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SunWater Limited Statement of Corporate Intent 2016−17

Commercial in Confidence It is in the public interest to ensure that this document is not disclosed to third parties. This document contains information that the disclosure of which could reasonably be expected to prejudice the commercial, professional or financial affairs of SunWater; the trade secrets or business affairs of SunWater; the commercial activities of SunWater; and the deliberative processes of government (see Schedule 4, Part 3 Right to Information Act 2009). Government Owned Corporation SunWater Limited

Chief Executive Officer

Nicole Hollows

Board Chair

Leith Boully

Shareholding Ministers

Curtis Pitt – Treasurer, Minister for Aboriginal and Torres Strait Islander Partnerships and Minister for Sport Mark Bailey – Minister for Main Roads, Road Safety and Ports and Minister for Energy, Biofuels and Water Supply

Shareholding Departments Queensland Treasury – Shareholder and Structural

Policy Division (SSPD)

Department of Energy and Water Supply (DEWS)

Period of application 1 July 2016 to 30 June 2017

Context

SunWater’s Statement of Corporate Intent 2016-17 (SCI) has been prepared by the Directors and Management for submission by the SunWater Board to shareholding Ministers. The SCI meets all legislated requirements under Part 8 of the Government Owned Corporations Act 1993.

SunWater’s SCI outlines the actions that have been agreed for implementation in 2016-17, being the first year of SunWater’s five-year corporate plan. The SCI also identifies the measures of success that will be applied in evaluating achievement against identified deliverables and goals.

SunWater Statement of Corporate Intent 2016-17

Commercial in confidence 31 May 2016

PERFORMANCE AGREEMENT

In accordance with Chapter 1, Part 3, Section 7 of the GOC Act, the SCI represents a formal performance agreement between the Board of SunWater and its shareholding Ministers - The Treasurer, Minister for Aboriginal and Torres Strait Islander Partnerships and Minister for Sport and the Minister for Main Roads, Road Safety and Ports and Minister for Energy, Biofuels and Water Supply - with respect to the financial and non-financial performance targets specified for the financial year. The SCI also represents an acknowledgment of and agreement to major activities, objectives, undertakings, policies, investments and borrowings of SunWater for 2016-17.

This SCI is consistent with SunWater’s 2016-21 Corporate Plan agreed to by shareholding Ministers in accordance with Chapter 3, Part 7 of the GOC Act.

In signing this document, the Board of SunWater undertakes to ensure that the document, and all associated reports to shareholding Ministers, are prepared with accuracy and timeliness and that all reasonable efforts are made to achieve the targets proposed for 2016-17.

Major changes to key assumptions and outcomes detailed in this SCI, and which come to the SunWater Board’s attention during the year, will be brought to the attention of shareholding Ministers. Any modifications to this SCI will be dealt with in accordance with the GOC Act.

This SCI is signed by the Chair on behalf of all the Directors in accordance with a unanimous decision of the Board of SunWater.

TREASURER, MINISTER FOR ABORIGINAL AND TORRES STRAIT ISLANDER PARTNERSHIPS AND MINISTER FOR SPORT

Date

MINISTER FOR MAIN ROADS, ROAD SAFETY AND PORTS AND MINISTER FOR ENERGY, BIOFUELS AND WATER SUPPLY

Date

10/06/2016

SUNWATER CHAIRMAN

Date



Contents

Part 1 Financial and Non-financial Performance Targets, Objectives and Activities 4

1 – Financial performance KPIs

2 – Non-financial performance KPIs

3 – Community service obligations (CSOs)

4 – Market, industry demand and company outlook

5 – Key performance indicator trends and forecasts

6 – Outline of SunWater’s 2016-17 Objectives

7 – Outline of SunWater’s 2016-17 Undertakings

Part 2 Attachments 9

1 – Policies

2 – Employment and Industrial Relations Plan

3 – Financials (Consolidated, Parent, Subsidiaries)

4 – Significant projects

5 – Planned asset acquisitions and disposals

6 – Other significant expenses

7 – WACC rate calculations

8 – Key 2016-17 business risks

9 – Sponsorship, advertising, corporate entertainment, donations and other arrangements

10– Key Financial and Non-Financial Metrics



Part 1 – SunWater’s 2016-17 Financial and Non-financial Performance Targets, Objectives and Activities SunWater’s performance in 2016-17 will be assessed against the financial and non-financial performance indicators that have been agreed with shareholders. SunWater will report its achievements against these agreed measures and targets through Quarterly Scorecard reports and directly through quarterly and annual presentations to shareholder representatives.

1 Financial performance KPIs Quarterly targets (2016-17)

Jun

Annual (2016–17)

Financial metrics Sept Dec Mar Operating revenue $M 73.503 75.161 74.044 75.086 297.794

Total assets $M 1,254.976 1,100.650 1,113.857 1,054.492 1,054.492

EBITDA $M 41.510 42.435 40.262 40.817 165.024

EBIT $M 32.115 33.040 31.031 (26.504) 69.682

NPAT $M 19.727 19.891 18.250 (22.014) 35.854

Economic profit (loss) $M - - - - 5.541

Return on operating assets % 8.80 9.08 8.57 (10.88) 3.89

Return on average contributed equity % 20.75 26.00 29.17 (35.18) 10.18

Current ratio 1.13 1.31 1.40 1.22 1.22

Market gearing (debt to debt + equity ratio) %

30.14 44.31 43.31 46.46 46.46

EBITDA interest coverage (Multiple) 10.55 9.17 8.12 8.27 8.94

EBIT interest coverage (Multiple) 8.16 7.14 6.26 (5.37) 3.77

FFO interest coverage (Multiple) 10.38 9.03 7.98 8.13 8.80

Cost efficiency savings $M (total – includes carry over of residual 2012-17 price path targets)

0.204 0.204 0.204 0.650 1.263

2 Non-financial performance KPIs Quarterly targets (2016-17)

Jun Annual

Non-financial metrics Sept Dec Mar (2016–17) Water deliveries ML-m 0.262 0.391 0.304 0.278 1.236

Customer service levels (Number of exceptions)

0 0 0 0 0

Environmental compliance breaches 0 0 0 0 0

Distribution system efficiency % 77 77 77 77 77

Pump Performance – Target Range (kWhr/Ml/m)

3.4 – 4.3 3.4 – 4.3 3.4 – 4.3 3.4 – 4.3 3.4 – 4.3

Total recordable injury frequency rate (TRIFR)

< 5 < 5 < 5 < 5 < 5

Lost time injury frequency rate (LTIFR) 0 0 0 0 0

Lost time injuries (LTIs) 0 0 0 0 0

Medical treatment injuries (MTIs) < 2 < 2 < 2 < 2 < 5

Total Workforce (No. of directly employed, staff contractors and apprentices) - averaged FTEs across the period

439 439 439 439 439



Notes to Financial and Non-financial Performance KPIs • 2015-16 estimated actual water deliveries were significantly higher than budgeted (1.08 ML-m) driven by increased irrigation

water usage. The 2016-17 budget also reflects this higher irrigation usage. • TRIFR and LTIFR actuals are based on 12 month rolling averages projected through to 30 June 2017. • Increase in staffing numbers (FY2017 compared to FY2016) reflects recruitments during first half FY2016 (implemented to

reduce recreational and TOIL leave balances and overtime payments) and planned recruitments to meet the program of dam safety improvement projects and SunWater’s response to the IGEM recommendations.

