ANNUAL REPORT 2014/2015
RESIDENTS BUSINESS DEVELOPMENT COMMUNITY PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY SERVICE AREA
Navarre
Redbank
Havelock Timor Landsborough Bowenvale
Alma Maryborough Centenary Reservoir Tullaroop Sugarloaf Avoca Reservoir Reservoir Bung Bong Craigie Lead Daisy Hill Dam Majorca
Amphitheatre Talbot
Talbot Reservoir Lexton Lexton Evansford Reservoir Reservoir Clunes Hepburn Springs Smeaton Hepburn Reservoir Raglan Waubra Daylesford Kingston Broomfield Bullarto Reservoir Wombat Learmonth Newlyn Beaufort Lake Creswick Reservoir Learmonth Cosgrave Reservoir Dean Burrumbeet Miners Rest Dean Blackwood Lake White Swan Reservoir Burrumbeet Reservoir Wilson’s Moorabool Ballarat Reservoir Reservoir Colbrook Gong Gong Reservoir Reservoir
Kirk’s Wallace Bungaree Carngham Haddon Reservoir Gordon
Snake Valley Ballan Lal Lal Smythesdale Reservoir Pittong Buninyong Scarsdale Napoleons Skipton Linton
Enfield 0 4.75 9.5 19 Kilometres
Dereel LEGEND Corindhap Rokewood Water pipeline Recycled water Wastewater treatment plant Water treatment plant Major road Lake and reservoir Water district Sewer district
2 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX CONTENTS
PART 1 – YEAR IN REVIEW PART 4 – CORPORATE INFORMATION About us 4 Organisational structure 22 At a glance 5 Corporate governance 23-24 Message from our Chair and Managing Director 6 Board of directors 25 Summary of financial results 7 Executive team 26 Summary of financial performance 8 Employment data 27 Project Highlights 9 Workplace inclusion policy 28 Health and safety reporting 29 PART 2 – WATER CONSUMPTION Access to information 30 AND DROUGHT RESPONSE Other Acts and applicable policies 31 Corporate water consumption 10 Consultancy expenditure 32 Major water users 10 Major works 33 Water consumption report 11 Management of drinking water quality 12 PART 5 – PERFORMANCE REPORT Drought response report 13 Statement of performance for the 2014/15 financial year 34-35 – Financial performance indicators PART 3 – ENVIRONMENTAL AND – Water and sewerage service performance indicators SOCIAL SUSTAINABILITY – Customer responsiveness performance indicators Environmental sustainability 14-16 – Environmental performance indicators Groundwater licences 16 Statutory certification 36 Central region sustainable water strategy 17 Objectives and performance report 37 Bulk entitlement reporting 18-19 VAGO report 38-39 Greenhouse gas emissions 20 Social sustainability reporting 21 PART 6 – FINANCIAL STATEMENTS Comprehensive operating statement for the period ended 30 June 2015 40 Balance sheet 41 Statement of changes in equity 42 Cash flow statement 43 Notes to the financial statements 44-86 Accountable officer’s and chief finance and accounting officer’s declaration 87
PART 7 – DISCLOSURE INDEX 90-91
Additional copies ISSN: 2203-9503 (Print) This annual report is available for viewing or download from Central Highlands ISSN: 2203-9511 (Online) Water’s website chw.net.au © State of Victoria, Central Highlands Water 2015. To minimise our impact on the environment we print limited numbers of this This publication is copyright. No part may be reproduced by any process report, so we encourage you to view this report online. If you require any except in accordance with the provisions of the Copyright Act 1968. additional printed copies, please contact Central Highlands Water at: This report has been printed on Ecostar 100% recycled stock. Email: [email protected] Phone: 1800 061 514 Post: PO Box 152 Ballarat VIC 3353 In person: 7 Learmonth Rd Wendouree VIC 3355
2014/15 ANNUAL REPORT 3 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL RESPONSIBILITY PART 1 YEAR IN REVIEW
ABOUT US
Central Highlands Water (CHW) is a • develop and implement programs Corporate governance regional water corporation providing for the conservation and efficient use high quality drinking water, sewerage, of water Central Highlands Region Water trade waste and recycled water services Corporation is a statutory body • educate the public about the operating under the Victoria Water Act to customers in Ballarat and water supply surrounding towns. 1989. The responsible Minister during Sewerage the reporting period 1 July 2014 to Formerly known as the Central Highlands • the efficient transfer, treatment and 3 December was The Hon. Peter Walsh Region Water Authority, we are one of disposal of sewage MLA, 4 December 2014 to 30 June 19 state-owned water businesses 2015 The Hon. Lisa Neville MP. operating under the guidance of the • identify current sewerage needs Victorian Water Act 1989. and plan for future needs The Corporation operates under a • develop and implement programs Statement of Obligations issued for the recycling and reuse of treated under section 41 of the Water Industry Our region wastewater Act 1994. Our prices and service We cover a geographical region of standards are regulated by the Essential • investigate, promote and conduct Services Commission. 9,275 square kilometres incorporating research into the provision of 7 local government areas: Ballarat, sewerage services Central Goldfields, Golden Plains, Key capital investment Hepburn, Pyrenees, Northern Recycled water Grampians, Moorabool and Recycled water produced at a number for the year Corangamite (Skipton). of sites to support agriculture, reduce • $1.4m Wilsons Reservoir safety demand on our water catchments and upgrade completed (see page 9) support greener open spaces. Our services • $1.3m Completion of major works on We perform these functions in an the Maryborough clear water storage We provide water supply and sewerage environmentally sound way, recognising services through 66,192 water supply tank to enhance water security and the need to preserve landscape, fauna asset life connections and 56,486 wastewater and flora. service connections to more than • $1.2m Maryborough Fluoridation 139,000 people. We also undertake project completed various customer satisfaction surveys Our promise • $1.2m Investment in mains renewal throughout the year to help us gain a We promise to provide quality water and projects throughout the service area better understanding of our customers wastewater services fairly, efficiently and • $1.2m Maryborough Water Quality needs and expectations. sustainably to communities in the Enhancement Project commenced Central Highlands region. Our core functions are: Major wastewater and sewerage Water projects included: • collect, store, treat, transfer Our values • $3.7m Ballarat South Wastewater and distribute water • Collaborate Treatment Plant upgrade works • manage and protect the water • Innovate continued throughout 2014/15. supply system • Deliver • identify current and future • Trust water needs
4 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX AT A GLANCE
139,740 Total population serviced
$95.9 M Current operating revenue
$885 M Value of infrastructure, property, plant and equipment
183.5 Full-time equivalent employees
60,626 Total residential water supply connections
5,566 Non-residential customers
13,064 ML Total water supply volume
15 Water treatment plants
30 Number of reservoirs
13 Number of diversion weirs
34 Number of groundwater bores
17 Bulk water entitlements held
2,473 KM Length of water mains
47 Number of service basins and tanks
41 Number of water pumping stations
56,486 Total wastewater connections
17 Major trade waste customers
13 Wastewater treatment plants
10,227 ML Total volume of wastewater treated
1,014 ML Volume of effluent irrigated to land
1,377 KM Length of sewer mains
97 Wastewater pump stations
2014/15 ANNUAL REPORT 5 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL RESPONSIBILITY MESSAGE FROM OUR CHAIR AND MANAGING DIRECTOR
that with the increased focus on the governance has played an important quality and commitment to this specialised role in providing clarity and sound service we have seen a 50% reduction outcomes throughout the year. With a of incoming affordability complaints. strong focus on financial management Providing quality and reliable services and occupational health and safety in to our ever expanding customer base addition to many other actions, CHW’s requires investment and in 2014/15 performance is showing a quantum improvement based on robust strategies Jeremy Johnson Paul O’Donohue $19.8 million was spent on over 60 around risk management which also diverse water and wastewater projects. provides the business with clear 2014/15 has been a strong year These included $3.7 million at the direction. We would like to take this for Central Highlands Water (CHW) Ballarat South Treatment Plant to cater opportunity to thank our Board as it continues to supply quality for this new customer growth, $1.4 members for their commitment and water and wastewater services to million on Dam Safety works at Wilsons work and the impetus they have Reservoir (one of the oldest in our nearly 140,000 customers across continued to provide as we move into region), a major Biosolids Improvement the Central Highlands region. 2015/16 and beyond. Project located at the Clunes Throughout 2014/15 CHW continued Wastewater Treatment Plant, pre The level of professionalism and the development of strategies to planning on a major water quality commitment of all staff during 2014/15 improve productivity whilst still delivering upgrade at Maryborough as well as an should also be acknowledged as our on all agreed customer performance investment of over $2 million on Water business continues to deliver quality targets. On behalf of all management Mains and Sewer Renewals to upgrade projects and services for the betterment and staff at CHW, we are pleased to existing and new infrastructure of our customers and communities in commit to our customers that for the throughout the region the Central Highlands Region. Three next three years, all water and years ago, CHW started a business- In order to manage our costs and wastewater prices (with the exception of wide productivity project to improve carbon footprint, CHW has actively the Water Supply charge which will have sustainability and limit future resource committed to a number of energy no increase) will only increase by the and pricing shocks. Since this time, our efficient projects to ensure responsible Consumer Price Index (CPI) which is staff have wholly embraced the energy usage and lessening of our currently 1.33% for 2015/16. opportunities and change that has carbon footprint. These projects include presented itself. We are pleased to say In relation to the Fixed Access Charge, planning the installation of a mini hydro that following the recent Victorian Public as part of the State Government’s 2014 facility located at the Lal Lal Reservoir, Sector Commissions bi-annual Fairer Water Bills initiative, CHW dropped installation of solar mixers at another Employee Survey conducted in early this charge by an average of $50 per two of our Reservoirs as well as roof top 2015, CHW has improved in 42 out of connection per annum and this reduction solar panel installation at our head office the 45 category questions that were will stay in place until at least 2018. in Wendouree. As part of an ongoing previously surveyed back in 2012. Of program, CHW will continue to explore Whilst tariffs are only increasing by CPI, particular noteworthiness, CHW’s level other options to reduce our energy CHW has and will continue to meet the of engagement measured through the usage and costs over the coming years. key performance targets that are set to Engagement Index scored an ensure that our customers are being Running a financially sustainable impressive 71%. In addition, our Lost delivered quality water and wastewater business is important to CHW and in Time Injury rates continues to drop as services. A recent survey of our 2014/15 we achieved a profit before we emphasise the importance of a safe customers showed that over 87% rated tax of $14.2 million compared to work place for all. This ongoing cultural our business performance as good to $10.3 million in 2013/14 which enabled and business improvement is important very good when they phoned our 24 $7 million of long term debt to be within a large regional employer such as hour 1800 number to report a service retired. This strategy and commitment our organisation. difficulty or fault that was affecting their from the Board and our organisation In conclusion, 2014/15 has on many water or sewer supply. has supported CHW in maintaining its accounts been an extremely successful In addition to the above, our business A- credit rating (as set by Treasury year for CHW as we continued to understands that for some customers Corporation Victoria) and based on this deliver customer value, sound business affordability is an ongoing issue. To this substantial debt reduction over the past strategies and positive financial end, we offer a proactive and highly two years, the long-term costs burden outcomes all of which are presented experienced customer support service on the business and our customers in within this Annual Report. In accordance whose sole focus is to help our customers servicing high levels of debt continues with the Financial Management Act who are most in need by developing to be lowered. 1994 we are pleased to attest that the tailored easy-pay plans to support them The ongoing support and professional Central Highlands Region Water through difficult financial times. Results input of the CHW Board of Directors in Corporation 2014/15 Annual Report is from our recent survey also indicated setting the strategies and overview of compliant with all statutory requirements.
6 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX SUMMARY OF FINANCIAL RESULTS
2010/11 2011/12 2012/13 2013/14 2014/15 $'000 ($’000) ($’000) ($’000) ($’000)
Core business revenue 68,543 74,564 84,373 88,441 90,113
Government contributions 1,089 75 1,205 700 737
Other revenue 4,034 3,239 4,562 4,680 5,022
Total revenue 73,666 77,878 90,140 93,822 95,872
Operating expenditure 42,214 47,531 45,611 46,634 45,440
Depreciation expenditure 17,830 19,881 22,306 20,251 20,252
Finance costs 10,702 11,960 12,154 12,135 11,383
Other expenditure 4,183 4,573 4,529 4,470 4,562
Total expenditure 74,929 83,945 84,600 83,490 81,637
Net result before tax (1,263) -6,067 5,540 10,332 14,235
Current assets 21,401 23,471 29,813 29,535 30,027
Non-current assets 916,011 920,382 918,238 920,561 925,063
Total assets 937,412 943,853 948,051 950,096 955,090
Current liabilities 56,244 46,665 27,088 34,985 34,365
Non-current liabilities 146,352 166,633 185,796 172,724 168,389
Total liabilities 202,956 213,298 212,884 207,709 202,754
Net cash flows from operations 10,964 14,955 15,323 24,374 24,569
Payments for property, plant and equipment (including infrastructure) 33,151 25,920 19,897 14,863 17,457
Significant changes in financial position There were no significant matters which changed our financial position during the reporting period.
Significant changes or factors affecting performance There were no significant changes or factors which affected our performance during the reporting period.
2014/15 ANNUAL REPORT 7 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY SUMMARY OF FINANCIAL PERFORMANCE
2013/14 2014/15 2014/15 Variance to Variance to Result Result Target prior year target
Interest Cover (Cash) 2.90 3.14 2.50 8.4% 25.5%
Gearing Ratio 17.92% 16.93% 18.00% (5.5)% (5.9)%
Internal Financing Ratio 163.99% 140.74% 97.80% (14.2)% 43.9%
Current Ratio 0.84 0.87 1.04 3.5% (16.0)%
Return on Assets 2.37% 2.69% 1.43% 13.6% 88.1%
Return on Equity 0.98% 1.33% 0.10% 36.2% 1231.2%
EBITDA Margin 45.53% 47.85% 40.30% 5.1% 18.7%
8 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX PROJECT HIGHLIGHTS
Clunes biosolids The river health program will remove Solar panels at Learmonth Road approximately 0.5ha of willows, exclude The recently completed, purpose built, stock from 400m of waterway and CHW continues to develop and Clunes Soil Nutrient Improvement provide appropriate stock crossings implement energy efficient initiatives Facility is a biosolids processing facility with the aim of works to continue on the with the installation of solar panels at that aims to achieve maximum value remaining 3km of waterway throughout the Learmonth Road complex in from biosolids reuse while delivering on the property over the next few years. January 2015. A feasibility study significant environment, economic and determined that the installation of a social sustainability outcomes. A This program has significant benefits to 100kW solar panel system at the strategic innovation of international water quality and supply including: Learmonth Rd offices will provide standing, this showcase facility employs • reduction of pathogen loads entering approximately 10% of the buildings a low tech, low cost approach while the creek line through stock electricity and feed daily back into the positively contributing to the community. exclusion fencing grid any unused energy. The study also found that the expected lifespan of the • filtration of water through the This project demonstrated significant system is 25 years with a payback establishment of native vegetation and sustainable environment, economic period of between 8 to 10 years. and social achievements including: and a grassy understorey to reduce Partnering with AGL, CHW conducted • Construction of the biosolids sediment and nutrient loads entering a structural and economic assessment processing facility at the Clunes the waterway; and of the buildings to determine their Wastewater Treatment Plant site • increased biodiversity value of suitability to supporting a roof mounted creek line through establishment which is located within our service solar system. This assessment proved of native revegetation district, approximately 40km from the favourable and 400 solar panels were Ballarat South Wastewater Treatment fitted to the main office and stores Plant (BSWWTP) Wilsons Reservoir roofing structure. • The project was delivered well under budget and was fully operational one CHW has invested $1.5m to upgrade month ahead of expected timelines Wilsons Reservoir to meet current Ballarat south wastewater national and international dam industry treatment plant augmentation • The biosolids process utilises natural practices and safety standards. The processes to enable the biosolids to reservoir was built in 1891 and located CHW is expanding the capacity of the be spread over a drying pad and approximately 20 kilometres north-east Ballarat South Wastewater Treatment turned once a year to achieve of Ballarat. Historically the reservoir has Plant to accommodate future population required treatment grades – essentially been and remains an integral component growth in the Ballarat area. a very effective ‘low tech’ solution of the Ballarat water supply system, The scope of works includes: • Operational costs are significantly servicing five other reservoirs including • construction of a new 42m diameter reduced with payback in two years White Swan. clarifier to increase the treatment on the capital outlay This upgrade included the extension of capacity of the plant under construction the outlet pipe and implementation of – due for completion February 2016 Willow removal at Lal Lal creek sand filters, resulting in the fortification • installation of a new 50m long and widening of the embankment. An The Lal Lal Creek is of significant filtrate pipeline (200mm diameter) to auxiliary spillway was also constructed. value to the community and has been improve the sludge de-watering The project commenced in November designated as a priority under the system – completed 2014 was completed in mid-June 2015. Corangamite Catchment Management • refurbishment of the digesters under Authority (CMA) River Health Strategy This is a major milestone investment in construction – due for completion due to its role in supplying water to the the region’s future water supply and the December 2016 Ballarat and Geelong region. The creek first major works the reservoir has • replacement aeration blowers – due provides an estimated 62% of inflow received since it was built in 1891. for completion December 2017 into the Lal Lal Reservoir. The river Much of the historical engineering • new boiler and heat exchange is in a highly degraded condition with practices were preserved throughout – nearing completion uncontrolled stock access, willow the construction, including the original infestations and degraded riparian bluestone spillway and bluestone channel. The key benefits of these works include: vegetation leading to poor water quality A key asset in the Ballarat water system, • provide increased capacity for sewerage and supply. the reservoir supplies 8% of the regions volume treatment at the plant up to 2035 Research has concluded that removing annual water demand. The community • provide ongoing maintenance of one hectare of in-stream willows can can be confident in the knowledge that CHW’s infrastructure save 5.5 million litres of water per year this upgrade project not only services • meet environmental licensing conditions as well as promote improved stream the population for the next 100 years and improve the plants service levels flow and water quality (CSIRO 2010). but that the reservoirs structural integrity to match industry standards will endure. • energy efficiencies
2014/15 ANNUAL REPORT 9 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL RESPONSIBILITY PART 2 WATER CONSUMPTION AND DROUGHT RESPONSE
CORPORATE WATER MAJOR WATER CONSUMPTION USERS
The amounts highlighted in the table below represent water Customer by volume range consumption at our Wendouree and Maryborough sites. The figures include maintenance, office and workshop areas. Volumetric range (ML per year) No. These amounts do not include any treatment plants or customers other work sites. Equal to or greater than 200 ML 0 and less than 300 ML
Consumption Value Units Equal to or greater than 300 ML 0 and less than 400 ML Consumption 2479 kL Equal to or greater than 400 ML 0 No of Employees (FTE) 183.5 and less than 500 ML
Annual Use 13.5 kL per person Equal to or greater than 500 ML 1 and less than 750 ML Daily Use 37.0 L per person Equal to or greater than 750 ML 0 Per m2 Office Space 619.75 L per person and less than 1000 ML
Greater than 1000 ML 0
Total no. customers 1
Major customers and their participation in water conservation programs
Name of customer Information as to customer’s participation in water conservation program
McCain Foods (Aust) Ongoing focus to reduce water Pty Ltd consumption as part of water conservation programs.
10 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX WATER CONSUMPTION REPORT
Water Residential Non-Residential Totals Supply System Water Potable Non- Recycled Recycled Water Potable Non- Recycled Recycled Total Total Total Non- Total Total Average Weekly Conn- Cosump- Potable Waste- Storm- Conn- Consump- Potable Waste- Storm- Water Potable Potable Recycled Consump- Annual Resi- ections tion (ML) Cosump- water water ections tion (ML) Cosump- water water Conn- Volume Volume Water tion (ML) Consump- dential tion (ML) Volume Volume tion (ML) Volume Volume ections (ML) (ML) Volume tion (ML) Potable (ML) (ML) (ML) (ML) (ML) Consump- tion (KL)
Amphitheatre 67 - 11.3 - - 7 - 0.5 - 74 - 11.8 - 11.8 10.7 0.0
Avoca 572 81.2 - 92 29.5 - 21 - 664 110.7 - 20.6 131.3 98.3 2.7
Ballarat & 49,280 7,316.7 - 4,293 3,220.7 - 213.6 - 53,573 10,537.4 - 213.6 10,941.0 9711.5 2.9 District
Beaufort 716 91.2 11.7 - 108 28.1 2.7 74.3 - 824 119.3 14.4 74.3 208.0 123.3 2.4
Blackwood 323 24.4 - - 16 4.9 - - 339 29.3 - - 29.3 26.7 1.5
Clunes 855 131.1 - - 83 36.7 - - - 938 167.8 - - 167.8 153.7 2.9
Daylesford 2,561 349.6 - - 308 152.6 - 421.9 - 2,869 502.2 - 421.9 924.1 457.6 2.6
Dean 16 3.6 - - 5 1.5 - - - 21 5.1 - - 5.1 4.9 4.3
Forest Hill 459 102.5 - - 39 15.2 - - - 498 117.7 - - 117.7 106.7 4.3
Landsborough 111 16.6 - - 33 6.7 - - - 144 23.3 - - 23.3 19.3 2.9
Learmonth 125 21.5 - - 28 17.5 - - - 153 39.0 - - 39.0 36.3 3.3
Lexton 92 13.3 - - 10 2.9 - - - 102 16.2 - - 16.2 13.2 2.8
Maryborough 5,309 841.7 - - 531 315.4 - 379.3 - 5,840 1,157.1 - 379.3 1,536.4 1001.3 3.0 & District
Redbank 38 - 4.3 - - 5 - 0.2 - 43 - 4.5 - 4.5 4.1 0.0
Waubra 102 17.5 - - - 8 1.5 - - 110 19.0 - - 19.0 16.4 3.3
TOTALS 60,626 9,011 27.3 - - 5,566 3,833 3.4 1,109.7 66,192 12,844.1 30.7 1,109.7 14,174.5 11,784.1* 2.9
*Note: Average Annual Consumption calculated between 2010 to 2015
Non-revenue water Weekly residential potable consumption
Volume (ML) 2014-15 (ML) Month Week 1 Week 2 Week 3 Week 4 Remainder Total Non Revenue Water 1406 of month
Real Losses 772 jul 136 136 136 136 58 604
Avoidable Losses 92 aug 134 134 134 134 58 595
Unavoidable Losses 681 sep 157 157 157 157 45 674
oct 151 151 151 151 65 668
nov 148 148 148 148 42 632
dec 231 231 231 231 99 1,023
jan 231 231 231 231 99 1,022
feb 233 233 233 233 - 932
mar 189 189 189 189 81 836
apr 182 182 182 182 52 781
may 171 171 171 171 73 758
jun 113 113 113 113 32 484
2,076.62 2,076.62 2,076.62 2,076.62 704.37 9,011
*Note: Estimated weekly consumption due to tri-cycle billing nature for residential customers
2014/15 ANNUAL REPORT 11 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL RESPONSIBILITY MANAGEMENT OF DRINKING WATER QUALITY
CHW is committed to managing its Water quality water supply systems effectively to provide safe, high quality drinking water improvement projects that meets regulatory requirements During 2014/15, CHW completed a such as the Safe Drinking Water Act number of major initiatives to maintain 2003 and the Safe Drinking Water and improve water quality for Regulations 2005. customers, including: In accordance with the legislation, we • the Lexton Water Quality Improvement have prepared and implemented a project to increase the security of ‘catchment to tap’ risk management supply and improve aesthetics; plan to identify and manage risks in • the refurbishment of the treated relation to all of our water supply systems. water storage tank at the Maryborough This plan is audited by approved Water Treatment Plant to protect auditors from the Department of Health water quality; and and Human Services and was last • the construction and commissioning completed during February 2014. The of a fluoridation facility at the audit confirmed that CHW continues to Maryborough Water Treatment Plant. be compliant with the obligations of the In addition CHW has developed a Safe Drinking Water Act 2003. comprehensive testing and monitoring program to verify the effectiveness of risk management processes. Detailed results of compliance with those parameters specified in the Safe Drinking Water Regulations 2005 are outlined in the Annual Water Quality Report available.
