2013/14 ANNUAL REPORT€¦ · Operational excellence We innovate to drive operational excellence to achieve outcomes at the lowest long-term cost. Our key focus areas: • Define

2013/14

ANNUAL REPORT

Enrich quality of life

TABLE OF CONTENTSLetter of Compliance 4

About this report 5

Highlights 6

Performance summary 8

Chapter 1: At a glance 11Who we are 11

What we do 11

Our strategic direction 11

Our location 12

Our 150-year history 12

Our operating environment 13

Our asset planning and management 14

Our awards 15

Facts and figures 16

Chapter 2: Our leadership 19Chairman’s foreword 19

Chief Executive Officer’s foreword 20

Our organisational structure 21

Our Board 22

Our Executive Leadership Team 24

Chapter 3: Our performance 29

Customer 30Our customers 30

Performance against strategic direction 31

Delivering against our Customer Service Standards 33

Our performance challenges and highlights 35

Case study: Delivering on our customers’ expectations 36

Case study: Improving customer experience 38

Shareholders and communities 40Our stakeholders 40

How we engage with our stakeholders 41



Case study: Supporting our communities 46

Case study: New water approvals process 48

Operational excellence 50Performance against strategic direction 51


Case study: Driving innovation 58

Case study: Our new operating model 60

Case study: Improving our operational efficiency – Hawkeye 62

Case study: Improving our operational efficiency – TaKaDu 64

Case study: Saving $18.1m in operational efficiencies 66

People 68Our values 68

Our workforce profile 68



Supporting our people 72

Case study: Prioritising health and safety at work 74

Case study: Recognising and rewarding our people 76

Chapter 4: Corporate governance 79Our Board 79

Our Organisation 82

Chapter 5: Financial performance 87Explaining the financial statements 87

Audited financial statements 90

Indices and glossary 147

Cover: Taylor Drake from Belmont Scouts at a Queensland Urban Utilities community tree planting day. In partnership with not-for-profit landcare group, Bulimba Creek Catchment Coordinating Committee (B4C), and with the help of local communities, we’ve established more than 25,000 trees and shrubs since our formation in 2010. Our agreement for offset planting and site rehabilitation with B4C demonstrates our commitment to environmental and corporate social responsibility and helps increase the health and overall wellbeing of the communities we serve, enriching quality of life. The planting took place in Enoggera, Brisbane on 22 May 2014 at one of our 30 community events in 2013/14 and coincided with Healthy Waterways’ Connect to your Creek week (see page 45). This environmental milestone enabled us to inform the community about the benefits of our investment in local water and sewerage infrastructure, our commitment to the environment and the benefits of drinking tap water.

4 Queensland urban utilities 2013/14 ANNUAL REPORT

ABN 86 673 835 011

GPO Box 2765 Brisbane QLD 4001

General Enquiries 13 26 57 Faults & Emergencies 13 23 64 www.urbanutilities.com.au

Hon. Mark McArdle, MP Minister for Energy and Water Supply PO Box 15456 CITY EAST QLD 4002

11 September 2014

Dear Minister

I am pleased to present the annual Report 2013/14 for the Central SEQ Distributor-Retailer Authority trading as Queensland Urban Utilities.

I certify that this annual report complies with:

• the prescribed requirements of the financial accountability act 2009 and the financial and Performance Management Standard 2009; and

• the detailed requirements set out in the annual Report Requirements for queensland Government agencies.

A checklist outlining the annual reporting requirements can be found at: www.urbanutilities.com.au/annualreport.

Yours sincerely,

Geoff Harley Board Chairman Central SEQ Distributor-Retailer Authority trading as Queensland Urban Utilities

Queensland urban utilities 2013/14 ANNUAL REPORT 5

ABOUT THIS REPORTQueensland Urban Utilities’ 2013/14 annual Report provides an account of our achievements and challenges for the financial year ending 30 June 2014. It gives us the opportunity to measure and report on our operational, environmental, social and financial performance against our 2013-18 Corporate Plan and 2013/14 Operational Plan. Both plans incorporate our refreshed vision for the future (page 29), which is guided by four strategic pillars, each with key focus areas and supporting initiatives.

To reflect our new direction, this annual report is structured around our four strategic pillars:

• Customers, • Shareholders and Communities, • Operational Excellence, • People.

Readership

This report aims to communicate comprehensive information to satisfy the needs of individuals and groups who are affected by, or have an interest in, our activities, including, but not limited to:

• our customers, • the communities we serve, • our employees, • our shareholders, • government departments, • developers, • other utilities, • business and industry.

Global Reporting Initiative The Global Reporting Initiative (GRI) is an internationally-recognised framework for sustainability reporting. This is the third year our annual report has been prepared in accordance with core GRI sustainability reporting guidelines. The GRI index can be found on page 149.

Glossary and index

A full glossary explaining the meaning of words and acronyms can be found on page 152. For ease of navigation, refer to the detailed index on page 147.

Interpreter service statement

We are committed to providing accessible services to our customers and stakeholders from culturally and linguistically diverse backgrounds. If you have difficulty in understanding the annual report, please contact 13 14 50 to arrange an interpreter to communicate the report to you effectively.

Additional copies and feedback

If you would like an additional copy of this report, or wish to provide feedback, please contact us via:

Website www.urbanutilities.com.au

OfficeLevel 2, 15 Green Square Close Fortitude Valley QLD 4006 (Monday to Friday 8am – 5pm)

Phone 13 26 57 (7am – 7pm weekdays)

Email [email protected]

ISSN: 1838-5575 © Queensland Urban Utilities 2014

As a result of changes to the water industry in South East Queensland, Queensland Urban Utilities was established on 1 July 2010. While still a new organisation, we have seized upon opportunities presented, overcome challenges faced

and, most importantly, we have transformed as a business. The 2010-2014 Achievements and challenges report is a snapshot of our key achievements and the challenges we have overcome in our four-year history.

This report is available on our website.

In our first four years of operations, we have:

• invested $914 million into the water and sewerage infrastructure facilitating population growth and economic development in South East Queensland while minimising price increases,

• achieved operational efficiencies of $88 million,

• been recognised for our commitment to safety,

• saved $4.5 million by trialling innovative technology and doing things differently,

• consolidated multiple workplace cultures into one, enabling a 41% increase in constructive behaviours,

• helped rebuild our communities after two floods,

• planted 25,000 trees as part of our partnership with Bulimba Creek Catchment Coordinating Committee for site rehabilitation.

1

2010-14

ACHIEVEMENTS AND CHALLENGES

ENRICH QUALITY OF LIFE

Established on 1 July 2010, Queensland Urban Utilities provides water and sewerage services to 1.4 million customers in Brisbane, Ipswich, Lockyer Valley, Scenic Rim and Somerset. While still a new organisation, we have seized upon opportunities presented, overcome challenges faced and, most importantly, we have transformed as a business. This is a snapshot of our key achievements and the challenges we have overcome in our four-year history.

QUU 1314 Achievements and Challenges Timeline v6.indd 1-4 28/07/2014 11:35 am


HIGHLIGHTS

RECEIVED STRONG SHAREHOLDER SATISFACTION RESULTS(PAGE 44)

77.6%30HOSTED AND ATTENDED A RECORD NUMBER OF COMMUNITY EVENTS

(PAGES 45-47)

INVESTED IN OUR WATER AND SEWERAGE SYSTEM TO BENEFIT CURRENT AND FUTURE GENERATIONS (PAGE 57)

$203M

INCREASED OUR FACEBOOK FOLLOWERS BY

443% (PAG

E 35

)


WON AN AWARD FOR OUR GOODNA SEWAGE TREATMENT PLANT UPGRADE PROJECT (PAGE 56)

(PAGE 70)

SENIOR LEADERS’ ExPERIENCE OF OUR CULTURE HAS IMPROVED BY

41%

(PAGE 75)

RECEIVED CERTIFICATION OF OUR SAFETY MANAGEMENT SYSTEM

LAUNCHED NEW WEBSITE IN LINE WITH CUSTOMER FEEDBACKVISIT US AT WWW.URBANUTILITIES.COM.AU (PAGE 39)

$18.1MSAVED IN OPERATIONAL EFFICIENCIES (PAGE 67)

PLANTED OUR

25,000TH TREE SINCE WE COMMENCED OPERATIONS (PAGE 45)


Our four strategic pillars each have key focus areas that help guide us towards achieving our purpose and vision. Below is a summary of how we performed in 2013/14 against our strategic pillars. Detailed performance information can be found in Chapter 3.

Customers

We understand our customers and deliver a quality service that meets their evolving needs.

Our key focus areas:

• Develop customer insight and understanding.• Deliver the Queensland Urban Utilities customer

experience consistently.• Influence and educate customers.

Our key achievements this year:

• Kept price increases to a minimum.• Implemented the first phase of our customer

segmentation strategy (see page 35).• Launched our new website (see page 39).

We achieved these strategic success measures:

• Brand index score.• Customer experience satisfaction.• Corporate reputation.

The challenges we faced this year include:

• Increased water main bursts impacted services to our customers (see page 35).

• Our Contact Centre performance was impacted by third party system outages and increased call volumes (see page 35).

See pages 30-39

Shareholders and communities

We understand our shareholders’ aspirations and are accountable to them and their communities.


• Be a forward-looking organisation with the agility and adaptability to act.

• Actively engage and interact with shareholders and stakeholders to strengthen relationships.

• Consistently deliver on shareholder expectations.


• Received strong results in our Stakeholder Satisfaction Survey (see page 44).

• Supported a record number of community events (see pages 45-47).


• Total shareholder returns.• Shareholder satisfaction.


• Establishing proper processes and systems to be able to handle all aspects of new applications for water and sewerage services from 1 July 2014 (see page 49).

See pages 40-49

PERFORMANCE SUMMARY


Operational excellence

We innovate to drive operational excellence to achieve outcomes at the lowest long-term cost.


• Define and deploy operational excellence. • Innovate to identify, assess and adapt to

opportunities that align to operational excellence.• Influence the supply chain and regulatory environment.


• Delivered a $203 million capital works program (see page 57) while saving $18.1 million in operational efficiencies (see page 67).

• Implemented a new business operating model (see page 61).

• Implemented our innovation framework with estimated cost savings of $4.5 million identified in 2013/14 (see page 59).

• Prudently managed our finances, achieving key financial measures and credit metrics, and delivered agreed dividends to shareholders (see page 55).


• Operating cost.• Operating profit after tax.• Return on assets.• Capital program.• Research and development.• ICT program delivered.• Biosolids production.• Greenhouse gas emissions.


• Increased operating costs as a result of legislative changes and supplier delays were offset by the realisation of further operational efficiencies (see page 53).

• Unexpected procurement delays resulted in cogeneration targets not being achieved (see page 53).

See pages 50-67

People

We are safe, adaptable, capable, and are committed to achieving our vision and living our values.


• Create and embed a ‘no-harm’ workplace through employees who value safety.

• Be a performance-orientated workforce with strong, visible leadership.

• Build a workforce that is adaptable, agile and change resilient.


• Achieved certification of our Safety Management System (see page 75).

• Launched our Reward and Recognition Program (see page 77).

• Achieved a 41% increase in Senior Leaders’ experiences of constructive behaviours (see page 70).


• Total injury frequency rate.• Culture.


• Our Enterprise Bargaining Agreement negotiations are on hold until Queensland Industrial Relations Commission's Award Modernisation process is completed (see page 73).

• Transforming to a new business operating model and managing significant associated change to provide enhanced customer service and efficient service delivery (see page 61).

See pages 68-77


Mark Rushforth, Service Delivery Team Leader, looks after the maintenance of the water and sewerage network and is one of our innovators exploring better ways to repair burst water mains.


1CHAPTER 1: AT A GLANCEWho we are

On 1 July 2010, Queensland Urban Utilities was established as a statutory body under the provision of the South east Queensland Water (Distribution and Retail Restructuring) act 2009 and as a service provider under the Water Supply (Safety and Reliability) Act 2008.

Our shareholders are the councils of Brisbane, Ipswich, Lockyer Valley, Scenic Rim and Somerset and we are governed by an independent Board.

What we do

As a distributor-retailer and provider of essential services, we are primarily responsible for delivering drinking water, recycled water and sewerage services to over 1.4 million customers in South East Queensland.

To support these core services, we undertake the following functions:

1. Provision for water distribution, sewage transportation and treatment including:

• demand forecasting and management, • asset planning, • asset management and alterations, • waste management (including trade waste).

2. Customer interface and service provision relating to:

• water meter management and data, • residential billing and customer management, • bulk water billing and contract management, • direct supply to large customers, including trade

waste management, • development assessments.

3. Enabling functions for business sustainability including:

• strategy deployment, • financial and people management, • legal, governance and risk mitigation, • environmental management, • community and stakeholder engagement, • regulatory and legislative compliance, • information, communication and technology, • procurement and contract management.

Our strategic direction

Our purpose: Enrich quality of life.

Our vision:We will be recognised for our excellence in water and sewerage services that meet the evolving needs of our customers and enhance our communities.

Our strategic pillars:• Customers, • Shareholders and Communities, • Operational Excellence, • People.

Our values:

PARTICIPATION Activate • Collaborate • Accelerate

ACCOUNTABILITY See it • Own it • Solve it

CUSTOMERS AND COMMUNITY Listen • Understand • Respond

SAFETY Everyone • Everywhere • Every day

DELIVER VALUE Define it • Create it • Deliver it

CREATIVITY Initiate • Create • Inspire


OUR PROUD HISTORY

2010s

1980s

1960s

1950s

1920s

1910s

1890s

1860sTo address Brisbane’s inadequate water supply, the Brisbane Board of Waterworks constructed Enoggera Dam in 1866. As Brisbane continued to grow, the supply from Enoggera Dam was soon outstripped and work commenced on Gold Creek Dam.

In 1878, Ipswich Municipal Council became the first council in the state to manage a government-built water supply, which drew water from the Brisbane River at Kholo.

In response to the need for more storage for the Brisbane water supply system, construction commenced on Somerset Dam on the Stanley River - a tributary of the Brisbane River.

The sewering of Ipswich’s central business district commenced in 1937, with waste directed to the treatment plant at Tivoli.

Modern water treatment commenced in 1947 when revolutionary “rapid sand filters” were constructed at Mount Crosby. This greatly reduced the area of land required to treat water.

Following this, filtration systems were built on the constrained Mount Crosby site next to the sedimentation basins (the primary form of treatment).

Prior to Brisbane being completely sewered, most properties had an outhouse - a toilet located outside, away from the main house, without a flush or sewer attached.

In response to the flood that devastated Brisbane in 1974, construction of Wivenhoe Dam commenced in 1976 to mitigate future severe floods and prevent smaller ones.

Brisbane City Council introduced its first integrated data and telemetry system to control all of its water and sewerage assets via computer.

Brisbane City Council began construction on the city’s largest sewering project at the time – the S1 tunnel. The 2.4 metre diameter tunnel runs from Hamilton to North Quay at the top of Turbot Street in Brisbane’s central business district.

South East Queensland endured its worst drought in recorded history. At its peak in 2007, stringent water restrictions were enacted when the region’s combined dam levels fell below 17%.

In response to the drought, the State Government-owned SEQ Water Grid (made up of three entities) was established in 2008 to provide long-term water security for the region.

The record drought of 1901-03 made it clear that a storage dam was required on the Brisbane River.

After examining a number of potential sites, including Somerset Dam, it was decided to construct the storage dam on Cabbage Tree Creek - a tributary of the Brisbane River, upstream from Mount Crosby.

The Mount Crosby Pumping Station was an important part of the Brisbane Board of Waterworks’ plan to solve Brisbane’s limited water supply problem.

Construction of the Mount Crosby Pumping Station, reservoir and associated pipeline commenced in 1890 and pumping from the Brisbane River commenced in 1892.

In 1910, the Brisbane Board of Waterworks was replaced by The Metropolitan Water Supply and Sewerage Board.

In 1917, a sedimentation basin was introduced at Mount Crosby to remove mud from the water. Up until this time, raw water was pumped directly from the Brisbane River to consumers, which generated many complaints.

In 1922, Ipswich City Council began purchasing bulk water from the Mount Crosby scheme and the old Ipswich waterworks became obsolete.

In 1925, chlorine was added to the bulk water supply to kill harmful organisms.

In 1928, The Metropolitan Water Supply and Sewerage Board was dissolved and the water supply system was transferred to Brisbane City Council.

Although construction of Somerset Dam commenced in 1935, it was suspended due to World War II. Work resumed in 1948 and the dam was completed in 1959.

With a storage capacity of 904,000 megalitres, the dam was built to provide flood mitigation and water storage for Brisbane, Logan, Ipswich, Redcliffe, and the shires of Beaudesert, Esk and Kilcoy.

As most suburban Brisbane properties were not sewered in the early 1960s, human waste was disposed of in buckets or pails and collected by “night soil men”.

Brisbane City Council operated night soil sanitation depots including one located beside Cedar Creek, which closed in the late 1960s as the need for night soil collection declined.

Construction of Wivenhoe Dam was completed in 1984. On top of storing 1.15 million megalitres of drinking water, Wivenhoe Dam can store an additional 1.45 million megalitres, equal to 2.5 times the volume of Sydney Harbour.

This additional space is known as the dam’s flood storage compartment, which works to hold back the flood waters that gather in the Brisbane Valley.

On 1 July 2010, 10 water and sewerage distributor-retailers were amalgamated into three organisations.

At the peak of the January 2011 floods, Wivenhoe Dam reached 197% of its normal water supply storage capacity.

On 1 January 2013, three bulk water entities (Seqwater, LinkWater and the SEQ Water Grid Manager) were amalgamated into one authority, Seqwater.

Image: Enoggera Dam was the first major dam built in Queensland.

Image: Water for laundering was pumped from a tank and reused, first to wash the least soiled clothing, then to wash progressively dirtier laundry.

Image: Sewerage trenches were hand-dug prior to the advent of trenchless technology.

Image: Rows of outhouses lined backyards in Brisbane.

Image: A view inside the S1 tunnel during construction.

Image: During the drought In 2007, Wivenhoe Dam’s water level fell to record low levels.

Image: Locals often travelled by horse and cart to the Enoggera Reservoir to picnic at the picturesque location.

Image: The Mount Crosby Pumping Station, c1911.

Image: Construction of water treatment facilities (for aeration and sedimentation removal) underway at Mount Crosby in 1916.

Image: In 1926, a weir was built across the Brisbane River at Mount Crosby to increase raw water storage capacity.

Image: Labourers used drilling rigs to bore a tunnel for the Hamilton Siphon (sewer under the river) between Hamilton and Bulimba.

Image: Night soil carts were used to collect and transport human waste in pails, which were often covered with dirt or soil.

Image: Brisbane City Council’s Control Room in Newstead was responsible for monitoring water supply and reservoir levels.

Image: Queensland Urban Utilities was established on 1 July, 2010. It services the Brisbane, Ipswich, Somerset, Lockyer Valley and Scenic Rim regions.

1900s

1930s

1940s

1970s

1990s

2000s

Our location

Our geographic area is made up of five regions: Brisbane, Ipswich, Lockyer Valley, Scenic Rim and Somerset. This area covers 14,384km2 – around two-thirds of South East Queensland.

Our 150-year history

In 2013, we celebrated the 150th anniversary of our region’s ‘urban’ water history.

In 1863, the Brisbane Water Works act was introduced to improve the health and quality of South East Queensland’s water supply. Over the decades, the industry has continued to innovate and, in turn, improve quality of life for residents.

To honour and preserve our industry’s rich history, we created a timeline that depicts the significant events and milestones of the past 150 years. An abridged version of this timeline can be seen below. A digital version of the historical timeline, as well as a short video presentation, is available on our website.

N

E

S

W

SOMERSET

LOCKYER VALLEY IPSWICH

SCENIC RIM

BRISBANE

1860s

1900s

1930s

1940s

1890s

1910s

1920s

OUR 150-YEAR HISTORY

CHAPTER 1: AT A GLANCE

QLD

NT

WA

SA


1

OUR PROUD HISTORY

2010s

1980s

1960s

1950s

1920s

1910s

1890s

1860sTo address Brisbane’s inadequate water supply, the Brisbane Board of Waterworks constructed Enoggera Dam in 1866. As Brisbane continued to grow, the supply from Enoggera Dam was soon outstripped and work commenced on Gold Creek Dam.

In 1878, Ipswich Municipal Council became the first council in the state to manage a government-built water supply, which drew water from the Brisbane River at Kholo.

In response to the need for more storage for the Brisbane water supply system, construction commenced on Somerset Dam on the Stanley River - a tributary of the Brisbane River.

The sewering of Ipswich’s central business district commenced in 1937, with waste directed to the treatment plant at Tivoli.

Modern water treatment commenced in 1947 when revolutionary “rapid sand filters” were constructed at Mount Crosby. This greatly reduced the area of land required to treat water.

Following this, filtration systems were built on the constrained Mount Crosby site next to the sedimentation basins (the primary form of treatment).

Prior to Brisbane being completely sewered, most properties had an outhouse - a toilet located outside, away from the main house, without a flush or sewer attached.

In response to the flood that devastated Brisbane in 1974, construction of Wivenhoe Dam commenced in 1976 to mitigate future severe floods and prevent smaller ones.

Brisbane City Council introduced its first integrated data and telemetry system to control all of its water and sewerage assets via computer.

Brisbane City Council began construction on the city’s largest sewering project at the time – the S1 tunnel. The 2.4 metre diameter tunnel runs from Hamilton to North Quay at the top of Turbot Street in Brisbane’s central business district.

South East Queensland endured its worst drought in recorded history. At its peak in 2007, stringent water restrictions were enacted when the region’s combined dam levels fell below 17%.

In response to the drought, the State Government-owned SEQ Water Grid (made up of three entities) was established in 2008 to provide long-term water security for the region.

The record drought of 1901-03 made it clear that a storage dam was required on the Brisbane River.

After examining a number of potential sites, including Somerset Dam, it was decided to construct the storage dam on Cabbage Tree Creek - a tributary of the Brisbane River, upstream from Mount Crosby.

The Mount Crosby Pumping Station was an important part of the Brisbane Board of Waterworks’ plan to solve Brisbane’s limited water supply problem.

Construction of the Mount Crosby Pumping Station, reservoir and associated pipeline commenced in 1890 and pumping from the Brisbane River commenced in 1892.

In 1910, the Brisbane Board of Waterworks was replaced by The Metropolitan Water Supply and Sewerage Board.

In 1917, a sedimentation basin was introduced at Mount Crosby to remove mud from the water. Up until this time, raw water was pumped directly from the Brisbane River to consumers, which generated many complaints.

In 1922, Ipswich City Council began purchasing bulk water from the Mount Crosby scheme and the old Ipswich waterworks became obsolete.

In 1925, chlorine was added to the bulk water supply to kill harmful organisms.

In 1928, The Metropolitan Water Supply and Sewerage Board was dissolved and the water supply system was transferred to Brisbane City Council.

Although construction of Somerset Dam commenced in 1935, it was suspended due to World War II. Work resumed in 1948 and the dam was completed in 1959.

With a storage capacity of 904,000 megalitres, the dam was built to provide flood mitigation and water storage for Brisbane, Logan, Ipswich, Redcliffe, and the shires of Beaudesert, Esk and Kilcoy.

As most suburban Brisbane properties were not sewered in the early 1960s, human waste was disposed of in buckets or pails and collected by “night soil men”.

Brisbane City Council operated night soil sanitation depots including one located beside Cedar Creek, which closed in the late 1960s as the need for night soil collection declined.

Construction of Wivenhoe Dam was completed in 1984. On top of storing 1.15 million megalitres of drinking water, Wivenhoe Dam can store an additional 1.45 million megalitres, equal to 2.5 times the volume of Sydney Harbour.

This additional space is known as the dam’s flood storage compartment, which works to hold back the flood waters that gather in the Brisbane Valley.

On 1 July 2010, 10 water and sewerage distributor-retailers were amalgamated into three organisations.

At the peak of the January 2011 floods, Wivenhoe Dam reached 197% of its normal water supply storage capacity.

On 1 January 2013, three bulk water entities (Seqwater, LinkWater and the SEQ Water Grid Manager) were amalgamated into one authority, Seqwater.

Image: Enoggera Dam was the first major dam built in Queensland.

Image: Water for laundering was pumped from a tank and reused, first to wash the least soiled clothing, then to wash progressively dirtier laundry.

Image: Sewerage trenches were hand-dug prior to the advent of trenchless technology.

Image: Rows of outhouses lined backyards in Brisbane.

Image: A view inside the S1 tunnel during construction.

Image: During the drought In 2007, Wivenhoe Dam’s water level fell to record low levels.

Image: Locals often travelled by horse and cart to the Enoggera Reservoir to picnic at the picturesque location.

Image: The Mount Crosby Pumping Station, c1911.

Image: Construction of water treatment facilities (for aeration and sedimentation removal) underway at Mount Crosby in 1916.

Image: In 1926, a weir was built across the Brisbane River at Mount Crosby to increase raw water storage capacity.

Image: Labourers used drilling rigs to bore a tunnel for the Hamilton Siphon (sewer under the river) between Hamilton and Bulimba.

Image: Night soil carts were used to collect and transport human waste in pails, which were often covered with dirt or soil.

Image: Brisbane City Council’s Control Room in Newstead was responsible for monitoring water supply and reservoir levels.

Image: Queensland Urban Utilities was established on 1 July, 2010. It services the Brisbane, Ipswich, Somerset, Lockyer Valley and Scenic Rim regions.

1900s

1930s

1940s

1970s

1990s

2000s

Our operating environment

Queensland Urban Utilities’ relationship with other participants in the South East Queensland water industry can be seen in Figure 1.

SeqwaterSeqwater is a Queensland Government

statutory body responsible for ensuring a safe, secure and reliable bulk drinking water supply

for South East Queensland, as well as providing essential flood mitigation services.

Our shareholdersBrisbane City Council, Ipswich City Council,

Lockyer Valley Regional Council, Scenic Rim Regional Council and

Somerset Regional Council.

Department of Energy and Water Supply (DEWS)

DEWS delivers policy, planning and regulatory solutions to support cost-effective, safe and

reliable energy and water supply.

Other Queensland Government regulators

Queensland Urban UtilitiesWe provide water and sewerage services to more than 1.4 million customers.

Customers and communities

Figure 1 – Our operating environment

1970s

1990s

2000s

1950s

1960s

1980s

2010s

OUR 150-YEAR HISTORY


CHAPTER 1: AT A GLANCEOur asset planning and management

Our planning assumptions primarily reflect those developed by the Queensland Government and presented in the South east queensland Regional Plan 2010–2031. This plan’s purpose is to manage regional growth and change in the most sustainable way, and to protect and enhance the quality of life. Of particular importance to us is the population and housing projections and the guidance they provide for development in the region. The South East Queensland Water Strategy and Regional Water Security Program are two other Queensland Government initiatives with which we align our planning assumptions.

At a local level, we work with the planning schemes adopted by our five shareholders, the Economic Development Queensland business unit, and other Queensland Government authorities. It is this information that provides us with the type, size, location and timing of future development and growth. We adopt a strategic role to influence prudent capital planning and infrastructure delivery.

We plan our infrastructure to service growth and to provide our customers with services to an agreed standard. We take a 'no gold-plating' approach to infrastructure delivery to ensure minimal price impacts on our customers.

We continue to monitor the needs of our customers and communities through regular consultation and engagement. Our Water Netserv Plan provides an overview of our infrastructure planning and development for the next 20 years. It supports and reflects the land-use planning undertaken by the Queensland Government and our five shareholders, and promotes greater transparency in the business operations.

We provide strategic and specific input to state and local governments as they update their planning.

We manage our assets by using:

• contemporary asset management,

• efficient and effective capital investment through strategic procurement and ‘just-in-time’ delivery,

• the Water Services Association of Australia Asset Management Benchmarking, which gives:

• proven “best value”, effectiveness and efficiency to ratepayers/stakeholders,

• asset performance levels and maintenance deployment aligned to service levels,

• an opportunity to leverage processes across all service areas.

