SWIMCO - Audit Report 68pp inc cover.indd

Transcription

SOUTH WEST IRRIGATION
MANAGEMENT COOPERATIVE LIMITED
Annual Report
2011/12
This page has been left blank intentionally
Contents
Harvey Water at a Glance .......................... 1
About Harvey Water .................................. 2
Chairman’s Report ..................................... 3
General Manager’s Report......................... 5
Management Structure ............................12
Board of Directors .....................................13
Senior Management Team ...................... 15
Corporate Governance............................. 16
Directors’ Report...................................... 19
Statutory Report of the Directors ........... 20
Certificate by the Directors .......................21
Declaration by the General Manager .......21
Financial Report ....................................... 22
Audit Report ............................................. 62
HWIA Map ................................................ 65
Harvey Water at a Glance
HEAD OFFICE
BOARD OF DIRECTORS
James Stirling Place (PO Box 456)
HARVEY WA 6220
Telephone: 08 9729 0100
Facsimile: 08 9729 0111
Email:
[email protected]
Website:
www.harveywater.com.au
Ian Eckersley
Sam Epiro
Tom Busher
Kevin Depiazzi
Len Snell
Mike Snell
Chairman
Deputy Chairman
Collie
Collie
Waroona
Non-Member Director
SENIOR STAFF
General Manager
Operations Manager
Corporate Services Manager / Accountant
Geoff Calder
Steve Iceton
Susan Boland
LEGAL ADVISORS
AUDITORS
Corrs Chambers Westgarth
Sceales & Co
Jenni Mattila & Associates
AMD Chartered Accountants
28-30 Wellington Street
BUNBURY WA 6230
BANKERS
INSURANCE BROKERS
Westpac Banking Corporation
143 Victoria Street
BUNBURY WA 6230
AON Risk Services Australia Ltd
Level 32, QV 1, 250 St Georges Terrace
PERTH WA 6000
STATISTICS
Total Irrigation Area
112,000 ha
Total Area of Farms
34,369 ha
Total Irrigated Area (2011/12) 5,734 ha
Number of Members
720
Number of staff (FTE)
Lined Channels*
Unlined Channels*
Pipelines*
23
85km
171km
489km
Average Annual Sales
(2001-11) 63.9 GL
Number of Supply Points*
Total Number of Assets*
1,668
7,338
*statistics relate to entire irrigation system, some assets may
actually be owned by SWIAC.
2011/12 HIGHLIGHTS
•
•
Construction of the Somers Road pipeline.
Community Involvement – Harvey Water supported local events/organisations, including:
Harvey Harvest Festival
Brunswick Ag. Society
Lions Club of Harvey
Rotary Club of Harvey
Waroona Ag. Society
Harvey Visitor Centre
Harvey Golf Club
Log Fence Pony Club
Brunswick Bowling Club
Harvey Agricultural. Society
Page 1
Harvey Water Annual Report 2011/12
About Harvey Water
South West Irrigation Management
Cooperative Ltd (SWIMCO), trading as
Harvey Water, is a locally owned, self
funded cooperative serving its 720
Members in the Shires of Waroona, Harvey
and Dardanup.
The Harvey Water Irrigation Area (HWIA) is
located to the west of the Darling Scarp on
the Swan Coastal Plain, around 100 km
south of Perth. Irrigation is long established
in the HWIA with Harvey Water assuming
responsibility for the management of the
assets and the distribution of water in 1996
in response to COAG competition policy.
The HWIA covers an area of 112,000
hectares (around 75km long and 15km
wide) in three Irrigation Districts: Harvey,
Waroona and Collie River. There are
currently around 6,000 ha of land under
permanent irrigation for dairy farming,
beef grazing and horticulture, with a total
irrigable area of approximately 34,000 ha.
Harvey Water is responsible for the
delivery of water to irrigators and the
irrigation system delivery infrastructure - a
network of channels and pipes: 85km lined
channels, 171km unlined channels and
489km of pipeline with about 350 water
checks and diversions and 1,600 supply
points.
The Company is well recognised across
Australia for its lateral thinking and
creative approach to water use efficiency
programmes. Harvey Water has received
particular attention with its multi award
winning $100 million Pipe Projects gaining
national recognition and praise not only for
the concepts involved and the benefits
brought to the community, but also due to
the skill and diligence of Harvey Water’s
Board and management who delivered this
project on time and on budget. Prior to
the major Project the Waroona District was
converted to a piped system in 2003.
The piped irrigation system allows
24x7x365 access to water under sufficient
gravity pressure for operating sprinklers
and similar higher technology systems,
which leads to more efficient on farm
usage of water. The aim is to convert the
rest of the system to pipes, particularly the
Collie River Irrigation District.
Harvey Water is licensed to draw an annual
total of 136,360 ML from the seven dams,
Waroona, Drakesbrook, Samson Brook,
Logue Brook, Stirling, Harvey, Wellington
and Burekup Weir, which are the supply
sources for the irrigation area. The HWIA is
different from most Australian irrigation
areas because it does not have a
longitudinal river system(s) from which
water is diverted or pumped. Water is
supplied entirely by gravity flow from dam
to farm along a network of channels and
pipes.
Page 2
Chairman’s Report
Ian Eckersley - Chairman
On behalf of my fellow Directors at Harvey
Water, it gives me great pleasure to
present the Chairman’s Report for
2011/12.
The drying trend as forecast by science and
experienced by all in the past decade has
continued and resulted in an allocation of
just 45% in the Waroona/Logue/Harvey
Irrigation Districts. Thankfully, this is more
than the 34% last year but still well under
the long-term average. In making sense of
this it is appropriate to note that four of
the driest years in the past century have
occurred in the past decade.
This lack of runoff into the dams has a
significant effect on the costs of water for
irrigators. On the other side of the
equation, there is less water delivery
income for Harvey Water. Collie River
irrigators again received 100% allocation
but of water quality that we would all
prefer to be much better.
Another feature of the year was the
unusually wet spring which meant that
irrigators did not need to draw on their
entitlements until quite late in the season.
This was a bonus for irrigators but meant
that Harvey Water did not make the usual
12 GL of deliveries during that period and
so income was down.
Page 3
Unhappily, for the first time since Harvey
Water was privatised, the company made
an operating loss after tax of $1.86 m,
largely due to the much lower water
delivery income. With expected water
sales next year, this disappointing result is
not expected to be repeated.
The
construction phase that the cooperative
has been going through has eased off for
the present, so cost savings have been
made in the Asset Management area. The
balance sheet remains strong with a loan
of $1M from SWIAC being the main
important liability.
The Waroona and Logue catchments both
performed poorly yet Wokalup Pipehead
dam transferred 7.2 GL into Harvey dam
compared to 1.2 GL the previous year. It
appears that the rainfall is not as heavy or
as uniform as before with a big local
rainfall/runoff event helping the Wokalup
Catchment.
With the challenge of low supplies in the
Waroona area and Harvey Water’s desire
for uniform allocation across Waroona and
Harvey Irrigation Districts, a 8km HDPE
pipeline was installed along Somers Road
at a cost of $2.8M. This enabled water to
be transferred from Harvey dam under
gravity into the western side of the
Waroona Irrigation District. Local meetings
were also held to demonstrate the benefits
of good scheduling in the Water Delivery
section to enable the most effective use of
the system.
Water quality in the Collie River Irrigation
District remains Harvey Water’s biggest
challenge. We have been working in
conjunction with the South West
Development Commission and the
Department of Water plus an industry and
a government committee, albeit at a
frustratingly slow pace, to promote a
project to improve the situation for the
long term.
Chairman’s Report (cont.)
At Harvey Water’s request, our engineering
consultants have completed the design to
store diverted water in the upper
catchment of the Collie River East Branch.
From there, they have also designed a
transfer pipeline route to move the high
salinity water from the storage to an outfall
into the sea. The modelling of this system
estimates that by removing the
autumn/early winter flows from the river,
the salinity in the dam will be reduced to
less than 700 mg/l TDS. It remains for a
Business Case to be developed which will
assess the economics, governance and
access regimes for presentation to
government.
A Special General Meeting was held on 2nd
May at the Benger Hall where the
members voted on and approved the
adoption of the new Rules to enable
SWIMCO to operate in compliance with the
new WA Cooperatives Act 2009.
Subsequently the Board formally accepted
the voting and approved the adoption of
the Rules at its June meeting. The Rules
were then forwarded to the Registrar who
agreed that they were compliant with the
Act and registered them. These Rules
replaced the Articles of Association, under
which SWIMCO had operated since 1996.
In the main, the new Rules are a repeat of
the old Articles with some adjustments to
bring SWIMCO into line with the Act. The
two notable differences are the ability for a
member to resign from the cooperative
and a tightening of the active membership
provisions that require the Board to cancel
the membership of shareholders who are
not active according to the Rules.
The position the Board has adopted and
will continue to apply is to always act in the
best interests of all 720 members, to
attempt to treat all members equitably and
to ensure the financial viability of the
company. Any resignations will have the
effect of spreading the fixed costs across
fewer shares resulting in higher costs for
Page 4
remaining members.
Harvey Water
therefore expects members who are
intending to resign to first attempt to trade
with existing members by any of a number
of means available. At present, this is not
an issue in the Waroona and Harvey
Irrigation Districts because there is a strong
market there but for 2011/12, there was
effectively no market in the Collie River
Irrigation District.
Although SWIMCO and SWIAC have nearly
the same shareholders, they are separate
companies and so have to operate at legal
arm’s length. I am pleased to report that
the good relationships between the two
cooperatives have been maintained.
Our key personnel at Harvey Water, led by
General Manager, Geoff Calder and
Operations Manager, Steve Iceton and staff
have all continued to perform at a high
level and deserve congratulations. It is a
well-known fact that our shareholders have
had to become a lot more efficient over
time and Harvey Water management also
aspires to continued improvement.
Your elected Board has applied themselves
constructively to ensure the successful
future of Harvey Water. I would like to
thank my fellow Directors for their support
and efforts over the reporting period. Tom
Busher and Len Snell will be completing
their 3-year terms at the 2012 AGM and
have given advice of their retirement. Their
input has been enthusiastic and valuable
and I would like to acknowledge their
contribution to the Board and cooperative.
I would encourage anyone in the Waroona
and Collie River Irrigation Districts with an
interest in joining the Board to contact
fellow Directors or myself for any
information and support.
General Manager’s Report
assessments plus the ability to resign and
to apply for partial buy-back of shares.
These options are stimulating significant
interest in the Collie River Irrigation District
(CRID).
The passage of the new Water Services Act
is a major step towards modernising the
near 100-year-old water legislation in WA.
Geoff Calder – General Manager
OVERVIEW
The key issue affecting the cooperative’s
result this year was the continuing low
allocation of 45% in the Waroona/Harvey
Irrigation District (W/HID).
Combined with the wet spring this led to
low deliveries and had a direct influence on
the poor financial outcome in 2011/12
where an operating loss after tax of $1.86
m was recorded. This is the first time in 15
years that Harvey Water has made an
operating loss.
Harvey Water is working hard to mitigate
the effects of the drying climate and
decided to invest in a pipeline that
connected, and thus integrated, the
Waroona and Harvey Irrigation Districts
allowing a single allocation to apply.
Harvey Water’s attempts to stimulate
action to reduce salinity in Wellington dam
continue to have their ups and downs.
However, for the first time the cooperative
has real confidence that a project proposal
will be provided to government before the
end of 2012.
The cooperative was required to change its
previous Articles of Association to Rules
that complied with the new WA
Cooperatives Act 2009.
This brought
significant changes in active membership
Page 5
Harvey Water approached the Economic
Regulation Authority to review the charges
it requires Harvey Water to pay to Water
Corporation because of the way these
increase the effective cost of water in these
drying times.
The annual Customer Survey was similar to
previous years in which CRID irrigators are
generally quite grumpy because of fair and
reasonable concerns while W/HID members
are more satisfied.
The recognition given to past Chairman
Dan Norton at the IAL Conference in
Launceston was for his Life Membership of
ANCID and a proud moment for us all.
Annual Water Allocation
The effects of the extremely dry 2010
winter followed through to 2011/12. This
type of outcome is becoming clearer as we
experience more of these very dry events.
The allocation in W/HID was 45% of
entitlement, more than the 34% in 2010/11
at least, but well below the 15 year
average of 70%.
Of particular concern for Harvey Water was
that the stand-alone allocation for the WID
would have been about 15%. In the
interest of equitable treatment for
members, Harvey Water invested $2.8 m
to construct the 8km Somers Road pipeline
that connects the HID with the western
side of the WID.
General Manager’s Report (cont.)
This allows direct gravity access to the
Harvey Dam, taking the pressure off the
very low Waroona and Logue Brook Dams
and permitted the 45% allocation across
both districts.
been recorded in the 15 years the
cooperative has been functioning. The
balance sheet remains strong and the longterm budgets show that this loss will be a
one off aberration.
This investment further advances Harvey
Water’s ambition to integrate the whole
irrigation area as far as possible. In the
northern districts this effectively allows the
four storages to be managed as one, rather
than having to access the water in them
independently of each other.
Collie Kemerton Integrated Water
Management Strategy
Harvey Water has been involved with
government in trying to find ways to
reduce the salinity in Wellington Dam since
the day we began in 1996. Over the years,
there have been multitudes of meetings,
discussions and committees that have
resulted in slow progress. During 2011/2,
the cooperative worked with the South
West Development Commission to develop
a project proposal to achieve the reduction
irrigators need. A good beginning then
collided with the needs of government
administrative processes with the result
that at financial year-end there had not
been much to show for the effort that had
gone in.
Nonetheless, Harvey Water
remains confident that there will be
funding and progress towards presenting a
business case to government by the end of
2012.
In response to this further low allocation,
