year ended 30 june, 2012 - parliament of victoria · 2013. 6. 7. · profit / (loss) for the year...

10.Financial Statements

Table of contentsComprehensive Operating Statement 58

Balance Sheet 59

Statement of Changes in Equity 60

Cash Flow Statement 61

Notes to the Financial Statements 62 - 94

Certification of Financial Statements 95

Independent Audit Report 96

YEAR ENDED 30 JUNE, 2012

GVW ANNUAL REPORT 2011|2012 | p57

Comprehensive Operating StatementFOR THE YEAR ENDED 30 JUNE, 2012

NOTE

2012

$’000

2011

$’000

Revenue from Operating Activities

Fees and Charges 3 56,173 47,895

Developer and Landowner Contributions 4 6,578 6,324

Government Contributions 5 - 563

Interest Revenue 6 449 473

Other Revenue 7 1,604 1,987

Total Revenue 64,804 57,242

Expenses from Operating Activities

Operating Expenses 8 50,469 37,832

Administration Expenses 9 12,712 11,247

Environmental Contribution 1(c) 1,915 1,915

Borrowing Costs 10 6,525 5,977

Total Expenses 71,621 56,971

Profit / (Loss) before Income Tax (6,817) 271

Income Tax Expense / (Credit) 11 (2,058) 75

Profit / (Loss) for the Year (4,759) 196

Other Comprehensive Income

Net gain (loss) on revaluation of Property, Plant and Equipment 1(m), 16 - 232,490

Income Tax relating to components of Other Comprehensive

Income1(g), 11(e) - (69,747)

Other Comprehensive Income for the period, net of Income Tax - 162,743

Total Comprehensive Income for the period (4,759) 162,939

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

10. Financial Statements

| GVW ANNUAL REPORT 2011|2012p58

Balance SheetAS AT 30 JUNE, 2012

NOTE

2012

$’000

2011

$’000

ASSETS

Current Assets

Cash and Cash Equivalents 12 7,754 4,340

Receivables 13 15,153 13,040

Prepayments 1(j) 412 452

Inventories 14 1,140 952

Biological Assets 15 1,211 1,071

Total Current Assets 25,670 19,855

Non-Current Assets

Receivables 13 3,667 4,309

Property, Plant and Equipment 16 760,437 756,336

Deferred Tax Assets 11(d) 35,210 30,762

Total Non-Current Assets 799,314 791,407

Total Assets 824,984 811,262

LIABILITIES

Current Liabilities

Payables 17 12,082 7,490

Interest Bearing Liabilities 18 9,000 3,000

Employee Benefits 19 4,245 3,804

Total Current Liabilities 25,327 14,294

Non-Current Liabilities

Interest Bearing Liabilities 18 92,000 87,000

Employee Benefits 19 416 358

Deferred Tax Liabilities 11(e) 117,404 115,014

Total Non-Current Liabilities 209,820 202,372

Total Liabilities 235,147 216,666

Net Assets 589,837 594,596

EQUITY

Contributed Capital 20 234,704 234,704

Reserves 21 186,010 186,010

Retained Profits 22 169,123 173,882

Total Equity 589,837 594,596

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



10. Financial StatementsStatement of Changes in EquityFOR THE YEAR ENDED 30 JUNE, 2012

NOTE

CONTRIBUTIONS

BY OWNERS

$’000

RESERVES

$’000

ACCUMULATED

FUNDS

$’000

TOTAL

$’000

Balance at 1 July 2010 234,704 23,267 173,686 431,657

Total Comprehensive Income for the year as

reported in the 2011 financial report- 162,743 196 162,939

Balance at 30 June 2011 234,704 186,010 173,882 594,596

Total Comprehensive Income for the year - - (4,759) (4,759)

Balance at 30 June 2012 234,704 186,010 169,123 589,837

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


Cash Flow StatementFOR THE YEAR ENDED 30 JUNE, 2012

NOTE

2012

$’000

2011

$’000

Cash Flows from Operating Activities

Receipts from Customers (inclusive of goods and services tax) 62,442 57,395

Grants from Government Departments - 563

Payments to Suppliers and Employees (inclusive of goods and services tax) (41,587) (40,584)

Interest and Bill Discounts Received 452 521

Interest and Other Costs of Finance Paid (6,340) (5,892)

Net Cash Inflow from Operating Activities 23 14,967 12,003

Cash Flows from Investing Activities

Proceeds from Sale of Property, Plant and Equipment 730 675

Payments for Property, Plant and Equipment (23,283) (20,073)

Net Cash (Outflow) from Investing Activities (22,553) (19,398)

Cash Flows from Financing Activities

Proceeds from Borrowings 14,000 12,000

Repayment of Borrowings (3,000) (3,100)

Proceeds from Government Contributions - -

Net Cash Inflow from Financing Activities 11,000 8,900

Net Increase in Cash held 3,414 1,505

Cash at the beginning of the Financial Year 4,340 2,835

Cash at the end of the Financial Year 12 7,754 4,340

Financing arrangements 18

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



10. Financial Statements1. Summary of Significant Accounting Policies

1(a) Basis of Accounting

General

The financial report includes separate financial statements for Goulburn Valley Region Water Corporation as an

individual reporting entity. This financial report is a general purpose financial report that consists of a Comprehensive

Operating Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes accompanying

these statements. The general purpose financial report has been prepared in accordance with Australian Accounting

Standards (AAS’s), Interpretations and other authoritative pronouncements of the Australian Accounting Standards

Board, and the requirements of the Financial Management Act 1994 and applicable Ministerial Directions. Goulburn

Valley Region Water Corporation is a notfor-profit entity for the purpose of preparing the financial statements.

This financial report has been prepared on accrual and going concern bases. The accrual basis of accounting has been

applied in the preparation of these financial statements whereby assets, liabilities, equity, income and expenses are

recognised in the reporting period to which they relate, regardless of when cash is received or paid.

The Annual Financial Statements were authorised for issue by the Board on 22 August, 2012.

Accounting policies

Unless otherwise stated, all accounting policies applied are consistent with those of the prior year. Where appropriate,

comparative figures have been amended to align with current presentation and disclosure. There has been no material

change to comparatives in this report.

Functional and presentation currency

Items included in this financial report are measured using the currency of the primary economic environment in which

the Corporation operates (‘the functional currency’). The financial statements are presented in Australian dollars, which

is the Corporation’s functional and presentation currency.

Classification between current and non-current

In the determination of whether an asset or liability is current or non-current, consideration is given to the time when

each asset or liability is expected to be realised or paid. The asset or liability is classified as current if it is expected to

be turned over within the next twelve months, being the Corporation’s operational cycle – see 1(q) for a variation in

relation to Employee Benefits.

Rounding

Unless otherwise stated, amounts in the report have been rounded to the nearest thousand dollars.

Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of

financial assets and certain classes of property, plant and equipment.

Accounting estimates

The preparation of financial statements in conformity with AAS’s requires the use of certain accounting estimates that

affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.

Actual results may differ from these estimates. It also requires management to exercise its judgement in the process of

applying the entity’s accounting policies.

Estimates and judgements are continually evaluated and are based on historical experience and other factors,

including expectations of future events that may have a financial impact on the entity and that are believed to be

reasonable under the circumstances. It is expected that the estimates and assumptions adopted are not likely to cause

a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

NOTES TO THE FINANCIAL STATEMENTS


Financial statement presentation

The entity has applied the revised AASB 101 Presentation of Financial Statements which became effective for

reporting periods on or after 1 July, 2011 and AASB 1054 Australian Additional Disclosures which became effective for

reporting periods beginning on or after 1 July, 2011.

1(b) Revenue Recognition

Revenue is brought to account when services have been provided or when tariffs and fees have been levied.

Water and sewerage charges by measure are recognised as income when the service has been used. Meter reading is

cyclical and, therefore, estimation is made at the end of each accounting period for water services used by customers

and recorded on meters which have not yet been read.

Gains or losses on disposal of non-current assets are calculated as the difference between the gross proceeds on sale

and their written down value.

Contributions for capital works from all sources are normally treated as revenue and are disclosed in the Notes to the

Financial Statements as Landowner Contributions and Headworks Fees.

Landowner Contributions represent assets acquired at no cost to the Corporation. The fair values of these assets are

recognised as revenue upon their acceptance by the Corporation for maintenance in perpetuity.

Developers are required to make fair and reasonable contributions towards the cost of developing the

Corporation’s water supply distribution and sewerage disposal systems. These contributions are recorded as

Headworks Fees and are recognised as revenue upon receipt.

Government grants are recognised as revenue on receipt or when the entity obtains control of the contribution

and meets certain criteria as outlined by AASB 1004, whichever is the sooner, and disclosed in the Comprehensive

Operating Statement as Government Grants and Contributions. However, grants received from the Victorian State

Government for specific capital projects where the Minister for Finance and the Minister for Water have indicated

the grant is in the nature of owners’ contributions are accounted for as Equity and disclosed in the Balance Sheet as

Contributed Capital.

Interest and rental are recognised as revenue when earned or the service is provided.

1(c) Environmental Contribution

The Water Industry (Environmental Contributions) Act 2004 amended the Water Industry Act 1994 to make provision

for Environmental Contributions to be paid by water supply Corporations.

The Act establishes an obligation for Corporations to pay into the consolidated fund annual contributions in

accordance with a pre-established schedule of payments, which sets out the amounts payable by each Corporation.

The purpose for the Environmental Contribution is set out in the Act, and the funds may be used for the purpose of

funding initiatives that seek to promote the sustainable management of water or address water-related initiatives.

This schedule of payments has been set for the period 1 July, 2012 to 30 June, 2016. This Environmental Contribution

commitment for future periods has been included in Note 27 Capital and Other Commitments.

The Environmental Contributions are disclosed separately within expenses in the Comprehensive Operating

Statement.

NOTES TO THE FINANCIAL STATEMENTS10. Financial Statements


10. Financial StatementsNOTES TO THE FINANCIAL STATEMENTS

1(d) Borrowing Costs

Borrowing costs are recognised as an expense in the period in which they are incurred. Borrowing costs include

interest on bank overdrafts, interest on borrowings and finance lease charges.

1(e) Depreciation of Property, Plant and Equipment

All non-current physical assets with the exception of Land are depreciated using the straight line method to write

off the cost or revalued amount of each item, net of residual values, over its estimated useful life to the Corporation.

Where assets have separate identifiable components that have distinct useful lives and/or residual values, a separate

depreciation rate is determined for each component. The estimated useful lives of each group of assets have been

reviewed during the year, and adjustments made where required.

The estimated useful lives are listed below and are consistent with the prior year, unless otherwise stated:

• Buildings 30 to 50 years

• Infrastructure Assets 5 to 110 years

• Plant and Equipment 1 to 20 years

1(f) Leases

Operating Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as

operating leases. Payments made under operating leases are charged to the Operating Statement on a straight-line

basis over the period of the lease, in the periods in which they are incurred, as this represents the patterns of benefits

derived from the leased assets.

1(g) Income Tax

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

Taxation Office.

The Income Tax expense or revenue for the period is the expected tax payable or receivable on the current period’s

taxable income based on the current income tax rate of 30% adjusted by changes in Deferred Tax Assets and Liabilities

attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the

financial statements, and to unused tax losses.

Deferred Tax Assets and Liabilities are recognised for temporary differences at the tax rates expected to apply when

the assets are recovered or liabilities are settled. The relevant tax rates are applied to the cumulative amounts of

deductible and taxable temporary differences to measure the Deferred Tax Asset or Liability. Deferred Tax Assets

are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable

amounts will be available to utilise those temporary differences and losses.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in

Other Comprehensive Income or directly in Equity. In this case, the tax is also recognised in Other Comprehensive

Income or directly in Equity, respectively.