3 Community service obligations (CSOs)

SunWater’s forecast CSO payments in 2016-17 (from DEWS) are tabled in Attachment 3 of the Financials. SunWater’s corresponding CSO deliverables in 2016-17 include:

• Irrigation water – provision of irrigation water across SunWater’s irrigation water supply schemes consistent with the CSO services and payments determined by the Queensland Competition Authority (QCA) in its 2012-17 price path.

• Urban water – provision of urban water to the township of Cloncurry. 4 Market, industry demand and company outlook

SunWater’s focus in 2016-17 will be to continue provide existing bulk water, pipeline and irrigation distribution services which meet customer needs.

SunWater’s ongoing interaction with customers and industry representative groups suggests the outlook for key customer sectors is expected to continue to remain subdued. SunWater continues to actively work with customers to investigate all business opportunities which are consistent with Government’s expectations and priorities. Key to these customer discussions will be the need for ongoing dialogue with shareholders to clarify SunWater business development activities and the funding arrangements for new infrastructure.

Notwithstanding this, rationalisation or withdrawal of significant mining customers would expose SunWater to significant revenue replacement risk given the current downturn in the mining industry.

5 Key performance indicator trends and forecasts

SunWater’s key financial and non-financial metrics showing actual performance in the previous five years and forecast performance through to 2020-21 are graphed in Appendix 10.

6 Outline of SunWater’s 2016-17 Objectives SunWater will continue to deliver all current bulk water, irrigation systems and industrial pipelines services efficiently and in line with customer, community and shareholder expectations. SunWater’s key objectives for 2016-17 include:

• Work closely with shareholders to establish an agreed and clear focus for SunWater now and post the potential transition to local management arrangements (LMA)

• Meet the bulk water supply needs of regional Queensland’s irrigation, urban and industrial customer sectors

• Manage the risks associated with SunWater’s operations and infrastructure in accordance with the expectations of SunWater’s shareholders, regulators, stakeholders and the community

• Prudent and efficient management of SunWater

• Align SunWater’s organisational capacity and workforce capability with the services and functions agreed for delivery

• Ensure SunWater’s high levels of performance in health, safety, environment and quality are maintained



7 Outline of SunWater’s 2016-17 Undertakings Objective: Work closely with shareholders to establish an agreed and clear focus for SunWater now and post the potential transition to local management arrangements (LMA) ID Activity By When

1 Prepare an options and directions paper for Government consideration about the future of SunWater post the potential transition to LMA

Feb-17

2 Prepare a Business Development Strategy and Plan incorporating funding strategies to support business growth for discussion and agreement with shareholders

Nov-16

Objective: Meet the bulk water supply needs of regional Queensland’s irrigation, urban and industrial customer sectors

ID Activity By When 3 Operate and maintain SunWater’s water infrastructure to ensure continued delivery

of water to customers and communities in line with customer and other stakeholder needs, shareholder expectations and QCA targets.

Ongoing

4 Engage with irrigation sector customers about, and publish reports on, the annual performance and plans / projected costs associated with each of SunWater’s irrigation service contracts (including for example, network service plans).

Annual performance engagement Oct-16, plans / projected cost engagement Apr-17

5 Implement Government’s decisions regarding potential transition of SunWater’s eight channel irrigation schemes to Local Management Arrangements • Support transition of Eton, Emerald, Theodore and St George schemes; • Support the development of updated business cases for the Lower Mary,

Bundaberg, Burdekin and Mareeba schemes

In line with Government timeframes

6 Conduct the SunWater customer engagement survey and develop and implement a customer relationship improvement strategy across all customer sectors (including downstream residents that have the potential to be impacted by SunWater operations).

Strategy developed by Nov-16 Implementation Ongoing.

7 Work closely with industry and development proponents and with Building Queensland (BQ) to progress commercial business opportunities.

In line with SunWater’s Business Development Strategy and Plan and Government and proponent timeframes

8 Finalise the EIS processes: • Nathan Dam • Lower Fitzroy River Infrastructure Project

Dec-16 Jan-17

9 Lead and support water infrastructure development investigations (including those considered by BQ or under the National Water Infrastructure Development Fund) in

In line with proponent



accordance with relevant GOC policies and shareholders agreed funding strategy. needs and shareholder approvals

10 Establish an agreed working framework with the Gladstone Area Water Board for developing the Environmental Impact Statement and business case for the Lower Fitzroy River Infrastructure Project.

Oct-16 (to be verified)

11 Work with shareholders to develop agreed bulk water pricing arrangements for local government water supplies.

Policy aimed to be agreed with shareholders by Nov-16 Implementation ongoing

12 Keep shareholders informed of all significant business matters and variations to agreed and communicated schedules.

Quarterly reporting and as necessary

Objective: Manage the risks associated with SunWater’s operations and infrastructure in accordance with the expectations of SunWater’s shareholders, regulators, stakeholders and the community

ID Activity By When 13 Implement the dam safety improvement program of works:

• finalise Fairbairn Dam (Spillway Improvement 2:1 Slope) construction; • finalise Fairbairn Dam (Spillway Rectification) business case; • commence Fairbairn Dam (Spillway Rectification) construction; • finalise Paradise Dam (Strengthening of Monoliths D & K); • finalise Boondooma Dam (Flood Repair Spillway Reinstatement and Spillway

Repair to Sidewall – capital and expense components) business case; • Boondooma Dam (Flood Repair Spillway Reinstatement and Spillway Repair to

Sidewall – capital and expense components) contract award; and • Burdekin Falls Dam (Foundation Drainage Improvement) contract award.

Dec-16 Jul-16 Mar-17 Jun-17 Jul-16 Nov-16 May-17

14 Continue to action the recommendations from the Inspector‐General Emergency Management (IGEM) reviews (Review of Seqwater and SunWater warnings communications and 2015 Callide Creek Flood Review): • establish a dedicated control room to provide continuous monitoring and

oversight; • establish a sustainable funding model for the capital investment and ongoing

operating costs; • complete the program of flood risk mapping; and • progress the emergency planning and community education programs agreed

with relevant local government authorities with a view to finalising implementation early 2017-18.

30-Aug-16 31-Dec-16 30-Apr-17 30-Jun-17

15 Implement SunWater's responses to the Coroner's recommendations from the Inquest into the Bedford Weir incident: • consult with customers on the need and cost to remove SunWater’s inflatable

rubber fabridams; • remove and not reinstate, the rubber fabridams manufactured by Queensland

Rubber/Trelleborg; • establish an Agreement to allow the placement of warning signs in appropriate

areas downstream of the weirs and dams; and • install and maintain appropriate signage to warn people of the risks that exist in

conducting any activities in areas below the walls of dams and weirs.

Jul-16 (Oct-17) Oct-16 Jun-17



Objective: Prudent and efficient management of SunWater ID Activity By When

16 Refurbish, enhance and repair SunWater’s water infrastructure in line with customer and stakeholder needs and reflective of QCA targets and commercial agreements.

Ongoing

17 Meet agreed annual Enterprise Bargaining Agreement efficiency targets. Jun-17 18 Deliver SunWater’s insurance renewal program to ensure adequate coverage and, in

the event of any coverage gaps, implement agreed risk management strategies in consultation with shareholders.

Jun-17

19 Manage SunWater’s current (significant) disputes and insurance claims and provide regular updates to shareholders.

Ongoing

20 Deliver the required $260M special payment (to be paid in FY2017, reflective of SunWater’s end FY2016 financial position), restructure SunWater’s borrowings and amend SunWater’s dividend policy in line with shareholders’ direction.

