Murray Irrigation Annual Report 2015 Report Annual Irrigation Murray
Murray Irrigation
Change in action
Murray Irrigation Annual Report 2015 Murray Irrigation Limited Banker 2015 Murray Irrigation Limited (ABN 23 067 197 933) is a company Commonwealth Bank of Australia Annual Report limited by shares, incorporated and 241 Cressy Street The 2015 Murray Irrigation Limited Annual domiciled in Australia. Its registered office Deniliquin NSW 2710 Report is a summary of operations and and principal place of business is: financial performance of the company from 1 July 2014 to 30 June 2015. 443 Charlotte Street Engineering Consultant Operations and performance for this period PO Box 528 Kellogg Brown and Root have been measured against key reporting Deniliquin NSW 2710 186 Greenhill Road areas in addition to meeting our statutory Telephone: 1300 138 265 Parkside SA 5063 Facsimile: (03) 5898 3301 financial reporting responsibilities. www.murrayirrigation.com.au The 2015 Murray Irrigation Limited [email protected] Solicitor Annual Report provides a concise and Norton Rose Fulbright Australia comprehensive summary. The objective Board of Directors Grosvenor Place of this report is to provide information 225 George Street to our shareholders to demonstrate The following people were directors of the Sydney NSW 2000 our transparency, accountability and company at the end of the financial year: performance. B.P. Simpson Taxation Advisor The 2015 Murray Irrigation Limited Annual C.D. Badger Report is published electronically and can R. Clubb Ernst & Young be accessed via the Murray Irrigation Limited M.L. Hughes 680 George Street website www.murrayirrigation.com.au T.W. McKindlay Sydney NSW 2000 R.E. Reynoldson ISBN 978-0-9923511-2-0 D.M. Robertson Annual General Meeting Copyright 2015 J. Sides Will be held at 7.00pm on Thursday 19 November 2015 Chief Executive Officer at the RSL Club, 72 End Street Michael Renehan Deniliquin NSW 2710
Company Secretary Further information Ross Mallett For further information about Murray Irrigation go to the company’s website at www.murrayirrigation.com.au Auditor Grant Thornton Audit Pty Ltd Design and photography The Rialto Level 30, 525 Collins Street Design langdonlorraine Melbourne VIC 3000 www.langdonlorraine.com.au Photography Nick Robinson CreativeProof Photography www.creativeproof.com.au Photography Nathan Holohan Murray Irrigation
Cover: Murray Irrigation Customer Consultation Officer, Emily Pearse, discusses on-farm water delivery requirements with Wakool landholder David May. Murray Irrigation will engage with our customers and be ready to meet the challenge to reshape the company. We will ensure we can capture the opportunities that will present themselves and deliver value to our customers and shareholders. It is our responsibility as custodians of vitally important assets to ensure the long-term viability of our infrastructure and operations.
Contents At a glance 2 Chairman’s report 4 Chief Executive Officer’s report 6 Year in review 10 01 Customers and community 13 02 Water availability, usage and efficiency 19 03 Infrastructure and works 23 04 Ancillary activities 29 05 People 33 06 Safety 39 07 Financial performance 41 08 Governance 45 Directors 50 Company profile and management team 52
Directors’ report and financial statements Directors’ report 58 Financial statements 62 Directors’ declaration 91 Auditor’s independence declaration 92 Independent audit report 93
Murray Irrigation Limited Annual Report 2015 1 At a glance
Corporate structure Established 1995 (formerly government owned) Unlisted public company 2015 delivery Head office Deniliquin efficiency Regional offices Finley and Wakool 88.2% Water access licences 84.3% last year NSW Murray Regulated River 1,029,417 units general security at 30 June 297,060 units conveyance Irrigation customers profile 121,704 units supplementary water 3,287 units high security (as at June 2015) Landholdings supplied 2,037 Staff 154 Area of operations 748,000ha 1,299 2,037 Regional population farm businesses landholdings Approximately 33,000 1,112 last year 2,023 last year Infrastructure replacement value Over $800m Gross value agriculture production Over $500m (farm gate) Supply system 2,944km gravity-fed earthen channels Supply points 301 extra-large outlets 20% 29% 3,002 large outlets of farm of farm 325 small outlets businesses businesses 1,164 unmetered pipes grew rice grew cereals Five year average water use on farm 36% last year 45% last year 738GL Drainage catchment 259,000ha Drainage system 1,421km gravity-fed earthen channels Sub-surface drainage catchment 25,000ha Sub-surface drainage system 115 km pipes, 54 pumps, 2,100ha evaporation basins 17% 30% of farm of farm Accredited escapes Capacity 3,350ML/day (four escapes) businesses grew businesses permanent grew annual pasture pasture 26% last year 50% last year
Sam Armytage with his son Will and his 2 Murray Irrigation Limited Annual Report 2015 father Neville on their property at Conargo. Higher flows achieved From the moment local farmer Sam Armytage bought his Conargo property, he knew he’d require higher water flows on-farm. “We wanted to be able to command more water when we’re irrigating so when we were told about PIIOP, we were straight on board. A consultation officer came and sat down with me, and it wasn’t long before the new outlets were installed. We used to get about 13ML per day out of each of the old (Dethridge) wheels. Now we have the ability to irrigate up to 30ML a day from each new outlet. The next step is remote control. It would be good to put order changes in twice daily.” Mr Armytage farms winter cereals on his two Murray Irrigation-serviced properties, near Conargo. The two landholdings cover about 1,538 hectares.
Murray Irrigation Limited Annual Report 2015 3 Chairman’s report
In opening the 2014/15 Chairman’s We are now at a point, however, where The Company developed a six point plan, report I want to say Murray Irrigation we need to take a fresh perspective to which was outlined at last year’s Annual has a positive future where it will continue reshape our company in preparation for General Meeting, designed to prepare to make a significant contribution to the next 20 years. Murray Irrigation for the future. It included: irrigated agriculture; and irrigated To be successful we need to harness the 1. Improving our safety culture. agriculture will deliver positive growth wisdom of those who have gone before to the national economy. 2. Ensuring decision making is based us and capture the aspirations and ideas on facts and data, not emotion. The challenge for the Board and of the next generation. It is wonderful to Management is to reshape the company see many younger people contributing. 3. Progressive irrigation engineering to ensure we can capture the opportunities needing increasing investment in that are starting to present themselves, Industry evolution technology, research and development, intellectual property and information delivering value to our customers and The irrigation industry today is vastly technology. shareholders. For this to happen we must different to 20 years ago. Technology has respond more effectively to the implications made farmers more sophisticated, while 4. Invest in skills as technology intensity of water reform. Government water reform and policies are increases. changing the way we think about water and 5. Manage projects and seasonal business Twenty years on we are challenged by the fact less water by schedule. Murray Irrigation is in its 20th year since is available to our farming customers to be privatisation in 1995. delivered through the system. 6. Stakeholder unity when working outside the region. In preparing Murray Irrigation for the In response, Murray Irrigation is also going next 20 years, and in order to capture through a process of change. We have Upon completion of his tenure, the interim the opportunities, we must recognise embarked on our PIIOP project to upgrade CEO presented the Board with a report of the achievements and learnings of the our systems, improve our delivery efficiency his business health check which identified last 20 years and build on them. and ensure our customers will be compliant key issues that need to be addressed by with new regulations. This evolution also the Board and the Company to secure our Over the last 20 years, the company and future. These include: its shareholders have confronted significant means our fundamental business structure challenges and changes, including must also evolve. • Our long-term stewardship of successive waves of government regulatory Following the departure of former Chief multigenerational assets, including reform and what is now referred to as the Executive, Anthony Couroupis, Murray considering maintenance and ‘millennium drought’. Irrigation appointed Dr Stephen Gumley as reinvestment; Despite these challenges, both the interim CEO for a six-month tenure to bring • Continuing to recognise the cyclic company and its shareholders have fresh eyes to the company and conduct nature of our water sales and improving collectively achieved many things, which a broad corporate review. the capacity of our business to respond we should all be proud of. While it has The interim CEO’s strengths included to this; not always been easy, it has shaped what working with, and leading, organisational • Identifying opportunities to innovate Murray Irrigation is today; a leader in the change and motivation and he identified how we work so we are more effective delivery of irrigation water and water- some key priorities in order to ensure and efficient. related products and services. Murray Irrigation’s long-term sustainability A key part of this work was the and financial wellbeing. His review was development of improved financial the first step along the pathway to ready modelling which is providing the Board Murray Irrigation for the implications of with more comprehensive and robust water reform. information to assist their decision making. The business health check, combined with financial modelling, has highlighted medium and long-term issues, which need to be considered in consultation with our shareholders.
4 Murray Irrigation Limited Annual Report 2015 Murray Irrigation is here for the long haul, it is custodian to nationally significant irrigation infrastructure that must service generations to come.
Securing the future In developing our strategy the Board is Nick Ritchie joined Murray Irrigation in Appointing an interim CEO allowed the committed to ensuring we are a customer- 2008 during the difficult water availability Board to take the time necessary to find focused organisation. Priority areas the crisis. Nick took the learnings from the the right candidate to take the helm and Board has identified for the strategy drought and designed our successful lead the company into the future. The include how to strengthen and improve: Private Irrigation Infrastructure Operators Board conducted an extensive recruitment • Customer and key stakeholder Program (PIIOP) application. Nick also process before appointing Michael engagement; took on the role of acting project manager Renehan as Chief Executive Officer. for a period and has been pivotal in the • Safety performance; implementation of the program. With more than 15 years’ experience • Employee development; in CEO and general management roles Finally, I want to thank Jenny McLeod who and a background in engineering and • Profitability; has been a constant at Murray Irrigation manufacturing, Michael brings a fresh • Efficiency of maintenance and water since privatisation. Jenny has been key in perspective to the company and is working delivery; and ensuring the interests of Murray Irrigation with both customers and the Board to build and our customers have been represented • The successful completion of the on Dr Gumley’s health check and develop at the highest levels of Government and PIIOP project. a robust strategic plan paving the way for bureaucracies through water reform for the future. After all, it is our responsibility as two decades. Over the last 18 months, custodians of vitally important agri-business Jenny was a stabilising factor during Working with Michael as we embark on assets to ensure the long-term viability this period of significant change. Jenny’s our next 20 years, we must focus on what of the infrastructure and operations alike. focus on day to day operations ensured needs to be achieved in order to ensure the company continued to deliver for our As it was when privatisation occurred Murray Irrigation’s long-term sustainability customers’ needs allowing Dr Gumley, in 1995, our actions now will affect and financial wellbeing. This means at the and now Michael Renehan, time to take the health of Murray Irrigation and its very least striving to ensure our operational a strategic look at the company’s needs. income covers our operational costs. shareholders in 20 years’ time. I wish all of them the best for the future. As a company, we need to be focused, Acknowledgements responsive and innovative. But we also need I would also like to take the opportunity to to protect the valuable assets that we were I must take this opportunity to thank thank my fellow directors for their support given and ensure we have the capacity to the Executives who have left the company over the last 12 months as it has been a continue to maintain and efficiently operate in the past year. busy year and I look forward to working those assets into the future. Matthew Watts joined the Company with them over the next 12 months as we deliver on the strategic plan The issues faced by Murray Irrigation in 2003 as the IT officer. Matt was are a collective challenge shared with our responsible for developing the electronic I thank management and the Murray customers and stakeholders. It is therefore water exchange as well as building our Irrigation team for their commitment and important that solutions are identified, not early website. Matt became administration dedication to delivering service to all our in isolation, but with the cooperation of our manager in 2009 and Company Secretary customers. shareholders. In reaching out to customers, f ro m 2 011. But without customers and shareholders, Michael has made it clear that he is not Oliver Kietzmann was with Murray Irrigation Murray Irrigation is of no value – so I thank willing to assume to know what customers for 18 months and was the key driver in you all and wish you well for the next want and is actively seeking their input. the development of our long-term financial 12 months. He has identified the need to better modelling that enables us to model future understand how our customers, both scenarios which helps with business farmers and Government water agencies, planning. He restructured our finance have evolved and what their water use and department to provide better customer delivery service needs are now, and will be service and increased account transparency. Bruce Simpson in the future. Chairman
Murray Irrigation Limited Annual Report 2015 5 Chief Executive Officer’s report
The challenges of Murray Quality performance Irrigation have been A system of Key Performance Indicators (KPIs) has been set up throughout the identified after a year of organisation. A lot of work is now going change with a focus on into setting up practical, robust work safety, culture, customer procedures which ensure that we perform requirements and financial same tasks effectively and consistently. This includes a review of critical processes performance being the key in each work area within the organisation. drivers of the business. Workplace health and safety Our safety performance has improved in We have reviewed all company policies, recent years but is still below best-practice procedures, safety tools, staff education with a Lost Time Injury Frequency Rate and safety reporting to ensure that Murray (LTIFR) of 20 in FY 2015. Irrigation’s safety culture is of the highest We delivered 739GL of water to our possible standard. customers which, while both over our The company recorded three lost time budget forecast and our allocated licence injuries (LTI) during 2014/15. This is volume – showing net trade into the area – down from seven LTIs in 2013/14 and does not meet our break-even target of from 13 in 2012/13. 1,000GL per year. In August we established Safety Panels The business operated at a loss both at for Finley, Wakool and Deniliquin offices. EBITDA and EBIT despite management The focus is to proactively manage our efforts to control fixed costs. risks and ensure that our workplace is healthy and safe. All work now conducted by our staff commences with a tool-box or pre-start meeting beforehand.
6 Murray Irrigation Limited Annual Report 2015 Safety is now a priority with Murray Irrigation. The main goal is ensure the safety of our people – both Murray Irrigation staff and the wider community.
Financial MIL MILCast PIIOP RHPL Total 2015 $’000 $’000 $’000 $’000 $’000 Profitability Water volumes were strong in 2014/15 Revenue with the company delivering 739GL. Irrigation activities 29,516 29,516 However, profitability was disappointing, following a ($9.9m) EBIT loss for Murray MILCast 4,765 4,765 Irrigation (excluding other business units). Total revenue 29,516 4,765 0 0 34,281 This was in-line with budget expectations, but is far from the breakeven position that Cost of goods sold we should be operating at as a commercial business. The principal contributors to the Irrigation activities, Govt fees 11,216 11,216 loss were costs were not fully recovered and charges and our pricing increases were moderate MILCast 3,694 3,694 in the current economic climate. Total cost of goods sold 11,216 3,694 0 0 14,910 The real challenge going forward is to get our profitability back to breakeven in Gross profit 18,300 1,071 0 0 19,371 a regular operating year. The first priority is to be cash-flow positive and bring our Expenditure costs in line with our reduced volumes. Wages 10,555 1,024 11, 579 Balance sheet Operations 6,553 6,553 Our investment portfolio returned five Corporate and admin 2,749 3,335 (64) 6,020 percent on its reserves. The AMRR Other (105) (212) (317) increased $4.4m this year, but there was a drawdown on equity due to the business Total expenditure 19,857 919 3,335 (276) 23,835 operating at a negative EBITDA in the current operating year. EBITDA (1,557) 152 (3,335) 276 (4,464) Depreciation 9,202 126 132 9,460 Cash flow Operating EBIT (10,759) 26 (3,467) 276 (13,924) There was a negative cash flow impact on the business due to an EBITDA operating Other income 2,672 118 2,790 loss of ($1.56m). This was offset by funds Provisions/adjustments (1,800) (1,800) coming from investment, but essentially deteriorated the overall cash position of EBIT (9,887) 26 (3,467) 394 (12,934) the company. The overall net cash outflow from core operating activities was $4.1m. Interest received AMRR 3,655 3,655 Other 2,070 2,070 Total interest received 5,725 0 0 0 5,725 Net profit/(loss) before tax (4,162) 26 (3,467) 394 (7,209) and PIIOP revenue
PIIOP revenue – grant funding 25,366 25,366 Net profit/(loss) before tax, (4,162) 26 21,899 394 18,157 Note: RHPL stands for Riverbank Holdings Pty Ltd inc PIIOP revenue
Murray Irrigation Limited Annual Report 2015 7 Chief Executive Officer’s report (continued)
After a challenging year with cash outflows being a drag on the business Murray Irrigation has renewed the focus on getting the financial fundamentals in place.
Consolidated cash flow statement for the year ended 30 June 2015 Consolidated 2015 2014 $’000 $’000
Cash flows from core operating activities
Receipts from customers 36,825 34,842 Income tax received/(paid) (328) 971 Payments to suppliers and employees (40,632) (56,901) Net cash outflows from core operating activities (4,135) (21,088)
Cash flows from non-core operating activities
Grants received from government 20,239 49,238 Net cash inflows from non-core operating activities 20,239 49,238
Cash flows from investing activities Interest Received on investments 4,305 4,900 Proceeds from sale of financial assets 120,503 145,712 Proceeds from sale of property, plant and equipment 1,161 1,355 Payment for property, plant and equipment (26,779) (16,449) Payment for financial assets (112,576) (139,821) Net cash outflow from investing activities (13,386) (4,303)
Net increase in cash held 2,718 23,847
Cash at the beginning on the financial year 63,697 39,850 Cash at the end of the financial year 5 66,415 63,697
The above cash flow statement should be read in conjunction with the notes to the financial statements commencing on page 66 of the annual report.
8 Murray Irrigation Limited Annual Report 2015 With a renewed focus on customers Murray Irrigation is working with them to develop a plan for the future that builds our business around our customers needs.
Customers Our People Projects 2015 saw a renewed focus on customer As at 30 June 2015, Murray Irrigation The company has reviewed its Private and stakeholder engagement, particularly employed 154 full-time equivalent staff. Irrigation Infrastructure Operators Program with the PIIOP investment. As part of our gender equity obligation, the (PIIOP) to secure it is implemented in During 2014/15, Murray Irrigation also company received a compliant report from a way that will ensure Murray Irrigation made further improvements to its Water the Federal Government’s Gender Equity a return on its investment. Future ordering system. This included an upgrade Commission. implementation will be undertaken to to allow customers to nominate a second maximise utilisation and minimise over- The company has supported four staff capitalisation. Funding of $169,000,000 mobile number for customer subscribed to undertake tertiary studies for their SMS alerts. is being provided from the Commonwealth professional development and possible Government’s Sustainable Rural Water Use Over the last few months, we’ve been succession. We’ve also supported Year and Infrastructure Program. looking at our company strategy to develop 12 students at Deniliquin High School, a plan for the future of our operations. along with other professionals from within Murray Irrigation is currently implementing This involved working with our customers the community, to develop their interview Round Four of the Commonwealth’s On- and other stakeholders to understand skills. In addition to our technical and skills Farm Irrigation Efficiency Program (OFIEP) what their needs are. We want to build our development within the organisation, 80 and finalising the Round two program. In business around our customers’ needs and staff attended a fraud awareness and August 2015, the Parliamentary Secretary the Board is committed to making sure that code of conduct training course earlier this to the Minister for the Environment, The it takes a fresh approach to this process. year, while a further 70 staff undertook a Hon. Bob Baldwin MP, announced Murray proactive training and awareness program Irrigation as a Delivery Partner for Round regarding bullying, harassment and gender Five of the OFIEP for around $20m. equity issues. Feedback from many participating customers is that the works result in improvement of irrigation efficiencies, reduced labour and increased production.