1(h) Cash and Cash Equivalent Assets

Cash and Cash Equivalents include cash on hand, 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. Bank Overdrafts are

shown within Interest Bearing Liabilities on the Balance Sheet, but are included within Cash and Cash Equivalents for

Cash Flow Statement presentation purposes.

1(i) Receivables

Receivables are recognised initially at fair value less allowance for impairment. Current Receivables are due for

settlement no more than 28 days from the date of recognition for water, sewerage and trade waste receivables. Non-

Current Receivables relate to trade waste customers for charges raised to meet the cost of extending our wastewater

treatment and re-use facilities. These receivables are due for settlement by instalments over terms remaining of no

more than 10 years. Commercial interest charges apply to outstanding balances.

Collectability of receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written

off. An allowance for impaired receivables is established when there is objective evidence that the Corporation will

not be able to collect all amounts due according to the original terms of receivables. The amount of the allowance is

the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at

the effective interest rate. The amounts credited to the allowance are recognised as an expense in the Comprehensive

Operating Statement.

1(j) Prepayments

Prepayments represent payments in advance of receipt of goods or services or that part of expenditure made in one

accounting period covering a term extending beyond that period.

1(k) Inventories

Inventories consist of stores and materials used by the Corporation in construction, repairs and maintenance of works.

Stores and materials are measured at the lower of cost and net realisable value. Costs are assigned to stores and

materials on the basis of weighted average cost.

1(l) Biological Assets

Biological assets consist of Livestock held on the Corporation’s wastewater re-use facilities. Livestock is measured at

net market value.

1(m) Recognition and Measurement of Property, Plant and Equipment

Property, Plant and Equipment represent non-current physical assets comprising land, buildings, water and sewerage

infrastructure, plant, equipment and motor vehicles, used by the Corporation in its operations. Items with a cost or

value in excess of $1,000 and a useful life of more than one year are recognised as an asset. All other assets acquired

are expensed.



10. Financial StatementsAcquisition

All non-current physical assets are measured initially at cost and subsequently revalued at fair value less accumulated

depreciation and impairment in accordance with the requirements of Financial Reporting Direction (FRD) 103D.

The purchase method of accounting is used for all acquisitions of assets. Cost is measured as the fair value of the

assets at the date of exchange, plus costs directly attributable to the acquisition.

Where assets are constructed by the Corporation, the cost at which they are recorded includes an appropriate share of

fixed and variable overheads.

Assets acquired at no cost or for nominal consideration by the Corporation are recognised at fair value at the date of

acquisition.

Repairs and Maintenance

Routine maintenance, repair costs and minor renewal costs are expensed as incurred. Where the repair relates to the

replacement of a component of an asset and the cost exceeds the capitalisation threshold, the cost is capitalised and

depreciated.

Measurement of Non-Current Physical Assets

Revaluations are conducted in accordance with FRD 103D. Scheduled revaluation is undertaken every five years

with an annual assessment of fair value to determine if it is materially different to carrying value. If the difference to

carrying value is greater than 10 per cent, a management revaluation is undertaken while a movement greater than

40 per cent will normally involve an Approved Valuer (usually the Valuer General of Victoria) to perform detailed

assessment of the fair value. If the movement in fair value since the last revaluation is less than or equal to 10 per cent,

then no change is made to carrying amounts.

Water infrastructure assets are measured at fair value less accumulated depreciation and impairment in accordance

with FRD 103D. These assets comprise substructures or underlying systems held to facilitate harvesting, storage,

treatment and transfer of water to meet customer needs. They also include infrastructure assets that underlie sewage

and drainage systems.

The initial fair value assessment for water infrastructure in the prior period was undertaken with involvement from

the Valuer-General of Victoria (VGV) and under the instructions of Department of Treasury and Finance (DTF). The

assessment was performed on a portfolio basis for various categories of water infrastructure. Further details of the

valuation exercise are provided in Note 16.

Carrying Amount

Land and Buildings are measured at the amounts for which assets could be exchanged between knowledgeable,

willing parties, in an arm’s length transaction. Infrastructure is measured at fair value. As there is no market-based

evidence of Infrastructure valuation (as assets are rarely traded) depreciated replacement cost has been used as an

estimate of fair value. Plant, equipment and vehicles are measured at fair value.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the

Comprehensive Operating Statement.

All assets must be tested for impairment on an annual basis. Such assets are tested to ascertain whether the carrying

amounts exceed their recoverable amounts.



Revaluations

Land, Buildings and Infrastructure are revalued with sufficient regularity to ensure that the carrying amount of each

asset does not differ materially from its fair value. This revaluation process occurs at least every five years. Revaluation

increments or decrements arise from differences between an asset’s carrying amount and fair value at the date of

the valuation. These assets are subject to an interim fair value assessment during the five year revaluation cycle. The

assessment of these assets is done by way of reference to industry prescribed and Valuer-General indexation factors.

Revaluation increments are credited directly to equity in the Revaluation Reserve, except that, to the extent that an

increment reverses a revaluation decrement in respect of that class of asset previously recognised as an expense in

determining profit or loss, the increment is recognised as revenue in determining profit or loss.

Revaluation decrements are recognised immediately as an expense in the net result, except that, to the extent

that a credit balance exists in the revaluation reserve in respect of the same class of assets, they are debited to the

revaluation reserve.

Revaluation increases and revaluation decreases relating to individual assets within a class of assets are offset against

one another, within that class, but are not offset in respect of assets in different classes.

Revaluation reserves are not transferred to accumulated funds on derecognition of the relevant asset.

Impairment of Assets

Property, Plant and Equipment are assessed annually for indicators of impairment. If there is an indication of

impairment, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount.

Where an asset’s carrying amount exceeds its recoverable amount, the difference is written-off by a charge to the

Comprehensive Operating Statement except to the extent that the write-down can be debited to an Asset Revaluation

Reserve amount applicable to that class of asset.

The recoverable amount for most assets is measured at the higher of depreciated replacement cost and fair value

less costs to sell. Recoverable amount for assets held primarily to generate net cash inflows is measured at the higher

of the present value of future cash flows expected to be obtained from the asset and fair value less costs to sell. It is

deemed that, in the event of the loss of an asset, the future economic benefits arising from the use of the asset will be

replaced unless a specific decision to the contrary has been made.

An impairment loss on a revalued asset is recognised directly against any revaluation reserve in respect of the same

class of asset to the extent that the impairment loss does not exceed the amount in the revaluation reserve for that

same class of asset.

A reversal of an impairment loss on a revalued asset is credited directly to equity under the heading revaluation

reserve. However, to the extent that an impairment loss on the same class of asset was previously recognised in the

Comprehensive Operating Statement, a reversal of that impairment loss is also recognised in the Comprehensive

Operating Statement.

1(n) Payables

Payables consist predominantly of Trade and Sundry Creditors. These amounts represent liabilities for goods and

services provided to the Corporation prior to the end of the financial year, which are unpaid. The amounts are

unsecured and are usually paid within 60 days of recognition.



10. Financial Statements1(o) Interest Bearing Liabilities

Interest Bearing Liabilities are initially recognised at fair value, net of transaction costs incurred. They are

subsequently measured at amortised cost. Any difference between the initial amount recognised (net of transaction

costs) and the redemption amount is recognised in the Comprehensive Operating Statement over the period of the

borrowings, using the effective interest method.

Interest Bearing Liabilities are classified as current liabilities unless the Corporation has an unconditional right to defer

settlement of the liability for at least 12 months after the reporting date.

1(p) Provisions

Provisions are recognised when the Corporation, as a result of a past event, has a legal or constructive obligation

that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the

obligation.

The amount recognised as a Provision is the best estimate of the consideration required to settle the present

obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the

obligation.

1(q) Employee Benefits

Wages and Salaries, Annual Leave and Sick Leave

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave

when it is probable that settlement will be required and they are capable of being measured reliably.

Provisions made in respect of Employee Benefits expected to be settled within 12 months are measured at their

nominal values, using the remuneration rate expected to apply at the time of settlement.

Provisions made in respect of Employee Benefits which are not expected to be settled within 12 months are measured

at the present value of estimated future cash outflows to be made by the Corporation, in respect of services provided

by employees up to the reporting date. Regardless of the expected timing of settlements, provisions made in respect

of Employee Benefits are classified as a current liability, unless there is an unconditional right to defer the settlement of

the liability for at least 12 months after the reporting date, in which case it would be classified as a non current liability.

Long Service Leave

Current Liability – unconditional LSL, representing 7 or more years of continuous service, is disclosed as a current

liability even when the Corporation does not expect to settle the liability within 12 months because it does not have

the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months.

The components of this current LSL liability are measured at:

• Present value – component that the Corporation does not expect to settle within 12 months; and

• Nominal value – component that the Corporation expects to settle within 12 months.

Non-Current Liability – conditional LSL, representing less than 7 years of continuous service, is disclosed as a non-

current liability. There is an unconditional right to defer the settlement of the entitlement until the employee has

completed the requisite years of service. Conditional LSL is measured at present value.

In calculating present value, consideration is given to expected future wage and salary levels, experience of employee

departures and periods of service. Expected future payments are discounted using market yields at the reporting date

on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated

future cash outflows.



Superannuation

The amount charged to the Comprehensive Operating Statement in respect of superannuation represents the

contributions made by the Corporation to the superannuation plan in respect to the current services of entity

staff. Superannuation contributions are made to the plans based on the relevant rules of each plan and additional

contributions are required to fund any unfunded liability in the defined benefit plan. Refer to Note 25.

Employee Benefit On-Costs

Employee Benefit on-costs, including Payroll Tax and Workcover, are recognised and included in employee benefit

liabilities and costs when the employee benefits to which they relate are recognised as liabilities.

Performance Payments

Performance Payments for the Corporation’s Executive Officers are based on a percentage of the annual salary

package provided under their contracts of employment. A liability is recognised and is measured as the aggregate of

the amounts accrued under the terms of the contracts to balance date.

1(r) Goods and Services Tax

Revenues, expenses and assets are recognised net 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 an item of expense.

Receivables and Payables are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the

ATO is included as a current asset or liability in the Balance Sheet.

Cash flows arising from Operating Activities are disclosed in the Cash Flow Statement on a gross basis – i.e. inclusive

of GST. The GST component of cash flows arising from Investing and Financing activities which is recoverable or

payable to the ATO is classified as operating cash flows.

1(s) Financial Instruments

Recognition

Financial instruments are initially measured at fair value, plus in the case of a financial asset or financial liability not at

fair value through profit and loss, transaction costs that are directly attributable to the acquisition or the issue of the

financial asset or liability. Subsequent to initial recognition, the financial instruments are measured as set out below:

Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in

an active market. They are included in current assets, except for those with maturities greater than 12 months after

the reporting date which are classified as non-current assets. Loans and receivables are included in Receivables in the

Balance Sheet. Loans and receivables are recorded at amortised cost less impairment.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied

to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar

instruments and option pricing models.



10. Financial StatementsImpairment

At each reporting date, the Corporation assesses whether there is objective evidence that a financial instrument has

been impaired. Impairment losses are recognised in the Comprehensive Operating Statement.

1(t) Provision for Dividend

An obligation to pay a Dividend only arises after consultation between the Board, the Minister for Water and the

Treasurer. Following this consultation a formal determination is made by the Treasurer. Although this process has not

yet been completed at the reporting date, the Board’s preliminary Dividend estimate in respect of the current year is

nil. Dividends are prescribed by the State Government in accordance with the Public Authorities (Dividend) Act 1983

based on a prescribed percentage of the previous year’s adjusted net profit.

1(u) New Accounting Standards and Interpretations issued that are not yet effective

Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June

2012 reporting period. As at 30 June 2012, the following standards and interpretations had been issued but were

not mandatory for financial year ending 30 June 2012. The Corporation has not and does not intend to adopt these

standards early.

