Yarra Valley Water Annual Report 2022-2023 by Yarra Valley Water

2022-23

Yarra Valley Water Annual Report

Yarra Valley Water Annual Report 2022-23

Contents 1. Introduction

Environmental outcomes

About us

Climate adaptation

Bulk entitlements report

Greenhouse gas emissions and net energy consumption

Other statutory obligations

A message from the Chair and Managing Director

Our strategic context

2. 2022-23 Highlights

Our performance

100

Key Initiatives

4. 2022-23 Financial Report

108

Overview of 2022-23 performance

5. Disclosure Index

172

3. Delivering Value

Our leadership

Our people and culture

Liveability outcomes

Resilient and liveable cities and towns

Customer and community outcomes

Water for Aboriginal cultural, spiritual and economic values

Acknowledgement of Traditional Owners/Custodians

Yarra Valley Water proudly acknowledges the Traditional Owners/Custodians of the land, water and skies on which we rely and operate. We pay our deepest respects to their Elders past, present and emerging. We acknowledge the continued cultural, social and spiritual connections that First Nations people have with Country and recognise and value the care and protection provided by Traditional Owners/Custodians over thousands of generations. We also recognise and value the continuing rich cultures and contribution of First Nations people to the Victorian community.

Language statement We recognise the diversity of Aboriginal and Torres Strait Islander people living in Victoria. We have used the term ‘First Nations people’ to include all people of Aboriginal and Torres Strait Islander descent who live in Victoria. The use of words ‘our’ and ‘we’ throughout this document refers to Yarra Valley Water.

Yarra Valley Water Annual Report 2022-23

Our purpose

To support the health and wellbeing of our customers and create a brighter future for communities and the natural environment

Key statistics

818k Residential properties

61k Business customers

Our assets

45k properties with recycled water

10,377km 2m Population served

water supply mains

755km recycled water supply mains

$5.9b Assets

10,266km Sewer mains

Drinking water and recycled water pumping stations

Drinking water and recycled water service reservoirs

Water recycling plants

Sewage pumping stations

Food waste to energy facility

Sewage treatment plants

152 Drinking water and recycled water pressure reducing stations

Yarra Valley Water Annual Report 2022-23

Introduction

About us

A message from the Chair and Managing Director

Our strategic context

Yarra Valley Water Annual Report 2022-23

About us Yarra Valley Water is one of Australia’s largest water utilities, servicing 2 million Victorians and more than 60,000 businesses. We manage $5.9 billion worth of assets across a vast service area stretching from Wallan in the north to Warburton in the east.

Our primary function is to supply safe, reliable and affordable water and sewerage services to customers. This includes the provision of high-quality drinking water sourced mostly from protected catchments in Melbourne’s east and supplemented with water produced from the Victorian Desalination Plant. We take pride in delivering a reliable water supply to our customers and removing and treating sewage in a way that protects the environment. While most sewage is treated at Melbourne Water’s Eastern and Western treatment plants, we also have 9 regional treatment plants which process sewage. Several of these also produce recycled water for non-drinking water uses in homes and public spaces as part of our work to secure water supplies for the future. Our 2030 Strategy sets out a long-term strategic plan to deliver on our purpose: to support the health and wellbeing of our customers and deliver a brighter future for communities and the natural environment. We’re driven by this vision as we plan the delivery of our essential services to meet challenges including cost of living pressures, population growth and climate change.

Introduction

We have a diverse customer base including more than 10,000 First Nations people and more than 630,000 people who were born overseas. A high proportion of customers speak a language other than English at home, with the top 5 languages being Mandarin, Greek, Arabic, Italian and Cantonese. We deliver extra value for our customers through innovations such as Victoria’s first food waste to energy facility at Wollert. This year the facility processed more than 28,000 tonnes of food waste to generate our own renewable energy. Our facility helps reduce our carbon footprint, turning food waste into energy which powers our Aurora Sewage Treatment Plant and reducing energy costs. We also export excess energy to the electricity grid. New innovations underway include a second, larger food waste to energy facility, expanding digital water meter trials to help customers identify leaks and opportunities to save water, and exploring how the water sector can contribute to the development of a viable hydrogen economy in Australia. We’ve developed a high-performing hybrid workplace and our workforce culture is globally recognised. We live our values - putting people first, working as one team, being brave, delivering what matters and having a positive impact.

more than

28,000 tonnes of food waste processed this year to generate our own renewable energy We are a water corporation under the Water Act 1989 and our activities are overseen by an independent Board of Directors appointed by the Victorian Government. The Water Act 1989 and the Statement of Obligations issued by the Minister for Water govern our activities. During the 2022-23 financial year, we were accountable to the Hon. Harriet Shing MP as Minister for Water. We are regulated by the Department of Health in relation to drinking water quality and Environment Protection Authority Victoria for environmental compliance. The Essential Services Commission is our economic regulator. Every 5 years we’re required to make a price submission which sets out the services and standards we propose to deliver to our customers and proposed prices. Our next price submission, developed after an extensive and award-winning engagement process, is due to come into effect on 1 July 2023.

Yarra Valley Water Annual Report 2022-23

A message from the Chair and Managing Director We’re proud to present our Annual Report 2022-23 which details our performance and shows how we’re delivering value to our customers and broader community. Our approach is centred around our 2030 Strategy, which focuses on transforming around customers, helping communities thrive and leading for our environmental future. We know times are tough and we’ve maintained our focus on keeping bills affordable and supporting customers. We’ve run a continuous campaign to raise awareness of our WaterCare support program which has assisted more than 17,000 vulnerable customers this year. Support options for commercial customers introduced during the COVID-19 pandemic are now embedded to ensure ongoing assistance for businesses impacted by hardship. This marks the final year of our 2018-2023 price submission which sets out commitments to customers across 7 key service areas including safe drinking water, reliable and flexible service, fair access for all and care for the environment. We’re proud to report that we again met 6 of the 7 outcomes. The exception was ‘water availability and conservation’. We achieved 225 litres per person per day against a target of 210 litres. We’re committed to working collaboratively to explore new ways to reduce water consumption as we face the challenges of climate change and population growth. Both put pressure on our network and the availability of water. We know we’re likely to need to add more water supplies to our system within the next 10 years. Two significant strategies were delivered this year to help guide this work and ensure there is enough water for everyone in the future. The Central and Gippsland Region Sustainable Water Strategy and the Greater Melbourne Urban Water and System Strategy: Water for Life were developed in partnership with other water corporations, the Victorian Government, Traditional Owners/Custodians, the community and stakeholders. These strategies provide a clear way forward for collectively addressing the significant long-term water security issues we face. We rely on a healthy environment to deliver our services and we adopt an innovative approach as we work to

protect our planet for the future. We aim to be net zero in 2025 and then go beyond zero carbon. Renewable energy now powers 66% of our operations. Yarra Valley Water is one of only 45 Australian companies and the top-ranking water business named on the prestigious Climate Leaders list for 2023. The list, compiled by the Financial Times and Statista, showcases the most influential companies leading the way in climate action and sustainability in the in Asia-Pacific region. We’re committed to going beyond zero carbon. We’ve commenced trialling hydrogen generation. Subject to the success of the trial, we’ll secure an $11.9 million grant from the Victorian Government’s Energy Innovation Fund towards a full-scale hydrogen production facility at our Aurora Sewage Treatment Plant. The circular economy opportunities from this initiative are significant, with the potential for reusing the oxygen by-product from hydrogen production to improve the efficiency of sewage treatment processes. We’re also partnering with Traditional Owners/ Custodians to protect biodiversity on land we own. We’re working with stakeholders to explore potential models to deliver a water-efficient community in Beveridge, in Melbourne’s north. Known as Hazelwynde, this project aims to help establish a sustainable, water efficient community that meets all its own water needs through leading edge water management. This year we’ve finalised development of our price submission for 2023-28. Our extensive engagement process included community panels, a Citizens’ Jury and a First Nations Community Working Group. Caring for Country was a key priority for the Jury and this approach will underpin all our actions and decision making. As we did throughout the 2018-23 price period, we’ll assess our performance every year and return $1.8 million for any outcome we don’t achieve (up to $10.8 million per annum) via a community rebate.

Introduction

Our engagement efforts to prepare this price submission received recognition at the 2022 International Association for Public Participation (IAP2) Core Value Awards for excellence in customer engagement. The Essential Services Commission also fast-tracked our price submission which we’ll commence implementing in 2023-24. Our customer bills have consistently declined in real terms over the past 10 years – lessening their impact on household budgets. Under our approved price submission we’re pleased this trend will continue, with prices forecast to increase by less than inflation until 2024-25 and then be in line with inflation. We exceeded our key customer satisfaction target this year with 86% of customers satisfied with our service. We’ve also maintained high levels of trust among both residential and business customers (88%). Our commitment to customer care was recognised nationally at the prestigious Australian Service Excellence Awards in 2022. We went on to win the Service Excellence in a Service Centre (Medium) category at the 2022 International Service Excellence Awards.

We delivered our financial target this year with a net profit after tax of $93.2 million, which is $21.1 million higher than budget. This is mainly due to acceleration and completion of developer contributed asset revenue and new customer contributions. However, this is partially offset by lower residential water and sewer usage and revenue due to wet weather conditions. Revenues from the commercial sector grew marginally as people returned to workplaces. We maintained a strong focus on managing operational risks and expenditure despite the ongoing economic challenges emerging from supply chain, inflation, and labour capacity constraints. This increased profit has resulted in increased dividends back to the State of Victoria. Lastly, we’d like to thank our people for their commitment, care and great work delivering exemplary service to our customers and the community. Thanks too, to our Board members for their governance and oversight. We also appreciate and value our government, community and industry partnerships, which help us to continually grow and evolve as we deliver our essential services.

Other highlights this year include: • Delivering 144 billion litres of water to our customers, all 100% compliant with stringent water quality regulations. • Investing $308 million in water and sewerage infrastructure. • Obtaining a development licence from the Environment Protection Authority Victoria for the Doncaster Hill Recycled Water Project. • Receiving global recognition for our ongoing efforts to reduce non-revenue water (water lost in our network mainly through bursts and leaks) through benchmarking by Isle Utilities, an international consultancy specialising in technology and innovative best practices. We’ve continued to manage impacts in relation to global labour and supply chain challenges and responded to heightened risk around cyber and data security.

Sue T O’Connor Chair

Patrick J McCafferty Managing Director

Yarra Valley Water Annual Report 2022-23

Our strategic context Our purpose is to support the health and wellbeing of customers and create a brighter future for communities and the natural environment. Three key pillars bring our purpose to life:

We drive high performance across all 3 pillars with the enabling streams of People and Culture, Safe and Well, Always Efficient and Digital Enablement powering our work. Together with our price submission customer commitments, these aim to deliver exceptional results for our customers, stakeholders, owners and staff. We are committed to the United Nations Global Compact and work to advance the Sustainable Development Goals (SDGs). We’ve embedded the SDGs in our business strategy to provide a global context for how our activities contribute to a more sustainable and liveable future. We are also guided by the Victorian Government’s Letter of Expectations, which focuses on: • climate change and environment • customer and community outcomes • deliver water for Aboriginal cultural, spiritual and economic value and support economic inclusion in the water sector • resilient and liveable cities and towns • leadership, diversity and culture • performance and financial sustainability • recognise recreational values • compliance and enforcement.

Introduction

The priority policy areas, customer commitments and Sustainable Development Goals are all embedded in our 2030 Strategy. Our approach evolves as the needs and expectations of customers and stakeholders change. Government policy direction Priority policy areas

Climate change and environment

Customer and community outcomes

Performance and financial sustainability

Resilient and liveable cities and towns

Leadership, diversity and culture

Compliance and enforcement

Recognise recreational values

Deliver water for Aboriginal cultural, spiritual and economic values and support economic inclusion in the water sector

Customer commitments (2018-23) Customers expect

Safe drinking water

Reliable water and sewerage services

Timely response and restoration

Water availability and conservation

Modern flexible service

Customers value

Fair access and assistance for all

Sustainable Development Goals

Care for and protect the environment

Yarra Valley Water Annual Report 2022-23

Strategic theme Transforming around the customer

2018-2023 Price submission customer commitments

Letter of Expectations

• Safe drinking water

• C1 – Customer satisfaction

• Reliable water and sanitation services • Timely response and restoration • Modern flexible service

Helping communities thrive

• Fair access and assistance for all

• C2 – Customer and community engagement

• Water availability and conservation

• AC1 – Supporting Aboriginal self-determination • AC2 – Partnerships with Traditional Owners/Custodians • AC3 – Aboriginal inclusion plan/ Reconciliation Action Plan • CC3 – Adaption to climate change and variability • L1 – Integrated water management • L2 – Water efficiency

Leading for Environmental Future

• Care for and protect the environment

• CC1 – Emissions reduction • CC2 – Electricity consumption • L3 – Circular economy outcomes • L4 – Environmental statutory obligations

High Performance

• G1 – Diversity and inclusion • PF1 – Audited statement of performance • G2 – Health and safety

Sustainable Development Goals

Introduction

Yarra Valley Water Annual Report 2022-23

2022-23 Highlights

KEY INITIATIVES

Transforming around customers

Helping communities thrive

Leading for our environmental future

High performance

Yarra Valley Water Annual Report 2022-23

Transforming around customers We’re committed to transforming around our customers to ensure we meet their needs. This includes delivering digital improvements to enhance our service delivery and response and building awareness of support programs for vulnerable customers.

Key initiatives Safe and pleasant drinking water Providing safe and pleasant drinking water is our number one priority. It’s a key driver of customer satisfaction and we continually review and improve our operations to ensure we keep it flowing every day. The water we supply in Healesville was voted the best tasting in Australia at the prestigious Water Industry Operators Association of Australia’s 2022 Ixon Best Tasting Water Awards. Most of Melbourne’s water comes from protected catchments which contributes to its high quality, and our supply is supplemented with water from the Victorian Desalination Plant as needed. Extensive independent water quality testing ensures the water we supply is 100% compliant with stringent Victorian drinking water regulations. We undertake regular inspections and maintenance of our water storage tanks to ensure their integrity and have ongoing programs in place to keep water mains clean. We work closely with customers to manage any water quality complaints and resolve issues. Our latest customer research shows that 91% of customers are satisfied with overall water quality.

2022-23 Highlights

Reliable water and sewerage services We’re committed to providing reliable water and sewerage services to our customers and responding quickly to fix faults. This year we achieved our best result yet with 0.78% of customers experiencing 3 or more water or sewerage interruptions (against a target of less than 0.96% on a rolling 5-year average). We also exceeded the target for restoring water or sewerage services within 4 hours (94.6% of customers against a target of 91.1%). We’ve delivered a new Distribution Management System to enable predictive and proactive management of potential water quality issues in our network and make it easier for customers and staff to quickly get the information they need about faults and repairs. Customers are increasingly using the Snap Send Solve app as a quick and simple option to contact us about faults. We were awarded Snap Send Solve’s Solver of the Year Award for Customer Service in 2022, showing that we’re meeting a demand for online notification and resolution of faults and emergencies.

Network resilience We continue to improve the resilience of the water supply network, installing additional chlorinators and control valves and boosting generator capacity. We’ve also developed and installed 130 digital water pressure sensors on customers’ properties to allow early detection of pressure and water-off issues. This is a trial to assess the technology and determine the customer benefits associated with improved communication, proactiveness and mitigation to minimise service disruption. Uplifting our emergency response in the face of climate change and more severe weather events has continued throughout this year. We’ve also increased collaboration with regulatory agencies and worked with our supply chain to understand their risks and put measures in place to ensure effective surge capacity in the event of emergencies.

We’ve adopted a new framework to ensure we’re prioritising investment in the improvement of sewer branches at highest risk of causing environmental and social impact. In addition to assessing the frequency and types of spills, we used the Healthy Waterways Strategy - a shared strategy across Melbourne Water, state and local government, water corporations and the community – to enhance spill risk assessment. This has helped us to effectively prioritise mitigation actions for predicted wet weather spills to waterways. We’ve upgraded more than 750 facilities to comply with 4G network communications ahead of the Telstra 3G network being decommissioned in 2024. This will ensure business continuity for real-time field data retrieval, so customer experience and environmental performance is not compromised.

Affordability We know times are tough for many of our customers and we’re committed to ensuring our services are affordable and accessible to everyone. Melbourne’s water bills are among the lowest in Australia for all capital cities. Our focus on affordability has seen our bills consistently decline in real terms since 2013-14 and we’ll deliver lower bills in real terms for 2023-24. We’re committed to raising awareness of support services for customers facing hardship through events such as ‘Bring Your Bill’ days, where customers can reach out for one-on-one support, and through promotion of our support programs.

WaterCare WaterCare, our flagship financial support program, continues to wrap support around vulnerable customers, assisting 17,163 people this year. Through WaterCare, we offer a range of tailored options to help people who are having difficulty managing their bills. This includes assisting customers to access entitlements such as concessions and government grants and setting up affordable payment plans. In 2022-23 we delivered a WaterCare awareness campaign which enabled us to connect with and assist more customers facing vulnerability. The campaign was a finalist for the Australian Water Association’s Victorian Organisational Excellence Award in 2022 and included a pilot partner initiative with the Olivia Newton-John Cancer Wellness & Research Centre to provide wellness packs with information about WaterCare to patients undergoing cancer treatment. We also provided face-toface support through pop-ups in demographically targeted shopping centres.

Yarra Valley Water Annual Report 2022-23

Transforming around customers continued... Thriving Communities Partnership

Customer satisfaction

We’re a proud founding member of the Thriving Communities Partnership (TCP), a cross-sector not-forprofit organisation which works to ensure all Australians have access to essential services. Along with TCP and other member organisations, we’re involved in the One Stop One Story (OSOS) Hub, a world-first digital customer platform.

Our latest customer satisfaction levels for service experience are high - 95% of customers are satisfied or very satisfied with our handling of fault calls and 92% are satisfied or very satisfied with emergency repairs. We also exceeded our key customer satisfaction target this year with 86% of customers satisfied with our service.

Since the launch of the OSOS Hub in October 2021 it’s helped more than 1,500 Australians, reducing stress and protecting dignity by ensuring people only have to tell their story once to receive support from multiple service providers. The initial pilot focused on people impacted by family violence but has now expanded to assist others in the community experiencing financial vulnerability. In 2022, the OSOS Hub was awarded Gold Winner for Social Impact at the Good Design Australia Awards and took out Project of the Year at the Shared Value Australia Awards. We continue to actively support the Hub’s development as its partnership grows and helps increasing numbers of customers in our service area and beyond.

Supporting commercial customers In response to COVID-19 we developed a hardship policy to support businesses facing financial pressure. We’ve embedded this as an ongoing policy to offer a range of options to help businesses struggling to pay their bills. This includes offering 3-6 month deferred payment arrangements and a 50% discount on service charges. We’re committed to building and fostering positive relationships with business customers. This includes developing efficiency and sustainability initiatives which can help them save water and money. We’re trialling a new under-sink strainer system which could prove to be a cost-effective alternative to traditional grease traps for suitable small businesses such as cafes and hairdressers. We maintain ongoing relationships with commercial and business customers to help them save water and optimise water-efficiency plans.

In 2022 we received the national Customer Service Team of the Year (Large) Award at the prestigious Australian Service Excellence Awards. The team went on to win the Service Excellence in a Service Centre (Medium) category at the 2022 International Service Excellence Awards. This recognition of best practice is a testament to our commitment to care for customers and provide seamless and affordable services that meet their needs.

Delivering on our price submission Every 5 years all Victorian water corporations undergo a water price review process run by the industry’s independent regulator, the Essential Services Commission (ESC). This results in a 5-year price submission which outlines the services we’ll provide, and prices customers will pay. This year marks the end of our price submission for the period 2018-2023 and we’re pleased to report that we again met 6 of the 7 outcomes this year – matching our best result from 2021-22. We’ve worked with a deeply diverse group of customers to develop our 2023-28 price submission, engaging more widely over a longer period through community panels, a Citizens’ Jury and First Nations Community Working Group. We’ve evolved the 7 customer outcomes we’ve worked towards since 2018-19 into 6 outcomes: • Safe and pleasant drinking water. • Reliable water and sewerage services. • Timely response and repair. • Service that meets everyone’s needs. • Saving water for the future. • Looking after our natural environment.

2022-23 Highlights

We’ve also committed to embedding a caring for Country philosophy across all our decisions – a key priority identified by the Citizens’ Jury. As we did throughout the 2018-23 price period, we’ll assess our performance every year and return $1.8 million for any outcome we don’t achieve (up to $10.8 million per annum) via a community rebate. Our price submission engagement process received recognition at the 2022 International Association for Public Participation (IAP2) Core Value Awards for excellence in customer engagement. The ESC also fast-tracked our price submission which we’ll commence implementing from 2023-24.

Future Customer Experience Program We’re delivering a 5-year vision for our desired customer experience to meet future needs of customers, improve service satisfaction and manage costs. We’ve established a Customer Lab where customers and staff from across the business are involved in co-design workshops and other activities to help inform our approach. This includes choices about technology, how we’re prioritising our investment and our capacity to pursue initiatives with the highest value. The program defines our desired future customer experience through building a deep understanding of current and future customer needs. We’ve developed 5 primary customer missions and 13 value propositions that identify the moments that matter most to customers. We’ve also developed a unified view of current and future predicted channel preferences for customers to interact with us and related demand and cost forecasts. This piece of work is informing the roadmap of technology investment for the next 5 years, enabling us to leverage digital capabilities for both our customers and employees.

25,000 properties in our expanded digital meter trial in 2024

Digital meters Digital meters empower customers to save water and money off their bills by enabling them to monitor their water use and identify and fix leaks. We’ve been testing digital meters since 2019 and they’ve helped customers save more than 5 million litres of water. Trial customers have access to usage data online and receive alerts about their usage and potential leaks. We’re now preparing to expand our digital meter trial to more than 25,000 properties across our service area in 2024. Our price submission engagement process identified strong customer support for digital water meters and other products and services with the potential to save water for the future. Our expanded trial will cover residential and commercial customers in parts of Glen Waverley, Box Hill North and Reservoir. Subject to the success of the extended trial, we’ll roll out digital water meters across our entire service area, which will help manage Melbourne’s water supply more sustainably. Customers will have a greater understanding of their water use and be able to identify wastage and fix leaks - saving water and reducing bills.

Yarra Valley Water Annual Report 2022-23

Helping communities thrive We’re working now to secure water for the future and deliver innovative projects to enhance life for our customers and community.

Key initiatives Water security Climate change and population growth are putting increasing pressure on Melbourne’s water supply. Building system resilience will be key to managing future climate variability. We know that we need to add alternative water supplies such as desalination, recycled water and stormwater to our system within the next 10 years. In 2022-23 we worked with Melbourne’s other water corporations to develop the Greater Melbourne Urban Water and System Strategy: Water for Life, a shared plan that will shore up Melbourne’s water supplies for the next 50 years. Beyond industry collaboration, the strategy is also a shared plan with Traditional Owners/Custodians and the community. Establishing genuine partnerships with Traditional Owners/Custodians will enable greater involvement in water management and planning. Communities will also be encouraged to actively participate in water efficiency initiatives and engage in future water supply planning.

2022-23 Highlights

We’re delivering projects and plans to deliver on our strategic commitments including: • Implementing water conservation campaigns to encourage behaviour change based on insights from customers across Melbourne (see page 25 for more information). • Developing a joint Water Efficiency Plan and Community of Practice to increase our focus on water conservation and efficiency to provide savings. Our 2023-28 price submission includes a commitment to conduct a water audit and efficient appliance pilot with particular focus on vulnerable and higher water use customers. We’ll share our insights and learnings through the Community of Practice once established to support broad water conservation and efficiency across the sector. • Working with the Department of Energy, Environment and Climate Action and other Victorian urban water corporations to support the implementation of the Victorian Government’s Central and Gippsland Region Sustainable Water Strategy: Water for Life. This collaboration places emphasis on water conservation and efficiency for residential customers, schools, businesses and industry, and reducing leaks within our network. • Progressing implementation of the options identified in Water for Life’s Adaptive Plan pathways including investment in water efficiency, integrated water management (IWM) and consideration of manufactured water augmentation options. • Assessing options to consider how river entitlements could be reduced through water efficiency, IWM and substitution with manufactured water sources to support waterway health and restorative water justice for Traditional Owners/Custodians. • Progressing work on catchment scale IWM plans (see page 26 for more information).

Climate Resilience Plan We’re responding to climate challenges and risks through the ongoing implementation of our Climate Resilience Plan. This includes piloting scenario modelling for water and sewer networks that include climate change modelling parameters. We’ve secured a grant from Emergency Management Victoria to help develop a framework for conducting climate change asset resilience assessments. We helped inform development of the Department of Energy, Environment and Climate Action’s (DEECA’s) Guidelines for the Adaptive Management of Wastewater Systems Under Climate Change in Victoria. We’re making good progress in reducing our carbon footprint. In addition to our commitment to generate 100% of own electricity energy requirement from renewables in 2025, we now have a green fleet strategy in place and have developed guidelines for the design and delivery of assets with a lower carbon footprint. We’ve maintained our partnership with the Bureau of Meteorology and are involved in regular climate outlook workshops. We continue to review and adapt emergency management plans with a climate lens. In learning from extreme weather events, we’re strengthening our ability to plan for and respond to these challenges. We also continued working in partnership with DEECA and the other water corporations on the Victorian Climate Change Adaptation Action Plan, extensive long-term water planning and other industry collaborations. Our work in climate change mitigation and adaptation was recognised by the International Water Association in 2022, when we were identified as a Climate Smart Utility and selected as an exceptional case.

Yarra Valley Water Annual Report 2022-23

Helping communities thrive continued... Recycled water

Doncaster Hill Recycled Water Project

Increasing use of recycled water for non-drinking purposes is crucial to long-term water security. Our recycled water network now services 45,000 homes and businesses through 755 km of dedicated recycled water mains, mostly in Melbourne’s northern growth corridor, and continues to expand.

Plans are progressing to build an underground water recycling facility in Doncaster. The Environment Protection Authority Victoria has issued a development licence for the facility. We’ve also applied for a planning permit from Manningham Council, with a decision pending. The council has commissioned an independent construction traffic review following feedback from the community. We’re anticipating the planning permit decision later in 2023.

In 2022-23 we provided over 358 million litres of Class A recycled water to homes, sporting grounds and local councils. We conducted over 10,600 recycled water audits to ensure the safe delivery of this product. Class A recycled water can be used for a variety of nondrinking water purposes such as flushing toilets, doing laundry and car washing. Now we’ve started planning and design to increase capacity at our Aurora recycled water treatment facility to cater for increased demand in growth areas. This will enable recycled water to be provided to customers in the Epping North, Donnybrook and Craigieburn areas, with the number of connected homes forecast to grow to 70,000 by 2027-28. Through integrated growth planning and working with the Victorian Planning Authority and other stakeholders, we’ve also secured a site for a new recycled water treatment facility at Wollert. This facility will ultimately enable us to supply recycled water to approximately 160,000 residents in the northern growth area.

358 million litres of Class A recycled water to homes, sporting grounds and local councils

This project is critical to enabling developers to meet Manningham Council’s environmental development requirements. It will supply Class A recycled water to about 6,000 apartments and houses in and around Doncaster Hill. It will also provide water to irrigate and drought-proof local parks and reserves. We’re committed to ongoing engagement with the community to keep residents informed about the project as it moves forward.

Non-revenue water Benchmarking by Isle Utilities Asia Pacific in 2022 confirms that we’re recognised as one of the top performers across the global water industry for reducing non-revenue water (water that’s lost in our system before it reaches customers). In this financial year we’ve installed over 86 flow and pressure monitoring sites as part of our district metering program. We can now monitor performance in real time at a granular level for 36% of our water supply network to help us respond faster to any water loss events. In 2022-23 the amount of non-revenue water was estimated to be 14.7 GL (9.3%).