12 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX DROUGHT RESPONSE REPORT
Overall, the region experienced a • An increased reliance on particularly dry season during 2014/15 groundwater supplies was required with both recorded rainfall and reservoir (particularly north of the Great inflows failing to exceed long-term Dividing Range). averages. The following points • Storages generally tracked slightly summarise the general trends below those experienced in experienced during the year: previous years.
System Date Drought Comment Response Action
Amphitheatre All year PWSRs Amphitheatre Reservoir received some winter inflow. However, a dry spring and summer resulted in a decline in reservoir level.
Avoca All year PWSRs Little inflow to surface water storages with reservoirs tracking at very low levels. Supply is being maintained from the reliable groundwater resource.
Ballarat All year PWSRs A low inflow year saw some decline in storage levels. However, the system continues to hold a considerable volume of water.
Beaufort All year PWSRs Reservoir levels gradually recovered throughout much of the year following the completion of dam safety works.
Blackwood All year PWSRs A dry summer and autumn period saw reservoir levels decline gradually, but storages were maintained at healthy levels throughout the year.
Clunes All year PWSRS Groundwater levels remained similar to previous years and there were no supply issues.
Daylesford All year PWSRs A dry spring resulted in reservoir levels declining as early as November. As a result, the system tracked lower than the previous year.
Dean All year PWSRs A groundwater system that continued to supply sufficient volumes of water.
Forest Hill All year PWSRs Groundwater levels remained similar to previous years and the system performed in a reliable manner.
Landsborough All year PWSRs A reliable groundwater supply system that performed well throughout the year.
Learmonth All year PWSRs A groundwater system that continued to provide a reliable supply.
Lexton All year PWSRs Lexton’s new groundwater supply delivered a reliable water source during a relatively dry season.
Maryborough All year PWSRs Storage levels resulted in similar levels experienced in previous years, largely due to the reliance on the water supply from Tullaroop Reservoir.
Redbank All year PWSRs Redbank Reservoir remained dry. However, the new groundwater supply provided a reliable supply source throughout the year.
Waubra All year PWSRs A reliable groundwater supply system that continued to perform well throughout 2014/15.
Despite a particularly dry season, the water restriction status remained at Permanent Water Saving Rules (PWSR) across all supply systems.
2014/15 ANNUAL REPORT 13 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY PART 3 ENVIRONMENTAL AND SOCIAL SUSTAINABILITY
ENVIRONMENTAL SUSTAINABILITY
Water conservation CHW continues to help customers to 2. LVF14196 – Greening Ballarat enjoy a healthy, environmentally friendly Schools with Recycled Water CHW continued to support water and low-cost community lifestyle efficiency during the 2014/15 financial This project will provide a sustainable through a drinking tap water initiative. irrigation water supply to the adjacent year which resulted in an extension of As part of the Be Smart Choose Tap current programs including: campuses of Ballarat Grammar program, CHW has installed more School and Wendouree Primary • The State Government Showerhead drinking fountains at key locations School. The project will investigate Exchange Program for residential around our region so that adults, alternative and on-site water supplies customers continued, although in children and pets have access to such as stormwater and small numbers due to the high free quality drinking water where they groundwater. Other alternative water penetration of water-efficient need it most. sources will also be investigated showerheads in our communities. The such as the use of recycled water small business rebates (non-residential Sustainable water use from the Ballarat North Water program) continued to assist Reclamation Plant. The project will businesses in its scaled down form. CHW had two projects successfully enable the two schools to have • The waterMAP program for large approved under the Living Victoria Fund access to a sustainable source of non-residential customers continued Round 2 during the financial year: water for keeping playing fields and as a voluntary participation program. gardens green without reliance on 1. LVF14175 – Recycled Water for CHW’s commitment to water the potable urban system. The Ballarat Demonstration Farm efficiency also saw the continued project is due for completion in 2016. major involvement in the Living This project will provide a sustainable Ballarat Whole of Water Cycle source of recycled water from the Management Project. The project Ballarat North Water Reclamation The central region sustainable has produced further work, including Plant for irrigation purposes at the water strategy a Department of Environment, Land, nearby Ballarat Demonstration Farm. The Central Region Sustainable Water Water & Planning (DELWP)-managed The Farm is used by local school Strategy (SWS) was launched by the and CHW-led project to develop a groups to facilitate agricultural state government in Ballarat in 2006. Ballarat Whole of Water Cycle education and is also used by the This strategy contained a number of Management Plan. Central Highlands Agribusiness actions to complete, based around Forum to investigate the suitability of Encouragement and support of local reducing consumption demand levels new crops for the district and holding government water conservation and building additional infrastructure to field days. The provision of a programs continued. CHW continues increase the reliability of available water sustainable irrigation supply will to be an active partner partner in the resources. These actions have all been greater increase the potential for the Regional Sustainability Alliance Ballarat. successfully implemented, with the Farm to investigate and trial new community now enjoying the benefits Water efficiency remains an important crops. This project is due for of a sustainable water supply for the element of planning future demand and completion in mid/late 2015. supply of water. foreseeable future. It is anticipated that the Central SWS will be reviewed during 2016.
14 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX
Sustainable and resilient water Regional catchment strategy Catchment risk management services systems CHW continues to engage with CHW continues to implement actions CHW has also received funding from Catchment Management Authorities to reduce risks to water quality in its the state government during 2014/15 with regard to the Corporations assets declared water supply catchments. to assist in the development of a and their association with regional In 2014/15, 55 catchment hazard whole-of-water-cycle management plan natural resources. This was underpinned notifications were closed out by for the Ballarat region as part of the by the reinforcement of drinking water catchment field staff with the majority of Ballarat and Region’s Water Futures quality standards and the impact of these were in relation to perimeter fence project which was based on extensive broader catchment land use. breaches surrounding Reservoirs. community consultation. This project Opportunities to align projects that have Statutory planning permits continued to will examine current demand trends and mutual benefits to the community, land be assessed against the Ministerial examine the reliability and access to holders and the environment are Guidelines for planning permits in open current water resources and is due for reviewed regularly with the Corangamite potable water supply catchments. Our completion in 2017. and North Central Catchment staff worked with the Moorabool, Management Authorities. Pyrenees and Hepburn Shire Council in CHW has contributed to the City the completion of municipal Domestic of Ballarat’s Stormwater and Urban CHW’s Catchment and Land Management Plan has been aligned to Wastewater Management Plans. The Flood Management Taskforce and completion of these works resulted in also to the Greening Ballarat initiative. deliver the outcomes of Regional Catchment Strategies. The plan has six the processing of 85 planning applications This has identified six key local within potable water supply catchments. projects that will benefit from the use programs delivered through the of stormwater resources. Sustainability team which are: Fencing around water supplies provides • Source Water Protection one of the first barriers to protect water quality. In 2014/15 approximately • Land Maintenance Water supply demand strategies 4.6 km of fencing was replaced around • Biosecurity Victoria has an integrated and dynamic water assets. In addition to this 4.2 km water planning framework, in which • Fire Management of internal roading was upgraded to Water Supply Demand Strategies • Biodiversity provide management vehicle access. (WSDS) play an important role in guiding • River Health strategic local planning for regional Maryborough water urban water corporations. The purpose of the WSDS is to identify the best mix Victorian waterway supply catchments of measures to maintain a balance management strategy Fencing of a 1km section of McCallum’s between the demand for water and Creek was completed to remove stock Follow our commitment to River Health available supply in our towns over a 50 access and improve water quality. An the Corporation has completed an year outlook. alternative farm water solution was extensive willow tree eradication installed with the neighbouring landholder, CHW released a the WSDS for each of program over the last decade spanning, this included reticulated stock water its fifteen water supply systems in across the land estate and 34km of troughs and tanks. A diversion weir is 2011/12 and is required to review the waterway. The works included the also positioned within this reserve which strategy at five year intervals. Water removal and rehabilitation of willow can divert water to Talbot Reservoir. Security Outlooks, which are part of the infestations at the Moorabool and Lal strategy, are reviewed and updated on Lal reservoirs and land holdings in the an annual basis. These show the Bullarto district. This work has improved Health based water quality expected resource position over a 1-2 surface water quality and quantity as it targets and risk assessments year outlook period for a range of moves through our catchment systems. climatic scenarios. Ongoing maintenance of our waterways Our drinking water catchments were Since the release of the strategies in continues to be completed during assessed for biological, chemical and 2012 there has been significant summer months so as to prevent the physical risks on surface and consideration and consultation reestablishment of willow around our groundwater systems during 2014/15. regarding water resource management reservoirs and waterways. A new health based target model was taking account of best understanding of trialled for the Daylesford Water Supply System. This was validated against the supply alternatives and demand River health projects requirements. CHW has commenced treatment process and as a result water development of an Integrated Water CHW partnered with the Corangamite quality data to determine an appropriate Cycle Management Plan for Ballarat Catchment Management Authority source category was identified. We which was one of the initiatives arising during 2014/15 to conduct river health collaborated with Goulburn-Murray from the Living Ballarat Project. The works on the Lal Lal Creek at the Water in completing joint risk learnings from this project will be historic Lal Lal Estate, Lal Lal. The River assessments for the Newlyn and applied to other CHW supply systems Health Program removed approximately Tullaroop catchments and met with where applicable. The overall benign 0.5ha of willows, excluded stock from industry peers to review health based water resource position over the 400m of waterway and provided target assessment methodologies. 2014/15 period has provided good appropriate stock crossings with the opportunity for long term planning and aim of works to continue on the CHW is hence well positioned to remaining 3km of waterway throughout produce updated the WSDS by 2017. the property over the next few years (see project highlight).
2014/15 ANNUAL REPORT 15 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY
Biodiversity program • environmental impact assessments Biodiversity offsets of capital infrastructure projects CHW is committed to the protection, Conservation actions were implemented enhancement and restoration of natural • school planting days along the at 13 offset sites as a result of native assets on owned and managed land. Yarrowee River vegetation clearance during capital During 2014/15 CHW continued to • 15,000 native trees and shrubs works projects. These actions were in implement our Biodiversity Program planted achieving 12ha of native accordance with approved offset which focused on: revegetation along waterways and management plans set by the • implementation and monitoring of 10 decommissioned forestry coupes. Department of Environment, Land, Offset Management Plans A partnership program continued to Water and Planning. • control of woody weeds in high be implemented with the Corangamite A new offset site has been created at conservation value areas CMA to improve the condition of a Musical Gully Reservoir due to 20ha wetland area in the Moorabool • building knowledge of biodiversity unavoidable vegetation losses Catchment. Natural regeneration, assets through flora and fauna surveys associated with the update of the weed control and restoration of natural Musical Gully Dam Wall in 2013. • management of Environment drainage were implemented as part protection and biodiversity of a 5 year program. conservation act (EPBC) listed Basalt Peppercress Lepidium hyssopifolium
GROUNDWATER LICENCES
Water Supply Bore Name Groundwater RWA Licence Annual Licence Volume Extracted System Licence Number Authority Volume (ML) in 2014/15
Amphitheatre Amphitheatre Bore 8003903 GWMWater 20 0
Avoca Bung Bung Bore BEE014154 G-MW 250 179.5
Ballarat Ballarat West BEE031536 SRW 1700 559.4
Bungaree Bore BEE027683 SRW 120 0
Beaufort Raglan BEE030997 SRW 200 26.5
Blackwood Barry’s Reef Bore BEE027580 SRW 50 0
Clunes Clunes (UW usage) BEE069135 G-MW 350 209.4
Daylesford Coomora Bore BEE069510 G-MW 273 0.1
Dean Dean Bore BEE025842 SRW 30 18.7
Forest Hill Forest Hill Bores BEE004957 G-MW 350 165.1
Landsborough / Navarre Bore 8003328 GWMWater 150 35.3 Navarre
Learmonth Bankin Hill BEE005382 G-MW 100 45.5
Lexton Gordon Hill BEE071487 G-MW 30 29.4
Maryborough Moolort Bores BEE018090 G-MW 565 119.1
Stoney Creek Bore BEE049134 G-MW 0 2.6
Redbank Redbank Bores BEE056519 GWMWater 50 5.8
Waubra Waubra Bores BEE014898 G-MW 70 29.5
16 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX CENTRAL REGION SUSTAINABLE WATER STRATEGY
Released in 2006, the Central Region Sustainable Water Region SWS have been implemented or are of an ongoing Strategy (SWS) commits to a wide range of actions to protect nature. CHW is responsible for several actions outlined in the rivers and aquifers while securing water supplies for cities, Central Region SWS. The status of those actions is towns and farms in Melbourne, Ballarat, Geelong, the Inner summarised in the following table. CHW expects the Central West and the Latrobe Valley. Most actions in the Central Region SWS to be reviewed during 2016.
Action Status Comments
Action 4.1 The government requires CHW to work with AHEAD OF CHW remains ahead of schedule to achieve these targets its customers to achieve a 25% reduction in total per SCHEDULE due to the implementation of successful demand capita water use for Ballarat by 2015, increasing to 30% management programs and the community’s response to by 2020. The basis of comparison is the 1990s average responsible water usage. water use. Residential consumption is currently less than the 2020 target of 197 litres per person per day and non-residential customers are on track to achieve the 2015 target.
Action 4.2 CHW will implement a range of conservation AHEAD OF Due to highly successful water efficiency programs, the and efficiency measures within the residential sector SCHEDULE 2,200 ML per year target water savings by 2014 is being (homes) and non-residential sector in order to meet its exceeded as a result of significant savings achieved in both new conservation targets. residential and non-residential programs.
Alternative Supplies
Action 4.3 CHW will substitute potable water COMPLETED Construction work has been completed and the delivery with recycled water in Lake Wendouree and for use of recycled water to Lake Wendouree commenced in by industry. August 2009.
Interconnections
Action 4.4 CHW will connect Cosgrave Reservoir to COMPLETED The Cosgrave-White Swan pipeline connection was White Swan Reservoir to allow access to CHW’s currently commissioned in late 2006 and this continues to be a unused entitlement. valuable supply source for the Ballarat and district water supply system.
Action 4.5 CHW will develop infrastructure to transfer COMPLETED The Newlyn pipeline connection was completed in unused entitlement in Newlyn Reservoir directly into White October 2007 and this supply source further adds to the Swan Reservoir via the Cosgrave-White Swan pipeline. security of water supplies for the Ballarat and district water supply system.
Action 4.6 CHW will interconnect to the Goulburn system COMPLETED The Ballarat-Goulburn connection was completed well (White Swan Reservoir to Lake Eppalock) to allow access ahead of schedule in May 2008. Since commissioning, the to water from the Waranga Channel. pipeline has contributed more than 22,000 ML to Ballarat’s water supply system.
Augmentations
Action 4.7 CHW will develop infrastructure to supply COMPLETED This groundwater project was completed in July 2007 and water from Cardigan aquifer to the Ballarat urban water the resource remains available to supplement Ballarat's supply system during dry periods. urban water supply.
Action 4.8 Following the completion of major COMPLETED This was completed late 2010. augmentation options for Geelong and Ballarat, the government will transfer part of the water authorities’ water entitlements in the West and Lower Moorabool catchments to the environment.
2014/15 ANNUAL REPORT 17 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY BULK ENTITLEMENT COMPLIANCE REPORT
2014/15 General CHW hold seventeen Bulk Entitlement Conversion Orders CHW also maintain a Bulk Entitlement Metering Plan to which define the corporation’s legal right to extract water to ensure repairs, replacements, operational processes and data supply its fifteen water supply systems. These Orders require control is conducted in accordance with Bulk Entitlement reporting on various aspects which are summarised below. requirements. During the 2014/15 period, CHW did not make application to the Minister in regard to Making Allowances or Environmental Obligations.
Bulk Entitlement Annual Volume remaining Transfers of BE Failures or Comment (*) Order Amount in Reservoirs at or to Supply Difficulties with Taken from 30 June 2015 (*) System, complying with specified Amendments, requirements point(s) New Entitlements of BE (*) under or Credits (*) Order (*)
Bulk Entitlement (Upper 4146.5 ML Beales - None None West Moorabool (14.1 (e)) 12 ML Wilsons - (14.1(g),14.1(h), (14.1,(k),(l)) System) Conversion 6 ML Moorabool - 14.1(i), 14.1 (j)) Order 1995 1651 ML (14.1 (d))
Bulk Entitlement 3937.6 ML CHW share None None Total net gain to CHW’s (Lal Lal) Conversion (CHW) of Lal Lal (18.1(l),18.1(m), (18.1(p), 18.1 (q)) share of the reservoir was Order 1995 1685 ML Reservoir - 18.1(n),18.1(o)) 2302 ML. (18.1(f),(j). No (enviro) 27240.8 ML water was taken from any 2112 ML (18.1(e)) point other than the specified (Barwon point (18.1(i)). Water) (18.1(g))
Bulk Entitlement 0 ML Colbrook None None Reservoir remained out of (Ballan) Conversion (12.1 (c)) 146 ML (12.1(e)) (12.1(f)) (12.1(i)) (12.1(j)) service during 2014/15. Order 1998 (12.1(g)) (12.1(h))
Bulk Entitlement 30.2 ML Not None None (Blackwood and Barry’s (11.1(e)) Applicable (11.1(g)),(11.1(h)) 11.1(k)) (11.1(l)) Reef)) Conversion (11.1(i)), 11.1(j)) Order 1998
Bulk Entitlement 7678.7 ML White Swan None None (Yarrowee-White Swan (14.1(e)) 6916 ML Gong (14.1(g)),(14.1(h)) (14.1(k)),(14.1(l)) System) Conversion 502 ML Kirks (14.1(i)), 14.1(j)) Order 2002 220 ML Pincotts 196 ML (14.1(d))
Bulk Entitlement 0 ML 42.4 ML None None No surface water used (Landsborough/ 12.1(d)) (12.1(c)) (12.1(f)) (12.1(g)) (12.1(j)) (12.1 (k) during 2014/15. System now Navarre) Conversion (12.1 (h) (12.1(i)) relies on groundwater supply. Order 2003
Bulk Entitlement 18.6 ML 67.1 ML None (12.1(e)) None System switched to (Lexton) Conversion (12.1(c)) (12.1(b)) (12.1(f)) (12.1(g)) (12.1(i)) (12.1(j)) groundwater in 2014/15 Order 2004 (12.1 (h)
Bulk Entitlement 0 ML 0 ML None None System reliant on (Redbank) Conversion 12.1(d)) (12.1(c)) 12.1(f)) (12.1(g)) (12.1(j)) (12.1 (k) groundwater supply for Order 2003 (12.1 (h) (12.1(i)) 2014/15
Bulk Entitlement 21.5 ML Sugarloaf None None System reliant on (Avoca) Conversion 12.1(d)) 20 ML 12.1(f)) (12.1(g)) (12.1(j)) (12.1 (k) groundwater supply for Order 2003 (12.1(c)) (12.1 (h) (12.1(i)) 2014/15
18 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX
Bulk Entitlement Annual Volume remaining Transfers of BE Failures or Comment (*) Order Amount in Reservoirs at or to Supply Difficulties with Taken from 30 June 2015 (*) System, complying with specified Amendments, requirements point(s) New Entitlements of BE (*) under or Credits (*) Order (*)
Bulk Entitlement 643.8 ML Wombat None None (Daylesford- Hepburn 12.1(c)) 286 ML Bullarto 12.1(e) (12.1(i)) (12.1(j)) Springs) Conversion 57 ML Hepburn 12.1(f)) (12.1(g)) Order 2004 30 ML (12.1 (h) (12.1(b))
Bulk Entitlement 469.9 ML Cosgrave None None (Creswick) Conversion (12.1(c)) 301 ML Russells (12.1(e)) (12.1(f)) (12.1(i)) (12.1(j)) Order 2004 25 ML Dean (12.1(g)) (12.1 (h) 75 ML (12.1(b))
Bulk Entitlement 167.6 ML Musical Gully None None Some groundwater was (Beaufort) Conversion 12.1(d)) 220 ML Troys 8 ML 12.1(f)) (12.1(g)) (12.1(j)) (12.1 (k) added to Musical Gully Order 2005 (12.1(b)) (12.1 (h) Reservoir during 2014/15. (12.1(i))
Bulk Entitlement 12.0 ML 35.6 ML None (12.1(e)) None (Amphitheatre) (12.1(c)) (12.1(b)) (12.1(f)) (12.1(g)) (12.1(i)) (12.1(j)) Conversion Order 2003 (12.1 (h)
Bulk Entitlement 0 ML None (12.1(e)) None Reservoir remained out of (Skipton) Conversion (12.1(c)) (12.1(f)) (12.1(i)) (12.1(j)) service during 2014/15. Order 2004 (12.1(g)) (12.1 (h)
Bulk Entitlement 1455.5 ML Not Applicable None None Tullaroop Reservoir was (Loddon System (14.1(b)) (14.1(c)) (14.1(e)) (14.1(i)) (14.1(j)) again the main water supply – Part Maryborough) (14.1(g)) (14.1(h)) source for Maryborough Conversion Order 2005 during 2014/15. 290ML was transferred into ABA039610 to increase water available to 1490ML for supply to Maryborough
Bulk Entitlement 1434.9 ML Evansford None None Reflects the total volume of (Evansford-Talbot (17.1(b)) 1126 ML (17.1(d)) (17.1(f)) (17.1(k)) (17.1(l)) water taken for Maryborough System – Part Talbot (17.1(g)) (17.1(h)) (i.e. volume leaving Maryborough) 179 ML (17.1(i)) Centenary Reservoir less any Conversion Order 2006 Centenary (17.1(j)) groundwater into Centenary 173 ML Reservoir). (17.1(c)) Minimal groundwater entered Centenary during aquifer and pipeline testing.
Bulk Entitlement 217 ML Not None Not applicable A full allocation was available (Bullarook System) (12.1(b)) applicable (12.1(f)) (12.1(g)) (12.1(h)) (12.1(i)) for the Bullarook and Loddon Conversion Order 2009 systems in 2014/15.
*Note: The numbers in brackets refer to the relevant clause of the Bulk Entitlement Order
2014/15 ANNUAL REPORT 19 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY GREENHOUSE GAS EMISSIONS
CHW produces greenhouse emissions from activities such as emissions from wastewater treatment and carbon dioxide electricity use for pumping, water and wastewater treatment from combustion of fuel to provide energy for vehicles, and office based facilities, methane and nitrous oxide generators and diesel pumps.
Scope 1 and 2 greenhouse gas emissions by operational area
ESC 2010/11 2011/12 2012/13 2013/14 2014/15 Variance Comments Performance Indicator Scope 1 & 2 (tCO2-e) %
Water treatment A rise in emissions has been observed due to an and supply 4238 2932 3148 4268 5886 38% increase in water pumping including utilisation of the Goldfields Superpipe and the Ballarat West Bores.
Sewerage A decrease in emissions has been reported due to a treatment and 12347 9715 9417 10140 8727 -14% reduction in fugitive emissions at the Ballarat South management Wastewater Treatment Plant.
Transport A 34% reduction in transport related emissions has been observed across the business due to an 1079 1085 1029 928 615 -34% internal fleet review process which has reduced the organisations use of fleet vehicles.