Michael Renehan Chief Executive Officer
Murray Irrigation Limited Annual Report 2015 9 Year in review 2014 – 2015
July 2014 September 2014 November 2014 • NSW Office of Water announces • NSW Office of Water announces three • John Bradford is elected Chairman commencing allocation of six percent for percent allocation increase for general of Southern Riverina Irrigators. NSW Murray general security (Class C) security (Class C) water entitlement • Murray Irrigation Policy Officer, Perin water entitlement holders. holders, bringing total allocation to Davey, is elected to the Board of the • Murray Irrigation implements new 20 percent. NSW Irrigators’ Council. organisational and staff structures. • Minister for Natural Resources, Lands • NSW Office of Water announces six The change is primarily in response and Water, Kevin Humphries visits Murray percent allocation increase for general to the rollout of new technology on Irrigation’s area of operations. security (Class C) water entitlement our day-to-day water delivery operations. • NSW Office of Water announces eight holders, bringing total allocation to The General Manager’s role is re-titled percent allocation increase for general 45 percent. to Chief Executive Officer to reflect security (Class C) water entitlement an increased focus on strategic and • Murray Irrigation holds its Annual General holders, bringing total allocation to Meeting on Thursday 20 November at policy matters, rather than day-to-day 28 percent. operational matters. the Deniliquin Rams Clubrooms. • Michael Hughes resigns as Deputy • Tony Read is farewelled as a Director. • NSW Office of Water announces three Chairman of the Murray Irrigation percent allocation increase for general His contribution to the company for over Board of Directors. Michael remains 20 years is recognised at the AGM. security (Class C) water entitlement a shareholder Director. holders, bringing total allocation to • New Director Chris Badger is formally nine percent. • Mark Robertson is elected as the new welcomed to the Board. Deputy Chairman. • Chris Badger is appointed as Murray Irrigation’s new independent Director. • Murray Irrigation launches the Standard Level of Service (SLOS) Yallakool Pilot December 2014 • The Board approves the formation of on Monday 22 September. The pilot is a PIIOP Steering Committee, chaired based on Central Remote Control (CRC) • NSW Office of Water announces four by Tony Read. It also includes fellow technology. percent allocation increase for general Directors Chris Badger and Tim security (Class C) water entitlement McKindlay. holders, bringing total allocation to • Murray Irrigation opens the Mulwala October 2014 49 percent. Canal and Wakool Main Canal offtakes, • The Australian Government announces signalling the start of the 2014/15 • NSW Office of Water announces six up to $125m for Round 5 of the On-Farm irrigation season. The Wakool Canal percent allocation increase for general Irrigation Efficiency Program. is filled using supplementary water. security (Class C) water entitlement holders, bringing total allocation to 34 percent. January 2015 August 2014 • NSW Office of Water announces five percent allocation increase for general • The Commonwealth signs the Funding • NSW Office of Water announces three security (Class C) water entitlement Agreement for Round 4 of the On-Farm percent allocation increase for general holders, bringing total allocation to Irrigation Efficiency Program. security (Class C) water entitlement 39 percent. • NSW Office of Water announces three holders, bringing total allocation to percent allocation increase for general 12 percent. • Dr Stephen Gumley is appointed as Murray Irrigation’s interim Chief security (Class C) water entitlement • Murray Irrigation completes its 2014 Executive Officer. holders, bringing total allocation to PIIOP Winter Works enabling the 52 percent. operation of channels in all divisions. • Murray Irrigation Director Tim McKindlay is re-elected Deputy Chair of National • Murray Irrigation Chairman Bruce • NSW Office of Water announces five Irrigators’ Council. Simpson and SRI Chairman John percent allocation increase for general Bradford travel to Dubbo to meet with security (Class C) water entitlements • Murray Irrigation and the Office of NSW Deputy Premier, Troy Grant. Environment and Heritage enter into holders, bringing total allocation to • Murray Irrigation launches new PIIOP 17 percent. a formal Environmental Water Delivery agreement. section of its website. The expanded • Channel filling is completed and system- section includes detailed information on wide deliveries commence. the program, photos, a glossary of terms, • Jennifer McLeod is appointed to the map of completed works and customer role of acting Chief Executive Officer, testimonials. following the departure of Anthony Couroupis. Mr Couroupis was with the organisation for seven years.
10 Murray Irrigation Limited Annual Report 2015 February 2015 April 2015 June 2015 • NSW Office of Water announces one • Murray Irrigation Company Secretary • An updated MILCast price list is released. percent allocation increase for general and Business Administration Manager, This incorporates a 10 percent price security (Class C) water entitlement Matthew Watts resigns after 12 years increase on all products, effective 1 June. holders, bringing total allocation to with the company. • The Murray Irrigation Water Exchange 53 percent. • Southern Riverina Irrigators launch their closes on Friday 5 June. • Parliamentary Secretary to the new-look website. • The service role of Murray Irrigation’s Environment Minister, Bob Baldwin, • The April Chairman’s report announces Regional Planning staff is redefined. and newly appointed MDBA Chairman that 700GL of water was delivered Staff in these positions are now referred Neil Andrew visit the southern connected on-farm during the 2014/15 season. to as Network Controllers. Murray-Darling Basin. Murray Irrigation This is 100GL above forecast sales and • Murray Irrigation’s 2015/16 Fees hosts the pair in a tour to showcase the 2014/15 budget. benefits of investing in on and off-farm and Prices Schedule and Information infrastructure. Statement is mailed to all customers on Wednesday 17 June. • Murray Irrigation farewells retiring May 2015 Wakool Water Distribution Supervisor, • New CEO Michael Renehan starts with Lee Pattinson after 34 years’ service. • The company closes its Mulwala the company on Monday 22 June. and Wakool Canal offtakes on Monday • NSW Office of Water announces six • Murray Irrigation wins the Communication 11 May, marking the end of the 2014/15 Award at the Australasian Reporting percent allocation increase for general irrigation season. security (Class C) water entitlement Awards. holders, bringing total allocation to • Murray Irrigation commences its SLOS • Murray Irrigation engages Bartley 59 percent. Winter Works program. Consulting to conduct a telephone survey • In response to customer feedback, with customers in the Yallakool Pilot area. Murray Irrigation upgrades its Water March 2015 ordering system to allow customers to nominate a second mobile number • NSW Office of Water announces two for customer subscribed SMS alerts. percent allocation increase for general security (Class C) water entitlement • The NSW Office of Water releases an holders, bringing total allocation to updated outlook for 2015/16. Opening 61 percent. allocations for NSW Murray general security are expected to be zero percent. • Due to dry conditions being experienced, NSW Office of Water forecasts opening • The company commences routine season allocations for NSW Murray winter maintenance and PIIOP general security to be zero percent of construction works. entitlement. • Dr Stephen Gumley concludes his term • Murray Irrigation produces a new fact as interim CEO. sheet on efficiency allocations, which • The Board sets its 2015/16 fees and explains what an efficiency allocation prices. In setting the fees and prices, is and what considerations are made the Board builds on the business health when determining efficiency allocations. check and financial modelling completed • The Board agrees to a water efficiency during Dr Gumley’s tenure. allocation of two percent of permanent • Michael Renehan is appointed as the delivery entitlements. company’s new CEO. • Murray Irrigation farewells long-serving Finley Channel Attendant, Adrian Fisher, after 41 years’ service to the company. • Murray Irrigation commences channel draining from all escapes in preparation for routine winter maintenance and PIIOP construction works. • Legislation to cap buyback at 1,500GL is introduced to Federal Parliament.
Murray Irrigation’s customers produce food and fibre crops including (from L–R) rice, wheat and corn. Right: Edward River Escape. Murray Irrigation Limited Annual Report 2015 11 12 Murray Irrigation Limited Annual Report 2015 Customers and community 01
Strategic objective: We will understand and meet our customers’ needs.
Key performance indicator Deliverables 2014/15 performance 2013/14 performance Effective communication Talking Water 65 publications 78 publications (including water updates)
Chairman’s report 16 publications 14 publications
Annual highlight Engaging on Completion of customer engagement for opportunities the Yallakool Pilot Project and continued 2015 saw a renewed focus on customer engagement on the Water ordering system. and stakeholder engagement, particularly with the PIIOP investment. Our engagement approach focuses on opportunities for our customers, ensuring that the benefits of PIIOP are realised and successful outcomes are achieved for the future of their farm businesses. We are pleased to be able to share some of our customers’ success stories throughout this report.
Results from Yallakool Pilot Project (standard level of service) customer survey:
85% 85% 90% said upgrades had said upgraded outlets uptake of new water improved or maintained deliver consistency ordering service quality of service
100% 60% customer awareness of customers had used flexible ordering availability flexible ordering
Lateral spray irrigation system. Murray Irrigation Limited Annual Report 2015 13 Customers and community
Sponsorship Annual sponsorship of the ‘Learn to Swim’ Working in the program began in 2003/04. Murray Irrigation is committed to In addition, Murray Irrigation also provides community reinforcing the water safety message a $2,000 school grant to secondary Murray Irrigation works with other industry to children in our area. Living in an area schools within our area of operations each representative bodies in the Murray region, where rivers, dams and irrigation channels year. Local high schools are able to spend NSW and nationally to provide information are part of our everyday lives, water safety this money on any worthwhile initiative and participate constructively in policy is a necessary skill for our children. As which benefits both the school and development and issues relevant to water part of the company’s proactive approach students. Examples of how this funding has management in NSW. to water safety, we provide annual been used in the past include purchasing sponsorship of learn to swim programs resources to support students, water for schools and swimming clubs in our systems for agriculture plots and materials Landholder area of operation. Sponsorship of $10 per for outdoor learning centres. participant is provided for accredited learn Associations to swim programs. In October 2014, Murray Irrigation sponsored the inaugural Tuppal Food and There are five Landholder Associations Our 2014/15 Learn to Swim Sponsorship Fibre event which attracted 12,000 visitors within Murray Irrigation’s area of Program attracted 1,353 children, with and showcased the agricultural industry in operations, representing the diverse sponsorship totalling $13,530 (plus GST). our region. interests of our irrigation community Sponsorship funds were used to cover As well as providing sponsorship to the throughout the district. Berriquin Irrigators’ travel cost, pool entry fees, equipment, Council, West Berriquin Irrigators’ Council, as well as instructor and life guard wages. Bitterns in Rice program (see opposite), Murray Irrigation was a sponsor of the Denimein Landholders’ Association, Lessons focused on teaching children 2014 Ricegrowers’ Association of Australia Deniboota Landholders’ Association about water safety, swimming, rescue, CPR (RGA) Annual Conference. and Wakool Landholders’ Association. and survival techniques, focusing on water The Landholder Associations provide an confidence and increasing awareness. important link to our communities and Individual programs differed from school enable Murray Irrigation to receive and to school, as did the age of students respond to feedback about concerns in participating and range of skills needed. these regions.
Deniliquin South School students enjoying 14 Murray Irrigation Limited Annual Report 2015 their 2014/15 school swimming program. Southern Riverina National Irrigators’ Irrigators Council Bitterns in rice In 2012 Birdlife Australia and the Southern Riverina Irrigators (SRI) is the Murray Irrigation is a member of the Ricegrowers’ Association of Australia representative body for landholders in National Irrigators’ Council which established the Bitterns in Rice project the Murray Irrigation area of operations. represents irrigators across Australia. to better understand the relationship SRI advocate for the interests of National Irrigators’ Council enables between the endangered Australasian irrigators in public policy development. members to participate in National water Bittern and rice crops. Murray Irrigation has a memorandum of reform at the highest levels. Through this understanding with SRI which enables membership, Murray Irrigation attends It has been established that in most the company to provide financial support industry and stakeholder briefings with years, around 19 to 50 percent of the to the organisation representing the the Murray-Darling Basin Authority on total global population of the bittern interests of our landholders. Basin Plan implementation and briefings congregate in Riverina rice crops from heads of Government agencies to breed, with nests producing fully regarding broader water reform policies. fledged young before harvest. Industry Associations In early 2015, the Bitterns in Rice Local branches of the Ricegrowers’ team launched a world first crowd- Association of Australia (RGA) represent funding campaign to raise funds to the large number of rice-growing catch and tag bitterns to get a better customers throughout the Murray understanding of their behaviour Region. Murray Dairy provides regional after harvest. Murray Irrigation was development programs to dairy farmers pleased to support the project which throughout the NSW Murray and northern will eventually see up to seven birds Victoria. Murray Irrigation works closely tagged and tracked. with industry associations to provide The first bird, named Robbie, was information on the water market, pre- tagged in April 2015 in Coleambally. season water availability and outlooks Robbie initially stayed local before and in-season water balances. moving south to Deniliquin, possibly chasing unharvested rice. He then continued on his southward trek, NSW Irrigators’ Council reaching the South Australian coast, before turning east again settling for the Murray Irrigation is a member of the winter at a restored wetland in Victoria NSW Irrigators’ Council, the peak body called Long Swamp. In September representing water access licence holders 2015 Robbie returned to the Riverina. across NSW. Through this association, Murray Irrigation supports the development The Bitterns in Rice project continues and growth of sustainable irrigated to discover and promote the agriculture through advocacy and the relationship between farming and development of industry policy. nature conservation. The team have recorded 11 threatened species that live in and around rice crops in NSW. www.bitternsinrice.com.au
Robbie the Bittern. Photograph courtesy of Andrew Silcocks, Birdlife Australia. Murray Irrigation Limited Annual Report 2015 15 Customers and community
Water Licensing for Allocating water in Murray Irrigation the NSW (regulated) Murray Irrigation is an irrigation corporation Murray Valley listed in the Water Management Act 2000 Allocating water in the NSW Murray (NSW). As an irrigation corporation, Valley is a complex process. It involves Murray Irrigation is a private company the sharing of water between the three holding bulk water entitlements on behalf states (NSW, Victoria and South Australia), of their shareholders. according to the Murray-Darling Basin The Water Management Act 2000 (NSW) Agreement. The water available to NSW includes the requirement for a Water is then allocated as described in the Water Sharing Plan which describes the rules Sharing Plans. for the allocation of water. Murray Irrigation Under normal operating conditions, is subject to the Water Sharing Plan for the water allocated to the water access the New South Wales Murray and Lower licences is made in the following order: Darling Rivers Water Sources. • Carryover of unused water from The Water Management Act 2000 (NSW) previous year requires Murray Irrigation to hold the following Licences and Approvals: • Barmah-Millewa Forest environmental water allocation and planned • The Operating Licence permits Murray environmental water Irrigation to carry out the business of Compliance the supply of water. It requires Murray • High security water entitlements Irrigation to hold an Environment (97 percent), stock and domestic Murray Irrigation has a number of Protection Licence issued by the requirements compliance obligations associated with Environment Protection Authority. the Licences and Approvals issued under • Conveyance entitlements the Water Management Act 2000 (NSW). • Water Access Licences (WAL) entitle • General security entitlements Murray Irrigation as the licence holder The Combined Water Supply and Water to both own water entitlements, known Use Approval requires Murray Irrigation as the Share Component, and entitles to produce the Annual Compliance Report Murray Irrigation to extract water in which includes details regarding the accordance with the Water Sharing Plan, volume of water extracted and volume known as the Extraction Component. of water delivered to, and utilised by, Murray Irrigation holds the following our customers. types of Water Access Licences: Murray Irrigation is issued an Environment > High security – regulated river Protection Licence by the NSW Environment Protection Authority. The > Town water supply high security Environment Protection Licence requires > Conveyance – regulated river Murray Irrigation to monitor and report on > General security – regulated river the volume and quality of water discharged from the Murray Irrigation drainage system. > Supplementary water The Combined Water Supply and Water • The Combined Water Supply and Water Use Approval requires Murray Irrigation Use Approval authorises Murray Irrigation to monitor the depth to water table to extract water using the authorised within the area of operations. Murray extraction water supply works, the Irrigation’s Environment Policy addresses Mulwala Canal Offtake and Wakool Canal a requirement in the Approval to limit Offtake and includes the requirement to groundwater recharge and discharge of produce an Annual Compliance Report. salt. The Environment Policy documents • The Combined Water Supply and Work Murray Irrigation’s commitment to achieving Use Approval for salinity and water table a balance between environmental management tubewells authorises Murray responsibility and agricultural production. Irrigation to operate the Wakool Tullakool Subsurface Drainage Scheme.
Compliance Supervisor Penny Sloane 16 Murray Irrigation Limited Annual Report 2015 analyses water samples. Service delivery performance standard summary of outcomes 2014/15
Service standard Deliverables 2014/15 2014/15 2013/14 Target Actual
Customer communication Talking Water (publications per year) 50 65 68 Chairman’s report (publications per year) 11 16 14 Water availability announcements As required 20 10 (announcements per year) Customer meetings As required 0 27 Annual Operating Plan Published annually July 2014 July 2014 July 2014 Season length Mid-August to mid-May 273 days 293 days 291 days Water supply quality Blue-green algae (alerts) As required 0 0 Irrigation water Water ordering – availability during season 100% 100% 100% Orders in advance – delivered within four days 100% 100% 100% Water delivery restrictions – restrictions imposed 0 0 12* Meter readings – meters read weekly 3,671 3,693 3,671 (number of meters) Stormwater escape Access points (number) 2,692 2,695 2,692 Call outs Available 24 hours 100% 100% 100% Emergencies Available 24 hours 100% 100% 100% Water exchange (Days available per year) 325 340 341 Fees and prices Schedule Published Published Published Billing Quarterly Quarterly Quarterly Compliance (zero penalties) Number and volume (ML) of allocation debit notices 0/0ML 0/0ML 0/0ML issued Number and volume ($) of cost recovery notices 0/$0 0/$0 0/$0 issued Number and days of temporary suspension notices 0/0 days 0/0 days 0/0 days issued Number of court prosecutions 0 0 0 Customer feedback Customer surveys 1 0 1 Customer complaints 0 31** 50** Murray Irrigation Annual Published October October October Report
* Restrictions is a measure of the individual channel systems that experienced a flow restriction event for the period due to physical capacity constraints, regardless of whether that restriction lasted for one day, or the entire period. It does not include internal restrictions imposed by Murray Irrigation due to limits placed on the order at Mulwala or Wakool offtakes. ** Customer complaints were received on a range of topics with no common issues reported. 27 have been completed and resolved to the customers satisfaction.
Murray Irrigation Limited Annual Report 2015 17 18 Murray Irrigation Limited Annual Report 2015 Water availability usage and efficiency 02
Strategic objective: We will seek every additional water supply opportunity, create strong commercial incentives for water demand and maximise both the volume of water available to our customers and the efficiency of every megalitre we source and deliver.
Key performance indicator Deliverables 2014/15 performance 2013/14 performance End-of-season losses Loss target for 750GL on-farm Actual losses 163 GL Actual losses 215GL maintained or improved to be deliveries was 175GL below historic average Non-accredited escape flows Less than or equal to 4% of Actual flows less 0.8% Actual flows less 0.8% nett diversions Customer orders delivered 100% of orders delivered on 91% 97% requested delivery date Total delivery efficiency Equal to or greater than 80% 88.2% 84.3%
On-farm delivery efficiency Equal to or greater than 70% 82.0% 81.1% Gross value and volume of Maximise efficiency allocations 21GL valued at $2.7m 147GL valued at $9m efficiency allocations while preserving our obligations for supply
Annual highlight Delivery efficiency Levels of Service Standard level of service implementation 480GL delivered out of accredited High level of service (HLOS) and standard on the Yallakool pilot. escapes to assist river operations and level of service (SLOS) channels both in deliver environmental water. operation, both providing positive results. Channel levels remained below full supply Over 1,000 orders placed using the flexible when not in use. ordering times the improved levels of The high flow strategy for on-farm service provide. operations which is only achieved through Customers in these areas can make the outlet upgrade process, allowed over alterations at least twice per day. 740 orders to be placed at higher flow rates than traditionally possible with Dethridge outlets.
Delivery service 17,000 orders placed for the season. 91 percent of orders delivered on the day requested.
Birganbigil Regulator on the Mulwala Canal. Murray Irrigation Limited Annual Report 2015 19 Water availability usage and efficiency
Water efficiency allocations Revitalising Tuppal Creek 21GL in Water Efficiency Allocations In 2014/15, Murray Irrigation facilitated “The watering of Tuppal Creek aimed to the delivery of 11,547ML of NSW and build on previous releases from 2012 Commonwealth environmental water to 2014; replenishing refuge pools for Environmental water managed by the NSW Office native fish and improving the water deliveries of Environment and Heritage (OEH). quality within the creek system. Environmental water delivered from “A productive partnership between Almost 11GL of water delivered directly via Murray Irrigation escapes and private the Tuppal landholders, Murray on-farm outlets and non-credited escapes outlets contributed to seven watering Irrigation, OEH, the Commonwealth for the Office of Environment and Heritage. events including flows of 6,170ML Environmental Water Office and into Tuppal Creek. Murray Local Land Services enabled The Tuppal Creek is an ephemeral the success of this watering. creek system which has benefited from “The Tuppal watering is a good example delivery of environmental water via of how the Murray Irrigation system Murray Irrigation infrastructure. Local provides environmental water holders landholders have reported rejuvenated with a great opportunity to deliver river red gums and an increase in water to important ephemeral creek birdlife as a result of the Tuppal systems and private wetlands in the Creek flows. Murray Valley,” Ms Wilson said. OEH Environmental Water Management Officer Emma Wilson said:
Operational water delivery (MDBA/State Water)
88.2% 739GL 11GL 470GL delivery efficiency delivered on-farm delivered to environment delivered for river operations
20 Murray Irrigation Limited Annual Report 2015 On-Farm Irrigation On Wednesday 5 August 2015 the (then) The Commonwealth’s On-Farm Irrigation Parliamentary Secretary to the Minister Efficiency Programs have seen an Efficiency Program for the Environment, The Hon. Bob Baldwin increased investment in On-Farm projects MP, announced Murray Irrigation as a and water savings on irrigated landholdings. The Commonwealth Government through Delivery Partner for Round Five of the The portion of water savings transferred to the Department of the Environment, has On-Farm Irrigation Efficiency Program. the Commonwealth contribute towards the sought organisations experienced in To maximise the chance of receiving funds, Murray-Darling Basin Plan target for the project management related to farm and Murray Irrigation’s application was divided NSW Murray whilst concurrently improving irrigation systems to be Delivery Partners into categories which were based on the irrigation systems, thus making a positive for the On-Farm Irrigation Efficiency price sought per Water Entitlement in the contribution to our community’s ability to Program (OFIEP). Funding is provided from Expression of Interest process. Total in- cope with less irrigation water in the future. Water for the Future the Initiative through principle funds awarded to Murray Irrigation the On-Farm Irrigation Efficiency Program. The delivery of these funds has been a for Round Five is $20,006,196 (ex. GST). well-received cash injection to our local Murray Irrigation’s role as a Delivery These funds only cover a portion of the communities providing work for suppliers Partner is to oversee the implementation application amount sought. and contractors in the agricultural sector, of individual farm projects. Such projects Stage Two Applications for the Round with flow-on from these activities also entail funding by the Commonwealth Five program are being submitted for benefiting other businesses in our area. for on-farm works for more efficient assessment in October 2015. The irrigation, in return for Water Entitlements Commonwealth will assess these being transferred to the Commonwealth applications and Murray Irrigation expects Environmental Water Holder. to sign a Funding Agreement in early 2016. Murray Irrigation has successfully Subject to the signing of this agreement, completed the Pilot Program, Rounds One and individual project approvals, on-ground and Two and is currently implementing works should commence in early 2016. Round Four of the Commonwealth Program.