2022-23 Highlights

Water conservation As our population grows and the climate changes, water is becoming increasingly scarce. Our ambitious water use target has proved difficult to meet during the current pricing period. The target is a holistic measure comprising more than just customer use, and includes water used for firefighting and lost to system leaks and bursts. Performance is primarily influenced by weather conditions and the level of engagement in water efficiency by consumers. We haven’t met the target for water use this year (225 litres of water per person per day against a target of 210). We’re evolving our approach as we move into the next pricing period (2023-28), expanding work to reduce water loss in the network and increasing collaboration with industry peers to support a collective approach to ensuring future water security and building water literacy and efficiency. Initiatives in 2022-23 to support water conservation included: • Supporting the Victorian Government’s Target 150 initiative – a voluntary water efficiency program that encourages Melbourne households to use water efficiently, with a target of 150 litres per person per day. • Inducting more schools into the Schools Water Efficiency Program (SWEP). Over 350 schools in our service area now participate in the Victorian Government funded program, which enables schools to track their water usage using data logger technology. Since the start of the program in 2012, the schools in our service area alone have saved over 2 billion litres of water and made estimated cost savings of almost $8.5 million. • Relaunching our Water Watchers campaign to encourage children to save water. We’ve distributed almost 22,000 Water Watcher characters this year. The fun figures are placed on taps as a reminder to watch water use around the home. We’ve also delivered more than 350 incursions across more than 50 schools as part of the Water Watchers program.

• Partnering with Merri-Bek and Maroondah councils along with Bunnings to showcase the Water Watchers education program through their school holiday programs. • Working in collaboration with Greater Western Water and South East Water to conduct surveys to better understand community attitudes to water conservation to help tailor future campaigns for maximum impact. • Delivering the Community Housing Retrofit Program in partnership with the Department of Energy, Environment and Climate Action, South East Water and Greater Western Water. Not-for-profit organisations providing emergency and community housing can access water efficiency audits and upgrades as part of the program. In 2022-23, we worked with 5 housing organisations to complete 220 audits. This work saved more than 24 million litres of water and resulted in bill savings by fixing leaks and replacing inefficient fixtures with more water efficient options. We also provide advice and education to customers on water quality and safety, while actively promoting the health, environmental and cost benefits of tap water over bottled water. This includes our popular Refiller campaign, with more than 150 cafes across Melbourne now signed up to offer free water bottle refills. The campaign encourages people to ‘be a refiller, not a landfiller’, cutting out plastic waste caused from buying single-use bottles of water and giving people an option to avoid spending money on bottled water when they’re on the go.

Yarra Valley Water Annual Report 2022-23

Helping communities thrive continued... More than

150 cafes across Melbourne now signed up to offer free water bottle refills

Key commitments for Yarra Valley Water in the Yarra, Maribyrnong and Dandenong catchments are: • Upper Merri Creek IWM sub-catchment plan development (near completion). • Doncaster Hill Recycled Water Project (in final planning phase). • Eastern Recycled Water Scheme - Dingley extension (in feasibility assessment phase).

Integrated water management We believe that strong collaboration between the water industry, community and stakeholders (including Traditional Owners/Custodians, developers and other government agencies) is critical for effective water cycle management and planning. We acknowledge the rights and moral obligations of Traditional Owners/Custodians to care for water under their lore and customs. These obligations connect across communities and language groups, extending to downstream communities, throughout catchments and over connected aquifer and groundwater systems. Over the past decade, momentum has been steadily building towards a more formalised approach to integrated water management (IWM). The Central and Gippsland Region Sustainable Water Strategy and the Greater Melbourne Urban Water and System Strategy: Water for Life have identified the pivotal role that IWM can play to efficiently deliver water security to the Greater Melbourne region. We’re an active participant in the collaborative industry wide IWM forums facilitated by the Department of Energy, Environment and Climate Action (DEECA). These were established as the IWM Framework for Victoria; consistent with policy commitments in Water for Victoria. The IWM forums have collaboratively developed catchment scale plans with measures and targets endorsed by forum members to progress towards a more water-sensitive Melbourne. The forum’s targets are built off the shared visions and priority outcomes that were collectively identified in each catchment’s Strategic Directions Statement. The Yarra catchment is our primary catchment – although we also participate in the Maribyrnong and Dandenong forums due to their overlap with our service area. IWM collaboration through the IWM forums provides a strong foundation to jointly realise broader benefits through partnerships.

• Wallan Restorative Project (in concept planning phase). • Wollert Community Farm (in stage one construction phase). • Re-commissioning of Kalkallo Stormwater Treatment Plant. • Hazelwynde Water Efficient Community Project. As part of the DEECA-led partnership approach, in 2022-23 we were involved in joint projects and collaborations including: • A DEECA-led project looking at funding mechanisms to enable the step-change in investment required to progress IWM infrastructure. • Embedding IWM in urban planning through a DEECAled project identifying opportunities for strengthening IWM outcomes as part of precinct planning and urban development. • Citywide Assessment of Stormwater Network Opportunities (CASNO), a Melbourne Water-led project to understand the role of stormwater in water security over the next 50 years. In 2022-23 we also partnered on other priority projects including: • The Gardiners Creek (KooyongKoot) Regional Collaboration, a new alliance of 16 diverse organisations and groups committed to improving the catchment for future generations. • Collaborative water quality monitoring programs (understanding pathogen and toxicant impacts and sources to support evidence-based decision making). • The Reimagining Tarralla Creek Project in Croydon - we contributed $310,000 towards Stage 2, which included a system to capture, treat and reuse stormwater to irrigate 4 nearby sports grounds, saving about 13 million litres of drinking water a year.

2022-23 Highlights

Reconciliation We’re committed to reconciliation and supporting the self-determined role for Traditional Owners/Custodians in water and land management. In 2022 our Board came together with First Nations staff and Elder-in-residence, Aunt Janet Turpie-Johnstone, to begin exploring how caring for Country and self-determination can be embedded into decision-making processes and ways of working. Through our partnership with Traditional Owners/Custodians, we’re now building knowledge around our approach to caring for Country and our commitment to adopt this philosophy across all that we do. This has started with a partnership with Wurundjeri Woi-wurrung’s natural resource management unit (Narrap) to care for Country on our sites through formal agreements. The Narrap Unit is currently working at the Aurora Sewage Treatment Plant in Wollert, managing and caring for the protected grasslands and stony rises onsite. Discussions are now underway about shared management of land at other properties, including the Wallan and Upper Yarra sewage treatment plants. This year, we participated in Reconciliation Australia’s biannual Workplace RAP Barometer survey and engaged staff and community partners for feedback on our Reconciliation Action Plan (RAP) progress. Results reveal that 87% of staff agree our reconciliation commitment is genuine and strong and 93% of respondents have heard a leader speak passionately about reconciliation. However, approximately 70% of our staff reported that their level of knowledge about the histories or cultures of First Nations people in Australia was low and 13% of staff indicated they were unsure of our RAP commitments. As a result, we’ve amplified our efforts to increase staff understanding through various events and approaches throughout the year. This includes immersive activities to support National Reconciliation Week and NAIDOC Week and an ongoing commitment to delivery of cultural awareness training. We joined Melbourne Water and South East Water to sponsor and promote a healing ceremony marking the 30th anniversary of AFL footballer Nicky Winmar’s stance against racism, with a number of staff attending the event this year. Yarning circles have been introduced in meeting settings and Reconciliation Working Group members delivered powerful personalised Acknowledgements of Country at a series of strategy update sessions in 2023. These practices, along with our partnership work with Traditional Owners/Custodians and the First Nations community, contribute to our commitment to build cultural capability and ensure we create a culturally safe workplace. Through social procurement and our active membership of Kinaway Chamber of Commerce Limited, we continue to increase engagement of First Nations businesses.

We’ve achieved our RAP target of engaging 13 First Nations organisations, which is approximately 3% of active contracts and amounts to approximately $1.3 million. This year we’ve also established a pilot program with our contract partner Ventia to build capability of First Nations businesses and improve their knowledge and access to contract work in the water industry. The pilot, which has commenced with Have A Dig Excavation, aims to understand and support businesses to upskill and overcome barriers to participation. Yarra Valley Water’s Aboriginal Partnerships Manager Nina Braid was recognised as Water Professional of the Year at the Australian Water Association’s Victorian Water Awards 2022 in recognition of her outstanding contribution and impact in the sector.

Wollert Community Farm Construction is now underway on our community farm at the Aurora Sewage Treatment Plant, in partnership with Melbourne Polytechnic and Whittlesea Community Connections. Our shared vision is to create a farming enterprise and community food hub which uses best practice sustainable agriculture and land management, provides pathways to employment and demonstrates the circular economy in action. We’ve commenced a partnership with Wurundjeri Woi-wurrung’s Land Management Unit (Narrap) on the restoration of endangered grasslands on the site. The first cultural burn was completed in autumn 2023 to rejuvenate seed beds and remove weeds which will help improve the health of the native grassland ecosystem. Whittlesea Community Connections plans to establish a social enterprise indigenous plant and seed nursery onsite that will significantly contribute to greening Melbourne’s northern growth corridor. Melbourne Polytechnic will provide education in conservation and regenerative agriculture.

Hazelwynde We’re working with government stakeholders to explore potential models to deliver a water-efficient community in Beveridge, in Melbourne’s north. Known as Hazelwynde, this project aims to help establish a sustainable, water efficient community that meets all its own water needs through leading edge water management. This will take pressure off Melbourne’s water supplies. Treating the precinct as a water catchment in its own right could deliver a cooler summer climate, mitigating the effects of extreme heat on human health and the local environment. This will be achieved using sustainable water sources to support greening of the precinct and retaining water in the urban landscape.

Yarra Valley Water Annual Report 2022-23

Leading for our environmental future Our goal is to be net zero in 2025 and then go beyond zero carbon.

2022-23 Highlights

Key initiatives Circular economy We are committed to reducing our environmental impact by embracing the circular economy to reduce, reuse and recycle more in the areas of water, nutrients and construction. Circular economy initiatives in 2022-23 include completing waste management plans, pursuing opportunities to make our supply chain more circular and diverting construction waste from landfill. We’ve also completed a carbon baseline assessment of 10 construction projects to understand the potential for reducing embedded greenhouse gas emissions in project work. We’re embedding a circular economy approach in our planning, design and construction to foster low carbon assets. In 2022-23 we committed to using more than 5,000 tonnes of recycled or low carbon material in construction projects. We also partnered with the Department of Energy, Environment and Climate Action and Melbourne Water to trial a version of the Infrastructure Sustainability Council’s framework for the water sector. We produced an e-journal paper, Evaluating and Comparing Circular Economy Options in Yarra Valley Water’s 2030 Strategy, which shared our strategic approach to circular economy with the broader industry. The paper was recognised by the Australian Water Association as the best e-journal paper at its 2023 national awards – the second of these prestigious awards in a row.

Food waste to energy Food waste to energy production is central to our commitment to create a circular economy and go beyond zero carbon. The Wollert Food Waste to Energy Facility (known as ReWaste) generated 4,817 MWh of power in 2022-23 and diverted more than 28,300 tonnes of waste from landfill.

Plans are progressing to build our second food waste to energy facility, which will be co-located with the Lilydale Sewage Treatment Plant. We have applied to the Minister for Planning for a planning permit and Environment Protection Authority Victoria (EPA) for a development licence. Throughout this process, we’ve consulted with the community and we’ll continue to engage with them through planning and construction, which is expected to start in 2023-24. The new facility will have more capacity than the Wollert facility, diverting 55,000 tonnes of food waste from landfill a year and generating 39,000 kilowatt hours of electricity a day – around 35% of our energy needs.

Green hydrogen We’ve started a pilot hydrogen generation trial to test new electrolyser technology which could supply hydrogen for use in a range of industries. Subject to a successful pilot, we’ve secured a funding grant of $11.9 million from the Victorian Government’s Energy Innovation Fund towards a full-scale hydrogen production facility at our Aurora Sewage Treatment Plant. Ultimately, we’ll also be exploring the viability of using the by-product of hydrogen production (oxygen) to improve the efficiency of our sewage treatment processes. We also believe the water sector will play a critical role in the development of the hydrogen economy given the dependency on reliable water in the hydrogen production process.

Solar energy We’re members of Zero Emissions Water (ZEW) and purchased 3,135 MWh of solar energy this year from the Kiamal Solar Farm in northern Victoria. This contributes to our net zero and beyond goals. We produced 497 MWh of solar energy in 2022-23 through solar panels at our Mitcham head office and sewage treatment plants.

497 MWh of solar energy produced in 2022-23

Yarra Valley Water Annual Report 2022-23

Leading for our environmental future continued... Office of the future

Healthy ecosystems

We’re proudly building an energy efficient office of the future. Funding from the Department of Environment, Energy and Climate Action’s Business Recovery Energy Efficiency Program has enabled us to implement a variety of measures to reduce energy use and emissions. This includes implementing an Energy Demand Management System to improve overall energy efficiency by optimising how our Mitcham head office uses electricity. We’ve switched hot water systems from natural gas to electricity and we’re using heat pumps to ensure a much more efficient use of energy.

Through the development of our 2023-2028 price submission, we know that customers support efforts to address biodiversity decline and increase protection of plants and animals on our land. We’ve developed a biodiversity framework and business case to improve land management practices on 1527 hectares of land we own across Melbourne. Much of this land retains significant biodiversity value and provides habitat for wildlife, including endangered species.

We’ve also installed 6 new electric vehicle fast chargers in the office’s main carpark as part of our transition to a zero-emissions vehicle fleet. The new 75kW Tritium DC fast chargers are powered with renewable energy from solar panels on our purpose-built carpark. We intend to purchase only electric vehicles from 2025 (where available and fit-for-purpose). In the meantime, we’re offsetting our vehicle emissions.

Community Sewerage Program Our Community Sewerage Program continues to expand. In 2022-23 new sewerage services were made available to more than 1300 properties in the Dandenong Ranges including Monbulk, The Patch and Kallista. The Eltham Sewerage Project was also completed, providing a new sewerage network for 300 properties. Expansion of the program will continue to enable more customers in outer areas to move off septic tanks and connect to the modern sewerage system, improving environmental and public health outcomes. There are about 10,000 properties on the program to be serviced over the next 15 years. Our pop-up shop in Monbulk’s main street allows Dandenong Ranges residents to drop in to learn more about the program. They can speak directly with specialist staff to get the answers they need about how to connect their property.

More than

1300 new sewerage services were made available to properties in the Dandenong Ranges

2022-23 Highlights

We have commenced a program with rolling targets to improve weed management, undertake revegetation and restoration of waterways and introduce species monitoring. This year we have achieved our target of restoring 8.7 hectares. This area will increase each year over the next 5 years until we have covered all high value sites.

Building on the partnership with Wurundjeri Woiwurrung’s Narrap Unit at Aurora Sewage Treatment Plant, we’re also exploring future management of other land by Traditional Owners/Custodians to support their self-determined approach to caring for Country.

We are also working with Greening Australia, Jacobs, Spiire and Zoos Victoria on a detailed design to create 35 hectares of habitat at our Upper Yarra Sewage Treatment Plant. This will provide a haven for the critically endangered Helmeted Honeyeater and Lowland Leadbeater’s Possum - Victoria’s faunal emblems - as well as other wildlife. It will have the added benefit of absorbing carbon. Our regenerative approach will ensure positive biodiversity and ecosystem outcomes are part of our asset planning, design, operation and maintenance activities.

8.7 hectares of land restored this year

Yarra Valley Water Annual Report 2022-23

High performance Our world-class workplace culture drives our high-performing organisation. Supporting the safety and wellbeing of our people is critical to success.

2022-23 Highlights

Key initiatives People and culture Our globally recognised organisational culture is strong and enables us to deliver our strategic commitments and aspirations through the work of our talented people and delivery partners. In 2022 Human Synergistics, which delivers the International Organisational Cultural Inventory – a robust independent assessment of an organisation’s culture - presented Yarra Valley Water with its Award for Cultural Excellence after our survey results this year. It’s only the second time in 40 years it’s been awarded in Australia. Our commitment to hybrid working is now firmly embedded in our People Strategy, Better for Being Here. As part of our commitment to maintaining our high performing and inclusive culture in a hybrid environment, we’ve updated and adapted onboarding processes for new staff and delivered new learning and growth opportunities for our people. We’ve invested in a new hands-on leadership growth program comprising of face-to-face learning, peer connects and coaching and toolkits to support application on the job. We have also conducted a strategic workforce planning deep dive considering our challenges and opportunities. This work has included the identification of critical strategic and operational roles within our Distribution Services group and detailed action plans to support sourcing, internal development and succession management.We also deliver in-person ‘moments that matter’, such as regular strategy updates and First Nations immersive experiences, to support staff connection and collaboration.

Diversity equity and inclusion Our focus on diversity, equity and inclusion purposefully challenges us to achieve a workforce which reflects the diverse community we serve. We’re committed to sustaining equitable and inclusive practices across the business. This year, we’ve focused on advancing women in leadership and technical careers and increasing the number of First Nations employees. We have launched our new Gender Affirmation Leave Guide. This presents an important step in our journey to create a more inclusive, fair, respectful and supportive workplace. Developed by our Diversity and Inclusion Committee in collaboration with our People Performance and Culture team, Pride Network at Yarra Valley Water and Pride in Diversity, the guide aims to enhance our understanding and support for people to live a life true to themselves. We continue to be active members of WaterAble, a network for people with disability and their allies in the Victorian water industry. We have developed and shared a fact sheet on reasonable adjustments and updated our job advertisements to encourage people with disability to apply, with application assistance provided if needed. We are also creating dedicated quiet and reduced stimulation rooms for neurodiverse employees working at our Mitcham office. We’re committed to creating a culturally safe workplace and are building a refreshed First Nations Expression of Interest portal for vacancies. We’ve also engaged First Nations expertise to develop resources to promote high quality induction and culturally safe onboarding experiences.

Yarra Valley Water Annual Report 2022-23

High performance continued... Gender equity We’re part of the Victorian Government’s Gender Equality Act 2020. Our Gender Equality Action Plan is our roadmap for disrupting gendered expectations and norms and promoting genuine choice and opportunity for all employees. This year we’ve achieved several milestones, including the creation of the Women in STEM (science, technology, engineering and mathematics) network, piloting our first Gender Intelligence Program, contributing to the water sector careers project with high schools and celebrating International Women’s Day. Recent changes to our remuneration framework deliberately increase transparency and parity for equal work. We implemented a new remuneration framework for contract staff (approximately 250 senior employees), which ensures people are paid fairly, regardless of gender, and benchmarked to key external market sectors and indicators. It forms part of our fair, equitable and sustainable approach to remuneration. All contract staff positions will now be advertised with a fixed remuneration offer. In the next 12 months we’re working towards consistently achieving 48.5% female representation for all people manager positions (currently 49.1%) and 40% for women in STEM roles (currently 36.7%).

Safe and well In 2022-23, we continued the staged implementation of our bespoke people-based safety model. This model recognises the human condition and its contribution to physical and psychosocial safety in the workplace. We introduced new fun and engaging safety and wellbeing inductions for staff and delivery partners, based on our safety philosophy. We overhauled our contractor safety management framework, shifting from a primarily compliance-based model to a safety partnership approach with our delivery partners. The new model is founded on trust and positive working relationships with our delivery partners. It’s resulted in more time in the field for our project and contract managers to engage on safety matters. We finalised the development and operationalisation of a new Safety in Design framework in consultation with our design partners. This brings focus to how occupational health and safety is considered in the design of our assets, both for construction and maintenance.

Work has begun on our psychosocial injury prevention plan in response to new occupational health and safety legislation introduced in 2022. This plan identifies key psychosocial hazards and details mitigation measures and initiatives to reduce risks. The primary psychosocial risk addressed by the injury prevention plan is workload, with mitigation measures focused on job design. We’ve also trained more staff in Mental Health First Aid this year and now have 27 accredited Mental Health First Aiders across the organisation.

Prosperous partnerships We’re currently participating in the Partnerships for a Resilient and Climate Smart Water Sector Program, partnering with a water company in Palembang in Sumatra, Indonesia. The program is facilitated by the Australian Water Association (AWA) and supported by the Federal Government in collaboration with Indonesian-based PERPAMSI. We’ve been paired with Tirta Musi Palembang City in Sumatra and are working with them up until mid-2024, sharing knowledge and helping improve outcomes for customers and communities. This program builds on successful AWA-facilitated utility ‘twinning’ programs in the region, including our previous partnership with Tirta Sanjiwani in Bali. It aims to establish trusted partnerships to enable 2-way knowledge sharing and skill transfer to achieve measurable development outcome improvements for communities overseas.

Always efficient Our financial sustainability strategy is focused on providing affordable services and optimising community returns from investments to deliver economic benefit to our customers, community and shareholder, the Victorian Government. We continued to mitigate economic challenges and its impact on our customers, operations and financials. Our focus on affordability and optimising community returns has seen bills consistently decline in real terms since 2013-14. We’ve continued to work to reduce water loss in our system through our focus on active leak detection, mains renewals, district metering, trialling of intelligent network technologies and the continued reduction to the size of District Metered Areas across our network. This enables us to detect smaller losses and proactively address them.

2022-23 Highlights

We continued to support vulnerable customers through targeted multi-channel campaign and supported them through our Water Care Support program. We are supporting 7332 customers with hardship grants which is a 6.7% increase from previous years and supporting 31628 customers (2% increase from last year) with flexible payment plans. Our Enterprise Portfolio Management Office (EPMO) continues to mature to provide governance and support with the delivery of our 2030 Strategy. It also facilitates the integration, streamlining and consolidation of all our strategic planning and monitoring processes. The EPMO governance framework enables effective prioritisation of short and long-term projects and resources, with a sharp focus on our strategic goals and the ability to adapt our course as needed. We’re committed to being one of Australia’s most efficient water utilities, as confirmed through Water Services Association of Australia (WSAA) benchmarking. We have continued to improve our analytics capability to gain insights from our data, to make tangible improvements in asset utilisation, customer and employee experience, cost allocations and productivity. Additionally, we’ve leveraged government and industry relationships to actively identify and explore opportunities and gain insights about where to focus our efforts for the best reward.

Major capital expenditure projects As a rapidly growing city, Melbourne faces challenges associated with ageing infrastructure. To ensure we maintain service levels and reliability for our customers, we continue to make significant investments to replace ageing assets in our network. This includes replacing more than 100 km of water and sewer mains a year and completing major projects to meet increasing demand for our services. Capital expenditure in 2022-23 was $308 million, driven largely by expansion of our network in the north, integrating properties on septic tanks into our sewer network and renewing our existing water and sewer pipework. This reporting period marks the final year of our 2018-23 price submission, which included commitments to deliver 10 high-value projects. We’re pleased to say we’ve completed 9 of these major projects. The remaining project, Craigieburn flow storage and distribution hub – Stage 2, was deliberately deferred and combined with the next stage of storage expansion to create efficiencies in delivery, leading to a better outcome for customers. This project, which will ensure capacity to service additional development in the northern growth area of Craigieburn, Kalkallo, Beveridge and Wallan, is scheduled to be completed in early 2024-25.

9 Major projects completed – part of our 2018-23 price submission commitments

Cyber and infrastructure security In response to the increased risk of cyber-attack, we completed a comprehensive review and update of our cyber security plans and priorities in 2022. We’ve significantly strengthened our cyber security posture through the implementation of several key controls, enhancing our ability to prevent, detect and respond to cyber threats. This includes segmentation of our information technology (IT) and operational technology (OT) environments and introducing a 24x7 monitoring capability in our IT environment (complementing the service we had in place for the OT environment). Cyber incident readiness is a top priority. In 2023 we conducted a comprehensive cyber incident simulation to test our response. These exercises will be conducted regularly, with a focus on continuous improvement.

Digital enablement Our digital enablement plan is designed to ensure we continue to meet customers’ expectations and reduce our cost to serve. As well as enabling the delivery of the Future Customer Experience Program (see page 21), digital enablement aims to make our services accessible 24/7 and enable near real time information sharing with our partners. It also protects customer and critical business data from cyber-attack and simplifies our technology environment through state-of-the-art systems and platforms. In 2023 we’ve delivered improvements to the way we bill customers. This includes combining the sewage disposal and water usage charges into a single usage charge, moving the annual Parks charge to quarterly payments and updating account information to align with the Essential Services Commission’s new Water Industry Standards.

Yarra Valley Water Annual Report 2022-23

Overview of 2022-23 performance Price submission customer commitments Target

Result

1 April 2022 – 31 March 2023 Compliance with Safe Drinking Water Regulations 2015

100%

Customers who experience 3 or more unplanned water interruptions or 3 or more sewerage service interruptions in 12 months (5-year rolling average)

<0.96%

0.78%

Customers whose interrupted service (water and sewerage) has been restored within 4 hours

>91.1%

94.6%

Customers who, having accessed its support programs, believe Yarra Valley Water helps customers experiencing difficulty paying for their water and sewerage services

89%

94%

Total water usage (litres/per person/per day)

210

225

Customers who are satisfied with their most recent interaction

86%

Reduction in carbon emissions (cumulative) (baseline is 34,083 tonnes CO2e in 2016-17)

52.5%

54.0%

Safe drinking water

Reliable water and sewerage services

Timely response and restoration

Fair access and assistance for all

Water availability and conservation

Modern flexible service

Care for and protect the environment

2022-23 Highlights

Financial summary Yarra Valley Water recorded a net profit after tax of $93.2 million in 2022-23. The net profit after tax result is $15.7 million higher than the 2021-22 result and $21.1 million higher than 2022-23 budget. The additional profit above budget is mainly due to higher than anticipated revenue from developers contributed assets and new customer connections but partially offset by reduced water usage and sewage disposal revenue due to wet weather conditions. Capital expenditure of $308 million was incurred during 2022-23 primarily to renew, augment and upgrade water and sewer infrastructure. Yarra Valley Water focuses on the efficient and effective use of its capital expenditure to deliver the planned outcomes in accordance with our approved price submission.

A final dividend of $23.1 million for the 2021-22 financial year was paid in 2022-23. The amount of the final dividend for the year ended 30 June 2023 is determined by the Minister for Water and the Treasurer of Victoria in consultation with the Board. This will be paid in 2023-24 financial year. During 2022-23 total assets have increased by $215 million due to the growth in infrastructure, property, plant, and equipment. Total liabilities increased by $164 million in 2022-23 as a result of additional borrowings of $141.8 million which were used to fund operating costs and capital investments for our water and sewerage infrastructure and payments to the Victorian Government.

Yarra Valley Water Annual Report 2022-23

Overview of 2022-23 performance continued... Five-year financial summary 2023 $’000

2022 $’000

2021 $’000

2020 $’000

2019 $’000

Service and usage revenue

959,584

954,406

968,728

951,083

957,613

Other revenue

170,018

131,765

162,683

192,491

166,440

Total revenue

1,129,602

1,086,171

1,131,411

1,143,574

1,124,053

Operating and other expenses

732,753

727,304

749,083

747,486

724,304

Depreciation and amortisation

120,584

115,130

116,318

114,505

107,486

Finance costs

143,183

132,877

130,264

132,886

132,207

Total expenses

996,520

975,311

995,665

994,877

963,997

Profit before income tax

133,082

110,860

135,746

148,697

160,056

Income tax

(39,855)

(33,365)

(41,632)

(44,299)

(48,356)

Net profit after tax

93,227

77,495

94,114

104,398

111,700

Balance sheet

2023 $’000

2022 $’000

2021 $’000

2020 $’000

2019 $’000

Current assets

179,253

202,263

189,127

166,412

171,358

Non-current assets

5,892,228

5,653,772

5,410,964

5,151,903

4,949,698

Total assets

6,071,481

5,856,035

5,600,091

5,318,315

5,121,056

Current liabilities

668,803

592,036

548,119

505,071

505,272

Non-current liabilities

3,646,202

3,558,580

3,380,871

3,211,136

2,981,543

Total liabilities

4,315,005

4,150,616

3,928,990

3,716,207

3,486,815

Net assets

1,756,476

1,705,419

1,671,101

1,602,108

1,634,241

Statement of comprehensive income

2022-23 Highlights

Return on equity (%)

Return on average assets (%)

10 8

10 6.75

8 6.45

5.75

5.39 4.59

2018-19

2019-20

2020-21

2021-22

2022-23

5.79

2018-19

5.39

2019-20

4.87

2020-21

4.26

2021-22

4.63

2022-23

Return on equity increased in 2022-23 primarily due to higher new customer contributions and completion of previous year’s developer works delayed during the COVID-19 pandemic. This is partially offset by reduced water usage and sewage disposal revenue due to wet weather conditions.

Return on assets has increased primarily due to higher new customer contributions and completion of previous year’s developer works delayed during the COVID-19 pandemic. This is partially offset by growth in average capital assets delivered during the year.