A rise in emissions has been observed due to Other 1133 1079 988 950 1064 12% increase in gas usage at the Learmonth Road Office.
Offsets Offsets gained from claiming of Renewable Energy -15 -15 -15 -15 -15 0% Certificates (RECs) from Kirks Reservoir Depot Solar Panel System.
Total 18782 14826 14596 16270 16277 0%
CHW’s greenhouse gas emissions have been assessed in accordance with the National Greenhouse Accounts (NGA) Factors July 2013, National Greenhouse and Energy Reporting System Measurement −Technical Guidelines, July 2013 and National Greenhouse and Energy Reporting (Measurement) Determination June 2008.
Energy consumption
ESC 2010/11 2011/12 2012/13 2013/14 2014/15 Variance Comments Performance Indicator kWh per ML
Water treatment An increase in electricity consumption for the water distribution system has driven the increase in kWh and supply 829 818 777 764 850 11% per ML, specifically the utilisation of the Goldfields Superpipe.
Sewerage A decrease in the volume of wastewater treated has treatment and 630 710 778 766 806 5% led to an increase in the amount of energy management consumed per ML of sewage treated.
Our Energy Efficiency Committee continued to promote External reporting on greenhouse gas emissions is provided energy awareness and facilitate energy efficiency outcomes to stakeholders including the Essential Services Commission, through the use of technological and behavioural change. Victorian Water Association, Water Services Association of Energy efficiency initiatives undertaken in the reporting Australia and the Department of Environment, Land, Water period include: and Planning. • installation of solar panels at Learmonth Road office • ongoing business energy efficiency review • ongoing demand management control systems on the Goldfields Superpipe • energy efficiency improvement and demand management control at key infrastructure sites
20 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX SOCIAL SUSTAINABILITY REPORTING
Value of community service obligations provided
No. Applied For Amount Granted Amount Granted (2014/15) (2014/15) (2013/14)
Rebates and Concessions
Pensioner & Health Care card Concessions 22,640 $4,772,133.00 $4,559,087.00
Life Support Rebates 9 $760.00 $790.00
Rebate Paid to Not-for-Profit Organisations 1,283 $313,299.00 $317,513.00
Hardship Relief
Utility Relief Grant Scheme 270 $104,832 $113,298
CHW Hardship Relief 34 $7,911 $17,974
Water Saving
Water Saving Products Rebates 394 $99,884.00 $113,003.00
Guaranteed Service Levels
Customer Charter Rebates 40 $2,000.00 $2,150.00
* Customers receive payment for the Utility Relief Grant Scheme directly from the Department of Health and Human Services.
Management of social and Community reference economic impacts committees
During this reporting period, CHW Maryborough water resource undertook a number of measures stakeholder group to address the social and economic impacts on customers in relation The group aims to meet twice a year to: to water restrictions, difficulties with • discuss with community members payment of accounts and other and council representatives water circumstances. resource options and projects for the These include: Maryborough and district water supply system, and • promotion of Permanent Water Saving Rules throughout the region. • to agree on the best forms of communication within the community. • CHW’s Customer Resolution Officer worked with customers throughout The group consists of up to 12 the year to achieve goals in relation members and is chaired by Wendy to service delivery. McIvor (Central Goldfields Shire Council Mayor) • CHW’s Corporation’s Customer Assistance Program (which includes The group met in 2014/15 and discussed a dedicated Customer Assistance a wide range of key topics including: Officer) facilitated: • water resources, capital investment – access to state government program, concessions • water quality improvement program, – access to the Utility Relief and Grant Scheme – referral to a sponsored no-cost • community support initiatives. financial counselling service – a large range of payment options including bill smoothing – access to the Water And Sewerage Connection Scheme
2014/15 ANNUAL REPORT 21 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY PART 4 CORPORATE INFORMATION
ORGANISATIONAL STRUCTURE
State Government of Victoria Hon. Lisa Neville MP Minister for Environment, Climate Change and Water
Audit and Risk Board of Directors Committee Chair Jeremy Johnson
Executive Assistant Rebekah Fraser
Strategic Planner Managing Director Phillip Anstis Paul O’Donohue
Manager Commercial and Business Development Simon Cornwell
People and Infrastructure Infrastructure Business Customer and Culture Planning and Delivery Services Community Robyn Clark Operations Acting Anthony O’Brien Paul Clark Jeff Haydon Simon Cornwell
OH&S Finance and Customer service Sustainability Infrastructure governance People services Community Water and delivery Strategic engagement and Learning and wastewater Capital expenditure procurement marketing development treatment program Business analytics Land development Change Water resources management ICT Network field Laboratory services People strategy Strategic asset management and planning
22 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX CORPORATE GOVERNANCE
Role of the board Audit & risk committee • Requisite professional qualification in accounting; or The Board sets the strategic directions, The Audit & Risk Committee supports policies and goals for the business and the Board in fulfilling its responsibilities • Comparable experience with financial management. It comprises of six in sound corporate governance and in oversight responsibilities. directors, a chair and managing director. the reporting practices of CHW. Membership from January 2015 to The chair and directors are appointed The Committee also: December 2015 by the Minister for Environment, Climate Change and Water. The managing • Oversees and appraises the scope Stewart Howe (Chair) director is appointed by the Board. and quality of the audits conducted Gaye Mason by internal and external auditors Michael Myers • Maintains, by holding quarterly Board meetings meetings, open lines of communication Sustainability committee Board meetings are scheduled bi-monthly among the Board, internal auditors in February, April, June, August, and the external auditors to The function of the Sustainability October and December with strategic exchange views and information, and Committee is to ensure that the Board briefings held on most other months confirm their respective authorities maintains a focus on Sustainability throughout the year. Minutes of meetings and responsibilities throughout its policies, operations and record Board decisions and are • Serves as an independent and service delivery. This includes the broad available on the Corporation’s website. objective party to review the reliability areas of: and integrity of financial information • Resource sustainability Managing Director Business Unit • Determines the adequacy of CHW’s • Water efficiency administrative, operating and • Climate Change Response The Managing Director Business Unit accounting controls oversees the high level priorities and • Catchment management and corporate projects of the organisation • Identifies and monitors systems for biodiversity; and reporting risks, with the aim of including: • Energy and waste management. minimising them • Board of Directors Operations: This will be achieved through: Management of all Board operations The authority and role of the Audit & • maintaining, by holding quarterly for our 7 Government elected Risk Committee is set out in the Audit & meetings, open lines of communication Directors including publishing of all Risk Committee Charter. The Charter is among the Board, and key Board and Sub-Committee papers a regulatory requirement that outlines stakeholders to exchange views and and correspondence. the parameters and framework in place to ensure the Audit & Risk Committee is information, and confirm their • Executive Operations: Oversight fulfilling its corporate governance respective authorities and and leadership of the Executive responsibilities including but not limited to responsibilities Management Team and Executive those outlined in the “Standing Directions • oversight of Sustainability Framework; Assistants team to ensure that key of the Minister for Finance under the business priorities and corporate • providing thought leadership into Financial Management Act 1994”. projects are centrally managed. policy development of the Board; and • Commercial and Business Membership • making recommendations consistent Development: Supporting growth to with the strategic plan to the Board The Audit & Risk Committee will comprise to assist the advancement of our ensure our activities add value to the at least three independent non- business and our customers. integration of the Sustainability executive directors – and may include Management Principles into the • Strategic Planning: Provision of one independent external member – performance of the Corporation’s strategic planning services and with diverse and complementary functions, powers and duties. advice to the board and executive backgrounds. Each member should have management team including such a working knowledge of finance and The Committee will annually review its high level projects as the Corporate accounting practices, compliance and/ Sustainability Framework (Principles; Plan, Environmental scanning to or risk management practices and be Objectives; Key Programs), its Work identify and understand emerging capable of making a valuable contribution Plan and Annual Calendar. trends and issues of importance, to the Committee. At least one member Membership from January 2015 to Water Plan and Strategic planning must have appropriate expertise in December 2015 processes such as scenario planning financial accounting or auditing. and robust strategies. Ian Coles (Chair) Appropriate expertise being defined as Stewart Howe one or a combination of the following: Jo Plummer • Relevant past employment experience in an accounting profession;
2014/15 ANNUAL REPORT 23 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY
People, culture & Membership from January 2015 to • Provide a connection between the safety committee December 2015 Corporate Plan and our customers Richard Nicholson (Chair) to ensure the services we provide The role of the People, Culture & Safety Jeremy Johnson reflect the needs and expectations of Committee is to assist the Board of Ian Coles customers and community. Directors to fulfil its governance • Receive feedback on community responsibilities in relation to satisfaction with our current level of organisational development and Customer & community service performance. employee related activities including partnerships committee • Strategic focus on being proactive in safety and wellbeing. The Customer & Community Partnerships mitigating possible arising problems The People, Culture & Safety Committee was established to ensure within the community. Committee will: CHW remains responsive to residential • Ensure an appropriate level of • Review the strategies and policies to and commercial customers’ needs consideration is given to identifying attract, retain, develop and provide through ensuring that the Board remains and implementing policies and succession plans so that we have informed on issues that impact processes to provide better service the highest quality staff to allow it to customers and their perceptions of us. to our customer and community. maintain and enhance its performance. The Customer & Community • Maintain a forum that emphasises a • Ensure that we have a safety and Partnerships Committee will: strategic, whole of business focus to OH&S management system within • Provide a link between the CHW customer perception. the organisation which is being Board and its customer base so • Board awareness of local priorities, proactively managed so that CHW is CHW is responsive to its customer’s perspective, values and issues. a safe workplace and key needs and concerns. performance indicators are being met Membership from January 2015 to • Provide strategic opportunities for and over time improved. December 2015 us to develop positive community • Manage and monitor all related engagement and perceptions. Jo Plummer (Chair) polices to ensure they meet the Michael Myers • Provide a mechanism by which we relevant mandatory and statutory Gaye Mason obligations as well as the Public can receive feedback on concerns, Sector Code of Conduct. issues and possible solutions from the perspective of the various interest • Ensure Executive remuneration, Performance appraisals groups and to identify the trends in performance management and review customer service. Performance appraisals are processes and Executive performance conducted annually. bonuses fall within GSERP • Provide CHW with access to Remuneration policy parameters. valuable local community and consumer perceptions. • Ensure that CHW has established relevant industry benchmarks appropriate for the employment conditions and a competitive remuneration structure. Board member meeting attendance • Monitor trends in relevant strategic Board member No. of meetings attended employment indicators. 1 July 2014 – 30 June 2015 • Review and endorse the People, Culture & Safety Strategy and action plans. Jeremy Johnson (Chair) 6 of 6 • Review and receive relevant audit Richard Nicholson (Deputy Chair) 6 of 6 reports and monitor the progress and Paul O'Donohue (Managing Director) 6 of 6 effectiveness of remedial actions arising. The Committee may also be used by Ian Coles 6 of 6 the Managing Director or Directors to Stewart Howe 5 of 6 canvass any issues about staffing or organisation structure however it cannot Jo Plummer 6 of 6 provide any binding direction to the Gaye Mason 6 of 6 Managing Director on these matters. Reporting responsibility: All matters relating Michael Myers 6 of 6 to the Managing Director’s employment terms and conditions will be referred to the Board Chair.
24 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX BOARD OF DIRECTORS
Jeremy Stewart Howe, Gaye Mason, Johnson, Chair Director Director Dip (BusSt) BEng (Chem), BBus (Acc), Jeremy is the M (AppFin), GradDip Chief Executive FAICD, FFin, (AppInfSys), Officer of Sovereign FAusIMM(CP) GradDip Hill, Ballarat. He is Honorary Treasurer Stewart has 30 years’ experience in the (AppCorpGov), of the Council of Australasian Museum global oil, gas and mining sectors in MBA, FCPA, FAICD, AGIA/ACSA Directors, past President of the Board executive management, operations, Gaye is a board member of the and Executive Council of the Victorian mergers and acquisitions and Southern Metropolitan Cemeteries Trust, Employers’ Chamber of Commerce and restructuring roles. His career with BP an independent member of the Audit Industry (VECCI) and Chairman of the and Zinifex included direction of major and Risk Committees for the Victorian Victoria Tourism Industry Council. investment programs to develop long Departments of Health and Justice and In 2011 he was awarded an Honorary life natural resource assets, plus she chairs the Audit and Risk Doctorate by the University of Ballarat for directorship of a range of subsidiary and Committee at Wyndham City Council. his services to the business community. joint venture companies. Appointed: 1 October 2012 A Justice of the Peace, Jeremy is a For the past six years Stewart has run qualified Company Secretary and Fellow his own corporate advisory firm, Michael Myers, of the Governance Institute of Australia. directing restructuring initiatives and Appointed: 1 July 2010 investment selection for financiers. He Director holds non-executive advisory roles and LLB, BCom, ownership interests in privately owned GAICD Richard mining service companies. Nicholson, A solicitor with Appointed: 1 October 2011 more than 30 Deputy Chair years’ experience, Michael operates a BEng (Hons), Jo Plummer, mediation practice. GAICD Director During his time in the tourism and A director and hospitality industry he managed and owner of a 100 year old family business GAICD, MBA, oversaw the re-development of the in commercial construction, Richard is a GradCert (Mgt), Royal Mail Hotel in Dunkeld and the qualified civil engineer with practiced skills Dip (RetailMgt), Victoria Hotel in Port Fairy. Cert IV (TAA) in business and financial risk management. Michael also has extensive experience A Graduate Member of the Australian Jo is owner and Director of Out of the serving on boards at a variety of Institute of Company Directors, he is a Box Business Services. This boutique education, tourism and welfare-based Director and past President of the management and consultancy business community organisations. Sovereign Hill Museums Association specialises in assisting organisations, Appointed: 1 October 2013 (2006-2008). teams and individuals to think strategically and operate efficiently. Appointed: 1 October 2011 She has a strong commercial Paul O’Donohue, background having held product Managing Ian Coles, development and procurement, Director Director business planning, and strategic design roles with well-known retail brands for BA (Mgt), BEng (Hons), over 20 years. She also has previous Dip (Ldrshp), GradDip experience as a non-executive Director GradDip (BusMgt), (BusAdmin), and Committee Chair in the not-for- GAICD, FIWA FAICD profit sector. Paul is the Managing Director of CHW. Ian is a consultant and company Appointed: 1 October 2011 Since joining the organisation in 2003, he director with extensive public and has overseen many key business areas private sector experience in including major project delivery, strategy, management, environmental and long term planning, communications sustainability programs and projects. and account management. He is a Director of several private sector Prior to joining CHW, Paul held senior and government organisations, an management positions in the recreation independent member of EPA Victoria’s and hospitality sectors. Risk and Audit Committee. Appointed: July 2012 Appointed: 1 October 2007
2014/15 ANNUAL REPORT 25 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY EXECUTIVE TEAM
Jeff Haydon, General Manager Simon Cornwell, Customer service Infrastructure Planning and Operations Acting Executive Manager Management of all customer enquiries, including billing and collection, debt This division comprises the following Infrastructure Delivery management, financial difficulties, trade sections and services. The Infrastructure Delivery Division waste management and key account Sustainability develops and maintains strategies management services. systems, policies and procedures in Protect source water quality through the Network field services relation to provision of new water and management of our surface water wastewater infrastructure. It also provides Manages the water and sewerage catchments and aquifers; care for and governance, leadership and oversight of networks, network maintenance protect our natural assets, including the capital expenditure program. programs, faults and emergency biodiversity and ecological systems; response and non-revenue water maximise the beneficial reuse of biosolids investigations. and reclaimed water; and implement Anthony O’Brien, Community engagement programs to account for and reduce General Manager water consumption, waste generation and marketing and greenhouse gas emissions. Business Services Responsible for external customer Water and wastewater treatment The division comprises the following communication via newsletters, media, functions and services: internet and announcements relating to Provision of safe drinking water, meeting the provision of water and wastewater. Finance and governance Department of Health and Human Includes regular water resource updates Services requirements; sustainable Responsible for ensuring that the and general information on key projects return to the environment of treated financial and accounting operations, and activities. The customer market wastewater meeting EPA corporate functions and obligations of the business research program is also a key role of licence and water quality compliance are managed according to applicable this team, gaining a clear understanding and reporting. standards and regulations with a strong of our customer needs through our Water resources focus on efficiency. Delivering the community engagement program. governance framework including audit Hydrologic monitoring; headwork Land development support, insurance, risk management, operations and dam safety; system business continuity and compliance. Manage and process requirements water resource modelling; and relating to subdivision and special land Information communications management of groundwater licences use requests in relation to water and technology (ICT) and bulk entitlements. wastewater services. Laboratory Delivering ICT services and support to drive improved customer engagement Delivering a comprehensive chemical and business efficiency. Robyn Clark, Executive Manager and microbiological analysis and People and Culture sampling regime while maintaining Strategic procurement National Association of Testing Driving efficient commercial procurement The People and Culture team, in Authorities accreditation to support our outcomes targeted to specific business partnership enables a collaborative, safe water and wastewater operations. needs and market offering and managing and fair workplace. Strategic asset management the governance framework around The team guides the way CHW people and planning procurement policies and practices. are appointed, retained, developed, transitioned and treated. It comprises Strategic management of assets, Business analytics the following services: network modelling, options assessment Management and monitoring of all • people safety (OH&S) and infrastructure master planning and business performance indicators both concept designs for major infrastructure regulatory and non-regulatory. Delivering • employee support/employee benefits projects including the preparation of KPI reporting to the Board and • employee relations advice asset strategy and development of management team to improve resource • management support servicing plans. Prepare drought allocation and business decision-making. response plans and long-term water • acknowledgment and celebration supply demand strategy of each water • learning and development Paul Clark, General Manager supply system. Management of the • people policy and governance annual and long-term organisational Customer and Community capital works program. • workforce reporting This division comprises the following • change management functions and services: • people strategies
26 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX EMPLOYMENT DATA
Employment and culture ensures that we employ the right • A review of our procedures that people and provide them with clear implement the Our People and Code conduct principles direction and challenging work, enable of Conduct Policies to ensure that CHW is committed to treating their performance through strong leadership they contain articulated principles people fairly and taking reasonable and honest feedback, and provide that reinforce the values based management action. The People, ongoing development through targeted organisational culture and the Culture & Safety Committee was learning opportunities. requirements of relevant legislation; established during the 2012/2013 During 2014/15, CHW reviewed and and period and through this governance implemented a number of programs to • Access to a corporate training program mechanism, the organisation has support and develop a values based for all staff that focus on the Victorian embedded the Our People and Code of organisational culture, including: Public Sector Code of Conduct, Conduct policies into the organisation. • A review of the corporate values that safety and customer service. CHW believes that a pro-active culture has engaged all our employees CHW is committed to applying merit is the key to achieving great outcomes • A revised induction process for all and equity principles when appointing, providing the foundation for a high- employees that focuses on the and in the employment of staff. The performing workplace where people requirements of the Victorian Public recruitment and selection process was collaborate to deliver exceptional Sector Code of Conduct, the reviewed during the reporting period to outcomes for our customers and the importance of safety, and other ensure that applicants are assessed and environment. statutory requirements evaluated fairly and equitably on the basis of the key selection criteria and CHW has adopted a holistic approach • An extensive Management key capabilities without discrimination. in creating a positive workplace culture, Development Program to improve The process for recruitment of encompassing all aspects of the management capability at all levels managers and supervisors now includes employment life cycle, such as of the business recruitment, communication, quality a focus on management capability. management, role design and clarity, • A structured program which recognition and reward, development, identifies and develops current and equity and leadership. Our focus on future leaders;
Staff Numbers 2014/15 Gender Participation in the Workforce
Division Total Full Time 2014/15 Equivalent 2014/15 Female employees 35% Managing Director 12.07 Male employees 65% Business Services 31.73
Infrastructure Planning & Operations 55.59 2014/15
Infrastructure Delivery 6.00 Females 68
Customer & Community 78.15 Males 126
183.55 Total 194
Staff by division
13/14 14/15
Admin Officer 112.13 121.75
Executive Officer 6.00 5.00
Field Staff 46.00 45.80
Senior Manager 12.00 11.00
176.13 183.55
2014/15 ANNUAL REPORT 27 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY WORKFORCE INCLUSION POLICY
CHW is committed to fostering a As part of our Workforce Strategy, (women in non-traditional roles, conducive culture that inspires, motivates building workforce diversity and equity people with a disability, Aboriginal and and strengthens the engagement of our practices has been a very deliberate Torres Strait Islander) and increasing people, and mirrors the community focus, which includes engaging interview participation of females in demographics that it serves. traditionally underrepresented groups higher level roles.
Workforce Strategy Initiative Target Outcome Method of achievement
Engaging traditionally At least 1% of the workforce 1% of the workforce has been We have dedicated our underrepresented groups is represented by indigenous represented by indigenous traineeship program to in employment people people during the year employment of Aboriginal and (two people) Torres Strait Islander people
Ensuring increased 50% of vacancies at the Band 90% of vacancies at the Band Affirmative action strategy that representation of female 4 or 5 level have women 4 / 5 level have had women ensures that women have been participation in interviews for shortlisted for interview shortlisted for interview during considered for interview per higher level positions 2014/15 Band 4/5 level vacancy Women have been recruited to 70% of our Band 4 and or 5 positions throughout the 2014/15 period
28 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX HEALTH AND SAFETY REPORTING
OHS Governance & Staff Representation Preventative Programs & Injury Management The 2014/15 year has been one of strong safety We continue to monitor injury trends to identify additional performance within the organisation with the following key preventative controls which further reduce the risk of injury to achievements completed: staff throughout the organisation. The following key • Significant reduction in the number of injuries and the achievements have occurred in 2014/15: severity of injuries. • Analysis of high risk manual handling tasks in consultation • Substantial reduction in incurred Workcover claims costs. with physiotherapists to develop targeted standard operating procedures with video footage and deliver • AS4801 recertification audit completed successfully with training sessions. no areas of non-conformance identified. • Participation in a National Fleet Safety Benchmarking • Further refinement and review of OH&S governance Project to identify further means of improving Fleet Safety arrangements including: initiatives at CHW. – documented OH&S policy – OHS Committee’s Terms of Reference • A Safety Innovation Awards program was introduced in – OHS Committee’s Key Performance Indicators (KPIs). 2014/15 as one of the initiatives in the 2 year 2014/16 OHS Strategy. The purpose of program is to encourage The revised OHS Committee KPIs include a mixture of staff to think outside the square and implement solutions in lead and lag indicators. These KPIs are reported every six their workplace for improved safety outcomes. The awards weeks at OHS Committee meetings, bi-monthly at board recognise and reward creative and practical solutions to meetings and quarterly at People, Culture & Safety Board health and safety and to promote their application across Committee meetings. the Water Industry. To date one team and two individuals Summary of Results: have been formally recognised. • CHW achieved the target Significant Injury Frequency Rate • Offering on-site physio treatment for pre-existing injuries (SIFR) of 17.5 for 2014/15 with a score of 6.7 for the CHW with utilisation in excess of 90%. only measure, and 14.1 for the combined SIFR which • Strengthened partnership between line managers and includes contractor data. The organisation will continue to Safety specialists. lower the target for 2015/16 and introduce new initiatives • Revision of Capacity for Work Procedure to strengthen to ensure people are working safely. preventative injury management and return to work outcomes, 70.0 including annual fit for work assessments as a preventative measure to proactively manage the health of staff. 60.0 • OHS related training session attendance was measured at 50.0 96% for the financial year and significant improvements 40.0 Combined SIFR have been made to the internal OHS related training
30.0 CHW offered to staff. 100% of staff attended an in-house safety SIFR refresher program in 2014/15. 20.0 14.1 • Attendance at scheduled health monitoring sessions was 10.0 6.7 100% for the year with staff attending all sessions scheduled. 0.0 2006-07 2007-08 2008-9 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 • Improvements in return to work processes and the treatment of injured staff resulting in a significant reduction • Additional OHS Committee representatives were elected in the cost of standard claims and the average number of during the year to improve the representation of staff in days lost per Lost Time Injury. The average days lost per teams throughout the organisation. The OHS Committee LTI improved significantly in 2014/15 compared to the now includes 12 staff elected representatives and previous financial year due to an increased focus on 5 management representatives, above the minimum strengthening return to work outcomes to get people legal requirements. back to work quickly and safely. • We continue to have a strong culture of OHS incident Average Lost Time Per LTI – Annual Comparison reporting as indicated in the Victorian Public Sector Commission’s People Matter Survey results with 100% of 35 31 staff indicating they are encouraged to report OHS 30
incidents at work. 25 Average Lost 20 15 15 12 9 10 5 3 5 2 AVERAGE DAYS LOST PER LTI LOST PER LTI DAYS AVERAGE 0 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
YEAR
2014/15 ANNUAL REPORT 29 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY ACCESS TO INFORMATION
Freedom of Information Building Act 1993 The Freedom of Information Act 1982 Central Highlands Water conducts a allows public access to documents held regular program to ensure compliance by government entities. During 2014/15 with all relevant provisions of the the Corporation received two valid Building Act 1993 in building and requests for access to documents maintenance activities, any areas of under the Act. Partial access was concern are logged and addressed. granted in one case and the other case was referred to another agency. Privacy and Data Protection Requests for access to documents under the Freedom of Information Act Act 2014 (Vic) 1982 are to be addressed to: The Privacy and Data Protection Act Freedom of Information Officer 2014 (Vic) Received Royal Assent in Central Highlands Water September 2014 and replaced the PO Box 152 Information Privacy Act 2000. Ballarat VIC 3353 The Corporation has to the best of its Each request must be accompanied by knowledge, met its obligations under a $27.20 application fee and clearly the Information Privacy Act 2000 to identify the documents sought. General September 2014, and the Privacy and enquiries can be made by contacting Data Protection Act 2014 (Vic) since the the Freedom of Information Officer time of its inception. during business hours on 1800 061 514.
