MAKING WATER WORK EVERY DAY SUNWATER ANNUAL REPORT 2010-11 insert title EVERY DAY OF THE MONTH, EVERY MONTH OF THE YEAR, SUNWATER IS MAKING WATER WORK FOR YOU. www.sunwater.com.au II SECTION SUNWATER ANNUAL REPORT 2010-11 CONTENTS 2 Corporate profile 4 Performance summary 6 CEO’s review 8 Chairman’s outlook 10 Infrastructure development Communication objective This annual report is a summary of programs and 14 Infrastructure management activities undertaken to meet key performance indicators as set out in SunWater’s Statement of 18 Safety Corporate Intent 2010-11 (SCI) and summarised on page 76 of this report. 20 Environment The report chronicles the performance of the organisation and describes SunWater’s 22 Community initiatives, achievements and the organisation’s future plans and prospects as a leader in water 24 infrastructure development and management. Our people It also communicates significant events impacting the organisation that have occurred after the 26 Organisational structure reporting period. This annual report aims to provide accurate 28 Our leaders information to meet the needs of SunWater stakeholders. SunWater is committed to open 32 Corporate governance and accountable governance and welcomes your feedback on this report. 40 Directors’ report The annual report can be accessed on SunWater’s website: www.sunwater.com.au. 43 Financial report Hard copies are also available on request: SunWater PO Box 15536 City East, Brisbane QLD 4002 73 Directors’ declaration Ph: +61 7 3120 0000 Fax: +61 7 3120 0260 SunWater Limited is a registered water service 74 Independent auditor’s report provider under the Water Act 2000. 76 Statement of Corporate Intent summary 82 Key statistics 90 Glossary 91 SunWater scheme map Cover image: Looking over the downstream wall from atop Ned Churchward weir, Bundaberg. MAKING WATER WORK EVERY DAY As one of the most progressive and successful water infrastructure companies in Australia, we are leading the way in the delivery of bulk water infrastructure development and management. Our proven history of growth and leadership is backed by our Our assets own $7 billion asset base and our reliable supply of 40% of all Our extensive regional asset base, including a full storage water used commercially in Queensland. capacity of 6.7 million ML, provides water security for over 5,000 agricultural, urban and commercial water customers Our expertise every day. From designing and building dams, managing and operating SunWater’s asset base has developed over time to include: bulk water infrastructure, to finding new ways to deliver water to remote locations, we are the specialists that industry, 19 major dams mining and government turn to when they need the right 63 weirs and barrages solution for their complex water needs. 84 major pumping stations over 2,700km of pipelines and channels, and Every day our team draws on the experience of 80 years 730km of drains. of developing and managing bulk water infrastructure with our current asset base capable of delivering in excess of Our customers 2 million megalitres (ML) of water annually. We have the From mining and agriculture to energy and urban, our people, knowledge, systems and overall capability to deliver customers represent a range of industries for which we on industry and community needs. provide tailor-made solutions to suit each need. OUR SERVICE PORTFOLIO SERVICE MINING ENERGY AGRICULTURE URBAN Water supply planning Bulk water supply Sale or lease of water allocations Water infrastructure design and development to provide new water allocations Water infrastructure design and development to provide a water supply and transportation service Facilities management services Beneficial use strategies Water cycle management Water reuse management planning and delivery Fluoridation installation and management 2 CORPORATE PROFILE SUNWATER ANNUAL REPORT 2010-11 OUR VISION To be a modern, customer focused water utility business providing outstanding solutions for our customers and the community. OUR MISSION To enhance the value of the corporation by providing cost-effective and commercial water services that add value for our customers. OUR VALUES Our organisational values provide a behavioural framework that guides how we do business. Our values are delivering outstanding service and results, working safely, taking responsibility, working together, being open to change, and respecting others. SECTION SUNWATER ANNUAL REPORT 2010-11 3 PERFORMANCE SUMMARY Our continuing focus on costs has improved earnings before interest and tax for the 2011 year by 12% to $85M. Total Revenue Return on EquitY (%) Return on TotaL Assets (%) NPAT, EBITDA and EBIT ($M) TOTAL REVENUE ($M) 108 7.6 104 104 7.4 204 7.0 199 200 191 6.5 85 80 76 143 4.9 4.6 4.5 60 4.1 4.0 46 45 45 41 37 2.3 28 25 18 2006-07 2007-08 2008-09 2009-10 2010-11 2006-07 2007-08 2008-09 2009-10 2010-11 2006-07 2007-08 2008-09 2009-10 2010-11 Return on Equity Return on Total Assets (written down value) Net Profit (after