2008/0919 october 2009 the honourable stephen robertson mp minister for natural resources, mines and...

2008/09annual report

19 October 2009

The Honourable Stephen Robertson MP Minister for Natural Resources, Mines and Energy GPO Box 2454 Brisbane Qld 4001

The Honourable Andrew Fraser MP Treasurer GPO Box 611 Brisbane Qld 4001

Dear Ministers

I am pleased to present the Annual Report 2008-09 for WaterSecure.

I certify that this annual report complies with:

• the prescribed requirements of the Financial Administration and Audit Act 1977 and the Financial Management Standard 1997, and

• the detailed requirements set out in the Annual Reporting Guidelines for Queensland Government Agencies.

A checklist outlining the annual reporting requirements can be accessed at page 44 of the report.

Yours sincerely

Keith Davies

Chief Executive Officer

WaterSecure

1WaterSecure Annual Report 2008-09

ContentsHighlights

Our business

About WaterSecure

Chair’s report

CEO’s report

Organisational structure

Board of directors

Executive Management Team

Priorities for 2010

Our performance – what we delivered

Western Corridor Recycled Water Project

Gold Coast Desalination Project

Alignment with Queensland Government Priorities

How we measure performance

Efficiency and effectiveness

Lessons learned

Our people

Corporate Governance

Summary of financial position and performance

Glossary

Annual report checklist

Financial report (see CD attached to this report)

How to comment on this annual report

We value your comments on our annual report and any other matters relating to WaterSecure. Please contact us by:

M: Level 2, 95 North Quay Brisbane Qld 4000

T: 1800 997 464

E: [email protected]

W: www.watersecure.com.au

Copies of this annual report

You can obtain copies of this annual report by contacting WaterSecure or by downloading the report from our website www.watersecure.com.au.

ISSN 1837-0446 (Print)

ISSN 1837-0454 (Online)

Interpreter service

The Queensland Government is committed to providing accessible services to Queenslanders from all culturally and linguistically diverse backgrounds. If you have difficulty understanding this annual report, you can contact us on 1800 997 464 and we will arrange an interpreter to help you understand the parts of this report causing difficulty.

© State of Queensland (WaterSecure) 2009

2 WaterSecure Annual Report 2008-09

2008-09 highlights

Financial highlights Western Corridor Recycled Water Project

WCRW Project met regulation dates and completed under budget

More than 7.3 million hours worked

Lost time injury (LTI) rate of only 2.21, below industry averages

20.4 billion litres of purified recycled water supplied to Swanbank and Tarong power stations

Interim Water Quality Report shows Bundamba Advanced Water Treatment Plant consistently produced water to meet the Public Health Regulation guidelines throughout testing period (May-December 2008)

Environmental benefits – the amount of nitrogen and phosphorus that would otherwise have been discharged into the Brisbane River from wastewater treatment plants feeding Bundamba AWTP reduced by approximately 35 per cent and 90 per cent respectively

Winner of 12 international, national and state awards, and finalist in further three national awards

Gold Coast Desalination Project First Water supplied to SEQ Water Grid in

February 2009


LTI rate of only 1.16, well below industry averages

4.2 billion litres of desalinated water supplied to the SEQ Water Grid

Network Integration Pipeline completed and handed over to LinkWater

Winner of 2009 Membrane Desalination Plant of the Year – Global Water Intelligence

WaterSecure revenue by source

75.1%Water Grid Manager

23.6%Pipeline Construction

1.0%Other revenue

0.4%Interest Income

WaterSecure source of funding ($M)

359.6Equity Injection

2,630.1Qld Treasury Corporation

403.3National Water commission


Cost vs budget

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WCRW Project GCD Project

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Budget

Budget

Final forecast

cost

Final forecast

cost

Expenses to

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Expenses to

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About WaterSecure

Legislative basis

WaterSecure is the trading name of the Queensland Manufactured Water Authority, a Queensland Government statutory authority established under the South East Queensland Water (Restructuring) Act 2007.

The purpose of this legislation is to facilitate a restructure of the water industry in South East Queensland to deliver:

improved regional coordination and management of water supply

more efficient delivery of water services

enhanced customer service for water consumers

a clearer accountability framework for water supply security.

Role and functions

WaterSecure is responsible for producing and supplying purified recycled water and desalinated water to the South East Queensland Water Grid.

On 1 September 2008, WaterSecure became the sole shareholder of Western Corridor Recycled Water Pty Ltd and acquired a 50 per cent share in South East Queensland (Gold Coast) Desalination Company. The remaining half was acquired on 1 October 2008, making WaterSecure the sole shareholder.

WaterSecure’s water supply system includes more than 200 kilometres of large-diameter underground pipeline, three advanced water treatment plants located at Bundamba, Luggage Point and Gibson Island and a reverse osmosis desalination plant at Tugun on the Gold Coast.

The combined production capacity of WaterSecure’s assets is up to 365 megalitres a day; the Western Corridor Recycled Water Project has the capacity to supply up to 232 megalitres of purified recycled water a day and the Gold Coast Desalination Plant’s capacity is 133 megalitres of desalinated water a day.

Purified recycled water is supplied to Swanbank and Tarong power stations and will be supplied to future industrial and agricultural customers and, when the region’s combined dam levels fall below 40 per cent and the necessary government approvals are in place, will supplement drinking water supplies in Wivenhoe Dam. Desalinated water is supplied directly into the SEQ Water Grid. It is blended with dam water and piped to customers in parts of the Gold Coast and Brisbane.

Vision, mission and values

Our vision

We are a customer-focussed world leader in sustainable, large-scale, purified water supplies.

Our mission

WaterSecure’s mission is:

to substantially enhance the security of water supplies

to manage and improve the environmental footprint of our business

to inform, influence and participate in the ongoing development of associated water industries.

Our business


Our values

WaterSecure works together as one team, guided by our SPIRIT values:

Safety is WaterSecure’s number one value and is broader than workplace health and safety. WaterSecure is committed to providing water supplies that always meet and aim to exceed the water quality, safety and environmental regulatory requirements through the provision of safe work places and the effective management of water supply infrastructure.

People - WaterSecure is committed to supporting and developing its people.

Integrity - WaterSecure is open and honest to earn and maintain the support and trust of all stakeholders.

Respect - WaterSecure staff respect each other, the community and the environment in which we operate. We will always protect and seek to enhance our environment.

Innovation - We seek continuous improvement by challenging our thinking and that of others, encouraging our team to think innovatively.

Teamwork - We understand that the power of the team exceeds the power of any individual and will partner for the benefit of stakeholders.


Chair’s ReportI am pleased to present the annual report for the first full year of operation of WaterSecure, the Queensland state authority incorporating Western Corridor Recycled Water and SureSmart Water.

WaterSecure, the Queensland Manufactured Water Authority, began operation on 1 July 2008 as the Queensland state authority charged with producing and supplying purified recycled water and desalinated water. With assets totalling more than $3.7 billion, WaterSecure is an integral part of the South East Queensland Water Grid and is supplying a new source of pure water to the region through the Western Corridor Recycled Water Project and the Gold Coast Desalination Plant.

It’s been an exciting year for WaterSecure as we have achieved major milestones across both projects. The projects have not been without their challenges, as any large-scale project built under pressure is. The combined efforts of all staff who have worked on the schemes have resulted in world-class infrastructure being delivered under extraordinary time pressures, within budget and with an outstanding safety record.

Our core business of providing pure, quality water to South East Queensland remains our focus. The past year has seen the South East Queensland region experience some good fortune with weather patterns, as increased rainfall has topped up our dams. However, we cannot forget how quickly this situation can change and must take into account the unpredictable and unreliable nature of weather conditions, especially in times of a changing climate. Both Western Corridor Recycled Water and the Gold Coast Desalination Plant are helping safeguard against future water shortages now, and for the future.

