preparing for the future - office of the tasmanian ... › documents... · • delivery of $26.4...

preparing for the future A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

Tasmanian Water and Sewerage Corporation (North-Western Region) Pty Limited

04 About Cradle Mountain Water

04 Our Vision and Mission

05 2011- 12 at a Glance

05 2011-12 Highlights

06 Chairman’s Report

08 Chief Executive Officer’s Report

16 Corporate Governance

20 Directors’ Report

27 Financial Report

StatementofComprehensiveIncome

StatementofFinancialPosition

StatementofCashFlows

StatementofChangesinEquity

NotestotheFinancialStatements

A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

Contents

3

preparingforthefuture

Owner CouncilsBurnieCityCouncil

CentralCoastCouncil

CircularHeadCouncil

DevonportCityCouncil

KentishCouncil

KingIslandCouncil

LatrobeCouncil

Waratah-WynyardCouncil

WestCoastCouncil

About Cradle Mountain Water

4

Owners’ RepresentativesUndertheWaterandSewerageCorporationsAct2008(WSCA),theninecouncilownersofCradleMountainWaterarerequiredtoappointthreeOwners’Representatives.TheirroleistoprovidealiaisonpointbetweentheBoardandtheCorporation’sOwners.

The Owners’ Representatives are:

Ald.StevenKons

MayorofBurnieCityCouncil

ChairoftheOwnersRepresentatives

Cr.JanBonde

MayorofCentralCoastCouncil

Cr.JohnPerkins

LatrobeCouncil

Directors

ThecurrentDirectorsofCradleMountainWaterare:

MrMilesHampton,Chairman

MrGrantAtkins

MrBrianBayley

MsSarahMerridew

DrDanNorton

Cradle Mountain Water has the responsibility for managing the delivery of high quality water and sewerage services to homes and businesses across North West Tasmania. We are owned by the nine councils of North West Tasmania.

Vision

Cradle Mountain Water will protect public health, improve the environment, provide exceptional quality services and deliver successful economic and social outcomes for our customers, now and in the future.

Mission

To supply our customers with quality water and wastewater services that meet their expectations and regulatory requirements, and delivers our shareholders sustainable returns on their investment.

A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

2011 – 12 Highlights

•Preparation,negotiationandfinalisationofthe2012–2015PriceandServicePlan.

•ReductioninCradleMountainWater’sLostTimeInjuryFrequencyRate(LTIFR)from16.2to12.3.

•Deliveryof$26.4millioninCapitalWorks.

•Implementationofquarterlycustomerbilling.

•CompletedconstructionofWaratahWaterTreatmentPlant.

•InstallationofemergencyassetreplacementsatLeeStreetSmithtonandtheSimplotsewerrisingmaininUlverstone.

•Completedtheinstallationof12,300watermeterstoresidentialandbusinessproperties.

•CommencedtheSupervisoryControlandDataAcquisition(SCADA)projectwhichwillresultinoperationalefficienciesacrossourplants.

•Reductioninpumpstationoverflowsfrom84eventsforthepreviousyearto48eventsin2011-12.

•FinalisationoftheDamManagementPlan.

•NewoperatinglicencesforTullahandSheffieldSewageTreatmentPlants.

A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

About Cradle Mountain Water

2011 – 12 at a glance

5

Scope of Business

Numberofsewagetreatmentplants 27

Numberofwatertreatmentplants 17

Numberofwaterpumpingstations 61

Lengthofwatermains(km) 1,389

Numberofwaterdistributionstoragefacilities 86

Numberofsewagepumpingstations 250

Lengthofseweragemainsandchannels(km) 1,197

Totalsourcedwater(ML) 17,223

Populationreceivingwatersupplyservices# 105,559

Populationreceivingsewerageservices# 98,616

Totalconnectedproperties–watersupply* 43,983

Totalconnectedproperties-sewerage* 41,090

*Totalconnectedpropertiesdoesnotincludepropertiesthatarechargedbutnotconnected.

#Basedonthenumberofconnectedpropertiesmultipliedby2.4(averagehouseholdsizeforMersey/LyellandKingIslandABSDistricts,2006Censusdata).


The Year under Review

Ineachofourfirsttwoyearsofoperation,CradleMountainWaterconfrontedsignificantchallengesaswesoughttobecomefullyfunctionalasanewlyestablished,standalonebusiness.

Intheyearunderreviewwecontinuedtofaceanumberofsignificantchallenges.Thedemandsonourpeoplehavebeenextraordinarybutthroughtheirefforts,2011-12hasbeenanotheryearofsignificantprogress.

In2011-12wehadbeforeustwoverysignificantnon-negotiabledeadlines:thelegislatedintroductionoftwo-partpricingby1July2012,whichinvolvedtheinstallationofmorethan12,300watermetersacrossNorthWesternTasmania,andthepreparationandfinalisationofourPriceandServicePlanforthethreeyearscommencing1July2012.

Themeterinstallationprogramwasdeliveredwithinbudget,acredittoallinvolvedintheplanningandmanagementoftheverydemandingworkschedule.

ThepreparationofthePriceandServicePlan,itssubsequentreviewandultimateapprovalbytheTasmanianEconomicRegulatorwasasignificantwholeofbusinesstask.

ThattheOfficeoftheTasmanianEconomicRegulatorlargelyendorsedthePriceandServicePlanpreparedbyCradleMountainWaterreflectstheeffortandthoughtthatunderpinnedourPlan.

TheapprovalofthePriceandServicePlanmeansthatfrom1July2012ourcustomerswillmovetoafairerandmoreequitablepricingregimeforwaterandsewerageservices.Overtime,customerswithlikeserviceswillpaylikecharges,irrespectiveofwheretheyliveintheNorthWestregion.

Thefactthatwemetthedeadlines,whilemaintainingourfocusonimprovingwaterandsewerageservicestocustomers,achievinggreaterbusinessefficiency,improvingsafetyperformanceandbuildingamorecohesiveworkforce,isasignificantachievementfortheCorporationasawhole.

Duringtheyear,constructionofthenewWaratahWaterTreatmentPlantwascompletedandofficiallyopenedinAugust,2012.ThenewplantisprovidingtheWaratahcommunitywithfullytreatedwater.WealsocommencedthereplacementofamajorsewermaininSmithton.

Theimplementationofournewbillingsystemhasledtosignificantprogressinimprovingthetimelinessandaccuracyofbillingservicesandhasenabledustocommencedebtormanagementprocessesthathadbeenputonholdwhileweoperatedwithinterimbillingsystems.

Towards a Single CorporationInSeptember2011,onbehalfoftheBoardsofthefourCorporations,IproposedtoourownercouncilsthatSouthernWater,BenLomondWater,CradleMountainWaterandcommonservicesprovider,Onstream,bemergedtoformasinglestate-widewaterandsewerageCorporation.

Chairman’s Report

6

A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

TheBoardofCradleMountainWaterhadreachedtheviewthatamergerofthefourCorporationswouldbeinthebestinterestsofourcustomers,ouremployeesandourowners.

ItisourbeliefthattheTasmaniancommunitywillbebetterservedbyasingleCorporation:thatsuchamovewouldmakeiteasiertoensureaconsistentstate-wideapproach,whichisnecessarytofacilitateinvestmentanddevelopment,andachievesignificantfinancialsavings.

InearlySeptember2011,theOnstreamBoardtookthefirststeptowardsrationalisationwhenitdecidedtoco-locateOnstreamstaffmembersstate-widewithSouthernWater,BenLomondWaterandCradleMountainWaterrespectively.Theco-locationhasincreasedthesynergybetweensharedservicesandtheregionalCorporations,enhancedcustomerserviceandwillenablefinancialsavingsofsome$2.3millionperyear.

Chairman’s Report

InJune2012,ourcouncilownersreaffirmedtheirin-principlesupportfortheamalgamationofthefourCorporationsandagreedtheirpreferredgovernancearrangementsforasingleCorporation.

TheDirectorsofCradleMountainWaterlookforwardtocontributingtotheprocessoftransition,confidentthattheCorporationisnowsufficientlywellestablishedtoeffectivelymanagethechallengesthatwillhavetobeaddressedaswemovethroughthemergerprocess.

Itisourhopethatthedecisiontotakeaproactiveapproachwillensurethatstructuralchangestoourindustrycanbeachievedquickly,efficientlyandwithoutimpactingservicedeliverytoourcustomers.

TheBoardisveryawareofthepotentialimpactofthesechangesonemployeesoftheCorporation.

Whileuncertaintyisinevitableatsuchatime,therealityisthatforthevastmajorityofemployeesnothingwillchange.Theywillcontinuetheirvitalworkinmaintaining,upgradingandbuildingwaterandsewerageinfrastructure,deliveringessentialservicestocustomers,improvingthequalityofdrinkingwater,protectingtheenvironmentandfacilitatingthedevelopmentsthatbringrealeconomicbenefitstothestateasawhole.

TheBoardisconfidentthattheleadershipteamatCradleMountainWaterwillsupportandencourageemployeesthroughthisperiodoftransition.

IcommendthecommitmentandprofessionalismofourCEO,AndrewKneebone,andhisexecutiveteam,thehardworkandperseveranceofouremployeesandthediligenceandsupportofmyfellowDirectors.

Miles HamptonChairman

7


Financial ResultsThenetprofitaftertaxfor2011–12was$0.462million.Theresultwasimpactedby

•lowerthananticipatedrevenuefromdevelopers,

andhighercostsassociatedwith;

•de-sludgingofSewageTreatmentPlantstodischargequalitycompliance,

•higheremployeerelatedcosts;and

•doubtfulandbaddebts.

Somesignificantoneoffitemsimpactedtheprofitresultincludingthewritebackofanearlycontractterminationfeethathadbeenpreviouslybookedtorevenue.

OperationsDuring2011-12wefocussedontheidentificationandimplementationofoperationalefficienciesacrossallaspectsofourbusiness.

Wealsomaintainedoureffortstoestablisha“noharm”workplaceculture.

Theintroductionoftechnologytocaptureperformancedatainthefieldhasenabledustoimproveoperationalefficiencyandcustomerservicethrough:

•FieldservicestaffbeingabletomakerealtimeadjustmentstothelocationofassetsinourGeographicInformationSystem.

•Improvedaccuracyofourinformationwhichresultsinbettercustomerservicereporting.

•Trackingthecostsofrepairsinordertoachievegreaterefficiencies.

ThehighlightfortheyearintheareaofwaterqualitywastheinstallationofanewwatertreatmentplantatWaratah.Thisinnovative“modularstyle”membranefiltrationwatertreatmentplantincludesfluoridationandchlorinationthatcomplieswithindustrybestpractice.Themainspowerissupplementedbysolarpower.

SeveralothersignificantwaterprojectscontinuetomakegoodprogressovertheperiodincludingthePaloonaPipelinewhichwillprovidefullytreatedwatertotheKelseyTiersregion.AlsotheprovisionoffiltrationtoimprovethequalityoftheMountainCreeksupplytoRosebery,andtheimplementationofcriticalcontrolinstrumentationforthecontrolofchlorineandfluoridecomplianceatanumberoftreatmentplants.

WhiletheQueenstownwatertreatmentplantwasofficiallyopenedlastyear,qualityissueshavenotyetbeenrectified.Itisanticipatedthattheoutstandingissueswillberesolvedearlyinthenewfinancialyear.

TheplansforimprovedwaterqualityforKingIslandcontinuetoprogressfollowingacommunityforumthatwasheldtoaddressconcernsregardingtheproject.

Chief Executive Officer’s Report

8

A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

Chief Executive Officer’s Report

OngoingimprovementstoourwatertreatmentplantswillassistusinmeetingallobligationsintheAustralianDrinkingWaterQualityGuidelines.Ofmostimportanceisbacteriologicalcomplianceandin2011-12ourwatertreatmentplantscontinuedtoachieve100%compliancewiththisparameter(referGraph1).

Therehasbeenasignificantnumberofincrementalprocessandminorinfrastructureimprovementstooursewerageassetsovertheperiod.Consequently,animprovementineffluentproductionthatcomplieswithourdischargelicenceshasbeenachieved.Averagecomplianceoverallacrossalloftheplantsfor2011-12was44.75%(referGraph2).

9

Notetograph:Shouldonelicenceparameterbebreachedtheentireplantisdeemedtobe

non-compliant,asdefinedbytheNationalPerformanceFramework.

Water Quality Compliance

EPA Compliance 2011-2012

0

20

40

60

80

100

0

20

40

60

80

100

July

August

Septem

ber

October

November

December

January

February

March

April

May

June

0

20

40

60

80

100

0

20

40

60

80

100

July

August

Septem

ber

October

November

December

January

February

March

April

May

June

%systems98%freeofE.coli

%compliance


The key objectives for the 2012-13 financial year will include:

•ImplementationofaCustomerServiceStrategytoincreaseservicelevelsacrossthebusiness.

•Improveddatavalidationtominimisebillingissuesarisingfromdatainaccuracies.

•Improveaccessibilityofservicesforcustomersviaonlineselfservice.

Key Facts for the 2011-12 Financial Year

NumberofCustomers* 45,204

Totalcallsto13MYWATER 39,736

Averagecallwaitingtime 2minutes28seconds

Servicelevels(%callsansweredwithin30seconds)

41.9%

*NumberofcustomersthatarechargedbyCradleMountainWaterwhohaveaconnectionpoint.

CommunicationsThefinalisationofthePriceandServicePlanresultedinareviewandsignificantupdatingofourwebsite.

Thisoccurredinparallelwithacommunicationcampaigntoincreaseawarenessofpricingchangesthatcommencedon1July2012.

Therewasanincreasedemphasisonimprovingcommunicationwiththemediainresponsetocustomercomplaints.Aproactiveandtransparentapproachwasadopted,deliveringbetteroutcomesforallpartiesinvolved.

AcommunicationinitiativethathasprovenextremelybeneficialisourFacebookpage.Verypositivecustomerrelationshipoutcomeshavebeenexperiencedduetoits“instantnature”torespondtocustomerissues.Furtheremphasiswillbeplacedonraisingtheprofileofthismediuminthenexttwelvemonths.

10

TheseweragenetworkhasexperiencedanumberofmajorchallengesincludingthereplacementoftheSimplotrisingmaininUlverstone,therepairoftheUlverstoneHelenStreetPumpstation,thecompletionofEastDevonportNorthCarolineStreetPumpStationandthereplacementofaSmithtonmajorsewermain.

Duringtheyear,ourteamsrespondedto5,197reactiveordersand1,587standingserviceordersforprogrammedmaintenanceforwaterandsewerageservices.

Our CustomersSignificantmilestoneshavebeenreachedbyourCustomerServiceTeamduringthe2011-12financialyearincluding:

•Fullimplementationofthenewbillingsystem.

•Introductionofquarterlybilling.

•Introductionofdebtormanagementsystems.

•Upgradeofourcallcentrephonesystem.

A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

People and CultureOur People

Themajorityofourpeople-basedinitiativesarecentredonimprovedcommunication.Withthecurrentemployeeintranetgoing‘live’inAugust2011,thissignificantlyimprovedaccessibilitytoinformationforouremployees.Employeescannoweasilyaccesstheirpayrollinformation,applyforleaveonlineanddownloadanumberofrelevantpolicies,proceduresandforms.

InMay2012,weconductedaseriesofemployeeforumsandexplainedthefocusoftheCorporation’sactivitiesoverthe2012-13financialyear.

Theengagementwasfurtherreinforcedwiththefinalisationofourperformancereviewanddevelopmentplanningprogram;akeyoutcomewastheestablishmentofperformanceobjectivesfor2012-13foreveryemployee.

Wecongratulatedseveralemployeesforachievingsignificantyearsofservice.AshleyGaleachieved35yearsandDavidWalmsley,RobertWalters,andMichaelBeamishachieved25yearsservice.Reaching20yearsofservicewereGeoffreyHyland,DaleAuton,GregoryCoombes,JudithRayandPhillipBenson.10yearsofservicehasbeenachievedbyTimothyFlackandPeterMorice.

Diversity Statistics as at 30 June 2012 (full-time equivalents)

Male Female

Cradle Mountain Water Board 4 80% 1 20%

Senior Management 3 50% 3 50%

Permanent Workforce# 123.9 85% 22.1 15%

#excludingseniormanagementandtemporarystaff.

Health and Safety

Our“NoHarm”objectivehasprovidedtheimpetusbehindanumberofhealthandsafetyinitiativesoverthepasttwelvemonths.

Particularattentionhasbeenpaidtohighriskactivities,suchashandlingofhazardouschemicals,workingatheights,asbestosawarenessandexcavation/trenchingandshoring.Thishasnecessitatedthedevelopmentofproceduresandworkinstructions,provisionoftrainingandongoingcommunicationactivities.Afullauditwascompletedofallabove-groundfacilitiesinordertocomplywiththeNationalAsbestosCode,includingthedevelopmentofanAsbestosRegister.

Allemployeesconductingidentified“highrisk”activitiesarecompetencyassessedeverytwoyears.Anotheractivityoverthepastyearwhichiskeytoensuringthesafetyofourworkforceandcontractors,hasbeenthesignificant,ongoingconsultationwithkey

11

stakeholdersregardingintroductionofanAlcoholandOtherDrugsCEODirectiveandassociatedprocedure.Thisdirectivewillbeimplementedearlyin2012-13.

Weengagealargenumberofcontractorsandweconducted537contractorsafetyinductionsduringtheyear.

WearewelladvancedinplanningfortheintroductionoftheWorkHealthandSafetyActinJanuary2013aspartofthenational“harmonised”approachtoHealthandSafety.

Ourcommitmenttoworkplacesafetywasrecognisedinthe2011WorkSafeTasmaniaAwardsinOctoberandwewerea“finalist”and“highlycommended”intheBestNewWorkerProgram.

WhilstwehavealongwaytogoitispleasingtonotethatourLTIFRwasreducedfrom16.2in2010-11to12.3in2011-12.