0-3

YEAR

S3-

5 YE

ARS

5-10

YEA

RS10

-30

YEAR

S

Water NetServ Plan Water Treatment/Transportation/Demand

Sewerage Network/Treatment/Reuse/Biosolids/Energy

Integrated Master Plans Priority Infrastructure Plans

Enhance Capital

Strategy to maintain condition Performance and Economics of Assets

(by class) Rehabilitation Capital/Maintenance

Maintenance Plans

Strategy and Policy

Integrated Master Plans

Asset Management Plans

Contingency Plans

Feasibility Plans Asset Class Maintenance Strategy

Plans by asset class to meet outcomes Project Management Plans

Work Instructions/Procedures Project Delivery

Maintenance Delivery

Incident Management Plans

Figure 2 – Our asset management framework


1

Our awards – achieving excellence• Won the Healthy Waterways’ 2014 Water Services Award for the Goodna Sewage

Treatment Plant Upgrade Project (see page 56)• Won a bronze award for 2012/13 Annual Report in the Australasian Reporting Awards

• Finalist for the think at the Sink campaign in the Public Relations Institute of Australia Awards• Finalist Infrastructure Innovation Award (Queensland Branch) at the Australian Water Association (AWA)

2013 Gala Dinner and Awards Night for the Goodna Sewage Treatment Plant• Finalist in the 2014 Healthy Waterways Awards for Beaudesert Nutrient Offsets Project• Finalist in the 2014 Healthy Waterways Awards for our Clarity for Scenic Rim Waterways Project• Highly Commended at the 2014 Queensland Premier Sustainability Awards for the Beaudesert Nutrient

Offsets Project

$5B INFRASTRUCTURE NETWORK OPERATED AND MAINTAINED BY QUEENSLAND URBAN UTILITIES


CHAPTER 1: AT A GLANCE

FACTS & FIGURES14,384KM2

OUR GEOGRAPHIC AREA

WATER COLLECTION AT SEQWATER’S NETWORK OF DAMS

9,028KM OF WATER MAINS

191,000 WATER QUALITY TESTS CONDUCTED IN 2013/14

125 RESERVOIRS

25,000 TREES PLANTED SINCE OUR FORMATION IN 2010

40 110WATER PUMP STATIONS

WATER BOOSTERS

There’s more to providing quality water and sewerage services than you think

&


1

1.6M METER READINGS TAKEN IN 2013/14

10,000ML OF RECYCLED WATER DELIVERED TO COMMERCIAL CUSTOMERS

107,000ML OF SEWAGE COLLECTED, TRANSPORTED AND TREATED

28,000 TESTS IN 2013/14 TO ENSURE THE QUALITY OF WATER RELEASED INTO WATERWAYS

9,185KM OF SEWERAGE MAINS

27 SEWAGE TREATMENT PLANTS

331 SEWAGE PUMP STATIONS

136,000ML OF WATER DELIVERED TO

1.4 MILLION CUSTOMERS


Ensuring the health of South East Queensland’s waterways for our customers and communities to enjoy is a priority for us which is why we trial innovative nutrient offset projects (see page 55) and participated in Healthy Waterways’ Connect to your Creek week (see page 45).

CHAPTER 2: OUR LEADERSHIPChairman’s forewordThis year, Queensland Urban Utilities has made significant steps on its journey to become a modern, responsive, innovative and customer-focused organisation.

Customers

This year we launched a new customer-friendly website, which allows our customers to pay their accounts, view current charges, report leaks, view water service interruptions, and notify changes of address (see page 39).

We have assigned dedicated managers to our significant commercial customers, and through regular contact are exploring ways in which we can reduce the cost of service and deal more efficiently with waste by-products, including by conversion to energy which we can use to reduce our operating costs.

There has also been a very significant focus this year, and last year, on understanding the needs and drivers of the property development industry, so that we can service that industry as effectively as possible. This has involved extensive consultation with the industry, including developer’ forums (see page 49).

Capital investment

The Board is committed to continuing to invest in capital infrastructure which is supporting population and economic growth across all shareholding regions. This is demonstrated through our 2013/14 $203m capital infrastructure works program which was delivered on-time and on-schedule (see page 57). This investment is part of our $3.2 billion, 10-year capital works program to ensure the long-term sustainability of water and sewerage services across our five regions.

The Board will continue to maintain a strategic watching brief over our capital works program to ensure that it meets the aspirations of our shareholders and communities. In 2014/15, we will invest $234m in water and sewerage infrastructure.

Business operating model

This year we introduced a new operating model for our business, which is driving efficiencies and cost reduction. This new model will enable us to better support economic and population growth through the delineation of infrastructure design and planning and capital delivery functions (see page 61).

Our Enterprise Excellence Program also achieved sustainable efficiencies of $19.9 million in 2013/14. This program includes initiatives which have optimised our resourcing levels across our operations and corporate functions, improved our revenue recognition processes, optimised our billing, streamlined our procurement processes and transactional services, and initiated the introduction of new service delivery models in our maintenance delivery areas.

Utility model

As a result of legislative change, Queensland Urban Utilities is now required to receive and assess development proposals as and from 1 July 2014. This service was previously delivered by councils. Prior to the introduction of the new model, there has been extensive consultation with local government, developers and the public. While it is early days, the introduction of the new model has gone smoothly to date and we are confident that it will result in an enhanced customer experience, with reduction of cost in many areas and significant improved timelines (see page 49).

Stakeholder engagement

The strong shareholder satisfaction survey result of 77.6% in April this year is a clear reflection that our engagement, communication and consultation strategies are being well received by our shareholders (see page 44).

I am committed to building strong and trusting relationships with our shareholders, which is why stakeholder engagement continues to be a key focus area for the organisation. As part of this, the Board holds at least one board meeting in each of our shareholders’ local government areas each year. In addition, after each ordinary board meeting, I write to our shareholders updating them on key outcomes and decisions. Each year, the annual Special General Meeting provides our shareholders with an overview of our performance and an opportunity to provide feedback into our future plans. In addition to this regular two-way communication about our performance, strategic direction and operational issues, it is through our support of our shareholders’ aspirations for their area’s economic and population growth that we are able to deliver value and achieve our vision to enrich quality of life.

Acknowledgements

Thanks must go to our shareholders for their continued support and to the Board members for their commitment, strategic insight and direction.

I would also like to welcome John Cotter who, since joining the Board in January 2014, has contributed a wealth of knowledge and experience in the delivery of capital works projects.

Thank you to Louise Dudley, the Executive Leadership Team and employees of Queensland Urban Utilities for their dedication to operational excellence and to providing the highest level of service to our customers.

Reflecting on the numerous and significant achievements of 2013/14, I am confident that we are well placed to deliver on our strategic goals and I look forward to further building on our achievements in 2014/15.

Geoff HarleyBoard Chairman

2


Chief Executive Officer’s forewordAs Queensland Urban Utilities embarks on its fourth year of operations, I am proud that as

an organisation, we have successfully shifted our focus to providing improved customer service, building a constructive culture and having a safer workplace.

Delivering quality customer service

Queensland Urban Utilities has come a long way in improving our standard of customer service which is reflected in our customer experience satisfaction score. This has increased from 6.4 to 6.9 this year, positioning us favourably against other well-established utilities and above our target of 6.4.

As well as launching our new customer-focused website, we have improved our customer service by increasing our level of customer engagement and transparency by adopting a proactive approach to social media. We use Facebook and Twitter channels to engage in mutually beneficial two-way communication with our customers about a whole range of issues, from service interruptions to billing enquiries. This has enabled us to increase our customer reach, which has been highly valuable (see page 35).

Another achievement demonstrating our progress in the customer service space is our brand index score which measures public perception of our brand. This reached its highest point since our formation at 64/100 in March 2014 and puts us ahead of our larger, more established interstate counterparts (see page 37).

Improving safety

We continue to focus on safety for everyone, everywhere, every day. Putting safety first is now so ingrained in our organisational psyche that we have achieved nationally and internationally recognised certification of our Safety Management System against both the AS4801 and OHSAS 18001 standards (see page 75). We will continue to prioritise safety so that our people return home to their families in the same condition as when they left and that our communities are safe because of how we act and work.

Enhancing our culture

Another achievement that I’m particularly proud of is the improvement we’ve made to our organisational culture. Senior leaders’ experiences of constructive behaviours have increased by 41% compared to 2013.

This is thanks to our Building the Blue Culture Program which enabled us to better understand how our people think and feel about our workplace, and to determine our culture development initiatives.

To achieve our aspirational culture, we identified that we needed to increase the constructive aspects of our culture. This will enable us to enhance collaboration, performance growth and work quality which will result in improved organisational effectiveness (see page 70).

Driving innovation

This year, I launched the CEO Innovation Hour, which is a forum where employees can feel supported and empowered to share their ideas for improvement with myself and members of the executive. We started off with eight participants, who formed what is known as the iQ Group (see page 59). These eight were the ‘first followers’, who have since gathered many more followers and are making a positive change within our organisation.

I have been thoroughly impressed by the quality and creativity of the ideas that have been presented to me. This year, I have endorsed 31 innovative ideas to be rolled out which have the combined potential to save us millions of dollars and, more importantly, drastically improve the way we deliver services to our customers.

Further, this year we established an Innovation Centre at our Luggage Point Sewage Treatment Plant which will encourage the collaborative exploration of innovative practices to achieve operational excellence.

Acknowledgements

I’d like to take this opportunity to thank all Queensland Urban Utilities employees and executives for their commitment to improving our organisation and enhancing the services we provide to customers and communities. I’d also like to thank the Board for its guidance, strategic insights and support.

With such exciting strategic initiatives planned for the next few years, I look forward to leading Queensland Urban Utilities into a future focused on quality customer experiences, and safe and innovative service delivery.

Louise Dudley Chief Executive Officer

CHAPTER 2: OUR LEADERSHIP



2Our organisational structure

Board

Employees

Chief Executive OfficerLouise Dudley

Executive Leader Governance Mark Letica

Chief Information OfficerNina Meyers

Executive Leader Planning Paul Belz

General Counsel & Board Secretary

Tracey Moore

Chief Operating OfficerPeter Donaghy (acting)

Executive Leader People & Safety

Mark Letica (acting)

Executive Leadership Team

Board committees

People & Safety

Audit & Risk

Internal Audit

Strategic Asset Management

Finance & Pricing

Figure 3 – Our organisational structure as at 1 August 2014

Chief Financial OfficerDenise Dawson

Executive Leader Customer & Community

Justin Poulus

Executive Leader Commercial Customers

Ian Hall


Our BoardThe Queensland Urban Utilities Board is responsible for setting and overseeing our strategic direction. It ensures proper governance, oversees the performance of the Chief Executive Officer and provides guidance to our Executive Leadership Team on high-order operational matters. Complete biographies of our Board members are available on our website.

For information on our Board committees, including responsibilities and membership, see page 79. Geoff Harley (Chairman) LLB, FAICD

Geoff Harley was appointed the Chairman of the Queensland Urban Utilities Board on 5 October 2012.

Geoff has practised commercial law for more than 40 years and was an Adjunct Professor of Law at the University of Queensland for six years. During his career, he has held numerous senior management positions, including Managing Partner and Partner in Charge of the Brisbane office of Clayton Utz. Geoff is currently Chairman of BDO. He was previously Chairman of Translink Transit Authority and CS Energy Limited, and was both Deputy Chairman and Acting Chairman of Queensland Rail.

Bernard Ponting (Deputy Chairman) LLB (Hons), GDiP Legal Practice, Solicitor of the Supreme Court of Queensland, GAICD

Bernard Ponting has been a Queensland Urban Utilities Board member since 25 June 2010 and is currently the Chair of the Queensland Urban Utilities People and Safety Committee. A solicitor with more than 35 years’ experience, Bernard currently practises under the firm name of Bernard Ponting & Co, which focuses on commercial, corporate and administrative law. Bernard is also a Director of the Brisbane Festival, which aims to promote Brisbane as a key festival destination. Dennis Cavagna BEcon, GDiP Financial Planning, GAICD, FCA

Dennis Cavagna was appointed to the Queensland Urban Utilities Board on 25 June 2010 and is currently the Chair of the Queensland Urban Utilities Strategic Asset Management Committee. Dennis has held a number of leadership roles in finance, economics and IT within the water industry and economic regulation in Victoria.

Dennis’s professional experience spans some 25 years in the Victorian water industry, including specialist and leadership positions with South East Water, Melbourne Water, Mornington Peninsula and District Water Board and the Department of Water Resources.

Left to right: John Cotter, Geoff Harley, Paul Emmerson, Phil Kesby, Diana Eilert, Dennis Cavagna, Len Scanlan and Bernard Ponting.


2John Cotter FAIM, GAICD, BRTP, CPP

John was appointed to the Queensland Urban Utilities Board on 1 January 2014.

John is a qualified town and regional planner with 15 years’ experience in major property and infrastructure projects. He has led major project teams across Australia through concept, business case and delivery phases.

John is a Director of Flinders Hyder, Australian Institute of Management, Chair of the Fortitude Valley Economic Development Board, and a graduate member of the Australian Institute of Company Directors. Diana Eilert BSc (Maths), MComm (Financial and Marketing), GaiCd

Diana has been a Queensland Urban Utilities Board member since 25 June 2010. Diana is a professional Non-Executive Director, also appointed to the Boards of Veda (ASX:VED), Navitas (ASX:NVT), Networks NSW (electricity "poles and wires" for NSW) and AMP Life. She is currently the Chair of the Queensland Urban Utilities Finance and Pricing Committee.

Diana’s 25 year executive career includes Group Executive roles with Suncorp and Citibank, and strategy leadership roles with consulting firms AT Kearney and IBM.

Diana has significant digital experience, and was previously Non-Executive Director on the Boards of realestate.com.au and digital businesses “onthehouse” and "Our Deal." Paul Emmerson BComm, LLB, Solicitor of the Supreme Court of Queensland, GAICD

Paul Emmerson was appointed to the Queensland Urban Utilities Board on 25 June 2010 and is currently the Chair of the Queensland Urban Utilities Audit and Risk Committee.

Paul is a solicitor, certified practicing accountant and registered tax agent. His knowledge of the South East Queensland region, along with his long-standing involvement in numerous businesses, regional developments, community organisations, and major projects of regional significance contributed to his winning the 2009 inaugural Lockyer Valley Regional Council Citizen of the Year award.

Phil Kesby Cert Const (Hons), Licensed Builder (NSW and QLD), GaiCd

Phil Kesby was appointed to the Queensland Urban Utilities Board on 25 June 2010.

Phil has more than 34 years’ experience in infrastructure delivery and property related industries. In 2008, he established a successful practice providing strategic guidance to his clients in the fields of infrastructure, relationship management and stakeholder engagement.

Phil is the Chairman of the Queensland Building and Construction Commission and a Board member of Field Services Group – Brisbane City Council. Len Scanlan BBus (Acc), BA (Gov’t/Asian Studies/Public Admin), MPub Ad, FAICD

Len Scanlan was appointed to the Queensland Urban Utilities Board on 25 June 2010.

Len was Auditor-General of Queensland from 1997 until 2004. In this role he was also the Chief Executive Officer of the Queensland Audit Office.

Len has since pursued a successful career as an independent consultant, which has included service on audit committees as a Non-Executive Director and general consulting work.

Len is Chair of Ganes Ltd and a member of the Metro North Hospital and Health Board, the Building and Construction Commission Board and the Medical Benevolent Association of Queensland Ltd.



Our Executive Leadership TeamOur Executive Leadership Team is responsible for the deployment of strategy and the day-to-day service delivery and operations of Queensland Urban Utilities. Complete biographies of our Executive Leadership Team are available on our website.

During the 2013/14 financial year Robin Lewis, Chief Operating Officer, and Jenny Leis, Executive Leader People and Safety, left Queensland Urban Utilities. We thank them for their multiple decades of service to the water and sewerage industry.

Louise Dudley Chief Executive Officer BCom, CA, GAICD

Louise was appointed Chief Executive Officer of Queensland Urban Utilities on 1 July 2012, having been part of the organisation since it was formed on 1 July 2010. She previously held the role of Chief Financial Officer.

Louise played a key role in the creation of Queensland Urban Utilities during her time as Executive Manager, Water Retail, Brisbane City Council. This included a major contribution to the successful transition of five local authority water businesses into a single entity.

Prior to joining Brisbane City Council, Louise spent 17 years with leading accounting and advisory firm KPMG, and a senior role with PresCare.

Left to right: Paul Belz, Peter Donaghy, Tracey Moore, Louise Dudley, Justin Poulus, Mark Letica, Nina Meyers and Denise Dawson.


2Paul Belz Executive Leader Planning MBA, BEng

Paul is responsible for services strategy, infrastructure planning, capital inauguration, development assessment, and environmental and water quality strategy across Queensland Urban Utilities’ geographic area.

Paul has more than 20 years’ experience in the water and sewerage industry across a wide spectrum of disciplines. His main areas of expertise are in planning, asset management, and operations.

Paul was a key member of the team that established Queensland Urban Utilities and had input into the South East Queensland water supply model.

Paul is the Executive Sponsor of the Strategic Asset Management Committee. Denise Dawson Chief Financial Officer BBus, Grad Dip (Acctg), FCPA, GAICD

Denise was appointed Chief Financial Officer in November 2012 and is responsible for Queensland Urban Utilities’ financial activities, strategic procurement and Shared Services which includes transactional accounting, collections, billing and business support administrative services.

Denise spent the previous 11 years working for Sydney Water in three general manager roles. The most recent role was General Manager Corporate Services, responsible for managing and delivering a range of business services including financial shared services, information technology, insurance, risk management, legal, and business improvement. She was also Chief Financial Officer and General Manager Customer Service. Denise spent many years in the electricity industry and held a number of general manager positions with United Energy Melbourne, and Powerlink Queensland.

Denise is the Executive Sponsor of the Finance and Pricing Committee.

Peter Donaghy Acting Chief Operating Officer BEng, MSc, CEng, MIEI, MIEAust, CPEng

Peter has been acting Chief Operating Officer since 26 May 2014.

Peter has 24 years’ management experience in both the public and private sectors. He has led Queensland Urban Utilities’ Treatment and Environmental Management team since October 2012. Prior to this, he worked in a leading Australian consultancy as Associate Director – Water and Infrastructure Services.

Peter also has 12 years’ experience with a water authority in Ireland responsible for the strategic planning, delivery and operation of water and wastewater infrastructure. Based in New York City for eight years, he was Program and Project Manager working on multiple civil and building projects including the iconic Grand Central Station and Pan Am buildings. Mark Letica Executive Leader Governance BCom, GIA (Cert)

Mark is responsible for Queensland Urban Utilities’ corporate planning, performance measurement, and corporate reporting and publications functions. He is also responsible for internal audit, corporate property, innovation and research and development functions.

In addition, Mark leads the corporate stakeholder relationship management team, which includes shareholder relations. The purpose of this function is to foster strong and trusting relationships by actively engaging and interacting with our shareholders and stakeholders.

Prior to this role, Mark was appointed as Program Manager to establish Queensland Urban Utilities. This represented the largest water transaction – and second largest utilities transaction – in Australian history.

Mark is Chairman of the Customer and Community Reference Group and Executive Sponsor of the Audit and Risk Committee. He is also Acting Executive Sponsor of the People and Safety Committee.



Nina Meyers Chief Information Officer BInf, MBA, GAICD, AFAIM

As Queensland Urban Utilities’ Chief Information Officer, Nina is responsible for managing all aspects of the organisation’s information, communication and technology (ICT) environment. She has played a critical role in establishing the five-year strategic ICT vision and roadmap to enable the business to transform. This involves outsourcing the commodity ICT services that support Queensland Urban Utilities’ operations, and realigning the internal organisational structure and service delivery to augment this model.

With more than 20 years’ experience in the ICT industry, Nina joined Queensland Urban Utilities after leaving Allconnex Water, where she was part of the Executive Leadership Team and responsible for establishing a ‘greenfields’ ICT capability and environment.

Tracey Moore General Counsel and Board Secretary BA LLB (Hons), MA (Hons)

As the General Counsel/Board Secretary, Tracey is responsible for providing legal advice to the organisation (including Right to Information and Crime and Corruption Commission matters), secretarial assistance to the Board, policy development and implementation, management of the organisation’s insurance and corporate risk portfolio and land access and tenure services.

Tracey has significant experience in infrastructure delivery in both the public and private sectors. Tracey is also an experienced probity advisor and contract lawyer.

Immediately prior to this appointment, Tracey was a partner with, and led the water and electricity practice groups of a major independent law firm.

Tracey has held several previous board appointments in the not-for-profit sector and is a member of Queensland Law Society, Australian Corporate Lawyers Association and the Australian Water Association.



2Justin Poulus Executive Leader Customer and Community BComm

As Executive Leader Customer and Community, Justin is responsible for leading and managing Queensland Urban Utilities’ retail business. This includes management of customer service, marketing communications and media.

Justin previously held senior management roles at Energex and various marketing agencies.

Justin launched his career as a journalist in the mid-1980s and holds a degree in professional writing and journalism, from the University of Canberra.

Ian Hall (not pictured) Executive Leader Commercial Customers (from 14 July 2014) BEng, MIEEE

Ian has more than 25 years’ experience with global enterprises including Boeing, Verizon and Telstra. He has held roles in a range of fields spanning engineering, consultancy, project and change management, commercial management, business development, government liaison, sales, sales management and the negotiation of large multi-faceted contracts.

Prior to joining Queensland Urban Utilities, Ian held the position of State Sales Manager at Telstra where he was accountable for the overall business relationship with large enterprise customers in Queensland.

50% OF OUR ExECUTIVE LEADERSHIP TEAM IS FEMALE* * As at 30 June 2014


Rebecca Holborn, Team Leader Community Engagement, speaking to some fun runners at the Mater Foundation’s Mater Little Miracles 5ks where we distributed 500 litres of free drinking water to fun runners and the community.


3CHAPTER 3: OUR PERFORMANCEFor 2013/14, we refreshed our strategic direction to reflect where we want to be and how we will get there.

Our strategic pillars guide us in achieving our vision and purpose. Each pillar has key focus areas and outcomes, and are supported by strategic success measures against which we monitor and evaluate our achievements.

Chapter 3 is structured around our four strategic pillars and details our performance for 2013/14.

CUSTOMERS We understand

our customers and deliver a quality

service that meets their evolving

needs. (pages 30-39)

PEOPLE We are safe,

adaptable, capable and are committed

to achieving our vision and living

our values. (pages 68-77)

OPERATIONAL ExCELLENCE

We innovate to drive operational

excellence to achieve outcomes

at the lowest long-term cost. (pages 50-67)

SHAREHOLDERS & COMMUNITIES We understand

our shareholders’ aspirations and are accountable

to them and their communities. (pages 40-49)

OUR PURPOSE Enrich quality of life

OUR VALUES How we work together

OUR STRUCTURE How we operate to deliver our vision

MY TEAM What we contribute and how we are measured

MY ROLE How I contribute and how that is measured

OUR VISION We will be recognised for our excellence in water and sewerage services that meet

the evolving needs of our customers and enhance our communities

OUR STRATEGIC PILLARS

Figure 4 – Our strategic framework


Our customers

CUSTOMERWe understand our customers and deliver a quality service that meets their evolving needs.

Key focus areas: • Develop customer insight and understanding. • Deliver the Queensland Urban Utilities customer experience consistently. • Influence and educate customers.

CHAPTER 3: OUR PERFORMANCE

Customer segments

Drinking water supplied (ML)

Social media reach

Population receiving water supply services

Residential properties (524,470)

Commercial properties (37,119)

Commercial (40,122)

Residential (81,608)

Other (14,431)

2012/13

2010/11 2011/12 2012/13 2013/14

2013/14

3500

1400

2000

800

500

200

3000

1200

1500

600

0

0

2500

1000

1000

400

Cust

omer

sPo

pula

tion

(000

s)

Twitter Facebook


3Performance against strategic direction

Achievement of strategic direction

Key focus area: Develop customer insight and understanding

• For the fourth consecutive year, we have kept our price increases to a minimum while delivering $203 million investment in new and renewed infrastructure.

• Completed research for commercial customers and developer segments to better understand their requirements (see page 35).

• Updated our customer experience modelling based upon new customer segments. Each segment will be tracked and benchmarked on a regular basis, driving segment-specific training and improvement.

• Completed survey of our top 200 largest commercial customers to capture contingency information for better management of extreme incidents.

• Completed the Enterprise Systems Strategy and Business Intelligence Vision and Roadmap to provide the platform for delivering a single view of our customer approach to enable service excellence and improved decision making.

Key focus area: Deliver the Queensland Urban Utilities customer experience consistently

• Successfully established our Brisbane south depot. This depot was strategically chosen for its proximity to customers to improve response and resolution to interruptions (see page 54).

• Implemented the first phase of our Customer Segmentation Strategy, with new customer segments which will enable the delivery of differentiated service levels that meet the needs of those segments.

• Established of our new Commercial Customer Group which will bring a new strategic focus on new commercial customer segments and increasing our non-regulated revenue.

• Established our Development Services Industry Reference Group, enabling collaboration with and enhanced service provision for the development industry.

• Received 189 customer commendations during 2013/14, demonstrating our commitment to providing outstanding customer experiences.

• Developed and trialled the CustomerCARE Strategy which supports customer service training across the organisation.• Implemented improvements to the correspondence process to provide more efficient processing time for

customer correspondence.

Key focus area: Influence and educate customers

• Launched our new website incorporating mobile compatibility, workflow management and improved navigation and content for an enhanced customer experience (see page 39).

• Refreshed our quarterly customer newsletter, in the Pipeline, which provides residents with valuable information on works we are undertaking in their area, as well as tips on managing water consumption and maintaining private plumbing.

• Celebrated the 150th anniversary of ‘urban’ water supply by developing a media and marketing campaign to inform customers about the history of water and sewerage services (see page 12).

• Improved our social media reach by achieving a 443% increase in Facebook followers and a 50% increase in Twitter followers (see pages 30 and 35).

• Issued the first edition of an e-newsletter for our 200 largest commercial customers to provide these customers with a greater level of understanding about our services.

• Participated in Healthy Waterways’ Connect to your Creek week (see page 45) and Regional Behaviour Change Campaign (see page 37) to help improve waterway health.

• Progressed our financial hardship program by enhancing our relationship with The Salvation Army MoneyCare Queensland to support the delivery of financial counselling services in two high need areas (see page 35).

• Streamlined infrastructure replacement information on our website to improve information provided to local councillors, communities and customers.


Strategic success measures

Key Performance Indicator Unit Target Result status

Status is reported using the below key = target achieved; = slightly outside target, risk being managed; = target not achieved.

Brand index score Score out of 100 59 60

Customer experience satisfaction survey Score out of 100 6.4 6.9

Corporate reputation index Score out of 100 50 51

Looking forward

• Ongoing focus on building customers’ understanding of the value of the services we provide.• Development of commercial customer segments, laying the foundation to provide differentiated services to reflect

their requirements.• Easier customer interactions through customer-driven contact channels, increased on-line capability and further roll

out of customer care programs.• Introduction of new non-regulated products and services to meet our commercial customers’ needs.• Improve customer billing through targeted billing efficiencies and improvements.

4TH LARGEST WATER UTILITY IN AUSTRALIA BY GEOGRAPHIC AREA


Please refer to the glossary on page 152 for definitions of our strategic success measures.


3Delivering against our Customer Service Standards

Our Customer Service Standards inform our customers of the level of service they can expect to receive from us. Our Customer Service Standards, including detailed definitions of the standards, can be found on our website. The tables below and overleaf show how we have performed against our Customer Service Standards over the past four years.

Indicator Service standard 2010/11 result

2011/12 result

2012/13 result

2013/14 result

status


Water quality

Drinking water quality standard

Australian Drinking Water

Guidelines

Queensland Urban Utilities' drinking water complied with the Australian Drinking Water Guidelines specified by the

National Health Medical Research Council.

Water quality complaints

≤8 per 1,000 properties

4.1 5.2 3.2 2.7

Water quality incidents ≤10 per 1,000 properties

0.3 0.04 0.03 0.04

Water supply

Water pressure Urban area ≥210 kPa

Trickle feed areas (and private

booster) ≥100 kPa

Queensland Urban Utilities undertakes ongoing electronic and manual monitoring of the water network to ensure water supply pressure and volume standards are met.

Where an issue is detected or a complaint received, it is investigated and corrective action is undertaken.Water volume Urban areas

≥25 L/min Trickle feed areas

≥3.2 L/min

Customer service

Calls answered - grade of service

≥80% within 30 secs

75%(% within 20

secs)

83% 76% 72%


Indicator Service standard 2010/11 result

2011/12 result

2012/13 result

2013/14 result

status


Service connections

Time to install a new service connection

≥95% within 15 working

days (following customer payment)

38% 52% 86% 90%

Continuity of supply

Number of unplanned water supply interruptions

≤100 per 1,000 properties per

annum

63 48 62 95(1)

Restoration of water supply

≥90% unplanned interruptions

restored within 5 hours

87% 89% 88% 94%

Response to incidents

Urgent water and sewerage

80% within 1 hour

89% 98% 93% 83%

Non-urgent water andsewerage

80% within 24 hours

81% 96% 92% 69%

1 In 2013/14, this result also includes individual property connection failures, consistent with national performance benchmarking definitions.

189 CUSTOMER COMMENDATIONS RECEIVED THIS YEAR



3Our performance challenges and highlights

Overcoming Contact Centre challenges

In the beginning of the financial year, we experienced challenges relating to third party system outages and increased call volumes which impacted our Contact Centre performance. These challenges have been overcome resulting with performance in the second half of the year above target.

Minimising the impact of interruptions to water supply

During 2013/14, we experienced an increase in water main breaks, predominantly due to the dry conditions, which resulted in an increase in the number of water supply interruptions. This impacted our ability to respond to all urgent and non-urgent requests within the minimum standards in our Customer Service Standards. Priority was placed on urgent incidents, which include interruptions to water supply, to ensure we responded to, and restored,

water supply interruptions within the service standards.