Gearing Ratio (%) interest bearing debt to assets

Net profit after tax ($M)

150

51.35

54.59

56.02

57.51

57.80

120

111.7

104.39

99.23

94.11 77.50

90 40 60 20 0

30 2018-19

2019-20

2020-21

2021-22

2022-23

2018-19

2019-20

2020-21

2021-22

2022-23

Gearing ratio has increased in 2022-23 due to an increase in borrowing levels to fund capital and operating payments.

Net profit after tax has increased in 2022-23 as a result of higher revenue from new customer contributions and completion of previous year’s developer works delayed during the COVID-19 pandemic. This is partially offset by reduced water usage and sewage disposal revenue due to wet weather conditions.

Interest cover times

Capital expenditure ($M)

400 312.77

2.61

2.41

2.44

2.21

100

2019-20

2020-21

281.90

2021-22

308.00

2.34 200

2018-19

332.82

300

333.62

2022-23

Interest cover ratio in 2022-23 primarily due to higher cash receipts from customers and lower tax payments when compared to 2021-22.

2018-19

2019-20

2020-21

2021-22

2022-23

2022-23 Capital expenditure has increased due to higher investment in water and sewerage infrastructure improvement and growth projects.

Yarra Valley Water Annual Report 2022-23

Delivering Value

Our leadership

Our people and culture

Liveability outcomes

Environmental outcomes

Yarra Valley Water Annual Report 2022-23

Our leadership

A high standard of corporate governance The Yarra Valley Water Board has overall responsibility for corporate governance including: • Setting the strategic direction.

Our leadership team is focused on sustaining our highperformance culture and driving decisions and actions that lead to better outcomes for our customers and community.

• Establishing goals for management and monitoring the achievement of these goals. • Monitoring the business’ performance. We are committed to ensuring a robust Corporate Governance Framework is in place and reviewing the framework regularly to ensure it aligns with best practice. This section sets out the main Corporate Governance practices in place during the 2022-23 financial year.

Delivering Value

Organisational chart

Board of Directors

Managing Director Pat McCafferty

Service Futures

Growth Futures

People, Performance & Culture

Distribution Services

Retail Services

Strategy & Community

Financial & Corporate Services

Corporate Secretary

Glenn Wilson

Chris Brace

Amy Singe

Bridie Fennessy

Steve Lennox

Tiffany White

Natalie Foeng

Lisa Anelli

Yarra Valley Water Annual Report 2022-23

Board

The Yarra Valley Water Board comprises 9 independent Non-Executive Directors and one Executive Director, with the Non-Executive Chair and Non-Executive Directors appointed by the Minister for Water.

The Managing Director is appointed by the Board in accordance with the Water Act 1989. Our Directors have a wide range of backgrounds and bring an appropriate mix of skills and experience to the Board.

Delivering Value

Sue O’Connor

Rob Skinner AM

Chair

Deputy Chair

BAppSc, GDipBus Mgt, FAICD

BE (Hons), MSc, FIEAust, FAICD

Sue O’Connor became Chair on 1 October 2015.

Rob Skinner became a Director on 1 October 2015.

Sue is an experienced business leader who has served as a Chair, Director and senior business leader with ASXTop10 and global unlisted companies as well as high profile statutory authorities and not for profits.

He is a Professorial Fellow at the Monash Sustainable Development Institute, Chair of Victorian IWM Reference Group, Lead Chair of the Victorian Government’s Integrated Water Management Forums, Chair of NSW Independent Metropolitan Water Advisory Panel and Program Director for Net Zero Carbon Water Program as part of Monash University of Queensland. He has also been a Distinguished Fellow of the International Water Association (IWA) and Member of the Sydney Water Planning Partnership Independent Evaluation Panel.

Sue is known for her board leadership, commercial acumen and using her expertise in critical digital infrastructure, nett zero transitions, audit and risk and ESG to deliver sustained value to companies, communities and the environment. She is currently Chair of Indara Digital Infrastructure and Yarra Valley Water and a Director of Mercer Superannuation, CDC Data Centres and ClimateWorks Centre and President of Bush Heritage Australia. Her 25+ year executive leadership career in the technology sector included 13 years as a senior executive at Telstra Corporation. Sue holds a Bachelor of Applied Science and a Graduate of Diploma Business Management. She is a Fellow of the Australian Institute of Company Directors and a member of Chief Executive Women. Committee membership: • Hazelwynde Steering Committee – Chair (wound up March 2023) • Service, Community, Assets and Regulation Committee • Risk Management and Audit Committee • Leadership, Culture and Diversity Committee. Sue will retire as Chair and Director of the Board of Yarra Valley Water on 30 September 2023.

Rob was Managing Director at Melbourne Water from 2005 to 2011, and Chief Executive Officer of the City of Kingston from 1996 to 2005. Over the past 20 years, Rob has been on a number of boards and involved in numerous advisory panels and reviews related to water policy and strategy in Victoria and elsewhere. Committee membership: • Service, Community, Assets and Regulation Committee – Chair • Risk Management and Audit Committee • Hazelwynde Steering Committee (wound up March 2023).

Yarra Valley Water Annual Report 2022-23

Our leadership continued...

Ian Hamm

Victoria Marles AM

MAICD FIPAA

BA, Dip Ed, Dip Arts (Dramatic Arts), LLB (Hons), LLM, FAICD

Ian Hamm became a Director of Yarra Valley Water on 1 October 2019. Ian is currently the Chair of First Nations Foundation (National), the Indigenous Land and Sea Corporation, Connecting Home Ltd (Stolen Generations Service) and the Koorie Heritage Trust. President of the Community Broadcasting Foundation, Director of Inclusive Australia, Community First Development (formerly Indigenous Community Volunteers), Killara Foundation, Victorian Aboriginal Employment and Economic Development Council, Holmesglen TAFE, VicHealth and Australia Institute Company Directors (AICD). Ian is also a sessional member of Planning Panels Victoria and the Australian Financial Complaints Authority. Ian has had a wide level of exposure to Policy Development and Program Management at executive level through his work with the Federal Government and the Victorian Government. Ian was also previously the President of the Western Region Football League, one of the major Australian Football leagues in Melbourne. Committee membership: • Risk Management and Audit Committee • Service, Community, Assets and Regulation Committee.

Victoria Marles became Director on 1 October 2017. Victoria is the Chair of Australian Land Conservation Alliance. She has practised as a lawyer in the private, not-for- profit and public sectors in media/ communications and consumer complaints law. Victoria has previously held the positions of Chief Executive Officer of Trust for Nature, Director of Consumer Action Law Centre, Abbotsford Convent Foundation, Chief Executive Officer of the Legal Services Board (Victoria), Legal Services Commissioner (Victoria), Deputy Telecommunications Industry Ombudsman and has been a trustee of the Victorian Arts Centre Trust. Victoria brings to the Board extensive knowledge in the areas of natural resource management, climate change adaption, biodiversity conservation/offsets and consumer law. Committee membership: • Risk Management and Audit Committee • Service, Community, Assets and Regulation Committee.

Delivering Value

Karen Milward

Victor Perton

GAICD

BEc, LLB, LLM, Dip Chinese Law, GAICD

Karen Milward became a Director of Yarra Valley Water on 1 October 2017.

Victor Perton became a Director of Yarra Valley Water on 1 October 2015.

Karen is the owner of Karen Milward Consultancy Services and is currently the Chair of Mullum Mullum Indigenous Gathering Place, Kinaway Chamber of Commerce Victoria Ltd, Community First Development (formerly Indigenous Community Volunteers), Co-Chair of the Victorian Aboriginal Employment and Economic Council and Deputy Chair Major Projects Victoria Aboriginal Advisory Council and a lead evaluator with the Victorian Government’s Biodiversity 2037 Implementation Evaluation Panel.

Victor is the founder and Chief Optimism Officer of The Centre for Optimism, fostering optimism underpinning resilience, innovation and positive leadership. Its key research project asks, “What makes you Optimistic?”. The Centre for Optimism is the legacy of the Australian Leadership Project. Victor is the author of “Optimism: The How and Why.”

Karen brings to the Board extensive experience in working with Aboriginal and Torres Strait Islander communities, having worked on complex projects commissioned by public sector agencies responsible for policies, programs and services impacting on Aboriginal communities and also having served on numerous committees and reference groups, including Ken Wyatt’s Local and Regional Voice to Parliament Group, Victorian Aboriginal Economic Board and the Premier’s Aboriginal Advisory Council. Committee membership: • Leadership, Culture and Diversity Committee • Service, Community, Assets and Regulation Committee.

Victor is an elected Board Member of Vicwater. Victor brings 18 years’ experience as a Parliamentarian, practice as a barrister, mediator, arbitrator, businessman, private sector board service and mentor. He is a former Commissioner to the Americas promoting foreign direct investment in Victoria, supporting Victorian exporters and building global supply chains and expatriate and alumni networks. He was a Senior Adviser to the Australian G20 presidency. His experience in governance includes service on Boards including that of the Transport Accident Commission, the Global Integrity summit, Austhink and Bensons Property Group. the Australian Centre for Financial Studies, and patron of the Digital Leadership Institute. He has chaired public sector inquiries and committees on technology, justice, equal opportunity, regulatory efficiency, subordinate legislation, data privacy and several other topics. Committee membership: • Leadership, Culture and Diversity Committee - Chair • Service, Community, Assets and Regulation Committee • Hazelwynde Steering Committee (wound up March 2023).

Yarra Valley Water Annual Report 2022-23

Our leadership continued...

Ari Suss

Helen Thornton

MPPM Master of Public Policy and Management, GAICD

BEc, ICA, GAICD

Ari Suss became a Director of Yarra Valley Water on 1 October 2021. Ari is Chief Executive Officer of Fox Special Projects Group, supporting the family investment arm of the Linfox Group of Companies. He also holds roles as a Board Member of Avalon Airport Australia and Melbourne Arts Precinct Corporation. Ari has provided specialist expertise in regulatory, legislative, and political matters for Linfox’s logistics, property, and aviation businesses, joining as Manager of Government and Corporate Affairs in 2004. He became Executive Director of Fox Private Group in 2008. Ari was a senior adviser to former Premier Steve Bracks between 1999 and 2004. During this time, he specialised in policy and advice in the areas of infrastructure development, transport, ports, major projects, multicultural affairs, and parliamentary strategy. In 2011, Ari also commenced in his role as General Manager of the Australian Automotive Research Centre, a Linfox Group-owned 1000-hectare vehicle test facility in Anglesea, Victoria.

Helen Thornton became a Director of Yarra Valley Water on 1 October 2015. Helen has more than 30 years’ experience in finance roles across a wide range of industries. Helen is currently Deputy Chair of the Treasury Corporation of Victoria. She is also a Director of Industry Super Property Trust (ISPT) Pty Ltd, Ansvar Insurance Ltd, McPhersons Ltd, Arena REIT Ltd and Legal Practitioners Liability Committee. Helen is also Independent Chair of the Department of Education and Training Audit & Risk Committee. Helen was previously Deputy Chair of Zoos Victoria and a non-executive director of Austin Health, Big Sky Building Society and Rural Finance Corporation. A Chartered Accountant, Helen has extensive experience in finance, governance, audit and risk management. She has held senior roles at Deloittes, KPMG, BHP Ltd and BlueScope Steel Ltd where she was responsible for the global risk management function. Committee membership: • Risk Management and Audit Committee

Committee membership:

• Hazelwynde Steering Committee (wound up March 2023)

• Service, Community, Assets and Regulation Committee

• Service, Community, Assets and Regulation Committee.

• Leadership, Culture and Diversity Committee.

Helen will retire as Director of the Board of Yarra Valley Water on 30 September 2023.

Delivering Value

Catherine (Kate) Vinot

Pat McCafferty

BE (Hons) Civil Engineering, MSc Economics for Development (Hons), MBA, FIEAust, GAICD

Managing Director

Kate Vinot became a Director of Yarra Valley Water on 1 October 2021.

Pat McCafferty was appointed Managing Director of Yarra Valley Water on 1 July 2014.

Kate is an experienced business leader with strong commercial acumen and a deep understanding of developing and delivering of effective strategies, with a particular focus on the water, energy, resources and environment sectors and sustainable urban development.

Pat has extensive long-term experience across the water sector, including previous executive roles at Yarra Valley Water covering a wide range of leadership positions, including strategy, planning, regulation, finance and operations.

Kate brings exceptional skills in effective implementation of lasting strategic, customer-focussed transformational change in complex public, private and government organisations. She is able to bring the leaders of diverse specialist functions together into one high performing team to execute strategy across an organisation and beyond.

BBus (Acc), Exec. MBA, GAICD, FWCLP, FIWA

He has also worked in the USA water sector and advised the Australian Federal Government as part of the National Water Initiative. Pat is Chair of the Thriving Communities Partnership, a Director of WaterAid Australia and past Chair and Board member of the Water Services Association of Australia (Australia’s peak body for major urban water utilities).

Kate has extensive knowledge of regulatory and policy frameworks and is a skilled speaker, facilitator and communicator who enjoys opportunities to promote ideas and issues in public forums.

Pat is also a member of the Oversight Committee for Victoria’s Women in Water Leadership Program, and is a member of the Committee for Melbourne’s Standing Committee on Infrastructure and Sustainability.

Kate is Chair of Tasmanian Irrigation, Non-Executive Director Natural Hazards Research Australia, Governor Cerebral Palsy Alliance Research Foundation and Principal Ageos Consulting.

Committee membership:

Committee membership: • Risk Management and Audit Committee • Service, Community, Assets and Regulation Committee.

• Leadership, Culture and Diversity Committee • Hazelwynde Steering Committee (wound up March 2023) • Service, Community, Assets and Regulation Committee.

Yarra Valley Water Annual Report 2022-23

Our leadership continued... Board charter

The Board Charter clearly sets out the role, responsibilities and powers of the Board and incorporates all aspects of Board governance. Code of conduct The Board has adopted a Directors’ Code of Conduct based on the minimum standards of behaviour that support the corporation’s cultural aspirations and the Victorian Public Sector Commission’s Directors’ Code of Conduct, which articulates the duties of Directors.

Declaration of private interests All Directors have completed a declaration of private interests. All executives, senior managers, officers and contractors/consultants with delegation to approve expenditure in excess of $20,000 have completed a declaration of private interests.

Independent professional advice The Board has adopted a number of measures to ensure that independent judgement is achieved and maintained. Directors are entitled to seek independent professional advice on matters relating to the business of Yarra Valley Water at Yarra Valley Water’s expense, subject to the prior approval of the Chair. No Director exercised this right during the year.

Board performance review In accordance with Board Policy, an externally facilitated Performance Review of the Board was conducted in June 2023. The review aims to assist the Board to optimise its performance, enhance its preparedness for the future (in light of 2 key Board members retiring from the Board in September 2023) and fulfil its key functions across all areas of responsibility: • The effectiveness of the Board’s leadership as Yarra Valley Water faces into the future, the characteristics and strengths of the Board that underpin its performance and contribution, and how that performance can be sustained and enhanced over the medium term; and • An examination of the Board’s current performance, its effectiveness in fulfilling its role and its contribution to Yarra Valley Water’s success, including identifying any opportunities to further enhance performance. The review approach incorporated the following features: • Conducted in a manner consistent with performance evaluation for a high performing Board, relevant regulatory requirements and corporate governance better practice. • Individual interviews with each Director and members of the Executive leadership team, to understand how the Board operates, its relationships and the underlying drivers of Board performance, its strengths and any opportunities for improvement. • Draft report was provided to the Chair for consideration before finalisation. • Report tabled at the Board meeting for discussion and reflection. The review identified the characteristics that make the Board high performing and some opportunities of focus, aimed at further elevating the Board’s performance.

Delivering Value

Induction and training The Board has adopted a training and development policy for Directors. This policy facilitates appropriate training and development opportunities for Directors to enable them to fulfil their role, broaden their knowledge and share this knowledge with other members. All newly appointed Directors are required to undertake an induction program to help them understand their role and encourage fulfilment of their Board responsibilities. The induction program includes an overview of the Yarra Valley Water business, the water industry and linkages with government, and site tours. Directors also attend seminars and other events to broaden their exposure to water industry issues and initiatives including the VicWater Directors Development Program held earlier this year, and also exposure to seminars and webinar events outside of the water sector.

Learning and development In 2022-23 Directors undertook activities to support ongoing learning and development in all areas of oversight, insight and foresight, including exposure to senior management submissions and presentations and external presentations from water and non-water representatives. These presentations focused on learning about various business operations, topics that informed the strategic direction of the business including integrated water management and water security. They also examined key areas of the business’s 2023-28 price submission submitted to the Essential Services Commission in September 2022, and deepdived into specific areas to ensure Directors are adequately informed to continue to meet their obligations including safety and wellbeing, safe drinking water, environment, customer complaints reporting and strategic risks including cyber-related risks and the business’ emergency management framework. Some noteworthy learning and development opportunities undertaken by the Board during the year are discussed further below. With cyber incidents occurring globally and locally in 2022-23, there was a strong imperative this year to thoroughly investigate the business’s cyber security plan. This included risk assessments informed by external reviews, identifying areas that required action, progress on actions, incident role play findings, the role of the Board in this regard and the integration of cyber incidents into the business’s overarching Emergency Management Framework. This work continues into 2023-24.

In preparation for the new Occupational Health and Safety (OH&S) Amendment (Psychological Health) Regulation in 2023 and the rise in psychological injuries, the Board was updated on the legal landscape as it relates to OH&S regulations. This included advice on how Directors and Officers can effectively acquit their duties under the new regulations, a summary of what other Victorian organisations are doing in this space and implications for the business and actions undertaken or planned to mitigate risks. The Board also received training on our people based safety model and the key principles we use to guide what we do, and its application at Yarra Valley Water. One of the key recommendations and the number one priority from our citizens’ jury process undertaken as part of the 2023-28 price submission was to adopt a care for Country philosophy across all we do. This recommendation aligned with Victoria undertaking nation-leading work in areas of cultural rights, selfdetermination, treaty and truth telling. Responding to our commitment to do this, our Board Strategy Day focused on key concepts of caring for Country and self-determination to help progress Board and management thinking on ensuring we are truly culturally confident and have integrated reconciliation and care for Country through every part of our Strategy. The approach for this strategic focus was designed using the indigenous ways of working, being and doing to provide an immersive experience for Directors. The outcome was increased knowledge and understanding of the evolving relationship between self-determining First Peoples and the State and connection with the important concepts of caring for Country and selfdetermination. This will help us deliver on our price submission promise and incorporate this approach into our Strategy in a culturally appropriate manner. Some Directors also participated in events during National Reconciliation Week including story telling with Mullum Mullum Indigenous Gathering Place Elder Aunty Daphne Milward. Connection with First Nations peoples not just at the Traditional Owner/Custodian level but also with various Aboriginal and Torres Strait groups and communities to build trust, rapport and understanding is vital to further the Board’s journey towards reconciliation. It is therefore an ongoing priority for the Board. Directors and the Executive team meet with all staff from the Mullum Mullum Indigenous Gathering Place at a recent engagement.

Yarra Valley Water Annual Report 2022-23

Our leadership continued... Board committees

The Board has established 4 Committees of Directors to assist with carrying out its responsibilities and to allow detailed consideration of complex issues. Each Board Committee has its own terms of reference, which set out the committee’s objectives, duties and responsibilities, composition, meetings, authority and reporting responsibilities. The committees are: Risk Management and Audit Committee

Leadership, Culture and Diversity Committee

The Risk Management and Audit Committee assists the Board in fulfilling its duties and responsibilities relating to risk management, the effectiveness of internal controls and the accounting and reporting practices of the business, reviewing financial reports and overseeing the audits conducted by internal and external auditors.

The Leadership, Culture and Diversity Committee assists the Board in reviewing strategies and policies to ensure critical actions and plans are in place to implement and develop the business’ people and culture, the adequacy of the Executive Remuneration Framework, the Management Succession Plan and the business’ Diversity Policy, Strategy and Action Plans.

Service, Community, Assets and Regulation Committee

Hazelwynde Steering Committee

The Service, Community, Assets and Regulation Committee assists the Board with oversight to ensure the business is meeting customer needs, community expectations and regulatory obligations. It also provides insight and has oversight of the business’ future plans to meet customer needs, engage with community and address regulatory requirements.

The Hazelwynde Steering Committee assists the Board with strategic oversight and expert input into progressing the Hazelwynde Project. The Committee was wound up in March 2023 and all matters related to the Hazelwynde Land Development Project have been elevated to the Board.

Delivering Value

Directors’ attendance at Board and Committee meetings – 1 July 2022 to 30 June 2023

Board

Risk Management & Audit Committee

Service, Community, Assets and Regulation Committee

Leadership, Culture and Diversity Committee

Hazelwynde Steering Committee

S O’Connor

8 of 9

1 of 4

1 of 3

1 of 1

R Skinner

9 of 9

3 of 4

4 of 4

1 of 1

I Hamm

8 of 9

4 of 4

V Marles

8 of 9

4 of 4

K Milward

8 of 9

3 of 4

3 of 3

V Perton

9 of 9

4 of 4

3 of 3

1 of 1

A Suss

7 of 9

3 of 4

3 of 3

H Thornton

7 of 9

4 of 4

1 of 1

K Vinot

7 of 9

4 of 4

P McCafferty1

9 of 9

3 of 4

3 of 3

1 of 1

Notes: 1. P McCafferty is not a member of the Risk Management and Audit Committee however attends in his capacity as Managing Director.

Yarra Valley Water Annual Report 2022-23

Our leadership team

Pat McCafferty

Bridie Fennessy

Managing Director BBus (Acc), Exec. MBA, GAICD, FWCLP, FIWA

General Manager Distribution Services BA/LLB, GDip LegalPrac

As Managing Director, Pat is also a member of the Board.

Bridie is responsible for managing our water, recycled water and sewerage infrastructure to ensure it delivers our desired customer service levels and meets applicable environmental performance standards.

Refer to details in the Board section.

She is primarily responsible for long-term asset management, the optimisation of the existing infrastructure networks, maintenance and renewal of infrastructure, and the integrated management systems for Yarra Valley Water.

Amy Singe

Bridie has a professional background in alternative dispute resolution and customer advocacy, policy and protection.

General Manager People, Performance and Culture BCom/LLB, GDip LegalPrac Amy is responsible for for execution of our People Strategy – ‘Better for Being Here’ including the delivery of enterprise change, safety, talent, diversity and inclusion, culture and capability and HR operations. She also fosters a culture of engagement and holistic wellbeing to enable a high-performing workforce to deliver exceptional value and outcomes to our customers, community and the natural environment.

Natalie Foeng Chief Financial Officer BCom (Acc), CA, GAICD

Steve Lennox General Manager Retail Services BBus (Acc), CPA, ACIS, AGIA, GAICD Steve is responsible for customer operations functions. He leads a group that delivers meter reading, billing management, debt collection, customer care centre operations and commercial and development services, along with the development and implementation of support programs for customers in financial difficulty.

Natalie leads the Finance and Corporate Services at Yarra Valley Water. This remit includes providing business partnering support on key strategic projects across the organisation as well as seamless financial planning, management accounting, statutory accounting, treasury and taxation support, all of which are focused on the financial sustainability of the organisation and delivering exceptional outcomes for customer and the community. Her remit also includes leading various critical support functions for the organisation such as payroll, procure to pay, risk and compliance, property and facilities management. Natalie has extensive experience as a finance executive and in senior leadership roles across a number of industries spanning the water sector, retail, consumer products and telecommunications.

Delivering Value

Chris Brace

Glenn Wilson

General Manager Growth Futures BE (Chem), BS, GCert (Man)

General Manager Service Futures BE (Civil), BBus (Admin)

Chris is responsible for the provision of water and sewerage services to new customers.

Glenn is responsible for leading the transformation of our core product and service offering in partnership with the business to deliver on our long-term strategic objectives. This work brings together customer experience, business process design, and technology delivering end-to-end solutions and reimagining the way we work.

A key focus for his function is partnering with the community to undertake place-based planning that generates greater shared benefits enhances water related community resilience and drives positive outcomes for the environment. He is accountable for the procurement of new infrastructure to service growth, the delivery of major upgrade projects for existing infrastructure as well as the delivery of other major capital projects.

He is also accountable for our core technology function which supports business continuity, our renewable energy strategy, and our digital metering program.

Tiffany White

Lisa Anelli

General Manager, Strategy and Community BA (EngLit), MA (Comms), GradDip (Project Management)

Corporate Secretary BCom (Acc), CA, GAICD

Tiffany is responsible for providing strategy leadership and programs that achieve greater customer and community connection and value. Her role includes corporate strategy, enterprise portfolio management and business planning, pricing and regulatory economic affairs, corporate sustainability, strategic research, marketing and communication programs, community inclusion and stakeholder engagement. She also represents the business in industry policy development such as long-term water security planning.

Lisa is responsible for ensuring compliance with statutory and regulatory requirements and governancerelated administrative tasks of the Board and the organisation. This includes supporting the effective and efficient operation of the Board and providing advice and support on governance issues to the Board and the organisation.

Yarra Valley Water Annual Report 2022-23

Our people and culture We believe that a great culture delivers great outcomes. Over the past decade, we have developed a high-performance culture, high levels of employee engagement and effective workplace practices.

Organisational culture

Our culture provides the foundation for a highperforming workplace where we collaborate with partners and stakeholders to deliver exceptional outcomes for our customers, community and the environment. Creating this constructive workplace culture requires a holistic approach, encompassing all aspects of the employment life cycle, such as recruitment, communication, role clarity, recognition, development, equity and leadership. Our focus on culture and engagement ensures we employ the right staff and provide them with clear direction and challenging work. It also enables performance through strong leadership and honest feedback, and provides ongoing development through targeted learning opportunities.

Delivering Value

We’re committed to continually developing our achievement-oriented culture to create the best possible outcomes for our community. We use several internationally recognised benchmarking tools to track our progress and develop targeted strategies to improve our culture and engagement including: • The Human Synergystics Organisational Culture Inventory which measures our organisational culture. • The People Matter Survey undertaken by the Victorian Public Sector Commission, which provides insights into how our employees view different aspects of the workplace including leadership, learning and growth, diversity and inclusion, work group cohesion and collaboration. • Pulse Check surveys to support continuously listening and to measure progress on actions taken to enhance culture and engagement.

Fair treatment at work We aim to create a vibrant culture achieving exceptional business outcomes and successful partnerships through highly capable and engaged people. We’re committed to providing fair and equitable treatment for everyone in the workplace including partners, contractors, suppliers and agents. We do not tolerate discrimination and all employees are required to comply with relevant federal and state legislation that establishes grounds on which discrimination is illegal. This includes the Acts relating to Occupational Health and Safety, Equal Employment Opportunity, Discrimination and Human Rights. Employees are also required to complete discrimination awareness training which is renewed every 2 years.

Recruitment We’re committed to applying merit and equity principles when appointing staff. Selection processes ensure that applicants are assessed and evaluated fairly and equitably on the basis of key selection criteria and other accountabilities without discrimination. We’re also continuing to refine our processes to reduce any unconscious bias in our job advertisements to attract the most diverse candidate pool possible.

Diversity and inclusion Diversity and inclusion in the water sector and beyond is vital to ensure a fair and equitable society where everybody can achieve their full potential. In June 2023, our Board endorsed an updated Diversity, Equity, and Inclusion policy. This evolves our current internally focused policy, to one which also reflects our commitment to customers and communities as well as supporting the expectations of who we prefer to work with within our supply chain. It states `we are committed to providing accessible and inclusive services that meet the needs of our diverse community. We prioritise respect, dignity, equity, and human rights for all, while fostering a diverse and inclusive workforce. By empowering our people and partners, we strive to reflect the customers and communities we serve, learn from lived experience and work together to deliver positive outcomes for all’. Our People Strategy embeds this focus on diversity, equity and inclusion and is fundamental to our business performance. Our Gender Equality Action Plan (GEAP) 2021-2025 guides our progress through a range of initiatives, partnerships, and programs. Some highlights this year include releasing our LGBTIQ+ gender affirmation guide to educate and support access to employee gender affirmation leave entitlements. This was an outcome achieved through the work of our Diversity and Inclusion Committee, YVW Pride Network and consultation with ACON. We have converted 2 meeting rooms in the Mitcham offices to be neurodivergent-friendly quiet spaces, in line with our WaterAble commitment from last year. These rooms are available for all staff to book to access a reduced stimulation space while working from the office. They feature do not disturb signage, dimmable lights, window frosting, curtains for privacy and soundproofing and a range of seating options. We will continue to consult with our people on their experiences and listen to their suggestions for greater inclusion. We are also contributing to a national disability and inclusion employment project, coordinated by Thriving Communities Partnerships in partnership with SCOPE disability support services. This co-design project aims to build employers’ capacity and confidence to recruit and retain people with communication disability. This year we have been sharing our knowledge on attitudes, confidence, skills, and resources with more to come next year.