Harvey Water engaged a local consultant,
Steve Hossen, to provide information and
support to irrigators on how to manage
their way through low allocation times.
This was broadcast on the Local ABC
Morning Rural Radio session and Harvey
Water adapted the talks to eight
Information Bulletins that are available on
its website.
The allocation in the CRID remained at
100% but of much poorer quality water.
Irrigation Water Deliveries
The volume of water delivered and as a
percentage of entitlement this season was
5,271 ML or 38% for WID, 18,424 ML or
37% for HID and 22,397 ML or 50% for
CRID respectively. These are record low
results for all districts by a considerable
margin.
Apart from the low allocation, the much
wetter than normal spring meant that 12
GL of deliveries that normally occurred
during the spring months were not
required because members were able to
rely on rainfall instead.
Financial Result
The financial result from this low volume of
deliveries was an operating loss after tax of
$1.86 m. This is the first time a loss has
Page 6
The cooperative has spent a lot of time and
effort in lobbying the various Ministers,
politicians and government departments
on the importance of the project and has
always received a positive response.
Cooperatives Legislation
The State government passed the WA
Cooperatives Act (2009), which is core
consistent with similar acts passed in all
other Australian states and territories. As a
cooperative under this act, Harvey Water
was required to replace its Articles of
Association with new Rules that conformed
to the act.
It was also necessary for Harvey Water to
ask members whether to accept the Act
and adopt the Rules. Members voted on
these choices and approved both late in
the year.
Some significant differences between the
new Rules and previous Articles are that
there are tighter rules on active
membership, members now have the right
to resign and they can request the
cooperative to buy back some of their
shares.
Harvey Water had been working on the
implications of resignations and partial
buy-backs for many months and met with
members in May to explain the Rules and
the choices, to receive feedback from
them. By June, the cooperative was ready
to receive applications for resignations and
15 enquiries involving 1,834 shares were
recorded by the end of the year.
Water Legislation
The RIWI Act dates from 1914 so it is well
past time that it was updated to modern
conditions and to reflect the changes that
have occurred nationally with the National
Water Initiative and the Commonwealth
Water Act.
The Water Services Act was passed late in
the year but needs to have the regulations
added, which describe the detail of how it
will operate, before it will receive assent.
Harvey Water was required to pay Water
Corporation a Water Storage Charge and a
Dam Safety Charge based on the nominal
entitlement to water stored in the dams.
Harvey Water was at all times sceptical of
some of the assumptions that were applied
but accepted the outcome as the best
possible in the end.
Since that time, the volume of water in the
dams has decreased consistently and
markedly so that the impact of these fixed
charges has meant that the effective cost
of water entitlement has trebled in some
years while the risk of dams failing would
seem to have diminished considerably.
Harvey Water approached ERA to review
this issue because irrigators are finding it
difficult to afford to use their water at the
costs involved.
We were very pleased to engage with a
group of irrigators who gave excellent
input into the submission that went up and
we thank them for their contributions.
This review was underway during the last
months of the 2011/12 year.
The development of the Water Resources
Management Bill was progressed during
the year with Harvey Water represented
on the Horticulture/Agriculture Industry
Reference Group that is providing input to
government.
ERA Review
Harvey Water stores the water it is
licensed to take in dams owned by the
Water Corporation so it is fair that it pay
charges associated with the operations of
this infrastructure.
The Economic
Regulation Authority (ERA) reviewed these
charges during 2006/7 with input and
challenge from Harvey Water and Water
Corporation. The outcome was that
Page 7
Customer Survey
The results from the annual customer
survey held in May/June were consistent
with previous surveys of recent times.
CRID irrigators were concerned about the
quality of the water from Wellington dam
which, when combined with the low
profitability in agriculture presently and
the high effective cost of water from fixed
charges, means that they are quite
concerned about the future.
To some extent, this is transferred to
discontent with the services provided by
Harvey Water.
On the other hand, irrigators in the W/HID
who have good quality water, if of
restricted allocations, along with an
excellent water delivery system, were
more content with what Harvey Water
offers.
Of concern to Harvey Water was the
comment that some members felt that the
cooperative was not transparent in its
dealings with members.
This was
disturbing to some extent because the
cooperative has no reason to hide anything
from members and answers all queries as
accurately and fully as they can be, except
where they are commercial-in-confidence.
It is always a disappointment to Harvey
Water that there are rarely more than 30
to 40 people out of our 720 members, at
any meeting that we organise and where
information can be provided directly.
Tariffs
A significant portion of the tariffs levied on
members is outside of Harvey Water’s
control. In a year of full allocation where
an irrigator uses all their entitlement, the
full cost is $41.03/ML (2011/2) in payments
to SWIMCO.
The Water Delivery Charge reflects the
company operating costs to get water to
members. It has increased from $19.80 in
1997/98 to $25.85/ML in 2011/12, which
demonstrates how well controlled
company costs are, being an average of
2.03% increase per year. There are not
many farm input costs that can compete
with that.
Page 8
On the other hand, the fixed charges
collected by Harvey Water and paid fully
and directly to Water Corporation amount
to $15.06/share irrespective of the
allocation. This will continue to increase
according to a 10 year price path until the
new cost level is reached in 2016/17.
These fixed charges are supported by
government, which pays a Community
Service Obligation amount to Water
Corporation to replace the revenue that is
not being paid by irrigators.
Water Trade
Temporary Trade
In the WID and HID, trades by volume were
at about the long-term average but about
25% below recent years. Prices were 2 to 3
times the long term average and
significantly higher than recent years.
These results reflected the continuing low
allocation. In the CRID, trades were about
25% of the long-term average but prices
were steady at the average of $10/ML.
This
result
reflects
the
growing
disenchantment with the water quality.
Permanent Trade
There were no permanent trades in the
WID. In the HID, permanent trades were
up about 60% by volume over the average
but well down compared to the record
highs of the previous two years
Prices remained high, being 25% above
average but 23% below last year’s record
highs.
In the CRID, sales were well down
compared to the previous 5 years, as were
prices. This reflects the declining interest
in the CRID due to poor water quality, high
fixed charges and low profitability.
Auctions
The company continues to experiment
with the number and timing of auctions to
make them of best value to both buyers
and sellers because we are aware that the
prices become the benchmark for nonauction trades.
Two auctions were held with results that
suggest that the type of year in terms of
initial allocation and in-season rainfall have
a major effect on how useful they are.
Carry-over Water
The issue of carry-over water was raised
during the year. The discussions held
considered the pros and cons and decided
that it was not a sensible idea because it
would actually operate in the opposite way
to which it was intended. The company
felt that the amount of water bought by an
individual, its timing and cost were
business decisions for the individual alone
and Harvey Water could not accept any
risk resulting from those decisions if it was
to act equitably for all members.
Rural Water Sales
Water use by RWS customers remains
quite steady with only about 80% of supply
points active and average use of about
0.85/ML per supply.
Asset Management
In 2011/12 we completed a piped circuit by
installing the Somers Road pipeline that
ensures equitable distribution of water to
west Waroona irrigators and helps to
lessen the load from the Drakesbrook
(especially as in 2011 the dam works had
only just been completed and the dam was
severely lacking in water volume). This
pipeline was installed by Harvey Water
using our own resources and completed in
under 40 workdays and under budget at a
cost of $2.8m.
Just under 60km of redundant channels
have now been filled with a further 40km
under discussion for transfer to the Water
Corporation as part of the drainage
network. Water Corporation has already
Page 9
accepted 25km of existing drainage
channels. There remain 22km of old
channels surveyed; we expect that most of
these will also eventually have to be
transferred over as part of the drainage
system given their importance in collecting
and removing run-off water. The cost of
channel filling was budgeted for as a part
of the Harvey Pipe Project. By filling the old
channels we reduce/eliminate our liability
and substantially reduce safety and health
risks and in so doing we reduce operating
costs for a redundant system.
In CRID, we have carried out numerous
repairs to concrete lined channels and
repaired many eroded channels. Of $490k
budgeted for repairs and maintenance for
the year 60% was spent in the CRID and a
further 20% was spent between Cathodic
protection and SCADA repairs and upgrade.
Rehabilitation
Harvey Water was required to rehabilitate
a reach of the Wellesley River where it
drains the HID as part of the approvals
from DoW for the HPP. These works
include fencing off access to the river,
weed control and planting of native
species.
The work is progressing satisfactorily with
good results being obtained.
Research & Development
Development Officer Richard Yates has
been working on a range of projects of
direct and indirect assistance to irrigators.
These include support to the Peel Farmers
Market where irrigators can capture near
full retail prices for their produce on
weekends.
Customer support to the market has been
steady despite a number of changes of
venue, which now seems to have settled
into a permanent location.
Harvey Water was able to assist irrigators
to attend Centre Pivot Courses to improve
how they manage these to optimise water
use.
over there. He had many useful things to
say to help HWIA irrigators.
The Irrigation Systems site at the Wokalup
Agricultural College had to be moved and
re-established because of the works for the
new college. Harvey Water is working with
the College staff and students to set the
site up again for training to the students,
demonstration to irrigators and research
opportunities as they arise.
The WA government drought pilot project
provided funding to allow works on water
saving activities. Six Harvey irrigators will
pipe approximately 3,300 m of head ditch,
including 80 supply points at a cost of
about $240,000. Two farmers have opted
to try fully automated supply points.
Harvey Water was able to assist in
collectively negotiating the purchase of the
pipes, transporting them and installing
them using company labour at cost.
The fledgling development of a seed
potato project in Waroona has been of
great interest to Harvey Water as it
provides the type of industrial, semi or fully
processed production that is suited to the
area, in comparison to the fresh market,
which is subject to considerable variation.
Harvey Water carried out a pot trial in
conjunction with DAFWA to examine the
effects of salty water being sprayed onto
the leaves of normal rye grass and clover
pasture plants growing in a well drained
medium. This was to estimate the effects
of using water from Wellington dam in a
sprinkler based irrigation system. The
result showed that ryegrass was little
affected, even up to quite high levels
whereas clover began to suffer at about
1000 mg/l TDS.
Also in conjunction with DAFWA, an
examination was made of a proprietary
product claimed to eliminate the effects of
salty water when used for irrigation. The
plant growth trial did not show any
significant differences between treated
and un-treated plants.
Harvey Water coordinated with DAFWA to
host a visit by Phil Shannon, a dairy
specialist from Victoria who has
experienced and survived the long drought
Page 10
The export market for seed potatoes is
very buoyant and the company has
established a grading, packing and cool
storage facility in Yarloop with a capacity of
3,000 tonnes. Harvey Water looks forward
to assisting with opportunities for irrigators
to participate in production for this
market.
Drying Climate
The last decade has seen four of the driest
years in the last century along with record
dry months leading to very low inflows into
the dams. Harvey Water has taken the
position that its focus must be on
managing what is in front of us, which is
low water supplies, and to leave the
debate about what is happening, why and
how to fix it to others who have the
expertise and time to devote themselves to
it.
Given this drying climate situation, Harvey
Water believes it is very important that all
irrigators consider what changes may be
needed to their individual farming
practices and management in both the
seasonal and long term to adjust to this
situation.
Lower Collie Allocation Plan
Harvey Water has been involved with DoW
in framing the Lower Collie Allocation plan.
Harvey Water has confirmed that the
practice of scouring is one of the only
management practices that can be used to
reduce salinity in Wellington dam and we
do not want that altered such that it’s
effectiveness is reduced.
Relationships
Harvey Water is one of the 14 major
irrigation utilities in Australia so it
frequently entertains visitors, attends
events, functions and meetings and is a
member of various related organisations.
Some of the more prominent ones are
recorded below.
Some of the overseas visitors this year
included groups from Vietnam, India and
northern Africa.
The Chairman met with the Chair and
members of the National Water
Commission.
Harvey Water was asked to participate in
the review of water supply to the Myalup
strip. It regularly meets with other
members of the South West Water
Industry Group. It attended the Irrigation
Australia Ltd annual conferences in
Launceston and Adelaide and supported
members to come along as well.
We are members of the Bunbury
Wellington Economic Alliance and the
Bunbury Chamber of Commerce.
Harvey Water was very pleased to support
the local Federal Member Nola Marino’s
promotion of “South West Sensations” in
Canberra. The opportunity was taken to
meet with senior members of parliament
Page 11
and their staff to brief them on our world
and our issues.
The annual irrigators’ meeting and a
meeting with Waroona irrigators were held
in September. We were very happy to
support the annual Dairy Information Day
at Malcolm Hayes property at Cookernup.
Staff
Harvey Water continues to keep a close
eye on staff numbers and has been able to
reduce them because of largely completing
our construction programs for the medium
term.
Many people do not appreciate that
Harvey Water has a considerable work load