Statement of availability of other information Information listed in Financial Reporting Direction 22F of the Financial Management Act 1994 is held at Central Highlands Water’s office in Learmonth Rd Wendouree and is available on request, subject to the Freedom of Information Act 1982.
30 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX OTHER ACTS AND APPLICABLE POLICIES
Protected Disclosures Act 2012 Contacts This Act enables people to make Department of Environment, Land, disclosures about improper conduct Water and Planning (DELWP) within the public sector without fear of Jennifer Berensen, Senior Advisor, reprisal. It aims to ensure openness and Privacy & Ombudsman accountability by encouraging people to Department of Environment, Land, make disclosures and protecting them Water and Planning (DELWP) when they do. Address: PO Box 500, East Melbourne VIC 8002 What is a protected disclosure? Phone: 03 9637 8697 Website: http://delwp.vic.gov.au/ A protected disclosure is a complaint of corrupt or improper conduct by a public Independent Broad-Based officer or a public body. Central Anti-Corruption Commission Victoria Highlands Water is a public body for the Address: Level 1, North Tower, purposes of the Act. 459 Collins Street, Melbourne VIC 3001 Mail: IBAC, GPO Box 24234, What is improper or corrupt conduct? Melbourne VIC 3000 Improper or corrupt conduct involves Website: www.ibac.vic.gov.au substantial: Phone: 1300 735 135 Email: see the website above for the • mismanagement of public resources; secure email disclosure process, which or also provides for anonymous disclosures • risk to public health or safety or the environment; or • corruption. National Competition Policy The conduct must be criminal in nature Competitive neutrality is a guiding or a matter for which an officer could principle of the National Competition be dismissed. Policy. It requires that government owned businesses should compete How do I make a protected with private sector businesses on the disclosure? same basis. Central Highlands Water has operated in a manner that meets You can make a protected disclosure the National Competition Policy about Central Highlands Water or its compliance requirements. board members, officers or employees by contacting the Department of Environment, Land, Water and Planning Victorian Industry Participation (DELWP) or Independent Broad-Based Policy Disclosures (VIPP) Anti-Corruption Commission (IBAC) on the contact details provided below. During the financial year the following Please note that Central Highlands contracts to which a VIPP applied Water is not able to receive protected included: disclosures. • supply and delivery of water and waste treatment chemicals How can I access Central Highlands • Musical Gully Dam Upgrade Project Water procedures for the protection of persons from detrimental action? • design and construction on the Lexton Water Supply Project. Central Highlands Water has established procedures for the protection of persons Contracts completed to which a from detrimental action in reprisal for VIPP applied: making a protected disclosure about • Musical Gully Dam Upgrade Project Central Highlands Water or its employees. • design and construction on the Lexton Water Supply Project.
2014/15 ANNUAL REPORT 31 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY CONSULTANCY EXPENDITURE
In 2014/15 CHW engaged 32 consultancies of less than $10,000. The total expenditure was $161,776. There were 10 consultants engaged in 2014/15 in excess of $10,000 with a total value of $784,115.
Consultant engaged Purpose of consultancy Total Expenditure Future approved 2014/15 expenditure project fee (excl. GST) (excl. GST) (excl. GST)
GHD Pty Limited Engineering Sevices 74,328 69,862 0
Information Management Services Pty Ltd CRM Development 14,090 20,685 3,000
Integra Land Pty Ltd Land Development 18,788 18,788 0
Kapish Services Pty Ltd ICT System upgrades 14,000 11,484 0
MWH Australia Pty Ltd Engineering Sevices 561,240 473,906 230,228
PricewaterhouseCoopers Business Efficiency Improvement Program 60,000 25,500 30,000
Projects On The Road Town Planning 37,500 57,526 0
Schneider Electric Pty Ltd SCADA Design Standard 40,000 20,986 0
The Humphreys Group Strategic Planning 60,000 58,049 0
Underwood Management Group Major Project Stakeholder Engagement 30,000 27,329 20,000
909,946 784,115 283,228
32 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX MAJOR WORKS
Central Highlands Water did not award any major contracts valued at $10 million or more in 2014/15.
Risk attestation
Statutory Authority and other relevant agency I, Jeremy Johnson certify that the Central Highlands Water has complied with the Ministerial Standing Direction 4.5.5 – Risk Management Framework and Processes. The Central Highlands Water Audit Committee verifies this.
Jeremy Johnson Chair 31 August 2015
2014/15 ANNUAL REPORT 33 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY PART 5 PERFORMANCE REPORT
STATEMENT OF PERFORMANCE FOR THE 2014/15 FINANCIAL YEAR
Financial performance indicators
KPI 2013/14 2014/15 2014/15 Variance Notes Variance Notes Number Result Result Target to prior to target year F1 Cash Interest Cover Net operating cash flows before net interest and tax/net interest payments 2.90 3.14 2.50 8.3% 25.6% 1 F2 Gearing Ratio Total Debt (including finance leases)/total assets*100 17.92% 16.93% 18.00% (5.5)% (5.9)% F3 Internal Financing Ratio Net operating cash flow less dividends/net capital expenditure *100 163.99% 140.74% 97.80% (14.2)% 2 43.9% 3 F4 Current Ratio Current assets/current liabilities (excluding long-term employee provisions and revenue in advance) 0.84 0.87 1.04 3.6% (16.3)% 4 F5 Return on Assets Earnings before net interest and tax/average assets *100 2.37% 2.69% 1.43% 13.5% 5 88.1% 6 F6 Return on Equity Net profit after tax/average total equity *100 0.98% 1.33% 0.10% 35.7% 7 1230.0% 8 F7 EBITDA Margin Earnings Before Interest, Tax, Depreciation and Amortisation/total revenue *100 45.53% 47.85% 40.30% 5.1% 18.7% 9
Notes: 1 Favourable variance to target driven by a combination of factors including 5 Favourable variance to prior year driven by a combination of factors stronger demand, operational efficiencies and the debt reduction strategy including increased revenue from gifted assets, a modest aggregate which has resulted in lower interest payments. demand increase and a reduction in operating expenditure as a result 2 Unfavourable variance to prior year driven by the low capital expenditure of operational efficiencies. program in 2013/14 despite improved operating cash flows in 2014/15. The 6 Favourable variance to target driven by a combination of factors capital expenditure program in 2013/14 was the lowest amount planned including increased revenue from gifted assets, stronger demand and over the Corporate Plan period, hence the unfavourable variance in 2014/15 operational efficiencies. is to be expected. 7 Favourable variance to prior year driven by a combination of factors 3 Favourable variance to target driven by a combination of factors including including increased revenue from gifted assets & a modest aggregate stronger demand and operational efficiencies across both the operating and demand increase and a reduction in operating expenditure as a result capital expenditure programs. of operational efficiencies. 4 Unfavourable variance to target driven by the roll-over of short-term lending 8 Favourable variance to target driven by a combination of factors including facilities from non-current to current liabilities that were not fixed at longer increased revenue from gifted assets, stronger demand than planned and maturities by 30 June 2015 which enabled CHW to take advantage of operational efficiencies resulting in lower expense than planned. improvements in the Financial Accommodation Levy (FAL) available from 1 9 Favourable variance to target driven by a combination of factors including July 2015. These facilities have since been fixed to longer maturities during increased revenue from gifted assets, stronger demand than planned and July 2015 at the lower FAL rates. operational efficiencies resulting in lower expense than planned.
34 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX
Water and sewerage service performance indicators
KPI Key Performance Indicator 2013/14 2014/15 2014/15 Variance Notes Variance Notes Number Result Result Target to Prior to Target Year WS1 Unplanned Water Supply Interruptions No. of customers receiving 5 unplanned interruptions in the year/total number of water (domestic and non- domestic) customers *100 0% 0% 0% 0% 0% WS2 Interruption time 104 84.4 120 Average duration of unplanned water supply interruptions. minutes minutes minutes -18.8% 1 -29.7% 2 WS3 Restoration of Unplanned Water Supply Interruptions Unplanned water supply interruptions restored within 5 hours/total unplanned water supply interruptions *100 97.80% 98.50% 98.70% 0.7% -0.2% SS1 Containment of Sewer Spills Sewer spills from reticulation and branch sewers contained within 5 hours/total sewer spills from reticulation and branch sewers *100 100% 100% 100% 0% 0% SS2 Sewer Spills Interruptions Percentage of residential sewerage customers affected by sewerage interruptions restored within 5 hours. 100% 97.80% 100% -2.2% -2.2%
Notes: 1 & 2 Favourable variance to both prior year and target driven by a number of factors including more timely fault diagnosis, better scheduling of reactive maintenance teams and improved efficiency in the repair process.
Customer responsiveness performance indicators
KPI Key Performance Indicator 2013-14 2014-15 2014-15 Variance Notes Variance Notes Number Result Result Target to Prior to Target Year CR 1 Water Quality Complaints No. of complaints per 100 customers for: 0.32 0.13 0.60 -59.4% 1 -78.3% 2 CR 2 Sewerage Service Quality Complaints No. of complaints per 100 customers for: 0.0020 0.0019 0.02 -5% 3 -90.5% 4 CR 3 Sewage Odour Complaints No. of complaints per 100 customers for: 0.02 0.01 0.05 -50.0% 5 -80.0% 6 CR 4 Billing Complaints No. of complaints per 100 customers for: 0.02 0.01 0.10 -50.0% 7 -90.0% 8
Notes: 1& 2 Favourable variance to both prior year and target as a result of 5 & 6 Favourable variance to both prior year and target. CHW continues to continued strong trend in this KPI. CHW continues to focus on water drive improved sewer network performance through CCTV monitoring, quality improvements with 2014/15 initiatives including the Lexton Water annual mains renewal programs and odour monitoring activities. Quality Improvement Project and refurbishment of the treated water 7 & 8 Favourable variance to both prior year and target as a result of a storage tank at Maryborough. number of factors including minimal price increase following the 3 Favourable variance to prior year as a result of the increase in customer Government Water Rebate applied from 1 July 2014, increases in base. The same number of complaints (one) were received in both years. the number of customers on payment plans and the introduction of 4 Favourable variance to target as a result of continued strong trend in this SMS reminders. KPI with one complaint being received in each of the last three financial years. CHW continues to drive improved sewer network performance through CCTV monitoring and annual mains renewal programs.
Environmental performance indicators
KPI Performance Indicators 2013/14 2014/15 2014/15 Variance Notes Variance Notes Number Result Result Target to Prior to Target Year E1 Effluent re-use volume (end use) Percentage recycled for each category: 15.7% 15.0% 17.6% -4.5% -14.8% 1 E2 Total net CO2 emissions Net tonnes CO2 equivalent 16,270 16,277 <45,000 0% -63.8% 2
Notes: 1 Unfavourable variance to target driven by limited demand for recycled 2 Favourable variance to target driven by the optimised use of local water effluent at two of our facilities. Central Highlands Water is seeking to sources and hence reduced pumping of the Superpipe identify additional recycled water opportunities for the remaining two wastewater treatment plants.
2014/15 ANNUAL REPORT 35 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY STATUTORY CERTIFICATION
We certify that the accompanying Performance Report of Central Highlands Region Water Corporation in respect of the 2014/15 financial year is presented fairly in accordance with the Financial Management Act 1994.
The report outlines the relevant performance indicators for the financial year as determined by the Minister for Environment, Climate change and Water and as set out in the 2014/15 Corporate Plan, the actual and comparative results achieved for the financial year against pre-determined performance targets and these indicators, and an explanation of any significant variance between the actual results and performance targets and/or between the actual results in the current year and the previous year.
As at the date of signing, we are not aware of any circumstance which would render any particulars in the Performance Report to be misleading or inaccurate.
Jeremy Johnson Chair Central Highlands Region Water Corporation
Paul O’Donohue Managing Director Central Highlands Region Water Corporation
Anthony O’Brien General Manager Business Services Central Highlands Region Water Corporation
Dated this 31st day of August 2015
36 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX OBJECTIVES AND PERFORMANCE REPORT
Water Plan 3 The reforms most relevant to • Privacy and Data Protection Act CHW include: 2014 (Vic). This is a new Act that The ESC provided its final determination provides for the responsible collection for the third regulatory period in June • A new vision to manage and preserve our water supplies. and handling of personal information 2013. This five-year period is referred to in the Victorian public sector. as Water Plan 3 (2013-18). The State Government announced on 8 April 2015 a new vision for the • Safe Drinking Water Regulations The year 2014/15 represented the Victorian water sector. The new 2005 review. These regulations second year of the Water Plan 3 period. approach to water policies will support the Safe Drinking Water Key outcomes were as follows: include a greater focus on climate Act 2003 (Vic) and will apply from • Price reductions to ease pricing change adaption and listening and July 2015. pressure on customers. While a price engaging with local communities to • Statement of Obligations. A review increase of just 1.1% plus CPI was ensure their water needs and of this water industry regulatory applied over the Water Plan period, a priorities are understood. instrument incorporating climate 20% reduction in the fixed Water • Board appointments. As part of the change adaptation strategies will be Access Fee became effective 1 July government’s new vision for the completed during 2015. 2014 with other price components water sector, a review of all Board increasing by CPI only. This price positions (excluding Managing reduction was made possible due to Directors) in all state water Business efficiency savings developed from the efficiency corporations will be undertaken to improvement program programs undertaken. The reduced ensure future environmental and CHW has worked for many years Fixed Water Access Fee will remain economic challenges can be met. It to establish a culture of creating unchanged for 2015/16 with other is expected new Board appointments efficiencies and building productivity price components increasing by CPI will be in place by 1 October 2015. through several major initiatives. During only from 1 July 2015. This means • Central Region Sustainable Water the year CHW successfully delivered the that the price for services for all Strategy. The Central Region SWS following efficiency programs in order householders will increase at or was developed by the state to improve customer outcomes while below the CPI. government in 2006 and included minimising costs: • Reduction in long-term debt with a number of priority actions and 1. Energy efficiency initiatives including a repayment of $7m of long term timeframes including the development solar reservoir mixers and contract debt during the year. This also helps of major system augmentations and demand electricity reset on major sites reduce long-term pressure on demand management initiatives. customer prices through reduced We anticipate the Central Region 2. Procurement savings associated with interest payments. SWS will be reviewed during the chemicals for water treatment and laboratory testing services • Capital expenditure program of coming year. approximately $20m continued to • Emergency Management 3. Savings associated with internal invest in key priority projects Amendment (Critical management of the Country Towns to ensure customer service levels Infrastructure Resilience) Act Sewerage Program were maintained or improved. 2014 (Vic). CHW is required to 4. Improved internal workforce • Responsible water consumption comply with the relevant provisions of alignment to meet business priorities through the region was maintained, this new Act. 5. Introduction of fleet management with households using an average of • EPA review. The government booking system and sale of just under 150,000 litres of water in announced a review of the excess vehicles 2014/15 which is consistent with the environmental regulator by a Ministerial 6. Development of internal consultancy previous two years. Advisory Council during the year. panel to review submissions for • EPA State Environment consultancy requirements Government Policy Reform Protection Policy (Waters of 7. Introduction of new procurement model Victoria). The government is Government and key regulators policy 8. Benefits from key Engineering undertaking a review of these relevant to the operations and future Service Provider two important policies relevant to development of the water sector further our operations. 9. New revenue streams developed matured during the year and a number Further work will continue to identify and of policy announcements and reviews • ESC review of water pricing deliver additional efficiencies, particularly were made. approach. This review will help select the most appropriate approach for in the areas of roster reform and the the 2018 water price setting process. development of integrated customer service platforms.
2014/15 ANNUAL REPORT 37 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY VAGO REPORT
38 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX
2014/15 ANNUAL REPORT 39 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY PART 6 FINANCIAL STATEMENTS
COMPREHENSIVE OPERATING STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 2015 2014 $'000 $'000 Revenue Service charges 1.2, 3 54,965 55,867 Water usage charges 1.2, 3 25,264 23,892 Government grants and contributions 1.2, 3 737 700 Developer contributions 1.2, 3 1,777 1,741 Interest 250 289 82,993 82,489 Income from non-operating activities Gifted assets 3 8,228 7,380 Net Gain/(Loss) on disposal of non-financial assets 3 (371) (727) Other income 3 5,022 4,680 12,879 11,333 Total Income 95,872 93,822
Expenses Interest expense 1.3, 3 (11,383) (12,135) Depreciation 1.3, 3 (19,368) (19,414) Amortisation 1.3, 3 (884) (837) Employee benefits 1.3, 3 (19,496) (18,874) BOOT Tolls 1.3 (8,696) (8,545) Contractors & Materials 1.3 (11,396) (13,146) Utilities 1.3 (2,729) (2,946) Environmental Contributions 1.3 (3,123) (3,123) Other expenses 1.3, 3 (4,562) (4,470)
Total Expenses (81,637) (83,490)
Net Result before tax 14,235 10,332 Income Tax (expense)/revenue 4 (4,286) (3,111)
Net result after tax 9,949 7,221
Other comprehensive income - -
Comprehensive result 9,949 7,221
The above Comprehensive Operating Statement should be read in conjunction with the notes to the financial statements.
40 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX BALANCE SHEET AS AT 30 JUNE 2015
Note 2015 2014 $'000 $'000 ASSETS Current Assets Cash and cash equivalents 1.4, 5 5,209 6,293 Receivables 1.4, 6 23,748 22,149 Inventories 1.4 552 548 Prepayments 1.4 518 545 Total Current Assets 30,027 29,535
Non-Current Assets Receivables 1.4, 6 191 202 Biological assets 1.4, 7 5,555 5,600 Infrastructure, Property, Plant & Equipment 1.4, 8 885,205 880,871 Intangible assets 1.4, 9 34,112 33,888
Total Non-Current Assets 925,063 920,561
Total Assets 955,090 950,096
LIABILITIES Current Liabilities Payables 1.5, 11 8,097 9,132 Interest bearing liabilities 1.5, 12 21,702 21,518 Employee benefits 1.5, 13 4,566 4,335 Total Current Liabilities 34,365 34,985
Non-Current Liabilities Interest bearing liabilities 1.5, 12 140,032 148,734 Employee benefits 1.5, 13 641 560 Net deferred tax liabilities 1.7, 10 27,716 23,430 Total Non-Current Liabilities 168,389 172,724
Total Liabilities 202,754 207,709
Net Assets 752,336 742,387
EQUITY Contributed capital 1.6 358,241 358,241 Reserves 14 88,722 88,722 Accumulated surplus 305,373 295,424 Total Equity 752,336 742,387
The above Balance Sheet should be read in conjunction with the notes to the financial statements.
2014/15 ANNUAL REPORT 41 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note Contributed Reserves Accumulated Total Capital Surplus $'000 $'000 $'000 $'000
Balance at 1 July 2013 358,241 88,722 288,204 735,166
Net result after tax for the year as reported - - 7,221 7,221 in the 2014 financial report
Transactions with the State in its capacity as owner:
Contributions by owners - - - -
Balance at 30 June 2014 358,241 88,722 295,424 742,387
Net result after tax for the year - - 9,949 9,949
Transactions with the State in its capacity as owner:
Contributions by owners - - - -
Balance at 30 June 2015 358,241 88,722 305,373 752,336
The above Statement of Changes in Equity should be read in conjunction with the notes to the financial statements.
42 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 2015 2014 $'000 $'000
Cash Flows from Operating Activities
Receipts
Service and usage charges 79,959 79,214
Interest received 250 296
GST received from the Australian Taxation Office* 4,368 4,590
Developer contributions 1,776 1,741
Other receipts 5,891 5,501
Government Grants and Contributions 367 450
Payments
Payments to suppliers and employees (inclusive of GST) (53,424) (50,767)
Interest and other costs of finance paid (11,495) (12,862)
Environmental contributions levy paid (3,123) (3,788)
Net Cash (outflow)/inflow from Operating Activities 19 24,569 24,375
Cash Flows from Investing Activities
Proceeds from sale of infrastructure, property, plant & equipment 1,430 141
Payments for purchases of infrastructure, property, plant & equipment (17,457) (14,863)
Payments for Intangible Assets (1,108) (904)
Net Cash (outflow)/inflow from Investing Activities (17,135) (15,626)
Cash Flows from Financing Activities
Repayments of borrowings (8,518) (9,346)
Net Cash (outflow)/inflow from Financing Activities (8,518) (9,346)
Net increase/(decrease) in cash and cash equivalents (1,084) (598)
Cash and cash equivalents at the beginning of the financial year 6,294 6,892
Cash and cash equivalents at the end of the financial year 5 5,210 6,294
* Goods and Services Tax received from ATO is presented on a net basis. The above Cash Flow Statement should be read in conjunction with the accompanying notes.