Yarra Valley Water Annual Report 2022-23

Our people and culture continued... We continue to prioritise opportunities for deep thinking and learning in relation to issues impacting gender equality and its intersections. Our Gender Intelligence Program has explored topics in a brave environment to activate the hearts and minds our leaders to help achieve actions set out in the GEAP and apply learnings to everyday activities. We now acknowledge more days of cultural and religious significance working alongside Community Inclusion and Strategy and Community. We have also refreshed our communications to ensure employees are aware of our flexible public holiday policy which enables staff to substitute certain public holidays for other days of personal significance to them. Under the Gender Equality Act, we also have an obligation to conduct Gender Impact Assessments (GIA) - a structured process that applies a gendered lens to new and up-for-review policies, programs and services. Throughout 2022-23, we have undertaken 7 GIAs on high impact projects across the business. These pilots have delivered recommendations for the specific projects, however, importantly, have also helped us to build capability and test our approach to implementing this new process. A key change has been to explicitly move to naming this tool `Equity Impact Assessments’, to reflect the Act’s intersectionality considerations and align with our focus on inclusion. With this, they are more explicitly a tool to support us to embed inclusion across the way we deliver services. Through our focus on gender balance, we have made a deliberate effort in the recruitment process to include balanced interview panels. Our managers and the recruitment team have adjusted their approach to shortlisting and we have made changes to our job advertisement and careers’ website. The proportion of women in senior leadership positions include: • Directors – 50% female • Executive leadership team – 50% female • People leadership – 49% female • Overall workforce – 51% female.

Strategic initiatives have been implemented to ensure cultural diversity is a core component of our employee base to ensure we truly reflect our community. At Yarra Valley Water: • 28% of employees were born overseas. • 52% of employees have one or both parents who were born overseas. • 27% of employees speak another language other than English conversationally. We’re also committed to providing employment opportunities for First Nations peoples and will continue to take action to ensure we work towards having a culturally safe environment and promote attraction and retention. At the time of reporting, 1.4% of our workforce identifies as Aboriginal and/or Torres Strait Islander. Ian Hamm, a Yorta Yorta man and Karen Milward, a Yorta Yorta woman, continue to serve on our Board, bringing a wealth of experience and knowledge to our organisation. We are directly drawing on their expertise to enhance our recruitment practices and guidance to ensure a better experience for First Nations candidates and increase support for successful candidates and their reporting leaders. Our Reconciliation Leadership Committee is a key element of our governance for delivering our RAP actions. It includes First Nations staff and external representatives. The committee’s purpose is to ensure ongoing collaboration, capacity and relationship building at a senior level within the organisation with representatives from Victorian Aboriginal communities, and their active involvement in assessing the overall direction and effectiveness of outcomes being achieved.

Delivering Value

Safety and wellbeing Our safety vision is to embrace the human condition and its contribution to safety. We achieve this through our people-based safety model, which seeks to humanise safety and make it relatable for all staff, contractors and delivery partners. Our people-based safety model is underpinned by 4 key principles: • Our people offer the solutions to our safety challenges. • Mistakes are normal. • Safety is about the presence of capacity in varying conditions. • Safety systems, procedures and programs are based on how the work is actually performed by those undertaking it. We are committed to making: • Our workplaces safe. • Working towards being a culturally safe organisation for First Nations employees and businesses and the Aboriginal and Torres Strait Islander community. • Carrying out our work without harming ourselves or others. The behaviours that support our safety culture include taking responsibility for the safety and wellbeing of ourselves and others, taking action when we see something unsafe, and talking regularly about safety and wellbeing.

The 3 key enablers for safety and wellbeing that we focus on are: • People (wellbeing and capability). • Leadership (safety culture, strategy, planning and risk management). • Safety management systems (including contractor engagement and safety monitoring). We have identified 4 desired safety and wellbeing outcomes. We use a suite of key indicators to measure our performance against them. These desired outcomes are: • Staff and partners are kept safe at work and their wellbeing is enhanced. • Staff and partners are not exposed to unmanaged risks. • We make safe decisions. • Staff and partners are engaged in safety and wellbeing. Our safety and wellbeing focus continues to be on our people, contractors and partners, using work insights to understand safety challenges facing them. We maintain our Safety Management System certification to the ISO45001 standard and during the past year we operationalised our new Contractor Safety Partnering Framework, redeveloped Safe and Well inductions to reflect our people-based safety model, and constructed a safety in design framework to facilitate the safe design of new assets.

Key safety performance indicators

2022-23

2021-22

2020-21

Number of reported hazards for the year per 100 full time equivalent staff members

146.85 1

77.29

45.29

Number of recordable injuries for the year per 100 full time equivalent staff members

0.51

0.55

3.96

Number of ‘lost time’ standard claims for the year per 100 full time equivalent staff members

0.64

0.14

$5,739

$4,798

$114,331

$4,630

Average cost per claim for the year Outstanding claim cost

1. In 2022-23 we experience a 100% increase in hazard reporting (1159 hazards reported compared to 578 in 2021-22) - a positive indication of proactive hazard identification.

Yarra Valley Water Annual Report 2022-23

Our people and culture continued... Employment data The following table discloses the head count and full-time equivalent (FTE) staff of all active Yarra Valley Water employees in the last full pay period in June 2023. Full time

Part time

Casual

Total

FTE 2022-23

Full time

Part time

Casual

Total

FTE 2021-22

Male

380

404

395.8

367

382

376.2

Female

307

102

421

387.4

273

102

384

350.8

687

115

825

783.2

640

110

766

727.0

15-24

24.1

26.8

25-34

164

188

180.7

142

166

159.6

35-44

250

297

284.1

232

272

259.5

45-54

174

207

197.7

162

192

183.3

55-64

78.2

73.2

65+

18.4

24.6

Total

687

115

825

783.2

640

110

766

727.0

Executive

7.9

8.0

Senior Manager

33.0

34.8

Administration and field staff

647

114

784

742.3

598

109

723

684.2

Total

687

115

825

783.2

640

110

766

727.0

Gender

Self-described Total Age

Classification

There are currently no employees who identify as self-described gender within our payroll system. However, through the People Matter survey 2021, we understand that approximately 1% of our workforce identify as non-binary, trans or gender diverse. In line with our commitments under the Gender Equality Act 2020, we are working towards creating safe and confidential avenues for employees to voluntarily disclose additional gender and intersectional data over the coming years. The results from the most recent People Matter survey are expected to be released in August.

Employee levels have increased over the course of the year as the high level of vacancies arising in the previous financial year have been filled. Of the 8 Executives, 1 is classified as Senior Executive Service 3 (PESES-3) and 7 are classified as Senior Executive Service 2 (PESES-2). One Executive works part time and has an FTE of 0.9.

Delivering Value

Corporate information Information and Communication Technology (ICT) expenditure For the 2022-23 reporting period, Yarra Valley Water had a total ICT expenditure of $61.73 million, details shown below: Business As Usual (BAU)

BAU ICT expenditure $’000

Non BAU Total non-BAU ICT expenditure $’000

Operational expenditure $’000

Capital expenditure $’000

ICT depreciation $’000

41,801

119

18,803

22,879

19,923

Consultancy expenditure The following is a summary of consultancy expenditure incurred by Yarra Valley Water during 2022-23.

Details of consultancies (valued at less than $10,000) In 2022-23 Yarra Valley Water engaged 6 consultancies where the total fees payable to the consultants were less than $10,000. Total expenditure incurred during the reporting period in relation to these consultants was $40,684 (excluding GST).

Details of consultancies (valued at $10,000 or greater) In 2022-23 Yarra Valley Water engaged 26 consultancies where the total fees payable to the consultants were $10,000 or greater (excluding GST). Total expenditure incurred during the reporting period in relation to these consultants was $2,675,142 (excluding GST).

Details of individual consultancies are outlined on Yarra Valley Water’s website at yvw.com.au

Government advertising expenditure In 2022-23, Yarra Valley Water delivered a campaign promoting its WaterCare program, which offers support to help vulnerable customers pay their water bills. The campaign ran over 2 bursts: • January - March 2023 • May - June 2023 The campaign costs comprised:

Media advertising

$141,918.00

Creative and campaign development

$32,769.75

Research and evaluation

Print and collateral

Other campaign costs

$41,010.10

Total campaign costs

$215,697.85

Yarra Valley Water Annual Report 2022-23

Our people and culture continued... Social procurement

Fair Payments Policy

Our Social Procurement Strategy guides us in creating new opportunities to generate social value and deliver outcomes that help build a fair, inclusive and sustainable community. It also commits us to progressing the performance of suppliers to deliver their own positive social and environmental impacts.

Under the Victorian Government’s Fair Payments Policy all departments and major agencies are to pay invoices up to $3 million within 10 business days of receiving a correct invoice. This policy ensures small and local businesses providing goods and services to government departments and agencies are paid on time to improve their cash flows and support with the economic recovery post pandemic.

Key activities during 2022-23 include: • Renewing our platinum memberships with Social Traders and Kinaway Chamber of Commerce Victoria Ltd. We continue supporting these partnerships and leveraging our strong alliance to further promote social and Aboriginal and Torres Strait Islander enterprises throughout our organisation.

In 2022-23 Yarra Valley Water paid 89% of all invoices up to $3 million within 10 business days. Average days taken to pay invoices under $3 million was 12 days.

• Running social procurement training for all relevant staff in April 2023.

Privacy and Data Protection Act 2014

• Running a social procurement partner forum with support from Kinaway and Social Traders. This brought together 19 partner organisations, 8 Kinaway members and 6 social enterprises to educate and share learnings across our supply chain on the benefits of working with First Nations businesses and social enterprises, and how our partners can create opportunities. • A dedicated Social Procurement Working Group that consists of champions across the organisation. • Commencing a pilot program with Ventia and Jaydo, to support Have A Dig (cultural salvage experts) expanding into broader civil maintenance services. This follows a self-determined approach, to enable them to build on their experience, knowledge and business capability to improve access to service contracts in the water sector. This partnership initiative is called Gama Dji Balit (`Emerge Strongly’). We spent more than $2.77 million with Aboriginal businesses in 2022-23 including $0.87 million with Wurundjeri Woi Wurrung Cultural Heritage Aboriginal Corporation.

Disclosure of emergency procurement In 2022-23, Yarra Valley Water did not activate Emergency Procurement policies.

Legislative compliance

Yarra Valley Water falls into the definition of a Victorian Public Sector agency under section 13 of the Privacy and Data Protection Act 2014 (Vic) (the Act), and consequently complies with the Act in the way that we handle personal information about our customers and other individuals. If we collect any health information we are bound by the Health Records Act 2001 (Vic). As the holder of our customers’ confidential and personal information, we are conscious of the need to ensure that this information is protected, and to prevent any unauthorised access to, and improper use of, that information. In respect to the Notifiable Data Breach Scheme, we’re legally obliged to disclose privacy breaches. A Privacy Policy and Code of Practice are in place for our employees, contractors and agency staff to ensure customer information is protected.

Delivering Value

Public Interest Disclosure Act 2012 We have procedures in place to help employees and contractors understand the requirements and obligations under the Public Interest Disclosure Act 2012, and to facilitate making and handling disclosures and notifying such disclosures to the Independent Broad-based Anticorruption Commission. These procedures are available to the public on our website.

Freedom of Information Act 1982 The Freedom of Information Act 1982 (the Act) gives the public a right to access documents held by us. The purpose of the Act is to extend as far as possible the right of the community to access information held by government departments, local councils, Ministers and other bodies subject to the Act. An applicant can apply for access to documents both created by us or supplied to us by an external organisation or individual. This includes maps, films, microfiche, photographs, computer printouts, computer discs, tape recordings and videotapes. The Act allows Yarra Valley Water to refuse access, either fully or partially, to certain documents or information. Examples of documents that may not be accessed include: cabinet documents; some internal working documents; law enforcement documents; documents covered by legal professional privilege; personal information about other people; and information provided in-confidence. The Act specifies that Freedom of Information (FOI) requests should be processed within 30 days. In some cases, this time may be extended. If an applicant is not satisfied by a decision made by Yarra Valley Water, they have the right to seek a review by the Office of the Victorian Information Commissioner (OVIC) within 28 days of receiving a decision letter.

Making a request FOI requests can be lodged online. An application fee applies. Access charges may also be payable if the document pool is large, and the search for material is time consuming. Access to documents can also be obtained through a written request to Yarra Valley Water’s FOI team, as detailed in s17 of the Freedom of Information Act 1982.

When making a FOI request, applicants should ensure requests are in writing, and clearly identify what documents or materials are being sought. FOI requests should be addressed to: Manager, Risk and Corporate Services Yarra Valley Water Private Bag 1 Mitcham, Victoria, 3132. General enquiries relating to FOI can be made by calling us on (03) 9872 2634 between 8.30am and 4.30pm, Monday to Friday.

Freedom of Information statistics During 2022-23, we received 38 applications. Eleven were received from the general public, the remaining 27 were received from legal firms and a number of government agencies. We made 38 FOI decisions this year. Full access to all documents was provided in response to all requests but one. The average time taken to finalise requests was 28 days. The one request where access was denied was subject to a complaint/ internal review by the Office of the Victorian Information Commissioner.

Building Act 1993 We own government buildings at Lucknow Street, Mitcham and are consequently required to include a statement on compliance with the building and maintenance provisions of the Building Act 1993 in relation to the buildings. We require that appropriately qualified consultants and contractors be engaged for all proposed works on land controlled by Yarra Valley Water and we require their work and services to comply with current building standards. All consultants and contractors are expected to have appropriate mechanisms in place to ensure compliance with the Building Act 1993, Building Regulations 2018 and the National Construction Code. Our Facilities Department is responsible for mandatory testing of emergency and exit lighting and lift equipment in accordance with relevant standards, monthly, quarterly and bi-annual inspection and preventative maintenance of mechanical services and monthly and annual fire service audits. These inspections inform the works program, which is delivered annually through existing maintenance.

Yarra Valley Water Annual Report 2022-23

Our people and culture continued... Sourcing decisions

In 2022-23

Yarra Valley Water undertook an objectives-based assessment for its laboratory testing and chlorination services, as a result it was determined that these services would be best delivered by sourcing directly from the market.

Number of major works projects undertaken by Yarra Valley Water (greater than $50,000)

Nil

Number of building permits, occupancy permits or certificates of final inspection issued in relation to buildings owned by the entity

One building permit

Local Jobs First policy disclosures

Nil occupancy permits

Yarra Valley Water implements the Local Jobs First policy in accordance with the Local Jobs First Act 2003.

Number of emergency orders and building orders issued in relation to buildings

Nil emergency orders

Number of buildings that have been brought into conformity with building standards during the reporting period

Nil buildings brought into conformity

Nil certificates of occupancy

Nil building orders

Disclosure of major contracts A major contract is a contract entered into during the reporting period valued at $10 million or more (excluding GST). Yarra Valley Water awarded 3 major contracts during 2022-23 being: • MFJ Constructions for the construction of the Rankin Street Branch Sewer and Rising Main project valued at $12 millon (excluding GST). • Simpson Construction Company for the construction of the Craigieburn Sewerage Transfer Hub Tanks 3 and 4 project, value at $17.64 million (excluding GST). • New Plumbing Solutions (NPS) for replacement of customer water meters until 30 June 2028 with 3 possible separate 2-year extension periods, subject to approvals, valued at $45 million (excluding GST). Construction contracts may allow for agreed variations at additional costs.

During 2022-23, we commenced 11 Local Jobs First Standard or Strategic projects where a Local Industry Development Plan (LIDP) was required. The value of these projects totalled $127.9 million and they were all located in metropolitan Melbourne and regional areas in Hume. The outcomes expected from implementing the Local Jobs First -VIPP to these projects are: • An average of 89.9% local content commitment. • A total of 197 jobs (annualised employee equivalent (AEE) were committed, including creating 23 new jobs and retaining 149 jobs (AEE). • A total of 25 positions for trainees and apprentices were committed, including 15 created and retained positions. During 2022-23, we completed 9 Local Jobs First Standard projects that required either a VIPP plan or a LIDP. The value of these projects totalled $38.9 million and were all located in metropolitan Melbourne. The outcomes from implementing the Local Jobs First - VIPP to these 9 projects were: • An average of 95% local content commitment was achieved. • A total of 235,446 hours were achieved, including 2,889 hours worked in new jobs and 225,618 hours worked in retained jobs (AEE). • A total of 6,939 hours worked in trainee positions, including 955 hours worked in new trainee positions and 5,984 hours worked in retained trainee positions.

Delivering Value

For the 9 completed projects, there were 175 small to medium sized businesses engaged as either the principal contractor or as part of the supply chain. Five projects, with combined value of $25.1 million, were mostly delivered during 2022-23. These projects are due to be complete in the coming months and will be reported in 2023-24.

Competitive Neutrality Policy

• A list of major committees sponsored by the entity, the purposes of each committee and the extent to which the purposes have been achieved. • Details of all consultancies and contractors including: • consultants/contractors engaged • services provided • expenditure committed to for each engagement.

Competitive neutrality seeks to enable fair competition between government and private sector business.

Financial management compliance attestation statement

Any advantages or disadvantages that a government business may experience, simply as a result of government ownership, should be neutralised.

I Sue O’Connor, on behalf of the Responsible Body, certify that Yarra Valley Water has no Material Compliance Deficiency with respect to the applicable Standing Directions under the Financial Management Act 1994 and Instructions.

Yarra Valley Water continues to comply with the requirements of the Competitive Neutrality Policy.

Other information The following information is available from Yarra Valley Water on request, subject to the Freedom of Information Act 1982: • A statement that declarations of pecuniary interests have been duly completed by all relevant officers. • Details of shares held by any senior officer as nominee or held beneficially in a statutory authority or authority. • Details of publications produced by the entity about itself, and how these can be obtained. • Details of changes in process, fees, charges, rates and levies charged by the entity. • Details of any major external reviews carried out on the entity. • Details of major research and development activities undertaken by the entity. • Details of overseas visits undertaken including a summary of the objectives and outcomes of each visit. • Details of major promotional, public relations and marketing activities undertaken by the entity to develop community awareness of the entity and its services. • Details of assessments and measures undertaken to improve the occupational health and safety of employees. • A general statement on industrial relations within the entity and details of time lost through industrial accidents and disputes.

Sue T O’Connor Chair

Yarra Valley Water Annual Report 2022-23

Liveability outcomes Yarra Valley Water seeks to enhance the liveability of our community, now and in the future.

Resilient and liveable cities and towns

We’re proud of our role in helping to make Melbourne one of the world’s most liveable cities. Integrated water management (IWM), including social and recreational values We want to ensure that our customers can continue to enjoy the places that they live, work and visit, and recognise the importance of providing for their social, environmental and economic needs. We also recognise the importance of community values and preferences for liveability, wellbeing and sense of belonging. And we appreciate the need for better understanding, enhancing and celebrating the cultural values that Traditional Owners/Custodians have with Country. Integrated water management (IWM) aims to leverage the water management opportunities related to these wide-ranging community needs within the context of climate change, population growth and urbanisation.

Delivering Value

Water is fundamental to the health of our customers, the broader community and our environment. COVID-19 public health restrictions saw people spending more time in their local areas and heightened the value of local green open spaces. We’re committed to working collaboratively through placemaking and urban development planning processes to ensure all Melburnians can continue to enjoy these valuable spaces - despite the increasing pressure on water availability.

Our key commitments in the Yarra, Maribyrnong and Dandenong catchments are summarised below:

A formalised approach to IWM has been steadily building momentum across the state over the past decade. Over 2022-23, we have been involved in development of both the Central and Gippsland Region Sustainable Water Strategy and the Greater Melbourne Urban Water System Strategy: Water for Life. These strategies have identified the pivotal role that IWM can play to increase the resilience and security of our water supplies across Greater Melbourne. We’re an active participant in the industry-wide IWM forums facilitated by Department of Energy, Environment and Climate Action (DEECA), which were established as the IWM Framework for Victoria was implemented, consistent with policy commitments in Water for Victoria. The IWM forums have collaboratively developed Catchment Scale Plans with measures and targets endorsed by forum members to progress towards a more water-sensitive Melbourne as we look towards 2050.

• Wallan restorative project (in concept planning phase).

The Yarra catchment is our primary catchment although we also participate in the Maribyrnong and Dandenong forums, which overlap our service area. IWM collaboration through the IWM forums provides a strong foundation to realise broader benefits jointly through partnerships.

• Upper Merri Creek IWM sub-catchment plan development (completed). • Doncaster Hill recycled water project (in final planning phase). • Eastern Recycled Water Scheme - Dingley extension (in feasibility assessment phase).

• Wollert Community Farm initiative (in Stage 1 construction phase). • Re-commissioning of Kalkallo Stormwater Treatment Plant. • Hazelwynde land development project. As part of the DEECA partnership approach, in 2022-23 we were involved in joint projects and collaborations including: • Systemic funding of IWM: DEECA-led project looking at funding mechanisms to enable the step-change in investment required to progress IWM infrastructure. • Embedding IWM in urban planning: DEECA led project identifying opportunities for strengthening IWM outcomes as part of precinct planning and urban development. • Citywide Assessment of Stormwater Network Opportunities (CASNO): Melbourne Water led project to understand the role of stormwater in water security over the next 50 years. In 2022-23 we also partnered in the delivery of other priority projects including: • Monbulk Community Sewerage Program. • Collaborative water quality monitoring programs (understanding pathogen and toxicant impacts and sources to support evidence-based decision making). • Reimagining Tarralla Creek project in Croydon - Stage 2, which includes a system to capture, treat and reuse stormwater to irrigate 4 nearby sports grounds, saving about 13 million litres of drinking water a year. • Endorsing the marram baba Merri Creek Regional Parkland Plan together with multiple partners including Wurundjeri, Parks Vic, DEECA and Councils. Marram baba will be one of the largest conservation areas in Greater Melbourne and a central feature of the northern growth corridor. Yarra Valley Water owned land, including Aurora Sewage Treatment Plant, contributes to approximately 5% of the parkland area.

Yarra Valley Water Annual Report 2022-23

Liveability outcomes continued... Conservation and efficient water use A third consecutive year of higher than average rainfall has resulted in an increase in the volume of water in storage. However across Melbourne our climate is drying and on average, Melbourne is using more water than rainfall is providing. We’ve had a relatively stable level of per capita usage over the past 5 years, which is comparable with the metropolitan average. We promote sensible and efficient use of water through the Target 150 program, advertising campaigns and education programs. We also help businesses and councils to become more water efficient. Melbourne’s water industry is working together to secure water supplies for the next 50 years through the development and implementation of the Greater Melbourne Urban Water and System Strategy, Water for Life as well as implementation of joint and common activities from the 2017 urban water strategies. This included joint actions supporting efficient water use across the community. To support the Victorian Government’s new target of ‘150 litres per person, per day’, in 2022-23 we focused on efficient and sensible water use by Melburnians to preserve our state’s precious water. We do this through: • Engaging customers around water efficiency through social media, videos, sponsorships, bills, local media and website content, including the Target 150 program. • Our primary school incursion program which takes a long-term approach, aiming to make it easy for children to form positive water saving habits that will last a lifetime. The program delivered a total of 471 incursions across 80 schools in the area. • Partnering with Merri-Bek and Maroondah councils along with Bunnings to showcase our Water Watchers education program in their respective school holiday programs. • Delivering an advertising campaign pitched at families that encouraged our youngest customers to save water by ordering a Water Watcher. These fun devices sit on taps as a reminder to turn them off when not in use. Over 5,500 Water Watchers were ordered. • Participation in the Schools Water Efficiency Program, a Victorian Government initiative that enables schools to track and manage their water consumption. Since it started in 2012 more than 1,300 Victorian schools have saved over 10 billion litres of water - enough to fill 7 MCGs.

Besides water conservation, extensive customer research has told us that customers want us to focus efforts on improving and innovating when it comes to alternative sources of water, such as stormwater and recycled water. We have a continued focus on alternative water sources and are actively participating in the government’s integrated water management forums. Under the WaterCare program, we offer water audits – directly to residential customers experiencing vulnerability or hardship through our Community Rebate Program (CRP) and via not-for-profit community housing (through the Community Housing Retrofit Program – CHRP). Both of these programs are funded by DEECA on an annually reviewed basis, and on average we also contribute an additional $100,000 funding to the CRP program each year. The objective of the CRP program is to support customers to gain greater control over their bills by fixing minor leaks or replacing inefficient appliances. We organise a plumber if the customer can’t afford to and pay them directly so there are no out-of-pocket expenses for the customer. There is strong demand for this program, with the allocated funding spent each year it has run. The number of customers assisted depends on the level of funding. The program has been very well received with 355 customers assisted in 2022-23. The CHRP program has a similar objective, however targets emergency and community housing across the Melbourne metropolitan areas serviced by Yarra Valley Water, Greater Western Water and South East Water. These properties are owned or managed by community agencies. The program has been very well received by the community sector and in the last 12 months we worked with 6 housing providers and audited over 220 properties. In addition to promoting water efficiency, these programs provide an opportunity for customers facing vulnerability and hardship to actively reduce their water usage, which gives them more control over their bills. These programs also enable us to directly connect with customers and raise awareness of the services and support options available to them. Water literacy, including sustainable water use is an important part of long term efficient water use by the community. The Choose Tap program aims to increase access to drinking water in the community and educates customers on the benefits of choosing tap water (for their wellbeing, the environment, and their hip-pocket).

Delivering Value

As part of this program, we grew our Refiller initiative, signing up a further 124 businesses to display a ‘Refillers Welcome’ sticker in their window, inviting community members to refill their water bottle for free. This was supported by an advertising campaign to raise awareness of the initiative and encourage our customers to access tap water on the go, helping to reduce plastic waste caused by the unnecessary purchase of bottled water. In a post-campaign survey, 46% of customers who

recalled the advertising, reported that they had refilled their bottle at a café since seeing the campaign. We also facilitated community access to tap water via our partnerships with local football leagues, the Eastern Football Netball League and the Northern Football Netball League. We delivered water refill stations at 19 community football events throughout the season and provided water jugs for use in club canteens, as a sustainable alternative to bottled water.

Water consumption report 2022-23 Number of customers (as at 30 June 2023) Residential customers

818,154

Non-residential customers

60,970

Total

879,124

Drinking water volume (ML)1 Residential customers

114,593

Non-residential customers

29,678

(1)Total

144,271

Average annual drinking water consumption2

145,881

Recycled wastewater volume (ML) Residential customers

340

Non-residential customers

616

(2)Total

956

(1)+(2) Total consumption (ML)3

145,228

Non-revenue water (ML) Leakage

8,782

Bursts

2,912

Other

3,286

(3)Total

14,980

(1)+(2)+(3) Total water all sources (ML)

160,208

1. Includes a small amount of unchlorinated water supplied directly from aqueducts. 2. Average customer usage calculated over 5 years from 2018-19 to 2022-23. 3. Total consumption does not include water sourced from rainwater tanks or from greywater reuse.

Yarra Valley Water Annual Report 2022-23

Liveability outcomes continued... The below figures include an estimate for customer usage for Quarter 4 (April – June 2023) which was not available at the time of preparing this report.

Customers are billed 3 months in arrears and therefore customer usage for April to June 2023 is not known until early October.

Residential water consumption

litres, per person, per day

300 237 244

246 217

230 210

200

207 186

200

164

157 152

147 153

168 166 164 161 168 160 161 166 163 159 163

22/23

21/22

20/21

19/20

18/19

17/18

16/17

15/16

14/15

13/14

12/13

11/12

10/11

09/10

08/09

07/08

06/07

05/06

04/05

03/04

02/03

01/02

00/01

99/00

98/99

100

Drought response report The metropolitan water retailers have prepared common Drought Preparedness Plans (incorporating a Drought Response Plan). Plans are based around an adaptive framework to manage water shortages and potential use of 4 levels of water restrictions to control the use of drinking water outdoors. As part of the development of the Greater Melbourne Urban Water and System Strategy we have worked with Greater Western Water, South East Water and Melbourne Water to update the Drought Preparedness Plan, Drought Response Plan and adaptive framework to reflect current demand forecasts and projected inflows.

