at a real yield of 6.25%. Payments are made quarterly and are indexed with movements in Average Weekly Ordinary Time Earnings (AWE). The contract commenced in the 1995-96 financial year and is for 35 years, with the Corporation having an option to extend for a further 15 years. If the Corporation chooses to exercise the option after 35 years, the annual payment to be made until the end of the agreement will be fixed at 80% of the final payment in the 35th year with no further indexation.

(b) LOANS AND ADVANCES ANALYSIS Loans and advances are payable as follows: Not later than one year 766,015 690,749 766,015 690,749 Later than one year but not later than two years 432,139 179,919 432,139 179,919 Later than two years but not later than five years 314,246 582,856 314,246 582,856 Later than five years 517,935 413,970 517,935 413,970 2,030,335 1,867,494 2,030,335 1,867,494 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES Total short term obligations as at balance date which have been excluded from Current Liabilities and included in Non-current Liabilities, due to a refinancing agreement with NSW Treasury Corporation (refer Note 11(a)), amounts to $764.035 million (2001: $688.948 million). Under the terms of this agreement, Board’s loans, Other advances and NSW Treasury Corporation loans are refinanced at maturity on an ongoing basis at the discretion of the Corporation.

62 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

12 PROVISIONS

CURRENT Dividend 110,000 53,353 110,000 53,353 Employee entitlements, including on-costs 34,524 35,293 34,483 28,788 Workers’ compensation insurance 10,023 10,438 10,023 10,438 General insurance 10,494 21,384 10,494 21,384 Obligation in respect of Rouse Hill Infrastructure Agreement 19(g) 1,650 8,850 1,650 8,850 Restoration of leased premises – 170 – – Loss on realisable value of controlled entity 22(d) – 915 – – 166,691 130,403 166,650 122,813

NON-CURRENT Employee entitlements, including on-costs 154,555 91,444 154,555 49,666 Workers’ compensation insurance 44,704 33,185 44,704 33,185 Restoration of leased premises – 311 – – 199,259 124,940 199,259 82,851

13 CONTRIBUTED EQUITY

ISSUED AND FULLY PAID UP SHARE CAPITAL 3,108,354,000 (2001: 3,108,354,000) ordinary shares of $1.00 each 3,108,354 3,108,354 3,108,354 3,108,354

The Corporation’s two shareholders are the Treasurer of NSW, Minister for State Development and Vice-President of the Executive Council, and also the Special Minister of State, Minister for Industrial Relations, Assistant Treasurer, Minister Assisting the Premier on Public Sector Management and Minister Assisting the Premier for the Central Coast. Each shareholder holds 1,554,177,000 $1 ordinary shares non-beneficially. Under the NTER, the Corporation is not required to maintain a dividend franking account.

14 RESERVES Asset revaluation 7,472,707 7,148,285 7,472,707 7,148,285 Foreign currency translation 2 23 – – 7,472,709 7,148,308 7,472,707 7,148,285

MOVEMENTS DURING THE FINANCIAL YEAR Asset Revaluation Balance at beginning of financial year 7,148,285 6,976,456 7,148,285 6,976,379 Add (less): Net revaluation increment (decrement) for: System and property assets 334,364 167,839 334,364 167,916 NSW Treasury Corporation “Hour Glass” Facility 964 3,990 964 3,990 Transfer to retained profits for realised “Hour Glass” Facility amount 15 (10,906) – (10,906) – Balance at end of financial year 7,472,707 7,148,285 7,472,707 7,148,285

The asset revaluation reserve includes the net revaluation increments and decrements arising from the revaluation of non-current assets and any applicable write-downs to recoverable amount. (Refer Notes 1(d) and 1(f)). Foreign Currency Translation Balance at beginning of financial year 23 30 – – Add (less): Translation adjustment on controlled foreign entities’ Financial Statements (21) (7) – – Balance at end of financial year 2 23 – –

The foreign currency translation reserve records the foreign currency differences arising from the translation of self-sustaining foreign operations. (Refer Note 1(q)).

63 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

15 RETAINED PROFITS Balance at beginning of financial year 673,188 563,323 627,632 515,041 Net profit attributable to members of the parent entity 183,088 163,218 225,501 165,944 Transfer from asset revaluation reserve for realised “Hour Glass” Facility amount 14 10,906 – 10,906 – Dividends recognised as a liability (110,000) (53,353) (110,000) (53,353) Balance at end of financial year 757,182 673,188 754,039 627,632

16 OUTSIDE EQUITY INTERESTS Outside equity interests in controlled entities comprise: Interest in share capital 89 – – – Total outside equity interests 89 – – –

17 TOTAL EQUITY RECONCILIATION Balance at beginning of financial year 10,929,850 10,648,163 10,884,271 10,599,774 Total changes in parent entity interest in equity recognised in the Statements of Financial Performance 518,395 335,040 560,829 337,850 Transactions with owners as owners: Dividends recognised as a liability (110,000) (53,353) (110,000) (53,353) Total changes in outside equity interests 16 89 – – – Balance at end of financial year 11,338,334 10,929,850 11,335,100 10,884,271

18 NOTES TO THE STATEMENTS OF CASH FLOWS

(a) RECONCILIATION OF CASH For the purposes of the Statements of Cash Flows, cash includes cash on hand, in banks (net of bank overdraft) and short term investments in money market instruments. Both cash on hand or in banks and short term investments in money market instruments are classified as Cash Assets in the Statements of Financial Position. (Refer Note 4). Bank overdrafts are included within Current Interest-bearing liabilities in the Statements of Financial Position. (Refer Note 11(a)). Investments classified in the previous financial year as Non-current and which have now been classified as Current due to their maturity dates falling within one year of balance date are reclassified as cash equivalents in the Statements of Cash Flows. These amount to $4.976 million for both the consolidated entity and the Corporation (2001: $5.046 million for both the consolidated entity and the Corporation). This movement is included within Investing Activities. Cash as at the end of the financial year as shown in the Statements of Cash Flows is reconciled to the related items in the Statements of Financial Position as follows: Cash assets 4 81,148 53,861 75,406 53,872

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES Bank overdraft 11(a) (30,163) (31,537) (30,163) (26,407) 50,985 22,324 45,243 27,465

64 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

18 NOTES TO THE STATEMENTS OF CASH FLOWS continued

(b) RECONCILIATION OF NET PROFIT TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net profit 183,088 163,218 225,501 165,944 Add (less) cash items classified as investing or financing activities: Interest received from non-current investments (2,308) (5,755) (2,308) (5,755) Proceeds from sale of non-current assets 2(a) (45,883) (12,016) (45,883) (14,340) Add (less) expense (revenue) items classified as investing or financing activities: Borrowing costs expense 2(b) 140,721 149,013 140,730 149,095 Current year contributions for capital works (excluding Provision for Rouse Hill) 2(a) (190,717) (181,516) (190,717) (181,516) Add (less) non-cash items: Amounts set aside to provisions 2(b) 156,235 166,346 156,180 132,320 Depreciation and amortisation 2(b) 173,976 182,248 173,878 179,092 Written down value of assets disposed of and written off 2(b) 54,335 38,832 54,335 40,999 Asset valuation decrements 148 – – – Income tax expense relating to ordinary activities 3(a) 151,460 120,293 148,927 114,702 Add (less) net movement applicable to operating activities for: Inventories (218) 913 (472) 773 Debtors and prepayments 7,749 60,897 (21,245) 43,331 Creditors 2,112 (1,632) (23,543) (8,031) Receipts for tax assets – 19 – – Payments for tax liabilities (91,202) (113,752) (84,598) (113,715) Tax balances transferred to (from) controlled entity – – (17,752) 4,865 Payments made from provisions (78,570) (115,090) (60,544) (86,691) Net cash provided by operating activities 460,926 452,018 452,489 421,073

(c) NON-CASH FINANCING AND INVESTING ACTIVITIES Assets which are acquired by the consolidated entity under finance leases, other financing arrangements or assets handed over at no cost by subdividers/developers are not included in the Statements of Cash Flows as these are regarded as non-cash. During the financial year, no assets were acquired under finance leases or other financing arrangements by either the consolidated entity or the Corporation (2001: $Nil for both the consolidated entity and the Corporation). The amount capitalised during the financial year in respect of assets handed over at no cost by subdividers/developers to both the consolidated entity and the Corporation was $127.305 million (2001: $158.641 million). This includes assets from the Rouse Hill development for which a provision of $9.500 million (2001: $46.950 million) has been recognised in the Statements of Financial Performance. (Refer Notes 2, 12 and 19(g)).

(d) STANDBY CREDIT ARRANGEMENTS The Corporation has a bank overdraft facility with Citibank Limited, to a value of $5 million, which is used as and when required as part of its daily cash management functions, whereby the bank balance may often fluctuate from a deposit to an overdrawn balance. This facility was not utilised as at balance date. Also, the Corporation’s subsidiary company has a drawdown facility with Citibank Limited, to a value of $2 million, which the subsidiary company uses to provide bank guarantees in lieu of security deposits. At balance date $0.683 million (2001: $0.713 million) of this facility was utilised. In addition, as mentioned in Note 11(a), the approval of the Governor of NSW was obtained during the financial year for the Corporation to seek new loan funding totalling $100 million (2001: $130 million). Of this amount, $90 million (2001: $54 million) in cash was drawn down during the current financial year as well as the remaining $80 million from the previous financial year.

(e) RESTRICTIONS OVER CASH BALANCES As mentioned in Note 1(r), funds raised under the Special Environmental Program that are yet to be expended are administered by the Special Environmental Levy (SEL) Unit Trust. The terms and conditions under which the consolidated entity can use these funds are governed by a subscription Deed between the Corporation and the Trust. The Deed ensures that procedures are in place so that all funds raised under the program, and interest thereon, are independently administered by the Trust and properly expended on approved environmental projects undertaken by the Corporation. The total SEL funds which are unexpended as at balance date amounted to $6.258 million (2001: $17.812 million).

65 SYDNEY WATER ANNUAL REPORT 2002 66 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 9COMMITMENTS 19 8NOTES TO STATEMENTSTHE OFCASH FLOWS18 continued C transfers comprisedthese are shownseparatelytheir respective in t classifications in cash flowsthat inrelationthe items to the cashpaymentsthe Corporation between company, anditssubsidiary the abovetransfersAlthough were settledbyway ofnet companysubsidiary byway ofcashconsideration. the Corporation $8.329millionbeingmadeby of the to payment transfers These resulted inanet transferredthe Corporation. to r transfersthe Corporation ofbusinesses between that company andits subsidiary took place the previous also In financialyear, (Refer Note22(c)). the Corporation companythe subsidiary to being paidby byway ofcashconsideration. $16.934millio of amount resulting inanet transfersthese transfer wasthe the Corporation, ofvariousto assetsandliabilities Associated with Theeffective date forthis integration transfer and ofbusinesseswas 1July2001. services. operational support c theCorporation acquired businessesproviding suchasengineering services Asaresult, effectiveness ofprocesses andfunctions. C the company’s andintegratedthe subsidiary allof with, businessesinAustralia weretransferred to, As mentioned inNote1, (f) TRANSFER OFBUSINESSES Co COMMITMENTS(b) OTHER EXPENDITURE longer than one year but not longer than five longer years not than oneyearlonger but Co SERVICE AGREEMENTS(d) MAJOR FORFILTERED WATER from 1July 2005. taketo effect to bealigned entities b of PricingandRegulatory Tribunal’s PricingDeterminationsthe Independent inrespect the expiryto enable dateto soas prior take will place to renew negotiationsthe agreement isanticipatedthat It to expire isdue on30June2005. bulk water agreement Thecurrent The Corporation Authority. draws downpredominantly allofitsbulkwater requirementsthe Sydney from Catchment SYDNEY WAT SYDNEY * Value * Present than fivelonger years –Net than five longer years not than oneyearlonger but than fivelonger years than five longer years not than oneyearlonger but Co (a) CAPITAL COMMITMENTS EXPENDITURE the GoodsandServices includeestimates of Tax. The following commitments donot Co (c) BULK WATER FROM PURCHASES SYDNEY CATCHMENT AUTHORITY not longer than oneyear longer not longer than one year but not longer than five longer years not than oneyearlonger but than oneyear longer not not longer than oneyear longer not not longer than oneyear longer not sle nntast f$229mlinbigtaserdt h usdaycmayadntassetsof$3.970millionbeing transferred assetsof$12.299millionbeing companythe subsidiary to andnet esulted innet ntuto,mcaia,eetia n ii aneac,evrnetl cetfcadtcnlgclsrie,andvarious technological services, scientific and environmental, andcivilmaintenance, electrical mechanical, onstruction, orporation’s Statement of Cash of Flows. orporation’s Statement the consolidated of entity’sto improve ongoingrestructuring efficiency and orporationthe financialyear during aspart nt nt nt nt 4% perannum. perannumreal comprising before 7% tax andanestimated average infla rate usedis11.28%perannumnominalbeforetax, discount valuethese contracts as extend overtwenty five ye present The cashflowamounts beyond five years are expressedterms ofnet in ra ra ra ra c c c c e u o provided for andpayable: not ted but e u o provided for andpayable: not ted but e u o provided for andpayable: not ted but e u o provided for andpayable: not ted but ER ANNUAL REPORTER ANNUAL 2002 NOTE 244,812 123,930 403,236 296,827 103,101 132,092 360,965 120,882 473,783 94,272 64,138 28,697 $’000 2002 294 C ONSOLIDATED THE CORPORATION THE ONSOLIDATED 253,800 509,840 418,922 186,222 374,100 189,673 115,079 120,300 130,744 93,619 14,758 3, $’000 2001 907 451 244,812 403,236 123,930 296,827 103,101 132,092 360,965 120,882 473,783 94,272 64,138 28,697 $’000 2002 294 r.The ars. 253,800 509,840 418,922 186,222 374,100 189,673 115,079 120,300 130,744 93,619 14,758 tion rate of 3, $’000 2001 907 451 he n oth , CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

19 COMMITMENTS continued

(e) OPERATING LEASE COMMITMENTS Payable as lessee Future operating lease rentals not provided for in the Financial Statements and payable: not longer than one year 19,304 21,381 19,258 20,984 longer than one year but not longer than five years 52,314 54,907 52,265 54,774 longer than five years 43,034 53,488 43,034 53,488 114,652 129,776 114,557 129,246 Representing: Cancellable operating leases 87,118 104,579 87,118 104,339 Non-cancellable operating leases 27,534 25,197 27,439 24,907 114,652 129,776 114,557 129,246 Non-cancellable operating lease rentals are payable as follows: not later than one year 7,928 7,756 7,882 7,589 later than one year but not later than five years 10,048 7,765 9,999 7,642 later than five years 9,558 9,676 9,558 9,676 27,534 25,197 27,439 24,907

The Corporation leases property, motor vehicles and desktop computer equipment under operating leases. Leases for property generally have terms of one to seven years’ duration with option periods following, ranging up to five years. The only exceptions are two 99-year ground leases at Chatswood and Homebush that do not expire until 2086. Where no option periods exist under these leases, it is necessary to negotiate a new lease with the owner, who has the right to require vacant possession. Where there are option periods, the option to continue occupation rests with the Corporation alone. Leases for motor vehicles are for terms between two and four years and provide the Corporation with an option to replace at the end of the lease term. Leases for desktop computers are generally for three-year terms and provide the Corporation with an option to replace at the end of the lease term. Receivable as lessor Future operating lease rentals not recognised in the Financial Statements and receivable: not longer than one year 3,144 3,438 3,144 3,438 longer than one year but not longer than five years 11,497 12,805 11,497 12,805 longer than five years 7,745 16,050 7,745 16,050 22,386 32,293 22,386 32,293

Operating leases are non-cancellable and are mainly in respect of residential, commercial and industrial properties, open space and space for telecommunication towers. Operating leases are for terms ranging from less than one year to 50 years, with the longest remaining term being 37 years. Lease rentals are generally reviewed annually.

(f) FINANCE LEASE COMMITMENTS Finance lease rentals are payable as follows: not later than one year 525 524 525 524 later than one year but not later than five years – 525 – 525 525 1,049 525 1,049 Less: Future lease financing charges 20 74 20 74 505 975 505 975 Lease liabilities provided for in the Financial Statements: Current 11(a) 505 470 505 470 Non-current 11(a) – 505 – 505 Total lease liabilities 505 975 505 975

The finance lease is in respect of a geographical information system. This lease is for a term of five years and is due to expire on 30 June 2003.

67 SYDNEY WATER ANNUAL REPORT 2002 19 COMMITMENTS continued (h) NORTHSIDE STORAGE TUNNEL In December 1997, the NSW Government approved the then (g) CONTRACTUAL ARRANGEMENTS FOR THE ROUSE HILL Sydney Water Corporation Limited’s proposal to construct the DEVELOPMENT AREA Northside Storage Tunnel. The Corporation’s predecessor company entered into an Alliance Agreement on 29 January Stage 1 1998 with Transfield Pty. Ltd., Montgomery Watson Australia In October 1992, the then Water Board entered into a Pty. Ltd. and Connell Wagner Pty. Ltd. to construct the Storage commercial arrangement with the Rouse Hill Infrastructure Tunnel. All rights and obligations under this Agreement Consortium, representing a group of major developers, for the transferred to the Corporation when the former company financing, design and construction of water, waste water and was disestablished. stormwater infrastructure for Stage 1 of the Rouse Hill The Storage Tunnel extends from Lane Cove to North Development Area. The Consortium obtained a credit facility Head, intercepting, for transport to North Head Waste from a consortium of Banks to fund the Stage 1 works. Water Treatment Plant, the four largest wet weather Repayment of the loan was to be made from landowner overflows into Sydney Harbour at Lane Cove, Tunks Park, developer contributions required under Section 74 of the Quakers Hat Bay and Scotts Creek. then Water Board (Corporatisation) Act 1994, now titled the Sydney Water Act 1994. Consortium landowners paid their Practical completion of the Storage Tunnel, for the purpose developer contributions in 1994 at the commissioning of the of receiving wet weather overflows at all of the above four Stage 1 works. Non-Consortium landowners were required sites, was achieved in January 2001. As at balance date, to pay as they develop their land. However, the ultimate disposal of plant (used in the construction of the Tunnel) responsibility for providing the funds for discharging the was still in progress. Additionally, a number of insurance credit facility at maturity on 1 August 1999, which was later claims, relating to machinery breakdown, material damage extended to 31 January 2002, rested with the Corporation, and lost work time, were in the process of being assessed. being the ultimate owner of the infrastructure provided. The final cost of the Storage Tunnel will be determined on completion of these activities. As of 31 January 2002, all works under the Stage 1 arrangement have been completed. The Corporation made Expenditure incurred during the current financial year was a final remittance of $1.600 million to the Banks on $13.090 million (2001: $68.210 million). The amount that 31 January 2002 to retire the outstanding loan balance has been partially capitalised and depreciated to balance and close the credit facility. In the previous financial year, date is $458.884 million (2001: $457.848 million). The an amount of $2.000 million was outstanding at balance remaining costs will be capitalised and depreciated when date and had been fully provided for. (Refer Note 12). the final cost of the project has been determined. The amount provided in the Statements of Financial Performance during the financial year was $1.600 million (2001: $9.650 million). Stage 2 In July 1999, the Corporation entered into a commercial arrangement with Rouse Hill Infrastructure Pty Ltd (“RHI”), representing a group of landowners in Stage 2, for the financing, design and construction of Stage 2 works estimated at $63.300 million. RHI obtained a credit facility from a major Bank to fund the works. Under the commercial arrangement, the Corporation is required to remit to the Bank an amount equivalent to the developer charges from both the participating landowner group and non-participating landowners in the Stage 2 area, as and when collected, to repay any outstanding balance under the credit facility at that time. This arrangement is to continue until 2004 when the facility expires. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES Participating landowners have until three years after the practical completion of relevant works to pay their developer contributions. Non-participating landowners are required to pay as they develop their land. As at balance date, the amount outstanding under the credit facility is $1.650 million (2001: $6.850 million). (Refer Note 12). The Corporation has received developer contributions from landowners in Stage 2, in respect of which it will repay the balance outstanding. The amount provided in the Statements of Financial Performance during the financial year was $7.900 million (2001: $37.300 million).

68 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

20 EMPLOYEE ENTITLEMENTS Aggregate employee entitlement liabilities, including on-costs: Current 39,232 38,925 39,191 30,836 Non-current 154,555 91,444 154,555 49,666 193,787 130,369 193,746 80,502 Prepayment for over-funded superannuation schemes: Current 7 – 33,536 – 12,893

SUPERANNUATION The Corporation contributes to the following NSW superannuation schemes: the State Superannuation Scheme, the State Authorities Superannuation Scheme, the State Authorities Non-Contributory Superannuation Scheme and the First State Superannuation Scheme. With the exception of the First State Superannuation Scheme, the above funds provide defined benefits based on years of service and final average salary. Benefits are payable on retirement, disability or death. Employer contributions are based on a full funding multiple calculated actuarially every three years. The First State Superannuation Scheme is a defined contribution scheme. Employer contributions are based on a percentage of gross salaries. The gross liabilities as at balance date for the State Superannuation Scheme, the State Authorities Superannuation Scheme and the State Authorities Non-Contributory Superannuation Scheme have been actuarially calculated. The liability for the First State Superannuation Scheme has been determined as a percentage of gross salaries and represents the contribution that is unpaid as at balance date. After deducting the stake (ie. the amount funded) in each fund at balance date from the relevant gross liability, the difference is brought to account in the Corporation’s Statement of Financial Position as either a liability or an asset. Where the gross liability exceeds the stake, the difference is recorded as a liability. Conversely, where the stake exceeds the gross liability, the difference is recorded as an asset. (Refer Note 7). In the previous financial year, the Corporation’s subsidiary company also contributed to the above schemes when it had employees of its own in NSW. From 1 July 2001, all NSW based employees in the subsidiary company were transferred to the Corporation as part of the transfer of businesses and integration process. (Refer Notes 1, 18(f) and 22(c)). Accordingly, all superannuation balances and other employee entitlements relating to those employees were also transferred from the subsidiary company to the Corporation. Additionally, the comparative superannuation amounts for the consolidated entity include liabilities in relation to the subsidiary company’s then controlled entity Water Ecoscience Pty Ltd, which contributed to a defined contribution scheme known as the Local Authorities Superannuation Plan in Victoria. This controlled entity was subsequently disposed of during the current financial year (refer Note 22(d)) and accordingly the consolidated entity has no further liability to recognise in relation to this scheme. During the current financial year, the overall superannuation position changed from an over-funded position of $32.448 million as at 30 June 2001 to an unfunded position of $67.558 million as at balance date. This was due to an increase in the actuarially calculated gross liabilities combined with a significant downturn in investment earnings of the funds. The amount recorded in the Statement of Financial Performance that was necessary to reflect this superannuation position has been separately disclosed in Notes 2(b) and 2(c). Details in respect of each superannuation scheme as at balance date, including stakeholding data and actuarial assumptions supplied by Pillar Administration are as follows: Actuarial Assumptions:

RATE OF INTEREST RATE OF SALARY RATE OF INCREASE IN RETURN (PER ANNUM) INCREASE CONSUMER PRICE INDEX

2002 2001 2002 2001 2002 2001 % % % % % %

2001-2002 7.00 7.00 3.00 3.00 2.50 2.50 2002-2003 7.00 7.00 6.50 6.50 2.50 2.50 2003-2004 7.00 7.00 4.00 4.00 2.50 2.50 2004-2005 and thereafter 7.00 7.00 4.00 4.00 2.50 2.50

69 SYDNEY WATER ANNUAL REPORT 2002 20 EMPLOYEE ENTITLEMENTS continued Consolidated:

GROSS LIABILITY STAKE IN FUND NET LIABILITY (ASSET)

2002 2001 2002 2001 2002 2001 $’000 $’000 $’000 $’000 $’000 $’000

State Superannuation Scheme 553,392 528,733 501,957 562,206 51,435 (33,473) State Authorities Superannuation Scheme 90,689 84,742 79,184 83,778 11,505 964 State Authorities Non-Contributory Superannuation Scheme 32,758 30,061 28,147 30,124 4,611 (63) First State Superannuation Scheme 7 7 – – 7 7 Local Authorities Superannuation Plan – 117 – – – 117 676,846 643,660 609,288 676,108 67,558 (32,448)

The Corporation:

GROSS LIABILITY STAKE IN FUND NET LIABILITY (ASSET)

2002 2001 2002 2001 2002 2001 $’000 $’000 $’000 $’000 $’000 $’000

State Superannuation Scheme 553,392 501,853 501,957 514,746 51,435 (12,893) State Authorities Superannuation Scheme 90,689 90,049 79,184 81,606 11,505 8,443 State Authorities Non-Contributory Superannuation Scheme 32,758 28,339 28,147 25,451 4,611 2,888 First State Superannuation Scheme 7 2 – – 7 2 676,846 620,243 609,288 621,803 67,558 (1,560)

21 CONSULTANTS The total amount paid or payable to consultants engaged by the Corporation during the financial year was $1.050 million (2001: $1.011 million).

22 PARTICULARS IN RELATION TO CONTROLLED ENTITIES

(a) OWNERSHIP INTEREST AND ESTABLISHMENT

NAME OWNERSHIP INTEREST HELD NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES NOTE 2002 2001 % %

Ultimate parent entity: Sydney Water Corporation Controlled entities: Directly controlled by Sydney Water Corporation: Australian Water Technologies Pty. Ltd. 100 100 Special Environmental Levy (SEL) Unit Trust 100 100 Directly controlled by Australian Water Technologies Pty. Ltd. Water Ecoscience Pty. Ltd. 22(d) – 100 AWT International Pty. Ltd. 100 100 Directly controlled by AWT International Pty. Ltd. AWT Philippines Inc. 100 100 AWT International (Thailand) Limited. 22(d) 49 –

AWT Philippines Inc. was established in the Philippines. AWT International (Thailand) Limited was established in Thailand on 10 May 2002. (Refer Note 22(d)). All other controlled entities were established in Australia.

70 SYDNEY WATER ANNUAL REPORT 2002 22 PARTICULARS IN RELATION TO CONTROLLED ENTITIES continued

(b) KEY FIGURES FOR SYDNEY WATER CORPORATION AND ITS CONTROLLED ENTITIES

TOTAL REVENUE FROM PROFIT (LOSS) FROM ORDINARY ACTIVITIES TOTAL ASSETS ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE AS AT 30 JUNE

2002 2001 2002 2001 2002 2001 $’000 $’000 $’000 $’000 $’000 $’000

Sydney Water Corporation 1,573,242 1,429,798 374,428 280,646 14,246,664 13,431,183 Australian Water Technologies Pty. Ltd. 29,094 295,028 4,345 8,955 12,895 161,692 Special Environmental Levy (SEL) Unit Trust 708 1,818 – – 6,273 17,872 Water Ecoscience Pty. Ltd. * 539 8,712 4 (633) – 4,609 AWT International Pty. Ltd. 674 175 3 100 1,615 1,563 AWT Philippines Inc. 13 57 (1) 52 301 324 AWT International (Thailand) Limited – – (1) – 174 –

* Water Ecoscience Pty. Ltd. was part of the consolidated entity only up to 31 July 2001, being the date of its disposal. (Refer also Note 22(d)).

(c) TRANSFER OF BUSINESSES TO THE CORPORATION As mentioned in Notes 1 and 18(f), all of the subsidiary company’s businesses in Australia were transferred to, and integrated with, the Corporation as part of the consolidated entity’s ongoing restructuring to improve efficiency and effectiveness of processes and functions. As a result, the Corporation acquired businesses providing services such as engineering, construction, mechanical, electrical and civil maintenance, environmental, scientific and technological services, and various operational support services. The effective date for this integration and transfer of businesses was 1 July 2001. Associated with these transfers was the transfer of various assets and liabilities to the Corporation, resulting in a net amount of $16.934 million being paid by the subsidiary company to the Corporation by way of cash consideration. Details of the assets and liabilities transferred to the Corporation were as follows:

CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Inventories – – 456 – Receivables and Prepayments – – 35,192 483 Property, plant and equipment – – 9,047 699 Future income tax benefit – – 18,834 2,345 Payables – – (22,201) – Provisions – – (57,180) (7,497) Deferred tax liability – – (1,082) – Net assets (liabilities) transferred to the Corporation – – (16,934) (3,970)

In addition to these transfers, the subsidiary company undertook a capital restructure to position itself to operate under its new form. As a result, the subsidiary company repaid $20.300 million to the Corporation as a reduction in share capital. This has reduced the Corporation’s investment in the subsidiary company from $20.800 million to $0.500 million. (Refer also Note 8).

71 SYDNEY WATER ANNUAL REPORT 2002 22 PARTICULARS IN RELATION TO CONTROLLED ENTITIES continued

(d) ACQUISITION/DISPOSAL OF CONTROLLED ENTITIES The following controlled entities were acquired or disposed of during the financial year: Acquisition of entity During the financial year, the consolidated entity established AWT International (Thailand) Limited. AWTI acquired 49% of the share capital of AWT International (Thailand) Limited for a cash consideration of $0.082 million. In addition, AWTI provided a loan of $0.089 million to the outside equity interests of the new controlled entity in order for them to acquire their portion of the share capital. (Refer also Note 5). The operating result of the new controlled entity since the date of establishment has been included in the consolidated operating profit. The consolidated entity controls AWT International (Thailand) Limited despite only holding 49% of the issued share capital, as the financial and operating policy decisions affecting the new controlled entity are made by AWTI. The new controlled entity markets in Thailand the Corporation’s expertise in providing consulting services related to water and water-related services. Disposal of entity On 31 July 2001, the consolidated entity disposed of all of the ordinary shares of Water Ecoscience Pty. Ltd. The disposal was in the form of a management buy-out. Details of the disposal was as follows:

CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

Consideration (cash) 1,700 – – – Net assets of controlled entity disposed of: Cash assets 1,010 – – – Receivables and Prepayments 1,769 – – – Property, plant and equipment 1,327 – – – Payables (807) – – – Current tax liability (14) – – – Provisions (1,488) – – – Net assets 1,797 – – – Profit (loss) on disposal (97) – – –

% % % %

Interest held after disposal – – – –

23 AUDITORS’ REMUNERATION Remuneration for audit or review of the financial reports of the Corporation or any entity in the consolidated entity: NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES Auditors of the Corporation The Corporation 481 467 481 467 Controlled entities 33 179 3 3 Other auditors of controlled entities 20 21 – – 534 667 484 470

No other services were provided by the above auditors.

72 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001

24 DIRECTORS’ REMUNERATION During the financial year, the Corporation paid its Directors a total of $0.950 million for performing their duties in respect of the Corporation. This included an amount of $0.518 million for non-executive Directors. The Corporation’s Directors were also Directors of Australian Water Technologies Pty Ltd, which separately paid non-executive Directors a total of $0.076 million during the financial year. Further, the Corporation paid $0.171 million to a senior executive who was also a Director of three small controlled entities in the consolidated entity. Accordingly, the total remuneration paid to Directors of all entities in the consolidated entity was $1.197 million. Directors’ remuneration includes salaries for executive Directors and any other benefits paid to both executive and non-executive Directors in both the Corporation and the consolidated entity. An analysis of Directors’ remuneration paid to both Directors of the Corporation and Directors of all entities in the consolidated entity, by the respective entities, is shown below: The number of Directors of the Corporation whose income from the Corporation or any related party falls within the following bands: $40,000 – $49,999 – 5 $50,000 – $59,999 3 – $70,000 – $79,999 4 2 $100,000 – $109,999 – 1 $120,000 – $129,999 1 – $390,000 – $399,999 – 1 $430,000 – $439,999 1 –

$’000 $’000 $’000 $’000

Total income paid or payable, or otherwise made available, to all Directors of the Corporation from the Corporation or any related party: by the Corporation (1) 1,121 785 950 785 by the subsidiary company (2) 76 1,387 76 98 1,197 2,172 1,026 883 Notes: (1) The amount of $0.171 million that was paid to a senior executive of the Corporation (see above) has been included in the current financial year consolidated amount as this officer was a Director of a controlled entity in the consolidated entity that was not wholly owned. In the previous financial year, this senior executive was only a Director of two small wholly owned controlled entities and therefore his remuneration was not required under Australian Accounting Standards to be included in the comparative consolidated amount. (2) The previous financial year amount includes a termination payment and accrued leave entitlements for a former executive Director of the subsidiary company.