2014/15 ANNUAL REPORT 43 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note: Note 1: Summary of significant accounting policies 1 Summary of significant accounting policies 1.1 Basis of Accounting 2 Financial risk management objectives and policies General 3 Revenue and expense disclosures The financial report includes separate financial statements for 4 Income tax Central Highlands Region Water Corporation (CHW, the 5 Cash and cash equivalents Corporation) as an individual reporting entity. 6 Receivables This general purpose financial report consists of a Comprehensive Operating Statement, Balance Sheet, 7 Biological assets Statement of Changes in Equity, Cash Flow Statement and 8 Infrastructure, Property, Plant and Equipment notes accompanying these statements. The general purpose 9 Intangible assets financial report has been prepared in accordance with Australian Accounting Standards (AASs), Interpretations and 10 Deferred tax other authoritative pronouncements of the Australian 11 Payables Accounting Standards Board (AASB), and the requirements of the Financial Management Act (1994) and applicable 12 Interest bearing liabilities Ministerial Directions. 13 Employee benefits The Corporation is a not for profit entity for the purpose of 14 Reserves preparing the financial statements. 15 Commitments for expenditure Where appropriate, those AASs paragraphs applicable to not- 16 Contingent liabilities and contingent assets for-profit entities have been applied. 17 Superannuation The accrual basis of accounting has been applied in the preparation of this financial report whereby assets, liabilities, 18 Remuneration of executives and payments to equity, income and expenses are recognised in the reporting other personnel period to which they relate, regardless of when cash is 19 Reconciliation of profit/(loss) for the period after related received or paid. income tax to net cash flows from operating activities The annual financial report was authorised for issue by the 20 Financial instruments Board on 31 August 2015. 21 Events occurring after balance date The principal address is 7 Learmonth Road, Wendouree VIC 3355. 22 Joint arrangements Accounting policies Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. Unless otherwise stated, all accounting policies applied are consistent with those of the prior year. Where appropriate, comparative figures have been amended to align with current presentation and disclosure. Functional and presentation currency Items included in this financial report are measured using the currency of the primary economic environment in which the Corporation operates (‘the functional currency’). The financial report is presented in Australian dollars, which is the Corporation’s functional and presentation currency. Classification between current and non-current In the determination of whether an asset or liability is current or non-current, consideration is given to the time when each asset or liability is expected to be realised or paid. The asset or liability is classified as current if it is expected to be turned over within the next twelve months, being CHW’s operational cycle. See Note 1.5 for a variation in relation to employee benefits.
44 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX
Rounding Amendments to Australian Accounting Standards -Fair Value Unless otherwise stated, amounts in the report have been disclosures of Not-for-Profit Public Sector Entities on 13 July rounded to the nearest thousand dollars. 2015. In accordance with FRD 7A Early adoption of authoritative accounting pronouncements, the Minister for Historical Cost Convention Finance has approved the option for Victorian not-for-profit This financial report has been prepared under the historical public sector entities to early adopt the amending accounting cost convention, except for the revaluation of financial assets, standard to enable them to benefit from some limited and certain classes of property, plant and equipment. exemption in relation to fair value disclosures for the 2014-15 reporting period. The limited exemption is available to those Accounting estimates entities whose assets are held primarily for their current The preparation of the financial statements in conformity with service potential rather than to generate net cash inflows. AAS’s requires the use of certain accounting estimates that CHW meets the criteria specified in AASB 2015-7 to benefit affect the application of accounting policies and the reported from the reduced disclosure requirements, so it has chosen to amounts of assets, liabilities, income and expenses. Actual early adopt the amendments to Fair Value disclosure of Not- results may differ from these estimates. It also requires for-profit-public sector entities. management to exercise its judgement in the process of applying the Corporation’s accounting policies. The most AASB 10 Consolidated Financial Statements significant accounting estimates undertaken in the preparation AASB 10 provides a new approach to determine whether an of the financial statements relate to: entity has control over an entity, and therefore must present • estimation of useful lives consolidated financial statements. The Corporation has • the impairment of assets concluded that there are no additional entities that meet the control criteria, therefore no consolidated financial statements • recognition of deferred tax assets will be generated. • unearned revenue AASB 11 Joint Arrangements • employee entitlements In accordance with AASB 11, there are two types of joint • contingent assets and liabilities arrangements, i.e. joint operations and joint ventures. Joint • fair value of infrastructure, property, plant and equipment operations arise where the investors have rights to the assets • actuarial assumptions of the defined benefits and obligations for the liabilities of an arrangement. A joint superannuation operator accounts for its share of the assets, liabilities, revenue and expenses. Joint ventures arise where the investors have During the period ended 30 June 2011 a revaluation of assets rights to the net assets of the arrangement; joint ventures are was undertaken across the entire water industry. The asset accounted for under the equity method. Proportionate revaluations were taken to account in 2010/11. The review consolidation of joint ventures is no longer permitted. also included a revised set of useful lives for long lived assets. The adoption of these assumptions is being reviewed by a The Corporation has reviewed its existing contractual VicWater working group and this work is still in progress as at arrangements with other entities to ensure they are aligned 30 June 2015. Accordingly, the Corporation will assess the with the new classifications under AASB 11. CHW has findings and adjust the carrying amounts of assets within the concluded that there are no joint venture arrangements and next financial year where appropriate. that the arrangement that was formerly referred to as an unincorporated joint venture satisfies the requirements of a Financial statement presentation joint operation, primarily as neither party satisfies the definition The Corporation has applied the revised AASB 101 of control required by AASB 11 to form a joint venture. Presentation of Financial Statements which became effective AASB 12 Disclosure of Interests in Other Entities for reporting periods beginning, on or after, 1 July 2014, and AASB 1054 Australian Additional Disclosures which AASB 12 prescribes the disclosure requirements for an became effective for reporting periods beginning on, or after, entity’s interests in subsidiaries, associates, joint 1 July 2014. arrangements and extends to the entity’s association with unconsolidated structured entities. Changes in accounting policies The Corporation has disclosed information about its interests Subsequent to the 2013/14 reporting period, the following in joint arrangements in Note 22, including any significant new and revised Standards have been adopted in the current judgement and assumptions used in determining the type of period with their financial impact detailed as below. joint arrangement in which it has an interest. AASB 2015-7 Amendments to Australian Net gain/(loss) on disposal of non‑financial assets Accounting Standards Any gain or loss on the disposal of non‑financial assets is The Australian Accounting Standards Board issued an recognised at the date of disposal and is the difference between amending accounting standard AASB 2015-7 the proceeds and the carrying value of the asset at the time.
2014/15 ANNUAL REPORT 45 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
1.2 Revenue Depreciation is calculated using the straight line basis to Service and usage charges allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, commencing from the Rate/tariff and service charges are recognised as revenue time the asset is held ready for use. The assets residual when levied or determined. values and useful lives are reviewed, and adjusted if Trade Waste charges are recognised as revenue at the end of appropriate, at each balance sheet date. the service delivery period. Volume meters are read and Intangible assets with finite useful lives are amortised as appropriate charges levied as per the trade waste an expense on a systematic basis (typically straight line) agreements. The meters are read on a monthly basis with commencing from the time the asset is available for use. The accounts sent on a quarterly basis. amortisation periods are reviewed and adjusted if appropriate Water usage charges by measure are recognised as revenue at balance date. Intangible assets with indefinite useful lives when the water is provided. Meter reading is undertaken are not amortised. However, all intangible assets are assessed progressively during the year. An estimation, calculated by for impairment annually as outlined in Note 1.4. multiplying the number of days since the last reading by each Major depreciation periods used are listed below and are customer’s average service usage, is made at the end of each consistent with the prior year, unless otherwise stated: accounting period in respect of meters which have not been read at balance date. Periods Government Grants and Contributions Buildings - Buildings 20 - 100 years Government grants and contributions are recognised as - Leasehold improvements 30 - 66.67 years operating revenue on receipt or when the Corporation obtains control of the contribution and meets certain other criteria as Infrastructure Water outlined in AASB 1004, whichever is sooner, and disclosed in - Storages 40 - 400 years the comprehensive operating statement as government grants - Distribution network 40 - 150 years and contributions. However, grants and contributions received - Treatment plants 15 - 100 years from the Victorian State Government, which were originally Infrastructure Waste Water appropriated by the Parliament as additions to net assets or - Distribution network 20 - 150 years where the Minister for Finance and the Minister for Water have - Treatment plants 25 - 100 years indicated are in the nature of owners’ contributions, are accounted BOOT Assets 44 years for as Equity – Contribution by Owners in accordance with FRD 119A Transfers through Contributed Capital. Plant and Equipment 3 - 20 years Interest and Rents Intangible Assets - Software 3 - 12 years Interest income is recognised as revenue when earned. Rentals are recognised as income on a straight line basis over Employee benefits the rental period. These expenses include all costs related to employment Developer contributions (other than superannuation which is accounted for separately) including wages and salaries, fringe benefits tax, leave Water infrastructure assets built by developers in new land entitlements, redundancy payments and WorkCover premiums. subdivisions are provided to CHW on completion and upon acceptance are recognised at their fair value as revenue. Fees Superannuation paid by developers to connect new developments to the The amount charged to the Comprehensive Operating Corporation’s existing water supply and sewerage systems Statement in respect of superannuation represents are recognised as revenue when the contributions are received. contributions made or due by CHW to the relevant superannuation plans in respect to the services of CHW’s staff 1.3 Expenses (both past and present). Superannuation contributions are Interest Expense made to the plans based on the relevant rules of each plan Borrowing costs are recognised as an expense in the period and any relevant compulsory superannuation requirements in which they are incurred. Borrowing costs include interest that CHW is required to comply with. on bank overdrafts and short-term and long-term borrowings, BOOT Tolls amortisation of discounts or premiums relating to borrowings, These expenses include costs incurred in operating CHW’s amortisation of ancillary costs incurred in connection with the water and wastewater treatment plants. arrangement of borrowings and finance lease charges. Contractors and Materials Depreciation and Amortisation of Non-Current Assets These expenses include costs incurred in operating and All non-current physical assets that have a limited useful life maintaining CHW’s assets as well as costs incurred for are depreciated. Where assets have separate identifiable consultants and specialist advice. components that have distinct useful lives and/or residual values, a separate depreciation rate is determined for each component.
46 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX
Utilities Contractual receivables are recognised initially at fair value These expenses include amounts made for communication, and subsequently measured at amortised cost, less an gas and electricity costs. allowance for impaired receivables. Trade receivables are due for settlement no more than 30 days from the date Environmental Contributions of recognition. The Water Industry (Environmental Contributions) Act 2004 Collectability of contractual receivables is reviewed on an (the Act) amended the Water Industry Act 1994 to make ongoing basis. Debts which are known to be uncollectible are provision for environmental contributions to be paid by water written off. A provision for doubtful debts is established when supply authorities. The Act establishes an obligation for there is objective evidence that the Corporation will not be authorities to pay into the consolidated fund annual able to collect all amounts due according to the original terms contributions for the first period, from 1 October 2004 to 30 of receivables. June 2008 in accordance with the pre-established schedule of payments, which sets out the amounts payable by each The amount of the provision is the difference between the corporation. The contribution period has been extended to asset’s carrying amount and the present value of estimated cover the period 1 July 2012 until 30 June 2016. future cash flows, discounted at the original effective interest rate. The purpose of the environmental contribution is set out in the Act, and the funding may be used for the purpose of funding The amounts credited to the provision are recognised as an initiatives that seek to promote the sustainable management expense in the comprehensive operating statement. of water or address water-related initiatives. Inventories The Corporation has a statutory obligation to pay an Inventories comprise stores and materials used in the environmental contribution to the Department of Environment, construction of new works and for the repair and Land, Water & Planning. This contribution is recognised as an maintenance of existing assets. All inventories are valued at expense during the reporting period as incurred. the lower of cost and net-realisable value. Costs are assigned Other Expenses to inventory quantities on hand at balance date on a first in, first out basis (FIFO). Inventories held for distribution are These costs generally represent other operating costs measured at the lower of cost and current replacement cost. incurred during the course of normal operations. Supplies and services costs are recognised as an expense in the Prepayments reporting period in which they are incurred. The carrying Prepayments represent payments in advance of receipt amounts of any inventories held for distribution are expensed of goods or services or that part of expenditure made in when distributed. one accounting period covering a term extending beyond that period. 1.4 Assets Biological Assets Cash and Cash Equivalents Productive trees in forests surrounding water catchments are Cash and cash equivalents include cash on hand, deposits recognised as biological assets. The fair value of timber in held at call with financial institutions, other short-term, highly forestry plantations is calculated by using the closing balance liquid investments with original maturities of three months or of the previous year, applying the average rate per cubic less that are readily convertible to known amounts of cash metre sold during the financial year to the increase/(decrease) and which are subject to insignificant risk of changes in value, in natural growth of the plantations and then applying a and bank overdrafts. discounted cash flow to calculate the gains/(losses) Receivables attributable to price changes over time. Receivables consist of: Infrastructure assets, property, plant and equipment (1) contractual receivables, such as debtors in relation to Recognition of Non-current Physical Assets goods and services and accrued investment income; and Infrastructure, property, plant and equipment represent (2) statutory receivables, such as amounts owing from the noncurrent assets comprising land, buildings, leasehold Victorian Government and Goods and Services Tax (GST) improvements, water, sewer and drainage infrastructure, input tax credits recoverable. plant, equipment and motor vehicles used by CHW in its Contractual receivables are classified as financial instruments operations. Items with a cost or value in excess of $1,000 and categorised as loans and receivables. and a useful life of more than one year are recognised as an asset. All other assets acquired are expensed. Statutory receivables, are recognised and measured similarly to contractual receivables (except for impairment), but are not Where assets are constructed by the Corporation, the cost at classified as financial instruments because they do not arise which they are recorded includes an appropriate share of from a contract. fixed and variable overheads.
2014/15 ANNUAL REPORT 47 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Acquisition Revaluation of Non-Current Physical Assets The purchase method of accounting is used for all Revaluation increments are credited directly to equity in the acquisitions of assets, regardless of whether equity revaluation reserve, except that, to the extent that an instruments or other assets are acquired. Cost is measured increment reverses a revaluation decrement in respect of that as the fair value of the assets given or liabilities incurred or same class of assets previously recognised as an expense in assumed at the date of exchange plus costs directly determining the net result, the increment is recognised as attributable to the acquisition. Where assets are constructed other comprehensive income in determining the net result. by CHW, the cost at which they are recorded includes an Revaluation decrements are recognised immediately as appropriate share of fixed and variable overheads. Assets an expense in the net result, except that, to the extent that acquired at no cost or for nominal consideration by CHW are a credit balance exists in the revaluation reserve in respect recognised at fair value at the date of acquisition. of the same class of assets, they are debited to the Repairs and Maintenance revaluation reserve. Routine maintenance, repair costs and minor renewal costs Revaluation increases and revaluation decreases relating to are expensed as incurred. Where the repair relates to the individual assets within a class of property, plant and replacement of a component of an asset and the cost equipment are offset against one another within that class but exceeds the capitalisation threshold, the cost is capitalised are not offset in respect of assets in different classes. and depreciated. Revaluation reserves are not transferred to accumulated funds Measurement of Non-Current Physical Assets on derecognition of the relevant asset. All non-current physical assets are recognised initially at cost Impairment of Assets and subsequently measured at fair value less accumulated Intangible assets with indefinite useful lives are tested annually depreciation and impairment in accordance with the as to whether their carrying value exceeds their recoverable requirements of Financial Reporting Direction (FRD) 103F amount. All other assets are assessed annually for indicators Non-Financial Physical Assets. of impairment, except for; Revaluations are conducted in accordance with FRD 103F. - inventories; Scheduled revaluation is undertaken every five years with an - deferred tax assets; annual assessment of fair value to determine if it is materially different to carrying value. If the difference to carrying value is - financial instrument assets; and greater than 10%, a management revaluation is undertaken - certain biological assets related to agricultural activity. while a movement greater than 40% will normally involve an If there is an indication of impairment, the assets concerned Approved Valuer (usually the Valuer General of Victoria) to are tested as to whether their carrying value exceeds their perform detailed assessment of the fair value. If the recoverable amount. Where an asset’s carrying amount movement in fair value since the last revaluation is less than exceeds its recoverable amount, the difference is written-off or equal to 10%, then no change is made to carrying amounts. by a charge to the statement of other comprehensive income Plant, equipment and motor vehicles are measured at fair except to the extent that the write-down can be debited to value. For the plant, equipment and vehicles asset class, an asset revaluation reserve amount applicable to that class where the Corporation is able to demonstrate that there is no of asset. evidence that a reliable market-based fair value (or other fair The recoverable amount for most assets is measured at the value indicators) exist for these assets, depreciated higher of depreciated replacement cost and fair value less replacement cost is used to represent a reasonable costs to sell. Recoverable amount for assets held primarily to approximation of fair value. generate net cash inflows is measured at the higher of the Water infrastructure assets are measured at fair value less present value of future cash flows expected to be obtained accumulated depreciation and impairment in accordance with from the asset and fair value less costs to sell. It is deemed FRD 103F. These assets comprise substructures or underlying that, in the event of the loss of an asset, the future economic systems held to facilitate harvesting, storage, treatment and benefits arising from the use of the asset will be replaced transfer of water to meet customer needs. unless a specific decision to the contrary has been made. They also include infrastructure assets that underlie sewage A reversal of an impairment loss on a revalued asset is and drainage systems. credited directly to equity under the heading revaluation The initial fair value assessment for water infrastructure in the reserve. However, to the extent that an impairment loss on year ended 30 June 2011 was undertaken with involvement the same class of asset was previously recognised in the from the Valuer General of Victoria (VGV) and under the statement of other comprehensive income, a reversal of that instructions of the Department of Treasury and Finance (DTF). impairment loss is also recognised in the comprehensive The assessment was performed on a portfolio basis for operating statement. various categories of water infrastructures.
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Intangibles Each stream of lease payment is allocated between the Intangible assets represent identifiable non-monetary assets liability and finance charges so as to achieve a constant rate without physical substance. Intangible assets are initially on the finance balance outstanding. The interest element of recognised at cost. Subsequently, intangible assets with finite the finance cost is charged to the operating statement over useful lives are carried at cost less accumulated amortisation the lease period so as to produce a constant periodic rate of and accumulated impairment losses. Costs incurred subsequent interest on the remaining balance of the liability for each to initial acquisition are capitalised when it is expected that period. The asset(s) acquired in a BOOT scheme that meets additional future economic benefits will flow to the Corporation. the classification of finance lease is depreciated over the asset’s useful life. A summary of the policies applied to the Corporation’s intangible assets is as follows: Finance Leases Software Permanent Water Leases of property, plant and equipment where CHW has Entitlements substantially all the risks and rewards incidental to ownership are classified as finance leases. Finance leases are capitalised Useful lives Finite Indefinite at the lease’s inception at the lower of the fair value of the Amortisation Straight line Not amortised or leased property and the present value of the minimum lease method used revalued payments. The corresponding rental obligations, net of Internally Both Acquired finance charges, are included in payables. Each lease generated/ payment is allocated between the liability and finance charges acquired so as to achieve a constant rate on the finance balance outstanding. The interest element of the finance cost is Impairment Amortisation Annually and charged to the comprehensive operating statement over the test/ method reviewed where an indicator lease period so as to produce a constant periodic rate of Recoverable at each financial of impairment interest on the remaining balance of the liability for each amount testing year-end; Reviewed exists period. The property, plant and equipment acquired under annually for finance lease is depreciated over the shorter of the assets indicators of useful life and the lease term. impairment. 1.5 Liabilities Permanent Water Entitlements Payables Permanent water entitlements purchased after 20 June 2007 are treated as an intangible asset on the Balance Sheet at Payables consist of: cost (in accordance with AASB 138 Intangible Assets and • contractual payables, such as accounts payable. FRD 109 Intangible Assets), and will not be subject to Accounts payable represent liabilities for goods and amortisation, as the permanent water entitlements have an services provided to the Corporation prior to the end of indefinite life. the financial year that are unpaid, and arise when the Corporation becomes obliged to make future payments in Permanent entitlements purchased after 20 June 2007 will be respect of the purchase of those goods and services; and tested annually for impairment. • statutory payables, such as goods and services tax and BOOT (Build Own Operate and Transfer) Contracts fringe benefits tax payables. CHW has two BOOT contracts in operation. The first was Contractual payables are classified as financial instruments signed on 12 April 1999 and commenced full operational and categorised as financial liabilities at amortised cost. tolling in December 2000 for the supply of treated water to Statutory payables are recognised and measured similarly Ballarat and a number of neighbouring communities for a to contractual payables, but are not classified as financial period of 25 years. The second was signed on 12 November instruments and not included in the category of financial 2003 and commenced full operational tolling in June 2006 for liabilities at amortised cost, because they do not arise the supply of treated water to four small towns (Beaufort, from a contract. Blackwood, Forest Hill and Clunes) for a period of 20 years. As ownership of the asset(s) is transferred to the CHW at the end of the contractual term and this term is for the major part of the economic life of the asset(s), CHW accounts for the asset(s) under the BOOT scheme as a finance lease. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in payables.
2014/15 ANNUAL REPORT 49 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Interest bearing liabilities Conditional LSL is disclosed as a non‑current liability. There is All interest bearing liabilities are initially recognised at the fair an unconditional right to defer the settlement of the value of the consideration received, less directly attributable entitlement until the employee has completed the requisite transaction costs.The measurement basis subsequent to years of service. This non‑current LSL liability is measured at initial recognition depends on whether the Corporation has present value. categorised its interest‑bearing liabilities as either financial Any gain or loss following revaluation of the present value of liabilities designated at fair value through profit or loss, or non‑current LSL liability is recognised as a transaction. financial liabilities at amortised cost. Any difference between In calculating present value, consideration is given to the initial recognised amount and the redemption value is expected future wage and salary levels, experience of recognised in net result over the period of the borrowing using employee departures and periods of service. Expected future the effective interest method. payments are discounted using market yields at the reporting The above classification depends on the nature and date on national government bonds with terms to maturity purpose of the interest bearing liabilities. The Corporation and currency that match, as closely as possible, the determines the classification of its interest bearing liabilities estimated future cash outflows. at initial recognition. (iii) Superannuation Provisions The amount charged to the comprehensive operating Provisions are recognised when the corporation, as a result of statement in respect of superannuation represents the a past event, has a legal or constructive obligation that can contributions made by CHW to the superannuation plan in be estimated reliably, and it is probable that an outflow of respect to the current services of current entity staff. economic benefits will be required to settle the obligation. The Superannuation contributions are made to the plans based on amount recognised as a provision is the best estimate of the the relevant rules of each plan. consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and (iv) Employee Benefits On-Costs uncertainties surrounding the obligation. Provisions for on‑costs such as payroll tax, workers Employee Benefits compensation and superannuation are recognised separately from the provision for employee benefits. (i) Wages and salaries and annual leave (v) Performance payments Liabilities for wages and salaries, including non‑monetary benefits annual leave, are all recognised in the provision for Performance payments for the Corporation’s Executive employee benefits as ‘current liabilities’, because the Officers are based on a percentage of the annual salary Corporation does not have an unconditional right to defer package provided under their contract(s) of employment. settlements of these liabilities. A liability is recognised and is measured as the aggregate of Depending on the expectation of the timing of settlement, the amounts accrued under the terms of the contracts to liabilities for wages and salaries and annual leave are balance date. measured at: 1.6 Equity • Undiscounted value – if the Corporation expects to wholly settle within 12 months: or Contributions by owners • Present value – if the Corporation does not expect to Additions to net assets which have been designated as wholly settle within 12 months. contributions by owners are recognised as contributed capital. Other transfers that are in the nature of contributions (ii) Long service leave or distributions have also been designated as contributions by Liability for long service leave (LSL) is recognised in the owners. Transfers of net assets arising from administrative provision for employee benefits. Unconditional LSL is restructurings are treated as distributions to or contributions disclosed in the notes to the financial statements as a current by owners. liability; even where the Corporation does not expect to settle Grants and contributions received from the Victorian State the liability within 12 months because it will not have the Government, which were originally appropriated by the unconditional right to defer the settlement of the entitlement Parliament as additions to net assets or where the Minister for should an employee take leave within 12 months. Finance and the Minister for Water have indicated are in the The components of this current LSL liability are measured at: nature of owners’ contributions, are accounted for as Equity – • Undiscounted value – if the Corporation expects to wholly Contributions by Owners. settle within 12 months; and • Present value – if the Corporation does not expect to wholly settle within 12 months.