Training and Development

Itisapriorityforustoensurethatemployeesareprovidedwitheveryopportunitytoachievetheirpotentialandthattheyhavetheskillstoworksafelyatalltimes.

Atotalof1,119trainingattendanceswererecordedfor2011-12.Currently,wehave40employeesenrolledinqualificationsatCertificateIIIlevelorhigher.

Wewerefortunatetobeawardedfundingfor22employeestoundertakeCertificateIIIleveltrainingorhigherundertheProductivityPlacesProgram,ajointCommonwealth/Statefundedprogramthataimstosubstantiallyincreasethenumberofworkerswithhigherqualifications.

FundingwasalsoreceivedundertheWorkplaceEnglishLanguageandLiteracyProgram,anAustralianGovernmentinitiativetoassistworkplacetrainingwherelanguage,literacyornumeracysupportisneeded.

Trainingneedsarebeingregularlyreviewedthroughanup-to-datefunctionalneedsanalysisofallexistingpositions.

Price and Service PlanThedevelopmentofthePriceandServicePlanwasamajorprojectin2011-12.Thisplansetsthepricesandservicestandardsfortheorganisationforthenextthreeyears,commencingon1July2012.

Theobjectivesoftheplanareto:

•Overtime,transitionexistingcustomertariffsto‘targettariffs’thatachieveequitypricingovertheregion.

•Improveproductandcustomerservicestandards.

•Setpricepathswhichminimisepriceshockstocustomers.

Thismajorprojectincorporated:

•Forecastingdemandonourservices.

•Analysingourcurrentandpotentialrevenueandexpenditure.

•Determiningtypesofregulatedservicesandchargingarrangements.

•Settingpricesthattakeintoconsiderationtheremovalof‘waterallowances’.

•Communityandstakeholderengagement.

•ConsultationwithRegulators.

Development ApplicationsDuringtheyear,345developmentapplicationsand187buildingapplicationswereprocessed,comparedwith347developmentapplicationsand154buildingapplicationsfromthepreviousyear.

Wefinalisedservicearrangementswithanumberofsubstantialprojects,includingtheHarveyNormanHomemakerCentreinDevonport,theTasmanianDairyProductsCoLtdmilkprocessingdevelopmentinSmithtonandtheLionLtdcheesefactorydevelopmentinBurnie.

Capital Works Program and Highlights

Capital Works

Atotalof$26.4millionincapitalworkswasexpendedin2011-12.

North Caroline Street Sewage Pump Station, Devonport (Project Budget $2.8 million – this year $0.8 million)

ThisisthelargestsewagepumpstationinDevonport.ItreceivessewagefrompropertiesinWestDevonportandpumpsittothePardoeTreatmentPlant.

12

A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

Servicingandrefurbishmentoftheoldpumpstationhasbeencompletedandanewby-passpumpinstalledtoincreasecapacity.Asignificantodourproblemhasbeenovercomebytheinstallationofanodourcontrolsystem.Anemergencygeneratorhasbeeninstalledandpowerfailuresshouldnotimpactupontheoperationsofthepumpstation.Theupgradeisscheduledforcompletioninearly2012-13.

Water Metering Project ($5.2 million)

Atotalof12,300meterswereinstalledduringtheyearonun-meteredpropertiesandreplacementofoldmeters.Fundingof$1.95millionwasreceivedfromtheCommonwealthGovernmentforthisproject.

Sewage Treatment Plant Compliance ($3.7 million)

CradleMountainWaterisplacingapriorityonimprovingthetreatmentefficiencywhichalsoenhancescomplianceofoursewagetreatmentplants.PrioritisingoftheplannedworkswasachievedthroughthedevelopmentoftheWastewaterManagementPlan.

Improvementstypicallyincludeupgradeofcontrols,processmodifications,reductionofinflowandinfiltrationandupgradeofdisposalinfrastructure.TheplantswhereworkhascommencedareSheffield,Wynyard,Smithton,Railton,Ulverstone,Burnie,BoatHarbour,PortSorellandPardoe(Devonport).

Dam Safety and Compliance Works Upgrades

AfiveyearDamSafetyPlanhasbeendevelopedthatidentifiesworkrequiredtoimprovestoragecapacityandwaterflows.Theseincludeinterventionssuchasspillwayupgrades,flowmeasurementtomonitorseepage,pipeworkandvalveenhancements.Majorprojectsthatfollowedfromthisare:

•LakeIsandula(Gawler)-UpgradeofspillwaycompletedinDecember2011.

•ConglomerateCreekDam(Queenstown)-SafetyreviewwhichisscheduledforcompletioninOctober2012.

•PetDam(Ridgley)-UpgradeofvalvesandpipeworkintheoutlettowerwhichisscheduledforcompletioninDecember2012.

Upgrade of Smithton Sewer Main ($3.5 million)

Thereplacementof1.8kmoftheSmithtonsewermainisprogressingwell.ThispipelineisoneofthethreemainsewersinSmithton.Theprojectalsoinvolvestheinstallationofanodourcontrolunit.Thesewerconstructionisdueforcompletioninearly2012-13intimetoaccepteffluentfromthenewTasmanianDairyProductsCoLtdmilkprocessingfactory.Theodourcontrolisplannedtobeoperationalearlyin2013.

Inflow and Infiltration Investigations and Interventions ($1.1 million)

CradleMountainWaterhaslaunchedanintensiveinflowandinfiltrationreductionprograminRosebery,LatrobeandSheffield.Thepurposeofthisprojectistoreducethevolumeofstormwaterthatenterstheseweragesystemimposinghydraulicloadonthepipenetwork,pumpstationsandthetreatmentplant.Manholeinspectionsandsmokeanddyetestingtoidentifypointsofingresswillbecompletedinearly2012-13.Testingdatawillbereviewedandaworksprogramwillbedevelopedtoaddresstheidentifiedproblems.Abudgetallocationof$1.1millionisavailableforremediationintheselectedareas.

13


Supervisory Control and Data Acquisition (SCADA) System Upgrade (Budget $7.2 million over eight years)

CradleMountainWaterisseekingtoenhanceandstandardiseourcurrentSCADAandtelemetrysystems.Theprojectwillalsodeliverefficienciesthroughimprovedservicedprovisionthroughlocalandremotemonitoring,alarmingandcontrolofallinstallations(treatmentplants,pumpstations).TheinstallationoftheSCADAcentralcontrolsystemisfinishedandremotesiteswillbeprogressivelyconnectedastheupgradesarecompleted.Theprojectwillrunoveraperiodofeightyears,upgradingsitesaccordingtoriskandcriticality.

Geographic Information System (GIS) ($0.46 million for this year)

ThefocusoftheGISduring2012-13willbetorespondtothecorporaterequirementsofprovidingwebandmobilesolutionsforCradleMountainWater.Thiswillbeachievedthroughthecontinuedprocessofdevelopingourabilitytocaptureandvalidatedatathroughourmobilesolution(e-book)andweb-basedGISinterface.

Replacement of Access Ladders and Pit Lids (Budget $2.047 million over five years)

InlinewithCradleMountainWater’semphasisonoccupationalhealthandsafety,thisprojectinvolvesthereplacementormodificationofsewagepumpstationaccesslidswithpurposedesignedlightweightlidswithspecialsafetyfeatures.Thisisanongoingprojectexpectedtobecompletedoverthenextfiveyears.

Waratah Treatment Plant ($1.6 million)

AnewwatertreatmentplanthasbeenconstructedforWaratahconsistingofthelatesttechnologymembranefiltration.Constructionwascompleted,theplantcommissionedthenofficiallyopenedinAugust,2012.

Major Planning Initiatives

King Island – Currie – Grassy Water Supply System

TheaimofthisprojectistoimprovethesecurityandqualityofthewatersupplytoCurrieandGrassy.Planningincludesfortheschemetobeimplementedinprogressivestages,withprojectcompletionscheduledfor2017.Thedesignconceptandthecostestimatesoftheschemearebeingdeveloped.

Helen Street Pump Station, Ulverstone (Budget $1.5 million)

Planning,designandtendersweresoughtfortheupgradetotheHelenStreetPumpStation.Thiswillinvolvethereplacementofpumps,installationofodourcontrolandastandbygeneratortoprovideemergencypower.ContractshavebeenawardedandworkcommencedonsiteinAugust2012.

Burnie/Cam Link Water Main ($3.5 million)

TheobjectiveofthisprojectistoprovideSomersetandWynyardwithtreatedwaterfromtheBurniereticulationsystemthroughanewlinkingwatermain.Discussionswithlandownersanddetaildesignworksareprogressing.Theconstructionofthewatermainisexpectedin2015-16.

14

A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

Our People

•Thecompletionoftheworkforceoptimisationstudywillensurewehavetherightnumbersofpeoplewiththerightskillmix,intherightplaces,todeliverimprovinglevelsofservice.

•ThroughtheongoingimplementationofourNo-Harmphilosophy.

Our Processes

•Throughongoingreviewofourkeyprocessesusedtodeliverourservices,wecontinuetostriveforoperationalexcellenceandefficiencywithatargetofannualcostgrowthatorbelowCPI-1%.

Thecontinuedfocusoncommunicationandconsultationwithstaff,customersandotherstakeholderswillbepivotalinmovingforwardsuccessfully.

IwouldliketothanktheBoard,theexecutiveandmanagementteamandallCradleMountainWateremployeesfortheirongoingcommitmenttoourorganisationandourcustomers.

Andrew Kneebone

ChiefExecutiveOfficer

Dam Management Plan

ThisyearsawtheimplementationandcompletionoftheDamManagementPlan.Theplanprovidesanoverviewof15damsownedandmanagedbyCradleMountainWater.Theplancontainsinformationabouttheeffectivemanagementofthedamstoensuretheycomplywithsafetyrequirements.

TheDamManagementPlanisthefinalplanwearerequiredtodevelopbythedamsafetyregulatorandthenreportoncomplianceeachyear.ThisplancomplementsthesuiteofplansthatcomeundertheAssetManagementPlan:

•WastewaterManagementPlan.

•DrinkingWaterQualityManagementPlan.

•EmergencyManagementPlan.

Thesemanagementplansprovidethebasisforcontinuedimprovementsinourinfrastructureandsystems.TheoutcomesandprioritiesoftheplanswereusedfordevelopingthePriceandServicePlan,whichisthefoundationfortheannualCorporatePlan.

15

Complaints and Information Requests

Complaints to the Ombudsman

Atotalof28complaintswereescalatedtotheOmbudsmanduringtheyear.

Information Requests

ThisyearwereceivedonlyonerequestforinformationundertheRighttoInformationAct2009.Thisrequestrelatedtowaterqualityanalyses.

TherewerenoappealsandnodisclosuresmadeunderthePublicInterestDisclosuresAct2002.

Looking to the Future

Ourkeyobjectivesfortheyearaheadare:

Our Customers

•ThroughtheimplementationofaCustomerServiceImprovementStrategy,theCorporationestablishesaplantoachievetheservicestandardsoutlinedinourPriceandServicePlan.


Corporate Governance

Governanceisanumbrellatermthatcoverstheadministrationofanorganisation,andtheinteractionbetweenitsBoard,seniormanagementandcorporatestakeholders.AtCradleMountainWatergovernanceisanon-goingprocessof:

•Settingappropriatestrategicdirectiontoensureweremainasustainable,resilientorganisation.

•Managingrisktomitigatelossandseizeopportunity.

•Engagingwithstakeholdersandthecommunitytoensureweunderstandourobligationsandmeettheirexpectations.

•Makingdecisionssupportedbysolidanalyticalevidence.

Wearecommittedtogoodgovernancetoprovideatransparent,accountable,fairandresponsiveapproachfordirectingandcontrollingtheorganisation.Weachievegoodgovernancethrough:

•ClearlydefinedrolesandresponsibilitiesfortheBoard,theChiefExecutiveOfficerandexecutivemanagementteam.

•ImplementationofagovernanceframeworkthatalignswithASXcorporategovernanceprinciples.Areportoncompliancewiththegovernanceprinciplesisavailableonourwebsitewww.cmwater.com.au

•EstablishmentofBoardCommittees.

•Implementationofnumerousstrategicpoliciesandproceduresatalllevelsthroughouttheorganisation.

ManagementhasreportedtotheBoardontheeffectivenessofinternalcontrolandriskmanagementsystems,andprovideditsdeclarationinaccordancewithrelevantpartsofs.295AoftheCorporationsAct2001.

Legislative Authority and Formal Governance

CradleMountainWaterwasformedon13November2008undertheCorporationsAct2001andpursuanttotheWaterandSewerageCorporationsAct2008(WSCA).ItisgovernedbytheConstitutionfortheTasmanianWaterandSewerageCorporation(North-WesternRegion)PtyLimited,whichisapprovedbytheTasmanianParliament.

TheWSCAmandatesgovernancefeaturesincludingtherightsandresponsibilitiesofourownercouncils,andthesectionsoftheCorporationsAct2001thatareformallydisplacedandtherefore,donotapply.

TheprimarypurposesoftheCorporationare:

•Topromotetheefficientdeliveryofwatersupplyandprovisionofsewerageservices.

•Toencouragewaterconservation,demandmanagementofwaterandthere-useofwateronaneconomicandcommercialbasisand;

•Tobeasuccessfulbusinessand,tothisend:

-operateouractivitiesinaccordancewithgoodcommercialpractice;and

-maximisesustainablereturnstoourshareholders.

WeareownedinequalsharesbytheninelocalgovernmentcouncilsintheNorth-Westernregionand,assuch,aresubjecttotheShareholder’sLetterofExpectations(SLE).TheSLEcommunicatesthehigh-levelperformanceexpectationsandstrategicprioritiestoourBoard.

16

A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

Corporate Governance

WearepresentlysubjecttothreeTreasurer’sInstructions.TheserelatetotheminimumcontentofourCorporatePlan,andourobligationstopaybothincometaxequivalentsandloanguaranteefeestoourowners.

Board Role and Structure

UnderourConstitution,theBoard’sroleistomanagethebusinessoftheCorporationinallmatters,unlesstheyarethespecificresponsibilityofownercouncils.TheBoardhasdeterminedwhichmattersitwillmanageexclusively,withtheremainderdelegatedtotheCEO.AsummaryofthisinformationisavailableintheGovernancesectionofourwebsite.

TheWSCAprescribesthecompositionoftheBoardsofallfourTasmanianWaterandSewerageCorporations.ThisissignificanttoCradleMountainWaterassomeDirectorsarecommontotheotherCorporations.AllDirectorsoftheRegionalCorporationsarenon-executiveandindependentintermsoftheexternalrelationshipswiththeCorporations.

Directors’ Background, Terms and Meeting Attendances

Miles Hampton BEc (Hons), FCPA, FCIS, FAICD

Appointed Director 26 November 2008Appointed Chairman 1 January 2011

MrHamptonwasappointedChairmanofthefourTasmanianWaterandSewerageCorporationsinJanuary2011,havingbeenaDirectoroftheCorporationssinceNovember2009.

HewastheChairmanofthebulkwaterauthority,HobartWater,from2005to2009.

Inarelatedcapacity,MrHamptonisamemberoftheInfrastructureAdvisoryCouncilandtheTasmanianPlanningCommission.TheseappointmentsrelatetotheroleofChairmanofthewaterCorporationsandhisinvolvementisprescribedundertherelevantTasmanianlegislation.

MrHamptonisadirectorofMyStateLimited,AustralianPharmaceuticalIndustriesLtd,ForestryTasmaniaandtheVanDiemen’sLandCompany.HeisChairmanoftheUTASFoundation.

HewasManagingDirectorofASXlistedagribusiness,RobertsLimited,for20yearsuntilhisresignationin2006.

Grant Atkins FLGMA, FAICD, JP

Appointed 26 November 2008 Term 1

MrAtkinsisformerGeneralManageroftheLatrobeandKentishCouncilsandisalsoaDirectorwiththeDulvertonWasteManagementAuthority.

MrAtkinshaspreviouslyservedasacouncilrepresentativememberonvariouslocalgovernmentauthoritiesincludingtheCradleCoastWaterAuthority.HeiscurrentlyamemberoftheTasmanianLocalGovernmentAssociationStandardsPanelandtheStateGrantCommission.

Brian Bayley DipCivEng

Appointed 26 November 2001

MrBayleyhasover35yearsexperienceinthewaterindustry,holdingthepositionofManagingDirectorofMelbourneWaterforsevenyears,upuntil2005.HeisalsoaformerChairmanandDirectorofboththeWaterServicesAssociationofAustraliaandtheVictorianWaterAssociation.

MrBayleyiscurrentlyaCivilEngineeringConsultantandbringsabroadportfolioofindustryknowledgeandchangemanagementexperiencetotheCorporation.

HeistheChairmanoftheSafetyandHealth,EnvironmentandPublicHealthCommitteeforallTasmanianWaterandSewerageCorporations.

17


Sarah Merridew BEc, FCA, FAICD

Appointed 10 March 2011

MsMerridewisaCharteredAccountantandaDirectorofMyStateLimitedandTasmanianRailwayPtyLtd.

SheisHonoraryTreasureroftheRoyalFlyingDoctorServiceTasmaniaInc.andactivelyinvolvedwithothercommunityorganisations.

MsMerridewisaformerDirectorofTasmanianPublicFinanceCorporationandapartnerofDeloitteToucheTohmatsu.Shehasextensiveexperienceinprovidingaudit,riskmanagement,governance,andbusinessadvisoryservicestothepublicandprivatesectors.

MsMerridewistheChairoftheAuditandRiskCommitteesforallfourTasmanianWaterandSewerageCorporations.

Dr Daniel Norton BAgricSci (Hons), MEcon, PhD in Economics and Business,

International Advanced Management Program.

Appointed 26 November 2008

DrNortonisanexperiencedChairmanandCEOwhohasworkedintheelectricityindustry,centralgovernmentagenciesandininternationalcommoditymarketing.