73 SYDNEY WATER ANNUAL REPORT 2002 25 RELATED PARTY TRANSACTIONS No penalties were required to be paid by the Corporation to the subsidiary company in respect of those contracts. (a) DIRECTORS As part of the trading arrangements between the two entities The names of each person holding the position of Director of during that financial year, the Corporation made strategic co- Sydney Water Corporation at any time during the financial payments for transport and maintenance availability and year were: reimbursed the subsidiary company for the cost of certain redundancies. The total of these expenses for that financial G. Kibble (Chair) year was $10.388 million. A. Walker (Managing Director) J. A. Messer The purpose of the co-payments was to ensure the availability J. D. Priest of specialist resources in the then Civil Maintenance and P. E. Baume Mechanical/Electrical Maintenance businesses of the G. M. McCully subsidiary company so that the Corporation’s needs could be A. Peters (appointed 7 September 2001) met in fulfilling its role and objectives. The co-payments J. P. Grant (appointed 7 September 2001) represented net costs incurred by those businesses for that R. D. Kelly (appointed 21 September 2001) financial year. Details of Directors’ remuneration are disclosed in Note 24. Also, the Corporation met the cost of redundancy payments All transactions by the Corporation with Director-related incurred by the subsidiary company up to 7 March 2001. This entities are conducted on an arm’s length basis in the normal was on the basis that the significant majority of benefits course of business and on commercial terms and conditions. accruing to the subsidiary company’s then employees arose Details of transactions totalling more than $1 million from their previous years of service with the Corporation and during the current or previous financial years with above its predecessor entities. Director-related entities are as follows: On 8 March 2001, however, the Corporation’s Board of Mrs G. Kibble was a Director of Sydney Airports Directors resolved to make structural changes to both the Corporation. During the financial year, the consolidated Corporation and the subsidiary company that culminated in entity paid Sydney Airports Corporation a total of the transfer and integration of the subsidiary company’s $Nil (2001: $1,012,000) in relation to work related to Australian businesses back into the Corporation. (Refer Notes the protection of the Corporation’s infrastructure 18(f) and 22(c)). As part of this decision, the Board of the (SWOOS Number 1) at Kyeemagh Avenue, Sydney Airport. subsidiary company resolved that the subsidiary company would meet the costs incurred for redundancies accepted by (b) WHOLLY-OWNED GROUP it on and from 8 March 2001. It also resolved that it would meet the cost of redundancies incurred by the Corporation up As mentioned in Notes 1, 18(f) and 22(c), all of the subsidiary to 30 June 2002 where the persons involved were employees company’s businesses in Australia were transferred to, and of the subsidiary company at 8 March 2001 and the integrated with, the Corporation on 1 July 2001 as part of redundancies related directly or indirectly to these the consolidated entity’s ongoing restructuring to improve structural changes. In this last respect, the Corporation efficiency and effectiveness of processes and functions. will be reimbursed by the subsidiary company during As part of this integration, the role of the subsidiary company the next financial year for redundancy payments totalling has changed in that it now focuses on marketing the $0.673 million that were paid out to such employees by Corporation’s expertise in water and water-related services in the Corporation. the Water industry to external customers both domestically and overseas. It is no longer a service provider to the Corporation. Instead, the Corporation now provides the subsidiary company with all of the resources and services necessary for the subsidiary company to fulfil its contractual obligations for external work. In providing its resources to the subsidiary company under the current trading arrangements, the Corporation charges for its services based upon an assessment of direct costs and

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES a factor to cover local and corporate overheads. In the previous financial year when the subsidiary company was a service provider to the Corporation, trading between the two entities was conducted through open tender, selective tender, service agreements and direct negotiation. Trading through open tender and selective tender in that financial year was on an arm’s length and commercial basis. In respect of the other two methods of trading, the Corporation endeavoured to deal at arm’s length and on commercial terms and conditions even though both entities operated together in the wholly-owned group. On occasions, some transactions were negotiated to achieve tight service delivery in the commercial interests of the consolidated entity and were not at arm’s length. The extent to which such trading occurred in that financial year could not be reliably measured. However, trading at arm’s length and on commercial terms and conditions in those cases would have resulted in a reduction in the operating result of both the Corporation and the consolidated entity for that financial year. As a result of the decision to integrate the Australian businesses of the subsidiary company into the Corporation as from 1 July 2001, contracts with the Corporation that were competitively won by the subsidiary company in that financial year were considered terminated as at 30 June 2001.

74 SYDNEY WATER ANNUAL REPORT 2002 26 ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE

(a) DERIVATIVE FINANCIAL INSTRUMENTS Objectives Of Derivative Financial Instruments The consolidated entity enters into a variety of derivative financial instruments to manage its exposure to interest rate risk and foreign exchange rate risk. These instruments include interest rate swaps, forward interest rate contracts, forward foreign exchange contracts, bond options and interest rate futures. The consolidated entity uses derivative financial instruments for hedging purposes only and does not enter into or trade them for speculative purposes. Strict internal guidelines exist to control the use of derivative financial instruments. Significant Terms and Conditions Interest Rate Swaps Under interest rate swap contracts, the consolidated entity agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts with an approved counterparty. The frequency of interest payments are either quarterly or half yearly as determined by the counterparties. Such contracts enable the consolidated entity to manage financial exposures resulting from movements in interest rates and to adjust the fixed/floating rate mix of the actively managed investment and liability portfolios. The following table details the notional principal amounts and the remaining terms of interest rate swap contracts as at balance date:

OUTSTANDING CONTRACTS AVERAGE INTEREST RATE NOTIONAL PRINCIPAL

2002 2001 2002 2001 NOTE % % $’000 $’000

Not longer than one year 5.08 7.34 125,000 600,000 One to two years 8.14 5.85 150,000 75,000 Two to five years – 10.36 – 150,000 26(b) 275,000 825,000 Forward Interest Rate Contracts Under forward interest rate contracts (also known as forward rate agreements), the consolidated entity agrees to exchange the difference between a specified interest rate and an agreed reference rate calculated on a notional principal amount at a predetermined future date. Such contracts enable the consolidated entity to fix the rates for future interest commitments and receipts. Such agreements are used to manage short dated interest exposures and have terms to maturity of less than one year. There were $Nil forward interest rate contracts outstanding at balance date (2001: $Nil). Forward Foreign Exchange Contracts The consolidated entity enters into forward foreign exchange contracts to hedge certain firm purchase and sale commitments and debt exposures denominated in foreign currencies. Under these contracts, the consolidated entity agrees to exchange specified amounts of various currencies at an agreed future date at a specified exchange rate. These contracts can vary in duration from one month to several years. However, the consolidated entity typically chooses to use the forward market out to a maximum of one year. The following table details the forward foreign currency contracts outstanding as at balance date in Australian dollar equivalents:

OUTSTANDING CONTRACTS AND CURRENCY AVERAGE EXCHANGE RATE NOTIONAL PRINCIPAL

NOTE 2002 2001 2002 2001 $’000 $’000

SELL NZ DOLLARS Not longer than one year – 1.26 – 639 BUY EURO Not longer than one year 0.5824 – 380 – Bond Options Bond option contracts are purchased as a hedging instrument for the actively managed investment portfolio only. These contracts give the purchaser the right but not the obligation to buy or sell a particular interest rate security on a specified expiry date ata specified price (yield). A premium is payable as the cost of the option. On the expiry date, the option either lapses or the nominated interest rate security is either bought or sold at the predetermined price and recorded as part of the actively managed investment portfolio. Bond options are used to manage exposures during periods of expected interest rate volatility and are typically negotiated for short terms to a maximum of three months. There were $Nil bond options outstanding at balance date (2001: $Nil). Interest Rate Futures Interest rate futures contracts replicate physical securities such as bank bills and government bonds and obligations to buy or sell a particular financial instrument on a future date at a specified price established in an organised financial market. The consolidated entity uses futures contracts in the active management of its investment portfolios particularly at times of market volatility when the liquidity of these markets allow much more efficient and effective pricing compared to equivalent physical markets. Futures positions are held for short periods only (up to one month) after which the contracts are closed or the position is replicated in the appropriate physical market. There were $Nil interest rate futures outstanding as at balance date (2001: $Nil).

75 SYDNEY WATER ANNUAL REPORT 2002 26 ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE continued

(b) INTEREST RATE RISK The consolidated entity’s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities, both recognised in the Statement of Financial Position and not recognised as at balance date, is set out below:

WEIGHTED FIXED INTEREST RATE MATURING IN: AVERAGE FLOATING NON INTEREST INTEREST LESS THAN MORE THAN INTEREST RATE RATE 1 YEAR 1 TO 5 YEARS 5 YEARS BEARING TOTAL

2002 NOTE % $’000 $’000 $’000 $’000 $’000 $’000

Financial Assets Recognised: Cash 4 4.05 5,746––––5,746 Bills of exchange 4,8 4.86 – 1,820–––1,820 Promissory notes 4,8 4.96 –65,806–––65,806 Mortgage certificates 4,8 5.26 6,404––––6,404 Interest-bearing deposits 4,8 4.70 – 2,800–––2,800 Certificates of deposit 4,8 ––––––– Inscribed stock 4,8 6.20 – 4,976 15,735 7,488 – 28,199 NSW Treasury Corporation “Hour Glass” Facility 8 –––––29,328 29,328 Trade receivables 5 –––––116,579 116,579 Other receivables 5 10.00 – – – 89 33,311 33,400 12,150 75,402 15,735 7,577 179,218 290,082 Not recognised: Interest rate swaps* 26(a) 4.40 – 75,000 50,000 – – 125,000 –75,000 50,000 – – 125,000 Financial Liabilities Recognised: Trade creditors 10 –––––39,02839,028 Other payables 10 –––––203,031203,031 Bank overdraft 11(a) 4.17 30,163––––30,163 Board’s loans 11(a) 6.16 – 420 571 5,140 – 6,131 Commonwealth Govt. loans 11(a) 9.68–––49,214 – 49,214 Other advances 11(a) 8.15 – 700 488 3,572 – 4,760 NSW Treasury Corp. loans 11(a) 6.33 582,911 179,808 734,947 472,564 – 1,970,230 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES Obligation under Blue Mountains Sewage Transfer Scheme 11(a) 6.25–––74,731–74,731 Lease liabilities 11(a) 7.14 –505–––505 Dividend payable 12 –––––110,000110,000 613,074 181,433 736,006 605,221 352,059 2,487,793 Not recognised: Interest rate swaps* 26(a) 8.70 – 50,000 100,000 – – 150,000 –50,000 100,000 – – 150,000

* Notional/contractual principal amount

76 SYDNEY WATER ANNUAL REPORT 2002 26 ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE continued

WEIGHTED FIXED INTEREST RATE MATURING IN: AVERAGE FLOATING NON INTEREST INTEREST LESS THAN MORE THAN INTEREST RATE RATE 1 YEAR 1 TO 5 YEARS 5 YEARS BEARING TOTAL

2001 NOTE % $’000 $’000 $’000 $’000 $’000 $’000

Financial Assets Recognised: Cash 4––––––– Bills of exchange 4,8––––––– Promissory notes 4,8 5.09 – 47,755–––47,755 Mortgage certificates 4,8 5.78 3,392––––3,392 Interest-bearing deposits 4,8 3.45 – 278–––278 Certificates of deposit 4,8 5.10 – 782–––782 Inscribed stock 4,8 6.43 – 5,046 20,237 5,406 – 30,689 NSW Treasury Corporation “Hour Glass” Facility 8 –––––53,363 53,363 Trade receivables 5 –––––104,375 104,375 Other receivables 5 –––––12,878 12,878 3,392 53,861 20,237 5,406 170,616 253,512 Not recognised: Interest rate swaps* 26(a) 4.89 – 350,000 75,000 – – 425,000 – 350,000 75,000 – – 425,000 Financial Liabilities Recognised: Trade creditors 10 –––––26,18426,184 Other payables 10 –––––165,515 165,515 Bank overdraft 11(a) 5.52 31,537––––31,537 Board’s loans 11(a) 6.12 – 527 760 5,371 – 6,658 Commonwealth Govt. loans 11(a) 9.68–––51,015–51,015 Other advances 11(a) 8.12 – 245 942 3,783 – 4,970 NSW Treasury Corp. loans 11(a) 6.95 354,796 333,413 751,331 365,311 – 1,804,851 Obligation under Blue Mountains Sewage Transfer Scheme 11(a) 6.25–––75,640 – 75,640 Lease liabilities 11(a) 7.14 – – 975 – – 975 Dividend payable 12 –––––53,353 53,353 386,333 334,185 754,008 501,120 245,052 2,220,698 Not recognised: Interest rate swaps* 26(a) 10.01 – 250,000 150,000 – – 400,000 – 250,000 150,000 – – 400,000

* Notional/contractual principal amount

(c) CREDIT RISK Credit risk refers to the risk that indebted counterparties will default on their contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity deals with creditworthy counterparties as a means of mitigating the risk of financial losses from defaults. The consolidated entity does not have any significant direct credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The consolidated entity is not materially directly exposed to overseas countries. Financial Instruments recognised in the Statement of Financial Position The credit risk on financial assets of the consolidated entity which have been recognised in the Statement of Financial Position is the carrying amount, net of any provision for doubtful debts. (Refer Note 26(b)). Financial Instruments not recognised in the Statement of Financial Position The credit risk on derivative financial instruments that are not recognised in the Statement of Financial Position is minimised, as counterparties are recognised financial intermediaries. The credit risk exposure in relation to these instruments is represented by the net fair value of the contracts. (Refer Note 26(d)).

77 SYDNEY WATER ANNUAL REPORT 2002 26 ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE continued

(d) NET FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES Net fair values of financial assets and financial liabilities are determined by the consolidated entity on the following bases: Financial Instruments recognised in the Statement of Financial Position The net fair values of financial assets recorded as Current and Non–current investments are determined on the basis of discounted cash flows using valuation rates supplied by independent market sources and take into account accrued interest and transaction costs which would be incurred to realise the financial assets. The net fair values of Loans and advances recorded as Interest-bearing liabilities (refer Note 11(a)) are determined as follows: NSW Treasury Corporation loans are valued on a discounted cash flow basis using valuation rates supplied by independent market sources and take into account transaction costs which would be incurred to settle the liabilities. All other Loans and advances, while not traded on organised markets, are valued on a discounted cash flow basis using the equivalent interest rate swap rates supplied by independent market sources and take into account transaction costs which would be incurred to settle the liabilities. It is considered that this method closely approximates the settlement values of these loans should they be actively traded. All other financial assets and financial liabilities in the Statement of Financial Position are not readily traded on organised markets and it is considered that their carrying value approximates net fair value. Financial Instruments not recognised in the Statement of Financial Position The net fair values of derivative financial instruments are determined on the basis of valuation rates and valuations supplied by independent market sources and take into account transaction costs which would be incurred to realise or settle the financial instruments. These are readily traded on organised markets.

The following table details the carrying amounts and net fair values of the consolidated entity’s financial assets and financial liabilities at balance date:

CARRYING AMOUNT NET FAIR VALUE

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

FINANCIAL ASSETS TRADED ON ORGANISED MARKETS Recognised: Bills of exchange 4,8 1,820 – 1,822 – Promissory notes 4,8 65,806 47,755 65,900 47,849 Mortgage certificates 4,8 6,404 3,392 6,458 3,456 Interest-bearing deposits 4,8 2,800 278 2,801 278 Certificates of deposit 4,8 – 782 – 782 Inscribed stock 4,8 28,199 30,689 29,010 31,463 105,029 82,896 105,991 83,828

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES Not recognised: Interest rate swaps – – 945 4,173 Forward foreign exchange contracts – – 23 3 – – 968 4,176 105,029 82,896 106,959 88,004 NOT READILY TRADED ON ORGANISED MARKETS Recognised: Cash 4 5,746 – 5,746 – Trade receivables 5 116,579 104,375 116,579 104,375 Other receivables 5 33,400 12,878 33,400 12,878 NSW Treasury Corporation “Hour Glass” Facility 8 29,328 53,363 29,328 53,363 185,053 170,616 185,053 170,616 Total Financial Assets 290,082 253,512 292,012 258,620

78 SYDNEY WATER ANNUAL REPORT 2002 26 ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE continued

CARRYING AMOUNT NET FAIR VALUE

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

FINANCIAL LIABILITIES TRADED ON ORGANISED MARKETS Recognised: NSW Treasury Corporation loans 11(a) 1,970,230 1,804,851 2,025,163 1,898,154 1,970,230 1,804,851 2,025,163 1,898,154 Not recognised: Interest rate swaps – – 9,051 22,513 Forward foreign exchange contracts – – – 5 – – 9,051 22,518 1,970,230 1,804,851 2,034,214 1,920,672 NOT READILY TRADED ON ORGANISED MARKETS Recognised: Trade creditors 10 39,028 26,184 39,028 26,184 Other payables 10 203,031 165,515 203,031 165,515 Bank overdraft 11(a) 30,163 31,537 30,163 31,537 Board’s loans 11(a) 6,131 6,658 6,298 6,777 Commonwealth Government loans 11(a) 49,214 51,015 60,145 52,203 Other advances 11(a) 4,760 4,970 5,187 5,060 Obligation under Blue Mountains Sewage Transfer Scheme 11(a) 74,731 75,640 74,731 75,640 Lease liabilities 11(a) 505 975 505 975 Dividend payable 12 110,000 53,353 110,000 53,353 517,563 415,847 529,088 417,244 Total Financial Liabilities 2,487,793 2,220,698 2,563,302 2,337,916

79 SYDNEY WATER ANNUAL REPORT 2002 CONSOLIDATED THE CORPORATION

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

27 AMOUNTS PAYABLE/RECEIVABLE IN FOREIGN CURRENCIES The Australian dollar equivalents of unhedged amounts payable or receivable in foreign currencies, calculated at year-end exchange rates, are as follows: UNITED STATES DOLLARS Amounts receivable: Current 50 322 – – 50 322 – – PHILIPPINE PESO Amounts receivable: Current 28 33 – – 28 33 – – SINGAPORE DOLLARS Amounts payable: Current 40 13 – – 40 13 – – Amounts receivable: Current 492 100 – – 492 100 – – NEW ZEALAND DOLLARS Amounts payable: Current 651 – – – 651 – – – Amounts receivable: Current 978 – – – Non-current 197 – – – 1,175 – – – FIJIAN DOLLARS Amounts payable: Current 3 – – – 3 – – – THAILAND BAHT Amounts payable: Current 1 – – –

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED THE FINANCIAL OF STATEMENTS AND FORMINGTO PART NOTES 1 – – – Amounts receivable: Current 85 – – – Non-current 89 – – – 174 – – –

80 SYDNEY WATER ANNUAL REPORT 2002 28 SEGMENT REPORTING During the financial year, the Corporation completed its The consolidated entity operates in the Water industry as one Heritage and Conservation Register. The Register includes business segment in the provision of water and water-related 57 asset items that are also listed on the State Heritage services to its customers both in Australia and overseas. Register and are subject to minimum standards of It operates predominantly in the one geographical segment maintenance and repair, weather protection, fire of NSW in Australia, with some services of a consulting protection and security. The Corporation is committed to nature being provided internationally in New Zealand, the preparation of Conservation Management Plans for Singapore and more recently in Thailand through the the 57 items of State heritage significance over the next Corporation’s controlled entities. Operations in Fiji and the 3 to 5 years. Until completion of these Plans, it is not Philippines also exist through the Corporation’s controlled possible to reliably estimate the extent and cost of any entities. However, these are currently dormant. Operations repairs, maintenance or other work that may possibly have only just commenced in the current financial year in need to be carried out on these assets. Thailand through the establishment of a new controlled The Corporation has an ongoing program of assessing entity on 10 May 2002. (Refer Note 22(d)). The geographical the need for remediation of contaminated sites within segment representing all of these international operations, its property holdings. The Corporation liaises with the either individually or collectively, is immaterial in terms of Environment Protection Authority to determine its position its financial impact on the consolidated entity’s financial and any possible obligations on a case by case basis. It is not results or financial position. possible to reliably estimate contingent liabilities in respect of undertaking remediation on all contaminated sites, as the need for remediation and the type of remediation work that 29 CONTINGENT LIABILITIES may be undertaken are dependent upon future events that Claims made against the Corporation in respect of cannot be determined at this time. compensation and litigation arising from its operations to balance date are fully covered by the Corporation’s workers’ compensation and general insurance provisions. Apart from 30 EVENT SUBSEQUENT TO BALANCE DATE these matters, the maximum total cost of all matters at As part of the consolidated entity’s ongoing review balance date in which there is a risk of financial exposure is of efficiency and effectiveness of processes, functions estimated at $39.946 million for the consolidated entity and structure, the Board of AWTI resolved during the (2001: $79.747 million) and $38.696 million for the financial year that AWTI be de-registered and that all of Corporation (2001: $77.241 million). its operations, assets and liabilities should be transferred Under the Workers’ Compensation Act 1987, since the to the Corporation’s subsidiary company. It is expected that Corporation is a self-insurer which, as a State-owned the de-registration of AWTI will simplify the consolidated Corporation, is deemed to not have Government-employer entity’s operational and governance structure and will status, the Corporation is required to provide a bank guarantee enable better focus on the operations of the subsidiary to the Workcover Authority which secures the Corporation’s company. The de-registration of AWTI is subject to approval workers’ compensation liability. At balance date, the value of by the Boards of the subsidiary company and the Corporation, the bank guarantee provided to the Workcover Authority was and ultimately by the Corporation’s Voting Shareholders. $53.850 million (2001: $40.530 million). This was subsequently The date of de-registration of AWTI is currently not known. increased to $72.568 million from 1 July 2002.

In addition, the Corporation has in place a Cross-Guarantee END OF AUDITED FINANCIAL STATEMENTS Agreement with its subsidiary company, the subsidiary company’s controlled entity AWT International Pty. Ltd., and the Workcover Authority. Under this Agreement, the Corporation guarantees the workers’ compensation obligations of these controlled entities and vice versa, in the event that these obligations are not able to be settled by either of these entities. This Agreement is required as part of the conditions of the Group Self-insurer’s licence held by the Corporation under the Workers’ Compensation Act 1987. Further, the Corporation has given its subsidiary company an undertaking that it will provide whatever financial support or assistance, if any, to ensure that the subsidiary company is able to satisfy its debts, loan repayments and obligations under any guarantees for a period up to and including 30 September 2003. At balance date, there are no outstanding registered Native Title Claims against the Corporation that impact on the Corporation’s land. It is unlikely that land owned by the Corporation under freehold title will be affected by Native Title Claims. Non-freehold property interests that extend to include easements over unalienated Crown Land may be affected by claims. Compensation associated with a successful claim, however, is limited by the Corporation’s payment of compensation in the acquisition process.

81 SYDNEY WATER ANNUAL REPORT 2002 SYDNEY WATER CORPORATION AND ITS CONTROLLED ENTITIES DIRECTORS’ DECLARATION

In the opinion of the Directors of Sydney Water Corporation: (a)the Financial Statements and Notes: (i) exhibit a true and fair view of the financial position of the Corporation and the consolidated entity as at 30 June 2002 and of their performance, as represented by the results of their operations and their cash flows for the year ended on that date; (ii) comply with applicable Accounting Standards, Urgent Issues Group Consensus Views and other mandatory and statutory reporting requirements including Part 3 of the Public Finance and Audit Act 1983 and the associated requirements of the Public Finance and Audit Regulation 2000. (b) there are reasonable grounds to believe that the Corporation will be able to pay its debts as and when they become due and payable. (c) we are not aware of any circumstances at the date of this declaration that would render any particulars included in the Financial Statements to be misleading or inaccurate. Signed in accordance with a resolution of the Directors: DIRECTORS’ DECLARATION

John Priest DIRECTOR

Gabrielle Kibble DIRECTOR

DATE: 20 SEPTEMBER, 2002

82 SYDNEY WATER ANNUAL REPORT 2002 DEPENDENT AUDIT REPORT DEPENDENT REPORT AUDIT IN

83 SYDNEY WATER ANNUAL REPORT 2002 DEPENDENT AUDIT REPORT CONTINUEDDEPENDENT REPORT AUDIT IN

84 SYDNEY WATER ANNUAL REPORT 2002 SPECIAL ENVIRONMENT LEVY (SEL) UNIT TRUST ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2002

86 ANNUAL REPORT 87 STATEMENT OF FINANCIAL PERFORMANCE 87 STATEMENT OF FINANCIAL POSITION 88 STATEMENT OF CASH FLOWS NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 89 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES 90 2 NET PROFIT 90 3 CASH ASSETS 91 4 RECEIVABLES 91 5 PAYABLES 91 6 CONTRIBUTED EQUITY 92 7 STATEMENT OF CASH FLOWS 92 8 AUDITORS’ REMUNERATION 92 9 TRUSTEES’ REMUNERATION 92 10 ASSISTANCE TO TRUST FROM SYDNEY WATER CORPORATION 93 11 ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE 94 12 STATEMENT OF OPERATIONS OF SEGMENTS 95 STATEMENT BY THE TRUSTEES 96 INDEPENDENT AUDIT REPORT

85 SYDNEY WATER ANNUAL REPORT 2002 86 ANNUAL REPORT in the section immediatelythe section below.in the mechanismoutlined via Program, Special Environment the of the value ofexpenditure incurred actually aspart Sydney Water redeemsthe from Inaddition, Trust procedures. approval nominated approvedthe SELprojects under Trust Wa earnedfrom investmentstransferred is to Sydney Interest 28 May 1994. Thebalanceoffundswastransferred on on 20May 1994. was openedwith Westpac BankingCorporation 97-0072, No. The Trust’s the Trust. BankAccount,and invested onbehalfof, weretransferred to, –30June1994, the period1January in whichwouldhave beenraised theoreticalthe amount with together The balanceofunusedfundsraisedthe SEL, under the designated by Trust. approvals procedures according tothe reimbursement Sy The Trusteesthe meeting of Trust. nowregularly reimburse official thefirst Deedwas signedon3May 1994at The Trust satisfactory tothe Trustees. hadbeenproperly funds expended accordingto criteria that ofapproval procedures whichwouldensure establish aset to Deedand the of Trust andformat the content finalise took placefromPreliminary late meetings to 1993inorder T THE between 1995andDecember1998. Board pre-1995 andSydney Water Corporation Limited Re Sy forthe purposesofpreparing itsFinancial Statements. 2000, r P the 3of toPart isnowsubject the As aconsequence Trust from 1999. 1January C 1998 andreplaced byanewstatutory State Owned Wa Sydney 1994, the Sydneyto 1998 andamendments Water Act (Drinking Water and Corporate Structure) Act Amendment c Sy the Water Board was incorporated as 1995, On 1January the program. the fundswouldbeproperly expended overthe lifetime of re fullfive-year's a that would beaccounted for independently; thefunds wouldbeensuredthat it this way, In (“The Trust”). Trust tobeadministeredthe SELUnit by in aSpecialAccount, was deposited amount equivalent insuchawaythat – spent onenvironmental works –andbeonrecord asbeing spent SELfundswouldbe that Inlinewithacommitment account. set-aside fundswere depositedinaspecialinterest-bearing the toensurethat then Ministerforthe Environment, the W wasthe stated responsibility the Environmental in1993of It to 30June1994. 1994 the period1January during whichwouldhave beenraisedthe SEL by that to equivalent C than scheduled. sixmonths earlier SEL from 1994, 1January involvedthe the ending of Pricing Tribunal, NSW Government then the asdeterminedby Board's 1993/94 pricingpackage, The Water The Levy wasto endofficially on30June1994. Wa the normalprogramthen to the addition ofworkplannedby andbein onprojects providing environmental benefit spent wasto be payments are included, $490 millionwheninterest totalled overthe five years, which, Therevenue, five (5)years. Wa The SpecialEnvironmental Levy (“SEL”) of$80perannum BACKGROUND FOR 2002 THE YEAR 30JUNE ENDED ANNUAL REPORT ENVIRONMENTALSPECIAL LEVY (SEL)UNIT TRUST LEVEL BATHURST 23115-123 STREET SYDNEY NSW AUSTRALIA 2000 SYDNEY WAT SYDNEY qieet ftePbi iac n ui Regulation equirementsthe Public of Finance andAudit ompany. Following the enactment of the of Water Legislation Following the enactment ompany. ublic Finance and Audit Act 1983 and the associated 1983and Act ublic Finance andAudit orporation calledSydney Water Corporation (“Sydney Water”) neunl,teWtrBadstasideanamount the Water Boardonsequently, set v orks Community Audit Committee (“EWCAC”), reporting to reporting Committee (“EWCAC”), orks Community Audit dney Water for approved expenditure already made the entity of Trust. dney Waterthe parent isnow anunlistedpublic dney Water Corporation Limited, fe enue of funds from the SEL would be allocated, and that and the SELwouldbeallocated, enue offundsfrom ter to reimburse/fundter Sydney Water for expenditure on ter Corporation Limitedwas deregistered on31December ter Board. ter Board customerwas institutedin1989for aperiodof r ne nti eottoSydney Waterthe include Waterthis Report ences in RUST AND TRUSTEES ER ANNUAL REPORTER ANNUAL 2002 •A Such documentation consists of: control system. balances withinamanagement r documentationto accompany eachproject's reimbursement Sy Beforethe toreimburse Trustees releasethe fundsfrom Trust FROMMETHOD OFREIMBURSEMENT TRUST FUNDS •M • • • 30June2002were: The Trustees at the Deed. to invoke todate this provision of beenarequirement has not There be referredthe responsibleto Ministerfor resolution. thematter would tied vote, a of the event in casting vote and, have a TheChairdoesnot funds. of Trust management scrutiny forthe toindependent Sydney Water issubject that means incorporatingexternal Trustees, composition, The Trust •A funds are exhausted. willcontinueto administerallSELfundsuntil such The Trust normal Sydney Water works programs. areto inaddition works for ongoing orfuturethat projects are includedinaprogram ofspecialenvironmental the Trust the fundsheldby environmentaltotal of the full to projects hasbeeninformed bySydney WaterThe Trust that At FUTURE THE • •R •C •P • financial year included: were reimbursed to Sydney Waterbenefits that in the current Special Environmental Levy projects providing environmental approved environmentalthe SEL. projects under to Sydney million $12.4 Water for expenditure/funding of reimbursed the Trust financialyear, the current During YE BYPROJECTS FUNDED SELIN THE THE •A qet Thedocumentation setsupasystemofchecks and equest. nyWtr the dney TrusteesWater, require appropriate AR ENDED 30 JUNE 2002 30JUNE AR ENDED r ev status, current key outcomes, of approval for eachvariation, S niomn Protection Authority. NSW Environment and Planning; of NSW Department Mr David Papps (and Alternate Trustee MrDonaldGeering), a Director ofSydney Water McCully, Mr Garry Corporation; C Mr Alex ManagingDirector ofSydneyWalker, Water r R the Client lineManager(towhom the relevant $0.2 million r plants to sewage treatment Upgrading works at $0.1 million projects: $1.1million includingStreamwatch: programs, million $5.5 Stage 1: Blue Mountains BacklogSewerage Program, request. the reimbursement the to deliverto place Trusteestrue andfair a viewof systemsare in themanagement that stating Manager, 0Jn 02 $6.3million wasthe heldby Trust. 30 June2002, esponsible. lvn Division. elevant educe oceanpollutionandenhanceoperating reliability: icton Regional Sewerage Scheme: $5.5 million. $5.5 Regionalicton Sewerage Scheme: epresentative reports), and the Financethe and Managerof epresentative reports), ehabilitation andrestoration ofbushlandandwetland roain Chair; orporation, ontinuation ofenvironmental education andawareness

rjc umr saigaons il fapoe,date titleofapprover, (stating summary amounts, project Ce Ce r Ross (and Carter Alternate Trustee Mr Warren Hicks), aluation) prepared andsignedoffthe person by r r iiaeivligsg-f yteCin Representative, tificate involving sign-offthe Client by tificatethe General from ManagerandBranch OF THE TRUSTOF THE START OF AUDITED FINANCIAL STATEMENTS SPECIAL ENVIRONMENTAL LEVY (SEL) UNIT TRUST STATEMENT OF FINANCIAL PERFORMANCE

FOR THE YEAR ENDED 30 JUNE 2002

Note 2002 2001 $.c $.c

Revenues from ordinary activities 2(a) 707,652.12 1,818,225.85 Expenses from ordinary activities 2(b) (707,652.12) (1,818,225.85) Net profit – –

The Statement of Financial Performance is to be read in conjunction with the Notes to and forming part of the Financial Statements set out on the following pages.

STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2002

Note 2002 2001 $.c $.c

CURRENT ASSETS Cash assets 3 6,257,879.14 17,812,456.43 Receivables 4 15,102.49 59,431.62 TOTAL CURRENT ASSETS 6,272,981.63 17,871,888.05 TOTAL ASSETS 6,272,981.63 17,871,888.05

CURRENT LIABILITIES Payables 5 15,102.49 59,431.62 TOTAL CURRENT LIABILITIES 15,102.49 59,431.62 TOTAL LIABILITIES 15,102.49 59,431.62 NET ASSETS 6,257,879.14 17,812,456.43

EQUITY Contributed equity 6 6,257,879.14 17,812,456.43 TOTAL EQUITY 6,257,879.14 17,812,456.43

The Statement of Financial Position is to be read in conjunction with the Notes to and forming part of the Financial Statements set out on the following pages. EMENTS OF FINANCIALEMENTS PERFORMANCE AND POSITION AT ST

87 SYDNEY WATER ANNUAL REPORT 2002 88 STATEMENT OF CASH FLOWS neetdistributionspaid Interest Outflows Outflows CA cashprovided (consumed) byoperating activities Net Bank charges paid R received Interest Inflows CA FOR 2002 THE YEAR 30JUNE ENDED ST ENVIRONMENTALSPECIAL LEVY (SEL)UNIT TRUST SYDNEY WAT SYDNEY (11,554,577.29) (11,554,577.29) the following on pages. out set the Financial of Statements Cash of to andformingto beread Flowsthe Notes part is inconjunction with The Statement CA R C increase (decrease) incashheld Net cashreceived from (paid) financingactivities Net C eimbursement of bankcharges of eimbursement casfcto fln emivsmn scs qiaet7(d) ascashequivalent term investment eclassification oflong ash at the beginning of the financialyear thebeginningof ash at ptluisrdee 6 apital unitsredeemed AT SH FLOWS ACTIVITIES FROM FINANCING SH FLOWS FROM OPERATING ACTIVITIES SH AT OF YEAR END FINANCIAL THE THE EMENT OFCASH FLOWS ER ANNUAL REPORTER ANNUAL 2002 ,7( 3, ,7( 3, Note 7(b) a) a) 17,812,456.43 11,554,577.29 11,554,577.29 6,257,879.14 751,981.25 751,981.25 7 7 49,789.79 49,789.79 2,191.46 2,191.46 2,191.46 2002 $.c – – (16,092,622.40) (16,092,622.40) 33,686,224.35 33,686,224.35 16,092,622.40 16,092,622.40 16,092,622.40 16,092,622.40 17,812,456.43 17,812,456.43 1,912,854.80 1,912,854.80 1,912,854.80 1,932,137.71 1,932,137.71 218,854.48 218,854.48 19,282.91 19,282.91 2001 $.c – 89 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 1S SYDNEY WAT SYDNEY netethl sa balancedate. heldasat investment value ofeachclass the market isdeterminedas amount at Theseare valued as OtherFinancial Assetswhenapplicable. Financial of Position 12 months are recordedthe Statement in Investments withamaturity date beyondthe ensuing (Refer Note3). value. market and thelowerofcost Theseare valued at within Cash assets. Financial of Position 12 months are recordedthe Statement in Investments withamaturitythe ensuing date within (d) INVESTMENTS (Refer Notes2(a) and2(b)). recorded asanexpense. charges amount f Le administer fundsraisedthe SpecialEnvironmental under to is the Thepurposeof 3 MayTrust the 1994by Trustees. Deedon the signingofa to Trust established pursuant was Trust The SpecialEnvironmental Levy (SEL)Unit FOR 2002 THE YEAR 30JUNE ENDED NOTES TO PART FORMING AND STATEMENTS OF FINANCIAL THE ENVIRONMENTALSPECIAL LEVY (SEL)UNIT TRUST re r withSydney Water Corporationto There isanagreement CHARGES REIMBURSEMENT (c) BANK (Refer Notes2(a) and2(b)). to) of(added any losses(gains) oninvestments. earned net revenue Distributionsexpenseto Interest equates Interest thetotal of Therefore, Deed. accordance with the Trust (receivable) ispaid(payable)to Sydney Water Corporation in F of revenue earnedisrecognisedthe Statement in Interest (b) INTEREST REVENUE c Theaccounting policiesare convention. historical cost hasbeenprepared inaccordancethe with The financialreport r the associated 1983and Act the Publicof Finance andAudit 3 and statutory requirements reporting includingPart Issues Group Consensus Views andothermandatory Urgent prepared inaccordance with applicableAccounting Standards, r C (a) BASIS OFPREPARATION are detailedbelow: preparationthe financialreport of havethe beenadoptedin that policies The significant purpose ofconsistency inpresentation. c Where appropriate, 30June2001. position asat the financial to 30June2001and period 1July2000 forthe figures coverthe the financialperformance of Trust Thecomparative 30June2002. the financialpositionasat to 30June2002and forthe period1July2001 the Trust coversthe financialperformance of The financialreport as “the Trust”.this financialreport willbereferredto in Trust Environmental Levy (SEL)Unit Co environmental projects bySydney undertaken Water onapproved suchfundsare properly spent to ensurethat or reimbursement of bank charges equates to the bank bankcharges of to equates or reimbursement qieet ftePbi iac n ui Regulation 2000. equirementsthe Public of Finance andAudit whichhasbeen isageneral purposefinancialreport eport ibreteTutfrBn hre nurd Therefore, for BankCharges incurred. the eimburse Trust onsistent with those adoptedforthe previous with financialyear. onsistent omparative figures have beenreclassified forthe nnilPromnewe eevbe neetreceived Interest inancial Performance whenreceivable. TA nitn ihtetrso h rs ed the financial Deed, withtheterms of the Trust onsistent v vy prto,teTutsprn niy TheSpecial entity. the Trust’srporation, parent h oe fcs n eoeal mut Recoverable andrecoverable amount. the lowerofcost enue recorded in the Statement of Financial of Performance enue recordedthe Statement in T

between the 1989-90 and 1993-94 financial years and1993-94 and the 1989-90 between EMENT OF SIGNIFICANT ACCOUNTINGEMENT OFSIGNIFICANT POLICIES ER ANNUAL REPORTER ANNUAL 2002 nt n r auda 1prUi.(Refer Note6). $1perUnit. Units andare valued at C c Co (g) CONTRIBUTED EQUITY due. amount the balancedate are accruedandrecorded at been paidat andwhichhave not Bank Charges incurredthe by Trust due. theamount payable isrecorded at Interest the Trust. C revenueto Sydney Water to payThe obligation interest (Refer Note5). C toSydney Water payablethe by Trust accrued interest Pa (f) PAYABLES (Refer Note4). due. amount Financial of Position at the Statement Theseare recordedof bankcharges incurredthe in by Trust. r receivable from investments andamounts accrued interest R (e) RECEIVABLES eceivable from Sydney Water Corporation for reimbursement mrssUisise otesl nthle,Sydney Water holder, the soleUnit to omprises Unitsissued eceivables in the Statement of Financial of Position comprise eceivablesthe Statement in roain Unitsissuedcomprise Income UnitsandCapital orporation. roainaie hnteitrs revenue isearnedby orporationthe interest ariseswhen orporation andaccruedbankcharges payablethe by Trust. y n ables in the Statement of Financial of Position comprise the Statement ables in tributed equity in the Statement of Financial of Position the Statement tributed equityin 90 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 3C 2N Re neetdistributions: Interest Additional disclosures for specificitemsare asfollows: distributions Interest (b) EXPENSESFROM ORDINARY ACTIVITIES Bills ofexchange purchased from: National Australia BankLimited Promissory notespurchased from: investmentsthe following: comprise Current Re FROM ORDINARY ACTIVITIES(a) REVENUES afterthe following including revenue andexpense items: hasbeenarrived at profit Net ENVIRONMENTALSPECIAL LEVY (SEL)UNIT TRUST SYDNEY WAT SYDNEY thereon. the accumulated interest invested plus paidonmaturitythe originalprincipalamount is comprised of Theamount generally maturing withinsix months. and adiscount issuedat They are negotiableinstruments, securitiesacceptedorendorsed byabank. Bills ofexchange are debt thereon. investedthe accumulated interest plus paidonmaturitythe originalprincipalamount iscomprised of Theamount andgenerally mature within sixmonths. discount 7(a) a They are issuedat the issuer. theassetsof security secured solelyagainst Promissory notesare anegotiablecorporate debt dated depositsmaturing within oneyear. typically holdsonlyshort Interest-bearing depositscanbeissuedfor any duration maturity. the although Tr rate overtheir life at paying afixed interest face value They are issuedat Authorities. Interest-bearing depositsare non-negotiableinvestments withbanks andGovernment CONDITIONS: AND TERMS SIGNIFICANT the above Noneof investments are listedonastockexchange. balancedate. securitiesat orpublicsector There are noGovernment T National Australia BankLimited Macquarie BankLimited investments Current C CU Bank charges Bank charges: tlCretinvestments otal Current ash ASH ASSETS ET PROFIT v v RRENT enues from non-core operating activities: enues from core operating activities: neetrevenue from investments Interest W distributions Interest L balance date revenue earnedandpayable at Interest L R Gain oninvestments neetreceived andpaid Interest tt oenetDutyondeposits State Government Tax onwithdrawals State Government s:Loss (Gain) oninvestments ess: previous balancedate payable at Interest ess: eimbursement of bankcharges of eimbursement estpac BankingCorporation Ltd fees ER ANNUAL REPORTER ANNUAL 2002 Note 7(a) 6,253,841.31 6,253,841.31 5 5 6,257,879.14 ,930,155.32 ,930,155.32 692,452.12 323,685.99 323,685.99 70 70 70 70 70 70 70 7 49,789.79 15,097.83 57,337.67 4, 7 7 7, 7, 7, 7, 7, ,652.12 ,652.12 102.17 102.17 102.17 549.95 549.95 549.95 549.95 549.95 037.83 64.07 38.10 2002 .c $. – – – – 17,812,456.43 11,876,000.98 17,801,183.01 17,801,183.01 17,801,183.01 1,912,854.80 5 1,799,343.40 1,818,225.85 1,799,343.40 1,818,225.85 1,799,343.40 1,523,151.25 1,580,488.92 1,580,488.92 (218,854.48) ,925,182.03 218,854.48 389,703.55 11,273.42 18,882.45 18,882.45 18,882.45 18,623.18 57,337.67 185.40 73.87 2001 .c $. ust – – Note 2002 2001 $. c $. c

4RECEIVABLES

CURRENT Accrued interest revenue from investments 15,097.83 57,337.67 Accrued reimbursement of bank charges 4.66 2,093.95 15,102.49 59,431.62

SIGNIFICANT TERMS AND CONDITIONS: Interest from Investments is receivable within a maximum period of six months. Reimbursements of bank charges from Sydney Water Corporation are normally received monthly.

5PAYABLES

CURRENT Interest distribution payable to Sydney Water Corporation 15,097.83 57,337.67 Accrued bank charges 4.66 2,093.95 15,102.49 59,431.62

SIGNIFICANT TERMS AND CONDITIONS: The Trustees approve reimbursement requests to Sydney Water Corporation and those comprise redemptions of Capital Units and Interest distributions. Interest distributions are normally paid to Sydney Water Corporation approximately four times a year. Bank charges are normally paid monthly.

6CONTRIBUTED EQUITY

UNITS ON ISSUE Income Units: 10 Units (2001: 10 Units) at $1.00 each 10.00 10.00 Capital Units: 6,257,869 Units (2001: 17,812,446 Units) at $1.00 each 6,257,869.14 17,812,446.43 6,257,879.14 17,812,456.43

MOVEMENTS DURING THE FINANCIAL YEAR: Income Units: There was no movement during the current or previous financial year. Capital Units: Units on issue at the beginning of the financial year: (2002:17,812,446, 2001: 33,905,069) 17,812,446.43 33,905,068.83 Less: Units redeemed during the financial year: (2002:11,554,577, 2001: 16,092,622) 11,554,577.29 16,092,622.40 Units on issue at the end of the financial year: (2002:6,257,869, 2001: 17,812,446) 6,257,869.14 17,812,446.43

SIGNIFICANT TERMS AND CONDITIONS: Sydney Water Corporation is the sole Unit holder of both Income and Capital Units issued by the Trust. The conditions attaching to these Units are detailed within the Trust Deed and are summarised below: Income Units entitle Sydney Water Corporation to the interest revenue earned by the Trust. Such interest distributions must be used by Sydney Water Corporation for expenditure on approved environmental projects. Income Units will only be redeemed when the Trust is wound up and all Capital Units have firstly been redeemed. Capital Units are redeemed when the Trust receives a Redemption Notice from Sydney Water Corporation and it is satisfied that expenditure has been incurred by Sydney Water Corporation on approved environmental projects. The amount redeemed is calculated as the difference between the total amount of the expenditure reimbursement claim and the interest distribution amount applied to that claim.

91 SYDNEY WATER ANNUAL REPORT 2002 92 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 0ASSISTANCE TO TRUST FROM SYDNEY 10 WATER CORPORATION 9T 8AUDITOR 7S No other services wereNo otherservices providedthe auditors. by necessary adjustment to reflect this is shown in the comparatives on the face of the Statement of Cash of Flows. the comparatives thisisshownin the facethe Statement on of toreflect adjustment necessary Cash of Flows and Thisreversal alsoaffectedthe definitionofCashthe Statement for the purposesof and nolosswas incurred. financialye financialyearthe fullpurchase consideration as those investmentsthe 2000-01 of was realisedthat onmaturity in took placein Thereversalthen the loss of Cash of Flows. 2000 affectedthe definitionofCashthe Statement for the purposesof 30J Theoriginalreclassificationthe related and recording ofalossat maturity date falling within12months ofbalancedate. financialyear ascashequivalentsthe to due were reclassifiedthat in inrelationtwo long-terminvestmentsto that $218,854.48 financialyear represents disclosedforthe reversalthe 2000-01 financialyear of ofalossrecordedthe 1999-00 in The amount (d) RECLASSIFICATION ASCASH EQUIVALENT earninterest. iswith WestpacThe BankingCorporationTrust’s Limitedanddoesnot bankaccount (c) CASH AT BANK cashprovided (consumed) from operating activities Net to operating applicable for: activities movement Add (less) net profit Net (b) RECONCILIATION PROFIT OFNET TO CASH PROVIDED NET (CONSUMED) BY OPERATING ACTIVITIES (Refer Note3). Financial of Position. bothofwhichcomprisethe Statement Cash assetsin instruments, F (a) RECONCILIATION OFCASH SYDNEY WAT SYDNEY the ofauditing SydneyTrust’s Water financialreport. Corporation hasnoemployees ofitsown. paysthe cost The Trust Sy The Trustees receive noremuneration fortheir services. R rteproeo h ttmn fCs lw,Cs nldsCs tbn n urn investments inmoney market bankandCurrent Cash includesCash at Cash of Flows, the Statement the purposeof or mnrto o ui rrve ftefnnilrpr 10 orreviewthe financialreport of emuneration for audit TA UTE’REMUNERATION RUSTEES’ dney Water Corporation has provided legal, administrative, clerical and management assistance at no cost to the to Trust. nocost assistanceat clericalandmanagement dney administrative, Water Corporation hasprovided legal, T Pa R EMENT OFCASH FLOWS eceivables y ables ’REMUNERATION S’ ER ANNUAL REPORTER ANNUAL 2002 Note (44,329.13) 44,329.13 2,800.00 2,800.00 2002 .c $. – (332,766.34) 332,766.34 2,750.00 2,750.00 2001 .c $. une – ar the ir 11 ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE Financial instruments held by the Trust comprise Cash, Investments, Receivables and Payables, all of which are recognised in the Statement of Financial Position.

(a) INTEREST RATE RISK The Trust’s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out below:

FIXED INTEREST RATE WEIGHTED AVERAGE MATURING IN NOTE INTEREST RATE LESS THAN 1 YEAR NON INTEREST BEARING TOTAL

%$.c$.c$.c

2002

FINANCIAL ASSETS Cash 3 ––4,037.83 4,037.83 Promissory notes 3 5.15 5,930,155.32 – 5,930,155.32 Bills of exchange 3 5.05 323,685.99 – 323,685.99 Receivables 4 ––15,102.49 15,102.49 6,253,841.31 19,140.32 6,272,981.63

FINANCIAL LIABILITIES Payables 5 ––15,102.49 15,102.49 –15,102.49 15,102.49

2001

FINANCIAL ASSETS Cash 3 – – 11,273.42 11,273.42 Promissory notes 3 5.04 17,801,183.01 – 17,801,183.01 Bills of exchange 3 –––– Receivables 4 – – 59,431.62 59,431.62 17,801,183.01 70,705.04 17,871,888.05

FINANCIAL LIABILITIES Payables 5 – – 59,431.62 59,431.62 – 59,431.62 59,431.62

(b) CREDIT RISK Credit risk refers to the risk that counterparties will default on their contractual obligations resulting in financial loss to the Trust. In accordance with the terms of the SEL Unit Trust Credit Risk Limit Policy, adopted by the Trust on 29 May 1997, the Trust deals with creditworthy counterparties as a means of mitigating the risk of financial losses from defaults. These include Sydney Water Corporation, the sole Unit holder, and creditworthy financial institutions. (Refer Note 3). The Trust does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk on financial assets of the Trust, which have been recognised in the Statement of Financial Position, is the carrying amount. (Refer Notes 3 and 4).

93 SYDNEY WATER ANNUAL REPORT 2002 94 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 2STATEMENT OFOPERATIONS OFSEGMENTS 12 1ADTOA IACA NTUET ICOUEcontinued INSTRUMENTS ADDITIONAL FINANCIAL DISCLOSURE 11 h olwn al eal h arigaonsadntfi auso iaca sesadfnnillaiiisa balancedat fair values offinancialassetsandliabilitiesat amountsthe carrying andnet The followingtable details c r transaction costs whichwouldbeincurredto take sources and into account market using valuation rates suppliedbyindependent fair values offinancialassetsrecorded asInvestments (refer Note3)arethe basisofdiscounted determinedon cashfl The net FAIR(c) NET VALUE LIABILITIES ASSETS AND OFFINANCIAL il fecag 3 3 Bills ofexchange Promissory notes R ASSETS FINANCIAL SYDNEY WAT SYDNEY STATEMENTS OFAUDITEDEND FINANCIAL NSW of inAustralia. alsooperatesthe onegeographical in segment It Environmental and1993-94. Levy between 1989-90 for administeringfundsraisedthe Special under operatesthe in WaterThe andhasonebusinesssegment industry Trust T Pay T R o readilytraded onorganised markets: Not LIABILITIES FINANCIAL C readilytraded onorganised markets: Not aietefnnilast.Alohrfnnilast n l iaca iblte r o traded onorganised markets andit Allotherfinancialassetsandallliabilitiesare not the financialassets. ealise otal Financial Liabilities otal Financial Assets niee httercryn au prxmtsntfair value. value theircarrying approximates net onsideredthat cials4 eceivables eadily tradedeadily onorganised markets: s 3 ash be 5 ables ER ANNUAL REPORTER ANNUAL 2002 NOTE CARRYI ,5,4.16,270,172.04 6,253,841.31 ,7,8.36,289,312.36 6,272,981.63 5 90153 5,946,297.15 ,930,155.32 2,8.9323,874.89 323,685.99 5124 15,102.49 15,102.49 15,102.49 15,102.49 5124 15,102.49 15,102.49 9103 19,140.32 19,140.32 NG AMOUNT NET FAIR NET VALUE NG AMOUNT 4,037 8 4,037.83 .83 .c$ c $. c $. 2002 CARRYI 781880 17,929,128.34 17,871,888.05 781130 17,858,423.30 17,801,183.01 781130 17,858,423.30 17,801,183.01 NG AMOUNT NET FAIR NET VALUE NG AMOUNT 11,273.42 11,273.42 11,273.42 11,273.42 59,431.62 59,431.62 59,431.62 59,431.62 59,431.62 59,431.62 59,431.62 59,431.62 59,431.62 59,431.62 0750 70,705.04 70,705.04 .c$ c $. c $. – 2001 is e: ows 95 STATEMENT BY THE TRUSTEES be misleadingorinaccurate. r SYDNEY WAT SYDNEY T (ALTERNATE) Donald Geering T Garry McCully SY Fu 2 1 inouropinion: that the Trust wedeclare onbehalfof Trust, Environmental Levy (SEL)Unit In accordance witharesolutionthe of Trusteesthe Special of ST ENVIRONMENTALSPECIAL LEVY (SEL)UNIT TRUST T Alex Walker T R ender any particulars included in the Financial includedin Statementsender any particulars to RUSTEE RUSTEE RUSTEE (CHAIR) RUSTEE oss Carter AT NY 0AGS,2002 30AUGUST, DNEY, r hr eaentaware ofany circumstances whichwould weare not ther, EMENT BY TRUSTEES THE EMENT F Au Co IssuesGroup Urgent professional requirements, reporting applicable Accounting Standards andothermandatory and with Deed, accordance with theterms of the Trust The Financial Statements have beenprepared in and transactions for thetwelve months then ended. 30June2002 asat Trust Environmental Levy (SEL)Unit the Special and fairthe financialpositionof viewof true a The accompanying Financial Statements exhibit nneadAdtRegulation 2000. inance andAudit nsensus Views, and Part 3 of the Public 3of Finance and andPart nsensus Views, i c 1983andassociated requirementsthe Public of Act dit ER ANNUAL REPORTER ANNUAL 2002 96 INDEPENDENT AUDIT REPORT SYDNEY WAT SYDNEY ER ANNUAL REPORTER ANNUAL 2002 AUSTRALIAN WATER TECHNOLOGIES PTY LTD FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2002

98 STATEMENTS OF FINANCIAL PERFORMANCE 99 STATEMENTS OF FINANCIAL POSITION 100 STATEMENTS OF CASH FLOWS NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 101 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES 104 2 PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE 105 3 TAXATION 106 4 CASH ASSETS 107 5 RECEIVABLES 107 6 INVENTORIES 108 7 OTHER ASSETS 108 8 OTHER FINANCIAL ASSETS 108 9 PROPERTY, PLANT AND EQUIPMENT 110 10 PAYABLES 110 11 INTEREST-BEARING LIABILITIES 110 12 PROVISIONS 111 13 CONTRIBUTED EQUITY 111 14 RESERVES 111 15 RETAINED PROFITS 111 16 OUTSIDE EQUITY INTERESTS 112 17 TOTAL EQUITY RECONCILIATION 112 18 NOTES TO THE STATEMENTS OF CASH FLOWS 113 19 INTANGIBLES 113 20 COMMITMENTS 114 21 EMPLOYEE ENTITLEMENTS 115 22 CONSULTANTS 115 23 PARTICULARS IN RELATION TO CONTROLLED ENTITIES 116 24 AUDITORS’ REMUNERATION 117 25 DIRECTORS’ REMUNERATION 118 26 RELATED PARTY TRANSACTIONS 120 27 ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE 122 28 AMOUNTS PAYABLE/RECEIVABLE IN FOREIGN CURRENCIES 123 29 SEGMENT REPORTING 123 30 ECONOMIC DEPENDENCY 123 31 CONTINGENT LIABILITIES 123 32 EVENT SUBSEQUENT TO BALANCE DATE 124 DIRECTORS’ DECLARATION 125 INDEPENDENT AUDIT REPORT

97 SYDNEY WATER ANNUAL REPORT 2002 98 STATEMENTS OF FINANCIAL PERFORMANCE Income tax expenseIncome relating T rftfrom before ordinaryactivities Profit fteprn niy2,168 2,168 4,702 COMPANY THE 3(a) of financialstatements ofself-sustaining exchange differencetranslation on Net CONSOLIDATED entity of the parent profit Net after related incometax expense from ordinaryactivities Profit to ordinary activities income tax expense E Re FOR 2002 THE YEAR 30JUNE ENDED AU SYDNEY WAT SYDNEY (21) the following on pages. out set the Financial of Statem The Statements ofFinancial Performanceto andforming areto bereadthe Notes part inconjunction with fromtransactions withownersas entityandrecognised inequity directly parent fo ST ST eraei se eauto eev 14 revaluation reserve Decrease inasset attributable to members profit Net adjustments attributable to members of the adjustments attributableto membersof T otal changes in equity other than those resultingthan otal changes inequityother tlrvne,expenses andvaluation otal revenues, pne rmodnr ciiis1 () 18(d) 2(b), 1, xpenses from ordinary activities AT ART STATEMENTS OFAUDITED FINANCIAL r ST v inoeain 14 eign operations ne rmodnr ciiis1 () 18(d) 2(a), 1, enues from ordinary activities EMENTS OF FINANCIAL PERFORMANCE EMENTS OFFINANCIAL RA LIAN WATER PTYTECHNOLOGIES LTD ITS AND CONTROLLED 81003848860 ENTITIES ABN ER ANNUAL REPORTER ANNUAL 2002 NOTE 17 (25,173) 29,875 (2,534) 2,168 2,147 $’000 2002 (21) – (294,479) 303,340 (5,591) 3 3 3 3, 8,861 $’000 ,270 ,270 ,270 2001 186 (84) (77) (7) (24,749) 29,094 (2,175) 4 2,166 2,170 2,170 2,170 $’000 ,345 2002 (4) (4) – ents (286,073) 295,028 (5,588) 3 3 3 3 8,955 $’000 ,291 ,367 ,367 ,367 2001 (76) (77) 1 99 STATEMENTS OF FINANCIAL POSITION urn a ses3(b) taxassets Current R Co EQUITY 6 Inventories T SYDNEY WAT SYDNEY R rvsos12 12 N TO TO Provisions 3(c) TO 7 Provisions TO TO Deferred tax assets TO Other C ASSETS CURRENT AS ST AU usd qiyitrss16 the following on pages. out set the Financial of Statement The Statements ofFinancial Positionto andforming areto bereadthe Notes part inconjunction with TOT Outside equityinterests 3(e) R Deferred tax liabilities LIABILITIES NON-CURRENT 9 andequipment plant Property, te iaca ses8 Other financialassets neetbaiglaiiis11 Interest-bearing liabilities Pay LIABILITIES CURRENT R ASSETS NON-CURRENT urn a iblte 3(d) taxliabilities Current tlprn niyitrs 3,644 interest entity otal parent sre 14 eserves cials5 eceivables tie rft 15 etained profits cials5 eceivables s ses4 ash assets AT TAST 3,733 ET ASSETS

ST AT n T T T T T T be 10 ables EMENTS OF FINANCIAL POSITIONEMENTS OFFINANCIAL LLAIIIS10,281 145 AL EQUITY 10,136 14,014 AL LIABILITIES 451 LIABILITIES AL NON-CURRENT LIABILITIES AL CURRENT 13,563 AL ASSETS ASSETS AL NON-CURRENT ASSETS AL CURRENT rbtdeut 13 tributed equity RA