Nov-16

21 Ensure agreed Community Service Obligation services are delivered efficiently and in line with the CSO payment schedule agreed with Government.

Ongoing

22 Continue to engage with shareholders and their representatives with regard to increasing SunWater’s irrigation scheme revenues to offset the accounting operating loss incurred on irrigation operations ($4.272M in 2016-17).

Ongoing

23 Continue to progress discussions with DEWS and SunWater’s external advisors regarding the potential sale and partial leasing back of the Rocklea Hydraulics Laboratory site for SunWater’s physical modelling needs (infrastructure options).

Jun-17

Objective: Align SunWater’s organisational capacity and workforce capability with the services and functions agreed for delivery

ID Activity By When 24 Enhance the level of commercial understanding across the business:

• Develop a workforce capability strategy which targets improved understanding of SunWater’s project, procurement and risk management processes.

• Develop SunWater’s 5 year procurement strategy. • Finalise the business case to update SunWater’s SAP / Work Management

Structure (WMS) business system / platform.

Feb-17 Mar-17 Jun-17

25 Implement culture and leadership development programs and staff training, induction, communication and consultation programs to ensure continued provision of professional, high quality services to customers and in line with compliance and organisational capability needs and obligations.

Jun-17

26 Implement initiatives that enhance the level of engagement of SunWater staff, reflective of SunWater’s staff survey improvement opportunity areas of: • Leadership • Balance and Wellbeing • Image and Brand Conduct a pulse survey to measure changes in level of engagement of SunWater staff and progress against implementation of initiatives responding to the above opportunities.

30-Jun-17

Objective: Ensure SunWater’s high levels of performance in health, safety, environment and quality are maintained ID Activity By When

27 Continue to reinforce the critical importance of safety at all levels of SunWater, including public safety, through the targeting of the “No Harm” safety objective and ensure organisational safety and environmental performance aligns with Government’s expectations of high performance.

Ongoing



28 Refresh SunWater’s health, safety, quality and environmental systems to reflect changing organisational needs.

May-17

29 Maintain third party accredited systems for quality management (ISO9001:2008), environmental management (AS/NZS ISO14001:2004), workplace health and safety management (AS/NZS 4801:2011) and project management (PMO accreditation through the Australian Institute of Project Management – AIPM).

Jun-17

Part 2 – Attachments Attachment 1 - Policies As part of its performance agreement with its shareholding Ministers, SunWater provides the following additional undertakings: Sponsorship, advertising, corporate entertainment, donations and other arrangements

SunWater’s budgeted spend on Sponsorship, Advertising, Corporate Entertainment, Donations and Other Arrangements are provided in Attachment 9 to the SCI. Planned expenditure is consistent with the Corporate Entertainment and Hospitality Guidelines and SunWater’s Corporate Entertainment and Hospitality Policy. Prudential financial information

The Board will ensure SunWater takes full responsibility (within the constraints associated with shareholders’ policy requirements) to ensure that prudent financial practices will be applied both within the corporation and within its subsidiaries (whether fully controlled or otherwise). Without limiting the obligations imposed on the Board and the CEO by the GOC Act and, where applicable, the Corporations Act 2001 (Cth), this includes a commitment to:

• abide by the Code of Practice for Government Owned Corporations’ Financial Arrangements (Code of Practice), as issued by the Queensland Government; and

• establish, maintain and implement appropriate financial risk management practices and policies required and as specified in the above Code of Practice.

Capital structure

SunWater’s overall debt will be managed to ensure as a minimum that a BBB+ credit rating – or other rating as directed or constrained by shareholders’ policy requirements – is maintained. Weighted average cost of capital (WACC) The Board will ensure that SunWater reviews its WACC on an annual basis. As part of the SCI negotiation process, SunWater’s beta and optimal capital structure have been determined in consultation with the Queensland Treasury Corporation. Separate WACCs have been calculated for those parts of SunWater’s operations that face differing business risk profiles. Other than the annual review process, in the event that SunWater encounters a significant change to the risk profile of its business, its WACC will be recalculated in consultation with shareholder representatives. Details of SunWater’s WACC calculation are provided as Attachment 7 to this Statement of Corporate Intent. Dividend policy and payment SunWater’s dividend process is governed by the Government Owned Corporations Act 1993 and the Corporations Act 2001 (Cth). SunWater’s previous policy has been to recommend and pay a dividend amount equivalent to 80% of SunWater’s adjusted audited consolidated net profit after tax for the year. SunWater is currently implementing the steps necessary to make the $260M special payment in November 2016 (special dividend plus a return of capital) and to adjust SunWater’s future dividends to be based on 100% of the company’s adjusted audited consolidated net profit after tax for the year.



As part of its processes SunWater has received verbal confirmation from shareholding Ministers representatives that:

• Shareholders will provide a letter of comfort in support of SunWater’s Dam Safety Improvement Program, given the funding consequences of the “special payment” and the potential need for additional grant or equity funding at some future point; and

• A special payment of $260M consisting of a special dividend of $130M and a return of equity of $130M is required to be paid by 30 November 2016. Shareholders will provide a letter of comfort in the event that SunWater is unable to carry out its normal operations in accordance with its Charter in the future due to restrictions on its financial capacity as a result of the Board’s compliance with the requirement to make the “special payment”. In addition, a direction to pay the special dividend of $130M (together with 100% of net profit after tax relating to the 2015-16 year) will be provided.

When determining the actual dividend to be paid based on the audited financial results, the Board will ensure shareholding Ministers are consulted and that written agreement is received for any material changes to the adjustment items previously identified (by May each year) and for any subsequent new adjustment items identified. This written agreement will be obtained by SunWater prior to payment of the final dividend by the Board. Investment thresholds SunWater will comply with Government’s Investment Guidelines for GOCs. SunWater will provide early notification to shareholding Ministers of significant expenditure and revenue contracts when their total value equals or exceeds $10M, have public policy implications or involve third parties (associated with joint venture or similar such agreements). SunWater will seek approval of shareholding Ministers for expenditure and revenue contracts of $40M and above total value. SunWater will also notify shareholders (via quarterly Scorecard submissions) of lower value projects which are both proponent funded and consistent with SunWater’s core business activities, prior to committing any funds beyond early stage investigations. Risk management The Board of SunWater has ultimate responsibility for the management of all potential internal and external risks for the Corporation. SunWater deploys a comprehensive risk management framework designed to identify, monitor, assess and mitigate all potential business risks. Examples of business risks that are routinely assessed, managed and monitored include environmental, occupational health and safety, quality assurance, financial and asset management related risks. Enterprise risks are routinely monitored and assessed by SunWater’s management and periodically reviewed by Board or a relevant Board Committee viz. the Audit and Corporate Governance Committee, the Industry Regulation, Safety and Environment Committee or the Remuneration Committee. As other matters of significance are actioned, updates will be provided to shareholding Ministers through the Quarterly Scorecard process and directly, through written correspondence, as necessary. Business risks are further detailed in Attachment 8 and within the Corporate Plan 2016-21. Compliance with Government policies The Board of SunWater and its subsidiaries will comply with all Policies and Guidelines as advised by shareholding Ministers/responsible Ministers from time to time. SunWater has adopted the recommendations in the Corporate Governance Guidelines for Government Owned Corporations (February 2009). The Board of SunWater also undertakes to continually monitor and review its corporate governance arrangements to reflect good practice, having regard to the guidelines.