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1.7 Taxation those with maturities greater than 12 months after the CHW is subject to the National Tax Equivalent Regime reporting date which are classified as non-current assets. (NTER), which is administered by the Australian Tax Office. Loans and receivables are included in trade and other The income tax expense or revenue for the period is the receivables and other receivables in the balance sheet. Loans expected tax payable or receivable on the current period’s and receivables are recorded at amortised cost less impairment. taxable income based on the national corporate income tax 1.9 Fair Value rate of 30%, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax Consistent with AASB 13 Fair Value Measurement, the bases of assets and liabilities and their carrying amounts in Corporation determines the policies and procedures for both the financial statements, and to unused tax losses. Deferred recurring fair value measurements such as infrastructure, tax assets and liabilities are recognised for temporary property, plant and equipment and biological assets, in differences at the tax rates expected to apply when the accordance with the requirements of AASB 13 and the assets are recovered or liabilities are settled, based on those relevant Financial Reporting Directions. tax rates which are enacted or substantially enacted. The All assets and liabilities for which fair value is measured or relevant tax rates are applied to the cumulative amounts of disclosed in the financial statements are categorised within deductible and taxable temporary differences to measure the the fair value hierarchy, described as follows, based on the deferred tax asset or liability. No deferred tax asset or liability lowest level input that is significant to the fair value is recognised in relation to these temporary differences if they measurement as a whole: arose in a transaction that at the time of the transaction did • Level 1 – Quoted (unadjusted) market prices in active not affect either accounting profit or taxable profit or loss. markets for identical assets or liabilities Deferred tax assets are recognised for deductible temporary • Level 2 – Valuation techniques for which the lowest level differences and unused tax losses only if it is probable that input that is significant to the fair value measurement is future taxable amounts will be available to utilise those directly or indirectly observable; and temporary differences and losses. Current and deferred tax is • Level 3 – Valuation techniques for which the lowest level recognised in profit or loss, except to the extent that it relates input that is significant to the fair value measurement is to items recognised in other comprehensive income or directly unobservable. in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. For the purpose of fair value disclosures, the Corporation has determined classes of assets and liabilities on the basis of the Goods and Services Tax nature, characteristics and risks of the asset or liability and Revenues, expenses and assets are recognised net of goods the level of the fair value hierarchy as explained above. In and services tax (GST), except where the amount of GST addition, the Corporation determines whether transfers have incurred is not recoverable from the Australian Taxation Office occurred between levels in the hierarchy by reassessing (ATO). In these circumstances, the GST is recognised as part categorisation (based on the lowest level input that is of the cost of acquisition of the asset or as part of an item significant to the fair value measurement as a whole) at the of expense. end of each reporting period. Receivables and payables are stated inclusive of GST. The net The Valuer General Victoria (VGV) is the Corporation’s amount of GST recoverable from, or payable to, the ATO is independent valuation agency, however there may be included as a current asset or liability in the balance sheet. occasions when CHW will use other external independent Cash flows arising from operating activities are disclosed in third-party valuers to determine fair value. the Cash Flow Statement on a gross basis - i.e. inclusive of The Corporation, in conjunction with VGV and other external GST. The GST component of cashflows arising from investing valuers, where applicable, monitors changes in the fair value and financing activities which is recoverable or payable to the of each asset and liability through relevant data sources to taxation authority is classified as operating cash flows. determine whether revaluation is required. 1.8 Financial Instruments The Valuer General Victoria (VGV) confirmed in May 2015 that Recognition the use of the indices detailed below remain appropriate revaluation options for the year ended 30 June 2015. CHW Financial instruments are initially measured at fair value, plus utilised both indices for relevant asset classes. in the case of a financial asset or financial liability not at fair value through profit and loss, transaction costs that are 1. Road and Bridge Construction (Victoria) for pipelines, directly attributable to the acquisition or the issue of the dams, reservoirs and channels; and financial asset or liability. Subsequent to initial recognition, the 2. Stage of Production – Final Domestic Capital (Australia) financial instruments are measured as set out below: index for other built asset classes. Loans and receivables Additionally, CHW is required to assess land and building asset valuations based on postcode indexation factors for land and Loans and receivables are non-derivative financial assets with general building (non-specialised) cost factors reported by the fixed or determinable payments that are not quoted in an Australian Bureau of Statistics (ABS) biannually. active market. They are included in current assets, except for
2014/15 ANNUAL REPORT 51 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Fair value measurement 1.10 Commitments Fair value is the price that would be received to sell an asset Commitments for future expenditure include operating and or paid to transfer a liability in an orderly transaction between capital commitments arising from contracts. These market participants at the measurement date. Fair value has commitments are disclosed by way of a note (refer to Note been considered for all classes of non-current physical assets 15) at their nominal value and inclusive of the goods and including Land,Buildings, Plant and Equipment, Water services tax (GST) payable. In addition, where it is considered Infrastructure Assets and Wastewater Infrastructure Assets. appropriate and provides additional relevant information to The fair value measurement is based on the following users, the net present values of significant individual projects assumptions: are stated. These future expenditures cease to be disclosed as commitments once the related liabilities are recognised in • that the transaction to sell the asset or transfer the liability the balance sheet. takes place either in the principal market (or the most advantageous market, in the absence of the principal 1.11 Contingent assets and contingent liabilities market), either of which must be accessible to the entity at Contingent assets and contingent liabilities are not recognised the measurement date; and in the balance sheet, but are disclosed by way of a note (refer • that the entity uses the same valuation assumptions that to Note 16) and, if quantifiable, are measured at nominal market participants would use when pricing the asset or value. Contingent assets and liabilities are presented inclusive liability, assuming that market participants act in their of GST receivable or payable respectively. economic best interest. The fair value measurement of a non-financial asset takes into account a market 1.12 Dividend Policy participant’s ability to generate economic benefits by using An obligation to pay a dividend only arises after consultation the asset in its highest and best use or by selling it to with the portfolio Minister and the Treasurer and a formal another market participant that would use the asset in its determination is made by the Treasurer. The Corporation’s highest and best use. preliminary estimate for the reporting period is $Nil (2014: Nil). Consideration of highest and best use for non-financial physical assets 1.13 Events after the reporting period Judgements about highest and best use (HBU) must take into Assets, liabilities, income or expenses arise from past account the characteristics of the assets concerned, including transactions or other past events. Where the transactions restrictions on the use and disposal of assets arising from the result from an agreement between the Corporation and other asset’s physical nature and any applicable legislative/ parties, the transactions are only recognised when the contractual arrangements. In accordance with paragraph agreement is irrevocable at or before the end of the reporting AASB 13.29, CHW assumes the current use of a non- period. Adjustments are made to amounts recognised in the financial physical asset is its HBU unless market or other financial statements for events which occur between the end factors suggest that a different use by market participants of the reporting period and the date when the financial would maximise the value of the asset. statements are authorised for issue, where those events provide information about conditions which existed at the Identifying unobservable inputs (Level 3) fair value reporting date. Note disclosure is made about events measurements between the end of the reporting period and the date the Level 3 fair value inputs are unobservable valuation inputs for financial statements are authorised for issue where the events an asset or liability. These inputs require significant judgement relate to conditions which arose after the end of the reporting and assumptions in deriving fair value for both financial and period that are considered to be of material interest. non-financial assets. Unobservable inputs shall be used to measure fair value to the extent that relevant observable 1.14 New Accounting Standards and Interpretations inputs are not available, thereby allowing for situations in Certain new accounting standards and interpretations have which there is little, if any, market activity for the asset or been published that are not mandatory for the 30 June 2015 liability at the measurement date. However, the fair value reporting period. measurement objective remains the same, i.e. an exit price at the measurement date from the perspective of a market As at 30 June 2015, the following standards and participant that holds the asset or owes the liability. Therefore, interpretations which were applicable to the Corporation had unobservable inputs shall reflect the assumptions that market been issued but were not mandatory for financial year ending participants would use when pricing the asset or liability, 30 June 2015. including assumptions about risk. The Corporation has not and does not intend to adopt these Assumptions about risk include the risk inherent in a particular standards early. valuation technique used to measure fair value (such as a pricing model) and the risk inherent in the inputs to the valuation technique.
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Standard / Summary Applicable Impact on financial statements Interpretation for annual reporting periods beginning on or after
AASB 9 Financial The key changes include the simplified requirements for 1-Jan-18 The assessment has identified that the financial Instruments the classification and measurement of financial assets, a impact of available for sale (AFS) assets will now new hedging accounting model and a revised impairment be reported through other comprehensive loss model to recognise impairment losses earlier, as income (OCI) and no longer recycled to the opposed to the current approach that recognises profit and loss. While the preliminary impairment only when incurred. assessment has not identified any material impact arising from AASB 9, it will continue to be monitored and assessed. While the preliminary assessment has not identified any material impact arising from AASB 9, CHW will continue to monitor and assess.
AASB 14 Regulatory AASB 14 permits first-time adopters of Australian 1-Jan-16 CHW'S assessment has indicated that there is Deferral Accounts # Accounting Standards who conduct rate-regulated no expected impact, as CHW has already activities to continue to account for amounts related to adopted Australian Accounting Standards. rate regulation in accordance with their previous GAAP.
AASB 15 Revenue from The core principle of AASB 15 requires an entity to 1-Jan-17 The changes in revenue recognition Contracts with recognise revenue when the entity satisfies a requirements in AASB 15 may result in changes Customers performance obligation by transferring a promised good to the timing and amount of revenue recorded in or service to a customer. the financial statements. The Standard will also require additional disclosures on service revenue and contract modifications. Revenue that was deferred and amortised over a period may now need to be recognised immediately as a transitional adjustment against the opening returned earnings if there are no former performance obligations outstanding.
AASB 2014-1 Amends various AASs to reflect the AASB's decision to 1-Jan-18 This amending standard will defer the Amendments to defer the mandatory application date of AASB 9 to application period of AASB 9 to the 2018-19 Australian Accounting annual reporting periods beginning on or after 1 January reporting period in accordance with the Standards [Part E 2018 as a consequence of Chapter 6 Hedge Accounting, transition requirements. Financial Instruments] and to amend reduced disclosure requirements.
AASB 2014-4 Amends AASB 116 Property, Plant and Equipment and 1-Jan-16 The assessment has indicated that there is no Amendments to AASB 138 Intangible Assets to: expected impact as the revenue-based method Australian Accounting • establish the principle for the basis of depreciation is not used for depreciation and amortisation. Standards – Clarification and amortisation as being the expected pattern of Acceptable Methods of consumption of the future economic benefits of of Depreciation and an asset; Amortisation [AASB 116 • prohibit the use of revenue based methods to calculate & AASB 138] the depreciation or amortisation of an asset, tangible or intangible, because revenue generally reflects the pattern of economic benefits that are generated from operating the business, rather than the consumption through the use of the asset.
AASB 2015-6 The Amendments extend the scope of AASB 124 1-Jan-16 The amending standard will result in extended Amendments to Related Party Disclosures to not-for-profit public disclosures on CHW's responsible persons, and Australian Accounting sector entities. A guidance has been included to assist the related party transactions. Standards – Extending the application of the Standard by not-for-profit public Related Party sector entities. Disclosures to Not-for- Profit Public Sector Entities [AASB 10, AASB 124 & AASB 1049]
In addition to the new standards and amendments above, the AASB has issued a list of other amending standards that are not effective for the 2014-15 reporting period (as listed below). In general, these amending standards include editorial and references changes that are expected to have insignificant impacts on public sector reporting.
§ AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) § AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments § AASB 2014‑1 Amendments to Australian Accounting Standards [PART D – Consequential Amendments arising from AASB 14 Regulatory Deferral Accounts only] # § AASB 2014‑3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations [AASB 1 & AASB 11] § AASB 2014‑5 Amendments to Australian Accounting Standards arising from AASB 15 § AASB 2014‑7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) § AASB 2014‑8 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) – Application of AASB 9 (December 2009) and AASB 9 (December 2010) [AASB 9 (2009 & 2010)] § AASB 2015‑2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101 [AASB 7, AASB 101, AASB 134 & AASB 1049] § AASB 2015‑3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality Note: # This Standard or Amendment may not be relevant to Victorian not-for-profit entities when operative.
2014/15 ANNUAL REPORT 53 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 2: Financial Risk Management Objectives and Policies
The Corporation’s activities expose it to a variety of financial (ii) Foreign Exchange Risk risks: market risk, credit risk and liquidity risk. The Corporation has no exposure to changes in the foreign The Corporation’s Board has the overall responsibility for the exchange rate. establishment and oversight of the Corporation’s risk (iii) Other Price Risk management framework. The Corporation’s overall risk management program focuses on the unpredictability of The Corporation has no significant exposure to Other financial markets and seeks to minimise potential adverse Price Risk. effects on the financial performance of the Corporation. The Market Risk Sensitivity Analysis Corporation uses different methods to measure different types The sensitivity analysis below has taken into consideration of risk to which it is exposed. These methods include past performance, future expectations, economic forecasts sensitivity analysis in the case of interest rate and other price and management’s knowledge and experience of the financial risks and ageing analysis for credit risk. markets, the Corporation believes that: Risk management is carried out by the finance department - a movement of 0.5% in interest rates is reasonable over under policies approved by the Board of Directors. The the next 12 months. finance department identifies and evaluates financial risks on behalf of the Corporation. The Board provides written principles for overall risk Interest Rate Risk management, as well as policies covering specific areas, -0.5% +0.5% such as interest rate risk, credit risk and investment of 30 June 2015 Carrying Result Equity Result Equity excess liquidity. Amount $'000 $'000 $'000 $'000 $'000 2.1 Risk Exposures Financial Assets The main risks the Corporation is exposed to through its Cash 5,209 (26) (18) 26 18 financial instruments are as follows: Deposits at Call - - - - - (a) Market Risk Total increase/ (decrease) (26) (18) 26 18 Market risk is the risk that changes in market prices will affect the fair value or future cash flows of the Corporation’s financial Financial Liabilities instruments. Market risk comprises of foreign exchange risk, Loans1 8,000 40 28 (40) (28) interest rate risk and other price risk. The Corporation’s Total increase/ exposure to market risk is primarily though interest rate risk, (decrease) 40 28 (40) (28) there is no exposure to foreign exchange risk and insignificant 1 Interest rate risk only applies to loans held at variable rates exposure to other price risks. (30th June 2015: $8m; 30th June 2014: $7m). Objectives, policies and processes used to manage these risks are disclosed in the paragraphs below: Interest Rate Risk (i) Interest Rate Risk -0.5% +0.5% The Corporation’s exposure to market interest rates relates 30 June 2014 Carrying Result Equity Result Equity primarily to the Corporation’s long term borrowings. Amount The Corporation minimises its exposure to interest rate $'000 $'000 $'000 $'000 $'000 changes on its long term borrowings by holding a mix of fixed Financial Assets and floating rate debt. Debt is sourced from Treasury Cash 601 (3) (2) 3 2 Corporation Victoria and is managed within a range of Board Deposits at Call 5,692 (28) (20) 28 20 approved limits with debt levels and interest rates being Total increase/ monitored regularly. CHW manages interest rate risk by (decrease) (31) (22) 31 22 endeavouring to enter into all new borrowings at fixed interest Financial rates, thereby avoiding risks attributable to movements in Liabilities interest rates. This approach has not changed from the 1 previous period. Loans 7,000 35 25 (35) (25) Total increase/ The Corporation has minimal exposure to interest rate risk (decrease) 35 25 (35) (25) through its holding of cash assets. CHW applies interest charges to overdue accounts. 1 Interest rate risk only applies to loans held at variable rates (30th June 2014: $7m; 30th June 2013 $Nil).
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(b) Credit Risk on-going basis to ensure that exposure to bad debts is not Credit risk is the risk of financial loss to the Corporation as a significant. Credit risk for receivables is managed in the result of a customer or counterparty to a financial instrument following ways: failing to meet its contractual obligations. Credit risk arises - payment terms are 30 days principally from the Corporation’s receivables. - debt collection policies and procedures, including use of a The Corporation’s exposure to credit risk is influenced by the debt collection agency. individual characteristics of each customer. The receivables An analysis of the ageing of the Corporation’s receivables at balance consists of a large number of residential and reporting date has been provided in Note 20. business customers which are spread across a diverse range of industries. Receivable balances are monitored on an
Credit quality of contractual financial assets that are neither past due nor impaired
Financial Government Government Other Total institutions agencies agencies (triple-A (triple-A (triple-B credit rating) credit rating) credit rating)
2015
Cash and deposits* - - - 5,209 5,209
Receivables - 966 - 22,296 23,262
Investments and other financial assets* - - - - -
Total contractual financial assets - 966 - 27,505 28,471
2014
Cash and deposits* - - - 601 601
Receivables - 534 - 21,171 21,705
Investments and other financial assets* - - - 5,692 5,692
Total contractual financial assets - 534 - 27,464 27,998
* Funds held with Commonwealth Bank of Australia, which has a credit rating of AA-.
(c) Liquidity Risk liquidity risk by maintaining adequate reserves, banking Liquidity risk is the risk that the Corporation will not be facilities and reserve borrowing facilities, and by continuously able to meet its financial obligations as they fall due. The monitoring forecasts and actual cash flows and matching the Corporation’s policy is to settle financial obligations within 30 maturity profiles of financial assets and financial liabilities. days and in the event of dispute make payments within 30 The Corporation’s financial liability maturities have been days from the date of resolution. The Corporation manages disclosed in Note 20.
2014/15 ANNUAL REPORT 55 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 3: Revenue and Expense Disclosures
2015 2014 $'000 $'000 REVENUES
Service charges Water access* 13,188 16,214 Waste water access 41,405 39,282 Fire Service 231 221 Trade Waste 141 150 Total 54,965 55,867
Usage charges Water volume 23,248 22,091 Waste water volume 616 434 Trade waste volume 1,210 1,182 Recycled water volume 190 185 Total 25,264 23,892
Government contributions Operating 737 700 Total 737 700
Developer contributions Fees paid by developers 1,777 1,741 Total 1,777 1,741
Net gain/(loss) on disposal of non current assets Net gain/(loss) on disposal of: Land & Buildings 26 (39) Plant and equipment (140) (108) Retired Infrastructure (257) (516) Intangible Assets - (64) Total (371) (727)
Other Income Forestry Timber Sales 1,243 775 Gifted Assets 8,228 7,380 Insurance Recoups 69 92 Sundry Income 3,710 3,813 Total 13,250 12,060
* Reduction due to the Government Water Rebate, which delivered a 20% reduction to fixed access water fees from 1 July 2014 (approximately $3.3 million).
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Note 3: Revenue and Expense Disclosures (cont’d)
2015 2014 $'000 $'000 EXPENSES
Depreciation Buildings (810) (789) Plant and equipment (1,379) (1,518) Water infrastructure assets (10,636) (10,693) Wastewater infrastructure assets (6,543) (6,414) Total (19,368) (19,414)
Amortisation Intangible assets (884) (837) Total (884) (837)
Employee Benefits - Salaries and wages (14,816) (13,866) - Annual leave (1,101) (1,113) - Long service leave (634) (914) - Superannuation contributions (1,455) (1,331) - Other (1,490) (1,650) Total (19,496) (18,874)
Interest expense Interest paid/payable (9,088) (9,733) Interest on Finance Leases (2,295) (2,402) Total (11,383) (12,135)
Other Expenses Auditors' remunerations - Victorian Auditor-General's Office for audit of financial statements (77) (75) - Internal audit (107) (85) Bad and Doubtful debts - Trade and Tariff Debtors (117) (95) Harvesting Costs (679) (463) Postage (185) (196) Legal Fees (173) (207) Insurance Costs (581) (583) Training (257) (206) Bank and Merchant Fees (387) (471) Advertising (31) (104) Bulk Water Charges (661) (653) Temporary Water Charges (120) (206) Other Expenses (1,187) (1,126) Total (4,562) (4,470)
2014/15 ANNUAL REPORT 57 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 4: Income Tax
2015 2014 $'000 $'000
The income tax expense for the financial year differs from the amount calculated on the net result. The differences are reconciled as follows:
(a) Components of tax expense Current tax payable 3,570 1,360 Deferred tax relating to temporary differences 716 1,751 4,286 3,111
Deferred income tax expenses included in income tax expense comprises: (Decrease)/increase in deferred tax assets 129 189 Decrease/(increase) in deferred tax liabilities (845) (1,941) (716) (1,752)
(b) Reconciliation of income tax to prima facie tax payable Net result before income tax 14,235 10,332
Tax at the Australian tax rate of 30% (2014: 30%) (4,270) (3,100)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: - Expenditure not allowed for income tax purposes (16) (11)
Income tax as reported in the Comprehensive Operating Statement (4,286) (3,111)
Note 5: Cash and cash equivalents
2015 2014 $'000 $'000
Cash Cash on Hand 3 3 Cash at Bank 5,206 598 Deposits at Call - 5,692 5,209 6,293
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Note 6: Receivables
2015 2014 $'000 $'000
Current Contractual Trade receivables 18,000 18,209 Provision for doubtful debts (237) (189) Sundry Debtors 1,374 965 Accrued Income - Gifted Assets 3,900 2,469 Other receivables 34 50
Statutory GST Input tax credit receivables 677 645 Total current receivables 23,748 22,149
Non-current Contractual Other receivables 191 202 Total non current receivables 191 202
Total receivables 23,939 22,351
2014/15 ANNUAL REPORT 59 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 6: Receivables (cont’d)
(a) Provision for Doubtful Debts As at 30 June 2015, current receivables of the Corporation with a nominal value of $288,225 (2014: $227,484) were impaired. The amount of the provision was $236,610 (2014: $189,036). The individually impaired receivables mainly related to tenant debtors and sundry debtors. It was assessed that a portion of the receivables is expected to be recovered. The aging of these receivables is as follows:
2015 2014 $'000 $'000 3 - 6 months 25 23 Over 6 months 264 204 289 227
Movements in the provision for impaired receivables are as follows:
2015 2014 $'000 $'000 At 1 July 189 161 Provision for impairment recognised during the year 237 189 Receivables written off during the year as uncollectible (189) (161) 237 189
The creation and release of the provision for doubtful debts has been included in ‘other expenses’ in the comprehensive operating statement. Amounts charged to the provision account are generally written off when there is no expectation of recovering additional cash.
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Note 6: Receivables (cont’d)
(b) Past due but not impaired trade receivables As at 30 June 2015, trade receivables of $1,533,105 (2014: $1,490,110) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The aging analysis of these receivables is as follows:
2015 2014 $'000 $'000 Up to 6 months 1,223 1,178 Over 6 months 310 312 1,533 1,490
The other amounts within receivables do not contain impaired assets and are not past due. Based on credit history, it is expected that these amounts will be received when due.
(c) Fair value and credit risk Due to the short term nature of the current receivables, their carrying value is assumed to approximate their fair value. The carrying amount of other receivables (non-current) is equal to the fair value because the Corporation discount these long term receivables on an annual basis.
2015 2014 Carrying Fair Value Carrying Fair Value Amount Amount $'000 $'000 $'000 $'000 Other receivables 191 191 202 202 191 191 202 202
The maximum exposure to credit risk at the reporting date is the carrying value of receivables mentioned above. The Corporation does not hold any collateral as security. Refer to Note 2 for more information on the risk management policy of the Corporation.