Understanding the differing needs of our customer segments to provide an enhanced customer service

Over the past year, we have expanded our established Core Customer Insights Program to incorporate specific studies focusing on the evolving needs of commercial customers. Through a mix of qualitative and quantitative studies and forums, we have been building our understanding of customer needs and expectations.

From this program, three key commercial segments – large commercial, developers, and water reliant businesses – have emerged that have substantially different needs and expectations requiring an evolution of standardised customer management and service delivery approaches.

We are now in the process of significantly improving the level of service provided to these customer segments, including the establishment of a dedicated Commercial Customer Group which will further develop and implement a differentiated service and communication strategy for these key segments.

Supporting customers experiencing financial hardship

At Queensland Urban Utilities, we understand that from time to time some of our customers face circumstances that make it difficult for them to manage their water and sewerage accounts.

Our established Financial Hardship Program supports our customers experiencing financial hardship by offering flexible and affordable payment plans, a range of payment channels, and water conservation and efficiency advice. We also provide customers with referrals to free community services, such as UnitingCare’s Financial First Aid Line, which offers financial counselling services and advice.

We continue to work closely with community groups and organisations. One of our new hardship initiatives this year has been to enhance our relationship with The Salvation Army Moneycare Queensland, and support them in the provision of a part-time Financial Counsellor in Ipswich and Goodna. This initiative will benefit our customers and communities in these areas.

Raising our profile through social media

Our Facebook and Twitter channels allow us to reach our customers and stakeholders in a fast, efficient and cost-effective way. During times of incidents and service interruptions, we have been able to give our customers real-time updates about their water and sewerage services.

Using Facebook and Twitter is easy for many of our customers as they don’t need to leave the channels they use every day and we are now there to answer their questions at their convenience. We continually assess the ways our customers are communicating with us, and want to communicate in the future so that we can adapt to make it easy for our customers to interact with us.

Our Facebook followers have increased 443% this financial year. Our Twitter following has grown by 50% and we are now engaging with customers on LinkedIn and Instagram.

Proactive media approach to reach more customers

Our media communications approach has become more proactive over the past year resulting in a 322% increase in the number of positive media stories about Queensland Urban Utilities.

Positive media coverage enables us to quickly communicate key messages, such as the benefits of our investment in the water and sewerage network, to a large number of customers.


CUSTOMER CASE STUDY


Drinking tap water helps protect the environment and saves money. For the price of a 1 litre bottle of water from the supermarket, Queensland Urban Utilities delivers 500 litres direct to our customers' taps.*

* Based on 2013/14 residential prices and an average 1 litre bottle of water costing $2.70.


3

This year, we achieved our strongest brand index score (a measure of the public perception of our brand) to date which indicates that we have been delivering on our customers’ expectations.

We achieved this, not only by getting on with the job of delivering water and sewerage services but by improving our customer service and the way in which we engage and communicate with our customers.

One way in which we communicate and engage with our customers is through our focus on informing customers of the financial and environmental benefits of drinking tap water and using reusable water bottles.

This initiative was part of a wider Regional Behaviour Change Campaign in which we worked with Healthy Waterways and stakeholders to reduce waterway litter, particularly single-use plastic bottles.

Encouraging our customers and employees to drink tap water and use reusable water bottles reduces the use of single-use plastic bottles which are the most common item of rubbish found in South East Queensland’s waterways. It also helps reduce the amount of waste that goes to landfill.

We’ve been promoting the benefits of drinking tap water and using reusable water bottles through messaging on our bills via our customer newsletter in the Pipeline, social media, website, community events, internal communications, employee information sessions and documentary screenings.

Delivering on our customers’ expectations

Single-use plastic bottles are the most common item of litter

removed from South East Queensland’s waterways by the Healthy

Waterways Clean Up crew. To reduce plastic bottle litter, Healthy

Waterways’ members have launched the Love your reusable

bottle campaign. This campaign encourages everyone to drink

tap water and use reusable water bottles. Queensland Urban

Utilities is a highly valued member of Healthy Waterways and we

acknowledge their hard work and commitment to protecting

South East Queensland’s waterways.

Julie McLellan, Chief Executive Officer, Healthy Waterways


CUSTOMER CASE STUDY


Our new mobile and tablet-compatible website enables our customers to quickly and easily find the information they need.


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This year we reached a significant milestone in our e-business strategy to improve customer experience by launching our new corporate website.

As well as giving customers greater choice of the way in which they interact with us, our e-business strategy is increasing online customer self-service options enabling customers to interact with us whenever and wherever they are. It is also achieving business efficiencies by creating a cheaper way for customers to interact with us which ultimately is beneficial for our customers.

To ensure our new website and e-business strategy meet the evolving needs of all of our customer segments, we conducted extensive customer research and incorporated this feedback into our strategy. Our new website now includes:

• mobile compatibility – enabling our customers to access our website from the smart phone or tablet of their choice,

• functionality for customers to find out if their property is in our geographical area,

• online forms with a clean, easy-to-use intuitive design,• 24/7 listing of reported water service interruptions,• online payment function,• improved content covering more of the services and

value we provide.

Our customers can now:

• easily report a leak online and include a photo of the leak,• apply for a Direct Debit to be set up on their account,• apply for a Special Water Meter Read (used when a

customer moves house),• send us an online enquiry.

Over the next two years, our website will continue to be developed to become more customer friendly, sophisticated and interactive providing additional self-serve options, real time updates and enhanced customer services such as online chat.

Improving customer experience and delivering self-service options with our new website

437,134 WEBSITE VISITS WHICH IS 10.8% MORE THAN LAST YEAR


Our stakeholders

We recognise that effective stakeholder management is

critical to enabling the organisation’s sustainability, growth

and success.

Our vast stakeholder group includes our shareholders,

residential and commercial customers, the community,

developers, all levels of government, regulators and

industry groups.

We work closely with our shareholders to ensure our

strategic vision is aligned with their aspirations and goals,

and that our service delivery balances customers’ needs

and business efficiencies.

Our solid relationships with the state and federal governments allow us to keep abreast of legislation and regulations and ensure we continually fulfil our responsibility to protect the environment and support sustainable practices.

Our relationships with fellow South East Queensland water industry participants, suppliers, innovation bodies and environmental groups allow us to collaborate at a local level to work towards common goals.

We continue to seek input from customer and community representatives on relevant policy, planning and service standards through consultation with our Customer and Community Reference Group (see page 44).

SHAREHOLDERS AND COMMUNITIESWe understand our shareholders’ aspirations and are accountable to them and their communities.

Key focus areas: • Be a forward-looking organisation with the agility and adaptability to act.• Actively engage and interact with shareholders and stakeholders to strengthen relationships.• Consistently deliver on shareholder expectations.

30 COMMUNITY EVENTS HOSTED OR PARTICIPATED IN THIS YEAR TO SUPPORT OUR COMMUNITIES



3How we engage with our stakeholders

Stakeholder group Key concerns/issues Engagement tools

Shareholders • strategic direction • business performance• sustainability• services to customers

and communities

• regular direct engagement and communication via Board Chairman and Chief Executive Officer

• dedicated point of contact – Manager, Shareholders and Stakeholders

• corporate and operational plans distributed annually

• quarterly reports• annual reports• annual stakeholder reports• annual stakeholder satisfaction surveys• Board meetings held in each

shareholder region• Special General Meetings

Customers and community • customer service• billing• financial hardship• community relations• environmental impact • corporate and charitable support• capital works and infrastructure

maintenance

• direct engagement• Customer and Community Reference Group • quarterly in the Pipeline

residential newsletter• regular social media updates• corporate website• marketing collateral – fact sheets, flyers,

signage, community notices• letters• quarterly bill account communications • focus groups• community events• information sessions• corporate plans and annual reports• surveys • sponsorships and partnerships

Developers and industry groups • customer service• research and development• partnerships• development

• direct engagement• biannual developer industry forum• industry reference group• website• newsletters• corporate plans and annual reports

Regulators and Government • legislative compliance• environmental management• financial management• sustainability

• direct engagement• annual stakeholder satisfaction surveys• information provision• corporate plans and annual reports

Other stakeholders • innovation bodies • water industry • suppliers • environmental groups

• research and development partnerships

• collaborative activities

• direct engagement• collaborative projects and alliances• annual stakeholder satisfaction survey• presentations• meetings


Performance against strategic direction


Key focus area: Be a forward looking organisation with the agility and adaptability to act

• Overcame the challenges from government changes to water and sewerage connection services and developed and implemented a new development services Utility Model (see page 49).

• Continued to develop strong relationships with key stakeholders as part of our Emergency Response Plan review to ensure a coordinated and proactive approach to future incidents.

• Completed planning for the 2014 G20 Summit to ensure continuity of supply. • Meetings held with Seqwater, Queensland Health and local disaster management groups to prepare for potential severe

weather during the summer season ensuring a coordinated and proactive approach (see page 54). • In partnership with Seqwater and UnityWater, we promoted our innovations and Scientific Analytical Services at Ozwater

to national and international water industry peers.• Held the Inaugural SEQ Innovation Working Group meeting with subject matter experts from UnityWater, Seqwater, and

Gold Coast and Logan City Councils to demonstrate leadership and forward thinking amongst peers.• Our Corporate Plan 2014-19, which documents our future direction, goals and priorities was approved by our

shareholders and adopted by our Board.

Key focus area: Actively engage and interact with shareholders and stakeholders to strengthen relationships

• Supported a record number of community projects and events, including WaterAid Golf Day, the Salvation Army Red Shield Appeal, the Mater Foundation's Mater Little Miracle’s 5ks, and Clean Up Australia Day (see page 45-47).

• Held planned events with Board members, shareholders and key stakeholders to provide opportunities for greater understanding of stakeholder requirements and interests.

• Held four Customer and Community Reference Group meetings to receive feedback and insight from customer and community representatives on operational matters (see page 44).

• Continued implementation of the sewer overflow management strategy for wet weather overflows, with 98% of customers offered a solution within eight weeks.

• Created a foundation communications and community engagement strategy for future capital works projects based on the successes and learnings from community engagement during the Woolloongabba Sewer Capacity Upgrade and the Bulimba Creek Trunk Sewer projects.

• Implemented our first interactive social media approach for managing infrastructure project enquiries with cyclists, a key stakeholder group in the Indooroopilly Rising Sewer Main Upgrade Project.

• Our Chief Executive Officer became Chair of Water Services Association of Australia, enabling us to strengthen relationships within our industry.

Key focus area: Consistently deliver on shareholder expectations

• Our Stakeholder Satisfaction Survey results showed that overall stakeholder engagement is effective and strong. We achieved a 77.6% satisfaction score for shareholders and 76.4% satisfaction score for stakeholders (see page 44).

• Continued ongoing collaboration with key stakeholders for the Ripley Valley Sustainable Development Servicing Plan to ensure that stakeholder feedback is incorporated where possible.

• Completed sewage treatment plant upgrades for Goodna, Rosewood and Boonah, with Fernvale and Gatton under planning review to ensure the long-term sustainability of water and sewerage services.



3Strategic success measures



Total shareholder returns % of forecast

met95% 117%

Shareholder satisfaction Score out of 100 76% 77.6%

Looking forward

• Increased interaction with shareholders, with a strong focus on strategic and proactive matters.• Increased understanding of key stakeholders, supported by more proactive and coordinated collaboration with those

key stakeholders.

76.4% STAKEHOLDER SATISFACTION SCORE



Our performance challenges and highlights

Engaging with our shareholders

We maintain strong relationships with our shareholders by supporting their economic and population growth, regularly reporting on our performance, consulting on our strategic direction and liaising on operational matters that are pertinent to each region. We engage with our shareholders to gain a greater understanding of their aspirations so that we can tailor our strategic direction to meet the evolving needs of our communities.

On 16 September 2013, we hosted our third annual Special General Meeting. This meeting provided the Mayors and Chief Executive Officers of our five shareholding councils with an overview of our past performance and an insight into our future initiatives.

As a means of providing further transparency on decisions, the Board Chairman writes to the Mayors of our five shareholding councils after each ordinary Board meeting to outline the key outcomes and decisions made.

Stakeholders confident of our ability to provide quality water and sewerage services

A survey of our key stakeholders was conducted in April 2014. The survey was issued to 165 stakeholders. Of respondents that had an interaction or dealing with Queensland Urban Utilities in the previous 12 months, the level of shareholder satisfaction was 77.6% and overall stakeholder satisfaction was 76.4%.

This demonstrates that our shareholders and stakeholders have confidence in our ability to provide high quality water and sewerage services to our customers.

Understanding the needs of our customers and communities

Our Customer and Community Reference Group (CCRG) has 10 members who provide feedback and explore opportunities on a range of water and sewerage related issues.

The group includes representatives from a cross-section of the community, and represents a range of customers and interest groups, including community and social welfare, primary production, environment, property, and residential and commercial water users.

This year, the CCRG convened on four occasions to discuss topics such as the development services Utility Model, Queensland Competition Authority’s long term regulatory review, innovation at Queensland Urban Utilities and our Concealed Leak Policy. The CCRG is pivotal in providing us with insight and understanding of how our operations and strategic direction affect our customers and communities.

77.6% SHAREHOLDER SATISFACTION SCORE



3Actively supporting our stakeholders

As an essential service provider, we are committed to giving back to the communities we serve. As part of this, we were pleased to participate in Ipswich City Council’s Activate Ipswich Program which gives start-up enterprises a helping hand.

We supported the Ipswich community by waiving water and sewerage access charges for 10 property owners participating in the Activate Ipswich program. This initiative benefited the Ipswich community by:

• finding short and medium-term uses for buildings in Ipswich’s central business district that were vacant, disused or awaiting redevelopment,

• supporting start-up businesses, artists, cultural projects and community groups to get their projects off the ground,

• generating activity and foot traffic to Ipswich’s central business district boosting the local economy.

Activate Ipswich was launched in August 2013 at a community event (see pages 46-47) celebrating the completion of our $2.9 million Brisbane Street Water Main Upgrade which delivered an improved water network for the Ipswich community.

Record number of community events to support our communities

To support our customers and communities, this year, we participated in a record number of community events. Through sponsorships and partnerships, we hosted, or participated in, 30 different community events, many of which were in collaboration with our shareholders, stakeholders or peers. Through some of these events, such as the WaterAid Golf Day, we’ve raised thousands of dollars for charity. At others, such as the Mater Little Miracles 5ks, we've handed out hundreds of litres of free drinking water to runners. We also encouraged our employees to be part of the fun run team as part of our Wellness Program. At these events we’ve been able to inform thousands of customers about the benefits of our capital works programs in their local areas and educate customers about how they can help look after their plumbing, the sewerage network and the environment through our think at the Sink campaign. At the tree planting events, we have worked with the Bulimba Creek Catchment Coordinating Committee (B4C) and the community to plant more than 25,000 trees, shrubs and plants since our formation in 2010.

Benefiting the environment and our communities at the inaugural Connect to your Creek week

As part of our commitment to the environment and the communities in which we operate, Queensland Urban Utilities was pleased to support Healthy Waterways’ Connect to your Creek week which ran from 17-25 May 2014. Connect to your Creek week aimed to achieve healthier waterways in South East Queensland by providing opportunities for communities to connect with, care for and get to know their local creek and waterway.

More than 70 community events were held across South East Queensland during Connect to your Creek week to celebrate the diversity and value of our waterways. We participated in five events across our geographic area including a tree planting event in Brisbane, a family fun day and canoe trail in Ipswich, a thank you informative morning tea in Lockyer Valley, a canoe expo in Somerset and a nutrient offset project information session and BBQ in the Scenic Rim. For more information on the Connect to your Creek week events, see pages 46-47.

As part of this initiative, our Chief Executive Officer was pleased to be a Connect to your Creek Champion enabling her to share her connection to her local waterway via a documentary which can be seen on our website www.urbanutilities.com.au/events


Somerset Rail Trail fun runPromoted our capital works projects in Somerset and supported Diabetes Australia.

B4C community tree planting & BBQPlanted 400 trees and promoted the benefits of the Bulimba Creek Trunk Sewer Upgrade project.

Lockyer Valley business awardsSupported local businesses.

B4C community tree planting & BBQPlanted 500 trees and promoted the benefits of the North Kedron Brook Sewer Protection Project.

Water Aid Golf DayRaised more than $18,000 for Water Aid improving access to safe water, hygiene and sanitation in third-world countries.

Sunnybank Rugby Club family fun dayPromoted the benefits of the Bulimba Creek Trunk Sewer Upgrade and the value of our services.

B4C community tree planting eventSupported National Tree Day and planted 560 trees.

Ipswich Park2Park fun runPromoted our capital works projects in Ipswich and supported the Ipswich Hospital Foundation.

EkkaPromoted our think at the Sink campaign, network investments and the value of our services.

Lockyer Valley community fun runPromoted the value of our projects in the Lockyer Valley region.

Mitchelton Football Club’s family fun dayPromoted the benefits of the North Kedron Brook Sewer Protection Project.

Canungra ShowPromoted the benefits of the Canungra Water Main Renewals Project.

Brisbane St East Community BBQThanked the Ipswich community for their patience during the water main replacement project.

RiversymposiumShowcased our Scientific Analytical Services to industry peers.

Mt. Crosby State School WalkathonSupported a key stakeholder in the Mt. Crosby Water Main Replacement project.

SHAREHOLDERS AND COMMUNITIES CASE STUDY


Supporting our communities at more than 30 events


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Healthy Waterways’ Clean Up Australia DayPromoted our investment in the local community.

North Kedron Brook tree plantingPlanted our 25,000th tree since formation during Connect to your Creek week (see page 45).

Somerset canoe expoPromoted the value of our investment in Somerset during Connect to your Creek week (see page 45).

Mater Little Miracles 5ksDistributed more than 500 litres of free drinking water to runners and promoted the benefits of drinking tap water.

Indooroopilly cyclists’ thank you breakfastPromoted the benefits of the Indooroopilly Rising Sewer Main Upgrade.

Healthy Waterways AwardsPromoted the environmental and financial benefits of drinking tap water.

Beaudesert Nutrient offsetsPromoted our Beaudesert Nutrient Offsets Project during Connect to your Creek week (see page 45).

Corinda State High School FetePromoted the benefits of our Sewer Pump Station Upgrade to stakeholders.

Oxley Creek Sewage Treatment Plant tourShowcased our services and facilities to international delegates as part of OzWater Conference.

Thank you BBQ in GattonThanked the Gatton community for their patience during the Gatton Sewer Main Upgrade.

Ipswich family fun dayPromoted the value of our investment in Ipswich during Connect to your Creek week (see page 45).

Mother’s Day Classic fun runDistributed free drinking water to runners and promoted the benefits of our local infrastructure projects.

Salvation Army Red Shield breakfastSupported communities experiencing financial hardship.

OzWater ConferenceEngaged with stakeholders and promoted our Innovation Program to the national and international water industry.

Financial Counsellors Association ConferenceSupported customers experiencing financial hardship.


SHAREHOLDERS AND COMMUNITIES CASE STUDY


Our new water approvals process provides customers with a more streamlined approval process for the connection, disconnection and alteration of water and sewerage services.


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Queensland Urban Utilities prepared for one of the biggest challenges in our four-year journey, when we took on responsibility for handling all aspects of new applications for the connection, disconnection and alteration of water and sewerage services on 1 July 2014.

Under the Water Supply Services Legislation Amendment act 2014, the Queensland Government streamlined the process for water and sewerage connection services (called the Utility Model).

Queensland Urban Utilities now directly receives, assesses and approves water and sewerage connection applications, a service that was previously delivered by the five councils in our geographic area. This means that we are now directly accountable to the development industry and other customers for all aspects of the end-to-end connection process.

The new water approvals process offers customers a more streamlined approval process and other benefits including:

• water and sewerage connection approvals customised for all scales of development,

• timely decisions on connection applications – standard connection requests are decided within five business days,

• a simple and efficient construction service for standard connections,

• a streamlined certification process for minor infrastructure works,

• flexible, staged water approvals for large-scale developments,

• an advisory service provided directly to customers.

The change will result in Queensland Urban Utilities managing upwards of 6,000 service requests per year (up from 800 applications per year previously referred by councils).

To deliver the water approval process, a simple two-stream approach has been adopted: a key customer management approach for major customers and complex projects, and an online approach for standard connections and minor works.

A third party certification scheme has been introduced for the design and construction of minor infrastructure works.

To ensure the changes reflected the requirements of key stakeholders, extensive consultation was conducted with local government, the development industry and the public. Targeted consultation was achieved by establishing:

• a Council Working Group consisting of key planning and development personnel,

• an Industry Reference Group made up of key industry association and development industry stakeholders,

• bi-annual Development Industry Forums to inform and consult with key development industry contacts,

• a public consultation process inviting submissions on our Interim Connections Policy via an on-line survey.

Introducing an enhanced process for water approvals


Capital investment

OPERATIONAL ExCELLENCEWe innovate to drive operational excellence to achieve outcomes at the lowest long-term cost.

Key focus areas: • Define and deploy operational excellence.• Innovate to identify, assess and adapt to opportunities that align to operational excellence.• Influence the supply chain and regulatory environment.


Growth RenewalComplianceImprovement

$350m

2010/11 2011/12 2012/13 2013/14

$300m

$250m

$200m

$150m

$100m

$50m

$0m




Key focus area: Define and deploy operational excellence

• Saved $18.1 million in operational efficiencies, demonstrating our commitment to operational excellence (see page 67).• Completed the $80 million Woolloongabba Sewer Capacity Upgrade Project four months ahead of schedule (see page 56).• Appointed an external provider to perform standard new connections services and sewer cleaning, inspection and

evaluation services to provide better service outcomes for our customers.• Enhanced the remote monitoring of our water and sewerage networks to identify water leaks, pressure issues and

potential sewage overflows to enable proactive action to be taken and reduce the impact on customers (see pages 63 and 65).

• Action plans developed for six high priority sites in order to reduce the impact of wet weather sewer overflows on the environment and occupiers of affected land and waterways.

• Developed a refreshed Emergency Management Framework, including the new Board Crisis Management Plan, to ensure that emergency teams and the Board are prepared to respond to, and recover from, any future incidents.

• Completed master plans for Gibson Island and Luggage Point sewage treatment plants to support long-term growth in Brisbane.

• Commenced consolidation of our administration and transaction services to provide efficiencies and reduce costs (see page 67).

• Enhanced our risk management to further align our risks with our strategic and operational planning. • Implemented a multi-agency Summer Preparedness Program to address key findings from the 2013 Australia Day flood

and water supply event. As a result South East Queensland is now better prepared to deal with any extreme weather events (see page 54).

Key focus area: Innovate to identify, assess and adapt to opportunities that align to operational excellence

• Implemented research and development pilot and trials program to identify, assess and adapt to opportunities that align to operational excellence.

• Established internal iQ Group to identify and develop new initiatives that align to operational excellence (see page 59).• Established the Innovation Centre at Luggage Point Sewage Treatment Plant to enable industry and university

collaboration, the sharing of risks, reducing costs and finding new innovative practices to achieve operational excellence (see page 58).

• Launched the CEO Innovation Hour to provide employees with the opportunity to present new initiatives to the CEO for consideration (see page 59).

• Commissioned internal technology surveys for the Research and Development Investment Plan to inform future investment, ensure we are targeting the correct areas and achieve business efficiencies.

• Implemented new energy management platform to generate greater management capability at a lower operating cost.

Key focus area: Influence supply chain and regulatory environment

• Actively engaged in the review of the long-term regulatory framework to apply to the South East Queensland water industry from July 2015.

• Supplied Department of Energy and Water Supply with information for the Simplifying Water and Sewerage Service Provider Regulation project, which will provide transparency and accountability to regulators and customers.

• Queensland Competition Authority’s review of our expenditure for 2013-15 confirmed that our prices are fair and reasonable.

• Appointed a new vehicle fleet management partner to maximise value through access to leading edge fleet management systems including effective cost control systems, increased buying power and the use of local suppliers to undertake servicing and repairs.

• Implemented improvements to the procurement process to reduce invoice processing costs and improve invoice payment performance to benefit suppliers.

• Developed a Significant Procurement Plan for flood resilience works at Oxley, Fairfield, Esk and Karana Downs enabling us to prepare for future flood events.





Operating cost $ per property $560 $465

Operating profit after tax $m $124m $134.7m

Return on assets % 5.4% 5.4%

Capital Program deemed prudent and efficient by Queensland Competition Authority % 98% 98.45%

Research and development investment % of revenue 0.037% 0.039%

Capital Infrastructure Program delivered against budget % 100% (+/-5%) 98.34%

ICT Investment Program delivered against budget % 100% (+/-5%) 99.45%

Biosolids production 000 wet tonnes 152 148.9

Total net greenhouse gas emissions 000 tonnes CO2e 137.3 119.5

Cogeneration 000 MWh 12.2 7.41

Looking forward • Further improvements in the reliability of water and wastewater services and minimising environmental impact.• Enhanced capital investment prioritisation, with a stronger focus on improving service delivery standards and

long-term investment value. • Further optimisation of capital investment cost through targeted market engagement.• Further innovation in waste to energy opportunities to further reduce costs and minimise environmental impact.• Stronger focus on benefits-driven investment in IT and operational improvement.




3Our performance challenges and highlights

Overcoming our operating budget challenges

A number of operational challenges occurred during 2013/14 which impacted our agreed operating budget. These included:

• The Government’s decision in 2013/14 to introduce the carbon tax increased key costs such as electricity.

• Industrial relations rulings (which applied to some of our key suppliers) increased supplier contract costs for products and services.

• Supplier delays for key infrastructure impacted our ability to deliver targeted operational efficiency.

These, and a number of other impacts, were all mitigated through the identification and delivery of further operational efficiencies, enabling us to meet our operating budget.

Working towards achieving our cogeneration target for 2014/15

Cogeneration, which is the generation of gas from a waste product, was a challenge for us this year. We inject waste into our digesters to generate a biogas which we use in our operations to offset our energy costs. Our cogeneration target for 2013/14 was based on the installation of a new cogeneration plant at our Oxley Creek Sewage Treatment Plant, replacing the plant damaged in recent floods. Unexpected delays associated with the procurement of the plant resulted in this target not being achieved. This challenge was overcome late in 2013/14, and through close collaboration with the contractor and key stakeholders, work is being accelerated to bring the cogeneration plant on line in early 2014/15 to enable the achievement of cogeneration targets for 2014/15.

Innovating for operational excellence through our research and development program

This year, we enhanced our Research and Development Program to identify areas for future investment, conduct pilot and trials and work with industry and research partners

to explore new and innovative ways to operate.

We greatly value the partnership with Queensland Urban Utilities as it gives us an excellent opportunity to jointly develop and evaluate leading-edge innovations that can achieve major environmental and economic benefits for the industry. This close collaboration covers several areas including smart sewer optimisation strategies, novel nitrogen removal strategies, resource recovery processes and innovative zero-energy sewage treatment concepts to generate operational and asset management options for Queensland Urban Utilities and the broader Australian water industry now and into the future.Prof Jurg Keller FTSE, IWA Fellow Director, Advanced Water Management Centre, The University of Queensland


new depots increase service delivery efficiency

As an essential service provider, fast response times are vital, especially in the event of an emergency. In 2013/14, we commissioned two strategically-located depots to help us improve our service efficiency and, in turn, enhance customer experience.

In September 2013, we commenced servicing the Lockyer Valley from a new depot in Gatton. The depot now houses all equipment in the one location and, for the first time, has brought our Lockyer Valley employees together under one roof.

In February 2014, we commissioned a new depot in Acacia Ridge to help us better serve our customers living on Brisbane’s south side, improve our response times and reduce travel costs.

By operating out of our new, strategically-located depots, we have not only improved our response times to unplanned service interruptions, but we have achieved business efficiencies.

Our Summer Preparedness Action Plan

In preparation for the challenges that summer weather can pose to water and sewerage services, we worked in partnership with Seqwater to develop a joint Summer Preparedness Program that identified potential risks for the summer and collaboratively planned and implemented mitigation strategies. A highlight of this program was our Customer Early Engagement Communications Strategy to help prepare our customers and communities for severe weather.

To meet our customers’ needs, we identified and mapped critical customers which are those that could experience serious adverse impacts from the loss of water supply including hospitals, receiving at-home dialysis patients and critical commercial customers.

We also identified and addressed risks for asset protection from the impacts of potential disasters, to ensure continuity of services for our customers.

Our planning was supported by lead disaster management agencies such as Queensland Fire and Emergency Services, the Bureau of Meteorology and Emergency Management Queensland and included the preparation of specific plans for responding to a range of disaster scenarios.



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SEQ Catchments is proud to partner with Queensland Urban Utilities in delivering projects such as the Beaudesert Nutrient Offsets Pilot study, which is beneficial for the environment, community and economy while reducing the cost of living.Simon Warner, Chief Executive Officer, SEQ Catchments

Supporting waterway health using green infrastructure

Innovative and sustainable. Two words that define Queensland Urban Utilities’ Nutrients Offset Project in Beaudesert.