During 2022-23 there was no requirement for drought preparedness measures. We continue to encourage the community to use water efficiently and increase the readiness of the Greater Melbourne water corporations to respond to a changing water security position. In April 2023 the Minister for Water announced that no desalinated water order would be placed for 2022-23. Permanent Water Use Rules continued to apply throughout 2022-23.

Delivering Value

Corporate water consumption There has been a noticeable reduction in water usage across the Mitcham office site. This reduction is primarily attributed to improvements and upgrades to rainwater systems used for irrigation and toilet flushing. The amounts in the table below represent consumption at our Mitcham office excluding any treatment plants or other work sites. 2022-23

2021-22

2020-21

Total water consumption1 2

2211kL

2722kl

1747kL

Number of FTE staff on site3

150

100

170

14.74kL

27.22kL

10.27kL

Average water use per employee (kL per employee) Total office space Average water use per m2

10,000m2 10,000m2 10,000m2 0.221kL

0.272kL

0.175kL

1. Coronavirus response, particularly working from home directives and social distancing requirements, has impacted total water consumption and annual number of FTE staff reported in 2020-21 and 2021-22. 2. Hybrid working models have impacted total water consumption and annual number of FTE staff reported in 2022-23. 3. FTE reported number is an estimate based on average office attendance across the year due to hybrid work arrangements.

Yarra Valley Water Annual Report 2022-23

Liveability outcomes continued... Annual reporting of major non-residential water use Requirement 1: number of customers who fall within each range (Section 122ZJ of the Water Act 1989) Table 1: Customer by volume range

Volumetric range – ml per year

Number of customers

Equal to or greater than 100ML and less than 200ML

Equal to or greater than 200ML and less than 300ML

Equal to or greater than 300ML and less than 400ML

Equal to or greater than 400ML and less than 500ML

Equal to or greater than 500ML and less than 750ML

Equal to or greater than 750ML and less than 1,000ML

Greater than 1,000ML

Total number of customers

Requirement 2: naming of major water users and whether or not they participate in water efficiency programs (Section 122ZJ of the Water Act 1989) Table 2: Names of major customers and their participation in water efficiency programs

Name of customer

Status of customers’ participation in water efficiency program

Austin Hospital

Yes

Bertocchi Smallgoods

Yes

Box Hill Hospital

Yes

Chadstone Shopping Centre

Yes

Chiquita Mushrooms Pty Ltd

Yes

Continental Poultry Pty Ltd

Yes

CSL Behring Pty Ltd

Yes

Eastland Shopping Centre

Yes

Huhtamaki Australia Pty Ltd

Yes

Latrobe University

Yes

Monash University

Yes

Northern Hospital

Yes

Peters Ice Cream

Yes

Premo Fresh

Yes

RePurpose It

Yes

Sorbent Paper Company Pty Ltd

Yes

Specialist Linen Services

Yes

The Glen Shopping Centre

Yes

Visy Packaging Properties Pty Ltd

Yes

Visy Paper Coolaroo

Yes

Westfield Doncaster

Yes

Delivering Value

To build business knowledge and support large water users to adopt local water solutions, we coordinate and facilitate seminars, undertake site visits at various businesses (exploring process and procedural improvements), and document case studies that share the learnings of others’ achievements in this area. Furthermore, all large water users have access to a national benchmarking website to compare their water consumption with others in similar industries.

Water recycling This year we treated 13,481ML of sewage at our treatment plants of which 2,515ML or 18.7% was reused as either Class A, B or C recycled water. We constructed 66km of recycled water mains and connected approximated 4,000 properties to Class A recycled water for non-drinking purposes such as toilet flushing and car washing. This brings the total number of properties connected to Class A recycled water to nearly 45,000. We continued to participate in a recycled water industry working group, allowing for collaboration and alignment between Victorian water corporations. We also worked with our regulators to revise existing recycled water guidelines to reduce barriers to recycled water use, while continuing to protect public health and the environment to the highest possible standard. Water recycling continues to be a key component of our integrated water cycle management servicing strategy for the Northern Growth Corridor, and new estates in the eastern suburbs. Public open space irrigation, and providing Class A recycled water to all homes via a third pipe system for toilet flushing, garden watering and laundry use, provides significant efficiency and environmental benefits to the entire community. We’ve also reintroduced Class A recycled water carting in partnership with Maroondah Council to support its tree renewal program to drought-proof public spaces and reduce reliance on drinking water.

Water quality During 2022-23, we maintained our commitment to provide safe and pleasant drinking water. This year we received 0.34 complaints for every 100 customers, against our target of 0.50 complaints. We work to keep customers informed about any operational changes to their water supply. This year we also carried out targeted cleaning of 530km of water mains. We achieved 91% customer satisfaction with the overall quality of drinking water provided.

Customer and community outcomes Customer and community engagement This year we’ve continued to work to enhance our community engagement practices and develop our capabilities to maximise our impact. At the heart of our approach lies a commitment to open, transparent, and timely communication. By fostering connections with our customers and stakeholders, we actively seek and value their feedback, which guides our decision-making processes and fosters community confidence and trust. During 2022-23, our Community Engagement team supported 92 infrastructure projects. Our team diligently ensured that key stakeholders, residents, businesses, and communities were well-informed about this work and promptly addressed any concerns.

Affordability and assistance programs Melbourne’s water bills are the lowest in Australia for all capital cities. We have an important role in sustaining Victoria’s productivity and a responsibility to deliver our services as efficiently as possible. In doing this we strive to relieve the pressure on household budgets and to ensure that the cost of water and sanitation services does not impact the competitiveness of our business customers. Because most of our investment decisions are long term we have an obligation to make financial decisions that optimise community value and intergenerational equity. We continue to hear from customers that they don’t want bills to increase, and that small annual bill changes are better than a single large change. Since 2013-14, customers’ bills have increased below the rate of inflation - that is they have fallen in real terms. The annual bill for a ‘typical’ residential customer using 150 kilolitres of water per annum are $85 per annum lower now than in 2013-14 even after inflation. These reductions are a combination of efficiencies, including reductions in the cost of debt. In 2022-23, the typical annual residential bill (based on 150kL consumption per annum) was $1,028 - an increase from 2021-22 of $2. For homes with 200kL consumption per annum, the 2022-23 bill is $1,223 - an increase from 2021-22 of $10. Despite this, given the broader climate of financial stress and cost of living pressures, keeping on top of bills remains a challenge for many Victorians. We continue to evolve our programs to support customers who find it difficult to pay their water bill. We also work proactively to improve awareness and access of the support that is available, in particular to people at greater risk of vulnerability - through targeted outreach, marketing campaigns and engagement with community partners.

Yarra Valley Water Annual Report 2022-23

Liveability outcomes continued... During 2022-23 we ran the second phase of our marketing campaign which used a hardship model to effectively identify the target audience for campaign messages. This enabled us to reach people who we expect are a great risk of financial hardship in a timely and relevant way. Campaign results indicate that it is particularly successful in raising awareness about the support that is available and confidence that we will provide support. We are maintaining the support options that were introduced in response to coronavirus, including support for commercial customers. By the end of June 2023 we had 11,415 customers being managed within our WaterCare Customer Support Team which is 10% higher than June 2022. In addition: • 8,421 customers applied for and received Utility Relief Grant assistance totalling $3.3 million. • We referred 328 customers to our external support partner who can provide additional services, including financial counselling, emergency relief, housing support, energy audits, employment coaching, drug and alcohol support - all at no cost to customers. • We also referred 111 customers via the Thriving Communities Partnership One Stop One Story hub directly to the relevant customer support teams in other partner organisations. • At 30 June 2023, 50,033 instalment plan arrangements were in place.

Accessible and inclusive services Our 2030 Strategy embeds our commitment to inclusive and accessible services. It ensures that everyone can access our services in the way they need and that we leave no one behind. In June 2023, the Board endorsed an updated Diversity, Equity and Inclusion Policy which applies to customers and communities, as well as current and future employees. It replaces our Diversity and Inclusion Policy, which is internally focused, and reflects our obligations and commitment to better practice. A holistic policy supports a consistent approach to equity and inclusion across our business, embedding it in our systems, processes and culture. It also underpins our expectations of who we prefer to work with in our supply chain.

We are committed to providing accessible and inclusive services that understand and meet the needs of our diverse community. We prioritise respect, dignity, equity, and human rights for all, while fostering a diverse and inclusive workforce. By empowering our people and partners, we strive to reflect the customers and communities we serve, learn from lived experience and work together to deliver positive outcomes for all. The policy formalises our areas of focus in service of our 2030 Strategy. Key activities throughout 2022-23 included: • Undertaking 7 Gender Impact Assessments (GIAs) on high impact projects across the business. These pilots delivered recommendations, including strengthened tender requirements to support meeting the needs of diverse communities within field services and additional work to define how customers experiencing family violence may be considered through service design. In addition to fulfilling obligations under the Gender Equality Act 2020, GIAs are important tools for embedding accessibility and inclusion consideration into the design of services, policies and programs. • Introducing a universal design approach into our service design so diverse needs and abilities of all users are considered throughout the design process of any new technology assets. Crucially, this means hearing directly from those with lived experience to inform our decision making. During 2022-23 we engaged Vision Australia and Victorian Advocacy League for Individuals with a Disability (VALID) to test our systems and participate in customer research. • Upskilling staff and improving processes to embed accessibility standards and run audits to ensure we meet Web Content Accessibility Guidelines (WCAG). • Finalising the implementation of our refreshed brand, which has incorporated accessibility as a core feature. This is important foundational work to ensure that staff have updated templates and guidance to consistently produce clear communications. Examples include ensuring document templates are fully accessible, and guidelines for written communications are based on Plain English and inclusive language principles. • Engaging with customers and community in an accessible and inclusive way to improve awareness and access to support services. This included an in-person activation at 3 shopping centres during February

Delivering Value

2023, as well as attendance at events such as Bring Your Bill Days and emergency food relief markets, and presentations to community groups. Key considerations have been the use of interpreters, multilingual staff, translated materials and the general accessibility of our outreach approach. • Strengthening processes for engaging with diverse communities during emergencies - including pretranslated materials, and community profiles outlining relevant stakeholders and key languages. • In support of people with diverse communication needs, we established a draft standard for accessible communications. This standard will be trialled in 2023-24 as part of services related to the maintenance of water and sewerage infrastructure.

Thriving Community Partnership We are the proud founders of the Thriving Communities Partnership (TCP), a cross-sector collaboration that aims to ensure everybody has fair access to the modern essential services they need to thrive in contemporary Australia, including utilities, financial services, telecommunications and transport. Throughout 2022-23 we continued to participate in the One Stop One Story (OSOS) Hub - a digital platform which allows people to contact one organisation for support and then be offered a direct referral to another organisation to receive further support. It demonstrates benefits at multiple levels - for customers and staff members as well as organisations. They include improved access to support and early engagement with customers. During 2022-23, the OSOS Hub celebrated its first anniversary and expanded to enable referrals for people experiencing financial hardship, as well as those impacted by family violence. Participating partners span energy, banking, transport, water and telecommunication sectors, as well as community organisations such as Mortgage Stress Victoria and Brotherhood of St Laurence.

Family violence We understand that family violence can happen to anyone at any time, and the devastating impact it has in our communities. We have well-established guidelines and processes to support customers and employees experiencing family violence, with safety being our top priority. We are committed to continually reviewing and refining our approach to ensure we uphold our responsibilities to those affected by family violence. This includes adopting learnings from other organisations and sectors and working closely with community partners and specialist organisations.

Our WaterCare Support Team is trained to assist customers impacted by family violence and can provide tailored case management to protect customers’ privacy and safety, as well as provide support and assistance in relation to debt. As mentioned above, we are also able to provide referrals to participating partners within the OSOS Hub which may include additional wrap-around support. As well as our standard privacy controls, we have additional privacy processes for customers affected by family violence to ensure that any details they provide are accessible only to authorised staff. We also provide a range of supports for staff impacted by family violence, including leave arrangements, safety plans and flexible work options. As part of our continuous improvement, during 2022-23 we also reviewed our training model to ensure it was accurate and aligned with regulatory requirements. The review considered the training needs across different cohorts, a sustainable resourcing model to address the safety and wellbeing risks for internal facilitators, and opportunities to improve how we monitor and track participation. Our refreshed model incorporates different delivery methods, with content tailored to the audience (such as people leaders, customer-facing staff and all other staff) for initial training upon employment and biannual refresher training. During 2022-23, 112 people completed family violence training - this included new starters, refresher training and training for mental health first aiders. We work to promote the support that is available to ensure people can access it when needed. During 2022-23, we actively worked with networks across our service area to promote our family violence supports for customers and to collaborate on strengthening responses and prevention. This included representation on several family violence networks and participation in the Migrant Information Centre in the East’s family violence program. Our face-to-face outreach also provided multiple opportunities to engage directly with customers impacted by family violence to provide information and respond to account enquiries on-the-spot.

Yarra Valley Water Annual Report 2022-23

Liveability outcomes continued... Community service obligations In addition to our own assistance programs, many customers are eligible for support via government initiatives. In 2022-23, the amount of assistance provided to customers was similar to 2021-22 for all initiatives except concessions.

We ran a proactive campaign to reach customers who may be eligible for a Utility Relief Grant. While the value of the payments was similar to the previous year, our efforts managed to reach more people, with 8,421 grants approved compared with 6,473 in 2021-22.

2022-23 $’000

2021-22 $’000

2020-21 $’000

Provision of concessions to pensioners1

51,841

53,048

56,168

Rebates paid to not-for-profit organisations under the Water and Sewerage Rebate Scheme2

1,325

1,287

1,270

Utility relief grant payments3

3,349

3,377

3,074

56,534

57,731

60,530

Community service obligations

Water concessions for life support machines – haemodialysis4 Total

Notes: 1. Provision of concessions to pensioners - Customers who hold either a Pension Concession Card, a Gold Repatriation Health Care Card for All Conditions or a Health Care Card are entitled to pay a concessionary amount instead of the full balance outstanding on their accounts. When a customer pays this lesser amount, the difference is billed to and paid by the Department of Families, Fairness and Housing (DFFH). 2. Rebates paid to not-for-profit organisations under the water and sewerage rebate scheme - Customers who are not-for-profit entities are entitled to pay a concessionary amount instead of the full balance outstanding on their accounts. When a customer pays this lesser amount, the difference is billed to and paid by the State Revenue Office.

3. Utility relief grant scheme - The Utility Relief Grant scheme provides assistance for residential customers unable to pay their utility accounts due to a temporary financial crisis. Customers need to demonstrate that unexpected hardship has left them seriously short of money so that they cannot pay their utility account without assistance. 4. Water concessions for life support machines – haemodialysis The State Government of Victoria provides a rebate for customers required to use a dialysis/life support machine at home, to compensate for water use and sewage disposal charges relating to its use. The rebate amount is determined by the DFFH based on the estimated annual water usage of a dialysis machine (168kL). This rebate is in addition to any other pension or concession entitlements.

Delivering Value

Water for Aboriginal cultural, spiritual and economic values We recognise and support self-determination of Aboriginal cultural values and economic inclusion in the water sector. This is expressed through our ongoing engagement with Traditional Owners/Custodians, Aboriginal Community Controlled Organisations and other Aboriginal and Torres Strait Islander owned businesses; and through formal organisational commitments such as our Stretch Reconciliation Action Plan, Social Procurement Strategy and People Strategy.

Supporting Aboriginal self-determination Supporting self-determination is a core commitment and guiding principle within our work to advance reconciliation and care for Country. We are committed to embrace and respond to truth telling and Treaty processes. During 2022-23 we have maintained a watching brief to monitor progress and ensure our readiness to respond as required. After completing a cultural values study in 2021-22, we connected with Wurundjeri Woi-Wurrung’s Narrap Unit - the natural resource management unit. We invited the Narrap Unit to propose a trial restoration plan for 6 hectares of remnant vegetation to reinstate a healthy, thriving landscape within our catchment. The development of scope and methodology was entirely in the hands of the Narrap Unit. We asked them to advise us on the actions required and subsequently awarded a contract based on their proposition. In early April 2023, the Narrap Unit undertook a cultural burn to heal and regenerate Country. Further methods will complement burning to control threats to biodiversity, in turn allowing activation of native seed present, including culturally significant species.

Procurement opportunities Through our Social Procurement Strategy and our Reconciliation Action Plan, we endeavor to promote and increase opportunities for First Nations enterprises to supply goods and services within the water sector both through direct and indirect procurement. This includes promoting opportunities internally and with our partners to raise awareness and partnering to build operational, financial, and commercial capability of First Nations businesses. 4.8% of active suppliers are First Nations enterprise businesses. In 2022-23 we procured goods and services from 20 enterprises with a direct spend of $1.89 million - not including cultural heritage management planning. Key activities within 2022-23 are included in the Social Procurement section on page 62.

Cross-cultural training Cross-cultural training and building our cultural competency underpin our commitment to reconciliation. This is relevant to all parts of our organisation, including our Board. In terms of cultural safety programs and policy, we have key commitments within our RAP to build a culturally safe and welcoming environment for staff and the broader First Nations community. Actions include tangible recognition of cultures across our sites and assets, and visibly promoting our commitment to reconciliation across the organisation and public communication channels.

Yarra Valley Water Annual Report 2022-23

Liveability outcomes continued... During 2022-23, some key activities included: • Focus on supporting people to understand and deliver an acknowledgement of Country as an important demonstration of respect. The number of staff who have personally delivered an acknowledgement has increased from 30% in 2020 up to 64% in 2022, and those who have been present at an event with a Welcome to Country or acknowledgement has gone from 81% to 92%. We have also observed a noticeable shift in the quality and connection displayed within acknowledgements. Feedback from Aboriginal staff members has been that this shift towards a deeper connection with this practice is significant and strengthens the cultural safety of our organisation. • 8 staff received enhanced cultural safety awareness training to support people wanting to informally discuss issues they may be experiencing in the workplace. This was delivered by an external provider. These support officers can be a vital first point of contact for someone who thinks they may be experiencing discrimination, harassment, vilification or victimisation in the workplace, or someone who has witnessed such behaviour. 187 staff completed a First Nations Culture Awareness module and Aboriginal Cultural Awareness training. • Ongoing assistance is available to staff via our comprehensive Employee Assistance Program which includes a dedicated First Nations support line. • Ongoing commitment to support staff to attend a range of cultural learning and immersive experiences, including: • Our annual National Reconciliation Week activities, which were co-designed and delivered in partnership with Mullum Mullum Indigenous Gathering Place. This year more than 300 staff participated in activities including the Sea of Hands, a smoking ceremony, storytelling with an Elder and string-weaving. We displayed the Sea of Hands in the shape and colours of the Aboriginal flag at the front of our Mitcham office, as a public display of our commitment to reconciliation. • Attending the Nicky Winmar anti-racism event, along with colleagues from Melbourne Water. • Participating in a Welcome to Country event at the Wollert Community Farm, organised by Whittlesea Community Connections, to celebrate commencement of their community farm conservation programs with Wurundjeri Woiwurrung Narrap Rangers (Nugal Biik enterprise).

Partnerships with Traditional Owners We are committed to working in direct partnership with Traditional Owners/Custodians in our service area, and as part of this we will build our internal cultural capability. The geography of our service area means that we work predominantly with Wurundjeri Woi-wurrung. Throughout 2022-23, we worked with them across a range of projects, including cultural heritage management, language, education and with their Water, Bushfoods and Botanicals and Narrap Units. We will continue to partner in research projects, such as the Lockerbie Main Sewer Project, where research questions were developed by Traditional Owners/ Custodians as a new way of partnering. We will also continue to work collaboratively with our water industry colleagues to support a self-determined role for Traditional Owner/Custodians in water planning and management, as set by Water is Life. This includes delivery of actions developed by Traditional Owners/ Custodians within Water for Life and the Central Gippsland Region Sustainable Water Strategy.

Delivering Value

Aboriginal Inclusion Plan/Reconciliation Action Plan

Place which is now based at our Mitcham office while their community centre is being refurbished.

We’re working to deliver our Stretch Reconciliation Action Plan (RAP) to achieve our vision that all who live on this land acknowledge our shared history and move forward, together, in a respectful way. Our Stretch RAP includes training, employment and procurement targets and actions to ensure Traditional Owners/ Custodians are actively involved in planning and managing water resources.

We have also established new relationships with the First Nation Leads at local councils across our region and have also recently begun a sponsorship with Aboriginal community group Mob Walks who support First Nations people living in the Whittlesea and Darebin local government areas.

We monitor and report on progress against these commitments to our Reconciliation Leadership Committee and to a Board Committee every 6 months. Pleasingly, our leadership commitment to reconciliation is evident to staff. In the 2022 RAP workplace barometer, 87% of staff agreed that our commitment to reconciliation is genuine and strong, and 93% have seen a senior leader speak passionately about reconciliation. In addition to the updates outlined above, another focus for 2022-23 has been to further build and strengthen relationships with Aboriginal Community Controlled Organisations. This includes collaboration and regular engagement with Mullum Mullum Indigenous Gathering

12 Aboriginal staff, including 2 Board members

20 active contracts with Aboriginal and Torres Strait Islander businesses

Yarra Valley Water Annual Report 2022-23

Environmental outcomes We rely on a healthy environment to deliver our services and we’re proud of our innovative approach to ecological challenges.

Climate adaptation Adaptation to climate change and variability Recent reports from the Intergovernmental Panel on Climate Change highlighted that climate change is widespread, rapid and intensifying, with weather extremes occurring simultaneously, causing cascading impacts that are increasingly difficult to manage. In Victoria, the Bureau of Meteorology is predicting a hotter and drier climate over the long term, with up to double the number of very hot and high fire-risk days in the 2050s, lower stream flows to our reservoirs and greater variability, including an increased number of storm events with more intense downpours. These challenges will require new approaches in the way we provide our services. We’re committed to being forward-thinking and customer-focused in how we face these challenges.

Delivering Value

Core activities

Strong foundations

Increasing focus

Ensuring water security

Managing climate resilient assets

Greenhouse gas emissions reduction

Emergency management, preparation and recovery

Embedding climate resilience

Building financial resilience

Understanding climate risks

Supporting community and environment resilience

Strengthening partnerships for climate resilience

Figure 1: Focus areas of Yarra Valley Water’s Climate Resilience Plan

Our latest Climate Resilience Plan summarises across 9 focus areas what we do to reduce our greenhouse gas emissions and embed climate resilience into everything we do. These actions will see our business systems and processes - and also the communities and environment we operate in - become better equipped to handle climate change. In the area of ensuring water security, the Greater Melbourne Urban Water System Strategy, known as Water for Life, and the drought preparedness plans within this strategy have been collaboratively developed with Greater Melbourne’s water corporations, applying the Department of Energy, Environment and Climate

Action’s (DEECA’s) Guidelines for Assessing the Impact of Climate Change on Water Suppliers in Victoria. It outlines plans for securing water supplies for the next 50 years, including specific actions on water efficiency, water conservation, fit-for-purpose recycled and alternative water as well as readiness activities for future augmentations. We’ve engaged with Traditional Owners/Custodians, community and stakeholders to develop this important work and will continue to engage in its implementation. Consideration of climate change impacts has also been embedded in the Melbourne Sewerage Strategy, in the scenarios explored and in the adaptive planning responses developed during implementation.

Yarra Valley Water Annual Report 2022-23

Environmental outcomes continued... Key actions implemented in 2022-23 that contribute to mitigation of and adaption to climate change include: • Strengthening our emergency management capability across preparedness, response and recovery, building surge capacity, and strengthening and fostering relationships and partnerships across the water sector, with emergency management agencies, government and not for profit organisations. • Holding quarterly seasonal outlooks with the Bureau of Meteorology to enable operational staff to prepare for likely weather patterns in the upcoming season. • Assessing our electrical assets to improve their resilience to extreme heat, and undertaking planning and design works for additional generators on pump stations to be more resilient to power outages. • Developing and submitting our Part 7a Emergency Management Act Critical Infrastructure Statement of Assurance Report to DEECA that included comprehensive risk assessments to address climate related emergencies. • Understanding the impact of climate change when planning our water assets, including considering ground wetness and pipe material vulnerabilities as part of our renewals strategies. • Understanding the impact of climate change when planning our sewer assets through applying the key principles outlined in DEECA’s Guidelines for assessing the impacts of climate change on sewerage systems in Victoria. The main benefit of applying the guidelines was ensuring that under climate change scenarios, the sewer has sufficient hydraulic capacity to meet our long-term servicing strategy targets and our General Environmental Duty (GED) obligations. • Including climate resilience as a key performance criteria in our asset design principles. • Continuing to improve our modelling and planning approaches to reflect latest science and industry knowledge, and embedding what we learn into our business processes, business planning and our asset management framework. • Further maturing our approach to climate change risk assessments through the development of a tool and guidelines to conduct asset risk assessments with a view to climate change and integrate these assessments with our Asset Management Framework.

• Supporting DEECA with the implementation of actions from the Water Sector Climate Change Adaptation Action Plan and Central and Gippsland Region Sustainable Water Strategy, and through participation in IWM forums, and industry knowledge sharing. • Moving towards our net zero carbon target in 2025, and committing to go beyond zero carbon to also redress our legacy emissions. • Building resilience to transition risks, through reducing our exposure to carbon pricing by generating our own energy. • Reducing our carbon emissions from construction activities (including encouraging use of recycled materials in construction under our 2030 Strategy’s circular economy goals). • Engaging customers around water efficiency through social media, videos, sponsorships, bills, local media and website content, including the Target 150 program. • Educating our youngest customers, through the Schools Water Efficiency Program and a school incursion program that aims to make it easy for children to form positive water saving habits that will last a lifetime. The program delivered a total of 471 incursions across 80 schools in the area. Alongside this was an advertising campaign targeting children with the same intent. • Contributing to environmental resilience through managing our land with high remnant biodiversity value with a biodiversity management approach, including restoring habitat for the Helmeted Honeyeater, a critically endangered species, at one of our sewer treatment plants. Through these actions we have embedded climate change considerations more deeply into our decisionmaking processes across our asset planning, water and sewerage resource planning and product delivery functions. We have also worked closely with industry colleagues to ensure our actions are aligned with broader adaptation actions undertaken across the industry. The following table outlines how each of the key actions in our new Climate Resilience Plan relates to core functional areas of our business, over the short, medium, and long term (S, M, L).

Delivering Value

WSAA core functional areas

Focus areas

Source waters

Ensuring water security

Assets

Natural environment

Customer and product delivery S

Greenhouse gas emissions reductions Preparing for, managing and recovering from emergencies

Building financial resilience

Interdependencies

Managing climateresilient assets

Supporting community and environment resilience

People and workplace

Embedding climate resilience across Yarra Valley Water

Strengthening partnerships for climate resilience

Understanding climate risks

Figure 2: Climate Resilience Plan actions in relation to core functional areas of our business, over the short, medium, and long term (S, M, L).