Not only are these projects a vital part of the solution to our water issues but they are reaping benefits for the environment as well. Our advanced water treatment process removes nutrients which would otherwise have been deposited into the Brisbane River, minimising environmental impacts and improving water quality in the Brisbane River and Moreton Bay. Our work in this area was recognised this year with the Western Corridor Recycled Water Project winning the 2009 Healthy Waterways Industry Award.

The significance of both assets to the global water industry is evidenced by the strong attention the projects continue to attract both nationally and internationally. This year has seen interest from industry, educational, government and general groups as far flung as Abu Dhabi and Japan and we take seriously our obligation to educate the wider community on water issues. We will continue to build on our community engagement role to build the public’s confidence in the quality of our water.

Together with my fellow board members I would like to take this opportunity to thank our CEO Keith Davies, the Executive Management Team and all staff for their extraordinary efforts and dedication in bringing these projects to fruition.

David Gray Chair

David Gray Chair


The combined efforts of all staff who have worked on the schemes have resulted in

world-class infrastructure.


CEO’s reportWhat a year it has been for WaterSecure. Since coming into existence on 1 July we have completed construction of both our desalination plant and recycled water scheme, which are now proving to be world leaders in the water industry.

We have also brought together the two companies under the WaterSecure banner, providing us with a fresh start and the opportunity to shape the organisation’s culture and future directions. We remain focused on the needs of our customers and stakeholders and I believe we have built a team that is committed to what the organisation stands for and will deliver.

The challenging deadlines and regulation dates set for the two projects required an enormous amount of effort, energy and innovation from all parties involved and I acknowledge and thank our Alliance partners for the integral role they have played in fulfilling our regulatory requirements.

Major construction activities on the Western Corridor Recycled Water Project were completed in December 2008, just two and a half years from the starting point and halving the normal construction time for a project of its complexity and size. While the purified recycled water being produced won’t be added to the dam until the levels reach the 40 per cent trigger, the scheme is supplying Swanbank and Tarong power stations, two of the region’s major water users, easing pressure on our dams and helping ensure we are not in the same position we were in just over two years ago when dam levels were at record lows.

Major construction activities on the Gold Coast Desalination Plant have also been completed in the past year, and the facility has now completed its commissioning requirements. Water produced by the plant has been supplied to the grid since February, having a direct impact on the availability of water in the region. The results have already been pleasing, with more than 4.6 billion litres of desalinated water supplied into the South East Queensland Water Grid and almost 21 billion litres of purified recycled water supplied to Tarong and Swanbank power stations by 30 June 2008.

With our construction challenges now largely behind us, we turn our attention to operations and the complexities inherent in running such large-scale facilities with ever-changing developments in technology and an emerging regulatory market. Managing their output in the face of changing climate conditions is another challenge for us, and we must be prepared to respond to those changes as necessary. Working with the Water Grid Manager to identify new customers for our purified water to reduce their dependence on traditional water supplies will be a focus.

We are committed to strengthening our position as a key player in the water industry by staying relevant through our research and development activities, which we intend on expanding in the coming year through the new National Centre of Excellence in Water Recycling. Western Corridor Recycled Water has been chosen to host this federally funded initiative which will allow us, along with our partners, to build

Keith Davies Chief Executive Officer


the knowledge and technology required to secure Australia’s future water supplies through alternative sources such as water recycling. In addition to research and development activities, the Centre will drive a national focus on addressing rural and urban water recycling to promote acceptance and application of alternative water sources in all areas of Australian society. We are also keen to play our part in helping address the current skills shortage that exists in the water industry and will proactively seek out ways to do so. We are very excited about the opportunities the Centre offers and we look forward to working with our many partners from industry and academia to position Australia as a leader in water recycling.

Both Western Corridor and the Gold Coast Desalination Plant continue to be recognised on the world stage for their world-leading design and technology, and the results they are achieving.

In the past 12 months our projects have received the following accolades:

2009 Membrane Desalination Plant of the Year for the Gold Coast Desalination Plant and 2009 Water Reuse Project of the Year for Stages 2A & 2B of Western Corridor Recycled Water Project at the Global Water Intelligence Awards

Western Corridor Recycled Water 2009 – Healthy Waterways Arup Industry Award

Bundamba Advanced Water Treatment Plant – Construction Management Association of America Project Achievement Awards, International Project of the Year

Bundamba Advanced Water Treatment Plant – Engineers Australia Engineering Excellence Environment Award.

Between the two projects, we have now won 12 prestigious awards – seven international, two national and three state – and been a finalist in another three national awards.

Already the two projects have achieved so much, and as I look to the year ahead I am excited by the opportunities that exist for WaterSecure. This year we expect to finalise the remaining technical and commercial issues at Gibson Island and Luggage Point Advanced Water Treatment Plants and the Gold Coast Desalination Plant, signifying final handover of these assets to WaterSecure. We will continue to work on building relationships with our stakeholders and the community, as well as potential customers for our water, further easing pressure on the dams, and we stand ready to supply to the water grid when required. Our focus remains unchanged, and that is to continue to provide environmentally sustainable sources of water of consistently high quality to the people of South East Queensland.



David Gray (Chair)

David has significant commercial expertise having held a number of senior management positions including Managing Director at Boeing Australia, Chief

Executive Officer of GEC Heavy Engineering and General Manager of telecommunications company Exicom.

Recognised with the Centenary Medal for services to the Aviation Industry, David was also awarded an Honorary Doctorate from Queensland University of Technology.

Mark Pascoe

Mark has more than 30 years experience in the water industry, including his current role as CEO of the International WaterCentre - the business centre for

building international capacity in integrated water management.

Mark’s career history also includes working for Brisbane City Council, environmental engineering consultancy Woodward-Clyde, and the International Water Association in London. He is a former President of the Australian Water Association and is current President of the Australian Water Partnership, indicating his renowned water industry expertise.

Our boardThe WaterSecure Board of Directors as at 30 June 2009 is:

Minister for Natural Resources, Mines and Energy

Queensland Treasurer

BoardAudit and Risk Committee

Water Quality and Asset

Management Committee

Chief Executive

Officer

Chief Corporate

Officer

Chief Financial

Officer

Chief Operations

Officer

Chief Technical

Officer


David McDougall

David has more than 30 years experience in project and structured finance, mergers and acquisitions, valuations, capital raising and providing strategic

advice to Governments and corporations.

David’s work as a Partner of KPMG and a Director of KPMG Corporate Finance and a Director of a major Australian investment bank, has assisted in skilling him in the areas of domestic and international corporate finance, strategy and structure.

With a Masters of Business Administration, David has experience across a range of industries, including natural resources, transport, utilities, telecommunications, property, tourism and leisure. David’s significant experience in the natural resources sector includes work for SA Water, CS Energy, Tarong Energy, and Singapore Power.

Stephen Golding

Stephen’s extensive career at the Department of Main Roads included joining as an engineer in 1967 and retiring as Director-General in 2005.

Paralleling this career, Stephen also enlisted as a private soldier in the Army Reserve in 1963 and retired in 1998 as a major general. He has received a number of awards for his outstanding service to the Army including a Member of the Order of Australia, the Queen’s Silver Jubilee Medal, the Centenary Medal, the Reserve Forces Decoration, the National Medal and the Australian Defence Medal.

Stephen is a Fellow of four professional associations and a member of the Australian Institute of Company Directors. Stephen’s current responsibilities include being a Director of Mackay Ports Ltd and an independent Member of the Corporate Governance Advisory Board of the Department of Primary Industries and Fisheries

Scott Standen

A partner at Hynes Lawyers, Scott has significant investor relations experience having worked on the ASX listings for Coppermoly Limited and Billabong. Recently, Scott

has also worked on the acquisition of a number of businesses in the mining services sector and the listing of a parent company on the Australian Stock Exchange.

With a Masters of Business Administration and a Master of Laws, Scott brings a unique legal and commercial perspective to business issues.