A Queensland first, the ‘green infrastructure’ pilot involved stabilising severely eroded riverbanks which will prevent around five tonnes of nitrogen and 11,200 tonnes of sediment from entering the Logan River every year. The $1 million ‘green’ solution was cheaper than the alternative – an $8 million upgrade of the Beaudesert Sewage Treatment Plant.

Other benefits include a reduction in greenhouse gas emissions, improved biodiversity and a healthier river ecosystem. The majority of South East Queensland's waterways suffer from poor riparian health which causes erosion and pollution. The potential exists for further investment in similar projects to improve the health of waterways across Queensland.

To see how the project progressed, view the time-lapse video on our website.

Delivering appropriate financial performance

This year, we achieved or exceeded all of the key financial performance measures in our Corporate Plan. We delivered the expected return to our shareholders for the fourth consecutive year and we continue to meet the Queensland Treasury Corporation’s requirements for our credit rating whilst maintaining our operating costs per property below target. See chapter 5 for more information on our financial performance.



74,000 CUSTOMERS WILL BENEFIT FROM THE COMPLETED WOOLLOONGABBA SEWER CAPACITY UPGRADE PROJECT

Investing in our area’s future

This year, we completed works on the $80 million Woolloongabba Sewer Capacity Upgrade Project which is our largest capital works project to date in Brisbane. The project was completed four months ahead of schedule and involved the construction of a new 4.2 kilometre sewer main to ensure the long-term sustainability of sewerage services for around 74,000 customers in the Woolloongabba catchment. Over the course of the five-year project, we maintained regular contact with residents and local businesses to ensure all affected parties were kept abreast of the progress.

We also completed works on the Bulimba Creek Trunk Sewer which currently services approximately 20,700 hectares of properties to Brisbane’s south east using 62 kilometres of sewer pipes. This $51.7 million project has increased the capacity of the sewer system to cater for the region’s growth. As part of our commitment to our communities and environment, we partnered with the non-profit community group Bulimba Creek Catchment Coordinating Committee (B4C) and local bushcare groups to hold a number of community planting days around the project site (see pages 46-47).

Recognised for excellence for our Goodna Sewage Treatment Plant Upgrade Project

This year, our Goodna Sewage Treatment Plant Upgrade won the Water Services Award at the 2014 Healthy Waterways Awards. The project used innovative technology to significantly reduce our environmental footprint. During 2013, the upgraded Goodna Sewage Treatment Plant delivered exceptional results, surpassing the targets set by the South East Queensland Healthy Waterways Strategy (SEQ HWS) and, in turn, prevented approximately 330 tonnes of nitrogen and 45 tonnes of phosphorus from entering waterways.

During this project, we worked in close partnership with the environmental regulator and Ipswich City Council to ensure that the objectives of the project met the council's plan for economic and social development in the region while achieving the environmental goals set out in the SEQ HWS.The success of the project is also highlighted by community engagement with more than 100 local residents attending the site’s open day.


3Major projects completed or progressed in 2013/14

As part of our $3.2 billion, 10-year capital works program, we invested $203 million in the water and sewerage network. This investment in our communities ensures the long-term sustainability of water and sewerage services for current and future generations. The table below is a summary of some of our capital works projects which have either been completed, progressed or commenced in 2013/14.

Region Project Name2013/14

investment ($’m)

Estimated total

project investment

($’m)

Commenced Completion*

Brisbane

Brisbane Woolloongabba Sewer Capacity Upgrade 21.6 82.7 2010/11 2013/14

Brisbane Water Main Renewals Program 19.1 N/A Ongoing programs

Brisbane Trunk Sewer System Renewals Program 13.9 N/A Ongoing programs

Brisbane Sewage Treatment Plant Upgrade Program 7.7 N/A Ongoing programs

Brisbane Water Meter Renewals Program 6.8 N/A Ongoing programs

Brisbane Capital Planning and Design Program 5.5 N/A Ongoing programs

Brisbane Creeks and Waterway Crossings Renewals Program

5.4 N/A Ongoing programs

Luggage Point Sewage Treatment Plant Inlet Works Upgrade

5.4 9.6 2012/13 2014/15

Other water and sewerage infrastructure projects and programs


Ipswich

Ipswich Water Main Renewals Program 4.2 N/A Ongoing programs

Woogaroo Trunk Sewer Upgrade 2.8 62.7 2010/11 2013/14

Goodna Sewage Treatment Plant Upgrade Stage 4A (Regional Sewerage Scheme for Goodna and Wacol Catchments Phase 1)

2.1 116.8 2011/12 2013/14

Rosewood Sewer Upgrade 1.9 5.2 2012/13 2014/15

Bundamba Trunk Sewer Main Upgrade 1.9 13.5 2011/12 2013/14



Lockyer Valley

Grantham Sewage Treatment Plant 4.3 4.3 2013/14 2013/14

Gatton Sewer Main Upgrade 3.0 3.5 2013/14 2014/15

Water Supply Contingency Improvement 2.4 4.1 2013/14 2014/15



Scenic Rim

Water Distribution Enhancement Program 2.7 N/A Ongoing programs

Bromelton land purchase for Sewage Treatment Plant

2.2 2.3 2013/14 2013/14

Scenic Rim Water Main Renewals Program 1.3 N/A Ongoing programs



Somerset

Somerset Dam Sewage Treatment Plant 0.8 3.0 2012/13 2014/15

Somerset Sewage Treatment Plants 0.6 N/A Ongoing programs



*Completion dates may exclude subsequent ongoing commissioning works


OPERATIONAL ExCELLENCE CASE STUDY


Our new Innovation Centre, established in a heritage-listed building at Luggage Point Sewage Treatment Plant, is a space dedicated to developing innovative solutions and trialling emerging technology to benefit customers and the wider community.


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Launched in December 2013, Queensland Urban Utilities’ iQ Group comprises volunteer representatives from all parts of the organisation, each of whom are responsible for championing participation in idea generation, sharing and promoting ideas with relevant areas of the business and tracking and monitoring the delivery of innovations.

In addition, we implemented our CEO Innovation Hour, a monthly forum that gives our employees the chance to present their innovation proposals to the CEO and Executive Leadership Team. We’ve already implemented a number of innovations resulting in millions of dollars of savings, improved safety practices and bettered service delivery.

Innovations implemented or progressed this year include:

• Introducing a regional fleet repairer program, which has streamlined the way we coordinate our insurance claim repairs on damaged fleet vehicles. This program is expected to result in efficiency savings of around $1 million per annum.

• Installing a hydro turbine at our Gibson Island Sewage Treatment Plant, which will reduce our carbon footprint, result in energy savings of 80,000kWh per year and cost savings of $15,000 per year.

• Swapping our concrete flow meter pits for plastic pits, which are cheaper to install, easier to access, and water resistant to save $3.5 million in maintenance and rehabilitation costs.

Driving innovation with our new iQ Group and CEO Innovation Hour

122 ideas generated from employees

$4.5m estimated cost savings

15 iQ Group volunteers (from an initial 8 members)

20 innovation mentors

6 CEO Innovation hour sessions held

31 innovations given CEO approval to proceed

1 innovation centre

To watch our innovation video, visit www.urbanutilities.com.au/innovation

Innovation in numbers




Neil Parry, Service Delivery Team Leader, repairing a water main. Neil is a member of the Operations Group which provides enhanced service delivery through our new business operating model.


3

Underpinning our transformation into a modern, efficient and responsive organisation, is our new business operating model which was set during 2013/14.

Our new operating model defines how we will be structured and how we will deliver our services. As well as taking into account future trends that, as a business, we will need to respond to, it is based on feedback from a range of stakeholders including, but not limited to, our shareholders, customers and industry.

The model will focus our efforts on delivering specialist services. These are the services or functions that, as an organisation, we are already very successful at delivering, or that can be improved upon to deliver solid business returns for our shareholders and excellent service outcomes for customers and the community.

An outcome of the new model is that there will be a differential service strategy for our commercial and water reliant business customers. This will result in strengthened customer relationships through improving the interface and service offerings for these customers (see page 35).

The new model will modernise the business through grouping and realigning high volume generic transactional activities into a shared services function. This will serve to drive in efficiency and allow better leverage of internal capability.

With South East Queensland likely to continue to experience high growth in the coming years, it is critical that as an essential service provider, we are focused on planning for future growth. The new model supports population and economic growth through the delineation of our infrastructure design and planning and capital delivery functions.

This will deliver significant benefits allowing the Planning Group to focus on service planning, servicing the development sector under the new Utility Model, and plan our forward Capital Infrastructure Investment Program. While our Operations and Service Delivery Group will continue to lead and be responsible for service and capital delivery.

The new operating model has also resulted in a significant amount of internal change which has been a challenge for us this year. To manage this, we have ensured open and transparent communication with employees and unions (see page 73) and focused on the benefits of the new operating model of enhanced customer service and efficient service delivery.

Enhanced customer service and efficiencies achieved through our new operating model




Adam Spencer, Senior Analyst Laboratory Systems, monitoring the quality of the Brisbane River and collecting data to help manage the health of this waterway.


3

This year, we completed a two-year Critical Sites Monitoring Program which involved implementing Hawkeye technology to improve our management of overflows resulting in a healthier environment and improved public health impacts.

To monitor sewer levels and alert our control room in the event of a sewage overflow, we have installed more than 326 Hawkeye remote telemetry units into maintenance holes located near emergency relief overflow structures (EROS).

Sewage overflows are typically caused by blockages in pipes, power supply interruptions or by stormwater entering and overloading the sewerage system. An overflow occurs when the sewage flow exceeds the capacity of the sewerage pipe. When this happens, an EROS diverts sewage resulting in an overflow. Preventing sewage overflows is a high priority for us.

As a result of the installation of the Hawkeyes and our Critical Sites Monitoring Program we can:

• reduce the public health and environmental impacts of overflows on waterways by immediately responding to overflows that may have previously been unnoticed,

• reduce the impact of overflows on our customers by immediately responding to, and cleaning up, overflows on private properties,

• improve our planning with increased knowledge of the impacts of overflows and by using sewage overflow data to validate catchment-based risk assessments,

• ensure just-in-time investment in sewerage system upgrades by using sewage height datasets from the new monitoring equipment to validate hydraulic sewerage models used in master plans.

Due to the success of this project, we are now looking into how we can roll out various applications of this technology to provide an enhanced service to customers, communities and the environment.

Using Hawkeye technology to improve our operational efficiency

326 HAWKEYE REMOTE TELEMETRY UNITS INSTALLED TO HELP PROTECT THE ENVIRONMENT




A member of our Operations Group speaking to a customer impacted by a water main burst. TaKaDu technology has enabled us to reduce the community impacts of water main bursts and improve our operational efficiency.


3

With an extensive proportion of our water network under pressure controlled areas, it is imperative that we maintain optimum pressure to ensure minimal strain and leakage. With this in mind, we implemented TaKaDu, an internationally-renowned software system that uses advanced statistics to identify leaks and pressure issues, enabling proactive action to be taken before major and costly problems emerge.

We began trialling TaKaDu in late 2013 to detect water leaks in over 2,000km of our water mains. In just a few months, the water saved by using this innovative technology equates to the volume of 265 Olympic-size swimming pools.

Additional benefits include cost savings in unplanned repairs and emergency response as well as improved customer service.

We have also been able to reduce community inconvenience by avoiding major supply interruptions and water main bursts as leaks and pressure issues have been able to be identified earlier. TaKaDu is particularly good at detecting underground leaks that would not have otherwise been reported to enable early repair.

This project is an ideal example of how we are working smarter to deliver significant benefits and savings for our customers, shareholders and the wider community.

The broader application of this technology across our entire water network is currently being investigated.

Using TaKaDu technology to improve our operational efficiency

265 OLYMPIC-SIZE SWIMMING POOLS OF WATER SAVED AS A RESULT OF INSTALLING TAKADU TECHNOLOGY




Outsourcing our fleet management services has achieved sustainable operational efficiencies and improved service delivery.


3

In 2013, we reviewed our organisation and identified strategies to further enhance performance in delivering services to customers. These strategies were to be bold, innovative and transformational, delivering long-term sustainable improvements, whilst enhancing customer experience and safety performance. At the start of the 2013/14 financial year, we set up a program to take the findings of the review forward, developing these opportunities through formal planning, validation and implementation processes to ensure the benefits are realisable and sustainable.

The Enterprise Excellence Program is directly influenced by our purpose, vision and strategic pillars, and provides a tangible way to link “what we need to focus on to succeed” to clear strategies of “how we will achieve success.” To date, the program has generated $18.1 million in sustainable operational efficiencies.

The program has improved revenue collection processes as well as streamlined and standardised corporate processes and centralised back-office operations. Other savings have been achieved by reducing our consultancy and accommodation costs and outsourcing our fleet management services.

In 2015, the program will deliver further operational expense savings, with future focused initiatives highlighting opportunities to remove a further $17 million through improved planned and responsive maintenance service delivery models, further process efficiency in back-office processes via a shared service implementation and optimising our operational and capital procurement spend.

Operational efficiencies of $18.1 million achieved this year

$18.1M SAVED IN SUSTAINABLE OPERATIONAL EFFICIENCIES IN 2013/14


Our values

Our organisational values (see page 11) support our purpose, vision and the development of a constructive culture. They provide guidelines for our employees on what behaviour is expected and how decisions should be made. We embrace and live our values every day.

Our workforce profile (total workforce 1,156)

PEOPLEWe are safe, adaptable, capable and committed to achieving our vision and living our values.

Key focus areas: • Create and embed a ‘no-harm’ workplace through employees who value safety.• Be a performance-orientated workforce with strong visible leadership.• Build a workforce that is adaptable, agile and change resilient.


By age Tenure

By gender By geographic region

2011/12 2012/13 2013/14

1200

1000

800

600

400

200

0

2011/12 2012/13 2013/14

100

70

40

10

90

60

30

0

80

50

20

18-25 1-5 years

25-39

Male

5-10 years

40-55

Female

10-20 years

Full-time equivalent (permanent)

Total employees (permanent)

Permanent retention rate

Permanent separation rate

55+ 20 years +

Brisbane - Office

Somerset - FieldScenic Rim - FieldLockyer Valley - FieldIpswich - FieldIpswich - OfficeBrisbane - Field




Key focus area: Create and embed a ‘no harm’ workplace through employees who value safety

• Achieved certification of our Safety Management System against both the AS4801 and OHSAS 18001 standards demonstrating our commitment to safety (see page 75).

• Achieved a 40% reduction in Lost Time Injuries during 2013/14. • Implemented three cultural programs – Respect and Integrity, Golden Rules and Safety in Design – to further influence

desired behaviours aligned to our corporate values.• Developed the 5-year Employee Wellness Program Plan demonstrating our commitment to the health of our employees.• Appointed an injury management provider to assist injured workers to return to duties.

Key focus area: Be a performance oriented workforce with strong visible leadership

• Achieved a significant uplift in preferred culture, as addressed through our cultural surveys. Senior Leaders’ experiences of constructive behaviours have increased 41% compared to 2013.

• Developed and implemented a new recognition program to recognise and reward employees (see page 77).• Became a Recognised Employer Partner with Certified Practising Accountants (CPA) Australia, which reflects our

commitment to the professional development of our employees. • Commenced debriefs of our Organisational Culture Inventory Survey to plan the actions needed to continually improve

on the outcomes of the survey.

Key focus area: Workforce to be adaptable, agile and change resilient

• Implemented a Change Management Framework and underpinning tools and resources, which have been provided to leaders to assist them in managing change.

• Commenced the Industrial Award Modernisation process, including a cross working group approach initiated with Seqwater and UnityWater which will enable greater consistency across our industry.




Total reportable injury frequency rate Rate 62 30

Organisational culture index Percentile improvement

in constructive behaviours

5 (from 2011

survey)7

Looking forward • Continual improvement in safety and employee health outcomes, building on the successful outcomes of 2013/14.• Further development of the preferred culture and leadership behaviours, building on strong performance in 2013/14.• Stronger understanding of current and future workplace skills, supported by training and employee development.



Our performance challenges and highlights

iQ Group driving a culture of innovation

As well as significantly contributing towards operational excellence by innovating to find new and improved ways to deliver our services, innovation at Queensland Urban Utilities (see page 59) has been pivotal in driving us towards our target culture.

In addition to generating innovations big and small, the objectives of the iQ Group are to build a culture of innovation underpinned by our cultural values, constructive behaviours and increased employee engagement in the workplace. The iQ Group is increasing morale through empowering employees to make changes and improvements. In its first six months of operation, innovation at Queensland Urban Utilities has actively engaged 215 employees.

Building a blue culture to improve our organisational performance

To benefit our employees and improve our effectiveness, this year we launched our Building the Blue program which aims to build a constructive culture. This involves conducting regular reviews of our culture, identifying and developing leadership behaviours, building pride through connecting employees to the wider purpose, bringing people together, reinforcing the new behaviours and aligning our internal and external brands.

One of the outcomes of this has been to look at leadership, what it means to lead at Queensland Urban Utilities, and develop an organisational leadership framework with strong links to build a constructive organisational culture.

The result was the Blue Leader program which is creating effective leadership which will drive enhanced organisational performance. According to Senior Leaders’ experiences of our culture, average constructive behaviours have increased by 41% compared to 2012/13.

Achieving our vision through the new Strategy, Culture and Values Program

During 2013/14, we implemented the Strategy, Culture and Values Program. This program focuses on creating the culture and instilling the values necessary to effectively develop and deploy our strategies that will enable us to achieve our purpose and vision (see page 29).

The program forms key components of both our governance and culture programs.

From a governance perspective, it focuses on the way we develop and deploy our five-year strategies to deliver our strategic direction, which will enable us to achieve our purpose and vision. The program involved approximately 70 executives, general managers, managers and team leaders across the business working collaboratively to agree our five-year goals and the strategies to achieve them, particularly what we need to achieve in 2014/15 to be on the right track.

From a culture and values perspective, it focuses on growing constructive, values-driven leadership influencing our preferred culture, reinforced through the development and deployment of our five-year goals. Through its governance and engagement framework, it enables all employees to directly or indirectly participate in the ongoing assessment and review of whether we are achieving our 2014/15 goals, and where we need to refocus, as an organisation, to achieve these goals.

As well as building a constructive culture and creating a consolidated focus, the program will ensure that all of our employees understand our short-term and long-term goals and how their roles contribute to these goals.


215 EMPLOYEES ACTIVELY ENGAGED IN INNOVATION


3Living our values: supporting those in need

In November 2013, a group of Queensland Urban Utilities employees initiated a fundraising effort to support the Red Cross in its Typhoon Haiyan Appeal in the Philippines, the purpose of which was to provide food, water, medicines and other supplies to affected communities.

Our employees dug deep, not just financially, but by baking goods to sell and organising competitions to increase the amount of funds raised. To show our support as an organisation, Queensland Urban Utilities matched employee contributions dollar for dollar, which resulted in $7,287 being donated to the appeal.

Closer to home, Queensland Urban Utilities employees initiated a Mater Little Miracles fundraising day on 23 May 2014 to raise money for research, equipment and education to give babies and children the best possible start to life.

A multi-cultural food fair, bake sales, competitions, barbeques and generous employee donations saw us raise more than $4,500 for the worthwhile cause. The fundraising day was in support of the 40-strong Queensland Urban Utilities team which ran the Brisbane Mater Little Miracles 5ks fun run. A further 15 employees were on hand at the event giving out free drinking water to thirsty runners (see pages 45-47) and speaking to residents about our West End Sewer Project (Mollison Street).

Queensland Urban Utilities’ sponsorship of Mater Little Miracles 5Ks for the past three years has been a very welcome addition to this long-standing Brisbane event. The enthusiastic and innovative participation of the Queensland Urban Utilities team adds to the experience of the day and contributes to the significant fundraising results that in turn fund medical research and clinical care supporting babies and children at Mater Hospital.Nigel Harris, Chief Executive Officer, Mater Foundation


CHAPTER 3: OUR PERFORMANCESupporting our people

Enhancing employee attraction and retention

In 2013/14, we upgraded our Learning Management System to help train our employees and create effective management oversight of our workforce’s current skill levels. This year, we focused on defining mandatory skill requirements and improved quality of training for our key operational roles.

We also revised our performance planning processes to ensure they more effectively align to our employees’ skills and reflect our desire to build a constructive culture. For example, we have introduced initiatives to build leadership and team effectiveness through coaching and employee development conversation skills. These initiatives will contribute to an increase in empowerment and engagement of employees.

This year, we agreed a partnership with an external specialist service provider for permanent recruitment services which has resulted in the attraction of quality candidates and a better understanding of how we are perceived in the market.

Improving safety with our dedicated Strategic Safety Group

The Strategic Safety Group leads, reviews and sets direction for the implementation of all Queensland Urban Utilities safety programs. The group, which is made up of the Executive Leadership Team, Chairs of safety committees, and the Safety Manager, makes decisions to foster a ‘zero harm’ culture.

This structure was developed in consultation with the business and has been specifically designed to enable effective consultation and communication on safety issues across our entire organisation.

The committee structure has three distinct layers, namely:

• Strategic Safety Group: Sets the strategic direction for all our safety initiatives and is responsible for creating and embedding our safety culture.

• Project Oversight Group: In consultation with the other committees, this group is responsible for providing steering and oversight on 'whole of business' safety projects.

• Line Committees: These committees bring together employees and management to discuss safety issues and are responsible for implementing best practice safety solutions for their workgroups. The line committees include:

• Office Administration Safety Committee. • Operational Safety Committee.

– Petroleum and Gas Advisory Group. – Electrical Safety Advisory Group.

• Major Projects and Contractor Safety Advisory Group.

Promoting a work/life balance

We continue to promote work/life balance for our employees by offering a range of options, including:

• flexible work arrangements, such as nine-day fortnights, staggered working weeks/fortnights and part-time agreements,

• part-time employment options i.e. where two or more employees share one full-time position, each working on a fractional basis,

• flex-time for all employees covered by the Enterprise Bargaining Agreement (up to 14.5 ordinary hours may be accrued for redemption on an agreed basis),

• the ability for employees to work from a remote workplace (e.g. their home), while electronically maintaining a presence in their primary office,

• access to various paid and unpaid leave arrangements, such as annual and long service leave (either at full pay or half pay).

Supporting the training and development of our people

This year, we established a training committee to oversee the quality, effectiveness and value of the training we provide. We also built a training, learning and development plan into our strategic goals and initiatives. For all critical operational roles, we completed a training needs analysis to identify all training, licenses, tickets, qualifications and immunisations our people require to safely and effectively complete their work.

The upgrading of our organisational Learning Management System to a new cloud learning system will improve our people management by integrating and automating this learning system with our human resources system.


3Ensuring Equal Employment Opportunities

This year we continued to focus on equal employment opportunities with our panel approach to recruitment. Interview panels with a mix of gender, positions and experiences encourage equity in recruitment. Equal employment opportunities are included in our recruitment guidelines and training. We use a merit-based, fair, equitable and accountable approach whereby candidates are assessed against competency and behaviours in line with our values and the inherent requirement of the role. We also ensure we have the same behavioural interview questions for all candidates which address capability rather than issues such as age and status.

Improving performance management

In 2013/14, we developed and began implementing a Leadership Development Strategy. The core elements of this strategy are to:

• develop clear expectations of our leaders and how leadership contributes to building a constructive culture,

• give leaders 360 degree feedback to build their levels of self-awareness regarding their impact on others,

• invest in our leaders’ mindset and skill development, specifically:

• building skill in resilience, perseverance and determination,

• building coaching skills, • building safety leadership skill in our

operational leaders.

This year, we started building clear procedures, policies and training linked to the employee lifecycle (entry, management, exit) in order to improve leadership throughout the organisation.

Consulting to improve industrial and employee relations

We continue to participate in consultative mechanisms provided for in the Queensland Urban Utilities Certified Agreement 2011 (Enterprise Bargaining Agreement 1) and other arrangements provided for by the Industrial Relations act 1999.

The Employment Consultative Committee (ECC) is the recognised committee for industrial matters between Queensland Urban Utilities, relevant unions and employee representatives. More than 76% of employees are covered by collective bargaining agreements.

Although the offer made was fair and reasonable, in August 2013, the proposed Enterprise Bargaining Agreement was voted down by employees. Consequently, to overcome this challenge, we continued to negotiate with the unions. During these negotiations, the Industrial Relations Act 1999 was amended to the extent that all collective agreement negotiations were placed on hold until the Queensland Industrial Relations Commission (QIRC) had completed an Award Modernisation process.

Due to amendments to the Industrial Relations Act 1999, we currently have in place a ‘continuing Enterprise Bargaining Agreement’ which has a nominal expiry date of 17 October 2014. The agreement cannot be renegotiated prior to the finalisation of the Award Modernisation process and no earlier than 60 days prior to the nominal expiry date.

We are also undergoing a number of organisational change processes and, where required, we consult with the relevant unions either individually or through the ECC, as provided for in the termination, change and redundancy provisions set out in the relevant industrial instruments.


PEOPLE CASE STUDY


Lisa Christensen, Senior Project Manager, working safely during the construction of the award-winning Goodna Sewage Treatment Plant Upgrade Project (see page 56).


3

Since our formation, the safety of our workers and the communities we serve has been our number one priority. Whether we are operating our extensive network of assets, hosting community events, or answering the phones in our call centre, we always put safety first.

Therefore we are proud of the significant safety milestones we have achieved during the last 12 months. One such milestone has been the successful realignment and certification of our Safety Management System against both the AS4801 and OHSAS 18001 standards.

These standards are widely recognised, both nationally and internationally, as being the gold standards for effective occupational safety management systems. So, by achieving certification against them, we have taken a significant step forward in terms of improving the overall effectiveness of our system.

In addition to achieving these two safety accreditations, we have achieved a 62% reduction in our reported injuries over two years and in 2014 we recorded three consecutive months with no lost time injuries.

We respect our employees and encourage them to enjoy a healthy work/life balance, both physically and mentally. To help them achieve this, we have introduced programs such as Respect and Integrity and weight loss at work. We also actively encourage participation in community activities, such as charity fun runs and the Global Corporate Challenge Workplace Health and Wellness Program.

At Queensland Urban Utilities, we firmly believe safety is for everyone, everywhere, every day.

Prioritising health and safety at work

62% REDUCTION IN TOTAL INJURIES DUE TO OUR ONGOING IMPROVEMENTS


PEOPLE CASE STUDY


Jaya Kumar, Engineer, one of the 40 Queensland Urban Utilities fun runners at the 2014 Mater Foundation’s Mater Little Miracles 5ks.


3

We are committed to building a positive workplace where employees are valued and outstanding performance is recognised and rewarded. In October 2013, the Board approved our new Reward and Recognition Program, URBANleGend. The URBANleGend Program provides a framework to proactively recognise and foster collaborative, performance-oriented attitudes amongst our workforce.

This multi-level program comprises five distinct categories ranging from instant peer-to-peer recognition through to formal awards that recognise and reward employees for outstanding work performance.

What would an URBANleGend be without an URBANHerO Award? This pinnacle award is presented at the discretion of the Chief Executive Officer for extraordinary performance or inspirational acts within the organisation or community.

Recipients of the URBANinsPiratiOn Award are determined through a formal nomination process and formally recognised at our biannual CEO Roadshows. As the name suggests, the award is presented to those who inspire greatness in others through their achievements, in alignment with our organisational values.

The URBANaCHieVer Award is available for managers to recognise the efforts of an individual or team that has gone above and beyond by delivering exceptional performance.

The URBANCOMMitMent Award is Queensland Urban Utilities’ way to thank employees for the commitment they have shown the business through their years of service. This award is presented informally to employees who have dedicated five or 10 years of service, and formally, at an awards ceremony, to those that have dedicated 15 years or more.

The URBANsPirit Award gives employees the opportunity to provide instant peer-to-peer recognition by presenting an URBANsPirit card to another employee they see demonstrating our organisational values.

Recognising and rewarding our people

URBANHERO (CEO discretion)

URBANINSPIRATION (six monthly/annual nomination process)

URBANACHIEVER (group/team level as manager’s discretion)

URBANCOMMITMENT (six monthly)

URBANSPIRIT (instant peer to peer)


Every year, Queensland Urban Utilities removes and treats 107,000ML of sewage and conducts 28,000 tests to monitor the quality of water released into waterways. Without treatment, this waste would harm wildlife and the environment. Our water and sewerage services enable the quality of life that our customers enjoy.


4CHAPTER 4: CORPORATE GOVERNANCEThe aSX Corporate Governance Principles and Recommendations are the basis upon which Queensland Urban Utilities demonstrates its commitment to sound corporate governance performance and practices.

Our BoardThe Queensland Urban Utilities Board comprises eight independent, non-executive members, including the Chairman. The appointments were made in accordance with the provisions of the South-east queensland Water (Distribution and Retail Restructuring) Act 2009.