Opposite: Tuppal Creek environmental Watering. Photograph courtesy Emma Wilson, NSW Office of Environment and Heritage. This page: Keith and Craig Steel under the lateral irrigator installed with funds from the On-farm Irrigation Efficiency Program. Murray Irrigation Limited Annual Report 2015 21 22 Murray Irrigation Limited Annual Report 2015 Infrastructure and works
Strategic objective: We will provide and03 maintain infrastructure that meets our service delivery requirements.
Murray Irrigation’s Infrastructure Services Reactive maintenance jobs completed 2014/15 2013/14 division is responsible for maintenance and construction works on the company’s Civil 3,426 2,672 irrigation delivery and drainage system. Mechanical 17 95 This includes programmed maintenance, reactive maintenance and construction SCADA 667 362 of new infrastructure. Total 4,110 3,129 During the 2014/15 season, our works crews conducted 4,110 reactive Detailed SCADA reactive maintenance Jobs Number maintenance jobs with civil works completed completed of sites contributing to about 87 percent of the workload. Civil maintenance work included FlumeGate™ 148 54 bank building, key trenching, desilting/ deweeding, grading and sanding of SlipMeter™ 118 118 access tracks, access track slashing Central Remote Control upgrade (SLOS pilot) 13 7 and spraying of noxious, emergent and 114 130 submergent weeds. TYCO flowmeters The Infrastructure Services Division Other 90 53 employs 29 people and covers the whole Total 483 362 of Murray Irrigation’s area of operations – Notes from Mulwala in the east to Moulamein FlumeGates™ and SlipMeters™ under warranty in the west. Murray Irrigation internally developed Central Remote Control upgrade in pilot phase Maintenance requests are logged daily and prioritised accordingly while the winter Civil maintenance works completed 2013/14 2014/15 works program ensures the company’s (km) (km) assets are maintained and operational. Bank building 23 63 Key trenching 15 16 Desilting/deweeding 464 457 Grading access tracks 1,580 1,097 Sanding access tracks 108 58 Access track slashing 683 184 Noxious weeds 210 224 87% Emergent weeds 1,724 2,110 Civil works accounted for 87% of Submergent weeds 0 38 reactive maintenance jobs in 2014/15 Erosion Control Site 204 Total 3083 4,247
Structure replacements (not under PIIOP) 2013/14 2014/15
Structure type Access structures 14 10 Subways 5 11 Regulators 2 7 29 people Escapes 2 4 The Infrastructure Services Division employs 29 people and covers the Outlets 5 0 whole of Murray Irrigation’s area Other 23 15 of operations Total 51 47
Construction crew install a new SlipMeter™ Murray Irrigation Limited Annual Report 2015 23 Infrastructure and works
PIIOP Project Strategic objective Works summary The Network Services Plan (NSP) sets Sub-project 1 out Murray Irrigation’s objectives, operating Outlet and meter strategy PIIOP plans, major works and anticipated expenditure in the five year period from To improve irrigation services to customers, Murray Irrigation continues to roll-out its 1 July 2012 to 30 June 2017. reduce its long-term cost base, and assist Private Irrigation Infrastructure Operators in meeting the company’s regulatory Within the NSP, Section 4.2 Service requirements for metering. Program (PIIOP) project. Funding of Enhancement provides the high level $169,000,000 is being provided from objectives for the PIIOP project, including: As part of the outlet and meter strategy, the Commonwealth Government’s Murray Irrigation will reduce the number Sustainable Rural Water Use and • Outlet and Meter Strategy implementation of irrigation outlets across our irrigation Infrastructure Program. • Investment in a water ordering system footprint, ensuring the company avoids over capitalisation of infrastructure and to help The funding agreement was reached • Expansion of SCADA and telemetry in 2012 and the project is designed control future costs. • Berriquin Irrigation System Upgrade to upgrade water management and Outlet and meter strategy measurement systems, undertake system • Implementation of remaining PIIOP implementation reconfiguration and system retirement. elements including: • 553 outlets constructed as at July 2015 The project is a once-in-a-generation > Remote control/automation of channel (22 percent complete) opportunity to modernise our irrigation regulators Regulator upgrade program infrastructure and supply system for > Reconfiguration of channel a) Standard Level of Service (SLOS) the benefit of our irrigation customers infrastructure • 32 completed sites in Yallakool pilot in and to provide improved water efficiency > Sub-system retirements 2013/14 and productivity for our customers’ farm businesses. • Completed preliminary channel installs Annual highlight for all 400 sites 2014/15 b) High Level of Service (HLOS) Installation of the 500th outlet achieved • Installed and commissioned 150 sites in May 2015. in 2013/14 Consultations passed the 1,000 mark • Installed 110 sites during 2014/15 in June 2015. • 199 sites to be installed New water ordering system • Launched July 2013 Expansion of the SCADA and telemetry system • 810 sites completed as at July 2015 Berriquin irrigation system upgrade • Now complete
24 Murray Irrigation Limited Annual Report 2015 Construction of regulator during the 2015 PIIOP winter works program. Sub-project 3 Steering Committee PIIOP team Reconfiguration Reconfiguration allows a customer In order to achieve the objectives and The PIIOP team is now based next to to remain connected to our channel targets set for the successful delivery the Murray Irrigation head office at 443 system but assume ownership of part of PIIOP, a PIIOP Steering Committee Charlotte Street, Deniliquin. This follows of the channel system. There may be has been formed with a combination of the construction of a new temporary opportunities to reduce the length of Directors and Management. A renewed building – built by local business channel or the number of major channel focus on customer engagement is a high Decentralised Demountables. This new assets by altering how a landholding is priority for this committee and a PIIOP contemporary, open-plan project office connected to our channel system. Communications and Engagement Plan houses our entire PIIOP project team of was approved by the committee and around 30 staff. Murray Irrigation has a methodology implementation commenced in 2014/15. for assessing the costs and benefits of New senior staff that have joined the reconfiguration projects. In cases where project this year include our Principal there are cost savings to Murray Irrigation, Project Manager Warren Jose (joined there will be financial incentives available Murray Irrigation in April 2015), to customers. Construction Manager Robert Adams, Contracts Manager Matthew Bennett, Progress Project Completions Joe Gogarty, Quality • Assessment criteria approved by Board Engineer Heidi Pimm, Project Engineers (1 May 2015) Jarryd Pearce and Russell Thomas, • Projects are currently under review and Reconfiguration Engineer Jorge Luengas, assessment, with implementation to Project Scheduler Fiona McGuinness and commence during 2015/16. Project Accountants Robert Kotkin-Smith and Andrew Johnson. Sub-project 4 The core purpose of the move was to Sub-System Retirements (SSR) consolidate the teams within Murray The SSR Project involves the strategic Irrigation. The new cost effective set- retirement of 30 landholdings from Murray up better integrates PIIOP with the Irrigation’s area of operations and the mainstream operations of Murray Irrigation, decommissioning of related channel as all departments work together to ensure delivery system infrastructure. The the efficient rollout of the program over the voluntary project is the result of several next two years. meetings with interested parties and will assist them to convert their properties to dryland farming with a piped stock and domestic water supply. Consultations with landholders have been completed and all Deeds of Agreements have been signed and executed. Progress of works was approximately 20 percent as at July 2015.
Murray Irrigation Limited Annual Report 2015 25 Retrofit Flumegate™ designed to fit existing infrastructure. Infrastructure and works
Efficiency benefits achieved Finley farmer Chris White has experienced enormous efficiency benefits since the completion of his Private Irrigation Infrastructure Operators Program (PIIOP) project last year. “We’ve had a flow increase of about 40 percent. The savings in time would also be huge. We’re talking about 50 percent savings in time (irrigation labour). I’ve still got to monitor the bays, but now I can run two or three bays at a time, rather than just the one. We can actually grow more tonnes of dry matter with the same amount of water now. We’ve also completed our own on-farm works to get the most out of our upgrades. And now we order our water on an iPad and an iPhone. It’s way faster and easier. With computer (internet) ordering, you can do it wherever you are; whether you’re in Tasmania, Perth or the other side of world. It’s a lot more user friendly.” Mr White operates an 1100 cow dairy between Blighty and Finley. His property also includes some 800 hectares of country which can be irrigated. On this land, he grows lucerne, permanent pasture, annual rye grasses, oats for hay and sub- clover for silage.
26 Murray Irrigation Limited Annual Report 2015 Customer Consultation – Outlet Upgrade Part of the company’s PIIOP rollout involves extensive and targeted consultation to enable customer input to determine the capacity, location and number of outlets to our customers’ landholdings, as well as identify any opportunities to rationalise the number of outlets or other infrastructure to help reduce our capital and maintenance costs. The customer consultation program operates under criteria which has been developed considering the company’s diverse customer base, number of outlets, water use history and availability of funds. At the end of June, owners of landholdings which account for nearly 60 percent of Murray Irrigation’s outlets, had been consulted within the consultation program. Early indicators also show that around 17 percent of outlets are proposed to be decommissioned.
Opposite: Blighty dairy farmer Chris White completes his water orders online. This page: Customer Consultation Officer Josh Bode discusses upgrades with customers. Murray Irrigation Limited Annual Report 2015 27 28 Murray Irrigation Limited Annual Report 2015 Ancillary activities 04
Strategic objective: We will achieve appropriate returns on our investments in ancillary activities.
Key performance indicator Deliverables 2014/15 performance 2013/14 performance Ancillary activities are positive All financial returns positive/ Achieved Achieved in their returns (financial or surplus non-financial, as appropriate)
Annual highlight Summary of trade Transaction 2014/15 2013/14 Net trade into the Murray Irrigation region of 100GL by our customers to allow Number Volume Number Volume business to deliver above budget volume. Exchange Seller listings 1,766 N/A 1,738 N/A Exchange Buy bids 166 N/A 195 N/A Exchange activity Exchange purchases 2,531 175,321ML 2,384 218,307ML Murray Irrigation’s Exchange experienced 44,681DE 77,457DE a steady workload throughout the 2014/15 ML – megalitre, DE – delivery entitlement, N/A – net applicable season despite the announced allocation of 61 percent being delivered at a slow rate throughout July 2014 to March 2015. Price per megalitre climbed steadily from mid- Share register 2014/15 Season season and peaked twice around $140 per Activity megalitre in early October 2014 and again in mid-November 2014, coinciding with rice Permanent LTX (Shares, water entitlements and delivery entitlements) 7 planting and insurance buying. The close transfers ETX (Water entitlements) 143 of season saw some interest from Western Murray Irrigation, selling megalitres on the STX (Shares) 21 Exchange via our Murray Water Exchange DTX (Delivery entitlements) 23 initiative. However interest from South Australia remained minimal. In April 2015, ETO (External permanent transfer out water entitlements) 10 Water Trade Officer Millie Harris resigned ETI (External permanent transfer in water entitlements) 4 and in mid-May Alex Schultz joined the Water Trade team and took over the day- ETM (Cancellation acquired by Murray Irrigation water entitlements) 5 to-day tasks of running the Exchange. Total 213 Customers are taking greater advantage of the ease in being able to list and purchase Mergers 132 LRN creating 33 merged accounts tradeable units online which we hope to Amalgamations 19 LRN into 9 amalgamated LRN further encourage in the coming seasons. Consolidation 50 LRN
MILCast team member Ricky Govan removing a protective cone from a cast. Murray Irrigation Limited Annual Report 2015 29 Ancillary activities
MILCast Strategic objectives Yard reconfiguration MILCast, a business unit of Murray • Safety The yard reconfiguration project is moving Irrigation Limited, design, manufacture • Correction of financials towards its completion. The new MILCast and supply precast concrete products for office has arrived had the required access agricultural and other commercial uses, • Reduction in costs ;and provisions installed to gain a Certificate including headwalls, culvert ends, culverts, • Correction of pricing, to get back to of Occupancy. The back automatic gate bay outlets (aluminium door or rubber flap), basics of producing a profit has been relocated and the fencing is rice stops, bankless channels, rice flumes, 2014/15 saw the successful manufacture complete. Staff moved into the new office pipe ends, pits (for recycle and pumps), and supply, on time, to specification, with at the start of October 2015. regulators, flumes, channel checks, grain/ no rejects or returns, of $1.07m worth of fertilizer bunker wall slabs and drop boxes. commercial product for a modernisation project at Trangie and Narromine in northern NSW.
30 Murray Irrigation Limited Annual Report 2015 The new sheds and MILCast yard. Business statistics for the year 2014/15
Tur nover $ 4.74m Internal sales $500,000
Gross profit $1.06m EBIT $263,000
The MILCast team in Finley. Murray Irrigation Limited Annual Report 2015 31 32 Murray Irrigation Limited Annual Report 2015 People 05
Strategic objective: Maintain and improve staff satisfaction and productivity.
Key performance indicator Deliverables 2014/15 performance 2013/14 performance Productivity improvement from Operational income/full-time 210K/FTE 290K/FTE prior year (revenue per full-time labour greater than $115K/FTE equivalent staff) Productivity through retention Unplanned labour turnover = 0 2% 8.5% Productivity through attendance Absenteeism (sick leave) less 4.7% 2.4% than 1.5% Safe work methods Lost time injuries = 0 3 injuries 7 injuries
Annual highlight Employee remuneration The company uses Mercer’s salary benchmarking system and supports We have continued to reduce lost time benefits equality in pay and employment conditions injuries and are actively putting in place across the organisation. Murray Irrigation is committed to ensuring systems to ensure we meet our target of equity and flexibility in its employment Employees receive a range of benefits zero lost time injuries and promote a safer, arrangements and remuneration practices under the Remuneration Policy. Murray more productive workplace. which enables the company to be market Irrigation recognises that it is our people competitive and innovative while supporting who make the difference.. employee engagement and commitment.
Professional Flexible working Counselling Additional paid development arrangements service parental leave opportunities
Flu vaccinations Hearing tests Disability and Life Superannuation Insurance cover and financial advice
GIS Officer Jason Tasker checking data on a Trimble hand-held unit. Murray Irrigation Limited Annual Report 2015 33 People
34 Murray Irrigation Limited Annual Report 2015 Training and Long service Acknowledgements development During the year, there were a number of Murray Irrigation’s strategic review employees achieving service milestones includes looking at the organisational • First Aid 15 attendees structure of the company and rebalancing • WHS 14 attendees 40 years the workforce and management roles. Steve O’Brien • White Card construction 16 attendees As such three executive managers, Jennifer McLeod, Nick Ritchie and Oliver • Site safety inductions 18 attendees 35 years Leo Jolley (passed away 16 August 2015) Kietzmann left the company at the end of and 11 contractors August 2015. Former Company Secretary • Manual handling 12 employees 30 years Matthew Watts left the Company in May • Gender equality 81 employees Mick Malone 2015. The company thanks them all for the Malcolm Sneddon valuable contribution they have made to • Discrimination and harassment the organisation. awareness 74 employees 20 years • Career development support for four Jennifer McLeod employees undertaking tertiary studies Scott Barlow Bernie Thomson 15 years Michael Pisasale 10 years Mark Fisher Mark Riddell Jason Tasker Michael Turley Retirements Adrian Fisher 41 years Peter Cooper 41 years Lee Pattinson 34 years Matthew Watts 12 years
Installation of support frame for a retrofit FlumeGate™. Murray Irrigation Limited Annual Report 2015 35 People
36 Murray Irrigation Limited Annual Report 2015 Diversity in the Gender diversity workforce Board Senior Other Total Murray Irrigation recognises the benefits management employees of having a diverse and skilled workforce. The Company promotes a positive Female 1 1 24 26 (16%) workplace culture based on inclusive Male 7 10 119 136 (84%) practices and behaviours. The following table sets out a breakdown Total 8 11 143 162 (100%) of employees on the Board, in senior management positions and across the Age diversity company based on gender and age. Board Senior Other Total management employees
Under 30 years 0 0 32 32 (19%) 31 – 50 years 3 5 60 68 (42%) Over 50 years 5 6 51 62 (39%)
8 11 143 162 (100%)
Staff numbers at 30 June 2015
Function Permanent Fixed-term Total
Board of Directors 0 8 8 Company services 72 36 108 Company sub-total 72 44 116
Ancillary – MILCast 1 16 17 Ancillary – On-Farm Irrigation 2 4 6 Efficiency Program PIIOP 1 22 23 Ancillary sub-total 4 42 46
Total 76 86 162
Accounts Receivable Officer Emma Fisher discusses accounts with Accountant Vicki Holloway (seated). Murray Irrigation Limited Annual Report 2015 37 38 Murray Irrigation Limited Annual Report 2015 Safety 06
Strategic objective: To establish a safety culture that results in reduced lost time injuries and improved incident reporting.
Aims Annual highlight Benchmarking hazard Reduce lost time, medical treated injuries The introduction of monthly housekeeping assessment by using investigation, corrective actions audits and toolbox safety prestart Murray Irrigation is providing measurable and implementing an organisation-wide meetings has opened up a healthy line benchmarking tools to effectively capture safety culture. of communication for all safety related and record safety performance indicators matters between employees, supervisors, Learn from our past mistakes and incidents at departmental levels, using technology managers and contractors. by investigation corrective outcomes that based on best practice and industry will not only reduce the incident rates but standards. also drive safety culture changes through Safe Work Practices (SWP) have been organisation-wide awareness. A new culture introduced with intent to update previous Provide measurable benchmarking tools Murray Irrigation is actioning change in safe work management systems and to effectively capture, record and lead the culture of the organisation by learning ensure the company is compliant with safety KPIs at departmental levels, using from past incidents and using investigation the definition of high risk construction technology based on best practice and and corrective outcomes that will not work as defined in the WHS Regulation. industry standards. only reduce the incident rates but also Hazard assessments are undertaken drive safety culture changes through Ensure the safety training being provided before beginning a new task. Where a organisation-wide awareness. to employees, contractors and visitors is residual risk rating of medium or higher current, relevant, and comprehensible Murray Irrigation is working to update is identified, a Job Step Hazard Analysis and adds positive value to our evolving and improve the safety training provided (JSHA) risk assessment is required. safety culture. to employees, contractors and visitors The JSHA lists each job step (task) in to ensure it is current, relevant, and sequence of events to assess foreseeable comprehensible and adds positive value hazards and identify safety controls to to our evolving safety culture. mitigate the risk or reduce to a low level. Safety Panels have been formed across The process is completed using workplace the business to discuss safety issues, consultation and agreement. concerns and identify actions to improve If the task is identified as reoccurring, safety and work towards achieving our the JSHA will go on to serve as a basis strategic objectives. for developing the new Safe Work Practice (SWP).
Year Lost time injuries Lost time injury days
2014/15 3 38 2013/14 7 37 2012/13 13 145 Work Health and Safety Advisor for the PIIOP project, John Bookluck and Murray Irrigation WHSE and Compliance Officer, Lee Nielsen. Murray Irrigation Limited Annual Report 2015 39 40 Murray Irrigation Limited Annual Report 2015 Financial performance 07
Strategic objective: We will deliver cost effective services that maintain the company’s viability.