Scott has been admitted as a solicitor in the Supreme Courts of Victoria and Queensland and the Australian High Court. Scott is also a member of the Queensland Law Society, the Australian Institute of Company Directors (AICD) and member of the Gold Coast Working Group of the AICD.


Sam Romano Chief Financial Officer

Sam has 20 years experience in the finance and accounting sector. He has worked in large private and public organisations.

Sam has introduced a range of innovative finance policies and procedures resulting in cost savings, improved reporting and profit increases. His skills and experience include strategic planning, budgeting, staff management, economic regulation, financial management and accounting frameworks.

Viviann Zavlanos Chief Operating Officer

Viviann oversees the operations of our advanced water treatment plants, desalination plant and pipelines that connect

purified water to the south-east Queensland water grid. With over 18 years experience in the water industry and leadership skills, Viviann has negotiated operating strategies and agreements between industry partners, state and local government agencies. Prior to joining WaterSecure, Viviann held senior positions managing water supply, sewerage treatment and recycling operations at Melbourne Water.

Our Executive Management Team


Keith has more than 30 years experience in the energy and utilities industry in the United Kingdom and Australia, working for South

Wales Electricity and PricewaterhouseCoopers, then Tarong Energy prior to joining us. He began his career an as engineer and has held senior executive positions in retail operations, strategic development, financial management and change management.


Antoinette Carley* Chief Corporate Officer

Antoinette oversees corporate governance, risk management and compliance responsibilities. She draws on more than

10 years experience in private and public sector organisations in infrastructure projects, commercial contracts, system establishment, board support and company directorship.

Cedric Robillot Chief Technology Officer

Cedric has extensive experience in water research, intellectual property and technology. Prior to joining WaterSecure, he worked

for 10 years in the biomedical field, co-founding a biotechnology company, Cleveland Biosensors, where he provided technology leadership in the development of new diagnostic platforms and managed the intellectual property portfolio.

Ron Wilson* Chief Corporate Officer

Ron draws on extensive and varied commercial experience, including property management, commercial negotiations

and contracts, corporate governance and compliance systems, and board and corporate secretarial practices. Ron also has more than 10 years of valuable public sector experience.

*Antoinette Carley resigned from WaterSecure effective 31 July 2009. Ron Wilson has been appointed Chief Corporate Officer.


It is essential to our business that we strengthen relationships with our existing stakeholders and customers, and forge new ones to support our role as a key player in the South East Queensland Water Grid. WaterSecure will continue to work with our primary customer, the South East Queensland Water Grid Manager, to ensure adherence to protocols and open communication is achieved. We will particularly focus on working with the Water Grid Manager to identify potential customers and commence supply where possible. With the machinery of government changes following the election this year, and the move from construction to operations, WaterSecure now works closely with the Department of Environment and Resource Management as well as the Department of Infrastructure and Planning, and it is vital that information sharing and collaborative working relationships are established with this department. We must continue to focus on meeting the needs of all customers and stakeholders by supplying high-quality, safe and reliable desalinated water and purified recycled water.

Through strong leadership incorporating creativity and innovative thinking, we will expand our research and commercialisation capabilities to develop water technologies currently used by our plants. Advances in technology will see the plants achieve their targets of having world’s best operational efficiency. The coming year will see the desalination plant’s energy consumption fully offset to meet the government’s goal of completely offsetting carbon emissions from the plant. These initiatives will also assist in financial management of the plants as they enable integration and synergy across the schemes to promote cost savings. Developments in technology should be made available to our colleagues in the water industry, reinforcing our relevance and value and further building relationships within the sector.

Priorities for 2010 2010 holds a number of changes for WaterSecure as final construction activities draw to a close and the projects move into full operation mode.

There is still considerable work to be done in the human resources area as consultants finish their work on the projects and are replaced by a permanent workforce. In addition to head office staff and consultants, there were six Alliances involving 20 organisations working across the Western Corridor and Desalination projects and the shift to permanent staff will not only see a new structure, policies and procedures emerge, but also a shift in culture. We hope to make this transition as seamless as possible, capturing the knowledge and experience of the workers moving off the projects for the benefit of those coming in. The new organisational structure will see a concentration of workers at head office supporting Veolia Water, the scheme operator, staff at the plants. It is our intention to develop a team culture across sites, offices and organisations to support our goals of working together in a safety-conscious environment.

Continuing our work in educating the public about the benefits of new, alternative water sources is a key priority for WaterSecure in the coming year. We have already been active in conducting site tours of our plants for industry groups and are keen to expand this to general interest groups and school students. Understanding the place of our water in the water cycle is an important step to building confidence in the water we produce. Through working more closely with our colleagues in the Water Grid we aim to present an education package that fully explains the process and informs people on where their water comes from, placing our operations in the normal context of the water cycle.


WaterSecure’s 2009-10 operational plan lists five key objectives:

Focus on the needs of customers and stakeholders

Target and achieve world’s best operational efficiency

Manage costs with tight controls

Be a key part of the water industry into the future – stay relevant

Build and retain a team that is committed to what the organisation stands for and will deliver


Project alliances

To accommodate its massive scale and tight timelines, the Western Corridor Recycled Water Project was constructed by five alliances. WCRW Pty Ltd is a partner in all five alliances:

Bundamba Alliance

The Bundamba Alliance was a joint venture between leading Australasian construction, mining and services company Thiess, and Black & Veatch, a global engineering, consulting and construction company.

This alliance was responsible for building the 66 ML/day Bundamba Advanced Water Treatment Plant, the first of the Western Corridor plants to supply water to Swanbank and Tarong power stations.

Both stages of the Bundamba plant were completed on time, on budget and, remarkably, approximately 1.8 million hours were worked without a lost time injury.

Eastern Pipeline Alliance

The Eastern Pipeline Alliance comprised horizontal directional drilling specialist AJ Lucas, international services firms Transfield Services and GHD and Sunwater, a Queensland Government-owned bulk water services supplier.

This alliance was responsible for building pipeline through heavily urbanised and environmentally sensitive areas in Brisbane’s east, south and south west.

The Premier of Queensland, Anna Bligh, attended a ceremony on 21 October 2008 to mark the last piece of pipe to be laid on the Western Corridor Project, signing the pipe before it was lowered into the ground and welded in place.

Western Corridor Recycled Water

Project overview

Western Corridor Recycled Water Pty Ltd was established in March 2007 as a government-owned special purpose vehicle to build the Western Corridor Recycled Water Project.

The $2.5 billion Project consists of three advanced water treatment plants at Bundamba, Luggage Point and Gibson Island, more than 200 kilometres of large-diameter underground pipeline and associated infrastructure, including nine large storage tanks and 12 pumping stations.

Taking water from six wastewater treatment plants in Brisbane and Ipswich and purifying it to the highest standards, it has the capacity to produce up to 232 megalitres of purified water a day, depending on available feedwater and demand for product water.

The Project was built in four phases, each with its own regulated completion date. The first two of these were in the previous financial year, with the final two being 31 October 2008 (Stage 2a) and 31 December (Stage 2b).

With the four regulated dates met, major construction activities on the Project were completed on time and under budget.

Other construction activities, such as the Eastern Pipeline drought contingency works and the Luggage Point pretreatment expansion, continued in 2009, as did commissioning activities.

Our performance – what we delivered


Premier Anna Bligh signs the last piece of pipe to be laid on WCRW Project.


Gibson Island Alliance

The Gibson Island Alliance was made up of international engineering company MWH, and Australian engineering firms WorleyParsons, Baulderstone Hornibrook and United Group Infrastructure.

This alliance was responsible for constructing the 100ML/day Gibson Island Advanced Water Treatment Plant, the Project’s largest capacity plant built on the smallest site.

Clever design allowed the plant’s capacity to be doubled within the same footprint.

Luggage Point Alliance

The Luggage Point Alliance was formed by global engineering and construction firms CH2M Hill and Laing O’Rourke, and international services and consulting companies Aurecon (formerly known as Connell Wagner) and Hatch.

