YARRA VALLEY ANNUAL REPORT WATER · YARRA VALLEY WATER A R 2012/13 About us 2 Nature and scope of...

YARRA VALLEYANNUAL REPORTWATER

ANNUAL REPORT 2012/13

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YARRA VALLEY WATERAnnual Report 2012/13

About us 2

Nature and scope of main activities 3

A message from the Chairman and the Managing Director 4

Year in Review 5

Financial Summary 9

Five year Financial Summary 11

Corporate Information 13

Risk Management Attestation 21

Annual Financial Report 23

Directors’ Report 24

Statement of Comprehensive Income 26

Balance Sheet 27

Statement of Changes in Equity 28

Cash Flow Statement 29

Notes to the Financial Statements 30

Statutory Certification 60

Auditor-General’s Audit Report 62

Additional Information 65

Performance Report 66

Water Consumption and Drought Response 68

Environmental and Social Sustainability Reporting 69

Annual Reporting of Major Non-Residential Water Users 73

Bulk Entitlements Report 74

Disclosure Index 78

CONTENTS

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Yarra Valley Water is the largest retail water corporation in Melbourne, providing essential water and sanitation services to more than 1.7 million people.

We manage infrastructure to the value of more than $3.6 billion on the community’s behalf, across a service district of approximately 4,000 square kilometres in the northern and eastern suburbs − as far north as Wallan and extending to East Warburton in the Yarra Valley.

From 1 July 2012, Yarra Valley Water became a corporation under the Water Act 1989. Our activities are overseen by an independent Board of Directors appointed by the State Government of Victoria. We are accountable to the Minister for Water, the Hon Peter Walsh, MLA.

Since Yarra Valley Water’s transition to a water corporation on 1 July 2012, a new Statement of Obligations was issued by the Minister for Water on 16 September 2012 under section 4I(2) of the Water Industry Act 1994. This Statement revoked and replaced all previous Statements of Obligations made and issued to Victorian water authorities under section 4I and 8(1)(a) of the Water Industry Act 1994.

The Statement imposes obligations on Yarra Valley Water regarding the performance of its functions and the exercise of powers. Yarra Valley Water is required to monitor compliance with the obligations set out in the Statement, report on non-compliance and take remedial action in relation to non-compliance.

On 1 January 2004, the Essential Services Commission became the economic regulator of the Victorian water sector. The Commission’s role encompasses the regulation of prices, service standards and market conduct.

We buy bulk water from Melbourne Water. We are also responsible for taking away sewage for treatment. Most of the sewage is transferred to Melbourne Water’s Eastern or Western Treatment Plants. The balance is treated at our nine regional plants, several of which produce recycled water for use in new homes or for the irrigation of sports fields or open space.

ABOUT US

– 1.74 million population served

– 671,000 residential properties

– 52,000 business customers

– 10,000 new customers in 2012/13

– 579 employees

– $3.6 billion of infrastructure assets

– 138 water pressure reducing stations

– 9,796 kilometres of water supply mains

– 9,234 kilometres of sewer mains

– 79 water pump stations

– 95 sewage pump stations

– 53 water supply tanks

– 9 sewage treatment plants

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The main business undertakings are:

Area Scope of activities

Water quality Meet all drinking water standards overseen by the Department of Health.

Manage compliance associated with recycled water.

Reticulated water reliability (bursts and leaks) Manage performance of planned and unplanned water supply interruptions.

Distribution water pipe reliability Minimise the possibility of a major burst in high risk areas.

Sewer blockages Manage the number of service interruptions.

Responsiveness to water pipe bursts and leaks Meet customers’ expectations in relation to response times to water supply interruptions.

Responsiveness to sewer spills and blockages Meet customers’ expectations in relation to response times for sewer spills and blockages.

Sewerage system capacity Ensure that the sewerage system meets the environmental standards defined by the Environment Protection Authority Victoria (EPAV).

Reducing the environmental and public health impacts of poorly performing septic tanks

Provision of modern sewerage systems to replace poorly performing septic tanks.

Affordability Offer effective assistance to customers who cannot afford to pay for our services.

Water efficiency Encourage consumers to use water efficiently.

Customer Charter requirements Meet all customer charter requirements as defined by the Essential Services Commission.

Protecting the environment Meet all environmental standards imposed by the EPAV and State environment protection policies.

Statement of Obligations Meet our obligations in our Statement of Obligations issued by the Minister for Water.

Trade waste Meet our trade waste obligations as described in the Water Act 1989.

NATURE AND SCOPE OF MAIN ACTIVITIES

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Over the last few years we have had to manage through the worst drought on record, deal with the costs and pricing issues associated with the Victorian Desalination Plant, managed through the upgrading of most of our IT systems and delivered on the objectives of our longstanding 2013 Business Strategy. With these challenges behind us and a new exciting policy agenda from the Office of Living Victoria emerging, we will continue to work for the benefit of our customers, the environment and our owner the State Government of Victoria.

On 1 July 2012, Yarra Valley Water became a water corporation, converting from a Company, subject to the Corporations Act 2001(Cth), under the State Owned Enterprises Act 1992. These legislative changes brought the three Melbourne metropolitan water retailers in line with the structure of the water industry throughout the rest of Victoria.

We delivered a better than budgeted financial result in 2012/13. This is mainly due to a combination of higher water sales, significant savings in operating and capital expenditure and lower finance charges.

While Yarra Valley Water’s strategy over the past 10 years has evolved, our fundamental purpose and direction has remained essentially the same: a focus on serving our customers and working in harmony with the natural environment. The key enablers of this strategy have been the ongoing pursuit of productivity improvements and the building of a high-performing organisational culture.

The most recent iteration of the strategy was our 2013 Strategy, which came to an end on 30 June 2013. The achievement of the 2013 Strategy has provided great outcomes for both our customers and the environment, supported by significant productivity improvements and a highly constructive, achievement orientated culture.

Broader coverage of our initiatives and our business activities over the past year can be found in the Year In Review section of this Annual Report.

Building on the recent delivery of our 2013 Strategy, we have created a long-term strategy to 2020 with a focus on achieving extraordinary performance in terms of service, productivity and environmental sustainability. Led by the Board and the Executive Team and co-created across the organisation, the 2020 Strategy identifies what is required to be a truly extraordinary organisation, defining goals that touch all areas of the business and reflecting performance outcomes beyond what may have seemed possible in the past. The entire strategy supports our purpose: “We exist to provide exemplary water and sanitation services that contribute to the health and well-being of current and future generations.”

John Tilleard retired as a Director on 30 September 2012 after six years of service on our Board. The Board thanks John for his invaluable contribution. One new Director has been appointed, Steve McArthur, whose appointment was effective from 1 October 2012 for a three-year term.

We extend a sincere thank you to the Board of Directors and staff for their continued support, efforts and achievements over the past year.

In accordance with the Financial Management Act 1994, we are pleased to present Yarra Valley Water’s Annual Report for the year ending 30 June 2013. It complies with all statutory reporting requirements.

Peter S Wilson AM Chairman

Vincent A (Tony) Kelly Managing Director

A MESSAGE FROM THE CHAIRMAN AND THE MANAGING DIRECTOR

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CUSTOMER SERVICEWe upheld our commitment to provide safe, high-quality drinking water. This year we received 4.2 complaints for every 1,000 customers, and achieved 91% customer satisfaction with the overall quality of drinking water provided. After an increase in the number of E.coli detections during 2011/12, we have achieved a 13-month period without E.coli detection.

Overall satisfaction improved for all Yarra Valley Water customers. Residential customers’ satisfaction improved from 76% in 2011/12 to 83% in 2012/13, while business customers improved from 75% in 2011/12 to 79% in 2012/13.

We continued to meet or exceed our customers’ expectations for water and sewer faults. The latest customer research on emergency fault management and scheduled maintenance has highlighted that, for the last 12 months, 95% of customers rate us as ‘meeting’ or ‘exceeding’ expectations.

In 2012/13 our ‘Choose Tap’ program continued to promote the benefits of tap water as an alternative to bottled water and other beverages, with superior health, environmental and ‘hip pocket’ benefits. The program reached over a million Melburnians through local community events, local sporting partnerships, primary school education programs, corporate partnerships, restaurants and cafes in our district. Over 85% of our customers think ‘Choose Tap’ is a good idea. A key feature of the program is a partnership with local councils to install water refill stations in public spaces to provide greater accessibility to drinking water – we estimate at least 50,000 fewer bottles have gone to landfill through the use of these refill stations.

As part of this program, we also launched our first smartphone and tablet ‘app’ to help people find their nearest public drinking water tap (and even dog water bowl) while they are out and about. Be Smart Choose Tap – Download the App!

We completed the most robust and sophisticated customer consultation processes ever undertaken by an Australian water utility for Water Plan 3. We used a unique ‘deliberative forum’ process to garner perspectives from a cross-section of customer segments. The forum duration was six hours and was backed up by an on-line customer survey that was completed by over 800 customers, to provide statistically valid support for the results identified at the deliberative forum. This included willingness to pay for several service initiatives and perspectives on tariff structures and price paths. The resulting data and conclusions were captured in the ‘Voice of the Customer’ section of our Water Plan.

91% of business customers said we met or exceeded their expectations and 44% of business customers that experienced our service rated us their best service provider.

We sustained levels of reliability in water and sanitation services by replacing 106.8 kilometres of water and sewerage pipes that had reached the end of their service life.

Major stakeholders’ perceptions exceeded our target (90%), with 91% of participants rating their relationship with Yarra Valley Water as ‘very good’ or ‘excellent’.

To dramatically improve the experience of customers who do not speak English, we recruited bilingual Customer Contact Centre consultants. Mandarin, Cantonese, Arabic and Greek speaking customers are now able to have their billing enquiries answered in their language of choice. This initiative also reduced the costs of using the nationally available translation services used by other utilities.

We enhanced customers’ service experience, with more online options and improved responsiveness for billing enquiries. In May 2013, we implemented a new IT system called EasyAccess, a first for the Australian Water Industry.

EasyAccess will significantly improve turnaround times for plumbers, builders and developers who want to connect to our infrastructure and for solicitors engaged in property sales – saving them time and money.

We are also the first water utility in Australia to offer our customers access to bills and payment services through the Australia Post Digital Mailbox, a new secure online mailbox that enables customers to receive communications, pay bills and store important documents, all in one place.

To improve customer service and reduce calls to our Customer Contact Centre, we introduced a new self-service facility that allows customers to extend the due date on their current bill by up to two weeks.

To assist customers to manage 1 July 2013 price rises, we introduced SmoothPay, an online self-service bill smoothing option that allows customers to pay their water bill through smaller, more regular payments. SmoothPay allows customers to nominate either fortnightly or monthly payments and they can even choose to nominate a break in payments (for instance, to avoid clashes with other high bills). The service is free, totally automated and customer driven, and integrates seamlessly into our billing system.

YEAR IN REVIEW

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ENVIRONMENTThe Greenhouse Gas (GHG) reductions brought about by our showerhead exchange program continued to offset our own GHG emissions, ensuring that we had no net GHG emissions for the fourth year in a row. Our business partners are also assisting and have reduced their emissions by an estimated 12,337 tonnes CO2-e per year.

Despite the easing of water restrictions, per capita water consumption remains low; 2012/13 overall consumption was 237 litres per capita, with residential consumption at 167 litres per capita.

Our objective to run our operations in a way that protects and enhances waterways and Port Phillip Bay has been achieved by keeping the quantity of nitrogen we discharge to less than 87 tonnes per year.

We continued to provide leadership to the water industry by delivering innovative projects that demonstrate new ways to provide sustainable water and sewerage infrastructure. Several projects that deliver new possibilities for the water industry are complete or well advanced and others are in the planning stage. Our ground-breaking alternative servicing approach at Kinglake West, which involved urine collection and reuse, together with on-property greywater systems and centralised ‘blackwater’ treatment, has been completed. Details of our learnings were published in the international journal, Water Resources Management volume 27, issue 2, in 2013.

Our leading edge Merrifield Stormwater Harvesting Project at Kalkallo is near completion. It will capture and treat around 365 million litres of stormwater harvested from a commercial development to supplement the Kalkallo region’s water supply. This will enable the community to use less drinking water while at the same time reducing the nutrient loads discharged to local waterways.

Additional integrated water cycle management projects involving stormwater reuse at Coburg and recycling of treated wastewater into new high rise developments at Doncaster Hill are in the planning stages. At the 2012/13 International Water Association World Congress in Busan, South Korea in September 2012, we presented two papers showing our experience in integrated water management.

We continued our work to provide a new modern sewerage service to properties that currently rely on poorly performing septic tanks. Our plan is to complete the servicing strategy by 2030.

Yarra Valley Water is currently pursuing an innovative approach to servicing properties in Park Orchards that have septic tanks. This approach will fully test an option that better utilises on-property septic systems. A review has indicated that by upgrading septic tanks, it may be possible (because of the soil characteristics and topography in this area) to meet acceptable environmental standards at a lower cost than providing conventional reticulated sewerage. Market research undertaken during 2012/13 shows that a significant proportion of the community supports this approach.

Work has commenced on designing an innovative and commercially viable Waste to Energy facility at the Aurora Sewage Treatment Plant in Epping. The facility will co-digest organic waste (originally destined for landfill) with sewage sludge to generate enough renewable energy to run the facility and the existing Sewage Treatment Plant while also reducing energy costs and greenhouse gas emissions. We believe that our plant will be the first of its kind for a water utility in Australia. Project completion is expected in June 2015.

As part of our office refurbishment, Yarra Valley Water has installed a tri-generation power system at our Mitcham office. This system replaces an aged and inefficient air conditioning system and uses natural gas to generate electricity, heating and cooling for the buildings.

The cessation of the water mains cleaning program in 2006 (due to the need to conserve water during the drought) presented a challenge to find an efficient and effective technique to clean water mains whilst also conserving water. After a global search, a cleaning technique that uses crushed ice to push sediment out of the main, known as ‘Ice Pigging’, was identified. The trial confirmed that the technique is vastly superior to traditional methods. Not only has it been proven to use less than half the amount of water, it also removed, on average, 17 times more sediment than flushing and is deemed to be 5.6 times more efficient. Yarra Valley Water has brought this technology to Australia and will benefit from future sales.

Through our non-revenue water investigation programs we have found leakage amounting to 3.9 GL in 2012/13. Leakage was found primarily through both our Active Leak Detection program and the use of specialist data analysis software (called TaKaDu). Detection of leakage has resulted in less water being wasted and reduced expenditure for wholesale charges.

We were selected as a finalist in the Tertiary Education category of the prestigious 2012 Premier’s Sustainability Awards for our partnership with Box Hill Institute to deliver a new and unique Diploma in Sustainable Operations – the first of its kind in Victoria.

YEAR IN REVIEW

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CULTUREFrom 2001 the business has measured its organisational culture using a tool called Organisational Culture Inventory (OCI) developed by Human Synergistics.

Our 2013 OCI result shows another significant improvement, with increases to all the constructive styles which now range from the 70th to the 84th percentile with an average of over 75%. This is approaching best practice in Australia for an organisation of our size. All the negative styles were further reduced to between the 25th and the 8th percentile. It is also very pleasing that over 90% of staff responded to the survey.

Over the last year we have implemented a number of key initiatives to ensure that our business culture fosters exceptional performance. These included implementing a cultural declaration and code of conduct known as ‘Our Way’, that clearly explains the behaviours we value and implementing our ‘Unlocking Potential’ program (UP!) – a series of three internally developed modules providing all staff with an opportunity to reach their full potential and develop their capacity to achieve great results.

In 2012/13 we have significantly raised the level of focus on safety. We commissioned an independent consultant, Wilson Consulting Group, to benchmark our performance and safety behaviours against best practice and have implemented a wide-ranging Safety Plan to begin to address some of the issues identified.

We also launched a single online resource for all safety information on our intranet. The site features new content and provides a single online access point for all safety related information. To oversee this important work we have created a new managerial role, focused entirely on safety.

All key safety culture targets were achieved with 95.8% of staff believing that safety is a priority and 95.5% of staff believing that their managers are committed to safety. In addition, 100% of partners believe that safety is a priority at Yarra Valley Water.

Our well-being programs have been noted by experts as best practice and our recent initiatives made good use of available Federal funding to ensure a variety of options were available to staff.

Our no smoking policy was extended to cover all areas of our premises. We became a completely smoke free site from 1 July 2013. Staff have been provided with a variety of information and support to assist them to stop smoking or change their smoking habits.

To enhance our technical skills we supported employees through the Diploma of Engineering Technology. This structured development opportunity increases existing technical knowledge and skills, ensuring depth within the technical officer ranks and expands the career opportunities for participants within the business.

We provided a series of learning modules to equip all employees in our Customer Contact Centre with the skills necessary to conduct two-way, productive, honest and inspiring conversations. Speaking and listening with integrity ensures that the intent and purpose of the conversation results in the desired outcome.

We launched our new intranet system, providing staff with faster, easier access to all the necessary corporate information they need in performing their role and to improve efficiency.

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YEAR IN REVIEW

EFFICIENCYAfter more than a decade of outsourced IT services we insourced our IT operations in 2012. This has reduced IT operations costs by $1.5 million annually and reduced capital expenditure by a similar amount. Service levels have significantly increased and staff satisfaction with our IT services has been greatly improved.

We engaged SKM, a tier 1 design house, to provide all our engineering designs. The SKM team is located at the Yarra Valley Water Mitcham office. The design services contract is for three years and is forecast to save us over $800,000 a year compared with previous arrangements. This will also reduce the life-cycle costs of our infrastructure and provide some of our own engineers with design experience.

We participated in benchmarking, carried out by Marchment Hill, which focused on water and sewerage maintenance. The study involved South East Water, City West Water, Barwon Water, Yarra Valley Water and Sydney Water. Overall, Yarra Valley Water was considered best practice in many activities. However, an opportunity was also identified to reduce road reinstatement costs. This resulted in the implementation of a new sourcing strategy for road reinstatement in November 2012, saving approximately $500,000 each year.

In 2012, Yarra Valley Water was one of the first utilities globally to deploy Oracle’s Exalogic servers. This allowed us to completely revamp our disaster readiness, reducing time to recover from system failures to hours rather than days or weeks. This is a vital component of our overall business continuity plan and helps to ensure that we continue to provide high levels of service to our customers.

Our forecast 2012/13 financial performance was adversely affected as an expected outcome of the different pricing arrangements for wholesale and retail water in the Essential Services Commission’s Water Plan 2 pricing decision. This resulted in a severely depressed budgeted profit. We identified the profit challenge and responded by reducing our controllable operating expenditure through a number of measures, including reductions to operating expenditure by cancelling and deferring non-essential work. We also implemented a wide range of productivity improvements and put a ceiling on staff numbers. This approach resulted in a 10.9% reduction in controllable operating expenditure in 2012/13.