During 2013/14, members of the Queensland Urban Utilities Board were:

• Geoff Harley (Chairman),• Bernard Ponting (Deputy Chairman),• Dennis Cavagna,• John Cotter (appointed January 2014),• Diana Eilert,• Paul Emmerson,• Phil Kesby,• Len Scanlan.

Profiles of each Board member are provided on pages 22-23.

Role of the board

The Board’s role includes deciding the strategies and the operational, administrative and financial policies to be followed. The Board also ensures that Queensland Urban Utilities performs its functions and exercises its powers in a proper, effective and efficient manner, and that it complies with planning and reporting requirements.

The Board’s role and responsibilities are set out in a Board Charter, and include, but are not limited to:

1. Setting the organisation’s purpose and vision. 2. Establishing Queensland Urban Utilities’ corporate

strategies, policies and financial objectives and monitoring the implementation of these strategies and policies and overseeing the achievement of financial objectives.

3. Establishing and monitoring a framework to ensure compliance with control and accountability systems.

4. Informing and approving business and capital investment plans.

5. Approving annual and long term budgets including operational and capital expenditure.

6. Tariff and price determination.

7. Establishing and monitoring a framework to ensure financial statements are prepared, certified and tabled in Parliament.

8. Reporting to shareholders on the performance of Queensland Urban Utilities.

To discharge its obligations and responsibilities, the Board operates to an authorities and delegation instrument, which describes the powers vested in and reserved by the Board.

Outside of these reserved powers, the Chief Executive Officer has the authority to manage and oversee the day-to-day operations and activities of Queensland Urban Utilities.

In accordance with the provisions set out in the South-east Queensland Water (Distribution and Retail Restructuring) act 2009, the Chief Executive Officer can sub-delegate some of her powers to employees through an instrument of sub-delegation.

Board committees

The Board has four sub-committees to assist in the execution of its duties. Each committee operates to a Terms of Reference, which sets out its roles and responsibilities, composition, structure, membership requirements and the manner in which it is to operate.

In 2013/14, the Board reviewed the structure, form, membership and accountabilities of its sub-committees.

Since formation, Queensland Urban Utilities has had three Board sub-committees: the Audit, Finance and Risk Committee; the Strategic Asset Management Committee; and Human Resources and Community Committee.

In the interest of good governance and ensuring our committees align to the environment in which we operate, it was agreed to refresh our existing committees and establish a fourth committee during 2013/14.

Effective from October 2013, the Board’s sub-committees are now known as the:

• Audit and Risk Committee.• Finance and Pricing Committee.• People and Safety Committee.• Strategic Asset Management Committee.

A summary of attendance of Board members at committee meetings is set out in the table on page 81.


Audit and Risk Committee

The Audit and Risk Committee is chaired by Paul Emmerson, with John Cotter and Len Scanlan as standing members. Geoff Harley, Chairman, attends in an ex officio capacity. Mark Letica, Executive Leader Governance is the executive sponsor for the committee.

The role of the committee is to provide independent assurance to the Board on the suitability of Queensland Urban Utilities’ accountability and control framework.

As per its Terms of Reference, the Audit and Risk Committee’s responsibilities include, but are not limited to:

• reviewing our risk assessment and management framework,

• evaluating the procedures to ensure Queensland Urban Utilities complies with laws and regulation,

• reviewing the contingency planning frameworks, processes and deliverables in place,

• reviewing and endorsing the internal audit plans,• reviewing internal audit reports,• overseeing the adequacy of Queensland Urban Utilities’

accounting internal control system,• reviewing external audit reports.

The Audit and Risk Committee has observed the terms of its Terms of Reference and has had due regard for the Queensland Treasury’s Audit Committee Guidelines.

Finance and Pricing Committee

The Finance and Pricing Committee, which was set up this year, is chaired by Diana Eilert, with Len Scanlan and Dennis Cavagna as standing members. Geoff Harley, Chairman, attends in an ex officio capacity. Denise Dawson, Chief Financial Officer is the executive sponsor for the committee.

Its role is to provide independent assurance to the Board on the suitability of Queensland Urban Utilities’ capital, finance and pricing approaches, requirements and recommendations.

Specifically, the Finance and Pricing Committee's responsibilities include, but are not limited to:

• reviewing the short- and long-term funding arrangements, debt profile and capital structures,

• working with rating agencies, including the Queensland Treasury Commission, on credit ratings,

• establishing and managing Queensland Urban Utilities’ pricing strategy, pricing principles and framework,

• reviewing long-term regulatory framework development and Queensland Competition Authority reviews,

• reviewing the annual budgeting process, including assumptions for operating and capital expenditure,

• reviewing revenue strategies.

People and Safety Committee

The People and Safety Committee is chaired by Bernard Ponting, with Paul Emmerson and John Cotter as standing members. Geoff Harley, Chairman, attends in an ex officio capacity. The Executive Leader People and Safety is the executive sponsor for the committee.

The primary function of this committee is to provide advice to the Board to ensure that Queensland Urban Utilities establishes appropriate human resource strategies and policies, and to promote a culture that supports the delivery of our strategic direction.

The People and Safety Committee's responsibilities include, but are not limited to:

• recommending to the Board the appointment or termination of the executive, including the Chief Executive Officer,

• recommending to the Board the remuneration of Board members and the executive, including the Chief Executive Officer,

• evaluating the performance of the Chief Executive Officer and her direct reports, and recommending remuneration outcomes to the Board,

• monitoring the culture of the organisation,• recommending to the Board the succession plans for the

Chief Executive Officer and her direct reports, and for critical roles within the organisation,

• reviewing major organisational structure changes proposed by the Chief Executive Officer,

• reviewing and recommending industrial agreements.

CHAPTER 4: CORPORATE GOVERNANCE


4Strategic Asset Management Committee

The Strategic Asset Management Committee is chaired by Dennis Cavagna, with Diana Eilert and Phil Kesby as standing members. Geoff Harley, Chairman, attends in an ex officio capacity. Paul Belz, Executive Leader Planning, is the executive sponsor for the committee.

The role of the committee is to support the Board by overseeing and providing advice on Queensland Urban Utilities’ asset management strategies, policies and systems. The scope of the committee includes all material capital investments (water, sewerage and information, communication and technology activities).

The Strategic Asset Management Committee’s responsibilities include, but are not limited to:

• reviewing the capital delivery program, focusing on major projects and significant variance to the program delivery,• reviewing long-term strategic asset management planning with a five to 10 year view,• reviewing and ensuring compliance with relevant statutory and environmental responsibilities, and customer service standards,• reviewing Queensland Urban Utilities’ five-year plan on an annual basis to ensure it is still relevant and economical,• keeping abreast of domestic and international innovation, including any new products and strategies that may benefit

our operations.

Conflict of interest

The Board is acutely aware of its members’ obligations to avoid conflicts of interest between their duties to Queensland Urban Utilities and their personal interests.

A Conflicts of Interest policy has been in place for the duration of the reporting period.

The policy sets out the obligation of Board members to declare any material interests relevant to the activities of Queensland Urban Utilities, and to ensure that conflict arising from any material interest is noted and managed in accordance with the policy.

Board member meeting attendance 2013/14

Member board

Audit, Finance & Risk

Committee (from

July 2013 to Oct 2013)

Human Resources & Community Committee

(from July 2013 to

Oct 2013)

Finance & Pricing

Committee (Oct 2013 to June 2014)

People & Safety

Committee (from

Oct 2013 to June 2014)

Audit & Risk Committee

(from Oct 2013 to June 2014)

Strategic asset

Management Committee

Ordinary Extra- ordinary

Meetings held 12 1 2 3 5 3 3 10

Geoff Harley 12 1 0 3 5 3 2 9

Len Scanlan 12 1 2 N/A 5 N/A 3 N/A

Diana Ellert 10 0 N/A 3 5 N/A 1 5

Phil Kesby 11 1 N/A 2 N/A N/A N/A 6

John Cotter 6 1 N/A N/A N/A 2 2 N/A

Paul Emmerson 12 1 2 N/A N/A 3 3 N/A

Dennis Cavagna 10 1 N/A N/A 5 N/A N/A 10

Bernard Ponting 11 1 2 N/A N/A 3 N/A N/A


Our OrganisationReporting to Shareholders

In accordance with the requirements of the Participation agreement, we provide the following documents to our shareholders each financial year:

• a quarterly performance report within one month after the end of each of the first three quarters,

• an annual report within four months of the end of each financial year.

The information presented in these documents assists our shareholders in making informed assessments of our operations, our financial performance and position, and emerging issues that may impact on our performance and/or our capacity to make a Participation Return. They also provide updates on the achievement of our strategic objectives.

Also in accordance with the Participation Agreement, we provide our shareholders with a copy of our audited accounts each financial year.

Executive Advisory Groups

To assist the Executive Leadership Team in fulfilling its responsibilities, four advisory bodies have been established: • the Procurement and Projects Advisory Group,• the Investment Committee,• the Enterprise Excellence Program Steering Committee,• the Strategic Safety Group.

Risk Management

Our Risk and Resilience Framework ensures our ability to manage risk by embedding a culture and capability that can rapidly adapt and respond to dynamic changes, demands, opportunities and threats – thereby safeguarding the sustainability and reputation of the business.

Our Risk and Resilience Framework was developed and implemented in accordance with the aS/NZS iSo 31000:2009 Risk management – Principles and Guidelines. This enables the achievement of our strategic direction and compliance with relevant legal and regulatory requirements. It also facilitates risk-based planning and decision-making, promotes and supports a risk-focused culture, and improves organisational resilience.

Our risks are managed at the strategic, group and operational levels. Our strategic risks are reviewed every six months to support the strategic planning process, and have the potential to materially impact the achievement of our strategic direction.

External Scrutiny

The Queensland Audit Office is Queensland Urban Utilities’ external auditor under the terms of the financial accountability act 2009. Besides the report on financial statements, no other government body, including the Queensland Audit Office, issued any other external scrutiny reports regarding the operations of Queensland Urban Utilities during the reporting period.

Internal Audit

Internal audit is an independent function within Queensland Urban Utilities’ Office of the Chief Executive Officer which assists the Chief Executive Officer in the discharge of her responsibilities under the financial accountability act 2009, and provides an independent review of internal system controls.

In 2013/14, Queensland Urban Utilities operated under a co-sourced internal audit model with KPMG and Brisbane City Council’s Assurance Security and Ethical Standards Unit providing internal audit services. These services were performed in accordance with an approved Internal Audit Charter, which is consistent with relevant audit and ethical standards. The services were also performed in accordance with the Board-approved 2013/14 Internal Audit Plan. This Internal Audit Plan had regard for, and was prepared based on Queensland Urban Utilities’ strategic risk profile. In addition, continuous assurance data reviews were carried out by Brisbane City Council on a quarterly basis.

The internal audit function was conducted independently of management and authorised auditors and the deployment of the program had due regard to Queensland Treasury’s Audit Committee Guidelines.

The recommended actions arising from internal audits were assigned to an accountable employee within Queensland Urban Utilities. These actions were allocated a set due date for completion which was determined based on an assessment of the risk, existing controls, the nature and complexity of the action and resource requirements. We conducted eight internal audits in 2013/14 including but not limited to payroll, procurement/contract management, Enterprise Excellence Program, customer complaints, environmental compliance, IT security and the control centre.



4Queensland Urban Utilities monitors, tracks and manages audit findings and recommendations through a centralised internal audit reporting system.

The Audit and Risk Committee maintains a watching brief over the status of audit actions as part of its ordinary committee meetings. In 2013/14, 100% of the internal audit actions due to be completed by 30 June 2014 were completed.

The internal audit function realised a number of achievements in 2013/14 including but not limited to the successful transition to the new co-sourced internal audit model, the completion of the internal audit program ahead of schedule and the successful pilot of a remote site assessment audit program.

Code of Conduct

Board members and employees are required to maintain the highest ethical standards in discharging their responsibilities and duties.

Decisions made are consistent with our organisational values, our policies and procedures, and overarching legislative requirements.

Regular Code of Conduct training is scheduled in by our Managed Learning System

Official misconduct

Matters that raise a suspicion of official misconduct are referred to the Crime and Corruption Commission. Where necessary, investigations are undertaken by Brisbane City Council’s Assurance Security and Ethical Standards Unit. Outcomes of the investigations are reviewed and monitored.

Public Sector Ethics Act 1994

Queensland Urban Utilities’ Code of Conduct was implemented in the latter half of 2011, with a minor review of content conducted in late 2013.

To ensure we actively promote the importance of a fair work place, we commenced rolling out our Respect and Integrity Program to support our Code of Conduct in December 2013.

Mandatory for all Queensland Urban Utilities employees, the Respect and Integrity Program consists of face-to-face training for all managers and supervisors, and an online training program for all employees.

The program consists of four key elements of fairness: equity, diversity, harassment and bullying. Each element has been closely linked to the current Code of Conduct.

To support this program, we have introduced Respect and Integrity contact employees and established an independent Respect and Integrity Committee, which meets regularly to monitor and review our performance against this program.

Strategic Framework

Our strategic framework (see figure 4 on page 29) enables us to plan and deliver our strategic direction.

Our Board sets the strategic direction for the organisation. This strategic direction is documented and formalised through our five-year Corporate Plan. Our strategic direction describes how we will achieve our purpose and vision. It is guided by our four strategic pillars, each of which has key focus areas, supported by desired outcomes.

Our Executive Leadership Team, supported by general managers and managers, applies a rigorous planning methodology to agree the goals we must achieve over the next five years and objectives we must achieve in the next financial year. These goals and objectives will enable us to deliver our strategic direction and ultimately achieve our purpose and vision.

Our Operational Plan, prepared for our shareholders under the Participation Agreement, is a summary of what we will achieve in the next financial year. It considers the objectives agreed for the next financial year, as well as services we will deliver to our customers and associated risks we will manage in delivering those services.

Supporting the Operational Plan are our internal group plans. These plans outline the accountabilities, actions and performance outcomes for each group, that will

contribute towards delivering our strategic direction.

Board strategic planning workshop

The Board convened in September 2013 for its annual strategic planning workshop. An outcome of this workshop was that the Board reaffirmed its support of our vision, purpose and four strategic pillars. At the workshop the Board also considered a number of key strategic matters relating to each of our four strategic pillars as well supporting our new operating model. This sets out a blueprint for our future service delivery strategy and is detailed in the case study on page 61.


Information Systems and Record Keeping

Under the provisions of the Public Records act 2002, we are required to make and keep full and accurate records of our activities and have regard to any relevant policy, standards and guidelines made by the Queensland State Archives about the making and keeping of public records.

We have a strong commitment to improving record keeping practices and complying with the Public Records act 2002 – Information Standard 40: Record keeping and Information Standard 31: Retention and Disposal of Public Records.

In 2013/14, we launched an electronic Document and Records Management System Project (eDRMS Project) to implement an enterprise-wide eDRMS solution to manage physical and electronic records.

The eDRMS project closed on 30 June 2014 with a small number of remaining activities handed over to their respective operational areas. This project enables us to maximise the value of records with consistent and timely capture and compliance management. It will also improve accessibility, reduce duplication and promote information-sharing across the organisation.

In addition, we have been working towards a paperless environment in which we will manage mail and records electronically to help sustain the environment and improve our records management processes.

Other Disclosures

Being accountable and transparent to our shareholders, customers, community, and stakeholders is a cornerstone principle for Queensland Urban Utilities. We are committed to providing timely, accurate and comprehensive reporting on our performance, and remaining accountable for our actions and decisions.

We produced a corporate plan for the period 2013–18 to set out our future direction, goals and priorities as defined by the Board. The purpose of this plan is to guide us in our forward action. In developing this plan, we consulted our shareholders.

In the interests of transparency, the corporate plan is publicly available on our website www.urbanutilities.com.au

The corporate plan is supported by our 2013/14 Operational Plan, which identifies our success targets for the current financial year and outlines the strategies we have in place to meet them. The operational plan identifies key risks to service delivery and mitigation strategies. It also articulates our operational performance measures including our customer service standards.



4Tables 1 and 2, below, respectively fulfil State Government disclosure obligations for overseas travel and consultancies respectively.

Name of member and position

Destination and date Reason for travel

Cost to Queensland Urban Utilities

Peter best General Manager Infrastructure Maintenance and Service Reliability

New Zealand 11-13 February 2014

Attended the Water Services Association of Australia Asset Management Committee meeting

$1,600

Louise Dudley Chief Executive Officer

New Zealand 11-13 February 2014

Attended the Water Services Association of Australia Asset Management Committee meeting

$1,600

Table 1 – Overseas travel

Table 2 – Consultancies

Consultancies $000

Operational Consultancies

Development Services Model 822

Expert Specialist Financial, Treasury and Taxation Advice 197

Governance and Business Resilience 267

Information Technology 384

Infrastructure Planning 584

Infrastructure Master Plans 591

Organisational Efficiency Reviews 472

Safety, Culture and Other Human Resource Consultancies 114

Specialist Engineering Technical Advice 226

Other 14

3,671

Capital Consultancies

Engineering and Design 6,044

Infrastructure Feasibilities 2,433

Information Technology 283

8,760

Total expenditure for consultancies 12,431


We provide water and sewerage services to 1.4 million customers. When our customers turn on a tap in their homes and workplaces, water comes out. When they flush the toilet, waste disappears. Water and sewerage service provision is an invisible but essential service that enriches the lives of our customers every day.

5


CHAPTER 5: FINANCIAL PERFORMANCEExplaining the financial statements

Financial statements are formal records of an organisation’s financial performance and financial standing. Our financial statements consist of five key elements.

1. Statement of Comprehensive Income (see page 91)

2. Statement of Financial Position (see page 92)

3. Statement of Cash Flows (see page 93)

4. Statement of Changes in Equity (see page 94)

5. Notes to the Financial Statements (see page 95)

1. Statement of Comprehensive Income

The Statement of Comprehensive Income shows our revenue and expenses for the financial year as well as our profit after tax.

2011 $m

2012 $m

2013 $m

2014 $m

revenue

Utility Charges 688 751 804 872

Developer Contributions – Cash 87 82 48 69

Developer Donated Assets 55 44 57 50

Flood Proceeds 10 - 8 39

Sundry Revenues 33 35 34 39

Total Revenue 874 912 951 1,069

Operating Expenses

Bulk Water Purchases 183 224 271 314

Employee Expenses 80 85 97 113

Materials & Services 140 147 171 180

Depreciation 166 144 151 171

Finance Costs 116 123 118 98

Total Operating Expenses 685 724 808 876

Profit Before Tax 189 188 143 193

Taxation Expense 58 56 40 60

Profit After Tax 131 132 103 133

revenue

This year, our revenue is $118 million more than last financial year. This is mainly due to an increase in developer contributions after subdued development in 2013 and the receipt of non-recurrent funds associated with prior years’ wet weather events. It includes insurance and grants under the National Disaster Relief and Recovery Arrangements.

Utility Charges (81%)Developer Contributions – Cash (6%)Developer Donated Assets (5%)Flood Proceeds (4%)sundry revenues (4%)


CHAPTER 5: FINANCIAL PERFORMANCE

Expenses

Operating expenses for 2014 are $68 million higher than last financial year. This is primarily due to an increase in bulk water costs, business restructuring costs and higher depreciation associated with the high capital program from 2013. Offsetting this is a reduction in finance costs due to the renegotiation of shareholder debt resulting in a lowering of the interest rate applied to the debt.

Bulk Water Purchases (36%)Employee Expenses (13%)Materials & Services (21%)Depreciation (19%)Finance Costs (11%)

Profit after tax

The net result for 2013/14, as reported in the financial statements, is a surplus of $133 million. This result is above the forecasted result of $117.4 million for 2013/14 contained in our 2013-18 Corporate Plan.

$140m

$160m

2011 2012 2013 2014

$120m

$100m

$80m

$60m

$40m

$20m

$0m

2. Statement of Financial Position

The Statement of Financial Position shows what we own (our assets), what we owe (our liabilities) and our net worth.

$m 2011 2012 2013 2014

Total Assets 4,604 4,795 5,165 5,321

Total Liabilities 2,025 2,159 2,310 2,403

Net Assets/Total Equity 2,579 2,636 2,855 2,918

5


Total Liabilities

Total Assets

assets

Our assets are primarily made up of infrastructure (water supply network and sewerage network), land, buildings, fleet and IT systems.

Liabilities

Our liabilities consist primarily of shareholder and Queensland Treasury Corporation debt, as well as money owed to suppliers for goods and services received and employees for leave entitlements.

$5400m

$2500m

$5200m

$2400m

$5000m

$2300m

$4800m

$2200m

$4600m

$2100m

$4400m

$2000m

$4200m

$1900m

2011

2011

2013

2013

2012

2012

2014

2014

3. Statement of Cash Flows

The Statement of Cash Flows shows the activities during the year that represent a change in our cash balance.

4. Statement of Changes in Equity

The Statement of Changes in Equity summarises the movements in each component of equity.

5. Notes to the Financial Statements

The Notes to the Financial Statements provide additional information about the financial statements.



Statement of Comprehensive Income 91

Statement of Financial Position 92

Statement of Cash Flows 93

Statement of Changes in Equity 94

Index to notes to the financial statements 951 Reporting entity 95

2 Basis of preparation 95

3 Significant accounting policies 97

4 Utility charges 106

5 Contributions, grants and subsidies 106

6 Insurance 106

7 Interest received 106

8 Fees and charges 106

9 Other revenue 106

10 Employee expenses 107

11 Bulk water purchases 107

12 Materials and services 107

13 Depreciation and amortisation 108

14 Finance/ borrowing costs 108

15 Loss on disposal of assets 108

16 Other expenses 108

17 Cash and cash equivalents 109

18 Trade and other receivables 110

19 Inventories 110

20 Other current assets 110

21 Property, plant and equipment reconciliation 111

22 Intangible assets 113

23 Key assumptions used in valuation 114

24 Income tax expense/(benefit) 116

25 Interest bearing liabilities 118

26 Employee benefits 120

27 Trade and other payables 120

28 Other current liabilities 120

29 Contributed equity 121

30 Asset revaluation surplus by class 122

31 Financial instruments 122

32 Operating leases 127

33 Commitments 127

34 Contingencies 128

35 Superannuation 129

36 Funds held in trust 134

37 Key management personnel and remuneration 135

38 Related parties 140

39 Significant weather events 142

40 Financial sustainability 142

Management Certificate 143

Independent Auditor's Report 144

Central SEQ Distributor-Retailer Authority Contents For the year ended 30 June 2014

The following financial statements and notes to the financial statements, concluding with the independent auditor's report on page 144, represent our audited financial statements for the year ended 30 June 2014.

5


Central SEQ Distributor-Retailer Authority Statement of Comprehensive Income For the year ended 30 June 2014

notes

2014 $'000

2013 $'000

revenue

Utility charges 4 872,397 803,835

Contributions, grants and subsidies 5 133,839 105,342

Insurance 6 24,339 7,979

Interest received 7 2,154 1,451

Fees and charges 8 33,172 29,936

Other revenue 9 3,175 2,396

Total operating revenue 1,069,076 950,939

Expenses

Employee expenses 10 113,159 97,009

Bulk water purchases 11 313,844 271,254

Materials and services 12 170,529 161,277

Depreciation and amortisation 13 167,213 146,852

Finance/borrowing costs 14 97,817 117,704

Loss on disposal of assets 15 3,742 4,400

Other expenses 16 9,566 9,233

Total operating expenses 875,870 807,729

Profit before income tax equivalent 193,206 143,210

Income tax equivalent 24 59,755 40,029

Profit for the year 133,451 103,181

Other comprehensive income

Items that will not be reclassified to profit or loss:

Increase in asset revaluation surplus 30 - 154,023

Defined benefit plan actuarial gains (losses) 1,305 167

Total other comprehensive income 1,305 154,190

Total comprehensive income 134,756 257,371

The accompanying notes form part of these statements.


CHAPTER 5: FINANCIAL PERFORMANCECentral SEQ Distributor-Retailer Authority Statement of Financial Position As at 30 June 2014

notes

2014 $'000

2013 $'000

Current assets

Cash and cash equivalents 17 94,048 56,291

Trade and other receivables 18 30,019 28,069

Inventories 19 2,536 2,529

Current income tax receivable 20 - 277

Other current assets 20 150,758 128,425

Total current assets 277,361 215,592

Non current assets

Property, plant and equipment 21 5,020,208 4,933,315

Intangible assets 22 20,381 15,008

Defined benefit plan 2,644 780

Total non-current assets 5,043,233 4,949,103

Total assets 5,320,594 5,164,695

Current liabilities

Trade and other payables 27 46,685 41,385

Employee benefits 26 34,931 34,007

Current income tax payable 28 8,924 -

Other current liabilities 28 98,357 97,210

Provision for participation rights 29a 41,136 22,638

Total current liabilities 230,033 195,240

Non current liabilities


Employee benefits 26 2,344 2,991

Interest bearing liabilities 25 2,064,895 2,019,895

Deferred tax liabilities 24c 96,847 83,130

Total non current liabilities 2,172,346 2,115,042

Total liabilities 2,402,378 2,310,281

net assets 2,918,216 2,854,414

Equity

Contributed equity 2,538,793 2,538,793

Asset revaluation surplus 30 154,023 154,023

Retained earnings 225,400 161,598

Total equity 2,918,216 2,854,414


5


Central SEQ Distributor-Retailer Authority Statement of Cash Flows For the year ended 30 June 2014

notes

2014 $'000

2013 $'000

Cash flows from operating activities

Inflows:

Receipts from customers 968,921 862,761

Developer cash contributions 58,723 89,980

Interest received 2,219 1,627

GST input tax credits from ATO 35,857 42,366

GST collected from customers 2,171 659

1,067,891 997,392

Outflows:

Employee expenses (118,541) (103,461)

Suppliers and services (521,970) (445,138)

Finance and borrowing costs (102,246) (123,104)

Income tax (37,395) (58,940)

GST paid to suppliers (35,857) (42,366)

GST remitted to ATO (2,140) (622)

(818,149) (773,631)

Net cash provided by (used in) operating activities 17b 249,742 223,761

Cash flows from investing activities

Inflows:

Proceeds from sale of plant and equipment 1,703 1,047

Outflows:

Payments for property, plant and equipment (206,230) (315,151)

Net cash provided by (used in) investing activities (204,527) (314,104)

Cash flows from financing activities

Inflows:

Borrowings 45,000 145,000

Outflows:

Participation rights payments 29 (52,457) (76,173)

Net cash provided by (used in) financing activities (7,457) 68,827

Net increase (decrease) in cash and cash equivalents 37,757 (21,515)

Cash and cash equivalents at the beginning of the financial year 56,291 77,806

Cash and cash equivalents at the end of the financial year 17 94,048 56,291



CHAPTER 5: FINANCIAL PERFORMANCECentral SEQ Distributor-Retailer Authority Statement of Changes in Equity For the year ended 30 June 2014

notes

Retained earnings

$'000

asset revaluation

surplus $'000

Contributed equity $'000

Total $'000

Balance as at 01 July 2012 97,301 - 2,538,793 2,636,093

Contributions by and distributions to Participants

Participation return to Participants 29a (39,051) - - (39,051)

Total contributions by and distributions to Participants

(39,051) - - (39,051)

Profit for the year 103,181 - - 103,181


Defined benefit plan actuarial gains 167 - - 167

Increase in asset revaluation surplus 30 - 154,023 - 154,023

Total comprehensive income for the year 103,348 154,023 - 257,371

Balance as at 30 June 2013 161,598 154,023 2,538,793 2,854,414

Balance as at 01 July 2013 161,598 154,023 2,538,793 2,854,414

Contributions by and distributions to Participants

Participation return to Participants 29a (70,954) - - (70,954)

Total contributions by and distributions to Participants

(70,954) - - (70,954)

Profit for the year 133,451 - - 133,451


Defined benefit plan actuarial gains 1,305 - - 1,305

Total comprehensive income for the year 134,756 - - 134,756

Balance as at 30 June 2014 225,400 154,023 2,538,793 2,918,216


5


Central SEQ Distributor-Retailer Authority Notes to the financial statementsFor the year ended 30 June 2014

1. Reporting entity

The Central SEQ Distributor-Retailer Authority (the Authority) was established under the South-east Queensland Water (Distribution and Retail Restructuring) act 2009 (the Act) and is a Statutory Body under the financial accountability act 2009 and the Statutory Bodies Financial Arrangements Act 1982 (SBFA).

Under the Act, governance arrangements for the new Authority were established in a Participation Agreement, which became operative from 25 June 2010. The participants are Brisbane City, Ipswich City, Lockyer Valley Regional, Scenic Rim Regional and Somerset Regional Councils.

The assets, liabilities, instruments and employees of the five participating Councils’ water distribution and sewerage operations were transferred to the Authority as a result of the Act and by the Queensland Government gazettal of the First and Second Transfer Schemes on 29 June 2010 and 30 September 2010 respectively. The value of the net assets transferred from the Councils to the Authority has been calculated using a regulatory asset base (RAB) valuation approved by the Queensland Government to represent the market value of the business. The final transfer notice was completed prior to 30 June 2012.