Hehasfirst-handexperienceacrossabroadrangeofareasincludingelectricity,transport(includingportsandrail),privatisationandcorporatisation,financialmanagementreform,education,waterservices,healthservices,informationandcommunicationstechnology,agriculturalmarketingandpublicsectormanagement.

HisothercurrentBoardappointmentsincludeChairman,TasmanianPortsCorporationPtyLtd,ChairmanMenziesResearchInstituteTasmaniaandDeputyChairmanAuroraEnergyPtyLtd.

Tony MacCormick BChemEng (Hons), DipBus, FAICD

Appointed 26 November 2008 Term 1, resigned 23 November 2011

MrMacCormickwasformerlytheChairofCradleCoastWater,beforetakingupadirectorshipwithCradleMountainWater.HewasalsoaDirectoroftheDulvertonWasteManagementAuthoritywhilstaDirectorofCradleMountainWater.

MrMacCormickbroughttotheBoardextensiveexperienceinthewaterindustrywithSiemensWaterTechnologiesandwasaDirectoroftheCooperativeResearchCentreforWasteManagementandPollutionControl.

18

A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

Board Committees

TheBoardassumesoverallresponsibilityforcorporategovernanceandmonitorstheperformanceoftheCorporation,bothdirectlyandthroughthefollowingBoardCommittees:

•AuditandRiskCommittee.

•Safety,HumanResources,EnvironmentandPublicHealthCommittee.

Audit and Risk Committee (AAR)

TheAARCommitteeisresponsibleforensuringthattheCorporation’saccountabilityandcontrolframeworksareappropriateandeffective.Thisisachievedthroughthereview,monitoringand,wherenecessary,recommendationofimprovementstothe:

•Internalcontrolprocesses.

•Financialreportingprocesses.

•Corporation’sinternalauditfunction.

•Riskmanagementandcomplianceprocesses.

TheCommitteemetfivetimesduring2011-12andcomprisesthreenon-executivedirectors:SarahMerridew(Chair),GrantAtkinsandDrDanNorton.

Safety, Human Resources, Environment and Public Health Committee (SHREP)

TheroleoftheSafety,HumanResources,EnvironmentandPublicHealthCommitteeistoassisttheBoardinfulfillingitsresponsibilitiesrelatingto:

•Workplacehealthandsafety.

•Humanresourcemanagementanddevelopment.

19

•Employeeremunerationandperformancemanagement.

•Environmentalmanagementandcompliance.

•Publichealthperformanceandcompliance.

InMarch2012,theSHREPCommitteerevieweditschartertoremovehumanresourcemanagementanddevelopment,employeeremuneration,andperformancemanagement;returningoversightoftheseareastotheBoard.

TheSHREPCommitteemetfourtimesduring2011-12withtheCommittee’scompositionchangingduringthecourseoftheyear.AtyearendtheCommitteecomprisedofthreenon-executiveDirectors:BrianBayley(Chair),GrantAtkinsandDrDanNorton.

Table 3 Meeting Attendances 2011-12

Board Meetings (14 held) AAR Committee (5 held) SHREP Committee (4 held) Strategic Workshop (1 held)

Attended Eligible Attended Eligible Attended Eligible Attended Eligible

Miles Hampton 14 14 5 5 3 4 1 1

Grant Atkins 12 14 4 5 4 4 1 1

Brian Bayley 14 14 1 0 4 4 1 1

Tony MacCormick (resigned23November2011)

8 8 1 0 1 1 0 0

Sarah Merridew 13 14 4 5 0 0 1 1

Dr Dan Norton 14 14 5 5 2 2 1 1


Directors’ Report

20

TheDirectorsofTasmanianWaterandSewerageCorporation(North-WesternRegion)PtyLtd,tradingasCradleMountainWater,presentthefinancialreportoftheCorporationforthefinancialyearended30June2012.InordertocomplywiththeprovisionsoftheCorporationsAct2001,theDirectors’Reportasfollows:

Principal ActivitiesTheprincipalactivitiesoftheCorporationduringthecourseofthefinancialyearwere:

•ProvidingwaterandsewerageservicesforresidentialandcommercialcustomersthroughoutNorth-WesternTasmaniaand;

•Undertakingmaintenance,upgradinganddevelopmentworksonwaterandsewerageassets,andpreparingstrategicassetdevelopmentplansforthefuture.

Review of OperationsDuringthefinancialyear,approximately44,000propertieswereprovidedwithservicesinvolvingtheprovisionofwaterandremovalofwastewater.

TheCorporationreportedaprofitaftertaxof$462,000fortheyearended30June2012(2010-11:$1,874,000).

AmoredetailedreviewoftheCorporation’soperationsduringtheyeariscontainedelsewhereinthisAnnualReport.

Environmental RegulationsTheCorporation’soperationsaresubjecttovariousenvironmentalregulationsunderbothCommonwealthandStatelegislation.TheBoardhastheresponsibilitytomonitorcompliancewithenvironmentalregulations.TheDirectorsarenotawareofanysignificantbreachesduringtheyearcoveredbythereport,apartfromthefailureoftheCorporation’ssewagetreatmentplantstoregularlycomplywitheffluentdischargelicencessetbytheEnvironmentalRegulator.TheCorporationhasanagreedWastewaterManagementPlanwiththeEnvironmentalRegulatoroutlininginitiativesandimplementationschedulestoaddresstheRegulator’spriorities.

Dam PortfolioTheCorporationmanagesitsdamsusingaRiskAssessmentandMitigationprocess,withtheaimofcompliancewithNationalCouncilonLargeDams(ANCOLD)DamSafetyManagementGuidelines2003.ThosedamsthatfalloutsideanycriteriaoftheGuidelines,includingtheSocietalRiskCriteria,arebeingmanagedunderaDamSafetyManagementPlanwhichhasbeenprovidedtotheTasmanianDamSafetyRegulator.AnannualreportisprovidedtotheDamSafetyRegulatorregardingthestatusofalldamsandtheCorporationhasanobligationtoimmediatelyadvisetheRegulatorofadversedevelopmentsindamstatus.

DividendsTheDirectorsdidnotdeclareaninterimdividendduringthe2011-12financialyear.

InlightofthecashpositionoftheCorporation,theDirectorshaveresolvednottodeclareafinaldividendfor2011-12,(2010-11:$Nil).Inaccordancewithaccountingstandards,nofinaldividendisrecognisedinthefinancialstatementsunlesstheyaredeclaredpriortothebalancedate.

A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

Directors’ Report

21

Subsequent Events Therehavebeennomattersorcircumstancesthathavearisensincetheendofthefinancialyearthathavesignificantlyaffected,ormaysignificantlyaffecttheCorporation,itsoperations,resultsofoperationsorstateofaffairsinfuturefinancialyears.

Likely Future Developments

TheCorporationmaybeimpactedbythefollowingfuturedevelopments:

InJune2012,membersoftheLocalGovernmentAssociationofTasmaniapreparedarecommendationtotheTreasurerofTasmaniatomergethethreewaterCorporations(BenLomondWater,CradleMountainWaterandSouthernWater)andthemanagementservicesproviderOnstream.Toeffectthisrecommendation,theTreasurerwillneedtosponsorachangetotheexistinglegislation.

TheintroductionbytheCommonwealthGovernmentofthecarbonschemeon1July2012willimpactthefuturefinancialresultsoftheCorporation.AtthedateofthisreporttheDirectorsareunabletodeterminewhetherthisimpactwillhaveamaterialeffectontheCorporation.

InformationonlikelyfuturedevelopmentsintheoperationsoftheCorporationisincludedelsewhereinthisAnnualReport.

Remuneration of Directors and Senior ManagementRemuneration Report

Thisremunerationreport,whichformspartoftheDirectors’report,setsoutinformationabouttheremunerationoftheCorporation’sDirectorsanditsseniorexecutivesforthefinancialyearended30June2012.Theprescribeddetailsforeachpersoncoveredbythisreportaredetailedbelowunderthefollowingheadings:

•Directorandseniorexecutivedetails.

•Remunerationpolicy.

•Relationshipbetweentheremunerationpolicyandthecompanyperformance.

•RemunerationofDirectorsandseniorexecutives.

•Keytermsofemploymentcontracts.

Director and Senior Executive Details

ThefollowingpersonsactedasDirectorsofthecompanyduringorsincetheendofthefinancialyear:

•MrMilesHampton

•MrGrantAtkins

•MrBrianBayley

•MsSarahMerridew

•DrDanNorton

•MrTonyMacCormickResigned23November2011

OtherdetailsregardingDirectorsandtheirattendanceatBoardmeetingsandrelevantcommitteemeetingsareprovidedelsewherewithinthisAnnualReport.

Theterm‘seniorexecutive’isusedinthisremunerationreporttorefertothefollowingpersons:

•MrAndrewKneebone(ChiefExecutiveOfficer)

•MrDougDoherty(ExecutiveManager–ChiefOperatingOfficer)

•MsJuliePoole(ExecutiveManager–CustomerServices)

•MrGraemeRocke(ExecutiveManager–CommercialServices)

•MsLouiseMaconachie(ExecutiveManager–Regulation–appointed19September2011)

•MsSandraWilson(ExecutiveManager–PeopleandCulture-appointed17October2011)


22

•MrBarryOmundson(ExecutiveManager–Operations–resigned23September2011)

•MrIanHutchinson(ExecutiveManager–PeopleandCulture–resigned14October2011)

Exceptasnoted,thenamedpersonsheldtheircurrentpositionforthewholeofthefinancialyearandsincetheendofthefinancialyear.

Remuneration PolicySenior Executives’ Remuneration

TheBoardhasapprovedaremunerationframework,developedinconjunctionwithindependentremunerationspecialists,Mercer,andbenchmarkednationally.Theframeworkappliestoseniorexecutives,linemanagersandspecificprofessionalorexpertpositionsandtheCEOisobligedtoworkwithinitsparameters.

TheremunerationofseniorexecutivesisbasedonTotalEmploymentCosttotheCorporation.Componentsofremunerationcanincludecashandnon-cashalternativesaswellasanyfringebenefitstaxincurred.Noequity-basedcomponentsareofferedaspartofanyremuneration.

An‘atrisk’element,inadditiontoTotalEmploymentCost,hasbeenintroducedforseniorexecutiveswithamaximumpossibleamountdeterminedbytheBoard.Theperformanceoftheseniorexecutivesismeasuredagainstcriteriaagreedannuallyinadvance.

Non-Executive Directors’ Remuneration

UndertheWaterandSewerageCorporationsAct(WSCA),thestate-wideOwners’RepresentativeGroup(ORG)isresponsiblefordeterminingtheremunerationandallowancesfornon-executiveDirectors.TheORGisappointedbytheownersoftheRegionalCorporationsandconsistsofthreepeoplefromeachregionappointedbyspecialmajority.TheORGmakesitsdeterminationofremunerationbasedontherecommendationoftheSelectionCommittee,asdescribedinWSCA.

Non-ExecutiveDirectorsareremuneratedbywayoffixedfeesandsuperannuationpaymentsasrequiredbylegislation.Nootherleave,terminationorretirementbenefitsareaccruedorpaidtoDirectors.

DirectorsarealsoentitledtoreimbursementofexpensesincurredwhileattendingtoCorporationbusiness.

IndependentDirectors’remunerationisincreasedannuallybyCPI,providedthatanindependentreviewisnotrequestedbytheSelectionCommittee,ORGortheBoardasawhole.

Relationship Between the Remuneration Policy and the Company Performance

TheCorporation’sremunerationpolicyhasbeendesignedtoaligntheobjectivesofseniorexecutiveswithbusinessobjectives,byprovidingbothafixedremunerationcomponentandaperformancebasedcomponent.

TheCEOandallseniorexecutivesareappointedunderemploymentcontractswhichincludeperformance-basedpayments.‘Seniorexecutiveperformanceobjectivesareestablishedannually’.TheCEO’sperformanceisreviewedbytheBoardatleastannually.Forotherseniorexecutives,theCEOreviewsperformanceandreportstotheBoardatleastannuallyandrecommendsanysubsequentperformancebasedpayment.Thereviewandanypaymentsarefinaliseduponcompletionoftheauditedfinancialstatements.

Whilstallincentivesarelinkedtopre-determinedperformancecriteria,theBoardhasultimatediscretioninapprovingpaymentofthese.

A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

2012 Financial Year 2011 Financial Year

Short-termbenefits Postemploymentbenefits

Short-termbenefits Postemploymentbenefits

Fees

Bonu

s

Supe

r-an

nuat

ion

Tota

l

Fees

Bonu

s

Supe

r-an

nuat

ion

Tota

l

Non-executiveDirectors $ $ $ $ $ $ $ $

MrMilesHampton–Chair 36,348 - 3,271 39,619 26,616 - 2,395 29,011

MrGeoffWillis(FormerChair,retired31/12/10)

- - - - 18,063 - 1,626 19,689

MrGrantAtkins 33,580 - 3,022 36,602 29,039 - 2,614 31,653

MrBrianBayley 21,665 - 1,950 23,615 17,326 - 1,559 18,885

MrTonyMacCormick(resigned23/11/11)

12,818 - 1,154 13,972 28,845 - 2,596 31,441

MsSarahMerridew 20,252 - 1,823 22,075 5,232 - 471 5,703

DrDanNorton 21,909 - 1,972 23,881 20,261 - 1,823 22,084

Total 146,572 - 13,192 159,764 145,382 - 13,084 158,466

Remuneration of Directors and Senior Executives

ThefollowingtableofbenefitsandpaymentsdetailsthecomponentsofremunerationforeachpersonthatactedasaDirectoroftheCorporationduringorsincetheendofthefinancialyear:

23


2012 Financial Year 2011 Financial Year

Base Total Base Total

$30,000-$39,999 1 - - -

$40,000-$49,999 1 - - -

$60,000-$69,999 - 1 - -

$70,000-$79,999 1 2 - -

$80,000-$89,999 1 - 1 -

$90,000-$99,999 1 1 1 1

$100,000-$109,999 - - - 1

$110,000-$119,999 - 1 1 -

$120,000-$129,999 - - 1 -

$130,000-$139,999 1 - - 2

$140,000-$149,999 1 - 1 -

$150,000-$159,999 - 1 - -

$160,000-$169,999 - 1 1 1

$180,000-$189,999 - - - 1

$190,000-$199,999 - - 1 -

$200,000-$209,999 1 - - -

$220,000-$229,999 - - - 1

$230,000-$239,999 - 1 - -

8 8 7 7

24

Thefollowingtabledisclosestheremunerationdetailsinbandsforeachpersonthatactedasaseniorexecutiveofthecompanyduringorsincetheendofthefinancialyear:

Base=Basesalary

Total=Totalsalaryincludingbasesalary,superannuationand,whereapplicable,bonusesand/orterminationbenefits.The‘atrisk’componentislimitedto10%oftheTECforseniorexecutivesand15%ofthetotalemploymentcostfortheCEO.

A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

25

Key Terms of Employment Contracts

Senior executive staff

TheemploymenttermsandconditionsofseniorexecutivesareformalisedinIndividualEmploymentAgreements.

Consistentwithlegislatedrequirements,seniorexecutivesreceiveaminimumsuperannuationguaranteecontribution,whichiscurrently9%,anddonotreceiveanyotherretirementbenefits.However,someindividualshavechosentosacrificepartoftheirsalarytoincreasepaymentstowardssuperannuation.Uponretirement,seniorexecutivesarepaidemployeebenefitentitlementsaccruedtothedateofretirement.

TermsofemploymentrequiretheseniorexecutiveoftheCorporationprovideaminimumnoticeperiodpriortoterminationofcontract,subjecttoconditionsoftheFairWorkAct(2009),whereapplicable.ThelengthofnoticevariesbetweenIndividualEmploymentAgreements,however,isgenerallybetweenthreetosixmonths.Undercertaincircumstances,seniorexecutivesmaybepaidaredundancy,thelevelofwhichisdependentonindividualcontractualarrangementsandlengthofcontractserved.Terminationpaymentsarenotpayableonresignationorundercircumstancesofunsatisfactoryperformance.

Independent Directors

AppointmentconditionsforindependentDirectorsarespecifiedinbothWSCAandformallettersofappointment.Theseinclude:

•maximumthreeyearterm;

•eithertheindependentDirector,theCorporationortheORGmayterminatetherelationshiponthreemonthsnoticeorimmediatelyincertainsituations;and

•theCorporationistoensurethatithasappropriateDirectors’andofficers’liabilityinsurance.

FurtherInformationabouttheremunerationofDirectorsandseniorexecutivesissetoutinNote17totheFinancialStatements.

Indemnification of Directors and Officers

Duringthefinancialyear,theCorporationpaidapremiuminrespectofaninsurancepolicycoveringtheliabilityofallcurrentDirectorsandofficersoftheCorporation.

TheCorporationhasnototherwise,duringorsincethefinancialyear,indemnifiedoragreedtoindemnifyanofficerorauditoroftheCorporationagainstaliabilityincurredassuchbyanofficerorauditor.

Proceedings on Behalf of the Corporation

NopersonhasappliedforleaveoftheCourttobringproceedingsonbehalfoftheCorporationorinterveneinanyproceedingstowhichtheCorporationisapartyforthepurposeoftakingresponsibilityonbehalfoftheCorporationforalloranypartofthoseproceedings.

TheCorporationwasnotapartytoanysuchproceedingsduringtheyear.

Auditor’s Independence Declaration

Theauditor’sindependencedeclarationisincludedonpage28.

Rounding Off of Amounts

TheCorporationisofakindreferredtoinASICClassOrder98/0100dated10July1998andinaccordancewiththatClassOrder,amountsinthefinancialreportandDirectors’Reporthavebeenroundedtothenearestthousanddollars,unlessotherwisestated.


26

ThisDirectors’ReportissignedinaccordancewitharesolutionofDirectorsmadepursuanttos.298(2)oftheCorporationsAct2001.