In 2012/13 we accommodated a significant reduction in our borrowing limit ($34 million) compared with our approved Corporate Plan. To achieve this outcome we successfully implemented a plan to reduce our capital expenditure program.

The upgrade to our Geographic Information System (GIS) has been completed within budget and on schedule. The new Intergraph system replaces one that was implemented in 2006 which is no longer supported. The upgrade modernises the existing GIS, removing many of the legacy system design complexities such as data replication and customisations.

We relocated the computer room in our Mitcham premises and as a result are using 40% less power. The move is also expected to improve system reliability.

We presented at the Global Leakage Conference in London outlining our post-program evaluation of our Pressure Management Program implemented from 2003 to 2012. The program has contributed to Yarra Valley Water having leakage levels among the lowest in the world.

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FINANCIAL SUMMARY

Yarra Valley Water recorded a net profit after tax of $47 million in 2012/13. Although this was $14 million less than the previous year due to the differential pricing arrangements for wholesale and retail water resulting from the Water Plan 2 pricing decision, it was significantly greater than the budgeted profit after tax of $1.8 million.

The additional profit was generated as a result of:

– increased water sales driven largely by the hot and dry weather experienced in summer

– strong focus on controllable operating costs by cancelling and deferring non-essential work and implementing productivity improvements which delivered savings of 10.9%

– growth in customer numbers and revenue from new developments

– effective management of the debt portfolio to minimise finance costs in the short and long term

– cost savings and efficient and innovative management of capital expenditure to minimise borrowings and depreciation.

Other3%

New customer / Developer

contributions5%

Trade waste charges3%

Volumetric sewage disposal charges

21%

Volumetric water usage charges

32%

Fixed sewerage service charges

26%

Fixed water service charges

10%

Where our revenue comes from

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What we spend our money on

Capital expenditure mainly on the

construction ofinfrastructure assets

23%

Environmental contribution paid to Department of Environment and Primary Industries

2%

Operating expensesincluding employee salaries

and contract payments 21%

Wholesaler charges –Melbourne Water

37%

Finance charges on borrowings

11%

Dividend to the State Government of Victoria

6%

Capital expenditure of $228 million was made during the year to renew, augment and upgrade water and sewer infrastructure and service urban developments. Yarra Valley Water actively reduces its capital expenditure whilst achieving the planned outcomes through the effective management of costs and innovative management of our program of works.

An interim dividend of $4.5 million for the 2012/13 financial year was paid during the financial year. The amount of the final dividend for the year ended 30 June 2013 will be determined after consultation between the Board, the Minister for Water and the Treasurer of Victoria.

During 2012/13 total assets have increased by $265 million primarily as a result of the growth in infrastructure, property, plant and equipment.

Total liabilities increased by $197 million in 2012/13 largely as a result of the growth in borrowings to fund capital expenditure and an increase in net deferred tax liability. Total borrowings increased by $160 million in 2012/13 to fund investments in the required growth of water and sewerage infrastructure and to replace old infrastructure. This growth in borrowings was significantly below the budgeted increase of $216 million. Increased cash from higher than planned revenues, primarily from the growth in water sales along with a strong focus on reducing expenditure, has ensured we minimised the growth in our borrowing levels.

YEAR IN REVIEW

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FIVE YEAR FINANCIAL SUMMARY

2013 $’000

2012 $’000

2011 $’000

2010 $’000

2009 $’000

Statement of Comprehensive IncomeService revenue 700,836 697,588 586,923 497,585 403,824 Other revenue 62,241 77,590 72,207 57,606 53,533

Total revenue 763,077 775,178 659,130 555,191 457,357

Operating and other expenses 510,933 507,367 406,159 369,518 318,695 Depreciation and amortisation 75,632 75,980 72,429 46,113 41,067 Finance costs 108,349 104,783 94,226 79,634 69,270

Total expenses 694,914 688,130 572,814 495,265 429,032

Profit before income tax 68,163 87,048 86,316 59,926 28,325 Income tax (20,708) (26,284) (26,012) (18,229) (8,561)

Net profit after tax 47,455 60,764 60,304 41,697 19,764

Statement of Financial PositionCurrent assets 138,015 141,243 107,928 76,858 86,850 Non-current assets 3,873,798 3,605,832 3,566,300 3,193,382 2,127,681

Total assets 4,011,813 3,747,075 3,674,228 3,270,240 2,214,531

Current liabilities 307,550 510,475 393,517 313,168 214,984 Non-current liabilities 2,301,917 1,901,698 1,842,916 1,710,620 1,338,845

Total liabilities 2,609,467 2,412,173 2,236,433 2,023,788 1,553,829

Net assets 1,402,346 1,334,902 1,437,795 1,246,452 660,702

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YEAR IN REVIEW

Return on equity (%) Return on average assets (%) Gearing ratio (%) interest bearing debt to assets

Net profit after tax ($M) Interest cover (times) Capital expenditure ($M)

Return on equity has reduced compared with the prior year due to the lower profit.*

Return on average assets reduced compared with the prior year due to lower earnings before interest and tax.*

Gearing ratio has increased as a result of the growth in borrowings largely to fund our capital expenditure program.

5.2

03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12

8.0

6.7

6.0

4.8

3.9 4.

5 5.0 5.2

12/134.6

03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11

3.2

2.6

2.2

1.6

1.4

1.2

1.8 1.9

11/12

1.8

12/13

1.6

03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12

8.2

7.3

6.0

3.6

1.4

3.0

4.4 4.5

4.4

12/13

3.5

03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11

52.5

42.0

36.1

22.1

19.8

9.1

41.7

60.3

11/12

60.8

12/13

47.5

The profit performance was driven by the impact of the desalination plant, growth in customer numbers, development activity, reduced operating costs and the active management of the debt portfolio to decrease finance costs.*

Interest cover has reduced slightly compared with the prior year due to the growth in borrowings to fund the capital expenditure program.

We continue to focus on the delivery of efficient outcomes for lower cost through innovative design in planning our capital expenditure program.

03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12

38.4 40

.8 43.3 46

.1 48.3 50

.8

40.3

39.9 44

.4

12/13

45.5

03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11

87.9 11

7.5 14

9.8

162.7 180.3

153.3

278.6

228.0

11/12

239.1

12/13

228.2

* The 2012/13 financial performance was adversely affected as an expected outcome of the differential pricing arrangements for wholesale and retail water in the Essential Services Commission’s Water Plan 2 pricing decision.

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Organisational structure

Role of the Board

The Yarra Valley Water Board has overall responsibility for corporate governance which includes:

– setting the strategic direction

– establishing goals for management and monitoring the achievement of these goals

– monitoring the performance of the business.

We are committed to ensuring that a robust corporate governance framework is in place and we review the framework regularly to ensure it aligns with best practice.

Board

The Board comprises seven independent non-executive Directors and one executive Director, who is the Managing Director. The non-executive Chairman and non-executive Directors are appointed by the Minister for Water and the Managing Director is appointed by the Board.

The Directors come from a wide range of backgrounds and bring to the Board an appropriate mix of skills and experience.

Peter Wilson AM, BCom (Hons), MA, FCPA, FAICD, FAHRI

Peter Wilson became a Director of Yarra Valley Water Limited on 1 January 2007 and was appointed Chairman on 1 July 2008. His appointment was transferred to Yarra Valley Water Corporation with effect from 1 July 2012.

He has a background in economics, commerce and strategy development and has held senior executive positions in a number of organisations. He was Executive General Manager at AMCOR, Chief Executive Officer of the Energy 21 Group and Managing Director, Asia Pacific Division at the ANZ Banking Group.

Peter is the National President of the Australian Human Resources Institute, a Director of the World Federation of People Management Associations based in Geneva, a Director of the Vincent Fairfax Ethics in Leadership Foundation and Chairman of Vision Super Pty Ltd.

Committee Membership:

– Risk Management and Audit Committee

– Human Resources, Remuneration and Safety Committee (Chairman of Committee for remuneration issues)

– Sustainability, Planning, Infrastructure and Environment Committee.

CORPORATE INFORMATION

Board of Directors

Managing DirectorTony Kelly

Sustainability, Planning,Infrastructure &

Environment Committee

Human Resources,Remuneration &

Safety Committee

Risk Management &Audit Committee

Strategy &CommunicationsPat McCafferty

SustainableDevelopmentSam Austin

InfrastructureServices

David Snadden

Finance &Corporate Services

Kevin Jones

People & CultureAnne Farquhar

BusinessTechnology Services

Leigh Berrell

Billing & ContactServices

Steve Lennox

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Caryle Demarte PSM, BBus, FAICD

Caryle Demarte became a Director of Yarra Valley Water Limited in September 2005. Her appointment was transferred to Yarra Valley Water Corporation with effect from 1 July 2012 and Caryle was appointed Deputy Chairman of the Board from 1 July 2012.

She has had extensive experience in the energy industry and held executive and non-executive positions in the public and private sectors. Caryle was General Manager at TXU Australia and at Kinetik Energy. She is a Director of Aurora Energy Pty Ltd and Energy Retail Corporation (Synergy).


– Sustainability, Planning, Infrastructure and Environment Committee (Chairman)


– Human Resources, Remuneration and Safety Committee.

Tony Kelly CPEng, SFCDA, MAICD

Tony Kelly was appointed Managing Director of Yarra Water Limited in January 2003. His appointment was transferred to Yarra Valley Water Corporation with effect from 1 July 2012.

He has extensive experience in the water industry and has held four General Manager roles at Yarra Valley Water since its inception in 1995.

Tony is Chairman of Savewater! Alliance Incorporated and a Director of the Smart Water Fund. During 2012, Tony completed a ten-year term as Chairman of WaterAid Australia.


– Human Resources, Remuneration and Safety Committee.

Dean Comrie BSc (Hons), Grad Cert (Env Eng), MBA, MAICD

Dean Comrie became a Director of Yarra Valley Water Limited on 1 October 2011. His appointment was transferred to Yarra Valley Water Corporation with effect from 1 July 2012.

Dean is currently a Project Director with SP AusNet where he is responsible for the maintenance and capital delivery contracts for SP AusNet’s gas and electricity distribution networks.

Dean has extensive experience in the utilities sector and has held a variety of executive and non-executive positions, including recently as Managing Director of Ecowise Environmental, a specialist consulting and technical service provider to the water sector.




Susan Friend BCom, LLB, CA(NZ), MAICD

Susan Friend became a Director of Yarra Valley Water Limited on 1 January 2010. Her appointment was transferred to Yarra Valley Water Corporation with effect from 1 July 2012.

Susan has a background in audit, internal audit and forensic accounting gained from 15 years working with PricewaterhouseCoopers. She is currently a consultant with Sapere Research Group, a global expert services firm.


– Risk Management and Audit Committee (Chairman)


Steve McArthur

Steve McArthur became a Director of Yarra Valley Water Corporation on 1 October 2012. He is the Managing Director of Samanco Pty Ltd and Business Adviser to Glencoe Group Pty Ltd.

Steve is a member of the Melbourne Marketing Authority. He has served as a committee member, President and Chairman of a number of local community and sporting groups.

Steve was Shadow Minister for Water Resources (1999 – 2002) and Shadow Minister for Agriculture (2000 – 2002).


– Human Resources, Remuneration and Safety Committee


David Middleton BE (Civil), ME (Env), MBA (Tech Mgt)

David Middleton became a Director of Yarra Valley Water Limited on 1 October 2011. His appointment was transferred to Yarra Valley Water Corporation with effect from 1 July 2012.

David is Regional Business Group Manager, Water for CH2M Hill Australia Pty Ltd, a design, construction and operations firm.

He has previously held senior roles with Thames Water Asia Pacific Pty Ltd and operational roles with Melbourne Water Corporation, Western Region Water Corporation and Goulburn Valley Region Water Corporation.

David is a Director of CH2M Hill Australia Pty Ltd and Halcrow Pacific Pty Ltd and a member of Hutt Valley Water Services (NZ).


– Human Resources, Remuneration and Safety Committee (Chairman)



17


Michael Tilley, BA (Acc), FCA, FCPA, FAICD

Michael Tilley became a Director of Yarra Valley Water Limited on 1 October 2011. His appointment was transferred to Yarra Valley Water Corporation with effect from 1 July 2012.

Michael is Chairman of Terrain Capital Ltd and was previously the Managing Director responsible for providing corporate advisory and investment banking services for public and private companies within Australia and overseas.

He has worked in the accounting and finance industries for more than 40 years and has a broad range of senior advisory and project management experience in all facets of corporate finance.

Michael is the former Chairman of the Lower Murray Urban and Rural Water Corporation. He is a Director of the South Australian Tourism Commission, Oliver Hume Australia Ltd, and Chair of Free Eyre Ltd. Michael is also a registered Tax Agent and a Registered Company Auditor.




Retirement of Director on 30 September 2012

John Tilleard PhD, MS, BE (Civil), GAICD

John Tilleard was originally appointed a Director on 1 January 2007. He made an invaluable contribution to the business as a Director, including his role as Chairman of the Sustainability, Planning, Infrastructure and Environment Committee and a member of the Risk Management and Audit Committee.

John has a background in natural resources management with an emphasis on water, rivers and catchments. His career has

encompassed consulting and management roles in small and medium sized companies. In addition, he has been a Director of Southern Rural Water Corporation and a member of the Victorian Catchment Management Council.

John is a Director of Moroka Pty Ltd and the Catchments Australia Foundation. He is co-ordinator of the Graduate Certificate in River Health at the University of Melbourne.

Corporate Secretary

Kevin Jones FCCA, GAICD, BA (Hons), ALCM

Kevin Jones has been Corporate Secretary of Yarra Valley Water Corporation since 1 July 2012. He is responsible for ensuring compliance with statutory and regulatory requirements, for governance functions and for ensuring that the decisions of the Board of Directors and its Committees are implemented.

Board Charter

The Board Charter sets out clearly the role, responsibilities and powers of the Board.

A major review of the Board Charter was undertaken upon formation of the Corporation, culminating in the adoption of a revised Charter incorporating all aspects of Board governance and referencing the source of the items included in the Charter.

Code of Conduct

The Board has adopted a Directors’ Code of Conduct based on the Code of Conduct issued by the Public Sector Standards Commissioner.

Declaration of Private Interests

All Directors have completed a declaration of private interests.

All executives, senior managers, officers, contractors and consultants with delegation to approve expenditure in excess of $20,000 have completed a declaration of private interests.

Independent professional advice

The Board has adopted a number of measures to ensure that independent judgement is achieved and maintained. Directors are entitled to seek independent professional advice on matters relating to the business of Yarra Valley Water at the Corporation’s expense, subject to prior approval by the Chairman. No Director exercised this right during 2012/13.

Board performance review

In accordance with the Board’s Policy, the biennial externally facilitated performance review of the Board was conducted in July/August 2012.

The Board discussed the findings of the review and a number of actions have been implemented to further improve the performance of the Board.

Induction and training

The Board has adopted a training and development policy for Directors. This policy facilitates appropriate training and development opportunities for Directors to enable them to fulfil their role, broaden their knowledge and share this knowledge with the rest of the Board.

All newly appointed Directors are required to undertake an induction program to help them understand their role and to fulfil their Board responsibilities. The induction program includes an overview of the Yarra Valley Water business, the water industry and linkages with Government.

Directors also attend seminars and other events to broaden their exposure to water industry issues and initiatives.

New Director Steve McArthur has undertaken the induction program.

18

Board Committees

The Board has established the following Committees of Directors to assist it in carrying out its responsibilities and to allow detailed consideration of complex issues. Each Board Committee has its own terms of reference, which set out the Committee’s objectives, duties and responsibilities, composition, meetings, authority and reporting responsibilities.

At Board meetings, where the minutes of Committee meetings are presented, the Chairman of the Committee highlights key issues considered by the Committee.

Committee Scope of activities

Risk Management and Audit Committee The Risk Management and Audit Committee assists the Board in fulfilling its duties and responsibilities relating to risk management, the effectiveness of internal controls and the accounting and reporting practices of the business.

The majority of Committee members have financial expertise.

Human Resources, Remuneration and Safety Committee The Human Resources, Remuneration and Safety Committee assists the Board in reviewing strategies and policies to ensure that critical actions and plans are in place to implement and develop the business’ people and culture initiatives and in fulfilling its duties and responsibilities associated with policy, compliance, risk and audits for Occupational Health and Safety.

Sustainability, Planning, Infrastructure and Environment Committee

The Sustainability, Planning, Infrastructure and Environment Committee assists the Board in reviewing objectives, strategies, policies, compliance, actions, risks and audits in relation to minimising the business’ impacts on the environment and the effectiveness and efficiency of the business’ asset management practices in relation to water and sewerage infrastructure and in reviewing and recommending the adoption of the business’ Water Plan.

Directors’ attendance at Board and Committee meetings

Board of Directors

Meetings

Risk Management and Audit

Committee Meetings

Human Resources, Remuneration

and Safety Committee Meetings

Sustainability, Planning, Infrastructure

and Environment Committee Meetings

P S Wilson 10 of 10 4 of 4 4 of 4 2 of 2D M Comrie 9 of 10 4 of 4 - 2 of 2C P Demarte 10 of 10 4 of 4 4 of 4 2 of 2S E Friend 10 of 10 4 of 4 - 2 of 2V A Kelly 9 of 10 - 4 of 4 - S J McArthur (1) 7 of 8 - 2 of 3 1 of 1D A Middleton 10 of 10 - 4 of 4 1 of 2J W Tilleard (2) 2 of 2 1 of 1 - 1 of 1M D Tilley 8 of 10 2 of 4 - 1 of 2

(1) Steve McArthur was appointed as a Director from 1 October 2012 and a member of the Human Resources, Remuneration and Safety Committee and the Sustainability, Planning, Infrastructure and Environment Committee on 24 October 2012.

(2) John Tilleard retired as a Director on 30 September 2012.


19


Our Executive Team

Tony Kelly CPEng, SFCDA, MAICD

Managing Director

As Managing Director, Tony is also a member of the Board.

Refer to details under Board.

Sam Austin BE (Civil)

General Manager, Sustainable Development

Sam is responsible for the provision of water and sewerage services to new customers. He manages the planning and procurement of new infrastructure and the connection of new customers to the network. Sam works closely with the development industry and has the challenge of developing new and innovative sustainable servicing strategies to meet commercial and environmental objectives.

Leigh Berrell BAppSc (Comp) (Hons), MBA, GAICD

Chief Information Officer

Leigh is responsible for the strategic direction of information technology to achieve the business objectives of Yarra Valley Water. This includes the development and delivery of the IT Strategic Plan, Enterprise Architecture and IT projects. Leigh is also responsible for the operation, maintenance and support of IT systems, sourcing and procurement of IT products and services and the management of IT vendors.