Key performance indicator Deliverables 2014/15 performance 2013/14 performance EBIT excl. PIIOP Break-even ($9,467) ($2,883) Operating result Break-even $18,1571 $25.205m1 Variable costs 30% of costs variable 40% 42% Working capital (current assets/ Positive (ratio exceeds 1) 1.372 3.12 current liabilities) Corporate debt $0 $0 $0 1. Including government funding revenues 2. Excluding PIIOP cash
Murray Irrigation has Financial management Long-term modelling embarked on a total Murray Irrigation has operated effectively To enable effective management of the company cost review over the last 20 years in an industry that reserve fund and the company as a whole, so that the impact on is built on bust and boom cycles of water Murray Irrigation has developed a financial fees and prices into the availability. One way Murray Irrigation model that can simulate a variety of future has managed to do so was through the situations affecting the company’s long- future is controlled, whilst establishment of a reserve fund. term sustainability and financial wellbeing. ensuring that the company’s This fund collects finances for the Murray Irrigation is going through a infrastructure is sufficiently maintenance and renewal of key process of change. As part of this change maintained to provide better infrastructure, while channel maintenance a whole of company financial model has is funded through annual operating been developed to provide the Board with than acceptable levels of expenditure. The reserve fund can also feedback on changes occurring in the service to its customers. be used to ensure that the company can business at present and in the future. operate in the extreme years. Reserves The modelling specifically takes into can be drawn upon in the dry years of low account the effects of the investment in water delivery and rebuilt in the good years modernisation through the implementation of high water demand. The millennium of PIIOP. drought is a prime example. Sub-models for the management of the The objective of the fund is to ensure company’s assets and infrastructure are ongoing resilience for the company as we also going to be developed and will ensure experience increasing variability in water that all assets are maintained to a standard demand into the future. As a company we that provides our customers with the levels need to ensure we continue to monitor the of service that they require. management of the fund to achieve the objectives at both ends of the extreme. Information gathered from the modelling exercise, along with feedback from Profitability for 2014/15 was disappointing customers and stakeholders, will be following an EBIT loss excluding PIIOP used to assist in making sound financial of $9.467m. Whilst this was in line with decisions when setting company objectives budget expectations, it is far from the into the future. It will be used to simulate breakeven position at which we should be a variety of anticipated future situations operating as a commercial business. The affecting the company’s long-term principal areas of concern were that costs sustainability and financial wellbeing. were not recovered and that our pricing increases were moderate in the current economic climate.
The Mulwala Canal stretches 156km from Lake Mulwala to Deniliquin. Murray Irrigation Limited Annual Report 2015 41 Financial performance
Transparent reporting Figure 01 Key income items Figure 02 Key expenditure items 3% In 2014/15, Murray Irrigation is presenting 4% 7% a table at note 29 within the financial 6% report that identifies segmented profit 11% 24% and loss based on business units: PIIOP, 7% MILCast, Murray Irrigation and Riverbank 32% Holdings Pty Ltd.
Figure 01 Key income items Breakdown of Murray Irrigation’s total 19% 18% revenue for 2014/15 of $62.1m, including PIIOP funding. This figure demonstrates 22% the significance of revenue from customers; it also shows significant interest earned from company reserves. 30% 19% Figure 02 Key expenditure items Breakdown of Murray Irrigation’s total 32% / $19.8m Water charges 24% / $12.6m Salaries, wages & related expenses for 2014/15 of $52m. This figure 30% / $18.8m Government funding 22% / $11.5m Government charges shows the split between each of the key 19% / $11.7m Government charges recovery 19% / $9.7m Depreciation expense areas being relatively even. 7% / $4.2m MILCast revenue (ext) 18% / $9.2m Materials & contract payments 6% / $3.5m AMRR interest 11% / $5.5m Other expenses 4% / $2.2m Investment income 7% / $3.5m Legal 3% / $1.9m Miscellaneous income
The Edward River Escape releases water from the Mulwala Canal into the 42 Murray Irrigation Limited Annual Report 2015 Edward River near Deniliquin. Figure 03 Contribution to operating Figure 03 Contribution to operating result by division result by division Breakdown of Murray Irrigation’s total 25000 $’000s operating result for each of the business MIL -4162 MILCast 26 units – Murray Irrigation, MILCast, RHPL 20000 PIIOP 21899 and PIIOP. This shows the considerable RHPL 394 loss in Murray Irrigations primary activity – Total 18157 delivery of water – compared to income 15000 from Government for PIIOP and a small positive MILCast result. 10000
5000
$’000s 0
-5000
Gulpa Creek following environmental flows delivered through Murray Irrigation infrastructure. Murray Irrigation Limited Annual Report 2015 43 44 Murray Irrigation Limited Annual Report 2015 Governance 08
Murray Irrigation’s Role and responsibilities To assist the Board in the execution of its duties, it enlists, through delegated approach to corporate of the Board and powers, the assistance of Management governance Management and various Committees of the Board. The Board determines the responsibilities Murray Irrigation’s Board of Directors The authority of the Board derives from and functions of the Board as well as and management strongly support the the Corporations Act 2001, the Company’s those of Directors, the Chairman and principles of good corporate governance. Constitution and the State legislation those delegated to the CEO and Board This is particularly important given the governing the licences issued to Murray Committees. highly regulated industry in which Murray Irrigation to conduct its operations and Powers delegated by the Board to Irrigation and its businesses operate, the related activities. Management include the authority to Constitutional requirement for a majority The role of the Board is to govern and manage the day to day operation of the of shareholder Directors who are also oversee the management of the Company’s business including to undertake both customers, the relatively high barriers to business on behalf of and for the benefit financial and non-financial transactions entry for shareholders, and for the long of shareholders. and incur expenditure on behalf of the term sustainability of our businesses. The principal responsibilities of the Board Company up to specified thresholds. The Board seeks to operate as a are to: These authorities are set down in Murray professional, efficient and effective Irrigation’s Delegation of Authority body whose practices accord with, and a) Review, critique, enhance (where instrument, which has been agreed by the reflect, accepted principles and standards appropriate, in collaboration with Board with Management. Management) and approve the of corporate governance. The Board Powers that remain the preserve of the ensures that Murray Irrigation’s corporate strategies, budgets and business plans prepared by Management Board as ‘key decisions’ (defined in the governance policies and practices are Company’s Constitution) include: reviewed regularly and will continue to be b) Assure itself of the effectiveness of the developed and refined to meet the needs Company’s governance models, systems a) A determination, increase or decrease of Murray Irrigation Limited, taking account and practices including, amongst other of Annual Allocation of best practice. things: b) A determination of charges Murray Irrigation’s commitment to good i. The quality, performance and c) The investment of reserves. corporate governance is set out in its remuneration of the executive team Corporate Governance Policy which ii. The appropriateness of organisational is published on our website and in the arrangements and structures Director’s Handbook. In the setting of its corporate governance policies and iii. The adequacy of internal controls, practices, the Board and Management policies, procedures and processes have taken guidance from: iv. Review, ratify and monitor systems of a) The Australian Securities Exchange risk management Corporate Governance Principles and v. Oversee performance against targets Recommendations (2007, with 2010 and objectives amendments) vi. Oversee the reporting to shareholders b) Australian Standard AS 8000 Good and stakeholders on the strategic Governance Principles direction, governance and c) Applicable standards advocated by performance of Murray Irrigation the Australian Institute of Company c) Appoint and oversee the performance Directors (AICD) and the Governance of the Chief Executive Officer (CEO) Institute of Australia (GIA). d) Oversee the performance of the executives reporting to the CEO.
Lasered flood irrigated rice. Murray Irrigation Limited Annual Report 2015 45 Governance
Composition, skills The Board supports the continuing Directors’ retirement education of all Directors and staff to and performance of enable them to conduct their duties and re-election the Board in an efficient and knowledgeable manner. Directors are encouraged to Directors are required to retire at the fourth AGM following their election or most recent The composition of the Board is set, within obtain accreditation or membership with re-election. Any Director appointed to fill the parameters approved by shareholders the AICD, including completion of the a casual vacancy since the previous AGM in the Company’s Constitution, to provide ‘Company Directors Course’ or equivalent. must submit themselves to shareholders an appropriate mix of skills and expertise During the year, Tim McKindlay completed for election at the next AGM. in order for the Board to discharge its the AICD’s Company Directors course. duties. Currently six Directors are member The Board has committed to undertake an Board support for a Director’s re-election is appointed Directors and two are appointed independent evaluation of its performance not automatic and is subject to satisfactory by the Board. and that of individual Directors at least Director performance. The Board maintains a set of ‘candidate once every two years, with the last review criteria’ for prospective Directors that completed in June 2015. The Board addresses all legal and Constitution collectively discusses the findings from requirements, as well as desirable each evaluation and puts in place an attributes and skills sought by the Board. action plan to implement appropriate This criteria is made available to all recommendations arising from such reviews. potential director candidates prior to each Details of the Directors, their qualifications election or appointment. and experience are published on pages The Chairman of the Board is appointed 50 and 51 of this report and on the by the Board as a whole in accordance Company’s website. with procedures developed and adopted by the Board.
Murray Irrigation Board members, James Sides, Chris Badger, Michael Hughes, Tim McKindlay and Roger Reynoldson (standing). Mark Robertson (Deputy), Bruce Simpson (Chair) and 46 Murray Irrigation Limited Annual Report 2015 Robyn Clubb. Director independence A water trading protocol exists which Code of Conduct prevents not only Directors but also and conflict of interest any employee, from acting on or using The Company’s Code of Conduct sets out information prior to it being publicly the standard of behaviour expected of As six of the eight Directors are both available. Directors must notify the the Company’s Directors, employees and members and customers of the Company, Company Secretary of any permanent or contractors. The Code requires them, as a by virtue of the requirements set down in annual transfers carried out. The Board minimum, to: the Constitution, only two Directors, being sets an embargo period preventing trade • Act in the best interests of the Company Robyn Clubb and Chris Badger who were from the time of a Board decision affecting appointed by the Board, are regarded as and create value for the Company’s allocations or other market sensitive shareholders independent Directors. decisions until public announcement, Bearing in mind the composition of the usually by a ‘Chairman’s Report’. • Act honestly and with integrity and Board and potential for related party fairness in all dealings with each other Murray Irrigation Member Directors Michael and third parties transactions, the Company has put in Hughes, Tim McKindlay, Roger Reynoldson, place appropriate procedures and Mark Robertson, James Sides and Bruce • Avoid or manage conflicts of interest. protocols to assist Directors to declare, Simpson are customers of the Company, The Company has in place a process for manage and in some cases prevent any enjoying the same terms and conditions potential conflicts of interest and enable Directors, employees and third parties to as those applying to all Murray Irrigation report potential breaches of the Code of the Company and Directors to manage any customers in receipt of similar services. related party transactions in a transparent Conduct. and appropriate manner. This includes It is a Board Governance Policy consistent appropriate blackout periods where with the requirements of the Corporations Directors are not permitted to trade in Act 2001 that Directors declare their Independent Murray Irrigation marketable products. interest as customers when information professional advice which may affect water pricing or volumes Directors are also required to adhere made available, is discussed and decided The Board supports individual Directors, strictly to the constraints on their upon by the Board. The Directors will after following documented protocols, participation and voting in relation to either absent themselves during such obtaining independent professional matters in which they may have an interest, discussion, and subsequent voting on advice at the expense of the Company Corporations Act in accordance with the resolutions, and or warrant that they to assist them to discharge their duties and Company policies. will not buy or sell water entitlements or in a responsible manner. Protocols forming part of the organisation’s other tradeable products prior to such code of conduct are enforced in relation information becoming publicly available. to receipt of gifts and corporate hospitality The Board Governance Policy provides to ensure that no inappropriate or unethical for an embargo period within which the behaviour occurs or could be inferred directors may not trade as customers. It is or perceived. also the Board’s policy to disclose water and delivery entitlements held by Directors in the Annual Report.
Offtakes divert water from the main Canals into lateral channels. Murray Irrigation Limited Annual Report 2015 47 Governance
Committees of the Service Infrastructure Committee Internal control (SI Committee) Board Membership: Chris Badger (Chair), Bruce framework To assist it further in attending to its duties Simpson (ex-officio), James Sides, Roger The Board is committed to ensuring that – and as a means of providing Directors Reynoldson and Mark Robertson. appropriate frameworks are in place and with first-hand insight into critical aspects The Service and Infrastructure Committee regularly reviewed in relation to: of the Company’s business, the Board has reviews and advises on matters relating a) Internal controls established four committees: to water availability, usage and efficiency; customers and key stakeholders; and b) Sound annual budgeting and financial a) A Finance, Audit and Risk Management management processes including capital Committee infrastructure maintenance, refurbishment and construction. Activities include budgeting and expenditure, procurement, b) A Service Infrastructure Committee reviewing asset management controls and investment of reserves and taxation c) A Remuneration Committee policies, assessment of funding priorities, management d) PIIOP Steering Committee. costs and performance, asset management c) Adequate and appropriate monthly strategies, review of government reporting of both financial and Each committee includes one independent, infrastructure funding and operational operational performance is provided by non-executive Director and has its own agreements, policies relating to monitoring Management to the Board charter, which sets out its composition, of environmental compliance, customer d) Safety, risk and compliance management role, responsibilities and key processes. interaction and communication. The Board has not delegated executive and business continuity planning authority to any of its committees. Remuneration Committee e) Preparation of annual and half-yearly financial statements The role of the committees is to report to Membership: Michael Hughes (Chair), the Board and provide appropriate advice Bruce Simpson (ex-officio), Mark f) Assurance reporting on the above topics and recommendations on matters relevant Robertson, Robyn Clubb and Chris Badger. by both Management and the company to the Committee Charters in order to auditor. The Remuneration Committee facilitate effective decision making by the considers conditions of employment and Board. Committees of the Board serve remuneration of all staff, in particular senior an essential purpose in supplementing management and Directors, including Management of risk the resources of the Board where policy annual remuneration and bonuses or other development and implementation, the Murray Irrigation has adopted concepts and incentives. monitoring and control of the application principles identified in the AS/NZS ISO of policy, and the carriage of special briefs 31000:2009 – Risk Management standard Private Irrigation Infrastructure in its Risk Management Framework. are concerned. Operators Program (PIIOP) Steering Committee The Framework of policy, processes and Finance, Audit and Risk Management guidelines was established to ensure Committee (FARM Committee) Membership: Chris Badger (Chair), Bruce that the Company’s Risk and Compliance Simpson (ex-officio), Tim McKindlay and Membership: Robyn Clubb (Chair), Bruce functions, systems, attributes and Mark Robertson. Simpson (ex-officio), Michael Hughes, responsibilities are monitored and updated Roger Reynoldson and Tim McKindlay The Committee’s role is to oversee and appropriately, including in relation to major report on PIIOP project progress to the projects. These risk management systems The FARM Committee is responsible for Board, acting in an advisory capacity identify the: oversight of the Company’s accounting in relation to the project and make and statutory reporting practices, risk a) Nature and likelihood of occurrence recommendations to the Board about management, and related issues including for specific material risks policy and strategic matters relating to the audits, financial information and accounting project. In addition to the Directors listed b) Key controls that are in place to mitigate controls, management of investments, above, the CEO, Executive Managers, and and manage the risk the Company’s ancillary activities, share representatives from the project team register, agreements with government c) Sources and levels of assurance also attend meetings of the Committee; and identifying risks to the Company provided on the effective operation of however the powers of the committee are and the risk management framework. key controls exercised by vote of the Directors present. A representative from the auditor may d) Responsibilities for managing these risks attend meetings of this committee from e) Applicability of a Business Continuity time to time by invitation. Plan.
48 Murray Irrigation Limited Annual Report 2015 Policies of the Company Board and senior Shareholder The Board of Directors will ensure that executive remuneration communications Company policies and procedures are Remuneration levels and terms of Murray Irrigation maintains a variety reviewed and updated on a regular basis employment for Directors and Senior of communication methods with its to ensure currency and appropriateness. Executives are formalised in individual shareholders to ensure appropriate and Service Agreements. timely information is provided including via: Strategic planning and The Remuneration Committee reviews the a) Website Company’s remuneration strategy, policy b) Annual Report; corporate culture and framework on a regular basis. c) Annual General Meeting Murray Irrigation’s Board maintains and monitors performance against a five-year d) Regular customer information and strategic plan reviewed and approved Sustainability consultation meetings by the Board each year. The Strategic Murray Irrigation is committed to the long e) Weekly bulletins (Talking Water) Plan defines the underlying values and term sustainability of its operations and f) Mail-outs objectives of the Company over a five-year aims to optimise the social, environmental, planning window and guides Company g) Email and other means where workplace and economic impact of appropriate activities and policy during that time. its operations for the benefit of all At the time of the writing of this report, stakeholders. Murray Irrigation’s website provides stakeholders with a range of information the Company was well advanced in The Company will develop and maintain the development of the 2015 Strategic about Murray Irrigation, including its appropriate policies and protocols to operations, history, strategies, values, Plan details of which will be released to achieve these aims, having regard to shareholders at the 2015 AGM. market information about tradeable compliance with the Company’s various products, and shareholder reports. In August 2015, the Company initiated a licences and the regulated environment in “Fresh Start” program designed to broaden which it operates. Dedicated shareholder relations personnel and strengthen the already positive are available to assist in responding culture at Murray Irrigation. The program, promptly to all shareholder enquiries. Such which involves members of the Board, Diversity personnel include Water Trade Officers management and employees, is focused and the Company Secretary. on improving and building relationships Refer to page 37 of this Annual Report for Murray Irrigation encourages its with internal and external stakeholders information on diversity at Murray Irrigation. shareholders to participate fully at its and has been extremely well received by Murray Irrigation provides an annual report Annual General Meeting and other relevant all participants. to the Workplace Gender Equality Agency. meetings held by the Company throughout each year. All ‘external’ policies applying to customers or third parties outside the Company are approved by the Board and changes communicated to relevant stakeholders as soon as possible.
Murray Irrigation Limited Annual Report 2015 49 Directors
The following people were directors of the Company during or since the end of the financial year: Bruce Simpson Michael Hughes GAICD Chairman Mr Hughes is from the Denimein District Dipp AppSc (Ag) (Hons), FAICD and has been a shareholder Director since Mr Simpson is from Denimein Irrigation April 2009. Mr Hughes is the Company District and has been a shareholder nominated representative to and Chairman Director since August 2012. He was of the NSW State Water Corporation elected Chairman on 21 November 2013. Murray Lower Darling Customer Service He has been a Director of Peppin Planners Committee and is also Chairman of since 2001 and prior to this was a Director Irrigated Cropping Council. Mr Hughes of FS Falkiner & Sons Pty. Ltd. He was was previously a member of the Denimein Chair of the Murray Group of Concerned Land and Water Management Plan Communities. Mr Simpson is a Fellow Working Group, is a former Chairman of of the Australian Institute of Company the Denimein Landholders’ Association and Directors and the Australian Rural delegate to Southern Riverina Irrigators. Leadership Foundation. Mr Hughes is an owner/operator of a mixed farming business in the Denimein area.
Mark Robertson Roger Reynoldson AssDipAppSc (FarmMgt), GAICD Deputy Chairman Mr Reynoldson is a shareholder Director GAICD who was appointed in November 2011. Mr Robertson is a shareholder Director who Mr Reynoldson is involved in the East was appointed to the Board in April 2009. Berriquin Irrigators’ Council and Southern He has been a Director of Ricegrowers’ Riverina Irrigators’ and is Murray Irrigation’s Limited (trading as SunRice) since 1996, delegate to the Hume to Yarrawonga He holds directorships in Trukai Industries Advisory Group, which is an advisory in Papua New Guinea and Riviana Foods group to the Murray-Darling Basin Australia. Mr Robertson is a graduate of the Authority. Mr Reynoldson is an owner/ Australian Rural Leadership Program and operator of a mixed farm business in the is an owner/operator of a mixed farming East Berriquin area. business in the East Berriquin area.
50 Murray Irrigation Limited Annual Report 2015 Former Director
Robyn Clubb Tim McKindlay Anthony (Tony) Read BEc, CA, F Fin, MAICD B. Ag. Ec. (Hons) GAICD B. Ag. Ec. (Hons) GAICD Ms Clubb is a non-shareholder Director Mr McKindlay is a shareholder Director who Mr Read was a non-shareholder Director appointed to the Board in October 2011. was appointed to the Board in November appointed to the Board in December She has extensive experience as a non- 2009. He is Murray Irrigation’s delegate to 2005 who resigned as a Director on executive company director and has held the National Irrigators’ Council, appointed 19 November 2014. Mr Read retired senior executive positions in the financial to its Board in September 2012 and after a 50 year career with Kellogg Brown services industry with Citibank and AMP elected Deputy Chair in November 2013. & Root Pty Ltd, a business specialising Limited and internationally in New Zealand, He is a Murray Irrigation representative in design and project management of China and the United Kingdom. Ms Clubb to NSW Irrigators’ Council. Mr McKindlay irrigation, water and waste projects. is currently a director of Elders Limited, was formerly Chair of the Deniboota Mr Read was a Director of several Chairman and a non-grower Member of Landholders’ Association, delegate to companies including Lindsay Point the NSW Rice Marketing Board, Treasurer Southern Riverina Irrigators’, and member Almonds Pty Ltd, Wakool Partnership, of the Royal Agricultural Society of NSW, of the NSW State Water Corporation Laragon Pty Ltd and Nut Producers Trustee of the Farrer Memorial Trust, and Murray Lower Darling Customer Service Australia Pty Ltd. Consultation Reference member of the NSW Primary Industries Committee and the Barmah-Millewa Group. Mr McKindlay is an owner/operator Ministerial Advisory Council. Ms Clubb is Consultation Reference Group. Mr of a mixed farming business in the an owner/operator of a beef cattle herd at McKindlay is an owner/operator of a mixed Deniboota area. Araluen, in the NSW Southern Tablelands. farming business in the Deniboota area.