30 JUNE 2002 30 JUNE LIAN WATER PTY LTDTECHNOLOGIES ITS AND CONTROLLED 81003848860 ENTITIES ABN ER ANNUAL REPORTER ANNUAL 2002 NOTE 17 6,424 1,419 6,644 3, 8,676 3, $’000 2002 142 733 166 145 196 500 467 19 89 89 41 2 9 – – – C ONSOLIDATED THE COMPANY THE ONSOLIDATED 136,158 166,039 45,555 35,241 43,862 23,587 43,191 56,308 66,378 66,378 19,205 66,378 99,661 29,881 56,470 42,090 21,095 20,800 10,676 5 5 1,101 $’000 ,851 ,937 2001 722 23 25 – – – 12,895 12,512 10,236 10,090 1,419 6,252 8,630 2,659 2,659 2,659 2,171 5, $’000 2002 775 162 196 383 500 146 146 467 (12) 18 25 41 – – – – – s 161,692 131,921 53,457 54,683 44,582 22,457 35,213 41,272 19,228 18,834 42,861 96,318 65,374 65,374 65,374 41,779 29,771 20,800 5 5 9,212 1,725 1,082 $’000 ,835 ,937 2001 753 (8) – – – 100 STATEMENTS OF CASH FLOWS E Dividends received Pa L andequipment plant Other payments for property, R Outflows FOR THE YEAR ENDED 30 JUNE 2002 CONSOLIDATED THE COMPANY THE CONSOLIDATED Income tax received C C Inflows CA FOR 2002 THE YEAR 30JUNE ENDED AU SYDNEY WAT SYDNEY (31,292) (64,792) the following on pages. out set the Financial of Statements The Statements ofCash Flowsto andforming areto bereadthe Notes part inconjunction with CA of cashheldinforeign currencies C increase (decrease) incashheld Net cashusedinfinancingactivities Net Pa 9,493 23(b) interests incontrolled entity cashfrom (usedin)investing activities Net 23(b) interests ofcontrolled entity 18(d) ofcashdisposed) entity (net entity toparent and equipment plant Proceeds from saleofproperty, Inflows CA cashprovided by(usedin)operating activities Net Income tax paid received Interest f C Outflows ln n qimn 18(d) andequipment plant Pa Outflows ST Dividend paid Proceeds from issueofsharesto outsideequity Inflows CA Proceeds from saleofcontrolled andequipment plant property, Other proceeds from saleof rtase fbsnse 18(d) or transfer of businesses oan providedto outsideequity ffe epayment of borrowings of epayment s ttebgnigo h iaca er37,925 the financial year thebeginningof ash at s eevdfo aetentity ash received from parent ash receiptsthe course inofoperations ash paymentsthe course ofoperations in AT ST mn oprn niyfrtase fbsnse 18(d) entity fortransfer ofbusinesses toparent yment mn oprn o euto nsaecptl13 for reduction inshare capital toparent yment mnst aetentity for property, to parent yments SH FLOWS FROM OPERATING ACTIVITIES SH AT OF YEAR END FINANCIAL THE THE SH FLOWS FROM INVESTING ACTIVITIES SH FLOWS ACTIVITIES FROM FINANCING EMENTS OFCASH FLOWS c RA ts ofexchange ratethe balances fluctuations on LIAN WATER PTYTECHNOLOGIES LTD ITS AND CONTROLLED 81003848860 ENTITIES ABN ER ANNUAL REPORTER ANNUAL 2002 18(b) 18(a) NOTE 125,625 101,618 55,430 64,881 44,581 81,410 24,007 13,578 20,300 67 6,644 6,630 2,266 9,737 9,047 $’000 ,929 2002 155 244 690 89 11 89 89 – – – – – 244,728 272,170 300,453 260,384 (15,797) 25,848 15,619 20,450 10,400 15,797 40,069 17,377 37,925 (3,822) 2,416 5 4, 2,598 2,197 $’000 ,397 2001 973 795 699 274 19 98 37 – – – – – – 125,118 100,447 (64,881) (29,574) 55,430 64,881 44,581 12,429 81,410 24,671 35,335 10,636 20,300 67 10,747 6,608 2,220 5, 1,700 9,047 $’000 ,218 2002 111 775 111 250 14 – – – – – – – 264,036 236,884 252,533 292,210 (15,797) 14,930 25,848 15,619 35,335 10,400 20,403 39,677 15,797 (3,477) 4, 5 2,598 1,852 2,307 $’000 ,397 2001 450 973 699 274 19 30 2 – – – – – – 101 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 1S SYDNEY WAT SYDNEY re established after due consideration offactors suchaspast ex re the tradeclosing balanceof to reflect debtorsinorder the of provision for doubtfuldebtsismaintained inrespect F Tr (c) RECEIVABLES have beeneliminated. transactionsthe consolidated betweenentities in entity Thebalancesandeffects of the date controlto up ceases. arethe date includedonlyfrom control commences or theresults to becontrolledceases the financialyear, during Where anentity eitherbeginsor and itscontrolled entities. entity, the parent being the Company, of financial report the consolidated of the entity includes The financialreport OFCONSOLIDATION(b) PRINCIPLES those adoptedforthe previous financialyear. with the consolidatedentities in entity andare consistent The accounting policieshave beenconsistentlythe appliedby valuation. are recorded at assets that for non-current certain except convention, historical cost hasbeenprepared inaccordancethe with The financialreport professional requirements. reporting A required for entities reporting under accordancethat with tradingmanufacturing and statementsto allowdisclosure in the NSW Treasurer hasgranted anexemption from preparing 1983, Act the Public 3of Finance andAudit Part of In respect F Au the Public 3 of Finance and Part 2001, the Corporations Act mandatory andstatutory requirements reporting including IssuesGroup Consensus Views andother Urgent Standards, applicableAccounting has beenprepared inaccordance with that isageneral purposefinancialreport The financialreport (a) BASIS OFPREPARATION are asfollows: preparationthe financialreport of havethe beenadoptedin that policies The significant $’000. are rounded tothe nearest r to ensure comparabilitythe current andconsistency with comparative figures have beenreclassified Where applicable, 30June2001. the financialpositionasat June 2001and The comparative figures coverto 30 the period1July2000 30June2002. the financialpositionasat to 30June2002and C coversthe the financialperformance of The financialreport 21and26(b). 18(d), 13, are provided inNotes1(h), e which Companythat to isasignificantly different accordingly, ov bothdomesticallyand to external customers, industry e The Company nowonlyfocuses onmarketingthe parent’s the Sydneyprocesses within andfunctions Water Group. r the parent’s of ongoing transfer ofbusinesseswas part The theparent. andintegrated with, weretransferred to, the Company’s allof businessesinAustralia On 1July2001, Wa c its controlled entities willbecollectively referredto as “the theeconomic entitythe Company comprising and In addition, as “the Company”. will bereferredthis financialreport to in A FOR 2002 THE YEAR 30JUNE ENDED NOTES TO PART FORMING AND STATEMENTS OF FINANCIAL THE AU prigpro.Ecp hr tews niae,amounts where indicated, otherwise Except period. eporting to improve estructuring efficiency and effectiveness of noiae niy.TeCmaysprn niy Sydney entity, TheCompany’sonsolidated entity”. parent nnilPsto taonsde RfrNt ) Ageneral (Refer Note 5). amounts due. inancial Position at Regulation 2000. inance andAudit xisted at 30 June 2001. Details in respect of this integration of Detailsinrespect 30June2001. xisted at inwaterxpertise andwater relatedthe water in services TA ompany anditscontrolled entities forthe period1July2001 ustralian Accounting Standards andothermandatory 81003848860) (ABN ustralian Water Ltd. Technologies Pty. ade andotherreceivables are recordedthe Statements in of co co ST res ti olne evc rvdrt h aetand, the parent providerto isnolongeraservice It erseas. isting as at balance date. The balance of this provision Thebalanceof is balancedate. isting asat dit Act 1983 and the associated requirements 1983and the Public of Act dit e oprto,willbereferredto as “the parent”.ter Corporation, T RA ve ve EMENT OF SIGNIFICANT ACCOUNTINGEMENT OFSIGNIFICANT POLICIES LIAN WATER PTYTECHNOLOGIES LTD 81003848860 ABN r r ability experience andprevailing economic conditions. those debtors of ability whichisexpected inrespect ER ANNUAL REPORTER ANNUAL 2002 co held asinventory for external construction andconsulting stores andmaterials andworkinprogress including stock, Inventories normallyincludeavariety ofitemsonhand (e) INVENTORIES (Refer Notes 2(b)and12). of Financial Position. Financial of Performance andStatement entity’s Statement as aprovision for lossonrealisable valuethe consolidated in thedifference isrecorded assets, than itsnet entity islower agreed consideration value forthe disposalofacontrolled F of Financial of Performance andStatement Statement the Company’s in as aprovision for lossoninvestment re c re valuethe is that then the disposalofacontrolled entity, wherethere isanagreed consideration valueHowever, for entity. the controlledentity inwhich the parent entity is the consolidated assetsof the valuethe net determined as of c C Investments incontrolled entities arethe carriedin Co cost. Investments are recorded at Current F Assets. Other Financial AssetsunderNon-Current maturity date beyondtwelve months are recorded within the Statementsin ofFinancial Positionthose witha while Assets months are recorded withinCash AssetsunderCurrent Investmentstwelve withamaturitythe ensuing date within (d) INVESTMENTS (Refer Note2(b)). when determined. theprovision asand Known baddebtsare writtenoff against co Wherethe consolidated entity hasentered into consulting W of valuation forthe purposesofdeterminingcost. c c byactual they are arrived at Wherethese itemsare onhand, Stock Stores andMaterials co Wherethe consolidated entity hasentered into construction progress heldasinventory. r estimated total costsestimated for eachcontract. costs of incurredto date asapercentage of assessment The stageofcompletion ismeasured byreferenceto an exceedsof workundertaken $1,000. 30%complete andwherethe value least isat until acontract c revenuesto bereceived to andcosts made fortotal contract to date canbeclearlyidentified andreliable estimates canbe costs completion canbereliably determined, stage ofcontract the percentagebasis using ofcompletionthe method when isrecognised onanindividualconstruction contract Profit re revenue isonly thecosts willberecovered, that is probable Where it costs are expensed asincurred. contract estimated, bereliably cannot Wherethe outcome ofacontract allocation ofappropriate overhead expenses. includes allcosts directly relatedto specificcontracts and an Cost losses are provided forthey are assoon identified. such Where applicable, and provision for foreseeable losses. lessprogress billings the valuebased on ofworkcompleted, todate plusattributable profit cost inventory isrecorded at elated revenues remain unrecognised are recorded asworkin s,teCmaysivsmn srcre tcs.Where cost. isrecorded at theCompany’s investment ost, isnormally Recoverable amount andrecoverable amount. ost s n e realisable valuethe 'first-in using first-out' basis andnet ost thelowerof andare valued at ormeasurement weight ount, mlt.Poi eonto osntnormallycommence recognition doesnot Profit omplete. nnilPsto.(ee oe ()ad8.Wherethe (Refer Notes2(b)and8). inancial Position. inancial Assets maysSaeeto iaca oiina thelowerof Financial of Position at ompany’s Statement co co c ork inProgress HeldasInventory nt nt nt ntrolled Entities ognised to the extent of costs of incurred. the extent to ognised ve ve ra ra ra c c c r r beaon sblwcs,thedifference isrecorded isbelowcost, able amount exceeds Where recoverable amount able amount. s (Refer Note6). ts. swt xenlcins costs incurred wherethe ts withexternal clients, swt xenlcins workinprogress heldas ts withexternal clients, 102 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 1S fastcategories are asfollows:– of asset e commercialtechnical obsolescenceand and account takinginto The lives aretime, reviewedto time from making allowance where appropriate for residual values. linebasisovertheir estimated usefullives, on astraight are depreciated andequipment plant Items ofproperty, Depreciation Pe accordinglythey arethe Statements to charged ofFinancial the pattern ofbenefitsderived fromtheleasedassetsand Pa expense. interest the liabilityand isallocated between and eachleasepayment A corresponding liabilityisalsoestablished the leasedasset. theexpected usefullife of will retainthe asset, ownershipof islikelythe consolidated entity where it the leaseor, term of linebasisoverthe onastraight term andamortised lease the thebeginningof at payments isrecognised asanasset valuethe minimumlease of thepresent finance leases, isacquired bymeansof andequipment plant Where property, leases are classifiedasoperating leases. Other benefits ofownershipare classifiedasfinanceleases. or itscontrolled entitiesthe risks assumesubstantially and all L L value. closely represents market r the depreciation, aftertaking into account that has shown c and includingoffice equipment andequipment, Plant cost. were valued at the parent policies of c buildingspredominantly the previousIn financialyear, values. discounted totheir present SYDNEY WAT SYDNEY 5-12 (Refer Note10). future payments arises. haveor services beenreceivedto make andanobligation goods Theseliabilitiesare recognisedthe when billed. or not r f Liabilities are recordedthe Statements in ofFinancial Position (g) PAYABLES C andequipment Plant Re (Refer Note9). exceed recoverable amount. donot equipment and plant amountsThe carrying ofcategories ofproperty, Valuations Asset y and having aminimumexpected workinglifethree of Itemscosting $5,000 ormore individually the acquisition. thedate ofacquisitionpluscoststo incidental given upat the fair isdeterminedas valuethe assets of Cost acquisition. of thecost the consolidated entity are recorded initiallyat acquired by andequipment plant All itemsofproperty, Acquisitions andCapitalisation EQUIPMENT AND PLANT (f) PROPERTY, co or amounts to be paid in the futureto bepaidin or amounts for goodsorservices sligntbo au nrseto ln andequipment plant of bookvalue inrespect esulting net cie ytecnoiae niyo h opn,whether eceivedthe consolidated by the Company, entity or ae fpoet,patadeupetwherethe Company andequipment plant eases ofproperty, eased Assets muesaercre ttecs faqiiin Experience ofacquisition. thecost omputers are recorded at omprised demountable buildingsandinaccordancethe with ears are capitalised. TA pce omlwa n er Thenormallife expectancies tear. normalwearand xpected mue qimn 3-5 omputer equipment ntinued yments madeunderoperating leasesare representative of rf co T ormance in the periods in which they arethe periodsinwhich incurred.ormance in EMENT OF SIGNIFICANT ACCOUNTING EMENT OFSIGNIFICANT POLICIES ve r beaon sdtrie sn eeatcashflows isdeterminedusingrelevant able amount ER ANNUAL REPORTER ANNUAL 2002 ubrofYears Number co outside ofNSWtheir owninsurance obtain cover for workers’ the consolidatedOther entities in entity whichare based ex the consolidated to entity are the parent charged by Premiums Financial of Position. the parent’s Statement C liability was self-assessed oncomparable principles. ex 30June2001was calculated, actuarially leaveservice liabilityat matched Thetotal thetermsto long maturity of the liability. closely 30June2001whichmost securitiesat government w e the liabilityfor leave of longservice The portion whichwas 30June2001. based onremuneration rates existing at thenominalamount months ofbalancedate was calculated at financial yeartwelve whichwasto besettledwithin expected Theliabilityfor leave longservice the previous in operations. These nowonlyrelatethe Company’sto NewZealand balancedate. amounts basedonremuneration rates existing at nominal entitlements) are self-assessed andcalculated at leave (where futuretakings areto exceed expected future non-vesting sick annualleave, Liabilities for wages andsalaries, 30 June2001. provided forthe Statements in ofFinancial Position asat Thesewere fully on1July2001. transferredthe parent to balanceswere all employees andemployee entitlement forthe Company’s NewZealand operations, Except 18(d)). (Refer Note weretransferred to andintegrated withitsparent. the Company’s allof businessesinAustralia On 1July2001, (h) EMPLOYEE ENTITLEMENTS e both publicliabilityandindustrialspecialriskinsurance of The liabilityforthe insurance policyexcesses inrespect losses. reported not includes anestimate for incurred but assessedand isactuarially Financial of Position, Statement entity’s workers' compensation isrecordedthe parent in Theliabilityfor wholly-owned subsidiariesbasedinNSW. and its appliestothe parent compensation that workers’ holdsagroup self-insurer’sThe Company’s licence for parent (i) INSURANCE which were formallyto employees advised andunions. e Theliabilitywasthe payments basedon 30 June2001. payable until after were not periodbut reporting that during payments was recorded where suchobligations emerged aliabilityfor redundancy the previousIn financialyear, (Refer Note21). the Company. to the parent balance date prior totheirtransfer from with the Company at amounts provided relatingthe service byemployeesto still include didnot the respectivein superannuation schemesbut funded) theamount Superannuationthe Stake Plan)and (ie. Superannuationthe Local Schemeand Authorities State (or self-assessedthe First the caseofboth in differencethe gross calculated liabilityactuarially between Statements ofFinancial Position wasthe determinedas The 30June2001superannuation liabilityrecordedthe in both ofwhichwere calculated asapercentage ofsalaries. the Localand Authorities Superannuation Planin Victoria, ex f fata liseitn sa balancedate andisalsoin claimsexistingof actual asat or superannuationthe were advicewith basedonactuarial xpected to besettledbeyondtwelve xpected months ofbalancedate xposures is internally assessed by the parent on the basis on xposuresthe parent isinternally assessedby ofplannedrestructures to bemadeasaresult xpected luain nrseto h oa iblt t30June2001 total liabilityat the of alculations inrespect as discountedthe rates using to national attaching cept in the caseof in Water Ecoscience PtyLtd wherebythe cept mpensation. eto fteFrtState Superannuation SchemeinNSW the First ception of pensed asincurred. 1STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (l) REVENUE RECOGNITION continued Sales Revenue (j) TAXATION Sales revenue comprises revenue earned (net of returns, discounts and allowances) from the provision of products Income Tax or services by the Company and its controlled entities. The Company and its controlled entities in Australia are Sales revenue is recognised when the goods or services are subject to notional taxation in accordance with the State provided. Revenue recognition policies for construction work Owned Corporations Act 1989. An 'equivalent' or 'notional in progress are described above in Accounting Policy income tax' is payable to the NSW Government through Note 1(e) under Work in Progress Held as Inventory. the Office of State Revenue. Taxation liability is assessed Investment Revenue according to the National Tax Equivalent Regime (“NTER”) that replaced the former State Tax Equivalent Regime of Interest revenue is recognised in the Statements of Financial the NSW Treasury from 1 July 2001. The NTER closely mirrors Performance when receivable. The profit or loss on disposal the Commonwealth Income Tax Assessment Act 1936 of investments is calculated as the difference between the (as amended) and is administered by the Australian Taxation carrying amount of the investment at the time of the Office. The consolidated entity adopts the liability method disposal and the proceeds on disposal and is recorded in the of tax-effect accounting under the current Australian Statements of Financial Performance in the period of disposal. Accounting Standard AASB 1020 “Accounting for Income Dividend Revenue Tax (Tax-Effect Accounting)”. Tax-effect accounting is also Dividend revenue is recognised in the Company’s Statement used to recognise tax liabilities or assets arising in of Financial Performance when the dividend is proposed by overseas tax jurisdictions through the consolidated the controlled entity. entity’s overseas operations. Income tax expense is calculated on the profit from Property, Plant and Equipment Disposals ordinary activities adjusted for permanent differences The profit or loss on disposal of property, plant and between taxable income and accounting profit. The tax equipment is calculated as the difference between the effect of timing differences, which arise from items being carrying amount of the asset at the time of disposal and the brought to account in different periods for income tax and proceeds on disposal and is recorded in the Statements of accounting purposes, is carried forward in the Statements Financial Performance in the period of disposal. of Financial Position as a deferred tax asset (future income tax benefit) or a deferred tax liability (provision for deferred (m) FOREIGN CURRENCY income tax). Future income tax benefits are not brought to account unless realisation of the asset is assured beyond Transactions reasonable doubt. Future income tax benefits relating to Foreign currency transactions are translated to Australian entities in the consolidated entity with tax losses are only currency at the rates of exchange ruling at the dates of the brought to account when their realisation is virtually certain. transactions. Amounts receivable and payable in foreign (Refer Note 3). currencies at balance date are translated at the rates of From 1 July 2003, a revised Australian Accounting Standard exchange ruling on that date. Exchange differences relating AASB 1020 “Income Taxes” will become operative and will to amounts payable and receivable in foreign currencies are replace the current method of tax-effect accounting brought to account in the Statements of Financial mentioned above. The revised Standard will require a new Performance in the financial year in which the exchange approach in calculating and recognising income tax expense, rates change. deferred tax assets and deferred tax liabilities and may Hedges have a significant impact on the Statements of Financial Performance and Statements of Financial Position when it All non-specific hedge transactions are initially recorded at becomes operative. the relevant rate at the date of the transaction. Hedges outstanding at balance date are valued at the rates ruling on Sales Tax that date and any gains or losses are brought to account in Notional sales tax previously paid in relation to motor the Statements of Financial Performance. vehicles and computers that were leased by the Company and Forward Foreign Exchange Contracts the consolidated entity was recorded initially as a prepayment and recognised as an operating expense in the Statements of Forward foreign exchange contracts are based on notional Financial Performance over the term of the lease prior to principal amounts and therefore are not recognised in the integration on 1 July 2001. (Refer Note 18(d)). Statements of Financial Position. Upon maturity, the difference between the contract price and the current market Goods and Services Tax price is calculated and the resulting payment or receipt is In relation to the Goods and Services Tax (“GST”), revenues, recognised in the Statements of Financial Performance. expenses and assets are recognised net of the amount of Exchange differences on forward foreign exchange contracts GST except where the amount of GST incurred by the used to hedge the purchase or sale of specific goods and Company as a purchaser is not recoverable from the services are deferred and included in the measurement of Australian Taxation Office. In such cases, the GST incurred the purchase or sale when it takes place. Where the purchase is recognised as part of the cost of acquisition of an asset or sale transaction is terminated early, the exchange or as part of an item of expense. Receivables and payables differences are recorded in the Statements of Financial are stated with the amount of GST included. Cash flows are Performance as at the date of termination. At balance date, included in the Statements of Cash Flows on a gross basis any gain or loss is recognised in the Statements of Financial and classified as operating activities. Performance on an accrual basis. Forward foreign exchange contracts are held in the name (k) RESEARCH AND DEVELOPMENT of the parent. Research and development expenditure, when incurred, Translation of Controlled Foreign Entities is expensed except to the extent that its recoverability The Statements of Financial Position of self-sustaining is assured beyond any reasonable doubt. When this occurs, overseas controlled entities are translated at the rates of it is deferred and amortised on a straight line basis over exchange ruling at balance date. The Statements of Financial the period in which the related benefits are expected to Performance of those entities are translated at a weighted be realised. average rate for the financial year. Exchange differences arising on translation are taken directly to the Foreign Currency Translation Reserve. (Refer Note 14). 103 SYDNEY WATER ANNUAL REPORT 2002 104 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 2P neetrevenue from investments: Interest Sundry revenueSundry W Re Operating leaserental expenses: ercainadaotsto xess18(b) Depreciation expenses andamortisation Co expenses Materials andequipment Employee-related expenses (b) EXPENSESFROM ORDINARY ACTIVITIES C Tr Re FROM ORDINARY ACTIVITIES(a) REVENUES and expense items: afterthe following including revenue from before ordinary activities tax expense income hasbeenarrived at Profit SYDNEY WAT SYDNEY foreign exchange loss(gain) Net expense)toprovide for: aside(net Amounts set L R 21 2(c), T Superannuation expense Superannuation expense: Additional disclosures for specificitemsare asfollows: T Other expenses from ordinary activities 18(b) T assets Gross proceeds from saleofnon-current Depreciation of: s Gi)o ipslo rpry ln andequipment plant oss (Gain) ondisposalofproperty, otal depreciation otal Expenses from ordinary activities otal Revenues from ordinary activities sac n eeomn expenditure esearch anddevelopment mue aamngmn expenses omputer data management R npr expenses ansport itndw au fast ipsd18(b) ritten downvalue ofassetsdisposed v v nt OFIT FROM ORDINARY ACTIVITIES INCOME BEFORE TAX EXPENSE enues from other than coreenues from other operating activities: enues from core operating activities: f the parent by Strategic co-payment Dividends: Sales revenue from rendering ofservices L R Minimum leasepayments C Defined contribution schemes Bad anddoubtfuldebts Employee entitlements andon-costs andequipment Plant schemes Defined benefit R Fo Buildings ra rmitnneaalblt 26(b) or maintenance availability s nraial au fcnrle niy2c,23(b) 2(c), oss onrealisable value ofcontrolled entity a etrto 18(b) oad restoration estoration ofleasedpremises omputer equipment re c tor services expensestor services Other parties Parent Co seeable lossonoperating contracts ER ANNUAL REPORTER ANNUAL 2002 nt r olled entities NOTE 13,896 29,875 25,173 18,367 2,087 9,047 9,047 1,774 $’000 (817) 2002 184 190 135 109 325 300 150 247 98 98 55 51 63 49 49 (9) – – – – – – – – – – C ONSOLIDATED THE COMPANY THE ONSOLIDATED 294,479 303,340 166,565 298,137 25,653 13,317 13,690 22,356 42,181 29,138 16,144 21,081 27,915 3, 3, 1,418 2,454 8,616 1,299 2,354 1,129 1,546 2,147 (731) $’000 2001 269 396 413 413 915 973 155 300 232 962 (82) 97 – 29,094 13,703 24,749 17,615 2,051 1,367 9,047 9,047 $’000 2002 205 493 392 248 176 287 (25) (42) 63 63 99 48 35 25 94 38 – – – – – – – – – – – 161,460 289,685 295,028 286,073 24,955 13,690 28,310 41,383 22,164 15,794 12,796 20,141 27,369 1,418 2,899 2,899 8,587 1,995 1,299 1,129 1,129 2,104 1,546 2,085 (731) $’000 2001 250 395 222 155 170 807 973 300 97 9 CONSOLIDATED THE COMPANY

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

2PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE continued

(c) INDIVIDUALLY SIGNIFICANT ITEMS INCLUDED IN PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE Strategic co-payments by the parent for maintenance and tankering availability 26(b) – 1,695 – 1,695 Superannuation expense – 16,144 – 15,794 Redundancy costs 26(b) 173 6,554 173 6,554 Loss (gain) on realisable value of controlled entity 2(b), 23(b) (817) 915 – 1,129

3TAXATION

(a) INCOME TAX EXPENSE Prima facie income tax expense calculated at 30% (2001: 34%) on the profit from ordinary activities before income tax 1,411 3,013 1,303 3,045 Add (less) tax effect of permanent differences: Research and development – (254) – (254) Depreciation (2) 24 (2) 15 Plant and equipment expenses 3 – 3 – Loss on realisable value of controlled entity – 311 – 384 Redundancy costs 52 (2,919) 52 (2,919) Superannuation adjustment (write-back) – 4,545 – 4,545 Non-allowable expenses 26 62 23 42 Realised loss (gain) on foreign exchange (14) – – – Unrealised loss (gain) on foreign exchange 8 – – – Group entities’ results not recognised for tax purposes (104) – – – Prior years’ tax losses not previously recognised – (94) – (70) Under (Over)–provided in previous financial year 127 (142) 128 (145) Dividend rebate – – – (85) Restatement of deferred tax balances due to change in tax rate – (58) – (53) Deferred tax liability adjustment 933 – 944 – Future income tax benefit adjustment 94 1,103 (276) 1,083 Income tax expense relating to ordinary activities 18(b) 2,534 5,591 2,175 5,588 Total income tax expense relating to ordinary activities is made up of: Provision for current income tax 2,203 5,801 2,192 5,779 Provision for deferred income tax (956) (732) (937) (686) Future income tax benefit 19,039 522 18,672 495 Consideration for net transfers of tax assets/liabilities to parent (17,752) – (17,752) – 2,534 5,591 2,175 5,588

(b) CURRENT TAX ASSETS Amounts receivable from taxation authorities in the next financial year 9 25 – –

(c) FUTURE INCOME TAX BENEFIT Future income tax benefit comprises the estimated future benefit of the following items at the income tax rate which is expected to apply when the timing differences reverse: Provisions not currently deductible 162 18,893 162 18,579 Assets depreciated – 312 – 255 Unrealised foreign exchange loss 4 – – – 166 19,205 162 18,834

105 SYDNEY WATER ANNUAL REPORT 2002 106 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 4C 3T Government and other public sector securities: andother publicsector Government investmentsthe following: comprise Current T Income tax received Tax Income tax paid of the parent. callare interest-bearing investmentsthe name heldin Depositsat the aboveNone of investments are quotedonastockexchange. CONDITIONS AND TERMS SIGNIFICANT Depreciated assets W C Prepayments Accrued interest/income timing differencesthe to applywhen reverse: at the estimated expensethe following on items Provision for deferredtax comprises income (e) PROVISION INCOME FORDEFERRED TAX Over-provided inprevious financialyear the financialyear beginningof Balance at Movementsthe financialyear during were asfollows: (d) PROVISION INCOME FORCURRENT TAX urn year’stax payable income onoperating profit Current Tr SYDNEY WAT SYDNEY T investments 18(a) Current C CU Unrealised foreign exchange gains tlcretinvestments otal current ax liabilitydisposedwithsaleofcontrolled entity AXATION continued onsumable stores s 18(a) ash ASH ASSETS nfrt urn taxasset ansferto Current ork inprogress the income tax ratethe income whichisexpected RRENT losses sold to parentlosses sold At eoisa al 18(a) call Deposits at c ost: ER ANNUAL REPORTER ANNUAL 2002 NOTE (6,630) 1,419 5 6,644 2,076 5,741 $’000 ,851 2002 903 140 145 903 903 127 (14) 5 9 – – – – – – C ONSOLIDATED THE COMPANY THE ONSOLIDATED 43,862 42,143 42,143 42,143 5 5 1,101 1,719 (114) $’000 ,868 ,851 2001 157 135 137 766 (37) (67) 19 43 25 15 5 – (6,608) 5, 1,419 5 2,064 5, $’000 ,835 2002 140 128 775 323 452 323 323 146 6 – – – – – – – – 41,272 41,079 41,079 41,079 5 5 1,082 $’000 ,835 ,850 2001 157 137 757 193 (71) (90) (30) 19 89 87 4 8 – – CONSOLIDATED THE COMPANY

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

5RECEIVABLES

CURRENT Trade debtors: Parent – 45,106 – 45,106 Controlled entities – – 14 17 Other parties 6,224 9,782 5,764 7,903 6,224 54,888 5,778 53,026 Less: Provision for doubtful debts Other parties 572 931 572 921 5,652 53,957 5,206 52,105 Other debtors and accrued revenue: Parent 3 1,718 1 1,718 Controlled entities – – 316 250 Other parties 769 633 729 610 772 56,308 1,046 54,683 Total: Parent 3 46,824 1 46,824 Controlled entities – – 330 267 Other parties 6,421 9,484 5,921 7,592 6,424 56,308 6,252 54,683

NON-CURRENT Loan provided to outside equity interests in controlled entity 23(b) 89 – – –

SIGNIFICANT TERMS AND CONDITIONS Trade debtors are required to be settled within 30 days. Accrued investment income is receivable within a maximum period of six months. The non-current loan was provided by the Company’s wholly owned subsidiary, AWT International Pty. Ltd. (“AWTI”), to the outside equity interests of its new controlled entity in Thailand in order for them to acquire the shares in the new controlled entity. (Refer Note 23(b)). Under Thailand law, a foreign company can not own more than 49% of the shares in a Thailand company. There is no defined period for the settlement of the loan. The process of settlement by the outside equity interests can be by way of repayment of the loan in cash or returning all of their shares to AWTI. The loan is interest-bearing at the rate of 10% per annum. The actual interest payable each financial year is dependent on whether the new controlled entity can pay a dividend to the outside equity interests to the value of 10% of their total shareholding. If the dividend payable to outside equity interests for each financial year by the new controlled entity is less than 10% of their total shareholding, the difference between the dividend payable by the new controlled entity to its outside equity interests and the 10% interest payable on the loan is waived by AWTI.

6INVENTORIES

CURRENT Stock, stores and materials – at cost – 457 – 457 Construction work in progress: Contract costs incurred to date – 6,825 – 6,825 Profit recognised to date – 791 – 791 – 7,616 – 7,616 Less: Provision for foreseeable losses – – – – – 7,616 – 7,616 Less: Progress billings – 7,460 – 7,460 Net construction work in progress – 156 – 156 Consulting work in progress held as inventory 467 109 467 140 Total Inventories 467 722 467 753 Net construction work in progress comprises: Amounts due from customers – 156 – 156 Amounts due to customers – – – – – 156 – 156

107 SYDNEY WATER ANNUAL REPORT 2002 108 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 9P 8O 7O ln n qimn tcost – at andequipment Plant Government and other public sector securities: andotherpublicsector Government investmentsthe following: comprise Non-current o-urn investments Non-current NON-CURRENT T 21 Other prepayments for over-funded superannuation schemes Prepayment CURRENT SYDNEY WAT SYDNEY T C L L L cost Buildings –at (a) CARRYING AMOUNTS NON-CURRENT T C s:Accumulated depreciation ess: Accumulated depreciation ess: Accumulated depreciation ess: otal Otherassets tlPoet,patadeupet–ntbookvalue net – andequipment plant otal Property, investments otal Non-current mue qimn tcost – at omputer equipment ptlwr npors tcost apital workinprogress –at R TH TH OPERTY, PLANT AND EQUIPMENT AND PLANT OPERTY, At ER FINANCIAL ASSETS ER FINANCIAL ER ASSETS c ost: Shares in Ltd.Water Ecoscience Pty. hrsi W nentoa t.Ltd. Shares inAWT International Pty. L s:Poiinfrls nivsmn incontrolled entity Provision for lossoninvestment ess: ER ANNUAL REPORTER ANNUAL 2002 NOTE $’000 2002 196 118 141 174 19 19 63 78 56 – – – – – – – – – – – C ONSOLIDATED THE COMPANY THE ONSOLIDATED 24,109 35,241 15,627 31,010 10,676 4, 4 1,435 8,482 5 1,135 1,043 $’000 ,231 ,634 2001 499 392 16 – – – – – – $’000 2002 196 118 141 174 25 18 25 25 18 63 78 56 – – – – – – – – 35,213 13,614 13,614 31,010 20,821 4 4 1,435 3 9,212 6,241 1,700 1,725 1,725 1,043 7 7 $’000 ,941 ,203 ,392 ,338 ,207 2001 392 946 25 16 CONSOLIDATED THE COMPANY

NOTE 2002 2002 $’000 $’000

9PROPERTY, PLANT AND EQUIPMENT continued

(b) RECONCILIATION OF MOVEMENT IN CLASSES OF PROPERTY, PLANT AND EQUIPMENT Buildings: Balance at beginning of financial year 1,043 1,043 Disposals through transfer of businesses to parent 18(d) (1,043) (1,043) Balance at end of financial year –– Plant and equipment: Balance at beginning of financial year 8,482 7,207 Additions 72 29 Disposals through transfer of businesses to parent 18(d) (7,124) (7,124) Disposal of controlled entity 23(b) (1,148) – Asset valuation decrements (146) – Depreciation expense (49) (25) Reclassification between classes 23 23 Net foreign currency difference on translation of self-sustaining foreign operations 88 Balance at end of financial year 118 118 Computer equipment: Balance at beginning of financial year 1,135 946 Additions 55 54 Disposals through transfer of businesses to parent 18(d) (864) (864) Disposal of controlled entity 23(b) (179) – Depreciation expense (49) (38) Reclassification between classes (23) (23) Asset valuation decrements (2) (2) Net foreign currency difference on translation of self-sustaining foreign operations 55 Balance at end of financial year 78 78 Work in progress: Balance at beginning of the financial year 16 16 Disposals through transfer of businesses to parent 18(d) (16) (16) Balance at end of financial year –– Total Property, plant and equipment 196 196

109 SYDNEY WATER ANNUAL REPORT 2002 110 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 2PROVISIONS 12 INTEREST-BEARING LIABILITIES 11 PAYABLES 10 Other creditors andaccruedcharges: L mlyeetteet,icuigo-ot 21 on-costs including Employee entitlements, NON-CURRENT Tr CONDITIONS AND TERMS SIGNIFICANT T Tr CU SYDNEY WAT SYDNEY R R on-costs including Employee entitlements, R CU 18(a) (seebelow) Bank overdraft CU hand) and $5.452 million on hand for the Company (2001: $4.659 milliononhand). $4.659 milliononhandforthe Company (2001: hand) and$5.452 millionon $4.832 30June2002was $5.741million onhandforthe consolidated entity (2001: bankbalanceat the actual deposits allowingfor unpresented chequesandoutstanding millionoverdrawn $5.937 forthe consolidated the Company), entity and (2001: the cashbookshowedabalanceof$5.741 millionforthe CompanyWhile milliononhandfor the consolidated entity and$5.452 Bank Balance: the basis ofCitibankLimited’s ischarged on primerateto overdrawn whichiscalculated dailyandapplied balances. interest Overdraft toanoverdrawn position. wherebythe bankbalancemay fluctuate from adeposit function, daily cashmanagement the Company's of facility withCitibankLimitedwhichisusedasandwhenrequired aspart The Company hasabankoverdraft Arrangements: Credit CONDITIONS AND TERMS SIGNIFICANT oss onrealisable value ofcontrolled entity otal Payables: oad restoration estoration ofleasedpremises estoration ofleasedpremises ade accounts payable are normallysettledwithin30days. ade creditors: RRENT RRENT RRENT Co Co Parent Other parties Parent Parent Other parties Other parties nt nt r r olled entities olled entities ER ANNUAL REPORTER ANNUAL 2002 NOTE 8,676 8,676 7 7 $’000 ,695 ,855 2002 160 821 227 594 41 41 – – – – – – – – – C ONSOLIDATED THE COMPANY THE ONSOLIDATED 15,514 23,587 23,587 19,298 41,780 42,090 21,095 16,874 4 5 3, 4, 3, $’000 ,289 ,937 2001 784 024 265 915 310 170 136 – – 8,630 8,630 7 7 $’000 ,855 ,695 2002 160 172 765 593 10 10 41 41 – – – – – – – 22,457 22,457 22,457 15,922 15,316 15,316 19,228 18,104 41,779 41,779 4 5 3, 4, 2,788 $’000 ,289 ,937 2001 024 265 170 136 64 64 – – CONSOLIDATED THE COMPANY

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

13 CONTRIBUTED EQUITY

ISSUED AND FULLY PAID UP SHARE CAPITAL 500,000 (2001: 20,800,000) $1 ordinary shares fully paid 500 20,800 500 20,800

MOVEMENTS DURING THE FINANCIAL YEAR Balance at beginning of financial year 20,800 20,800 20,800 20,800 Reduction in share capital: 20,300,000 (2001: Nil) ordinary shares 17 (20,300) – (20,300) – Balance at end of financial year 500 20,800 500 20,800 During the financial year, the Company undertook a capital restructure that resulted in the Company reducing its share capital by $20.300 million (20,300,000 $1 ordinary shares). The reduction in share capital was an equal reduction in accordance with the Corporations Act 2001 and was approved by the parent (shareholder) following the transfer of the Company’s businesses to its parent on 1 July 2001. (Refer Notes 1 and 18(d)). The reduction was effected by way of a cash payment of $20.300 million to the parent. The Company is wholly owned by its parent, Sydney Water Corporation. There are no restrictions to dividends payable to the parent. Under the NTER, the Company is not required to maintain a dividend franking account.

14 RESERVES Asset Revaluation – – – – Foreign currency translation 2 23 (12) (8) 2 23 (12) (8)

MOVEMENTS DURING THE FINANCIAL YEAR Asset Revaluation Balance at beginning of financial year – 77 – 77 Add (less): Valuation adjustment to cost – (77) – (77) Balance at end of financial year – – – – The asset revaluation reserve records the net revaluation increments and decrements arising from the revaluation of non-current assets. Foreign Currency Translation Balance at beginning of financial year 23 30 (8) (9) Add (less): Translation adjustment on controlled foreign entities’ Financial Statements (21) (7) (4) 1 Balance at end of financial year 2 23 (12) (8) The foreign currency translation reserve records the foreign currency differences arising from the translation of self-sustaining foreign operations. (Refer Note 1(m)).