Yarra Valley Water Annual Report 2022-23

Environmental outcomes continued... Bulk entitlements report

Reporting obligation

Greater Yarra Victorian System - Thomson Desalination River Pool 1, 2 Project 5

Goulburn System 9

Goulburn System15

River Murray19

River Murray23

The volume of water taken by Yarra Valley Water in 2022-23

Clause 16.1(a) 159,251ML

Clause 13.1(a) 0ML

Clause 14.1(b) 7ML10,11

Clause 13.1 (b) 0ML16

0ML

Annual water allocation made available to Yarra Valley Water

Clause 16.1(b) 304,534ML

Clause 13.1(a) 1,570ML6

Clause 14.1(c) 6,482ML

Clause 13.1 (c) 10,959ML

Clause 11.1(a) 4,919ML

Clause 10.1(a) 19,530ML

Share of storage volume at 30 June 2023 for carryover

Clause 16.1(b) 384,569ML

Clause 13.1(a) 1,570ML

0ML12

4,019ML17

0ML20

6,566ML24

Compliance with the entitlement volume

Clause 16.1(c) Yes

N/A

Any assignment of water allocation or temporary/ permanent transfers of the bulk entitlement

Clause 16.1(d) Nil

Clause 13.1(b) Nil

Clause 14.1(d)13 Net 11,762ML Clause 14.1(e) Nil

Clause 13.1(d)18 Net 6,728ML Clause 13.1(e) Nil

Clause 11.1(b) Net 9,470ML21, Clause 11.1(c) Nil

Clause 10.1(b) Net 12,618ML25, Clause 10.1(c) Nil

Approval, amendment and implementation of approved metering program

Clause 16.1(e) Continued implementation3

N/A

Any amendment to the bulk entitlement

Clause 16.1(f) Yes4

Clause 13.1(c) Yes7

Clause 14.1(f) Yes14

Clause 13.1(f) Nil

Clause 11.1(d) Yes22

Clause 10.1(d) Nil

Any new bulk entitlement granted to Yarra Valley Water

Clause 16.1(g) Nil

Clause 13.1(d) Nil

N/A

Compliance with the bulk entitlement

N/A

Clause 13.1(e) Continued compliance8

N/A

Any failures to comply with any provision of the bulk entitlement

Clause 16.1(h) Nil

Clause 13.1(f) Nil

Clause 14.1(g) Nil

Clause 13.1(g) Nil

Clause 11.1(e) Nil

Clause 10.1(e) Nil

Any difficulty experienced in complying with the bulk entitlement and if so, any remedial action taken or proposed

Clause 16.1 (i)Nil

Clause 13.1(g) Nil

Clause 14.1(h) Nil

Clause 13.1(h) Nil

Clause 11.1(f) Nil

Clause 10.1(f) Nil

Delivering Value

Notes for compliance with bulk entitlements Greater Yarra System - Thomson River Pool

Goulburn System

1. Yarra Valley Water holds Greater Yarra System – Thomson River Pool Bulk Entitlement (Greater Yarra System – Thomson River Pool – Yarra Valley Water) Order 2014 – WSE000081.

9. Yarra Valley Water’s Bulk Entitlement (Goulburn System – Yarra Valley Water) Order 2012 – WSE000010 was revoked on 20 June 2023. This Bulk Entitlement provided for the progressive annual assignment of entitlement volumes as water saving works and measures from the Connections Project were completed.

2. The metropolitan retailers make water available in Tarago Reservoir to Gippsland Water under a Bulk Water Supply Agreement. This is used by Gippsland Water to supplement their Tarago Bulk Entitlement during periods of high demand. Yarra Valley Water provided 148.7ML under the Agreement in 2022-23. 3. Continued compliance with approved metering program through Bulk Water Supply Agreement between Melbourne Water and Yarra Valley Water and Melbourne Water’s System Management Rules. 4. The responsibility for making seasonal determinations for the Greater Yarra System – Thomson River Pool Bulk Entitlements changed in September 2022 from Melbourne Water as Resource Manager to Melbourne Water as Storage Manager when the Hon Harriet Shing, Minister for Water appointed Melbourne Water as Storage Manager and revoked Melbourne Water’s Resource Manager appointment. The Minister also amended the Greater Yarra System – Thomson River Pool Bulk Entitlement (Greater Yarra System – Thomson River Pool – Yarra Valley Water) Order 2014 to reflect this change.

Victorian Desalination Project 5. Yarra Valley Water holds Bulk Entitlement (Desalinated Water – Yarra Valley Water) Order 2014 – WSE000054. 6. The Hon Lisa Neville MP, Minister for Water, announced a 15GL desalinated water order for the 2022-23 year. On 22 September 2022, the Hon Harriet Shing, Minister for Water accepted advice from Melbourne Water recommending the Victorian Government cease the remainder of the 2022-23 desalination order. A total of 4,136 ML of desalinated water was delivered during 2022-23 of which Yarra Valley Water’s share was 1,570ML. 7. The Hon Harriet Shing, Minister for Water appointed Melbourne Water as Storage Manager and revoked Melbourne Water’s Resource Manager appointment in September 2022. The Minister also amended the Bulk Entitlement (Desalinated Water – Yarra Valley Water) Order 2014 to reflect this change. 8. Compliance with our Desalinated Water long term average diversion limit of 56,951ML is assessed using a 5-year rolling average diversion.

10. 7ML of the bulk entitlement was used to maintain the operational capacity of the North- South Pipeline and keep the pipeline charged for fire-fighting purposes, as allowed under clause 6.1 (b) of the Statement of Obligations (System Management). 11. Compliance with the combined annual diversion limit of 75,000ML for the holders of Bulk Entitlement (Goulburn System – City West Water, trading as Greater Western Water) Order 2012, Bulk Entitlement (Goulburn System – South East Water) Order 2012 and Bulk Entitlement (Goulburn System – Yarra Valley Water) Order 2012 is assessed using the actual measured annual diversion. Diversions are subject to clause 6.1 of Yarra Valley Water’s Statement of Obligations (System Management). 12. Yarra Valley Water’s commencement volume on 1 July 2022 was 5,287ML. At 30 June 2023, Yarra Valley Water held 0ML. 13. Yarra Valley Water has in place water management strategies to manage water allocation holdings in the River Murray and Goulburn System to maximise the value of the resources held to their customers and minimise the risk of spilling water allocation. These strategies include the transfer of allocations between Bulk Entitlement Allocation Accounts and trading water allocations. Net total trade out was 11,762ML. 14. The Bulk Entitlement (Goulburn System - Yarra Valley Water) Order 2012 was amended on 1 July 2022 to reflect the integration of City West Water and Western Water and to ensure consistency with the newly created Bulk Entitlement (Goulburn System - Yarra Valley Water) Order 2022. The amendment also revoked the Bulk Entitlement (Goulburn System - Yarra Valley Water) as at 20 June 2023 following the final issue of phase 3 allocation to this entitlement. 15. Yarra Valley Water holds Bulk Entitlement (Goulburn System – Yarra Valley Water) Order 2022 – WSE020022.

Yarra Valley Water Annual Report 2022-23

Environmental outcomes continued... 16. Compliance with the combined annual diversion limit of 75,000ML for the holders of Bulk Entitlement (Goulburn System – Greater Western Water) Order 2022, Bulk Entitlement (Goulburn System – South East Water) Order 2022 and Bulk Entitlement (Goulburn System – Yarra Valley Water) Order 2022 is assessed using the actual measured annual diversion. Diversions are subject to clause 6.1 of Yarra Valley Water’s Statement of Obligations (System Management).

22. The Bulk Entitlement (River Murray - Yarra Valley Water) Order 2012 was amended on 1 July 2022 to reflect the integration of City West Water and Western Water and to ensure consistency with the newly created Bulk Entitlement (River Murray - Yarra Valley Water) Order 2022. The amendment also revoked the Bulk Entitlement (River Murray - Yarra Valley Water) Order 2012 as at 20 June 2023 following the final issue of phase 3 allocation to this entitlement.

17. Yarra Valley Water’s commencement volume on 1 July 2022 was 0ML. At 30 June 2023, Yarra Valley Water held 4,019ML (3,325ML in Zone 1A and 694ML in Zone 1B).

23. Yarra Valley Water holds Bulk Entitlement (River Murray – Yarra Valley Water) Order 2022 – WSE020023.

18. Yarra Valley Water has in place water management strategies to manage water allocation holdings in the River Murray and Goulburn System to maximise the value of the resources held to their customers and minimise the risk of spilling water allocation. These strategies include the transfer of allocations between Bulk Entitlement Allocation Accounts and trading water allocations. Net total trade out was 6,728ML (4,412ML in Zone 1A and 2,316ML in Zone 1B).

River Murray 19. Yarra Valley Water’s Bulk Entitlement (River Murray – Yarra Valley Water) Order 2012 – WSE000145 was revoked on 20 June 2023. This Bulk Entitlement provided for the progressive annual assignment of entitlement volumes as water saving works and measures from Goulburn Murray Water’s Connections Project were completed. 20. Yarra Valley Water’s commencement volume on 1 July 2022 was 4,556ML (2,303ML in Zone 6 and 2,253ML in Zone 7). At 30 June 2023, Yarra Valley Water held 0ML. 21. Yarra Valley Water has in place water management strategies to manage water allocation holdings in the River Murray and Goulburn System to maximise the value of the resources held to their customers and minimise the risk of spilling water allocation. These strategies include the transfer of allocations between Bulk Entitlement Allocation Accounts and trading water allocations. Net total trade out for the River Murray was 9,470ML (4,576ML in Zone 6 and 4,894ML in Zone 7).

24. Yarra Valley Water’s commencement volume on 1 July 2022 was 0ML. At 30 June 2023, Yarra Valley Water held 6,566ML (3,240ML in Zone 6 and 3,326ML in Zone 7). 25. Yarra Valley Water has in place water management strategies to manage water allocation holdings in the River Murray and Goulburn System to maximise the value of the resources held to their customers and minimise the risk of spilling water allocation. These strategies include the transfer of allocations between Bulk Entitlement Allocation Accounts and trading water allocations. Net total trade out was 12,618ML (5,553ML in Zone 6 and 7,065ML in Zone 7).

Delivering Value

Greenhouse gas emissions and net energy consumption Our Statement of Obligations (Emissions Reduction) requires us to reduce our greenhouse gas (GHG) emissions by 64% by 1 July 2025 compared to the 2011-2016 baseline. We’ve also pledged to go beyond this target and reach net zero emissions from July 2025. This commitment is necessary as we operate against a backdrop of population growth and increased demand for our services. To measure our performance, we set a target of emitting no more than 16,190 tCO2-e (tonnes of carbon dioxide equivalents) in 2022-23. We achieved our target mostly through renewable energy use - reporting 15,910 tCO2-e for the financial year. We rely on electricity to pump and treat water and wastewater as well as power our head office.

We currently operate close to 400 network connection points which use grid electricity and this carbonintensive consumption is the largest source of our emissions. This year we used 66% renewable electricity, and we continue to look for additional ways to be more efficient, reduce consumption where possible and source an increasing amount of electricity from renewable generators. Our head office and treatment facilities are now powered by 100% renewable electricity. This year we have chosen not to purchase CACNS eligible International Certified Emission Reduction units to offset our residual Scope 1 and Scope 2 emissions. We’ve also been working with our partners and suppliers to encourage them to reduce their emissions (Scope 3) year on year.

Progress toward 2025 greenhouse gas emissions target 40000 35000 30000

tCO2-e

25000 20000 15000 10000 5000 0 2011-16

2016/17

2017/18

2018/19

2019/20

2020/21

2021/22

2022/23

Baseline

2023/24

2024/25 Target

Actual GHG emissions

Projected GHG emissions

Yarra Valley Water Annual Report 2022-23

Environmental outcomes continued... Greenhouse gas emissions (t CO2e) – scope 1 and 2 emissions The majority of our emissions profile is associated with the consumption of grid electricity for the pumping of water, and the pumping and treatment of sewage across our network. To date we have reduced our scope 2 emissions by consuming 66% renewable electricity. Our head office and treatment facilities are now powered by 100% renewable electricity with only our water and sewer network generating scope 2 emissions.

- currently we have no viable means of making direct reductions. We therefore aim to self-generate Australian Carbon Credit Units to offset them. We’ll do this through our second waste to energy facility, the Growing Carbon project in collaboration with Melbourne Water and Greater Western Water, the Upper Yarra Habitat Restoration project, and participation in the VicWater carbon offset project.

We will eliminate our scope 2 emissions from grid sourced electricity by consuming 100% renewable electricity from July 2025 across all sites. This will be achieved with the completion of our second food waste to energy facility at Lilydale, that will provide an additional 1.6 MW of generation capacity, the addition of 1.2 MW of solar generation capacity at our sites, and existing renewable sources already deployed in our portfolio.

Transport emissions are associated with petrol and diesel vehicles. We’re increasing the number of hybrid and electric vehicles in our fleet with plans to only purchase electric vehicles from July 2025 (where fit for purpose vehicles are available) and aspirations that we’ll have a fully electrified fleet by 2030. We’re also expanding our electric vehicle charging infrastructure across our facilities. Emissions from `other’ sources are mostly from natural gas heating at our Mitcham head office. This heating system is approaching end of life. We’re in the early stages of its replacement with energy efficient heat pumps powered by 100% renewable electricity, reducing our scope 1 emissions by an estimated 4%.

We have delivered energy efficiency projects to reduce our grid electricity consumption and will be continuing this program of works to further reduce consumption. Scope 1 fugitive emissions predominantly arise from the sewage treatment process and are difficult to eliminate

2022-23 result 2021-22 total emissions

Scope 1 emissions

Scope 2 emissions

Total emissions

Variance

Notes

Water treatment and supply

9,018

8,225

8,239

-8.6%

Sewage collection, treatment and recycling

7,545

2,203

4,442

6,645

-11.9%

1, 2

Transport

735

893

21.5%

Other (eg. office)

109

133

22.3%

17,407

3,243

12,667

15,910

-8.6%

Carbon Offsets (self-generated) retired

Total offsets (b)

17,407

3,243

12,667

15,910

-8.6%

Service delivery category

Total GHG emissions (a)

Net emissions (a-b) Notes:

1. Reduction due to increased penetration of renewable electricity to the grid. 2022-23 is the first-year emissions from stationary fuel use at network water and sewage pump stations have been included as Scope 1 emissions in these service delivery categories. 2. Reduction in Scope 1 emissions from lower nitrous oxide generation at our Lilydale and Brushy Creek sewage treatment plants, and increased consumption of grid sourced renewable electricity offsetting increased electricity use in pumping. 3. Response to coronavirus, particularly working from home directives, reduced transport, and office related emissions in 2021-22. Increase vehicle use resulting in increased petrol and diesel use due to staff returning to the office.

Delivering Value

Breakdown of emissions by each greenhouse gas – scope 1 and 2 emissions The predominant gas emitted is carbon dioxide associated with the consumption of grid electricity for the pumping of water and sewage across network sites.

All of our sewage treatment plants produce nitrous oxide as a by-product of the aerobic treatment process which is considered unavoidable. In the future we will be offsetting these emissions with locally generated carbon credit units that comply with the requirements of our Statement of Obligations (Emission Reduction).

The sewage treatment and sludge handling are responsible for fugitive emissions of nitrous oxide and methane.

The relatively small amount of methane and nitrous oxide associated with fuel combustion in vehicles will reduce as we increase the number of electric vehicles in our fleet.

The primary sources of methane emissions from sewage treatment process are the Wallan Sewage Treatment Plant (our only sewage treatment plant that generates methane as a product of the treatment process), and a stockpile of sewage sludge at the Lilydale Sewage Treatment Plant. Carbon dioxide (CO2)

Methane (CH4)

Nitrous oxide (N2O)

Other

Service delivery category

tonnes

t CO2e

tonnes

t CO2e

tonnes

Water treatment and supply

8,239

Sewage collection, treatment and recycling

4,519

4519

625

1,501

Transport

888

Other (eg. office)

133

13,779

625

1,506

Total GHG emissions

t CO2e tonnes

t CO2e

Notes

Notes: 1. Methane and nitrous oxide tonnes calculated from t CO2-e using AR5 GWPs (2020 -21 onwards)

Scope 3 emissions Our ambition (based on an initial estimate of our baseline) is that by 2030 we will reduce our scope 3 emissions by 66%. We also have a 2050 target of 100% reduction of our scope 3 emissions. The figures presented in the following table represent our initial estimation of our scope 3 emissions profile. Over 2023-24 we’ll complete a detailed investigation of attributable emissions outside our organisational boundary to determine relevant activities and embed methods to collect data, calculate our footprint and confirm our baseline. Once we’ve established our baseline and understand our ability to influence scope 3 emissions, we’ll develop a tactical plan to reduce our footprint.

Scope 3 emissions (t CO2e)

Notes

Commercial air travel

167

Waste disposal

218

Source

Any other scope 3 sources assessed

233,986

Total reported scope 3 emissions

234,371

Notes: 1. Estimate based on air travel spend. 2. Includes Melbourne Water, pipe network (limited to materials used in construction and maintenance), Ventia (maintenance contractor), IT suppliers, customers, and employee commuting. We’ll be seeking further guidance on boundary conditions, acceptable data collection standards and calculation methods, to ensure industry alignment.

Yarra Valley Water Annual Report 2022-23

Environmental outcomes continued... Total electricity consumption by service Service delivery category

2021-22 result (MWh)

2022-23 result (MWh)

Water treatment and supply

9,394

9,677

Sewage collection, treatment and recycling

18,927

18,127

Other (eg. Offices, depots)

1,000

1,118

Total

29,321

28,921

Notes

Notes: 1. Response to coronavirus, particularly working from home directives, reduced energy consumption at our head office in 2021-22. Staff returning to the office has resulted in an increase in electricity and natural gas use at the site . Electricity consumption has also increased due to the installation of efficient electric heat pumps replacing natural gas hot water systems, and the increase in the number of electric vehicles accessing electric vehicle charging stations provided at Mitcham head office.

2022-23 total electricity consumption by source (MWh) The electricity required to run our operations is either sourced directly (behind the meter) from our onsite renewable electricity generators or from the grid.

Self-generated electricity

In 2022-23, we self-generated renewable electricity at 6 of our sites, where 8% of all electricity we used was self-generated onsite. A further 11% of surplus power generated was exported to the grid and consumed at other sites. Net purchased electricity

Renewable - behind the meter

Renewable – from the grid

Renewable – mandatory 1

Renewable – voluntary 2

Non-renewable

Total

2,171

3,143

5,029

8,705

9,873

28,921

11%

17%

30%

34%

100%

Notes: 1. Renewable component of grid electricity. 2. Electricity sourced from the Kiamal Solar farm and Mt Gellibrand wind farms.

Delivering Value

Renewable electricity This year, 66% of our electricity requirement was supplied from renewable sources.

this renewable electricity onsite, with the surplus 6% exported to the grid and consumed at other sites.

16.7% of our electricity needs came from our food waste to energy facility at Wollert, which generated 4,817 MWh of renewable electricity. Of this, 35% was used to run the facility and the adjacent sewage treatment plant leading to a 1,450 tCO2-e reduction in emissions from grid sourced electricity.

This year our head office was again powered by 100% renewable electricity, with 22% coming directly from our solar carpark and the balance from 100% renewable electricity sourced from the grid - certified through voluntary surrender of large-scale generation certificates. In June 2023 our electric vehicle fast chargers consumed more than 2.11 MWh of renewable electricity, enough to send our vehicle fleet over 12,000 kilometers without generating emissions.

Solar systems located at our head office and 3 sewage treatment plants produced 497 MWh of renewable electricity for the year. We consumed 94% (465 MWh) of

Total renewable electricity consumption

Service delivery category

2021-22 renewable electricity 2022-23 renewable electricity consumption (MWh) consumption (MWh)

Total grid sourced

4,825

5,029

Biogas

2,921

1,706

Solar

446

465

Wind

Other

11,200

11,848

Total corporation led/ self sourced

14,567

14,073

Total renewable electricity consumption

19,392

19,048

66%

Hydroelectric

Percentage renewable electricity %

Notes

Notes: 1. The Aurora Sewage Treatment Plant was offline for part of the year, meaning we consumed less renewable electricity directly behind the meter and exported any surplus to the grid. 2. ‘Other’ relates to renewable electricity (validated by the voluntary surrender of large-scale generation certificates) that has been sourced from grid connected renewable power stations, including our food waste to energy facility at Wollert and the Kiamal Solar Farm located in Ouyen via Zero Emissions Water Ltd and the Mt Gellibrand wind farm.

Yarra Valley Water Annual Report 2022-23

Environmental outcomes continued... Total renewable electricity generation capacity

Capacity (MW)

Capacity factor

Annual Hours

Annual Capacity (MWh)

0.900

95.4%

8760

7,521

Solar

0.624

15.0%

8760

820

Wind

Other

Service delivery category Biogas Hydroelectric

Total generation capacity

1.524

8,341

Electricity generation from our Wollert food waste to energy facility was reduced due to maintenance between March and June 2023. This reduced the amount of renewable electricity we were able to generate in 2022-23 to 5,314 (MWh) - 63.7% of total generation capacity.

2,171 MWh (40.9%) was consumed behind the meter – the remainder was exported to the grid and consumed at other sites.

Total renewable electricity generated

Renewable large-scale systems Service delivery category

Renewable small-scale systems

Other

2022-23 Total by Source

Notes

4,817

221

497

1,950

3,129

221

5,314

Other

Consumed on-site

Exported

3,111

Solar

244

Wind

Other

Biogas Hydroelectric

Total renewable electricity generated

Consumed on-site

Exported

1,706

2, 3, 4

Notes: 1. 2. 3. 4.

Electricity generation from our Wollert food waste to energy facility was reduced due to maintenance between March and June 2023. This does not include allocation of 5,170 MWh under Zero Emissions Water Power Purchasing Agreement Large-scale solar system can generate more than 100kW, Small-scale system generates less than 100kW of power. Solar production was lower than stated capacity due to operation constraints that require maintenance.

Delivering Value

Fuel use and emissions Fuel is used for stationary and transport purposes.

essential to ensuring continuity of service. We’re in the early stages of the replacement of the heating system with energy efficient heat pumps powered by 100% renewable electricity.

Stationary fuel is consumed in natural gas heating at our Mitcham head office and in diesel backup generators, Buildings

Machinery

Fuel source

Energy used (MJ)

Greenhouse gas emissions (CO2-e)

Natural gas

2,594,000

133.0

Energy used (MJ)

Diesel

Total

Greenhouse gas emissions (CO2-e)

1,292,000

91.0

Total

Our goal is to transition to a zero emissions fleet and we’re offsetting our emissions from vehicles in the meantime and with more zero emission vehicles on our roads everyone will benefit from healthier neighbourhoods and cleaner air.

Greenhouse gas emissions (CO2-e)

2,594,000

133.0

1,292,000

91.0

3,886,000

224.0

To help make this transition, we’re expanding our electric vehicle charging infrastructure across our facilities. Currently we’ve 3 Tritium 75kW DC Chargers with dual charging capability, which can fast charge 6 cars at the same time plus another 8 AC electric car chargers, with an output of 7.3kW. These chargers use renewable power generated from solar panels on our purpose-built solar carpark, saving time and money for staff and the organisation. We also have AC chargers at select high use network facilities powered by renewable electricity, expanding coverage for our growing fleet of electric vehicles.

We’ve been steadily increasing the number of hybrid and electric vehicles in our fleet. We’ve currently 25 vehicles (13%) that are hybrid or fully electric, with another 29 on order that will mainly replace existing petrol and diesel fuelled vehicles. With plans to only purchase electric vehicles from July 2025 (where fit for purpose vehicles are available) – we’ve aspirations that we’ll have a fully electrified fleet by 2030. 2022-23 Fuel source

Energy used (MJ)

2021-22

2020-21

vehicles

Diesel

112

57%

112

55%

111

56%

Petrol

31%

36%

37%

Hybrid

Plug in hybrid electric

Electric

Total

198

100%

204

100%

200

100%

Yarra Valley Water Annual Report 2022-23

Environmental outcomes continued... In 2022-23, we've seen an increase in fuel use and greenhouse gas emissions as staff increasingly return to the office. Energy used (MWh)

Greenhouse gas emissions (CO2-e)

2022-23

2021-22

2020-21

2022-23

2021-22

2020-21

Diesel

2,344

1,918

2,019

594

486

512

Petrol

1,066

908

892

260

221

217

Hybrid

104

Plug in hybrid electric

3,573

2,939

2,984

893

735

747

Fuel source

Electric Total

We estimate 2,113,562 kilometres of air travel in 2022-23 with an associated emissions of 167 t CO2-e - based on the assumption that a long-haul economy class flight emits 0.079 kg of CO2 per passenger per kilometre.

Total energy use

Sustainable buildings and infrastructure

We are pursuing a pathway to electrification that will reduce our reliance on carbon intensive fuels and displace them with renewable electricity to reduce overall energy consumption, cost and emissions.

We own head offices at Mitcham and a small number of depots for operational purposes. None of these facilities or other infrastructure projects have been the subject of a recent environmental performance rating assessment.

Electricity Total energy used (MJ)

104,117,000

Fuel

Total 1,2

16,747,000 120,864,000

Notes: 1. 57% of our total energy use (68,571,952 MJ) is from renewable sources with the balance from non-renewable sources. While 66% of our electricity consumed is from renewable sources, electricity is only 86% of total energy consumed. The remaining 14% of energy consumed is through the combustion of nonrenewable fuels. 2. Tracking of FTE staff attending Mitcham head office site commenced in January 2022 and is based on security pass data and desk bookings. While YVW employs over 800 people the FTE numbers for staff attending the Mitcham head office for 2022-23 are estimated at 150 FTE. Energy use per FTE is therefore 805,760 MJ, however this measure should be considered in the context that most of our energy is consumed outside of our head office.

Delivering Value

Other statutory obligations Victorian biodiversity strategy In accordance with the state’s Protecting Victoria’s Environment - Biodiversity 2037 Strategy, we’ve been working to address biodiversity decline on our land. Following a report by Nature Glenelg Trust which classified 12 of our 190 sites as having high biodiversity value, we have commenced caring for these sites with a biodiversity approach. We’ve developed corporate targets to ensure optimum maintenance of these sites to reflect their biodiversity value. This includes better weed management, revegetation, restoration of waterway frontages and species monitoring including Environmental DNA testing. In addition to caring for our high value remnant vegetation, we have also commenced biodiversity restoration works on our land. We’ve been working with Greening Australia, Zoos Victoria, Melbourne Water, Jacobs and Spiire on plans to create 35Ha of habitat for the critically endangered Helmeted Honeyeater and Lowland Leadbeater’s Possum at our Upper Yarra Treatment Plant. We’re also constructing a conservation social enterprise to supply the Northern Growth Corridor with indigenous seedlings as part of the Wollert Community Farm project, together with our partners Whittlesea Community Connections and Melbourne Polytechnic. We have commenced a partnership with Traditional Owners/Custodians aiming to support their selfdetermined approach to Caring for Country. This year

we continued our partnership with Wurundjeri’s Narrap Rangers at our Aurora Treatment Plant, which included Narrap undertaking a cultural burn in April to regenerate endangered grasslands on site. We consider biodiversity outcomes as part of our asset planning, design, delivery, procurement, operation and maintenance activities, in accordance with our legal obligations. These include the Federal Environment Protection and Biodiversity Conservation Act 1999, Victorian Environment Protection Act 2017, Flora and Fauna Guarantee Amendment Act 2019, Catchment and Land Protection Act 1994 and State Planning Policy Framework (Clause 12.01); as well as local planning policies and council by-laws to manage noxious weeds. We take precautions to conserve important areas of biodiversity, and involve ecologists early in the preliminary decision phase of projects to complete them in a more sustainable manner. This includes conducting risk assessments, life-cycle analyses, net gain assessments and offset management plans, and preliminary flora and fauna options assessments as well as including a micro-siting process in detailed design. We liaise with stakeholders such as the Department of Energy, Environment and Climate Action (DEECA), local councils and other water utilities on a project-by-project basis to determine how best to conserve Victoria’s biodiversity. We also liaise directly with DEECA on ongoing growth and development of all native offset areas established as part of these projects.

Yarra Valley Water Annual Report 2022-23

Environmental outcomes continued... A circular economy Embracing the circular economy is a key element of our strategy, and we have made good progress towards integrating circular economy principles into our business decisions, thus contributing towards the State’s targets established in the Recycling Victoria circular economy plan. We have continued to seize opportunities to transform our treatment plants to focus on resource recovery and continued to build our recycled water network as part of our commitment to help create a circular economy for Victoria. We have progressed our showcase of the circular economy at our Aurora Sewage Treatment Plant, where we’re already manufacturing recycled water and converting food waste into clean energy. At Aurora, the work on a trial for hydrogen production has commenced, and the development of our community farm, with construction well underway. Circular economy initiatives in 2022-23 include: • Pursuing opportunities to make our supply chain more circular and diverting waste from landfill, including: • Construction of a new sewer at Rankin Street which used over 3,000 tonnes of recycled materials as pipe embedment and for access tracks and backfill. • Use of recycled crushed glass as media for bacterial treatment in wastewater onsite systems. • Re-use of 60 tonnes of ‘leftover’ aggregate from an old Melbourne Water stockpile near our construction site to repair the Bald Hill Water Reservoir site access track. • Use of recycled aggregate for the construction of an emergency release sewer structure in Blackburn. • Partnering with leading textile recovery and recycling organisation that will take our oldbranded uniforms and turn them into products like cushions and home insulation. • Partnering with the social enterprise Enable IT to recycle 615 kilograms of e-waste, and sell remaining hardware for reuse. Resulting revenue will help provide employment opportunities for disadvantaged jobseekers.