This alliance was responsible for building the 66ML/day Luggage Point Advanced Water Treatment Plant, on the north side of the mouth of the Brisbane River.

The plant’s completion was commemorated when the Deputy Premier of Queensland, Paul Lucas, attended a community open day in November and tasted water produced at the plant in front of the assembled media.

Western Pipeline Alliance

The Western Pipeline Alliance consisted of international construction company McConnell Dowell, leading Australian civil engineering company Abigroup and GHD.

This alliance was responsible for constructing the pipeline taking purified water from Bundamba to Caboonbah at the top of Wivenhoe Dam, the offtake pipeline at Comminya that will transport water to Wivenhoe Dam once the region’s combined dam levels fall below 40 per cent, pumping stations at Lowood and Caboonbah, and associated infrastructure.


WCRW achievements

Safety

Excellent safety record


LTI rate of 2.21 – well below industry standard

Bundamba AWTP completed LTI-free

Delivery

First Water to Swanbank August 2007, ahead of schedule

First Water to Tarong June 2008, ahead of schedule

Project completed December 2008, meeting regulation dates and coming in under budget

About 21 billion litres of purified recycled water supplied by 30 June 2009

Quality

Interim Water Quality Report released in February shows Bundamba AWTP consistently produced water to meet the Public Health Regulation standards throughout the testing period (May-December 2008)

Environment

Approximate 90% reduction in phosphorus that would otherwise have been discharged into the Brisbane River from wastewater treatment plants feeding the WCRW Project

Approximate 35% reduction in nitrogen that would otherwise have been discharged into the Brisbane River from wastewater treatment plants feeding the Bundamba AWTP, with the potential to increase this to 50% across the WCRW Project

Innovation

Alliance structure – delivered the flexibility needed for an evolving project

The scheme operator, Veolia Water Australia, provided strategic advice during construction

Safety box robot – an invention allowing safer and quicker pipelaying on the Western Pipeline

Triple pipeline section of the Eastern Pipeline, saved time and money and reduced disruption to community

Horizontal directional drilling (HDD) on the Eastern Pipeline – less disturbance to the sensitive wetland environment and infrastructure in Bulimba Creek, Aquarium Passage and the Brisbane River

Bundamba AWTP – built in two stages to provide First Water in an extremely tight timeframe, going from horse paddock to producing First Water in 300 days

Gibson Island AWTP – the largest WCRW plant on the smallest site, designed to be upgraded to 100ML/day. The plant even collects rainwater off its roofs for processing

Luggage Point AWTP – a fully functioning pilot plant built ahead of AWTP to reproduce the AWTP process at a small scale to test plant performance

Community engagement

Two rounds of a grants program for community groups along the WCRW pipeline route ($120,000 in each round)

Schools poster competition to raise awareness about the importance of water and water recycling


Award winning

Winner of 12 prestigious awards (7 international, 2 national and 3 state), including:

• 2008 Water Project of the Year – Global Water Intelligence

• 2008 International Project of the Year – Construction Management Association of America

• 2008 Grand Honour Award for Project Innovation – International Water Association

• 2009 Water Reuse Project of the Year – Global Water Intelligence

• 2009 Industry Award – South East Queensland Healthy Waterways

• 2009 Advisory Excellence Award (Evans & Peck), National Infrastructure Awards – Infrastructure Partnerships Australia

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Water supplied by the WCRW Project to Swanbank and Tarong power stations 2008-09

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Communication and community engagement were key to managing fast-track construction through urban communities and environmentally sensitive areas.

Working with the community

WCRW has used integrated communications and community engagement to reach its audiences to convey its key messages to build public understanding of, confidence in and support for the Western Corridor Recycled Water Project. This includes:

Freecall telephone and email address for public enquiries via a virtual project information desk, with enquiries logged in a stakeholder database to ensure issues and concerns were monitored and responded to appropriately

Regular local community events, including BBQs, information sessions, consultation booths and coffee vans, stakeholder and community meetings, workshops and information sessions

A suite of information materials, including fact sheets, newsletters, e-newsletters, resident letters, flyers, adverts, poster and signage, and a website

Presentations, static displays and briefings for elected representatives and industry, environmental, cultural or other key stakeholders

A public open day at Luggage Point Advanced Water Treatment Plant

A community grants program for groups along the WCRW pipeline route

A schools extension program for 35 schools along the pipeline route

Media releases and feature stories on project milestones for general news and trade publications

Measurement of stakeholder/community perception of connectedness and involvement in the project and measurement of media coverage and website traffic.


Outlook for 2010

Complete construction activities

Although major construction activities were completed in December 2008, other construction works are still underway, including the drought contingency works on the Eastern Pipeline and the expansion of pre-treatment facilities at Luggage Point. These activities will be completed in 2009-10.

Develop the WCRW Recycled Water Management Plan

WaterSecure has assumed responsibility for developing a scheme-wide Recycled Water Management Plan for the Western Corridor project. This plan will be developed in 2009-10 and submitted to the regulator for approval so that WaterSecure will be in a position to supply water to Wivenhoe Dam when required.

Deliver safe purified recycled water that complies 100% with public health regulations

The validation and verification processes for the Luggage Point and Gibson Island Advanced Water Treatment Plants will be completed in 2009-10. Continuous online monitoring and a program of testing will ensure the water produced consistently meets the Public Health Regulation standards.

Continue public education

WaterSecure will expand its public education and site tour program to help strengthen confidence in the quality and safety of purified water before the trigger point for adding this water to the dam is reached.

Conduct first phase of lifecycle analysis

WaterSecure will begin a lifecycle analysis to investigate the environmental implications of different water purification and wastestream treatment options to determine the most ecologically sustainable ways to operate its water purification plants.

Establish the Centre of Excellence

WaterSecure, through a wholly-owned subsidiary company, will work with founding partners Griffith University, The University of Queensland, University of New South Wales, CSIRO, GHD and Veolia Water to establish the Centre of Excellence in Water Recycling. The Centre will build the knowledge and technology required to secure Australia’s future water supplies through alternative sources such as water recycling. In addition to the research and development activities, it will drive a national focus on addressing rural and urban water recycling, undertaking public engagement activities to promote acceptance and application of alternative water sources in all areas of Australian society. WCRW Pty Ltd will also seek new partners, both nationally and internationally, to strengthen the Centre and its work. The Centre of Excellence will receive $20 million over five years in Commonwealth funding.


Gold Coast Desalination Project

Project overview

South East Queensland (Gold Coast) Desalination Company Pty Ltd, trading as SureSmart Water was established in November 2006 as a government-owned special purpose vehicle to be the Queensland Government’s arm of the Gold Coast Desalination Project.

The $1.2 billion project included a 133 megalitre a day seawater desalination plant and the 24.9 kilometre Network Integration Pipeline and associated tanks and pump stations.

The project was initially an initiative of the Gold Coast City Council. The Queensland Government became involved in the project through a memorandum of understanding with Council in August 2006 and became the sole owner of the project in June 2008. The State transferred ownership of the project to WaterSecure in October 2008.

The GCD Alliance

The Project was built by the GCD Alliance, a joint venture of John Holland and Veolia Water Australia, along with sub-Alliance partners Sinclair Knight Mertz and Cardno. SureSmart Water is part of the Alliance as the owner-representative.

John Holland is one of Australia’s largest engineering and construction firms. Veolia Water Australia is the local arm of one of the world’s foremost water and wastewater services companies. Both SKM and Cardno are international providers of engineering and professional services.

The GCD Alliance has a contract to operate the Gold Coast Desalination Plant on behalf of WaterSecure.