Chris Badger James Sides BEng, CPEng, ADP LBS, GAICD Mr Sides is a shareholder Director who Mr Badger is a non-shareholder Director was appointed to the Board in November who was appointed to the Board in July 2013. Mr Sides is a former Chair of the 2014 and ratified at the AGM in November West Berriquin Landholders’ Association. 2014. He has experience in Australia and He is a licenced Stock and Station, Real internationally in the utilities and energy Estate Agent and Auctioneer, and has sectors. He was formerly Deputy Chair of been operating for over 20 years. Mr Sides Trafalgar and District Bendigo Community operates his own Rural Property Estate Bank and is currently a Director of Agency and Water Brokering business South Gippsland Water, Trustee Director, in association with the national brand associate with consultancy firm Maddison Landmark and has based his business in Cross (2014) and a Director of his own Deniliquin and Hay since 1995. He is an consultancy business. Mr Badger has a owner/operator of a mixed livestock and Bachelor of Engineering and post-graduate farming business in the Deniliquin area. business training from AICD, Stanford University (USA), Warwick University (UK), and London Business School (UK). Murray Irrigation Limited Annual Report 2015 51 Company profile and management team
Murray Irrigation is Australia’s largest private irrigation company, formed in 1995 as an unlisted public company.
About us Company structure Michael Renehan Murray Irrigation is based in southern Murray Irrigation is currently undergoing MBA, MEng (Chem), MAICD NSW, and its shareholders are the irrigator- a strategic review to cement our goals and customers who own the landholdings the objectives for the next five years. This will Chief Executive Officer company supplies water to. This represents include a comprehensive review of the Appointed in June 2015, Michael Renehan over 1,200 family farm businesses who structure of the company to ensure it is fit brings more than 15 years’ experience own approximately 2,300 landholdings for purpose to deliver what our customers in CEO and general management within our area of operations, covering need, safely and efficiently. roles with a background in engineering 748,000 hectares. and manufacturing. He holds a Master of Business Administration from Deakin Board University, a Masters in Chemical Vision, mission Engineering from RMIT and is a Murray Irrigation presently has eight member of the Australian Institute and values Directors – six shareholder Directors and of Company Directors. two non-shareholder Directors. The Board Our vision is to be a leader in the delivery of Directors develops and oversees the of irrigation water and water related CEO implementation of the company’s strategic products and services. direction. The CEO is responsible for providing the Our mission is to meet the needs of organisation with strategic leadership and Shareholder Directors are elected by customers by delivering high quality organising the structure of the company shareholders for a four-year term. Non- irrigation water and water related products to deliver services that achieve our vision, shareholder Directors are nominated by the and services through developing an mission and values. Shareholder Directors according to their organisational culture of efficiency, specialist expertise, and their appointment innovation and customer service. is endorsed by shareholders at the Annual Our core values focus on customers, General Meeting. innovation, integrity, performance, safety, teamwork, community and environment. Key staff Murray Irrigation key staff members are listed over the following pages.
52 Murray Irrigation Limited Annual Report 2015 Ross Mallett Warren Jose Scott Barlow JD BBus GDLP FCIS FGIA FCPA BEng (Geol) MEng Sc (Geotech) MIE Aust Assoc.Dip in Applied Science.
Company Secretary & Risk Officer Principle Project Manager, PIIOP Water Distribution Manager Ross joined Murray Irrigation in July 2015. Warren started with Murray Irrigation in Scott commenced at Murray Irrigation in He has acted as a company secretary, April 2015. He brings diverse industry April 1996. He holds significant experience legal counsel and governance advisor for experience in the delivery of infrastructure within the bulk irrigation industry. With a a number of large listed companies for over projects and experience working within background in both irrigated and mixed 30 years including Elders Ltd, Icon Energy, an organisation on project delivery. dryland farming, and experience in the BHP Billiton, WMC and Rio Tinto. Ross is Warren has tertiary and post graduate forestry and agricultural sectors prior to a Fellow and former National President of qualifications in engineering. Most recently, commencing with Murray Irrigation, he has the Governance Institute of Australia and he held the role of General Manager played a large role in the water efficiency a Fellow of CPA Australia. Infrastructure Delivery at Central Highlands and operational development of the Murray Water (CHW) in Ballarat. Irrigation gravity network. Scott has an Governance Associate Diploma in Applied Science. The Company Secretary provides PIIOP governance, legal, compliance, risk The Private Irrigation Infrastructure Water Distribution and Customer management and assurance, company Operators Program (PIIOP) is funded Service secretarial and administration services under the Sustainable Rural Water Use The Water Distribution division is to the Board and management of and Infrastructure component of the responsible for the delivery of water to the Company. Commonwealth Government’s Water for landholdings for irrigation and stock and the Future program. With the support of domestic supply as well as the townships a PIIOP Steering Committee, the PIIOP of Berrigan, Finley, Wakool and Bunnaloo. team is responsible for the four-year rollout It is also responsible for the operation of of this once-in-a-generation opportunity company drainage infrastructure and some to invest in company infrastructure. The basic maintenance. Water Distribution PIIOP team includes project management, handles customer services including engineering, design, construction, request scheduling, account administration, communication, customer consultation, and temporary water transfer and trade. commissioning and safety. The division also delivers water for WaterNSW to assist with the operation of the River Murray systems, including around the Barmah Choke and to the regulated Billabong Creek.
Murray Irrigation Limited Annual Report 2015 53 Company profile and management team
Trevor Heise Cameron Pepper Michael Piko B. Eng (Hon) B.Bus (Acc). CPA Australia Dip Mgt
Infrastructure Manager Financial Controller Information and Communications Trevor joined the company in March 2015. Prior to starting with Murray Irrigation in Technology (ICT) Manager He has over 20 years’ experience in the September 2014, Cameron held Senior Michael started with Murray Irrigation construction industry in NSW, managing Accounting roles with National Foods in June 2015. He has over 18 years’ a number of large projects. He has worked (now Lion Pty Ltd) and more recently experience in the IT industry with strong in both public and private sectors. Trevor with Carlton United Breweries (CUB Pty skills in all areas including technical, project spent the last seven years as Business Ltd) where he held roles including Team management and team management. Manager and Project Manager of TCM Leader Financial Accounting, Systems Michael was previously Head of Enterprise Civil Pty Ltd in Newcastle, NSW. He has and Intercompany Accountant, as well as Infrastructure and Operations at La Trobe a Bachelor of Engineering (Civil) Honours. Senior Commercial Analyst. Cameron has University, leading a team of 50+ that a Bachelor of Business (Accounting) from serviced the University’s six campuses Infrastructure Services Swinburne University and is a member of with 30,000 users. Following that, The Infrastructure Services division CPA Australia. Michael had been consulting through a is responsible for the whole-of-life range of contracts in Canberra, including management of the company’s irrigation Finance the Department of Health and General and drainage assets including more than The Finance division is responsible for Practice Education and Training. 20,000 structures with a replacement overseeing the company’s finances and value of over $800 million. The division investments, budgeting and forecasting, ICT is responsible for all maintenance works managing company property and contract The ICT division is responsible for the on the irrigation and storm water escape management. The functions within the company’s information technology, system, and minor construction work. division include accounting, accounts geographic information systems and Additional responsibilities include the receivable, accounts payable, asset records and archives. The IT team manage operation and maintenance of the Wakool management, payroll, procurement and the company’s servers, internet services, Tullakool Sub-Surface Drainage Scheme, managing suppliers. This division is also website and strategic partnerships with the company’s groundwater pumping responsible for improving financial systems internet and telecommunications providers. scheme and the fleet management and processes and the overseeing of The GIS staff are responsible for all and stores. PIIOP financial reporting including regular mapping requests, coordinating satellite analysis of key performance metrics. imagery and providing service to staff and customers. Records and archives are responsible for ensuring the safe storage and accessibility of corporate records in accordance with Australian business standards.
54 Murray Irrigation Limited Annual Report 2015 Graham Taylor Perin Davey Peter De Vreede MHRM, MBA, GradDipLGM Grad Cert Public Relations Dip Bus Mgt, Dip Proj Mgt
Human Resources Manager Water Policy, Communications and Business Manager, MILCast Graham started with Murray Irrigation Compliance Manager Peter joined MILCast in December 2014 in March 2012. He has a background in Perin joined Murray Irrigation in October from Energy Resources Australia in the dealing with change, strategic planning 2010 as the Water Policy Officer. She has Northern Territory. Prior to that, he held and workplace culture and people. He a background in government relations and production manager roles with Humes reinforces that success comes through issues management. A former country Concrete Pipes and Fulton Hogan Central looking after people and helping them journalist and political media advisor, Precast, as well as Plant Manager at Hymix develop. Graham has extensive experience Perin also worked in Canberra with in Bendigo. Peter possesses a Diploma in local government, having worked in many an international government relations in Business Management and a Diploma states across Australia in the areas of consultancy firm. She worked on a wide of Project Management. He also has a engineering, town planning, construction, range of issues including single desk Certificate in Concrete Practice and is human resources and management. wheat marketing, on-line auctions, food currently undertaking an MBA with the and drug approvals and copyright. Perin has Australian Institute of Business. Human Resources a Graduate Certificate in Public Relations The Human Resources division supports from the University of Southern Queensland. MILCast the effective and efficient management MILCast is a business unit of Murray of our people within the organisation. Water Policy, Communications and Irrigation which designs, manufactures The division is responsible for employee Compliance and supplies precast concrete products engagement and leadership development; The Communications division is responsible for agricultural and other commercial uses. staff training programs; performance for stakeholder engagement and Products include headwalls, culvert ends, reviews; dealing with change; human communications. The Compliance division culverts, bay outlets (aluminium door or resources administration; Workplace is responsible for ensuring Murray Irrigation rubber flap), rice stops, bankless channels, Health and Safety, and any subsequent meets the range of regulatory requirements rice flumes, pipe ends, pits (for recycle and rehabilitation programs. The division also imposed on the company by government pumps), regulators, flumes, channel checks, monitors position descriptions and salary regulation that is specific to the irrigation and grain/fertilizer bunker wall slabs. bands to ensure we remain competitive sector. Water Policy oversees Murray in the modern jobs market to attract the Irrigation involvement in state and national best employees. water policy development and contributes to the development of company policy.
Murray Irrigation Limited Annual Report 2015 55 Directors’ report and financial statements 2014/15
56 Murray Irrigation Limited Annual Report 2015 Contents
Directors’ report 58 Consolidated statement of profit or loss and other comprehensive income 62 Consolidated balance sheet 63 Consolidated statement of changes in equity 64 Consolidated cash flow statement 65 Notes to the financial statements 1. Summary of significant accounting policies 66 2. Revenue 73 3. Expenses 74 4. Income taxes 75 Current assets 5. Cash and cash equivalents 76 6. Trade and other receivables 76 7. Inventories 77 Non-current assets 8. Available for sale financial assets 77 9. Trade and other receivables 77 10. Property, plant and equipment 78 11. Deferred tax assets 79 12. Intangible assets 80 Current liabilities 13. Trade and other payables 80 14. Provisions 80 15. Other 80 Non-current liabilities 16. Interest bearing liabilities 81 17. Deferred tax liabilities 81 18. Provisions 81 Equity 19. Contributed equity 81 20. Reserves and retained profits 82 Other 21. Related parties 83 22. Remuneration of auditors 84 23. Commitments 85 24. Non-cash financing and investing activities 85 25. Land and Water Management Plans 85 26. Financial risk management 86 27. Subsidiary 86 28. Parent entity information 87 29. Segment information 88 30. Subsequent events 90 31. Contingent assets and contingent liabilities 90 Directors’ declaration 91 Auditor’s independence declaration 92 Independent audit report 83
Murray Irrigation Limited Annual Report 2015 57 Directors’ report for the year ended 30 June 2015
Your directors present Conduct and Conflict of Interest Details of the Company’s Code of Conduct and approach to conflict in interest are set out their report together in the Corporate Governance Statement of the Annual Report with the accounts of the consolidated entity Director’s interests The relevant interests of the directors in the share capital, water entitlements, and delivery for the financial year entitlements of the company, as at 30 June 2015, are as follows: 1 July 2014 to 30 June Shareholder Direct Indirect Water Delivery 2015 and the Auditor’s directors shareholding shareholding entitlements entitlements report thereon. M.L. Hughes 475 3,497 3,179 3,299 T.W. McKindlay 2,920 – 1,677 2,424 R.E. Reynoldson 1,772 2,439 3,778 3,578 Directors The following people were directors of the D.M. Robertson 3,487 4,285 5,344 6,371 company during or since the end of the B.P. Simpson – 1,713 25 485 financial year: J.A. Sides 975 – 310 108 B.P. Simpson C.D. Badger (appointed 4 July 2014) Where a director is an authorised representative of a corporate entity, the figures above R. Clubb include the holdings of that entity. M.L. Hughes Non-shareholder directors in office during the year, C. Badger, R. Clubb and A. Read, hold T.W. McKindlay no Murray Irrigation shares, water entitlements or delivery entitlements. A.L. Read (resigned 19 November 2014) Shareholder director D.M. Robertson also has an indirect interest in a quarrying agreement with the company. R.E. Reynoldson D.M. Robertson J.A. Sides For details of directors’ qualifications and experience refer to page 50 of the Annual Report.
58 Murray Irrigation Limited Annual Report 2015 Training and professional advice Company Secretaries Officers The Board of Directors have an established The Secretaries of the company at any Persons who are executive officers of the minimum standard that all directors time during and at the end of the reporting Company as at the date of signing this are required to complete the ‘Company period, together with their qualifications report are: Director’s Course’ provided by the and experience, are set out below: Australian Institute of Company Directors. M. Renehan Chief Executive M.K. Watts, Company Secretary Officer This training is organised for any director (departed 15 May 2015) elected or appointed to the Board if they B App Sci, Grad Dip ACG, AGIA, ACIS, S. Barlow Water Distribution do not already hold the qualification. Tim AAICD Manager McKindlay completed this training in P. Davey Supervisor Policy & 2014/15. Mr Watts joined the company in 2003, and was appointed as Administration Manager Communication Directors have the right in connection with in 2009, whilst performing the role of C. Pepper Financial Controller their duties and responsibilities as directors Assistant Company Secretary between to seek independent professional advice W. Jose Executive Manager April 2009 and November 2011, and PIIOP Program at the company’s expense. Prior written Company Secretary from November 2011 approval of the Chairman is required, which onwards. He holds a Bachelor of Applied T. Heise Infrastructure will not be unreasonably withheld. Science, a Graduate Diploma in Applied Manager Corporate Governance and is an Associate G. Taylor Human Resources member of the Governance Institute Manager of Australia, the Institute of Chartered R. Mallett Company Secretary Secretaries and Administrators, and and Risk Officer Affiliate member of the Australian Institute M. Piko Information of Company Directors. Previous experience Technology Manager includes 12 years in the information technology field. P. de Vreede MILCast Business Manager A. Couroupis, Assistant Company Secretary (departed 28 August 2014) BEc (Hons), Grad Dip CSP Mr Couroupis joined the company in 2008 as General Manager, performing the role of Company Secretary between December 2008 and November 2009. Previous experience includes General Manager of the NSW Murray Catchment Management Authority and General Manager and Company Secretary of Western Murray Irrigation. J M McLeod (departed 31 August 2015) B.Ag.Sc (Hons), MA Org.Comm. Ms McLeod joined the Company in 1995 performing numerous senior roles including most recently Executive Manager Customer and External Relations. Ms McLeod performed the role of Company Secretary from 15 May 2015 to 14 July 2015. Secretaries of the Company as at the date of signing of this report are R.E. Mallett and M Renehan. The qualifications and experience of Messrs Mallett and Renehan are set out on pages 52 and 53 of this Annual Report.
Murray Irrigation Limited Annual Report 2015 59 Directors’ report for the year ended 30 June 2015
Meetings of directors The following table sets out the number of meetings of the directors held during the financial year to 30 June 2015, including meetings of committees, and the number of meetings attended by directors.
Committees Finance, Audit Board Service and and Risk PIIOP Steering Remuneration Infrastructure Management Attended Held Attended Held Attended Held Attended Held Attended Held C.D. Badger 10 11 – – 2 2 15 16 1 2 R. Clubb 11 11 4 4 – – – 2 2 M.L. Hughes 11 11 4 4 – – – – 2 2 T.W. McKindlay 11 11 3 3 1 1 15 15 – – A.L. Read 5 5 – – 1 1 11 11 – – R.E. Reynoldson 11 11 4 4 3 3 – – – – D.M. Robertson 11 11 – – 3 3 6 7 2 2 J.A.Sides 10 11 1 1 3 3 – – – – B.P. Simpson 11 11 4 4 2 2 – – – –
Principal activity The principal activity of Murray Irrigation during the period consisted of the delivery of water to landholders within an area from the Murray River to the Billabong Creek extending 150 kilometres to the west and 100 kilometres to the east of Deniliquin.
Review of operations and results from those operations A total of 739 GL of water was supplied on-farm for the year 1 July 2014 to 30 June 2015, compared to 924GL in the prior financial year. Note 2015 2014 $’000 $’000 Revenue from irrigation undertaking 2 29,516 28,825 Other revenue 2 38,119 42,022 Employee benefit expenses (11,579) (11, 6 75) Materials and contracts expenses (14,855) (13,178) Depreciation and amortisation expenses 3(a) (9,460) (9,742) Impairment of water infrastructure assets 3(b) – 833 Bulk water supply expenses (11,216) (10,896) Finance costs (3) (2) Other expenses 3(c) (2,366) (982) Profit before income tax 18,157 25,205 Income tax benefit/ (expense) 4 (19) 2,094 Profit for the year 18,138 27,299 Mr Michael Renehan was appointed Chief Executive Officer on 22 June 2015 in place of the Interim CEO Mr Stephen Gumley. For further information on the review of operations and results from those operations refer to the Chairman’s and CEO’s Reports and Review of Operations set out on pages 4 to 9 of this Annual Report.