In return for the net assets transferred to the Authority, each Council participates in the Authority based on its share of the RAB, comprising debt and participation rights as agreed by the five Councils and the Authority in the ratio of 40 to 60.

Section 10(1) of the Act states that the Authority expires at the end of 99 years from when it was established on 3 November 2009. On expiration (a) the Authority’s assets and liabilities become the assets and liabilities of its participants; and (b) the participants become the successor in law of the assets and liabilities rateably in accordance with their participation rights under the Participation Agreement.

The primary functions of the Authority are to do the following for its geographic area –

(a) purchase water; (b) distribute water; (c) provide the following services to customers – i. water services; ii. wastewater services; (d) charge customers for relevant services; (e) manage customer enquiries, service requests and

complaints; (f) on and from 1 July 2010 – i. perform functions under the South-east

Queensland Water (Distribution and Retail Restructuring) Act 2009 and the Water Supply act relating to trade waste and seepage water as a sewerage service provider; and

ii. perform particular planning and development assessment functions under the Planning act;

(g) anything else likely to complement or enhance a function mentioned in paragraphs (a) to (f).

The Authority trades as Queensland Urban Utilities and is a “for profit” entity. The registered office is Level 2, 15 Green Square Close, Fortitude Valley, Brisbane, QLD 4006.

2. Basis of preparation

(a) Statement of compliance

These financial statements are general purpose financial statements and have been prepared for the period 1 July 2013 to 30 June 2014 in accordance with:

• Australian Accounting Standards (AASBs) and Interpretations;

• the financial accountability act 2009;• the financial and Performance Management Standard

2009; • the Financial Reporting Requirements for Queensland

Government agencies (as applicable to statutory bodies); and

• applying the exemptions under the South-east Queensland Water (Distribution and Retail Restructuring) act 2009.



2. Basis of preparation (contd)

(a) Statement of compliance (contd)

The financial statements were authorised for issue by the Board on 19 August 2014.

(b) Measurement of fair values

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the following fair value hierarchy, based on the data and assumptions used in the most recent specific appraisals:

• level 1 – quoted market prices in active markets for identical assets and liabilities;

• level 2 – inputs (other than quoted prices included within level 1) that are observable, either directly or indirectly; and

• level 3 – inputs for the asset or liability that are substantially derived from unobservable inputs.

Queensland Urban Utilities recognises any evident transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

(c) Presentation currency and comparatives

Amounts included in the financial statements are in Australian dollars and have been rounded to the nearest $1,000 or, where that amount is $500 or less, zero, unless disclosure of the full amount is specifically required. Amounts shown in this financial report may not add to the correct sub-totals or totals due to rounding.

Comparative information has been restated where necessary to be consistent with disclosures in the current reporting period.

(d) Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future period affected.

In particular, information about specific areas of estimate, uncertainty and critical judgement in applying accounting policies that have a significant effect on the amounts recognised in the financial statements are described in the following notes:

Note 3 (a) (i) – Utility chargesNote 3 (a) (ii) – Non-cash contributionsNote 3 (n) – Employee benefitsNote 21 – Property, plant and equipment reconciliationNote 22 – Intangible assetsNote 23 – Key assumptions used in valuation Note 34 – Contingencies

(i) Impairment Queensland Urban Utilities assesses impairment at each reporting date by evaluating conditions specific to Queensland Urban Utilities that may lead to impairment of assets. In accordance with the provisions of AASB136 impairment of assets, where an indicator of impairment exists, the recoverable amount of the asset is determined. Value-in-use and fair value less costs of disposal calculations performed in assessing recoverable amounts incorporate a number of key assumptions, refer to note 23.

(ii) Provision for impairment of receivables A provision for impairment of receivables has been made at year end, refer note 18.


5



2. Basis of preparation (contd)

(e) Going concern

The financial statements have been prepared on a going concern basis in accordance with AASB 101 Presentation of financial Statements.

(f) New and revised accounting standards

Queensland Urban Utilities did not voluntarily change any of its accounting policies for the year ended 30 June 2014. The only Australian Accounting Standard changes applicable for the first time as from 2013/2014 that have had an impact on Queensland Urban Utilities’ financial statements are those arising from AASB 13 fair Value Measurement and AASB119 Employee Benefits, as explained below.

AASB 13 fair Value Measurement sets out a new definition of “fair value” as well as new principles to be applied when determining the fair value of assets and liabilities. This requirement will apply to all assets and liabilities (excluding leases) that are measured and/or disclosed at fair value. However, the measurement and disclosure requirements under AASB 13 do not apply to the value-in-use methodology applied under AASB136 impairment of assets, nor do the disclosure requirements apply to assets measured under the fair value less costs of disposal valuation methodology applied under AASB136.

AASB119 Employee Benefits changes requirements for the measurement of employer liabilities and/or assets arising from defined benefit plans and the measurement and presentation of changes in such liabilities/assets. As Queensland Urban Utilities has only a small number of staff remaining in the defined benefit plan for LG Super, the impact of this change will be immaterial.

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning on or after 1 July 2014. Queensland Urban Utilities has not applied any amendments or standards that have been issued but are not yet effective. Queensland Urban Utilities does not plan to early adopt any standards or interpretations. Expected impacts of new or amended standards with future commencement dates applicable to 2014/2015 are set out below:

AASB9 financial instruments and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] will become effective for reporting periods beginning on or after 1 January 2017. The main impacts of these standards on Queensland Urban Utilities are that they will change the requirements for the classification, measurement and disclosures associated with the Authority’s financial assets. Under the new requirements, financial assets will be more simply classified according to whether they are measured at amortised cost or fair value. Pursuant to AASB 9, financial assets can only be measured at amortised cost if two conditions are met. One of these conditions is that the asset must be held within a business model whose objective is to hold assets in order to collect contractual cash flows. The other condition is that the contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

All other Australian accounting standards and interpretations with future commencement dates are either not applicable or have no material impact on Queensland Urban Utilities.

3. Significant accounting policies

(a) Revenue

(i) Utility charges

Utility charges are recognised as revenue on an accrual basis in the period to which they relate. Queensland Urban Utilities issues utility accounts quarterly and monthly with water consumption billed in arrears and the fixed service charge generally billed in advance. An estimation of unbilled water consumption is performed monthly, based on historical information of the customers’ usage and accrued revenue is recognised for this amount. Accruals or prepayments are recognised for fixed access charges billed in arrears or advance.



3. Significant accounting policies (contd)

(a) Revenue (contd)

(ii) Contributions

Developer contributions Queensland Urban Utilities finances part of its capital works infrastructure program through non-refundable contributions from developers. These contributions received may be in the form of a non-cash contribution (assets) and/or a cash contribution.

Non-cash contributions Non-cash contributions from developers such as water and sewerage infrastructure are recognised as revenue and as non-current assets when the authority obtains control of the assets and becomes liable for any ongoing maintenance. These contributed assets are recognised at their fair value.

Cash contributionsNon-refundable cash contributions from developers towards the cost of water supply and sewerage infrastructure are collected by Councils on behalf of Queensland Urban Utilities and transferred to Queensland Urban Utilities when received. Cash developer contributions for specific assets are recognised as a liability where that specific asset has not been constructed at balance date. Cash contributions for assets already constructed or for which there are no performance obligations are recognised as revenue on receipt.

(iii) Grants and subsidies

Grants and subsidies that are non-reciprocal in nature are recognised as revenue in the year in which control is obtained. Where grants and subsidies are reciprocal in nature, revenue is recognised over the term of funding arrangements.

(iv) Interest

Interest income is recognised as it accrues in the Statement of Comprehensive Income, using the effective interest method.

(v) Insurance

Revenue from an insurance claim is recognised as a receivable on the Statement of Financial Position when it is near certain that an insurance claim will be accepted.

Revenue from an insurance claim is recognised off-balance-sheet as a contingent asset when the likelihood of the event is considered probable but not near certain.

(vi) Other services

Revenue from rendering of a service is recognised upon the delivery of the service to the customers and includes fees and charges from the approved fees and charges schedule and from quotes for services.

(b) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, all cash and cheques receipted but not banked at year end, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

(c) Receivables

Debtors are recognised at the amounts due at the time of invoicing, sale or service delivery for example the agreed purchase/contract price. Settlement of these amounts is required within 30 days from invoice date.

The collectability of receivables is assessed periodically with provision being made for impairment.

All known bad debts are written off periodically and/or as at 30 June. Subsequent recoveries of amounts previously written off are recognised via an adjustment to other expenses in the Statement of Comprehensive Income.

(d) Inventories

Inventories are measured at the lower of cost and net realisable value. Cost is assigned on a weighted average basis and includes expenditure incurred in acquiring the inventories and bringing them to their existing condition. Inventory is reviewed on a regular basis to recognise obsolescence, slow moving inventories and damaged goods. Any write down of inventories are recognised as an expense.


5



(e) Property, plant and equipment

RecognitionItems of property, plant and equipment with a total value of less than $5,000, except for network assets, are treated as an expense in the year of acquisition. All other items of property, plant and equipment are capitalised.

All network assets are capitalised. The term “network asset” is applied to an accumulation of individual items or components operating as a cohesive whole in the provision of a particular service. Computer equipment is to be treated as a network asset. Interconnected infrastructure assets are treated as a network asset.

Capital and operating expenditureLabour and materials expenditure, which are directly attributable to the purchase or construction of an asset, is considered capital expenditure. Expenditure necessarily incurred in either maintaining the operational capacity of assets or ensuring that their original life estimates are achieved, is considered maintenance and is treated as an expense as incurred.

AcquisitionAcquisitions of property, plant and equipment are initially recorded at cost. Cost is determined as the value of the assets given as consideration plus costs incidental to the acquisition, including architects’ fees, engineering design fees and all other establishment costs.

Donated (non-cash) contributions of items of property, plant and equipment are recognised as assets and revenue at fair value.

Revaluation of non-current physical and intangible assetsLand, buildings and infrastructure assets are measured at fair value in accordance with AASB116 Property, Plant and equipment and AASB13 fair Value Measurement. These assets are reported at their revalued amounts, being the fair value at the date of valuation, less any subsequent accumulated depreciation and impairment losses where applicable.

Assets within each class of property, plant and equipment carried at fair value are subject to ongoing review and revalued as necessary, so that the carrying amount of each class of asset does not materially differ from its fair value at the reporting date.

Where intangible assets have an active market, they are measured at fair value, otherwise they are measured at cost.

Plant and equipment and fleet assets are measured at cost.

The fair values reported by Queensland Urban Utilities are based on appropriate valuation techniques that maximise the use of available and relevant observable inputs and minimise the use of unobservable inputs.

Queensland Urban Utilities reviewed fair value methodologies in light of the new principles in AASB 13. This review did not result in a material impact on the values for the affected property, plant and equipment classes.

Any revaluation increment arising on the revaluation of an asset is credited to the asset revaluation surplus, except to the extent it reverses a revaluation decrement previously recognised as an expense. A decrease in the carrying amount on revaluation is charged as an expense, to the extent it exceeds the balance, if any, in the revaluation surplus for that asset.

On revaluation, accumulated depreciation is restated proportionately with the change in the carrying amount of the asset and any change in the estimate of remaining useful life.

Materiality concepts under AASB1031 Materiality are considered in determining whether the difference between the carrying amount and fair value of an asset is material.

Except for cash and cash equivalents, none of the valuations of assets or liabilities are eligible for categorisation into level 1 of the fair value hierarchy. As 2013/2014 is the first year of application of AASB 13 there were no transfers of assets between fair value hierarchy levels during the period. Specific fair value information is outlined in note 23.



CHAPTER 5: FINANCIAL PERFORMANCECentral SEQ Distributor-Retailer Authority Notes to the financial statementsFor the year ended 30 June 2014


(e) Property, plant and equipment (contd)

DepreciationLand is not depreciated. Other property, plant and equipment is depreciated on a straight-line basis so as to allocate the net cost or revalued amount of each asset, less its estimated residual value, progressively over its estimated useful life. These estimates are reviewed annually. The depreciation method applied to assets is reviewed annually. Details of estimated standard useful lives of assets are set out below.

Items or components that form an integral part of a complex infrastructure asset are recognised as a separate asset. These items or components may be replaced during the useful life of the complex asset. Each component is depreciated over its individual life or life of the complex asset if shorter.

Property, plant and equipment assets are depreciated from the date acquired or installed and ready for use or, for internally constructed assets, from the time an asset is completed and commissioned ready for use.

Class of Fixed Asset Depreciation Rate Useful Life

Buildings and improvements 1.25% - 6.66% 15-80 years

Plant and equipment: Fleet vehicles Fleet machineryComputer and communications equipmentOther

10% - 33.33%4.55% - 25%5% - 33.33%1.66% - 20%

3-10 years4-22 years3-20 years5-60 years

Infrastructure:Water supply networkSewerage network

0.91% - 10%1% - 10%

10-110 years10-100 years

(f) Construction work in progress

Property, plant and equipment under construction at year end is valued at cost, including the cost of materials and direct labour and an appropriate proportion of overheads excluding administration costs. Construction work in progress is assessed regularly and where costs cannot be capitalised, they are expensed. Assets under construction are not depreciated until they are complete and commissioned ready for use.

(g) Intangible assets

Purchased SoftwareAmounts paid for computer software in excess of the recognition threshold of $10,000 are capitalised and then amortised on a straight-line basis over the expected period of benefit (3 – 20 years) (note 22).

Goodwill The goodwill paid on the acquisition of the SAS Laboratories business has been capitalised and is being amortised on a straight-line basis over a period of 5 years.

Useful lives for intangible assets are reviewed annually to ensure these reflect the probability of continuing future benefits. Intangible assets are also assessed for impairment (refer note 23).

Subsequent expenditure on intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in the Statement of Comprehensive Income as incurred.

Amortisation is based on the cost of an asset less its residual value.

5



(g) Intangible assets (contd)

It has been determined that there is not an active market for any of the intangible assets. As such, the assets are recognised and carried at cost less accumulated amortisation and any accumulated impairment losses.

(h) Impairment of non-current assets

Each non-current physical and intangible asset is assessed for indicators of impairment annually. If an indicator of possible impairment exists, Queensland Urban Utilities determines the asset's recoverable amount. Any amount by which the asset's carrying amount exceeds the recoverable amount is recorded as an impairment loss. The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. Refer note 23.

An impairment loss is recognised immediately through profit or loss in the Statement of Comprehensive Income, unless the asset is carried at a revalued amount. When the asset is measured at a revalued amount, the impairment loss is offset against the asset revaluation surplus to the extent available.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation surplus increase.

(i) Leases

A distinction is made in the financial statements between finance leases that effectively transfer from the lessor to the lessee substantially all risks and benefits incidental to ownership, and operating leases, under which the lessor retains substantially all risks and benefits.

Queensland Urban Utilities is a statutory body under the Statutory Bodies financial arrangements act 1982 and cannot enter into a finance lease without the approval of the Queensland Treasurer.

As at 30 June 2014, Queensland Urban Utilities had not entered into any finance leases.

Operating lease payments are representative of the pattern of benefits derived from the leased assets and are expensed in the periods in which they are incurred.

(j) Investments

Term deposits in excess of three months are reported as investments, with deposits of less than three months being reported as cash equivalents.

(k) Payables

Trade creditors are recognised upon receipt of the goods or services ordered and are measured at the agreed purchase/contract price net of applicable discounts other than contingent discounts. Amounts owing are unsecured and are generally settled on 30 day terms.

(l) Financial instruments

A financial instrument is recognised if Queensland Urban Utilities becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if Queensland Urban Utilities’ contractual rights to the cash flows from the financial assets expire or if Queensland Urban Utilities transfers the financial instrument to another party without retaining control of substantially all risks and rewards of the asset. Financial liabilities are derecognised if Queensland Urban Utilities’ obligations specified in the contract expire or are discharged or cancelled.

Queensland Urban Utilities is not party to any derivative financial instruments and does not enter into transactions for speculative purposes.

Non-derivative financial instrumentsNon-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit and loss, any attributable transaction costs.





(l) Financial instruments (contd)

Subsequent to initial recognition non-derivative financial instruments are measured as described below.

Financial instruments are classified and measured as follows:

• Cash and cash equivalents – held at fair value through profit or loss,

• Receivables – held at amortised cost,• Payables – held at amortised cost,• Borrowings – held at amortised cost.

(m) Loan liabilities

(i) Queensland Treasury Corporation (QTC)

(a) General purpose borrowings – Queensland Urban Utilities borrows from QTC to fund a range of non-specific capital projects undertaken.

Repayments are made monthly in accordance with the underlying borrowing rate and after adjustment for new borrowings and earlier repayments.

Apportionment of the payment between finance costs and debt redemption will vary according to interest rates. At year end, the outstanding QTC loan balance is disclosed at book value.

(b) Specific borrowings – Queensland Urban Utilities borrows from QTC to fund a range of specific and targeted projects undertaken.

Repayments are made in accordance with the arrangements set up for the specific loans, including frequency of loan repayments and new borrowings.

(c) Queensland Urban Utilities has access to a working capital facility with QTC - refer note 17(c).

(ii) Participants’ loans

At its inception, Queensland Urban Utilities’ Participating Councils provided the Authority with separate fixed rate loans, which were due to expire on 30 June 2013. Prior to their expiry, these loans were extended for a further 10 years under separate loan agreements.

These loans are now subject to an annually reset fixed rate; the initial fixed rate for the 2013/2014 financial year was 4.98% with the loans requiring monthly interest-only payments for 10 years from 1 July 2013. The Queensland Treasurer approved the extension of these loans in accordance with the SBFA.

(n) Employee benefits

Employee benefits relate to amounts expected to be paid to employees for annual leave, leave in lieu of statutory holidays worked and overtime, long service leave, sick leave, workers' compensation and superannuation.

Payroll tax and workers’ compensation insurance are a consequence of employing employees, but are not counted in an employee’s total remuneration package. They are not employee benefits and are recognised separately as employee related expenses.

Wages and salaries Wages and salaries due but unpaid at reporting date are recognised in the Statement of Financial Position at the current salary rates.

annual leave Accrued annual leave is recognised in current liabilities (employee benefits) and represents the amount that Queensland Urban Utilities has a present obligation to pay resulting from employees' services provided up to balance date. The accrual has been calculated at nominal amounts based on remuneration rates that would be required to be paid if the liability was settled at balance date and includes related on-costs.

time in lieu Accrued leave in lieu is recognised in current liabilities (employee benefits) and represents the amount which Queensland Urban Utilities has a present obligation to pay resulting from employees' services provided up to balance date. The accrual has been calculated at nominal amounts based on remuneration rates that would be required to be paid if the liability was settled at balance date and includes related on-costs.


5



(n) Employee benefits (contd)

long service leave The provision for long service leave represents the present value of the estimated future cash outflows to be made by Queensland Urban Utilities resulting from employees' services provided up to balance date.

The provision comprises amounts that Queensland Urban Utilities has a present obligation to pay resulting from employees' services provided up to balance date and an actuarial estimate of future obligations, taking into account future increases in wage and salary rates, periods of service and experience of employee departures. Related on-costs have also been included. These are reported as current liabilities (employee benefits).

Amounts that Queensland Urban Utilities does not have a present obligation to pay at balance date are discounted using the rates attaching to national government securities at balance date that most closely match the terms of maturity of the related liabilities. This amount is reported as a non current liability (employee benefits).

Sick leave The provision for sick leave represents staff entitlements under arrangements that existed prior to 30 June 1996. The reported balances reflect Queensland Urban Utilities present obligation to employees resulting from employees services provided up to 30 June 1996 at which point sick leave ceased to vest (for example employees from this date were no longer entitled to cash equivalents payments for unused sick leave). Accordingly, the vested sick leave entitlement is effectively 'frozen' with remaining balances predominantly paid on termination of those entitled employees who were in service prior to 30 June 1996.

The provision has been calculated at nominal amounts based on remuneration rates as at 1 July 1996 and includes related on-costs and CPI adjustments.

All other sick leave is non-vesting, and an expense is recognised as leave is taken.

Superannuation Local Government Superannuation Scheme (LG Super)Queensland Urban Utilities contributes to LG Super for employees under both the defined benefit scheme and the accumulation superannuation scheme. Queensland Urban Utilities has no liability to or interest in LG Super other than the payment of the statutory contribution. Any amount by which either scheme is over or under funded would only affect future benefits of employees and is not an asset or liability of Queensland Urban Utilities. Accordingly, there is no recognition in the financial statements of any over-or-under funding of LG Super. Refer to note 35.

Termination benefitsTermination benefits are payable when employment is terminated by Queensland Urban Utilities before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. Termination benefits are recognised at the earlier of when Queensland Urban Utilities can no longer withdraw the offer of those benefits and when Queensland Urban Utilities recognises costs for a restructuring. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer.

Key executive management personnel and remunerationKey executive management personnel and remuneration disclosures are made in accordance with part B section 5 of the Financial Reporting Requirements for Queensland Government Agencies. Refer to note 37 for the disclosures on key executive management personnel and remuneration.

Board RemunerationThe Participation Agreement discloses the remuneration and benefits of Board Members and the Chairperson. Reimbursements for reasonable travelling, accommodation and other expenses incurred by a Board Member while attending Board Meetings or otherwise in connection with the business of Queensland Urban Utilities, are not included in Board remuneration.





(n) Employee benefits (contd)

To the extent permitted by law, Queensland Urban Utilities must indemnify each Board Member against a liability of that person and the legal costs of that person. Queensland Urban Utilities has an appropriate insurance coverage for Directors and Officers liability.

Detail of payments to each Board Member is included at note 38.

(o) Provision for restructuring

A provision for restructuring costs is recognised when Queensland Urban Utilities has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. Restructuring provisions include employee termination payments.

(p) Trust funds

Funds held in the trust account include deposits lodged to guarantee performance and unclaimed amounts. Queensland Urban Utilities performs only a custodian role in respect of these funds and because they cannot be used for Queensland Urban Utilities purposes they are not considered revenue nor brought to account in the financial statements. They are disclosed in note 36 for information purposes only.

(q) Finance and borrowing costs

Finance and borrowing costs comprise:

• Bank charges; and• Interest expense on bank overdrafts, short-term and

long-term borrowings.

Finance and borrowing costs are recognised in the profit or loss using the effective interest rate method and are expensed in the period in which they are incurred. Finance and borrowing costs that are not settled in the period in which they are incurred are added to the carrying amount of the borrowing.

Finance and borrowing costs directly attributable to a specific capital project that necessarily takes a substantial period of time to prepare for its intended use, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

(r) Taxation

Income tax Queensland Urban Utilities is exempt from Commonwealth Government income taxation but is subject to the Local Government Tax Equivalents Regime (LGTER). Under the LGTER, Queensland Urban Utilities pays an income tax equivalent to its participating Councils in accordance with the requirements of its Participation Agreement.

Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

5



(r) Taxation (contd)

Goods and services tax Revenue, expenses, assets and liabilities are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

Other taxes Queensland Urban Utilities pays payroll tax to the Queensland Government Office of State Revenue on its activities. Fringe benefits tax is paid to the ATO in accordance with the relevant legislation.

(s) Contributed equity

In return for the net assets transferred to Queensland Urban Utilities, each Council participates based on its share of the RAB, comprising debt and participation rights as agreed by the five Councils and the Authority in the ratio of 40 to 60. The value of participation rights (60% of the RAB) has been brought to account as contributed equity in accordance with advice given by Queensland Treasury and Trade.

(t) Participation returns

Participation returns are paid to the participating Councils in accordance with the Participation Agreement. Payment is from post-tax operating profits (after adjustment for donated assets and other comprehensive income).

An estimate of the total amount of Participation Returns is calculated according to the Participation Return Policy and provided to the participating Councils no later than 30 May annually.

Between 1 and 15 November annually, Queensland Urban Utilities will provide to the participating Councils an estimate of the net profit for the first six months and advise the total amount of the Interim Participation Return.

The Final Participation Return for the year ended 30 June 2014 was declared on 19 May 2014, refer note 29.




2014 $'000

2013 $'000

4. Utility charges

Wastewater charges 376,001 356,019

Water base charges 106,812 101,133

Water consumption 389,584 346,683

872,397 803,835

5. Contributions, grants and subsidies

Developer contributions - cash 69,207 47,990

Developer contributions - donated assets 49,974 57,238

NDRRA funding 14,574 -

Grants and subsidies - other 84 114

133,839 105,342

6. Insurance

Insurance recovery 24,339 7,979

24,339 7,979

7. Interest received

Interest on arrears 741 417

Interest on investments 1,413 1,035

2,154 1,451

8. Fees and charges

Property connection fees 11,089 10,403

Professional fees 4,420 4,356

Recycled water 10,728 9,771

Other fees 6,935 5,406

33,172 29,936

9. Other revenue

Recovery for damage to services 378 488

Other revenue 2,797 1,908

3,175 2,396

5


notes2014 $'000

2013 $'000

10. Employee expenses

Salaries and wages 86,365 85,297

Annual leave expenses 7,867 8,548

Long service leave expenses 3,098 3,100

Employer superannuation contribution 12,071 12,471

Workers' compensation premium 1,183 1,642

Payroll tax 6,154 5,683

Other employee related expenses 22,205 9,553

138,943 126,294

Less: capitalised costs 3(f) (25,784) (29,285)

113,159 97,009

The number of employees as at 30 June including both full time and part time employees measured on a full time equivalent basis (reflecting Minimum Obligatory Human Resource Information (MOHRI)) is:

1,050 FTE

1,105 FTE

FTE at 30 June 2013 includes resourcingassociated with the separation from Brisbane City Council

11. Bulk water purchases

Bulk water purchases 313,844 271,254

Bulk water is purchased from SEQWater. The price for bulk water is currently set by the Queensland Govern-ment through theDepartment of Energy and Water Supply.

12. Materials and services

Materials and services 129,754 123,554

Consultancies and legal fees 5,084 5,762

Directors fees 38 415 419

Other supplies and consumables 35,276 31,541

170,529 161,277




2014 $'000

2013 $'000

13. Depreciation and amortisation

Buildings 1,295 748

Plant and equipment 853 1,217

Fleet 3,443 3,089

Water supply network 47,185 43,678

Sewerage network 107,032 95,519

Intangibles 7,405 2,601

167,213 146,852

14. Finance/ borrowing costs

Bank charges 2,165 2,280

QTC finance costs 21,609 14,568

Interest on Participants' debt 74,043 100,856

97,817 117,704

15. Loss on disposal of assets

Proceeds from disposal of assets (1,703) (1,047)

Less: Cost of assets disposed 5,445 5,447

3,742 4,400

16. Other expenses

Impairment of trade receivables 2,532 2,132

Insurance 3,044 3,568

Audit fees (internal and external)* 740 721

Rates and taxes 2,522 2,293

Remissions 25 21

Other 703 498

9,566 9,233

* Total external audit fees paid to the Queensland Audit Office relating to the 2013/2014 financial statements are estimated to be $280,300 (2013: $241,000). There are no non-audit services included in this amount.

5


2014 $'000

2013 $'000

17. Cash and cash equivalents

(a) Cash and cash equivalents

Cash on hand 1 1

Cash at bank 1,779 1,010

Short term deposits Commonwealth Bank 1,000 46,000

Short term deposits Queensland Treasury Corporation 91,268 9,280

Cash and cash equivalents in the Statement of Cash Flows 94,048 56,291

(b) Reconciliation of cash from operating activities

Cash flows from operating activities

Profit for the year 133,451 103,181

adjustments for:

Depreciation and amortisation 167,213 146,852

Loss on sale of property, plant and equipment 3,742 4,400

Donated assets (49,974) (57,238)

Change in assets and liabilities

Change in trade and other receivables (1,577) (1,280)

Change in inventories (7) (100)

Change in GST input tax credits receivable (144) 187

Change in accrued revenue (23,021) 21,484

Change in prepayment 677 (633)

Change in deferred tax assets 20,530 (6,798)

Change in trade and other payables 9,248 957

Change in provisions and employee benefits 1,376 4,526

Change in unearned revenue (2,423) (2,795)

Change in interest payable (2,040) (174)

Change in deferred tax liabilities (7,371) 11,196

Change in GST payable 62 (4)

Net cash from operating activities 249,742 223,761

(c) Funding facilities

Working capital facility QTC 100,000 100,000

Client specific pool QTC borrowing limit for 30 June 110,000 145,000

Overdraft facility - Commonwealth Bank 5,000 5,000

Total facility 215,000 250,000

Amount of facility undrawn 170,000 105,000




2014 $'000

2013 $'000

18. Trade and other receivables

Current

Utility debtors 32,877 29,388

Other debtors 6,325 5,417

Less: Provision for impairment (13,037) (10,507)

26,165 24,297

GST receivable 3,982 3,838

GST payable (128) (66)

3,854 3,772

Total 30,019 28,069

Movements in the provision for impairment

Balance at beginning of the year (10,507) (8,376)

Amounts written off during the year 2 1

(Increase)/decrease in provision recognised

in the operating result (2,532) (2,132)

Balance at the end of the year (13,037) (10,507)

19. Inventories

Inventories held for use 2,536 2,529

Inventory recognised as an expense 5,082 5,551

20. Other current assets

Prepayments 746 1,422

Accrued revenue 1,487 1,342

Accrued water consumption 118,042 105,825

Accrued base charges 8,727 8,487

Accrued interest 9 74

Accrued developer contributions 21,697 11,212

Other 50 63

150,758 128,425

Current income tax equivalent receivable - 277

150,758 128,702

5


2014 $'000

2013 $'000

21. Property, plant and equipment

Land:

At fair value 57,404 53,667

Buildings:

At fair value 18,610 17,240

Less: Accumulated depreciation (2,327) (1,761)

16,283 15,478

Plant and equpment:

At cost 6,290 5,989


3,770 4,126

Fleet:

At cost 25,578 23,997


15,991 16,357

Water supply network:

At fair value 1,996,856 1,931,820


1,816,505 1,798,595

Sewerage network:

At fair value 3,254,131 3,038,181


2,862,051 2,752,936

Work in progress:

At cost 248,203 292,156

Total 5,020,208 4,933,315

Queensland Urban Utilities has plant and equipment with an original cost of $0.6m and a written down value of zero still being used in the provision of services. These assets are expected to be replaced in 2014/2015.