Attachment 2 – Employment and industrial relations plan 1. E&IR Philosophy/Direction SunWater is a bulk water infrastructure developer and manager playing a key role in Australia's water industry, with a proven nearly 90 year history of growth and leadership in delivering world-class bulk water infrastructure solutions. In order to achieve success in business activities, SunWater values and supports its



people, encourages innovation and initiative, removes unnecessary process, and ensures accountability for performance.

2. Significant and Emerging Issues SunWater has undergone significant organisational restructuring since late 2013 to ensure the business is best placed to deliver services to customers in the most efficient way possible, and to maximise the utilisation of our people in the current business context. SunWater’s workforce is ideally placed to react to both internally or externally driven opportunities as they present. Some of the key initiatives planned for the next ten years that will impact on the composition and capacity of SunWater’s workforce include significant dam safety improvement projects at facilities including:

• Paradise Dam • Boondooma Dam • Fairbairn Dam • Burdekin Falls Dam

SunWater’s other initiatives of significance include completing the potential transition of the eight channel irrigation schemes to Local Management Arrangements and implementation of the relevant recommendations arising out of the IGEM’s report in response to the 2015 flood event in Central Queensland.

3. Directors/Senior Executive Remuneration Non-Executive Directors, including Chairman (2015-16 year end / full year equivalent forecast – current Directors)

Non-executive directors Directors’ fees (Incl Subsidiary Boards)

Committee fees

Superannuation Other Total

Leith Boully (Chair) &^*#

From 1 October 2015

47,009 12,025 5,608 64,642

Neville Ide ^

From 1 October 2015

21,864 6,557 2,700 31,121

Patrice Sherrie ^

From 1 October 2015

21,864 9,837 3011 34,712

Moya Steele

From 3 December 2015

14,455 2,914 1,650 19,019

David Stewart

From 3 December 2015

14,455 1,457 1,511 17,423

• Remuneration amounts based on projected financial year amounts. • Final 2015-16 remuneration amounts (actuals) will be available at end June 2016 and will be reflected

in SunWater’s 2015-16 Annual Report. ̂ Directors of SunWater Subsidiary Board (Burnett Water Pty Ltd)

& Directors of SunWater Subsidiary Board (Eungella Water Pipeline Ltd)

* Directors of SunWater Subsidiary Board (North West Queensland Water Pipeline Ltd)

# Chair of Board Committee



CEO and Senior Executives Remuneration (2015-16 forecast full year equivalent payments shown as being representative)

CEO/Senior Executives Base Salary Employer Superannuation Contributions

Total Fixed Remuneration

Performance Payment Made&

Peter Boettcher Chief Executive

510,318 19,307 529,625 74,148

Geoffrey White GM Corporate

294,867 37,595 332,462 36,144

Alex Fisher GM Asset Delivery

260,693 19,307 280,000 0

Thomas Vanderbyl GM Operations

258,505 32,959 291,464 29,979

& SunWater will link senior executive performance payments to the achievement of the targets agreed through the annual SCI. Payments relate to performance in the previous year and are typically paid in August, following the year to which the payments relate. Performance payments shown in the above table relate to the most recent actual payments made to GMs in August 2015 and the CEO in February 2016. These payments relate to performance during the 2014-2015 year. Alex Fisher was appointed in November 2015 and was therefore not eligible to participate in the 2014-15 performance review. Actual payments made in 2014-15 are shown in SunWater’s Annual Reports.

There are no gain-sharing arrangements in place for SunWater senior executives.

4. Employment Conditions SunWater is a Government Owned Corporation (GOC), and is covered by federal industrial relations legislation, including the Fair Work Act 2009 (Cwth) [FWA]. SunWater employees (other than those on individual employment contracts) are covered by employment conditions contained in the Agreement. The Agreement contains conditions of employment that are not less than the National Employment Standards (NES). Relevant industrial instruments are as follows:

Award/Agreement Scope Reference Expiry date

SunWater Enterprise Agreement (2015-2018)

Covers 360 SunWater employees (as at 17 March 2016)

AG2015/6073 Nominal expiry date 30 June 2018

Individual Employment Contracts Covers 85 SunWater employees (as at 17 March 2016)

N/A N/A

Fair Work Act 2009 (Cwth) All employees N/A N/A

Water Industry Award All employees MA 000113 N/A

Industrial Relations Act 1999 (Qld) All employees N/A N/A

5. Enterprise Bargaining and Productivity Initiatives SunWater regularly monitors amendments to the FWA, Modern Industry Awards and NES to ensure compliance with relevant legislation. The nominal expiry date for the current SunWater Enterprise Agreement 2015-2018 is 30 June 2018.



6. Redundancy Provisions No forced redundancies will occur without the written approval of shareholding Ministers. Where redundancies do proceed, current entitlements for termination of employees covered by the SunWater Enterprise Agreement 2015-2018 include:

• Minimum four (4) weeks’ pay or three (3) weeks’ pay per year of service, with a proportionate amount for an incomplete year of service. The maximum redundancy payment will be equivalent to fifty-two (52) weeks’ pay.

• An incentive payment of eight (8) weeks’ pay to depart by the date nominated by SunWater; and • Long Service Leave payment of 1.3 weeks at the ordinary time rate for each completed year of

service and a proportionate amount for an incomplete year of service, less any Long Service Leave already taken or paid out.

7. Superannuation SunWater makes superannuation contributions on behalf of eligible employees into an approved fund in accordance with the federal Superannuation Guarantee Charge Amendment Act 2002. As SunWater subscribes to the government-wide superannuation fund, QSuper, it does not have access to any surplus or any current exposure to any short fall from the defined benefit fund.

8. Type of Employment (FTEs) and Workforce Planning 2016-17

estimate 2017-18 forecast

2018-19 forecast

2019-20 forecast

Employment category: Permanent full time 266 262 262 262 Permanent part time 15 15 15 15 Temporary full time 47 43 43 43 Temporary part time 0 0 0 0 Senior executive contract 4 4 4 4 Other contract 85* 87* 87* 87* Apprentices (in-house) 2 2 2 2 Cadets 0 0 0 0 Trainees (in-house) 0 0 0 0 Casual employees 4 3 3 3 Total directly employed workforce 423 416 416 416 Apprentices (group) 0 0 0 0 Trainees (group) 1 0 0 0 Contractor employees (trade/technical/ops) 10 21 11 15

Contractor employees (professional /administrative/clerical)

5 7 2 2

Labour hire (trade/technical) 0 0 0 0 Labour hire (professional/ administrative/ clerical)

0 0 0 0

s457 temporary visa 0 0 0 0 Total workforce: 439 444 429 433 Employment figures are based on business as usual for SunWater + increased project delivery activity *There has been a strategy to appoint staff onto Individual Employment Contracts at SW08 level and above. This has resulted in an overall decrease in staffing numbers covered by the EA, with an increase in staff covered by “Other Contracts”. FTEs shown are reflective of budgets and equate to average numbers of FTEs over the relevant year. Quarterly profiling of actual point in time numbers shown under the non-financial KPIs earlier in this document.



Apprentices, Cadets and Trainees SunWater directly employs two apprentices in Clare.

9. Workplace Health and Safety SunWater is committed to providing a safe workplace for employees, contractors, visitors and the general public. Health and safety is a core business value for the organisation, and ensuring people finish work safely every day is considered paramount and non-negotiable.

SunWater complies with all relevant health and safety legislation and related standards, codes of practice, Australian standards and industry guidelines. Consistent with the Queensland Government Policy ‘Engaging Trained Safety Advisors to Meet Due Diligence Requirements in Government (Work Health and Safety Act 2011), SunWater has five (5) trained dedicated safety professionals.