60 Murray Irrigation Limited Annual Report 2015 Revenue from contributed assets and Changes in the state of affairs Indemnification and insurance of taxation assessments In the opinion of the directors, there officers Under the Corporations Act, compliance were no significant changes in the state During the financial year, the company paid with accounting standards is mandatory. of affairs of the company not otherwise a premium indemnifying officers of the Accounting Standard AASB 1004 disclosed in this report and financial company. A condition of the contract is that requires that infrastructure works, when statements. the nature of the liability indemnified and constructed, to the extent to which their the premium payable not be disclosed. cost has been met from government Matters subsequent to the end of the funding, be treated as revenue of the financial period Proceedings on behalf of the company even though the receipt of the At 15 September 2015 the New South company funding is not revenue of the company. Wales Murray general security allocation No person has applied to the Court under Your directors are concerned that this was 4% with an unfavourable outlook for section 237 of the Corporations Act 2001 accounting treatment may be misleading water availability for the 2015/16 year. (Cth) for leave to bring proceedings on and are of the view that neither the The company is in a position to deliver only behalf of the company, or to intervene in receipt of any government funding for a moderate volume of water during the any proceedings to which the company reimbursement for infrastructure works nor coming season. is a party, for the purpose of taking the value of the works constructed should During August 2015, three Executive responsibility on behalf of the company for be recognised as revenue. Accordingly, Managers departed the company. These all or part of those proceedings. the directors feel obliged to express their individuals were Oliver Kietzmann, No proceedings have been brought or view that the receipt of both the Land and Executive Manager – Finance (departed 18 intervened in on behalf of the company Water Management Plans drainage works, August 2015), Jenny McLeod, Executive with leave of the court under Section 237 the Asset Renewal Program funding of Manager – External and Customer of the Corporations Act 2001. prior years, current funding in relation Relations (departed 28 August 2015) to the Private Irrigation Infrastructure and Nick Ritchie, Executive Manager – Rounding of amounts to the nearest Operators Program (PIIOP), or any future Operations (departed 28 August 2015). thousand dollars such funding should not be recognised as There has been no other item, transaction The company is of a kind referred to revenue by way of contributed assets of in Class Order 98/0100, issued by Murray Irrigation. or event of a material and unusual nature likely, in the opinion of the directors, to the Australian Securities & Investment The company has obtained advice over affect significantly the operations of the Commission, relating to the rounding of many years in respect to the application of company, the results of those operations amounts in the Directors’ report, which the Income Tax Law to previous Land and or the state of affairs of the company in have been rounded off in accordance with Water Management Plans and the Asset subsequent financial years. that Class order to the nearest thousand Renewal Program in order to form this dollars. view. The company will continue to pursue Likely developments and expected these matters to achieve an equitable results of operations Auditor’s independence declaration outcome for the company. The company’s results are influenced by The Auditor’s Independence Declaration is the level of its operating costs, the amounts set out following these financial statements Dividends required to be set aside in reserves, and and forms part of the Director’s report. The company is a not-for-profit income derived from the sale of water This report is made pursuant to a resolution organisation whose Constitution requires and other sources. The unpredictability of of the directors. that no operating surplus may be paid or the available water resource, government transferred by way of a distribution of profit requirements and river management mean to shareholders. it is not possible to accurately predict the results of operations. However, directors Environmental regulation will endeavour to protect the viability of the B Simpson Murray Irrigation is subject to NSW business in all circumstances. Chairman environmental legislation in relation to 17 September 2015 water and land use. The company holds an Environment Protection Licence issued by the NSW Environment Protection Authority. This licence requires discharges to waterways to be below specified levels of contaminants. There have been no breaches of the licence during the M Robertson reporting period. Deputy Chairman 17 September 2015
Murray Irrigation Limited Annual Report 2015 61 Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2015
Consolidated Notes 2015 2014 $’000 $’000
Revenue from irrigation undertaking 2 29,516 28,825 Other revenue 2 38,119 42,022 Employee benefit expenses (11,579) (11, 6 75) Materials and contracts expenses (14,855) (13,178) Depreciation and amortisation expenses 3(a) (9,460) (9,742) Impairment of water infrastructure assets 3(b) – 833 Bulk water supply expenses (11,215) (10,896) Finance costs (3) (2) Other expenses 3(c) (2,366) (982) Profit before income tax 18,157 25,205 Income tax benefit/ (expense) 4 (19) 2,094 Profit/(loss) for the year 18,138 27,299 Other comprehensive income/(loss) Items that may be reclassified subsequently to profit or loss: Available for sale financial assets – gains/(losses) net of tax 93 (341) Other comprehensive income/(loss) for the year 93 (341) Total comprehensive income for the year 18,231 26,958
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
62 Murray Irrigation Limited Annual Report 2015 Consolidated balance sheet as at 30 June 2015
Consolidated Notes 2015 2014 $’000 $’000
Assets
Current assets Cash and cash equivalents 5 66,415 63,697 Trade and other receivables 6 10,608 12,474 Inventories 7 19,766 16,251 Current tax assets – 2 Total current assets 96,789 92,424
Non-current assets Available for sale financial assets 8 85,254 91,604 Trade and other receivables 9 – – Property, plant and equipment 10 263,434 246,935 Deferred tax assets 11 3,824 4,932 Intangible assets 12 97,419 97,732 Total non-current assets 449,931 441,203 Total assets 546,720 533,627
Liabilities
Current liabilities Trade and other payables 13 9,752 6,240 Provisions 14 2,239 2,364 Other 15 48,493 55,562 Current tax liabilities 134 320 Total current liabilities 60,618 64,486
Non-current liabilities Interest bearing liabilities 16 45 279 Deferred tax liabilities 17 39,388 40,620 Provisions 18 461 265 Total non-current liabilities 39,894 41,164 Total liabilities 100,512 105,650 Net assets 446,208 427,977
Equity
Contributed equity 19 284,723 284,723 Reserves 20(a) 19,006 18,913 Retained profits 20(b) 142,479 124,341 Total equity 446,208 427,977
The above balance sheet should be read in conjunction with the accompanying notes. Murray Irrigation Limited Annual Report 2015 63 Consolidated statement of changes in equity for the year ended 30 June 2015
Consolidated Notes Contributed Reserves Retained Total equity earnings $’000 $’000 $’000 $’000
Balance as at 1 July 2013 284,723 165,216 (48,920) 401,019 Total comprehensive income – (341) 27,299 26,958 Transfers to reserves 20 – (145,962) 145,962 –
Balance at 30 June 2014 284,723 18,913 124,341 427,977 Total comprehensive income – 93 18,138 18,231 Transfers from reserves 20 – – – – Balance at 30 June 2015 284,723 19,006 142,479 446,208
The above statement of changes in equity should be read in conjunction with the accompanying notes.
64 Murray Irrigation Limited Annual Report 2015 Consolidated cash flow statement for the year ended 30 June 2015
Consolidated Notes 2015 2014 $’000 $’000
Cash flows from core operating activities
Receipts from customers 36,825 34,842 Income tax received/(paid) (328) 971 Payments to suppliers and employees (40,632) (56,901) Net cash outflows from core operating activities (4,135) (21,088)
Cash flows from non-core operating activities
Grants received from government 20,239 49,238 Net cash inflows from non-core operating activities 20,239 49,238
Cash flows from investing activities Interest Received on investments 4,305 4,900 Proceeds from sale of financial assets 120,503 145,712 Proceeds from sale of property, plant and equipment 1,161 1,355 Payment for property, plant and equipment (26,779) (16,449) Payment for financial assets (112,576) (139,821) Net cash outflow from investing activities (13,386) (4,303)
Net increase in cash held 2,718 23,847
Cash at the beginning on the financial year 63,697 39,850 Cash at the end of the financial year 5 66,415 63,697 The above cash flow statement should be read in conjunction with the accompanying notes.
Murray Irrigation Limited Annual Report 2015 65 Notes to the financial statements for the year ended 30 June 2015
1. Summary of significant In the determination of whether an asset In the 2013 year, the company made or liability is current or non-current, significant positive progress toward accounting policies consideration is given to the time when resolving its longstanding dispute each asset or liability is expected to be with the Australian Taxation Office This general purpose financial report realised or paid. The asset or liability is (ATO). The then Special Minister for covers the consolidated entity of Murray classified as current if it is expected to State, Mark Dreyfus MP, advised of his Irrigation Limited (“the company”) and be turned over within 12 months, or if the acceptance of the company’s arguments controlled entities (“consolidated entity” company does not have an unconditional that the debt imposed on the company or “group”). Murray Irrigation Limited right to defer settlement of a liability for at from implementing Land and Water is a public company limited by shares, least 12 months after the reporting date. Management Plans works was unfair incorporated and domiciled in Australia. and inequitable. To that end, the Minister Because the company’s principal purpose (b) Income tax granted a waiver of debt for the then is to provide cost effective services to The income tax expense for the period outstanding balance. The company its shareholders, rather than to generate is the tax payable on the current period’s subsequently received $3.3m in a profits, the company is a not-for-profit taxable income based on the notional combination of cash and offsets to bring entity as defined in the Accounting income tax rate adjusted by changes the outstanding ATO balance back to $nil. Standards. Accordingly the company has in deferred tax assets and liabilities The company now has no liability to the applied the Accounting Standards as they attributable to temporary differences ATO in respect of this dispute. apply to not-for-profit entities, although it is between the tax bases of assets and Further to this significant development, also tax assessable. liabilities and their carrying amounts in the the company will continue to pursue the The following is a summary of the material financial statements, and to unused tax relevant Minister and the ATO for the return financial accounting policies that have losses. of the remaining funds, as reported in Note been adopted by the consolidated entity Deferred tax assets and liabilities are 31. The company intends continuing to in the preparation of the financial report. recognised for temporary differences attempt to recover the outstanding amount These policies have been consistently at the tax rates expected to apply when and will support approaches to both the applied to all the years presented, unless the assets are recovered or liabilities are Minister and the ATO until we reach a otherwise stated. settled, based on those tax rates which are satisfactory resolution. The financial statements have been currently enacted. The relevant tax rates (c) Revenue recognition prepared using the measurement bases are applied to the cumulative amounts specified by Australian Accounting of deductible and taxable temporary Revenue is recognised for the major Standards for each type of asset, liability, differences to measure the deferred tax business activities as follows: income and expense. The measurement asset or liability. An exception is made (i) Water sales for certain temporary differences arising bases are more fully described in the Revenue from the sale of water is accounting policies below. from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised when the water is delivered to The financial report is presented in recognised in relation to these temporary customers, measured by meter readings Australian dollars, which is also the differences if they arose in a transaction conducted weekly. All water usage consolidated entity’s functional currency. that at the time of the transaction did not measurement is completed before the (a) Basis of preparation affect either accounting profit or taxable end of the financial year, as the ‘irrigation profit or loss. season’ generally concludes in May. Fixed These consolidated financial statements access and other fees are recognised on a are general purpose financial statements Deferred tax assets are recognised for pro-rata basis throughout the year. which have been prepared in accordance deductible temporary differences and with the requirements of the Corporations unused tax losses only if it is probable that (ii) Recognition of revenue arising from Act 2001, Australian Accounting Standards future taxable amounts will be available contributed assets – Reduced Disclosure Requirements and to utilise those temporary differences and The company was incorporated on other authoritative pronouncements of the losses. 23 February 1995 by the NSW State Australian Accounting Standards Board. Deferred tax assets and liabilities are Government (the State) as a vehicle to The directors have determined that the offset when there is a legally enforceable privatise the irrigation undertaking known company is permitted to apply the Tier right to offset tax assets and liabilities. as Murray Irrigation Area and Districts, an 2 reporting requirements (Australian Current tax assets and tax liabilities arm of the then NSW Department of Land Accounting Standards – Reduced are offset where the entity has a legally and Water Conservation (DLWC). The Disclosure Requirements) as set out enforceable right to offset and intends irrigation infrastructure was transferred in AASB 1053 “Application of Tiers of either to settle on a net basis, or to from the DLWC to the company on Australian Accounting Standards” because realise the asset and settle the liability 23 February 1995. The ownership of it is a not-for-profit private sector entity that simultaneously. Current and deferred the company was transferred from the does not have public accountability. tax balances attributable to amounts State to individual irrigators as company recognised directly in equity are also shareholders on 3 March 1995. recognised directly in equity.
66 Murray Irrigation Limited Annual Report 2015 The State agreed that as part of the (iv) On-Farm Irrigation Efficiency Program For the portion of the grants relating to privatisation process it would bear the cost The company has been contracted as payments to be made to landholders, the of refurbishing the irrigation infrastructure a delivery partner for implementation company’s role is to ensure that irrigation assets to a value of $82.5 million (indexed of the Commonwealth Government rights are surrendered in accordance with for inflation), in order to make good past funded On-Farm Irrigation Efficiency the Funding Agreement. The funds are deterioration of the infrastructure. The Program which is funded under the received through the company accounts mechanism by which this was affected was Water for the Future Sustainable Rural and paid to the landholders as their water a Funding Deed under which the State was Water Use and Infrastructure Program. rights are surrendered and they meet the to provide the funds to the company over The Commonwealth of Australia has a funding criteria in their agreements. As the 15 years as reimbursement for the cost Funding Agreement with the company company is considered to be acting as the of works carried out in accordance with and a contract for the purchase of Water agent in this component of the program, works programs approved by the State. Entitlements with the landholder. The gross revenue and expenditure relating to Assets constructed were contributed to the company has contracted the landholder the funds received from the government company to control and manage. The Deed to complete water efficiency investments and distributed to proponent landholders expired in 2009/10, so is reported for on their landholding. The company’s role is not recognised by the company. Funds information purposes only in this financial is to ensure that funds from government received and unspent are held in bank year. are spent in accordance with the Funding accounts controlled by the company, with (iii) Recognition of revenue arising from Agreement, and the funds are received a corresponding liability recognised as contributed assets through the company accounts and paid to disclosed in note 15. The company is the implementing authority the landholders as their projects meet the In relation to the company’s surrender of in respect of a number of Land and funding criteria in their agreements. As the Conveyance Water Access Entitlements Water Management Plans. Expenditure company is considered to be acting as the (water rights), there are no specific on these plans was reimbursed to the agent in this program, gross revenue and obligations (other than transfer to the company by the NSW State Government, expenditure relating to the funds received Commonwealth of the relevant water the Commonwealth Government, relevant from the government and distributed to access licences) or spending requirements local government authorities and irrigation proponent landholders is not recognised by attached to this portion of the grants. customer shareholders. Levies received the company. Funds received and unspent Accordingly, these funds are recognised as from irrigation customer shareholders are are held in bank accounts controlled by the they are received and the water licences considered to be payments for services company. Unspent funds are recognised are surrendered. performed, primarily for maintenance as a liability (refer note 15). The company’s Funding relating to capital works is of drainage assets. In accordance with administration costs are reimbursed from allocated to specific projects and AASB 118 Revenue, when the outcome program funds and are recognised as milestones which are to be completed of a transaction involving the rendering revenue as administration services are by the company. Under the terms of the of services can be estimated reliably, provided. Funding Agreement, the Commonwealth revenue associated with the transaction (v) Private Irrigation Infrastructure can require the return of funding that: shall be recognised by reference to the Operators Program (PIIOP) • has not been spent, or legally and stage of completion of the transaction at During the 2013 year, the company and irrevocably committed for expenditure, in the end of the reporting period. Where the then Department of Sustainability, accordance with the Funding Agreement; the directors have determined that a Environment, Water, Population or constructive obligation to provide these and Communities (representing the • has not been (correctly) spent, or dealt drainage maintenance services exists at Commonwealth) (“the Department”) signed reporting date, revenue has been deferred with, in accordance with the Funding the Funding Agreement for implementation Agreement. in accordance with AASB 118 (refer note of the company’s Private Irrigation 15). Amounts received from government Infrastructure Operators Program (PIIOP) bodies are defined as a contribution and project. are accounted for under AASB 1004 Contributions. Income arising from the Broadly, this Funding Agreement can be contribution of an asset to the company attributed to three categories: is recognised when the entity obtains • Payments to be made to landholders to control of the contribution or the right surrender their Irrigation Rights to receive the contribution, it is probable • Payments to the company to surrender that the economic benefits comprising Conveyance Water Access Entitlements the contribution will flow to the company, and the amount of the contribution can • Amounts to be spent on new capital be measured reliably. The entity does not works to improve the water infrastructure obtain control of a contribution under such of the company an agreement until it has met conditions or provided services or facilities that make it eligible to receive a contribution. Revenue is therefore deferred until such conditions have been met. Murray Irrigation Limited Annual Report 2015 67 Notes to the financial statements for the year ended 30 June 2015
Each tranche of the funding received (e) Trade and other receivables Reversals of impairment losses for or receivable is therefore recognised as Trade receivables are measured on available-for-sale debt securities are revenue only when milestones have been initial recognition at fair value, and are recognised in profit or loss if the reversal completed, or funds spent in accordance subsequently measured at amortised cost can be objectively related to an event with the Funding Agreement. Amounts are using the effective interest rate method. occurring after the impairment loss was deferred to the extent that, as at the end Amortised cost is the total receivable less recognised. For available-for-sale equity of a financial year, the Department had any amounts received and impairment investments impairment reversals are the legal right to request that the company losses. Appropriate allowances for not recognised in profit loss and any return funding because it had not achieved estimated irrecoverable amounts are subsequent increase in fair value is all of the criteria for a milestone by the due recognised in profit or loss when there recognised in other comprehensive income. date. is objective evidence that the asset is When the asset is disposed of or is (vi) Interest income impaired. The allowance recognised is determined to be impaired, the cumulative Interest income is recognised when measured as the difference between the gain or loss recognised in other earned. asset’s carrying amount and the amount comprehensive income is reclassified expected to be recovered. from equity reserve to profit or loss and (vii) Revenue from the sale of assets Refer to note 1(z) for further information presented as a reclassification adjustment Revenue from the sale of fixed assets is in regard to the company’s estimate of the within other comprehensive income. recognised when risks and rewards have recoverable amount of debtors. been passed to the buyer. (i) Property, plant and equipment Other receivables are carried at nominal (viii) Termination fees amounts. Property, plant and equipment represent Termination fees are charged and non-current assets comprising land, recognised at the time permanent water (f) Interest on water debtors buildings, infrastructure for the supply and transfers occur and associated delivery accounts drainage of water, plant, motor vehicles, entitlements are cancelled. radio technology, office and computer Interest is charged on water customers’ equipment, and land leased from State or (ix) Sale of goods accounts which are overdue and outside of Local Government over or under which Revenue is measured at the fair value the normal credit arrangements. water infrastructure is located. All property, of consideration received or receivable. plant and equipment with a cost value (g) Inventories Revenue from sale of goods is in excess of $1,000 and a useful life of recognised upon delivery of the goods Raw materials and stores are stated more than one year are recognised as to the customers and associated risks at the lower of cost and net realisable an asset; all other assets acquired are of ownership have passed. All revenue value. As the company is a not-for-profit expensed. Values are recorded at historical is stated net of the amount of goods entity, it considers the remaining service cost less depreciation. Acquisition cost is and services tax (GST), returns, trade potential of inventories when assessing determined as the fair value of the assets allowances and other duties and taxes the net realisable value of items held for given up or liabilities undertaken at the paid. distribution or use in delivering a service to date of acquisition plus costs incidental to members. the acquisition. As the company is a not- (d) Cash and cash equivalents The cost of manufactured products for-profit entity, where an asset is acquired For cash flow statement presentation includes direct materials, direct labour and at no cost, or for a nominal cost, the cost is purposes, cash and cash equivalents an appropriate portion of variable and fixed its fair value as at the date of acquisition. includes cash on hand, deposits held at overheads. Costs are assigned on the basis Land is not depreciated. Depreciation on call with financial institutions, other short- of weighted average costs. all infrastructure assets, buildings, plant, term highly liquid investments with original equipment and other non-current physical maturities of three months or less that (h) Available for sale financial assets assets is calculated using the straight-line are readily convertible to known amounts Available-for-sale financial assets comprise method to allocate their costs or re-valued of cash and which are subject to an investments in debt instruments such amounts, net of their residual values, over insignificant risk of changes in value. as fixed and floating rate notes. After their estimated remaining useful lives, initial recognition, these investments are commencing from the time the asset is measured at fair value with gains or losses held ready for use. The asset residual recognised in other comprehensive income values and useful lives are reviewed, and (available-for-sale reserve), except for adjusted if appropriate, at each reporting impairment losses, which are recognised in date. Estimates of remaining useful lives profit or loss. are made on a regular basis for all assets, with annual reassessments for major items.
68 Murray Irrigation Limited Annual Report 2015 The expected useful lives are as follows: (k) Non-current assets constructed (n) Maintenance and repairs by the company Maintenance, repair costs and minor Water infrastructure 10 to 100 years Where assets are constructed by the renewals are charged as expenses occur Leased assets 40 to 100 years company, the cost at which they are on the basis that asset lives are being Buildings 40 years recorded includes all materials used in preserved to expectation, rather than construction, direct labour on the project, extended. Where the repair relates to the Plant and 8 to 10 years and an appropriate share of other directly replacement of a component of an asset equipment attributable costs, such as design and and the cost exceeds the capitalisation Office equipment 3 to 14 years project management. threshold, the cost is capitalised and Motor vehicles 2 to 5 years amortised. (l) Intangible assets Water licences held by the company are (o) Trade and other payables (j) Leased non-current assets recognised at cost less impairment losses. These amounts represent liabilities for Certain assets comprising shire road Water rights have an indefinite useful life, goods and services provided to the bridges and culverts, have been leased and are thus not subject to amortisation, company up to the reporting date which by the company from public and local but are tested for impairment by comparing are unpaid. authorities for a period of 99 years from their recoverable amount with their The amounts are unsecured and are the date of privatisation. The company is carrying amount. usually paid within 28 days of recognition. obliged to maintain these assets during (m) Impairment of assets the period of the leases. These assets, in (p) Goods and Services Tax (GST) view of the long term nature of the leasing Assets are reviewed annually for Revenues, expenses and assets are arrangements and the future economic impairment or whenever events or recognised net of the amount of associated benefits that are likely to eventuate, are changes in circumstances indicate that the GST, unless the GST incurred is not included in non-current assets, on the carrying amount may not be recoverable. recoverable from the taxation authority. basis of control (Note 10). An impairment loss is recognised for the In this case it is recognised as part of the amount by which the asset’s carrying Other leases of fixed assets where cost of acquisition of the asset or as part amount exceeds its recoverable amount. substantially all the risks and rewards of the expense. Receivables and payables The recoverable amount is the higher of incidental to the ownership of the asset, are stated inclusive of the amount of GST an asset’s fair value less costs to sell and but not the legal ownership, that are receivable or payable. The net amount of value in use. transferred to entities in the consolidated GST recoverable from, or payable to, the entity are classified as finance leases. As the company is a not-for-profit entity taxation authority is included with other and the future economic benefits of receivables or payables in the balance Finance leases are capitalised at the the company’s assets is not primarily sheet. Cash flows are presented on a inception of the lease by recording an dependent on their ability to generate gross basis, inclusive of GST. The GST asset and a liability at the lower of the cash flows, value in use is taken to be components of cash flows arising from amounts equal to the fair value of the depreciated replacement cost provided investing or financing activities which are leased property and the present value of that the company would, if deprived of the recoverable from, or payable to the taxation the minimum lease payments, including asset, replace it. authority, are presented as operating cash any guaranteed residual values. Lease flows. payments are allocated between the Intangible assets with indefinite useful lives are reviewed annually as to whether their reduction of the lease liability and the lease (q) Employee benefits interest expense. carrying value exceeds their recoverable amount. (i) Wages, salaries, superannuation, The interest expense is recognised in the annual leave and sick leave profit or loss so as to achieve a constant The commencement of the PIIOP project periodic rate of interest on the remaining has created an expectation that a Provision is made for the group’s liability balance of the liability outstanding. significant portion of the company’s capital for employee benefits arising from services assets will be replaced, decommissioned rendered by employees to reporting date. Leased assets are depreciated on a or handed over to the landholders in future Employee benefits that are expected straight line basis over the shorter of the years. Where the company has been to be settled within one year have been asset’s useful life and the lease term. able to make a reasonable estimate of measured at the amounts expected to Lease payments for operating leases, such items, the carrying amount of the be paid when the liability is settled, plus where substantially all the risks and relevant assets has been reduced to their related on costs. Employee benefits benefits remain with the lessor, are recoverable amount. That reduction is payable later than one year have been charged to profit or loss on a straight line recognised as an impairment loss through measured at the present value of the basis over the lease term. profit and loss. estimated future cash outflows to be made for those benefits.