Queensland Urban Utilities has fleet assets with an original cost of $0.07m that has been written down to a residual value of $0.03m still being used in the provision services. These assets are expected to be replaced within the next six months.

Queensland Urban Utilities has water supply network with an original cost of $3.4m and a written down value of zero still being used in the provision of services. It is not intended to retire these assets in the next twelve months.

Queensland Urban Utilities has sewerage network with an original cost of $4.7m and a written down value of zero still being used in the provision of services. It is not intended to retire these assets in the next twelve months.




21. Property, plant and equipment reconciliation


2014land

(level 3)Buildings (level 3)

Plant and equipment

(level 3)Fleet

(level 3)

Water supply

network (level 3)

Sewerage network (level 3)

Work in progress Total

2014$'000

2014$'000

2014$'000

2014$'000

2014$'000

2014$'000

2014$'000

2014$'000

Carrying amount at 1 July 53,667 15,478 4,126 16,357 1,798,595 2,752,936 292,156 4,933,315

Additions at cost 3,738 2,099 477 4,652 36,222 198,937 - 246,125

Donated assets - - - - 31,297 18,677 - 49,974

Disposals - - (23) (1,574) (2,466) (1,381) - (5,445)

Transfers between classes - - 44 - 41 (85) - 0

Additions to work in progress - - - - - - 214,950 214,950

Work in progress capitalised - - - - - - (258,904) (258,904)

Depreciation for the year - (1,295) (853) (3,443) (47,185) (107,032) - (159,808)

Carrying amount at 30 June 57,404 16,283 3,770 15,991 1,816,504 2,862,052 248,203 5,020,208

Carrying amount under the cost model

54,849 15,546 3,770 15,991 1,732,940 2,735,811 248,203 4,807,109

A fair valuation of Queensland Urban Utilities was undertaken as at 30 June 2014 using a discounted cash flow methodology which determined the fair value of these assets to be $5.196B. This involves inputs that are not based on observable market data. Therefore these assets have been categorised as level 3 in the fair value hierarchy and there have been no transfers between levels in the current and prior year. The Board considered that the carrying value (RAB) was not materially different to the fair value and elected not to revalue the assets.

Additions acquired during the financial year are valued at cost.

5


21. Property, plant and equipment reconciliation (contd)

2013 land BuildingsPlant and

equipment Fleet

Water supply

networkSewerage network

Work in progress Total

2013$'000

2013$'000

2013$'000

2013$'000

2013$'000

2013$'000

2013$'000

2013$'000

Carrying amount at 1 July 50,110 5,625 3,191 13,688 1,668,960 2,335,914 429,100 4,506,589

Additions at cost 1,001 10,045 3,180 5,906 57,323 358,878 - 436,333

Donated assets - - - - 32,892 24,346 - 57,238

Disposals - (181) (106) (1,071) (2,550) (1,775) - (5,683)

Transfers between classes - - (922) 922 - - - -

Revaluation increments 2,556 737 - - 85,647 131,092 - 220,032

Additions to work in progress - - - - - - 314,033 314,033

Work in progress capitalised - - - - - - (450,977) (450,977)

Depreciation for the year - (748) (1,217) (3,089) (43,678) (95,519) - (144,251)

Carrying amount at 30 June 53,667 15,478 4,126 16,357 1,798,595 2,752,936 292,156 4,933,315

Carrying amount under the cost model

51,111 14,741 4,126 16,357 1,712,948 2,621,844 292,156 4,713,283

A fair valuation of Queensland Urban Utilities was undertaken as at 30 June 2013 using a discounted cash flow methodology which determined the fair value of these assets to be $4.951B. Both the value in use and the fair value models indicated that an increase in the carrying amount of the assets was required. The Board considered that the carrying value (RAB) was materially different to the fair value and elected to revalue the assets to fair value.

Additions acquired during the financial year are valued at cost.

Software purchased Goodwill Total

2014$'000

2013$'000

2014$'000

2013$'000

2014$'000

2013$'000

Carrying amount at 1 July 14,134 1,854 874 - 15,007 1,854

Acquisitions at cost 12,779 14,644 - 1,111 12,779 15,755

Disposals - - - - - -

Amortisation for the year (7,187) (2,364) (218) (237) (7,405) (2,601)

Carrying amount at 30 June 19,725 14,134 656 874 20,381 15,008

Gross carrying amount 30,863 18,084 1,112 1,111 31,975 19,196

Accumulated amortisation (11,138) (3,950) (456) (237) (11,594) (4,188)

Carrying amount at 30 June - at cost 19,725 14,134 655 874 20,381 15,008

22. Intangible assets




23. Key assumptions used in valuation

(a) Valuation techniques and process used to determine level 3 fair values

A valuation using the income approach based on discounted cash flows (DCF) was undertaken by Queensland Urban Utilities as at 30 June 2014. The fair value has been independently reviewed by Queensland Treasury Corporation. The DCF technique involves estimating the future cash inflows, outflows and appropriate terminal value to be derived from the assets; and applying an appropriate discount rate to those future cash flows. Modelling has been performed for six scenarios and an average determined. The scenarios include the three terminal value inputs below for each of the two price paths below.

(b) Valuation inputs and relationships to fair value

The following table summarises the quantitative information about the significant unobservable inputs used in the level 3 fair value measurements.

Unobservable inputs Basis Range of inputs Relationship between unobservable inputs and fair value

Price path Board approved budget 2014/2015, Maximum allowable revenue (MAR) in specified years, Board approved Corporate Plan prior to MAR

(1) 2015/2016 (2) 2023/2024

The higher the annual revenue cashflow the higher the fair value

Operating expenditure growth rate

Average growth as forecast by management

2.50% The higher the annual growth in operating expenditure the lower the fair value

Capital expenditure growth rate

Average growth as forecast by management

2.50% Minimal impact on fair value as when cash outflows on capital are reduced, the MAR is also reduced

Terminal value Gordon Growth Model and Regulatory Asset Base (RAB)

(1) Gordon Growth Model (2) RAB (3) RAB x 1.1

The higher the terminal value the higher the fair value

Weighted average cost of capital (WACC)

Developed by management in consultation with independent experts

Pre-tax 7.16% equivalent to Post-tax 6.57%

The higher the weighted average cost of capital the lower the fair value. WACC is determined by the combination of cost of debt and cost of equity

5


(c) Impairment testing

Following assessment of the fair value, Queensland Urban Utilities undertook an impairment review. Internal indicators of impairment including obsolescence or physical damage, significant changes with an adverse effect and internal reporting concerning economic performance of an asset were considered, together with external sources of information such as changes in technological, market, economic or legal environment, changes in the regulated environment, policy and/or legislative changes and market interest rate changes.

The results of this assessment were that there were no internal or external indicators of impairment.

(d) Price path post 1 July 2014

Fair value modelling cash flows are estimated using the building block approach consistent with the Queensland Competition Interim Price Monitoring Framework.

The fairer Water Prices for Seq amendment Bill 2011 was amended in November 2012 to remove the requirement on our Participating Councils to develop and publish final price paths for water and sewerage charges for residential and small customers by 30 March 2013.

The resultant outcome is that Queensland Urban Utilities is required to announce draft water and sewerage prices by 31 March before the start of the financial year, with final prices to be announced by the end of June.




2014 $'000

2013 $'000

24. Income tax expense/(benefit)

Queensland Urban Utilities is exempt from Commonwealth Government income taxation but is subject to the Local Government Tax Equivalents Regime. Queensland Urban Utilities is only subject to the Commonwealth taxes being Fringe Benefits Tax (FBT) and Goods and Services Tax (GST).

(a) Income tax expense/ (benefit)

Current tax 46,485 33,000

Deferred tax 12,865 9,761

Adjustments for permanent movement from prior periods 405 (2,732)

59,755 40,029

(b) Numerical reconciliation of income tax expense to prima-facie tax payable

Surplus/ (Deficit) from operating activities before income tax expense/(benefit)

193,206 143,377

Tax at the the Australian tax rate of 30% 57,962 43,013

Non-deductible expenditure 5 9

Permanent difference – depreciation on acquired assets 2,682 1,242

Permanent difference – accrued leave provisions (1,364) (1,487)

Permanent difference – co-operative research centres and goodwill 65 59

Permanent overs/unders 405 (75)

Adjustments for permanent movement from prior periods

- Depreciation on acquired assets - 104

- Accrued Leave Provisions - (2,835)

Income tax expense/ (benefit) 59,755 40,029

5


2014 $'000

2013 $'000

24. Income tax expense/(benefit) (contd)

(c) Deferred tax equivalents

Deferred tax assets 16,003 36,532

Deferred tax liabilities (112,850) (119,662)

Net tax asset (liability) (96,847) (83,130)

Deferred tax equivalent asset comprises of:

Provisions 11,545 3,560

Accrued expenses 1,129 146

Plant and equipment 539 20,691

Other 2,790 2,986

Expenses capitalised for tax - 2,269

Amounts recognised directly in equity:

– Annual leave and Long Sevice Leave: SAS Laboratories - 6,880

Deferred tax assets 16,003 36,532

Deferred tax liability comprises of:

Contributed assets (60,624) (46,638)

Plant and equipment (51,432) -

Other (235) (7,014)

Amounts recognised directly in equity:

Other (559) -

Revaluation of plant and equipment - (66,010)

Deferred tax liabilities (112,850) (119,662)




2014 $'000

2013 $'000

25. Interest bearing liabilities

Non-current

QTC client specific pool loans 578,089 533,089

Participant loans 1,486,806 1,486,806

Total 2,064,895 2,019,895

No assets have been pledged as security for any liabilities.

All borrowings are in Australian dollar denominated amounts and an amount of $4,550,861 has been capitalised during the current year (2013: $7,506,199). There have been no defaults or breaches of the loan agreements during the year.

No fair value adjustment is made to the carrying amount of the borrowings.

The Weighted Average Borrowing Rate for QTC borrowings as at 30 June 2014 is 4.772% (2013: 4.73%). Interest payments are made monthly in arrears at rates ranging from 3.1% to 4.78% (2013: 4.7251% to 6.7834%).

5


2014 $'000

2013 $'000

25. Interest bearing liabilities (contd)

Carrying Amount Carrying Amount

Balances of outstanding loans were as follows:

Participant loans 1,486,806 1,486,806

QTC - client specific pool 578,089 533,089

2,064,895 2,019,895

QTC client specific pool loans

Opening balance 533,089 388,089

Add: Drawdown of debt 45,000 145,000

578,089 533,089

Participant loans

Brisbane City Council 1,241,282 1,241,282

Ipswich City Council 202,309 202,309

Lockyer Valley Regional Council 14,735 14,735

Scenic Rim Regional Council 14,676 14,676

Somerset Regional Council 13,804 13,804

1,486,806 1,486,806

Until 30 June 2013 the Participating Councils had provided loans to Queensland Urban Utilities under separate loan agreements (“Participating Local Government Fixed Rate Loan Agreement (Senior Debt)”), subject to a fixed interest rate of 6.7834% with monthly interest-only payments for 3 years from 1 July 2010. The Councils agreed to extend the loans under separate loan agreements (“Participating Local Government Resetting-Rate Loan Agreement (Senior Debt)”) until 30 June 2023. These loans are subject to an annually resetting fixed rate; the initial fixed rate for the 2013/2014 financial year was 4.98% with the loans requiring monthly interest-only payments for 10 years from 1 July 2013. The Queensland Treasurer has approved the extension in accordance with the SBFA.




2014 $'000

2013 $'000

26. Employee benefits

Current

Salaries and wages accrued 4,618 1,908

Annual leave 12,828 13,741

Long service leave 16,582 16,997

Time in lieu 630 953

Vested sick leave 273 408

34,931 34,007

Non-current

Long service leave 2,344 2,991

2,344 2,991

27. Trade and other payables

Current

Trade creditors 36,341 31,090

Infrastructure agreement liabilities 5,452 5,081

Other payables 4,891 5,214

46,685 41,385

non Current

Other - lease incentive 8,260 9,025

8,260 9,025

28. Other current liabilities

Current

Unearned revenue 1,401 3,824

Accrued expenses 1,023 927

Accrued interest 8,315 10,355

Accrued capital program costs 39,489 30,769

Accrued electricity 2,042 3,609

Accrued bulk water purchases 23,688 20,322

Provison for restructuring* 3,158 -

Other 19,241 27,405

98,357 97,210

Current income tax equivalent payable 8,924 -

107,281 97,210

* Provision for restructuring includes the establishment of the Shared Services function and the restructuring of the Planned Maintenance function.

5


2014 $'000

2013 $'000

29. Contributed equity

(a) Participation rights returns

In accordance with the Participation Agreement, the Board

declared the final participation rights payment of $41.14m

(2013: $22.64m) on 19 May 2014. Payment will be made on

30 September 2014. 41,136 22,638

An interim participation return was declared on 15 October 29,819 16,413

2013 and paid on 31 January 2014.

Total participation rights paid/payable 70,954 39,051

Amounts per Participant:

Brisbane City Council 60,315 33,196

Ipswich City Council 8,672 4,773

Lockyer Valley Regional Council 641 353

Scenic Rim Regional Council 739 407

Somerset Regional Council 586 323

70,954 39,051

Cash payments to Participants during the financial year 52,457 76,173

(b) Participation rights percentages

Section 5.2(c) of the Participation Agreement provides for the calculation of the participation rights of each Participant. Participation rights are determined based on each Participants' Regulatory Asset Base (RAB). The RAB is calculated in accordance with the method set out in the Ministerial Direction titled "Queensland Competition Authority Act 1997 section 10(e) Ministers’ Direction Notice" as published in the Queensland Government Gazette No. 46 on 9 October 2009.

The RAB and participation rights percentage for each Participant is:

RAB $'000 Participation Rights %

Brisbane City Council 3,596,905 85.007%

Ipswich City Council 517,150 12.222%

Lockyer Valley Regional Council 38,199 0.903%

Scenic Rim Regional Council 44,100 1.042%

Somerset Regional Council 34,969 0.826%

4,231,322 100.000%




30. Asset revaluation surplus by class

land BuildingsWater supply

networkSewerage network Total

$'000 $'000 $'000 $'000 $'000

Balance 1 July 2012 - - - - -

Revaluation increments 2,556 737 85,647 131,092 220,032

Deferred tax liabilities (767) (221) (25,694) (39,328) (66,010)

Balance 30 June 2013 1,789 516 59,953 91,765 154,023

Balance 01 July 2013 1,789 516 59,953 91,765 154,023

Revaluation increments - - - - -

Deferred tax liabilities - - - - -

Balance 30 June 2014 1,789 516 59,953 91,765 154,023

31. Financial instruments

(a) Financial risk management

Queensland Urban Utilities' activities expose it to a variety of financial risks including credit risk, liquidity risk and interest rate risk. Exposure to financial risks is managed in accordance with approved policies on financial risk management. These policies focus on managing the volatility of financial markets and seek to minimise potential adverse effects on the financial performance of Queensland Urban Utilities. Queensland Urban Utilities measures risk exposure for credit risk by ageing analysis, liquidity risk by maturity analysis and interest rate risk by sensitivity analysis.

(b) Categorisation of financial instruments

Queensland Urban Utilities has the following categories of financial assets and financial liabilities.

Category

notes2014 $'000

2013 $'000

Financial assets



Total 124,067 84,360

Financial liabilities


Interest bearing liabilities 25 2,064,895 2,019,895

Total 2,119,840 2,070,305

5


Category

notes2014 $'000

2013 $'000

Maximum exposure to credit risk



Total 124,067 84,360

31. Financial instruments (contd)

(c) Credit risk exposure

Credit risk exposure refers to the situation where a financial loss may be incurred as a result of another party to a financial instrument failing to discharge their obligation.

The maximum exposure to credit risk at balance date in relation to each class of recognised financial asset is the gross carrying amount of those assets inclusive of any provisions for impairment. No collateral is held as security relating to the financial assets held by the Authority. Queensland Urban Utilities has minimum exposure to credit risk due to the large number of small value receivables.

The following table represents the maximum exposure to credit risk based on contractual amounts net of any allowances:

No financial assets and financial liabilities have been offset and presented net in the Statement of Financial Position.

The method of calculating any provisional impairment for risk is based on past experience.

The recognised impairment provision for receivables is $13,036,986 for the current year (2013: $10,507,190).

No financial assets have had their terms renegotiated so as to prevent them from being past due or impaired, and are stated at the carrying amount as indicated.

Ageing of past due receivables and the amount of impairment is disclosed in the following table:

Receivables 2014 2013

Gross $'000

Impairment$'000

Gross $'000

Impairment$'000

Not past due 12,774 - 14,129 -

Past due 31-60 days 6,922 - 8,028 -

Past due 61-90 days 4,709 - 172 -

More than 90 days 14,797 13,037 12,476 10,507

39,202 13,037 34,804 10,507





(d) Liquidity risk

Liquidity risk refers to the situation where Queensland Urban Utilities may encounter difficulty in meeting obligations associated with financial liabilities. Queensland Urban Utilities is exposed to liquidity risk in respect of its trade and other payables and interest bearing liabilities. Liquidity risk is managed by maintaining sufficient cash deposits and undrawn facilities, both short and long term, to cater for unexpected volatility in cash flows.

The following table sets out the liquidity risk of the financial liabilities held by the Authority. It represents the contractual maturity of financial liabilities, calculated based on cash flows relating to the repayment of the principal amount outstanding at reporting date.


Financial liabilities 2014 Payable in Total

< 1 year $'000

1-5 Years$'000

> 5 years$'000

$'000

Participant loans - - 1,486,806 1,486,806

QTC client specific pool - - 578,089 578,089

Trade and other payables 46,685 8,260 - 54,945

46,685 8,260 2,064,896 2,119,841

Financial liabilities 2013 Payable in Total

< 1 year $'000

1-5 Years$'000

> 5 years$'000

$'000

Participant loans - - 1,486,806 1,486,806

QTC client specific pool - - 533,089 533,089

Trade and other payables 41,385 9,025 - 50,410

41,385 9,025 2,019,895 2,070,305

5


(e) Interest rate risk

Queensland Urban Utilities is exposed to interest rate risk through borrowings and cash deposited in interest bearing accounts. Queensland Urban Utilities manages its portfolio by setting, monitoring and adjusting the terms and duration of its loan portfolio as allowed under its commercial financing contract with QTC. The risk in borrowing is effectively managed through QTC's capacity to issue securities with variable terms allowing an appropriate duration for that of Queensland Urban Utilities.

Sensitivity analysis

The following sensitivity analysis depicts the outcome on net income if interest rates would change by +/- 1% from the year-end rate rates applicable to Queensland Urban Utilities' financial assets and liabilities. The calculations assume that the rate would be held constant over the next financial year, with the change occurring at the beginning of that year. This is mainly attributable to Queensland Urban Utilities' exposure to variable interest rates on its borrowings.

2014

-1% +1%

Net carrying amounts

$'000

Profit$'000

Equity $'000

Profit$'000

Equity $'000

Cash and cash equivalents 94,048 (940) (940) 940 940

QTC client specific pool 578,089 5,781 5,781 (5,781) (5,781)

Overall effect on profit and equity 4,840 4,840 (4,840) (4,840)

2013

-1% +1%

Net carrying amounts

$'000

Profit$'000

Equity $'000

Profit$'000

Equity $'000

Cash and cash equivalents 56,291 (563) (563) 563 563

QTC client specific pool 533,089 5,331 5,331 (5,331) (5,331)

Overall effect on profit and equity 4,768 4,768 (4,768) (4,768)





(f) Fair value

Queensland Urban Utilities does not recognise any financial assets or financial liabilities at fair value except cash and cash equivalents which is valued using level 1 inputs.

The fair value of trade and other receivables and payables is assumed to approximate the value of the original transaction, less any allowance for impairment.

The fair value of borrowings is notified by QTC. It is calculated using discounted cash flow analyses and the effective interest rate and is disclosed below:

2014 noteCarrying amount

$'000Fair value

$'000

Financial assets


94,048 94,048


Participant loans 25 1,486,806 1,486,806

QTC client specific pool 25 578,089 597,272

2,064,896 2,084,078

2013 noteCarrying amount

$'000Fair value

$'000

Financial assets


56,291 56,291


Participant loans 25 1,486,806 1,486,806

QTC client specific pool 25 533,089 537,959

2,019,895 2,024,765


5


2014 $'000

2013 $'000

32. Operating leases

(i) Leases as lessee

Non-cancellable operating lease rentals are payable as follows:

Less than one year 6,960 6,302

Between one and five years 25,762 24,713

More than five years 24,771 30,375

57,493 61,390

(ii) Leases as lessor

Non-cancellable operating leases rentals are receivable as follows:

Less than one year 168 162

Between one and five years 497 566

More than five years 327 410

992 1,138

33. Commitments

(i) Capital

Within one year 69,759 83,250

One year and no later than five years 32,218 41,423

More than five years - -

101,977 124,673

(ii) Other

Within one year 50,702 50,635

One year and no later than five years 89,751 62,097

More than five years - -

140,453 112,732




2014 $'000

2013 $'000

34. Contingencies

Contingent liabilities

A small number of claims are pending for contract variations, the maximum exposure of which is: 9,394 12,000

There are 4 (2013: 5) appeals in the Planning and Environment Court, it is not possible to make an estimate of the final amount payable at reporting date.

On or about 5 July 2012 Workplace Health and Safety Queensland (WHSQ) commenced a prosecution by way of Complaint and Summons against Queensland Urban Utilities in the Ipswich Magistrates Court alleging that Queensland Urban Utilities failed to discharge its obligations under section 28 of the WHS Act (Complaint) in that workers were exposed to risk to their health and safety arising out of the conduct of Queensland Urban Utilities' business or undertaking. The maximum penalty for this type of offence under the WHS Act is:Queensland Urban Utilities proposed an enforceable undertaking as an alternative to prosecution. WHSQ accepted Queensland Urban Utilities proposal, and on 6 February 2014 the enforceable undertaking was approved. On 12 May 2014 the Complaint was withdrawn by the Ipswich Magistrates Court.

- 1,000

Contingent assets

Reimbursement of costs associated with an incompletecontract is pending, the maximum exposure is: 4,659 5,930

Outstanding insurance claims for 2011 wet weather events.It is the intention of management to pursue further insurancerecoveries. No amounts for contingent assets have beenprovided in the financial statements. 12,730 37,063

5


35. Superannuation

Refer to note 10 for details of amount of superannuation contribution paid by Queensland Urban Utilities to the superannuation funds in respect of this year for the benefit of the employees.

Local government superannuation scheme – LG Super

Queensland Urban Utilities contributes to the Local Government Superannuation Scheme (Qld) (the scheme). The scheme is a Multi-employer Plan as defined in the Australian Accounting Standard AASB119 Employee Benefits.

The Queensland Local Government Superannuation Board, the trustee of the scheme, advised that the local government superannuation scheme was a complying superannuation scheme for the purpose of the Commonwealth Superannuation Industry (Supervision) legislation.

The scheme has three elements referred to as:

The City Defined Benefits Fund (CDBF) which covers former members of the City Super Defined Benefits Fund.

The Regional Defined Benefits Fund (Regional DBF) which covers defined benefit fund members working for regional areas.

The Accumulation Benefits Fund (ABF).

The CDBF is a defined benefit plan as defined in AASB119. Queensland Urban Utilities engaged an actuary to assess the values and to provide the disclosures in accordance with AASB119 (refer note 35 (a) to (l)).

The ABF is a defined contribution scheme as defined in AASB 119. Queensland Urban Utilities has no liability to or interest in the ABF other than the payment of the statutory contributions as required.

The Regional DBF is a defined benefit plan as defined in AASB119. Queensland Urban Utilities is not able to account for the Regional DBF as a defined benefit plan in accordance with AASB119 because the scheme is unable to account to Queensland Urban Utilities for its proportionate share of the defined benefit obligation, plan assets and costs.

The funding policy adopted in respect of the Regional DBF is directed at ensuring that the benefits accruing to members and beneficiaries are fully funded as they fall due.

To ensure the ongoing solvency of the Regional DBF, the scheme's trustee can vary the rate of contributions from relevant local government employers subject to advice from the scheme's actuary. As at reporting date, no changes had been made to prescibed employer contributions which remain at 14% of employee assets and there are no known requirements to change the rate of contributions.

Any amount by which the Regional DBF and ABF is over or under funded would only affect future benefits and contributions to the Regional DBF, and is not an asset or liability of Queensland Urban Utilities. Accordingly, there is no recognition in the financial statements of any over or under funding of these funds.

As at the reporting date, the assets of the scheme are sufficient to meet the vested benefits.

The most recent actuarial assessment of the scheme was undertaken as at 1 July 2012. The actuary indicated that “the Regional DBF is currently in a satisfactory but modest financial position and remains vulnerable to adverse short and medium term experience."

Following the previous actuarial assessment in 2009, Queensland Urban Utilities was advised by the trustee of the scheme, that additional contributions may be imposed in the future at a level necessary to protect the entitlements of Regional DBF members. In the 2012 actuarial report the actuary has recommended no change to the employer contribution levels at this time.

The next actuarial investigation will be conducted as at 1 July 2015.




35. Superannuation (contd)

City Defined Benefits Fund

Nature of the benefits provided by the fund

Defined benefit members receive lump sum benefits on retirement, death, disablement and withdrawal. The defined benefit section is closed to new members. All new members receive accummulation benefits.

Description of the regulatory framework

The Superannuation Industry (Supervision) (SIS) legislation governs the superannuation industry and provides the framework within which superannuation plans operate. The SIS Regulations require an actuarial valuation to be performed for each defined benefit superannuation plan every three years, or every year if the plan pays defined benefit pensions.

Description of other entities' responsibilities for the governance of the fund

The fund's trustee is responsible for the governance of the fund. The trustee has a legal obligation to act solely in the best interests of fund beneficiaries. The trustee has the following roles:

– Administration of the fund and payment to the beneficiaries from fund assets when required in accordance with the fund rules;

– Management and investment of the fund assets; and – compliance with superannuation law and other

applicable regulations.

The prudential regulator, the Australian Prudential Regulation Authority (APRA), licenses and supervises regulated superannuation plans.

Description of risks

There are a number of risks to which the fund exposes Queensland Urban Utilities. The more significant risks

relating to the defined benefits are:

– Investment risk – The risk that investment returns will be lower than assumed and Queensland Urban Utilities will need to increase contributions to offset this shortfall.

– Salary growth risk – The risk that wages or salaries (on which future benefit amounts will be based) will rise more rapidly than assumed, increasing defined benefit amounts and thereby requiring additional employer contributions.

– Legislative risk – The risk is that legislative changes could be made which increase the cost of providing the defined benefits.

Description of significant events

There were no fund amendments affecting the defined benefits payable, nor were there any curtailments or settlements occurring during the year.

5


2014 $'000

2013 $'000


(a) Reconciliation of the net defined benefit liability/(asset)

Net defined benefit liability/(asset) at start of year (1,105) (1,007)

Current service cost 346 338

Net interest (36) (41)

Actual return on fund assets less interest income (744) (692)

Actuarial losses/(gains) arising from changes in financial assumptions

(747) 259

Actuarial losses/(gains) arising from liability experience (44) 361

Employer contributions (314) (323)

Net defined benefit liability/(asset) at end of year (2,644) (1,105)

(b) Reconciliation of the fair value of the plan assets

Fair value of plan assets at the beginning of the year 12,572 11,954

Interest income 398 443

Actual return on fund assets less interest income 744 692

Employer contributions 314 323

Contributions by plan participants 148 142

Benefits paid (787) (898)

Taxes, premiums and expenses paid (84) (84)

Fair value of plan assets at the end of the year 13,305 12,572

(c) Reconciliation of the defined benefit obligation

Present value of defined benefit obligations at beginning of the year 11,467 10,947

Current service cost 346 338

Interest cost 362 402

Contributions by fund participants 148 142

Actuarial losses/(gains) arising from changes in financial assumptions (747) 259

Actuarial losses/(gains) arising from liability experience (44) 361

Benefits paid (787) (898)

Taxes, premiums and expenses paid (84) (84)

Fair value of plan assets at the end of the year 10,661 11,467




2014 $'000

2013 $'000


(d) Reconciliation of the effect of the asset ceiling

The asset ceiling has no impact on the net defined benefit liability/(asset).