Gold Coast Desalination Project achievements

Safety

Excellent safety record


LTI rate of 1.16 – well below industry standard

More than 2 million hours completed LTI-free

Delivery

First Water to the SEQ Water Grid 26 February 2009

100% production reached March 2009

Network Integration Pipeline completed and transferred to Linkwater March 2009

More than 4.5 billion litres of desalinated water supplied by 30 June 2009

Quality

Consistently produced water to meet the Australian Drinking Water Guidelines

Environment

Desalination by-products – solids removed for landfill rather than being discharged to the ocean in brine and supernatant treated before being discharged with the brine

Energy efficiency – energy recovery devices and high-efficiency pumps minimise power consumption, making the Gold Coast Desalination Plant one of the most energy-efficient plants in the world, reducing costs and carbon emissions

Intake and outlet structures have become artificial reefs and home to countless sea creatures


Innovation

Alliance structure – delivered the flexibility needed for an evolving project

Inlet and outlet tunnels rather than pipelines were used to take seawater to the plant and return brine to the ocean to minimise the impact on the local community and environment

Open trenching methods were used to construct the Network Integration Pipeline, however to minimise the impact on local waterways, microtunnelling techniques were used underneath Tallebudgera and Currumbin Creeks

Community engagement

Community Reference Group, including representatives from local community groups, businesses, residents and government, met each month for the duration of the project to provide members with regular construction and information updates and allow them to raise any concerns

More than 3000 people visited the Project Information Centre, which was open to the public Monday to Friday 8am to 5pm for the majority of the project to provide general information about the project and allow specific questions to be answered

More than 7000 community members attended Desal Day, the Alliance’s largest celebration, on Sunday, 30 November 2008 to celebrate the production of ‘first water’ from the plant

Award winning

Winner, 2009 Membrane Desalination Plant of the Year – Global Water Intelligence

Water supplied by Gold Coast Desalination Plant to SEQ Water Grid.

Febr

uary

200

9

Mar

ch 2

009

April

200

9

May

200

9

June

200

9

5000

4000

3000

2000

1000

MONTHS

MIL

LIO

N L

ITRE

S


Working with the community

A project in a highly urbanised and environmentally sensitive area was bound to generate significant community interest so working with the community was a priority for the GCD Alliance.

The residents and businesses potentially affected by construction were kept up to date with all aspects of construction that could possibly impact on them. In addition to newsletters, flyers and notification letters, door knocking was undertaken to ensure that each resident was aware of relevant construction activities.

Monthly Community Reference Group meetings were held to keep the local community informed. Representatives included local councillors and Members of Parliament, local business and community group representatives and local residents.

Site tours were given to almost 200 business, community, school and local groups, and in addition presentations were given to more than 370 community groups.

Outlook for 2010

Complete construction activities

All construction activities, including construction of a fluoridation plant within the desalination plant, will be completed in 2009-10.

Complete reliability trial

The desalination plant is required to complete a reliability trial to demonstrate it can operate reliably at full capacity. This trial will be completed early in 2009-10.

Complete commissioning

As is usual with major infrastructure projects, a number of non-compliances came to light during commissioning of the plant. WaterSecure and the GCD Alliance are working cooperatively to resolve these issues, the majority of which have been fully resolved or a resolution is in progress. All will be resolved in 2010.

A project in a highly urbanised and environmentally sensitive area was bound to generate significant community interest so working with the community was a priority for the GCD Alliance.


Aligning with Queensland Government prioritiesThe recent drought experienced by South East Queensland was the region’s worst in recorded history. Dam levels dropped to as low as 16.7 per cent, just 16 months supply, and residents were forced to abide by strict water restrictions.

In response to this dire situation, the Western Corridor Recycled Water Project and the Gold Coast Desalination Plant were constructed to provide new sources of pure water to cope with declining supply and an increasing population. The construction of these facilities aligns with the Queensland Government’s priority of creating a diverse economy powered by bright ideas. The projects are world leaders in their use of innovation and technology and created thousands of jobs for locals. Both facilities now provide a sustainable water source for current South East Queensland residents, and the future population, contributing to the government’s target that Queensland be Australia’s strongest economy, with infrastructure that anticipates growth.

Western Corridor Recycled Water’s role as host of the new National Centre of Excellence in Water Recycling will see the organisation and its partners build the knowledge and technology required to secure Australia’s future water supplies. Through its research and development activities, the Centre will put Australia at the forefront of water recycling technology, supporting the state government’s target of a 50 per cent increase in the proportion of Queensland businesses that undertake research and development or innovation.

Both the desalination plant and Western Corridor Recycled Water are benefitting the environment by reducing the pressure on our dams. Western Corridor has additional benefits for our waterways through the removal of nutrients and contaminants that would otherwise be in the water, while the Gold

Coast desalination plant has recorded lower than expected energy readings. ‘Green’ energy options are being actively pursued to minimise the plant’s carbon footprint as part of Premier Anna Bligh’s public challenge to Australia’s green energy industry to completely offset carbon emissions from the plant. Early in the 2009-10 financial year, WaterSecure will purchase renewable energy certificates (RECs) to completely offset the plant’s energy consumption, contributing to the government’s target to cut Queensland’s carbon footprint by one third with decreased car and electricity use.

Efficiency, effectiveness and measuring performanceThe executive management of WaterSecure has set goals for the organisation that are routinely monitored. Dedicated operations staff have been employed at head office to monitor the operations of the plants, as well as onsite staff through scheme operator Veolia.

During the construction phase, timelines were set to keep the projects on track. All regulated dates for the Western Corridor Recycled Water Project were met, with a number occurring ahead of schedule. It was completed in record time, halving the normal construction time for its complexity and size. Both projects have also been built within budget, due to innovation and careful financial management resulting in cost efficiencies. WaterSecure intends on continuing its fiscal success as it moves into the operations phase and has policies, procedures and people in place to do so.


The results of the Interim Water Quality Report for the Bundamba Advanced Water Treatment Plant (AWTP) were extremely pleasing. The report was released in February 2009 and showed the Bundamba AWTP consistently produced water to meet Public Health Regulation standards throughout the testing period (May-December 2008).

The two projects are delivering great results for South East Queensland as they ease pressure on the region’s water supply. More than 4.6 billion litres of desalinated water has been supplied to the Water Grid since February 2009 and more than 21 billion litres of purified recycled water has gone to Swanbank and Tarong power stations since August 2007.

Performance reviews of WaterSecure’s Chief Executive Officer and Executive Management Team (EMT) members will be undertaken in the second half of 2009. These reviews will focus on the achievements and activities undertaken in the 2008/2009 financial period. The Chief Executive Officer will perform the reviews of EMT members and the Chairman of the Board will perform the CEO’s review. These reviews will follow the process set out in the evaluation policies developed by the Human Resources team.

Lessons learnedWhile the multi-alliance approach resulted in a number of benefits for the WCRW Project, inherent in that were also complexities that needed to be worked through. The governance framework for the project was developed to ensure effective management and decision making throughout the project. This framework included the Project Management Group (owner representatives only), Alliance Leadership Team (alliance representatives and owner representative) and the Alliance Management Team (alliance representatives and owner representative). Scope changes as the project progressed challenged the governance framework in

place at the time. In response to this, refinement of the governance processes ensured project risks continued to be well managed. As one of the first projects to adopt a multi-alliance method of construction this is a point to be taken on by similar projects in the future.

The single alliance used on the Gold Coast Desalination Project has included a slightly different approach to project management. A Joint Steering Committee comprising the WaterSecure, Veolia Water and John Holland chief executives has provided high-level oversight and guidance. The Alliance Leadership Group and Alliance Project Management Team, both of which include owner and non-owner representatives, have provided on-the-ground management and leadership.

The transition from construction to operations for both WCRW and desalination projects has required constant, open communication and strong policies and procedures to ensure a smooth transition. With clear communication and effective relationships in place, the move from two disparate projects to two schemes managed by the same owner has progressed well through great effort from all parties, particularly senior management.


WaterSecure recognises that people prosper in the workplace when they are motivated and inspired through strong leadership and teamwork.

WaterSecure’s organisational structure has been designed to incorporate the following four areas of responsibility:

Corporate

Business Services

Operations

Technical Services.