• Establishing a waste management plan to cover operational activities for Distribution Services and Facilities Management. The plan outlines our compliance obligations, waste types, classification, anticipated volumes and methods of disposal including diverting waste from landfill to recycling facilities. • Developing a tool and a carbon baseline assessment for 10 projects which identified significant opportunities to reduce carbon. We are now including the “ready to adopt” opportunities in the tender and construction phase of the projects, and running trials on the opportunities “requiring further investigation”. We’re also changing our internal processes for construction, to embed circular economy opportunities in the functional options assessment. • Partnering with the Department of Energy, Environment and Climate Action and other water authorities to identify opportunities for collaboration. • Progressing plans for our second food waste to energy facility in Lilydale, with construction to commence in the next financial year. This has received $1 million funding from Sustainability Victoria to support installation of an extra generator to increase electricity production at the site.

Delivering Value

Performance in alignment with Recycling Victoria targets and FRD24 Recycling Victoria Target Outcome

2022-23

2021-22

2020-21

9.2 (55.8%)

17.0 (85%)

2.26 (65.2%)

44.2%

10%1

34.8%

3.0 (18%)

0.4 (2%)

0.07 (2.1%)

4.3 (26.1%)

3.0 (15%)

1.21 (32.7%)

Printer cartridges collected by a 3rd party

0.01

n/a

0.06 (150 FTE)

0.17 (100 FTE)

0.013 (170 FTE)

44.2%

17%

36%

Not calculated

Contamination of standard bin contents [%]

bin audit not conducted

Number of recycled materials approved for construction

Waste to landfill from treatment plants (offices and treatment process) [tonnes]

160

182

130.9

Recycled water produced at our treatment plants (ML)4

2,515

3,259

3,838

Water beneficially reused (%)

1&3

Organic material treated at Rewaste facility (tonnes)

1&3

Waste to landfill in office (main office in Mitcham) [tonnes, %] Waste diverted from landfill – office waste recycled / composted (%) Food organics recycled in the office [tonnes] Recycled materials in office [tonnes, % of total] Printer cartridges recycling

Battery recycling [tonnes] Hard hat and uniform recycling [tonnes] Units of waste disposed to landfill normalised by FTE working in office3) [tonnes/ employee] Recycling rate [(recycled + composted)/ (total waste)] GHG emissions associated with waste disposal

1. Reduced recycling due to disposal of single use COVID-19 related items, increased construction work and reduced organic waste recycling due to low staff attendance at site. 2. Program to recycle hats and uniforms has commenced very recently. 3. Tracking of FTE staff attending Mitcham head office site commenced in January 2022 and is based on security pass data and desk bookings. FTE numbers for 2020-21 are estimated. 4. Total recycled water produced. 5. Reduction in capacity due to scheduled maintenance requiring operational shutdowns.

18.7%

29.3%

31.9%

28,2805

38,300

31,574

Note that the forecasts for recycled water produced and organic material treated will increase in coming years with the Lilydale food waste to energy facility leading to significant increases in organic material treated at ReWaste facilities, and Aurora plant upgrade leading to significant increase to recycled water volumes produced, and water beneficially reused.

Yarra Valley Water Annual Report 2022-23

Environmental outcomes continued... Percentage of biosolid mass reused 2022-23

2021-22

2020-21

Biosolids mass sent to Western and Eastern treatment plants (%)

100%

Biosolids sent to Western and Eastern treatment plants [dry tonnes]

5,036

4,518

4,672

Biosolids mass re-used (%)

Note: Our recent review has confirmed it is not currently viable for us to reuse our biosolids. We will review this again in future years.

Victorian Waterway Management Strategy We strive to deliver our services within the carrying capacity of nature and reducing our environmental footprint is a priority. To improve waterway health, we continued to manage our nitrogen discharges to Port Phillip Bay in accordance with our self-imposed nitrogen cap of 87 tonnes. In 2022-23, our discharge was 62.7 tonnes. To comply with river and aquifer health requirements as per our Statement of Obligations, we undertook regular sampling at each of our sewage treatment plants to ensure compliance with our Environment Protection Authority Victoria (EPA) Corporate Licence Requirements. In 2022-23 we continued to transition to the new EPA legislation and corresponding licence reform that is occurring by: • Undertaking a comprehensive review of all environmental risks associated with our treatment plant assets with reference to the General Environmental Duty. • Developing a site-specific tool to assess and monitor the ecological risks to waterways under dynamic conditions.

• Improving the mapping of key environmental and social waterway values within our service area and using this to inform sewer upgrade prioritisation. • Developing Environmental Management Plans (EMP) for identified high risks associated with the sewer network. This included an EMP for both dry and wet weather spills. • Developing Environmental Management Plans for our sewage and recycled water treatment plants. These inform the overall environmental management of each site and its unique environmental assets. • Developing risk management and monitoring plans for our sewage treatment plants. These plans are used to identify risks associated with each operational component of sewage treatment, identify controls to mitigate risk and then assess the effectiveness of those controls during implementation. • Undertaking a comprehensive review of groundwater at our sewage and recycled water treatment plants. The information produced informs not only how we monitor the environment for change over time, but also to assess which environmental assets are likely to be impacted by a contamination event or to demonstrate where contamination has spread from a 3rd party site. • Commencing a new waterway quality monitoring program to identify and monitor sites for indicators of wastewater run-off from septic tanks at locations associated with the Community Sewerage Program The EPA no longer requires licence holders to submit an Annual Performance Statement (APS) for licensed sewage treatment plants. Instead, the APS has been replaced by a new reporting requirement known as Permission Information and Performance Statements (PIPS). There is no set schedule or standard submission date for PIPS. We only need to submit if requested by the EPA. We’re currently undertaking preparatory work in readiness to submit a PIP in the later half of 2023 as notified by EPA. Water quality and flow data relating to waterways is reported to the Essential Services Commission, the National Pollution Inventory and the Bureau of Meteorology on an annual basis.

Delivering Value

State Environment Protection Policy (Waters) During 2022-23 we focused on developing a more detailed understanding of the subordinate legislation for the new Environment Protection Act – which has superseded the existing State Environment Protection Policy (Waters). The new Act, and its associated legislation, is a shift towards a prevention-based approach to environmental protection (rather than consequence based). We also engaged with other water authorities, environmental consultants and the EPA to ensure there was a shared understanding of our obligations under the Act. As part of this work we have been actively undertaking a gap analysis between our existing practices and the legislation requirements as well as completing risk assessments for all relevant sewerage aspects (dry weather spills, wet weather spills, odour, noise etc). In 2022-23 we delivered the following initiatives to better align our practices with the Sewerage Management Guidelines: • Deployed additional monitoring at critical locations within the sewer network - with a focus on locations at risk of wet weather overflows. • Improved mapping of all environmental and social waterway values within our service area to inform project prioritisation and operational response. • Updated wet weather prioritisation framework to be based on Australian Rainfall and Runoff 2019 guidelines (ARR2019) - which is an improved rainfall predictor that supersedes ARR1987. • Updated relevant Environmental Management Plans to document our approach to managing high risks to the environment. While the new regulations focus predominantly on a riskbased approach to environmental harm, the regulations still maintain a wet weather compliance standard (18.1% Annual Exceedance Probability). Work has progressed on several projects to minimise or eliminate noncompliant spills. We have: • Completed concept design, system performance assessment and Department of Treasury and Finance preliminary business case for the construction of the Darebin Creek Sewer Tunnel. • Continued inflow reduction projects to reduce the frequency and volume of wet weather spills in Blackburn North, Heidelberg West and Coburg. • Constructed a new emergency relief structure (ERS), including a screen to reduce impacts of sewage spills, on the Blackburn North branch sewer. • Completed detailed design for 6 ERS screen retrofits – which will reduce the impact of sewage spills.

• Completed detailed design for Eley Road main sewer duplication. • Carried out asset inspection and renewal programs across our asset base to reduce the risk of environmental impact from blockages and asset failures. We also continued to construct new sewerage infrastructure for previously unsewered areas as part of the Community Sewerage Program. This program provides wastewater services to areas of high risk of impact to waterways and public health. These areas contain a large number of failing or inappropriate septic systems and properties unable to contain wastewater within property boundaries. Approximately 10,000 properties remain on the program, to be serviced over the next 15 years. In 2022-23 new sewerage services were made available to over 1,400 properties in Monbulk, The Patch, Kallista and Eltham South. We operate a pop-up information shop for Community Sewerage Program customers in Monbulk, allowing customers in the area to learn more about the program and speak directly with specialist staff to get the answers they need to connect to the new system.

100

Yarra Valley Water Annual Report 2022-23

Our performance Financial performance indicators Performance indicator Cash interest cover Cashflow from operations before net interest and tax payments / net interest payments

2021-22 result

2022-23 Variance to result prior year

Notes

2022-23 Variance to target target

Notes

2.21 times

2.34 times

5.88%

2.20 times

6.36%

Gearing ratio Total debt (including finance leases) / total assets *100

57.51%

57.80%

0.50%

60.28%

(4.11%)

Internal financing ratio (Net operating cash flow – dividends) / capital expenditure *100

30.53%

48.74%

59.65%

36.61%

33.13%

Current ratio (Current assets / current liabilities) excluding long-term employee provisions and revenue in advance*100

40.25%*

31.16%

(22.58%)

38.87%

(19.84%)

Return on assets Earnings before net interest and tax / average total assets *100

4.26%*

4.63%

8.69%

4.13%

12.11%

Return on equity Net profit after tax / average total equity *100

4.59%*

5.39%

17.43%

4.32%

24.77%

Earnings before interest, tax, depreciation and amortisation Earnings before interest, tax, depreciation and amortisation / total revenue *100

33.04%*

35.13%

6.33%

35.29%

(0.45%)

* 2021-22 indicators have been restated due to Zero Emission Water (ZEW) fair value adjustment of $1.07 million, which was required as a result of revision in key assumptions for electricity prices subsequent to the signing of 2021-22 financial statements (refer to Note 7.4.2 – Fair Value – Financial Assets and Liabilities).

Delivering Value

101

Variance explanations 3a Increase in net operating cash flow due to higher cash receipts from customers, and deferral of 2022-23 interim dividend payments to Department of Treasury and Finance (DTF) which will be paid in 2023-24 as per the advice from DTF.

5b Return on assets is higher than target due to higher new customer contributions, completion of developer works delayed during the COVID-19 pandemic. This is partially offset by reduced water and sewage disposal revenue due to wet weather conditions.

3b Higher than budgeted cash receipts from customers and the deferral of interim dividend payments to Department of Treasury and Finance has increased the net operating cash flows compared to target.

6a and 6b Higher return on equity is due to higher new customer contributions, completion of developer works earlier than expected and completion of works delayed during pandemic.

4a and 4b Higher cash receipts from customers resulted in lower debtors combined with higher capital and operating expenditure which relates to payables at 30 June, increasing current liabilities.

102

Yarra Valley Water Annual Report 2022-23

Our performance continued... Operational performance Performance Report requirements for the suite of operational performance indicators have changed for 2022-23. These changes include: • Aligning definition to the Essential Services Commission's performance reporting framework. • Adding the following indicators:

• •

Customers awarded hardship grants Total complaints

• Removing the following indicators:

• Sewer blockages • Typical bills (households and renters) • Customers on flexible payment plans

• • •

Total net CO2 emissions Sewer spills interruptions Restoration of unplanned water supply interruptions

2021-22 result

2022-23 Variance to result prior year

Interruption time – planned water supply interruptions # Average duration of planned water supply interruptions

109.6 minutes

122.3 minutes

11.6%

127.5 minutes

-4.1%

Interruption time – unplanned water supply interruptions # Average duration of unplanned water supply interruptions

105.4 minutes

105.7 minutes

0.3%

107 minutes

-1.2%

Unplanned water supply interruptions Number of customers receiving > 5 unplanned interruptions in the year / total number of water (residential and business) customers *100

0.025

0.013

-48.6%

0.031

-59.4%

Sewer blockages * Number of sewer blockages reported in the year/ kilometres of sewer main *100

27.6

28.8

4.3%

-22.2%

Sewer spills # Number of sewer spills reported in the year/ kilometres of sewer main *100

17.0

16.6

-2.7%

21.1

-21.5%

Containment of spills # Sewer spills from reticulation and branch sewers (priority 1 and 2) contained within 5 hours / total sewer spills from reticulation and branch sewers

99.7%

99.8%

0.1%

99.0%

0.8%

Typical household bill * ^ Customer bill (residential) where the customer is an owner occupier at a property that has both water and sewer services connected

$1,018

$997

-2.1%

$1,036

-3.8%

Typical renter bill * ^ Customer bill (residential) where the customer is a renter at a property that has both water and sewer services connected

$493

$467

-5.3%

$506

-7.7%

Performance indicator

Notes

2022-23 Variance target to target

Notes

Water and sewerage network performance

Customer responsiveness

Delivering Value

2021-22 result

2022-23 Variance to result prior year

Customers on flexible payment plans * ~ Number of customers on flexible payment plans

49,702

50,488

1.6%

n/a

Customers awarded hardship grants * ~ Number of customers awarded hardship grants

6,873

7,332

6.7%

10a

n/a

Total complaints * Total number of complaints per 100 customers

0.95

0.88

-7.4%

11a

1.23

-28.3%

11b

Water quality complaints # Number of complaints per 100 customers

0.36

0.34

-4.2%

0.50

-32.0%

12b

Billing and account complaints # Number of complaints per 100 customers

0.22

0.21

-4.5%

0.34

-38.2%

13b

34.42%

22.5%

-34.7%

14a

30.0%

-25.1%

14b

Performance indicator

Notes

2022-23 Variance target to target

103

Notes

Water reuse Effluent re-use volume # Proportion of water recycled as a percentage of the volume of water produced

# Existing performance indicator - definition amended to align with Essential Services Commission definitions. * New performance indicator based on Essential Services Commission definitions. ^ A decrease in customer bills has been interpreted to be a favourable variance, as this indicator is based on customer focus rather than financial factors and reflects Essential Service Commission price determination position and water corporation’s commitment to keep bills affordable for customers. ~ An increase in customers provided with hardship assistance in these indicators has been interpreted to be a favourable variance, as this indicator is based on customer focus rather than financial factors and reflects the position that customers consistently support greater help for vulnerable customers, including those in hardship. This is also consistent with government policy.

Variance explanations 1a Increase in the planned water interruptions due to complex rail crossing projects, North-East link, and developer works which required extended water off periods. 3a & 3b Improved water reliability and renewals programs minimising multiple customer interruptions, as well as favorable weather conditions significantly decreased customers receiving >5 unplanned water supply interruptions. 4b Sewer blockages are below target due to ongoing improvements to sewer reliability and renewal programs. In addition, higher rainfall flushed the sediments and reduced the occurance of tree root infiltration into our sewers otherwise prevalent during prolonged dry periods. 5b Sewer spills are below target due to ongoing improvements to sewer reliability and renewal programs. Also, higher rainfall flushed the sediments in sewer pipelines removing potential blockages and the cause for major sewer spill events. 8a & 8b Typical household bills reduced largely due to a drop in average residential usage by 7 kilolitres this year due to continued wet weather conditions and people increasingly returning to workplaces. The price also marginally decreased on October 1 for cancellation of the remainder of the annual desalination water order.

10a Customers receiving hardship grants increased due to the deployment of multi-channel engagement campaign to raise awareness and the targeted support provided to vulnerable customers through our WaterCare Support Program. 11a & 11b Total complaints are lower due to reduced water quality complaints from fewer unplanned water interruptions, and cooler summer lead to fewer water main burst in summer and fewer bill related complaints. 12b Water quality complaints are lower than target due fewer unplanned water interruptions which temporarily affects water quality and cooler weather conditions. 13b Billing and account complaint volumes reduced due to lower high-bill enquiries as a result of reduced water consumption during a relatively cooler summer and improved call handling processes that resolved enquiries on first contact. 14a & 14b Aurora recycled water treatment plant was offline for substantial part of the year due to biological reactor and chemical dosing facility rectifications. Wallan recycled water treatment plant was running at reduced capacity due to biological reactor rectification works after aeration failure. Brushy Creek recycled water treatment plant was offline due to chemical dosing facility rectifications.

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Yarra Valley Water Annual Report 2022-23

Certification of Performance Report for 2022-23 We certify that the accompanying Performance Report of Yarra Valley Water Corporation in respect of the 2022-23 financial year is presented fairly in accordance with the Financial Management Act 1994. The Performance Report outlines the relevant performance indicators for the financial year as determined by the Minister for Water and as set out in the 2022-23 Corporate Plan, the actual and comparative results achieved for the financial year against predetermined performance targets and these indicators, and an explanation of any significant variance between the actual results and performance targets and/ or between the actual results in the current year and the previous year. As at the 28th day of August 2023, we are not aware of any circumstances that would render any particulars in the Performance Report to be misleading or inaccurate.

Sue T O’Connor Chair

Patrick J McCafferty Managing Director

Natalie Foeng Chief Financial Officer

Delivering Value

105

106

Yarra Valley Water Annual Report 2022-23

Auditor’s Report

Independent Auditor’s Report To the Board of the Yarra Valley Water Corporation Opinion

I have audited the performance report of the Yarra Valley Water Corporation (the corporation) for the year ended 30 June 2023, which comprises the: • • • • •

financial performance indicators water and sewerage network performance indicators customer responsiveness performance indicators water re-use performance indicator certification of performance report.

In my opinion, the performance report of the Yarra Valley Water Corporation for the year ended 30 June 2023 presents fairly, in all material respects, in accordance with the performance reporting requirements of Part 7 of the Financial Management Act 1994.

Basis for Opinion

I have conducted my audit in accordance with the Audit Act 1994 which incorporates the Australian Standards on Assurance Engagements. I further describe my responsibilities under that Act and those standards in the Auditor’s Responsibilities for the Audit of the performance report section of my report. My independence is established by the Constitution Act 1975. My staff and I are independent of the corporation in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to my audit of the performance report in Victoria and have also fulfilled our other ethical responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Board's responsibilities for the performance report

The Board is responsible for the preparation and fair presentation of the performance report in accordance with the performance reporting requirements of the Financial Management Act 1994, and for such internal control as the Board determines is necessary to enable the preparation and fair presentation of the performance report that is free from material misstatement, whether due to fraud or error.

Delivering Value

Auditor’s responsibilities for the audit of the performance report

As required by the Audit Act 1994, my responsibility is to express an opinion on the performance report based on the audit. My objectives for the audit are to obtain reasonable assurance about whether the performance report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian Standards on Assurance Engagements will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of this performance report. As part of an audit in accordance with the Australian Standards on Assurance Engagements, I exercise professional judgement and maintain professional scepticism throughout the audit. I also: •

•

identify and assess the risks of material misstatement of the performance report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the corporation’s internal control evaluate the overall presentation, structure and content of the performance report, including the disclosures, and whether the performance report represents the underlying events and results in a manner that achieves fair presentation.

MELBOURNE 5 September 2023

Paul Martin as delegate for the Auditor-General of Victoria

107

108

Yarra Valley Water Annual Report 2022-23

2022-23 Financial Report

110

Yarra Valley Water Annual Report 2022-23

The Directors of Yarra Valley Water Corporation present their report for the financial year ended 30 June 2023. Directors

The amount of the final dividend for the year ended 30 June 2023 will be determined after consultation between the Board, the Minister for Water and the Treasurer of Victoria.

Interim Dividend

Directors in office during the financial year were as follows. Directors were in office for the entire period, unless otherwise stated. Sue Therese O’Connor Robert Clive Skinner Patrick John McCafferty Victor John Perton Helen Lynette Thornton Karen Milward Victoria Fay Marles Ian David Hamm Ari Daniel Suss Kate Deborah Vinot

Dividends

Final Dividend

Chair Deputy Chair Managing Director

30 June 2023

30 June 2022

$18.3 million

$7.9 million

Payable on 31 July 2023

Paid on 30 June 2022

To be determined

$23.1 million Paid on 31 October 2022

In accordance with FRD 3 - Accounting for dividends we have accrued the 2023 interim dividend.

Capital repatriation A capital repatriation of $36.4 million was paid on 30 June 2022.

Particulars of the Directors’ and Corporate Secretary’s qualifications, experience and special responsibilities are set out in the Delivering Value – Our Leadership section of this Annual Report.

The Treasurer advised us on 29 June 2023 of a capital repatriation of $36.4 million. In accordance with FRD 119 - Transfers through contributed equity we have not accrued the 2023 capital repatriation.

Directors’ attendance at meetings

Review of operations

The number of Directors’ meetings and Board Committee meetings held, and the number of meetings attended by each of the Directors during the financial year is set out in the Delivering Value – Our Leadership section of this Annual Report.

During the 2022-23 financial year, Australia experienced market volatility with significant increases in inflation and multiple interest rate rises. Supply chain shortages continued along with global political unrest. These market factors have impacted us and our customers.

Principal activities

Further detail on our operations during the year ended 30 June 2023 and the results of those operations are contained in this Annual Report.

The principal activities during the course of the financial year were providing retail water supply and sewerage services and collecting trade waste within the Yarra Valley Water service area. There were no significant changes in the nature of these activities during the year.

State of affairs There were no significant changes in our state of affairs during the year ended 30 June 2023. For a discussion of the program and initiatives we rolled out this year, refer to the 2022-23 Highlights section in this Annual Report.

Events subsequent to balance sheet date In July 2023 we transferred 3,330 ML of our Greater Yarra System - Thomson River Pool entitlement to Gippsland Water. We paid a capital repatriation of $36.4 million and an interim dividend of $18.3 million on 31 July 2023.

2022-23 Financial Report

Except as provided above, no matter or circumstance has arisen since 30 June 2023 that has or might significantly affect the operations of Yarra Valley Water, the results of those operations, or Yarra Valley Water’s state of affairs in future financial years.

Environmental regulation Yarra Valley Water’s operations are subject to environmental regulation.

111

Further particulars of specific environmental performance measures are set out in the Delivery Value - Environmental Outcomes and Our Performance sections of this Annual Report.

Directors’ deeds Yarra Valley Water has entered into a deed with each Director under which it is required to provide access to its books and to maintain insurance coverage for at least 7 years after they cease to be a Director.

Licensing We hold 6 operating licences issued by the Environment Protection Authority Victoria (EPA) under the Environment Protection Act 2017 (Vic). Five licences impose conditions relating to discharges, reporting obligations and other matters concerning the operation of 5 sewage treatment plants. The sixth licence is to operate ReWaste, our food waste to energy facility at Wollert with a production capacity of 1MW. It allows for the acceptance of commercial food wastes, some of which are classed as prescribed industrial waste.

Compliance Yarra Valley Water had no breaches of a discharge licence where these exist. During 2022-23 we proactively notified the EPA of 7 unplanned discharges to waterways from 2 sewage treatment plants that do not have a discharge licence. No action was taken by the EPA.

Insurance of officers During the financial year, we paid premiums in respect of contracts to insure Directors, former Directors and Officers of Yarra Valley Water against certain liabilities. Some of the contracts of insurance prohibit disclosure of the nature of the liabilities insured and the amount of the premium.

Rounding of amounts to nearest thousand dollars The amounts in this financial report and the Annual Report have been rounded to the nearest thousand dollars, unless otherwise stated. This financial report is made in accordance with a resolution of the Directors of Yarra Valley Water on 28 August 2023.

All other conditions of the EPA’s operating licences were met in the 2022-23 financial year.

Compliance works Yarra Valley Water addressed the following to ensure continued compliance: • Ongoing works to manage odours at our ReWaste facility at Wollert and compliance to the EPA Improvement Notice issued in May 2022. Yarra Valley Water has implemented a number of actions to prevent odour, including decreasing the amount of waste received, diluting organic waste, engaging a contractor to install a biofilter, and installing permanent odour monitoring equipment at the facility. A final report was sent to the EPA on 30 June 2023 outlining how we have complied with the Notice. • As part of the decommissioning of the Monbulk Sewage Treatment Plant an updated Environmental Action Notice (EAN) was accepted by the EPA in March 2023. All requirements to meet EAN will be completed by September 2023. • Yarra Valley Water maintains an Environment Management System certified to ISO 14001: (2015).

Sue T O’Connor Chair

Patrick J McCafferty Managing Director

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Yarra Valley Water Annual Report 2022-23

Statement of comprehensive income for the year ended 30 June 2023 Note

2023 $’000

2022 $’000

Service and usage revenue

2.1

959,584

954,406

New customer contributions by developers

2.1

37,979

30,355

Developer contributed assets

2.1

77,426

48,239

Other revenue

2.1

51,496

49,152

Other income

2.2

3,117

4,019

1,129,602

1,086,171

Revenue

Total revenue Expenses Bulk water and sewerage expenses

3.1

(500,240)

(508,989)

Contract expenses

3.1

(63,572)

(56,158)

3.2.1 & 3.2.3

(60,452)

(56,047)

Environmental contribution

8.2

(47,430)

Depreciation

4.2

(102,630)

(97,232)

Amortisation

4.3

(17,954)

(17,898)

Finance costs

6.1.2

(143,183)

(132,877)

Other expenses

3.1

(61,059)

(58,680)

(996,520)

(975,311)

133,082

110,860

(39,855)

(33,365)

93,227

77,495

Salary and employee benefits expense

Total expenses Profit before income tax Income tax expense

8.1

Net profit after tax Other comprehensive income Decrease from revaluation of infrastructure assets

4.2 & 9.3

(45,417)

(59,680)

Increase from revaluation of land

4.2 & 9.3

91,167

Defined benefit superannuation plan actuarial gain

9.2

1,641

824

Deferred income tax on other comprehensive income

8.1

13,133

(2,642)

Other comprehensive income, net of tax

(30,643)

29,669

Total comprehensive income

62,584

107,164

The above statement of comprehensive income should be read in conjunction with the accompanying notes.

2022-23 Financial Report

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Balance sheet as at 30 June 2023 Note

2023 $’000

2022 $’000

Assets Current assets Cash

6.3

6,022

4,090

Receivables

5.1

168,345

173,852

Current tax receivable

8.1

4,085

Non-financial physical assets classified as held for sale

4.5

14,417

Other non-financial assets

5.3

4,886

5,819

179,253

202,263

Total current assets Non-current assets Infrastructure, property, plant and equipment

4.2

5,698,185

5,460,857

Intangible assets

4.3

176,317

179,304

Other financial assets

5.2

Other non-financial assets Defined benefit superannuation asset

5.3

4,066

1,582

3.2.3.2

13,649

12,018

Total non-current assets

5,892,228

5,653,772

Total assets

6,071,481

5,856,035

74,100

70,271

Liabilities Current liabilities Contract liabilities Current tax payable

5.5 8.1

8,755

3.2.2

23,056

22,123

Other provisions

5.6

11,064

9,861

Lease liabilities

6.1 & 6.2

Payables

5.4

122,309

95,030

Borrowings

6.1

Provisions - employee benefits

Total current liabilities

429,500

394,728

668,803

592,036

Non-current liabilities Contract liabilities Provisions - employee benefits Lease liabilities

5.5

100

225

3.2.2

3,140

2,548

6.1 & 6.2

Other financial liabilities

5.2

610

513

Payables

5.4

7,899

6,690

Deferred tax liabilities

8.1

554,444

575,594

Borrowings

6.1

3,080,000

2,973,000

Total non-current liabilities

3,646,202

3,558,580

Total liabilities

4,315,005

4,150,616

Net assets

1,756,476

1,705,419

Equity Contributed equity

9.1

414,462

384,602

Retained earnings

9.2

612,021

543,369

Asset revaluation surplus

9.3

729,993

777,448

1,756,476

1,705,419

Total equity The above balance sheet should be read in conjunction with the accompanying notes.