Anne Farquhar Cert Bus Mgt

General Manager, People and Culture

Anne is responsible for developing and implementing the human resources strategy for the business, including workplace planning, organisational culture and learning and development. Anne is also responsible for developing and maintaining systems for recruitment, succession planning, performance management and internal communications.

Kevin Jones FCCA, GAICD, BA (Hons), ALCM

Chief Financial Officer and Corporate Secretary

Kevin is responsible for overall business management reporting, statutory accounting, financial planning, treasury and taxation. His role also includes statutory compliance, occupational health and safety, corporate governance, insurance, risk management, auditing, property management, legal services and records management.

Steve Lennox BBus (Acc), CPA, ACIS

General Manager, Billing and Contact Services

Steve is responsible for customer billing and responding to customers’ enquiries. He is primarily responsible for meter reading, billing management, debt collections, Customer Contact Centre operations and the development and implementation of support programs for customers in financial difficulty.

Pat McCafferty BBus (Acc), Exec.MBA, FWCLP, GAICD

General Manager, Strategy and Communications

Pat is responsible for strategy, regulation, planning, marketing and communications. His responsibilities incorporate long-term strategic planning, pricing and regulatory affairs, innovation and growth, community and stakeholder engagement, representing the business in water industry policy and reform activities and development and implementation of marketing programs.

David Snadden BE (Civil)

General Manager, Infrastructure Services

David is responsible for managing water and sewerage infrastructure to ensure that it achieves our desired customer service levels and environmental performance. He is primarily responsible for strategy development, planning, operation, maintenance and renewal of the water and sewerage infrastructure.

20

Safety

Yarra Valley Water is committed to providing a safe and healthy working environment for its employees and contractors, as well as suppliers, customers and other visitors who may enter its work areas.

The Board of Directors, management, employees and our partner organisations share responsibility for Safety and Well-being.

Our process to manage Safety is centred on both our Risk Management Framework and the National OH&S standard AS/NZS 4801:2001.

In 2012/13, we engaged the services of Wilson Consulting Group, an organisation with experience in assessing the safety performance of a number of leading Australian companies, to:

– review our existing safety systems and undertake a gap analysis

– benchmark existing safety performance levels and provide an opinion as to our current safety maturity level

– develop a roadmap to improve our safety performance and culture.

Arising out of the Wilson Consulting Group’s report, a Safety Plan was developed incorporating a range of Safety initiatives. The implementation of these initiatives throughout the year has resulted in a significant improvement in our Safety performance. In particular, we achieved our target of <9 lost time injuries. Actual lost time injuries for 2012/13 was 7.

We also achieved the following Safety targets linked to our 2013 Strategy:

≥93% of our staff believe Safety is a priority in our Safety Culture Survey

≥93% of our staff believe managers are committed to Safety in our Safety Culture Survey

≥95% of our partners believe Safety is a priority in our Safety Culture Survey

The foundation has been set for us to deliver on our newly established Safety commitment to our 2020 Strategy ‘We are Safe’.

Our Safety Commitment strives to achieve the following outcomes:

– safety exists as each person’s responsibility

– we make our workplaces safe

– we carry out our work without harming ourselves or others.

Our people

We believe that a great culture delivers great outcomes. It provides the foundation for a high-performing workplace where we collaborate with partners and stakeholders to deliver exceptional outcomes for our customers and the environment. Creating this constructive workplace culture requires a holistic approach, encompassing all aspects of the employment life cycle, such as recruitment, communication, role clarity, recognition, development, equity and leadership. Our culture strategy ensures we employ the right staff, provide them with clear direction and challenging work, enable peak performance through strong leadership and honest feedback, and provide ongoing development through targeted learning opportunities.

Fair treatment at work – Discrimination

At Yarra Valley Water it is our strategic intent to create a vibrant workplace achieving exceptional business outcomes, successful partnerships and personal satisfaction. We are committed to providing fair and equitable treatment for all employees in the workplace including partners, contractors, work experience students, suppliers and agents, both on and off site, when on corporation business.

We endeavour to eliminate discrimination through proactive, reasonable and proportionate measures. All employees are required to comply with relevant Federal and State legislation that establishes grounds on which discrimination is illegal including but not limited to the Acts relating to Occupational Health and Safety, Equal Employment Opportunity, Discrimination and Human Rights.


21


Recruitment

Yarra Valley Water is committed to applying merit and equity principles when appointing staff. The selection processes ensure that applicants are assessed and evaluated fairly and equitably on the basis of the key selection criteria and other accountabilities without discrimination.

Employment data

Full time

Part time Casual Total

FTE 2012/13

FTE 2011/12

Female 179 68 21 268 243 266Male 285 11 15 311 305 353

Total 464 79 36 579 548 619

Legislative compliance

Victorian Information Privacy Act 2000

Yarra Valley Water complies with the information privacy principles set out in the Victorian Information Privacy Act 2000.

As the holder of our customers’ confidential and personal information, Yarra Valley Water is conscious of the need to ensure that this information is protected and to prevent any unauthorised access to, and improper use of that information.

A privacy policy and code of practice are in place for our employees, contractors and agency staff to ensure that customer information is protected.

Protected Disclosure Act 2012 (replaced the Whistleblowers Protection Act 2001 effective 10 February 2013)

Yarra Valley Water has procedures in place to help employees and contractors understand the requirements and obligations under the Protected Disclosure Act 2012. Officers have been appointed to handle any disclosures of improper conduct or detrimental action by Yarra Valley Water or its employees. These procedures were available to the public at Yarra Valley Water’s Office.

As required by the Protected Disclosure Act 2012, procedures to facilitate the making and handling of disclosures and the notification of such disclosures to the Independent Broad-based Anti-corruption Commission are available to the public at Yarra Valley Water’s Office.

There had been no disclosures, disclosed matters or investigations of disclosed matters received by Yarra Valley Water or the Victorian Ombudsman in relation to the operation, activities or officers of Yarra Valley Water.

Freedom of Information Act 1982

Yarra Valley Water is committed to ensuring information is accessible to customers in compliance with the Freedom of Information Act 1982.

During 2012/13, 20 requests were received for access to documents under the Freedom of Information Act 1982.

Requests were fulfilled as follows:

Full access to all documents 15Full access to some documents – others refused 2Full access to some documents – others in part 1No documents identified 2

20

Requests for access to Yarra Valley Water documents under the Freedom of Information Act 1982 are to be made in writing and addressed to:

Peter Thatcher Assistant Corporate Secretary Yarra Valley Water Private Bag 1 Mitcham, Victoria, 3132

Each application must be accompanied by a $25.70 application fee and clearly identify the documents sought. General enquiries relating to Freedom of Information can be made by telephoning (03) 9872 1238 between 8.30am and 4.30pm, Monday to Friday.

Building Act 1993

Yarra Valley Water maintains its head office complex in accordance with the Building Act 1993.

Victorian Industry Participation Policy Disclosures

Yarra Valley Water implements the Victorian Industry Participation Policy (VIPP) in accordance with section 9 of the Victorian Industry Participation Policy Act 2003.

During 2012/13 there were no contracts commenced or completed for which a VIPP plan was required.

National Competition Policy

Competitive neutrality seeks to enable fair competition between government and private sector business. Any advantages or disadvantages that a government business may experience, simply as a result of government ownership should be neutralised.

Yarra Valley Water continues to comply with the requirements of the National Competition Policy.

22

Other information

The following information is available from Yarra Valley Water on request, subject to the Freedom of Information Act 1982:

– a statement that declarations of pecuniary interests have been duly completed by all relevant officers

– details of shares held by any senior officer as nominee or held beneficially in a statutory authority or authority

– details of publications produced by the entity about itself, and how these can be obtained

– details of changes in process, fees, charges, rates and levies charged by the entity

– details of any major external reviews carried out on the entity

– details of major research and development activities undertaken by the entity

– details of overseas visits undertaken including a summary of the objectives and outcomes of each visit

– details of major promotional, public relations and marketing activities undertaken by the entity to develop community awareness of the entity and its services

– details of assessments and measures undertaken to improve the occupational health and safety of employees

– a general statement on industrial relations within the entity and details of time lost through industrial accidents and disputes

– a list of major committees sponsored by the entity, the purposes of each committee and the extent to which the purposes have been achieved

– details of all consultancies and contractors including:

– consultants/contractors engaged

– services provided

– expenditure committed to for each engagement.


23


The Directors of the Corporation certify that Yarra Valley Water has risk management processes in place consistent with the National Risk Management Standard AS/NZS ISO 31000:2009 and an internal control system in place that enables our executive to understand, manage and satisfactorily control our risk exposures.

The Directors of the Corporation verify that Yarra Valley Water’s Strategic and Operational Risk Profiles have been critically reviewed within the last 12 months.

This attestation has been made in accordance with the resolution of the Directors of the Corporation on the 14th day of August 2013.



RISK MANAGEMENT ATTESTATION

25


ANNUAL FINANCIAL REPORT 2012/13 Yarra Valley Water Corporation ABN 93 066 902 501

26

The Directors of Yarra Valley Water Corporation present their report for the financial year ended 30 June 2013.

Directors

The names of the Corporation’s Directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period, unless otherwise stated.

Peter Snowden Wilson

Chairman

Vincent Anthony (Tony) Kelly

Managing Director

Caryle Patricia Demarte

Deputy Chairman

Susan Elizabeth Friend

Michael Douglas Tilley

Dean Matthew Comrie

Stephen James McArthur

Appointed as a Director on 1 October 2012

David Anthony Middleton

John Winston Tilleard

Retired as a Director on 30 September 2012

Particulars of the Directors’ and Corporate Secretary’s qualifications, experience and special responsibilities (if any) are set out in the Corporate Information section of this Annual Report.

Directors’ attendance at meetings

The number of Directors’ meetings and Board Committee meetings, and number of meetings attended by each of the Directors of the Corporation during the financial year are set out in the Corporate Information section of this Annual Report.

Principal activities

The principal activities of the Corporation during the course of the financial year were the provision, within its district, of retail water supply and sewerage services and the collection of trade waste.

There were no significant changes in the nature of these activities during the year.

Dividends

The following dividends have been paid by the Corporation since the start of the financial year:

– a final dividend of $53.0 million for the year ended 30 June 2012 was paid on 14 December 2012

– an interim dividend of $4.5 million for the year ended 30 June 2013 was paid on 27 June 2013.

The amount of the final dividend for the year ended 30 June 2013 will be determined after consultation between the Board, the Minister for Water and the Treasurer of Victoria.

Review of operations

A review of the operations of the Corporation during the year ended 30 June 2013 and the results of those operations are contained in this Annual Report.

State of affairs

On 1 July 2012, under the provisions of the Water Amendment (Governance and Other Reforms) Act 2012, all assets, liabilities, contracts and employees of Yarra Valley Water Ltd transferred to Yarra Valley Water Corporation. The services previously supplied by Yarra Valley Water Ltd are now supplied by Yarra Valley Water Corporation.

These legislative changes create uniformity across the Victorian water and sewerage sector, with the three Melbourne metropolitan retailers becoming Water Corporations under the Water Act 1989, in line with the structure of the water industry throughout the rest of Victoria. Yarra Valley Water Ltd was de-registered by the Australian Securities and Investments Commission on 20 March 2013.

As a result of the Essential Services Commission’s price determination in June 2013, which set the maximum prices that Yarra Valley Water may charge its customers for regulated products for the five years, from 1 July 2013, the Corporation will increase prices on average by 21.7% + CPI for 2013/14 and by CPI for 2014/15, 2015/16, 2016/17 and 2017/18.

Except as provided above, there were no significant changes in the state of affairs of the Corporation during the year ended 30 June 2013 not otherwise disclosed in the Annual Report.

Events subsequent to balance sheet date

Since 30 June 2013 to the date of this Report, no matter or circumstance has arisen that, in the opinion of the Directors, has significantly affected or may significantly affect the operations of the Corporation, the results of those operations, or the state of affairs of the Corporation in future financial years.

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2013

27


Environmental regulation

The Corporation is subject to environmental regulation in respect of its operations. The Corporation holds a corporate licence issued by the Environment Protection Authority Victoria (EPAV) under the Environment Protection Act 1970. The licence imposes conditions about discharges, reporting obligations and other matters concerning the operation of seven sewage treatment plants.

During the financial year, we did not comply with three general conditions of our EPAV corporate licence due to the following events:

– extremely heavy rainfall that caused diluted sewage to spill from the Brushy Creek Sewage Treatment Plant;

– equipment failure on three separate occasions that caused the discharge of partially treated wastewater from the Craigieburn Sewage Treatment Plant; and

– reported odour complaints attributed to the operations of the Wallan Sewage Treatment Plant.

The Corporation maintains an Environmental Management System certified to ISO 14001.

Further particulars of specific environmental performance measures are set out in the Additional Information section of this Annual Report.

Directors’ Deed

The Corporation has entered into a Deed with each Director under which the Corporation is required to provide access to the books of the Corporation and to maintain insurance coverage for at least seven years after the Director ceases to be a Director.

Insurance of officers

During the financial year, the Corporation paid premiums in respect of contracts to insure Directors, former Directors and Officers of the Corporation against certain liabilities.

Some of the contracts of insurance prohibit disclosure of the nature of the liabilities insured and the amount of the premium.

Rounding of amounts to the nearest thousand dollars

The amounts in this Report and the Annual Financial Report have been rounded to the nearest thousand dollars, unless otherwise stated.

This Report is made in accordance with a resolution of the Directors of the Corporation on the 14th day of August 2013.



28

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013

Note2013

$’0002012

$’000

Revenue 4 763,077 775,178Expenses 5 (586,565) (583,347)Finance costs (108,349) (104,783)

Profit before income tax 68,163 87,048Income tax expense 6(a) (20,708) (26,284)

Net profit 47,455 60,764

Other comprehensive incomeIncrease / (decrease) from revaluation of infrastructure assets 12(b) 104,340 (145,174)Increase from revaluation of crown land 12(b) 408 -Defined benefit superannuation plan actuarial gain / (loss) 17(f) 5,978 (8,279)Deferred income tax on items of other comprehensive income 6(b) (33,237) 45,896

Other comprehensive income, net of tax 77,489 (107,557)

Total comprehensive income 124,944 (46,793)

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

29


BALANCE SHEET AS AT 30 JUNE 2013

Note2013

$’0002012

$’000

ASSETSCurrent assetsCash 8 136 528Receivables 3(c), 9 130,065 130,575Other 10 7,814 10,140

Total current assets 138,015 141,243

Non-current assetsInfrastructure, property, plant and equipment 12(a) 3,677,544 3,426,038Intangible assets 11(a) 196,254 179,794

Total non-current assets 3,873,798 3,605,832

TOTAL ASSETS 4,011,813 3,747,075

LIABILITIESCurrent liabilitiesUnearned income 15 3,440 6,808Current tax payable 6(d) 3,948 2,009Provisions 14 17,562 16,994Payables 3(c), 13 108,050 98,087Borrowings 3(b) 174,550 386,577

Total current liabilities 307,550 510,475

Non-current liabilitiesProvisions 16 1,363 1,313Refundable advances 3(c) 1,518 1,916Unearned income 15 7,543 7,404Defined benefit superannuation liability 17(d) 773 7,991Net deferred tax 6(e) 641,020 605,174Borrowings 3(b) 1,649,700 1,277,900

Total non-current liabilities 2,301,917 1,901,698

TOTAL LIABILITIES 2,609,467 2,412,173

NET ASSETS 1,402,346 1,334,902

EQUITYContributed equity 18 477,297 -Issued capital 18 - 84,940Retained earnings 20 147,943 153,945Reserves 19 777,106 1,096,017

TOTAL EQUITY 1,402,346 1,334,902

The above Balance Sheet should be read in conjunction with the accompanying notes.

30

2013 Note

Issued capital

$’000

Contributed equity $’000

Retained earnings

$’000

Asset revaluation

reserve $’000

Capital reserve

$’000Total $’000

Balance at 1 July 2012 84,940 - 153,945 703,660 392,357 1,334,902Net profit - - 47,455 - - 47,455Transfer upon transition to statutory authority

(84,940)

477,297

-

-

(392,357)

-

Other comprehensive income 19, 20 - - 4,043 73,446 - 77,489

Total comprehensive income

Transactions with owners in their capacity as owners

(84,940) 477,297 51,498 73,446 (392,357) 124,944

Dividends paid 7 - - (57,500) - - (57,500)

Balance at 30 June 2013 - 477,297 147,943 777,106 - 1,402,346

2012 Note

Issued capital $’000

Contributed equity $’000

Retained earnings

$’000

Asset revaluation

reserve $’000

Capital reserve $’000

Total $’000

Balance at 1 July 2011 84,940 - 155,216 805,282 392,357 1,437,795Net profit - - 60,764 - - 60,764Other comprehensive income 19, 20 - - (5,935) (101,622) - (107,557)

Total comprehensive income

Transactions with owners in their capacity as owners

- - 54,829 (101,622) - (46,793)

Dividends paid 7 - - (56,100) - - (56,100)

Balance at 30 June 2012 84,940 - 153,945 703,660 392,357 1,334,902

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2013

31


Note2013

$’0002012

$’000

Cash flows from operating activitiesReceipts from customers 748,271 723,471Payments to suppliers and employees (539,149) (526,871)Goods and services tax refunded (net) 27,628 33,012Income tax paid (16,348) (3,606)Interest and other finance costs paid (106,254) (102,674)Interest received 21 28

Net cash inflow from operating activities 28(a) 114,169 123,360

Cash flows from investing activitiesProceeds from sale of intangibles, infrastructure, property, plant and equipment 1,151 143Payments for acquisition of infrastructure, property, plant and equipment (174,223) (211,708)Payments for acquisition of intangible assets (43,759) (53,440)

Net cash outflow from investing activities (216,831) (265,005)

Cash flows from financing activitiesProceeds from borrowings 287,973 301,655Repayment of borrowings (128,200) (104,859)Proceeds / (repayments) of developer security deposits (3) 514Dividends paid 7 (57,500) (56,100)

Net cash inflow from financing activities 102,270 141,210

Net decrease in cash held (392) (435)Cash at beginning of year 528 963

Cash at end of year 8, 28(b) 136 528

The above Cash Flow Statement should be read in conjunction with the accompanying notes.

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2013

32

1. Summary of significant accounting policies

(a) Basis of Accounting

On 1 July 2012, under the provisions of the Water Amendment (Governance and Other Reforms) Act 2012, all assets, liabilities, contracts and employees of Yarra Valley Water Ltd transferred to Yarra Valley Water Corporation. The services previously supplied by Yarra Valley Water Ltd are now supplied by Yarra Valley Water Corporation.