STANDARD / INTERPRETATION SUMMARY

APPLICABLE FOR ANNUAL

REPORTING PERIODS

BEGINNING ON OR AFTER

IMPACT ON FINANCIAL

STATEMENTS

AASB 9 Financial Instruments

and AASB 2010-7

Amendments to Australian

Accounting Standards arising

from AASB 9 (December

2010)

AASB 9 Financial

Instruments addresses the

classification, measurement

and derecognition of

financial assets and financial

liabilities. The standard is not

applicable until 1

January 2013 but is

available for early adoption.

The derecoginition rules

have been transferred

from AASB 139 Financial

Instruments: Recognition and

Measurement and have not

been changed. The group

has not yet decided when to

adopt AASB 9.

1 January 2013 The entity is yet to assess its

full impact. However, initial

indications are that it may

affect the entity’s accounting

for its available-for-sale

financial assets, since AASB 9

only permits the recognition

of fair value gains and losses

in other comprehensive

income if they relate to equity

investments that are not held

for trading. Fair value gains

and losses on available-for-

sale debt investments, for

example, will therefore have

to be recognised directly in

profit or loss.





REPORTING PERIODS


IMPACT ON FINANCIAL

STATEMENTS

AASB 1053 Application of

Tiers of Australian Accounting

Standards, AASB 2010-2


Accounting Standards

arising from Reduced

Disclosure Requirements

AASB 2011-2 Amendments

to Australian Accounting

Standards arising from the

Trans-Tasman Convergence

Project – Reduced Disclosure

Requirements and AASB

2011-6 Amendments to

Australian Accounting

Standards – Extending

Relief from Consolidation,

the Equity Method and

Proportionate Consolidation

– Reduced Disclosure

Requirements.

On 30 June 2010 the AASB

officially introduced a

revised differential reporting

framework in Australia. Under

this framework, a two-tier

differential reporting regime

applies to all entities that

prepare general purpose

financial statements. Tier

1 are the Australian

Accounting Standards as

currently applied and Tier

2 is the reduced disclosure

regime which retains the

recognition and measurement

requirements of Australian

Accounting Standards but

with reduced disclosure

requirements.

AASB 2011-6 extends the

relief for intermediate parent

entities from consolidation,

equity accounting and

proportionate consolidation

to parent entities that report

under tier 2, where the

parent higher up the group is

reporting either under tier 1

or tier 2.

1 July 2013 The impact of this standard

will depend on instructions

provided by DTF on its

applicability to the entity. The

entity will assess its impact

once DTF has provided

guidance on this standard.

AASB 13 Fair Value

Measurement, AASB 2011-8


Accounting Standards

arising from AASB 13 and



Standards – Fair Value

Measurement – Reduced

Disclosure Requirements.

The standard explains how

to measure fair value and

aims to enhance fair value

disclosures.

1 July, 2013 The entity is yet to assess its

full impact. The group will

apply amendment standard

from 1 January 2013






REPORTING PERIODS


IMPACT ON FINANCIAL

STATEMENTS

AASB 119 Employee Benefits,



Standards arising from AASB

119 and AASB 2011-11

Amendments to AASB 119

(September 2011) arising

from Reduced Disclosure

Requirements.

These standards require

the recognition of all re-

measurements of defined

benefit liabilities/assets

immediately in other

comprehensive income

(removed of the so-called

‘corridor’ method) and the

calculation of a net interest

expense or income by

applying the discount rate

to the net defined benefit

liability account.

1 July, 2013 The entity is yet to assess its

full impact. The group will

apply amended standard

from 1 January 2013



Standards – Orderly Adoption

of Changes to the ABS

GFS Manual and Relating

Amendments.

The amendments clarify the

definition of the ABS GFS

Manual, facilitate the orderly

adoption of changes to the

Manual and improve related

disclosures. Applicable only

to not-for-profit entities and/

or public sector entities.

1 July 2012 The group will apply the

amended standard from

1 July 2012. When the

amendments are applied, the

group will need to disclose

(in the note containing the

summary of accounting

policies) a statement of

compliance to this standard,

a reference to the version of

the ABS GFS Manual used or

that the last version has not

been used and the impact

of this.



Standards to remove the

individual Key Management

Personnel Disclosure

Requirements.

Removes the individual key

management personnel

disclosure requirements

from AASB 124 Related

Party Disclosures, to

achieve consistency

with the international

equivalent standard and

remove a duplication of

the requirements with the

Corporation Act 2001.

The amendments cannot be

adopted early.

1 July 2013 This amendment is expected

to have a limited impact.



Standards – Presentation

of Items of Other

Comprehensive Income

Requirement for entities to

group items presented in

other comprehensive income

on the basis of whether they

may be recycled to profit or

loss in the future.

1 July 2012 The group will apply this

amendment from 1 July

2012. This will only have an

impact on disclosure and

presentation.





REPORTING PERIODS


IMPACT ON FINANCIAL

STATEMENTS



Standards – Improvements to

AASB 1049

The amendments clarify some

of the requirements in AASB

1049 Whole of Government

and General Government

Sector Financial Reporting

and will improve the

harmonisation of the financial

reporting requirements of the

Commonwealth, State and

Territory Governments.

Applicable only to not-for-

profit entities and/or public

sector entities

1 July 2012 This amendment is expected

to have a limited impact.

2. Financial Risk Management Objectives and Policies

The Corporation’s activities expose it to a variety of financial risks: market risk, credit risk , liquidity risk and defined

benefits superannuation fund risk (refer to Note 25). This note and Note 25 presents information about the

Corporation’s exposure to each of these risks, and the objectives, policies and processes for measuring and managing

risk.

The Corporation’s Board has the overall responsibility for the establishment and oversight of the Corporation’s risk

management framework. The Corporation’s overall risk management program focuses on the unpredictability of

financial markets and seeks to minimise potential adverse effects on the financial performance of the Corporation. The

Corporation uses different methods to measure different types of risk to which it is exposed. These methods include

sensitivity analysis in the case of interest rate and other price risks and ageing analysis for credit.

Risk management is carried out by the Corporation’s Executive Management Team under policies approved by

the Board of Directors. The Finance department identifies, evaluates and manages financial risks in line with the

Corporation’s objectives. The Board provides written principles for overall risk management, as well as policies

covering specific areas, such as interest rate risk, credit risk, use of derivative financial instruments and non-derivative

financial instruments and investment of excess liquidity.

2.1 Risk Exposures

The main risks the Corporation is exposed to through its financial instruments are as follows:

(a) Market risk

Market risk is the risk that changes in market prices will affect the fair value or future cash flows of the

Corporation’s financial instruments. Market risk comprises of interest rate risk and other price risk. The

Corporation’s exposure to market risk is primarily through interest rate risk, with no exposure to foreign

exchange risk and other price risks.




Objectives, policies and processes used to manage these risks are as follows:

(i) Interest Rate Risk

The Corporation’s exposure to market interest rates relates primarily to the Corporation’s long term

borrowings and funds invested on the money market.

The interest rate on the Corporation’s long term borrowings is fixed and therefore the Corporation

is not exposed to short term risk as a result of fluctuating interest rates. In addition, the maturity

dates for these long term borrowings are staggered to further minimise interest rate risk in any

given year.

The Corporation has minimal exposure to interest rate risk through its holding of cash assets and

other financial assets. Other financial assets include non-current receivables. These receivables are

of fixed terms with fixed interest rates.

(ii) Foreign Exchange Risk

Foreign exchange risk arises when financial instruments are recognised in a currency that is not

the entity’s functional currency. The Corporation’s exposure to foreign exchange risk is nil with no

instruments held in foreign currencies.

(iii) Other Price Risk

The Corporation has no significant exposure to other price risk.

Market Risk Sensitivity Analysis

The sensitivity analysis below has taken into consideration past performance, future expectations, economic forecasts

and management’s knowledge and experience of the financial markets. The Corporation believes that a movement of

1.0% in interest rates is reasonable over the next 12 months;

30 JUNE 2012

CARRYING

AMOUNT

$’000

INTEREST RATE RISK

-1.0% (100 bp) +1.0% (100 bp)

RESULT

$’000

EQUITY

$’000

RESULT

$’000

EQUITY

$’000

Financial assets

Cash and Cash Equivalents 7,754 (78) (78) 78 78

Receivables 18,820 - - - -

Financial liabilities

Payables 12,082 - - - -

Interest Bearing Liabilities 101,000 90 90 (90) (90)

Total increase / (decrease) 12 12 (12) (12)



30 JUNE 2011

CARRYING

AMOUNT

$’000

INTEREST RATE RISK

-1.0% (100 bp) +1.0% (100 bp)

RESULT

$’000

EQUITY

$’000

RESULT

$’000

EQUITY

$’000

Financial assets

Cash and Cash Equivalents 4,340 (43) (43) 43 43

Receivables 17,349 - - - -

Financial liabilities

Payables 7,490 - - - -

Interest Bearing Liabilities 90,000 30 30 (30) (30)

Total increase / (decrease) 13 13 (13) (13)

Interest rate risk analysis is applied to Cash and Cash Equivalents and Interest Bearing Liabilities as they are exposed

to market fluctuations.

(b) Credit Risk

Credit risk is the risk of financial loss to the Corporation as a result of a customer or counterparty to

a financial instrument failing to meet its contractual obligations. Credit risk arises principally from the

Corporation’s cash and receivables and other financial assets.

The Corporation’s exposure to credit risk is influenced by the individual characteristics of each customer.

The receivable balance consists of a large number of residential and business customers which are spread

across a diverse range of industries. Receivable balances are monitored on an on-going basis to ensure

that exposure to bad debts is not significant. The Corporation has in place policies and procedures

to assist customers who may be experiencing financial hardship and for the collection of overdue

receivables.

An analysis of the ageing of the Corporation’s receivables at reporting date has been provided

in Note 13.

(c) Liquidity Risk

Liquidity Risk is the risk that the Corporation will not be able to meet its financial obligations as they fall

due. The Corporation’s policy is to settle financial obligations within 60 days and in the event of dispute

make payments within 30 days from the date of resolution.

The Corporation manages liquidity risk by maintaining adequate reserves, banking facilities and reserve

borrowing facilities by continuously monitoring forecasts and actual cash flows and matching the maturity

profiles of financial assets and financial liabilities.

The Corporation’s financial liability maturities have been disclosed in Note 18.




2.2 Fair Value Measurement

The carrying value of Current Receivables less impairment provision and of Payables is a reasonable approximation of

their fair values due to their short-term nature.

The fair values of Non-Current Receivables and other financial liabilities for disclosure purposes is determined by

discounting the future contractual cash flows at the current market interest rate that is available to the Corporation for

similar financial instruments.

The carrying amounts and aggregate net fair values of financial assets and financial liabilities at reporting date have

been provided in Note 24.

NOTE

2012

$’000

2011

$’000

3. Fees and Charges

Tariffs and Charges 29,095 26,532

Metered Charges 21,953 16,951

Trade Waste Charges 4,313 3,577

Licences and Fees 812 835

56,173 47,895

4. Developer and Landowner Contributions

Landowner Contributions 5,039 4,985

Headworks Fees 1,539 1,339

6,578 6,324

5. Government Contributions

Capital Project Grant - Water - 563

6. Interest Revenue

Interest on Investments 52 33

Interest on Tariffs, Schemes and Charges 397 440

449 473



NOTE

2012

$’000

2011

$’000

7. Other Revenue

Rent/Lease 473 496

Farm Revenue 832 1,176

Miscellaneous 299 315

1,604 1,987

8. Operating Expenses

Purchase of Raw Water 949 907

Maintenance 8,173 7,364

Water Treatment 9,203 8,075

Sewage Treatment and Pumping 9,672 8,780

Depreciation Infrastructure 16 22,495 12,513

(Profit) / Loss on Sale or Disposal of Property, Plant and Equipment (23) 193

50,469 37,832

9. Administration Expenses

Employee Benefits 7,389 5,876

Bad Debts Written Off 51 42

Audit Fees - External Audit (Auditor-General, Victoria) 29 46 44

Internal Audit Services (Pitcher Partners) 61 37

Depreciation 16 1,985 2,155

Professional/Consulting Services 682 967

Office Expenses 846 799

Conservation and Consultation 358 272

Computer Expenses 657 539

Corporation and Associated Expenses 637 516

12,712 11,247

Employee Benefit Expenses

Employee Benefit Expenses 19,561 15,998

These expenses have been allocated to:

- Operating Expenses (i) 12,172 10,122

- Administration Expenses (i) 7,389 5,876

19,561 15,998


(i) Unfunded Superannuation Contribution

Employee Benefit Expenses include $3.064m (2011: $0.541m) being the Corporation’s contribution to the Vision

Superannuation Scheme Defined Benefit Plan unfunded superannuation liability - Refer to Note 25.