Murray Irrigation Limited Annual Report 2015 69 Notes to the financial statements for the year ended 30 June 2015
All employees belong to a superannuation (r) Provisions, contingent liabilities (t) Website and information scheme, which is of the defined and contingent assets technology costs contribution type. Contributions to these Provisions are measured at the estimated Costs in relation to website development defined contribution superannuation expenditure required to settle the present and maintenance are recognised as schemes are recognised as an expense obligation, based on the most reliable expenses in the period in which they in the period that they are payable. evidence available at the reporting date, are incurred, unless they relate to the The amount charged represents the including the risks and uncertainties acquisition of an asset, in which case they contributions made by the group to the associated with the present obligation. are capitalised and amortised over the superannuation plan in respect to the Where there are a number of similar period of expected benefits. The company current services of group directors and obligations, the likelihood that an outflow considers that its website does not give employees. The contributions are based will be required in settlement is determined rise to sufficient identifying value or costs on the choice of plans made by each by considering the class of obligations as to be regarded as an Intangible Asset employee and the relevant rules of each a whole. Provisions are discounted to their under AASB 138. plan. present values, where the time value of Information Technology costs including Employees are entitled to 10 days personal money is material. hardware and software generally relate leave per annum on a cumulative basis for Any reimbursement that the group can be to acquisition of assets of different useful either personal illness or primary care of virtually certain to collect from a third party lives, and are capitalised and amortised. immediate family. No liability is brought to with respect to the obligation is recognised Costs in relation to feasibility studies account as the expected future payments as a separate asset. However, this asset or business process reviews leading to are unlikely to exceed the personal leave may not exceed the amount of the related specifications forming part of subsequent entitlements. provision. technology implementation are considered (ii) Long service leave No liability is recognised if an outflow of as expenses. Costs in relation to building Current Liability – unconditional long economic resources as a result of present or enhancing Information Technology, to service leave (representing 10 or more obligation is not probable. Such situations the extent that they represent probable years of continuous service) is disclosed are disclosed as contingent liabilities, future economic benefits controlled by the as a current liability even where the group unless the outflow of resources is remote group that can be reliably measured, are does not expect to settle the liability within in which case no liability is recognised. capitalised as an asset and amortised over twelve months because it does not have an the period of expected benefits. unconditional right to defer the settlement (s) Reserves (u) Rounding of amounts should an employee take leave within 12 The Constitution allows that the directors months. The components of this current may set aside financial reserve accounts to The consolidated entity is of a kind referred liability are measured at: be applied at the discretion of the directors to in Class Order 98/0100, issued by the Australian Securities & Investments • Present value – component that the for any purpose to which the reserves Commission, relating to the “rounding off” group does not expect to settle within 12 may be applied, subject to satisfying the of amounts in the financial report. Amounts months; and requirements of the Operating Licence issued by the New South Wales State in the financial report have been rounded • Nominal value – component that the Government. off in accordance with that Class Order to group expects to settle within 12 months the nearest thousand dollars. (i) Water reserve Non-Current Liability – conditional long service leave (representing less than 10 The purpose of the Water reserve is to (v) Comparatives years of continuous service) is disclosed set aside funds for future investment Unless otherwise stated, all accounting as a non-current liability. There is an in water related products and services. policies applied are consistent with unconditional right to defer the settlement The source of funds is from the sale of a those of prior years. Where necessary, of the entitlement until the employee has proportion of the Murray Irrigation Limited comparatives have been reclassified for completed the requisite years of service. Supplementary Water Access Licence. consistency with current year disclosures. Conditional long service leave is required (ii) Available for sale asset revaluation to be measured at present value. reserve (w) Dividend policy In calculating present value, pro rata years All movements in the fair value of financial Under the company’s Constitution, of service utilising current salary and wage assets classified as available-for-sale are the company is prevented from paying rates are calculated, and indexed using the recorded in the available for sale reserve, dividends. Australian Bureau of Statistics Wage Price except where the asset is considered to be Index. impaired, in which case the impairment is recognised in profit and loss. This reserve is net of any deferred tax relating to the revaluation of available for sale assets.
70 Murray Irrigation Limited Annual Report 2015 (x) Principles of consolidation Recoverable amount of receivables As a result of successful PIIOP funding The consolidated financial statements The company has made an estimate of the a significant number of assets will either incorporate the assets and liabilities of all recoverable amount of all receivables. This be replaced or removed. It is assumed subsidiaries of Murray Irrigation Limited estimate requires the use of assumptions the majority of dethridge wheels will be (“parent entity”) as at 30 June 2015 and and a considerable degree of uncertainty replaced and 16.5% (2014: 20%) of the results of all subsidiaries for the year exists. regulators will not be required after the program is finished. Therefore a provision then ended. Murray Irrigation Limited The company has various receivables and its subsidiaries are referred to in has been created to provide for the from customers, largely relating to water expected impairment of these assets. this financial report as the “consolidated accounts, MILCast debtors and those entity” or “group”. The parent entity relating to the WaterBank operations. controls a subsidiary if it is exposed, or Valuation of available-for-sale The group has specifically identified all investments has rights, to variable returns from its debtor balances that are considered to involvement with the subsidiary and has be doubtful based on past history of The majority of available-for-sale the ability to affect those returns through repayments, status of account and other investments held by the company are not its power over the subsidiary. A list of factors in place at year end. The company listed on an exchange and therefore no subsidiaries is contained in Note 27 to has therefore made the assumption that market price can be observed. Calculation the financial statements. All subsidiaries the full amount of those particular loans of the fair value of these assets is have a June financial year end. All inter- is not recoverable, limited to the extent therefore based on other methodologies, company balances and transactions described below. such as analysing off market trading and between entities in the consolidated entity considering the expected cash flows have been eliminated on consolidation, The consolidated entity holds security attached to the instruments, taking into including unrealised gains and losses over these debtors in the form of the water account the instrument’s estimated yield to on transactions between group entities. entitlements held by irrigator customers. maturity. The value of these doubtful debtors is Where unrealised losses on intra-group (aa) Changes in accounting estimates asset sales are reversed on consolidation, therefore only reduced by the fair value of the underlying asset is also tested for the security held, as this is considered to During the reporting period, the group impairment from a group perspective. be the amount recoverable by the company. changed the discount rate used in Accounting policies of subsidiaries have Where the carrying amount exceeds the measuring its other long term employee been changed where necessary to ensure recoverable amount, the difference is benefits (annual leave and long service consistency with those policies adopted by recognised as an expense in profit or loss. leave) from the Australian government the consolidated entity. Where impairment losses are subsequently bond rate to the high quality corporate reversed they are recognised as a reversal bond rate. This change was necessitated (y) Segment reporting of impairment loss in the profit or loss. by developments in the Australian business environment that confirmed there is a A business segment is a group of assets Estimates of remaining useful lives of sufficiently observable, deep and liquid and operations engaged in providing PPE market in high quality Australian corporate services that are subject to risk and returns Estimates of remaining useful lives are bonds to satisfy the requirements in AASB that are different to those of other business 119 Employee Benefits. The group has segments. Refer note 29. made on a regular basis for all assets, with annual reassessments for major concluded that this alteration is a change in accounting estimate in accordance with (z) Critical judgements and items. These reassessments require the AASB 108 Accounting Policies, Changes significant accounting estimates company to make significant estimates and assumptions in respect of its intentions in Accounting Estimates and Errors. The preparation of financial statements for certain assets, based on the broader in conformity with Australian Accounting The Group reduced the carrying amounts strategic plan and specific funded Standards requires the use of certain of other long term employee benefits projects that are in place at reporting date. critical accounting estimates. It also by $46,750 during the reporting period Should these plans not eventuate or be requires management and directors to as a result of this change in accounting completed to a different timeframe than exercise their judgement in the process of estimate. initially anticipated, useful lives of some applying the group’s accounting policies. assets, and therefore carrying value, may The following are the key assumptions be significantly different than initially concerning the future, and other key estimated. sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Murray Irrigation Limited Annual Report 2015 71 Notes to the financial statements for the year ended 30 June 2015
(bb) New and revised standards AASB 10 (and AASB 2013-8) became AASB 2012-3 Amendments to Australian that are effective for these financial applicable to Not for Profit entities for Accounting Standards – Offsetting statements annual reporting periods beginning on or Financial Assets and Financial Liabilities A number of new and revised standards after 1 January 2014. AASB 2012-3 adds application guidance are effective for annual periods beginning Management has reviewed its control to AASB 132 to address inconsistencies on or after 1 January 2014. Information on assessments in accordance with AASB 10 identified in applying some of the offsetting these new standards is presented below. and has concluded that there is no effect criteria of AASB 132, including clarifying AASB 10 Consolidated Financial on the classification (as subsidiaries or the meaning of “currently has a legally Statements otherwise) of any of the group’s investees enforceable right of set-off” and that held during the period or comparative some gross settlement systems may be AASB 10 supersedes the consolidation periods covered by these financial considered equivalent to net settlement. requirements in AASB 127 Consolidated statements. and Separate Financial Statements AASB 2012-3 is applicable to annual (AASB 127) and AASB Interpretation 112 AASB 11 Joint Arrangements reporting periods beginning on or after 1 Consolidation – Special Purpose Entities. AASB 11 supersedes AASB 131 Interests January 2014. AASB 10 revises the definition of control in Joint Ventures (AAS 131) and AASB The adoption of these amendments has and provides extensive new guidance on Interpretation 113 Jointly Controlled not had a material impact on the group as its application. These new requirements Entities – Non-Monetary-Contributions the amendments merely clarify the existing have the potential to affect which of the by Venturers. AASB 11 revises the requirements in AASB 132. group’s investees are considered to be categories of joint arrangement, and AASB 2013-6 Amendments to AASB subsidiaries and therefore to change the the criteria for classification into the 136 arising from Reduced Disclosure scope of consolidation. The requirements categories, with the objective of more Requirements on consolidation procedures, accounting closely aligning the accounting with the for changes in non-controlling interests investor’s rights and obligations relating to AASB 2013-6 makes amendments to and accounting for loss of control of a the arrangement. In addition, AASB 131’s AASB 136 Impairment of Assets to subsidiary are unchanged. option of using proportionate consolidation establish reduced disclosure requirements for entities preparing general purpose AASB 10 is applicable to not-for-profit for arrangements classified as jointly controlled entities under that Standard financial statements under Australian entities for annual reporting periods Accounting Standards – Reduced beginning on or after 1 January 2014. To has been eliminated. AASB 11 now requires the use of the equity method for Disclosure Requirements arising from assist Not for Profit entities applying the AASB 2013-3 Amendments to AASB AASB 10, the AASB issued AASB 2013–8 arrangements classified as joint ventures (as for investments in associates). 136 – Recoverable Amount Disclosures for Amendments to Australian Accounting Non-Financial Assets. AASB 2013-3 made Standards – Australian Implementation AASB 11 became applicable to not-for- narrow scope amendments to AASB 136, Guidance for Not-for-Profit Entities – profit entities for annual reporting periods addressing disclosure of information about Control and Structured Entities on 31 beginning on or after 1 January 2014. the recoverable amount of impaired assets October 2013. The adoption of AASB 11 has not had any if that amount is based on fair value less AASB 2013-8 added an appendix to impact on the group as it is not a party to costs of disposal. AASB 10 to explain and illustrate how any joint arrangements. AASB 2013-6 became applicable to the principles in AASB 10 apply from the AASB 12 Disclosure of interests in annual reporting periods beginning on or perspective of not-for-profit entities in the Other Entities after 1 January 2014. private and public sectors, particularly to address circumstances where a for-profit AASB 12 integrates and makes The adoption of these amendments has perspective does not readily translate to consistent the disclosure requirements not had a material impact on the group. a not-for-profit perspective. Similarly, it for various types of investments, including added an appendix to AASB 12 Disclosure unconsolidated structured entities. It of Interests in Other Entities, in relation to combines the existing disclosures in structured entities. AASB 127, AASB 128 and AASB 131, and introduces a range of new disclosure requirements. AASB 12 became applicable to not-for- profit entities for annual reporting periods beginning on or after 1 January 2014. The adoption of AASB 12 has not had any significant impact on the group.
72 Murray Irrigation Limited Annual Report 2015 2. Revenue 2015 2014 $’000 $’000
Revenue from irrigation undertaking
Income from water sales – MIL Charges 17,801 17,783 Income from water sales – Government recoveries 11,712 11, 0 3 6 Termination fees 3 6 Revenue from irrigation undertaking 29,516 28,825
Other revenue
MILCast external sales 4,223 3,704 Interest received 4,305 4,525 Gain on sale of AFS investments 1,483 1,164 Net gain on disposal of property plant and equipment 341 138 Infrastructure – contributed assets 165 41 Other income 606 1,158 Government funding – sale of conveyance water 1,833 1,069 Government funding – water infrastructure assets 23,533 29,258 Government funding – on farm irrigation efficiency program 1,630 965 Other revenue 38,119 42,022 Total revenue 67,635 70,847
Murray Irrigation Limited Annual Report 2015 73 Notes to the financial statements for the year ended 30 June 2015
3. Expenses 2015 2014 $’000 $’000
Profit before income tax includes the following specific expenses:
(a) Depreciation and amortisation:
Depreciation: Buildings 91 81 Plant and equipment 708 721 Office equipment 497 338 Motor vehicles 667 655 Water infrastructure 6,591 6,971 Total depreciation 8,554 8,766 Amortisation of leased assets 906 976 Total depreciation and amortisation 9,460 9,742
(b) Impairment of water infrastructure assets
The commencement of the Private Irrigation Infrastructure Operators Program (PIIOP) has created an expectation that a portion of the company’s water infrastructure assets will be replaced, decommissioned or handed over to customers in future years. – assets identified to be replaced, scrapped or handed over in future periods 2,484 413 – assets estimated to be replaced, scrapped or handed over in future periods 7,001 9,320 9,485 9,733 The company has reassessed their estimate of the provision for impairment as disclosed in note 1(x). This has not resulted in a change to the provision. In the prior year, the decrease in the provision of $833k was recognised in the statement of profit or loss and other comprehensive income.
(c) Other expenses:
Write off obsolete assets – 330 Doubtful debts (447) 196 Other expenses 2,141 620 1,694 114 6 Other Expenses includes provisions pertaining to restructuring costs and estimated costs associated with resolving outstanding issues
(d) Employee benefit expenses capitalised 1,440 2,398
74 Murray Irrigation Limited Annual Report 2015 4. Income taxes 2015 2014 $’000 $’000
Current tax 271 (559) Deferred tax (i) and (ii) (164) (1,855) Under/(over) provision in prior year (88) 320 Aggregate income tax expense 19 (2,094)
(i) Deferred tax comprises: Decrease/(increase) in deferred tax assets 1,108 (1,136) Less deferred tax asset movement relating to current year tax losses – 567 Decrease in deferred tax liabilities (1,232) (1,432) (124) (2,001)
(ii) (Increase)/decrease in deferred tax represented by: Income tax expense (164) (1,855) Other comprehensive income 40 (146) (124) (2,001)
Numerical reconciliation of income tax expense to prima facie tax payable:
The aggregate amount of income tax attributable to the financial year differs from the amount calculated on the operating profit: The differences are reconciled as follows: Net profit before income tax 18,157 25,205 Income tax expense calculated @ 30% (2014:30%) 5,447 7,562 Non-deductible expenditure 844 605 Non-assessable income (government funding) (7,610) (9,098) Unrealised losses brought to account – (567) Utilised losses in current year (625) – Other timing differences 2,051 (916) (Over) / under provision in prior year (88) 320 19 (2,094)
Murray Irrigation Limited Annual Report 2015 75 Notes to the financial statements for the year ended 30 June 2015
5. Current assets – cash and cash equivalents 2015 2014 $’000 $’000
Cash at bank and on hand: 66,415 63,697
Restrictions are imposed on access to certain of the above funds as follows: On-Farm Irrigation Efficiency Program 5,875 6,005 Private Irrigation Infrastructure Operators Program 40,817 42,023 Land and Water Management Plans 7,857 7,534 Unrestricted funds 11,866 8,135 66,415 63,697
6. Current assets – trade and other receivables
Water debtors (a) 7,793 4,166 Less provision for doubtful debts (564) (656) 7,229 3,510 MILCast debtors (b) 644 459 Less provision for doubtful debts (25) (155) 619 304 Accrued income 637 5,575 Receivable from landholders (c) – 1,505 Government grant receivable – Department of the Environment – 512 Other receivables and prepayments 2,123 1,068 10,608 12,474
(a) Water debtors are invoiced four times per year: 30 September, 31 December, 31 March and 30 June, with payment due on 30 days terms. Interest is calculated at the rate stipulated in the New South Wales Water Management Act 2000 and accumulates on overdue balances. (b) MILCast debtors are invoiced on delivery of goods with payment due on 30 day terms. (c) The receivable from landholders represents lease/buyback arrangements of water entitlements over a 5 year period. The interest rate is fixed at 8.07% for the five year term.
Reconciliation of allowance for doubtful debts Balance at 1 July 1037 841 Amounts written back (447) 196 Impairment loss – – Balance at 30 June 590 1037
76 Murray Irrigation Limited Annual Report 2015 7. Current assets – inventories 2015 2014 $’000 $’000
MILCast inventories 539 686 Consumables 548 582 Less provision for obsolescence (75) (75) Water infrastructure assets not yet installed 18,754 15,058 19,766 16,251
8. Non-current assets – available for sale financial assets
Floating rate notes 37,784 27,593 Fixed rate notes 19,239 15,485 Inflation linked notes 28,231 4,032 Residential mortgage backed securities – 4,494 85,254 91,604
These investments have maturities ranging from 2016 to 2035 with fixed, indexed and floating interest rates. Fair value is determined by reference to off market trading, similar rated listed investments, and expected cash flows attached to the instruments, taking into account the instruments’ estimated yield to maturity.
(a) Restrictions
Restrictions are imposed on access to certain of the above funds as follows: Asset maintenance and renewals 53,283 53,506 Land and Water Management Plans – – 53,283 53,506
9. Non-current assets – trade and other receivables
Receivables
Receivable from landholders – – – –
The receivable from landholders represents lease/buyback arrangements of water entitlements over a five year period. The interest rate is fixed at 8.07% for the five year term.