SunWater’s workplace health and safety systems and processes are audited each year by external service providers. SunWater’s most recent external audit was conducted in March 2016, with the formal results expected to be available early April 2016. Indications from the post audit close out meeting are that as only two minor non-conformances were found SunWater will maintain its certification to AS/NZS 4801:2001.

10. Consultation The Office of Industrial Relations, the Department of Energy and Water Supply, staff and unions were consulted during the development of this employment and industrial relations plan, in accordance with section 149 of the Government Owned Corporations Act 1993. No issues were raised during these consultations.

11. Reporting SunWater will provide regular reports on the implementation and progress of the productivity initiatives included in SunWater’s Enterprise Agreement to shareholding Ministers through its quarterly Scorecard Reports. The reports will highlight any significant divergences from the plan and the background/content for the variances.

12. Enterprise Agreement 2015-18 and 2012-17 Irrigation Water Price Path Productivity Initiatives/Gains

Table – Productivity Savings Targets Year 1 FY16 Year 2 FY17 Year 3 FY18 Total

EA Productivity Initiatives / Savings $ $ $ $

(1) Rationalisation of office space 100,000 400,000 400,000 900,000

(2) Improved utilisation of employees (including reduction of 8 FTE)

142,190 292,911 603,397 1,038,499

(3) Utilisation of a new travel provider 100,000 100,000 100,000 300,000

(4) Reduction in licences/premiums 8,000 25,000 35,000 68,000

Total EA 2015-18 Savings 350,190 817,911 1,138,397 2,306,498

Total Residual QCA Savings (FY2017) 428,000 445,000 Not Applicable

873,000 (to FY17)

SunWater’s actual performance against the above targets is reported through quarterly scorecards and annual reports. SunWater’s year end forecast performance in FY2016 ($0.778M) is also documented in the draft Corporate Plan 2016-21. SunWater is focussed on delivering cost efficiencies across its irrigation systems in support of the potential transition of SunWater’s channel irrigation systems to local management arrangements.



Attachment 3 – Financials Consolidated group - Statement of Comprehensive Income

Notes: • 2017 budget based on the final QCA irrigation prices and QCA efficient cost base for routine and annuity costs. • QCA irrigation prices reflect current Government policy and (where applicable) include QCA recommended ramps towards lower

bound i.e. where prices are below lower bound annual increases equal $2 per ML plus CPI and where prices are at or above lower bound annual increases are limited to CPI only.

• Industrial water pricing reflects contractual arrangements. Revenue offsets of 75% of the total cost of the flood damage incurred at Boondooma Dam are included in industrial revenue for the 2016 to 2018 years, reflective of the contract in place with Stanwell Ltd.

• Insurance proceeds are only reflected when received and only allocated when the claim is finalised. • Urban water pricing increases in line with CPI. • Irrigation CSO is in accordance with the agreement in place with the Department of Energy and Water Supply (DEWS). • Salary indexation is 3% for the period of the EA after which it reverts to 2.5%. • Electricity costs budgeted to reflect operational requirements (pumping volumes). The budget is based on expected consumption on

planned water deliveries and on anticipated tariff increases. The increase allowed for in the 2017 budget is for an average of 5%, reverting to 2.5% per annum in outyears.

• Impairment reflects the impact of infrastructure asset values where prices do not recover costs. Capital dam safety improvement projects (DSIPs) and flood repairs are impaired in the same year the costs are incurred. Expense DSIPs and flood repairs – Fairbairn stage 1 and Boondooma (repair to dam side wall) – have been provisioned into 2016 and will offset against this provision as the costs are incurred.

Budget : 2016-17 SUNWATER LIMITEDQ1 Q2 Q3 Q4 CONSOLIDATED GROUP 2016-17 2014-15 2015-16 2015-16

Sept Dec Mar Jun STATEMENT OF COMPREHENSIVE INCOME Unit Budget Actual Budget Forecast

Operating revenueWater charges

• Irrigation $000 • Industrial $000 • Urban $000 Drainage $000 Electricity generation $000

Government transactions • CSO - irrigation $000 • CSO - urban $000

- - - - • Grants & subsidies $000 Water entitlement / trading $000 Consulting $000 Facilities management $000 Other $000 $000

Employee costs Salaries & wages $000 Employee related expenses $000 Staff contractors $000 $000

Direct costs Accommodation & travel $000 Contractors $000 Depreciation - infrastructure $000 Electricity $000 Materials $000 Plant, equipment & vehicles $000 $000

Corporate & administration costs Insurance, legal & administration costs $000 Depreciation - non infrastructure $000 Occupancy costs $000 Other asset costs $000 $000

Cost offsets Capitalised costs - other $000 Natural disaster provision $000 Restructuring reserve $000 Other provisions $000

Total costs $000

Operating profit (loss) $000

Asset (impairment) revaluation $000 Non-operating revenue $000 Financing charges $000

Offset - Capitalised costs - financing charges $000

Profit (loss) before taxation - PBT $000 Taxation $000 Profit (loss) after taxation - PAT $000

Dividends $000 Retained profit (loss) for the period $000

Notes1 Taxation

Current tax - external $000 Deferred tax liability - (increase) decrease $000 Deferred tax asset - increase (decrease) $000 Total $000

Financial model version - 1631.00



Consolidated group - Statement of Financial Position

Consolidated group - Statement of Cash Flows

SunWater’s 2017 CSO reflects current agreement between DEWS and SunWater.


Sept Dec Mar Jun STATEMENT OF FINANCIAL POSITION Unit Budget Actual Budget Forecast

Current Assets Cash $000 Receivables $000 Accrued revenue $000 Inventories $000 Other $000 Inter-company $000 $000

Non Current Assets Property, Plant & Equipment $000 Intangibles $000 Deferred tax assets $000 $000

TOTAL ASSETS $000

Current Liabilities Payables $000 Borrowings $000 Provision - dividends $000 Provisions - other $000 Provision - taxation $000 Other ( including deferred revenue ) $000 $000

Non Current Liabilities Borrowings $000 Provisions - other $000 Deferred tax liabilities $000 Other ( including deferred revenue ) $000 $000

TOTAL LIABILITIES $000

NET ASSETS $000

Shareholders Equity Contributed equity $000 Retained profits $000 TOTAL SHAREHOLDERS EQUITY $000



Sept Dec Mar Jun STATEMENT OF CASH FLOWS Unit Budget Actual Budget Forecast

Cash flows from operating activitiesInflows:

• Receipts from customers $000 • CSO, government grant & deferred income receipts $000

• Interest received $000 Outflows:

• Payments to suppliers and employees $000 • Taxation - external $000 $000

Cash flow from investing activitiesInflows:

• Proceeds from sale of property, plant & equipment $000 • Interest received $000

Outflows: • Purchase of property, plant & equipment $000 $000

Cash flow from financing activitiesInflows:

• Proceeds from borrowings $000 Outflows:

• Interest paid $000 • Repayment of borrowings $000

• Return of contributed equity $000 • Dividends to owners of SunWater Limited $000

$000

Increase (decrease) in cash balance $000 Cash balance brought forward $000 Cash balance carried forward $000




Consolidated group - Equity Injections / (Withdrawals)

Consolidated group – State Government Transactions

SunWater’s 2017 CSO reflects current agreement between DEWS and SunWater.