OnbehalfoftheDirectors

Miles Hampton Sarah Merridew

Chair Director

10August2012

A N N U A L R E P O R T 2 0 1 1 - 2 0 1 2

27

Financial Report

Note Contents Page Auditor’sIndependenceDeclaration 28 Directors’Declaration 29 IndependentAuditor’sReport 30 StatementofComprehensiveIncome 32 StatementofFinancialPosition 33 StatementofCashFlows 34 StatementofChangesinEquity 351 GeneralInformation 362 ApplicationofNewandRevisedAccountingStandards 363 SummaryofSignificantAccountingPolicies 374 Revenue 465 Expenses 466 IncomeTaxEquivalents 487 DividendsProvidedFororPaid 508 CurrentAssets 519 Property,PlantandEquipment 5210 Intangibles 5511 CurrentandNon-currentLiabilities 5612 Members’Equity 5713 Superannuation 5814 CommitmentsforExpenditure 6115 ContingentLiabilities 6216 RemunerationofAuditors 6217 CompensationofKeyManagementPersonnel 6218 RelatedPartyDisclosures 6219 NotestotheStatementofCashFlows 6620 FinancialInstruments 6721 ControllingEntities 7222 InvestmentinAssociate 7323 SubsequentEvents 73


28

29

10 August 2012

FINANCIAL REPORT 1 JULY 2011 TO 30 JUNE 2012 DIRECTORS’ DECLARATION

The directors declare that:

a) The attached financial statements and notes thereto comply with accounting standards; b) The attached financial statements and notes thereto give a true and fair view of the financial position and

performance of the Corporation;

c) In the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001 (Cth); and

d) In the Directors’ opinion, there are reasonable grounds to believe that the corporation will be able to pay its

debts as and when they become due and payable.

e) The Directors have been given the declarations as set out in Section 295A of the Corporations Act 2001 (Cth) from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2012.

Signed in accordance with a resolution of the directors made pursuant to s.295 (5) of the Corporations Act 2001 (Cth). Miles Hampton Chair Sarah Merridew Director

F I N A N C I A L R E P O R T 2 0 1 1 - 2 0 1 2


30

31


32


Statement of Comprehensive Income FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

Tasmanian Water and Sewerage Corporation (North-Western Region) Pty Ltd

Notes 2012 $’000

2011$’000

Continuing Operations

SalesRevenue 4 52,041 48,189

OtherIncomefromOperatingActivities 4 1,225 3,017

ShareofNetProfitofAssociate-EquityMethod 22 14 43

RawMaterialsandConsumables 5 (4,928) (4,390)

DepreciationandAmortisationExpenses 5 (12,698) (12,424)

EmployeeandRelatedExpenses 5 (13,782) (12,408)

OperationsandMaintenanceExpenses 5 (6,926) (5,841)

AdministrationExpenses 5 (8,082) (7,910)

Net Profit before Net Financing Costs 6,864 8,276

FinancingIncome 4 81 69

FinancingExpenses 5 (6,291) (5,568)

Net Financing Costs (6,210) (5,499)

Net Profit before Income Tax Equivalents Expense 654 2,777

IncomeTaxEquivalentsExpense 6.1 (192) (903)

Net Profit after Income Tax Equivalents Expense 12.1 462 1,874

Other Comprehensive Income

ActuarialGain(Loss)onDefinedBenefitPlan 13.2 (87) 190

ShareofothercomprehensivelossesofAssociate 22 (51) (19)

Incometaxrelatingtocomponentsofothercomprehensiveincome 6.2 26 (57)

Total Comprehensive Income for the Financial Year 350 1,988

TheaboveStatementofComprehensiveIncomeshouldbereadinconjunctionwiththeaccompanyingnotes.


33

Statement of Financial Position FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012


Notes 2012 $’000

2011$’000

Current Assets

CashandCashEquivalents 8.1 2,327 2,676

Receivables 8.2 14,966 12,818

Inventories 8.3 955 849

Prepayments 133 99

Total Current Assets 18,381 16,442

Non-current Assets

Property,PlantandEquipment 9 418,890 405,316

Intangibles 10 1,926 1,511

DeferredTaxAssets 6.4 5,466 4,898

InvestmentinAssociate 22 1 38

Total Non-current Assets 426,283 411,763

Total Assets 444,664 428,205

Current Liabilities

Borrowings 11.1 25,613 10,940

EmployeeBenefits 11.2 3,354 3,169

Payables 11.3 6,564 4,235

UnearnedIncome 11.4 253 123

CurrentTaxLiability 6.3 39 836

Total Current Liabilities 35,823 19,303

Non-current Liabilities

Borrowings 11.1 70,650 72,729

EmployeeBenefits 11.2 1,119 989

UnearnedIncome 11.4 3,571 1,917

DeferredTaxLiabilities 6.4 6,812 6,928

Total Non-current Liabilities 82,152 82,563

Total Liabilities 117,975 101,866

Net Assets 326,689 326,339

Equity

RetainedProfits(AccumulatedLosses) 12.1 1,581 1,231

ContributedEquity 12.2 325,108 325,108

Total Equity 326,689 326,339

TheaboveStatementofFinancialPositionshouldbereadinconjunctionwiththeaccompanyingnotes.

34


Statement of Cash Flows FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012


Notes 2012 $’000

2011$’000

Cash Flows from Operating Activities

ReceiptsfromCustomers 49,639 47,364

ReceiptsfromOtherSources 276 1,391

PaymentstoSuppliersandEmployees (35,233) (34,270)

GSTNetReceived 3,884 2,639

InterestReceived 81 69

InterestPaid (5,326) (4,819)

GovernmentGuaranteeFeesPaid (860) (771)

IncomeTaxEquivalentsPaid 6.3 (1,647) (1,278)

Net Cash from Operating Activities 19.1 10,814 10,325

Cash Flows from Investing Activities

PaymentsforProperty,PlantandEquipment (22,535) (13,861)

PaymentsforCapitalisedEmployeeandDirectCosts (3,033) (2,595)

PaymentsforInterest (474) (480)

ProceedsfromSaleofProperty,PlantandEquipment 334 3,102

Net Cash from / (Used in) Investing Activities (25,708) (13,834)

Cash Flows from Financing Activities

ProceedsfromBorrowings 17,741 19,816

RepaymentofBorrowings (5,146) (14,702)

GovernmentFunding-Commonwealth 1,950 -

DividendsPaid 12.1 - (467)

Net Cash from Financing Activities 14,545 4,647

Net Increase (Decrease) in Cash and Cash Equivalents (349) 1,138

Cash and Cash Equivalents at the Beginning of the Year 2,676 1,538

Cash and Cash Equivalents at the End of the Year 19.2 2,327 2,676

TheaboveStatementofCashFlowsshouldbereadinconjunctionwiththeaccompanyingnotes.



35

Statement of Changes in Equity FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012


Notes Retained Profits / (Losses)

$’000

Contributed Equity $’000

Total Equity

$’000

Balance as at 1 July 2010 (290) 325,108 324,818

DividendsPaid 12.1 (467) - (467)

NetProfitafterIncomeTaxEquivalentsExpense 12.1 1,874 - 1,874

OtherComprehensiveIncome 114 - 114

Balance as at 30 June 2011 1,231 325,108 326,339

DividendsPaid 12.1 - - -

NetProfitafterIncomeTaxEquivalentsExpense 12.1 462 - 462

OtherComprehensiveIncome (112) - (112)

Balance as at 30 June 2012 1,581 325,108 326,689

TheaboveStatementofChangesinEquityshouldbereadinconjunctionwiththeaccompanyingnotes.


1 General Information

TasmanianWaterandSewerageCorporation(North-WesternRegion)PtyLtd(theCorporation),tradingasCradleMountainWater,isaproprietylimitedcompanyincorporatedinAustralia.TheaddressoftheCorporation’sregisteredofficeis162PumpingStationRoad,Forth.

TheprincipalactivitiesoftheCorporationaretheprovisionofwaterandsewerageservicesforresidentialandcommercialcustomersthroughouttheNorth-WesternRegionTasmania.

2 Application of New and Revised Accounting Standards

2.1 Standards and Interpretations Affecting Amounts Reported in the Current Period (and/or Prior Periods)

NoneoftheneworrevisedStandardsandInterpretationswhichhavebeenadoptedinthecurrentperiodhaveaffectedanyoftheamountsrecognisedinthecurrentperiodoranypriorperiodandarenotlikelytoaffectfutureperiods.

2.2 New and Revised Standards and Interpretations Which Have Had No Effect on Financial Statements

ThefollowingnewandrevisedStandardsandInterpretations,thathavebecomeeffectiveforthecurrentreportingperiod,havenothadanysignificantimpactontheamountsreportedinthisfinancialreport.

Standard/Interpretation

Affected Standards

AASB2010-4 FurtherAmendmentstoAustralianAccountingStandardsarisingfromtheAnnualImprovementsProject[AASB1,7,101,134]

AASB124 RelatedPartychangestodefinitionsandcertainrelatedpartydisclosuresforgovernmentrelatedentities.

AASB2009-14 AmendmentstoAustralianInterpretation–PrepaymentsofaMinimumFundingRequirementinregardtotheCorporationsdefinedbenefitscheme.

AASB2010-6 AmendmentstoAustralianAccountingStandards–DisclosuresonTransfersofFinancialAssets

AASB1054‘AustralianAdditionalDisclosures’

AmendmentstoAustralianAccountingStandardsarisingfromTrans-TasmanConvergenceProject

AASB2010-5 AmendmentstoAustralianAccountingStandards[AASB1,3,4,5,101,107,112,118,119,132,137&139]

2.3 Standards and Interpretations in Issue Not Yet Adopted

Atthedateofauthorisationofthefinancialstatements,theStandardsandInterpretationslistedbelowwereinissuebutnotyeteffective.

Standard/Interpretation Effective for annual reporting periods beginning on or after

Expected to be initially applied in the financial year ending

AASB2010-8‘AmendmentstoAustralianAccountingStandards–DeferredTax:RecoveryofUnderlyingAssets’

1January2012 30June2013

AASB9‘FinancialInstruments’,AASB2009-11‘AmendmentstoAustralianAccountingStandardsarisingfromAASB9’andAASB2010-7‘AmendmentstoAustralianAccountingStandardsarisingfromAASB9(December2010)’


AASB2010-10‘FurtherAmendmentstoAustralianAccountingStandards-RemovalofFixedDatesforFirstTimeAdopters’


AASB2011-4‘FurtheramendmentstoAustralianAccountingStandardstoremoveindividualpersonneldisclosurerequirements’.

1July2011 30June2014

AASB13‘FairValueMeasurement’ 1January2013 30June2014

AASB2011-8‘AmendmentstoAustralianAccountingStandardsarisingfromAASB13’. 1January2013 30June2014

AASB2011-9‘AmendmentstoAustralianAccountingStandards–PresentationofotheritemsofotherComprehensiveIncome’.

1July2012 30June2013

AASB2011-10‘AmendmentstoAustralianAccountingStandardsarisingfromAASB119(September2011)


AASB2011-12‘AmendmentstoAustralianAccountingStandardsarisingfromInterpretation20[AASB1]


Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012


36

TheadoptionofthevariousAustralianAccountingStandardsandInterpretationsinissuebutnotyeteffectivearenotexpectedtomateriallyimpacttheCorporation’saccountingpolicies.TheCorporationdoesnotintendtoadoptanyofthesepronouncementsbeforetheireffectivedates.

3. Summary of Significant Accounting Policies

3.1 Statement of Compliance

Thisfinancialreportisageneral-purposefinancialreport,preparedinaccordancewiththeCorporationsAct2001(Cth),relevantAustralianAccountingStandardsoftheAustralianAccountingStandardsBoard(AASB)andotherlawswhereapplicable.ThefinancialreportalsocomplieswithInternationalFinancialReportingStandards(IFRS)andInterpretationsadoptedbytheInternationalAccountingStandardsBoard.

ThefinancialreportwasapprovedbytheBoardofDirectorson10August2012.

3.2 Basis of Preparation

Thefinancialreportispreparedonthebasisofhistoricalcost,exceptforcertainnon-currentassetsandfinancialinstrumentsthataremeasuredatrevaluedamountsorfairvalues,asexplainedintheaccountingpoliciesbelow.Historicalcostisgenerallybasedonthefairvaluesoftheconsiderationgiveninexchangefortheassets.AllfiguresunlessindicatedotherwisearereportedinAustraliandollars.

TheCorporationisofakindreferredtoinASICClassOrder98/100,dated10July1998,andinaccordancewiththatClassOrderamountsinthefinancialreportareroundedofftothenearestthousanddollars($’000),unlessotherwisestated.

Thefollowingsignificantaccountingpolicieshavebeenadoptedinthepreparationandpresentationofthefinancialreport.

3.3 Significant Accounting Judgements, Estimates and Assumptions

IntheapplicationofAASBstandards,managementisrequiredtomakejudgments,estimatesandassumptionsaboutcarryingvaluesofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Theestimatesandassociatedassumptionsarebasedonhistoricalexperienceandvariousotherfactorsthatarebelievedtobereasonableunderthecircumstances,theresultsofwhichformthebasisofmakingthejudgments.Actualresultsmaydifferfromtheseestimates.Theestimatesandunderlyingassumptionsarereviewedonanongoingbasis.

Fair Value of Property Plant and Equipment

VariousassumptionsandjudgementsareutilisedindeterminingthefairvalueoftheCorporation’sproperty,plantandequipment.TheseassumptionsarediscussedinNotes3.10,3.14and9.

Defined Benefit Superannuation Fund Obligations

VariousactuarialassumptionsareutilisedinthedeterminationoftheCorporation’sdefinedbenefitsuperannuationfundobligations.TheseassumptionsarediscussedinNotes3.15and13.

3.4 Revenue Recognition

Revenueismeasuredatthefairvalueoftheconsiderationreceivedorreceivable.

Sale of Water (Including Irrigation Income)

Fixedwaterchargesarebilledandrecognisedonaquarterlybasis.VariablewatersalesarerecognisedwhenwaterismeteredaspassingfromtheCorporation’sdistributionsystemtothecustomer.Unbilledwatersalesisanestimateofthevalueofwatersuppliedtothecustomerbetweenthedateofthelastmeterreadingandtheyearend,andisincludedinwaterincomewithinsalesrevenueandinthestatementoffinancialpositionasareceivable.




37


Sewerage Income

Fixedchargesforthecollectionandtreatmentofsewagearebilledandrecognisedonaquarterlybasis.Variableseweragecharges(Industrialcustomers)arerecognisedwhenwasteismeteredaspassingfromthecustomertotheCorporation’scollectionsystem.Unbilledsewerageincome(includingtradewaste)isanestimateofthevalueofsewagetreatedonbehalfofthecustomerbetweenthedateofthelastmeterreadingandtheyearend,andisincludedinsewerageincomewithinsalesrevenueandinthestatementoffinancialpositionasareceivable.

Interest Income

Interestincomeisrecognisedasitaccrues,takingintoaccounttheeffectiveyieldonthefinancialasset.

Sale of Non-Current Assets

Thenetgain(loss)onnon-currentassetsalesarerecognisedintheStatementofComprehensiveIncomeatthedatethecontroloftheassetpassestothebuyer,usuallyatthepointanunconditionalwrittencontractissignedandthesignificantrisksandrewardsofownershiphavebeentransferredtothebuyer.Thegainorlossondisposaliscalculatedasthedifferencebetweenthecarryingamountoftheassetatthetimeofthedisposalandthenetproceedsondisposal.

Government Funded Compensation

Aspartofthe2011-12Statebudgetthegovernmentannouncedchangestotheexistingfundingarrangementswithrespecttorevenueforgone.Underthenewarrangements,theCorporationwillreceivefundingin2011-12and2012-13.InadditionseparatefundingtospecificallysupporttheCorporationoverthreeyears2011-12to2013-14hasalsobeenprovided.Anysuchcompensationpaymentsarerecordedassalesrevenueonanaccrualbasis.

Government Funded Concessions

TheCorporationhasanagreementwiththeCrowninrightoftheStateofTasmaniatoprovidecommunityservicesintheformofaconcessionandfortheCorporationtobereimbursedforthecommunityservicescostsandadministrationcosts.Anysuchreimbursementsarerecordedassalesrevenueonanaccrualbasis.

Grants

GrantsarerecognisedwhenreceivedorwhentheCorporationobtainscontrolovertheassetscomprisingthecontributions.Governmentgrantsofarevenuenaturearerecognisedasincomeovertheperiodsnecessarytomatchrelatedcosts.GovernmentgrantsrelatedtoassetsarerecognisedintheStatementofFinancialPositionasadeferredliabilityandarerecognisedasrevenueonasystematicbasisovertheusefullifeoftheasset.

Customer Contributions and Developer Charges

Customercontributionsanddeveloperchargesreceivedfornoconsiderationarerecognisedatfairvalueandtreatedasrevenuewhenreceivedunlesstheyaredirectlyassociatedwithanincompletecapitalproject,inwhichcasetheyareincludedasaliabilityandcapitalworkinprogressinthestatementoffinancialpositionandrecognisedwhentheprojectiscompleted.

3.5 Goods and Services Tax

Revenues,expensesandassetsarerecognisednetoftheamountofgoodsandservicestax(GST),except:

i. wheretheamountofGSTincurredisnotrecoverablefromthetaxationauthority,itisrecognisedaspartofthecostofacquisitionofanassetoraspartofanitemofexpense;or

ii. forreceivablesandpayableswhicharerecognisedinclusiveofGST.

ThenetamountofGSTrecoverablefrom,orpayableto,thetaxationauthorityisincludedaspartofreceivablesorpayables.

Cashflowsareincludedinthestatementofcashflowsonagrossbasis.TheGSTcomponentofcashflowsarisingfrominvestingandfinancingactivitieswhichisrecoverablefrom,orpayableto,thetaxationauthorityisclassifiedwithinoperatingcashflows.

38



3.6 Taxation

Incometaxequivalentsexpenseontheprofitfortheyearcomprisescurrentanddeferredtax.IncometaxisrecognisedintheStatementofComprehensiveIncomeexcepttotheextentthatitrelatestoitemsrecogniseddirectlyinequity,inwhichcaseitisrecognisedinequity.