This financial report is a general purpose financial report that has been prepared in accordance with applicable Australian equivalents to International Financial Reporting Standards (AIFRS), Urgent Issues Group Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board, the requirements of the Financial Management Act 1994 and applicable Ministerial Directions.

The financial report of Yarra Valley Water Corporation (the Corporation) for the year ended 30 June 2013 was authorised for issue in accordance with a resolution of the Directors on 14 August 2013.

The financial report has been prepared on an accruals and going concern basis and is based on historical cost, except for infrastructure, property, plant and equipment which have been measured at fair value. All amounts are presented in Australian dollars, unless otherwise stated and have been rounded to the nearest thousand dollars, or in other cases to the nearest dollar.

The following is a summary of the material accounting policies adopted by the Corporation in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

(b) Critical accounting estimates and judgements

Management evaluates estimates and judgements which are incorporated in the financial report based on historical knowledge and the best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data obtained both externally and within the Corporation. Actual results may differ from these estimates.

The most significant accounting estimates undertaken in the preparation of this financial report relate to:

– residual values and useful lives

– asset impairment

– unearned revenue

– provisions

– fair value of infrastructure, property, plant and equipment

– contingent assets and liabilities

– defined benefit superannuation fund.

(c) Income tax

The Corporation is subject to the National Tax Equivalent Regime (NTER), which is administered by the Australian Taxation Office.

The current income tax expense is based on the profit for the year adjusted for any non assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the Balance Sheet date.

Deferred tax is accounted for using the Balance Sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in net profit in the Statement of Comprehensive Income, except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Corporation will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the Law.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

33


(d) Revenue recognition

Water and sewerage

Revenue is brought to account when services have been provided or when a usage or service charge has been made. The payment in advance by customers of accounts which at reporting date were unbilled is classified as trade payables.

Water usage charges and sewage disposal charges are recognised as revenue when the service has been provided. As meter reading is cyclical, an estimate is made at the end of the accounting period for water usage and sewage disposal by customers. The estimate is made by multiplying the number of days since the last reading by daily average water consumption for that period.

Developer contributed assets

Developers are required to provide water supply and sewerage facilities to new subdivisions which are subsequently gifted to, and maintained by, the Corporation. These assets are recognised as revenue at fair value upon the gaining of control of the asset and are recorded as ‘developer contributed assets’.

New customer contributions

New customer contributions represent fees paid by developers so that they can connect new developments to the Corporation’s existing water supply and sewerage systems. Generally, these are recognised as revenue when the contribution has been received; however, in respect of assets to service new urban growth, amounts are received in advance and recognised as revenue when the development lots are released for sale.

Other revenue

Other revenue includes fees for information statements, new meter installation services, water trading, billing and collection administration fees from both Melbourne Water and the Department of Environment and Primary Industries and charges for the relocation of assets requested by third parties. Property sales are recognised on the signing of an unconditional contract of sale with a deposit of at least 10%. Income from operating leases is recognised in net profit in the Statement of Comprehensive Income on a straight line basis over the lease term.

(e) Leases

Payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. The Corporation does not have any finance leases.

(f) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown in current liabilities in the Balance Sheet.

(g) Receivables and provision for impairment of receivables

All debtors are recognised at the amounts receivable less any provision for impairment of receivables. Credit is generally allowed for a period of 16 days. The collectability of debt is assessed each accounting period for usage and other charges. A provision for impairment of receivables is raised where doubt as to its collection exists. Bad debts are written off when the individual debt is determined to be uncollectible.

(h) Infrastructure, property, plant and equipment

Financial Reporting Direction 103D Non-Current Physical Assets requires non-current physical assets to be measured at fair value. Accordingly, the Corporation uses the revaluation model in accordance with AASB 116 Property, Plant and Equipment.

Infrastructure and property assets are measured initially at cost and subsequently revalued at fair value less depreciation and impairment losses where applicable. Plant and equipment assets are measured at cost less depreciation and impairment losses where applicable.

Due to the specialised nature of the Corporation’s infrastructure assets, fair value is estimated using the income approach (based on discounted cash flows). Refer Note 12.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Corporation and the cost of the item can be measured reliably. Repairs and maintenance are charged to net profit in the Statement of Comprehensive Income during the financial year in which they are incurred.

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The cost of fixed assets constructed within the Corporation includes the cost of materials, direct labour and an appropriate proportion of fixed and variable overheads.

Revaluations

Revaluations are performed with sufficient regularity such that the carrying amounts do not differ materially from those that would be determined using fair values at the end of the reporting period.

Any revaluation increase is recognised in other comprehensive income, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in net profit in the Statement of Comprehensive Income, in which case the increase is credited to profit to the extent of the decrease previously expensed. A decrease in the carrying amount arising on the revaluation is recognised in net profit in the Statement of Comprehensive Income to the extent that it exceeds the balance, if any, held in the revaluation reserve relating to a previous revaluation of that asset.

Depreciation

The depreciable amount of all fixed assets, but excluding freehold and crown land, is depreciated on a straight line basis over their useful lives, commencing from the time the asset is held ready for use. The useful lives, which are consistent with the prior period, used for each class of depreciable assets are:

Class of Fixed Asset Useful life

Buildings 10 to 100 yearsInfrastructure 3 to 100 yearsPlant and equipment 3 to 20 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each Balance Sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in net profit in the Statement of Comprehensive Income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

(i) Intangible assets

Intangible assets acquired separately

Intangible assets acquired separately are initially recognised at cost. Subsequently, intangible assets with finite useful lives are carried at cost less accumulated amortisation and impairment losses. Intangible assets with indefinite useful lives are carried at cost less impairment losses, where applicable. Costs incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefits will flow to the Corporation.

Research and development costs

Expenditure on intangible assets research activities is recognised as an expense in the period in which it is incurred. An internally generated intangible asset arising from a development project is recognised only if all the following are demonstrated:

– the technical feasibility of completing the intangible asset so that it will be available for use or sale

– the intention to complete the intangible asset and use or sell it

– the ability to use or sell the intangible asset

– how the intangible asset will generate probable future economic benefits

– the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset

– the ability to measure reliably the expenditure attributable to the intangible asset during its development.

Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and impairment losses on the same basis as intangible assets that are acquired separately.


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Amortisation

Intangible assets with finite useful lives are amortised on a straight line basis over the asset’s useful life. Amortisation begins when the asset is available for use; that is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each annual reporting period. The useful life used for the software asset class is between three and ten years. The water entitlements are classified as an intangible asset with indefinite useful life. Intangible assets with indefinite useful lives are not amortised.

(j) Impairment of non-financial assets

Infrastructure, property, plant and equipment and intangible assets with finite useful lives are assessed annually for indications of impairment. Whenever there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount.

Intangible assets that have an indefinite useful life and intangible assets not yet available for use are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired.

Where an asset’s carrying value exceeds its recoverable amount, an impairment loss is recognised in net profit in the Statement of Comprehensive Income for the excess amount, except to the extent that the write-down can be debited to an asset revaluation reserve amount applicable to that asset. The recoverable amount of assets held primarily to generate net cash inflows is measured at the higher of the present value of future cash flows expected to be obtained from the asset and fair value less costs to sell. The recoverable amount of assets that are not primarily held to generate net cash flows is measured at the higher of depreciated replacement cost and fair value less costs to sell.

No material indicators of impairment were present as at the time the financial statements were authorised for issue.

(k) Creditors and accruals

Creditors and accruals are recognised for future amounts to be paid in respect of goods and services received. The amounts are unsecured and are usually paid 30 days after invoice date.

(l) Employee benefits

Wages, salaries and annual leave

Liabilities for wages, salaries and annual leave entitlements which are expected to be settled within 12 months of the reporting date are measured using remuneration rates expected to apply when the obligation is settled. All on-costs including payroll tax, workers compensation premiums and superannuation are included in the determination of these liabilities.

Long service leave

Long service leave expected to be paid within 12 months has been measured at nominal value, and long service leave expected to be paid after 12 months has been measured at present value. Unconditional vested long service leave representing over seven years continuous service is disclosed as a current liability, even when the Corporation does not expect to settle the liability within 12 months, as it will not have the right to defer the settlement of the entitlement should an employee take leave within 12 months.

Superannuation

Accumulation plans – Contributions to accumulation plans are expensed as the contributions are paid or become payable.

Defined benefit superannuation plan – A liability or asset in respect of the defined benefit superannuation plan is recognised in the Balance Sheet and is measured as the present value of the defined benefit obligation at the reporting date plus unrecognised actuarial gains (less unrecognised actuarial losses) less the fair value of the superannuation fund’s assets at that date and any unrecognised past service cost. The present value of the defined benefit obligation is based on expected future payments which arise from membership of the fund to the reporting date, calculated annually by independent actuaries using the projected unit credit method. Consideration is given to the expected future wage and salary levels, experience of employee departures and periods of service.

Actuarial gains and losses are recognised immediately in retained earnings in the Balance Sheet in the year in which they occur.

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(m) Advances

Advances represent amounts advanced to the Corporation by developers for capital and recurrent works not completed. The advances are non interest bearing.

(n) Provisions

Provisions are recognised when the Corporation has a present legal or constructive obligation as a result of past events for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(o) Borrowings and finance costs

Loans are repaid or refinanced on maturity and are carried at their principal amounts. Where the Corporation has both the intention and discretion to refinance loans maturing within 12 months from balance date under a Government approved financing facility, such loans are classified as non-current. Interest is payable semi-annually and is accrued over the period it becomes due. Accrued interest is recorded as part of accruals.

Finance costs are directly attributable to the acquisition, construction or production of qualifying assets measured at fair value and are therefore recognised as expenses in the Statement of Comprehensive Income in the period in which they are incurred.

(p) Commitments

Commitments are disclosed at their nominal value and inclusive of goods and services tax.

(q) Contingent assets and contingent liabilities

Contingent assets and contingent liabilities are not recognised in the Balance Sheet, but are disclosed by way of a note and, if quantifiable, are measured at nominal value. Contingent assets and contingent liabilities are presented inclusive of goods and services tax receivable or payable respectively. Refer Note 24.

(r) Dividend

An obligation to pay a final dividend only arises after a formal determination is made by the Treasurer following consultation between the Board, the relevant portfolio Minister and the Treasurer.

(s) Smart Water Fund

The Smart Water Fund was established by Melbourne’s four water businesses and the State Government of Victoria for the purpose of providing grant funding to support the development of sustainable water use projects.

Contributions made to the Smart Water Fund are initially recognised as assets in the water businesses’ Balance Sheets. Expenses are subsequently recognised by the water businesses when incurred by the Fund.

Yarra Valley Water’s share of the Fund disbursements for the year is $653,733 (2012: $837,198) and is included in the Statement of Comprehensive Income. As at 30 June 2013, Yarra Valley Water’s Balance Sheet reflects its share of cash in the Fund totalling $729,376 (2012: $383,109). Refer Note 10.

(t) Environmental contributions

The Water Industry (Environmental Contributions) Act 2004 amended the Water Industry Act 1994 to make provision for environmental contributions to be paid by water authorities. The Act establishes an obligation for authorities to pay into the consolidated fund annually in accordance with a pre-established schedule of payments which sets out the amounts payable by each water business.

The purpose of the environmental contribution is set out in the Act and the funding may be used for the purpose of financing initiatives that seek to promote the sustainable management of water or address water-related initiatives. The environmental contributions are recognised as an expense as incurred.

(u) Goods and services tax (GST)

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

Cash flows are presented in the Cash Flow Statement on a gross basis except for the GST component of investing and financing activities which are disclosed as operating cash flows.


37


(v) Financial instruments

Financial instruments are initially measured at cost on transaction date which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition, these instruments are measured as set out below.

Loans and receivables

Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

Financial liabilities

Non derivative financial liabilities are recognised at amortised cost comprising original debt less principal repayments and amortisation.

(w) Government grants

Government grants are recognised once reasonable assurance has been reached that the Corporation will comply with the conditions attaching to them and that the grants will be received. Government grants of a revenue nature are recognised as income over the periods necessary to match them with the related costs. Government grants related to assets are recognised in the Balance Sheet by deducting the grant in arriving at the carrying amount of the asset, thereby incurring a reduced depreciation charge.

2. New accounting standards and interpretations not yet adopted

Standard / Interpretation Summary

Applicable for annual reporting periods beginning on or after

Impact on Yarra Valley Water financial report

AASB 9 Financial Instruments, AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) and AASB 2012-6 Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and Transition Disclosures

The standard addresses the classification, measurement and derecognition of financial assets and liabilities.

1 January 2015 The full impact of the revised standard is yet to be assessed.

AASB 13 Fair Value Measurement, AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13

The standard explains how to measure fair value and aims to enhance fair value disclosures.

1 January 2013 This amendment is expected to have limited impact.

AASB 119 Employee Benefits, AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119

The revised standard requires the recognition of all actuarial gains and losses immediately in Other Comprehensive Income. There is also a change to methodology in the calculation of superannuation expense.

1 January 2013 The revised methodology in the calculation of superannuation expense is expected to have a negative impact on the net profit.

AASB 2011-4 Amendments to Australian Accounting Standards to remove Individual Key Management Personnel Disclosure Requirements

Removes the individual key management personnel disclosure from AASB 124 Related Party Disclosures, to achieve consistency with the international equivalent standards and remove duplication of the requirements with the Corporations Act 2001 (Cth).

1 July 2013 This amendment is expected to have limited impact.

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3. Financial instruments

(a) Financial risk management

The Corporation’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, short-term and long-term borrowings with the Treasury Corporation of Victoria (TCV) and leases.

The main purpose of non-derivative financial instruments is to raise funds for Corporation operations. The Corporation does not have any derivative financial instruments.

The Corporation meets quarterly with representatives of TCV to discuss financial markets, interest rate exposure and treasury management strategies in the context of the most recent economic conditions and forecasts. The Board provides written principles for overall financial risk management as well as written policies covering specific areas.

The Corporation’s overall financial risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Corporation. Financial risks are identified, evaluated and managed in accordance with the Corporation’s operational requirements.

(b) Capital risk management

The Corporation controls its capital in order to maintain a satisfactory debt to equity ratio to provide the parent entity with adequate returns and to ensure that it can fund its operations as a going concern.

The capital structure of the Corporation consists of net debt (borrowings as detailed in section (d) to this Note and offset by cash and bank balances – see Note 8) and equity of the Corporation (comprising contributed equity, reserves and retained earnings detailed in Notes 18 to 20).

The only externally imposed capital requirements of the Corporation are that:

– financial accommodation does not exceed the approval limits set by the Treasurer of Victoria pursuant to the Borrowing and Investment Powers Act 1987; and

– the Corporation, with the exception of a trading account with overdraft facilities, is required to borrow exclusively with the Treasury Corporation of Victoria.

These external capital requirements are incorporated into the management of capital through the Board and approval of the Corporate Plan by the owner’s representatives.

The Corporation effectively manages its capital by assessing its financial risks and adjusting its capital structure in response to changes in these risks and the market. These responses include the management of debt levels and distributions to the parent entity. There have been no changes to the strategy adopted by the Corporation to control its capital during the year. The gearing ratios for the years ended 30 June 2013 and 30 June 2012 were as follows:

Note2013

$’0002012

$’000

Borrowings – Current 174,550 386,577Borrowings – Non-current 1,649,700 1,277,900Less: cash 8 (136) (528)

Net debt 1,824,114 1,663,949Total equity 1,402,346 1,334,902

Total capital 3,226,460 2,998,851

Gearing ratio 57% 55%


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(c) Financial risks

The main risks the Corporation is exposed to through its financial instruments are interest rate risk, liquidity risk and credit risk. The Corporation uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate risk, ageing analysis for credit risk and maturities analysis for liquidity risk.

i Interest rate risk

The Corporation’s main interest rate risk arises from long-term borrowings. The risk is that the Corporation is unable to refinance existing debt at the Essential Services Commission’s (ESC) benchmark cost of debt which would expose the Corporation to higher finance costs. Arranging debt to mature at or close to the dates the ESC will use to calculate the efficient rate of debt is a prudent treasury practice. Borrowings issued at variable rates expose the Corporation to cash flow interest rate risk. Borrowings issued at fixed rates expose the Corporation to fair value interest rate risk. The adopted debt portfolio strategy is to shorten the duration and increase the level of floating rate debt.

Interest rates details and maturities analysis on borrowings are provided in the following table.

Interest rates sensitivity analysis

As at 30 June 2013, if interest rates had changed by ±50 basis points from the year end rates with all other variables held constant, the post-tax profit impact for the year would have been $1.25 million (2012: $1.20 million) higher / lower as a result of higher / lower interest expense from variable interest rate borrowings.

ii Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and ensuring the availability of funding through an adequate amount of committed credit facilities. The Corporation manages liquidity risk by monitoring forecast and actual cash flows and ensuring that adequate borrowing facilities are maintained.

Financing arrangements

The Corporation had access to a total of $56.2 million (2012: $31.2 million) of unused approved borrowings by the Treasurer of Victoria as at 30 June 2013. The Corporation has a formal bank overdraft facility with the Australia and New Zealand Banking Group Limited.

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Maturities of financial liabilities

The following table allocates the Corporation’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows.

Interest rate details and maturities analysis on financial instruments: liabilities

Weighted average

effective interest rate

%

Less than 12 months

$’000

1 to 3 years $’000

3 to 5 years $’000

Over 5 years

$’000Total $’000

2013Refundable advances – non-interest bearing

- - 1,518 - - 1,518

Payables – non-interest bearing - 108,050 - - - 108,050Borrowings – fixed interest rate 5.66 98,200 291,400 276,400 851,900 1,517,900Borrowings – floating interest rate 2.97 76,350 - 70,000 160,000 306,350

Total 282,600 292,918 346,400 1,011,900 1,933,818

2012Refundable advances – non-interest bearing

- - 1,916 - - 1,916

Payables – non-interest bearing - 98,087 - - - 98,087Borrowings – fixed interest rate 5.94 78,200 276,400 236,400 765,100 1,356,100Borrowings – floating interest rate 3.64 308,377 - - - 308,377

Total 484,664 278,316 236,400 765,100 1,764,480


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iii Credit risk

Credit risk arises mainly from credit exposure to customers including outstanding receivables. A further exposure to credit risk arises from deposits with the Treasury Corporation of Victoria (TCV) and other financial institutions. In relation to credit exposure to customers, the Corporation is legally obliged to service all customers in its district without regard to their credit quality. The Corporation has extensive programs in place to minimise customer credit risk.