NOTE

2012

$’000

2011

$’000

10. Borrowing Costs

Interest on Bank Overdraft, Loans & Bank Charges 6,525 5,977

11. Income TaxIncome tax expense for the financial year differs from the amount

calculated on the net result. The differences are reconciled as follows:

a. Income tax expense

Current tax payable - -

Deferred tax relating to temporary differences (2,058) 75

(2,058) 75

Deferred income tax(revenue) expense included in income tax

expense comprises:

(Increase) in deferred tax assets 11(d) (4,448) (4,732)

Increase in deferred tax liabilities 11(e) 2,390 4,807

(2,058) 75

b. Reconciliation of income tax expense to prima facie tax payable

Profit before income tax expense (6,817) 271

Tax at the Australian tax rate of 30% (2011: 30%) (2,045) 81

Tax effect of amounts which are not deductible (taxable) in

calculating taxable income:

- Investment Allowance deductions - (19)

- Sundry items (13) 13

Income tax expense (2,058) 75

c. Amounts recognised directly in Equity

Aggregate current and deferred tax arising in the reporting period

and not recognised in profit for the year but directly debited to

equity:

Current Tax - -

Net deferred tax – debited directly to Equity 11(e) - (69,747)

- (69,747)



NOTE

2012

$’000

2011

$’000

d. Deferred Tax Assets

The balance comprises temporary differences attributable to:

Amounts recognised in the Comprehensive Operating Statement:

Impaired Receivables 30 30

Employee Benefits 1,398 1,248

Accrued Expenses 55 42

Depreciation 1,721 469

Tax Losses 32,006 28,973

Total Deferred Tax Assets 35,210 30,762

Movements:

Opening balance at 1 July 30,762 26,030

Charged to the Comprehensive Operating Statement 4,448 4,732

Closing balance at 30 June 35,210 30,762

e. Deferred Tax Liabilities

The balance comprises temporary differences attributable to:

Amounts recognised in the Comprehensive Operating Statement:

Unearned Receivables 1,641 1,942

Depreciation 44,582 41,891

Amounts recognised directly in Equity:

Revaluation of Property, Plant and Equipment 71,181 71,181

Total Deferred Tax Liabilities 117,404 115,014

Movements:


Charged to the Comprehensive Operating Statement 2,390 4,807

Charged to Other Comprehensive Income - 69,747


12. Cash and Cash Equivalents

Cash at Bank and on hand 7,754 4,340




NOTE

2012

$’000

2011

$’000

13. Receivables

Current Receivables 15,253 13,140

Less Provision for Doubtful Debts (100) (100)

Total Current Receivables 15,153 13,040

Non-Current Receivables 3,667 4,309

Total Receivables 18,820 17,349

a. Provision for Doubtful Debts

As at 30 June 2012, Current Receivables of the Corporation with a nominal value of

$227,000 (2011: $201,000) were impaired. The amount of the provision was $100,000

(2011: $100,000). The individually impaired Receivables mainly relate to tenant accounts

and a number of identified Trade Receivables, which are in unexpectedly difficult economic

situations. It was assessed that a portion of the Receivables is expected to be recovered.

The ageing of these Receivables is as follows:

Current 18 15

1-2 months 40 4

3-4 months - 5

Over 4 months 169 177

227 201

As at 30 June 2012, Receivables of $1.583m (2011: $1.211m) were past due but not

impaired. These relate to a number of customers for whom there is no recent history of

default. The ageing analysis of these Receivables is as follows:

The ageing analysis of these Receivables is as follows:

1-2 months 846 644

3-4 months 207 212

Over 4 months 530 355

1,583 1,211

Movements in the Provision for Impaired Receivables are as follows:

Balance at 1 July 100 100

Provision for impairment recognised during the year 51 42

Receivables written off during the year as uncollectible 9 (51) (42)

Balance at 30 June 100 100



NOTE

2012

$’000

2011

$’000

The creation and release of the Provision for Doubtful Debts has been included in Administration Expenses in the

Comprehensive Operating Statement. Amounts charged to the provision account are generally written off when there is no

expectation of recovering additional cash.

Other amounts within Receivables do not contain impaired assets and are not past due. Based on credit history, it is expected

that these amounts will be received when due.

Fair value and credit risk

Due to the short-term nature of the Current Receivables, their carrying value is assumed to approximate their fair value.

The maximum exposure to credit risk at the reporting date is the higher of the carrying value and fair value of each class of

Receivables mentioned above. The Corporation holds collateral as security on some Receivables. The collateral is a charge

over property. Refer to Note 2 for more information of the risk management policy of the Corporation and to Note 24 for

further analysis of Receivables.

14. Inventories

Stores and Materials – at cost 1(k) 1,140 952

15. Biological Assets

Livestock – at net market value:

Sheep 1,016 834

Cattle 195 237

1(l) 1,211 1,071

Represented by:

2012

QUANTITY

2011

QUANTITY

2012

$’000

2011

$’000

Carrying amount at 1 July 6,330 7,296 1,071 999

Increases due to:

Purchases 1,393 1,735 383 366

Natural Increase 4,906 3,941 414 336

Market value adjustment - - (34) 346

Decreases due to:

Sales (3,686) (6,336) (551) (934)

Deaths (427) (306) (72) (42)

Carrying amount at 30 June 8,516 6,330 1,211 1,071

All Livestock Biological Assets of the Corporation were independently valued as at 30 June 2012 by the following Livestock

Agents: Robson Donaldson Pty. Ltd., Landmark & Corcoran Parker Pty. Ltd. Livestock is valued at net market value.




NOTE

2012

$’000

2011

$’000

16. Property, Plant and Equipment

Land and Buildings

Freehold Land

At Fair Value 30,150 30,152

30,150 30,152

Buildings


Less: Accumulated Depreciation (167) -

5,207 5,373

Total Land and Buildings 35,357 35,525

Infrastructure Assets

At Fair Value 673,040 673,210

Less: Accumulated Depreciation (21,425) -

651,615 673,210

At Cost 38,254 -

Less: Accumulated Depreciation (985) -

37,269 -

688,884 673,210

Infrastructure Assets in the course of construction 29,606 40,788

Total Infrastructure Assets 718,490 713,998

Plant and Equipment


Less: Accumulated Depreciation (8,390) (7,227)

Total Plant and Equipment 6,590 6,813

Total Property, Plant and Equipment 760,437 756,336

Valuation of Property, Plant and Equipment

Land & Buildings of the Corporation were valued at the 30th June, 2011 by the Valuer General of Victoria (using Egan National Valuers Pty. Ltd.) at their fair value.

Infrastructure assets of the Corporation were valued at the 30th June, 2011 by the Valuer General of Victoria (using AECOM Australia Pty. Ltd.) at their fair value.

In relation to Plant and Equipment management has determined that in accordance with FRD 103D depreciated replacement cost represents a reasonable approximation of fair value at 30th June, 2012.



Reconciliations

Reconciliations of the carrying amounts of each class of Property, Plant and Equipment at the beginning and end of the current financial year and the previous financial year are set out below.

FREEHOLD

LAND

$’000

BUILDINGS

$’000

INFRASTRUCTURE

ASSETS

$’000

IN COURSE OF

CONSTRUCTION

$’000

PLANT &

EQUIPMENT

$’000

TOTAL

$’000

2012

Carrying amount at 1 July, 2011 30,152 5,373 673,210 40,788 6,813 756,336

Additions - 1 38,254 (11,182) 2,215 29,288

Disposals (2) - (85) - (620) (707)

Depreciation Expense - (167) (22,495) - (1,818) (24,480)

Carrying amount at 30 June, 2012 30,150 5,207 688,884 29,606 6,590 760,437

2011

Carrying amount at 1 July, 2010 40,354 8,868 423,476 36,317 6,654 515,669

Additions - 16 15,971 4,471 3,256 23,714

Disposals - (1) (227) - (641) (869)

Revaluation (9,482) 926 241,046 - - 232,490

Asset transfers (720) (4,306) 5,457 - (431) -

Depreciation Expense - (130) (12,513) - (2,025) (14,668)

Carrying amount at 30 June, 2011 30,152 5,373 673,210 40,788 6,813 756,336

2012

$’000

2011

$’000

Depreciation Charge for the Year

Buildings 167 130

Infrastructure 22,495 12,513

Plant and Equipment 1,818 2,025

24,480 14,668

Non-Current Assets Pledged as Security

The Corporation has not pledged any of its non-current assets as security.




NOTE

2012

$’000

2011

$’000

17. Payables

Trade Creditors (i) 11,440 6,726

Sundry Creditors 642 764

12,082 7,490

(i) Includes Vision Superannuation Scheme Defined Benefit Plan unfunded superannuation liability of $3.064m

(2011: $0). Refer Note 25.

Foreign currency risk and interest rate risk for trade and other Payables

The carrying amounts of the Corporation’s trade and other Payables are denominated in Australian dollars. For an analysis of

the sensitivity of trade and other Payables to interest rate risk refer to Note 2.

18. Interest Bearing Liabilities - Secured

Current

Other Loans 9,000 3,000

9,000 3,000

Non-Current

Other Loans 92,000 87,000

92,000 87,000

Total Interest Bearing Liabilities 101,000 90,000

Credit standby arrangements

Total facilities 9,000 15,000

Unused at balance date 9,000 15,000

Loan facilities

Total facilities 101,000 90,000

Used at balance date 101,000 90,000

Unused at balance date - -

Loans are secured by a guarantee from the Treasurer of Victoria.

Off-balance sheet

The Corporation does not have any liabilities classed as off-balance sheet. As per Note 26, the Corporation is not

aware of any Contingent Liabilities as at balance date.



NOTE

2012

$’000

2011

$’000

On-balance sheet

The fair value of current borrowings equals their carrying amount, as the impact of discounting is not significant. The fair

values of non-current borrowings are based on cash flows discounted using current borrowing rates varying from 3.33% to

4.32%, depending on the type of the borrowing (2011 – 5.15% to 5.96%). Fair values are disclosed at Note 24.

The Corporation’s loans are held with the Treasury Corporation of Victoria. These loans are taken out on fixed terms at fixed

interest rates and are staggered in terms of maturity to minimise interest rate risk.

Risk exposures

The exposure of the Corporation’s borrowings to interest rate changes and the contractual

re-pricing dates at the balance dates are as follows:

6 months or less 3,000 3,000

6 – 12 months 6,000 -

1 – 5 years 41,000 44,000

Over 5 years 51,000 43,000

Total Interest Bearing Liabilities 101,000 90,000

The carrying amounts of the Corporation’s borrowings are denominated in Australian

dollars. For an analysis of the sensitivity of borrowings to interest rate risk refer to Note 2.