Employees transferred to WaterSecure by way of a transfer notice issued in accordance with the South East Queensland Water (Restructuring) Act 2007 in September 2008 (Executives) and February 2009 (staff ). In total, 18 employees transitioned with their existing employment terms and conditions which is consistent with the South East Queensland Water (Restructuring) Act 2007.

The workforce profile as at 30 June 2009 was:

Full-time equivalents (FTEs)* 28.8

Permanent retention rate** 69%

Permanent separation rate*** 36%

* Includes permanent and fixed-term employees

** Calculated on the 13 permanent positions at 1 July 08

*** Calculated on the 25 permanent positions at 30 June 09

Policy development has been a key achievement of the past year, guiding staff in their activities and shaping the culture of the organisation. Given the infancy of the organisation, immediate resources have focused on assessing the organisational requirements

Our people

and developing a suitable structure. This has involved critical workforce planning and implementation of strategies to retain knowledge gained from the project aspects of the business.

WaterSecure has invested significant time on the development of a range of policies in accordance with the State Water Authorities Governance Framework. Specifically, WaterSecure has been developing policy frameworks in recruitment and selection, performance and remuneration. A five year strategic human resources plan is being developed as well as an industrial relations plan and annual workforce plan to forecast the resourcing and succession requirements for the coming years. Recruitment and selection processes follow equal employment opportunity policies and legislation. Further initiatives for women are under development.

WaterSecure developed a Code of Conduct and provided training to all staff in 2009. The Code was developed in consultation with internal and external stakeholders and approved by the WaterSecure Board. The Code is provided to all new staff and training on this Code is part of the induction program for new staff. Procedures are in place for staff to make disclosures or report concerns under the Code.

Safety is WaterSecure’s number one priority, and this message has been carried through from construction to operations. Management and staff representatives on our dedicated Health and Safety Committee meet each month. The Committee is proactive about maintaining safety in the office and on site. Committee members communicate through monthly Safety Toolbox meetings that all staff are required to attend. High safety standards are expected of all employees and regular training takes place in head office and on site. The standard has been set through the work of the Alliances, which maintained an impressive safety record over the past year, keeping Lost Time Injuries well below industry standards. There are also opportunities provided for training in health and safety.


WaterSecure recognises that people prosper in the workplace when they are motivated and inspired

through strong leadership and teamwork.


Consultancies

The tables below set out expenditure by WaterSecure, Western Corridor Recycled Water Pty Ltd and SureSmart Water on various categories of consultancies.

WaterSecure

Consultancy Type2008-2009

$

Communication 416,074.85

Financial Accounting 35,030.00

Human Resources 195,650.00

Professional/Technical 39,200.00

Costs of consultancies 685,954.85

Western Corridor Recycled Water Pty Ltd

Consultancy Type2008-2009

$

Asset Consultancy 1,048,287.74

Communication 777,769.72

Community Engagement 873,919.62

Financial Accounting 1,033,904.95

Human Resources 0.00

Information Technology 315,225.00

Professional/Technical 22,620,671.89

Costs of consultancies 26,669,778.92

SureSmart Water

Consultancy Type 2008-2009 $

Financial Accounting 248,009.92

Professional/Technical 3,532,288.25

Costs of consultancies 3,780,298.17


Overseas Travel

The tables below set out expenditure by WaterSecure and Western Corridor Recycled Water Pty Ltd on overseas travel.

WaterSecure

Financial Year Purpose Destination Employee Cost

2008-2009Attendance at Singapore Water Week as representatives of WaterSecure

SingaporeKeith Davies Cedric Robillot

13,748.02*

Western Corridor Recycled Water Pty Ltd

Financial Year Purpose Destination Employee Cost

2008-2009Visit to Singapore to develop Centre of Excellence Concept Plan

Singapore Stephen Ring 6,622.62

No overseas travel by SSW employees occurred during the financial year.

*Includes airfares, accommodation and registration for Singapore Water Week


WaterSecure believes that good corporate governance should encourage performance, innovation and value, yet provide high levels of accountability and risk management.

Corporate governance also changes with developing organisations. As WaterSecure has been established, we have developed and refined our governance processes and policies to reflect increasing levels of management accountability, efficiency and effectiveness.

Leadership and management structureThe Queensland Government has overall responsibility for WaterSecure under the direction of the Minister for Natural Resources, Mines and Energy and the Queensland Treasurer.

The Board of WaterSecure sets the strategic direction for WaterSecure and ensures that WaterSecure achieves and acts in accordance with its Strategic and Operational Plans.

To assist in fulfilling its duties the Board has two committees, the Audit, Risk and Remuneration Committee and the Water Quality and Asset Management Committee. Each committee has a formal charter that sets out committee roles, responsibilities and authority. Minutes of all meetings are provided at board meetings and the Chair of the committee reports to the Board on the committee meetings held.

WaterSecure’s Chief Executive Officer, Keith Davies, is supported by the Executive Management Team and respective leadership groups for the two projects. The Executive Management Team, in place throughout the past year, has helped provide business focus to each

Corporate governance

of the key areas of contract and asset management; corporate governance including regulatory requirements, finance and support services; business development and operations. This is a significant step forward from our original structure reflecting a project management approach to a corporate framework.

The Scheme Operator, Veolia Water Australia, interacts with head office primarily through the Chief Operating Officer and with each of the project Alliances. Veolia Water Australia has taken over operations and maintenance for the Bundamba Advanced Water Treatment Plant, with the Luggage Point, Gibson Island and desalination plants to follow.

Board administrationThe WaterSecure Board was formed on 1 August 2008. This was also the start date of each of WaterSecure’s current directors.

All directors are independent and there is no actual or potential conflict of interest between the personal or business affairs of any director and the discharge of their duties to WaterSecure as a director. A criterion of materiality thresholds will be developed to complement the assessment of directors’ independence.

As this is the first year of operations for WaterSecure and the board was only recently appointed, there has not been a formal board performance assessment to date. The initial WaterSecure board performance assessment will be undertaken in the upcoming year.

The Board has in place an agreed procedure for directors to follow when obtaining independent professional advice at WaterSecure’s expense, in relation to the discharge of their responsibilities as a director of WaterSecure.


Directors meetings 1 July 2008 – 30 June 2009There were no meetings of the WaterSecure, WCRW and SSW Boards between 1 July and 31 July 2008.

Mr PA Hennessy, Mr KN Sedgwick and Mr TJ Spencer resigned from the WCRW Board effective 1 August 2008.

Mr GJ Carpenter, Mr D Dickson, Mr D Stewart and Mr JD Witheriff resigned from the SSW Board on 1 August 2008.

The WaterSecure, WCRW and SSW Boards were reconstituted to have a common membership and Mr DM Gray, Mr ME Pascoe, Mr S Golding, Mr D McDougall and Mr S Standen consented to act as Directors of these boards on 1 August 2008.

The table below shows director attendance at Board and Committee meetings throughout 2008-09.

BoardAudit, Risk and

Remuneration Committee

Water Quality, Asset Management, Research and

Development Committee

DirectorMeetings

heldMeetings attended

Meetings held

Meetings attended

Meetings held

Meetings attended

David Gray 10 10 6 6 7 5

Steve Golding 10 10 N/A N/A 6 6

Mark Pascoe 10 8 N/A N/A 7 7

David McDougall 10 9 6 6 N/A N/A

Scott Standen 10 10 6 6 N/A N/A


Audit and risk management

Risk management

WaterSecure has developed a Risk Management Policy and Framework and established a Risk Management Committee. Our risk management approach is to identify, prioritise and manage all our risks, including strategic, operational and project risks. WaterSecure’s definition of risk and approach to risk management is aligned with the Australia/New Zealand Risk Management Standard (AS/NZ 4360:2004).

The Risk Management Committee regularly reports to the Audit Risk and Remuneration Committee, which includes board members David Gray, David McDougall and Scott Standen. Remuneration policies are also reported to this committee.