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to historical information about counterparty default rates. Receivables that are neither past due nor impaired had an average rate of default to revenue in the three years 2010/11 to 2012/13 of 0.73 per cent. For the 2012/13 financial year, the Corporation had $5.5 million (2012: $5.2 million) of bad debts and revenue of $727.6 million (2012: $730.7 million), being a default rate of 0.76 per cent.

The credit risk attributable to the Corporation’s deposits with the TCV and other financial institutions is considered very low due to the minor amounts involved and the high credit ratings of its counter parties. Currently, the Corporation does not hold any collateral as security nor credit enhancements relating to any of its financial assets.

The maximum exposure to credit risk at the reporting date is the carrying amount of the items in the Balance Sheet. For receivables, the maximum exposure is the gross amount of receivables before allowing for doubtful debts.

The Corporation uses ageing analysis to measure receivables credit risk as follows:

Ageing analysis and impairment detail of receivables

Not aged

1 to 16 days

$’000

17 to 60 days

$’000

61 to 90 days

$’000

91 to 180 days

$’000

Over 180 days

$’000Total $’000

2013 Trade debtorsNot past due and not impaired - 22,086 - - - - 22,086 Past due but not impaired - - 20,507 2,738 4,268 12,013 39,526 Impaired - (78) (472) (136) (245) (917) (1,848)

Net trade debtors - 22,008 20,035 2,602 4,023 11,096 59,764

Accrued revenue 59,496 - - - - - 59,496 Other receivables 10,805 - - - - - 10,805

Total receivables 70,301 22,008 20,035 2,602 4,023 11,096 130,065

2012Trade debtorsNot past due and not impaired - 34,551 - - - - 34,551 Past due but not impaired - - 16,358 2,333 4,492 9,599 32,782 Impaired - (28) (397) (116) (385) (982) (1,908)

Net trade debtors - 34,523 15,961 2,217 4,107 8,617 65,425

Accrued revenue 48,562 - - - - - 48,562 Other receivables 16,588 - - - - - 16,588

Total receivables 65,150 34,523 15,961 2,217 4,107 8,617 130,575

The Corporation’s policy on the provision for impairment of trade receivables is described in Note 1(g).

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(d) Fair value

All financial assets and liabilities with the exception of leases are recognised in the Balance Sheet. Cash, cash equivalents and non-interest bearing financial assets and financial liabilities are carried at a cost which approximates the fair value. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of the interest bearing financial liabilities is determined by discounting the expected future cash flows at current interest rates.

The carrying amounts and fair values of interest-bearing financial liabilities at balance date are as follows:

2013 Carrying amount

$’000

2013 Net fair

value $’000

2012 Carrying amount

$’000

2012 Net fair

value $’000

Interest-bearing financial liabilitiesBorrowings 1,824,250 1,949,474 1,664,477 1,821,801

Total 1,824,250 1,949,474 1,664,477 1,821,801

Note2013

$’0002012

$’0004. Revenue

Rendering of servicesFixed service charges 292,140 286,211Water usage charges 255,543 227,720Sewage disposal charges 167,504 159,490Trade waste charges 21,195 24,167Desalination plant return (35,546) -

Total rendering of services 700,836 697,588Interest income 21 28Other revenueNew customer contributions by developers 15,781 22,160Developer contributed assets 19,154 22,270Rent 1,110 1,346Superannuation defined benefit revenue 17(e) 286 -Other 25,889 31,786

Total other revenue 62,220 77,562

Total revenue 763,077 775,178


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Note2013

$’0002012

$’0005. Expenses

Bulk water and sewerage charges 21(b) 359,643 346,939Depreciation 12(b) 61,462 63,986Contract payments 47,994 50,201Salary and employee benefits expense 37,443 37,201Environmental contribution 17,503 17,503Information technology costs 7,336 14,116Amortisation 11(b) 14,170 11,994Billing and revenue collection costs 9,167 8,987Bad and doubtful debts 5,519 5,224Government taxes, fees and contributions 3,268 2,284Rental expenses relating to operating leases 873 1,572Smart Water Fund contributions 654 837Transport costs 616 640Write off of assets 2,713 485Superannuation defined benefit expense 17(e) - 14Our Water Our Future contributions - 9Other expenses 18,204 21,355

Total expenses 586,565 583,347

Net loss on disposal of infrastructure, property, plant and equipment 91 89

6. Income tax

(a) The components of income tax expense comprise:Current income tax – current income tax charge 18,330 22,844Deferred income tax – reversal of temporary difference 2,378 3,440

Income tax expense reported in net profit 20,708 26,284

(b) Deferred income tax recognised in other comprehensive income

Defined benefit superannuation plan actuarial gain / (loss) 1,935 (2,344)Gain / (loss) on revaluation of infrastructure assets 31,302 (43,552)

Total deferred income tax recognised in other comprehensive income 33,237 (45,896)

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2013 $’000

2012 $’000

(c) Reconciliation of income tax expense to prima facie tax payable

Accounting profit before income tax expense 68,163 87,048

At the statutory income tax rate of 30% (2012: 30%) 20,449 26,114Non-deductible expenses 247 158Non-deductible depreciation 12 12

Income tax expense reported in net profit 20,708 26,284

(d) Income tax payable

Current tax payable 3,948 2,009

(e) Deferred tax items

Non-current liabilities – deferred taxAccelerated depreciation for tax purposes 361,012 361,421Revaluation of infrastructure to fair value 252,109 220,807Revaluation of land to fair value 36,574 36,574Revaluation of buildings to fair value 61 60

Total non-current liabilities – deferred tax 649,756 618,862

Recognised directly in equity 288,851 257,549Recognised in net profit 360,905 361,313

Total non-current liabilities – deferred tax 649,756 618,862

Deferred tax assetsDefined benefit superannuation liability (232) (2,397)Provisions (6,315) (6,131)Buildings future deductible amounts (1,155) (5,160)Unearned Government grant income (1,034) -

Total deferred tax assets (8,736) (13,688)

Net deferred tax liabilities 641,020 605,174


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2013 $’000

2012 $’000

7. Dividends paid

Dividends paid by the Corporation to the State Government of Victoria were:Unfranked interim dividend paid 4,500 -Unfranked final dividend paid for prior year 53,000 56,100

Total dividends paid 57,500 56,100

The Corporation, under the National Tax Equivalent Regime, is not required to maintain a franking account.

8. Current assets – cash

Cash at bank 135 527Cash on hand 1 1

Total current assets – cash 136 528

9. Current assets – receivables

Trade receivables – debtors 61,612 67,333Trade receivables – accrued revenue 59,496 48,562Other receivables 10,805 16,588Less: Provision for impairment of receivables (1,848) (1,908)

Total current assets – receivables 130,065 130,575

10. Current assets – other

Water Efficiency Program for Schools – advance 1,519 1,905Other Water Efficiency Programs – advance 3,323 6,584Prepayments 2,972 1,651

Total current assets – other 7,814 10,140

The Water Efficiency Program for Schools – advance represents amounts advanced from the Department of Environment and Primary Industries and from the Department of Education and Early Childhood Development for the audit and delivery of the works required to improve the water efficiency of schools. The amount is recognised as both an asset and a liability in the Balance Sheet.

The Other Water Efficiency Programs – advance includes amounts advanced from the Department of Environment and Primary Industries with the objective to find a more sustainable way to service remote unsewered communities such as backlog areas.

Prepayments include $729,376 (2012: $383,109) which relate to amounts paid to the Smart Water Fund but not yet distributed.

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2013 $’000

2012 $’000

11. (a) Non-current assets – intangible assets

SoftwareCost 120,142 135,741Works in progress 16,995 29,894Less accumulated amortisation (37,844) (75,841)

Total software 99,293 89,794

Water entitlements and other intangible assets 96,961 90,000

Total intangible assets 196,254 179,794

11. (b) Movements in carrying amounts

Water entitlements

& other intangible

assets $’000

Software $’000

Intangible works in progress

$’000Total $’000

2013Balance at 1 July 2012 90,000 59,900 29,894 179,794Additions - - 33,714 33,714Transfers 10,045 36,568 (46,613) -Transfer of water entitlements (3,084) - - (3,084)Amortisation expense - (14,170) - (14,170)

Carrying amount at 30 June 2013 96,961 82,298 16,995 196,254

2012Balance at 1 July 2011 83,334 59,345 9,003 151,682Additions 6,666 - 33,440 40,106Transfers - 12,549 (12,549) -Amortisation expense - (11,994) - (11,994)

Carrying amount at 30 June 2012 90,000 59,900 29,894 179,794

The amortisation expense has been included in the line item ‘Amortisation’. Refer to Note 5.

Yarra Valley Water made a contribution of $100 million toward the cost of the Goulburn-Murray Water Connections Project (Connections Project), formerly known as the Northern Victoria Irrigation Renewal Project. In exchange for this contribution, Yarra Valley Water is entitled to a share of the water savings generated by the Connections Project on an ongoing basis. The entitlements are pooled between the three Melbourne metropolitan retailers.

In exchange for access to the three Melbourne metropolitan retailers’ pooled water entitlements, four regional urban water businesses (Barwon Water, South Gippsland Water, Western Water and Westernport Water) are required to make contributions of $9.3 million to the retailers, with Yarra Valley Water’s share being $3.1 million. The investment has therefore been recognised at its net value ($100 million less $3.1 million).


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2013 $’000

2012 $’000

12. (a) Non-current assets – infrastructure, property, plant and equipment

InfrastructureAt managerial valuation 3,197,802 2,974,903

Total infrastructure 3,197,802 2,974,903

Freehold landAt independent valuation 30 June 2011 258,709 258,709At cost 6,394 144

Total freehold land 265,103 258,853

Crown landAt independent valuation 30 June 2013 408 -

Total crown land 408 -

BuildingsAt independent valuation 30 June 2011 4,880 6,679At cost 14,136 12,266Less accumulated depreciation (939) (446)

Total buildings 18,077 18,499

Capital works in progress 171,762 150,817

Plant and equipmentAt cost 47,438 41,963Less accumulated depreciation (23,046) (18,997)

Total plant and equipment 24,392 22,966

Total infrastructure, property, plant and equipment 3,677,544 3,426,038

The 30 June 2012 and 30 June 2013 valuations of infrastructure assets to fair market value were estimated by discounting the Corporation’s future cash flows to their present value. The discount rate selected represents the rate that market participants would reasonably expect to use in determining the fair market value of the Corporation. Future estimated cash flows were based on the Essential Services Commission’s pricing determination and updated management forecasts. Advice on relevant assumptions and discount factors have been independently provided by Deloitte Touche Tohmatsu.

If infrastructure assets were measured at historical cost, the carrying amount would be $2.41 billion (2012:$2.28 billion).

The 30 June 2011 valuation of freehold land and buildings was independently determined by the Victorian Valuer-General’s Office using fair market value as at 30 June 2011 for land and fair market value based on existing use as at 30 June 2011 for buildings.

If land and buildings were measured at historical cost, the carrying amount would be $68.92 million (2012:$66.17 million).

The 30 June 2013 valuation of crown land was independently determined by the Victorian Valuer-General’s Office using fair market value as at 30 June 2013.

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12. (b) Non-current assets – infrastructure, property, plant and equipment – movements in carrying amounts

Capital works in progress

$’000Land $’000

Crown land

$’000Buildings

$’000

Plant and equipment

$’000

Infra- structure

$’000Total $’000

2013Balance at 1 July 2012 150,817 258,853 - 18,499 22,966 2,974,903 3,426,038Additions 210,933 - - - - - 210,933Transfers (189,988) 6,250 - 1,840 10,287 171,611 -Disposal / write off - - - (1,631) (1,075) (7) (2,713)Depreciation expense - - - (631) (7,786) (53,045) (61,462)Revaluation increase recognised in equity

-

-

408

-

-

104,340

104,748

Carrying amount at 30 June 2013 171,762 265,103 408 18,077 24,392 3,197,802 3,677,544

2012Balance at 1 July 2011 295,944 258,708 - 6,679 14,346 2,838,941 3,414,618Additions 221,297 - - - - - 221,297Transfers (366,424) 322 - 12,361 13,333 340,408 - Disposal / write off - (177) - (95) (145) (300) (717)Depreciation expense - - - (446) (4,568) (58,972) (63,986)Revaluation increase recognised in equity

-

-

-

-

-

(145,174)

(145,174)

Carrying amount at 30 June 2012 150,817 258,853 - 18,499 22,966 2,974,903 3,426,038

2013 $’000

2012 $’000

13. Current liabilities – payables

Trade payables 35,319 28,196Accruals 70,000 67,157Security deposits 2,731 2,734

Total current liabilities – payables 108,050 98,087


49


2013 $’000

2012 $’000

14. Current liabilities – provisions

Employee benefits 14,170 14,972Other provisions 3,392 2,022

Total current liabilities – provisions 17,562 16,994

Employee benefits include amounts relating to accrued annual leave and long service leave.

15. Current and non-current liabilities – unearned income

Grant income – current 3,440 6,808

Total current liabilities – unearned income 3,440 6,808

Developer contributions – non-current 7,543 7,404

Total current and non-current liabilities – unearned income 10,983 14,212

Unearned developer contributions income are amounts received or receivable from developers for the reimbursement of costs that will be incurred by the Corporation for the construction of assets to service new urban growth. The amounts paid to the Corporation will be offset in future years by new customer contributions that will be payable when the development lots are released for sale.

16. Non-current liabilities – provisions

Employee benefits 1,363 1,313

Total non-current liabilities – provisions 1,363 1,313

Movements in provisions (current and non-current)Employee benefits Carrying amount at beginning 16,285 12,865Additional provision 3,995 6,813Amounts utilised during year (4,747) (3,393)

Carrying amount at year end 15,533 16,285

Other provisionsCarrying amount at beginning 2,022 1,364Additional provision 36,530 1,118Amounts utilised during year (35,160) (460)

Carrying amount at year end 3,392 2,022

50

17. Non-current liabilities – defined benefit superannuation liability

(a) Superannuation plan information

For employees who are members of the Equipsuper Superannuation Fund defined benefits plan, an agreed percentage of salaries is contributed to the fund by the Corporation as recommended by an actuary.

Defined benefit members receive lump sum retirement benefits on retirement, death, disablement and withdrawal. The defined benefit plan is closed to new members. All new members of the fund receive accumulation only benefits.

2013 $’000

2012 $’000

(b) Reconciliation of the present value of the defined benefit obligations

Present value of defined benefit obligations at beginning of the year (37,312) (29,861)Benefit paid 3,393 1,215Interest cost (946) (1,349)Current service cost (782) (670)Contributions by plan participants (280) (298)Actuarial gain / (loss) 3,372 (6,552)Taxes and paid premiums 198 203

Present value of defined benefit obligations at the end of the year (32,357) (37,312)

(c) Reconciliation of the fair value of plan assets

Fair value of plan assets at beginning of the year 29,321 29,223Actuarial gain / (loss) 2,606 (1,727)Employer contributions 954 940Expected return on plan assets 2,014 2,005Benefits paid (3,393) (1,215)Contributions by plan participants 280 298Taxes and paid premiums (198) (203)

Fair value of plan assets at the end of the year 31,584 29,321

(d) Reconciliation of the assets and liabilities recognised in the Balance Sheet

Defined benefit obligation (32,357) (37,312)Fair value of plan assets 31,584 29,321

Superannuation liability (773) (7,991)


51


2013 $’000

2012 $’000

(e) Amounts recognised in net profit

Expected return on assets 2,014 2,005Service cost (782) (670)Interest cost (946) (1,349)

Superannuation gain / (loss) 286 (14)

(f) Amounts recognised in other comprehensive income

Actuarial gain / (loss) 5,978 (8,279)

(g) Cumulative amount recognised in other comprehensive income

Cumulative amount of actuarial gains / (losses) 9,449 (15,427)

2013 %

2012 %

(h) Plan assets

Australian equity 30 35International equity 29 27Fixed income 10 11Property 9 10Alternatives / Other 15 10Cash 7 7

Total 100 100

(i) Fair value of plan assets

The fair value of plan assets includes no amounts relating to:

– any of the Corporation’s own financial instruments

– any property occupied by, or other assets used by, the Corporation.

(j) Expected rate of return on plan assets

The expected return on plan assets’ assumptions are determined by weighting the expected long-term return for each asset class by the target allocation of assets to each asset class and allowing for the correlations of the investment returns between asset classes. The returns used for each asset class are net of investment tax and investment fees. An allowance for administration expenses has been deducted from the expected return.

52

2013 $’000

2012 $’000

(k) Actual return on plan assets

Actual return on plan assets 4,620 278

(l) Calculation of actuarial return on plan assets

Expected return on plan assets 2,014 2,005Actuarial gain / (loss) 2,606 (1,727)

Actual return on plan assets 4,620 278

The actual return is calculated as the sum of the expected return on plan assets, calculated at the beginning of the year, and the actuarial gain / loss realised at the end of the year.

2013 %

2012 %

(m) Principal actuarial assumptions to determine superannuation expense

Discount rate 2.70 4.70Expected rate of return on plan assets 7.00 7.00Expected salary increase rate 4.60 4.60

(n) Principal actuarial assumption to determine defined benefit obligation

Discount rate 3.10 2.70Expected salary increase rate 4.60 4.60

2013 $’000

2012 $’000

2011 $’000

2010 $’000

2009 $’000

(o) Historical information

Defined benefit obligation (32,357) (37,312) (29,861) (29,211) (29,673)Fair value of plan assets 31,584 29,321 29,223 28,702 26,992

Deficit in plan (773) (7,991) (638) (509) (2,681)

Surplus in plan includes annual movement of:Adjustments gain / (loss) – plan assets 2,606 (1,727) 472 533 (5,794)Adjustments gain / (loss) – plan liabilities 2,132 (225) (1,065) 535 (1,070)

(p) Expected contributions

The Corporation expects to make employer contributions to the fund of $0.5 million for the year ending 30 June 2014.


53


2013 $’000

2012 $’000

18. Contributed equity & Issued capital

Contributed equity 477,297 -Ordinary shares of $1 each fully paid - 84,940

Total 477,297 84,940

Issued capital was established when Yarra Valley Water Ltd was incorporated under the Corporations Act 2001 (Cth). This account represents the number and value of shares issued at the date of incorporation, plus or minus changes to the shares issued or bought back since that date. The issued capital balance has been aggregated into contributed equity on the 1 July 2012, upon transition from a Company to a Statutory Authority.

19. Reserves

Asset revaluation reserve 777,106 703,660Capital reserve - 392,357

Total reserves 777,106 1,096,017

On its formation, capital contributed to Yarra Valley Water Limited by the State Government of Victoria, other than in relation to shares, was disclosed as a capital reserve. The capital reserve balance has been aggregated into contributed equity on the 1 July 2012, upon transition from a Company to a Statutory Authority.