Currenttaxistheexpectedtaxpayableonthetaxableincomefortheyear,usingtaxratesenactedorsubstantiallyenactedatthebalancedate,andanyadjustmenttotaxpayableinrespectofpreviousyears.

IncometaxequivalentpaymentsaredistributedtoownercouncilsinaccordancewiththeTreasurer’sAllocationOrder.

Deferredtaxisprovidedusingthebalancesheetliabilitymethodandrepresentsthetemporarydifferencesarisingbetweenthetaxbaseofassetsandliabilitiesandtheircarryingamountsinthefinancialreport.Deferredtaxassetsrelatingtodeductibletemporarydifferencesandtaxlossesareonlybroughttoaccountwhentheirrealisationisprobable(ReferNote6).

3.7 Cash and Cash Equivalents

Cashandcashequivalentsincludescashonhandandinbanksandinvestmentsinmoneymarketinstrumentswhicharereadilyconvertibletocashonhandandwhichareusedinthecashmanagementfunctiononaday-to-daybasis.Cashassetsarebroughttoaccountatamortisedcost.

3.8 Inventories

Inventoriescomprisestoresandmaterialsusedintheconstructionofnewworksandfortherepairandmaintenanceofexistingassets.Allinventoriesarevaluedatthelowerofcostornetrealisablevalue.Costsareassignedtoinventoryquantitiesonhandatbalancedateonaweightedaveragecost(WAC)basis.

3.9 Receivables

Tradereceivablesarerecognisedattheiramortisedcostlessanallowanceforimpairmentlosses.Theallowanceforimpairedreceivablesiscalculatedasapercentageofoverduereceivablesbalanceatyearendaftertakingintoaccountspecificcustomersegmentswithreferencetopastdefaultexperience.Theactualpercentageapplieddependsontheageofthedebt.Debtsarewrittenoffwhencollectionisnolongerprobable.Tradereceivablescompriseresidential,commercial,industrialandirrigationcustomersandothersundrydebtors.Settlementtermsforcustomersrangefrom14to31daysfrominvoicedate.ReceivablesincludeunbilledwaterandsewerageincomeasdetailedinNote3.4.

3.10 Property, Plant and Equipment

(a)ConstructionofProperty,PlantandEquipment

Thecostofproperty,plantandequipmentconstructedbytheCorporationincludesthecostofallmaterialsusedinconstructionandthecostofdirectlabourontheproject.Internallabourandotherrelatedcostsmayalsoformpartoftheprojectcost.

(b)AcquisitionofProperty,PlantandEquipment

Property,plantandequipmentareinitiallyrecordedatthecostofacquisition.Costisdeterminedasthepurchasevalueoftheassetatthedateofacquisitionpluscostsincidentaltotheacquisition.Developercontributionsreceivedfornoconsiderationarerecordedatfairvalue.

(c)ValuationsandRecoverableAmountsofProperty,PlantandEquipment

InfrastructureAssets,FreeholdLandandBuildingsarecarriedatfairvalue.Attheendofeachreportingperiod,theCorporationreviewsthecarryingamountsoftheassetsheldwithintheassetclass(ReferNote3.14).

OtherAssetsarestatedatcostlessaccumulateddepreciationandaccumulatedimpairmentadjustments.OtherAssetsincludemotorvehicles,furniture,fittings,telemetryequipmentandIThardware.

39





(d)Depreciation

Depreciationofproperty,plantandequipment(otherthanland)iscalculatedonanindividuallyassessedeconomiclifeusingthestraight-linemethodofdepreciation,soastowriteoffthenetcost(orpreviouslyrevaluedamounts)ofeachassetoveritsexpectedusefullife.Theeconomiclifeofproperty,plantandequipmentisreviewedattheendofeachreportingperiod,withtheeffectofanychangesinestimateaccountedforonaprospectivebasis.

Theassessedeconomiclifeofproperty,plantandequipmentissummarisedasfollows:

Dams/Earthworks: 135years

Pipelines: 30–140years

Civil/Structural: 30–100years

OtherInfrastructure: 5–40years

Buildings: 50–85years

LeaseholdImprovements: 2–10years

OtherAssets: 2–25years

(e) SubsequentCosts

TheCorporationrecognisesinthecarryingamountofanitemofproperty,plantandequipmentthecostofreplacingpartofsuchanitemwhenthatcostisincurredifitisprobablethatthefutureeconomicbenefitsembodiedwithintheitemwillflowtotheCorporationandthecostoftheitemcanbemeasuredreliably.AllothercostsarerecognisedintheStatementofComprehensiveIncomeasanexpenseasincurred.

3.11 Leased Property, Plant and Equipment

Leasesofproperty,plantandequipmentareclassifiedasoperatingleaseswherethelessorretainssubstantiallyalloftherisksandbenefitsofownership.Leasepaymentsarechargedagainstprofitsinequalinstalmentsovertheaccountingperiodscoveredbytheleaseterms,exceptwhereanalternativebasiswouldbemorerepresentativeofthepatternsofbenefitstobederivedfromtheleasedproperty.

3.12 Intangible Assets

Intangibleassetscomprisecostsassociatedwiththepurchaseanddevelopmentofcomputersoftware.Intangibleassetsareinitiallyrecordedattheircostofacquisition.Costisdeterminedasthepurchasevalueoftheassetatthedateofacquisitionpluscostsincidentaltotheacquisition,includingdirectlabourcosts.

Amortisationofintangibleassetsiscalculatedonanindividuallyassessedeconomiclifeusingthestraight-linemethodofamortisation,soastowriteoffthenetcost(orpreviouslyrevaluedamounts)ofeachassetoveritsexpectedusefullife.Theestimatedusefullifeofcomputersoftwareisbetweentwoandtenyears.

a) Acquiredseparately

Separatelyacquiredintangibleassetscomprisecostsassociatedwiththepurchaseanddevelopmentofcomputersoftware.Intangibleassetsareinitiallyrecordedattheircostofacquisition.Costisdeterminedasthepurchasevalueoftheassetatthedateofacquisitionpluscostsincidentaltotheacquisition,includingdirectlabourcosts.



40

b) Internally-generated

Internally-generatedintangibleassetscomprisedevelopmentcostsassociatedwiththedevelopmentofspecificbusinessmanagementsystems.Aninternally-generatedintangibleassetarisingfromdevelopment(orfromthedevelopmentphaseofaninternalproject)isrecognisedif,andonlyif,allofthefollowinghavebeendemonstrated:

•thetechnicalfeasibilityofcompletingtheintangibleassetsothatitwillbeavailableforuseorsale;

•theintentiontocompletetheintangibleassetanduseorsellit;

•theabilitytouseorselltheintangibleasset;

•howtheintangibleassetwillgenerateprobablefutureeconomicbenefits;

•theavailabilityofadequatetechnical,financialandotherresourcestocompletethedevelopmentandtouseorselltheintangibleasset;and

•theabilitytomeasurereliablytheexpenditureattributabletotheintangibleassetduringitsdevelopment.

Theamountinitiallyrecognisedforinternally-generatedintangibleassetsisthesumoftheexpenditureincurredfromthedatewhentheintangibleassetfirstmeetstherecognitioncriterialistedabove.Wherenointernally-generatedintangibleassetcanberecognised,developmentexpenditureisrecognisedinStatementofComprehensiveIncomeintheperiodinwhichitisincurred.

3.13 Investment in Associate

InvestmentsinassociatesareaccountedforusingtheequitymethodinaccordancewithAASB128andareinitiallyrecognisedatcost.

TheCorporation’sshareofprofitsandlossesofanassociateisrecognisedinitsStatementofComprehensiveIncome,withanequivalentadjustmenttothecarryingvalueoftheinvestment.TheCorporation’sshareofmovementsinanassociate’sequitythathasnotbeenrecognisedintheassociate’sStatementofComprehensiveIncomeisrecogniseddirectlyinequity.

3.14 Impairment

TheCorporation’sassetsincludingitsdeferredtaxassetsarereviewedateachbalancedatetodeterminewhetherthereisanyindicationofimpairment.Ifanysuchindicationexiststheasset’srecoverableamountisestimated.

Animpairmentlossisrecognisedwheneverthecarryingamountofanassetoritscashgeneratingunitexceedsitsrecoverableamount.ImpairmentlossesarerecognisedintheStatementofComprehensiveIncome,unlessanassethaspreviouslybeenrevalued,inwhichcasetheimpairmentlossisrecognisedasareversaltotheextentofthatpreviousrevaluationwithanyexcessrecognisedthroughtheStatementofComprehensiveIncome.

(a)Calculationofrecoverableamount

Impairmentofreceivablesisnotrecogniseduntilobjectiveevidenceisavailablethatalosseventhasoccurred.Receivablesareindividuallyassessedforimpairmentbasedonobjectiveevidencefromhistoricalexperienceadjustedforconditionsexistingateachbalancedate.

InundertakingtheimpairmenttestingofitsinfrastructureassetsithasbeendeterminedthattheCorporation’sassetsoperateastwocash-generatingunits;waterandsewerage.Therecoverableamountoftheseassetsisthegreateroftheirfairvaluelesscoststosellandvalueinuse.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheassets.




41


(b)ReversalsofImpairment

Impairmentlossesarereversedwhenthereisanindicationthattheimpairmentlossmaynolongerexistandtherehasbeenachangeintheestimateusedtodeterminetherecoverableamount.Animpairmentlossisreversedonlytotheextentthattheasset’scarryingamountdoesnotexceedthecarryingamountthatwouldhavebeendetermined,netofdepreciationoramortisation,ifnoimpairmentlosshadbeenrecognised.

3.15 Employee Entitlements

(a)Wages,Salaries,AnnualLeave,RosteredDaysOffandTimeOffinLieu

Aliabilityisrecognisedforbenefitsaccruingtoemployeesinrespectofwagesandsalaries,annualleave,rostereddaysoffandtimeoffinlieuwhenitisprobablethatsettlementwillberequiredandtheyarecapableofbeingmeasuredreliably.

Liabilitiesrecognisedinrespectofemployeebenefitsthatareexpectedtobesettledwithin12monthsofthereportingdate,aremeasuredattheirnominalvaluesusingtheremunerationrateexpectedtoapplyatthetimeofsettlement.

Liabilitiesrecognisedinrespectofemployeebenefitsthatarenotexpectedtobesettledwithin12monthsofthereportingdatearemeasuredatthepresentvalueoftheestimatedfuturecashoutflowstobemadebytheCorporationinrespectoftheservicesprovidedatreportingdate.

Regardlessoftheexpectedtimingofsettlements,liabilitiesinrespectofemployeebenefitsareclassifiedasacurrentliability,unlessthereisanunconditionalrighttodeferthesettlementoftheliabilityforatleast12monthsafterthereportingdate,inwhichcaseitwouldbeclassifiedasanoncurrentliability.

(b)LongServiceLeave(LSL)

CurrentLiability-unconditionalLSL(representing10ormoreyearsofcontinuousservice)isdisclosedasacurrentliabilityevenwheretheCorporationdoesnotexpecttosettletheliabilitywithin12monthsbecauseitdoesnothavetheunconditionalrighttodeferthesettlementoftheentitlementshouldanemployeetakeleavewithin12months.

ThecomponentsofthiscurrentLSLliabilityaremeasuredat:

•Presentvalue-componentthattheCorporationdoesnotexpecttosettlewithin12months;and

•Nominalvalue-componentthattheCorporationexpectstosettlewithin12months.

Non-currentLiability-conditionalLSL(representinglessthantenyearsofcontinuousservice)isdisclosedasanon-currentliability.Thereisanunconditionalrighttodeferthesettlementoftheentitlementuntiltheemployeehascompletedtherequisiteyearsofservice.ConditionalLSLisrequiredtobemeasuredatpresentvalue.

Incalculatingpresentvalue,considerationisgiventoexpectedfuturewageandsalarylevels,experienceofemployeedeparturesandperiodsofservice.Thepresentvaluecalculationalsotakesaccountofemployeeswithsevenyearsofcontinuousserviceastheyareentitledtoapro-rataallowanceequivalenttotheirLSLentitlementupontermination–someotherconditionsalsoapply.Expectedfuturepaymentsarediscountedusingmarketyieldsatthereportingdateonnationalgovernmentbondswithtermstomaturityandcurrencythatmatch,ascloselyaspossible,theestimatedfuturecashoutflows.

AliabilityforLSLisrecognisedandismeasuredonthebasisofthepresentvalueoftheexpectedfuturecashoutflowsatbalancedate,includingsuperannuation.Themarketyieldsongovernmentbondsareusedtodeterminethepresentvalueofthefuturecashflows.Theclassificationoftheliabilityforlongserviceleaveisonthebasisthatentitlementsinrespectofservicegreaterthantenyearsareshownasacurrentliability.



42

(c)Superannuation

ProvisionismadefortheCorporation’sfutureliabilityforemployees’superannuationentitlementsundertheRetirementBenefitsFundScheme,thePublicServantsRetiringandDeathAllowancesSchemeandtheprovisionisfullyprovidedforbytheCorporation(referNote13).TheCorporationalsomakessuperannuationcontributionstotheQuadrantDefinedBenefitsScheme(forformeremployeesoftheBurnieCityCouncil,CentralCoastCouncil,DevonportCityCouncil,LatrobeCouncilandWestCoastCouncil).

TheprovisioninrelationtotheRetirementBenefitsFundSchemeisbasedonanactuarialvaluationconductedbyMercer(Australia)PtyLtd.TheCorporationisnotrequiredtoholdaprovisioninrelationtotheQuadrantDefinedBenefitsScheme,theactuarialvaluationisconductedbyBendzullaActuarialPtyLtd.

TheCorporation,onanemergingcostbasis,paysitsportionofthefutureservicecomponentofdeathanddisablementbenefitsundertheRetirementBenefitsFundScheme.

InaccordancewithaccountingstandardAASB119EmployeeBenefits,theCorporationhaselectedtorecogniseactuarialgainsandlossesondefinedbenefitplansdirectlythroughretainedearnings.

TheCorporationalsomakessuperannuationcontributionsforanumberofitsemployeestoanotherQuadrantDefinedBenefitsFund,whichisasubfundoftheQuadrantSuperannuationScheme.ThisFundisclassifiedasamulti-employersponsoredplan.AstheFund’sassetsandliabilitiesarepooledandarenotallocatedbyemployer,theActuary,BendzullaActuarialPtyLtd,isunabletoallocatebenefitliabilities,assetsandcostsbetweenemployees.Asprovidedunderparagraph32(b)ofAASB119,theCorporationdoesnotusedefinedbenefitaccountingforthesecontributions.

TheCorporationalsocontributesatleasttheminimumlevelofsupportrequiredbytheCommonwealthSuperannuationGuarantee(Administration)Act1992,toanumberofcomplyingaccumulatedbenefitssuperannuationfunds.Contributionsareexpensedastheyaremade.

3.16 Borrowings

Allborrowingsarerecognisedinitiallyatfairvaluelessattributabletransactioncosts.Subsequenttoinitialrecognition,interestbearingborrowingsaremeasuredatamortisedcostusingtheeffectiveinterestmethod.

3.17 Borrowing Costs

Borrowingcostsdirectlyattributabletotheacquisition,constructionorproductionofqualifyingassets,whichareassetsthatnecessarilytakeasubstantialperiodoftimetogetreadyfortheirintendeduseorsale,areaddedtothecostofthoseassets,untilsuchtimeastheassetsaresubstantiallyreadyfortheirintendeduseorsale.

IncludedinBorrowingCostsistheGovernmentGuaranteeFee(GGF)whichisadministeredbytheDepartmentofTreasuryandFinance.ThepurposeoftheGGFistoneutralisethecompetitiveadvantageoftheCorporationhavingaccesstofundingthroughtheTasmanianPublicFinanceCorporation(Tascorp).TheGGFispayabletoownercouncils.

AllotherborrowingcostsarerecognisedintheStatementofComprehensiveIncomeintheperiodinwhichtheyareincurred.

3.18 Payables

TradepayablesarerecognisedatamortisedcostwhentheCorporationbecomesobligedtomakefuturepaymentsresultingfromthepurchaseofgoodsandservices.Tradepayablesareunsecuredandareusuallysettledwith30daysofrecognition.




43


3.19 Provisions

TheCorporationassessesonanannualbasiswhetherthereisanobligationtoestablishaprovisionforsiterehabilitationtakingintoaccountplantorotheractivitywhichhasbeendecommissionedduringtheyearandplanstodecommissioninfutureyears.Theamounttobeprovisionedwillincludethecostofnecessaryworkstorehabilitatethesitetoconditionsnominatedinstatuteorgovernmentregulationsortosatisfycommunityorotherexpectations.Whenappropriatethefuturerehabilitationcostsmaybediscountedbyapresentvaluetechnique.

3.20 Dividends Payable

DividendspayablearerecognisedwhenapprovedbytheBoardoftheCorporation(ReferNote7).Inaccordancewithaccountingstandardsfinaldividendsarenotrecognisedinthefinancialstatementsunlesstheyaredeclaredpriortothebalancedate.

3.21 Financial Instruments

FinancialassetsandfinancialliabilitiesarerecognisedwhentheCorporationbecomesapartytothecontractualprovisionsoftheinstrument.Financialassetsandfinancialliabilitiesareinitiallymeasuredatfairvalue.

3.21.1 Financial Assets

Financialassetsareclassifiedintothefollowingspecifiedcategories:financialassets‘atfairvaluethroughtheStatementofComprehensiveIncome’,‘held-to-maturity’investments,‘available-for-sale’financialassetsand‘loansandreceivables’.TheCorporationdoesnotcurrentlyhold,norisitlikelytohold,anyfinancialassetsclassified‘atfairvaluethroughtheStatementofComprehensiveIncome’,‘heldtomaturity’investments,or‘availableforsale’.Theclassificationdependsonthenatureandpurposeofthefinancialassetsandisdeterminedatthetimeofinitialrecognition.