For both projects, WaterSecure appointed a risk administrator to oversee the risk management process. A risk management framework was developed to monitor and improve the performance and outcomes of the project. A risk register has been maintained since the inception of the project, addressing risks at a corporate level. A process of identifying, analysing, mitigating and reporting risks was adopted for the project at various levels as follows:

Project Management Group

Alliance

Operator

Alliances provided risk reports on a monthly basis in the following categories:

Safety

Schedule

Commissioning

Practical completion

Commercial

Defects management/Quality

Environment

Land access

Financials

Risk management is also of paramount importance in WaterSecure’s efforts to provide a safe working environment for personnel, operators, contractors, visitors and members of the public; to achieve our strategic objectives; and to enhance the environment in which we work.

These risks are reported using a traffic light formula which enables the issues to be rated in terms of their risk levels. These strategies continue to be employed post-construction to ensure WaterSecure meets its objectives and operates in a risk-mitigated environment.

Internal Audit

WaterSecure has developed an Internal Audit Charter to define Internal Audit’s objectives. The Charter sets out the purpose of the Internal Audit function, including authority, responsibility and objectives. The Charter is approved by the WaterSecure Board and Audit, Risk and Remuneration Committee and has been prepared in accordance with the requirements of the Financial Administration and Audit Act 1977.


Internal Audit assists the Board and Committees in the effective execution of their responsibilities by providing independent analysis, advice and recommendations concerning WaterSecure’s operations and processes. The internal audit function has been outsourced to Ernst & Young. The Internal Audit Partner has unrestricted access to the Audit, Risk and Remuneration Committee to discuss any matter relating to the finances and operations of WaterSecure.

Systems for obtaining financial and non-financial information

Financial information

WaterSecure has established a process whereby the cost elements of the project are forecast, captured, analysed and reported monthly to the Board and in detail to the Audit Risk and Remuneration Committee every two months.

Finances are regularly audited by the Queensland Audit Office. Each of the Alliances was also independently financially audited monthly.

Non-financial information

Personnel numbers across the scheme are collated from reports from the project alliances and reported to the Department of Infrastructure and Planning.

Schedule performance is managed by the Project Director through alliance reporting protocols.

The organisation’s reputation and that of the Western Corridor Recycled Water Project and Gold Coast Desalination Project is monitored by WaterSecure’s Corporate Communications and Community Engagement teams through media monitoring and stakeholder engagement activities.

Information systems and record keeping

The organisation has a number of policies and procedures in place to ensure the appropriate management of documents and records. These systems will be further consolidated in the coming year with the appointment of the Information and Knowledge Manager. This position will be responsible for developing a records management framework and implementing an electronic document and records management system to support efficient and effective knowledge management and ensure that information compliance and accountability requirements are met.


Summary of financial position and performance

Consolidated Parent

2009

$

2009

$

2008

$

Revenue

Sales - South East Queensland Water Grid Manager 126,941,416 - -

Sales - pipeline construction 39,882,096 - -

Services revenue - corporate support - 3,713,903 -

Other revenue 1,633,333 251,500 -

Interest income 669,095 95,438 -

Total revenue 169,125,940 4,060,841 -

Expenses

Cost of sales (54,185,107) - -

Depreciation (22,485,382) (1,225) -

Employee benefits and related expenses (2,437,645) (1,778,329) -

Other expenses (6,432,468) (2,441,945) -

Impairment of property, plant and equipment (124,128,395) - -

Loss on share transfers (39,055,245) - -

Finance costs (67,640,336) (10,836,708) -

Total expenses (316,364,578) (15,058,207) -

Loss before income tax equivalents (147,238,638) (10,997,366) -

Income tax equivalents (expense)/benefit (4,372,299) 3,299,210 -

Net loss after related income tax equivalents (151,610,937) (7,698,156) -

Queensland Manufactured Water Authority (WaterSecure) Income statement for the year ended 30 June 2009


Consolidated Parent

2009

$

2009

$

2008

$

ASSETS

Current assets

Cash and cash equivalents 196,349,297 162,923,683 -

Trade and other receivables 46,480,563 1,025,120 -

Other assets 2,596,945 43,124 -

Assets classified as held for transfer 46,177,700 - -

Total current assets 291,604,505 163,991,927 -

Non-current assets

Investments in controlled entities - 426,329,685 -

Property, plant and equipment 3,047,952,733 35,277 -

Deferred tax equivalents assets 143,562,828 3,299,210 -

Total non-current assets 3,191,515,561 429,664,172 -

TOTAL ASSETS 3,483,120,066 593,656,099 -

LIABILITIES

Current liabilities

Trade and other payables 97,029,358 957,379 -

Interest bearing liabilities 15,071,869 1,771,869 -

Current tax equivalents liabilities 184,176 - -

Accrued employee benefits 70,352 62,535 -

Other liabilities 59,031,770 - -

Total current liabilities 171,387,525 2,791,783 -

Non-current liabilities

Interest bearing liabilities 2,630,085,081 238,938,276 -

Deferred tax equivalent liabilities 70,341,543 - -

Other liabilities 403,292,658 - -

Total non-current liabilities 3,103,719,282 238,938,276 -

TOTAL LIABILITIES 3,275,106,807 241,730,059 -

NET ASSETS 208,013,259 351,926,040 -

EQUITY

Contributed Equity 359,624,196 359,624,196 -

Accumulated losses (151,610,937) (7,698,156) -

TOTAL EQUITY 208,013,259 351,926,040 -

Queensland Manufactured Water Authority (WaterSecure)Balance sheet 30 June 2009


Consolidated Parent

2009

$

2009

$

2008

$

Cash flows from operating activities:

Receipts from customers 176,570,571 2,702,346 -

Receipt of government grants 250,000 250,000 -

GST collected from customers 1,627,259 404,201 -

GST paid to suppliers 3,263,862 (154,054) -

Payments to suppliers and employees (121,808,907) (3,332,561) -

GST remitted to ATO 1,927,532 (170,434) -

Interest received 2,572,284 - -

Income tax equivalents paid (20,058,044) - -

Net cash provided by/(used in) operating activities

44,344,557 (300,502) -

Cash flows from investing activities

Interest received 704,082 92,739 -

Acquisition of subsidiaries (228,123,489) (228,123,489) -

Construction work in progress payments (642,433,721) - -

Property plant and equipment purchases (430,840) (36,502) -

Proceeds on sale of plant and equipment 12,107 - -

GST refunds - investing activities 34,110,742 - -

Proceeds from security deposits 9,600 - -

Cash acquired relating to share transfers 29,919,795 - -

Net cash provided by/(used in) investing activities (806,231,724) (228,067,252) -

Cash flows from financing activities

Proceeds from capital injection 161,418,000 161,418,000 -

Proceeds from QTC borrowings 796,818,546 229,873,437 -

Repayment of borrowings (82) - -

Net cash provided by/(used in) financing activities 958,236,464 391,291,437 -

Net increase in cash and cash equivalents held 196,349,297 162,923,683 -

Cash and cash equivalents at beginning of financial year - - -

Cash and cash equivalents at the end of financial year 196,349,297 162,923,683 -

For the full audited financial statements WaterSecure, Western Corridor Recycled Water Pty Ltd and SureSmart Water for 2008-09, please see the CD included in this annual report or download the full annual report from our website.

Queensland Manufactured Water Authority (WaterSecure)Cash flow statement for the year ended 30 June 2009


Glossary

Advanced oxidationAdvanced oxidation is a water treatment process that uses powerful oxidants in conjunction with ultraviolet light to destroy trace levels of organics that have not been rejected by reverse osmosis. It is the fifth barrier in the seven-barrier water treatment system (see below).

Advanced water treatment plantAn advanced water treatment plant (AWTP) is a plant where water from a wastewater treatment plant that would otherwise be discharged into a river is purified through a multi-barrier process so that it meets the Australian Drinking Water Guidelines and Australian Guidelines for Water Recycling.