19. Employee Benefits

Current

Employee Benefits expected to be settled within 12 months, measured at nominal value 1,251 1,258

Employee Benefits expected to be settled after 12 months, measured at present value 2,994 2,546

Total Current 4,245 3,804

Non-Current

Conditional Long Service Leave, measured at present value 416 358

Total Non-Current 416 358

Total Employee Benefits 4,661 4,162

The following assumptions were adopted in measuring the present value of Long Service

Leave entitlements:

Weighted average increase in employee costs 4.31% 4.48%

Weighted average discount rates 3.06% 5.16%

Weighted average settlement period 18 years 12 years




NOTE

2012

$’000

2011

$’000

20. Contributed Capital


Capital transactions with the State in its capacity as owner - -


21. Reserves

Opening balance at 1 July - Asset Revaluation Reserve 186,010 23,267

Revaluation of Property, Plant and Equipment - 232,490

Deferred Tax Liability - (69,747)

Closing balance at 30 June – Asset Revaluation Reserve 186,010 186,010

22. Retained Profits


Profit / (Loss) for the year (4,759) 196


23. Reconciliation of Profit for the Year to Net Cash Inflow from Operating Activities

Profit / (Loss) for the Year (4,759) 196

Add/(Less) Non Cash Flows in Profit for the Year

Contributed Assets (4,691) (4,707)

Depreciation 24,480 14,668

(Profit) / Loss on Sale of Property, Plant and Equipment (23) 193

Bad Debts Written Off 51 42

Change in Operating Assets and Liabilities

(Increase) / Decrease in Receivables (1,522) 2,084

(Increase) in Inventories (188) (114)

(Increase) in Biological Assets (140) (72)

Decrease in Prepayments 40 48

(Increase) in Deferred Tax Assets (4,448) (4,733)

Increase / (Decrease) in Payables 3,277 (737)

Increase in Employee Benefits 500 327

Increase in Deferred Tax Liabilities 2,390 4,808

Net Cash Inflow from Operating Activities 14,967 12,003



24. Financial Instruments(i) Interest Rate Risk Exposures

The Corporation’s exposure to interest rate risks, including the contractual repricing dates and the effective weighted average

interest rate by maturity, is recorded in the table below. Exposures arise predominantly from liabilities bearing variable interest

rates as the Corporation intends to hold fixed rate liabilities to maturity.

NON

INTEREST

BEARING

$’000

FLOATING

INTEREST

RATE

$’000

CONTRACTUAL REPRICING OR MATURITY PERIODS

TOTAL

$’000

1 YEAR

OR LESS

$’000

OVER

1 TO 2

YEARS

$’000

OVER

2 TO 3

YEARS

$’000

OVER

3 TO 4

YEARS

$’000

OVER

4 TO 5

YEARS

$’000

OVER

5 YEARS

$’000

2012

Financial Assets

Cash 5 7,749 - - - - - - 7,754

Receivables 14,513 - 640 674 699 746 797 751 18,820

Total Financial Assets 14,518 7,749 640 674 699 746 797 751 26,574

Weighted Average Interest Rate - 3.22% 6.88% 6.87% 6.86% 6.86% 6.86% 6.78% -

Financial Liabilities

Payables 12,082 - - - - - - - 12,082

Interest Bearing Liabilities - - 9,000 11,000 11,000 13,000 6,000 51,000 101,000

Total Financial Liabilities 12,082 - 9,000 11,000 11,000 13,000 6,000 51,000 113,082

Weighted average interest rate - - 6.78% 5.86% 5.69% 5.92% 6.96% 5.62% -

Net Financial Assets / (Liabilities) 2,436 7,749 (8,360) (10,326) (10,301) (12,254) (5,203) (50,249) (86,508)

2011

Financial Assets

Cash 4 4,336 - - - - - - 4,340

Receivables 12,434 - 607 635 677 701 749 1,546 17,349

Total Financial Assets 12,438 4,336 607 635 677 701 749 1,546 21,689

Weighted Average Interest Rate - 4.41% 6.88% 6.87% 6.87% 6.86% 6.86% 6.82% -


Payables 7,490 - - - - - - - 7,490

Interest Bearing Liabilities - - 3,000 9,000 11,000 11,000 13,000 43,000 90,000

Total Financial Liabilities 7,490 - 3,000 9,000 11,000 11,000 13,000 43,000 97,490

Weighted average interest rate - - 5.69% 6.78% 5.86% 5.69% 5.92% 6.16% -

Net Financial Assets / (Liabilities) 4,948 4,336 (2,393) (8,365) (10,323) (10,299) (12,251) (41,454) (75,801)




(ii) Fair Value of Financial Assets and Liabilities

The carrying amounts and fair values of financial assets and financial liabilities at balance date are:

2012 2011

CARRYING

AMOUNT

$’000

FAIR VALUE

$’000

CARRYING

AMOUNT

$’000

FAIR VALUE

$’000

Financial Assets

Cash and Cash Equivalents 7,754 7,754 4,340 4,340

Receivables 18,820 19,291 17,349 17,647

Total Financial Assets 26,574 27,045 21,689 21,987


Payables 12,082 12,082 7,490 7,490

Interest Bearing Liabilities 101,000 110,371 90,000 92,819

Total Financial Liabilities 113,082 122,453 97,490 100,309

Cash, cash equivalents and non-interest bearing Financial Assets and Financial Liabilities are carried at cost which

approximates their fair value. The fair value of other Financial Assets and Financial Liabilities is based upon market prices,

where a market exists or by discounting the expected future cash flows at current interest rates.

The carrying amounts of interest bearing Receivables are less than their respective fair values. The Corporation intends to

allow these Receivables to run in accordance with their maturities and, accordingly, has decided not to write them up to their

fair values.

The carrying amounts of Interest Bearing Liabilities are less than their respective fair values. The Corporation intends to repay

these borrowings in accordance with their maturities and, accordingly, has decided not to write them up to their fair values.



25. SuperannuationThe Corporation contributes in respect of its employees to 31 superannuation schemes. Contributions to superannuation

schemes expensed during the financial year were as follows:

SCHEME

CONTRIBUTIONS

BASIS OF CALCULATION

PAID OUTSTANDING

2012

$’000

2011

$’000

2012

$’000

2011

$’000

Vision Super Superannuation Scheme

(Defined Benefits)403 454 - -

3.25% of member employee’s

salary plus the equivalent of the

employee’s own contribution rate

Vision Super Superannuation Scheme

(Defined Benefits)- 541 3,064 -

Contribution to the Unfunded

Liability of the Scheme

Vision Super Saver Superannuation

Scheme 777 738 88 76 9% of member employee’s salary

State Superannuation Board New

Scheme64 74 14 -

Varying percentage of member

employee’s salary

First State Superannuation Fund 27 37 - -Varying percentage of member

employee’s salary

Australian Superannuation Fund 55 61 - -Varying percentage of member

employee’s salary

Other Funds 243 190 - 1Varying percentage of member

employee’s salary

1,569 2,095 3,166 77

Vision Super Superannuation Scheme and State Superannuation Fund are Defined Benefits funds. Any unfunded

liability in respect of Vision Super Superannuation Scheme is recognised in the financial statements of the Corporation.

Any unfunded liability in respect of State Superannuation Board New Scheme is recognised in the financial statements

of the State Government of Victoria. The Corporation makes employer contributions to these defined benefit funds at

rates determined by the Trustees on the advice of the Fund’s Actuaries.

The other funds are Accumulation funds. No further liability accrues to the employer for those funds as the

superannuation benefits accruing to the employees are represented by their share of the net assets of the funds.

As at the reporting date there were no loans to or from the Corporation to any of the above funds.

The Vision Super Superannuation Scheme Defined Benefit Plan is a multi-employer sponsored plan. As the Plan’s

assets and liabilities are pooled and are not allocated by employer, the Actuary is unable to reliably allocate benefit

liabilities, assets and costs between employers. As provided under Paragraph 32 (b) of AASB 119, the Corporation

does not use defined benefit accounting for these contributions.

The Corporation makes employer contributions to the defined benefit category of the Fund at rates determined by the

Trustee on the advice of the Fund’s Actuary. On the basis of the results of the most recent full actuarial investigation

conducted by the Fund’s Actuary as at 31 December 2011, the Corporation makes the following contributions:

• 9.25% of members’ salaries (same as previous year);

• the difference between resignation and retrenchment benefits paid to any retrenched employees, plus contribution

tax (same as previous year).




The Fund surplus or deficit (the difference between fund assets and liabilities) is calculated differently for funding

purposes (calculating required contributions) and for the calculation of accrued benefits as required in AAS 25 to

provide the values needed for the AASB 119 disclosure in the Corporation’s financial statements. AAS 25 requires

that the present value of the defined benefit liability be calculated based on benefits that have accrued in respect of

membership of the plan up to the measurement date, with no allowance for future benefits that may accrue.

Accounting Standard Disclosure

The Fund’s liability for accrued benefits, which includes the defined benefit and accumulation funds, was determined by the

Actuary at 31 December 2011 pursuant to the requirements of AAS 25 as follows:

31 DEC 2011

$’000

Net Market Value of Assets 4,315,321

Accrued Benefits 4,642,133

Difference between Assets and Accrued Benefits (326,812)

Vested Benefits (Minimum sum which must be paid to members when they leave the fund) 4,838,503

The financial assumptions used to calculate the Accrued Benefits for the defined benefit category of the Fund were:

• Net Investment Return 7.50% p.a.

• Salary Inflation 4.25% p.a.

• Price Inflation 2.75% p.a.

Pursuant to the actuarial review conducted by the Trustee in 2012 as at 31 December 2011, a funding shortfall of

$406 million for the defined benefit Fund was determined. Upon agreement with the Australian Prudential Regulation

Authority the Trustee will follow a 15 year funding plan so as to have a favourable financial position by the end of

that period. This funding plan includes active members continuing to pay 6% of salary, employers continuing to pay

9.25% of members’ salaries, employers to make additional contributions to cover any future shortfalls as they may

arise and an immediate call to employers for the financial year 30 June, 2012 for an additional contribution of $453

million payable by 1 July, 2013. The Corporation has recognised the sum of $3,064,167 as its share of the unfunded

liability with payment due by 1 July, 2013. This amount has been accounted for as an expense in the Comprehensive

Operating Statement as at the 30 June, 2012.



26. Contingent Liabilities and Contingent Assets

NOTES

2012

$’000

2011

$’000

Site restoration costs

On the 6 August, 2012 the Corporation was issued with a Clean-Up

Notice from the Environment Protection Authority regarding a stockpile

of spoil located at the Shepparton Operations Centre. The stockpile has

to be sampled and analysed for possible contaminants. The cost of this

clean up is not reliably measurable but initial estimates suggest it could

be potentially in the range of $500,000 to $1,000,000 depending on test

results.

Other

At balance date, the Corporation is not aware of any other material

Contingent Liabilities or Contingent Assets not recorded or disclosed in

the accounts.

NOTES

2012

$’000

2011

$’000

27. Capital and Other Commitments

Capital Commitments

Commitments for the acquisition of Property, Plant and Equipment

contracted for at the reporting date, but not recognised as liabilities,

payable:

Within one year 2,396 5,782

2,396 5,782

Other Commitments

The Corporation is committed to making Environmental Contributions

as per the Water Industry (Environmental Contributions) Act 2004 (see

Note 1(c)). The commitments for the Corporation’s contribution to the

consolidated fund at the reporting date, but not recognised as liabilities,

are as follows:

Within one year 1,915 1,915

One to two years 7,266 -

9,181 1,915

These commitments will be met by revenue raised in those periods.