Effective Interest Method

Theeffectiveinterestmethodisamethodofcalculatingtheamortisedcostofadebtinstrumentandofallocatinginterestincomeovertherelevantperiod.Theeffectiveinterestrateistheratethatexactlydiscountsestimatedfuturecashreceiptsthroughtheexpectedlifeofthedebtinstrument,or(whereappropriate)ashorterperiod,tothenetcarryingamountoninitialrecognition.

Loans and receivables

Tradereceivables,loans,andotherreceivablesthathavefixedordeterminablepaymentsthatarenotquotedinanactivemarketareclassifiedas‘loansandreceivables’.Loansandreceivablesaremeasuredatamortisedcostusingtheeffectiveinterestmethod,lessanyimpairment.Interestincomeisrecognisedbyapplyingtheeffectiveinterestrate,exceptforshort-termreceivableswhentherecognitionofinterestwouldbeimmaterial.Loansandreceivablesexcludestatutoryreceivables.

Impairment of Financial Assets

Financialassetsareassessedforindicatorsofimpairmentattheendofeachreportingperiod.Financialassetsareconsideredtobeimpairedwhenthereisobjectiveevidencethat,asaresultofoneormoreeventsthatoccurredaftertheinitialrecognitionofthefinancialasset,theestimatedfuturecashflowsoftheinvestmenthavebeenaffected.ImpairmentlossesarerecognisedintheStatementofComprehensiveIncome.



44

3.21.2 Financial Liabilities

Financialliabilitiesareclassifiedaseitherfinancialliabilities‘atFairValuethroughtheStatementofComprehensiveIncome’or‘otherfinancialliabilities’.CurrentlytheCorporationdoesnot,norisitlikelyto,holdfinancialliabilitiesclassifiedatfairvaluethroughtheStatementofComprehensiveIncome.

Other Financial Liabilities

Otherfinancialliabilities,includingborrowings,areinitiallymeasuredatfairvalue,netoftransactioncosts.

Otherfinancialliabilitiesaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod,withinterestexpenserecognisedonaneffectiveyieldbasis.

Theeffectiveinterestmethodisamethodofcalculatingtheamortisedcostofafinancialliabilityandofallocatinginterestexpenseovertherelevantperiod.Theeffectiveinterestrateistheratethatexactlydiscountsestimatedfuturecashpaymentsthroughtheexpectedlifeofthefinancialliability,or(whereappropriate)ashorterperiod,tothenetcarryingamountoninitialrecognition.

3.22 Comparisons with Previous Year

Wherenecessary,comparativefiguresareadjustedtoconformwithchangesinpresentationinthecurrentyear.




45



46


2012 $’000

2011$’000

4 Revenue

Sales Revenue:

Water-ServiceCharge 19,084 16,662

Sewerage-ServiceCharge 20,159 18,038

Water-UsageCharges 4,725 4,606

Sewerage-UsageCharge 3,703 3,647

IrrigationIncome 118 69

StateGovernmentFundedCompensation(Note3.4) 1,693 2,442

StateGovernmentFundedConcessions 1,685 1,442

OtherFeesandCharges 874 1,283

Total Sales 52,041 48,189

Other Income from Operating Activities:

ContributedAssetsandHeadworkCharges 1,234 1,092

GovernmentGrants 166 328

ProfitonDisposalofPropertyPlantandEquipment 22 84

RecoveryMisappropriatedFunds(Note3.22) - 1,035

Other 536 478

PriorPeriodCreditAdjustment (733) -

Total Other Income from Operating Activities 1,225 3,017

Financial Income:

InterestEarned-DepositsandInvestments 81 69

Total Financial Income 81 69

Total Revenue 53,347 51,275

5 ExpensesRaw Material and Consumables:

PowerCosts 3,055 2,740

WaterCommissionRights 464 393

Chemicals 1,409 1,257

Total 4,928 4,390

Depreciation and Amortisation Expenses:

InfrastructureAssets 11,424 11,538

Software 236 20

Buildings 49 46

OtherAssets 989 820

Total 12,698 12,424




47

2012 $’000

2011$’000

5 ExpensescontinuedFinancing Expenses:

InterestExpense-Borrowings 5,833 5,188

LessAmountCapitalised(1) (474) (480)

InterestExpense-Superannuation 57 77

GovernmentGuaranteeFeeExpense(Paidtoownercouncils) 869 780

Lossesincurredonrestructureofportfolio 6 3

Total 6,291 5,568(1)Averagecapitalisationrateis5.26%p.a.(2011:5.15%)

Employee and Related Expenses:

SalariesandOn-Costs 14,204 12,896

LessCapitalisedSalaries (2,470) (2,595)

EntitlementAllowance 1,449 1,508

TrainingandTravel 298 243

Other 301 356

Total 13,782 12,408

Operations and Maintenance Expenses:

MaintenanceandPlanning 4,723 3,847

WaterSampling 1,143 808

Propertycosts 511 246

MotorVehicles 903 762

SupportingOperatingSystemsandEquipment 209 178

LessCapitalisedExpenses (563) -

Total 6,926 5,841

Administration Expenses:

Insurance 382 330

ServicesprovidedbyAssociate 3,345 3,469

Rates,LandTaxandPropertyCosts 626 816

Consultancies 509 792

Leases 264 334

InformationSystemsandCommunications 703 594

MisappropriationofFunds 15 26

AllowancesforImpairedReceivablesandBadDebts 632 346

CorporateGovernance 729 672

Billingincludingpostage,printingandagencyfees 286 21

OtherAdministration 591 510

Total 8,082 7,910

Total Expenses 52,707 48,541



48


2012 $’000

2011$’000

6 IncomeTaxEquivalents6.1 Income tax equivalents recognised in

Statement of Comprehensive Income

Incometaxexpense(benefit)comprises

Current tax

Currenttaxexpense/(income)inrespectofcurrentyear 850 1,055

Adjustmentsrecognisedinthecurrentyearinrelationtothecurrenttaxofprioryears - (4)

Total 850 1,051

Deferred Tax

Deferredtaxexpense/(income)recognisedincurrentyear (655) (148)

Totalincometaxrecognisedinthecurrentyearrelatingtocontinuingoperations 195 903

Theprimafacieincometaxequivalentsonpre-taxaccountingprofitfromoperationsreconcilestotheincometaxequivalentsinthefinancialstatementsasfollows:

Profitfromcontinuingoperations 654 2,777

Profitfromoperations 654 2,777

Incometaxequivalentscalculatedat30% 196 833

Effectofexpensesthatarenon-deductibleindeterminingtaxableprofit (1) -

Other - 70

195 903

Adjustmentsincurrentyearinrelationtothecurrenttaxofprioryears (3) -

Income tax equivalents expense (benefits) 192 903

Thetaxequivalentrateusedinthereconciliationsaboveisthenationaltaxequivalentratepayableof30%payablebyAustraliannationaltaxequivalententitiesonprofitsunderAustraliantaxlaw.

6.2 Deferred tax equivalents recognised directly in equity

Thefollowingcurrentanddeferredtaxequivalentswerechargeddirectlytoequityduringtheperiod:

Actuarialgain(loss)ondefinedbenefitplan 26 (57)

Total 26 (57)

6.3 Current tax equivalent liabilities

Openingbalance (836) (1,059)

Nationaltaxequivalentpayable-Currentyear (850) (1,055)

Instalmentspaid 1,647 1,278

Total (39) (836)




49

2012 $’000

2011$’000

6 IncomeTaxEquivalentscontinued6.4 Deferred tax equivalent assets and (liabilities)

Deferredtaxequivalentassetscomprise:

Taxlosses-revenue 2,680 2,822

Temporarydifferences 2,786 2,076

Total 5,466 4,898

Deferredtaxequivalent(liabilities)comprise:

Temporarydifferences (6,812) (6,928)

Net deferred tax equivalent assets (liabilities): (1,346) (2,030)

Taxableanddeductibledifferencesarisefromthefollowing:

30 June 2012

Opening balance $’000

Charged to Income $’000

Charged to Equity $’000

Other Acquisitions / Disposals

$’000

Closing balance $’000

Deferred tax equivalent assets:

Provisions 1,372 152 26 - 1,550

Taxlosses 2,822 (175) - 33 2,680

Other 704 532 - - 1,236

Total 4,898 509 26 33 5,466

Deferred tax equivalent liabilities:

Property,plantandequipment (6,928) 146 - (30) (6,812)

Other - - - - -

Total (6,928) 146 - (30) (6,812)

Net deferred tax equivalent liabilities: (2,030) 655 26 3 (1,346)

Attributable to:

Continuingoperations (2,030) (1,346)



50


6 IncomeTaxEquivalentscontinued

30 June 2011

Opening balance $’000

Charged to Income $’000

Charged to Equity $’000

Other Acquisitions / Disposals

$’000

Closing balance $’000

Deferred tax equivalent assets:

Provisions 1,253 176 (57) - 1,372

Taxlosses 3,073 (251) - - 2,822

Other 706 (2) - - 704

Total 5,032 (77) (57) - 4,898

Deferred tax equivalent liabilities:

Property,plantandequipment (7,152) 224 - - (6,928)

Other (5) 5 - - -

Total (7,157) 229 - - (6,928)

Net deferred tax equivalent liabilities: (2,125) 152 (57) - (2,030)

Attributable to:

Continuingoperations (2,125) (2,030)

Grosscumulativetaxequivalentlossesof$8,934,706(2011:$9,406,571)(Taxeffect,2012:$2,680,412,2011:$2,821,971)werebroughttoaccountasadeferredtaxasset.IncludedinthecumulativetaxlossesarelossestransferredfromCradleCoastWaterattheinceptionoftheCorporation.Theutilisationoftransferredlossesislimitedbythe‘availablefraction’method.TheCorporation’scarryforwardlossesareclassifiedasanassetonthebasisofcertaintyofrecoupingthelossatsometimeinthefuture.

Thisbenefitfortaxequivalentlosseswillonlybeobtainedif:

(a)TheCorporationderivesfutureassessabletaxequivalentincomeofanatureandamountsufficienttoenablethebenefitfromthedeductionforthetaxequivalentlossestoberealised;

(b)TheCorporationcontinuestocomplywiththeconditionsofdeductibilityimposedbylegislation;and

(c)NochangesinlegislationthatadverselyaffecttheCorporationinrealisingthebenefitfromthedeductionforthetaxequivalentlosses.

AvailabilityoftaxlossesissubjecttotheCorporationcontinuinginitscurrentstructure.ConsiderationiscurrentlybeinggiventoamergeroftheTasmanianwaterandsewerageCorporations,includingtheirsharedservicesprovider.Theavailabilityofthelossestoamergedorganisationwouldbesubjecttotransitionalprovisionsandtheapplicationofthelossrecognitionprovisions.

7 DividendsProvidedFororPaid

TheDirectorsdidnotrecommendaninterimdividendduringthe2011-12financialyear(Interimdividend2010-11:$Nil).

AtthedateofthisreporttheBoardhasnotrecommendedthepaymentofafinaldividendfor2011-12(2010-11:$Nil).Inaccordancewithaccountingstandardsfinaldividendsarenotrecognisedinthefinancialstatementsunlesstheyaredeclaredpriortothebalancedate.




51

2012 $’000

2011$’000

8 CurrentAssets

8.1 Cash and Cash Equivalents

CashatBankandonHand 2,327 2,670

CashManagementAccountwithTascorp - 6

Total 2,327 2,676

8.2 Receivables

Tradereceivables 13,474 10,763

Lessallowanceforimpairedtradereceivables (734) (444)

Unbilledwaterandsewerageincome 437 1,389

NetGSTreceivable 649 258

Othercurrentreceivables 1,140 852

Total 14,966 12,818

AnageinganalysisofreceivablesisprovidedinNote20.3(CreditRiskManagement).

Movementinallowanceforimpairedtradereceivables.

Openingbalance 444 100

Increase(decrease)inallowance 632 346

Amountsrecoveredduringtheyear - -

Amountswrittenoffduringtheyear (342) (2)

ClosingBalance 734 444

Anallowancehasbeenmadeforestimatedunrecoverableamountswhenthereisobjectiveevidencethatanindividualreceivableisimpaired.Theincreaseintheallowancewasrecognisedinthenetresultforthecurrentyear.

8.3 Inventories (at cost)

Storesandconsumablesatcost 955 849

Total 955 849



52


9 Property,PlantandEquipment

FairvalueofassetscontributedbythenineownercouncilsandCradleCoastWaterwasdeterminedbyanindependentvaluationbasedondepreciatedreplacementcostasat1July2009,additionsarerecognisedatcost.Recoverableamountwaslowerthandepreciatedreplacementcostandthisamountwasusedfortheinitialrecognitionoftheassetvalues.Noimpairmentlosswasrecordedasthiswastheinitialrecognitionofassetvalues.Subsequenttodeterminingtheirfairvalue,theassetswerethentestedforimpairmentbyapplyingacash-generatingunittesttodeterminetheirrecoverableamount,whichrepresentstheirvalueinuse.Thecash-generatingunittestcalculatesthediscountedpresentvalueofthenetcashinflowsthattheCorporationexpectstobegeneratedfromitsassets,operatinggeneratingtogetherwithinseparatelyidentifiedcash-generatingunits,overtheirexpectedusefullives.TwocashgeneratingunitswereidentifiedfortheCorporation,waterandsewerage.Theimpairmenttesthasalsobeenperformedforthecurrentreportingperiod,whichresultedinnoimpairmentat30June2012.Thetestishighlydependentontheassumptionsusedtoestimatethefuturenetcashflowsthatarederivedfromtherelevantassets.Thereforethiscalculationcontainsanelementofsubjectivityanduncertaintyinrelationtotheseassumptions.

Themainassumptionswere:

Item Assumption

DiscountRate Realpre-taxweightedaveragecostofcapitalof7.27%pa(2011:7.27%)basedonindependentreview.

TheRiskFreeRateisakeyinputintothedeterminationoftheWeightedAverageCostofCapital.A20dayaverageofthe10yearAustralianCommonwealthbondratewasusedastheriskfreerateintheprioryearcalculation.Inthecurrentyearthishasbeenextendedtoa10yearaverageofthe10yearAustralianCommonwealthbondrate.Thisisconsideredtobemorereflectiveofthelong-lifenatureoftheCorporation’sassets.

CPIRate 2.75%pa(2011:2.5%)

Periodofdiscounting 7yearswithaterminalvalue,basedonaperpetualfactorof14.53(2011:14.53)appliedforsubsequentyears.

Cashinflows BasedonthemostrecentrevenueforecastandCorporatePlanestimates,incorporatinganominalpriceincreaseof6.6%asperthePriceandServicePlan.AfterallowingforCPI,therealpriceincreaseis4.1%pa(2011:4.1%).

Cashoutflows BasedonmostrecentexpenditureforecastandCorporatePlan,incorporatingnominalaveragecostincreaseof3.1%pa(2011:2.5%)andlabourincreaseof4%pa(2011:4.0%).AfterallowingforCPItherealcostincreaseis0.6%(2011:nil)andreallabourincreaseof1.5%pa(2011:1.5%)isassumed.




53

2012 $’000

2011$’000

9 Property,PlantandEquipmentcontinued

Infrastructure Assets - Water

AtFairValue 224,523 217,735

AccumulatedDepreciation (17,450) (11,715)

Total 207,073 206,020

Infrastructure Assets - Sewerage



Total 165,097 162,188

Freehold Land


Buildings


AccumulatedDepreciation (143) (92)

Total 2,444 2,495

Other Assets

AtCost 7,865 6,675


Total 5,660 5,220

Work In Progress

AtCost 26,563 17,340

Total 418,890 405,316



54


9. Property,PlantandEquipmentcontinued

Property, Plant and Equipment Reconciliation

Asset Group ($’000)

Infrastructure Assets Water at Fair Value

Infrastructure Assets

Sewerage at Fair Value

Freehold Land

at Fair Value

Buildings at Fair Value

Other Assets at Cost

Work In Progress at Cost

Total

OpeningNetBookValue 206,020 162,188 12,053 2,495 5,220 17,340 405,316

Reclassification - - - (2) 2 - -

ContributedAssetsatFairValue 348 609 - - - - 957

AdditionsatCost 4 - - - - 25,387 25,391

TransfersfromWorkinProgress 6,510 7,915 - - 1,739 (16,164) -

Disposals - - - - (312) - (312)

DepreciationExpenses (5,809) (5,615) - (49) (989) - (12,462)

Net Book Value as at 30 June 2012 207,073 165,097 12,053 2,444 5,660 26,563 418,890

OpeningNetBookValue 219,270 151,002 12,015 1,540 4,664 12,169 400,660

Reclassification (13,520) 13,350 - 479 (309) - -

ContributedAssetsatFairValue 197 538 - - - - 735

AdditionsatCost - - - - 648 15,687 16,335

TransfersfromWorkinProgress 5,801 2,970 38 522 1,185 (10,516) -

Disposals 138 - - - (148) - (10)

DepreciationExpenses (5,866) (5,672) - (46) (820) - (12,404)

Net Book Value as at 30 June 2011 206,020 162,188 12,053 2,495 5,220 17,340 405,316

Iftheproperty,plantandequipmentweremeasuredatdepreciatedreplacementcostthecarryingamountsat30June2012wouldbeasfollows.Depreciatedreplacementcostofwaterandsewerageassetswasdeterminedat1July2009byanindependentvaluationundertakenbyGHDandSerck.Otherassetsarerecordedatwrittendownreplacementcostasdeterminedbyowners.