in reporting to the National Water
Commission, the Bureau of Meteorology,
Department of Water and the Economic
Regulation Authority plus other less time
consuming responses and the normal
activities that any business must complete.
The cooperative is routinely asked to sit on
working groups that discuss aspects of the
water industry. We also respond on behalf
of members to the many reports and
consultation drafts that come out.
Our staff are loyal, hard working and
dedicated to their roles in supporting
irrigators. The national and state situation
in Occupational Health and Safety is
evolving very rapidly and the cooperative
makes sure it is on top of what is required
so that we can send our staff home safe
and well at the end of each working day.
It is very pleasing to everyone in the
cooperative to read the overwhelmingly
positive reports in the Customer Survey
about Harvey Water staff in the field and in
the office. We are very proud of them and
the jobs they do.
Management Structure
Head Office
ADMINISTRATION
Geoff Calder
Susan Boland
Julie Harbour
Tammie McDonald
Susan Niven
Tamara Praed
General Manager
Corporate Services Manager / Accountant
Customer Service Officer
Finance / IT Officer
Administration Officer
Finance Assistant
DEVELOPMENT
Richard Yates
Development Officer
OPERATIONS
Steve Iceton
Operations Manager
WATER SERVICES
Michael Ward
Water Services Coordinator
WATER CONTROLLERS
Ron Jones
Kim Davies
Syd Reale
Russell Gaston
Tim Hooper
Robert Clark
Julie Marshall
Bill Ward
Peter Dow
Operations
PROJECT ADMINISTRATION
Steve Iceton
Stephen Cook
Peter McBeath
Project Manager
Project Coordinator
Works Supervisor
OPERATIONS STAFF
Todd Wilson
Ben Ward
Page 12
Board of Directors
Ian Eckersley, Chairman, is a citrus and
wine grape grower from Harvey.
Ian was elected to the Board of Harvey
Water, by shareholders, at the 2009 AGM
and was subsequently elected as Chair by
the Directors. Ian previously served 13
years as Chair of the SWIAC Board.
Ian is a life member of the Harvey
Agricultural Society and is Chairman of the
Harvey Agricultural College Advisory
Committee.
Sam Epiro, Deputy Chair, is a dairy and beef
farmer from Harvey. Sam was elected by
the Board as Deputy Chair in November
2009.
He has worked in Local Government and has
completed the Foundations for Leadership
course.
Sam is also on the Board of the Rural Water
Services Company.
Tom Busher is a horticulturalist from
Dardanup, who has served as Chairman
of the South West Sustainable Rural
Development Partnership Group. He was
previously Chair and Secretary of the
Dardanup LCDC. Tom has completed a
Bachelor of Business and the AIM course
for Company Directors. He is currently
Manager of Community Relations with
Alcoa.
Tom is a
Committee.
Page 13
member
of
the
Audit
Board of Directors (cont.)
Kevin Depiazzi is a third generation
dairy farmer from Dardanup, managing
the family farm in partnership since
1981.
Kevin has been active in Rural Youth
and local community organisations. He
has off farm interests in property and
the share market.
Kevin was elected to the Board in
November 2009 and serves on the Audit
Committee. He previously served 3
years on the Board of SWIAC.
Len Snell graduated from Roseworthy
Agricultural College in SA and began
farming in Waroona in 1966. Currently
the enterprise integrates irrigation with
feed lotting and a pastoral property to
produce cattle mainly for export.
In 1986 he became a member of the
Water
Advisory
Committee,
then
Promoter Director and an inaugural
Director of SWIMCO, before taking a
break in 2000. In 2006 he was again
elected to represent irrigators of the
Waroona district. Len is also Chairman of
the Rural Water Services Company.
Mike Snell was elected to the SWIMCO
Board as a non-member Director at the
2008 AGM.
Mike worked for over 30 years with
Pricewaterhouse Coopers and since
retiring has served on the board of a
variety of community organisations. He
is also a Director of the South West
Irrigation Asset Cooperative Ltd. Mike is
a Fellow of the Institute of Chartered
Accountants in Australia.
Page 14
Senior Management Team
Geoff Calder – General Manager
Geoff has been General Manager of Harvey
Water since its inception in 1996. Over the 15
past exciting years Geoff has joined with the
Harvey Water irrigators in demonstrating that
a locally owned irrigation entity is a viable and
progressive way to manage water.
Geoff holds a Bachelor of Agricultural Science
from UWA, a Graduate Diploma in Business
from Curtin University and a Graduate
Certificate in Asian Business from Edith
Cowan University.
Steve Iceton – Operations / Projects
Manager
Steve has been with Harvey Water from
the beginning in the position of
Operations Manager.
Steve and his asset maintenance team
have been instrumental in the overhaul
of Harvey Water’s delivery system over
the past 15 years including automation
of the delivery system using SCADA
technology, refurbishment of channels
and the introduction of HDPE piping
technology for the highly successful,
award winning Harvey Pipe Project.
Steve holds a Graduate Diploma in
Structural Engineering from Longlands
College, United Kingdom.
Susan Boland – Corporate Services Manager /
Accountant
Susan commenced with Harvey Water in July
2012. She oversees the Administration and
Finance areas and is responsible for the
corporate governance.
Susan holds a Bachelor of Business from Edith
Cowan University and is an Associate member
of CPA Australia.
Page 15
Corporate Governance
Board Responsibilities
The Board is accountable to members for the performance of the Cooperative. In carrying out
its responsibilities, the Board undertakes to serve the interests of members, employees,
customers and the broader community honestly, fairly, diligently and in accordance with the
Articles of Association, Company Policy, Directors’ Code of Conduct and with applicable laws.
In particular, the Board:
• Appoints and reviews the performance of the General Manager
• Sets and reviews strategic direction
• Establishes and reviews policy
• Ensures compliance with laws and all appropriate accounting standards
• Monitors the operating and financial performance of the Company
• Monitors risk management
• Ensures adequate and inclusive communication with shareholders.
Board Structure
The Articles of Association provide for a maximum of seven Directors. This includes two
representatives each from the Collie River and the Harvey district, one representative from the
Waroona district and may include two non-member Directors with skills, experience or
knowledge in the engineering, industrial, legal, commercial or financial sectors.
The Board considers that its structure, size, focus, experience and use of committees enables it
to operate effectively and add value to the Company. The Board currently comprises of six
Directors, five member and one non-member Director. Details of the Directors, as at the date
of this report, including their qualifications and experience are set out on pages 13 and 14..
Meetings
The Board schedules a minimum of ten meetings per year, generally each month with the
exception of January and July. In addition to this, the Board will meet whenever necessary to
deal with specific matters. Details of Directors’ attendance at meetings are set out on page 19.
The Chairman and the Company Secretary establish meeting agendas to ensure adequate
coverage of strategic, financial and risk areas. Directors are encouraged to participate and
exercise their independent judgement.
Access to Information and Professional Advice
Directors receive regular detailed financial and operational reports and have unrestricted
access to Company records and information. The members of the Board have the authority to
engage independent experts should it be considered necessary.
Directors and Officers Insurance and Deeds of Indemnity
The Company provides Directors’ and Officers’ Insurance and access to Deeds of Indemnity
Insurance to the maximum extent permitted by law.
Page 16
Corporate Governance (cont.)
Director Training
All Directors are expected to maintain the skills required to discharge their obligations to the
Company. Directors are encouraged to undertake continuing professional education involving
industry seminars and approved education courses. All Directors are encouraged to attend
industry specific conferences including the annual IAL Conference and the WA Cooperatives
Conference.
Review of Board and Director Performance
The Remuneration Committee is responsible for overseeing the annual evaluation of Board
and Director performance. Evaluations are conducted every year and have produced
continuing improvements in Board processes and overall efficiency.
Committees of the Board
The Board has established two standing committees to assist in the discharge of its
responsibilities. These are:
• Audit Committee
• Remuneration Committee
Each of the standing committees has its own charter which describes its role and duties.
Minutes of the standing committees are provided to all Directors and the proceedings of each
meeting are reported by the Chairman of the committee at the next Board meeting.
The Board reviews the composition of its committees annually at the first Board meeting
following the Annual General Meeting.
Audit Committee
The role of the Audit Committee is to assist the Board in fulfilling its corporate governance
and oversight responsibilities in relation to the Company’s financial reporting, internal
control structure, risk management systems, and the internal and external audit functions.
Members of the Audit Committee during the twelve months ended 30 June 2012 were:
Mike Snell (Chairman)
Tom Busher
Kevin Depiazzi
Remuneration Committee
The Remuneration Committee is a joint committee of both SWIAC and SWIMCO.
Remuneration issues in respect to Directors are considered as a group rather than
individually given the common shareholding. The primary functions of the Remuneration
Committee are to:
•
Make specific recommendations to the Board of SWIMCO and SWIAC (as appropriate)
on the remuneration of Directors, the General Manager and, after consultation with
the General Manager, senior officers;
Page 17
Corporate Governance (cont.)
•
•
•
•
Recommend the terms and conditions of employment for the General Manager and
agree with the General Manager, the terms and conditions of employment of senior
officers;
Undertake a review of the performance of the General Manager at least annually,
setting goals for the coming year and reviewing progress in achieving these goals;
Oversee the annual evaluation of Board and Director performance; and
Review Board succession plans including the appointment of non-member Directors.
Members of the Remuneration Committee are:
Mike Snell (Chairman)
Ian Eckersley (Chair of SWIMCO)
Dan Norton (Chair of SWIAC)
Communication with Shareholders
Directors recognise that shareholders, as the ultimate owners of the Company, are entitled to
receive timely and relevant information about the Company. The Board has approved a
Communication Policy which aims to promote open and effective communication with
shareholders and other stakeholders of the Cooperative. A range of communication means
are used including:
•
•
•
•
•
•
•
•
•
The Annual Report
The Annual General Meeting
“Under the Trees” meetings with shareholders
Annual Irrigators meeting
The website www.harveywater.com.au
Harvey Water Video/CD
Newspaper advertisements
Regular Shareholder mail outs of “The Furphy”
General media releases and public comment.
Disputes Panel
In accordance with Rule 107, the Chairman has determined that the Disputes Panel shall
comprise all Directors of the Company and three members who are not Directors. For the
period ended 30 June 2012, the non-Director members were:
Frank Parravicini
Vernon Pitter
Terry Treasure
The Disputes Panel was not required to convene during the year.
Page 18
Directors’ Report
Directors
The following persons held office as Directors of South West Irrigation Management
Cooperative Limited at 30 June 2012:
Ian Eckersley
Tom Busher
Kevin Depiazzi
Sam Epiro
Len Snell
Mike Snell
Principal Activities
The principal activities undertaken by the Company during the financial year comprised
managing the supply of water to irrigators, replacing and maintaining irrigation assets within
the irrigation area from Waroona to Dardanup and supporting the economic development of
the Harvey Water Irrigation Area.
Directors’ Interests
The relevant interests of the Directors in the share capital of the Company, appearing in the
register maintained at the office under Section 232 of the Co-operatives Act 2009 were:
Director
Ian Eckersley
Tom Busher
Kevin Depiazzi
Sam Epiro
Len Snell
Mike Snell
Shareholding
1,165
172
335
646
1,320
Nil
Meetings of Directors
The following table sets out the number of meetings of the Directors held during the financial
year to 30 June 2012 and the number of Board and Committee meetings attended by each
Director.
Director
I Eckersley
T Busher
K Depiazzi
S Epiro
L Snell
M Snell
Page 19
Scheduled Board
Meetings
Eligible to
Attended
Attend
10
10
10
8
10
9
10
10
10
8
10
10
Audit Committee
Meetings
Eligible to
Attended
Attend
1
1
1
1
1
1
Remuneration
Committee Meetings
Eligible to
Attended
Attend
1
1
1
1
Directors’ Report (cont.)
Review of Operations
A total of 46 GL of water was sold for the year to 30 June 2012.
A restricted allocation of 45% applied to Waroona and Harvey, the allocation for Collie was not
restricted. Sales in Collie continued to decline due to the salinity of the water from Wellington
dam.
Significant Changes
There were no significant changes in the state of affairs of the Company that occurred during
the year which are not otherwise in this report and the accounts.
Auditor
AMD Chartered Accountants of Bunbury, were appointed auditors of the Company at the
Annual General Meeting held 14 December 2011.
This report is made in accordance with a resolution of the Directors.
Statutory Report of the Directors
In accordance with the requirements of Rule 80 and Section 225 of the Co-operatives
Act 2009, the Directors report that:
1.
In the opinion of the Directors the results of the year’s operations as disclosed in the
Statement of Financial Performance have not been materially affected by any items of
an abnormal nature.
2.
No dividend is recommended
Page 20
Certificate by the Directors
We, (Ian Eckersley and Sam Epiro), being two of the Directors of South West Irrigation
Management Cooperative Limited do hereby certify on behalf of the Board that, in our
opinion, the accompanying Statement of Financial Position is drawn up so as to exhibit a true
and correct view of the state of the Company’s affairs and that, in our opinion, the Statement
of Financial Performance is drawn up so as to exhibit a true and correct view of the results of
the business of the Company for the year.
Declaration by the General Manager
I, Geoffrey James Henderson Calder, General Manager of the South West Irrigation
Management Cooperative Limited hereby certify:
• that any reserves are used in the business
• that the accompanying Statements of Financial Performance and Financial Position of the
Company are to the best of my knowledge and belief, true in every particular
• that the names, addresses and occupations of persons who are Directors of the Company at
the date of the Statement are:
Ian Roland Eckersley
Samuel Michael Epiro
Leonard Griffin Snell
Kevin F Depiazzi
Thomas Raphael Busher
Michael Snell
Page 21
Farmer
Farmer
Farmer
Farmer
Farmer
Company Director
Harvey
Harvey
Waroona
Collie
Dardanup
Perth
SOUTH WEST IRRIGATION
MANAGEMENT COOPERATIVE LIMITED
Financial Report
30 June 2012
Page 22
Page 23
SOUTH WEST IRRIGATION MANAGEMENT COOPERATIVE LIMITED