(e) Fair value of fund assets as at 30 June 2014 (significant observable inputs – level 2)

Investment funds - LGsuper diversified growth fund* 13,305

*The defined benefit assets are invested in the LGsuper

diversified growth investment option.

The percentage invested in each asset class at the reporting date*:

Australian equity 17% 16%

International equity 18% 16%

Fixed income 35% 39%

Property 12% 14%

Alternatives/other 14% 13%

Cash 4% 2%

*Asset allocation as at 30 June 2014 is not yet available. Asset allocations at 31 March 2014 have been used instead.

(f) Fair value of own financial instruments

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

• any of Queensland Urban Utilities' own financial instruments

• any property occupied by, or other assets used by, Queensland Urban Utilities.

(g) Significant actuarial assumptions at the reporting date

Assumptions to determine defined benefit cost

Discount rate 3.3% pa 3.9% pa

Expected salary increase rate 3.0% pa until 30 June 2018; 2.5% thereafter

4.25% pa until 30 June 2013; 3.0% thereafter

Assumptions to determine defined benefit obligation

Discount rate 4.2% pa 3.3% pa

Expected salary increase rate 2.2% pa until 30 June

2015; 3.0% thereafter

3.0% pa until 30 June 2018;

2.5% thereafter

5


(h) Sensitivity analyses

The defined benefit obligation as at 30 June 2014 under several scenarios is presented below.

Scenarios A and B relate to discount rate sensitivity. Scenarios C and D relate to expected salary increase rate sensitivity.

Scenario A: 0.5% pa lower discount rate assumption Scenario B: 0.5% pa higher discount rate assumption Scenario C: 0.5% pa lower assumed salary increase rate assumption Scenario D: 0.5% pa higher assumed salary increase rate assumption

Basecase Scenario A Scenario B Scenario C Scenario D

-0.5% pa discount rate

+0.5% pa discount rate

-0.5% pa salary increase rate

+0.5% pa salary increase rate

Discount rate 4.2% pa 3.7% pa 4.7% pa 4.2% pa 4.2% pa

2.2% pa for the year ending 30 June 2015 and 3.0% pa thereafter





Salary increase rate

Defined benefit obligation* ($000s)*includes defined benefit contributions tax provision

10,661 11,129 10,223 10,281 11,063

The defined benefit obligation has been recalculated by changing the assumptions as outlined above, whilst retaining all other assumptions.

(i) Asset-liability matching strategies

We are not aware of any asset and liability matching strategies adopted by the fund.

(j) Funding arrangements

The financial approach adopted at the 1 July 2012 actuarial investigation of the fund, in a report dated 31 March 2013, is to ensure sufficient assets are available to meet benefits as and when they fall due while also to target appropriate coverage of vested benefits.

In that investigation, it was recommended that Queensland Urban Utilities contributes to the fund as follows:

– In respect of defined benefit members, 14% of members' salaries (inclusive of the 3% occupational contribution); plus – In respect of accumulation members, 14% of salaries for permanent employees and 9% of salaries for casual employees; and– 5.88% of salaries for defined benefit members' contributions made via salary sacrifice.

(k) Expected contributions

Expected employer contributions for 2015 are $0.270M (2014: $0.277M).




2014 $'000

2013 $'000


(l) Maturity profile of defined benefit obligation

The weighted average duration of the defined benefit obligation is 10 years.

Expected benefit payments for the financial year ending on:

30 June 2015 1,391

30 June 2016 1,197

30 June 2017 1,110

30 June 2018 1,041

30 June 2019 1,052

Following 5 years 5,304

36. Funds held in trust

Queensland Urban Utilities performs only a custodial role in respect of external Trust Fund money. As such, the balances disclosed below have not been brought to account in theFinancial Statements and are shown here for information purposes only:

Standpipe bonds, security deposits and unclaimed money 1,197 1,136

1,197 1,136

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37. Key management personnel and remuneration

(a) Key management personnel

The following details for key executive management personnel include those positions that had authority and responsibility for planning, directing and controlling the activities of Queensland Urban Utilities during 2013/2014. Further information on these positions can be found in the body of the Annual Report under the section relating to Executive Management.

Current incumbents

Position Responsibilities

Contract classification and appointment

authority Dates position held

Chief Executive Officer Strategic planning and corporate governance, legal (general counsel) and internal audit

Board appointed Band A Contract

Appointed 2 July 2012

Chief Financial Officer Tax and treasury, financial services, regulatory affairs, financial performance and reporting, financial planning, financial accounting, sourcing, procurement and risk


Appointed 14 November 2012

Chief Operating Officer Service delivery (West and East), maintenance and renewal planning, major projects and commercial services and source control


Transitioned under the Transfer Scheme 1 July 2010; resigned 23 May 2014

Chief Information Officer Strategic planning and program delivery, operations and knowledge management


Appointed 19 March 2012

Executive Leader People and Safety

HR and workforce planning, WH and S, learning and development, remuneration and HR administration, employment arrangements and HR practice and organisational development


Appointed 1 February 2012; resigned 30 June 2014

Executive Leader Customer and Community

Billing and revenue, demand and efficiency, customer service, marketing and communications and operation support


Appointed 2 September 2013 (acted in role from 15 March 2013)

Executive Leader Planning Planning, capital inauguration, environmental and water quality issues


Appointed 1 December 2013




37. Key management personnel and remuneration (contd)

(b) Remuneration

Remuneration for key executive management personnel is determined by the Board. Remuneration and other terms of employment is specified in individual employment contracts. The contracts provide for the provision of performance-related cash bonuses.

The annual review of remuneration of key executive management personnel increased by between 2.0% and 4.0% (2013: between 3.0% and 4.25%) based on a market review of similar roles.

Remuneration packages for key executive management personnel comprise the following components:

Short term employee benefits consisting of base salary, allowances and leave entitlements paid and provided for the entire year or for that part of the year during which the employee occupied the specified position. Amounts disclosed equal the amount expensed in the Statement of Comprehensive Income.

Long term employee benefits include long service leave accrued.

Post employment benefits include superannuation contributions.

Redundancy payments are not provided for within individual contracts of employment. Contracts of employment provide only for notice periods or payment in lieu of notice on termination, regardless of the reason for termination.

Performance bonuses may be paid or payable annually depending upon satisfaction of key criteria.

Performance payments of the key executive management are capped at a range of between 15% and 25% of total fixed remuneration. The amounts payable are tied to the achievement of pre-determined organisational and individual performance targets as agreed by the Board and the Chief Executive Officer.

5


Total fixed remuneration is calculated on a "total cost" basis as below.

2014

Position

Short term monetary

benefits $'000

Non-monetary

benefits $'000

Long term employee

benefits $'000

Post employment

benefits* $'000

Termination benefits

$'000

Total remuneration

$'000

Chief Executive Officer 527 3 13 44 - 587

Chief Financial Officer 342 3 9 32 - 386

Chief Operating Officer (resigned 23 May 2014)**

446 3 11 29 172 661

Acting Chief Operating Officer (from 23 May 2014)

24 - - 2 - 26

Chief Information Officer

269 3 7 25 - 304

Executive Leader People and Safety (resigned 30 June 2014)

261 3 7 24 - 295


239 3 6 22 - 270

Executive Leader Planning (refer note 37d)

123 2 3 11 - 139

Total remuneration 2,231 20 56 189 172 2,668

* The Superannuation Guarantee was increased from 9.00% to 9.25% from 1 July 2013 in accordance with the Superannuation Guarantee legislation.

** Includes performance payments for 2012/2013 and 2013/2014



(b) Remuneration (contd)




(b) Remuneration (contd)

2013

Position

Short term monetary

benefits $'000

Non-monetary

benefits $'000

Long term employee

benefits $'000

Post employment

benefits $'000

Termination benefits

$'000

Total remuneration

$'000

Chief Executive Officer (appointed 2 July 2012)*

508 - 13 46 - 566

Chief Financial Officer (appointed 14 November 2012)

187 - 5 17 - 209

Chief Operating Officer 313 - 8 28 - 349

Chief Information Officer 223 - 6 20 - 248

Executive Leader People and Safety

235 - 6 21 - 262


277 - 7 28 37 349

Executive Leader Strategy and Growth

219 - 5 20 - 244

Acting Chief Financial Officer (1 July 2012 to 13 November 2012)

74 - 2 7 - 83

Acting Executive Leader Customer and Community (15 March 2013 to 30 June 2013)

59 - 1 5 - 66

Total remuneration 2,095 - 52 192 37 2,376

* The Chief Executive Officer was appointed on 2 July 2012 and prior to this appointment held the position of Chief Financial Officer. Accordingly the amount disclosed as short term monetary benefits includes benefits associated with the role of Chief Financial Officer.

The outgoing Chief Executive Officer resigned with an effective date of 1 July 2012 and left the organisation after taking leave entitlements. The total remuneration paid on resignation was $153,848.

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(c) Performance payments

Individual performance plans based on achievement of targets for key result areas and tied to the Corporate Plan strategies for the basis for performance payments.

Performance payments are expected to be paid on 31 October 2014 (2012/2013 1 October 2013).

The aggregate performance bonuses expected to be paid to all key executive management personnel will not be determined until October 2014 (2013: $364,768).

(d) Organisational realignment

On 30 September 2013 the Board supported a new operating model in order to enable the achievement of the organisational vision. The position of Executive Leader Planning became a direct report to the Chief Executive Officer effective 1 December 2013 whilst the position of Executive Leader Commercial Customers will be in place after 1 July 2014 to manage the relationship with commercial and water reliant customers. This position also manages the relationship with developers and leads the Scientific Analytical Services.




38. Related parties

Key management personnel compensation

(a) Board members

The Board Members who were paid directly or indirectly were:

2014*

Salary and fees$'000

Superannuation$'000

Total$'000

Geoff Harley 97 9 106

Dennis Cavagna 48 4 52

Diana Eilert 48 4 52

Paul Emmerson 48 4 52

Phil Kesby 48 4 52

Bernard Ponting 48 4 52

Len Scanlan 48 4 52

John Cotter (appointed 14/1/14)

24 2 26

409 35 444

2013*

Salary and fees$'000

Superannuation$'000

Total$'000

Jude Munro AO (resigned 17/8/12)

12 1 13

Geoff Harley (appointed 8/10/12)

62 6 68

Barry Ball (completed term 30/6/2013)

43 4 47

Dennis Cavagna 43 4 47

Diana Eilert 43 4 47

Paul Emmerson 43 4 47

Phil Kesby 43 4 47

Bernard Ponting (Acting Chair 18/8/12 to 7/10/12)

50 4 54

Len Scanlan 43 4 47

384 35 418

* 2014 includes 12 months payments. The CPI increase of 2.5% was applied and monthly rates set at $8,068 Chair and $4,034 Board members.

* 2013 includes 11 months payments. The CPI increase of 1.3% was applied and monthly rates set at $7,781 Chair and $3,935.50 Board members.

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(b) Loans to key management personnel

None of the key management personnel have personal loans with Queensland Urban Utilities oustanding at 30 June 2014.

(c) Other key management personnel transactions

Transactions with related parties of key management personnel that occurred during the financial year are noted below.

Louise Dudley, Chief Executive Officer, was a Director of LG Super until 30 June 2014. All transactions are made on normal commercial terms.

(d) Board member transactions

There are no transactions with related parties of Board members for the financial year, other than on normal commercial terms.

(e) Transactions with Participating Councils

Queensland Urban Utilities entered into a number of transitional service agreements (TSA's) with its Participants. The amount of expenditure included in the Statement of Comprehensive Income follows:

2014 $'000

2013 $'000

Brisbane City Council 3,314 17,481

Services provided include:

information and communication technology, payroll,

internal audit*, accommodation*, contact centre, information

management systems, rates processing*, sourcing and

category management*, logistics and warehousing, GIS,

radio access

* These services continued in 2014, the remainder ceased in 2013

Ipswich City Council - 242

Services provided include:

PABX, radio access, GIS, help desk and phones

Capital commitments to be provided by Brisbane City - 10

Council (included in note 33)

(f) Returns to Participating Councils

Participation return, income tax equivalents and interest 193,785 172,907




2014 $'000

2013 $'000

Income from insurance 24,332 7,256

NDRRA funding 14,574 -

Assets written off due to damage beyond repair - 819

Cost of replacement of assets (5,382) (12,011)

Cost of repair to assets - (25)

Cost of cleanup (7) -

Other costs (278) (2,684)

Recovery by/(Cost to) Queensland Urban Utilities 33,239 (6,645)

2014 2013

Operating ratio 18% 15%

Capital replenishment ratio x 1.52 x 2.53

Debt to revenue ratio 193% 212%

39. Significant weather events

In January 2011 there were a number of signicant weather events that affected the business operations across the Brisbane, Ipswich and Lockyer Valley regions. Associated revenue and costs are:

Income from insurance and NDRRA funding has been included in revenue. These funds represent the reimbursement of losses previously incurred by Queensland Urban Utilities.

40. Financial sustainability

In November 2013 the Auditor-General tabled "Results of audit: Water sector entities 2012-13 Report to Parliament 7: 2013-14". The report recommended that the water sector be encouraged to self-report against the measures of financial sustainability used in the report. These measures are:

(a) Operating ratio – this is the operating profit before tax expressed as a proportion of total revenue and it should be positive over the medium to long term in order to remain financially sustainable.

(b) Capital replenishment ratio – this compares the annual net expenditure on non-current assets to annual depreciation. An average above one over time indicates that assets are being built or replaced at or above the rate the asset base is being depreciated.

(c) Debt to revenue ratio – this assesses the ability to pay the principal and interest on borrowings when they fall due, from the funds generated through operations.

The results have been disclosed for the current and comparative year as below:


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Central SEQ Distributor-Retailer Authority Certificate of Queensland Urban UtilitiesFor the year ended 30 June 2014


CHAPTER 5: FINANCIAL PERFORMANCECentral SEQ Distributor-Retailer Authority Independent Auditor's Report For the year ended 30 June 2014

5


Our $3.2 billion, 10-year investment in water and sewerage services provides the infrastructure and services to cater for population growth and economic development benefiting current and future generations. Through this investment, we enable the quality of life that the people of South East Queensland enjoy.


INDICES AND GLOSSARYIndexAchievements 5, 8, 9, 77, 83

Audit 21, 23, 25, 79, 80, 81, 82, 83

Awards 3, 15, 46, 77

Beaudesert Nutrient offsets 47

Behaviour 68, 151

Biosolids 9, 14, 52

Board 3, 4, 11, 19, 20, 21, 22, 23, 26, 41, 42, 44, 51, 77, 79, 80, 81, 82, 83, 84, 152

Brisbane City Council 13, 23, 24, 82, 83, 107, 119, 121, 141, 147

Brisbane Street Water Main Upgrade 45

Bulimba Creek Catchment Coordinating Committee 45, 56

Capital Infrastructure 52, 61

Capital works projects 42, 46, 57

Chairman 3, 4, 19, 22, 23, 25, 41, 44, 79, 80, 81

Code of Conduct 83

Commercial customers 31, 32, 35, 40, 54

Communities 3, 8, 11, 13, 14, 18, 20, 29, 35, 40, 44, 45, 46, 47, 54, 56, 57, 63, 71, 75

Community 5, 8, 11, 23, 35, 37, 40, 41, 42, 44, 45, 46, 47, 55, 56, 58, 61, 64, 65, 75, 77, 84

Conflict of interest 81

Connections 34, 49, 51

Consultancies 85

Culture 9, 20, 69, 70

Customer 3, 5, 8, 11, 21, 25, 27, 31, 32, 33, 35, 40, 41, 42, 44, 54

Customer and Community Reference Group 25, 40, 41, 42, 44

Customer experience 3, 8, 30, 31, 39, 54, 67

Customer satisfaction 20

Customer segments 31, 35, 39

Customer service 9, 20, 27, 31, 35, 37, 41, 61, 65, 81

Customer Service Standards 3, 33

Depots 54

Developer 31, 41

Developers 5, 35, 40

Development 49

Differential service strategy 61

Disclosures 84

Drinking tap water 37, 47

Economic and population growth 44

Efficiencies 3, 9, 32, 39, 40, 51, 53, 54, 61, 66, 67

Efficiency 3, 14, 35, 53, 54, 59, 61, 63, 64, 65, 67

Emergency Response Plan 42

Employee development 69, 72

Energy 13, 51, 52, 53, 59

Enterprise Bargaining Agreement 9, 73

Environment 3, 9, 13, 26, 36, 40, 44, 45, 50, 51, 55, 56, 63, 78, 79, 84

Executive Leadership Team 3, 21, 22, 24, 26, 59, 72, 82, 83, 152

Financial 3, 5, 11, 24, 25, 31, 35, 37, 41, 47, 67, 79, 82, 83, 84, 150, 151

Financial hardship 31, 35, 41, 47

Fleet 51, 59, 66, 67

Fundraising 71

G20 Summit 42

Goodna Sewage Treatment Plant Upgrade Project 15, 56, 74

Governance 3, 11, 22, 70, 79, 151

Government 5, 27, 40, 42, 49, 82, 151, 153

Growth 14, 20, 40, 44, 51, 56, 61, 146

Hawkeye 63

Healthy Waterways 15, 18, 31, 37, 45, 47, 56

ICT 9, 26, 52

Incidents 31, 33, 34, 35, 42, 51

Industry 31, 49

Information Systems 84

Innovative 18, 20, 51, 53, 56, 58, 65, 67, 71

Interruptions 20, 31, 34, 35, 39, 54, 63, 65


INDICES AND GLOSSARYInvestment Committee 82

Ipswich City Council 13, 45, 56

iQ Group 51, 59, 70

Leadership 3, 9, 22, 23, 42, 68, 69, 70, 72, 73

Leaks 51, 65

Lockyer Valley Regional Council 13, 23, 119, 121, 148

Lost Time Injuries 69

Misconduct 83

Operating model 3, 9, 60, 61, 83

Operating profit 9, 52

Operational excellence 29, 50

Operational Plan 5, 83, 84

Organisational structure 3, 21, 26, 80

Overseas travel 85

People 3, 11, 20, 70, 72, 77, 146

Performance management 73

Pricing 21, 23, 25, 79, 80, 81

Procurement 9, 11, 14, 25, 51, 53, 67, 82

Public health 63

Queensland Competition Authority 44, 51, 52, 80

Records 45, 84

Recruitment 72

Regulators 13, 40, 51

Research and development 41, 51, 53

Reward and Recognition 9, 77

Risk 21, 23, 25, 79, 80, 81, 82, 83

Safety 3, 9, 20, 59, 67, 68, 69, 72, 73, 75

Scenic Rim Regional Council 13, 119, 121, 148

Scientific Analytical Services 42, 46

Seqwater 13, 42, 54, 69

Service delivery 9, 20, 24, 26, 35, 40, 52, 54, 59, 60, 66, 67, 83, 84

Sewage overflow 63

Shared services 25, 61

Shareholders 5, 8, 9, 11, 13, 14, 25, 29, 40, 42, 43, 44, 45, 61, 65, 79, 82, 84

Skill 72, 73

Social media 30

Somerset Regional Council 13, 119, 121, 148

Special General Meeting 44

Stakeholders 3, 5, 8, 14, 25, 35, 37, 40, 41, 42, 43, 44, 45, 47, 49, 53, 61, 84, 151

Strategic Asset Management 22, 79, 81

Strategic direction 3, 11, 22, 29, 31, 41, 42, 44, 51, 69, 70, 72, 80, 82, 83

Strategic pillars 5, 8, 11, 29, 67, 83

Summer Preparedness 51, 54

TaKaDu 64, 65

Technology 11, 25, 26, 51, 56, 58, 63, 64, 65, 81

Training 31, 69, 72, 73, 83

Values 3, 9, 11, 29, 68, 69, 70, 71, 73, 77, 83, 151

Vision 5, 8, 9, 11, 26, 29, 40, 67, 68, 70, 83

Water and sewerage connection services 42, 49

Water consumption 31

Water quality 33

Waterways 18, 37, 45, 51, 55, 56, 63, 78

Wellness Program Plan 69

Woolloongabba Sewer Capacity Upgrade 42, 51, 56

Workforce profile 3, 68

Zero harm 72


Global reporting initiative content indexThe Global Reporting Initiative (GRI) is an internationally recognised framework for sustainability reporting. GRI promotes the use of sustainability reporting as a way for organisations to become more sustainable and contribute to sustainable development. This report has been prepared in accordance with the core option of GRI’s G4 Guidelines.

The following index indicates which GRI indicators have been reported and where they can be located in this report. A full GRI Content Index, including management disclosures, is available at www.urbanutilities.com.au.

Profile disclosures

Strategy & Analysis

General standard disclosures Page

G4-1 Statement from the most senior decision-maker of the organisation 19

Organisational Profile


G4-3 Name of the organisation Queensland Urban Utilities

G4-4 Primary brands, products and services 11

G4-5 Location of the organisation’s headquarters 5

G4-6 Number of countries where the organisation operates 12

G4-7 Nature of ownership and legal form 11-13

G4-8 Markets served 12, 30

G4-9 Scale of the organisation 11, 16-17, 68, 87-89

G4-10 Number of employees 68

G4-11 Employees covered by collective bargaining agreements 73

G4-12 Organisation’s supply chain 13

G4-13 Significant changes during the reporting period 49, 54, 61

G4-14 Whether and how the precautionary approach or principle is addressed by the organisation

82

G4-15 Externally developed economic, environmental and social charters, principles or other initiatives to which the organisation subscribes or endorses

5, 75, 82

G4-16 Memberships of associations and national or international advocacy organisations

46-47


Identified Material Aspects and Boundaries


G4-17 All entities included in the organisation’s consolidated financial statements or equivalent documents

Queensland Urban Utilities is a single entity

G4-18 Process for defining report content and the Aspect Boundaries Our strategic planning process and subsequent development of the Corporate Plan informs the content and structure of our Annual Report. The strategic planning process commences with analysis of our operating environment to determine the key drivers of our strategy. This includes PESTLE analysis (political, economic, sociological, technological, legal and environmental), shareholder reviews and customer requirements.

G4-19 Material aspects identified in the process for defining report content Economic: economic performance, indirect economic impact. Environmental: energy, water, biodiversity, emissions, effluents and waste, compliance. Labour practices and decent work: employment, labour/management relations, occupational health and safety. Society: local communities. Product responsibility: customer health and safety.

G4-20 Report whether each aspect is material within the organisation All aspects listed in G4-19 have been identified as material within Queensland Urban Utilities

G4-21 Report the aspect boundary outside the organisation for each material aspect

There are no material aspects listed in G4-19 that apply outside of Queensland Urban Utilities

G4-22 Effect of any restatements of information provided in previous reports No restatements of information

G4-23 Significant changes from previous reporting periods in the scope and aspect boundaries

No significant changes from previous reporting periods

INDICES AND GLOSSARY


Stakeholder Engagement


G4-24 List of stakeholder groups engaged by the organisation 41

G4-25 Basis for identification and selection of stakeholders with whom to engage

40-41, 44

G4-26 Organisation’s approach to stakeholder engagement 41

G4-27 Key topics and concerns that have been raised through stakeholder engagement, and how the organisation has responded

41, 45

G4-28 Reporting period for information provided 2013/14 financial year

G4-29 Date of most recent previous report Queensland Urban Utilities 2012/13 annual Report

G4-30 Reporting cycle Annual

G4-31 Contact point for questions regarding the report or its contents 5

G4-32 The ‘in-accordance’ option the organisation has chosen The Queensland Urban Utilities 2013/14 annual Report has been prepared in accordance with the core GRI sustainability reporting guidelines

G4-33 The organisation’s policy and current practice with regard to seeking external assurance for the report

The Queensland Urban Utilities2013/14 annual Report complies with the relevant Queensland state government legislation requirements and associated policy and guidelines. It is submitted to the relevant minister to provide Parliament with information needed to make informed decisions. Excluding the audited financial statement, no external assurance is provided with the report.

Governance


G4-34 Governance structure of the organisation, including committees of the highest governance body

21

Ethics and Integrity


G4-56 Describe the organisation’s values, principles, standards and norms of behaviour 83


INDICES AND GLOSSARYGlossaryadWG Australian Drinking Water Guidelines

Biosolids production The amount of by-product produced through the sewage treatment process and subsequently disposed.

board The Central SEQ Distributor-Retailer Board.

Board member Means a person who is, for the time being, a member of the Board of Queensland Urban Utilities.

Brand index score A weighted measure (between 0 and 100) of Queensland Urban Utilities’ overall brand health based on residential customers’ perceptions of performance against our brand drivers; value, transparency, customer focus and reliability.

Capital infrastructure program delivered against budget The percentage of the capital infrastructure program delivered within budget.

Capital program deemed prudent and efficient by QCa An assessment by the Queensland Competition Authority on the prudency and efficiency of our capital expenditure as part of the process of price monitoring.

Central SEQ distributor-retailer A statutory body supplying water and treating sewage to the service territories of Brisbane, Ipswich, Lockyer Valley, Scenic Rim and Somerset, also known as Queensland Urban Utilities.

CogenerationElectricity generated through our sewage treatment process to offset electricity purchases.

Corporate reputation indexA global measure (between 0 and 100) that is derived from a standard set of survey questions about an organisation’s overall reputation, its emotional appeal (i.e. favourability and trust) and the quality of its services.

Customer experience satisfaction surveyThe average score (between 0 and 10) of overall customer satisfaction for residential owners who have an interaction with Queensland Urban Utilities (excluding simple bill transactions).

Executive Leadership TeamMeans the Chief Executive Officer, and direct reports.

Gigalitre (GL) Measurement of volume equal to one billion litres, or one thousand megalitres (refer Megalitre).

ICT investment program delivered against budget The percentage of the ICT investment program delivered within budget.

Megalitre (ML) Measurement of volume equal to one million litres. One megalitre is approximately the volume of a one-metre deep Olympic-sized swimming pool.

Operating costTotal operating costs on a per property basis.

Operating profit after taxTotal profit after deduction of operating expenses, interest, tax and depreciation and amortisation from revenue received.

Organisational culture indexA measure of the improvement in constructive behaviours.

Participation AgreementA Participation Agreement under s20 or 23 of the South East Queensland Water (Distribution and Retail Restructuring) Act 2009.


raw water Unfiltered water supplied in bulk to water supply authorities for treatment before distribution to customers.

Recycled water Water taken from any waste (effluent) stream and treated to a level suitable for further use, where it is used safely and sustainably for beneficial purposes. This is a general term that can include reclaimed water.

Research and development investment Our investment in research and development to support achievement of our corporate strategies.

return on assets A measure of the percentage of profit earned in relation

to total asset value.

Sewage Material transported in a sewerage system. Sewage is collected from all internal household drains; it contains all the contaminants of grey water and urine, plus high concentrations of faecal material from toilets and wastes from industrial and commercial premises. Sewage can therefore contain a range of infectious enteric pathogens and a range of physical and chemical contaminants.

Sewerage The pipes and channels, including all trunk, pressure and reticulation pipes, via which sewage is transported from its point of origin (e.g. house or business) to a point of treatment and/or disposal.

Shareholder Brisbane and Ipswich City Councils and the Lockyer Valley, Scenic Rim and Somerset Regional Councils.

Shareholder satisfactionA measure of the effectiveness of our stakeholder

engagement through a survey of our shareholders.

Stakeholder All those who are either affected by or who can affect the activities of an organisation, namely customers, governments, the media, non-government organisations, local residents and employees.

Total net greenhouse gas emissions Greenhouse gas emissions generated by Queensland Urban Utilities through its operations relating to water supply and sewerage services.

Total reportable injury frequency rate Total recordable injuries sustained per million hours worked.

Total shareholder returns The expected shareholder returns as agreed

with shareholders.

trade waste Water-borne waste from a business or manufacturing premises, that is not:

1. a prohibited substance (for example, petrol, pesticide),

2. domestic sewage (human waste),

3. stormwater.

Some trade waste cannot be accepted at sewage treatment plants and must be disposed of through special facilities.


We supply first-class drinking water to 561,589 properties in our geographic area.


For more information visit www.urbanutilities.com.au

or call 13 26 57

Queensland Urban Utilities PO Box 2765 Brisbane QLD 4001

ABN 86 673 835 011

Q00711-2014 © Queensland Urban Utilities 2014

Documents

2013/14 ANNUAL REPORT€¦ · Operational excellence We innovate to drive operational excellence to achieve outcomes at the lowest long-term cost. Our key focus areas: • Define