Infrastructure Assets Water


Sewerage

Freehold Land Buildings Other Assets Work In Progress

Total

Depreciatedreplacementcost 303,042 386,462 12,054 2,681 7,984 26,446 738,669

Accumulateddepreciation (23,746) (36,512) - (147) (2,390) - (62,795)

Net Carrying Amount as at 30 June 2012 279,296 349,950 12,054 2,534 5,594 26,446 675,874

Depreciatedreplacementcost 295,102 378,038 12,054 2,587 6,676 17,340 711,797






55

9. Property,PlantandEquipmentcontinued

Property, Plant and Equipment Reconciliation continued

TheCorporationdeemedcostasat1July2009tobedepreciatedreplacementcostasnotedabove.Ifplantandequipmentweremeasuredusingthecostmodel,thecarryingamountsat30June2012wouldbeasfollows:


Infrastructure Assets Water


Sewerage

Freehold Land Buildings Other Assets Work In Progress

Total

Cost 643,509 609,941 12,054 2,831 7,774 26,446 1,302,555



Cost 636,714 601,351 12,054 2,737 6,642 17,340 1,276,838



2012 $’000

2011$’000

10 Intangibles

Computer software

AtCost 2,182 1,531

AccumulatedAmortisation (256) (20)

1,926 1,511

WorkinProgress-AtCost - -

Total 1,926 1,511

Software $000

Work in Progress $000

Total $000

2012 Intangibles - Reconciliation

OpeningNetBookValue 1,511 - 1,511

AdditionsatCost - 651 651

TransfersfromWorkinProgress 651 (651) -

Disposals - - -

AmortisationExpense (236) - (236)

Net Book Value as at 30 June 2012 1,926 - 1,926

2011 Intangibles - Reconciliation

OpeningNetBookValue - 930 930

AdditionsatCost - 601 601

TransfersfromWorkinProgress 1,531 (1,531) -

Disposals - - -

AmortisationExpense (20) - (20)

Net Book Value as at 30 June 2011 1,511 - 1,511



56


2012 $’000

2011$’000

11 CurrentandNon-currentLiabilities

11.1 Borrowings

Allsemi-governmentborrowingshavebeentransactedthroughtheTasmanianPublicFinanceCorporation(Tascorp).Allborrowingsaresecuredbyachargeoverreceivable.

Borrowings:

Current 25,613 10,940

Non-current 70,650 72,729

Total 96,263 83,669

Credit Facilities

At30JunetheCorporationhadaccesstothefollowingfinancefacilities.

Master Loan Borrowing Limit - Tascorp

Facility 100,000 100,000

Lessused/committed 96,263 83,669

Undrawn Balance 3,737 16,331

Temporary Loan Facility - Tascorp

Facility 10,000 -

Lessused/committed - -

Undrawn Balance 10,000 -

Corporate MasterCard

Facility 150 150

Lessused/committed - 3

Undrawn Balance 150 147

11.2 Employee Benefits

Current

AnnualLeave 1,418 1,318

LongServiceLeave 1,800 1,727

SickLeave - 26

RosteredDayOff 45 31

DefinedBenefitSuperannuation-RBF(ReferNote13.2) 91 67

3,354 3,169

Non-current

LongServiceLeave 185 178

DefinedBenefitSuperannuation-RBF(ReferNote13.2) 934 811

1,119 989

Total(1) 4,473 4,158(1)TheEmployeeBenefitsProvisionincludes$650,000(2011:$654,000)ofattributableon-costs.




57

2012 Employees

2011Employees

11 CurrentandNon-currentLiabilitiescontinued

Numberofemployeesatyearend(FTE) 169 166

2012 $’000

2011$’000

11.3 Payables

TradeCreditors 1,660 928

AccruedExpenses 3,949 2,392

AccruedInterestExpense 955 915

Total 6,564 4,235

11.4 Unearned Income

Current

GovernmentGrants(ReferNote3.4) 253 123

Non-current

GovernmentGrants(ReferNote3.4) 3,571 1,917

Total 3,824 2,040

12 Members’EquityTheCorporationisownedbyninecouncilsinthenorth-westernregionofTasmaniaasdetailedinNote21.Eachowner’ssharewasdeterminedeffective1July2009,byitsproportionateshareoftotalnetassetscontributedtotheCorporation.EachofthenineownersholdoneshareintheCorporation,witheachsharehavingequalvotingrights.

Eachsharehasanissuepriceof$1.

12.1 Retained Profits (Accumulated Losses)

OpeningBalance 1,231 (290)

ActuarialGain(Loss)ondefinedbenefitplan (87) 190

TaxeffectofActurialGain(Loss)ondefinedbenefitplan 26 (57)

Shareofothercomprehensiveincomeofassociates (51) (19)

Dividendspaid(ReferNote7) - (467)

ProfitafterIncomeTaxExpense 462 1,874

Closing Balance 1,581 1,231

12.2 Contributed Equity

OpeningBalance 325,108 325,108

Movementforyear - -

Closing Balance 325,108 325,108



58


13 Superannuation

Twodefinedbenefitsuperannuationliabilities,RBFandQuadrant,weretransferredtotheCorporationfromCradleCoastWaterandnineownercouncilson1July2009.DisclosuresregardingthesetwofundsareprovidedinNote13.1and13.2.

13.1 TheCorporationmakessuperannuationcontributionsforanumberofitsemployeestoQuadrantDefinedBenefitsFund,whichisasubfundoftheQuadrantSuperannuationScheme.TheQuadrantDefinedBenefitsFundhasbeenclassifiedasamulti-employersponsoredplan.AstheFund’sassetsandliabilitiesarepooledandarenotallocatedbyemployer,BenzullaActuarialPtyLtd(theActuary)isunabletoallocatebenefitliabilities,assetsandcostsbetweenemployers.Asprovidedunderparagraph32(b)ofAASB119,theCorporationdoesnotusedefinedbenefitaccountingforthesecontributions.

TheActuaryundertookthelastactuarialreviewoftheSchemeat30June2011.Thereviewdisclosedthatatthattimethenetmarketvalueofassetsavailableforfundingmemberbenefitswas$57,588,247,thevalueofvestedbenefitswas$52,794,839,thesurpluswas$4,793,408,andthevalueoftotalaccruedbenefitswas$57,330,437.TheseamountsrelatetoallmembersoftheschemeatthedateofvaluationandnoassetorliabilityisrecordedinQuadrantSuperannuationScheme’sfinancialstatementsfortheCorporation’semployees.

ThefinancialassumptionsusedtocalculatetheAccruedBenefitsfortheFundwere:

NetInvestmentReturn 0%p.a.for2011-12and7.0%p.a.thereafter SalaryInflation 4.0%p.a. PriceInflation n/a

Theactuarialreviewconcludedthat:

TheActuarywillcontinuetoundertakeabriefreviewofthefinancialpositionoftheFundattheendofeachfinancialyeartoconfirmthatthecontributionratesremainappropriate.ThefulltriennialactuarialreviewoftheFundwillhaveaneffectivedateof30June2014andisexpectedtobecompletedlatein2014orearlyin2015.Theemployeralsocontributestootheraccumulationschemesonbehalfofanumberofemployees,howevertheemployerhasnoongoingresponsibilitytomakegoodanydeficienciesthatmayoccurinthoseschemes.

13.2 RBF Defined Benefit Superannuation Liability

TheRBFisadefinedbenefitfundwheremembersreceivelumpsumbenefitsonresignation,andlumpsumorpensionbenefitsonretirement(mostofwhichiscalculatedasamultipleofthemember’sfinalaveragesalary),deathorinvalidity.TheRBFhascontributorymembers,compulsorypreservedmembersandpensionersandthedefinedbenefitssectionofRBFisclosedtonewmembers.Allnewmembersreceiveaccumulationonlybenefits.

Asat30June2012,Mercer(Australia)PtyLtdconductedavaluationofthepastserviceandaccruedliabilitiesfortheCorporation,withintheRetirementsBenefitsFund(RBF)superannuationfund.AnyshortfallbetweenthevaluesofthesebenefitsandthemarketvalueoftheRBFassetsrelevantforthosemembersdeterminesthevalueofanyunfundedsuperannuationandisshownasaliabilityintheStatementofFinancialPosition.TheseamountsareincludedinthesuperannuationliabilityreportedinNote11.2above.ThefundingstatusoftheCorporation’sshareofthisschemeasat30June2012,basedontheactuarialvaluation,issummarisedasfollows:

2012 2011

Principal Actuarial Assumptions as at Balance Date

Discountrate 3.5% 5.5%

Expectedsalaryincreaserate 3.5% 4.5%

Expectedreturnonplanassets(1) 7.5% 7.5%

Expectedpensionincreaserate 2.5% 2.5%

Expectedrateofincreasecompulsorypreservedamounts 3.8% 4.5%

(1)Theexpectedreturnonassetsassumptionisdeterminedbyweightingtheexpectedlong-termreturnforeachassetclassbythetargetallocationof

assetstoeachassetclassandallowingforcorrelationsoftheinvestmentreturnsbetweenassetclasses.Thereturnsusedforeachassetclassarenetof

estimatedinvestmenttaxandinvestmentfees.




59

13 Superannuationcontinued

ThediscountrateisbasedonthemarketyieldsonthelongestdatedGovernmentBondsasat30June2012extrapolatedtoallowforthefactthatthetermoftheliabilitiesexceedsthetermofthelongestGovernmentBondandadjustedtoallowforinvestmenttax,basedontheexpectedrateoftaxpayablebytheFund.Thedecrementratesused(e.g.,mortalityandretirementrates)arebasedonthoseusedatthelastactuarialvaluationoftheFund.

Operating Costs

OperatingcostsfortheFundasawholewereassumedtobeincurredattherateof1.5%ofsalariesplus1.0%ofpensionspayment.Thiscostisallocatedtoeachentityinproportiontoassets.

Temporary Invalidity Expense

Thecostoftemporaryinvaliditybenefitswasassumedtobe0.2%ofsalariesofcurrentcontributorymembers.

2012 2011

Fund Assets disclosure

Australianequities 29% 25%

Overseasequities 18% 22%

Fixedinterestsecurities 12% 13%

Property,infrastructureandrelatedassets 33% 19%

Other 8% 21%

AssetsarenotheldseparatelyforeachentitybutareheldfortheFundasawhole.ThefairvalueofFundassetswasestablishedbyallocatingthetotalFundassetstoeachentityinproportiontothevalueofeachentity’sfundedliabilities,calculatedusingtheassumptionsoutlinedinthisreport.

ThefairvalueofFundassetsincludesnoamountsrelatingtoanyoftheentity’sownfinancialinstrumentsoranypropertyoccupiedby,orotherassetsusedby,theentity.

2012 $’000

2011$’000

Statement of Financial Position results as at 30 June - Net liability

Definedbenefitobligation 1,190 1,087

RBFContributoryschemeassets (165) (209)

Deficit(surplus) 1,025 878

Unrecognisedpastservicecost - -

Unrecognisednet(gain)loss - -

AdjustmentforLimitationonnetassets - -

Netsuperannuationliability(asset) 1,025 878

Currentnetliability(ReferNote11.2) 91 67

Non-currentnetliability(ReferNote11.2) 934 811

1,025 878

Expense Recognised in the Statement of Comprehensive Income

Employerservicecost 37 56

Expectedreturnonplanassets (15) (20)

Expense recognised in employee related expenses 22 36



60


2012 $’000

2011$’000

13 SuperannuationcontinuedInterestcost 57 77

Expense recognised in net financing costs 57 77

Amounts Recognised in Other Comprehensive Income

Recognisedactuarial(gains)/losses 87 (190)

Cumulative Actuarial Gains or Losses recognised in Other Comprehensive Income

Cumulativeamountofactuarial(gains)orlossesatendofprioryear (68) 122

Actuarial(gains)orlossesrecognisedduringtheyear 87 (190)

Cumulativeamountofactuarial(gains)orlossesatendofprioryear 19 (68)

Reconciliation of Fair Value of Scheme Assets

Fairvalueofplanassetsatendofprioryear 209 285

Estimatedemployercontributions 19 251

Estimatedparticipantcontributions 23 25

Estimatedoperatingcosts (2) (3)

Estimatedbenefitpayments (29) (365)

Expectedreturnonassets 15 20

Expected assets at year end 235 213

Actuarialgain(loss)onassets (70) (4)

Individual plan assets at year end 165 209

Actualreturnonplanassets(1) (55) 15(1)Asseparateassetsarenotheldforeachentity,theactualreturnincludesany

differenceintheallocationtoeachentity.

Present Value of the Defined Benefit Obligations

Totaldefinedbenefitobligationsatendofprioryear 1,087 1,491

Employerservicecostplusoperatingcosts 37 56

Interestcost 57 77

Estimatedparticipantcontributions 23 25

Estimatedoperatingcosts(administration,insurance) (2) (3)

Estimatedbenefitpaymentpluscontributionstax (29) (365)

Expected defined benefit obligations at year end 1,173 1,281

Actuarial(gain)lossonliabilities 17 (194)

Actual total defined benefit obligations at year end 1,190 1,087

Thedefinedbenefitobligationconsistsentirelyofamountsfromplansthatarewhollyorpartlyfunded.




61

2012 $000

2011$’000

2010$’000

13 SuperannuationcontinuedHistorical information

Totaldefinedbenefitobligation 1,190 1,087 1,491

Actualassetsatyearend 165 209 285

Deficit (surplus) 1,025 878 1,206

Experienceadjustmentonliabilities (85) (183) (18)

Experienceadjustmentonassets 70 4 82

TheexperienceadjustmentforFundliabilitiesrepresentstheactuarialloss(gain)duetoachangeintheliabilitiesarisingfromtheFund’sexperience(e.g.membershipmovements,salaryincreasesandindexationrates)andexcludestheeffectofthechangesinassumptions(e.g.movementsinthebondrate).

Expected Contributions - Financial Year Ending 30 June 2013

Theestimatedemployercontributionsforthefollowingfinancialyearare$91,000.

2012 $’000

2011$’000

14 CommitmentsforExpenditure

14.1 Capital Commitments

Capitalcommitmentstotallingat30Juneof$4,462,728(2011:$4,480,191)werenotprovidedintheaccounts.

Paymentswithin1year 4,462 4,480

Payments1-5years - -

Paymentslongerthan5years - -

Total 4,462 4,480

14.2 Lease Commitments

Leasepaymentsexpensedduringtheyear 264 334

Operating Lease Commitments

Paymentswithin1year 141 126

Payments1-5years 76 152

Paymentslongerthan5years - -

Total 217 278

TheseleasecommitmentsrepresentpaymentsdueoncurrentoperatingleasesfortheCorporationsofficeaccommodationandinformationtechnology.Theleasesarecancellablebutincurapenaltyofthepresentvalueoffutureleasepayments.Thereisnodocumentedoptiontopurchaseleasedassetsattheexpiryoftheleases.



62


2012 $’000

2011$’000

15 ContingentLiabilitiesTheCorporationwasnotawareofanycontingentliabilitiesatthetimeoffinalisingthefinancialreport.

16 RemunerationofAuditorsAudit Services - Tasmanian Audit Office

Annualexternalauditfee 40 37

17 CompensationofKeyManagementPersonnelDirectors

Short-Term 147 145

PostEmployment(superannuation) 13 13

Other Key Management Personnel

Short-Term 823 922

PostEmployment(superannuation) 81 93

Total 1,064 1,173

FurtherdetailsonthecompensationofkeymanagementpersonnelcanbefoundintheRemunerationReportwhichformspartoftheDirectors’Report.

18 RelatedPartyDisclosures18.1 Board Directors

TheBoardDirectorsduringthefinancialyearended30June2012anduptothedateofthisreportwere:

-MrMilesHampton-Chairman

-MrGrantAtkins

-MrBrianBayley

-MsSarahMerridew

-DrDanNorton

-MrTonyMacCormick(Resigned23November2011)

2012 $

2011$

Other expenses associated with the Board are as follows:

Travel,accommodation,mealsandother 16,284 24,867

Directorprofessionaldevelopment - 1,276

16,284 26,143




63

18 RelatedPartyDisclosurescontinued

18.2 Transactions with Directors’ Related Parties

TherewerenoloansinexistencebytheCorporationtoresponsibleorrelatedpartiesduringthefinancialyear.

Anumberofkeymanagementpersons,ortheirrelatedparties,holdpositionsinotherentitiesthatresultinthemhavingcontrolorsignificantinfluenceoverthefinancialoroperatingpoliciesofthoseentities.AnumberoftheseentitiestransactedwiththeCorporationinthereportingperiod.

Inaddition,anumberofkeymanagementpersons,ortheirrelatedparties,transactedwiththeCorporationinthereportingperiodasresidentsorownersofpropertiesintheregioninwhichtheCorporationprovideswaterandsewerageservices.Thetermsandconditionsofthetransactionswithkeymanagementpersonnelandtheirrelatedpartieswerenomorefavourablethanthoseavailable,orwhichmightreasonablybeexpectedtobeavailable,onsimilartransactionstonon-keymanagementpersonel.

Wheremattersforresolutionwerediscussedinrespecttotheabovetransactions,Directorswerenotpresentinmeetings.

18.3 Transactions with Other Related Parties

TheCorporationownsaonethirdshareinTasmanianWaterandSewerageCorporation(CommonServices)PtyLimited,tradingasOnstream.OnstreamprovidesvariousservicestotheCorporation.RefertoNote22fordetailsoftheservicesprovidedandfinancialinformationoftheinvestmentinthisassociate.Transactionswerenotconductedonan“arm’slength”basisastheownerCorporationswereinvolvedinthesettingofpricesandpriceswereonlychargedonacostrecoverybasis.Allservicesarechargedmonthlywithsettlementwithin31days.Totalpurchases(exclusiveofGST)andamountspayablewere:

2012 $’000

2011$’000

Transactions with Onstream

ServiceFees 3,345 3,469

Reimbursementofothercosts 1,053 691

AccountsPayable 803 207

Sales 42 233

AccountsReceivable - 8

TheCorporationisownedbyninecouncilsinthenorthwestofTasmaniaasdetailedinNote21.ThecouncilsmakepaymentstotheCorporationforwaterandsewerageservicesandothermiscellaneousservices.

Transactionsareonanarm’slengthbasisinthenormalcourseofbusinessandonnormalcommercialtermsandconditions.