2012
Notes
$
Operating Revenue
Other Income
Expenses
Administration Expenses
Asset Management Expenses
Water Services
Development Expenses
Project Expenses
Finance Expenses
Other Expenses
2
2
24
3
2011
$
5,517,756
22,500
5,540,256
6,856,851
5,511,803
12,368,654
651,371
3,626,862
3,202,599
144,436
42,801
664,093
8,332,162
729,629
3,593,404
2,924,490
106,786
466,736
614,169
8,435,214
Surplus / (Deficit) before Income Tax
3
(2,791,906)
3,933,440
Income Tax (Expense) / Revenue
4
925,152
(1,206,844)
(1,866,754)
2,726,596
-
-
(1,866,754)
2,726,596
(1,866,754)
2,726,596
(1,866,754)
2,726,596
Surplus / (Deficit) for the Year
Other Comprehensive Income:
Other Comprehensive Income
Total Comprehensive Income for the Year,
Net of Tax
Surplus / (Deficit) Attributable to:
Members of the Cooperative
Total Comprehensive Income Attributable to:
Members of the Cooperative
The accompanying notes form part of these financial statements.
Page 24



Notes
CURRENT ASSETS
Cash and Cash Equivalents
Trade and Other Receivables
Inventories
Current Tax Assets
Other Current Assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Financial Assets
Property, Plant &Equipment
TOTAL NON-CURRENT ASSETS
5
6
7
8
5
9
10
TOTAL ASSETS
2012
$
2011
$
793,573
303,656
1,055,971
69,235
49,412
2,271,847
3,284,804
881,261
1,411,321
86,558
37,397
5,701,341
61,935
1
71,601,926
71,663,862
59,614
1
69,966,039
70,025,654
73,935,709
75,726,995
CURRENT LIABILITIES
Trade and Other Payables
Financial Liabilities
TOTAL CURRENT LIABILITIES
11
12
1,041,731
1,000,000
2,041,731
1,058,092
1,058,092
NON-CURRENT LIABILITIES
Long-term Provisions
Deferred Tax Liability
TOTAL NON-CURRENT LIABILITIES
13
14
83,063
18,814,449
18,897,512
66,034
19,739,601
19,805,635
TOTAL LIABILITIES
20,939,243
20,863,727
NET ASSETS
52,996,466
54,863,268
107,947
13,556,232
39,332,287
107,995
13,917,104
40,838,169
52,996,466
54,863,268
EQUITY
Issued Capital
Reserves
Accumulated Surplus
TOTAL EQUITY
15
Page 25
Page 26
-
360,872
39,332,287
(48)
107,947
469,977
40,838,169
107,995
-
-
-
(1,866,754)
2,726,596
-
-
Accumulated
Surplus
$
37,641,596
Issued
Capital
$
107,995
7,637
68,047
-
-
-
10,530
60,410
-
-
Development
Levy Reserve
$
49,880
Comprehensive Income:
Surplus attributable to members of the
cooperative
Total other comprehensive income for the
year
Transactions with members in their capacity
as members and other transfers:
Share buy-back during the year
Transfers to accumulated surplus from
reserves
Balance at 30 June 2012
Balance at 1 July 2011
Comprehensive Income:
Surplus attributable to members of the
cooperative
Total other comprehensive income for the
year
Transactions with members in their capacity
as members and other transfers:
Transfers to accumulated surplus from
reserves
Balance at 30 June 2011
Note




52,996,466
(48)
-
(1,866,754)
54,863,268
-
2,726,596
Total
$
52,136,672
(368,509)
13,488,185
-
-
-
(480,507)
13,856,694
-
-
Future Works and
Environmental
Reserve
$
14,337,201



Notes
2012
$
2011
$
CASH FLOWS FROM OPERATING ACTIVITIES
5,406,755
290,661
206,367
(6,015,166)
(7,837)
(42,801)
11,389,399
371,068
184,339
(7,184,381)
(144,371)
-
(162,021)
4,616,054
Payments for Plant & Equipment
(3,349,941)
(2,600,125)
Net Cash used in Investing Activities
(3,349,941)
(2,600,125)
1,000,000
(139,411)
160,142
1,020,731
(73,912)
116,509
42,597
(2,491,231)
2,058,526
3,284,804
1,226,278
793,573
3,284,804
Receipts from Customers / Grant Funds
Receipts from SWIAC – Management Fees
Interest Received
Payments to Suppliers and Employees
Income Tax Paid
Finance Costs
Net Cash provided by / (used in) Operating
Activities
21(b)
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Related Party Loan
Loans to Members / RWS Customers
Repayment of Member / RWS Customer Loans
Net Cash provided by Financing Activities
Net Increase / (Decrease) in Cash Held
Cash at Beginning of Financial Year
Cash at End of Financial Year
21(a)
Page 27



1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
South West Irrigation Management Cooperative Limited (‘the Company’) is a co-operative
limited by shares, incorporated and domiciled in Australia.
Basis of Preparation
The financial statements are general purpose financial statements that have been prepared
in accordance with Australian Accounting Standards (including Australian Accounting
Interpretations) of the Australian Accounting Standards Board and other mandatory
professional reporting requirements.
Australian Accounting Standards set out accounting policies that the AASB has concluded
would result in financial statements containing relevant and reliable information about
transactions, events and conditions. Compliance with Australian Accounting Standards
ensures that the financial statements and notes also comply with International Financial
Reporting Standards. Material accounting policies adopted in the preparation of the financial
statements are presented below and they have been consistently applied unless otherwise
stated.
The financial statements have been prepared on an accruals basis and are based on
historical costs, modified, where applicable by the measurement at fair value of selected
non-current assets, financial assets and financial liabilities. The amounts presented in the
financial statements have been rounded to the nearest dollar.
(a)
Income Tax
The income tax expense (revenue) for the year comprises current income tax expense
(income) and deferred tax expense (income). Current income tax expense (revenue)
charged (or credited) to the profit or loss is the tax payable (receivable) on taxable income
calculated using applicable income tax rates enacted, or substantially enacted, as at
reporting date. Current tax liabilities (assets) are therefore measured at the amounts
expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax
liability balances during the year as well unused tax losses.
Current and deferred income tax expense (income) is charged (or credited) outside profit or
loss when the tax relates to items that are recognised outside profit or loss.
Deferred tax assets and liabilities are ascertained based on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. Deferred tax assets also result where amounts have been fully expensed but
future tax deductions are available. No deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business combination, where there is no effect
on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to
the period when the asset is realised or the liability is settled, based on tax rates enacted or
substantively enacted at reporting date. Their measurement also reflects the manner in
which management expects to recover or settle the carrying amount of the related asset or
liability.
Page 28



1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Deferred tax assets relating to temporary differences and unused tax losses are recognised
only to the extent that it is probable that future taxable profit will be available against which
the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches,
associates, and joint ventures, deferred tax assets and liabilities are not recognised where
the timing of the reversal of the temporary difference can be controlled and it is not probable
that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists
and it is intended that net settlement or simultaneous realisation and settlement of the
respective asset and liability will occur. Deferred tax assets and liabilities are offset where a
legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or
different taxable entities where it is intended that net settlement or simultaneous realisation
and settlement of the respective asset and liability will occur in future periods in which
significant amounts of deferred tax assets or liabilities are expected to be recovered or
settled.
(b)
Inventories
Inventories are measured at the lower of cost and net realisable value.
(c)
Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value less, where
applicable, any accumulated depreciation and impairment losses.
Property
Freehold land is measured at cost, and where applicable less impairment losses.
Plant and Equipment
Plant and equipment are measured on the cost basis and are therefore carried at cost less
accumulated depreciation and any accumulated impairment losses. In the event the carrying
amount of plant and equipment is greater than the estimated recoverable amount, the
carrying amount is written down immediately to the estimated recoverable amount and
impairment losses are recognised either in profit or loss or as a revaluation decrease if the
impairment losses relate to a revalued asset.
Subsequent costs are included in the assets carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the Company and the cost of the item can be measured reliably. All other
repairs and maintenance are recognised as expenses in the statement of comprehensive
income during the financial period in which they incurred.
Page 29
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

1.
Depreciation
The depreciable amount of all fixed assets including buildings but excluding freehold land, is
depreciated on a straight line or diminishing value basis over their useful lives to the
Company commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Office Improvements
Minor Plant & Tools
Computer Equipment
Office Equipment
Software
Motor Vehicles
Irrigation Assets
Depreciation Rate
7.5%
30%
37.5%
10-40%
40%
18.75%
2%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the
end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the
asset’s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying
amount. These gains or losses are included in the statement of comprehensive income.
When revalued assets are sold, amounts included in the revaluation reserve relating to that
asset are transferred to retained earnings.
(d)
Financial Instruments
Initial Recognition and Measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to
the contractual provisions of the instrument. For financial assets, this is equivalent to the
date that the Company commits itself to either purchase or sell the asset (i.e. trade date
accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where
the instrument is classified ‘at fair value through profit or loss’ in which case transaction
costs are expensed to profit or loss immediately.
Classification and Subsequent Measurement
Financial instruments are subsequently measured at either fair value, amortised cost using
the effective interest rate method or cost. Fair value represents the amount for which an
asset could be exchanged or a liability settled, between knowledgeable, willing parties.
Where available, quoted prices in an active market are used to determine fair value. In other
circumstances, valuation techniques are adopted.
Page 30