Sept Dec Mar Jun EQUITY INJECTIONS (WITHDRAWALS) Unit Budget Actual Budget Forecast

548,966 568,693 458,584 476,835 Total equity - opening $000 548,966 677,649 665,015 678,965 - - - - Adjustment to opening equity $000 - 0 - -

548,966 568,693 458,584 476,835 Re-stated opening equity $000 548,966 677,650 665,015 678,965

19,727 19,891 18,250 (22,014) Profit (loss) after taxation $000 35,854 6,573 55,515 15,002

Transactions with equity holders :- - (130,000) - - Contributed equity injection (return) $000 (130,000) - - - - - - (35,900) Dividends to owners of SunWater Limited $000 (35,900) (5,258) (44,000) (145,000)

568,693 458,584 476,835 418,921 Total equity - closing $000 418,921 678,965 676,530 548,966



Sept Dec Mar Jun STATE GOVERNMENT TRANSACTIONS Unit Budget Actual Budget Forecast Received by State Government

- 145,000 - - Dividends $000 145,000 42,100 44,000 5,258 658 658 658 658 Current tax $000 2,632 10,552 15,488 25,249

- 130,000 - - Contributed equity - returned $000 130,000 - - - 517 541 564 676 Borrowings - debt service - principal $000 2,298 4,359 129,564 21,595

3,440 3,986 4,248 4,227 Borrowings - debt service - interest $000 15,901 15,393 14,457 14,170 496 642 713 710 Borrowings - debt service - competitive neutrality fees $000 2,560 2,521 2,277 2,365

- - - 274 Borrowings - market realisation fees $000 274 - - 281

Paid by State Government (929) (929) (929) (929) CSO - irrigation $000 (3,715) (5,989) (4,738) (4,738)

(1,464) (1,464) (1,464) (1,464) CSO - urban $000 (5,855) (5,304) (5,436) (5,411) - - - - CSO - other $000 - - - - - - - - Grants $000 - (2,030) (1,371) - - - - - Contributed equity - injected $000 - - - - - (120,000) - - Borrowings - advanced $000 (120,000) - - -

2,719 158,433 3,790 4,152 Total $000 169,094 61,601 194,240 58,768




Consolidated group – Details of Borrowings

• Debt repayment relates to the Woleebee Creek to Glebe Weir contractual arrangements. New debt relates to SunWater’s DSIP

Program.

SUNWATER LIMITEDCONSOLIDATED GROUP 2016-17 2014-15 2015-16 2015-16STATEMENT OF FINANCIAL POSITION Unit Budget Actual Budget Forecast

1 Borrowings



Parent entity - Statement of Comprehensive Income

Budget : 2016-17 SUNWATER LIMITEDQ1 Q2 Q3 Q4 PARENT ENTITY 2016-17 2014-15 2015-16 2015-16

Sept Dec Mar Jun STATEMENT OF COMPREHENSIVE INCOME Unit Budget Actual Budget Forecast

Operating revenueWater charges

• Irrigation $000 • Industrial $000 • Urban $000 Drainage $000 Electricity generation $000

Government transactions • CSO - irrigation $000

• Grants & subsidies $000 Water entitlement / trading $000 Consulting $000 Facilities management $000 Other $000 $000

Employee costs Salaries & wages $000 Employee related expenses $000 Staff contractors $000 $000

Direct costs Accommodation & travel $000 Contractors $000 Depreciation - infrastructure $000 Electricity $000 Materials $000 Plant, equipment & vehicles $000 $000

Corporate & administration costs Insurance, legal & administration costs $000 Depreciation - non infrastructure $000 Occupancy costs $000 Other asset costs $000 $000

Overheads & indirect costs Costed overhead $000 $000

Cost offsets Capitalised costs - other $000 Natural disaster provision $000 Restructuring reserve $000 Other provisions $000

Total costs $000



Offset - Capitalised costs - financing charges $000

Profit (loss) before taxation $000 Taxation $000 Profit (loss) after taxation $000





Parent entity - Statement of Financial Position


Sept Dec Mar Jun STATEMENT OF FINANCIAL POSITION Unit Budget Actual Budget Forecast

Current assets Cash $000 Receivables $000 Accrued revenue $000 Inventories $000 Other $000 Inter-company $000 $000

Non current assets Equity investments - subsidiaries $000 Property, plant & equipment $000 Intangibles $000 Deferred tax assets $000 Inter-company $000 $000

TOTAL ASSETS $000

Current liabilities Payables $000 Borrowings $000 Provision - dividends $000 Provisions - other $000 Provision - taxation $000 Other ( including deferred revenue ) $000 Inter-company $000 $000

Non current liabilities Borrowings $000 Provisions - other $000 Deferred tax liabilities $000 Other ( including deferred revenue ) $000 $000


NET ASSETS $000

Shareholders equity Contributed equity $000 Retained profits $000

TOTAL SHAREHOLDERS EQUITY $000




Parent entity - Statement of Cash Flows


Sept Dec Mar Jun STATEMENT OF CASH FLOWS Unit Budget Actual Budget Forecast

Cash flows from operating activitiesInflows:

• Receipts from customers $000 • CSO, government grant & deferred income receipts $000

• Interest received $000 Outflows:

• Payments to suppliers and employees $000 • Taxation - external $000

• Taxation - internal - tax sharing agreement $000 $000


• Proceeds from sale of property, plant & equipment $000 • Interest received $000 • Dividends from subsidiaries $000

Outflows: • Purchase of property, plant & equipment $000

• Purchase of subsidiaries $000 $000


• Proceeds from borrowings $000 • Repayment of loans advanced $000

Outflows: • Interest paid $000 • Repayment of borrowings $000

• Loans advanced $000 • Return of contributed equity $000 • Dividends to shareholders $000

$000





Subsidiaries Burnett Water P/L - Statement of Comprehensive Income

Budget : 2016-17 Burnett Water Pty LtdQ1 Q2 Q3 Q4 STATEMENT OF COMPREHENSIVE INCOME 2016-17 2014-15 2015-16 2015-16

Sept Dec Mar Jun Unit Budget Actual Budget ForecastOperating revenue

Water charges • Irrigation $000

• Industrial $000 Electricity generation $000 Water entitlement / trading $000 Consulting $000 Other $000

$000 Employee costs

Employee related expenses $000 Staff contractors $000 $000

Direct costs - - - - Accommodation & travel $000

Contractors $000 Depreciation - infrastructure $000

Electricity $000 Materials $000 Plant, equipment & vehicles $000

$000 Corporate & administration costs

Insurance, legal & administration costs $000 Depreciation - non infrastructure $000 Occupancy costs $000 $000

Cost offsets Capitalised costs - other $000

Natural disaster provision $000

Total costs $000



Profit (loss) before taxation $000 Taxation $000 Profit (loss) after taxation $000





Burnett Water P/L - Statement of Financial Position

Burnett Water P/L - Statement of Cash Flows

Budget : 2016-17 Burnett Water Pty LtdQ1 Q2 Q3 Q4 STATEMENT OF FINANCIAL POSITION 2016-17 2014-15 2015-16 2015-16

Sept Dec Mar Jun Unit Budget Actual Budget ForecastCurrent Assets

Cash $000 Receivables $000

Accrued revenue $000 Other $000

Inter-company $000 $000

Non Current Assets Property, plant & equipment $000 Intangibles $000 Deferred tax assets $000 $000

TOTAL ASSETS $000

Current Liabilities Payables $000 Provisions - other $000 Provision - taxation $000 $000

Non Current Liabilities Provisions - other $000 Deferred tax liabilities $000 $000