Murray Irrigation Limited Annual Report 2015 77 Notes to the financial statements for the year ended 30 June 2015
10. Non-current assets – property, plant and equipment 2015 2014 $’000 $’000
Freehold land – at cost 1,959 1,959
Water infrastructure 293,341 265,869 Less accumulated depreciation (79,171) (72,762) Less provision for impairment (9,485) (9,733) 204,685 183,374
Construction in progress 10,920 15,292
Leased assets – at cost 50,465 50,207 Less accumulated amortisation (14,058) (13,153) 36,407 37,054
Buildings and cottages – at cost 3,205 2,953 Less accumulated depreciation (870) (779) 2,335 2,174
Plant and equipment – at cost 9,833 8,351 Less accumulated depreciation (5,858) (5 , 011) 3,975 3,340
Office equipment – at cost 3,526 3,407 Less accumulated depreciation (2,630) (2,133) 896 1,274
Motor vehicles – at cost 3,312 4,607 Less accumulated depreciation (1,055) (2,139) 2,257 2,468 263,434 246,935
78 Murray Irrigation Limited Annual Report 2015 10. Non-current assets, property plant and equipment (continued)
Reconciliations
Carrying Additions Disposals Depreciation Transfers Carrying amount at amount 1 July 2014 30 June 2015 $’000 $’000 $’000 $’000 $’000 $’000 Land 1,959 – – – – 1,959 Water Infrastructure 183,374 97 – (6,591) 27,805 204,685 Construction in progress 15,292 23,944 – – (28,316) 10,920 Leased assets 37,054 – – (906) 259 36,407 Buildings 2,174 – – (91) 252 2,335 Plant and equipment 3,340 1,350 (104) (708) 97 3,975 Office equipment 1,274 119 – (497) – 896 Motor vehicles 2,468 1,269 (716) (667) (97) 2,257 246,935 26,779 (820) (9,460) – 263,434
11. Non-current assets – deferred tax assets 2015 2014 $’000 $’000
The balance comprises temporary differences attributable to:
Accounts recognised in profit or loss: Land and Water Management Plans 2,357 2,260 Employee benefits 810 793 Doubtful debts 177 311 Deferred Deductible expenditure – 304 Carried forward tax losses – 778 Other temporary differences 54 20 3,398 4,466
Accounts recognised in other comprehensive income Available for sale assets 426 466 3,824 4,932
Murray Irrigation Limited Annual Report 2015 79 Notes to the financial statements for the year ended 30 June 2015
12. Non-current assets – intangible assets 2015 2014 $’000 $’000
Conveyance Water Access Licence at cost (a) 86,108 86,421 Supplementary Water Access Licence at cost (b) 11,311 11, 311 97,419 97,732
At reporting date, the company held a 297,060 (2014: 298,140) unit share Conveyance Water Access Licence and a 121,704 (2014: 121,704) unit share Supplementary Water Access Licence. During the year the company sold 1,080 unit shares (2014: 630) of Conveyance Water as part of the PIIOP funding program. Water rights have an indefinite useful life as a result of their legal form and are thus not amortised. The company has made this assessment based on past history, which suggests that the licences will continue to be renewed on substantially the same terms and conditions. (a) The most recent independent valuation obtained for the Conveyance Water Access Licence was at 19 July 2010 and resulted in a valuation of $2,050 per unit share. The directors have re-assessed the fair value of the water licences at reporting date and believe that it is approximately $1,987 per unit share. (b) The most recent independent valuation obtained for the Supplementary Water Access Licence was at 1 September 2014 and resulted in a valuation of $250 per unit share, equating to a total fair value of $30,426,000.
13. Current liabilities – trade and other payables
Trade creditors 4,486 5,170 Other creditors, including accruals for reconstruction costs and timing differences related 5,266 1,070 to water charges 9,752 6,240
Trade creditors are normally settled on 28 day terms.
14. Current liabilities – provisions
Employee entitlements (Note 1(q)) 2,239 2,364
15. Current liabilities – other
Murray Irrigation Limited holds the following funds as the implementing authority for the respective programs: Land and Water Management Plans 7,857 7,534 On-Farm Irrigation Efficiency Programs 5,954 6,005 Private Irrigation Infrastructure Operators Program 34,682 42,023 48,493 55,562
A portion of the Land & Water Management Plan funds is applied to support community activities based on applications from Landholder Associations in support of specific programs, with the remainder apportioned to reconfigurations and other water initiatives.
80 Murray Irrigation Limited Annual Report 2015 16. Non-current liabilities – interest bearing liabilities 2015 2014 $’000 $’000 Other creditors 45 279
17. Non-current liabilities – deferred tax liabilities
The balances comprise temporary differences attributable to:
Amounts recognised in profit or loss Consumable stores 296 299 Accrued income 63 1,497 Accrued interest 128 107 Other 93 75 Capital allowances and depreciation 38,808 38,642 39,388 40,620
18. Non-current liabilities – provisions
Employee entitlements 461 265
19. Equity – contributed equity
Shares $000’s Share capital 2015 2014 2015 2014 Ordinary shares 1,422,821 1,426,865 284,723 284,723
Reconciliation of movement in Share Capital Shares 2015 2014 Balance at 1 July 1,426,865 1,427,528 Additional Shares Issues – – Shares Cancelled 4,044 713 Balance at 30 June 1,422,821 1,426,865
The share capital of the company consists only of fully paid ordinary shares; the shares do not have a par value. All shares represent one vote at a shareholders’ meeting. Being a not-for-profit company, the shares have no rights to dividends or the distribution of capital on winding up of the company.
Murray Irrigation Limited Annual Report 2015 81 Notes to the financial statements for the year ended 30 June 2015
20. Equity – reserves and retained profits 2015 2014 $’000 $’000
(a) Reserves:
Contributed assets – – Water reserve 20,000 20,000 Available for sale assets revaluation reserve (994) (1,087) 19,006 18,913
Movements:
Contributed assets Balance – 1 July – 145,962 Transfer from retained profits – 41 Transfer to retained profits – (146,003) Balance – 30 June – –
Water reserve Balance – 1 July 20,000 20,000 Transfer to retained profits – – Balance – 30 June 20,000 20,000
Available for sale assets revaluation reserve Balance – 1 July (1,087) (746) Other comprehensive income 93 (341) Balance – 30 June (994) (1,087)
(b) Retained profits (accumulated losses)
Balance – 1 July 124,341 (48,920) Net profit 18,138 27,299 Transfer to contributed asset reserve – (41) Transfer from contributed asset reserve – 146,003 Balance – 30 June 142,479 124,341
(c) Nature and purpose of reserves
Refer Note 1(s).
82 Murray Irrigation Limited Annual Report 2015 21. Related parties
(a) Key management personnel
(i) Directors
The following persons were directors of Murray Irrigation for the whole year ended 30 June 2015, unless otherwise stated: C.D. Badger (appointed 4 July 2014), R. Clubb, M.L. Hughes, T.W. McKindlay, A.L. Read (resigned 19 November 2014), R.E. Reynoldson, D.M. Robertson, J.A. Sides, B.P. Simpson.
(ii) Other key management
The following persons also had authority and responsibility for planning, directing and controlling activities of the group, directly or indirectly during the financial year: S.A. Barlow, A. Couroupis (resigned 29 August 2014), P. de Vreede (appointed 8 December 2014), S.J. Gumley (appointed 16 October 2014, resigned 15 May 2015), T. Heise (appointed 2 March 2015), W. Jose (appointed 22 April 2015), O. Kietzmann (resigned 18 August 2015 ), P. Knill (resigned 20 February 2015), J.M. McLeod (resigned 31 August 2015), M. Renehan (appointed 22 June 2015), N.J. Ritchie (resigned 31 August 2015), G. Taylor, R.H. van Putten (resigned 12 August 2014), M.K. Watts (resigned 15 May 2015).
(b) Key management personnel compensation
Long term Short–term Superannuation Total 2015 Total 2014 benefits Gross salary Cash bonus Long Service Leave $ $ $ $ $ $ Directors B.P. Simpson 62,349 – 5,923 – 68,272 56,512 C.D. Badger 69,963 – 6,646 – 76,609 – R. Clubb 38,228 – 3,632 – 41,860 41,824 M.L. Hughes 38,355 – 3,644 – 41,999 41,207 T.W. McKindlay 37,773 – 3,588 – 41,361 41,303 A.L. Read 27,598 – 2,622 – 30,220 40,422 R.E. Reynoldson 35,043 – 3,329 – 38,372 38,313 D.M. Robertson 37,108 – 3,525 – 40,633 36,817 J.A. Sides 32,312 – 3,070 – 35,382 20,547 N.G. Graham 28,689 Directors total 378,729 – 35,979 – 414,708 345,634 Other key management 1,207,259 – 131,754 150,252 1,489,265 1,485,064 Total 1,585,988 – 167,733 150,252 1,903,991 1,830,698
The stated cash bonus is the amount paid during the financial year. In addition to remuneration as a Director, Mr Badger was engaged by the company to perform services with approval of the Board.
Murray Irrigation Limited Annual Report 2015 83 Notes to the financial statements for the year ended 30 June 2015
21. Related parties (continued)
No. shares No. shares 2015 2014 (c) Key management personnel equity
Ordinary shares held 19,940 22,895
(d) Other transactions with key management personnel
During the period the company delivered water for cropping and other activities to a number of directors and other key management personnel or their related entities on commercial terms and conditions no more favourable than those which is reasonable to expect would have been adopted if dealing with them at arm’s length in the same circumstances. The value of these transactions totalled $789,304 (2014: $818,704). During the year the company purchased raw materials from a quarry in which shareholder director, Mr M. Robertson has an indirect interest. The value of these transactions totalled $7,890 (2014: $30,693). During the year the company also made payments to key management personnel, their director related entities or associates, in their capacity as landholders, in relation to PIIOP totalling $36,246 (2014: $207,390). Shareholder directors receive annual allocation and water efficiency allocations based on their water and delivery entitlements, on the same terms as all other shareholders and customers. Aggregate amounts payable or receivable from directors and other key management personnel or their related entities as at balance date:
2015 2014 $’000 $’000 Water accounts receivable 136 13
(e) Loans to key management personnel
There are no loans to directors or other key management personnel.
22. Remuneration of auditors 2015 2014 $ $
During the year the auditor earned the following remuneration: Audit of the financial report 129,000 76,818 Other assurance services 76,752 101,203 Total audit and other assurance services 205,752 178,021
Taxation services 48,486 – Other non-assurance services 194,509 89,795 Total remuneration 448,747 267,816
During the current year, the company’s auditor was engaged to assist in the acquittal of PIIOP and OFIEP government funded programs, to undertake independent reviews aimed at enhancing the control environment and to assist in the development of a three way financial model to support the implementation of the PIIOP program.
84 Murray Irrigation Limited Annual Report 2015 23. Commitments 2015 2014 $’000 $’000 Capital commitments 38,140 47,518 Operating commitments 974 – Total commitments 39,114 47,518
24. Non-cash financing and investing activities
Contributed assets – 41
25. Land and Water Management Plans i) Details of income and expenditure on the Land and Water Management Plans are as follows: $’000 Berriquin Cadell Denimein Wakool Total
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
Income Government agencies – – – – – – – – – – Irrigator contributions and 188 330 76 74 4 3 78 64 346 471 interest on funds 188 330 76 74 4 3 78 64 346 471
Expenditure Expenses incurred (a) – (9) (12) (4) (8) (1) – – (20) (14) – (9) (12) (4) (8) (1) – – (20) (14) Net funds accumulated 188 321 64 70 (4) 2 78 64 326 457
(a) Includes farm rebates, monitoring, education and administration (negatives relate to prior year adjustment) ii) Details of Land and Water Management Plans Funds held as implementing authority are as follows:
$’000 Berriquin Cadell Denimein Wakool Total
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
Opening balance – 4,682 4,361 1,897 1,827 93 91 862 798 7,534 7,077 July 1 Add net funds accumulated/ 188 321 64 70 (4) 2 78 64 326 457 (expended) Closing balance – 4,870 4,682 1,961 1,897 89 93 940 862 7,860 7,534 30 June (Note 15)
Murray Irrigation Limited Annual Report 2015 85 Notes to the financial statements for the year ended 30 June 2015
26. Financial risk management
(a) Net fair values
The net fair values of financial assets and liabilities at the reporting date approximates the respective carrying values in the balance sheet. For further information regarding fair values of available-for-sale assets, refer to note 8.
(b) Credit risk exposure
Credit risk is the risk of financial loss to the company if a party to a financial instrument fails to meet its contractual obligations. Credit risk arises from cash and cash equivalents and deposits with banks as well as other credit exposures including outstanding receivables and long term investments in interest bearing securities. The maximum exposure to credit risk at balance date is the carrying amount of financial assets. To manage its short term credit risk the company invests surplus funds in term deposits to maximise its return while reducing the potential effect of the short term unpredictability of financial markets. These investments are made with reputable Australian banks and are considered low risk. The company also has long term investments in the form of floating and fixed rate securities. The current investment policy restricts funds invested in different types and ratings of investments. Each rating category also has a limit of total funds invested as a ratio of available company funds. In respect of accounts receivable the balances are managed and monitored in accordance with a credit management policy. In respect of water debtors and loans receivable from landholders, the company has security over the debt in accordance with the Water Management Act 2000.
27. Subsidiary
The company has the following subsidiary:
Name of subsidiary Country of Class of share Equity holding % Equity holding % incorporation 2015 2014 Riverbank Holdings Pty Ltd Australia Ordinary 100 100
It is the intention of the Board to deregister Riverbank Holdings Pty Ltd
86 Murray Irrigation Limited Annual Report 2015 28. Parent entity information 2015 2014 $’000 $’000
(a) Summary financial information
The individual financial statements for the parent entity are as follows:
Current assets 96,816 92,558 Total assets 584,770 533,574 Current liabilities (60,693) (64,123) Total liabilities (138,780) (105,420) Net assets 445,990 428,154
Contributed equity 284,723 284,723 Reserves 19,006 18,913 Accumulated profits 142,261 124,518 Total equity 445,990 428,154
Statement of profit or loss and other comprehensive income Profit for the year 17,743 27,462 Total comprehensive income 17,836 27,121
(b) Guarantees entered into by the parent entity
The parent entity has not entered into any financial guarantees.
(c) Contingent liabilities of the parent entity
Former customers of the Company in respect of three landholdings have commenced legal proceedings in relation to termination fees charged in respect of the termination of their delivery entitlements when they sold water entitlements to the NSW and Commonwealth Governments in 2008/2009. The former customers contend that the termination fees should not have been charged and they are claiming around $1.9 million. The Company considers that there is no merit in the claims. The proceedings will be defended vigorously in the Supreme Court of NSW. It is estimated that the Company’s exposure in these disputes is approximately $175,000, representing legal fees yet to be paid.
Murray Irrigation Limited Annual Report 2015 87 Notes to the financial statements for the year ended 30 June 2015
29. Segment information
Operating segments have been identified on the basis of internal reports about components of a company that are regularly reviewed by the chief operating decision makers, being the board and executive management of Murray Irrigation Limited, in order to allocate resources to, and assess the performance of, each segment. Murray Irrigation Limited (MIL) represents the activities encompassing the delivery of water to landholders from Mulwala in the east to Moulamein in the west within Southern NSW. MILCast is a business unit of Murray Irrigation Limited which designs, manufactures and supplies precast concrete products for agricultural and other commercial uses. Private Irrigation Infrastructure Operators Program (PIIOP) consists of a funding agreement entered with the Commonwealth Government and includes upgrading water management and measurement systems, targeted channel refurbishment, system reconfiguration and system retirement. All non-current assets are located in Australia. No single customer represents more than 10% of revenue.
88 Murray Irrigation Limited Annual Report 2015 Segment information for the reporting period is as follows:
MIL MILCast PIIOP RHPL Total 2015 2015 2015 2015 2015 $000 $000 $000 $000 $000
Revenue Irrigation activities 29,516 29,516 MILCast 4,765 4,765 Total revenue 29,516 4,765 0 0 34,281
Cost of goods sold Irrigation activities, Govt fees and charges 11,216 11,216 MILCast 3,694 3,694 Total cost of goods sold 11,216 3,694 0 0 14,910 Gross profit 18,300 1,071 0 0 19,371
Expenditure Wages 10,555 1,024 11, 579 Operations 6,553 6,553 Corporate and admin 2,749 3,335 (64) 6,020 Other (105) (212) (317) Total expenditure 19,857 919 3,335 (276) 23,835
EBITDA (1,557) 152 (3,335) 276 (4,464) Depreciation 9,202 126 132 9,460 Operating EBIT (10,759) 26 (3,467) 276 (13,924) Other income 2,672 118 2,790 Provisions/adjustments (1,800) (1,800) EBIT (9,887) 26 (3,467) 394 (12,934)
Interest received AMRR 3,655 3,655 Other 2,070 2,070 Total interest received 5,725 0 0 0 5,725 Net profit/(loss) before tax and PIIOP revenue (4,162) 26 (3,467) 394 (7,209)
PIIOP revenue – Grant funding 25,366 25,366 Net profit/(loss) before tax, inc PIIOP revenue (4,162) 26 21,899 394 18,157
No segment liabilities are disclosed because there is no measure of segment liabilities regularly reported to the chief operating decision makers. Unallocated operating income and expense mainly consist of research expenditure as well as post-employment benefits expenses.
Murray Irrigation Limited Annual Report 2015 89 Notes to the financial statements for the year ended 30 June 2015
30. Subsequent events
At 15 September 2015 the New South Wales Murray general security allocation was 4% with an unfavourable outlook for water availability for the 2015/16 year. The company is in a position to deliver only a moderate volume of water during the coming season. During August 2015, three Executive Managers departed the company. These individuals were Oliver Kietzmann – Executive Manager – Finance (departed 18 August 2015), Jenny McLeod, Executive Manager, External and Customer Relations (departed 28 August 2015) and Nick Ritchie, Executive Manager – Operations (departed 28 August 2015). There have been no other adjusting or significant non-adjusting events that have occurred between the reporting date and the date of authorisation of these financial statements.
31. Contingent assets and contingent liabilities
Former customers of the Company in respect of three landholdings have commenced legal proceedings in relation to termination fees charged in respect of the termination of their delivery entitlements when they sold water entitlements to the NSW and Commonwealth Governments in 2008/2009. The former customers contend that the termination fees should not have been charged and they are claiming around $1.9 million. The Company considers that there is no merit in the claims. The proceedings will be defended vigorously in the Supreme Court of NSW. It is estimated that the Company’s exposure in these disputes is approximately $175,000, representing legal fees yet to be paid. The company has a contingent asset in respect of the ongoing tax dispute with the ATO (described in note 1(b)), which if resolved favourably could result in a refund of approximately $6.6m for the company.
90 Murray Irrigation Limited Annual Report 2015 Directors’ declaration
In the opinion of the directors of Murray Irrigation Limited: (a) the consolidated financial statements and notes of the company are in accordance with the Corporations Act 2001, including: i. giving a true and fair view of its financial position as at 30 June 2015 and of its performance for the financial year ended on that date; and ii. complying with Australian Accounting Standards – Reduced Disclosure Requirements (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and (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.
Signed in accordance with a resolution of the directors:
B Simpson Chairman 17 September 2015
M Robertson Deputy Chairman 17 September 2015
Murray Irrigation Limited Annual Report 2015 91 92 Murray Irrigation Limited Annual Report 2015 Page 1/2
Murray Irrigation Limited Annual Report 2015 93 Page 2/2
94 Murray Irrigation Limited Annual Report 2015 Murray Irrigation Limited Annual Report 2015 95 Menindee Lakes
Menindee Weir 32
Darling River
Wentworth
Mildura
Hay Murrumbidgee River Murray River
New South Wales
Moulamein
Billabong Creek Wagga Wagga Edward River Swan Hill Conargo Wakool River Jerilderie
Wakool Deniliquin
Barham Finley Berrigan
Mathoura Tocumwal
Mulwala Albury SA Murray Darling Basin Moama Echuca Hume Reservoir
NSW Murray Irrigation Shepparton Sydney
Canberra Dartmouth Reservoir VIC
Melbourne
96 Murray Irrigation Limited Annual Report 2015 Murray Irrigation provides Menindee Lakes Menindee Weir 32 irrigation water to over 2,300 farms in southern NSW. Our area of operation Darling River stretches from Mulwala in the east to Moulamein in the west, taking in 748,000 hectares of farmland north of the Murray River.
Wentworth
Mildura
Hay Murrumbidgee River Murray River
New South Wales
Moulamein
Billabong Creek Wagga Wagga Edward River Swan Hill Conargo Wakool River Jerilderie
Wakool Deniliquin
Barham Finley Berrigan
Mathoura Tocumwal
Mulwala Albury Moama
Echuca Hume Reservoir
Shepparton
Dartmouth Reservoir
Australasian Reporting Awards 2013 Bronze Award Winner 2013 Finalist Communications Award 2014 Winner Communications Award Murray Irrigation Annual Report 2015 Report Annual Irrigation Murray
Murray Irrigation Limited 443 Charlotte Street Deniliquin NSW 2710 T 1300 138 265 F 03 5898 3301 ABN 23 067 197 933 PO Box 528 Deniliquin NSW 2710 www.murrayirrigation.com.au