Movements in asset revaluation reserve

Infrastructure $’000

Crown land

$’000Land $’000

Buildings $’000

Total $’000

2013Balance at 1 July 2012 515,216 - 188,256 188 703,660Revaluation, net of tax effect 73,038 408 - - 73,446

Balance at 30 June 2013 588,254 408 188,256 188 777,106

2012Balance at 1 July 2011 616,838 - 188,256 188 805,282Revaluation, net of tax effect (101,622) - - - (101,622)

Balance at 30 June 2012 515,216 - 188,256 188 703,660

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

54

2013 $’000

2012 $’000

20. Movements in retained earnings

Opening balance 153,945 155,216Net profit 47,455 60,764Defined benefit superannuation plan actuarial gain / (loss) 5,978 (8,279)Net deferred tax assets recognised through retained earnings (1,935) 2,344Dividend paid (57,500) (56,100)

Closing balance 147,943 153,945

21. Related party disclosures

(a) Parent entity

The Corporation’s parent entity is the State Government of Victoria.

(b) Relationship with State Government of Victoria related parties

i. Minister for Environment and Climate Change

The Corporation, under a normal commercial agency arrangement, bills and collects rates on behalf of the Minister for Environment and Climate Change relating to Parks Victoria services. The Corporation charges the Department of Environment and Primary Industries for the services it provides in billing and collecting rates and on charges costs incurred regarding supplementary council valuations.

Amounts recognised as revenue in the Statement of Comprehensive Income Administration fees for billing and collecting rates and reimbursement of costs of supplementary council valuations 2,462 2,158

Cash amounts paid during the year Parks Victoria services billed to customers 49,467 47,797


55


ii. Melbourne Water Corporation

The Corporation transacts solely with the Melbourne Water Corporation for the purchase of potable water and disposal of sewage. The Corporation, under a normal commercial agency arrangement, bills and collects drainage rates and charges on behalf of the Melbourne Water Corporation. The Corporation charges the Melbourne Water Corporation for the services it provides in billing and collecting drainage fees on behalf of the Melbourne Water Corporation and on charges costs incurred regarding supplementary council valuations.

2013 $’000

2012 $’000

Amounts recognised as an expense in the Statement of Comprehensive Income Bulk water and sewer wholesaler charges expense 359,643 346,939

Amounts recognised as revenue in the Statement of Comprehensive Income Administration fees for billing and collecting drainage rates and reimbursement of the costs of supplementary council valuations 3,574 4,433

Amounts recognised in the Balance Sheet Goulburn-Murray Water Connections Project (previously named Northern Victoria Irrigation Renewal Project) 10,000 6,666

Cash amounts paid during the year Drainage billed to customers 70,390 69,497

iii. Department of Environment and Primary Industries

The Corporation is required to make various payments to the Department of Environment and Primary Industries.

Amounts recognised as an expense in the Statement of Comprehensive Income Environmental contribution Contribution for Our Water Our Future campaign

17,503 -

17,503 9

Amounts recognised as revenue in the Statement of Comprehensive Income Recoupment of water conservation program costs incurred - 13

iv. Treasury Corporation of Victoria

The Corporation borrows from and invests with the Treasury Corporation of Victoria. The aggregate amount of borrowings payable at reporting date and the amounts of interest expense included in the determination of profit before income tax is:

Aggregate amount of borrowings Interest expense

1,824,250 92,069

1,664,477 91,032

v. Department of Treasury and Finance

The Corporation pays amounts to its owner, the State Government of Victoria, via the Department of Treasury and Finance. Amounts were paid as follows:

Dividend paid Financial accommodation levy

57,500 16,110

56,100 13,517

vi. Department of Human Services

Customers of the Corporation who hold either a Pension Concession Card, a Gold Repatriation Health Care Card for All Conditions or a Health Care Card are entitled to pay a concessionary amount instead of the full balance outstanding on their bills. When a customer pays this lesser amount, the difference is billed to and paid by the Department of Human Services.

Concession amounts billed during the year 44,735 40,956

56

vii. State Revenue Office

In addition to Payroll Tax and Land Tax, which are payable on normal commercial terms and conditions, customers of the Corporation who are Not For Profit entities are entitled to pay a concessionary amount instead of the full balance outstanding on their bills. When a customer pays this lesser amount, the difference is billed to and paid by the State Revenue Office.

2013 $’000

2012 $’000

Concession amounts billed during the year 1,176 1,190

viii. Other State Government of Victoria related parties

Water and sewerage services were provided to wholly owned State Government of Victoria entities for properties within Yarra Valley Water’s district under normal commercial terms and conditions.

All other transactions with State Government of Victoria related party entities were made on normal commercial terms and conditions.

22. Responsible Persons, executive officers and other personnel

(a) Responsible Persons

The relevant Minister and Directors of Yarra Valley Water are deemed to be Responsible Persons by Ministerial Direction pursuant to the provisions of the Financial Management Act 1994.

The Responsible Person (Minister) of Yarra Valley Water during the reporting period, from 1 July 2012 to 30 June 2013, was the Hon Peter Walsh, MLA, Minister for Water.

The Responsible Persons (Directors) of Yarra Valley Water at any time during the financial year ended 30 June 2013 were:

Peter Snowden Wilson

Chairman

Vincent Anthony (Tony) Kelly

Managing Director

Carlye Patricia Demarte

Deputy Chairman

Susan Elizabeth Friend

Michael Douglas Tilley

Dean Matthew Comrie

David Anthony Middleton

Stephen James McArthur

(Appointed as a Director on 1 October 2012)

John Winston Tilleard

(Retired as a Director on 30 September 2012)


57


Remuneration of responsible persons

The remuneration paid to the Minister is reported in the Annual Report of the Department of Premier and Cabinet. Other relevant interests are declared in the Register of Members’ Interest which each member of the State Parliament completes.

The number of responsible persons whose remuneration from the Corporation was within the specified bands were as follows.

2013 No.

2012 No.

$10,000 – $19,999 1 2$30,000 – $39,999 1 3$40,000 – $49,999 5 2$50,000 – $59,999 - 1$90,000 – $99,999 1 1$380,000 – $389,999 - 1$400,000 – $409,999 1 -

Total numbers 9 10

Total amount

$’000

800

$’000

772

(b) Transactions with director related entities

Water and sewerage services were provided to Directors or director related entities for properties within Yarra Valley Water’s district under normal commercial terms and conditions.

Mr Kelly completed a ten-year term as the Chairman of WaterAid Australia Ltd during 2012. The Corporation paid donations and purchased services in the amount of $48,870 (2012: $91,080) to WaterAid Australia Ltd. No amounts remained payable to WaterAid Australia Ltd at 30 June 2013 (2012: Nil).

Mr Kelly is also the Chairman of Savewater! Alliance Incorporated. During 2012, the Corporation paid membership fees and purchased goods and services in the amount of $716,971 (2012: $1,062,262). No amounts remained payable to Savewater! Alliance Incorporated at 30 June 2013 (2012: Nil). An interest free loan has previously been provided as part of the agreement between Savewater! Alliance Incorporated and the Corporation. As at 30 June 2013, there was no outstanding balance on the loan (2012: $20,000).

Mr Kelly is also the Director of Smart Water Fund. Smart Water Fund has provided services to the Corporation for which an amount of $1,000,000 (2012: $1,000,000) in fees was paid or payable on normal commercial terms and conditions. No amounts remained payable at 30 June 2013 (2012: Nil).

Mr Middleton is the Regional Business Group Manager, Water for CH2M Hill Australia Pty Ltd. CH2M Hill Australia Pty Ltd has provided services to the Corporation for which an amount of $43,093 (2012: $148,616) in fees was paid or payable on normal commercial terms and conditions. No amounts remained payable at 30 June 2013 (2012: Nil).

Mr Wilson is the Chairman of Vision Super Pty Ltd. Vision Super Pty Ltd provides superannuation services to the Corporation’s employees for which an amount of $290,064 (2012: $344,606) in employee superannuation contributions was paid or payable on normal commercial terms and conditions. No amounts remained payable at 30 June 2013 (2012: Nil).

Mr Comrie is a Project Director with SP AusNet. SP AusNet has provided services to the Corporation for which an amount of $137,569 (2012: $166,403) in fees was paid or payable on normal commercial terms and conditions. No amounts remained payable at 30 June 2013 (2012: Nil). Select Solutions, a division of SP AusNet, has provided services to the Corporation for which an amount of $11,760,242 (2012: $11,843,389) in fees was paid or payable on normal commercial terms and conditions. No amounts remained payable at 30 June 2013 (2012: Nil).

There were no other transactions with director related entities.

58

(c) Remuneration of Executive Officers

The number of Executive Officers, excluding the Responsible Persons, whose total annualised remuneration from the Corporation was within the specified bands were as follows:

Total Remuneration Base Remuneration

2013 No.

2012 No.

2013 No.

2012 No.

$70,000 – $79,999 - 1 - 1$90,000 – $99,999 - - 1* -$130,000 – $139,999 - - - 1$140,000 – $149,999 - - 2 5$150,000 – $159,999 - 3 8 5$160,000 – $169,999 3 5 6 4$170,000 – $179,999 8 4 - -$180,000 – $189,999 5 3 1 1$200,000 – $209,999 1 1 - 1$210,000 – $219,999 - - 1 1$220,000 – $229,999 - 2 4 3$230,000 – $239,999 1 - - 2$240,000 – $249,999 - 1 1 1$250,000 – $259,999 1 1 1 -$260,000 – $269,999 3 2 - -$270,000 – $279,999 - 1 - -$280,000 – $289,999 1 1 - -$290,000 – $299,999 1 - - -$570,000 – $579,999* 1* - - -

Total numbers 25 25 25 25

Total annualised employee equivalent (AEE) 25 25 25 25

Total amount

$’000

5,473

$’000

4,891

$’000

4,431

$’000

4,369

Total remuneration is inclusive of base remuneration, bonus payments, redundancy payments, retirement benefits and payments of annual leave and long service leave upon termination.

* The disclosure relates to the retirement of a long-serving executive officer in November 2012. Upon termination long service leave and annual leave payments were made and have been disclosed in total remuneration.

Annualised employee equivalent (AEE) is based on working 38 hours per week over the reporting period.


59


2013 $’000

2012 $’000

(d) Key management personnel compensation

Short-term employee benefits 5,266 4,831Post-employment benefits 1,007 832Other employment benefits* 115 115

Total amount 6,388 5,778

Total numbers 34 35

Key management personnel includes Responsible Persons and Executive Officers whose total annualised remuneration (total and base) exceeded $141,667. Where applicable, the table above includes performance bonuses paid during the year, based on performance in the previous year.

*Other employment benefits represents long service leave.

(e) Other Personnel (Contractors with Significant Management Responsibilities)

During the year Yarra Valley Water had no other Personnel, by way of contractors, charged with significant management responsibilities.

2013 $’000

2012 $’000

23. Remuneration of auditor

Amount received, or due and receivable, by the auditor of the Corporation for auditing the financial statements of the Corporation 127 122

24. Contingent liabilities and contingent assets

(a) Contingent liabilities

The Corporation is unaware of any material contingent liability. Claims to which the Corporation is aware and which may result in a liability being incurred have been provided for as other provisions. Refer Notes 14 and 16.

(b) Contingent assets

The Corporation enters into agreements with land developers whereby assets are transferred to the Corporation at no cost. These assets are brought to account as revenue and capitalised. At the reporting date, land developers had commenced construction of assets that are transferred to the Corporation after the maintenance period contingent upon the release of Statements of Compliance by the Corporation. Due to the nature of the industry and the assets involved, a contingent asset amount cannot be reliably measured.

25. Commitments

(a) Capital commitments

Total capital expenditure contracted for at balance date but not provided for in the accounts Payable:Not later than one year 65,730 84,662Later than one year but not later than five years 9,913 33,732Greater than five years 123 44

Total (GST inclusive) 75,766 118,438

The Corporation’s capital commitments include growth works and mains renewals for both water and sewer.

60

2013 $’000

2012 $’000

(b) Lease commitments

Non-cancellable operating leases contracted for at balance date but not provided for in the accountsPayable:Not later than one year 381 796Later than one year but not later than five years 256 326Later than five years 5 3

Total (GST inclusive) 642 1,125

Non-cancellable operating lease receivable:Not later than one year 839 1,213Later than one year and not later than five years 1,340 1,545Later than five years 2,141 287


There are no commitments in relation to finance leases as the Corporation does not have any finance leases.

(c) Other commitments

Other expenditure commitments at balance date not provided for in the accounts Payable:Not later than one year 29,880 17,503Later than one year but not later than five years 59,760 89,640


Other commitments are represented by environmental commitments. The Corporation has a commitment to pay an environmental contribution to the Department of Environment and Primary Industries of $29.9 million per annum until 30 June 2016.

26. Economic dependency

The normal trading activities of the Corporation depend on the provision of bulk water and sewerage services from the Melbourne Water Corporation. The normal trading activities of the Corporation also depend to a significant extent on the provision of finance from the Treasury Corporation of Victoria.

27. Events subsequent to balance sheet date

Since 30 June 2013 to the date of this report, no matter or circumstance has arisen that, in the opinion of the Directors, has significantly affected or may significantly affect the operations of the Corporation, the results of those operations, or the state of affairs of the Corporation in future financial years.


61


28. Cash flow information

For the purpose of the Cash Flow Statement, cash includes deposits at call which are readily convertible to cash on hand and which are used in the cash management function on a daily basis.

2013 $’000

2012 $’000

(a) Reconciliation of net profit to net cash from operating activities

Net profit 47,455 60,764

Adjustments for non-cash itemsDepreciation / amortisation 75,632 75,980Bad and doubtful debts 5,519 4,864Write off of assets 2,713 485Defined benefit superannuation plan (revenue) / expense (286) 14Net loss on disposal of non-current assets 91 89Value of works taken over from developers (19,154) (22,270)

Changes in operating assets and liabilitiesIncrease in net deferred tax liabilities 20,708 26,285(Increase) / decrease in other current assets 106 (2,585)Increase in interest creditors 1,926 2,109Increase / (decrease) in provisions and unearned income (2,952) 5,356Increase / (decrease) in payables (14,347) 2,512Increase in trade receivables (2,921) (33,963)(Increase) / decrease in GST receivable 6,905 (3,633)Increase / (decrease) in unfunded defined benefit superannuation plan liability (7,226) 7,353

Net cash inflow from operating activities 114,169 123,360

(b) Reconciliation of cash

Cash and cash equivalents 136 528

Closing cash balance 136 528

(c) Financing arrangements

The Corporation’s borrowings are made exclusively with the Treasury Corporation of Victoria in accordance with approvals from the Treasurer of Victoria.

62

We certify that the attached financial statements of Yarra Valley Water Corporation have 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.

In our opinion, the information set out in the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and accompanying notes presents fairly the financial transactions during the year ended 30 June 2013 and financial position of the Corporation at 30 June 2013.

We are not aware of any circumstance which would render any particulars included in the Financial Statements to be misleading or inaccurate.

We authorise the attached Financial Statements for issue dated at Melbourne on this 14th day of August 2013.



Kevin W Jones Chief Financial Officer

STATUTORY CERTIFICATION

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THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY

64

AUDITOR-GENERAL’S AUDIT REPORT

65


AUDITOR-GENERAL’S AUDIT REPORT

67


ADDITIONAL INFORMATION 2012/13

68

FINANCIAL PERFORMANCE INDICATORSPerformance Indicator Notes 2011/12

Result2012/13

Result2012/13

Target2012/13

Variance to Target

Internal Financing Ratio

(Net operating cash flow – dividends) / capital expenditure

A 25.4% 26.1% 3.0% 23.1%

Gearing Ratio

Total debt (including finance leases) / total assets

B 44.4% 45.5% 48.3% 2.8%

Interest Cover (EBIT)

Earnings before net interest and tax expense / net interest expense

C 1.8 times 1.6 times 1.0 times 0.6 times

Interest Cover (Cash)

Cash flow from operations before net interest and tax payments / net interest payments

D 2.2 times 2.2 times 1.6 times 0.6 times

Return on Assets

Earnings before net interest and tax / average total assets

C 5.2% 4.6% 3.2% 1.4%

Return on Equity

Net profit after tax / average total equity

E 4.4% 3.5% 0.1% 3.4%

Notes

A Favourable primarily due to higher cash flows from additional water sales and lower interest payments as a result of reduced borrowings and the active management of debt portfolio.

B Lower borrowings than budgeted as a result of additional cash flows from water sales.

C Higher earnings before interest and tax due to additional revenue and savings in operating expenses.

D Favourable primarily due to the higher cash flows from additional water sales.

E Higher profit after tax due to additional revenues and savings in operating expenses and finance charges.

PERFORMANCE REPORT

69


SERVICE AND ENVIRONMENTAL PERFORMANCE INDICATORSPerformance Indicator Notes 2011/12

Result2012/13

Result2012/13

Target2012/13

Variance to Target

Water supply interruptions

Number of customers receiving 5 unplanned interruptions in the year

F 218 204 400 196

Interruption time indicators

Average duration of unplanned water supply interruptions

G 101.3 minutes

108.0 minutes

107.0 minutes

(1.0 minute)

Restoration of water supply

Unplanned water supply interruptions restored within 5 hours

G 96.6% 96.0% 97.0% (1.0%)

Reliability of sewerage collection services

Sewer spills from reticulation and branch sewers (priority 1 and 2)

1,817 1,703 < 2,676 973

Containment of sewer spillages

Sewage spills contained within 5 hours H 90.0% 97.1% 99.7% (2.6%)

Customer complaints indicators

Water quality complaints per 1,000 customers 3.6 4.2 4.3 0.1

Sewerage service quality and reliability complaints per 1,000 customers

0.04 0.01 < 0.06 0.05

Billing complaints per 1,000 customers I 4.1 5.9 < 1.0 (4.9)

Sewage odours complaints per 1,000 customers 0.27 0.27 0.33 0.06

Reuse indicators

Effluent reuse (volume) J 20.7% 25.7% 24.0% 1.7%

Biosolids reuse (dry mass) 0.0% 0.0% 0.0% 0.0%

Sewage treatment standards

Number of analyses complying with EPAV licence agreements as % of samples from Sewage Treatment Plants.

100.0% 100.0% 100.0% 0.0%

Notes

F Performance much better than planned as a result of improved asset delivery practices and data availability which has reduced response times and also increased proactive management of customers who are experiencing multiple interruptions.

G Performance was impacted by the significantly higher volume of faults experienced through the summer period.

H The heavy rain events of May and June 2013 increased the volume of spills, impacting performance.

I A higher volume of complaints were experienced due to the desalination plant overcharge, the recovery of previously unbilled sewer charges and the elimination of direct debit payment method on credit cards.