NET ASSETS $000

Shareholders Equity Contributed equity $000 Retained profits $000



Budget : 2016-17 Burnett Water Pty LtdQ1 Q2 Q3 Q4 STATEMENT OF CASH FLOWS 2016-17 2014-15 2015-16 2015-16

Sept Dec Mar Jun Unit Budget Actual Budget ForecastCash flows from operating activities

Inflows: • Receipts from customers $000

Outflows: • Payments to suppliers and employees $000



• Interest $000 Outflows:

• Purchase of property, plant & equipment $000 $000


• Repayment of loans advanced $000 • Proceeds from increase in contributed equity $000

Outflows: • Loans advanced $000

$000





Eungella Water Pipeline P/L - Statement of Comprehensive Income

Budget : 2016-17 Eungella Water Pipeline Pty LtdQ1 Q2 Q3 Q4 STATEMENT OF COMPREHENSIVE INCOME 2016-17 2014-15 2015-16 2015-16


Water charges • Industrial $000 • Urban $000

Consulting $000 Other $000

$000 Employee costs

Employee related expenses $000 $000

Direct costs Contractors $000 Depreciation - infrastructure $000 Electricity $000 Materials $000

- - - Plant, equipment & vehicles $000 $000

Corporate & administration costs Insurance, legal & administration costs $000

Depreciation - non infrastructure $000 Other asset costs $000

$000 Cost offsets

Capitalised costs - other $000

Total costs $000


Non-operating revenue $000 Financing charges $000

Profit (loss) before taxation $000 Taxation $000 Profit (loss) after taxation $000 Dividends $000 Retained profit (loss) for the period $000




Eungella Water Pipeline P/L - Statement of Financial Position

Eungella Water Pipeline P/L - Statement of Cash Flows

Budget : 2016-17 Eungella Water Pipeline Pty LtdQ1 Q2 Q3 Q4 STATEMENT OF FINANCIAL POSITION 2016-17 2014-15 2015-16 2015-16


Cash $000 Receivables $000 Accrued revenue $000 Other $000 Inter-company $000 $000

Non Current Assets Property, plant & equipment $000 Intangibles $000 Deferred tax assets $000 $000

TOTAL ASSETS $000

Current Liabilities Payables $000

Borrowings $000 Provisions - other $000

Provision - taxation $000 Inter-company $000 $000

Non Current Liabilities Borrowings $000

Deferred tax liabilities $000 Inter-company $000 $000


NET ASSETS $000




Budget : 2016-17 Eungella Water Pipeline Pty LtdQ1 Q2 Q3 Q4 STATEMENT OF CASH FLOWS 2016-17 2014-15 2015-16 2015-16


Inflows: • Receipts from customers $000


• Payments to suppliers and employees $000 • Taxation - internal - tax sharing agreement $000

$000 Cash flow from investing activities

Inflows: • Interest $000

Outflows: • Purchase of property, plant & equipment $000 $000


• Proceeds from borrowings $000 Outflows:

• Interest $000 • Repayment of borrowings $000 • Dividends to shareholders $000 $000





North West Queensland Water Pipeline P/L - Statement of Comprehensive Income

Budget : 2016-17 North West Qld Water Pipeline Pty LtdQ1 Q2 Q3 Q4 STATEMENT OF COMPREHENSIVE INCOME 2016-17 2014-15 2015-16 2015-16


Water charges • Industrial $000 • Urban $000

Government transactions • CSO - urban $000

Water entitlement / trading $000 $000

Direct costs Contractors $000 Depreciation - infrastructure $000 Electricity $000 Materials $000 $000

Corporate & administration costs Insurance, legal & administration costs $000

Depreciation - non infrastructure $000 Occupancy costs $000 $000

Cost offsets Capitalised costs - other $000

Total costs $000


Non-operating revenue $000 Financing charges $000

Profit (loss) before taxation $000 Taxation $000 Profit (loss) after taxation $000 Dividends $000 Retained profit (loss) for the period $000 (




North West Queensland Water Pipeline P/L - Statement of Financial Position

North West Queensland Water Pipeline P/L - Statement of Cash Flows

Budget : 2016-17 North West Qld Water Pipeline Pty LtdQ1 Q2 Q3 Q4 STATEMENT OF FINANCIAL POSITION 2016-17 2014-15 2015-16 2015-16


Cash $000 Receivables $000 Accrued revenue $000 Other $000

Inter-company $000 $000

Non Current Assets Property, plant & equipment $000 Intangibles $000

Deferred tax assets $000 $000

TOTAL ASSETS $000

Current Liabilities Payables $000 Provision - taxation $000 Inter-company $000 $000

Non Current Liabilities Deferred tax liabilities $000 Inter-company $000 $000


NET ASSETS $000




Budget : 2016-17 North West Qld Water Pipeline Pty LtdQ1 Q2 Q3 Q4 STATEMENT OF CASH FLOWS 2016-17 2014-15 2015-16 2015-16


Inflows: • Receipts from customers $000 • CSO, government grant & deferred income receipts $000

Outflows: • Payments to suppliers and employees $000




• Purchase of property, plant & equipment $000 $000

Cash flow from financing activitiesOutflows:

• Interest $000 • Repayment of borrowings $000

• Dividends to shareholders $000 $000





Attachment 4 – Significant projects

Expense projects assessed to be expense under accounting rules but subject to final sign off by external audit. Attachment 5 – Planned asset acquisitions and disposals SunWater is planning to sell the land associated with its hydraulic modelling facility at Rocklea. As part of these negotiations SunWater intends to enter into a leasing agreement for a portion of the site for continued use. SunWater’s 2016-17 budget does not reflect an estimate of the proceeds from the sale. Attachment 6 – Other significant expenses

SUNWATER LIMITED 2015 - 16 2016 - 17 2017 - 39CONSOLIDATED GROUP Unit Forecast Budget Total

Approvalstatus

Capital orExpense SIGNIFICANT PROJECTS

Cum. Project

Bulk WaterProject list

D Capital DSIP - Burdekin Falls Dam ( Saddle Dam and Monolith Improvement ) $000 D Capital DSIP - Paradise Dam ( Secondary Spillway Improvements ) $000 D Capital DSIP - Fairbairn Dam ( Spillway Rectification ) $000 A Expense DSIP - Fairbairn Dam ( Spillway Improvement 2:1 Slope ) $000 D Capital DSIP - Leslie Dam $000 A Capital DSIP - Paradise Dam ( Strengthening of Monoliths D&K ) $000 D Capital DSIP - Burdekin Falls Dam ( Foundation Drainage Improvement ) $000 D Capital DSIP - Teemburra Dam $000 D Capital DSIP - Coolmunda Dam $000 A Capital DSIP - Paradise Dam ( Improving Emergency Response ) $000 D Capital Flood Repair - Boondooma Dam ( Spillway Reinstatement ) $000 D Expense Flood Repair - Boondooma Dam ( Spillway Repair to Sidewall ) $000 D Expense Flood Repair - Fred Haigh Dam ( Scour Repair ) $000 D Capital DSIP - Paradise Dam ( Primary Spillway Improvements ) $000 D Capital DSIP - Wuruma Dam $000 D Capital DSIP - Eungella Dam $000 D Capital DSIP - Callide Dam ( Stage 1 Safety Reduction ) $000 D Capital DSIP - Fred Haigh Dam $000 D Capital DSIP - Cania Dam $000 D Capital DSIP - Peter Faust Dam $000 D Capital DSIP - Moura Offstream Storage $000 D Capital DSIP - Kinchant Dam ( Stage 2 Safety Reduction ) $000