15 RETAINED PROFITS Balance at beginning of financial year 45,555 42,285 44,582 41,215 Net profit attributable to members of the parent entity 2,168 3,270 2,170 3,367 Dividends recognised as a liability or paid (44,581) – (44,581) – Balance at end of financial year 3,142 45,555 2,171 44,582

16 OUTSIDE EQUITY INTERESTS Outside equity interests in controlled entity comprises: Interest in share capital 89 – – – Total outside equity interests 23(b) 89 – – –

111 SYDNEY WATER ANNUAL REPORT 2002 112 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 8NOTES TO STATEMENTSTHE 18 OFCASH FLOWS TOTAL RECONCILIATION EQUITY 17 to operating for: activities applicable movement Add (less) net e profit Net (b) RECONCILIATION PROFIT OFNET TO CASH PROVIDED NET BY OPERATING ACTIVITIES Tr re T C the Statementsshown in ofCash Flows isreconciledthe relatedto the Statements itemsin ofFinancial Position asfollows: the financialyear theendof as Cash asat Assets. whichare classifiedunderCurrent instruments, investments inmoney market F (a) RECONCILIATION OFCASH endoffinancialyear Balance at T beginningoffinancialyear Balance at SYDNEY WAT SYDNEY T F cashprovided by(usedin)operating activities Net 11 investments 4 Current Bank overdrawn percashbook F balancedate was asfollows: these facilities Thepositionof at balancedate. usedasat were not facilit Theparent’s drawdown facilitythe bankoverdraft and facility from CitibankLimited. $0.250 million)bankoverdraft (2001: $2.000million)Performance Bond/Guarantee facility anda$0.250 million theCompany hasa$2.000million (2001: In addition, million). $10.400 (2001: milliondrawdown a$10.400 facility providedthe parent by The Company hasavailableto it (c) STANDBY ARRANGEMENTS CREDIT or financingactivities: Add (less) cashitemsclassifiedasinvesting Add (less) non-cash items: Add (less) non-cash tlcagsi aetett neetinequity entity interest otal changesinparent tlcagsi usd qiyitrss16 otal changesinoutsideequityinterests otal facility clt o utilised acility not acility utilised rteproe fteSaeet fCs lw,cs nldscs nhn,i ak nto akoedat n n hr term ofbankoverdraft) andany short inbanks (net cashincludesonhand, the Statementsthe purposesof ofCashor Flows, s 4 ash ansactions withownersasowners: ansactions c ognised in the Statementsognised in ofFinancial Performance R noetxepnerltn oodnr ciiis 3(a) tax expenseIncome relating to ordinary activities Dividends recognised asaliabilityorpaid Pa Pa Creditors Debtors andprepayments Inventories nelsdfrinecag gi)ls 2(b) Unrealised foreign exchange (gain)loss T R se revaluation decrements Asset W rcesfo aeo o-urn ses2(a) assets Proceeds from saleofnon-current ercainadaotsto 2(b) 2(b) Depreciation andamortisation to provisions aside Amounts set ax balances transferred to parent dcini hr aia 13 inshareeduction capital eceipts fortax assets itndw au fast ipsd2(b) ritten downvalue ofassetsdisposed yments madefrom provisions yments fortax liabilities ER ANNUAL REPORTER ANNUAL 2002 NOTE (44,581) (16,932) (58,151) (20,300) 24,007 66,378 12,650 11,967 82,720 17,752 (6,630) (9,047) 2,534 6,644 2,168 3, 2,147 9,047 5,741 $’000 2002 733 903 683 148 254 89 98 55 (9) – – C ONSOLIDATED THE COMPANY THE ONSOLIDATED (14,326) 63,192 66,378 12,650 11,220 11,937 42,143 40,069 37,925 27,915 (4,865) (5,937) 3, 5 3 3, 1,129 1,719 7, (973) $’000 ,591 ,270 2001 144 186 713 651 413 (82) (37) 19 – – – – (44,581) (16,644) (58,038) (20,300) 24,671 12,650 11,967 83,0 65,374 17,752 (6,608) (9,047) 5, 2,659 2,175 2,166 5, 2,170 9,047 $’000 2002 775 452 683 285 323 493 (25) 63 46 2 – – – (13,597) (13,597) 35,335 35,335 12,650 11,937 11,139 39,677 65,374 62,083 41,079 27,369 (4,865) (5,937) 5 3 3 6,981 2,899 1,129 (973) $’000 ,588 ,291 ,367 2001 193 713 642 (30) 19 9 – – – – y CONSOLIDATED THE COMPANY

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

18 NOTES TO THE STATEMENTS OF CASH FLOWS continued (d) TRANSFER OF BUSINESSES As mentioned in Note 1, all of the Company’s businesses in Australia were transferred to, and integrated with the parent during the current financial year. The transfer of businesses was part of the parent’s ongoing restructuring to improve efficiency and effectiveness of processes and functions within the Sydney Water Group. As a result, the parent acquired the Company’s businesses that provided services such as engineering, construction, mechanical, electrical and civil maintenance, environmental, scientific and technological services, and various operational support services. The effective date of integration and transfer of businesses was 1 July 2001. Associated with the transfer of businesses was the transfer of the Company’s various assets and liabilities to the parent, resulting in a net amount of $16.934 million being paid by the Company to the parent by way of cash consideration. Details of assets and liabilities transferred to the parent were as follows: Inventories 456 – 456 – Receivables and Prepayments 35,192 483 35,192 483 Property, plant and equipment 9,047 699 9,047 699 Future income tax benefit 18,834 2,345 18,834 2,345 Payables (22,201) – (22,201) – Provisions (57,180) (7,497) (57,180) (7,497) Deferred tax liability (1,082) – (1,082) – (16,934) (3,970) (16,934) (3,970) Following the transfer of businesses to the parent, the Company undertook a review of its capital structure in order to establish a revised structure that was more appropriate for the Company to operate in its new form after integration. As a result of this review, the Company made a dividend payment of $44.581 million (Refer Notes 15 and 17) and a share capital repayment of $20.300 million to the parent. (Refer Note 13). In the previous financial year, a transfer of businesses between the Company and the parent also took place that resulted in net assets and liabilities of $12.299 million being transferred to the Company and net assets and liabilities of $3.970 million being transferred to the parent. These transfers resulted in a net payment of $8.329 million to the Company. Although the above transfers of businesses in both financial years were settled by way of net cash payments between the Company and the parent, the cash flows in relation to the items that comprised these transfers are shown separately in their respective classifications in the Statements of Cash Flows.

19 INTANGIBLES Goodwill – at cost – 5,327 – – Less: accumulated amortisation – 5,327 – – – – – –

20 COMMITMENTS The following commitments do not include estimates of the Goods and Services Tax. OPERATING LEASE COMMITMENTS Future operating lease rentals not provided for in the Financial Statements and payable: Not longer than one year 46 397 46 93 Longer than one year but not longer than five years 49 133 49 97 Later than five years – – – – 95 530 95 190 Representing: Cancellable operating leases – 240 – 30 Non-cancellable operating leases 95 290 95 160 95 530 95 190 Non-cancellable operating lease rentals are payable as follows: Not later than one year 46 167 46 74 Later than one year but not later than five years 49 123 49 86 95 290 95 160 The Company leases property, motor vehicles and office equipment under operating leases expiring from one to three years. Leases generally provide the consolidated entity with a right of renewal at which time all terms are negotiated.

113 SYDNEY WATER ANNUAL REPORT 2002 114 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 1EMPLOYEE ENTITLEMENTS 21 co ev Employer contributions were basedonafullfundingmultiplecalculated actuarially disabilityordeath. payable onretirement, Benefitswere theabove fundsprovided definedbenefitsbasedonyears andfinalaverage ofservice salary. Superannuation Plan, State Superannuationthe Local Schemeand Authorities Withthe exception the First of Superannuation Planin Victoria. F theState Authorities Non-Contributory Superannuationthe Schemeand theState Authorities Superannuation Scheme, Scheme, theState Superannuation theCompanythe following contributedto NSW superannuationthe previousIn schemes: financialyear, financial year. contributedto any superannuation the current schemeduring TheCompany hasnot (Refer Note1(h)). transferredthe parent. to allemployees for andsuperannuationthe Company’s assetsandliabilitieswere NewZealand operations, except On 1July2001, SUPERANNUATION (Refer year balancerelatesthe Company’s Note1(h)). to NewZealand branch employees. The current Actuarial Assumptions: Actuarial Superannuation Administration Corporation were asfollows: each superannuation of schemeincludingstakeholdingthe data suppliedby The previous financialyear detailsinrespect grosstransferthe date liabilitiesandstakes of the fundssince in werethe Statements reflected in ofFinancial Position. the incremental only movements in entity, Where employeestransferred the differencethe parent from was recorded asanasset. wherethe stake exceededthe gross lia thedifference Conversely, was recorded asaliability. gross liabilityexceededthe stake, Wherethe balancedate. thecontribution remaining unpaid asat the Localand Authorities Superannuation Planwhichrepresent State Superannuation Sc forthe liabilitiesforthe First except 30June2001were calculated, actuarially The gross liabilitiesat rpyetfor over-funded superannuation schemes: Prepayment F 2002-2003 Current C 2001-2002 7 Current Non-current Ag SYDNEY WAT SYDNEY L State Authorities Superannuation Scheme State Superannuation Scheme Thereafter 2000-2001 Superannuation Scheme State Authorities Non-Contributory ocal Authorities Superannuation Plan irst State Superannuation Scheme. The Company’s former subsidiary,Water Ecoscience Pty Ltd, contributed to the Local contributedto TheCompany’s Authorities former State subsidiary,Water Superannuation Ecoscience PtyLtd, Scheme. irst rtState Superannuation Scheme irst onsolidated: r he er.TeFrtState Superannuationthe Local Schemeand Authorities Superannuation Planwere bothdefined TheFirst three years. ery n rgt mlyeetteetlaiiis includingon-costs: liabilities, gregate employee entitlement rbto cee.Employer contributions were basedonapercentage ofgross salaries. tribution schemes. ER ANNUAL REPORTER ANNUAL 2002 $’000 2002 2002 RE % – – – – – – – – – – RATE TU GROSS LIABILITY STAKE IN FUND NET LIABILITY (ASSET) LIABILITY NET STAKE FUND IN GROSS LIABILITY RN FITRS AEO AAYRATE IN OFINCREASE RATE OFSALARY OF INTEREST

PRANM NRAECONSUMER INDEX PRICE INCREASE (PER ANNUM) 23,417 26,880 (5,308) 1,723 NOTE $’000 2001 2001 7 7 7 7 117 .00 .00 .00 .00 % 5 $’000 $’000 2002 2002 2002 41 41 % – – – – – – – – – – – – C ONSOLIDATED THE COMPANY THE ONSOLIDATED 54,305 18,456 41,780 31,010 60,236 47,460 4,673 2,172 $’000 $’000 2001 2001 2001 % 6.50 3.00 4 4 – – .00 .00 $’000 $’000 2002 2002 2002 41 41 % – – – – – – – – – – – – (20,580) (30,888) 59,259 41,779 31,010 17,480 (2,950) (7,480) $’000 $’000 2.50 2.50 2.50 2.50 2001 2001 2001 117 heme bility, % 5 21 EMPLOYEE ENTITLEMENTS continued The Company:

GROSS LIABILITY STAKE IN FUND NET LIABILITY (ASSET)

2002 2001 2002 2001 2002 2001 $’000 $’000 $’000 $’000 $’000 $’000

State Superannuation Scheme – 26,880 – 47,460 – (20,580) State Authorities Superannuation Scheme – (5,308) – 2,172 – (7,480) State Authorities Non-Contributory Superannuation Scheme – 1,723 – 4,673 – (2,950) First State Superannuation Scheme – 5 – – – 5 – 23,300 – 54,305 – (31,005)

22 CONSULTANTS The total amount paid or payable to consultants engaged by the Company during the financial year was $0.077 million (2001: $0.210 million).

23 PARTICULARS IN RELATION TO CONTROLLED ENTITIES

(a) OWNERSHIP INTEREST AND ESTABLISHMENT

NAME CLASS OF SHARE OWNERSHIP INTEREST HELD

2002 2001 % %

Parent Entity: Australian Water Technologies Pty. Ltd. Directly controlled by Australian Water Technologies Pty. Ltd. Water Ecoscience Pty. Ltd. Ordinary – 100 AWT International Pty. Ltd. Ordinary 100 100 Directly controlled by AWT International Pty. Ltd. AWT Philippines Inc. Ordinary 100 100 AWT International (Thailand) Limited Ordinary 49 –

AWT Philippines Inc. was established in the Philippines. AWT International (Thailand) Limited was established in Thailand on 10 May 2002. (Refer Note 23(b)). All other controlled entities were established in Australia.

(b) ACQUISITION/DISPOSAL OF CONTROLLED ENTITIES The following controlled entities were acquired and disposed of during the financial year: Acquisition of Entity During the financial year, the consolidated entity established AWT International (Thailand) Limited. AWTI acquired 49% of the share capital of AWT International (Thailand) Limited for a cash consideration of $0.082 million. In addition, AWTI provided a loan of $0.089 million to the outside equity interests of the new controlled entity in order for them to acquire their portion of the share capital. (Refer also to Note 5). The operating result of the new controlled entity since the date of establishment has been included in the consolidated operating profit. The consolidated entity controls AWT International (Thailand) Limited despite only holding 49% of the issued share capital as the financial and operating policy decisions affecting the new controlled entity are made by AWTI. The new controlled entity markets in Thailand the parent’s expertise in providing consulting services related to water and water-related services.

115 SYDNEY WATER ANNUAL REPORT 2002 116 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 4ADTR’REMUNERATION AUDITORS’ 24 3PARTICULARS RELATION IN TO CONTROLLED ENTITIES continued 23 Other auditorsofbranchesthe of No other services wereNo otherservices providedthe above by auditors. (c) KEY FIGURES FORAUSTRALIAN(c) KEY FIGURES ITS CONTROLLED AND WATER ENTITIES LTD. PTY. TECHNOLOGIES management buy-out. Details of the disposalwas Detailsof asfollows: buy-out. management Thedisposalwasthe form in ofa theCompanythe ordinary shares disposedofall of Ltd. Water Ecoscience Pty. On 31July2001, Disposal ofentity e assetsofcontrolled entity disposedof: Net C SYDNEY WAT SYDNEY C A C R * A T A A Wa A cnlge t.Ltd. echnologies Pty. emuneration for audit or review of the financial reports of the orreview of the financialreports of emuneration for audit WT International Limited (Thailand) TItrainlPy Ltd. WT International Pty. WT PhilippinesInc. onsideration (cash) ompany and controlled entities ompany or anythe consolidated entity in entity: uditors of the Company:uditors of ustralian Water e csinePy Ltd. ter Ecoscience Pty. – Controlled entities – Wa heldafter disposal Interest (loss) ondisposal Profit assets Net Provisions Pa andequipment plant Property, C urn taxliability Current R eceivables andPrepayments ash assets The Company y e csinePy t.wspr ftecnoiae niyol pt 1Jl 01 en h aeo t ipsl (Refer Note the date ofitsdisposal. being the consolidated of to 31July2001, entity onlyup was part Ltd. ter Ecoscience Pty. ables ER ANNUAL REPORTER ANNUAL 2002 29,094 $’000 2002 539 674 12 TO RIAYATVTE EOEICM A XES AS AT 30JUNE INCOME BEFORE TAX EXPENSE ACTIVITIES ORDINARY – T LRVNEFO RFT(OS RMODNR CIIISTOTAL ASSETS PROFIT (LOSS) FROM ACTIVITIES ORDINARY FROM AL REVENUE 295,028 8,712 NOTE NOTE $’000 2001 175 57 – (1,488) 4 1,327 1,010 1,769 1,700 1,797 $’000 $’000 $’000 (807) ,345 2002 2002 2002 (14) (97) 19 30 50 (1) (1) %%%% 1 3 4 – C C ONSOLIDATED THE COMPANY THE ONSOLIDATED ONSOLIDATED THE COMPANY THE ONSOLIDATED 8,955 (633) $’000 $’000 $’000 2001 2001 2001 197 153 100 23 21 52 – – – – – – – – – – – 12,895 (1,488) 1,615 1,327 1,010 1,769 1,700 1,797 $’000 $’000 $’000 (807) 2002 2002 2002 301 174 (14) (97) 40 10 30 – – – 23(b)). 161,692 4 1,563 $’000 $’000 $’000 ,609 2001 2001 2001 162 153 324 9 – – – – – – – – – – – – CONSOLIDATED THE COMPANY

NOTE 2002 2001 2002 2001

25 DIRECTORS' REMUNERATION During the financial year, the only remuneration paid by the Company was $0.076 million to its non-executive Directors for performing their duties. In addition to this payment, the Company’s Directors were also separately paid a total of $0.950 million by the parent in respect of performing their duties as Directors of the parent. This included an amount of $0.518 million for non- executive Directors. Further, the parent also paid $0.171 million to a senior executive of the parent who was also a Director of three small controlled entities in the consolidated entity. Accordingly, the total remuneration paid to the Directors of all entities in the consolidated entity, by all entities in the Sydney Water Group, was $1.197 million. Directors’ remuneration includes salaries for executive Directors and any other benefits paid to both executive and non-executive Directors in both the Company and the consolidated entity. An analysis of Directors’ remuneration paid to both Directors of the Company and Directors of all entities in the consolidated entity, by the respective entities, is shown below: The number of Directors of the Company whose income from the Company or any related party falls within the following bands: $50,000 – $59,999 3 1 $70,000 – $79,999 4 2 $100,000 – $109,999 – 1 $120,000 – $129,999 1 – $390,000 – $399,999 – 1 $430,000 – $439,999 1 – $1,210,000 – $1,219,999 (1) – 1

$'000 $’000 $'000 $’000

Total income paid or payable, or otherwise made available, to all Directors of the Company or each entity in the consolidated entity from the Company or any related party: by the parent (2) 1,121 555 950 555 by the Company (1) 76 1,366 76 1,366 by controlled entities – 22 – – 1,197 1,943 1,026 1,921 Notes: (1) The previous financial year amount includes a termination payment and accrued leave entitlements for a former executive Director of the Company. (2) The amount of $0.171 million that was paid to a senior executive of the parent (see above) has been included in the current financial year consolidated amount as this officer was a Director of a controlled entity in the consolidated entity that was not wholly owned. In the previous financial year, this senior executive was only a Director of two wholly owned controlled entities and therefore his remuneration was not required under Australian Accounting Standards to be included in the comparative consolidated amount.

117 SYDNEY WATER ANNUAL REPORT 2002 118 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 6RELATED PARTY TRANSACTIONS 26 .P Gr P. J. Peters A. McCully M. G. co coststo andafactor direct of based uponanassessment charges for itsservices theparent trading arrangements, In providing itsresourcesthe Companyto the current under e f C nowprovidesthe theparent Instead, the parent. to theCompany provider isnolongeraservice 1 July2001, Effective from bothdomesticallyandoverseas. customers, wa f theCompany now the Companyof that haschangedin therole this integration, of Aspart of processes andfunctions. to improveongoing restructuring efficiency andeffectiveness the parent’s of on1July2001aspart theparent with, andintegrated businesses inAustralia weretransferred to, the Company’s allof 18(d) and21, As mentioned inNotes1, terms andconditions. the normalcourse ofbusinessandoncommercialbasis in C Transactionsthe between and water related services. forthe provision ofwater AWTI, with itscontrolled entity, theCompany enteredtransactions into the year, During Tr below. out set the Sydneydealings withentities within Water Group are Detailsof in controlled entities are provided inNote23. entity isSydney Detailsofinterests Water Corporation. parent the ultimate entity and The Company’s immediate parent (b) WHOLLY-OWNEDGROUP forthe previous publications in financialyear. payment transaction withDirectorThe only related entities was a of businessandoncommercialterms andconditions. are conducted onanarm’sthe normalcourse lengthbasisin the Companytransactions by All withDirector-related entities remuneration are disclosedinNote25. Details ofDirectors’ Kelly D. R. As a result of the decision to integratethe decision of the Company’s As aresult C r c arm’s lengthandon trading at However, measured. e The arm’s length. at the Sydney Water Group andwere not the commercial delivery service in interests of achievetight transactions were some to negotiated Onoccasions, group. though bothentities operatedtogether inawholly-owned arm’s lengthandoncommercialterms andconditions even theCompany endeavouredto dealat trading, methods of two the other of Inrespect length andcommercial basis. tender wastender andselective primarilyonanarm’sopen Tradingthrough negotiation. agreementsservice anddirect tender, selective entities wastender, through conducted open trading between thetwo service provider tothe parent, the Company when was a the previousIn financialyear, J. J. Walker A. Kibble G. financial year were: A the positionofDirector of The namesofeachpersonholding (a) DIRECTORS SYDNEY WAT SYDNEY P. or the Companyor to fulfilitscontractual obligations for ocuses onmarketingthe parent’s inwater expertise and esulted in a reduction in the operating result of both the ofboth the operatingesulted inareduction in result ommercial terms and conditions in those caseswouldhaveterms andconditionsommercial in xternal work. tn owihsc rdn curdcudntbereliably trading towhichsuch occurred could not xtent ompany with all of the resourcesompany withallof necessary andservices ompany andAWTI are conducted onanarm’s length mayadtecnoiae niyfrta financialyear. the consolidatedompany and entity forthat ustralian the time during anyWater Technologies PtyLtd at D. Messer A. natoswt aetandControlled Entities withParent ansactions .Baume E. v ter-relatedthe in services Waterto external industry er localandcorporate overheads. Priest ant (Appointed 2001) 17October ( (Managing Director) (Appointed 2001) 17October (Appointed 2001) 17October Chair) (Appointed 1July2001) ER ANNUAL REPORTER ANNUAL 2002 (Appointed 1July2001) (Appointed 1July2001) (Appointed 1July2001) each entity. those itemswhichwere of usedby inrespect Bank Limited, Macquarie andthe Company directly to the lessor, parent C c andwerethe parent’s onlyincludedin the parent name of c entered into operating leasesfor motorvehicles and parent the the previous in financialyear, Note20, of In respect the Company. within function the internalto perform audit designated ofemployees specifically thecost alsomet The parent tosuchemployeesthe parent. by out r financialyear for the next during will reimbursethe parent theCompany respect this last In the parent. businesses with the integrationstructural changesin the Company’s of former the redundanciesand relatedthe to directly orindirectly 8March 2001 involved were employeesthe Company of at to 30June2002wherethe persons up incurredthe parent by thecosts ofredundancies wouldmeet it also resolvedthat TheCompany’sintegrate Boardthe Company the parent). into the parent’sthe decisionby the date of (being to Board r thecosts incurred for theCompany wouldmeet that theCompany’s Board resolved the integration, of As aresult anditspredecessor entities. the parent employees arosetheir previous from years with ofservice the Company’sto majority ofbenefitsaccruing then thesignificant that Thiswasthe basis on to 7March 2001. c the also met Theparent financialyear. businesses forthat costs incurredthose by The co-payments represented net infulfillingitsrole andobjectives. needs could bemet theparent’s the CompanyMaintenance businessesof that so then CivilMaintenance andMechanical/Electrical the in resources payments wasto ensurethe availability ofspecialist the co- Thepurposeof financial year was $10.388 million. Thetotal of these expenses for that redundancies. certain av andmaintenance strategic co-payments fortransport made theparent the previous in financialyear, the parent and tradingthe arrangements of the Company between As part those contracts. of the Company to inrespect parent Nopenaltieswere requiredthe to bepaidby 30 June2001. financialyear were consideredterminated asat that in were competitivelythe Company wonby that the parent with contracts asfrom 1July2001, the parent businesses with dnac amnsttlig$.7 ilo htwere paid edundancy paymentstotalling $0.673 that million onandfrom 8March 2001 edundancies acceptedbyit ommitments, they applied to both the parent and the and the parent to both they applied ommitments, the leaseswerethe Although in omputer equipment. ofredundancy payments incurredthe Company by up ost may Thesepayments were madeseparatelyompany. the by iaiiyadribre h opn o h otof ailability andreimbursedthe Company forthe cost THE COMPANY

2002 2001 $’000 $’000

26 RELATED PARTY TRANSACTIONS continued Balances with Entities within the Wholly-Owned Group The aggregate amounts receivable from, and payable to, entities within the wholly-owned group by the Company at balance date are as follows: Receivables Current Trade debtors Parent – 45,106 Controlled entities 14 17 Other debtors Parent 1 1,718 Controlled entities 316 250 Investments 323 41,079 Work in progress Parent – – Controlled entities – 31 654 88,201 There is no provision for doubtful debts in respect of receivables from the parent or the Company’s controlled entities. Creditors and other liabilities Current Trade Creditors Parent 160 265 Controlled entities – – Other Creditors Parent 7,695 4,024 Controlled entities 10 64 7,865 4,353 Dividends Dividends receivable by the Company from wholly-owned controlled entities: AWT International Pty. Ltd. – 250

119 SYDNEY WATER ANNUAL REPORT 2002 120 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 27 ADDITIONAL FINANCIAL INSTRUMENTS ADDITIONAL FINANCIAL DISCLOSURE 27 eoisa al .0–42,14 – 5.00 4 Tr call Deposits at te aals1 – 10 Other payables C Tr te aals10 Other payables eoisa al 4 Tr call Deposits at C F 2001 Re F Re u below: out isse balancedate, Financial of Position asat assets andfinancialliabilitiesbothrecognised andunrecognisedthe Statement in rate for classesoffinancia ratethe effective riskand weighted averageThe consolidated interest entity’s exposureto interest F F 2002 (a) INTEREST USADN OTAT N URNYAEAEECAG AE NOTIONAL PRINCIPAL WAT SYDNEY AVERAGE EXCHANGE RATE than oneyear longer Not SELL NZDOLLARS 5,93 9.90 OUTSTANDING CONTRACTS CURRENCY AND 11 – Bank overdraft 5 Other receivables 11 Bank overdraft 5 Re Other receivables Tr Re h olwn al eal h owr oeg urnycnrcsottniga tbalancedate inAustralian dollarequivalen the forwardThe followingtable details foreign currency contracts outstandingasat y Thesecontracts canvary induration from anagreedto several onemonth future rate. specified amounts ofvarious currencies at agreesto exchange theparent these contracts, Under exposures denominated inforeign currencies. sale commitments anddebt enters into forward firmpurchase an hedgecertain to foreign exchange contractsthe consolidated onbehalfof entity, The parent (b) FORWARD EXCHANGE FOREIGN CONTRACTS as oee,teprn yial hoe ouetefradmre u toamaximumofoneyear. out the forwardto use chooses typically market theparent However, ears. inancial Assets inancial Liabilities inancial Liabilities inancial Assets s .01,71 3.90 4 ash s 4 ash d eevbe – 5 ade receivables d rdtr 0– 10 ade creditors d rdtr 10 ade creditors d eevbe 5 ade receivables c c c c ognised: ognised: ognised: ognised: ER ANNUAL REPORTER ANNUAL 2002

RATE RISK OE%$00$00$00$00$00$’000 $’000 $’000 $’000 $’000 $’000 % NOTE EGTDFIXEDINTEREST RATE MATURING IN: WEIGHTED IN A EAEFOTN NON FLOATING VERAGE 00 972861 772 89 – – – 10.00 TE 4 4 AERT ER1T ER ER ERN TOTAL BEARING YEARS 5 YEARS 5 TO 1 YEAR 1 RATE RATE RE .80 .05 ST –––––7–––––754754 –––––5 ––––––– NOTE IN 5 5, 5,741 ,1 213––5,0 100,170 56,308 – – 42,143 1,719 TE ,93 74 RE ST 9––––1,719 1––––5,741 7–––237––––5 ––––53 –––– ––––4,0494,049 – ––––8,6768,676 ––––2,3512,351 ESTA OETA INTEREST THAN MORE LESS THAN 2002 0 964413,157 6,424 89 – 903 90 3–––42,143 3–––903 – 1.26 2001 $’000 2002 95819,538 19,538 – 927,922 ,922 625,652 ,652 9753,957 ,957 5729,524 ,587 $’000 ,937 2001 639 l t ts: d 27 ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE continued

(c) CREDIT RISK Credit risk refers to the risk that counterparties will default on their contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity deals with creditworthy counterparties as a means of mitigating the risk of financial losses from defaults. The consolidated entity does not have any material credit risk exposure to any single counterparty or group of counterparties under financial instruments entered into by the consolidated entity. Financial Instruments Recognised in the Statement of Financial Position The credit risk on financial assets of the consolidated entity which have been recognised in the Statement of Financial Position is the carrying amount, net of any provision for doubtful debts. (Refer Note 27(a)).

(d) NET FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES Net fair values of financial assets and financial liabilities are determined by the consolidated entity on the following bases: Financial Instruments recognised in the Statement of Financial Position The net fair values of financial assets recorded as Current investments are determined on the basis of discounted cash flows using valuation rates supplied by independent market sources and take into account accrued interest and transaction costs which would be incurred to realise the financial assets. Deposits at call are held in the name of the parent. All other financial assets and liabilities in the Statement of Financial Position, other than deposits at call, are not readily traded on organised markets and it is therefore considered that their carrying value approximates net fair value. Financial Instruments not recognised in the Statement of Financial Position The net fair values of derivative financial instruments are determined on the basis of valuation rates and valuations supplied by independent market sources and take into account transaction costs which would be incurred to realise or settle the financial instruments. These instruments are held in the name of the parent and are readily traded on organised markets. The following table details the carrying amounts and net market values of the consolidated entity’s financial assets and financial liabilities at balance date:

CARRYING AMOUNT NET FAIR VALUE

NOTE 2002 2001 2002 2001 $’000 $’000 $’000 $’000

FINANCIAL ASSETS TRADED ON ORGANISED MARKETS Recognised: Deposits at call 4 903 42,143 903 42,143 903 42,143 903 42,143 Not recognised: Forward foreign exchange contracts – – – 3 – – – 3 903 42,143 903 42,146 NOT READILY TRADED ON ORGANISED MARKETS Recognised: Cash 4 5,741 1,719 5,741 1,719 Trade receivables 5 5,652 53,957 5,652 53,957 Other receivables 5 861 2,351 861 2,351 12,254 58,027 12,254 58,027 Total Financial Assets 13,157 100,170 13,157 100,173 FINANCIAL LIABILITIES TRADED ON ORGANISED MARKETS Not recognised: Forward foreign exchange contracts – – – 5 – – – 5 NOT READILY TRADED ON ORGANISED MARKETS Recognised: Bank overdraft 11 – 5,937 – 5,937 Trade creditors 10 754 4,049 754 4,049 Other payables 10 7,922 19,538 7,922 19,538 Dividend payable 12 – – – – 8,676 29,524 8,676 29,524 Total Financial Liabilities 8,676 29,524 8,676 29,529

121 SYDNEY WATER ANNUAL REPORT 2002 122 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 8AMOUNTS PAYABLE/RECEIVABLE CURRENCIES FOREIGN IN 28 Amounts payable: DOLLARS SINGAPORE Current Amounts receivable: Amounts payable: DOLLARS FIJIAN Amounts receivable: Current Amounts receivable: Amounts payable: T Amounts receivable: PESOS PHILIPPINE Non-current Current Amounts payable: NE ex year-end The Australian dollarequivalents calculated at ofunhedgedamounts payable orreceivable inforeign currencies, SYDNEY WAT SYDNEY Non-current Current Current Current Current Current Current Amounts receivable: UN HAILAND BAHT HAILAND hnerts are asfollows: change rates, W ZEALAND DOLLARS W ZEALAND IT ED STATES DOLLARS ER ANNUAL REPORTER ANNUAL 2002 NOTE 1,175 $’000 2002 651 492 651 492 197 978 174 40 85 28 89 28 40 50 50 1 3 1 3 C ONSOLIDATED THE COMPANY $’000 2001 322 322 100 100 13 33 33 13 – – – – – – – – – – – – 1,175 $’000 2002 651 651 197 978 3 3 – – – – – – – – – – – – – $’000 2001 – – – – – – – – – – – – – – – – – – – – 29 SEGMENT REPORTING 31 CONTINGENT LIABILITIES The Company and its controlled entities operate in one Claims made against the Company in respect of business segment, water and water-related services. The compensation and litigation arising from its normal consolidated entity markets the parent’s expertise in these operations are fully covered by the parent’s insurance services in the Water industry to external customers, both in provisions. The maximum total cost for all matters as at Australia and overseas. balance date in which there is legal action either pending or The consolidated entity operates predominantly in Australia commenced, other than workers’ personal injury and other with operations currently through branches in New Zealand insurance exposures already provided for by the parent, is and Singapore. Operations in Fiji and the Philippines are estimated at $1.250 million for the consolidated entity currently dormant. A new controlled entity was established in (2001: $2.506 million) and $1.250 million for the Company Thailand on 10 May 2002 and has only just commenced (2001: $2.506 million). The contingent liability is in respect operations. (Refer Note 23(b)). of possible legal penalties relating to contract matters. The Australian and New Zealand operations are very similar in The Company and AWTI are party to a Cross-Guarantee that they exhibit similar long-term financial performance, Agreement with the parent and the Workcover Authority of similar economic and political conditions and close proximity NSW. Under this Agreement, the parent guarantees the and relationship between operations. The operations also workers’ compensation obligations of the Company and AWTI have similar exchange control regulations and currency risks. in the event that these obligations are not able to be settled Accordingly, these are regarded as one single geographical by either of these entities. This Agreement is required as part reportable segment. All other overseas operations are either of the conditions of the Group Self-insurer’s licence held by dormant or not material as geographical segments at the the parent under the Workers’ Compensation Act 1987. present time. 32 EVENT SUBSEQUENT TO BALANCE DATE 30 ECONOMIC DEPENDENCY As part of the consolidated entity’s ongoing review of As part the parent’s ongoing restructuring, the Company’s efficiency and effectiveness of processes, functions and businesses were transferred to and integrated with the structure, the Board of the Company’s controlled entity, parent on 1 July 2001. (Refer Notes 18(d) and 23(c)). In the AWTI,resolved during the financial year that AWTI should previous financial year, the Company sold to its parent be de-registered and that all of its operations, assets and services to the value of $256.4 million. This represented 88.5% liabilities should be transferred to the Company. It is of total sales in that year. From 1 July 2001, the Company expected that the de-registration of AWTI will simplify the ceased providing services to its parent and now focuses on consolidated entity’s operational and governance structure marketing the parent’s expertise in water and water-related and will enable better focus on the operations of the services to external customers, both domestically and Company. The de-registration of AWTI is subject to approval overseas. During the financial year, this included services to by the Boards of the Company and the parent, and the Sydney Catchment Authority representing 59.69% of ultimately by the parent’s Voting Shareholders. The date total sales. While this was a significant proportion of the of de-registration of AWTI is currently not known. Company’s sales in the current financial year, the Company is actively seeking to expand its presence in National and International markets and continue to grow its customer base END OF AUDITED FINANCIAL STATEMENTS in these markets. In providing the services, the Company contracts with the parent to obtain the necessary resources to fulfil its contracts with its external customers. The Directors of the Company have been given an undertaking by the parent that it “will provide whatever financial support or assistance, if any, to ensure that Australian Water Technologies Pty Ltd is able to satisfy its debts, loan repayments and obligations under any guarantees for a period up to and including 30 September 2003”.