J Dry conditions experienced in 2012/13 resulted in an increase in customer demand for the supply of recycled water as well as the establishment of new on-site recycled water customers at our Aurora and Whittlesea Sewage Treatment Plants.

70

WATER CONSUMPTION AND DROUGHT RESPONSE

WATER CONSUMPTION REPORT

Residential customers Non-residential customers Non-revenue water (ML)

Total consumption

(ML)

Average annual

consumption (ML)†

Number Volume consumed

(ML)

Number Volume consumed

(ML)

670,778 105,370 52,478 27,627 16,638 149,635 158,482

The total consumption volumes are based on the total billed volumes from Melbourne Water plus recycled Class A water supplied from our recycled water treatment plants.

† Based on 13-year average from 2000/01 to 2012/13, inclusive of Class A recycled water from 2010/11.

DROUGHT RESPONSE REPORTMetropolitan water retailers are required to prepare a Drought Response Plan with four levels of water restrictions that control the use of drinking water outdoors.

During the 2011/12 and 2012/13 years, metropolitan Melbourne was subject to the following levels of water restrictions:

– Stage one water restrictions were imposed on 1 December 2011 and were lifted on 30 November 2012

– Permanent Water Saving Rules were imposed on 1 December 2012 and still remain in place.

CORPORATE WATER CONSUMPTIONThe amounts in the table below represent consumption at Yarra Valley Water’s Lucknow Street, Mitcham office. These amounts do not include any treatment plants or other work sites.

Total water consumption for 2012/13 2,747.96 kL

Number of people on site (including contractors) 645

Average water use per person 4.260 kL

Total office space 10,000 m2

Average water use per m2 0.275 kL

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ENVIRONMENTAL AND SOCIAL SUSTAINABILITY REPORTING

SUSTAINABLE WATER USE

Water Recycling

In 2012/13 we produced 10,447 million litres of recycled water at our sewage treatment plants, of which 2,319 million litres, or 25.7%, of the total was reused. This was above our target of 24.0%. We connected 1,875 properties to Class A recycled water and constructed 56.5 km of recycled water mains.

Water recycling continues to be a key component of our integrated water cycle management servicing strategy for the Northern Growth Corridor. This strategy is providing recycled water

to all homes and provides significant efficiency and environmental benefits for the community. Class A recycled water is provided to new homes via a third pipe system for toilet flushing, garden watering and laundry use.

We continued expanding our recycled water supply system by:

– constructing the Wallan Recycled Water Treatment Plant. This plant will supply Class A recycled water to up to 10,000 residential homes in the future

– constructing the treatment plant

and stormwater basin for the Kalkallo Stormwater Harvesting and Reuse Project

– completing Integrated Water Servicing Plans as part of developing servicing options for the Epping, Nunawading and Preston Principal Activity Centres

– constructing a new 12 ML Class A Recycled Water Storage Tank at Mt Ridley in Craigieburn.

72

Water Efficiency

We continued to encourage our customers to maintain their water wise habits, to help protect the long-term security of our water supplies, reduce the cost of supply augmentations.

In 2012/13 we:

– processed 4,786 rebates under the Living Victoria Water Rebate Program

– assisted businesses with voluntary water management plans and small business grants

– distributed more than 4,802 water efficient showerheads under our Showerhead Exchange Program

– assisted 6,058 customers since October 2009 in upgrading their toilets to the most efficient dual flush models under the Toilet Replacement Program

– engaged over 120 schools within our district, who have integrated material from Water – Learn It! Live It! initiatives into the schools curriculum. Since its inception 1,080 classroom presentations have been completed to more than 21,000 primary school children within our district.


150

146 152158

209

189

164

20221

2

232

218

245

241245

233

97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12

167

12/13

Residential – Average Litres of Water per Capita per Day

73


OTHER STATUTORY OBLIGATIONS

Victorian Biodiversity Strategy

Yarra Valley Water follows the directive of ‘Victoria’s Native Vegetation Management: A Framework for Action’, which was developed as an offset measure to support the Victorian Biodiversity Strategy. We work with multidisciplinary companies and involve ecologists early in the preliminary design phase of projects to complete them in a more sustainable manner. This includes conducting complete risk assessments, life cycle analyses, net gain assessments and offset management plans and preliminary flora and fauna options assessments.

We liaise with stakeholders such as the Department of Environment and Primary Industries (DEPI) and other water utilities on a project-by-project basis to determine how best to conserve Victoria’s biodiversity. We liaise directly with DEPI on ongoing growth and development of all native offset areas established as part of these projects.

Victorian River Health Strategy

Yarra Valley Water strives to deliver our services within the carrying capacity of nature and reducing our environmental footprint is a priority.

To improve waterway health we:

– exceeded our Sewer Backlog Program target, with 384 properties this year switching from poor performing septic tanks to modern reticulated sewerage infrastructure. This brings the overall number of connections for the Water Plan 2 period to 1,632 which is above our target of 1,600. This reduces local pollution and improves the quality of water in the Yarra River and its tributaries

– continued to manage our nitrogen discharges to Port Phillip Bay in accordance with our self-imposed nitrogen cap: 47 tonnes of nitrogen was discharged in 2012/13 compared with our cap of 87 tonnes.

To comply with river and aquifer health requirements as per our Statement of Obligations, Yarra Valley Water undertakes the following measures:

– regular (weekly, fortnightly, monthly) sampling at each of our sewage treatment plants to ensure that our treatment complies with our Environment Protection Authority Victoria (EPAV) corporate licence requirements

– biological monitoring of the creeks we discharge into, as agreed with EPAV, on a periodical basis to assess and understand our impacts on the receiving waterways.

A summary of our sewage treatment plants’ performance is reported to EPAV on an annual basis. Additionally, water quality and flow data relating to the waterways is reported to the Essential Services Commission, the National Pollutant Inventory and the Bureau of Meteorology.

74

GREENHOUSE GAS EMISSIONS

2012/13 tonnes

2011/12 tonnes

2010/11 tonnes

Water treatment and pumping (water and sewer pumps)

8,420 8,492 8,023

Wastewater treatment 17,204 16,153 15,584

Office use (encompassing Mitcham office and natural gas, diesel and unleaded fuel generator use)

2,823 2,940 3,155

Vehicle fleet 1,065 1,042 1,376

Offsets purchased 274 272 283

Other offsets* 29,238 28,355 27,855

The greenhouse gas emissions related to our waste disposal were 31 tonnes.

* We offset our greenhouse gas emissions as a result of the Showerhead Exchange Program as water efficient showerheads reduce the amount of energy required to heat water.

COMMUNITY SERVICE OBLIGATIONS

Value of Community Service Obligations provided 2012/13 $’000

2011/12 $’000

Provision of concessions to pensioners 44,719 40,939

Rebates paid to not-for-profit organisations under the water and sewerage rebate scheme

1,178 1,190

Utility Relief Grants Scheme payments 242 442

Water concession on life support machines – Haemodialysis 18 17

TOTAL 46,157 42,588

Provision of concessions to pensioners

Customers who hold either a Pension Concession Card, a Gold Repatriation Health Care Card for All Conditions or a Health Care Card are entitled to pay a concessionary amount instead of the full balance outstanding on their accounts. When a customer pays this lesser amount, the difference is billed to and paid by the Department of Human Services (DHS).

Rebates paid to not-for-profit organisations under the water and sewerage rebate scheme

Customers who are not-for-profit entities are entitled to pay a concessionary amount instead of the full balance outstanding on their accounts.

When a customer pays this lesser amount, the difference is billed to and paid by the State Revenue Office.

Utility Relief Grants Scheme

The Utility Relief Grants Scheme provides assistance for residential customers unable to pay their utility accounts due to a temporary financial crisis. Customers need to demonstrate that unexpected hardship has left them seriously short of money so that they cannot pay their utility account without assistance. To be eligible, customers must hold a Pensioner Concession Card, Health Care Card or Department of Veterans’ Affairs (DVA) Gold Card that is not marked ‘dependant’.

Water concession on life support machines – Haemodialysis

The State Government of Victoria provides a rebate for customers required to use a dialysis/life support machine at home, to compensate these customers for water usage and sewage disposal charges relating to the use of such a machine.

The rebate amount is determined by the DHS based on the estimated annual water usage of a dialysis machine (168 kL). This rebate is in addition to any other pension or concession.


75


Requirement 1: Number of customers who fall within each range (Section 122ZJ of the Water Act 1989 and Section 77A of the Water Industry Act 1994)

Table 1: Customer by volume range

Volumetric Range – ML per year Number of Customers

Equal to or greater than 200 ML and less than 300 ML 1




Equal to or greater than 750 ML and less than 1,000 ML 0

Greater than 1,000 ML 2

Total number of customers 7

Requirement 2: Naming of major water users and whether or not they participate in water conservation programs (Section 122ZJ of the Water Act 1989 and Section 77A of the Water Industry Act 1994)

Table 2: Names of major customers and participation in water conservation programs

Customer name Developed and commenced a water management plan

Amcor Fibre Packaging Australasia ✓

La Ionica ✓

La Trobe University ✓

Monash University ✓

SCA Hygiene Australasia Pty Ltd ✓

Visy Pulp & Paper (Coolaroo) ✓

Visy Pulp & Paper (Reservoir) ✓

ANNUAL REPORTING OF MAJOR NON-RESIDENTIAL WATER USERS

76

Mel

bo

urn

e m

etro

po

litan

w

ater

ret

aile

r re

po

rtin

g

ob

ligat

ion

Co

mb

ined

Yar

ra

Riv

er, S

ilver

an

d

Wal

lab

y C

reek

s,

Tho

mso

n R

iver

Yarr

a R

iver

3 Si

lver

an

d

Wal

lab

y C

reek

s5Th

om

son

Riv

er8

Tara

go

an

d

Bu

nyi

p R

iver

s11V

icto

rian

D

esal

inat

ion

Pr

oje

ct14

Go

ulb

urn

Sy

stem

18 1

9 R

iver

Mu

rray

23 2

4

The

volu

me

of

wat

er t

aken

by

th

e Re

taile

rs

in 2

012/

13

Cla

use

15.1

(a)

325,

855

ML

Cla

use

15.1

(a)

299,

636

ML

Cla

use

13.1

(a)

1,07

1 M

LC

laus

e 15

.1 (a

) 25

,148

ML

Cla

use

14.1

(a)

4,61

2 M

L (T

arag

o)

2,19

0 M

L (B

unyi

p)

Cla

use

11.1

(a)

0 M

L15 1

6C

laus

e 14

.1 (b

) 18

ML

200

ML

Com

plia

nce

with

th

e lo

ng-t

erm

av

erag

e bu

lk

entit

lem

ent

dive

rsio

n lim

it

Cla

use

15.1

(b)

411,

571

ML1

Cla

use

15.1

(b)

297,

382

ML4

Cla

use

13.1

(b)

13,4

87 M

L6C

laus

e 15

.1 (b

) 10

9,69

4 M

L9C

laus

e 14

.1 (f

) 7,

545

ML

(Tar

ago)

12

2,19

2 M

L (B

unyi

p)13

Cla

use

11.1

(e)

0 M

LN

/AN

/A

The

tota

l ann

ual

cons

umpt

ion

in

2012

/13

404,

260

ML

N/A

N/A

N/A

N/A

N/A

N/A

N/A

The

Reta

ilers

’ sh

are

of fl

ows

in

201

2/13

N/A

Cla

use

15.1

(a)

312,

311

ML

Cla

use

13.1

(a)

N/A

Cla

use

15.1

(a)

140,

799

ML

Cla

use

14.1

(a)

26,9

24 M

LC

laus

e 11

.1 (a

) N

/AC

laus

e 14

.1 (c

) 18

,099

ML

Cla

use

11.1

(a)

8,94

3 M

L

The

Reta

ilers

’ sha

re

of s

tora

ge v

olum

e at

30

June

201

3

N/A

Cla

use

15.1

(a)

428,

906

ML

N/A

Cla

use

15.1

(a)

754,

560

ML

Cla

use

14.1

(a)

29,5

47 M

LN

/A27

,104

ML21

13,3

15 M

L25

BULK

ENTITL

EMEN

TS R

EPOR

T Th

e th

ree

Mel

bour

ne m

etro

polit

an w

ater

ret

aile

rs (t

he R

etai

lers

) hol

d Bu

lk E

ntitl

emen

ts t

o th

e w

ater

res

ourc

es o

f th

e Ya

rra

Rive

r, Th

omso

n Ri

ver,

Tara

go a

nd B

unyi

p Ri

vers

, Silv

er a

nd W

alla

by C

reek

s (G

oulb

urn

Rive

r Ba

sin)

and

to

the

Vic

toria

n D

esal

inat

ion

Proj

ect.

The

ent

itlem

ents

hav

e be

en e

stab

lishe

d as

a c

olle

ctiv

e “p

ool”

. On

2 Ju

ly 2

012,

the

Min

iste

r fo

r W

ater

gaz

ette

d ne

w B

ulk

Entit

lem

ents

fo

r th

e Re

taile

rs in

the

Riv

er M

urra

y an

d G

oulb

urn

Syst

em o

f up

to

75,0

00 m

egal

itres

(ML)

ann

ually

, as

a re

sult

of t

he R

etai

lers

’ inv

estm

ent

in t

he G

oulb

urn-

Mur

ray

Wat

er C

onne

ctio

ns P

roje

ct.

Prio

r to

thi

s, o

n th

e 26

Mar

ch 2

012

the

Min

iste

r fo

r W

ater

am

ende

d th

e Re

taile

rs S

tate

men

t of

Obl

igat

ions

(Sys

tem

Man

agem

ent)

, to

prov

ide

clar

ity o

n w

hen

the

Reta

ilers

’ may

dra

w o

n th

is w

ater

fo

r M

elbo

urne

’s co

nsum

ptiv

e us

e. T

his

incl

uded

the

nee

d fo

r M

elbo

urne

’s to

tal s

yste

m s

tora

ge le

vels

to

be a

t le

ss t

han

30%

as

at 3

0 N

ovem

ber

of t

hat

year

, tha

t al

loca

tions

hav

e be

en m

ade

agai

nst

high

-rel

iabi

lity

wat

er s

hare

s in

the

Gou

lbur

n Sy

stem

for

the

cur

rent

irrig

atio

n se

ason

and

wat

er is

ava

ilabl

e in

the

crit

ical

wat

er r

eser

ve. T

he S

tate

men

t of

Obl

igat

ions

(Sys

tem

Man

agem

ent)

am

endm

ent

also

allo

ws

for

up t

o 30

0 M

L to

be

used

ann

ually

, to

mai

ntai

n th

e N

orth

-Sou

th P

ipel

ine

in g

ood

wor

king

ord

er a

nd k

ept

read

y fo

r fir

e-fig

htin

g pu

rpos

es.

77

Mel

bo

urn

e m

etro

po

litan

w

ater

ret

aile

r re

po

rtin

g

ob

ligat

ion

Co

mb

ined

Yar

ra

Riv

er, S

ilver

an

d

Wal

lab

y C

reek

s,

Tho

mso

n R

iver

Yarr

a R

iver

3 Si

lver

an

d

Wal

lab

y C

reek

s5Th

om

son

Riv

er8

Tara

go

an

d

Bu

nyi

p R

iver

s11V

icto

rian

D

esal

inat

ion

Pr

oje

ct14

Go

ulb

urn

Sy

stem

18 1

9 R

iver

Mu

rray

23 2

4

The

volu

me

of

wat

er t

aken

by

th

e Re

taile

rs

in 2

012/

13

Cla

use

15.1

(a)

325,

855

ML

Cla

use

15.1

(a)

299,

636

ML

Cla

use

13.1

(a)

1,07

1 M

LC

laus

e 15

.1 (a

) 25

,148

ML

Cla

use

14.1

(a)

4,61

2 M

L (T

arag

o)

2,19

0 M

L (B

unyi

p)

Cla

use

11.1

(a)

0 M

L15 1

6C

laus

e 14

.1 (b

) 18

ML

200

ML

Com

plia

nce

with

th

e lo

ng-t

erm

av

erag

e bu

lk

entit

lem

ent

dive

rsio

n lim

it

Cla

use

15.1

(b)

411,

571

ML1

Cla

use

15.1

(b)

297,

382

ML4

Cla

use

13.1

(b)

13,4

87 M

L6C

laus

e 15

.1 (b

) 10

9,69

4 M

L9C

laus

e 14

.1 (f

) 7,

545

ML

(Tar

ago)

12

2,19

2 M

L (B

unyi

p)13

Cla

use

11.1

(e)

0 M

LN

/AN

/A

The

tota

l ann

ual

cons

umpt

ion

in

2012

/13

404,

260

ML

N/A

N/A

N/A

N/A

N/A

N/A

N/A

The

Reta

ilers

’ sh

are

of fl

ows

in

201

2/13

N/A

Cla

use

15.1

(a)

312,

311

ML

Cla

use

13.1

(a)

N/A

Cla

use

15.1

(a)

140,

799

ML

Cla

use

14.1

(a)

26,9

24 M

LC

laus

e 11

.1 (a

) N

/AC

laus

e 14

.1 (c

) 18

,099

ML

Cla

use

11.1

(a)

8,94

3 M

L

The

Reta

ilers

’ sha

re

of s

tora

ge v

olum

e at

30

June

201

3

N/A

Cla

use

15.1

(a)

428,

906

ML

N/A

Cla

use

15.1

(a)

754,

560

ML

Cla

use

14.1

(a)

29,5

47 M

LN

/A27

,104

ML21

13,3

15 M

L25

Volu

me

supp

lied

to

Prim

ary

Entit

lem

ent

Hol

ders

Mel

bour

ne “

Pool

”2 10

,433

ML

(Wes

tern

Wat

er)

0 M

L (B

arw

on W

ater

) 0

ML

(Wes

tern

port

Wat

er)

0 M

L (S

outh

Gip

psla

nd

Wat

er)

Cla

use

15.1

(a)

N/A

N/A

N/A

Cla

use

14.1

(a)

346

ML

(Gip

psla

nd W

ater

) 0

ML

(Sou

ther

n Ru

ral

Wat

er)

Cla

use

11.1

(a)17

N/A

N/A

Any

ass

ignm

ent

of

wat

er a

lloca

tion

or

tem

pora

ry/

perm

anen

t tr

ansf

ers

of t

he

bulk

ent

itlem

ent

N/A

Cla

use

15.1

(c)

Nil

Cla

use

13.1

(c)

Nil

Cla

use

15.1

(c)

Nil

Cla

use

14.1

(b)

Nil

Cla

use

11.1

(b)

Nil

Cla

use

14.1

(d)22

-2

5,89

2 M

L C

laus

e 14

.1 (e

) N

il

Cla

use

11.1

(b)26

4,

372

ML

Cla

use

11.1

(c)

Nil

Any

tem

pora

ry o

r pe

rman

ent

tran

sfer

of

the

bul

k en

title

men

t w

hich

m

ay a

lter

the

flow

in

the

wat

erw

ay

N/A

Cla

use

15.1

(d)

Nil

Cla

use

13.1

(d)

Nil

Cla

use

15.1

(d)

Nil

Cla

use

14.1

(a)

Nil

N/A

N/A

N/A

Any

am

endm

ent

to

the

bulk

ent

itlem

ent

N/A

Cla

use

15.1

(e)

No

Cla

use

13.1

(e)

No

Cla

use

15.1

(e)

No10

Cla

use

14.1

(d)

No

Cla

use

11.1

(c)

No

Cla

use

14.1

(f)

No

Cla

use

11.1

(d)

No

Any

new

bul

k en

title

men

t gr

ante

d to

the

Ret

aile

rs

N/A

Cla

use

15.1

(f)

Nil

Cla

use

13.1

(f)

Yes7

Cla

use

15.1

(f)

Nil

Cla

use

14.1

(e)

Nil

Cla

use

11.1

(d)

Nil

Yes18

Yes23

Any

fai

lure

s to

co

mpl

y w

ith a

ny

prov

isio

n of

the

bu

lk e

ntitl

emen

t

N/A

Cla

use

15.1

(g)

Nil

Cla

use

13.1

(g)

Nil

Cla

use

15.1

(g)

Nil

Cla

use

14.1

(g)

Nil

Cla

use

11.1

(f)

Nil

Cla

use

14.1

(g)

Nil

Cla

use

11.1

(e)

Nil

Any

diffi

culty

ex

perie

nced

in

com

plyi

ng w

ith t

he

bulk

ent

itlem

ent

and

if so

, any

re

med

ial a

ctio

n ta

ken

or p

ropo

sed

N/A

Cla

use

15.1

(h)

Nil

Cla

use

13.1

(h)

Nil

Cla

use

15.1

(h)

Nil

Cla

use

14.1

(h)

Nil

Cla

use

11.1

(g)

Nil

Cla

use

14.1

(h)

Nil

Cla

use

11.1

(f)

Nil

78

BULK

ENTITL

EMEN

TS R

EPOR

T N

ote

s fo

r co

mp

lian

ce w

ith

bu

lk e

nti

tlem

ents

Co

mb

ined

Yar

ra R

iver

, Silv

er a

nd

Wal

lab

y C

reek

s, T

ho

mso

n R

iver

1.