2014/15 ANNUAL REPORT 61 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 7: Biological Assets
2015 2014 hectares hectares Timber volume (hectares) 1,411 1,433
Movements in carrying amounts of timber in forests:
2015 2014 $'000 $'000 Carrying amount at beginning of period 5,600 5,616 Gains arising from changes in fair value less estimated 1,547 1,398 point of sale costs attributable to physical changes Gains/(losses) arising from changes in fair value less estimated (367) (638) point of sale costs attributable to price changes Decreases due to harvest (1,225) (776) Carrying amount at end of period Timber in Forests 5,555 5,600
CHW manages significant timber plantations in its catchments primary financial risk occurs due to the length of time between for the purpose of catchment protection. These plantations expending cash on the purchase, planting and maintenance are managed on a 35 year cycle from planting to harvesting. of trees and on felling the adult trees and ultimately receiving The value of the timber in these forest has been calculated on the cash from the eventual sale to third parties. The a discounted cash flow basis, based on the harvesting forecast Corporation manages these risks by actively reviewing and over this 35 year period and using a discount rate of 5.27%. managing the working capital requirements of these activities. The movement in carrying amounts of timber in forests over Disclosure of biological assets measured at fair value and their the period reflects changes in the harvesting forecast. categorisation in the fair value hierarchy can be seen below. The Corporation is exposed to financial risks in respect of its biological activities, in particular, the commercial forests. The
Carrying amount Fair value measurement at end of as at reporting period using: 30/06/2015 $'000 Level 1(i) Level 2(i) Level 3(i) Forests 5,555 - 5,555 -
Carrying amount Fair value measurement at end of as at reporting period using: 30/06/2014 $'000 Level 1(i) Level 2(i) Level 3(i) Forests 5,600 - 5,600 -
(i) Classified in accordance with the fair value hierarchy, see Note 1.9.
There have been no transfers between levels during the period. There were no changes in valuation techniques throughout the period to 30 June 2015. Biological assets are measured at fair value less costs to sell, with any changes recognised in the comprehensive operating statement – other expenses. Costs to sell include all costs that would be necessary to sell the assets, including freight and direct selling costs.
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Note 8: Infrastructure, Property, Plant and Equipment
2015 2014 $'000 $'000
Land At fair value 41,460 41,863 Total 41,460 41,863 Buildings At fair value 16,067 15,328 Less: Accumulated depreciation (2,535) (1,996) Total 13,532 13,332 Plant & Equipment At fair value 14,542 15,277 Less: Accumulated depreciation (8,201) (8,198) Total 6,341 7,079 Water infrastructure assets At fair value 525,184 515,042 Less: Accumulated depreciation (41,382) (31,548) Total 483,802 483,494 Wastewater infrastructure assets At fair value 349,232 339,334 Less: Accumulated depreciation (23,471) (17,149) Total 325,761 322,185 Capital Works In Progress At Cost 14,309 12,918 Total Capital works in progress 14,309 12,918
Total Infrastructure, Property, Plant and Equipment 885,205 880,871
Revaluation of Land, Buildings and Infrastructure Assets condition assessments. This sample size included assets Land, buildings and infrastructure assets were valued at across all asset classes for above ground assets owned 30 June 2011. by CHW. From this data, AECOM then estimated useful remaining lives for all other assets in the appropriate The valuation of land and buildings were completed by Egan asset classes. National Valuers acting as an agent for the Valuer General of Victoria. The valuation of infrastructure assets was completed To form a judgement on assets that are unable to be by AECOM, also acting as an agent for the Valuer General inspected (i.e. underground assets), AECOM utilised a of Victoria. combination of CHW’s asset condition data and previous deterioration curves in their databases for underground assets For land and buildings, the valuer used a market based operating under similar conditions. comparison approach whereby CHW’s properties were compared to recent comparable land sales in comparable AECOM then established current optimised current proximity to the subject properties and applying an replacement costs (determined on an optimum modern appropriate $-rate per square metre/hectare rate to determine equivalent basis) and assigned salvage values using industry their valuation. benchmarking data. With the establishment of remaining useful lives, current replacement costs and salvage values, For infrastructure assets, the approach taken by the valuer AECOM were then able to establish fair value using the was to undertake physical site inspection of a sample of depreciated replacement cost method. CHW’s infrastructure assets and determine their useful life via
2014/15 ANNUAL REPORT 63 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 8: Infrastructure, Property, Plant and Equipment (cont’d)
Reconciliations Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the financial year are set out below.
Opening Additions Gifted Disposals Re- Transfer Impairment Transfer to Work in De- Closing WDV at 1 Assets valuations Work in Intangibles Progress preciation WDV at 30 July 2014 Progress amounts June 2015 to Assets expensed $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 2014/2015 Land 41,863 292 (695) - 41,460 Buildings 13,332 (61) 1,071 (810) 13,532 Plant and Equipment 7,079 622 (787) 806 (1,379) 6,341 Water Infrastructure Assets 483,494 2,170 (197) 8,971 (10,636) 483,802 Wastewater Infrastructure Assets 322,185 4,628 (61) 5,551 (6,543) 325,761 Work In Progress 12,918 18,898 (16,399) (1,108) 14,309 Carrying amount at end of year 880,871 19,812 6,798 (1,801) - - - (1,108) - (19,368) 885,205
Opening Additions Gifted Disposals Re- Transfer Impairment Transfer to Work in De- Closing WDV at 1 Assets valuations Work in Intangibles Progress preciation WDV at 30 July 2013 Progress amounts June 2014 to Assets expensed $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 2013/2014 Land 41,162 701 - 41,863 Buildings 13,146 (39) 1,014 (789) 13,332 Plant and 7,925 102 (252) 822 (1,518) 7,079 Equipment Water 487,296 1,999 (243) 5,135 (10,693) 483,494 Infrastructure Assets Wastewater 312,336 5,544 (274) 10,993 (6,414) 322,185 Infrastructure Assets Work In 17,064 14,719 (17,964) (901) 12,918 Progress Carrying amount at end of year 878,929 15,522 7,543 (808) - - - (901) - (19,414) 880,871
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Note 8: Infrastructure, Property, Plant and Equipment (cont’d)
Fair value measurement hierarchy for assets as at 30 June 2015
Carrying Fair value measurement at end of amount reporting period using: as at 30/06/2015 Level 1(i) Level 2(i) Level 3(i) $'000
Land at fair value Specialised land 41,460 - - 41,460 Total of land at fair value 41,460 - - 41,460
Buildings at fair value Specialised buildings 13,532 - - 13,532 Total of buildings at fair value 13,532 - - 13,532
Plant, equipment and vehicles at fair value Vehicles 2,702 - 2,702 - Plant and equipment 3,639 - - 3,639 Total of plant, equipment and vehicles at fair value 6,341 - 2,702 3,639
Water infrastructure at fair value Water treatment plants 47,875 - - 47,875 Water mains 263,062 - - 263,062 Reservoirs 67,019 - - 67,019 Water infrastructure - other 105,846 - - 105,846 Total of water infrastructure at fair value 483,802 - - 483,802
Wastewater infrastructure at fair value Wastewater treatment plants 87,708 - - 87,708 Wastewater sewer mains 178,269 - - 178,269 Wastewater infrastructure - other 59,784 - - 59,784 Total of wastewater infrastructure at fair value 325,761 - - 325,761
(i) Classified in accordance with the fair value hierarchy, see Note 1.9 There have been no transfers between levels during the period.
2014/15 ANNUAL REPORT 65 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 8: Infrastructure, Property, Plant and Equipment (cont’d)
Fair value measurement hierarchy for assets as at 30 June 2014
Carrying Fair value measurement at end of amount reporting period using: as at 30/06/2014 Level 1(i) Level 2(i) Level 3(i) $'000
Land at fair value Specialised land 41,863 - - 41,863 Total of land at fair value 41,863 - - 41,863
Buildings at fair value Specialised buildings 13,332 - - 13,332 Total of buildings at fair value 13,332 - - 13,332
Plant, equipment and vehicles at fair value Vehicles 3,268 - 3,268 - Plant and equipment 3,811 - - 3,811 Total of plant, equipment and vehicles at fair value 7,079 - 3,268 3,811
Water infrastructure at fair value Water treatment plants 48,764 - - 48,764 Water mains 263,060 - - 263,060 Reservoirs 65,881 - - 65,881 Water infrastructure - other 105,789 - - 105,789 Total of water infrastructure at fair value 483,494 - - 483,494
Wastewater infrastructure at fair value Wastewater treatment plants 86,013 - - 86,013 Wastewater sewer mains 178,190 - - 178,190 Wastewater infrastructure - other 57,982 - - 57,982 Total of wastewater infrastructure at fair value 322,185 - - 322,185
(i) Classified in accordance with the fair value hierarchy, see Note 1.9 There were no transfers between levels during the period.
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Note 8: Infrastructure, Property, Plant and Equipment (cont’d)
Specialised land and specialised buildings Vehicles The market approach is used for specialised land and Vehicles are valued using the market approach. Under this buildings, although it is adjusted for the community service valuation method, the assets are compared to recent obligation (CSO) to reflect the specialised nature of the land comparable sales, or sales of comparable assets which are and buildings being valued. The CSO adjustment is a considered to have nominal or no added improvement value. reflection of the valuer’s assessment of the impact of The Corporation acquires new vehicles and at times disposes restrictions associated with an asset to the extent that is also of them before the end of their economic life. The process of equally applicable to market participants. This approach is in acquisition, use and disposal in the market is managed by light of the highest and best use consideration required for fair experienced staff who set relevant depreciation rates during value measurement, and takes into account the use of the use to reflect the utilisation of the vehicles. asset that is physically possible, legally permissible, and Plant and equipment financially feasible. As adjustments of CSO are considered as significant unobservable inputs, specialised land is classified Plant and equipment is held at fair value. When plant and as Level 3. equipment is specialised in use, such that it is rarely sold other than as part of a going concern, fair value is determined Water infrastructure and wastewater infrastructure using the depreciated replacement cost method. Infrastructure is valued using the depreciated replacement There were no changes in valuation techniques throughout cost method. This cost represents the replacement cost of the period to 30 June 2015 and all fair value assessments the building/component after applying depreciation rates on a undertaken during the period, for each relevant asset class, useful life basis. Replacement costs relate to costs to replace revealed that no movement had occurred that was greater the current service capacity of the asset. Economic than 10% of the carrying amount, hence no revaluations were obsolescence has also been factored into the depreciated brought to account in 2015. replacement cost calculation. For all assets measured at fair value, the current use is Where it has not been possible to examine hidden works considered the highest and best use. such as structural frames and floors, the use of reasonable materials and methods of construction have been assumed bearing in mind the age and nature of the building. The estimated cost of reconstruction includes structure services and finishes as applicable. These assets are classified as Level 3 fair value as the lowest level input, the absence of an active market, has a significant impact on the fair value which is unobservable.
2014/15 ANNUAL REPORT 67 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 8: Infrastructure, Property, Plant and Equipment (cont’d)
Reconciliation of Level 3 fair value $’000
2015 Specialised Specialised Plant and Water Wastewater land buildings equipment Infrastructure Infrastructure Opening balance 41,863 13,332 3,811 483,494 322,185
Purchases (sales) (429) 1,010 857 11,141 10,179 Transfers in (out) of Level 3 - - - - - Gains or losses recognised in net result 26 - (21) (197) (60) Depreciation - (810) (1,008) (10,636) (6,543) Impairment loss - - - - - Subtotal 41,460 13,532 3,639 483,802 325,761
Revaluation - - - - - Subtotal - - - - - Closing balance 41,460 13,532 3,639 483,802 325,761
Reconciliation of Level 3 fair value $’000
2014 Specialised Specialised Plant and Water Wastewater land buildings equipment Infrastructure Infrastructure Opening balance 41,162 13,146 7,925 487,296 312,336
Purchases (sales) 701 1,014 780 7,134 16,536 Transfers in (out) of Level 3 - - (3,268) - - Gains or losses recognised in net result - (39) (108) (243) (273) Depreciation - (789) (1,518) (10,693) (6,414) Impairment loss - - - - - Subtotal 41,863 13,332 3,811 483,494 322,185
Revaluation - - - - - Subtotal - - - - - Closing balance 41,863 13,332 3,811 483,494 322,185
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Note 8: Infrastructure, Property, Plant and Equipment (cont’d)
Description of significant unobservable inputs to Level 3 valuations
Asset Type Fair value at Valuation Significant unobservable inputs 30 June 2015 technique $'000 Specialised land 41,460 Market approach Community Service Obligation (CSO) VGV provided to Egans plus subsequent additions 6,823ha Specialised buildings 13,532 Market approach Direct cost per square metre VGV provided to Egans 13,295m2 Useful life of specialised buildings Plant and equipment 3,639 Depreciated Cost per unit replacement cost Useful life of plant and equipment Water Infrastructure Water treatment plants 47,875 Depreciated Cost per unit (15 in total) replacement cost Useful life of water treatment plants Water mains 263,062 Depreciated Cost per metre (18mm - 1,250mm) (2,473,292m) replacement cost Useful life of water mains Reservoirs 67,019 Depreciated Cost per unit (30 in total) replacement cost Useful life of reservoirs Wastewater Infrastructure Wastewater treatment plants 87,708 Depreciated Cost per unit (13 in total) replacement cost Useful life of wastewater treatment plants Wastewater sewer mains 178,269 Depreciated Cost per metre (63mm - 1,500mm) (1,377,286m) replacement cost Useful life of wastewater mains
Asset Type Fair value at Valuation Significant unobservable inputs 30 June 2014 technique $’000 Specialised land 41,863 Market approach Community Service Obligation (CSO) VGV provided to Egans plus subsequent additions 6,843ha Specialised buildings 13,332 Market approach Direct cost per square metre VGV provided to Egans 13,295m2 Useful life of specialised buildings Plant and equipment 3,811 Depreciated Cost per unit replacement cost Useful life of plant and equipment Water Infrastructure Water treatment plants 48,764 Depreciated Cost per unit (15 in total) replacement cost Useful life of water treatment plants Water mains 263,060 Depreciated Cost per metre (18mm - 1,250mm) (2,443,616m) replacement cost Useful life of water mains Reservoirs 65,881 Depreciated Cost per unit (30 in total) replacement cost Useful life of reservoirs Wastewater Infrastructure Wastewater treatment plants 86,013 Depreciated Cost per unit (13 in total) replacement cost Useful life of wastewater treatment plants Wastewater sewer mains 178,190 Depreciated Cost per metre (63mm - 1,500mm) (1,358,307m) replacement cost Useful life of wastewater mains
2014/15 ANNUAL REPORT 69 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 9: Intangible Assets
2015 2014 $'000 $'000
At cost 38,565 37,467 Less: accumulated amortisation (4,453) (3,579) 34,112 33,888
$'000 $'000 $'000 Software Permanent Total Water Entitlements
Year Ended 30 June 2015 Opening WDV at 1 July 2014 2,890 30,998 33,888 Additions 668 - 668 Transfer Work in Progress to Assets - 440 440 Net gain/(loss) on disposal - - - Amortisation (884) - (884) Closing WDV at 30 June 2015 2,674 31,438 34,112
Year Ended 30 June 2014 Opening WDV at 1 July 2013 2,887 30,595 33,482 Additions 904 - 904 Transfer Work in Progress to Assets - 403 403 Net gain/(loss) on disposal (64) - (64) Amortisation (837) - (837) Closing WDV at 30 June 2014 2,890 30,998 33,888
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Note 10: Deferred Tax
2015 2014 $'000 $'000
Deferred Tax Assets The balance comprises temporary differences attributable to: - Tax Losses 57,509 61,080 - Doubtful Debts 71 57 - Employee Benefits 1,538 1,468 - Accrued Expenses 45 -
Deferred Tax Assets 59,163 62,605
Movements: Opening balance at 1 July 62,605 63,777 Loss Utilisation (3,571) (1,361) Credited/(debited) to the comprehensive operating statement 129 189 Closing balance at 30 June 59,163 62,605
Deferred tax assets to be recovered after more than 12 months 57,509 61,080
Deferred tax assets to be recovered within 12 months 1,654 1,525
Deferred Tax Liabilities The balance comprises temporary differences attributable to: Amounts recognised in the comprehensive operating statement - Infrastructure, Property, plant and equipment 74,073 73,229 - Accrued Income - - Aggregate in comprehensive operating statement 74,073 73,229
Amounts recognised directly in equity Buildings (Revaluation) 12,806 12,806
Deferred Tax Liabilities 86,879 86,035
Movements: Opening balance at 1 July 86,035 84,094 Credited/(debited) to the comprehensive operating statement 844 1,941 Adjustments to DTL - - Closing balance at 30 June 86,879 86,035
Set-off of deferred tax assets 59,163 62,605 Net deferred tax liabilities 27,716 23,430
2014/15 ANNUAL REPORT 71 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 11: Payables
2015 2014 $'000 $'000
Current Payables Trade Creditors 4,183 4,980 Accrued Expenses 3,828 3,879 Sundry Creditors, Deposits and Retention Monies 86 273 Total current payables 8,097 9,132
Total Payables 8,097 9,132
(a) Foreign currency risk and interest rate risk for trade and other payables The carrying amounts of the Corporation’s payables are denominated in Australian Dollars. For an analysis of the sensitivity of payables to interest rate risk, refer to Note 2.
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Note 12: Interest bearing liabilities
2015 2014 $'000 $'000
Current Secured Finance Leases: BOOT arrangement 1,702 1,518 Total current secured borrowings 1,702 1,518 Unsecured Loans** 20,000 20,000 Total current unsecured borrowings 20,000 20,000 Total current borrowings 21,702 21,518
Non-current Secured Finance Leases: BOOT arrangement 28,032 29,734 Total non current secured borrowings 28,032 29,734 Unsecured Loans** 112,000 119,000 Total non current unsecured borrowings 112,000 119,000 Total non current borrowings 140,032 148,734
** All borrowings have been transacted with the approval of the Treasurer of Victoria and hence are subject to Statutory Guarantee by the State of Victoria in accordance with the Borrowing and Investment Powers Act 1987.
Total interest bearing liabilities 161,734 170,252
Assets pledged as security
Non Current Finance Lease Water Infrastructure Assets 27,259 28,135
Credit Standby Arrangements Bank Overdrafts - - Used at Balance Date - - Unused at Balance Date - -
Loan Facilities Total Facilities 134,000 145,100 Used at balance date 132,000 139,000 Unused at Balance Date 2,000 6,100
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Note 12: Interest bearing liabilities (cont’d)
2015 2014 Carrying Fair Carrying Fair Amount Value Amount Value $'000 $'000 $'000 $'000 On Balance Sheet Non traded financial liabilities Loans 132,000 145,522 139,000 150,786 Lease Liabilities 29,734 29,734 31,252 31,252 161,734 175,256 170,252 182,038
On Balance Sheet The fair values of non-current borrowings are based on cash flows discounted using borrowing rates varying from 3.41% to 7.275%, depending on the maturity and type of borrowing (2014: 4.285% to 7.275%). Fair value refers to the current value of borrowings with Treasury Corporation Victoria (TCV). TCV “mark to market” its portfolio on a daily basis which involves making a daily accounting adjustment to reflect unrealised gains or losses on the book value of its portfolio.
(a) Risk Exposures The exposure of the Corporation’s borrowings to interest rate changes and the contractual repricing dates at balance date are as follows:
2015 2014 $'000 $'000
6 months or less 13,000 7,000 6 - 12 months 7,000 13,000 1 - 5 years 55,000 60,000 Over 5 years 57,000 59,000
132,000 139,000
Current borrowings 20,000 20,000 Non-Current borrowings 112,000 119,000 132,000 139,000
The carrying amounts of the Corporation’s borrowings are denominated in Australian dollars. For an analysis of the sensitivity of borrowings to interest rate risk refer to Note 2.
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Note 13: Employee Benefits
2015 2014 Employee Benefits $'000 $'000
Current employee benefits Rostered Days Off 77 69 Annual Leave Unconditional and expected to settle within 12 months 886 852 Unconditional and expected to settle after 12 months 294 276 Long Service Leave Unconditional and expected to settle within 12 months 432 351 Unconditional and expected to settle after 12 months 2,235 2,206
Non‑current employee benefits Long Service Leave 549 484
Total employee benefits 4,473 4,238
Current on-costs 642 581 Non-current on-costs 92 76 Total on-costs 734 657
Total employee benefits and on-costs 5,207 4,895
Note 1.5 sets out the value measurement applied to employee entitlements. Comparatives have been adjusted to enhance disclosure in line with new requirements for AASB 119.
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Note 14: Reserves
2015 2014 $'000 $'000
Movements in reserves (a) Land Revaluation Reserve
Opening Balance at 1 July 26,663 26,663 Increment (decrement) on revaluation - - Less tax effect of revaluation decrement - - Closing balance at 30 June 26,663 26,663 The asset revaluation reserve is used to record asset revaluation increments and decrements in the value of non-current physical assets.
(b) Building Revaluation Reserve
Opening Balance at 1 July 28,083 28,083 Increment (decrement) on revaluation - - Less tax effect of revaluation increment - - Closing balance at 30 June 28,083 28,083
(c) Infrastructure Revaluation Reserve
Opening Balance at 1 July 33,976 33,976 Increment (decrement) on revaluation - - Less tax effect of revaluation increment - - Closing balance at 30 June 33,976 33,976
Total Reserves 88,722 88,722
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Note 15: Commitments for Expenditure
2015 2014 $'000 $'000 Capital Commitments Commitments for capital expenditure entered into but not yet recognised as liabilities, payable: Within one year 5,232 1,452 Later than one year but not later than 5 years - - Later than 5 years - - Total 5,232 1,452
Build-Own-Operate-Transfer – Supply of Treated Water Service Charge by the Private Sector CHW is obligated to pay Ballarat Water Pty Ltd an annual On 12 April, 1999 CHW signed a Build, Own, Operate and service charge comprising both fixed and variable components. Transfer (BOOT) contract with Ballarat Water Pty Ltd to supply At 30 June 2015 the present value of the obligation has been Ballarat and a number of neighbouring communities with measured using a discount rate of 5.27% (2014: 5.50%). treated water for a period of 25 years. Nominal Value of Consideration On 12 November, 2003 CHW signed another BOOT contract The nominal value of the purchase consideration provided with Ballarat Water Pty Ltd to supply four small towns for the supply of services under the arrangement as at the (Beaufort, Blackwood, Forest Hill and Clunes) with treated date of entering the contract has been determined on the water for a period of 20 years. following basis:
2015 2014 Commitments contracted for but not recognised as liabilities: $'000 $'000 Obligation for Service Charge Within one year 7,129 6,948 Later than one year but not later than 5 years 21,656 29,572 Later than 5 years 42,100 49,991 Total 70,885 86,511
2015 2014 Finance Lease Commitments $'000 $'000 are payable as follows: Within one year 3,877 3,813 Later than one year but not later than 5 years 16,186 15,912 Later than 5 years 23,203 27,354 Minimum lease payments 43,266 47,079 Less: Future interest charges 13,532 15,827 Total 29,734 31,252 Representing lease liabilities Current (refer Note 12) 1,702 1,518 Non Current (refer Note 12) 28,032 29,734 Total 29,734 31,252
Environmental Commitments 2015 2014 $'000 $'000 Commitments for payments in relation to environmental contributions are as follows: Within one year 3,123 3,123 Later than one year but not later than 5 years - 3,123 Total 3,123 6,246
2014/15 ANNUAL REPORT 77 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 16: Contingent Liabilities and Contingent Assets
CHW has one contingent liability relating to a disputed utilities invoice (2014: $Nil). CHW has no contingent assets to disclose in this period (2014: $Nil). It is not possible to estimate the potential financial effect of the contingent liability and the timing of the payment is uncertain, however, no litigation is proceeding against CHW.