Australian Drinking Water Guidelines The Australian Drinking Water Guidelines is the key Australian reference to drinking water quality published by the National Health and Medical Research Council and the Agriculture and Resource Management Council of Australia and New Zealand.

Australian Guidelines for Water RecyclingThe Australian Guidelines for Water Recycling is based on the framework developed for the Australian Drinking Water Guidelines (see above) with adaptations to manage risks to human health and the environment. It outlines not only the technical issues of recycled water supply but also aspects such as corporate commitment, communication, training and relationships with other stakeholders and with consumers which WaterSecure must comply with.

Corporate social responsibilityWaterSecure manages its business in a way that produces an overall positive impact on the community and environment. To that end, WaterSecure has adopted a broad definition of the environment that includes biological, ecological, physical, social and cultural resources, and is committed to protecting these in the short and long term.

DesalinationDesalination is the process of creating drinking water from seawater.

First waterFirst water refers to the first production of water from one of WaterSecure’s water recycling or desalination plants.

Lost time injury rateLost time injury frequency rate is the number of injuries that occur on a project per million hours worked and is used to analyse the success of safety practices.

MegalitreOne million litres.

MicrofiltrationMicrofiltration, the third barrier in the seven-barrier water treatment system (see below) involves passing wastewater through very fine hollow fibre membranes. With pores the size of 0.04 to 0.2 micrometres (human hair ranges in size from 20 to 200 micrometres in diameter), these membranes remove particulate matter, protozoa and some viruses.


Project allianceA project alliance is a commercial legal framework between a government agency as ‘owner’-participant and one or more private sector parties as the ‘alliance contractor’ or ‘non-owner participant’ in a capital works project.

Purified recycled water Purified recycled water (PRW) is water that has been purified at an advanced water treatment plant. For more information visit www.qwc.qld.gov.au.

Queensland Water CommissionThe Queensland Water Commission (QWC) is the Queensland Government authority responsible for implementing water restrictions, managing water demand, providing advice to government and reforming the water industry to provide a sustainable water supply for South East Queensland.

Reverse osmosisReverse osmosis, the fourth barrier in the seven-barrier water treatment system (see below) involves forcing filtered water through a specially engineered membrane at high pressure to remove impurities such as dissolved salts, viruses, pesticides and most organic compounds.

Reverse osmosis concentrate Reverse osmosis concentrate is the part of feed water that is rejected by the reverse osmosis membranes in an advanced water treatment plant.

Scheme operatorVeolia Water is the scheme operator selected to manage the operation of the Western Corridor Recycled Water Project and Gold Coast Desalination Plant.

Seven-barrier treatment system A system for purifying wastewater by passing it through a system of barriers or treatment processes, for which WaterSecure’s advanced water treatment plants provide barriers three (microfiltration), four (reverse osmosis) and five (advanced oxidation and disinfection).

South East Queensland Water GridThe SEQ Water Grid is a network of water storages, water purification plants and two-way pipes to transport water from areas of water surplus to areas facing a shortfall. The project features more than 400 km of pipeline, two new dams, a desalination plant and three advanced water treatment plants.

Special purpose vehicleA special purpose vehicle is an entity which is formed for a lawful, single, well-defined and narrow purpose. The Western Corridor Recycled Water Pty Ltd special purpose vehicle has been established with the specific and sole objective of carrying out the design and construction of the Western Corridor Recycled Water scheme. SureSmart Water performs a similar function for the Gold Coast Desalination Project.


FAA Financial Administration and Audit Act 1977

FMS Financial Management Standard 1997

ARGs Annual Reporting Guidelines for Queensland Government Agencies


Summary of Requirement Basis for RequirementAnnual Report

Reference

Accessibility

Table of Contents

Glossary

ARGs – section 8.1 P1

P42

Public Availability FMS – section 95 (1) (i) P1

Interpreter Service Statement Queensland Government Language Services Policy

P1

Copyright Notice Copyright Act 1968 P1

Letter of Compliance

A letter of compliance from the accountable officer or

statutory body to the relevant Minister(s)ARGs – section 9 Inside

cover

Introductory Information

Agency role and main functions

Operating environment

External Scrutiny

Machinery of Government changes

Review of proposed forward operations

FMS – section 95 (1) (a) and (b)

ARGs – section 10.3

FMS – section 95 (1) (f ), (e), (j)



FMS – section 95 (1) (h)

P4

P6-9; 14-15

See Financial statements P51

n/a

P14-15

Agency Performance

Government Objectives for the Community FMS – section 95 (1) (a) and (i)


P28

Agency Objectives and Performance Indicators P15; 28-29

Agency Outputs and Output Performance Measures

P16-29

Summary of Financial Information

Summary of financial information ARGs – section 12 P38-40



Reference

Governance – Management and Structure

Organisational Structure FMS – section 95 (1) (f ) (iii) P10; 34

Executive Management FMS – section 95 (1) (f ) (iii) P10-13; 34

Related Entities FMS – section 96 (1) See Financial statements P4

Schedule of Statutory Authorities or Instrumentalities

FMS – section 96 (2) n/a

Boards and Committees ARGs – section 13.5 P10-11; 34-37

Public Sector Ethics Act 1994 - implementation statement giving details of the action taken during the reporting period

Public Sector Ethics Act 1994

(section 23 and Schedule)

P30

Whistleblowers Protection Act 1994 - public interest disclosures received

Whistleblowers Protection Act 1994

(sections 30 – 31 and Schedule)

n/a

Governance – Risk Management and Accountability

Risk Management FMS – section 95 (1) (k) P35-36

Audit Committee ARGs – section 14.2 P35-37

Internal audit ARGs – section 14.3 P35-37

Governance – Human Resources

Workforce Planning, Retention and Turnover FMS – section 95 (1) (f ) (iii) P30

Voluntary Early Retirement (VER) Directive No.11/05 Voluntary Early Retirement (VER)

n/a

Retrenchments Directive No.10/05 Retrenchment

n/a

Initiatives for Women ARGs – section 15.4 P30



Reference

Governance - Operations

Consultancies FMS – section 95 (1) (eb) P32

Overseas Travel FMS – section 95 (1) (ea) P33

Information Systems and Recordkeeping Public Records Act 2002 P37

Waste Management Environmental Protection (Waste Management) Policy 2000, Environmental Protection Act 1994

n/a

Other Prescribed Requirements

Shared Services ARGs – section 17.1 n/a

Carbon Emissions Premier’s Statement n/a

Financial Statements

Annual general purpose financial statements Financial Reporting Requirements for Queensland Government Agencies

See Financial statements

Certification of Financial Statements FAA – sections 39 and 46F See Financial statements P50

Independent Auditors Report FAA - sections 38AA(1) and 46FA(3)

See Financial statements P51

Remuneration Disclosures Financial Reporting Requirements for Queensland Government Agencies

See Financial statements P26-27



Financial ReportQueensland Manufactured Water AuthorityFOR THE YEAR ENDED 30 JuNE 2009


ContentsIncome Statement 50

Balance Sheet 51

Statement of Changes in Equity 52

Cash Flow Statement 53

Notes to the Financial Statement 54

Management Certificate 99

Independent Audit Report 100

5569

7474747476767779797980808184868787888889899091929293979898



Financial ReportWestern Corridor Recycled Water Pty LtdFOR THE YEAR ENDED 30 JuNE 2009


ContentsDirectors’ report 104

Auditor’s Independence Declaration 110

Income Statement 111

Balance Sheet 112




Directors’ Declaration 147


116126126126127128128129131131131132132134134135136136137137138139141141141145146146



Financial ReportSouth East Queensland (Gold Coast) Desalination Company Pty LtdFOR THE YEAR ENDED 30 JuNE 2009


ContentsDirectors’ report 152

Auditor’s Independence Declaration 158

Income Statement 159

Balance Sheet 160




Directors’ Declaration 193


163174174174175178179179179180181181182182183183184184186187187190191191


2008/0919 october 2009 the honourable stephen robertson mp minister for natural resources, mines and...

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