123 SYDNEY WATER ANNUAL REPORT 2002 AUSTRALIAN WATER TECHNOLOGIES PTY LTD ABN 81 003 848 860 DIRECTORS’ DECLARATION

In the opinion of the Directors of Australian Water Technologies Pty Ltd: (a)the Financial Statements and Notes are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the financial position of the Company and the consolidated entity as at 30 June 2002 and of their performance, as represented by the results of their operations and their cash flows for the year ended on that date; (ii) complying with applicable Accounting Standards and the Corporations Regulations 2001, and (iii)complying with other mandatory and statutory reporting requirements, including Part 3 of the Public Finance and Audit Act 1983 and the associated requirements of the Public Finance and Audit Regulation 2000. (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. (c) we are not aware of any circumstances at the date of this declaration that would render any particulars included in DIRECTORS’ DECLARATION the Financial Statements to be misleading or inaccurate. Signed in accordance with a resolution of the Directors:

John Priest DIRECTOR

Gabrielle Kibble DIRECTOR

DATE: 20 SEPTEMBER, 2002

124 SYDNEY WATER ANNUAL REPORT 2002 125 INDEPENDENT AUDIT REPORT SYDNEY WAT SYDNEY ER ANNUAL REPORTER ANNUAL 2002 THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY

126 SYDNEY WATER ANNUAL REPORT 2002 AWT INTERNATIONAL PTY LTD FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2002

128 STATEMENTS OF FINANCIAL PERFORMANCE 129 STATEMENTS OF FINANCIAL POSITION 130 STATEMENTS OF CASH FLOWS NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 131 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES 133 2 PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE 133 3 TAXATION 134 4 CASH ASSETS 135 5 RECEIVABLES 135 6 OTHER ASSETS 135 7 OTHER FINANCIAL ASSETS 136 8 PAYABLES 136 9 INTEREST-BEARING LIABILITIES 136 10 PROVISIONS 136 11 CONTRIBUTED EQUITY 136 12 RESERVES 137 13 RETAINED PROFITS 137 14 OUTSIDE EQUITY INTERESTS 137 15 TOTAL EQUITY RECONCILIATION 137 16 NOTES TO THE STATEMENTS OF CASH FLOWS 138 17 PARTICULARS IN RELATION TO CONTROLLED ENTITIES 138 18 AUDITORS’ REMUNERATION 139 19 DIRECTORS’ REMUNERATION 140 20 RELATED PARTY TRANSACTIONS 141 21 ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE 143 22 AMOUNTS PAYABLE/RECEIVABLE IN FOREIGN CURRENCIES 144 23 SEGMENT REPORTING 144 24 ECOMONIC DEPENDENCY 144 25 CONTINGENT LIABILITIES 144 26 EVENT SUBSEQUENT TO BALANCE DATE 145 DIRECTORS’ DECLARATION 146 INDEPENDENT AUDIT REPORT

127 SYDNEY WATER ANNUAL REPORT 2002 128 STATEMENTS OF FINANCIAL PERFORMANCE ex E e rft9,840 COMPANY THE 2(b) entity the parent attributableto membersof profit Net CONSOLIDATED profit Net r r Borrowing costs expense Re FOR 2002 THE YEAR 30JUNE ENDED ST AW ST SYDNEY WAT SYDNEY (17,792) the following on pages. out set the Financial of Statem The Statements ofFinancial Performanceto andforming areto bereadthe Notes part inconjunction with 9,654 fromtransactions withownersas T 12 and recognised inequity directly a T statements ofself-sustaining foreign operations tax revenueIncome (expense) before incometax expense from ordinaryactivities Profit e exchange differencetranslation on of financial Net rftfrom after ordinaryactivities Profit ltn oodnr ciiis 3(a) to ordinaryelating activities ltdicm a xes 9,840 elated incometax expense otal changes in equity other than those resultingthan otal changes inequityother expenses andvaluation adjustments otal revenues, xpenses from ordinary activities, ttributable to members of the parent entity entity the parent to membersof ttributable AT ART STATEMENTS OFAUDITED FINANCIAL ldn orwn ot xes 2(b) cluding borrowing costs expense v T INTERNATIONAL PTY LTD ITS AND CONTROLLED 98079035135 ENTITIES ABN ne rmodnr ciiis 2(a) enues from ordinary activities EMENTS OF FINANCIAL PERFORMANCE EMENTS OFFINANCIAL ER ANNUAL REPORTER ANNUAL 2002 NOTE 13 15 (656,416) 666,070 (17,792) (7,952) 9,840 2002 186 – $ 101,570 170,010 (68,440) (12,811) 81,561 88,759 88,759 88,759 (7,198) (7,198) 2001 – $ (659,895) 674, (11,561) 2,881 2,881 2,695 2,881 2,881 2002 151 186 – – $ ents 174,853 100,263 (11,483) (63,107) (16,021) 84,242 84,242 84,242 84,242 2001 – – $ 129 STATEMENTS OF FINANCIAL POSITION SYDNEY WAT SYDNEY eerdtxlaiiis 3(e) R N TO TO Deferred tax liabilities LIABILITIES NON-CURRENT 3(c) 7 TO Provisions 10 3(b) TO TO Deferred tax assets Other financialassets R ASSETS NON-CURRENT TO Other 6 taxassets Current R C ASSETS CURRENT AS ST AW usd qiyitrss 14 the following on pages. out set the Financial of Statement The Statements ofFinancial Positionto andforming areto bereadthe Notes part inconjunction with TOT Outside equityinterests T R Pa LIABILITIES CURRENT urn a iblte 3(d) 9 taxliabilities Current Interest-bearing liabilities Co EQUITY tlprn niyitrs 1,010,613 interest entity otal parent tie rft 13 etained profits eceivables 5 eceivables 5 eserves 12 s ses 4 ash assets AT TAST 1,099,309 ET ASSETS

y AT n T T T T T T T INTERNATIONAL PTY LTD ITS AND CONTROLLED 98079035135 ENTITIES ABN ables 8 EMENTS OF FINANCIAL POSITIONEMENTS OFFINANCIAL LLAIIIS 385,127 – AL EQUITY 385,127 1,484,436 AL LIABILITIES LIABILITIES AL NON-CURRENT 91,939 LIABILITIES AL CURRENT 1,392,497 AL ASSETS ASSETS AL NON-CURRENT ASSETS AL CURRENT rbtdeut 11 tributed equity

30 JUNE 2002 30 JUNE ER ANNUAL REPORTER ANNUAL 2002 NOTE 15 1,099,309 512,484 385,127 869,122 9 13,266 88,696 88,696 25,000 72,347 3 8,858 2,033 ,243 2002 – – – – – $ C ONSOLIDATED THE COMPANY THE ONSOLIDATED 1,328,668 1,328,668 1,018,565 1,018,565 1,018,565 1,230,949 962,507 301,782 310,103 250,000 24,889 25,000 31,058 70,632 50,287 1,495 8,321 8,321 2,198 2001 – – – – – – $ 1,615,278 1,008,193 1,008,193 1,008,193 1,140,577 223,534 383,551 983,193 488,089 641,597 382,762 474,701 607,085 607,085 88,696 25,000 3 8,858 2,033 ,243 2002 – – – – – – $ s 1,252,201 1,562,695 1,179,371 1,005,312 1,005,312 1,005,312 310,494 310,494 549,062 980,312 250,000 557,383 247,280 25,000 70,632 50,287 1,495 8,321 8,321 2,198 2001 – – – – – $ 130 STATEMENTS OF CASH FLOWS C C Outflows Borrowing costs paid Outflows FOR THE YEAR ENDED 30 JUNE 2002 CONSOLIDATED THE COMPANY THE cashprovided by(usedin)operating activities Net CONSOLIDATED Income tax paid received Interest C Inflows CA FOR 2002 THE YEAR 30JUNE ENDED ST AW SYDNEY WAT SYDNEY (359,575) (161,304) the following on pages. out set the Financial of Statements The Statements ofCash Flowsto andforming areto bereadthe Notes part inconjunction with CA balances ofcashheldinforeign currencies E increase (decrease) incashheld Net cashusedinfinancingactivities Net 17(b) (88,696) Dividend paid 17(b) equity interests incontrolled entity Proceeds from issueofsharesto outside Inflows CA cashusedininvesting activities Net interests ofcontrolled entity Pa Outflows CA L oans providedto outsideequity ffe s ttebgnigo h iaca er 1,230,949 the financialyear thebeginningof ash at ash paymentsthe course ofoperations in ash receiptsthe course inofoperations AT mn o otoldett 17(b) for controlled entity yment T INTERNATIONAL PTY LTD ITS AND CONTROLLED 98079035135 ENTITIES ABN SH FLOWS FROM OPERATING ACTIVITIES SH AT OF YEAR END FINANCIAL THE THE SH FLOWS ACTIVITIES FROM FINANCING SH FLOWS FROM INVESTING ACTIVITIES EMENTS OFCASH FLOWS c ts ofexchange ratethe fluctuations on ER ANNUAL REPORTER ANNUAL 2002 16(b) 16(a) NOTE (109,575) 363,355 341,623 208,133 869,122 253,780 250,000 250,000 88,696 88,696 88,696 88,696 45,647 21,732 (2,252) 2002 – – $ 1,302,056 1,230,949 (167,583) (167,583) 231,179 230,102 63,596 63,596 96,476 1,077 2001 – – – – – – – – – – – $ 1,179,371 (535,341) (261,561) (103,196) (170,584) 261,561 356,558 378,290 275,094 231,034 641,597 170,584 250,000 44,060 88,696 81,888 11,561 21,732 (2,433) 2002 – – $ 1,179,371 1,260,702 (168,371) (178,706) 228,228 229,305 (10,335) 60,934 10,335 10,335 60,934 97,375 1,077 2001 – – – – – – – – $ 131 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 1S SYDNEY WAT SYDNEY sadwe eemnd (Refer Note 5). as andwhendetermined. theprovision Known baddebtsare writtenoff against e c this provisionThe balanceof isestablishedafter due r therecoverability whichisexpected in to reflect in order tradethe closingbalance of debtors of maintained inrespect ageneral provision for doubtfuldebtsis Where necessary, (Refer Note5). amounts due. of Financial Position at Tr (c) RECEIVABLES eliminated. the consolidatedbetween entities in entity have been Thebalancesandeffectstransactions of date control ceases. the dateincluded onlyfrom control the to commences orup theresults are to becontrolledthe financialyear, during Where anentity eitherbeginsorceases its controlled entities. and entity, the parent being the Company, of financial report the consolidated of the entity includes The financialreport OFCONSOLIDATION(b) PRINCIPLES those adoptedforthe previous financialyear. with the consolidatedentities in entity andare consistent The accounting policieshave beenconsistentlythe appliedby valuation. are recorded at assets that for non-current certain except convention, historical cost hasbeenprepared inaccordancethe with The financialreport professional requirements. reporting A required for entities reporting under accordancethat with tradingmanufacturing and statementsto allowdisclosure in the NSW Treasurer hasgranted anexemption from preparing 1983, Act the Public 3of Finance andAudit Part of In respect F Au the Public 3 of Finance and Part 2001, the Corporations Act mandatory andstatutory requirements reporting including IssuesGroup Consensus Views andother Urgent Standards, has beenprepared inaccordance withapplicableAccounting that isageneral purposefinancialreport The financialreport (a) BASIS OFPREPARATION are asfollows: preparationthe financialreport of havethe beenadoptedin that policies The significant r r to ensure comparabilitythe current andconsistency with comparative figures have beenreclassified Where applicable, 30June2001. the financialpositionasat June 2001and The comparative figures coverto 30 the period1July2000 30June2002. the financialpositionasat to 30June2002and C coversthe the financialperformance of The financialreport Co C the while willbereferredto as “the parent” Ltd., Pty. Australian Water entity, TechnologiesThe Company’s parent will becollectively referredto as “the consolidated entity”. entitythe Company comprising anditscontrolled entities theeconomic Inaddition, as “the Company”. financial report A Sydney NSW 2000 Street, Pitt 339-341 office is “Level 1, Theaddress ofitsregistered 2001. the Corporationsto Act proprietary company incorporated inAustralia andissubject A FOR 2002 THE YEAR 30JUNE ENDED NOTES TO PART FORMING AND STATEMENTS OF FINANCIAL THE AW seto hs etr xsiga tbalancedate. those debtors existing asat of espect are the financialreport Theamounts in period. eporting uddt h ers $. ounded tothe nearest nieaino atr uha atrecoverability onsideration offactors suchaspast nneadAdtRegulation 2000. inance andAudit xperience andprevailing economic conditions. TA WT International Pty. Ltd. (ABN 98079035135)isasmall (ABN Ltd. WT International Pty. ompany anditscontrolled entities forthe period1July2001 Sydney Water entity, ompany’s ultimate parent ustralian Accounting Standards andothermandatory willbereferredthis to in Ltd. AWT International Pty. ustralia.” ade andotherreceivables are recordedthe Statements in prto,willbereferredthe to as “ultimate parent”.rporation, T INTERNATIONAL PTY LTD ITS AND CONTROLLED 98079035135 ENTITIES ABN dit Act 1983 and the associated requirements 1983and the Public of Act dit T EMENT OF SIGNIFICANT ACCOUNTINGEMENT OFSIGNIFICANT POLICIES ER ANNUAL REPORTER ANNUAL 2002 okr’compensation. workers’ outside ofNSWtheir owninsurance obtain cover for are based the consolidatedOther entities in that entity are expensed asincurred. ifany, entity, the consolidated to Premiumsthe ultimate charged parent by Financial of Position. the ultimate parent’salso in Statement balancedate andis claimsexistingthe basisofactual asat special riskinsurance exposures isinternally assessedon ex Theliabilityforthe insurance policy losses. reported not but assessedandincludesanestimateactuarially for incurred is Financial of Position, ultimate parent’s Statement The liabilityfor workers' compensation isrecordedthe in anditswholly-owned subsidiariesbasedinNSW. parent appliestothe ultimate compensation that licence for workers’ holdsagroup self-insurer’sThe Company’s ultimate parent (g) INSURANCE when incurred. are recognisedthe Statements in ofFinancial Performance andotherborrowing costs onloansandadvances Interest L (f) LOANS ADVANCES AND (Refer Note8). future payments arises. haveor services beenreceivedto make andanobligation Theseliabilitiesare recognisedthe goods when billed. or not r f Liabilities are recordedthe Statements in ofFinancial Position (e) PAYABLES (Refer Notes2(b)and7). Financial of Position. Statement c re co Wherethe agreed consideration value forthe disposal ofa Financial of Position. of Financial Performance andStatement the Company’s in Statement a provision for lossoninvestment re c re f wherethere isanagreed consideration value However, entity. the controlled assetsof the valuethe net determined as of re and thelowerofcost Financial of Position at Statement Investments incontrolled entities arethe Company’s carriedin Co cost. Investments are recorded at Current F Assets. Other Financial AssetsunderNon-Current maturity date beyondtwelve months are recorded within the Statementsin ofFinancial Positionthose witha while Assets months are recorded withinCash AssetsunderCurrent Investmentstwelve withamaturitythe ensuing date within (d) INVESTMENTS rtedsoa facnrle niy hnta valuethe is that then the disposalofacontrolledor entity, or amounts to be paid in the futureto bepaidin or amounts for goodsorservices cie ytecnoiae niyo h opn,whether eceivedthe consolidated by the Company, entity or asadavne r eodda theirface value. oans andadvances are recorded at onsolidated entity’s Statement of Financial of Performance and onsolidated entity’s Statement s,teCmaysivsmn srcre tcs.Where cost. isrecorded at theCompany’s investment ost, inancial Assets co co co co nt cesses in respect of bothpublicliabilityandindustrial of cesses inrespect ntrolled Entities ve ve ve r r ded asaprovision for lossonrealisable valuethe in le niyi oe hnisntast,thedifference is assets, than itsnet olled entity islower r r r beaon sblwcs,thedifference isrecorded as isbelowcost, able amount exceeds Where recoverable amount able amount. isnormally Recoverable amount able amount. 132 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 1S co SYDNEY WAT SYDNEY as operating activities. Statements ofCash Flows onagross basisandare classified Cash flows arethe includedin GST of included. amount e anitem of of oraspart ofacquisitionanasset the cost of theGST incurred isrecognised aspart Insuchcases, Office. recoverablethe Australian from Taxationa purchaser isnot ex e revenues,In relationthe GoodsandServices to Tax (“GST”), Goods andServices Tax becomes operative. Pe the Statements on ofFinancial impact may have asignificant e new approach incalculating andrecognisingtax income Therevised Standard willrequire a mentioned above. r AASB 1020 willbecome“Income operative Taxes” andwill Fr (Refer Note3). their realisation certain. when isvirtually account c F r F or adeferredtax liability(provision for deferredtax). income P iscarriedforwardthe Statements in ofFinancial purposes, periodsfortax andaccounting income different in account to whicharisefrom itemsbeingbrought timing differences, of tax effect The taxable income andaccounting profit. differences between adjustedforactivities permanent from ordinary tax expenseIncomethe profit iscalculated on entity’s overseas operations. ov to recogniseused tax liabilitiesorassetsarisingin T Accounting Standard AASB 1020 “ Accounting for Income Australian accounting under the current of tax-effect Theconsolidatedthe liabilitymethod entity adopts Office. amended) andisadministeredthe Australian by Taxation C NSW TheNTER the closelymirrors Treasury from 1July2001. Regimethe of replacedthe former State Tax Equivalent that Regime (“NTER”) the Nationalaccording to Tax Equivalent TaxationOffice ofState Revenue. liabilityisassessed through the income tax' is payable tothe NSW Government An'equivalent' or'notional 1989. Owned Corporations Act taxation tonotional inaccordancethe State with subject The Company anditscontrolled entities inAustralia are Income Tax (h) TAXATION paetecretmto ftxefc accounting tax-effect methodof the current eplace isassured beyond reasonable doubt. the asset ealisation of x(a-fetAcutn).Txefc accounting isalso Tax-effect Accounting)”. ax (Tax-Effect noiae niywt a ossaeol ruh to onsolidatedtax lossesare entity with onlybrought uturetax benefitsrelating income the to entities in unless toaccount brought uturetax benefitsare income not TA pne Receivables andpayables arethe stated with xpense. GST of the amount of xpenses andassetsare recognised net pne deferredtax assetsanddeferred tax liabilitiesand xpense, sto sadfre a se (futuretax benefit) income osition asadeferredtax asset mowat noeTxAssmn c 1936(as Act ommonwealth Income Tax Assessment m1Jl 03 a revised Australian Accounting Standard om 1July2003, ntinued cept where the amount of GST of incurredthe Company by as wherethe amount cept erseas throughjurisdictions the consolidated rf T ormance andStatements ofFinancial Position whenit EMENT OF SIGNIFICANT ACCOUNTINGEMENT OFSIGNIFICANT POLICIES ER ANNUAL REPORTER ANNUAL 2002 Currency (Refer Translation Note12). Reserve. arising on translation are taken directly tothe Foreign av Pe ex ov The Statements ofFinancial Position ofself-sustaining Tr ra Pe the Statements in ofFinancial toaccount brought to amounts payable andreceivable inforeign currencies are ex therates of balancedate aretranslated at currencies at Amounts receivable andpayable inforeign transactions. the thedates of therates ofexchange rulingat currency at Fo Tr CURRENCY (j) FOREIGN Statements ofFinancial Performancethe periodofdisposal. in the proceeds ondisposalandisrecordeddisposal and the in the time of the at the investment of amount carrying investmentsthe difference iscalculated as the between Pe revenue isrecognisedthe Statements in ofFinancial Interest Revenue Investment are provided. Sales revenue isrecognised the goodsorservices when the Company by or services anditscontrolled entities. discounts andallowances)the provision from ofproducts ofreturns, Sales revenue comprises revenue earned(net Sales Revenue RECOGNITION (i) REVENUE anslation ofControlled Foreign Entities ansactions tes change. rg aefrtefnnilya.Exchange differenceserage rate forthe financialyear. r hnerln tblnedt.TheStatements ofFinancial balancedate. change rulingat hnerln nta ae Exchange differences relating date. that change rulingon rescnrle niisaetasae tthe rates of erseas controlled entities aretranslated at rf rf rf eign currency transactions are translated to Australian rac ftoeette r rnltda aweighted those entities areormance of translated at ormance in the financialyearthe exchangeormance in inwhich rac hnrcial.Tepoi orlossondisposalof Theprofit ormance whenreceivable. CONSOLIDATED THE COMPANY

NOTE 2002 2001 2002 2001 $ $ $ $

2PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE Profit from ordinary activities before income tax expense has been arrived at after including the following revenue and expense items:

(a) REVENUES FROM ORDINARY ACTIVITIES Revenues from core operating activities: Sales revenue from rendering of services 617,194 37,216 617,194 37,216 Revenues from other than core operating activities: Interest revenue from investments: Ultimate parent 36,118 29,877 36,118 29,877 Other parties 8,185 29,305 7,091 33,339 Gain on investment in controlled entity – – – 50,782 Gain on foreign exchange 4,573 73,612 13,748 23,639 Total Revenues from ordinary activities 666,070 170,010 674,151 174,853

(b) EXPENSES FROM ORDINARY ACTIVITIES Accomodation and travel expenses 51,713 8,635 51,713 8,615 Materials and services expenses 561,035 36,474 561,035 36,474 Transport expenses 10,343 – 10,343 – Administration expenses 33,325 23,331 27,184 18,018 Loss on investment in controlled entity 7 – – 9,620 – 656,416 68,440 659,895 63,107 Borrowing costs expense – – 11,561 11,483 Total Expenses from ordinary activities 656,416 68,440 671,456 74,590 Borrowing costs expense: Interest expense Controlled entities – – 11,561 11,483 – – 11,561 11,483

3TAXATION

(a) INCOME TAX EXPENSE Prima facie income tax expense calculated at 30% (2001: 34%) on the profit from ordinary activities before income tax 2,896 34,534 808 34,090 Add (less) Tax Effect of Permanent Differences: Restatement of deferred tax balances due to change in tax rate – (1,109) – (1,109) Prior year tax losses not previously recognised – (24,359) – (6,649) Write down loss (gain) in value of investment in controlled entity – – 2,886 (17,266) Withholding tax written-off – 1,205 – – Legal expenses 2,606 – 2,606 – Realised loss (gain) on foreign exchange (13,980) – (13,980) – Unrealised loss (gain) on foreign exchange 8,076 – 8,076 – Group entities’ results not recognised for tax purposes 798 – – – Income tax under (over)-provided in previous financial year (582) 2,540 (582) 6,955 Income tax expense (revenue) relating to ordinary activities 16(b) (186) 12,811 (186) 16,021 Income tax expense (revenue) relating to ordinary activities is made up of: Provision for current income tax 11,378 6,754 11,378 7,614 Provision for deferred income tax (8,321) 5,794 (8,321) 8,144 Future income tax benefit (3,243) 263 (3,243) 263 (186) 12,811 (186) 16,021

133 SYDNEY WATER ANNUAL REPORT 2002 134 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 4C 3T cre neetincome Accrued interest Prepaid expenses the timing differences reverse: tax rateincome to applywhen whichisexpected the estimatedthe following expense on itemsat Provision for deferredthe tax comprises income (e) PROVISION INCOME FORDEFERRED TAX W Income tax paid Amounts receivabletaxation from authorities (b) CURRENT TAX ASSETS Fo urn year’stax payable income onoperating profit Current W W W Unrealised foreign exchange loss timing differencesthe to applywhen reverse: tax rate theincome whichisexpected items at the following of estimated future benefit F (c) FUTURE INCOME TAX BENEFIT financialyear the next in SYDNEY WAT SYDNEY 16(a) Allinvestmentsthe ultimate are parent. the nameof heldin the aboveNone of investments are quotedonastockexchange. CONDITIONS AND TERMS SIGNIFICANT T investments Current C CU Unrealised foreign exchange gains Tr Under (over)-provided inprevious financialyear the financialyear beginningof Balance at Movementsthe year during were asfollows: (d) PROVISION INCOME FORCURRENT TAX oenetadohrpbi etrscrte,a cost: at securities, andotherpublicsector Government investmentsthe following: comprise Current tlCretinvestments otal Current AXATION continued tr noetxbnftcomprises the uture income tax benefit s 16(a) ash ASH ASSETS nfrt urn tax assets ansferto current ithholding tax deducted ithholding tax written-offithholding (irrecoverable) ithholding tax paidandrecoverableithholding tax reclassifiedithholding from prepayments r RRENT eign exchange loss(gain)onoverseastax liabilities At c ost: eoisa call Deposits at ER ANNUAL REPORTER ANNUAL 2002 NOTE 289,122 869,122 580,000 580,000 580,000 (21,732) 11,961 1,495 3 8,858 8,858 (582) ,243 2002 – – – – – – – – – – $ C ONSOLIDATED THE COMPANY THE ONSOLIDATED 1,063,371 1,063,371 1,063,371 1,230,949 167,578 (23,994) 24,889 24,889 (4,829) (1,261) (1,077) 4 1,495 8,321 1,205 1,148 7, (134) ,635 2001 833 396 913 092 – $ 641,597 580,000 580,000 580,000 (21,732) 11,961 61,597 1,495 3 8,858 8,858 (582) ,243 2002 – – – – – – – – – – $ 1,179,371 1,063,371 1,063,371 1,063,371 116,000 (5,609) (1,077) 1,495 8,321 6,700 1,147 7, (579) 2001 833 396 092 913 – – – – – – $ CONSOLIDATED THE COMPANY

NOTE 2002 2001 2002 2001 $ $ $ $

5RECEIVABLES

CURRENT Trade debtors: Other parties 460,619 64,694 460,619 64,694 Less: Provision for doubtful debts – – – – 460,619 64,694 460,619 64,694 Other debtors and accrued revenue: Ultimate parent 1,924 – 1,924 – Parent 10,004 20 10,004 20 Other parties 39,937 5,918 15,542 5,918 Less: Provision for doubtful debts – – – – 51,865 5,938 27,470 5,938 Total: Ultimate parent 1,924 – 1,924 – Parent 10,004 20 10,004 20 Controlled entities – – – – Other parties 500,556 70,612 476,161 70,612 512,484 70,632 488,089 70,632

NON-CURRENT Loan provided to outside equity interests of controlled entity 17(b) 88,696 – 88,696 –

SIGNIFICANT TERMS AND CONDITIONS Trade debtors are required to be settled within 30 days. Accrued investment income is receivable within a maximum period of six months. The non-current loan was provided by the Company to the controlled entity’s outside equity interests in order for them to acquire the shares in the controlled entity. (Refer Note 17(b)). Under Thailand law, a foreign company can not own more than 49% of the shares in a Thailand company. There is no defined period for the settlement of the loan. The process of settlement by the outside equity interests can be by way of repayment of the loan in cash or returning all of their shares to the Company. The loan is interest- bearing at the rate of 10% per annum. The actual interest payable each financial year to the Company is dependent on whether the controlled entity can pay a dividend to the outside equity interest to the value of 10% of their total shareholding. If the dividend payable to outside equity interests for each financial year by the controlled entity is less than 10% of their total shareholding, the difference between the dividend payable by the controlled entity to its outside equity interests and the 10% interest payable on the loan is waived by the Company.