1.
Amortised cost is calculated as the amount at which the financial asset or financial liability is
measured at initial recognition less principal repayments and reduction for impairment, and
adjusted for any cumulative amortisation of the difference, if any, between the initial amount
and the maturity amount calculated using the effective interest method.
The effective interest method is used to allocate interest income or interest expense over the
relevant period and is equivalent to the rate that exactly discounts estimated future cash
payments or receipts (including fees, transaction costs and other premiums or discounts)
through the expected life (or when this cannot be reliably predicted, the contractual term) of
the financial instrument to the net carrying amount of the financial asset or financial liability.
Revisions to expected future net cash flows will necessitate an adjustment to the carrying
value with a consequential recognition of an income or expense in profit or loss.
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
arms’ length transactions, reference to similar instruments and option pricing models.
(i)
Financial Assets at Fair Value through Profit or Loss
Financial assets are classified at ‘fair value through profit or loss’ when they are
either held for trading for the purpose of short term profit taking, derivatives not held
for hedging purposes, or when they are designated as such to avoid an accounting
mismatch or to enable performance evaluation where a group of financial assets is
managed by key management personnel on a fair value basis in accordance with a
documented risk management or investment strategy. Such assets are subsequently
measured at fair value with changes in carrying value being included in profit or loss.
(ii)
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market and are subsequently measured at
amortised cost. Gains or losses are recognised in profit or loss through the
amortisation process and when the financial asset is derecognised.
Loans and receivables are included in the current assets, except for those which are
not expected to mature within 12 months after the end of the reporting period, which
will be classified as non-current assets.
(iii)
Held-to-maturity Investments
Held-to-maturity investments are non-derivative financial assets that have fixed
maturities and fixed or determinable payments, and it is the Company’s intention to
hold these investments to maturity. They are subsequently measured at amortised
cost. Gains or losses are recognised in profit or loss through the amortisation
process and when the financial asset is derecognised.
Held-to-maturity investments are included in non-current assets, except for those
which are expected to mature within 12 months after the end of the reporting period,
which will be classified as current assets.
If during the period the Company sold or reclassified a significant amount of the heldto-maturity investments before maturity, the entire category of held-to-maturity
investments would be tainted and would be reclassified as available for sale.
Page 31



1.
(iv)
Available-for-sale Financial Assets
Available-for-sale financial assets are non-derivative financial assets that are either
not capable of being classified into other categories of financial assets due to their
nature or they are designated as such by management. They comprise investments
in the equity of other entities where there is neither a fixed maturity nor fixed or
determinable payments.
They are subsequently measured at fair value with any remeasurements other than
impairment losses and foreign exchange gains and losses are recognised in other
comprehensive income. When the financial asset is derecognised, the cumulative
gain or loss pertaining to that asset previously recognised in other comprehensive
income is reclassified into profit or loss.
Available-for-sale financial assets are included in non-current assets, except for
those which are expected to be disposed of within 12 months after the end of the
reporting period, which will be classified as current assets.
(v)
Non-derivative financial liabilities (excluding financial guarantees) are subsequently
measured at amortised cost.
Impairment
At the end of each reporting period, the Company assesses whether there is objective
evidence that a financial instrument has been impaired. A financial asset or a group of
financial assets is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events (a “loss event”) having occurred, which has an
impact on the estimated future cash flows of the financial assets(s).
In the case of available-for-sale financial instruments, a significant or prolonged decline in
the market value of the instrument is considered to constitute a loss event. Impairment
losses are recognised in profit or loss immediately. Also, any cumulative decline in fair value
previously recognised in other comprehensive income is reclassified to profit and loss at this
point.
In the case of financial assets carried at amortised cost, loss events may include: indications
that the debtors or a group of debtors are experiencing significant financial difficulty, default
or delinquency in interest or principal payments; indications that they will enter bankruptcy or
other financial reorganisation; and changes in arrears or economic conditions that correlate
with defaults.
For financial assets carried at amortised cost (including loans and receivables), a separate
allowance account is used to reduce the carrying amount of financial assets impaired by
credit losses. After having taken all possible measures of recovery, if management
establishes that the carrying amount cannot be recovered by any means, at that point the
written-off amounts are charged to the allowance account or the carrying amount of impaired
financial assets is reduced directly if no impairment amount was previously recognised in the
allowance account.
Page 32



1.
Impairment (cont.)
When the terms of financial assets that would otherwise have been past due or impaired
have been renegotiated, the Company recognises the impairment for such financial assets
by taking into account the original terms as if the terms have not been renegotiated so that
the loss events have occurred are duly considered.
Financial Guarantees
Where material, financial guarantees issued which require the issuer to make specified
payments to reimburse the holder for a loss it incurs because a specified debtor fails to
make payment when due, are recognised as a financial liability at fair value on the initial
recognition.
The fair value of financial guarantee contracts has been assessed using the probability
weighted discounted cash flow approach. The probability has been based on:
- The likelihood of the guaranteed party defaulting in a year’s period;
- The proportion of the exposure that is not expected to be recovered due to the
guaranteed party defaulting; and
- The maximum loss exposed if the guaranteed party were to default.
Financial guarantees are subsequently measured at the higher of the best estimate of the
obligation in accordance with AASB 137: Provisions, Contingent Liabilities and Contingent
Assets and the amount initially recognised less, when appropriate, cumulative amortisation
in accordance with AASB 118: Revenue. Where the entity gives guarantees in exchange for
a fee, revenue is recognised under AASB 118.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows
expire or the asset is transferred to another party whereby the entity no longer has any
significant continuing involvement in the risks and benefits associated with the asset.
Financial liabilities are derecognised where the related obligations are either discharged,
cancelled or expire. The difference between the carrying value of the financial liability
extinguished or transferred to another party and the fair value of consideration paid,
including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
(e)
Impairment of Assets
At the end of each reporting period, the Company assesses whether there is any indication
that an asset may be impaired. The assessment will included considering external sources
and internal sources of information. If such an indication exists, an impairment test is carried
out on the asset by comparing the recoverable amount of the asset, being the higher of the
asset’s fair value less costs to sell and value in use to the asset’s carrying value.
Any excess of the asset’s carrying amount over its recoverable amount is recognised
immediately in profit or loss, unless the asset is carried at a revalued amount in accordance
with another Standard (eg: in accordance with the revaluation model in AASB 116.) Any
impairment loss of a revalued asset is treated as a revaluation decrease in accordance with
that other standard. Where it is not possible to estimate the recoverable amount of an
individual asset, the Company estimates the recoverable amount of the cash-generating unit
to which the asset belongs.
Page 33



1.
(f)
Employee Benefits
Provision is made for the Company’s liability for employee benefits arising from services
rendered by employees to balance date. Employee benefits that are expected to be settled
within one year have been measured at the amounts expected to be paid when the liability is
settled. Employee benefits payable later than one year have been measured by the present
value of the estimated future cash outflows to be made for those benefits. Those cash flows
are discounted using market yields on national government bonds with terms to maturity that
match the expected timing of cash flows.
(g)
Cash and cash equivalents include cash on hand, deposits held at call with banks, other
short-term highly liquid investments with original maturities of three months or less, and bank
overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on
the statement of financial position.
(h)
Revenue
Revenue from levies and contributions is recognised on the due date.
Interest revenue is recognised using the effective interest rate method, which, for floating
rate financial assets is the rate inherent in the instrument.
Revenue from contracts performed is brought to account on the basis of the percentage
completion of the relevant contracts and taking account of any future losses that may be
incurred.
All revenue is stated net of the amount of goods and services tax (GST).
(i)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the
amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable.
The net amounts of GST recoverable from, or payable to, the ATO is included with other
receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from
investing or financing activities, which are recoverable from or payable to the ATO, are
presented as operating cash flows including in receipts from customers or payments to
suppliers.
Page 34



1.
(j)
Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the
ownership of the asset, but not the legal ownership, are transferred to entities in the
Company are classified as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the
amounts equal to the fair value of the leased property or the present value of the minimum
lease payments, including any guaranteed residual values. Lease payments are allocated
between the reduction of the lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated
useful lives or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain
with the lessor, are charged as expenses in the periods in which they are incurred.
(k)
Trade and other receivables include amounts due from customers for goods and services
charged in the ordinary course of business. Receivables expected to be collected within 12
months of the end of the reporting period are classified as current assets. All other
receivables are classified as non-current assets.
Trade and other receivables are initially recognised at fair trade value and subsequently
measured at amortised cost using effective interest method, less any provision for
impairment.
(l)
Trade and other payables represent the liability outstanding at the end of the reporting
period for goods and services received by the Company during the reporting period, which
remain unpaid. The balance is recognised as a current liability with the amounts normally
paid within 30 days of recognition of the liability.
(m)
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to
conform to changes in presentation for the current financial year.
(n)
New Accounting Standards for Application in Future Periods
The AASB has issued a number of new and amended Accounting Standards and
Interpretations that have mandatory application dates for future reporting periods, some of
which are relevant to the Company. The Company has decided not to early adopt any of the
new and amended pronouncements. The Company’s assessment of the new and amended
pronouncements that are relevant to the Company but applicable in future reporting periods
is set out below:
-
AASB 9: Financial Instruments (December 2010) and AASB 2010-7: Amendments to
Australian Accounting Standards arising from AASB9 (December 2010) [AASB 1, 3, 4,
5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038
and Interpretations 2, 5, 10, 12, 19 & 127] (applicable for annual reporting periods
commencing on or after 1 January 2013).
Page 35



1.
This Standard is applicable retrospectively and includes revised requirements for the
classification and measurement of financial instruments, as well as recognition and
derecognition requirements for financial instruments.
The key changes made to accounting requirements include:
-
-
-
simplifying the classifications of financial assets into those carried at amortised cost
and those carried at fair value;
simplifying the requirements for embedded derivatives;
removing the tainting rules associated with held-to-maturity assets;
removing the requirements to separate and fair value embedded derivatives for
financial assets carried at amortised cost;
allowing an irrevocable election on initial recognition to present gains and losses on
investments in equity instruments that are not held for trading in other comprehensive
income. Dividends in respect of these investments that are a return on investment
can be recognised in profit or loss and there is no impairment or recycling on
disposal of the instrument;
requiring financial assets to be reclassified where there is a change in an entity’s
business model as they are initially classified based on: (a) the objective of the
entity’s business model for managing the financial assets; and (b) the characteristics
of the contractual cash flows; and
requiring an entity that chooses to measure a financial liability at fair value to present
the portion of the change in its fair value due to changes in the entity’s own credit risk
in other comprehensive income, except when that would create an accounting
mismatch. If such a mismatch would be created or enlarged, the entity is required to
present all changes in fair value (including the effects of changes in the credit risk of
the liability) in profit or loss.
The Company has not yet been able to reasonably estimate the impact of these
pronouncements on its financial statements.
-
AASB 1053: Application of Tiers of Australian Accounting Standards and AASB 2010–2:
Amendments to Australian Accounting Standards arising from Reduced Disclosure
Requirements [AASB 1, 2, 3, 5, 7, 8, 101, 102, 107, 108, 110, 111, 112, 116, 117, 119,
121, 123, 124, 127, 128, 131, 133, 134, 136, 137, 138, 140, 141, 1050 & 1052 and
Interpretations 2, 4, 5, 15, 17, 127, 129 & 1052] (applicable for annual reporting periods
commencing on or after 1 July 2013).
AASB 1053 establishes a revised differential financial reporting framework consisting of
two tiers of financial reporting requirements for those entities preparing general purpose
financial statements:
- Tier 1: Australian Accounting Standards; and
- Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.
Tier 2 of the framework comprises the recognition, measurement and presentation
requirements of Tier 1, but contains significantly fewer disclosure requirements.
Page 36