64



18.3 Transactions with Other Related Parties continued

Sales for the year ended 30 June 2012

Water and Sewerage Sales

$’000

Other Services $’000

Amount Receivable as at

30 Jun 2012 $’000

BurnieCityCouncil 230 83 87

CentralCoastCouncil 72 57 84

CircularHeadCouncil 109 39 1

DevonportCityCouncil 158 30 80

KentishCouncil 38 4 1

KingIslandCouncil 30 - 8

LatrobeCouncil 101 22 37

Waratah-WynyardCouncil 125 6 14

WestCoastCouncil 81 14 19

Salesfortheyearended30June2011

WaterandSewerageSales

$’000

OtherServices$’000

AmountReceivableasat

30Jun2011$’000



CircularHeadCouncil 42 11 42


KentishCouncil 37 - 36

KingIslandCouncil 17 - 4

LatrobeCouncil 66 33 7

Waratah-WynyardCouncil 113 - 1

WestCoastCouncil 70 1 -




65


18.3 Transactions with Other Related Parties continued

TheCorporationmakespaymentstothecouncilsforrates,communityserviceobligationcontributionsandothermiscellaneousservices.Transactionsareonanarm’slengthbasisinthenormalcourseofbusinessandoncommercialtermsandconditions.

Purchases for the year ended 30 June 2012Council Rates Other Council

ServicesAmount Payable as at 30 Jun 2012


CentralCoastCouncil 47 131 -

CircularHeadCouncil 18 29 -


KentishCouncil 6 - -

KingIslandCouncil 2 375 23

LatrobeCouncil 7 3 -

Waratah-WynyardCouncil 18 60 8

WestCoastCouncil 19 - -

Purchasesfortheyearended30June2011CouncilRates OtherCouncil

ServicesAmountPayableasat30Jun2011



CircularHeadCouncil 17 13 -


KentishCouncil 5 2 -

KingIslandCouncil 2 270 -

LatrobeCouncil 7 36 -

Waratah-WynyardCouncil 12 55 -

WestCoastCouncil 4 26 -



66


2012 $’000

2011$’000

19 NotestotheStatementofCashFlow

19.1 Reconciliation of Net Cash From Operating Activities to Operating Result

NetProfit(Loss)beforeIncomeTaxEquivalents 654 2,777

Add (Less) Non-Cash Items:

DepreciationandAmortisationExpense 12,698 12,424

AllowanceforImpairedReceivables 290 346

Loss(Profit)onSaleofNon-currentAssets (22) (84)

GiftedAssetsandContributions (1,125) (858)

ActuarialLossonDefinedBenefitPlans (87) -

ShareofNetProfitofAssociate (14) (43)

Changes in Assets and Liabilities:

(Increase)DecreaseinReceivables (2,436) (1,592)

(Increase)DecreaseinStores (105) (245)

(Increase)DecreaseinPrepayments (34) (63)

Increase(Decrease)inPayables 2,326 (1,331)

Increase(Decrease)inEmployeeBenefits 316 272

Income Tax Equivalents Paid (1,647) (1,278)

Cash Flows from Operating Activities 10,814 10,325

19.2 Reconciliation of Cash and Cash Equivalents

CashManagementAccountwithTascorp - 6

CashatBankandonHand 2,327 2,670

Cash as per Statement of Cash Flows 2,327 2,676




67

20 FinancialInstruments

20.1 Significant Accounting Policies

TheCorporation’sactivitiesexposeittoavarietyoffinancialrisks:marketrisk,creditriskandliquidityrisk.TheCorporationusesdifferentmethodstomeasureandmanagethedifferentfinancialrisks.TheBoardhastheprimaryresponsibilitytosetappropriatepoliciestomanagetheserisks.ThisnotepresentsinformationabouttheCorporation’sexposuretoeachoftheserisks,andtheobjectivespoliciesandprocessesformeasuringandmanagingrisk.

DetailsofsignificantaccountingpoliciesandmethodsadoptedintherecognitionandmeasurementwithrespecttoeachclassoffinancialassetsandliabilitiesareincludedunderNotes3.7,3.9,3.16,3.18,3.20and3.21.

Categoriesoffinancialassetsandfinancialliabilitiesatbalancedatewere:

Financial Instruments

2012 Carrying Amount

$’000

2011CarryingAmount

$’000

Financial Assets

Cashandcashequivalents 2,327 2,676

LoansandReceivables 14,966 12,818

Total Financial Assets 17,293 15,494

Financial Liabilities

Payablesatamortisedcost 6,564 4,235

BorrowingsatamortisedCost 96,263 83,669

Total Financial Liabilities 102,827 87,904



68


20 FinancialInstrumentscontinued

20.1 Significant Accounting Policies continued

Netholdinggain/lossonfinancialinstrumentsbycategory:

Financial Instrument 2012

Interest (Income) and Expense

$’000

Fee (Income) and Expense

$’000

Impairment Loss $’000

Total $’000

Financial Assets

Cashandcashequivalents (81) - - (81)

LoansandReceivables - - 290 290

Total Financial Assets (81) - 290 209


Payablesatamortisedcost - - - -

BorrowingsatamortisedCost 5,833 875 - 6,708

Total Financial Liabilities 5,833 875 - 6,708

Net Holding Loss 5,752 875 290 6,917

Financial Instrument 2011

Interest (Income) and Expense

$’000

Fee (Income) and Expense

$’000

Impairment Loss $’000

Total $’000

Financial Assets

Cashandcashequivalents (69) - - (69)

LoansandReceivables - - 346 346

Total Financial Assets (69) - 346 277


Payablesatamortisedcost - - - -

BorrowingsatamortisedCost 5,188 783 - 5,971

Total Financial Liabilities 5,188 783 - 5,971

Net Holding Loss 5,119 783 346 6,248

20.2 Interest Rate Risk

TheobjectivesoftheCorporation’sinterestrateriskmanagementpolicyaretocontainthepotentialadversefinancialimpactfromunfavourablemovementsininterestrates,predominantlyassociatedwithinterestbearingliabilities,andtocapturethepotentialforreducingcostsbymanagementoftheCorporation’sdebt.TheCorporation’sinterestrateriskismanagedbysettingborrowingswithtermsandmaturitystructureswhichreflectthemediumandlongertermcapitalrequirementsandtariffstructuresoftheCorporation.Theaimofinterestrateriskmanagementistominimisethelongertermcostofborrowingsbyadoptingdebtportfoliomaturitiesandtospreaddebtbetweenfixedandfloatinginstruments.DebtissourcedfromTascorpandismanagedwithinarangeofBoardapprovedlimitswithdebtlevelsandinterestbeingmonitoredregularly.TheCorporationhasnotengagedhedgingaspartofitsfinancialriskmanagementstrategy.

TheCorporationhasminimalexposuretocashflowinterestrateriskthroughitscashanddeposits,termdepositsandbankoverdraftsthatareatfloatingrates.




69


20.2 Interest Rate Risk continued

As at 30 June 2012

Variable interest

rate $’000

Fixed interest rate maturing in: Non-interest bearing $’000

Total carrying amount $’000

Weighted average interest

rate 1 year $’000

1 – 5 years $’000

> 5 years $’000

Financial Assets

CashatBank 2,327 - - - - 2,327 4.16%

CashManagementAccount - - - - - - 4.54%

Receivables - - - - 14,966 14,966 -

Total 2,327 - - - 14,966 17,293 -


Borrowings-Tascorp 25,137 5,000 42,500 23,626 - 96,263 6.30%

Payables - - - - 6,564 6,564 -

Total 25,137 5,000 42,500 23,626 6,564 102,827 -

Net Financial (Liabilities) Assets (22,810) (5,000) (42,500) (23,626) 8,402 (85,534) -

As at 30 June 2011

Variable interest

rate $’000

Fixed interest rate maturing in: Non-interest bearing $’000

Total carrying amount $’000

Weighted average interest

rate 1 year $’000

1 – 5 years $’000

> 5 years $’000

Financial Assets

CashatBank 2,670 - - - - 2,670 4.58%

CashManagementAccount 6 - - - - 6 4.66%

Receivables - - - - 12,818 12,818 -

Total 2,676 - - - 12,818 15,494 -


Borrowings-Tascorp 10,494 11,602 27,500 34,073 - 83,669 6.46%

Payables - - - - 4,235 4,235 -

Total 10,494 11,602 27,500 34,073 4,235 87,904 -

Net Financial (Liabilities) Assets (7,818) (11,602) (27,500) (34,073) 8,583 (72,410) -



70



20.2 Interest Rate Risk continued

WhilethetableabovehighlightstheCorporation’stotalexposuretovariableinterestratesat30June2012wasanetliabilityof$22,810,000(2011:$7,818,000).TheCorporationisexposedtomovementsininterestratesonvariableinterestbearingliabilities.Thereissufficientvolatilityininterestratesanditisreasonablypossibleratesmaymarginallyincreaseoverthenext12monthsbutmorelikelydecrease.

Thetablebelowshowstheimpactonprofitaftertaxandequityona0.25%increaseanda0.25%decreaseininterestrates.

TheCorporationonlyentersintoborrowingswithTascorp.TheinterestratesensitivityislargleybasedupontheforecastsprovidedbyTascorp.

Profit after tax 0.25% increase

30 Jun 12 $’000

Profit after tax 0.25% decrease

30 Jun 12 $’000

Profitaftertax1%increase30Jun11

$’000

Profitaftertax1%decrease

30Jun11$’000

CashandCashEquivalents 4 (4) 19 (19)

InterestBearingLiabilities-Variable (44) 44 (73) 73

Total (40) 40 (54) 54

20.3 Credit Risk

ExposuretocreditriskarisesfromthepotentialdefaultofacounterpartywithrespecttotheCorporation’sfinancialassets.Financialassetsincludecashandcashequivalents,tradeandotherreceivables.AsidentifiedinNote20.2,theCorporation’smaximumexposuretocreditriskatreportingdatewas$17,513,000(2011:$15,494,000).

Creditriskismeasuredatfairvalue.Allreceivablebalancesaremonitoredonanongoingbasis.Tradereceivablesconsistofalargenumberofcustomersandindustriesovertheregion.TheCorporationdoesnotholdanycollateraloveranytradereceivable.TheCorporationcurrentlyrecordsalargeportionofpastduereceivablesthatarebeingprocessedbytherecentlydevelopedcreditcontrolprocess.

ForcashatbankitistheCorporation’spolicytoonlydealwithAustralianbankswithaminimumStandardandPoor’slongtermcreditratingofA.Theratingcounterpartiesaremonitoredonanongoingbasis.

2012 $’000

2011$’000

Age of receivables that are past due but not impaired

0-30Days 2,354 3,086

31-60Days 287 424

61-90Days 521 147

91Daysandover 2,988 4,140

Total 6,150 7,797

Age of impaired receivables

0-30Days 9 -

31-60Days 5 -

61-90Days 1 -

91Daysandover 719 444

Total 734 444




71


20.4 Liquidity Risk

LiquidityriskistheriskthattheCorporationwillnotbeabletomeetitsfinancialobligationsastheyfalldue.TheCorporationmanagesliquidityriskbymaintainingadequatereservesandbankingfacilitiesandbycontinuouslymonitoringforecastsandactualcashflowsandmatchingthematurityprofilesoffinancialassetsandfinancialliabilities.

Thefollowingtableidentifiesthecontractualmaturitiesonrolloveroffinancialliabilitiesatthereportingdate.

3 months or less $’000

3 - 12 months $’000

1 - 2 years $’000

2 - 5 years $’000

> 5 years $’000

Carrying Amount $’000

2012

Borrowings-Tascorp 25,137 5,000 12,500 30,000 23,626 96,263

Payables 6,564 - - - - 6,564

Total 31,701 5,000 12,500 30,000 23,626 102,827

2011

Borrowings-Tascorp 12,096 10,000 5,000 22,500 34,073 83,669

Payables 4,235 - - - - 4,235

Total 16,331 10,000 5,000 22,500 34,073 87,904

20.5 Foreign Exchange Risk

TheCorporationisexposedtoaninsignificantforeigncurrencyriskrelatingtopurchasesofsuppliesandconsumablesfromoverseas.Whilethereisalimitedamountofpurchasesdenominatedinforeigncurrenciestheriskisfurtherreducedbyashorttimeframebetweencommitmentandsettlement.ShouldasignificantforeigncurrencyexposurearisetheCorporationisauthorisedtoenterintoaderivativeinstrumenttolimittheeffectofforeigncurrencymovements.TheCorporationdidnotenterintoanyderivativeinstrumentsduringtheyear.



72



20.6 Net Fair Value

AtbalancedatetheCorporationdidnotholdanyfinancialinstrumentswhichhavebeenmeasuredatfairvalueandrecognisedontheStatementofFinancialPosition.At30JunetheCorporationwasnotcarryinganyfinancialassetsorliabilitieswhichweretradeableonanactivemarketwithreferencetoquotedprices.TheCorporationhadnotenteredintoanyderivativesorforwardforeigncurrencycontractsatbalancedate.Accordinglytherewerenofinancialinstrumentstoreportinlevel1,2or3ofthefairvaluehierarchyfor30June2012(2011:Nil).Thefairvalueofthefinancialassetsandliabilitiesatyearendwere:

Financial Instrument

Total carrying amount per the statement of

financial position

Aggregate net fair value

2012 $’000

2011$’000

2012 $’000

2011$’000

Financial Assets

CashatBank 2,327 2,670 2,327 2,670

CashManagementAccount - 6 - 6

Receivables 14,966 12,818 14,966 12,818

Total 17,293 15,494 17,293 15,494


Borrowings 96,263 83,669 102,467 86,323

Payables 6,564 4,235 6,564 4,235

Total 102,827 87,904 109,031 90,558

Themethodsandassumptionsusedtodeterminethesenetfairvaluesofthefinancialassetsandliabilitiesareasfollows:

-Cash,cashmanagementandtermdeposits-thecarryingamountapproximatesthefairvalueduetotheshorttermnatureoftheinstrument;

-Receivables,tradecreditorsandaccruals-thecarryingamountapproximatesthefairvalue;

-Borrowings-arecarriedatamortisedcostwhichisdifferenttonetfairvalueduetomarketsensitivityofthedebtportfolioasat30June2012.Borrowingshelduntilmaturityarepaidatthecarryingamount.

20.7 Capital Management Policy

TheCorporationhasestablishedathreeyearcapitalexpenditureprogramnecessarytoachievethebusinessandregulatoryobjectives.CapitalismanagedbytheCorporationtoachievetheseobjectiveswithinfinanciallyprudentgearingthresholdswhilebeingmindfulofacceptablereturnstoshareholders.

21 ControllingEntities

TheCorporationoperatesasanentityundertheCorporationAct2001(Cth)andinaccordancewiththeWaterandSewerageCorporationsAct2008(WSCA)andtheWaterandSewerageIndustryAct2008(WSIA).CradleMountainWaterisownedbythefollowingninecouncilsinNorth-WesternTasmania:BurnieCityCouncil,CentralCoastCouncil,CircularHeadCouncil,DevonportCityCouncil,KentishCouncil,KingIslandCouncil,LatrobeCouncil,Waratah-WynyardCouncilandWestCoastCouncil.




73

22 InvestmentinAssociate

On9December2008theCorporationwasissuedoneofthreesharesinTasmanianWaterandSewerageCorporation(CommonServices)PtyLimited,tradingasOnstream.TheothertwosharesareownedbyTasmanianWaterandSewerageCorporation(SouthernRegion)PtyLimited,tradingasSouthernWaterandTasmanianWaterandSewerageCorporation(NorthernRegion)PtyLimited,tradingasBenLomondWater.

Allordinarysharesshallrankparipassuinallrespects,exceptforthedividendrightsattachingtotheshares,whicharedeterminedbytheproportionofsalesbyOnstreamtoeachowner.TheCorporation’sshareofOnstream’sprofitfortheyearisalsodeterminedonthisbasis.

Onstreamprovidesvariousservicestoallthreeownersincludinginformationtechnology,billing,payroll,procurementandfinancialservices.Fordetailsonthecostoftheseservices,referNote18.3.

ThefollowingtableshowssummarisedfinancialinformationforOnstream,togetherwithareconciliationofmovementsinthecarryingamountoftheCorporation’sinvestment.

Onstream’sfiguresareforthesameyearenddateastheCorporation’saccounts.

2012 $’000

2011$’000

Summarised financial information of Onstream

Revenue 13,693 16,154

Profitbeforeincometax 74 232

Incometaxequivalentsexpensebenefits (22) (70)

Profitafterincometax 52 162

Othercomprehensiveincome(loss)aftertax (189) (73)

Total comprehensive income for the period (137) 89

Corporation’sshareofprofitbeforetax 20 62

Corporation’sshareofincometaxequivalents(expense)benefit (6) (19)

Corporation’sshareofprofitaftertax 14 43

Corporation’sshareofothercomprehensiveincome(lossaftertax) (51) (19)

Corporation’s share of total comprehensive income (loss after tax) (37) 24

Assets 10,306 10,260

Liabilities (10,296) (10,113)

Net Assets 10 147

Reconciliation of carrying amount of investment

Carryingamountatbeginningofyear 38 14

Shareofsurplus(deficit)fortheyear (37) 24

Carrying amount at end of year 1 38

23 SubsequentEvents

Therehavebeennomattersorcircumstancesthathavearisensincetheendofthefinancialyearthathavesignificantlyaffected,ormayaffecttheCorporation,itsoperations,resultsofoperations,orstateofaffairsinfuturefinancialyears.

74


CradleMountainWaterABN90133655008

162PumpingStationRoad,Forth•POBox3147DC,UlverstoneTAS7315Phone:(03)64987900Fax(03)64987935Email:[email protected]

www.cmwater.com.au

©re

thin

k en

viro

nmen

tal p

rint 4

7880

preparing for the future - office of the tasmanian ... › documents... · • delivery of $26.4...

Documents