Com

plia

nce

with

the

long

-ter

m a

vera

ge d

iver

sion

lim

it of

555

,000

ML

is a

sses

sed

usin

g a

15 y

ear

rolli

ng a

vera

ge a

nnua

l div

ersi

on.

2.

The

supp

ly o

f w

ater

to

Prim

ary

Entit

lem

ent

Hol

ders

is o

blig

ated

und

er t

he V

icto

rian

Des

alin

atio

n Pr

ojec

t Bu

lk E

ntitl

emen

ts, v

ia w

ater

so

urce

d fr

om t

he M

elbo

urne

“po

ol”

of a

ll M

elbo

urne

’s B

ulk

Entit

lem

ent

sour

ces.

Yar

ra R

iver

3.

The

Reta

ilers

hol

d th

e fo

llow

ing

Bulk

Ent

itlem

ents

on

the

Yarr

a Ri

ver

–Bu

lk E

ntitl

emen

t (Y

arra

Riv

er –

Mel

bour

ne W

ater

for

City

Wes

t W

ater

) Con

vers

ion

Ord

er 2

006

– BE

E049

364

–Bu

lk E

ntitl

emen

t (Y

arra

Riv

er –

Mel

bour

ne W

ater

for

Sou

th E

ast

Wat

er) C

onve

rsio

n O

rder

200

6 –

BEE0

4936

3

–Bu

lk E

ntitl

emen

t (Y

arra

Riv

er –

Mel

bour

ne W

ater

for

Yar

ra V

alle

y W

ater

) Con

vers

ion

Ord

er 2

006

– BE

E049

362

4.

Com

plia

nce

with

the

long

-ter

m a

vera

ge d

iver

sion

lim

it of

400

,000

ML

is a

sses

sed

usin

g a

15 y

ear

rolli

ng a

vera

ge a

nnua

l div

ersi

on.

Silv

er a

nd

Wal

lab

y C

reek

s

5.

The

Reta

ilers

hol

d th

e fo

llow

ing

Bulk

Ent

itlem

ents

on

the

Silv

er a

nd W

alla

by C

reek

s

–Bu

lk E

ntitl

emen

t (S

ilver

& W

alla

by C

reek

s –

Mel

bour

ne W

ater

for

City

Wes

t W

ater

) Con

vers

ion

Ord

er 2

006

– BE

E049

475

–Bu

lk E

ntitl

emen

t (S

ilver

& W

alla

by C

reek

s –

Mel

bour

ne W

ater

for

Sou

th E

ast

Wat

er) C

onve

rsio

n O

rder

200

6 –

BEE0

4947

4

–Bu

lk E

ntitl

emen

t (S

ilver

& W

alla

by C

reek

s –

Mel

bour

ne W

ater

for

Yar

ra V

alle

y W

ater

) Con

vers

ion

Ord

er 2

006

– BE

E049

473

6.

Com

plia

nce

with

the

3 y

ear

tota

l div

ersi

on li

mit

of 6

6,00

0 M

L is

ass

esse

d us

ing

a 3

year

rol

ling

tota

l div

ersi

on.

7.

The

Reta

ilers

rec

eive

d ne

w B

ulk

Entit

lem

ents

on

2 Ju

ly 2

013

in t

he G

oulb

urn

Syst

em a

s a

resu

lt of

the

inve

stm

ents

mad

e in

the

G

oulb

urn-

Mur

ray

Wat

er C

onne

ctio

ns P

roje

ct.

Tho

mso

n R

iver

8.

The

Reta

ilers

hol

d th

e fo

llow

ing

Bulk

Ent

itlem

ents

on

the

Thom

son

Rive

r

–Tr

ansf

er o

f Bu

lk E

ntitl

emen

t (T

hom

son

Rive

r –

Mel

bour

ne W

ater

) Con

vers

ion

Ord

er 2

001

to C

ity W

est

Wat

er 2

006

– BE

E049

361

–Tr

ansf

er o

f Bu

lk E

ntitl

emen

t (T

hom

son

Rive

r –

Mel

bour

ne W

ater

) Con

vers

ion

Ord

er 2

001

to S

outh

Eas

t W

ater

200

6 –

BEE0

4936

0

–Tr

ansf

er o

f Bu

lk E

ntitl

emen

t (T

hom

son

Rive

r –

Mel

bour

ne W

ater

) Con

vers

ion

Ord

er 2

001

to Y

arra

Val

ley

Wat

er 2

006

– BE

E049

359

9.

Com

plia

nce

with

the

long

ter

m a

vera

ge d

iver

sion

lim

it of

171

,800

ML

is a

sses

sed

usin

g a

15 y

ear

rolli

ng a

vera

ge a

nnua

l div

ersi

on.

10.

On

12 M

ay 2

013,

the

Min

iste

r fo

r W

ater

am

ende

d th

e Bu

lk E

ntitl

emen

t (T

hom

son

Rive

r –

Envi

ronm

ent)

Ord

er 2

005,

to

prov

ide

chan

ges

to p

assi

ng fl

ow o

blig

atio

ns. T

hese

cha

nges

wer

e no

ted

by t

he R

etai

lers

and

Mel

bour

ne W

ater

.

Tara

go

an

d B

un

yip

Riv

ers

11.

The

Reta

ilers

hol

d th

e fo

llow

ing

Bulk

Ent

itlem

ents

on

the

Tara

go a

nd B

unyi

p Ri

vers

–Bu

lk E

ntitl

emen

t (T

arag

o an

d Bu

nyip

Riv

ers

– M

elbo

urne

Wat

er f

or C

ity W

est

Wat

er) C

onve

rsio

n O

rder

200

9 –

BEE0

4935

8

–Bu

lk E

ntitl

emen

t (T

arag

o an

d Bu

nyip

Riv

ers

– M

elbo

urne

Wat

er f

or S

outh

Eas

t W

ater

) Con

vers

ion

Ord

er 2

009

– BE

E049

357

–Bu

lk E

ntitl

emen

t (T

arag

o an

d Bu

nyip

Riv

ers

– M

elbo

urne

Wat

er f

or Y

arra

Val

ley

Wat

er) C

onve

rsio

n O

rder

200

9 –

BEE0

4935

6

12.

Com

plia

nce

with

the

Tar

ago

Rive

r lo

ng-t

erm

ave

rage

div

ersi

on li

mit

of 2

4,95

0 M

L is

ass

esse

d us

ing

a 5

year

rol

ling

aver

age

an

nual

div

ersi

on.

13.

Com

plia

nce

with

the

Bun

yip

Rive

r lo

ng-t

erm

ave

rage

div

ersi

on li

mit

of 5

,560

ML

is a

sses

sed

usin

g a

5 ye

ar r

ollin

g av

erag

e

annu

al d

iver

sion

.

Vic

tori

an D

esal

inat

ion

Pro

ject

14.

The

Reta

ilers

hol

d th

e fo

llow

ing

Bulk

Ent

itlem

ents

to

the

Vic

toria

n D

esal

inat

ion

Proj

ect

–Bu

lk E

ntitl

emen

t (D

esal

inat

ed W

ater

– C

ity W

est

Wat

er) O

rder

201

0 –

BEE0

5081

4

–Bu

lk E

ntitl

emen

t (D

esal

inat

ed W

ater

– S

outh

Eas

t W

ater

) Ord

er 2

010

– BE

E050

815

–Bu

lk E

ntitl

emen

t (D

esal

inat

ed W

ater

– Y

arra

Val

ley

Wat

er) O

rder

201

0 –

BEE0

5081

6

15.

On

1 A

pril

2012

, the

Min

iste

r fo

r W

ater

mad

e a

zero

des

alin

ated

wat

er o

rder

for

the

201

2/13

yea

r.

16.

24,8

50 M

L w

as t

rans

ferr

ed t

o C

ardi

nia

Rese

rvoi

r fo

r co

mm

issi

onin

g of

the

Vic

toria

n D

esal

inat

ion

Plan

t, t

his

is n

ot c

onsi

dere

d to

be

wat

er t

aken

und

er t

he B

ulk

Entit

lem

ent.

17.

As

the

Prim

ary

Entit

lem

ent

hold

ers

are

supp

lied

from

the

Mel

bour

ne “

pool

”, t

his

is r

epor

ted

unde

r no

te 2

of

the

com

bine

d Ya

rra

Rive

r, Si

lver

and

Wal

laby

Cre

eks

and

Thom

son

Rive

r.

Go

ulb

urn

Sys

tem

18.

The

Reta

ilers

hol

d th

e fo

llow

ing

Bulk

Ent

itlem

ents

to

the

Gou

lbur

n Sy

stem

–Bu

lk E

ntitl

emen

t (G

oulb

urn

Syst

em –

City

Wes

t W

ater

) O

rder

201

2 –

BEE0

4947

8

–Bu

lk E

ntitl

emen

t (G

oulb

urn

Syst

em –

Sou

th E

ast

Wat

er)

Ord

er 2

012

– BE

E049

477

–Bu

lk E

ntitl

emen

t (G

oulb

urn

Syst

em –

Yar

ra V

alle

y W

ater

) O

rder

201

2 –

BEE0

4947

6

19.

The

Reta

ilers

wer

e gr

ante

d Bu

lk E

ntitl

emen

t’s t

o th

e G

oulb

urn

Syst

em o

n 2

July

201

2.

20.

18 M

L of

was

use

d to

mai

ntai

n th

e op

erat

iona

l cap

acity

of

the

Nor

th-S

outh

Pip

elin

e an

d ke

ep t

he p

ipel

ine

char

ged

for

fire-

fight

ing

purp

oses

, as

allo

wed

und

er c

laus

e 9.

1 (c

) of

the

Reta

ilers

’ Sta

tem

ents

of

Obl

igat

ions

(Sys

tem

Man

agem

ent)

.

21.

The

Reta

ilers

had

16,

682

ML

dedu

cted

fro

m t

heir

30 J

une

2012

vol

umes

as

a re

sult

of c

arry

ove

r ru

les

and

spill

able

wat

er a

ccou

nt

spill

loss

es d

urin

g 20

12/1

3.

22.

The

Reta

ilers

hav

e in

pla

ce w

ater

man

agem

ent

stra

tegi

es t

o m

anag

e w

ater

allo

catio

n ho

ldin

gs in

the

Riv

er M

urra

y an

d G

oulb

urn

Syst

em t

o m

axim

ise

the

valu

e of

the

res

ourc

es h

eld

to t

heir

cust

omer

s an

d m

inim

ise

risk

of s

pilli

ng w

ater

allo

catio

n. T

hese

str

ateg

ies

incl

ude

the

tran

sfer

of

allo

catio

ns b

etw

een

Bulk

Ent

itlem

ent

Allo

catio

n Ba

nk A

ccou

nts

and

trad

ing

allo

catio

ns.

Riv

er M

urr

ay

23.

The

Reta

ilers

hol

d th

e fo

llow

ing

Bulk

Ent

itlem

ents

to

the

Rive

r M

urra

y

–Bu

lk E

ntitl

emen

t (R

iver

Mur

ray

– C

ity W

est

Wat

er) O

rder

201

2 –

BEE0

4948

1

–Bu

lk E

ntitl

emen

t (R

iver

Mur

ray

– So

uth

East

Wat

er) O

rder

201

2 –

BEE0

4948

0

–Bu

lk E

ntitl

emen

t (R

iver

Mur

ray

– Ya

rra

Valle

y W

ater

) Ord

er 2

012

– BE

E 04

9479

24.

The

Reta

ilers

wer

e gr

ante

d Bu

lk E

ntitl

emen

t’s t

o th

e Ri

ver

Mur

ray

on 2

Jul

y 20

12.

25.

The

Reta

ilers

had

0 M

L de

duct

ed f

rom

the

ir 30

Jun

e 20

12 v

olum

es a

s a

resu

lt of

car

ry o

ver

rule

s an

d sp

illab

le w

ater

acc

ount

spi

ll lo

sses

dur

ing

2012

/13.

26.

The

Reta

ilers

hav

e in

pla

ce w

ater

man

agem

ent

stra

tegi

es t

o m

anag

e w

ater

allo

catio

ns h

oldi

ngs

in t

he R

iver

Mur

ray

and

Gou

lbur

n Sy

stem

to

max

imis

e th

e va

lue

of t

he r

esou

rces

hel

d to

the

ir cu

stom

ers

and

min

imis

e ris

k of

spi

lling

wat

er a

lloca

tion.

The

se s

trat

egie

s in

clud

e th

e tr

ansf

er o

f al

loca

tions

bet

wee

n Bu

lk E

ntitl

emen

t A

lloca

tion

Bank

Acc

ount

s an

d tr

adin

g al

loca

tions

.

79

Yarra Valley Water’s 2012/13 Annual Report is prepared in accordance with all relevant Victorian legislation and pronouncements. This index has been prepared to facilitate identification of Yarra Valley Water’s compliance with statutory disclosure requirements.

INDEX

Legislation Disclosure requirement Page

Report of Operations

Charter and purpose

FRD 22D Manner of establishment and the relevant Minister 2FRD 22D Objectives, functions, powers and duties 2-8FRD 22D Nature and range of services provided 2-3

Management and structure

FRD 22D Organisational structure 13FRD 22D Directors of the Board 13-16

Financial and other information

FRD 10 Disclosure index 78FRD 22D Summary of financial results for the year 11FRD 22D Operational and budgetary objectives, and performance against objectives 3-12FRD 22D Significant changes or factors affecting performance 4-12FRD 22D Employment and conduct principles 18-19FRD 22D Subsequent events 58FRD 22D Application and operation of Freedom of Information Act 1982 19FRD 22D Application and operation of Protected Disclosure Act 2012 19FRD 22D Statement of National Competition Policy 19FRD 22D Statement of availability of other information 20FRD 22D Environmental performance 6, 69-72FRD 22D Building and maintenance provisions of the Building Act 1993 19FRD 25A Victorian Industry Participation Policy disclosures 19FRD 30A Standard requirements for the design and print of annual reports AllSD 4.5.5 Risk management compliance attestation 21SD 4.2(g) General information requirements 2-20SD 4.2(j) Sign-off requirements 4

Ministerial reporting directions

MRD 01 Performance Reporting 66-67MRD 02 Reporting on water consumption and drought response 68MRD 03 Environmental and social sustainability reporting 69-72MRD 04 Disclosure of information on bulk entitlements, transfers of water entitlements,

allocations and licences, irrigation water usage and licence requirements

74-76MRD 05 Annual reporting of major non-residential water users 73

DISCLOSURE INDEX

80


Financial Report

Financial Statements required under Part 7 of the Financial Management Act 1994

SD 4.2(b) Statement of Comprehensive Income 26SD 4.2(b) Balance Sheet 27SD 4.2(b) Statement of Changes in Equity 28SD 4.2(b) Statement of Cash Flows 29SD 4.2(b) Notes to the Financial Statements 30-59

Other requirements under Standing Directions 4.2SD 4.2(c) Compliance with applicable Australian accounting standards

and other authoritative pronouncements

60SD 4.2(c) Compliance with Ministerial Directions 60SD 4.2(c) Accountable Officer’s declaration 60SD 4.2(d) Rounding of amounts 30

Other disclosures as required by FRDs in notes to the financial statements

FRD 03A Accounting for dividends 34, 43FRD 07A Early adoption of authoritative accounting pronouncements 35FRD 17A Long service leave wage inflation and discount rates 33, 47FRD 21B Disclosures of Responsible Persons, Executive Officers and other Personnel

in the Financial Report

54-57FRD 103D Non-current physical assets 31-32, 45-46FRD 105A Borrowing costs 34, 36-38FRD 106 Impairment of assets 31-33FRD 109 Intangible assets 32FRD 110 Cash Flow Statements 29, 59FRD 119 Contributions by owners 51FRD 120G Accounting and reporting pronouncements applicable to the 2012/13

reporting period

35FRD 121 Infrastructure assets 31-32, 45-46

Legislation

Freedom of Information Act 1982

Building Act 1993

Protected Disclosure Act 2012

Victorian Industry Participation Policy Act 2003

Financial Management Act 1994

Yarra Valley Water ABN 93 066 902 501

Lucknow Street Mitcham Victoria 3132 DX 13204

Telephone: 03 9874 2122 Fax: 03 9872 1353

www.yvw.com.au

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