1.
Management believes that the company qualifies for the reduced disclosure
requirements for Tier 2 entities. However, it is yet to determine whether to adopt the
reduced disclosure requirements.
-
AASB 2010–8: Amendments to Australian Accounting Standards – Deferred Tax:
Recovery of Underlying Assets [AASB 112] (applies to periods beginning on or after 1
January 2012).
This Standard makes amendments to AASB 112: Income Taxes and incorporates
Interpretation 121: Income Taxes – Recovery of Revalued Non-Depreciable Assets into
AASB 112.
Under the current AASB 112, the measurement of deferred tax liabilities and deferred
tax assets depends on whether an entity expects to recover an asset by using it or by
selling it. The amendments introduce a presumption that an investment property is
recovered entirely through sale. This presumption is rebutted if the investment property
is held within a business model whose objective is to consume substantially all of the
economic benefits embodied in the investment property over time, rather than through
sale.
The amendments are not expected to significantly impact the Company.
-
AASB 13: Fair Value Measurement and AASB 2011 – 2011-8: Amendments to
Australian Accounting Standards arising from AASB 13 [AASB 1, 2, 3, 4, 5, 6, 7, 9,
2009-11, 2010-7, 101, 102, 108, 110, 116, 117, 118, 119, 12, 121, 128, 131, 132, 133,
134, 136, 136, 138, 139, 140, 141, 1004, 1023 & 1038 and interpretations 2, 4, 12, 13,
14, 17, 19, 131 & 132] (applicable for annual reporting periods commencing on or after 1
January 2013.)
AASB 13 defines fair value, sets out in a single Standard a framework for measuring fair
value, and required disclosures about fair value measurement.
AASB 13 requires:
- Inputs to all fair value measurements to be categorised in accordance with fair
value hierarchy: and
- Enhanced disclosures regarding all assets and liabilities (including, but not
limited to financial assets and financial liabilities) to be measured in fair value.
These standards are not expected to significantly impact the company.
- AASB 2011-09: Amendments to Australian Accounting Standards – Presentation of
Items of Other Comprehensive Income [AASB 1, 5, 7, 101, 112, 120, 121, 132, 133,
134, 1039 & 1049] (applicable for annual reporting periods commencing on or after 1
July 2012).
Page 37



1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
The main change arising from this Standard is the requirements for entities to group items
presented in other comprehensive income (OCI) on the basis of whether they can
potentially be reclassified to profit or loss subsequently.
This Standard affects presentation only and is therefore not expected to significantly
impact the Company.
- AASB 119: Employee Benefits (September 2011) and AASB 2011-10: Amendments to
Australian Accounting Standards arising from AASB 19 (September 2011) [AASB 1,
AASB 8, AASB 101, AASB 124, AASB 134, AASB 1049 & AASB 2011-8 and
Interpretation 14] (applicable for annual reporting periods commencing on or after 1
January 2013).
These standards introduce a number of changes to the accounting for and presentation of
defined benefit plans. The Company does not have any defined benefit plans and so it is
not impacted by the amendment.
AASB 119 (September 2011) also includes changes to:
- require only those benefits that are expected to be settled wholly before 12 months
after the end of the annual reporting period in which the employees render the
related service to be classified as short-term employee benefits. All other employee
benefits are to be classified as other long term employee benefits, post-employment
benefits or termination benefits, as appropriate; and
- the accounting for termination benefits that require an entity to recognise an
obligation for such benefits at the earlier of:
- for an offer that may be withdrawn – when the employee accepts;
- for an offer that cannot be withdrawn – when the offer is communicated to
affected employees; and
- where the termination is associated with a restructuring of activities under
AASB 137: Provisions, Contingent Liabilities and Contingent Assets, and if
earlier than the first two conditions – when the related restructuring costs are
recognised.
The Company has not yet been able to reasonably estimate the impact of these changes
to AASB 119.
Page 38
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

2.
OPERATING REVENUE
Operating Revenue
Delivery and Sale of Water
Development Levy
Sale of Services
SWIAC Management Fee
RWS Management Fee
Interest Revenue
Other Income
Government Funding
Logue Brook Pipeline Project as per Agreement
(refer note 24)
Logue Brook Reimbursement as per Agreement
(refer note 24)
Interest Revenue
(a) Interest Revenue from
- Other Persons
- Members
Total Interest Revenue
3.
2012
$
2011
$
4,757,861
12,957
191,855
405,146
15,022
134,915
5,517,756
5,888,821
11,879
311,987
379,114
16,834
248,216
6,856,851
22,500
16,500
-
5,202,732
22,500
292,571
5,511,803
131,822
3,093
134,915
238,128
10,088
248,216
SURPLUS FOR THE YEAR
2012
$
2011
$
The surplus for the year is after the following charges
Finance Costs
- External
- Related Parties
Total Finance Costs
Depreciation
Directors Fees
Bad and Doubtful Debts expense
Page 39
42,801
42,801
-
1,714,054
138,000
1,650
1,685,407
138,000
-



4.
INCOME TAX EXPENSE
(a) The components of tax expense comprise
Current Tax
Deferred Tax
2012
$
2011
$
-
33,666
(925,152)
(925,152)
1,173,178
1,206,844
(2,791,906)
3,933,440
(837,572)
1,180,032
1,024,473
(1,112,053)
(925,152)
1,604,387
(1,577,575)
1,206,844
33%
31%
(b) The prima facie tax payable on surplus / (deficit)
from Ordinary Activities before Income Tax is
reconciled to the Income Tax Expense as follows
Surplus / (deficit) from Ordinary Activities before
Income Tax
Prima facie tax at 30%
Add the tax effect of
- Other Non-Allowable Items
- Temporary Difference – Pipe Projects
The applicable weighted average effective tax rates
are as follows
Page 40
4.
Deferred Tax Assets and Liabilities
INCOME TAX (cont.)



(c)
(19,860,266)
120,665
(19,739,601)
Balance
30 June 2011
$
(18,675,380)
(805)
109,762
(18,566,423)
Balance
30 June 2010
$
Charged
directly to
Equity
$
Charged
directly to
Equity
$
-
-
Net
2012
2011
$
$
(20,355,616) (19,860,266)
(3,527)
1,544,695
120,665
18,814,449 (19,739,601)
(20,355,616)
(3,527)
1,544,695
(18,814,449)
Balance
30 June 2012
$
(19,860,266)
120,665
(19,739,601)
Balance
30 June 2011
$
Liabilities
2012
2011
$
$
(20,335,616)
(19,860,266)
(3,527)
(20,359,143)
(19,860,266)
(495,350)
(3,527)
1,424,030
925,153
Charged to
Income
$
(1,184,886)
805
10,903
(1,173,178)
Charged to
Income
$
Deferred tax assets and liabilities are attributable to the following:
Assets
2012
2011
$
$
1,544,695
120,665
1,544,695
120,665
Accelerated tax depreciation
Income not yet assessable for taxation purposes
Expenses not yet deductible for taxation purposes
Tax Assets (Liabilities)
Movement in temporary differences during the year
Movement in temporary differences during the year
Page 41



4.
INCOME TAX (cont.)
Deferred tax assets not brought to account, the benefits of which will only be realised if the
conditions for deductibility set out in Note 1(a) occur:
- Temporary differences $Nil
(2011: $Nil)
- Tax losses: operating losses $Nil
(2011: $Nil)
5.
TRADE AND OTHER RECEIVABLES
CURRENT
Trade Receivables
Accrued Income
GST Receivable
Accrued Interest
Related Party Receivable – RWS
Rural Water Service Customer Loans
Somers Road Loans
HPP Stage 1 Member Loans
NON-CURRENT
Rural Water Service Customer Loans
Somers Road Member Loans
2012
$
202,800
41,999
11,755
1,961
20,919
7,672
2,800
13,750
303,656
2011
$
457,728
155,211
116,421
83,207
501
35,645
25,750
6,798
881,261
30,517
23,018
8,400
61,935
45,864
13,750
59,614
(a)
Trade Receivables
Trade receivables relate to water delivery charges receivable by the Company.
(b)
Customer Loans
Customer Loans relate to amounts not yet paid by members and RWS customers in respect
of irrigation system expansion programs. Interest is receivable on the loans.
2012
2011
$
$
170,404
Beginning of the Year
127,807
Loans Advanced
139,411
73,912
Loan Repayments Received
(160,142)
(116,509)
Interest Charged
11,144
9,624
Interest Received
(11,144)
(9,624)
End of Year
107,076
127,807
Unsecured loans are made to members on an arm’s length basis. Repayment terms are set
for each loan, which have a term of five years (unless paid upfront). The interest rate is set
when the loan is entered into and remains constant for the life of the loan, with annual
principal and interest repayments made over the term of the loan.
Page 42



5.
TRADE AND OTHER RECEIVABLES (cont.)
(c)
Provision for Impairment of Receivables
Current trade and term receivables are non-interest bearing loans and generally on 30-day
terms. Non-current trade and term receivables are assessed for recoverability based on the
underlying terms of the contract. A provision for impairment is recognised when there is
objective evidence that an individual trade or term receivable is impaired. These amounts
have been included in the other expenses item.
Movement in the provision for impairment of receivables is as follows:
Opening
Balance
1 July 2011
$
Amounts Receivable from
members
Opening
Balance
1 July 2010
$
Amounts Receivable from
members
Charge for
the year
$
-
Amounts
written off
$
-
Charge for
the year
$
Amounts
written off
$
-
-
Closing
Balance
30 June 2012
$
Closing
Balance
30 June 2011
$
-
Credit Risk
The Company has no significant concentration of credit risk with respect to any single
counterparty or group of counterparties. The main source of credit risk to the Company is
considered to relate to the class of assets described as ‘trade and other receivables’.
The following table details the Company’s trade and other receivables exposed to credit risk
with aging analysis and impairment provided for thereon. Amounts are considered as ‘past
due’ when the debt has not been settled within the terms and conditions agreed between the
Company and the customer or counterparty to the transaction. Receivables that are past due
are assessed for impairment by ascertaining solvency of the debtors and are provided for
where there are specific circumstances indicating that the debt may not be fully repaid to the
Company. This assessment for 30 June 2012 did not identify any debtor impairment.
The balances of receivables that remain within initial trade terms (as detailed in the table)
are considered to be of high credit quality.
Page 43



5.
TRADE AND OTHER RECEIVABLES (cont.)
2012
Trade and Term
Receivables
2011
Trade and Term
Receivables
Past
Due and
Impaired
$
Within
Initial
Trade
Terms <30
$
202,800
-
105,070
1,979
20,157
75,594
457,728
-
393,445
(446)
14,299
50,430
Gross
Amount
$
Past Due but Not
Impaired (Days
Overdue)
31-60
61-90
$
$
>90
$
The Company does not hold any financial assets for which terms have been renegotiated,
but which would otherwise be past due or impaired.
(d)
Financial assets classified as trade and other receivables
Note
2012
$
2011
$
303,656
61,935
365,591
881,261
59,614
940,875
1,055,971
1,411,321
CURRENT
Current Tax Asset
69,235
86,558
8.
OTHER ASSETS
Prepayments
49,412
37,397
1
1
- Total Current
- Total Non-Current
Financial Assets
30
(e)
Collateral pledged
No collateral is held over trade and other receivables.
6.
INVENTORIES
CURRENT
Materials at Cost
7.
TAX ASSETS
9.
FINANCIAL ASSETS
Shares held in Rural Water Services Pty
Limited At Cost
Page 44



10.
PROPERTY, PLANT AND EQUIPMENT
2012
$
2011
$
32,485
32,485
Computer Equipment – at Cost
Less Accumulated Depreciation
134,052
(115,998)
18,053
129,090
(100,905)
28,185
Motor Vehicles – at Cost
156,032
(120,481)
35,551
156,032
(109,059)
46,973
Other Plant & Equipment – at Cost
1,938,274
(1,225,041)
713,233
1,843,184
(1,048,185)
794,999
Harvey Pipe Project – at Cost (Refer Note 23)
58,509,758
(6,050,191)
52,459,567
58,509,758
(4,879,999)
53,629,759
Benger Pipe Project At Cost
7,978,894
(477,603)
7,501,291
7,978,894
(318,027)
7,660,867
Logue Brook Pipeline Project (Refer Note 24)
- at Cost
5,472,366
5,472,366
(218,899)
5,253,467
(109,447)
5,362,919
Brunswick Pipe Project - at Cost
2,570,603
(59,276)
2,511,327
2,417,912
(8,060)
2,409,852
Somers Pipe Project - at Cost
3,046,984
(20,251)
3,026,733
-
-
50,219
-
71,601,926
69,966,039
Land – at Cost
Wokalup Pipe Project – In Progress
Page 45
PROPERTY, PLANT AND EQUIPMENT (cont.)
-
-
32,485
Disposals / Asset
Write Off*
Depreciation
Expense
Balance –
30 June 2011
-
32,485
Depreciation
Expense
Balance –
30 June 2012
Page 46
-
-
-
-
-
32,485
-
-
-
(271,819)
-
Additions
Disposals/ Asset
Write Off
Balance –
30 June 2011
-
271,819
$
32,485
$
Land
Additions
Balance –
1 July 2010
Capital
WIP
18,053
(15,093)
-
28,185
4,961
28,185
(27,428)
(7,330)
6,182
56,761
$
Computer
Equipment
35,551
(11,422)
-
46,973
-
46,973
(15,130)
-
-
62,103
$
Motor
Vehicles
Movements in Carrying Amounts during the Year
10.