28. Responsible Persons and Executive Officers of the Corporation(i) Responsible Persons

The names of persons holding the position of Responsible Person of the Goulburn Valley Region Water Corporation during

the financial year were:

The Hon. Peter Walsh, MLA Minister for Water

M. Lawlor Chair

C.L. Scott Deputy Chair (retired 30 September, 2011)

M. Hall Director (retired 30 September, 2011)

D.W. Flett Director (Deputy Chair appointed 5 October, 2011)

B. Nicholls Director

S. O’Connor Director

D. McKenzie Director

A. Larkins Director (appointed 1 October, 2011)

D. Rutledge Director (appointed 1 October, 2011)

P.A. Quinn Managing Director

B.P. Hammond Acting Managing Director (9 - 13 January, 2012)

(ii) Remuneration of Responsible Persons

The numbers of Responsible Persons are shown below in their relevant income bands:

INCOME BANDS

2012

NO.

2011

NO.

$0-$9,999 2 -

$10,000-$19,999 2 -

$20,000-$29,999 4 6

$50,000-$59,999 1 1

$270,000-$279,999 1 1

The total remuneration of Responsible Persons including superannuation contributions and retirement benefits referred to in

the above bands was $452,125 (2011: $451,024).

The relevant amounts relating to Ministers are reported in the Annual Report of the Department of Premier and Cabinet.

Other relevant interests are declared in the Register of Members’ Interest which each member of the Parliament completes.



(iii) Remuneration of Executives

The number of Executive Officers, other than Responsible Persons included under “Remuneration of Responsible Persons”

above, whose total remuneration exceeded $100,000 during the reporting period is shown below in their relevant income

bands:

INCOME BANDS

TOTAL REMUNERATION BASE REMUNERATION

2012

NO.

2011

NO.

2012

NO.

2011

NO.

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

$100,000 - $109,999 - - 2 -

$110,000 - $119,999 1 3 1 3

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

$130,000 - $139,999 1 2 1 5

$140,000 - $149,999 3 4 3 1

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

$160,000 - $169,999 2 - - 1

$170,000 - $179,999 - - 1 2

$180,000 - $189,999 1 2 1 -

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

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

Total Number of Executives 12 12 12 12

Annualised Employee Equivalent 11.6 12 11.6 12

Total Remuneration $1,893,767 $1,758,229 $1,683,076 $1,707,765

Base Remuneration excludes any bonus payments, long service leave, redundancy or retirement benefits paid to Executive

Officers. Four Executive Officers retired or resigned during the year. This has had an impact on Total Remuneration due to the

inclusion of annual leave and long service leave payments.

(iv) Other Transactions of Responsible Persons and their Related Entities

Transactions between related parties are on normal commercial terms and conditions.

Land Development

Companies in which Responsible Persons hold an interest, contract to Goulburn Valley Region Water Corporation for the

provision of land development works from time to time. The companies involved and the amount of works during the year

are listed below:

COMPANY DIRECTOR INVOLVED

2012

$

2011

$

Gowangardie Group Pty Ltd D. McKenzie - 926,892

The Boulevard Corporation Pty Ltd D. McKenzie 538,277 138,908

Murray River Estate Pty Ltd M. Hall 5,020 -

Other




D. McKenzie is a Director of Opteon (Goulburn North East Victoria) Pty Ltd which provided property valuation services to the

Corporation during the year on normal terms and conditions. The aggregate amount for the year of these services is $19,250

(2011: $2,145 ~ under the name HMC Valuations Pty Ltd).

There have been no related party transactions with the Minister during the reporting period.

(v) Retirement Benefits of Responsible Persons

There were no retirement benefits paid during the year by the Corporation in connection with the retirement of responsible

persons of the Corporation.

29. Remuneration of Auditors

2012

$’000

2011

$’000

Amounts received, or due and receivable, by the Victorian Auditor-General for

auditing the accounts of the Corporation.46 44

46 44

There were no other services provided by the Victorian Auditor-General in the reporting periods.

30. Events Occurring After Balance DateOther than the matter identified at Note 26 Contingent Liabilities and Contingent Assets no matters or circumstances

have arisen since the end of the reporting period which significantly affect or may significantly affect the operations of the

Corporation, the results of those operations, or the state of affairs of the Corporation in future financial years.


STATUTORY CERTIFICATION

We certify the attached financial statements for Goulburn Valley Region Water Corporation have been prepared in

accordance with Standing Direction 4.2 of the Financial Management Act 1994, applicable Australian Accounting Standards,

Interpretations and other mandatory professional reporting requirements.

We further state that, in our opinion, the information set out in the Comprehensive Operating Statement, Balance Sheet,

Statement of Changes in Equity, Cash Flow Statement and notes to and forming part of the financial statements, presents

fairly the financial transactions during the year ended 30 June 2012 and the financial position of the Corporation as at 30 June

2012.

We are not aware of any circumstance which would render any particulars included in the financial statements to be

misleading or inaccurate.

Signed on behalf of the Corporation

M. G. Lawlor P. A. Quinn G. D. Jolly

Chairman Managing Director General Manager – Financial Services

22 August 2012



11. Notes & AppendicesMinisterial DirectionsReport of Operations – FRD GuidanceLEGISLATION REQUIREMENT PAGE REFERENCE

Charter and purposeFRD 22C Manner of establishment and the relevant Ministers 5

FRD 22C Objectives, functions, powers and duties 2-10

FRD 22C Nature and range of services provided 5

Management and structureFRD 22C Organisational structure 30

Financial and other informationFRD 10 Disclosure index 98

FRD 12A Disclosure of major contracts 47

FRD 15B Executive officer disclosures 92

FRD 22C Operational and budgetary objectives and performance against objectives 6-10

FRD 22C Employment and conduct principles 36

FRD 22C Occupational health and safety policy 39

FRD 22C Summary of the financial results for the year 46

FRD 22C Significant changes in financial position during the year 47

FRD 22C Major changes or factors affecting performance 47

FRD 22C Subsequent events 94

FRD 22C Application and operation of Freedom of Information Act 1982 47

FRD 22C Compliance with building and maintenance provisions of Building Act 1993 48

FRD 22C Statement on National Competition Policy 48

FRD 22C Application and operation of the Whistleblowers Protection Act 2001 49

FRD 22C Details of consultancies over $100 000 47

FRD 22C Details of consultancies under $100 000 47

FRD 22C Statement of availability of other information 48

FRD 25A Victorian Industry Participation Policy disclosures 49

FRD 27B Presentation and reporting of performance information 50-54

FRD 29 Workforce Data disclosures 36

FRD 30A Standard requirements for the design and print of the annual report All

FRD 121 Infrastructure Assets (Water/Rail) 28

SD 4.5.5 Risk management compliance attestation 49

SD 4.2(g) General information requirements 2-5

SD 4.2(j) Sign-off requirements 54, 95

Ministerial Reporting DirectionsMRD 01 Performance Reporting 50-54

MRD 02 Reporting on water consumption and drought response 24-27

MRD 03 Environmental and social sustainability reporting 11-17

MRD 04Disclosure of information on bulk entitlements, transfers of water entitlements,

allocations and licences, irrigation water usage and licence entitlements18-20

MRD 05 Annual reporting of major non-residential water users 25-26

DISCLOSURE INDEX


Financial StatementsFinancial statements required under Part 7 of the FMA

SD4.2(a) Statement of Changes in Equity 60

SD4.2(b) Comprehensive Operating Statement 58

SD4.2(b) Balance Sheet 59

SD4.2(b) Cash Flow Statement 61

Other requirements under Standing Directions 4.2

SD4.2(c)Compliance with Australian accounting standards and other authoritative

pronouncements62, 70-73

SD4.2(c) Compliance with Ministerial Directions 62

SD4.2(d) Rounding of amounts 62

SD4.2(c) Accountable officer’s declaration 95

SD4.2(f) Compliance with Model Financial Report All

Other disclosures as required by FRDs in notes to the financial statementsFRD 03A Accounting for Dividends 70

FRD17A Long service leave wage inflation and discount rates 68, 85

FRD 21B Responsible person and executive officer disclosures 92-94

FRD 102 Inventories 59, 81

FRD 103D Non current physical assets 59, 79, 82-83

FRD 105A Borrowing costs 58, 64 & 78

FRD 106 Impairment of assets 67

FRD 110 Cash flow statements 61, 86

FRD 112C Defined benefit superannuation obligations 89-90

FRD 114AFinancial Instruments – General Government Entities and public non financial

corporations73-76, 87-88

FRD 119 Contributions by owners 59, 86

FRD 120FAccounting and reporting pronouncements applicable from 2011/12 reporting

period70-73

FRD 121 Infrastructure assets 59, 65-67, 82-83

Legislation Freedom of Information Act 1982 47

Building Act 1993 47

Whistleblowers Protection Act 2001 49

Victorian Industry Participation Policy Act 2003 49

Financial Management Act 1994 62

DISCLOSURE INDEX Cont.


Appendix: 1WHISTLEBLOWERS PROTECTION POLICY & PROCEDURES

Table of contents1 Statement of support to whistleblowers 101

2 Purpose of these procedures 101

3 Objects of the act 101

4 Definitions of key terms 101

5 The reporting system 102

6 Roles and responsibilities 103

7 Confidentiality 104

8 Collating and publishing statistics 105

9 Receiving and assessing disclosures 105

10 Investigations 107

11 Action taken after an investigation 109

12 Managing the welfare of the whistleblower 110

13 Management of the person against whom a disclosure has been made 112

14 Criminal offences 113

15 Review 113


WHISTLEBLOWERS PROTECTION POLICY & PROCEDURES Cont.

1. Statement of support to whistleblowers

Goulburn Valley Water (GVW) is committed to the aims and objectives of the Whistleblowers Protection Act

2001 (Act). It does not tolerate improper conduct by its employees, officers or members, nor the taking of

reprisals against those who come forward to disclose such conduct.

GVW recognises the value of transparency and accountability in its administrative and management

practices, and supports the making of disclosures that reveal corrupt conduct, conduct involving a substantial

mismanagement of public resources, or conduct involving a substantial risk to public health and safety or the

environment.

GVW will take all reasonable steps to protect people who make such disclosures from any detrimental action

in reprisal for making the disclosures. It will also afford natural justice to any person who is the subject of a

disclosure.

2. Purpose of these procedures

These procedures establish a system for reporting disclosures of improper conduct or detrimental action

by GVW or its employees. The system enables such disclosures to be made to the protected disclosure

coordinator. Disclosures may be made by employees or by members of the public.

These procedures are designed to complement normal communication channels between supervisors and

employees. Employees are encouraged to continue to raise appropriate matters with their supervisors at any

time. As an alternative, employees may make a disclosure of improper conduct or detrimental action under the

Act in accordance with these procedures.

3. Objects of the act

The Act commenced operation on 1 January 2002. The purpose of the Act is to encourage and facilitate the

making of disclosures of improper conduct by public officers and public bodies. The Act provides protection

to whistleblowers who make disclosures in accordance with the Act, and establishes a system for the matters

disclosed to be investigated and rectifying action to be taken.

4. Definitions of key terms

Three key concepts in the reporting system are improper conduct, corrupt conduct and detrimental action.

Definitions of these terms are set out below. In applying these definitions to GVW, it should be noted that GVW

is a public body and employees of GVW are public officials for the purposes of the Act.

4.1 Improper conduct

A disclosure may be made about improper conduct by a public body or public official. Improper conduct

means conduct that is:

4.1.1 corrupt;

4.1.2 a substantial mismanagement of public resources; or

4.1.3 conduct involving substantial risk to public health or safety or to the environment.

The conduct must be serious enough to constitute, if proved, a criminal offence or reasonable grounds

for dismissal.


Appendix: 1WHISTLEBLOWERS PROTECTION POLICY & PROCEDURES Cont.

4.2 Corrupt conduct

Corrupt conduct means:

4.2.1 conduct of any person (whether or not a public official) that adversely affects the honest

performance of a public officer’s or public body’s functions;

4.2.2 the performance of a public officer’s functions dishonestly or with inappropriate partiality;

4.2.3 conduct of a public officer, former public officer or a public body that amounts to a breach of

public trust;

4.2.4 conduct by a public officer, former public officer or a public body that amounts to the misuse of

information or material acquired in the course of the performance of their official functions; or

4.2.5 a conspiracy or attempt to engage in the above conduct.