Note 17: Superannuation
Vision Super To determine the VBI, the fund Actuary used the following CHW makes the majority of its employer superannuation long-term assumptions: contributions in respect of its employees to Vision Super Net Investment Return 7.50% p.a. Superannuation Fund (the Fund). This Fund has two Salary Inflation 4.25% p.a. categories of membership, accumulation and defined benefit, Price Inflation 2.75% p.a. each of which is funded differently. Obligations for contributions Vision Super has advised that the estimated VBI at March to the Fund are recognised as an expense in Comprehensive 2015 was 108.5%. Operating Statement when they are made or due. The VBI is to be used as the primary funding indicator. Accumulation Because the VBI was above 100%, the actuarial investigation The Fund’s accumulation category, Vision MySuper/Vision determined the defined benefit category was in a satisfactory Super Saver, receives both employer and employee financial position and that no change was necessary to contributions on a progressive basis. Employer contributions the defined benefit category’s funding arrangements from are normally based on a fixed percentage of employee prior years. earnings (for the year ended 30 June 2015, this was 9.5% Employer contributions required under Superannuation Guarantee legislation (for 2013/14, this was 9.25%)). Regular contributions Defined Benefits Members On the basis of the results of the most recent full actuarial investigation conducted by the Fund’s Actuary as at 30 June CHW does not use defined benefit accounting for its defined 2014, CHW makes employer contributions to the Fund’s benefit obligations under the Fund’s Defined Benefit category. Defined Benefit category at rates determined by the Fund’s This is because the Fund’s Defined Benefit category is a Trustee. For the year ended 30 June 2015, this rate was pooled multi-employer sponsored plan. 9.5% of members’ salaries. This rate will increase in line with There is no proportional split of the defined benefit liabilities, any increase to the Superannuation Guarantee (SG) assets or costs between the participating employers as the contribution rate. defined benefit obligation is a floating obligation between the In addition, CHW reimburses the Fund to cover the excess of participating employers and the only time that the aggregate the benefits paid as a consequence of retrenchment above obligation is allocated to specific employers is when a call is the funded resignation or retirement benefit. made. As a result, the level of participation of CHW in the Fund cannot be measured as a percentage compared with Funding calls other participating employers. Therefore, the Actuary is unable If the defined benefit category is in an unsatisfactory financial to allocate benefit liabilities, assets and costs between position at actuarial investigation or the defined benefit employers for the purposes of AASB 119. category‘s VBI is below its shortfall limit at any time other than Funding arrangements the date of the actuarial investigation, the defined benefit category has a shortfall for the purposes of SPS 160 and the CHW makes employer contributions to the defined benefit Fund is required to put a plan in place so that the shortfall is category of the Fund at rates determined by the Trustee on fully funded within three years of the shortfall occurring. The the advice of the Fund’s Actuary. Fund monitors its VBI on a quarterly basis and the Fund has The Fund’s latest actuarial investigation was held as at 30 set its shortfall limit at 97%. June 2014 and it was determined that the Vested Benefit In the event that the Fund Actuary determines that there is a Indexed (VBI) of the defined benefit category of which CHW is shortfall based on the above requirement, the Fund’s a contributing employer was 103.4%. participating employers (including CHW) are required to make an employer contribution to cover the shortfall.
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Note 17: Superannuation (cont’d)
Using the agreed methodology, the shortfall amount is apportioned between the participating employers based on the pre-1 July 1993 and post-30 June 1993 service liabilities of the Fund’s defined benefit category, together with the employer’s payroll at 30 June 1993 and at the date the shortfall has been calculated. Due to the nature of the contractual obligations between the participating employers and the Fund, and that the Fund includes lifetime pensioners and their reversionary beneficiaries, it is unlikely that the Fund will be wound up. If there is a surplus in the Fund, the surplus cannot be returned to the participating employers. In the event that a participating employer is wound-up, the defined benefit obligations of that employer will be transferred to that employer’s successor. Latest actuarial investigation surplus amounts The Fund’s latest actuarial investigation as at 30 June 2014 identified the following in the defined benefit category of which CHW is a contributing employer: • A VBI surplus of $77.1 million; and • A total service liability surplus of $236 million. The VBI surplus means that the market value of the fund’s assets supporting the defined benefit obligations exceed the vested benefits that the defined benefit members would have been entitled to if they had all exited on 30 June 2014. The total service liability surplus means that the current value of the assets in the Fund’s defined benefit category plus expected future contributions exceeds the value of expected future benefits and expenses. CHW was notified of the results of the actuarial investigation during January 2015.
2014/15 ANNUAL REPORT 79 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 17: Superannuation (cont’d)
Contributions by CHW (excluding any unfunded liability payments) to the above superannuation plans for the financial year ended 30 June 2015 are detailed below:
Type of Contribution 2015 2014 Scheme Rate $'000 $'000 Vision Super Scheme (DEFB) Defined Benefits 9.50% 303 326 Vision Super Scheme (Super Saver) Accumulation 9.50% 667 633 Australian Superannuation Accumulation 9.50% 83 61 AMP Accumulation 9.50% 36 38 ASGARD Accumulation 9.50% 13 12 VIC Super Accumulation 9.50% 55 32 Portfolio Super Accumulation 9.50% 22 21 MLC Super Accumulation 9.50% 7 7 UniSuper Accumulation 9.50% 30 25 CBUS Super Accumulation 9.50% 9 11 Plum Super Accumulation 9.50% 9 10 Telstra Accumulation 9.50% 25 26 ING Master Super Accumulation 9.50% 1 4 Health Superannuation Accumulation 9.50% 7 6 HESTA Super Accumulation 9.50% 6 6 Equipsuper Accumulation 9.50% 7 6 BT SuperWrap Accumulation 9.50% 15 7 Rest Accumulation 9.50% 53 33 Colonial First State Accumulation 9.50% 18 18 JWM Superannuation Fund Accumulation 9.50% 4 4 Mercer Accumulation 9.50% 0 3 Navigator Personal Retirment Accumulation 9.50% 7 6 Host Plus Accumulation 9.50% 7 7 LG Super Accumulation 9.50% 8 7 Wendouree Superannuation Fund Accumulation 9.50% 0 0 Force For Good Superannuation Accumulation 9.50% 2 2 Nicholson FRF Pty Ltd Accumulation 9.50% 2 2 RND Superannuation Fund Accumulation 9.50% 2 4 Water Corp Super Fund Accumulation 9.50% 0 2 North Personal Superannuation Accumulation 9.50% 14 10 Freedom of Choice Personal Super Accumulation 9.50% 6 4 LUCRF Super Accumulation 9.50% 12 1 Care Super Accumulation 9.50% 4 1 J & L Bolt Super Fund Accumulation 9.50% 3 0 Myers Family Superannuation Fund Accumulation 9.50% 2 0 Russell Supersolutions Masters Accumulation 9.50% 9 0 IAG & NRMA Super Fund Accumulation 9.50% 4 0 ANZ One Path Master Fund Accumulation 9.50% 3 0 IOOF - Personal Super Accumulation 9.50% 5 0 First State Super Accumulation 9.50% 2 0 Contributions to all funds 1,455 1,331
As at the reporting date, there were no outstanding/overdue contributions payable to the above funds. As at the reporting date, there were no loans to or from CHW to any of the above funds. The 2014 contribution rate was 9.25%.
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Note 18: Remuneration of executives and payments to other personnel
(a) Responsible Persons The names of persons who were Responsible Persons at any time during the financial year are:- The Hon. Peter Walsh MP, Minister for Water (1 July 2014 to 3 December 2014) The Hon. Lisa Neville MP, Minister for Environment, Climate Change and Water (4 December 2014 to 30 June 2015) J. Johnson - Board Chair I. Coles - Director S. Howe - Director R. Nicholson - Director J. Plummer - Director G. Mason - Director M. Myers - Director P. O’Donohue - Managing Director
Remuneration of responsible persons appointment and departure of executives and the payment of Remuneration paid to ministers is reported in the Annual leave accruals to the departing executives. This has resulted Report of the Department of Premier and Cabinet. Other in a higher number of executives being reported in 2015 but a relevant interests are declared in the Register of Members’ lower total annualised employee equivalent. Interests which each member of the Parliament completes. There were no contractors with significant management The number of Responsible Persons are shown below in their responsibility during the financial year. relevant income band. Additionally, superannuation, vehicle and FBT components Several factors have affected total remuneration payable to have been included in the executive remuneration figures executives over the year. These include the timing of disclosed below, which differs to prior year disclosures.
Income Band ($) 2015 2014 Number Number $10,000-$19,999 - 1 $20,000 - $29,999 6 5 $40,000 - $49,999 1 1 $320,000 - $329,000 - 1 $360,000 - $369,999 1 - 8 8
2015 2014 $'000 $'000 Remuneration received, or due and receivable from the Corporation in connection with the management of the Corporation (includes termination payments and bonuses paid). 551 506
There were no amounts paid by the Corporation in connection with the retirements of responsible persons of the Corporation during the financial year. There were no amounts paid by the Corporation to other related parties during the year.
2014/15 ANNUAL REPORT 81 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 18: Remuneration of executives and payments to other personnel (cont’d)
(b) Executive officers’ remuneration payments, long service leave payments, redundancy The number of executive officers, other than ministers and payments and retirement benefits. These bonus payments accountable officers, and their total remuneration during the depend on the terms of individual employment contracts. reporting period are shown in the first two columns in the All of the Corporation’s executive officers have been employed table below in their relevant income bands. The base on a full time basis during the reporting period. There were no remuneration of executive officers is shown in the third and contractors with significant management responsibility during fourth columns. Base remuneration is exclusive of bonus the financial year.
Income Band ($) Total Remuneration Base Remuneration 2015 2014 2015 2014 Number Number Number Number $50,000-$59,999 - - 1 - $90,000-$99,999 1 1 1 1 $100,000-$109,999 1 - - - $160,000-$169,999 - - 1 - $170,000-$179,999 - - 1 3 $180,000-$189,999 - - 1 - $190,000-$199,999 - - - - $200,000-$209,999 1 1 - 1 $210,000-$219,999 - 2 1 - $220,000-$229,999 1 - - - $240,000-$249,999 1 - - - $250,000-$259,999 1 1 - - Total number of Executives 6 5 6 5 Total annualised employee equivalents 4.6 4.7 4.6 4.7
2015 2014 $'000 $'000 Total remuneration received or due and receivable, by executive officers from the Corporation amounted to: 1,135 979 Base remuneration received or due and receivable, by executive officers from the Corporation amounted to: 890 838
Loans to Responsible Persons No loans have been made, guaranteed or secured by CHW, on behalf of the Responsible Persons or Responsible Persons’ related entities, during the financial year. Other Transactions between Responsible Persons and Responsible Persons’ Related Entities During the year transaction occurred between CHW, responsible persons and their related entities. All such dealings are conducted on normal commercial or employee terms as arms length transactions in accordance with Board policy.
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Note 19: Reconciliation of profit/(loss) for the period after related income tax to net cash flows from operating activities
2015 2014 $'000 $'000
Net Result for the period after income tax 9,949 7,221 Add/(less) Non-Cash Flows in Net Result Depreciation and Amortisation 20,252 20,250 (Profit)/Loss on Sale of Non-Current Assets 371 727 Provision for Impaired Receivables 117 95 Gifted Assets Income (8,228) (7,543)
Changes in Assets and Liabilities Decrease/(Increase) in Receivables (274) (208) Decrease/(Increase) in Inventory and Biological Assets 41 (30) Decrease/(Increase) in Prepayments 27 (154) (Decrease)/Increase in Payables and Accruals (2,284) 306 (Decrease)/Increase in Provisions 312 599 (Decrease)/Increase in Deferred Tax Liabilities 4,286 3,111
Net Cash (Outflow)/Inflow from Operating Activities 24,569 24,375
2014/15 ANNUAL REPORT 83 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 20: Financial Instruments
Table 20.1 Ageing analysis of financial assets
30 June 2015 Carrying Not past Past due but not impaired Impaired Amount due and financial Less than 1 1-3 months 3 months - 1-5 years not assets month 1 year impaired $'000 $'000 $'000 $'000 $'000 $'000 $'000 Receivables Trade Receivables 17,763 16,179 529 428 820 45 (237) Other Receivables 5,499 5,012 35 226 34 191 - Investments and other financial assets Cash 5,209 5,209 - - - - - Deposits at Call ------Total 28,471 26,400 564 654 854 236 (237)
30 June 2014 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Receivables Trade Receivables 18,020 16,491 554 413 689 61 (189) Other Receivables 3,685 3,153 145 54 104 228 - Investments and other financial assets Cash 601 601 - - - - - Deposits at Call 5,692 5,692 - - - - - Total 27,997 25,937 699 467 793 289 (189)
Table 20.2 Maturity analysis of financial liabilities
30 June 2015 Carrying Nominal Maturity Dates Amount Amount Less than 1-3 3 months - 1-5 years 5+ 1 month months 1 year years $'000 $'000 $'000 $'000 $'000 $'000 $'000 Financial Liabilities Payables 8,097 8,097 8,011 - 86 - - Borrowings 132,000 132,000 - - 20,000 55,000 57,000 Finance Lease Liabilities* 29,734 29,734 - - 1,702 8,994 19,038 Total 169,831 169,831 8,011 - 21,788 63,994 76,038
30 June 2014 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Financial Liabilities Payables 9,132 9,132 8,860 - 272 - - Borrowings 139,000 139,000 - 7,000 13,000 60,000 59,000 Finance Lease Liabilities* 31,252 31,252 - - 1,518 8,082 21,652 Total 179,384 179,384 8,860 7,000 14,790 68,082 80,652
* Finance Lease Liabilities relate to BOOT Contracts as disclosed at Note 1.4
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Note 20: Financial Instruments (cont’d)
Table 20.3 Interest rate risk exposures The following sets out the Corporation’s exposure to interest rate risk, including the contractual repricing dates and the effective weighted average interest rate by maturity periods. Exposures arise predominantly from liabilities bearing variable interest rates as the Corporation intends to hold fixed rate liabilities to maturity.
30 June 2015 Weighted Carrying Interest rate exposure Floating Non- Average Amount interest interest Fixed Fixed Fixed Interest rate bearing interest interest interest Rate rate rate rate 0 - 1 Year 1 - 5 Years Over 5 Years $'000 $'000 $'000 $'000 $'000 $'000 Receivables Trade Receivables 6.3% 17,763 1,248 45 - - 16,470 Other Receivables - 5,499 - - - - 5,499 Investments and other financial assets Cash 0.00% 5,209 - - - 5,209 - Total Financial Assets 28,471 1,248 45 - 5,209 21,970
Financial Liabilities Payables - 8,097 - - - - 8,097 Borrowings 5.27% 132,000 12,000 55,000 57,000 8,000 - Finance Lease Liabilities 7.77% 29,734 1,702 8,994 19,038 - - Total Financial Liabilities 169,831 13,702 63,994 76,038 8,000 8,097
30 June 2014 Weighted Carrying Interest rate exposure Floating Non- Average Amount interest interest Fixed Fixed Fixed Interest rate bearing interest interest interest Rate rate rate rate 0 - 1 Year 1 - 5 Years Over 5 Years $'000 $'000 $'000 $'000 $'000 $'000 Receivables Trade Receivables 6.9% 18,020 1,102 61 - - 16,857 Other Receivables - 3,685 - - - - 3,685 Investments and other financial assets Cash 0.00% 601 - - - 601 - Investments 2.40% 5,692 - - - 5,692 - Total Financial Assets 27,997 1,102 61 - 6,293 20,542
Financial Liabilities Payables - 9,132 - - - - 9,132 Borrowings 5.50% 139,000 13,000 60,000 59,000 7,000 - Finance Lease Liabilities 7.77% 31,252 1,518 8,082 21,652 - - Total Financial Liabilities 179,384 14,518 68,082 80,652 7,000 9,132
2014/15 ANNUAL REPORT 85 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
Note 21: Events occurring after balance date
On the 8 April 2015, the Minister for Environment, Climate Change and Water, the Hon. Lisa Neville MP, announced a review of all 135 Victorian water corporation board director positions. Expressions of interest were invited during April and May 2015 with new boards to be in place by 1 October 2015. Water corporations remain governed by a properly constituted board of directors and will do so following 1 October 2015 when any new appointments are due to commence. No matters or circumstances have arisen since the end of the reporting period which significantly affected or may significantly affect the operations of the Corporation, the results of those operations, of the state of affairs of the Corporation in future financial years.
Note 22: Joint arrangements
On 6 May 2008, CHW established with Coliban Water, a joint operation for the development,operation and maintenance of the pipelines and infrastructure associated with the Goldfields Superpipe. Under the agreement, both parties to the joint operation will own all assets in their respective percentage interests. CHW’s capital share has been determined by the total expenditure incurred on the Sandhurst Reservoir to the White Swan Reservoir portion of the Goldfields Superpipe, as well as expenditure incurred on the upsizing of the Waranga Channel to Lake Eppalock and the Lake Eppalock to Sandhurst Reservoir upgrade. The construction and operation of these jointly controlled assets are embedded in CHW’s core operations, and as such there are no separately identifiable borrowings, borrowing costs or depreciation charges. There are no contingent liabilities. Operational costs are to be calculated on a combination of fixed component based on capacity share, a variable component based on volumes of water pumped and an energy charges share based on volumes stored or pumped from Lake Eppalock.
Principal Activity Interest Water Operational 2014/15 Distribution* Costs % $'000 $'000 Operation and maintenance of pipelines and associated infrastructure As detailed below Waranga Channel to Lake Eppalock, Bendigo pipeline and associated 1/3 operations and pumps and works maintenance costs 19,739 381 Lake Eppalock to Sandhurst Reservoir, Bendigo pipeline and associated 1/3 operations and pumps and works maintenance costs 39,602 174 Sandhurst Reservoir Bendigo, to White Swan Reservoir, Ballarat pipeline 100% operations and and associated pumps and works maintenance costs 86,903 130
Principal Activity Interest Water Operational 2013/14 Distribution* Costs % $'000 $'000 Operation and maintenance of pipelines and associated infrastructure As detailed below Waranga Channel to Lake Eppalock, Bendigo pipeline and associated 1/3 operations and pumps and works maintenance costs 19,979 580 Lake Eppalock to Sandhurst Reservoir, Bendigo pipeline and associated 1/3 operations and pumps and works maintenance costs 40,155 164 Sandhurst Reservoir Bendigo, to White Swan Reservoir, Ballarat pipeline 100% operations and and associated pumps and works maintenance costs 88,051 179
As at 30 June 2015, there were $nil ($nil 2013/14) outstanding liabilities incurred by CHW and the joint operation.
* Note that these figures are a subset of the values disclosed in Note 8 - Infrastructure, Property, Plant and Equipment.
86 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX ACCOUNTABLE OFFICER’S AND CHIEF FINANCE AND ACCOUNTING OFFICER’S DECLARATION
The attached financial report for the Central Highlands Region Water Corporation has been prepared in accordance with Standing Directions 4.2 of the Financial Management Act 1994, applicable Financial Reporting Directions, Australian Accounting Standards including Interpretations, and other mandatory professional reporting requirements. We further state that, in our opinion, the information set out in the comprehensive operating statement, balance sheet, statement of changes in equity, cash flow statement and accompanying notes, presents fairly the financial transactions during the year ended 30 June 2015 and financial position of the Corporation at 30 June 2015. At the time of signing, we are not aware of any circumstance which would render any particulars included in the financial statements to be misleading or inaccurate. We authorise the attached financial statement for issue on 25 August 2015.
Signed in accordance with a resolution of the Board:
Jeremy Johnson Chair Central Highlands Region Water Corporation
Paul O’Donohue Managing Director Central Highlands Region Water Corporation
Anthony O’Brien General Manager Business Services Central Highlands Region Water Corporation
31 August 2015
2014/15 ANNUAL REPORT 87 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY VAGO REPORT
88 2014/15 ANNUAL REPORT PART 4 – CORPORATE INFORMATION | PART 5 – PERFORMANCE REPORT | PART 6 – FINANCIAL STATEMENTS | PART 7 – DISCLOSURE INDEX
2014/15 ANNUAL REPORT 89 PART 1 - YEAR IN REVIEW | PART 2 - WATER CONSUMPTION & DROUGHT RESPONSE | PART 3 - ENVIRONMENTAL & SOCIAL SUSTAINABILITY PART 7 DISCLOSURE INDEX
The 2014/15 Annual Report of the CENTRAL HIGHLANDS REGION WATER CORPORATION is prepared in accordance with all relevant Victorian legislation. This index has been prepared to facilitate identification of the Corporation’s compliance with statutory disclosure requirements.
Legislation Requirement Page Reference
REPORT OF OPERATIONS Charter and purpose FRD 22 F Manner of establishment and the relevant Ministers 4 FRD 22 F Objectives, functions, powers and duties 4 FRD 22 F Nature and range of services provided 4 Management and structure FRD 22 F Organisational structure 22 SD 2.2(f)(g) Audit Committee requirements 23 Financial and other information FRD 10 Disclosure index 90-91 FRD 22 F & FRD 29 A Statement of workforce data 27 FRD 22 F Employment and conduct principles 27 FRD 22F Workplace inclusion policy 28 FRD 22 F 5 year summary of the financial results 7 FRD 22 F Significant changes in financial position during the year 7 FRD 22 F & FRD 27 C Operating and budgetary objectives and performance against objectives 37 FRD 12 A Disclosure of major contracts 33 FRD 22 F Major changes or factors affecting performance 7 FRD 22 F Subsequent events 86 FRD 22 F Application and operation of the Freedom of Information Act 1982 30 FRD 22 F Compliance with building and maintenance provisions of Building Act 1993 30 FRD 22 F Statement on National Competition Policy 31 FRD 22 F Application and operation of the Protected Disclosures Act 2012 27 31 FRD 22 F Details of consultancies over $10,000 32 FRD 22 F Details of consultancies under $10,000 32 FRD 22 F Statement of availability of other information 30 FRD 22 F Occupational Health and Safety 29 FRD 25 B Victorian Industry Participation Policy disclosures 31 SD 4.2(j) Accountable Officer’s Declaration 87 SD 4.5.5 Risk Management Attestation 33
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2014/15 ANNUAL REPORT FINANCIAL STATEMENTS Financial statements required under Part 7 of the FMA SD 4.2(c) Compliance with Australian accounting standards and other authoritative pronouncements 44-86 SD 4.2(c) Compliance with Ministerial Directions 44-86 SD 4.2(d) Rounding of amounts 45 SD 4.2(c) Accountable Officer’s Declaration 87 SD 4.2(a) Statement of changes in equity 42 SD 4.2(b) Comprehensive Operating Statement 40 SD 4.0(b) Statement of financial position 41 SD 4.2(b) Statement of cash flows during the year 43 Other disclosures in notes to the financial statements FRD 15 B Responsible person and executive officer disclosures 81-82 FRD 23 Superannuation liabilities and disclosure 80
LEGISLATION Freedom of Information Act 1982 30 Building Act 1993 30 Protected Disclosures Act 2012 31 Victorian Industry Participation Policy Act 2004 31
MINISTERIAL REPORTING DIRECTIONS MRD 01 Performance Reporting 34-35 MRD 02 Water Consumption and Drought Response 10-13 MRD 03 Environmental and Social Sustainability Reporting 14-21 MRD 04 Bulk Entitlement Reporting 18-19 MRD 05 Major Non-Residential Water Users 10
2014/15 ANNUAL REPORT 91 CENTRAL HIGHLANDS WATER 7 Learmonth Road Wendouree VIC 3355 PO Box 152 Ballarat VIC 3353 P: 1800 061 514 F: 03 5320 3299
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