713,233
(176,852)
-
794,999
95,086
794,999
(196,134)
(3,198)
413,470
580,861
Other
Plant &
Equipment
$
52,459,567
(1,170,192)
-
53,629,759
-
53,629,759
(1,170,195)
-
-
54,799,954
$
HPP
7,501,291
(159,576)
-
7,660,867
-
7,660,867
(159,013)
-
28,239
7,791,641
$
BPP
5,253,467
(109,452)
-
5,365,919
-
5,362,919
(109,447)
-
6,141
5,466,225
$
LBPP
-
2,511,327
(51,216)
-
2,409,852
152,691
2,409,852
(8,060)
-
2,417,912
$
BWKPP
-
-
-
-
-
-
-
-
-
-
50,219
-
-
50,219
WOKALUP
$
TOTAL
71,601,926
(1,714,054)
-
69,966,039
3,349,941
69,966,039
(1,685,407)
(282,347)
2,871,944
69,061,849
3,026,733
(20,251)
-
3,046,984
SOMERS



10.
PROPERTY, PLANT AND EQUIPMENT (cont.)
The Somers Pipe Project was completed March 2012 and was first ready for use March
2012; accordingly four months depreciation charge has been recognised for the Somers
Pipe Project asset.
*The Disposals/Asset Write off for Capital WIP in the prior year was for the upgrade to the
customer information and billing database (BOB). The upgrade occurred over a number of
years, with costs allocated to Capital WIP. The upgrade was completed in October 2010 and
the full cost of the project was transferred from Capital WIP to the software asset account
under Other Plant and Equipment.
11.
TRADE AND OTHER PAYABLES
CURRENT
Unsecured Liabilities:
Trade Payables
Sundry Payables and Accrued Expenses
Related Party Creditor – SWIAC
Employee Benefits (Note 13)
(a) Financial liabilities at amortised cost classified
as trade and other payables
Total Current
Total Non-Current
Less annual leave entitlements (Note 13)
Financial Liabilities as Trade and Other Payables
(Note 30)
12.
2012
$
2011
$
163,091
108,481
580,150
190,009
1,041,731
321,707
225,722
312,571
198,092
1,058,092
1,041,731
1,041,731
(190,009)
1,058,092
1,058,092
(198,092)
851,722
860,000
FINANCIAL LIABILITIES
Loans from related parties on commercial terms in accordance with loan agreement.
CURRENT
Loans from Related Party
Page 47
1,000,000
-



13.
PROVISIONS
CURRENT
Employee Benefits (Note 11)
NON-CURRENT
Cash Received in Advance for Issue of Share
Capital
Long-term Employee Benefits
2012
$
2011
$
190,009
198,092
4,121
78,942
83,063
4,073
61,961
66,034
Provision for Long-Term Employee Benefits
A provision has been recognised for employee benefits relating to long service leave for
employees. In calculating the present value of future cash flows in respect of long service
leave, the probability of long service leave taken is based upon historical data.
The measurement and recognition criteria for employee benefits have been included in Note
1(f).
14.
TAX LIABILITIES
2012
$
Deferred Tax Liability
15.
18,814,449
2011
$
19,739,601
ISSUED CAPITAL
107,947 (2011 – 107,995) Fully Paid Ordinary
Shares
107,947
107,995
The Company has authorised share capital amounting to 112,068 shares.
(a)
Ordinary Shares
At the Beginning of Reporting Period
Shares Issued During the Year
Share Buy Back
At Reporting Date
No.
107,995
(48)
107,947
No.
107,995
107,995
At the members annual general meeting each voting member is entitled to one vote when a
poll is called.
Page 48




(b)
Capital Management
Management and the Directors control the capital of the Company to ensure the Company
funds its operations for members.
The Company’s capital includes ordinary share capital. There are no externally imposed
capital requirements.
Management effectively manages the Company’s capital by assessing financial risks and
adjusting its capital structure in response to member share transfers. There have been no
changes in the strategy adopted by management to control the capital of the Company since
the prior year.
16.
EXPENDITURE COMMITMENTS
(a) Operating Lease Commitments
Non-cancellable operating leases contracted for
but not capitalised in the financial statements.
Payable – minimum lease payments
- Not later than 12 months
- Between 12 months and five years
- Greater than five years
2012
$
2011
$
169,740
21,546
191,286
149,046
105,707
254,753
(b) Capital Expenditure Commitments
There were no capital commitments at 30 June 2011 or 30 June 2012.
17.
AUDITORS REMUNERATION
Remuneration of the Auditors of the Company for:
- Audit or reviewing the financial report
- Other Services
- Taxation Services provided by related
division of audit practice
- Business Services provided by related
division of audit practice
Page 49
2012
$
26,850
13,210
2011
$
25,890
3,900
7,290
7,770
6,680
54,030
37,560



18.
RELATED PARTY TRANSACTIONS
(a)
Directors Names
The Directors of the Company during the financial year were:
Chairman
Deputy Chairman
Director
Director
Director
Director
18.
I Eckersley
S Epiro
K Depiazzi
T Busher
L Snell
M Snell
Harvey District
Harvey District
Collie River District
Collie River District
Waroona District
Non-member Director
RELATED PARTY TRANSACTIONS (cont.)
(b)
Remuneration of Directors
Income paid to the Directors of the Company totalled $138,000 for the period from 1 July
2011 to 30 June 2012 (2011: $138,000). The number of Directors whose total income was
within the specified bands were as follows:
$
0
10,000
20,000
30,000
40,000
-
$
2012
2011
9,999
19,999
29,999
39,999
49,999
2
3
1
2
3
1
(c)
Directors’ Shareholdings
The aggregate number of fully paid and ordinary shares of the Company held by the
Directors in office at balance date, or their related entities, was 3,638 (2011 – 3,288).
(d)
Transactions of Directors concerning Shares
Director, Ian Eckersley purchased 350 shares on the 18 November 2011. There were no
other shares purchased or sold by Directors in office at balance date, during the year ending
30 June 2012.
Page 50



(e)
Other Transactions of Directors
During the financial year, the following Directors, or their related entities, received and paid
for irrigation services under normal trading terms and conditions:
-
I Eckersley
K Depiazzi
T Busher
S Epiro
L Snell
2012
$
Aggregate Amount for Irrigation Services:
87,433
2011
$
75,651
(f)
Other Related Party Transactions
The Company entered into an agreement effective 1 July 2006 to lease a property (Lot 500
Turnbull Street, Harvey) from South West Irrigation Asset Cooperative Limited for a 10 year
period. A portion of this property has been sub-leased to Rural Water Services Pty Ltd for
the same period.
19.
KEY MANAGEMENT PERSONNEL COMPENSATION
Short-Term Benefits
Other Long Term Benefits
Post Employee Benefits
Termination Benefits
20.
2012
$
418,805
24,101
442,906
2011
$
479,410
26,942
506,352
SEGMENT INFORMATION
The Company operates in the Harvey Water Irrigation Area of Western Australia and the
main function is the supply of irrigation water and related services.
Page 51



21.
CASH FLOW INFORMATION
(a)
Reconciliation of Cash
Cash at the end of the financial year as shown in the statement of cash flows is reconciled to
the related items in the statement of financial position as follows:
Cash on Hand
(b)
2012
$
793,573
2011
$
3,284,804
Reconciliation of cash flow from operations with surplus / (deficit) after income tax:
Surplus / (Deficit) after Income Tax
Depreciation
Loss / (Surplus) on Disposal of Assets
Change in Assets and Liabilities:
Increase / (Decrease) in Leave Provisions
Increase / (Decrease) in Provision for Income Tax
Increase / (Decrease) in Deferred Tax Liability
(Increase) / Decrease in Inventories
Increase / (Decrease) in Creditors and Accruals
(Increase) / Decrease in Receivables and Other
Assets
(Increase) / Decrease in Accrued Income
Net Cash Flow from/(used in) Operating Activities
Page 52
2012
$
(1,866,754)
1,714,054
-
2011
$
2,726,596
1,685,407
10,528
8,898
17,323
(925,152)
355,350
(9,738)
1,148
(137,147)
1,173,178
120,027
(493,457)
388,787
155,211
(162,021)
(251,138)
(219,088)
4,616,054



22.
CONTINGENT LIABILITIES
Contributions to Water Corporation’s Dam Safety Program
The Water Corporation is currently in the process of undertaking a Dam Safety Program
(DSP) throughout the South West Region. Water Corporation's DSP includes safety
upgrades and improvements in respect of irrigation dams which supply the Company.
By agreement with Water Corporation in 1996, the Company will contribute towards the DSP
relating to some irrigation dams.
The Economic Regulation Authority (ERA) conducted an Inquiry into the Bulk Water pricing
of the Company which included considerations of the cost of Water Storage and the cost of
Dam Safety. This report has now received full formal approval by government, Water
Corporation and Harvey Water. The Dam Safety Program (DSP) costs recommended from
that review are now being levied on irrigators over a 10 year increasing price path and
amount to $1,272,849 in 2011/12 (estimated to be $1,436,144 in 2012/13).
Harvey Water’s contribution to the Dam Safety Program relates only to works on Waroona
and Wellington dams and works on those two dams are now complete.
The report required that extra payments be made for those items in 2007/8. These payments
took into account previous payments for Water Storage and Dam Safety made by the
Company.
These fixed charges have become increasingly burdensome to irrigators from the very low
allocations in the past 5 years in the Waroona/Harvey districts which drive up the effective
cost of water on a per unit volume basis. As well, the high salinity and therefore low
productivity from Wellington dam water makes the profitability of irrigation in the Collie River
district much harder than in Waroona/Harvey.
In response to these financial difficulties, Harvey Water wrote to the ERA requesting a
review of the situation, taking into account the real changes in water supply which have
occurred since the 2007 review. ERA agreed to this request and at year end this review was
under way as part of a review of costs and charges of Water Corporation and other water
utilities.
The ERA approved price path is as per the table below:
Page 53
CONTINGENT LIABILITIES (cont.)
Total $m
CPI*
Formula
$m
$/month
Annual $
154.3
2006/07
2007/08
0.925235
155.6
1.008
0.933030
77,753
2008/09
1.077561
162.2
1.051
1.132731
94,394
1,132,731
2009/10
1.229886
166.2
1.077
1.324738
110,395
1,324,738
Page 54
0.988461
1.095443
91,287
1,095,443
1.111492
1.272849
106,071
1,272,849
1.234524
1.436144
119,679
1,436,144
The formula is used to convert the price path number in 2006 Dollars to the price path year eg 2009/10, dollars.
The method is to divide the lagged year CPI by the 2006 CPI and multiply the product by the price path number.
0.865429
0.932173
77,681
932,173
Formula
-
Dollar amounts are in June 2006 dollars and need to be increased by CPI for each year.
CPI is average for 8 Capital Cities from April to March lagged from the previous year from ABS data.
0.452339
0.526214
43,851
526,214
CPI*
0.742398
0.780408
65,034
780,408
0.619366
0.423045
0.484459
40,372
484,459
DSP
$m
$/month
Annual DSP $
0.393751
0.436367
36,364
436,367
2012/13
1.686863
179.5
1.163
1.962358
163,530
1,962,358
ERA
Actual
0.364457
0.392565
32,714
392,565
2011/12
1.534538
176.7
1.145
1.757310
146,442
1,757,310
WSC
$m
$/month
Annual WSC $
0.335163
0.352323
29,360
352,323
2010/11
1.382212
171.0
1.108
1.531810
127,651
1,531,810
ERA
Actual
0.305869
Break Down between Water Storage Charge (WSC) & Dam Safety Program (DSP)
Actual
ERA
WATER PRICES (table and calculations provided by the ERA)
22.