$000 Summary by approval status

A A - Shareholding Minister (SHM) approved $000 B B - Board approved - yet to be approved by SHM $000 C C - Board approved - does not require SHM approval $000 D D - Yet to be Board approved $000 E E - Does not require Board or SHM approval $000

$000 Summary by expense type

Capital $000 Expense $000

$000


SunWater Limited Consolidated Group 2017 2018 2019 2020 2021Significant Other Expenditure '000 '000 '000 '000 '000

Total



Attachment 7 – WACC rate calculations

Pricing Projects Asset val.SUNWATER LIMITED Nominal 1 Nominal 2 Nominal 3FINANCIAL MODEL - Version 1631.00SCI (2017) & CP (2017-21)WACC & Hurdle Rates

1 WACC & Hurdle RatesWACC rate

Applicable cashflow stream

Margin

Hurdle rate

2 Cost of EquityCommonwealth bond yield rate rfe Market risk premium mrp Expected return on the market rm

Asset Beta Ba Debt Beta Bd Equity Beta - calculated using the selected method if input below is blank Be

Equity beta - input

Alpha A

Cost of equity Ke

3 Cost of Debt - Pre TaxLong term debt

• 10 year Commonwealth bond yield rate rfd • Long term margin LTm

Short term debt

• Nominal short term bank base rate ST • Short term margin STm

Weighted cost of debt Kd

4 Debt / Equity structureLong Term Debt LTD Short Term Debt STD

Market value of debt D Market value of equity E

Market value of assets V 1

5 TaxationCorporate tax rate - % Tc

Portion of franking credits that can be used by shareholders to offset personal tax. G • Fraction of imputation credits distributed to shareholders f • Value of the imputation credit as a % of the credit's face value when received by shareholders w

Effective corporate tax rate under imputation - % Tic 1

6 Inflation rateImplied from 10 year Commonwealth bond rates - %Utilised for Real WACC % calculation

7 Data validation lists

WACC rate formula Tax Debt Imputation DescriptionNominal

rate %Nominal

rate %Nominal

rate %(1) Hurdle rate = Ke / ( 1 - Tc ) * ( E / V ) + Kd * ( D / V ) Pre Pre No Vanilla (2) Hurdle rate = Ke / ( 1 - Tc ) * ( E / V ) Pre Post No (3) Hurdle rate = Ke * ( E / V ) + Kd * ( 1 - Tc ) * ( D / V ) Post Pre No (4) Hurdle rate = Ke * ( E / V ) Post Post No (5) Hurdle rate = Ke * ( E / V ) + Kd * ( D / V ) Post Pre No Vanilla (6) Hurdle rate = Ke * ( E / V ) + Kd * ( 1 - Tic ) * ( D / V ) Post Pre Yes (7) Hurdle rate = Ke * (( 1 - Tc ) / (1 - Tic )) * ( E / V ) + Kd * ( 1 - Tc ) * ( D / V ) Post Pre Yes Officer (8) Hurdle rate = Ke * ( E / V ) + Kd * ( D / V ) Post Pre Yes

8 Cashflow definition termsOperating cash flows ( pre-tax and pre-financing ) XoCash flows to the providers of debt capital XdCash flows to tax at corporate tax rate XtcAdjustment to cash flows to tax as a result of imputation Xtic

9 Conversion from nominal to real



Attachment 8 – Key 2016-17 Enterprise Risks

Inherent Risks Mitigations



Inherent Risks Mitigations



Attachment 9 – Sponsorships, advertising, corporate entertainment, donations and other arrangements Table 1 - Sponsorship, advertising, corporate entertainment, donations and other activities – details of individual expenditure items

Activity 2015-16 Budget 2015-16 2016–17 Quarter 2016-17 2016-17 Per Head Budget

Forecast Budget ($)

($) ($) ($) Sept Dec Mar Jun ($)

Sponsorship

ANCOLD Conference a 10,000 10,000 10,000 - - 10,000 - NA

Total over $5,000 10,000 10,000 10,000 - - 10,000 -

Other (total) below $5,000 45,000 45,000 45,000 12,000 12,000 10,000 11,000

TOTAL (1) 55,000 55,000 55,000 12,000 12,000 20,000 11,000

Advertising

Water safety advertising campaign c 250,000 250,000 250,000 90,000 116,500 35,000 8,500 NA

School Safety Program d 30,000 30,000 30,000 7,500 7,500 7,500 7,500 NA

Total over $5,000 280,000 280,000 280,000 97,500 124,000 42,500 16,000

Other (total) below $5,000 - - - - - - - NA TOTAL (2) 280,000 280,000 280,000 97,500 124,000 42,500 16,000 Corporate entertainment

Staff awards ceremony e 13,000 13,000 13,000 - - - 13,000 120

Brisbane Office Christmas Celebration f 16,000 13,502 16,000 - 16,000 - - 120

Total over $5,000 29,000 26,502 29,000 - 16,000 - 13,000

Other (total) below $5,000 31,500 35,998 31,500 5,000 16,500 5,500 4,500

TOTAL (3) 60,500 62,500 60,500 5,000 32,500 5,500 17,500

Donations TOTAL (4) - - - - - - - NA

Strategic community and stakeholder engagement activities b

- - - - - - -

Total over $5,000 - - - - - - -

Other (total) below $5,000 15,000 13,000 15,000 - 5,000 7,500 2,500 NA

TOTAL (5) 15,000 13,000 15,000 - 5,000 7,500 2,500

Total (1)+(2)+(3)+(4)+(5) 410,500 410,500 410,500 114,500 173,500 75,500 47,000



a. Water Industry conferences to stay in touch with new developments and best practice. b. Promote the corporation and gain valuable feedback from industry and the public. c To promote safe public behaviour on and around SunWater assets, especially dams. d. To encourage and promote public safety around channels, weirs and dams. e. To recognise and reward staff who go over and above their duties to maximise benefits to SunWater and the State. f. Opportunities for the CEO and executive managers to convey their thanks to all staff directly for their contribution during the year and to reflect on achievements and challenges.



Table 2 – Corporate Entertainment: Details of Total Forecast Expenditure under $5,000 per event Activity 2015-16 2015-16 2016–17 2016–17 Quarter 2016-17

Budget Forecast No. of Budget ($)

($) ($) activities ($) Sept Dec Mar Jun

Corporate entertainment Total

Staff functions b 20,000 29,498 50 20,000 2,500 12,500 2,500 2,500

Stakeholder and Community Engagement b 11,500 6,500 6 11,500 2,500 4,000 3,000 2,000

Total under $5,000 31,500 35,998 56 31,500 5,000 16,500 5,500 4,500



Attachment 10 – Key Financial and Non-Financial Metrics



Notes:

• Retained profit in FY2016 impacted by special dividend • Special dividend payment shown FY2017 (Dividend paid – cashflow graph) • EBITDA 2013 impacted by provision for flood damage • EBITDA 2016 impacted by provision for Fairbairn and Boondooma expenditure • EBIT and NPAT in 2012 impacted by non-cash impairment of $95.895M • EBIT and NPAT in 2015 impacted by impairment of BWPL infrastructure and water entitlement assets • Above significant impacts also affect relevant multiplier metrics (Return on Average Contributed Equity etc.) • Floors and ceilings (when plotted) indicate limits which ensure SunWater’s targeted performance for the metric will be achieved.

statement of corporate intent€¦ · • 2015-16 estimated actual water deliveries were...

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