6OTHER ASSETS

CURRENT Prepayments 2,033 2,198 2,033 2,198

7OTHER FINANCIAL ASSETS

NON-CURRENT Non-current investments – – 382,762 310,494 Non-current investments comprise the following: Government and other public sector securities: At cost: Shares in AWT Philippines Inc. – – 310,494 310,494 Less: Provision for loss on investment – – 9,620 – – – 300,874 – Shares in AWT International (Thailand) Limited – – 81,888 – Total Non-current investments – – 382,762 310,494

135 SYDNEY WATER ANNUAL REPORT 2002 136 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 2RESERVES 12 CONTRIBUTED EQUITY 11 PROVISIONS 10 9INTEREST- 8PAY Other creditors andaccruedcharges: ne h ainlTxEuvln eie h opn sntrequiredto maintain adividendfranking account. theCompany isnot Regime, the National Under Tax Equivalent to the parent. Australian There areto dividendspayable norestrictionsWater The Company iswhollyownedbyitsparent, Ltd. Technologies Pty. Tr CONDITIONS AND TERMS SIGNIFICANT T Tr CU SYDNEY WAT SYDNEY (Refer Note1(j)). The foreign currencytranslation reserve recordsthe foreign currency differencestranslationthe arisingfrom ofself-sustaini endoffinancialyear Balance at fo Fo 25,000) ordinary shares of$1.00each 25,000 (2001: FULLY AND ISSUED PAID CAPITAL SHARE UP Dividend CU the Sydney borrow outside Water Group initsownname. facilities andcannot The Company maintains noothercredit CONDITIONS AND TERMS SIGNIFICANT L CU aac tbeginningoffinancialyear Balance at MOVEMENTSYEAR FINANCIAL THE DURING d:Tasainajsmn oncontrolled Translation adjustment Add: oan from AWT PhilippinesInc. otal Payables: ade accounts payable are normallysettledwithin30days. ade creditors: r r inette’Financial Statements eign entities’ RRENT RRENT RRENT eign currencytranslation ABLES Parent Parent Other parties Parent Other parties Other parties Co nt r olled entities ER ANNUAL REPORTER ANNUAL 2002 BEARI NG LIABILITIES NOTE 315,938 330,481 385,127 385,127 (17,792) 14,543 54,646 54,109 13,266 13,266 25,000 31,058 2002 537 – – – $ C ONSOLIDATED THE COMPANY THE ONSOLIDATED 250,000 31,236 16,853 31,236 38,256 25,000 19,051 31,058 31,058 50,287 50,287 (7,198) 2,198 2001 – – – $ 315,938 383,551 383,551 223,534 330,481 14,543 52,533 25,000 53,070 2002 537 ng foreign operations. – – – – – – $ 250,000 247,280 31,236 31,236 16,853 25,000 19,051 50,287 50,287 2,198 2001 – – – – – – $ CONSOLIDATED THE COMPANY

NOTE 2002 2001 2002 2001 $ $ $ $

13 RETAINED PROFITS Balance at beginning of financial year 962,507 1,123,748 980,312 1,146,070 Net profit attributable to members of the parent entity 9,840 88,759 2,881 84,242 Dividends recognised as a liability or paid – (250,000) – (250,000) Balance at end of financial year 972,347 962,507 983,193 980,312

14 OUTSIDE EQUITY INTERESTS Outside equity interests in controlled entity comprise: Interest in share capital 88,696 – – – Total outside equity interests 17(b) 88,696 – – –

15 TOTAL EQUITY RECONCILIATION Balance at beginning of financial year 1,018,565 1,187,004 1,005,312 1,171,070 Total changes in parent entity interest in equity recognised in the Statements of Financial Performance (7,952) 81,561 2,881 84,242 Transactions with owners as owners: Dividends recognised as a liability or paid – (250,000) – (250,000) Total changes in outside equity interests 14 88,696 – – – Balance at end of financial year 1,099,309 1,018,565 1,008,193 1,005,312

16 NOTES TO THE STATEMENTS OF CASH FLOWS

(a) RECONCILIATION OF CASH For the purposes of the Statements of Cash Flows, cash includes cash on hand, in banks (net of bank overdraft) and any short term investments in money market instruments, which are classified under Current Assets. Cash as at the end of the financial year as shown in the Statements of Cash Flows is reconciled to the related items in the Statements of Financial Position as follows: Cash 289,122 167,578 61,597 116,000 Current investments 580,000 1,063,371 580,000 1,063,371 4 869,122 1,230,949 641,597 1,179,371

(b) RECONCILIATION OF NET PROFIT TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net profit 9,840 88,759 2,881 84,242 Add (less) expense (revenue) items classified as investing or financing activities: Borrowing costs – – 11,561 11,483 Add (less) non-cash items: Provision for loss (gain) on investment in controlled entity – – 9,620 (50,782) Unrealised foreign exchange loss (gain) (4,573) (73,612) (13,748) (23,639) Income tax expense (benefit) relating to ordinary activities 3(a) (186) 12,811 (186) 16,021 Add (less) net movement applicable to operating activities for: Debtors and prepayments (439,699) (39,310) (417,291) (44,859) Creditors 346,775 (155,154) 325,699 (159,760) Payments for tax liabilities (21,732) (1,077) (21,732) (1,077) Net cash provided by (used in) operating activities (109,575) (167,583) (103,196) (168,371)

137 SYDNEY WATER ANNUAL REPORT 2002 138 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 8AUDITORS' REMUNERATION 18 PARTICULARS RELATION IN TO CONTROLLED ENTITIES 17 A A Pa NAME INTEREST ESTABLISHMENT AND (a) OWNERSHIP SYDNEY WAT SYDNEY Other auditorsofbranchesthe Company of A C R A A the issuedsharethe financialandoperating49% of capitalas policydecisionsaffectingthe newcontrolled entity are madeby TheCompany controls AWTthe consolidated International Limiteddespiteonlyholding included in operating (Thailand) profit. hasbeen the newcontrolled of the date entity ofestablishment since Theoperating result (Referto Note5). also share capital. loan of$0.089the outsideequityintereststo the newcontrolled million of entity inorderto acquiretheir portion forthem theCompany provided a Inaddition, capital ofAWT International Limitedfor (Thailand) acashconsideration of$0.0819 million. TheCompany acquiredthe share 49%of theCompany establishedAWT International Limited. (Thailand) the financialyear, During (b) ACQUISITION OFCONTROLLED ENTITY (Refer Note17(b)). 10 May 2002. A (c) KEY FIGURES FOR AWT INTERNATIONAL PTY. LTD. AND ITS CONTROLLED AND ENTITIES FORAWT(c) KEY LTD. FIGURES INTERNATIONAL PTY. the provision ofwater andwater-related services. C No other services wereNo otherservices providedthe above by auditors. emuneration for audit or review of the financial reports of the orreview of the financialreports of emuneration for audit TItrainlPy Ltd. WT International Pty. WT PhilippinesInc. WT International Limited (Thailand) Ltd. WT International Pty. AWT International Limitedwas (Thailand) establishedin Thailand on wasthe Philippines. establishedin WT PhilippinesInc. ompany oranythe consolidated entity in entity: may Thenewcontrolled entity marketsompany. in the ultimate parent’sThailand inproviding expertise consulting related services uditors of the Company:uditors of re Co The Company tEntity: nt ietycnrle yATItrainlPy Ltd. Directly controlled byAWT International Pty. nt A A r TPiipnsIc Ordinary WT PhilippinesInc. TItrainl(hiad iie Ordinary WT International Limited (Thailand) olled entities ER ANNUAL REPORTER ANNUAL 2002 674, 12,655 2002 151 TO RIAYATVTE EOEICM A XES AS AT 30JUNE INCOME BEFORE TAX EXPENSE ACTIVITIES ORDINARY – $ T LRVNEFO RFT(OS RMODNR CIIISTOTAL ASSETS PROFIT (LOSS) FROM ACTIVITIES ORDINARY FROM AL REVENUE 174,853 57,420 NOTE 2001 – $ (1,307) (1,354) 2,695 8,592 9,246 2002 2002 654 – $ $ C ONSOLIDATED THE COMPANY THE ONSOLIDATED CL AS S OF SHARE OWNERSHIP INTEREST HELD OWNERSHIP S OFSHARE 100,263 52,089 9,976 9,976 2001 2001 – – – $ $ 1,615,278 174,312 301,143 8,592 8,592 2002 2002 2002 100 49 % – – $ $ 1,562,695 323,747 9,976 9,976 2001 2001 2001 of the 100 % – – – – $ $

the to CONSOLIDATED THE COMPANY

NOTE 2002 2001 2002 2001

19 DIRECTORS' REMUNERATION During the financial year, no Director of the Company received any remuneration from the Company. The Directors, however, received remuneration totalling $719,811 from the ultimate parent in respect of their duties with the ultimate parent. This included an amount of $116,628 for the non-executive Director. In addition, the parent paid remuneration totalling $10,800 to the non-executive Director in respect of duties performed in relation to the parent. Accordingly, the total remuneration paid to the Directors of all entities in the consolidated entity, by all entities in the Sydney Water Group, was $730,611. Directors’ remuneration includes salaries for executive Directors and any other benefits paid to both executive and non-executive Directors in both the Company and the consolidated entity. An analysis of Directors’ remuneration paid to both Directors of the Company and Directors of all entities in the consolidated entity, by the respective entities, is shown below: The number of Directors of the Company whose income from the Company or any related party falls within the following bands: $70,000 – $79,999 – 1 $100,000 – $109,999 – 1 $120,000 – $129,999 1 – $170,000 – $179,999 1 – $390,000 – $399,999 – 1 $430,000 – $439,999 1 – $1,210,000 – $1,219,999 (1) – 1

$ $ $ $

Total income paid or payable, or otherwise made available, to all Directors of the Company or each entity in the consolidated entity from the Company or any related party: by the parent (1) 10,800 1,282,086 10,800 1,282,086 by the ultimate parent (2) 719,811 509,151 719,811 509,151 730,611 1,791,237 730,611 1,791,237

Notes: (1) The previous financial year amount includes a termination payment and accrued leave entitlements for a former executive Director of the Company and the parent. (2) The current financial year amounts include $171,393 paid to a senior executive of the ultimate parent who was also a Director of the Company and two small controlled entities in the consolidated entity, one of which is not wholly owned. In the previous financial year, this senior executive was only a Director of the Company and one other wholly owned controlled entity and therefore his remuneration was not required under Australian Accounting Standards to be included in the comparative amounts.

139 SYDNEY WATER ANNUAL REPORT 2002 140 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 0RELATED PARTY TRANSACTIONS 20 L Investments: are asfollows: balancedate the wholly-owned entities within the Company group by at andpayableto, The aggregate amounts receivable from, the Balances withEntitieswithin Wholly-Owned Group c were conducted onanarm’sthe normal lengthbasisin Transactionsthe Company between the parent and services. analytical scientific and forthe provision ofengineering, theCompany enteredtransactions into withitsparent the financialyear, During Other transactions arm’s lengthandoncommercialterms andconditions. payablethe loanisat on Interest (Refer Note9). $247,280) AWT PhilippinesInc. provided byitscontrolled entity, (2001: bearingloanof$223,534 The Company hasaninterest L C entity isSydney Water entity isAustralian anditsultimate parent WaterThe Company’s Ltd. Technologies immediate parent Pty. (b) WHOLLY-OWNEDGROUP $Nil). There weretransactions withentities no relatedthe financialyearto Directors during (2001: Other Transactions remuneration are disclosedinNote19. Details ofDirectors’ The names of each person holding the position of Director of AWT International Pty Ltd at any time during the financialyeartime during wer any the positionofDirector ofAWTThe namesofeachpersonholding International PtyLtd at (a) DIRECTORS SYDNEY WAT SYDNEY Dividends payablethe Companythe parent by to R Creditors andotheraccruedcharges: the Company’s or controlled entities. the parent from receivables of There isnoprovision for doubtfuldebtsinrespect oans: oans ourse ofbusinessandoncommercialterms andconditions. eceivables: roain Detailsofinterests incontrolled entities are provided inNote17.orporation. Other debtors: Current Tr Current Other Creditors Current .Walker A. MacKillop J. R. Kibble G. Current ade debtors: Parent Ultimate parent Co Parent Parent Co Ultimate parent Co Co Co Parent Tr ade creditors: ER ANNUAL REPORTER ANNUAL 2002 nt nt nt nt nt r r r r r ( olled entities olled entities olled entities olled entities olled entities Chair) 554,015 315,938 223,534 330,481 580,000 580,000 14,543 11,928 10,004 1,924 2002 – – – – – – $ THE COMPANYTHE 1,063,391 1,063,371 278,516 250,000 247,280 31,236 31,236 2001 20 20 – – – – – – – $ e: 21 ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE

(a) INTEREST RATE RISK The consolidated entity’s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities both recognised and unrecognised in the Statement of Financial Position as at balance date, is set out below:

WEIGHTED FIXED INTEREST RATE MATURING IN: AVERAGE FLOATING NON INTEREST INTEREST LESS THAN MORE THAN INTEREST RATE RATE 1 YEAR 1 TO 5 YEARS 5 YEARS BEARING TOTAL

NOTE % $$$$$$

2002

Financial Assets Recognised: Cash 4 3.26 289,122––––289,122 Deposits at call 4 4.80 – 580,000–––580,000 Trade receivables 5 – ––––460,619 460,619 Other receivables 5 10.00 – – – 88,696 51,865 140,561 – 289,122 580,000 – 88,696 512,484 1,470,302 Financial Liabilities Recognised: Trade creditors 8 – ––––15,08015,080 Other payables 8 – ––––370,047370,047 – ––––385,127385,127

2001

Financial Assets Recognised: Cash 4 3.6 167,578––––167,578 Deposits at call 4 5.0 – 1,063,371–––1,063,371 Trade receivables 5 – ––––64,694 64,694 Other receivables 5 – ––––5,938 5,938 –167,578 1,063,371 – – 70,632 1,301,581 Financial Liabilities Recognised: Trade creditors 8 – ––––33,43433,434 Other payables 8 – ––––16,853 16,853 Dividend payable 10 – ––––250,000250,000 – ––––300,287 300,287

(b) CREDIT RISK Credit risk refers to the risk that counterparties will default on their contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity deals with creditworthy counterparties as a means of mitigating the risk of financial losses from defaults. The consolidated entity does not have any material credit risk exposure to any single counterparty or group of counterparties under financial instruments entered into by the consolidated entity. Financial Instruments recognised in the Statement of Financial Position The credit risk on financial assets of the consolidated entity which have been recognised in the Statement of Financial Position is the carrying amount, net of any provision for doubtful debts. (Refer Note 5).

141 SYDNEY WATER ANNUAL REPORT 2002 142 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 21 ADDITIONAL FINANCIAL INSTRUMENTS ADDITIONAL FINANCIAL continued DISCLOSURE 21 te aals8 Other payables Tr Tr Re NOT READILY TRADED ONORGANISED MARKETS LIABILITIES FINANCIAL C F fair values offinancialassetsandliabilitiesarethe consolidated determinedby the following entity on bases: Net FAIR(c) NET LIABILITIES VALUES FINANCIAL ASSETS AND OFFINANCIAL iblte tbalancedate: liabilities at valuesthe consolidated of entity’s financialassetsandfinancia market amountsthe carrying andnet The followingtable details the ultimate parent. the nameof callare heldin Depositsat fair value. value theircarrying approximates net therefore is consideredthat organised markets andit readilytrad are not call, than depositsat other Financial of Position, the Statement All otherfinancialassetsandliabilitiesin be incurredto realisethe financialassets. v investments arethe basisofdiscounted determinedon cashflows using fair value offinancialassetsrecorded asCurrent The net Re TR ASSETS FINANCIAL SYDNEY WAT SYDNEY 10 5 T Dividend payable 4 T Other receivables call Deposits at Re NOT READILY TRADED ONORGANISED MARKETS otal Financial Liabilities otal Financial Assets aluation rates supplied by independent market sources and take into account accrued interest and transaction costs and whichwould accruedinterest take sources and into account market aluation rates suppliedbyindependent inancial Instruments recognised in the Statement of Financial of Position recognisedthe Statement in inancial Instruments s 4 ash d rdtr 8 ade creditors d eevbe 5 ade receivables c c c ADED ONORGANISED MARKETS ognised: ognised: ognised: ER ANNUAL REPORTER ANNUAL 2002 NOTE 1,470,302 385,127 289,122 890,302 140,561 46 580,000 580,000 370,047 15,080 0 ,619 2002 CARRYI – $ NG AMOUNT NET FAIR NET VALUE NG AMOUNT 1,301,581 1,063,371 1,063,371 238,210 300,287 250,000 167,578 33,434 64,694 16,853 5 ,938 2001 $ 1,470,302 385,127 289,122 890,302 140,561 46 580,000 580,000 370,047 15,080 0 ,619 2002 – $ 1,301,581 1,063,371 1,063,371 238,210 300,287 250,000 167,578 33,434 64,694 16,853 5 ,938 2001 ed on $ l CONSOLIDATED THE COMPANY

NOTE 2002 2001 2002 2001 $ $ $ $

22 AMOUNTS PAYABLE/RECEIVABLE IN FOREIGN CURRENCIES The Australian dollar equivalents of unhedged amounts payable or receivable in foreign currencies, calculated at year-end exchange rates, are as follows: UNITED STATES DOLLARS Amounts payable: Current – – 223,534 247,280 – – 223,534 247,280 Amounts receivable: Current 49,685 322,245 – 278,372 49,685 322,245 – 278,372 SINGAPORE DOLLARS Amounts payable: Current 40,140 99,745 40,140 99,745 40,140 99,745 40,140 99,745 Amounts receivable: Current 492,452 12,642 492,452 12,642 492,452 12,642 492,452 12,642 PHILIPPINE PESOS Amounts payable: Current 268 – – – 268 – – – Amounts receivable: Current 27,924 32,594 – – 27,924 32,594 – – THAILAND BAHT Amounts payable: Current 1,307 – – – 1,307 – – – Amounts receivable: Current 85,413 – – – Non-current 88,899 – – – 174,312 – – –

143 SYDNEY WATER ANNUAL REPORT 2002 144 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS CONTINUED 5CONTINGENT LIABILITIES 25 ECONOMIC DEPENDENCY 24 SEGMENT REPORTING 23 co tofulfilits resourcesnecessary the ultimate from parent the obtaining onitsparent economically dependent ov wa The Company marketsthe ultimate parent’s in expertise (Refer Note17(b)). commenced operations. only just entity was establishedin Thailand on10May 2002andhas Anewcontrolled the Philippinesarein currently dormant. Operations currently located predominantly inSingapore. The consolidated entity’s operations andcustomersare ov e The consolidated entity marketsthe ultimate parent’s water andwater-related services. business segment, The Company anditscontrolled entities operate inone SYDNEY WAT SYDNEY W the under Self-insurer’sthe ultimate parent licenceheldby Ag This these entities. to besettledbyeitherof able are not C compensationthe obligations of guaranteesthe workers’ A Ag to aCross-Guarantee are parties The Company anditsparent c re any possiblelegalor date andhave noreasonto believethat balance liabilitiesexisting at aware ofany contingent not To onsolidated entity. xpertise in these services in the in these services in Waterxpertise to its industry mayadisprn nteeetta theseobligations that the event in ompany anditsparent toiyo S.Udrti gemn,theultimate parent this Agreement, Under uthority ofNSW. medial action would result in a material cost or loss to the to orloss inamaterial cost wouldresult medial action res opnainAt1987. Compensation Act orkers’

nt res TheCompany hasnoemployeestherefore andis erseas. erseas customers. r r h eto hi nweg n eif theDirectors are their knowledgeand belief, of the best ter andwater-relatedto external customers services eement is required as part of the conditions of the Groupthe conditions of of isrequired aspart eement the and Workcover the ultimate parent with eement ra c ts withitsexternal customers. ER ANNUAL REPORTER ANNUAL 2002 26 EVENT SUBSEQUENT EVENT SUBSEQUENT TO DATE BALANCE 26 END OF AUDITED FINANCIAL STATEMENTS OFAUDITEDEND FINANCIAL known. de-registrationthe Company of iscurrently not ultimate parent’s Thedate of Voting Shareholders. the andultimately by the ultimate parent, and parent toapprovalthe the Boards of by the Companyof issubject f operational andgovernance structure andwillenablebetter the Companythe consolidatedof willsimplify entity’s the de-registration is expected that It transferred tothe parent. assetsandliabilitiesshouldbe allofitsoperations, that and theCompany shouldbede-registered the financialyearthat theCompany’s Board ofDirectors resolved during structure, and functions efficiency andeffectiveness ofprocesses, the consolidated of entity’s ongoingreview of As part cso h prtoso h aet Thede-registration the operationsocus on the parent. of 145 DIRECTORS’ DECLARATION SYDNEY WAT SYDNEY DA DIRECTOR Alex Walker DIRECTOR (a the Directors ofAWTthe opinionof In International PtyLtd: DECLARATION DIRECTORS’ AW Gabrielle Kibble Signed inaccordance witharesolutionthe Directors: of this thedate of aware ofany circumstances at weare not (c) theCompany there are reasonableto believe groundsthat (b) )t TE T INTERNATIONAL PTY LTD ITS AND CONTROLLED 98079035135 ENTITIES ABN ihteCroain c 01 including: 2001, the Corporationswith Act the Financial Statementsto bemisleadingorinaccurate. wouldrender includedin any particulars declarationthat and payable. to paythey becomewill beable itsdebtsasandwhen due (iii)complying with othermandatory andstatutory (iii)complying complying withapplicableAccounting Standards and (ii) true andfairthe financialposition givinga viewof (i) : he Financial Statements andNotesare inaccordance 0SPEBR 2002 20 SEPTEMBER, R r P r and the Corporations Regulations 2001, f the resultstheir operationsby of their cashflows and asrepresented their performance, 30 June2002andof the Companyof the consolidated and entity asat rteya ne nta date; the yearthat or endedon equirementsthe Public of Finance andAudit the 3of Part including requirements, eporting ublic Finance and Audit Act 1983 and the associated 1983and Act ublic Finance andAudit egulation 2000. ER ANNUAL REPORTER ANNUAL 2002 146 INDEPENDENT AUDIT REPORT SYDNEY WAT SYDNEY ER ANNUAL REPORTER ANNUAL 2002 STATUTORY AND STATISTICAL INFORMATION FOR THE YEAR ENDED 30 JUNE 2002

148 SPONSORSHIP – FUNDS GRANTED TO NON-GOVERNMENT COMMUNITY ORGANISATIONS 148 CONSUMER COMPLAINTS AND RESPONSE 148 CODE OF CONDUCT 148 STATEMENT ON IMPLEMENTATION OF WASTE REDUCTION AND PURCHASING POLICY (WRAPP) 149 ENERGY MANAGEMENT 150 HERITAGE AND CONSERVATION REGISTER 152 CONSULTANTS 153 LEGAL CHANGE 153 PROPERTY DISPOSAL 154 OVERSEAS TRAVEL FOR 2001–02 155 PERFORMANCE OF EXECUTIVE OFFICERS – NUMBER OF EXECUTIVE OFFICERS 156 PROFILE OF SYDNEY WATER WORKFORCE AND EQUAL EMPLOYMENT OPPORTUNITY (EEO) STATISTICAL INFORMATION 157 FREEDOM OF INFORMATION (FOI) 2001–02 158 PUBLICATIONS

147 SYDNEY WATER ANNUAL REPORT 2002 148 STATUTORY AND STATISTICAL INFORMATION re Sy ex successfulandlong-term the most Oneof environment. Wa to SydneyA key focusthe sponsorshipopportunity is linking E Charities AidFoundation Australiathrough its ‘Give As You Taronga Sydney Festival, Zoo and Sculpturethe Sea, by Life ManlySurf Saving Club, the BellShakespeare Company, Sydney Water’sand businessobjectives. include; partnerships ourcorporate support with like-minded organisationsthat Sponsorship enablesSydney Waterto develop partnerships initiatives. givethrough backadiverse range ofcommunity investment Wa c Sydney Water is this vision, Inimplementing customers. of its and support enjoysthetrust services provider that Sydney of Water’sA keyto beawater visionis component SPONSORSHIP SYDNEY WAT SYDNEY re 231issuesrelatingto Sydney year, Water were Overthe past rating andbilling. supply andaccount to interruption water pressure, sewage overflows, system, main areas ofcomplaintsthe sewerage includeodourfrom C r to be hasbeenunable reviewthat ofany issue independent scheme (EWON) whichprovides anavenue forthe $379,275 and the Energy is amemberof Water OmbudsmanofNSW Sydney Water Inaddition, them. performance indealingwith $77,800 Sy $301,949 could beimproved. that and identify areasthe business of C C $180,156 T andsponsorships partnerships localcommunityServicing Employee partnerships Sponsorships Philanthropic commitments L CO GRANTED FUNDS TO NON-GOVERNMENT the environment.education and c themany facets of whichreflect morethan 60organisations, Sydney Water’s community initiatives supported In 2001–02, Pa FoundationBusiness Arts GoldBookofBusinessArt re Re the the 2002Australian category in of Financial ‘Arts’ finalist Sy environment. the publichealthand Sydney Waterto helpprotect does that Sy Ta Thisyear’s Sydney long education campaigns. Water Month at tothe month for Taronga, plant site wastewater treatment fromthe assistanceindeveloping anon- the partnership, of andreinventing growth The Awards recognisedthe constant the Awards.category of HealthandEducation’ Environment, the in ‘Science, finalist ‘ the alsowon Thepartnership Sponsorship Awards. 2002 Australian Financial Review MagazineNational usadn ogTr pnosi’categoryOutstanding Long andwas a Term Sponsorship’ esolved directly withSydney Water. ocal community partnerships $135,111 $135,111 ocal community partnerships tl$1,074,291 otal mitdt okn ihtecmuiisi evs Sydney serves. the communities it to workingwith ommitted muiylf h rs pr,general community, sport, ommunity lifethe arts, – r’program. arn’ mlit oSde ae ayoe t rdc ag.The range. to Sydneyomplaints Water vary over itsproduct omplaints are avaluable source offeedback from customers ONSUMER COMPLAINTS RESPONSE AND c f c dney Water’s with 12-year partnership Taronga Zoo was dney Water records complaints andmeasures its dney Water’s withSculpturethe Seawas by a partnership dney Water’s wastewaterthe work education campaignand r MMUNITY ORGANISATIONSMMUNITY amples of this is the partnership with the partnership this is Tarongaamples of Zoo. r view MagazineNational SponsorshipAwards andwas also re oEO o eouin sarsl,issueshave been Asaresult, erredto EWON for resolution. ognised asoverallthe winnerin the ‘Sponsorship of Year’ ognised as an excellent partnership in the 2001Australian in partnership ognised asanexcellent onga Zoo sawover 50Sydney Water employees promoting tnerships. ter’s key corporatethe objectives –includingprotecting program helpsSydney Waterter’s community investment ER ANNUAL REPORTER ANNUAL 2002 ST customer service standards.customer service and Sydney Watertowards willcontinueto work improving customer isdisadvantaged inrelationto anessential service c c from EWONto date,the numberofsatisfied customers and positive feedback received cycle, This continual improvement the customer. between Sydney Water’sthe responsibility obligations and of the boundaries alsobetterexplains new CustomerContract Sydney Water hassincerevisedthe itspolicyand lines. service toprivate the responsibility ofSydney Water withrespect a misunderstandingbycustomersandplumbersregarding Instancesarose wherethere hadbeen customers withEWON. have beenraised by from sewerchokethat claimissues F and areas have beenre-examined andresearched. r R SauoyBde)At1984. (Statutory Bodies) Act asrequiredthe AnnualReports by appropriate AnnualReport amendments willbereproducedtheir entirety in the in r theSydney Water Code ofConduct 30June2002, As at r Wa Wa andisavailableto staff onSydney since November 2000, The Practical Guidehasbeenissuedprogressivelyto staff the Practical Guide. Sy C replacesthe BusinessEthics (Code of that Practical Guide Sy Work –Ethics program, inAction its of Values at As part CO and Intranet sites, further reducingtoner andpaperusage. further sites, and Intranet designsfor eachpageforthe web will use ‘printer friendly’ Sydney double-sided andprinting draftsWater onusedpaper. printing electronic ratherthan paper-based documents, tips includefavouring The be actively promoted in2002–03. f Aneducational tips’ ‘10 minimisepaperuse. that techniques Sy 600 printers have duplex capacity. Currently around 150ofSydney Water’spaper use. all printers have reduce duplexto further capacityinorder Sy P progress isachieved. ensurethat tasks are These reviewedto onanannualbasis strategy. Implementation Plancontainstasks undereach specific The Waste Minimisation developed andimplemented. Strategic Planrequires annualwasteto be tasks plan the Waste Minimisation Plan2000–2005, Environment the Inlinewith specific waste minimisation aspects. address Strategic Plan1999containing 10strategiesthat This policyisbeingdeployedthe through Waste Minimisation r reduce, to avoid, the principles the adoptionof based on the frameworkoutlines oforganisational commitment, Sy f andhave beenfurther Operating Licencerequirements, Sydney of Water’s They form part sustainability. to support Sydney of Water’s overallof waste products form effort part W rsaft vi at icuigppradtnrwse,will or staffto avoid wastetoner waste), (includingpaperand Plan2000–2005. the Sydneyormalised in Water Environment esolved, improvement opportunities have opportunities beenidentified, improvement esolved, mie nhne.Any updated documentation or emained unchanged. eproduced initsentirety forthe 2001AnnualReport. euse andrecycle. mlithnln rcs.EO ist nueta no EWONto ensurethat aims handlingprocess. omplaint Sydney of Water’sonfirm EWON’s positionasavaluable part or example, an improvement opportunity was identified opportunity animprovement or example, aper nut ouetissuedin1991andreprinted in1996. document onduct) EDUCTION AND PURCHASING POLICY (WRAPP) PURCHASING EDUCTION AND semnmsto,mxmsn es,recovery andrecycling maximisingreuse, aste minimisation, dney Water’s values remain unchangedandare restated in dney Water Work –Ethics inAction produced a Values at dney Water’s ITdivisionisprovidingtraining inprinting dney Waterthe costs isassessingandbenefitsofensuring dney Water hasdeveloped a Waste Minimisation Policythat AT DE OFCONDUCT e’ ausa Workter’s –Ethics Practical inAction Guidewas Values at Sydney Act, Asrequiredthe AnnualReport by ter’s Intranet. EMENT ONIMPLEMENTATION OF WASTE During the year Sydney Water recycled an estimated 45 tonnes Sydney Water also integrated procurement improvements of paper and 10 tonnes of cardboard. Following an audit of to EIA and EMP guidelines and capital works tenders and paper recycling activities, it was found that 80 per cent of all contracts. paper types are recycled in the head office building where Overall excavation waste recycled was 39,402 tonnes or 50 per cent of Sydney Water’s office staff are located. The audit 54 per cent. also showed that some areas within head office were Overall capital works waste material recycled was achieving a 100 per cent recycling rate for general office paper. 16,194 tonnes or 48 per cent. Sydney Water’s general office paper purchasing during the year, on average, was 25 per cent recycled containing 50 per Green Waste cent post consumer paper waste. In January 2002, a preferred During the year Sydney Water purchased approximately purchasing policy was introduced for recycled content office 750 tonnes of garden mix, which is used for landscaping. paper. By June 2002, 75 per cent of general office paper This material commonly contains recycled content purchased had recycled content. Sydney Water’s ‘With eg, poultry manure and compost. Compliments’ slips and envelopes also contain 30 per cent recycled content. ENERGY MANAGEMENT Toner Cartridges As a large energy user, Sydney Water recognises the need to Recycling of toner cartridges has been actively promoted to reduce the use of non-renewable energy and reduce Sydney Water staff since October 2000. Following advice from greenhouse gas emissions, in its move to provide sustainable the manufacturer, Sydney Water adopted a preferred water services. purchasing policy of recycled toner cartridges for all printers that can use these devices. Toner cartridges are now recycled Sydney Water is progressively developing a comprehensive through a variety of contractors and service providers. During energy management program, designed to minimise both the 2002–03, Sydney Water will review service providers to cost and environmental impacts from the use of energy in its improve toner cartridge recovery. operations. In developing this program, priority has been given to ensuring that Sydney Water’s environmental objectives and Construction and Demolition Materials the quality of products and services are not compromised. During the year, Sydney Water undertook water main Sydney Water is currently working to reduce greenhouse gas construction using trenchless technologies that avoided the (GHG) emissions through the purchase of ‘Green Power’ production of approximately 4,000 tonnes of waste. Sydney electricity, energy conservation and efficiency initiatives and Water estimates that 3,000 tonnes can be avoided through renewable energy generation. Considerable GHG savings have the use of these methods in the coming year. been made by working with customers to implement Sydney Water’s Water Demand Management Strategy. The strategy CONSTRUCTION SPOIL IF SPOIL BY supports initiatives such as the ‘Every Drop Counts’ Residential METHOD OPEN CUT THIS METHOD SPOIL SAVING and Commercial Programs. These programs save customers Pipe-bursting 2,400 tonnes 1,000 tonnes 1,400 tonnes money on water bills and electricity bills through reduced Slip-lining 2,000 tonnes 600 tonnes 1,400 tonnes energy used to heat water. The program also reduces the amount of electricity Sydney Water uses for treating and Small pumping water and wastewater. diameter boring Sydney Water is developing innovative renewable energy (driveways) 1,300 tonnes 150 tonnes 1,150 tonnes generation methods that take advantage of its existing Total 5,700 tonnes 1,750 tonnes 3,950 tonnes operations. Two bio-gas-fired cogeneration facilities, which utilise the gas produced as a by-product of the sewage Through the sand, aggregates and associated products tender treatment processes, continue to generate renewable energy for the supply of materials used for pipe embedment, trench at Malabar and Cronulla sewage treatment plants. fill and road surfacing, a number of recycled, alternative During the year a call for proposals was issued to identify products were identified that met Sydney Water’s potential energy partners capable of entering into a long- requirements. term relationship to: During the year Sydney Water purchased around 90,000 • accelerate the development of renewable energy generation tonnes of construction-related materials for use in opportunities, such as cogeneration and hydro-power operational works: facilities • topsoil, approximately 2,200 tonnes, commonly containing • improve energy efficiency in water and wastewater 10 per cent recycled content operations, property portfolio and motor vehicle fleet • sand and cement mix, approximately 1,100 tonnes, •reduce greenhouse gas emissions derived from the commonly containing 30 per cent recycled content purchase and use of energy. •road base, fine crushed rock, approximately 21,600 tonnes, Other initiatives during the year to progress energy commonly containing 40 per cent recycled content. reductions and efficiencies included: • inclusion of energy directions in WaterPlan 21, Sydney In addition, suppliers have advised that they will soon be able Water’s long-term plan for sustainable water services to provide 100 per cent recycled content versions of aggregate, crushed sandstone, garden mix and topsoil. •completion of investigations into the potential for small scale hydro-power generation plants within the water During the year, Sydney Water purchased 53,673 tonnes of distribution system construction materials for use in capital works projects, of • implemented a software installation and training program which 26 per cent contained recycled content. for an energy management information system to enable As part of the Waste Minimisation Implementation Plan, staff to closely monitor energy usage and costs in Sydney Water has developed and is continuing to implement operational facilities strategies to recycle construction and demolition waste. • finalised an agreement to conduct a trial project to evaluate During the year Sydney Water conducted a number of the potential to extract renewable energy from sewage activities in the pursuit of the beneficial use of construction sludge (biosolids) and demolition waste including: • undertook a comprehensive review of the potential • separation trial of mixed material waste application of enhanced energy efficiency motors •reuse options for construction spoil within water and wastewater pumping stations and •recycling of exhumed cast iron pipes treatment plants •concrete and bitumen reuse options. • purchased additional LPG powered cars for the corporate motor vehicle fleet. 149 SYDNEY WATER ANNUAL REPORT 2002 150 STATUTORY AND STATISTICAL INFORMATION CONTINUED obeBySwg jco tto o odto nnw.Itemwas covered insandfor Condition unknown. Y 1 Double Bay Sewage Station Ejector No. aktw eevi Eeae)N ao ok are u thisfinancialyear. Nomajorworks carriedout COMMENTS ASSET CONDITION Y LISTED Bankstown Reservoir (Elevated) (W Alexandra Canal ITEM NAME on request. the complete Acopy Sydney of the Sydneytable belowlistsall The Water Water HeritageRegister isavailablethe SHR. itemson • • • The Sydney Water HeritageRegister contains: Sydney Waterprepared hassincefinaliseditsheritageregister. in1996. detailedreview toundertake andupgrading ofanInterim Register asubstantial contract Sydney Water let In November 1998, Heritage andConservation Register. allgovernmental instrumentalities establishandmaintain a 1998requiresthat Act the HeritageAmendment 170of Section HE aa n soitdwrsPipe-head deckarea requires somemaintenance WAT SYDNEY canal andassociated works Pi (W P Y (W Y P Y (W P Y Dorothy Reservoir (WS 073) Mount Mosman Bay Sewage Aqueduct Middle HarbourSyphon (NSOOS) Wall Manly Dam, Y L Y Y Kiama Reservoir (WS 0231) Johnstons Creek Sewage Aqueduct Drummoyne Reservoir ( Y Y Y C (W 2 Chatswood Reservoir No. (W 1 Chatswood Reservoir No. (C Ce Busby’s Bore Y BO GeologicalSite Bombo HeadlandQuarry (W sfedRsror(lvtd omjrwrscridotthisfinancial year. Nomajorworks carriedout Y Botany WaterReserve Ashfield Reservoir (Elevated) im eevi W 22 Y Kiama Reservoir (WS 0232) Y (W Reservoir (Covered) Crown Street C eomsind conservation purposesinearly1990s. decommissioned) wsa eaeAudc Y ewisham Sewage Aqueduct trhmRsror(oee)Y Y Y etersham Reservoir (Covered) Reservoir (Elevated) enshurst Reservoir (Elevated) enshurst m alBig Y omo Rail Bridge osRvrSwg qeutY ooks River Sewage Aqueduct 6 tm flclhrtg infcne somelistedonenvironmental planninginstruments. 163 itemsoflocalheritagesignificance, the State HeritageRegister listedon (SHR) 59 itemsofState Heritagesignificance, total 222 itemsin eha ae upy Y pe-head water supply ov n 03 Y S 0003) S 0089) S 0088) S 0087)andsite S 0025) Y S 0024)andsite S 0007) 04 Workto fixwall leaks andrenew valves planned S 0034) S(od ca ufl ee)Y OS (BondiOceanOutfall Sewer) RI ena akRsrorN.1 Y 1 tennial Park Reservoir No. ered) (WS 0022) TA GE AND CONSERVATIONGE AND REGISTER ER ANNUAL REPORTER ANNUAL 2002 NSRGO ARPOOR FAIR GOOD ON SHR omjrwrscridotthisfinancialyear. No majorworks carriedout Improvement works to be carried out in the in to becarriedout works Improvement replaced. Internal cleaningModfor chlorinePlant thisfinancialyear. No majorworks carriedout T C carried out. thisfinancialyear. carried out W Environmental restoration works are being on steelwork. financialyear. next this financialyear. thisfinancialyear. No othermajorworks carriedout in2002. Structural investigation carriedout f hascommenced. the aqueduct associated with 2002–03. n ie de.Noothermajorworks carriedout and mixer added. replaced Internal cleaningModfor chlorinePlant R P omjrwrscridotthisfinancialyear. No majorworks carriedout omjrwrscridotthisfinancial year. No majorworks carriedout this financial year.Site cleanupperformed this financialyear.Site cleanupperformed omjrwrscridotthisfinancial year. No majorworks carriedout thisfinancialyear. No majorworks carriedout thisfinancialyear. No majorworks carriedout thisfinancialyear. No majorworks carriedout thisfinancialyear. No majorworks carriedout omjrwrscridotthisfinancialyear. No majorworks carriedout thisfinancialyear. No majorworks carriedout thisfinancialyear. No majorworks carriedout thisfinancialyear. No majorworks carriedout thisfinancialyear. No majorworks carriedout thisfinancialyear. No majorworks carriedout omjrwrscridotthisfinancialyear. No majorworks carriedout or 2003–04. win 600 mm pipes on bridge to berefurbishedwin 600mmpipesonbridge in itn fteaudc conduits completed. the aqueduct ainting of ehabilitation works structures onmasonry niinvre ln h ee.Nomajorworks ondition variesthe sewer. along all renewal/repairs currently beinginvestigated. HERITAGE AND CONSERVATION REGISTER continued