-
1.357555
0.481634
2013/14
1.839189
-
1.603618
0.540222
2015/16
2.143840
-
1.726650
0.569516
2016/17
2.296166
-
1.480587
0.510928
2014/15
1.991514
-
1.726650
0.569516
2017/18
2.296166



23.
EXTENSION TO THE HARVEY PIPE PROJECT
The effects of the very dry winter in 2010 extended into 2011/2 with both Waroona and
Logue Brook dams having very low water levels. If it had only been possible to deliver water
to the Waroona district from the Waroona dam, the allocation would have been 9%.
Consistent with Harvey Water’s objective of integrating the Waroona and Harvey Irrigation
Districts, and because of the very low level of water in the dams, a pipeline was constructed
from the northern end of the Harvey system to the western edge of the Waroona system to
augment the water supply system. This allowed the joint allocation in the Harvey and
Waroona districts to be 45%, which was a major benefit to Waroona irrigators.
The pipeline cost of $3m was internally funded and was constructed, largely using internal
resources, between September and December 2011.
24.
RATIONALISATION OF WATER SOURCES
After the completion of the Harvey Pipe Project, the situation was that Harvey Water and
Water Corporation both owned water in Samson, Logue Brook and Stirling dams, which are
dams all suitable for potable purposes. Harvey Water owned all the water in Waroona,
Drakesbrook and Harvey dams and most of the water in Wellington dam, which are all dams
with water only suitable for non-potable purposes.
The logistics of two organisations owning and sharing water in the dams – known as
capacity sharing – was onerous and the disruptions to Harvey Water’s supply service
caused by technicians making adjustments to the release and measuring systems without
reference to Harvey Water caused the cooperative to suggest a rationalisation of this
situation such that Harvey Water would own all the water that is suitable for irrigation (nonpotable) and for Water Corporation to own all the water that is suitable for drinking. This is a
sensible concept and makes the best use of water resources.
The outcome will be that Water Corporation owns all the water in Samson and Stirling dams
and Harvey Water owns all the water in Waroona, Drakesbrook, Logue Brook, Harvey and
Wokalup Pipehead Dam.
Negotiations are at an advanced stage and should be completed during 2012.
25.
COLLIE-KEMERTON INTEGRATED WATER MANAGEMENT SYSTEM
Harvey Water has always considered the salinity in Wellington Dam water the most serious
problem it has and has been working with the relevant government agencies to try to
stimulate actions to reduce it.
Funding ($15M each) was provided to DoW under the National Program for Water Quality
and Salinity but after 5 years no acceptable result was obtained and the remaining funds
returned.
The South West Development Commission then asked Harvey Water to take the lead role in
developing a Business Case for funding and action. Harvey Water accepted this opportunity
with great pleasure and has commenced the design and costing of a technical solution along
with the cost/benefit study and governance of the project.
Page 55



25.
COLLIE-KEMERTON INTEGRATED WATER MANAGEMENT SYSTEM (cont.)
A local Industry Reference Group has considered Harvey Water’s ideas and accepted them
for consideration by an Intergovernmental Department Consultative Committee, which has
agreed that funding can be approved for the Business Case.
It is anticipated that the full package will be available to be considered by government late in
2012. Funding will be a government decision but Harvey Water has offered to construct a
70 km pipeline at its own internal cost of around $10 m. This contribution is an important
matter as government is much more likely to approve a project that has real and tangible
support from the proponents.
26.
EVENTS SUBSEQUENT TO REPORTING DATE
There are no events subsequent to reporting date that materially impact on this financial
report.
27.
TRANSITION TO THE NEW CO-OPERATIVES ACT 2009
The new company Rules, which replace the previous Articles of Association, were approved
by members and then by the Regulator in June 2012.
The new Rules require active membership and allow for the cancellation of membership of
those who do not actively use their water.
A significant outcome is that members can now resign from membership and have their
shares cancelled. Six members have sought to take this option in the Collie River Irrigation
District as at August 2012. The cooperative is required to accept these resignations but can
apply a Termination Fee. As well, members can also apply to hand back part of their
shareholding but the cooperative is not obliged to accept these and can also apply an
Excision Charge.
The cooperative is considering the implications of these options because the outcome would
be that the lost income for fixed charges would have to be shared amongst the remaining
members and the equity of this has to be resolved.
The cooperative is actively working through the difficult issues involved and will
communicate the decisions to members as soon as possible.
28.
THIRD PARTY AGREEMENTS
(a)
Perdaman Chemicals and Fertilisers (PCF)
Harvey Water signed a time-limited agreement with PCF on 15 November 2010 for the sale
of industrial water from Wellington dam. Commencement of the agreement is dependent
upon various conditions that are yet to be fulfilled. The supply and payment, upon enactment
of the agreement, is guaranteed both ways that will provide an underpinning income stream
for the Company, which may allow it to fund infrastructure works. The supply will commence
when construction of the plant is complete. The PCF project is being held up by legal issues
and a best-case scenario is that water supply will commence in 2015.
Page 56



28.
THIRD PARTY AGREEMENTS (cont.)
(b)
Alcoa
Harvey Water is negotiating the medium term supply of a guaranteed volume of industrial
water to Alcoa Wagerup. Subsequent to financial year-end, August 2012, a Letter of Intent
has been received with the final details being negotiated. The supply is intended to come
ultimately from Wellington dam via Harvey dam through infrastructure funded by Harvey
Water that will be repaid by Alcoa. Modelling and DAFWA advice show that water quality
issues in Harvey dam are not likely to cause significant plant growth issues.
29.
RESERVES
(a)
Development Reserve
The development reserve records funds set aside for future research and development. The
development levy charged to members is placed within the reserve with expenditure on
research and development for the year allocated against the reserve.
(b)
Future Works and Environmental Reserve
The future works and environmental reserve is required under the Harvey Pipe Project
agreements with Water Corporation and Department of Water. These agreements require
works on approximately 210km of redundant channels and the environment. The redundant
channels require rehabilitation where not required by other stakeholders. Environmental
works relate to rehabilitating a stretch of the Wellesley River and enhancing fish migration in
the Bancell, Clarke and Logue Brooks. These works will take some time to negotiate and
complete. During the 2011/12 financial year, $368,509 of works were completed and
allocated against the reserve.
SWIMCO has agreed with SWIAC that as it has constructed pipelines which have caused
the SWIAC channel assets to now become redundant, it will be financially and
administratively responsible for the works required to achieve the agreed level of
rehabilitation.
30.
FINANCIAL RISK MANAGEMENT
The Company’s financial instruments consist mainly of deposits with banks, local money
market instruments, short-term investments, accounts receivable and payable, loans to and
from members and related parties.
The Company does not have any derivative instruments at 30 June 2012.
The totals for each category of financial instruments, measured in accordance with AASB
139 as detailed in the accounting policies to these financial statements, are as follows:
Page 57



30.
FINANCIAL RISK MANAGEMENT (cont.)
Note
2012
$
2011
$
Financial Assets
21(a)
5
793,573
365,591
1,159,164
3,284,804
940,875
4,225,679
Financial Liabilities at Amortised Cost:
- Trade and Other Payables
11(a)
851,722
851,722
860,000
860,000
Financial Risk Management Policies
The Board meet on a regular basis to analyse financial risk exposure and to evaluate
treasury management strategies in the context of the most recent economic conditions and
forecasts.
The Board’s overall risk management strategy seeks to assist the Company in meeting its
financial targets, whilst minimising potential adverse effects on financial performance.
Management operates under policies approved by the Board of Directors. Risk management
policies are approved and reviewed by the Board on a regular basis. These include credit
risk policies and future cash flow requirements.
Specific Financial Risk Exposures and Management
The main risks the Company is exposed to through its financial instruments are interest rate
risk, liquidity risk and credit risk, which are further detailed below:
(a)
Interest Rate Risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at
reporting date whereby a future change in interest rates will affect future cash flows or the
fair value of fixed rate financial instruments. The Company is also exposed to earnings
volatility on floating rate instruments.
The Company has no borrowings at balance date and is not exposed to fluctuations in
interest rates on borrowings.
(b)
Liquidity Risk
The Company manages liquidity risk by budgeting and monitoring forecast cash flows.
Page 58




30.
Financial Liability and Financial Asset Maturity Analysis
The table below reflects the undiscounted contractual maturity of financial liabilities.
1 to 5 years
2012
2011
$
$
Over 5 years
2012
2011
$
$
-
2012
$
Total
793,573
365,591
1,159,164
2011
$
3,284,804
940,875
4,225,679
2011
$
59,614
59,614
2012
$
860,000
860,000
-
Cash flows realised from financial assets reflect management expectation as to the timing of realisation. Actual timing may therefore differ from that
disclosed. The timing of cash flows presented in the table to settle financial liabilities reflect the earliest contractual settlement dates and do not reflect
management expectations that banking facilities will be rolled forward.
Within 1 Year
2012
2011
$
$
Financial Assets – cash flows realisable
3,284,804
881,261
4,166,065
851,722
851,722
61,935
61,935
793,573
303,656
1,097,229
-
3,365,679
Receivables
Total Anticipated Inflows
-
307,442
2011
$
-
-
2012
$
-
-
1 to 5 years
2012
2011
$
$
851,722
851,722
59,614
61,935
Within 1 Year
2012
2011
$
$
Financial Liabilities – due for payment
Total Expected Outflows
245,507 3,306,065
860,000
860,000
Net (Outflow) / Inflow
on Financial Instruments
Page 59




30.
(c)
Foreign Currency Risk
The Company is not exposed to fluctuations in foreign currencies.
(d)
Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or other security,
at balance date to recognised financial assets, is the carrying amount, net of any provisions
for impairment of those assets, as disclosed in the statement of financial position and notes
to the financial statements.
There are no material amounts of collateral held as security at 30 June 2012.
Credit risk is managed by management and reviewed regularly by the Board of Directors. It
arises from exposures to customers deposits with financial institutions.
Management monitors credit risk by actively assessing the rating quality and liquidity of
counter parties:
-
Only banks and financial institutions with ratings as outlined within the investment
policy are utilised; and
Customers that do not pay on a timely basis are subject to recovery actions in
accordance with Board policy and may ultimately have services restricted.
The Company does not have any material credit risk exposure to any single receivable or
group of receivables under financial instruments entered into.
The trade receivables balances at 30 June 2012 and 30 June 2011 do not include any
counter parties with external credit ratings. Customers credit worthiness is monitored
monthly and actions taken where applicable in accordance with Board policy.
(e)
Price Risk
The Company is not exposed to any material commodity price risk.
Sensitivity Analysis
The following table illustrates sensitivities to the Company’s exposures to changes in interest
rates. The table indicates the impact on how profit and equity values reported at balance
date would have been affected by changes in the relevant risk variable that management
considers to be reasonably possible. These sensitivities assume that the movement in a
particular variable is independent of other variables.
Profit
$
Equity
$
Year ended 30 June 2012
+/- 2% in interest rates
+/- 15,871
+/- 15,871
Year ended 30 June 2011
+/- 2% in interest rates
+/- 65,696
+/- 65,696
The above interest rate sensitivity analysis has been performed on the assumption that all
other variables remain unchanged.
Page 60




30.
Net Fair Values
Fair Value Estimation
The fair values of financial assets and financial liabilities are presented in the following table
and can be compared to their carrying values as presented in the statement of financial
position. Fair values are those amounts at which an asset could be exchanged, or a liability
settled, between knowledgeable, willing parties in an arm’s length transaction.
Fair values derived may be based on information that is estimated or subject to judgment,
where changes in assumptions may have a material impact on the amounts estimated.
Areas of judgment and the assumptions have been detailed below. Where possible,
valuation information used to calculate fair value is extracted from the market, with more
reliable information available from markets that are actively traded. In this regard, fair values
for listed securities are obtained from quoted market bid prices. Where securities are
unlisted and no market quotes are available, fair value is obtained using discounted cash
flow analysis and other valuation techniques commonly used by market participants.
Foot
note
2012
Carrying
Net Fair
Amount
Value
$
$
2011
Carrying
Net Fair
Amount
Value
$
$
Financial Assets
(i)
(i)
793,573
365,591
1,159,164
793,573
365,591
1,159,164
3,284,804
940,875
4,225,679
3,284,804
940,875
4,225,679
(i)
851,722
851,722
851,722
851,722
860,000
860,000
860,000
860,000
The fair values disclosed in the above table have been determined on the following
methodologies:
(i)
Cash and cash equivalents, trade and other receivables and trade and other
payables are short term instruments in nature whose carrying value is equivalent to fair
value. Trade and other payables exclude amounts provided for relating to annual leave
which is not considered a financial instrument. Fair values are in line with carrying values.
Financial Instruments Measured at Fair Value
The financial instruments recognised at fair value in the statement of financial position have
been analysed and classified using a fair value hierarchy reflecting the significance of the
inputs used in making the measurements. The hierarchy consist of the following levels:
- Quoted prices in an active market for identical assets or liabilities (Level 1);
- Inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2);
and
- Inputs for the asset or liability that are not based on an observable market data
(unobservable inputs) (Level 3).
All financial instruments for the year ended 30 June 2011 and 30 June 2012 are classified as
Level 1.
Page 61
Audit Report
Page 62
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