tax) (excluding excess of fair value) EBITDA EBIT SunWater’s return on equity declined marginally All 3 metrics have improved despite reduced Revenue across all sectors of SunWater continues to 7% as a result of the equity base increasing at a revenue streams as a result of the recent flood to show positive trends except irrigation revenue slightly faster rate than the flood impacted NPAT. events and Cyclone Yasi. Net profit after tax (which has been negatively impacted by higher than Similarly, return on total assets was affected by a increased by 2%. EBITDA increased by 4% and EBIT normal rainfall and the flooding events throughout lower increase in NPAT. by 12%, both reflecting decreased costs as a result Queensland). Revenue from the 2008-09 Seqwater of various initiatives implemented by SunWater. transaction (gain on sale of assets) has been excluded from these graphs. REVENUE BREAKDOWN ($M) Recent flood and cyclone events reduced revenue streams during the year. Repairs to damaged water infrastructure also impacted on the result. Irrigation Industrial water Urban bulk water 103 99 100 84 51 50 45 45 44 45 12 8 7 7 6 2006-07 2007-08 2008-09 2009-10 2010-11 2006-07 2007-08 2008-09 2009-10 2010-11 2006-07 2007-08 2008-09 2009-10 2010-11 Water allocation sales External consultancies/contracts Other revenues 31 24 23 19 17 14 14 15 11 11 12 11 11 13 9 10 8 2006-07 2007-08 2008-09 2009-10 2010-11 2006-07 2007-08 2008-09 2009-10 2010-11 2006-07 2007-08 2008-09 2009-10 2010-11 4 PERFORMANCE SUMMARY SUNWATER ANNUAL REPORT 2010-11 HIGHLIGHTS FOR THE YEAR w12 % w2 % increase in EBIT to increase in total revenue $85 million to $204.4 million page 4 page 4 w22 % w74% increase in green energy of customer survey production respondents believe that SunWater is a capable page 21 and credible organisation page 17 w100 % w84% of staff highly value of staff are committed to working in a safe and SunWater’s success and professional manner future direction page 18 page 25 w100% w91% of total water capacity was of Connors River Dam achieved in January 2011 – and Pipeline Project the highest dam storage investigations complete levels on record page 10 page 83 w60 % w87% of our sponsorship program labour utilisation rate for supports local community Infrastructure Management events and activities, 25% Group, a 3% increase from supports industry growth the previous year initiatives and 15% supports youth based initiatives page 15 page 23 PERFORMANCE SUMMARY SUNWATER ANNUAL REPORT 2010-11 5 CEO’S REVIEW The unprecedented, widespread flooding that occurred throughout Queensland during the December to January period resulted in great loss to individuals, communities and businesses. As an organisation that has a direct presence in many of the affected communities, SunWater is committed to assisting in the ongoing recovery process wherever possible. The unprecedented weather events of 2010-11 presented It is hoped that demand will increase in the coming year as many challenges and demonstrated the importance of our customers’ operations resume to normal levels. dam safety management, including clear standards, well Our productivity initiatives such as the SunWater water considered operating procedures, well trained staff and accounting and billing system replacement project (SWIMs) sound corporate systems. has progressed extremely well with the discovery phase and For the first time in the organisation’s history all SunWater preliminary design phase completed. The project is forecast storages filled and overflowed during 2010-11. SunWater’s for completion by July 2012. We also commenced work on storages performed well during the events, as did our people. the business case field mobility solution project. The initiative Their efforts are to be commended as they worked around the will enable SunWater’s field-based workforce to have the clock operating our own storages, those of other dam owners advantage of information constantly at their fingertips to and supporting Seqwater in the operations of the Wivenhoe, improve customer service and productivity. Field operators Somerset and North Pine Dams. will be able to receive, record and complete tasks on the spot via a hand-held device. This initiative is scheduled for During the aftermath we assisted with recovery efforts where implementation in 2012. needed, including providing assistance and support to the Queensland Floods Commission of Inquiry. As a progressive and responsive organisation we continue to evolve, and during the year we made improvements to the We are now expediting repairs to essential infrastructure and organisational structure that resulted in the establishment services which were impacted by the widespread flooding of the Safety, Strategy and Risk group. This was a result and cyclone Yasi, and implementing key recommendations of identified opportunities to strengthen both executive from the Commission of Inquiry in anticipation of the leadership and on-ground resources in the safety area and upcoming wet season.