ITEM NAME LISTED ASSET CONDITION COMMENTS ON SHR GOOD FAIR POOR Potts Hill Reservoirs Site Y No major works carried out this financial year. Pressure Tunnel and Shafts Y No major works carried out this financial year. Prospect Reservoir Y Reservoir, Dam Wall, Valve Houses, Upper Canal 2, Reservoir water, Spillway and Spillway ‘heritage bridge’ and the Reservoir catchment area are owned by the Sydney Catchment Authority. Other Heritage items including Lawson’s Cottage, Prospect Quarry, on site cottages, Avenue trees and Lower Canal ‘Horse Shoe’ are owned by Sydney Water. The condition of items range from good to fair. No major works carried out this financial year. Pymble Reservoir No. 1 (Covered) Y No major works carried out this financial year. (WS 0097) Pymble Reservoir No. 2 (Covered) Y No major works carried out this financial year. (WS 0098) Ryde Pumping Station and site Y No major works carried out this financial year. Roof replacement expected to start 2003–04. Sewer Vent and Cottage, Stanmore Y No major works carried out this financial year. Sewer Vent and Cottages, Marrickville Y Internal steelwork in the vent replaced. Penstocks were locked in ‘open’ position. Sewer Vent, Bondi (Ben Buckler) Y Rehabilitation work completed. Sewer Vent, Burwood Y No major works carried out this financial year. Sewer Vent, Croydon Y No major works carried out this financial year. Sewer Vent, Lewisham Y No major works carried out this financial year. Sewer Vent, North Sydney Y No major works carried out this financial year. Sewer Vent, The Obelisk, Hyde Park Y No major works carried out this financial year. Sewage Pumping Station 0001, Ultimo Y Major upgrade proposed for 2002–03 as part of Overflow Risk Reduction Program under the Sewage Treatment Systems Licence requirements. Sewage Pumping Station 0003, Annandale Y Routine maintenance including flushing and mechanical and electrical maintenance. Sewage Pumping Station 0018, Y No major works carried out this financial year. Rushcutters Bay Sewage Pumping Station 0027, Rozelle Y No major works carried out this financial year. Sewage Pumping Station 0038, Mascot Y Routine maintenance including flushing and mechanical and electrical maintenance. Sewage Pumping Station 0067, Camellia Y No major works carried out this financial year. Sewage Pumping Station 0271, Marrickville Y Routine maintenance including flushing and mechanical and electrical maintenance. Sydenham Pit and Drainage Y No major works carried out this financial year. Pumping Station 1 Sydney Water Head Office, 1939 Y No major works carried out this financial year. The Tank Stream Y No major works carried out this financial year. Veteran Hall (house remains) Y No major works carried out this financial year. Wahroonga Reservoir (Elevated) Y No major works carried out this financial year. (WS 0124) Waverley Reservoir (Elevated) Y Graffiti removed. No other works carried out this (WS 0136) financial year. Waverley Reservoir No. 1 (Covered) Y No major works carried out this financial year. (WS 0132) Roof crack repairs planned for 2003–04. Western Outfall Main Sewer Y Internal refurbishment of walls and replacement of (part of SWSOOS) roof at the merging chamber at Valda Street. New stop board guides and modified flow isolation/diversion arrangements have been made. Whites Creek Sewage Aqueduct Y No major works carried out this financial year. Wolli Creek Sewage Aqueduct Y Painting of the aqueduct conduits completed. Rehabilitation work on masonry structures associated with the aqueduct commenced. Woollahra Reservoir (Covered) Y Graffiti removed. (WS 0144) No other major works carried out this financial year.

151 SYDNEY WATER ANNUAL REPORT 2002 152 STATUTORY AND STATISTICAL INFORMATION CONTINUED se Technologies Pacific PtyLtd Asset taei dieadpeaaino se aaeetPa $81,855 T Re $74,250 Pa P L andinvestigations Advice oninternal audit &Young Ernst C PricewaterhouseCoopers Advice onpreparation ofdesignbrieffor relocation ofSydney Water HeadOfficeto Parramatta Terotech Rider Hunt Plan Management Strategic adviceandpreparation ofAsset Co PtyLimited Uniquest C cashpaymentsto consultants to 30June2002. from 1July2001 out The followingtables set C SYDNEY WAT SYDNEY $479,723 $33,000 $34,800 TO of total cost a There were 85engagements at C TOTALSUB to improveAdvice onuseofe-businesschannels customerinterfaces Blatan PtyLtd $42,059 C Environmental (Aust) PtyLtd It $38,000 Build-Own-Operate of agreements (BOO) Advice onaccountingtreatment Deloitte Touche Tohmatsu C C Preparation offinancialoptionsforthe proposed relocation ofSydney Water HeadOfficeto Parramatta Andersen&CoArthur oncommercialisationAdvice andreports (R&D) ofSydney Water research anddevelopment ogica Australasia PtyLtd echnology Commercialisationechnology Group P/L s-mlmnainrve fHda(optrsse)$53,603 ost-implementation review ofHydra (computer system) onsultants to whompaymentsonsultants exceeded $30,000 nutn engagements of$30,000 orless onsultant nutnysrie o h aeo ynyWtrsbiir opn ae csinePyLd$64,652 forthe saleofSydneyonsultancy services Water company subsidiary Water Ecoscience PtyLtd nutnyfrst eeito ok iad $33,342 $36,721 onsultancy for siteremediation works –Miranda onsultancy onScreening Transfer Upgrade HeadSTP –North ONSULTANTS H2M HillAustralia PtyLtd tterson Britton&Partners iwo evcn pin o ako ee ra $45,968 optionsforview ofservicing backlogsewerareas n T AL EXPENDITURE ONCONSULTANTSAL EXPENDITURE aiae eietStudy taminated Sediment ER ANNUAL REPORTER ANNUAL 2002 $1,186,353 $706,630 $113,227 $55,153 LEGAL CHANGE •removal of provisions which dealt with the transition of Sydney Water from a company State Owned Corporation Compensation for Easement (SOC) to a statutory SOC. In the case of Sydney Water Corporation v. Besmaw Pty Ltd, The changes accord with the requirements of the SOC Act, the New South Wales Court of Appeal has confirmed a provide greater clarity and update certain terms used in landowner’s entitlement to be compensated in respect of the the Constitution. potential exercise of an acquiring Authority’s discretion under the terms of an easement. The full implications of this ruling for Sydney Water are being assessed. Sydney Water is PROPERTY DISPOSAL reviewing its current policies and practices for protection of its assets in order to develop a comprehensive plan for Sydney Water disposed of 22 properties during 2001–02. improving the effectiveness and efficiency of Sydney Water’s The disposals achieved a total value of $50,165,092 net of approach to infrastructure protection. GST. Two of the properties are the subject of exchanged contracts but had not settled by 30 June 2002. Changes to Customer Contract The following properties were disposed of by means other Sydney Water’s Customer Contract outlines the rights and than public auction or tender and had a value of more obligations of its customers and the minimum standards of than $5,000,000: service they might expect from Sydney Water. On 1 April 2002, •Prospect – sale to Boral Resources (NSW) Pty Limited a revised Customer Contract with certain key areas of •Matraville – sale to Sydney Ports Corporation. improvement came into effect: The properties disposed of were surplus to Sydney Water • incorporated a Code of Practice for Sydney Water with Corporation needs and the proceeds from the sales were regard to the debt and disconnection of its customers placed in general revenue. Sydney Water is not aware of any • simplified the process for customer rebates and redress family connection or business association between any party •placed limits on when Sydney Water might disconnect who acquired the properties and any member of Sydney its customers Water who approved the sale. •clarified the position with respect to pipe maintenance Application for access to documents concerning details of the responsibilities. properties disposed of may be made in accordance with the The Customer Contract sets out the terms under which Freedom of Information Act 1989. Sydney Water provides, where available, water supply, sewerage, trade wastewater and stormwater drainage services and is a requirement of the Sydney Water Act 1994. Changes to the Constitution of Sydney Water Corporation On 29 November 2001, Sydney Water’s Shareholder Ministers approved changes to Sydney Water’s Constitution. Sydney Water’s Constitution, together with the State Owned Corporations Act 1989 (SOC Act), lays down the rules and mechanisms for Sydney Water’s governance. Certain key areas of change to the Constitution included: • Director appointment to be facilitated by Instruments of Appointment from Sydney Water’s Shareholder Ministers •removal of ambiguity about the retirement of Directors • updating outdated terminology in line with changes to the SOC Act

153 SYDNEY WATER ANNUAL REPORT 2002 154 STATUTORY AND STATISTICAL INFORMATION CONTINUED .MsnNwZaad2 ue20 o1 etme 02Gaut rga lcmn togain Graduate Program placement togain Graduate Program placement to 19September2002 24June2002 togain Graduate Program placement to 5April2002 2002 5January P. NewZealand to 26July2002 8April2002 Mason G. NewZealand Forster H. NewZealand Simpson M. K. Wiggins United Kingdom 1 February 2002 to 15 August 2002 Macarthur Macarthur Water –BuildOwnOperate 2002 1Februaryto 15August 2002 UnitedKingdom Wiggins K. S. B. J. D. ST O SYDNEY WAT SYDNEY Committee Advisory AWWARF Project Presentationtwo research of papersat 7 Mayto 11May 2002 2002 to 14June2002 7June2002 the AWTis publishedin AnnualReport. Overseastravel bySydney undertaken Water’s Australian Water company, subsidiary Technologies PtyLtd (AWT), J. Czech Republic Kastle USA G. users DHI Invited asKeynote Speaker at Angles M. to 19June2002 14June2002 –BuildOwnOperate ONDEO Fellowship P. AWWA Conference –vulnerability J. to 1June2002 7March 2002 to 5April2002 17March 2002 P. Thailand UnitedKingdom Keessen R. Fairbain I. P. USA DeRooy E. .Wle igpr 6Fbur 02t ac 02Atn sa ae ofrne Briefingand Attend Asian Water Conference. 26Februaryto 2March 2002 2002 the renewal Negotiating ofSydney Water B. Singapore 19Mayto 5June2002 2002 Walker A. Germany, Switzerland, Goyal R. F EBRDSIAINPRO DESCRIPTION PERIOD DESTINATION AFF MEMBER ai e eln pi 02t uy20 rdaePormpaeettogain Graduate Program placement to 6July2002 2April2002 NewZealand Davis asnUA2 coe 01t 5Otbr20 AWWARF Research Council Advisory annual 2001 to 25 October 2001 23October USA AWWARF Research Council Advisory Hansen 2001 to 17August 2001 16August USA Hansen VERSEAS TRAVEL FOR2001–02 V cao ntdKndm1Fbur 02t 9Fbur 02T etsystemsfor CustomerInformation Totest 1Februaryto 19February 2002 2002 UnitedKingdom McMahon akn aa 1Fbur 02t 5Fbur 02Getsekra workshop on speaker at Guest 11Februaryto 15February 2002 2002 Japan Hawkins Fr R Fe Blayney USA 1 October 2001 to 27 July 2002 ONDEO –BuildOwnOperate ONDEO Fellowship to 27July 2002 2001 1October USA Blayney clr e eln oebr20 o8Nvme 01Itra ui ofAWT NewZealand. Internal audit 2Novemberto 8November 2001 2001 New Zealand McClure on Huben USA 27 February 2002 to 18 May 2002 ONDEO –BuildOwnOperate ONDEO Fellowship 27Februaryto 18May 2002 2002 USA on Huben dyUie igo 24 UnitedKingdom oddy ea S 1Jn 02t 0Ags 02Suya Stanford University –Executive Studyat 2002 to 10August 21June2002 USA eeman r guson Switzerland, Germany, 19 May 2002 to 5 June 2002 Negotiating the renewal Negotiating ofSydney Water 19Mayto 5June2002 2002 Germany, Switzerland, guson ER ANNUAL REPORTER ANNUAL 2002 Fr and France study tour – tour of tour – study Vivendi facilities. and France United Kingdom Fr United Kingdom neadte insurance policiesandexplore alternatives. the ance and neadte insurance policiesandexplore alternatives. the ance and etme 01t 0Otbr20 W 2002 to 10October September 2001 e e e F tour –hydraulicstudy modelling. BedokNewater Plant. at tour ofproject and BillingSystem. A A A A r c International Water Association specialised member meeting. andpolicydecisionmaking. technology subcommittee meeting. Program. Development c facilities.tour –sludgedrying study facilities.tour –sludgedrying study Research Foundation (WERF). Environment for water utilitiesand Water assessment handbook produced for Macarthur Water. toxic algaeinlakes andreservoirs for co international of networkon establishment e esearch meeting. onference. onference. losi td or–poetmanagement tour –project ellowship study xperience inengineeringconsulting firm, xperience inengineeringconsulting firm, xperience inengineeringconsulting firm, xperience inengineeringconsulting firm, WT NewZealand. WT NewZealand. WT NewZealand. WT NewZealand. yuna –BuildOwnOperate Fellowship nt r ol technology of abnormal growth of ofabnormalgrowth technology ol PERFORMANCE OF EXECUTIVE OFFICERS Managing Director, Sydney Water Alex Walker has been in this role for the full reporting period and performed well against agreed criteria of having regard to the organisation’s statutory requirements of balancing public health, the environment and commercial outcomes. The remuneration package paid for the year was $440,000. No performance payments were paid or accrued to this office during the reporting year. General Manager, Asset Management Paul Freeman has been in this role for the full reporting period and performed well against agreed performance criteria of efficient and effective management of the organisation’s infrastructure systems, including water and wastewater treatment plants, water and wastewater reticulation, and meeting drinking water quality targets as set by NSW Health and environment protection licence targets as set by the Environment Protection Authority. The remuneration package paid for the year was $240,000. General Manager, Asset Solutions Ron Quill has been in this role for the full reporting period and performed well against agreed performance criteria of managing and delivering capital works and improving business performance. The remuneration package paid for the year was $240,000. General Manager, AWT division Jeff Wilson has been in the role for the full reporting period and performed well against agreed performance criteria of managing Sydney Water’s international and interstate interests. The remuneration package for the year was $212,000 (July to January) and $220,000 (February to June). General Manager, Corporate Affairs and Corporate Secretary Angela Tsoukatos has been in this role for the full reporting period and performed well against performance criteria of focussing on stakeholder relationships, regulatory affairs and compliance, corporate governance, legal, audit, communications, incident management and supporting the Board of Directors. The remuneration package paid for the reporting year was $240,000. General Manager, Customer Services Denise Dawson was not in the role for the full reporting period, however, performed well against agreed performance criteria managing customer and community relations, demand management, marketing, development and growth and revenue collection. The remuneration package for the year was $225,000. General Manager, Environment and Innovation Judi Hansen has been in this role for the full reporting period and performed well against agreed performance criteria of coordinating the business plan, reviewing and developing long-term product plans of water, wastewater and stormwater, prioritising and implementation of research and development projects, and provision of information technology. The remuneration package paid for the year was $240,000. General Manager, Finance John Kitney has been in this role for the full reporting period and performed well against the agreed performance criteria of setting and implementing sound financial and commercial strategies, policies and practices which enabled the organisation to achieve its required commercial performance. The remuneration package paid for the reporting year was $250,000. General Manager, People and Quality Ian Grey has been in the role for the full reporting period and performed well against agreed performance criteria of people attraction, retention and development. The remuneration package for the year was $215,000 (July to January) and $225,000 (February to June). General Manager, Water Services Michael Keelan has been in the role for the full reporting period and performed well against agreed performance criteria of cost effective and timely civil, mechanical and electrical maintenance services. The remuneration package paid for the year was $225,000 (July to January) and $240,000 (February to June).

Number of Executive Officers

SYDNEY WATER SYDNEY WATER AWT

2002 2001

Total number of SES equivalent Officers (including Executive Officers) 121 96 30 Total number of female SES equivalent Officers (including Executive Officers) 18 15 1 Total number of male SES equivalent Officers (including Executive Officers) 103 81 29

155 SYDNEY WATER ANNUAL REPORT 2002 156 STATUTORY AND STATISTICAL INFORMATION CONTINUED ponmns28221822285 38 292 2.79% 251 48 2.83% 198 286 4,340 2.97% 53 222 4,136 2.70% 258 258 51 3,455 2.58% 234 74 3,391 128 3,354 R Unplanned Absences Appointments R A T FTE –Part-time FTE – Temporary FTE –Permanent Sy FOR 2002 THE YEAR 30JUNE ENDED OFSYDNEYPROFILE WATER EQUALWORKFORCE AND EMPLOYMENT OPPORTUNITY (EEO) STATISTICAL INFORMATION SYDNEY WAT SYDNEY 30.0 0.0 24.9 32.1 91 5.3 33.9 42.6 26.0 1 20.8 27.7 17.5 271 102 23.0 55 30.4 0.0 84 23.6 22.4 24.5 31.8 15.8 14.5 7218.8 256 19.5 13.1 3 employee numbers Allfigures basedonFull-Time Equivalent Note: 71 71 F 17.5 41 23.6 4 3 52.6 26.2 25.5 183 304 2P 7619.8 26.8 1R 10 17218.3 843 125 84 366 55 14.3 323 302 8 24.0 Above 385 129 1,044 –$80,499 $64,401 15816.8 $80,499 $49,800 –$64,400 492 19 $39,355 315 655 276 29.5 –$39,354 $35,203 935 – $26,802 –$35,202 Below $26,802 $49,799 SA R ** * R T igures for 2001–02 basedonasurvey withresponse rateigures of72percent for 2001–02 tlepoes356255 6 . 9 546 1.9 66 5.4 193 0.7 36 2,565 3,556 otal employees tl3563663764404,629 4,470 3,766 3,676 3,556 otal dnace 2187724255 274 707 178 72 edundancies cutdi h er285 60051910.5 1 1.9 5 0.0 6 55 258 the year ecruited in peetto fAoiia n orsSri Islander(ATSI) employees andemployeesepresentation withaphysical ofAboriginaland disability Torres Strait epresentation ofEEOGroups levels withinsalary ec esne 5 8 6 9 231 294 368 383 453 gency Personnel AYLVL TF EPNET OE REEM WOMEN RESPONDENTS STAFF LARY LEVELS dney Waterworkforce EEO Groups asapercentagetotal respondents of to EEOSurvey EEO Groups asapercentagetotal staff of P P ol hs is agaesoe sacidwsntEnglish languagespoken asachildwas not eople whosefirst ol ihadsblt eurn duteta work at eople withadisabilityrequiring adjustment eople withadisability ca,ethnicandethno-religious minoritygroups acial, ER ANNUAL REPORTER ANNUAL 2002 3 OA TOTAL TOTAL 562558 52. 4 812. 6 8826.0 18.8 667 25.1 18.1 643 22.6 ,556 2,565 805 TOTAL TOTAL TOTAL TOTAL ST F EPNET TIPOL W*PWD-RA* * PWD* ATSI PEOPLE RESPONDENTS AFF O O STAFF NO. % NO. 010 000 990 989 1997–98 1998–99 1999–00 2000–01 2001–02 O%NO. % NO 2001–02 2001–02 1 F%O %O %OF %OF %OF % OF 3 R ESPOND 4 LANGUAGE %NO. % O STAFF NO. 2 3 R ESPOND 4 FREEDOM OF INFORMATION (FOI) 2001–02

FOI requests

PERSONAL OTHER TOTAL

New (including transferred) 1 16 17 Brought forward (incomplete) – – – Total to process 11617 Complete 11617 Transferred out ––– Withdrawn ––– Total processed 11617 Carried forward (incomplete) – 1 1

Result of FOI request

PERSONAL OTHER

Granted in full –7 Granted in part 15 Refused –4 Deferred –– Completed 116

Number of requests requiring formal consultations

ISSUED TOTAL

22

Basis of refusing or restricting access

PERSONAL OTHER

S.19 Application incomplete, wrongly directed – – S.22 Deposit not paid – – S.25 (1) (a1) unreasonable diversion of resources – 1 S.25 (1)(a) exempt –13 S.25 (1)(b)(b1)(c)(d) otherwise available 1 – S.28 (1)(b) documents not held – 2 S.24 (2) deemed refused, over 21 days – – S.31(4) releases to medical practitioner – – Total 116

Costs and fees of requests processed (Including all processed and withdrawn FOI requests)

ASSESSED FOI FEES COSTSRECEIVED

All completed requests $890 $650 Total $890 $650

Type of discount allowed on fees charged

PERSONAL OTHER

Public interest –2 Financial hardship – Pensioner/Child 1 1 Financial hardship – Non-profit organisation – – Total 13 Significant correction of records – –

157 SYDNEY WATER ANNUAL REPORT 2002 158 STATUTORY AND STATISTICAL INFORMATION CONTINUED Grounds onwhichinternalreview requested T Over 40hours hours 21–40 hours 11–20 0– Processing hours T Over 35days days 22–35 0– elapsedtime Days to process, SYDNEY WAT SYDNEY – Sydney Water publications isavailable www.sydneywater.com.au onSydneyInformation about Water’s websiteat fa 1 Sy •Y •S • – • •E •T • P 1 av Sy PUBLICATIONS 11years. the Administrativeto been noappeals Decisions Tribunal (ADT)the last in any formal reviews ofFOIdeterminations madebySydney ThereWater. have conduct theOmbudsmandidnot this period, During the originaldeterminations were upheld. Inbothcase Sydney WaterNo MinisterialCertificates received weretwo internal issuedover reviews this period. during2001–02. decrease inapplicationsthe previous from financialyear. This represents a32percent comparedto 25in2001–02. the Freedomtotal of17applications under witha ofInformation Act, Sydney Water dealt In 2001–02, T refused Amendment Charge unreasonably incurred Unreasonable charges Ex Def Access refused IN otal otal tl1–1– 1 – 1 otal ublicationsthe year produced during include: TE ct nyWtras rdcdvrosacutisrs niomn matSaeet,Rve fEvrnetlFcos brochures, Review ofEnvironmental Factors, Statements, Impact Environment inserts, dney Water alsoproduced various account dney Water Theitemsare provides awiderange ofgeneral information publications andactivities. dealingwithitsfunctions qiyadDvriyAna eot2001 Equity andDiversity AnnualReport 2001 Annual Drinking Water QualityReport 2001 Annual Report ailable through Sydneyailable Water Centres CustomerService orbycontactingthe Call Centre. mtmatter empt 21 days 10 hours wrsSsanblt eot2001 owards SustainabilityReport u ae osmrCniec eot(produced quarterly). our Water –Consumer Confidence Report y n R err dney Water CustomerContract hes andinformation sheets. sheets, A EIWGONSUHL AIDUHL VARIED UPHELD VARIED UPHELD GROUNDS NAL REVIEW iomna niaosCmlac eot2001 vironmental Indicators Compliance Report ed ER ANNUAL REPORTER ANNUAL 2002 –––– –––– –––– –––– –––– ESNLOTHER PERSONAL ESNLOTHER PERSONAL OTHER PERSONAL 116 114 116114 –– –– –2 –1 –1 s 159 INDEX AND SHORTENED FORMS Co Customer service (seeImproveCustomer service CustomerServices) Customer research system (CIBS) Customer information andbilling Customer Councils Plant Cronulla Sewage Treatment Co Co SYDNEY WAT SYDNEY Co Co C C C C C outlook2002–03 Budget Board membership Board members(profiles of) attendance of Board members, Board committees Blue Mountains sewerage scheme Biosolids B A Area ofoperations map Sydney Water About A INDEX A onsultants ode ofConduct ase Studies all Centre udited Financial Statements dtrGnrlsIdpnetAdtReport Audit uditor-General’s Independent rporate objectives (seealsoCase Studies) rporate Plankey performance indicators rporate Plan rporate Governance nsumer Complaints andResponse Protect the environment the Protect publichealth Protect Be asuccessfulbusiness A A A Sy Trust Special Environmental Levy (SEL)Unit A Sy Trust Special Environmental Levy (SEL)Unit WT International PtyLtd WT International PtyLtd ustralian Water Technologies PtyLtd ustralian Water Technologies PtyLtd dney WaterCorporation dney WaterCorporation ER ANNUAL REPORTER ANNUAL 2002 4 5 6 7 7 149 27, 17, 16, 15, 14, 1 6 7 5 158 35, 17, 16, 11, 1 6 7 7 154 27, 17, 16, 11, 0 1 155 31, 30, ,6, 3, ,8 0 37 30, 8, 6, 0 1 35 11, 10, 6 17 16, 148 8, 8 19 18, 23 22, 33 32, 0 16 10, 0 21 20, 7 38 37, 125 148 152 148 127 146 10 18 83 96 30 31 31 12 39 85 97 4 5 E Equity anddiversity Plan Environment managementEnergy (see Consumer complaints andresponse) and Energy Water Ombudsman statistical information (EEO) Opportunity Equal Employment F F Ec E Drinking water quality c Dispute resolution (seeConsumer Directory dutiesandresponsibilities Directors’ Directors Report D Knowledge management K T PricingandRegulatory Independent Indemnities andinsurance I HIH Heritage andConservation Register H Graduate Program (Overseas travel table) G C F Fr Fr F F Information technology omplaints andresponse) ribunal (IPART) inancial highlights inancial Performance Review inancial performance inbrief(table) unds grantedto Non-Government thics ommunity Organisations eedom ofInformation om the Chairman lgclyssanbedvlpet(ESD) ologically sustainabledevelopment

Insurance ,1,1,1,3,3,5,66 51, 37, 36, 16, 12, 11, 6, ,1,1,2,15 158 155, 25, 19, 12, 6, inside backcover 3 6 7 31 17, 16, 13, ,1,19 13, 6, 5 155 35, 1 148 31, 158 149 148 148 148 157 154 156 150 30 30 15 30 36 37 7 6 7 160 INDEX AND SHORTENED FORMS CONTINUED R R R aaeetstructure (Organisational chart) Management re Number ofExecutive Officers the Financial of Statements to andformingNotes part N Major works inprogress (table) M L L SYDNEY WAT SYDNEY Strategic Directions Stormwater management Statutory andStatistical Information Sponsorship AnnualReport Trust Levy (SEL)Unit Special Environment Sewage overflows S R R P disposal Property Program Management Project Principal statistics (table) Pe P P Overseas travel (table) Sydney Water’sOperating Licence, Operating Licencekey performance standards Occupational healthandsafety O Managing Director L egal change etter tothe Shareholding Ministers ublications ol aaeetProgram eople Management sac n eeomn ciiis ongoing(table) activities, esearch anddevelopment esearch anddevelopment sac n eeomn ciiis completed (table) activities, esearch anddevelopment elationship contracting view ofoperations rf ormance ofExecutive Officers L Innovation Improve customerservices products andservices quality, Deliver reliable, Sy Trust Special Environmental Levy (SEL)Unit A A an grow andbe asuccessfulbusiness earn, WT International PtyLtd ustralian Water Technologies PtyLtd dney WaterCorporation ER ANNUAL REPORTER ANNUAL 2002 ’ s Report – summary summary – s Report 2 8 1 2 3 5 2 103, 52, 35, 33, 32, 31, 28, 12, 0,15 5,155 152, 105, 104, ,1,2,148 24, 12, 6, 3 4 148 24, 13, ,3,153 31, 9, 5 16 15, ,148 6, 2 16 12, 0 16 10, ,16 9, ,10 9, 158 155 155 131 101 153 154 147 29 29 23 35 43 89 13 86 26 24 27 8 8 9 9 2 Wa WFP SWOOS STS STP SPS SEL SCI SCA SCADA OHS IPAR IICATS EWON ESD EPA EEO CIBS AWT SHORTENED FORMS Wa W W V V V V alues Work –Ethics inAction alues at ision aste Reduction andPurchasing Policy ter conservation andrecycling terPlan 21 T Ocean Outfall Sewer Southern and Western Suburbs and TelemetrySystem Integrated Instrumentation Control Automation needn PricingandRegulatory Tribunal Independent wa system sewage treatment plant sewage treatment sewage pumpingstation Levy Special Environment Corporate of Intent Statement Sy ControlSupervisory andData Acquisition occupational healthandsafety Energy and Energy Water OmbudsmanNSW ecologically sustainabledevelopment Protection Authority Environment opportunity equal employment customer information andbillingsystem A ustralian Water Technologies PtyLtd nyCthetAuthority dney Catchment ter filtration plant ,8 0 3 6 149 16, 13, 10, 8, 6, 1 14 11, 148 148 3 3 VISIT SYDNEY WATER AT www.sydneywater.com.au

CUSTOMER ENQUIRIES 13 20 92

EMERGENCY SERVICES 13 20 90 DIRECTORY PO Box A53 Sydney South 1232

SYDNEY WATER CUSTOMER CENTRES

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WOLLONGONG 120 Smith Street Wollongong

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BLACKTOWN 22 Main Street Blacktown

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COST PER COPY As part of Sydney Water’s commitment to reducing waste, only 2000 copies of the Annual Report were produced this year. Taking into account the reduced number of copies and the increase in pages due to the inclusion of financial statements for Sydney Water’s subsidiary companies, the estimated cost per copy is $48. Sydney Water Corporation ABN 49 776 225 038 115–123 Bathurst Street Sydney NSW 2000 Australia Telephone 13 20 92 Internet www.sydneywater.com.au