4.3 Detrimental action

The Act makes it an offence for a person to take detrimental action against a person in reprisal for

making a protected disclosure. Detrimental action includes:

4.3.1 action causing injury, loss or damage;

4.3.2 intimidation or harassment; and

4.3.3 discrimination, disadvantage or adverse treatment in relation to a person’s employment, career,

profession, trade or business, including the taking of disciplinary action.

5. The reporting system

5.1 Contact persons within GVW

Disclosures of improper conduct or detrimental action by GVW or its employees may be made to the

following officers:

5.1.1 Protected disclosure coordinator

Mr Danny Hogan

General Manager - Corporate Services

104-110 Fryers Street

Shepparton, Victoria 3632

Internet: www.gvwater.vic.gov.au

Email: [email protected]

Tel: 03 5832 0442

Fax: 03 5832 0491

All correspondence, telephone calls and e-mails from internal or external whistleblowers will be referred

to the protected disclosure coordinator.

Where a person is contemplating making a disclosure and is concerned about approaching the protected

disclosure coordinator in the workplace, he or she can call the relevant officer and request a meeting in a

discreet location away from the workplace.



5.2 Alternative contact persons

A disclosure about improper conduct or detrimental action by GVW or its employees may also be made

directly to the Ombudsman:

The Ombudsman Victoria

Level 22, 459 Collins Street

Melbourne Victoria 3000

(DX 210174)

Internet: www.ombudsman.vic.gov.au

Email: [email protected]

Tel: 03 9613 6222

Toll Free: 1800 806 314

6. Roles and responsibilities

6.1 Employees

Employees are encouraged to report known or suspected incidents of improper conduct or detrimental

action in accordance with these procedures.

All employees of GVW have an important role to play in supporting those who have made a legitimate

disclosure. They must refrain from any activity that is, or could be perceived to be, victimisation or

harassment of a person who makes a disclosure. Furthermore, they should protect and maintain the

confidentiality of a person they know or suspect to have made a disclosure.

6.2 Protected disclosure coordinator

The protected disclosure coordinator will:

6.2.1 be a contact point for general advice about the operation of the Act for any person wishing to

make a disclosure about improper conduct or detrimental action;

6.2.2 receive all telephone calls, e-mails and letters from members of the public or employees seeking

to make a disclosure made orally or in writing (from internal and external whistleblowers);

6.2.3 make arrangements for a disclosure to be made privately and discreetly and, if necessary, away

from the workplace;

6.2.4 commit to writing any disclosure made orally;

6.2.5 impartially assess the allegation and determine whether it is a protected disclosure made in

accordance with Part 2 of the Act (see paragraph 9.1 below)

6.2.6 if the disclosure has been determined to be a protected disclosure made in accordance with

Part 2 of the Act, impartially assess it to determine whether it is a public interest disclosure (see

paragraph 9.2 below);

6.2.7 refer all public interest disclosures to the Ombudsman;

6.2.8 be responsible for carrying out, or appointing an investigator to carry out, an investigation

referred to GVW by the Ombudsman;


Appendix: 16.2.9 be responsible for overseeing and coordinating an investigation where an investigator has been

appointed;

6.2.10 appoint a welfare manager (see paragraph 6.4 below) to support the whistleblower and to

protect him or her from any reprisals;

6.2.11 advise the whistleblower of the progress of an investigation into the disclosed matter;

6.2.12 establish and manage a confidential filing system;

6.2.13 collate and publish statistics on disclosures made;

6.2.14 take all necessary steps to ensure the identity of the whistleblower and the identity of the person

who is the subject of the disclosure are kept confidential; and

6.2.15 liaise with the chief executive officer of GVW.

6.3 Investigator

The investigator will be responsible for carrying out an internal investigation into a disclosure where the

Ombudsman has referred a matter to GVW. An investigator may be a person from within GVW or a

consultant engaged for that purpose.

6.4 Welfare manager

The welfare manager is responsible for looking after the general welfare of the whistleblower. The

welfare manager will:

6.4.1 examine the immediate welfare and protection needs of a whistleblower who has made a

disclosure and seek to foster a supportive work environment;

6.4.2 advise the whistleblower of the legislative and administrative protections available to him or her;

6.4.3 listen and respond to any concerns of harassment, intimidation or victimisation in reprisal for

making disclosure; and

6.4.4 ensure that the expectations of the whistleblower are realistic.

7. Confidentiality

GVW will take all reasonable steps to conceal the identity of the whistleblower. Maintaining confidentiality is

crucial in ensuring that reprisals are not made against a whistleblower.

The Act requires any person who receives information due to the handling or investigation of a protected

disclosure not to disclose that information except in certain limited circumstances. Disclosure of information in

breach of section 22 of the Act constitutes an offence that is punishable by a maximum fine of 60 penalty units

($6,000) or six months imprisonment or both.

The circumstances in which a person may disclose information obtained about a protected disclosure include:

7.1 where exercising the functions of GVW under the Act;

7.2 when making a report or recommendation under the Act;

7.3 when publishing statistics in the annual report of GVW; and



7.4 in criminal proceedings for certain offences in the Act.

However, the Act prohibits the inclusion of particulars in any report or recommendation that is likely to lead to

the identification of the whistleblower. The Act also prohibits the identification of the person who is the subject

of the disclosure in any particulars included in an annual report.

GVW will ensure that all files, whether paper or electronic, are kept in a secure room and can only be accessed

by the protected disclosure coordinator, the investigator or welfare manager (in relation to welfare matters).

All printed material will be kept in files that are clearly marked as a “whistleblower matter”, and warn of the

criminal penalties that apply to any unauthorised divulging information concerning a protected disclosure. All

electronic files will be produced and stored on a stand-alone computer and be given password protection.

Backup files will be kept on floppy disc. All materials relevant to an investigation, such as tapes from

interviews, will also be stored securely with the whistleblower files.

GVW will not email documents relevant to a “whistleblower matter” and will ensure that all telephone calls and

meetings are conducted in private.

8. Collating and publishing statistics

The protected disclosure coordinator will establish a secure register to record the information required to be

published in the annual report, and generally to keep account of the status of whistleblower disclosures. The

register will be confidential and will not record any information that may identify the whistleblower.

The register will contain the following information:

8.1 the number and types of disclosures made to GVW during the year;

8.2 the number of disclosures referred to the Ombudsman for determination as to whether they are public

interest disclosures;

8.3 the number and types of disclosed matters referred to GVW by the Ombudsman for investigation;

8.4 the number and types of disclosures referred by GVW to the Ombudsman for investigation;

8.5 the number and types of investigations taken over from GVW by the Ombudsman;

8.6 the number of requests made by a whistleblower to the Ombudsman to take over an investigation from

GVW;

8.7 the number and types of disclosed matters that GVW has declined to investigate;

8.8 the number and types of disclosed matters that were substantiated upon investigation and the action

taken on completion of the investigation; and

8.9 any recommendations made by the Ombudsman that relate to GVW.

9. Receiving and assessing disclosures

9.1 Has the disclosure been made in accordance with Part 2 of the Act?

Where a disclosure has been received by the protected disclosure coordinator or, he or she will assess

whether the disclosure has been made in accordance with Part 2 of the Act and is, therefore, a protected

disclosure.



Appendix: 19.1.1 Has the disclosure been made to the appropriate person?

For the disclosure to be responded to by GVW, it must concern an employee or officer of GVW.

If the disclosure concerns an employee or officer of another public body, the person who has

made the disclosure must be advised of the correct person or body to whom the disclosure

should be directed under the Act. If the disclosure has been made anonymously, it should be

referred to the Ombudsman.

9.1.2 Does the disclosure contain the essential elements of a protected disclosure?

A disclosure is a protected disclosure if:

a. a natural person (that is, an individual person rather than a corporation) makes the disclosure;

b. the disclosure relates to conduct of GVW or an employee or officer of GVW acting in their

official capacity;

c. the disclosure of either improper conduct or detrimental action taken against a person in

reprisal for making a protected disclosure; and

d. the person making the disclosure has reasonable grounds for believing the alleged conduct

has occurred.

Where a disclosure is assessed to be a protected disclosure, it must be referred to the protected

disclosure coordinator. The protected disclosure coordinator will determine whether the disclosure is a

public interest disclosure.

Where a disclosure is assessed not to be a protected disclosure, the matter does not need to be dealt

with under the Act. The protected disclosure coordinator will decide how best to respond to the matter.

9.2 Is the disclosure a public interest disclosure?

Where the protected disclosure coordinator has received a disclosure that has been assessed to be

a protected disclosure, he or she will determine whether the disclosure amounts to a public interest

disclosure. This assessment will be made within 45 days of the receipt of the disclosure.

In reaching a conclusion as to whether a protected disclosure is a public interest disclosure, the protected

disclosure coordinator will consider whether the disclosure shows, or tends to show, that the public

officer to whom the disclosure relates:

9.2.1 has engaged, is engaging or proposes to engage in improper conduct in his or her capacity as

a public officer; or

9.2.2 has taken, is taking or proposes to take detrimental action in reprisal for the making of the

protected disclosure.

Where the protected disclosure coordinator concludes that the disclosure amounts to a public interest

disclosure, he or she must:

9.2.3 notify the person who made the disclosure of that conclusion; and

9.2.4 refer the disclosure to the Ombudsman for formal determination as to whether it is indeed a

public interest disclosure.

Where the protected disclosure coordinator concludes that the disclosure is not a public interest

disclosure, he or she must:



9.2.5 notify the person who made the disclosure of that conclusion; and

9.2.6 advise that person that he or she may request GVW to refer the disclosure to the Ombudsman

for a formal determination as to whether the disclosure is a public interest disclosure, and that

this request must be made within 28 days of the notification.

In either case, the protected disclosure coordinator must make the notification and the referral within 14

days of the conclusion being reached by GVW. Notification to the whistleblower is not necessary where

the disclosure has been made anonymously.

10. Investigations

10.1 Introduction

Where the Ombudsman refers a protected disclosure to the GVW for investigation, the protected

disclosure coordinator will appoint an investigator to carry out the investigation.

The objectives of an investigation will be:

10.1.1 to collate information relating to the allegation as quickly as possible. This may involve taking

steps to protect or preserve documents, materials and equipment;

10.1.2 to consider the information collected and to draw conclusions objectively and impartially;

10.1.3 to maintain procedural fairness in the treatment of witnesses and the person who is the subject

of the disclosure; and

10.1.4 to make recommendations arising from the conclusions drawn concerning remedial or other

appropriate action.

10.2 Terms of Reference

Before commencing an investigation, the protected disclosure coordinator must draw up terms of

reference and obtain authorisation for those terms from the chief executive officer of GVW. The terms

of reference will set a date by which the investigation report is to be concluded, and will describe the

resources available to the investigator to complete the investigation within the time set. The protected

disclosure coordinator may approve, if reasonable, an extension of time requested by the investigator.

The terms of reference will require the investigator to make regular reports to the protected disclosure

coordinator who, in turn, must keep the Ombudsman informed of general progress.

10.3 Investigation Plan

The investigator will prepare an investigation plan for approval by the protected disclosure coordinator.

The plan will list the issues to be substantiated and describe the avenue of inquiry. It will address:

10.3.1 what is being alleged;

10.3.2 what are the possible findings or offences;

10.3.3 what are the facts in issue;

10.3.4 how the inquiry is to be conducted; and



Appendix: 110.3.5 what resources are required.

At the commencement of the investigation, the whistleblower will be:

10.3.6 notified by the investigator that he or she has been appointed to conduct the investigation;

10.3.7 asked to clarify any matters; and

10.3.8 asked to provide any additional material he or she might have.

The investigator must be sensitive to the whistleblower’s possible fear of reprisals and be aware of the

statutory protections available to the whistleblower.

10.4 Natural justice

The principles of natural justice will be followed in any investigation of a public interest disclosure. The

principles of natural justice concern procedural fairness and ensure that a fair decision is reached by an

objective decision maker. Maintaining procedural fairness protects the rights of individuals and enhances

public confidence in the process.

GVW will have regard to the following issues in ensuring procedural fairness:

10.4.1 the person who is the subject of the disclosure is entitled to know the allegations made against

him or her and must be given the right to respond. (This does not mean that the person must

be advised of the allegation as soon as the disclosure is received or the investigation has

commenced);

10.4.2 if the investigator is contemplating making a report adverse to the interests of any person, that

person should be given the opportunity to put forward further material that may influence the

outcome of the report and that person’s defence should be fairly set out in the report;

10.4.3 all relevant parties to a matter should be heard and all submissions should be considered;

10.4.4 a decision should not be made until all reasonable inquiries have been made;

10.4.5 the investigator or any decision maker should not have a personal or direct interest in the matter

being investigated;

10.4.6 all proceedings should be carried out fairly and without bias. Care should also be taken to

exclude perceived bias from the process; and

10.4.7 the investigator should be impartial in assessing the credibility of the whistleblowers and

any witnesses. Where appropriate, conclusions as to credibility should be included in the

investigation report.

10.5 Conduct of the investigation

The investigator will make contemporaneous notes of all discussions and telephone calls, and all

interviews with witnesses must be taped. All information gathered in an investigation will be stored

securely. Interviews will be conducted in private and the investigator must take all reasonable steps to

protect the identity of the whistleblower. Where disclosure of the identity of the whistleblower cannot be

avoided, due to the nature of the allegations, the investigator will warn the whistleblower and his or her

welfare manager of this probability.



It is in the discretion of the investigator to allow any witness to have legal or other representation

or support during an interview. If a witness has a special need for legal representation or support,

permission should be granted.

10.6 Referral of an investigation to the Ombudsman

The protected disclosure coordinator must make a decision regarding the referral of an investigation to

the Ombudsman where, on the advice of the investigator:

10.6.1 the investigation is being obstructed by, for example, the non-cooperation of key witnesses; or

10.6.2 the investigation has revealed conduct that may constitute a criminal offence.

10.7 Reporting requirements

The protected disclosure coordinator must ensure that the whistleblower is kept regularly informed

concerning the handling of a protected disclosure and an investigation.

The protected disclosure coordinator must report to the Ombudsman about the progress of an

investigation.

Where the Ombudsman or the whistleblower requests information about the progress of an

investigation, that information must be provided within 28 days of the date of the request.

11. Action taken after an investigation

11.1 Investigator’s final report

At the conclusion of the investigation, the investigator must submit a written report of his or her findings

to the protected disclosure coordinator. The report will contain:

11.1.1 the allegation/s;

11.1.2 an account of all relevant information received and, if the investigator has rejected evidence as

being unreliable, the reasons for this opinion being formed;

11.1.3 the conclusions reached and the basis for them; and

11.1.4 any recommendations arising from the conclusions.

Where the investigator has found that the conduct disclosed by the whistleblower has occurred,

recommendations made by the investigator will include:

11.1.5 the steps that need to be taken by GVW to prevent the conduct from continuing or occurring in

the future; and

11.1.6 any action that should be taken by GVW to remedy any harm or loss arising from the conduct.

This action may include bringing disciplinary proceedings against the person responsible for the

conduct, and referring the matter to an appropriate authority for further consideration.

The report should be accompanied by:

11.1.7 the transcript or other record of any oral evidence taken, including tape recordings; and



Appendix: 111.1.8 all documents, statements or other exhibits received by the officer and accepted as evidence

during the course of the investigation.

Where the investigator’s report is to include an adverse comment against any person, that person must

be given the opportunity to respond and his or her defence must be fairly included in the report.

The report must not disclose particulars likely to lead to the identification of the whistleblower.

11.2 Action to be taken

If the protected disclosure coordinator is satisfied that the investigation has found that the disclosed

conduct has occurred, he or she should recommend to the chief executive officer the action that must

be taken to prevent the conduct from continuing or occurring in the future. The protected disclosure

coordinator may also recommend that action be taken to remedy any harm or loss arising from the

conduct.

The protected disclosure coordinator will provide a written report to the Minister for Environment and

Conservation, the Ombudsman and the whistleblower setting out the findings of the investigation and

any remedial steps taken.

Where the investigation concludes that the disclosed conduct did not occur, the protected disclosure

coordinator must report these findings to the Ombudsman and to the whistleblower.

12. Managing the welfare of the whistleblower

12.1 Commitment to protecting whistleblowers

GVW is committed to the protection of genuine whistleblowers against detrimental action taken in

reprisal for the making of protected disclosures. The protected disclosure coordinator is responsible

for ensuring that whistleblowers are protected from direct and indirect detrimental action, and that the

culture of the workplace is supportive of protected disclosures being made.

The protected disclosure coordinator will appoint a welfare manager (see paragraph 6.4) to all

whistleblowers who have made a protected disclosure. The welfare manager will:

12.1.1 examine the immediate welfare and protection needs of a whistleblower who has made a

disclosure and, where the whistleblower is an employee, seek to foster a supportive work

environment;

12.1.2 advise the whistleblower of the legislative and administrative protections available to him or her;

12.1.3 listen and respond to any concerns of harassment, intimidation or victimisation in reprisal for

making disclosure;

12.1.4 keep a contemporaneous record of all aspects of the case management of the whistleblower

including all contact and follow-up action; and

12.1.5 ensure the expectations of the whistleblower are realistic.

All employees should be advised that it is an offence for a person to take detrimental action in reprisal

for a protected disclosure. The maximum penalty is a fine of 240 penalty units ($24,000) or two years

imprisonment or both. The taking of detrimental action in breach of this provision can also be grounds

for making a disclosure under the Act and can result in an investigation.



Detrimental action includes:

12.1.6 causing injury, loss or damage;

12.1.7 intimidation or harassment; and

12.1.8 discrimination, disadvantage or adverse treatment in relation to a person’s employment, career,

profession, trade or business (including the taking of disciplinary action).

12.2 Keeping the whistleblower informed

The protected disclosure coordinator must ensure that the whistleblower is kept informed of action taken

in relation to his or her disclosure, and the time frames that apply. The whistleblower should be informed

of the objectives of an investigation, the findings of an investigation, and the steps taken by GVW to

address any improper conduct that has been found to have occurred. The whistleblower should be given

reasons for decisions made by GVW in relation to a protected disclosure.

12.3 Occurrence of detrimental action

If a whistleblower reports an incident of harassment, discrimination or adverse treatment that would

amount to detrimental action taken in reprisal for the making of the disclosure, the welfare manager will:

12.3.1 record details of the incident;

12.3.2 advise the whistleblower of his or her rights under the Act; and

12.3.3 advise the protected disclosure coordinator or chief executive officer of the detrimental action.

The taking of detrimental action in reprisal for the making of a disclosure can be an offence against

the Act as well as grounds for making a further disclosure. Where such detrimental action is reported,

the protected disclosure coordinator will assess the report as a new disclosure under the Act. Where

the protected disclosure coordinator is satisfied that the disclosure is a public interest disclosure, he or

she will refer it to the Ombudsman. If the Ombudsman subsequently determines the matter to be a

public interest disclosure, the Ombudsman may investigate the matter or refer it to another body for

investigation as outlined in the Act.

12.4 Whistleblowers implicated in improper conduct

Where a person who makes a disclosure is implicated in misconduct, GVW must handle the disclosure

and protect the whistleblower from reprisals in accordance with the Act, the Ombudsman’s Guidelines

and these procedures. GVW acknowledges that the act of whistleblowing should not shield

whistleblowers from the reasonable consequences flowing from any involvement in improper conduct.

Section 17 of the Act specifically provides that a person’s liability for his or her own conduct is not

affected by the person’s disclosure of that conduct under the Act. However, in some circumstances, an

admission may be a mitigating factor when considering disciplinary or other action.

The chief executive officer of GVW will make the final decision on the advice of the protected disclosure

coordinator as to whether disciplinary or other action will be taken against a whistleblower. Where

disciplinary or other action relates to conduct that is the subject of the whistleblower’s disclosure, the

disciplinary or other action will only be taken after the disclosed matter has been appropriately dealt

with.

In all cases where disciplinary or other action is being contemplated, the chief executive officer of GVW

should be satisfied that it has been clearly demonstrated that:



Appendix: 112.4.1 the intention to proceed with disciplinary action is not causally connected to the making of the

disclosure (as opposed to the content of the disclosure or other available information);

12.4.2 there are good and sufficient grounds that would fully justify action against any non-

whistleblower in the same circumstances; and

12.4.3 there are good and sufficient grounds that justify exercising any discretion to institute disciplinary

or other action.

The protected disclosure coordinator will thoroughly document the process including recording the

reasons why the disciplinary or other action is being taken, and the reasons why the action is not in

retribution for the making of the disclosure. The protected disclosure coordinator will clearly advise the

whistleblower of the proposed action to be taken, and of any mitigating factors that have been taken

into account.

13. Management of the person against whom a disclosure has been made

GVW recognises that employees against whom disclosures are made must also be supported during the

handling and investigation of disclosures. GVW must take all reasonable steps to ensure the confidentiality

of the person who is the subject of the disclosure during the assessment and investigation process. Where

investigations do not substantiate disclosures, the fact that the investigation has been carried out, the results of

the investigation, and the identity of the person who is the subject of the disclosure will remain confidential.

The protected disclosure coordinator will ensure that the person who is the subject of any disclosure

investigated by or on behalf of GVW is:

13.1 informed as to the substance of the allegations;

13.2 given the opportunity to answer the allegations before a final decision is made;

13.3 informed as to the substance of any adverse comment that may be included in any report arising from

the investigation; and

The defence of the person who is the subject of any disclosure should be set out fairly in any report.

Where the allegations in a disclosure have been investigated, and the person who is the subject of the

disclosure is aware of the allegations or the fact of the investigation, the protected disclosure coordinator will

formally advise the person who is the subject of the disclosure of the outcome of the investigation.

GVW will give its full support to a person who is the subject of a disclosure where the allegations contained in

a disclosure are clearly wrong or unsubstantiated. If the matter has been publicly disclosed, the chief executive

officer of GVW will consider any request by that person to issue a statement of support setting out that the

allegations were clearly wrong or unsubstantiated.



14. Criminal offences

GVW will ensure that officers appointed to handle protected disclosures and all other employees are aware of

the offences created by the Act set out below.

14.1 It is an offence for a person to take detrimental action against a person in reprisal for a protected

disclosure being made. The Act provides a maximum penalty of a fine of 240 penalty units ($24,000) or

two years imprisonment or both.

14.2 It is an offence for a person to divulge information obtained as a result of the handling or investigation of

a protected disclosure without legislative authority. The Act provides a maximum penalty of 60 penalty

units ($6,000) or six months imprisonment or both.

14.3 It is an offence for a person to obstruct the Ombudsman in performing his responsibilities under the Act.

The Act provides a maximum penalty of 240 penalty units ($24,000) or two years imprisonment or both.

14.4 It is an offence for a person to knowingly provide false information under the Act with the intention that it

be acted on as a disclosed matter. The Act provides a maximum penalty of 240 penalty units ($24,000) or

two years imprisonment or both.

15. Review

These procedures will be reviewed annually to ensure they meet the objectives of the Act and accord with the

Ombudsman’s Guidelines.



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year ended 30 june, 2012 - parliament of victoria · 2013. 6. 7. · profit / (loss) for the year...

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