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Yarra Valley Water Annual Report 2022-23

Statement of changes in equity for the year ended 30 June 2023 Contributed equity $’000

Retained earnings $’000

Asset revaluation surplus $’000

Total $’000

420,967

500,677

748,356

1,670,000

77,495

9.2 & 9.3

577

29,092

29,669

Capital repatriation

9.1

(36,365)

Dividends paid

9.2

(35,380)

384,602

543,369

777,448

1,705,419

29,860

15,663

(15,663)

29,860

93,227

9.2 & 9.3

1,149

(31,792)

(30,643)

9.2

(41,387)

414,462

612,021

729,993

1,756,476

Note Balance as at 1 July 2021 Net profit after tax Other comprehensive income, net of tax

Balance as at 30 June 2022 Transfer

4.5 & 9.1

Net profit after tax Other comprehensive income, net of tax Dividends paid / payable Balance as at 30 June 2023

The above statement of changes in equity should be read in conjunction with the accompanying notes.

2022-23 Financial Report

115

Cash flow statement for the year ended 30 June 2023 2023 $’000

2022 $’000

1,025,795

997,880

1,620

3,245

Payments to suppliers and employees

(719,932)

(738,619)

Goods and services tax refunded (net)

28,884

32,353

Income tax paid

(35,031)

(41,942)

(144,006)

(133,126)

157,364

119,797

17,228

1,509

Payments for acquisition of infrastructure, property, plant and equipment

(277,475)

(264,055)

Payments for acquisition of intangible assets

(15,306)

(13,921)

Net cash outflow from investing activities

(275,553)

(276,467)

Refinancing of borrowings - inflow

567,000

514,828

Refinancing of borrowings - outflow

(425,228)

(284,100)

Developer security deposits

1,434

(571)

Principal element of lease payments

(22)

(18)

Note Cash flow from operating activities Receipts from customers Proceeds from grants

Interest and other costs of finance paid Interest received Net cash inflow from operating activities

6.3.1

Cash flows from investing activities Proceeds from sale of infrastructure, property, plant and equipment

Cash flows from financing activities

Dividends paid

9.2

(23,063)

(35,380)

Capital repatriation

9.1

(36,365)

120,121

158,394

Net increase in cash held

1,932

1,724

Cash at beginning of year

4,090

2,366

6,022

4,090

Net cash inflow from financing activities

Cash at end of year The above cash flow statement should be read in conjunction with the accompanying notes.

6.3

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 1

About this report

Introduction This section sets out the framework of our report.

Structure 1.1 Basis of accounting 1.2 Impact of COVID-19 on the 2022-23 financial report

Classification between current and non-current In the determination of whether an asset or liability is current or non-current, consideration is given to the time when each asset or liability is expected to be realised or paid. The asset or liability is classified as current if it is expected to be turned over within the next 12 months.

1.1 Basis of accounting This financial report is a general purpose financial report, consisting of the statement of comprehensive income, balance sheet, statement of changes in equity and cash flow statement and notes accompanying these statements for the period ending 30 June 2023. It has been prepared in accordance with Australian Accounting Standards, Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board, the requirements of the Financial Management Act 1994 and applicable Ministerial Directions. The financial report has been prepared on an accrual and going concern basis and is prepared on a historical cost convention, except for infrastructure, property, plant and equipment, land held for sale, derivative financial instruments and the defined superannuation asset which have been measured at fair value. The financial report of Yarra Valley Water Corporation, as an individual reporting entity for the year ended 30 June 2023, was authorised for issue in accordance with a resolution of the Directors on 28 August 2023.

Accounting policies Accounting policies are applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. The accounting policies have been consistently applied, unless otherwise stated.

Functional and presentation currency All amounts are presented in Australian dollars, unless otherwise stated, and have been rounded to the nearest thousand dollars or, in other cases, to the nearest dollar.

Comparative information In these financial statements, we have changed the classification or presentation of certain disclosures (and relevant comparative information) to improve readability by the user. This change in the presentation has not arisen as a result of the identification of errors or changes in accounting policies. Where adjustments have been made to comparative information as a result of the correction of errors and changes in accounting policies, the nature of error and its magnitude has been disclosed in line with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.

Accounting estimates We evaluate estimates and make judgements which are incorporated in the financial report based on historical knowledge and the best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data obtained both externally and within Yarra Valley Water. Judgements and estimates require assumptions to be made about highly uncertain external factors such as discount rates, probability factors, the effects of inflation, changing technology, political and social trends and climate change. There are uncertainties in the estimation process and assumptions that are valid at the time of estimation may change significantly when new information becomes available. Revisions to accounting estimates are made in the period in which the estimate is revised and also in future periods that are affected by the revision. The significant judgements made in preparing these financial statements are disclosed in the notes where amounts affected by those judgements are disclosed. Actual results may differ from these estimates. The most significant accounting estimates undertaken in preparing this financial report relate to: • The timing in satisfying performance obligations and their associated transaction price, impacting:

2022-23 Financial Report

• new customer contributions– note 2.1 • developer contributed assets – note 2.1 • other revenue – note 2.1 • accrued revenue – note 5.1 • unearned income – note 5.5 • Estimating accrued water usage and sewage disposal charges – notes 2.1 and 5.1 • Assumptions regarding CPI increases during lease and licence terms - note 2.3 • Assumptions on the likely tenure of existing staff, patterns of leave taken, future salary movements and future discount rates, impacting: • employee benefit provisions – note 3.2.2 • defined benefit superannuation fund – note 3.2.3.2 • Recognition and measurement of Software-as-aService (SaaS) arrangements – notes 4.3 and 5.3 • Asset residual values and useful lives – notes 4.2 and 4.3 • Asset impairment – notes 4.2 and 4.3 • For leases determining whether the arrangement is in substance a short-term arrangement and estimating the discount rate when not implicit in the lease – note 6.2 • Estimating the fair value of:

117

community by taking the following actions including, but not limited to: • Ensuring a strong response and putting provisions in place to continue to provide essential water and sewerage services to our customers. • Uplifting our IT network capability and supporting our employees to work in a hybrid manner. • Supporting customers experiencing financial difficulties through arrangements such as our hardship program, more time to pay arrangements and new payment plans. • Providing waivers to our trade waste customers and commercial tenants experiencing financial hardship. • Ensuring prompt payment of invoices in accordance with the government’s Fair Payments Policy. • Having a Social Procurement Strategy to support our procurement decisions.

Impact on the financial report The impacts of COVID-19 on our financial statements have been assessed by management. The areas affected are listed below. Further information has been documented where relevant under the respective note referred to: • Note 2.1 – Revenue from contracts with customers • Note 3.2.1 – Employee benefits – statement of comprehensive income

• other provisions – note 5.6

• Note 3.2.3.2 – Defined benefit superannuation asset

• contingent assets and liabilities – note 7.3 • infrastructure, property, plant and equipment – notes 4.2 and 7.4

• Note 4.2 – Reconciliation of movements in carrying values of infrastructure, property, plant and equipment

• derivative financial instruments – notes 2.2, 5.2 and 7.4

• Note 5.1.2 – Reconciliation of the expected credit loss allowance

• Assumptions on the likelihood of being able to realise deferred taxes in the future – note 8.1

1.2 Impact of COVID-19 on the 2022-23 financial report Background COVID-19 was first reported in late 2019 and had an unprecedented health and economic impact both internationally and domestically. The flow on impacts from the pandemic have continued to affect our customers, our employees and our community in various ways including labour shortages, supply chain delays, interest rate rises and inflationary pressures impacting decision making, outcomes and our overall financial results.

Impact on employees, customers and suppliers To help mitigate the impacts on our customers, employees and suppliers, we continue to support our

• Note 7.2 – Financial risk management objectives and policies • Note 7.4 – Fair value • Note 9.6 – Ex-gratia expenditure

Going concern During this period of uncertainty management continuously reviews budgets and forecasts while monitoring cash flow requirements and customer payment trends and has concluded that the going concern assumption remains appropriate. We have in place financing arrangements with the Victorian Government, refer note 7.2.3.2, with unused borrowings available to us. These financial statements have been prepared on a going concern basis and do not include any adjustments to the carrying amounts and classification of assets, liabilities and reported expenses that may otherwise be required if the going concern basis was not appropriate.

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 2 Funding delivery of our services Introduction

Structure

This section provides additional information about how we are funded and the accounting policies that are relevant for understanding the items recognised in the financial statements.

2.1 Revenue from contracts with customers 2.2 Other income 2.3 Commitments for lease and licence receivables

2.1 Revenue from contracts with customers 2023 $’000

2022 $’000

Fixed service charges

426,512

416,352

Water usage charges

389,868

398,085

Sewage disposal charges

120,643

118,820

Trade waste charges

26,915

25,917

Customer rebates

(4,354)

(4,768)

959,584

954,406

Service and usage revenue

Total

Type of service

Nature and timing of satisfaction of performance obligations, including significant payment terms

Fixed service charges

Charges for access to the water supply and sewerage systems, billed quarterly in advance to customers

Revenue is recognised over time as the customer receives access to our services

Water usage and sewage disposal charges

Charges to customers for water consumed by them and their disposal of sewage waste. Meter readings are cyclical and billed in arrears. An estimate is made at the end of the accounting period for water usage and sewage disposal by customers, refer note 5.1. This estimate is determined based on bulk water purchases from Melbourne Water less the estimated non-revenue, including bursts and leaks, water required for operational use, firefighting, unauthorised consumption/theft and meter inaccuracies

Revenue is recognised over time as the customer simultaneously receives and consumes the services

Trade waste charges

Based on the volume of trade waste disposed by customers. Volume meters are read, and appropriate charges levied per trade waste agreements. Meters are read on a cyclical basis with accounts sent on a quarterly basis

Revenue is recognised at a point in time when the service delivery period ends

Customer rebates

Service and usage revenue is impacted by customer rebates including our Arrange and Save Program, refer note 9.7

A reduction in revenue is recognised at the point in time that the rebate is applied to the customer account

Revenue recognition policies

2022-23 Financial Report

The payment in advance by customers of accounts is classified as contract liabilities, refer note 5.5. As a result of COVID-19, refer note 1.2, we saw a shift in how our water and sewerage services were used, with increased demand from residential customers and lower demand from businesses due to government imposed restrictions. As these restrictions have eased, this trend has begun to reverse but high levels of employees continue to work from home.

New customer contributions New customer contributions (NCCs) represent charges applicable when a customer builds or develops a property and connects to our water supply and sewerage infrastructure. These contributions help pay for shared infrastructure and are recognised as revenue at the point in time when we’ve met the performance obligations associated with the contribution. Performance obligations are typically recognised as being met by issuing of a statement of compliance (our consent for the relevant council to continue processing a developer’s application) or connection to services. Payments in advance are classified as contract liabilities, refer note 5.5.

Developer contributed assets Revenue from developer contributed assets (DCAs) arise where developers pay for the cost of constructing new assets and subsequently gift these assets to us. We maintain these assets in perpetuity. Revenue is recognised at the point in time when the asset has met the required performance obligations. Performance obligations are recognised as being met by issuing of a statement of compliance or acceptance of works (our acknowledgement that the assets are operational) depending upon the developer’s application and specific performance obligations. This non-cash revenue is recorded as developer contributed assets.

119

DCAs awaiting statement of compliance are classified as contract liabilities, refer note 5.5. Upon initial recognition the assets are recorded at fair value. Fair value is determined based on the construction costs advised by the developer. Whilst revenue from DCAs has increased this financial year when compared to the previous year, the construction sector is still recovering from government policy and mandates in response to COVID-19, refer note 1.2. We continue to observe unpredictable construction timeframes, with projects taking longer to satisfy performance obligations. This unpredictability has been impacted by economic factors including increased inflation and interest rates, supply chain delays and labour capacity constraints. These factors can impact the development sector’s supply and demand, developers’ ability to deliver to schedule and volume of development activity.

Other revenue

2023 $’000

2022 $’000

Other products and services

18,318

16,073

Recoverable works

13,135

11,610

Park and drainage collection fees

8,837

8,930

Information statements and applications

4,851

5,319

Waste to energy

2,528

3,406

Water trading

853

605

Other

2,974

3,209

Total

51,496

49,152

Other revenue items are recognised on an accrual basis.

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 Type of service

Nature and timing of satisfaction of performance obligations, including significant payment terms

Revenue recognition policies

Other products and services

Includes various plumbing services including new meter connections and recycled water inspection fees

Revenue is recognised at the point in time when we’ve met the performance obligations associated with the products and services, for example, issuing a statement of compliance or installing a new water meter

Recoverable works

Revenue generated from third parties reimbursing us for works we have carried out on their behalf. These works are a mixture of operating expenditure and capital items

Revenue is recognised at the point in time when we’ve met the performance obligations

Park and drainage collection fees

Billing and collection administration fees from both Melbourne Water and the Department of Energy, Environment and Climate Action for revenue collected from customers on their behalf

Revenue is recognised at the point in time parks and drainage fees are collected from customers

Information statements and applications

Fees paid to receive information statements regarding water assets or applications to carry out works on water assets

Revenue is recognised at the point in time that the application is assessed or the information statement provided

Waste to energy

Generated by our ReWaste facility at Wollert which converts food waste into renewable energy

Revenue is recognised at the point in time when we accept the waste into our facility

Water trading

Sale of water allocations in northern Victoria. Water trading revenue is impacted by the weather, which impacts demand and market pricing

Revenue is recognised at the point in time that the volume of water is deducted from our account and transferred to the account of the purchaser

Other revenue

Predominately generated from fire service revenue, council hydrant maintenance, legal settlement and sales of assets

Revenue is recognised at the point in time when we’ve met the performance obligations

2023 $’000

2022 $’000

Total revenue recognised over-time

937,023

933,257

Total revenue recognised at a point in time

189,462

148,895

1,126,485

1,082,152

Revenue from contracts with customers

Total

2022-23 Financial Report

121

2.2 Other income Other income is revenue that is not arising from contracts with customers. It is recognised on an accrual basis. Income from leases and licences is recognised in net profit in the statement of comprehensive income on a straight-line basis over the agreement term.

Notes

2023 $’000

2022 $’000

Lease and licence income

2.3

1,834

1,976

Gain on sale of land held for sale

4.5

1,222

5.2

5.2 & 7.4.2

4.2

1,990

3,117

4,019

Interest income Zero Emissions Water settlement income Gain on fair value of derivative financial instruments Impairment write-back 1 Total 1. Impairment writebacks occurred as a result of scheduled valuations for land and buildings, refer note 7.4.1.

Derivative financial instruments This relates to our investment in Zero Emissions Water Limited (ZEW). Refer to 5.2 for further details on this arrangement. We pay or receive the difference between the floating electricity price and the fixed price set under the agreement for the units of energy supplied into the National Electricity Market by the solar farm. The future settlements of Contract for Difference (CfD) are classified as derivative financial instruments. Movements in the derivative value are either recognised as a gain or as a loss. The derivative financial instrument is a liability. Refer to note 7.4.2 for more information about the judgements and assumptions used in measuring fair value determination of derivative financial instruments.

2.3 Commitments for lease and licence receivables The following table summarises the lease and licence receivables contracted for at balance date but not provided in the financial statements. Revenue for leases and licences, where substantially all risks and benefits remain with the lessors or licensors, are recognised as revenue over time. The commitments recorded below are at their nominal value and include GST. We have non-cancellable agreements with various utility bodies which use our land and buildings to house their telecommunication infrastructure. In addition to these agreements, we also have a small number of agreements with non-utility bodies which use our sites for a variety of purposes.

During the 2022 financial year we commenced negotiations with a number of the telecommunication bodies to sign new agreements to replace agreements on overhold, a number of these were finalised in the 2023 financial year. For new agreements, current market rates are applied, which may vary to historical rates. A number of our agreements are subject to rate increases based on CPI. We make assumptions about future CPI based on current market knowledge, which impacts the estimated future revenue. Non-cancellable lease and licence receivables

2023 $’000

2022 $’000

No later than one year

1,784

1,780

Later than one year and no later than 5 years

4,119

3,291

Later than 5 years

4,594

4,468

Total (GST inclusive)

10,497

9,539

Yarra Valley Water Annual Report 2022-23

122

Notes to the financial statements for the year ended 30 June 2023 3 The cost of delivering our services Introduction

Contract expenses

This section provides additional information about how our funding is applied and the accounting policies that are relevant for understanding the items recognised in the financial statements.

Contract expenses include maintenance contracts, insurance premiums and various other contracts which are expensed in the reporting period in which they are incurred.

Structure 3.1 Summary of other expenses incurred in the delivery of our services 3.2 Our People 3.2.1 Employee benefits – statement of comprehensive income 3.2.2 Employee benefits – balance sheet 3.2.3 Superannuation 3.3 Other commitments payable 3.4 Remuneration of auditors

3.1 Summary of other expenses incurred in the delivery of our services Bulk water and sewerage charges are levied by Melbourne Water for water we buy and for sewage treated at Melbourne Water’s treatment plants. Variable charges are levied in arrears and are payable on a weekly basis. Fixed charges are levied once a month and are payable on the fifteenth of the month to which they refer. Any variable charges that remain outstanding at the end of the period are accrued. Bulk water and sewerage expenses

2023 $’000

2022 $’000

Variable expenses

64,076

86,090

Fixed expenses

436,164

422,899

Total

500,240

508,989

2023 $’000

2022 $’000

Billing and revenue collection costs

8,141

8,202

Information technology costs

16,125

12,853

Electricity

4,918

5,530

Consulting services

3,896

5,704

Other expenses

Note

Impairment write down of assets to recoverable amount

4.2 & 4.3

3,645

1,005

Bad and doubtful debts

5.1.2

3,533

4,500

Government taxes, fees and contributions

3,124

2,384

Legal fees and insurance claims

2,530

1,825

Remediation works

2,000

Laboratory services

1,451

1,414

Subscriptions

1,182

1,361

Valuations

1,235

1,484

4.2 & 4.3

1,450

1,818

4.5

3,322

7,829

7,278

61,059

58,680

Write off / disposal / surrender of assets Land swap associated with assets held for sale Other expenses Total

2022-23 Financial Report

Billing and revenue collection costs

3.2 Our People

Billing and revenue collection costs include printing, postage and collection fees which are expensed in the reporting period in which they are incurred.

3.2.1 Employee benefits – statement of comprehensive income

Information technology costs Information technology (IT) costs include licences, maintenance agreements related to IT and telecommunication costs.

Remediation works The remediation works expense pertains to provisions raised for environmental related expenditure that may be required.

Other expenses This includes materials, transport and other expenses.

123

Employee expenses include all costs related to employment including wages and salaries, superannuation, fringe benefits tax, leave entitlements, termination payments and WorkCover premiums. In addition to the standard leave entitlements of our employees under legislation, our staff were temporarily provided with access to additional leave to support those dealing with COVID-19 impacts, refer note 1.2. This leave covered staff should they contract COVID-19, be caring for family who have contracted COVID-19 or who were required to take on additional caring commitments. This additional entitlement has now ceased. Termination benefits are payable when employment is terminated before normal retirement date, or when an employee accepts an offer of benefits in exchange for the termination of employment. Termination benefits are recognised when we can demonstrate commitment to terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value. Directly attributable costs for bringing an asset to the location and condition necessary for operation (such as costs of employee benefits arising directly from the construction or acquisition of the item of infrastructure, property, plant and equipment) are capitalised.

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 3.2.2 Employee benefits – balance sheet A provision is recognised for benefits accruing to employees in respect of annual leave and long service leave when it is probable that settlement will be required, and the liability is capable of being reliably measured. 2023 $’000

2022 $’000

Annual leave

2,373

2,127

Long service leave

865

518

Provision for on-costs

541

407

Annual leave

5,153

5,171

Long service leave

11,082

11,073

Provision for on-costs

3,042

2,827

23,056

22,123

Employee benefits - long service leave

2,631

2,155

On-costs

509

393

Total

3,140

2,548

Opening balance at 1 July

3,627

3,301

Additional provision

1,122

1,031

Amounts utilised during year

(1,115)

(1,017)

458

312

4,092

3,627

Employee benefits Current liabilities - provisions Unconditional and expected to settle within 12 months

Unconditional and expected to settle after 12 months

Total Non-current liabilities - provisions

Reconciliation of movement in on-cost provision

Effect of changes in discount rate and remeasurement Carrying amount at 30 June

Reconciliation of on-cost provision relates to the sum of current $3,583,000 (2022: $3,234,000) and non-current $509,000 (2022: $393,000) on-costs.

2022-23 Financial Report

125

Wages and salaries, annual leave and sick leave

Conditional long service leave

Liabilities for wages and salaries (including non-monetary benefits, annual leave and on-costs) are recognised as part of the employee benefit provision as current liabilities, because we do not have an unconditional right to defer settlements of these liabilities. The liability for salaries and wages are recognised in the balance sheet at remuneration rates which are current at the reporting date. As we expect the liabilities to be wholly settled within 12 months of the reporting date, they are measured at an undiscounted amount.

Conditional LSL is disclosed as a non-current liability. There is an unconditional right to defer the settlement of the entitlement until the employee has completed 7 years of service. This non-current long service leave is measured at present value.

The annual leave liability is classified as a current liability and measured at an undiscounted amount for those entitlements expected to be wholly settled within 12 months. Annual leave that is expected to be settled after 12 months is measured as the present value of estimated future cash flows.

3.2.3.1 Accumulation plans

No provision has been made for sick leave as all sick leave is non-vesting and it is not considered probable that the average sick leave taken in the future will be greater than the benefits accrued in the future. As sick leave is non-vesting, an expense is recognised in the statement of comprehensive income as it is taken.

A liability or asset in respect of the defined benefit superannuation plan is recognised in the balance sheet and is measured as the present value of the defined benefit obligation at the reporting date, plus unrecognised actuarial gains (less unrecognised actuarial losses) less the fair value of the superannuation fund’s assets at that date. The present value of the defined benefit obligation is based on expected future payments to the reporting date, calculated annually by independent actuaries using the projected unit credit method. Consideration is given to the expected future wage and salary levels, experience of employee departures and periods of service.

Employment on-costs such as payroll tax, workers’ compensation and superannuation are not employee benefits however contribute to the cost of employment provisions. They are disclosed separately as a component of the provision for employee benefits when the employment to which they relate has occurred.

Unconditional long service leave Unconditional long service leave (LSL) is disclosed as a current liability – even where we do not expect to settle the liability within 12 months because we don’t have the unconditional right to defer the settlement of the entitlement should an employee elect to take leave within 12 months. The components of this current LSL liability are measured at: • undiscounted value – if we expect to wholly settle within 12 months • present value – if we don’t expect to wholly settle within 12 months. The present value is impacted by historical trends of employees taking leave after 7 years of service, wage inflation estimates and discount rates. Discount rates and wage and salary growth assumptions are provided by the Department of Treasury and Finance (Victoria). There has been greater volatility in these rates over the financial year, refer note 1.2.

3.2.3 Superannuation All employees are members of either the defined benefit fund or an approved accumulation fund of their choice.

Contributions to the accumulation plans are expensed as the contributions are paid or become payable.

3.2.3.2 Defined benefit superannuation asset

Actuarial gains and losses are recognised immediately in other comprehensive income.

a. Superannuation plan information For employees who are members of the Equipsuper Superannuation Fund defined benefit plan, an agreed percentage of salaries is contributed to the fund as recommended by an actuary. Defined benefit members receive lump sum benefits on retirement, death, disablement and withdrawal. Some defined benefit members have the option of a pension benefit in certain circumstances. The defined benefit section of the plan is closed to new members. All new members of the fund receive accumulation only benefits. The Superannuation Industry (Supervision) Act 1993 (SIS) legislation governs the superannuation industry and provides the framework within which superannuation plans operate. The SIS regulations require an actuarial valuation to be performed for each defined benefit superannuation plan every 3 years, or every year if the plan pays defined benefit pensions unless an exemption has been obtained. We value our plan annually.

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 The plan’s Trustee is responsible for the governance of the plan and has a legal obligation to act solely in the best interest of plan beneficiaries. The Trustee has the following roles: • Administration of the plan and payment to the beneficiaries from plan assets when required in accordance with the plan rules. • Management and investment of the plan assets. • Compliance with superannuation law and other applicable regulations. The prudential regulator, the Australian Prudential Regulation Authority (APRA), licenses and supervises regulated superannuation plans. There were no plan amendments affecting the defined benefits payable, curtailments or settlements during the year.

b. Description of risks The plan has a number of risks which expose Yarra Valley Water. The more significant risks relating to the defined benefits are: • Investment risk – The risk that investment returns will be lower than assumed and we will need to increase contributions to offset the shortfall. • Salary growth risk – The risk that wages or salaries (on which future benefit amounts will be based) will rise more rapidly than assumed, increasing defined benefit amounts and thereby requiring additional employer contributions. • Legislative risk – The risk that legislative changes could be made which increase the cost of providing the defined benefits. • Pension risk – The risk that a greater proportion of eligible members will elect to take a pension benefit than assumed, which is generally more valuable than the corresponding lump sum benefit. Secondly, if a member elects to take a pension, the risks are the pensioner mortality will be lighter than assumed or pension increases will be greater than assumed. COVID-19, refer note 1.2 and other market volatility has increased investment risk and salary growth risk. The plan assets are invested by the Trustee in the Equipsuper Defined Benefit and cash investment options. The assets are diversified within these investment options and therefore the plan has no significant concentration of investment risk.

2022-23 Financial Report

127

c. Reconciliation of assets and obligations Fair value of Defined benefit plan assets obligation $’000 $’000 Opening balance at 1 July 2021

Net defined benefit asset $’000

33,969

(22,421)

11,548

(492)

451

(313)

138

(1,279)

172

(172)

Actuarial gains arising from changes in financial assumptions

3,277

Actuarial losses arising from liability experience

(1,174)

(3,516)

3,516

Taxes, premiums and expenses paid

(216)

216

Closing balance at 30 June 2022

29,581

(17,563)

12,018

Current service cost Interest income / (expense) Actuarial return on plan assets less interest income Contributions by plan participants

Benefits paid

Current service cost

(459)

Interest income / (expense)

1,228

(779)

449

Actuarial return on plan assets less interest income

868

Contributions by plan participants

151

(151)

Actuarial gains arising from changes in financial assumptions

621

Actuarial losses arising from changes in demographic assumptions

(33)

Actuarial gains arising from liability experience

185

(2,242)

2,242

Taxes, premiums and expenses paid

(138)

138

Closing balance at 30 June 2023

29,448

(15,799)

13,649

Benefits paid

Superannuation defined benefit expense is included in salary and employee benefits expense and is represented by the sum of current service cost, interest income and interest expense $10,000 (2022: $354,000).

The asset ceiling has no impact on the net defined benefit liability / (asset). The asset ceiling is the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.

d. Fair value plan assets as at 30 June 2023 Investment funds are measured using significant observable inputs – Level 2.

e. Plan assets 2023 %

2022 %

Australian equity

International equity

Fixed income

Property

Growth alternatives

Defensive alternatives

Cash

Total

100

Asset allocation as at 30 June 2023 is currently unavailable. Asset allocation at 31 May 2023 has been used.

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 f. Fair value of Yarra Valley Water’s own financial instruments The fair value of plan assets includes no amounts relating to: • Any of Yarra Valley Water’s own financial instruments

• Any property occupied by, or other assets used by, Yarra Valley Water

g. Actuarial assumptions to determine defined benefit cost and obligation Defined benefit cost

Defined benefit obligation

2023

2022

2023

2022

Discount rate

4.40%

1.40%

5.40%

4.40%

Expected salary increase rate

3.85%

2.95%

4.35%

3.85%

Expected pension increase rate 1

2.50%

2.00%

2.50%

1. Assumption for 30 June 2023 - 5.0% pa for first year, 3.5% for second year, 2.5% pa thereafter.

The expected salary increase and discount rate are impacted by market variables impacted by COVID-19, refer note 1.2 and other macro-economic issues. Market variables include changes to government policies, unemployment rates, inflation levels, changes in business productivity, and business and consumer confidence. In recent times we have seen greater volatility in these rates.

h. Sensitivity analysis The defined benefit obligation as at 30 June 2023 under several scenarios is presented below. Discount Rate

Base case

0.5% pa lower

0.5% pa higher

Discount rate - per annum

5.40%

4.90%

5.90%

Salary increase rate - per annum

4.35%

Defined benefit obligation ($’000) 1

15,799

16,379

15,249

Salary Rate 0.5% pa lower

0.5% pa higher

3.85%

4.85%

15,330

16,283

1. Includes contribution tax provision.

The defined benefit obligation has been recalculated by changing the assumptions as outlined above, whilst retaining all other assumptions. In accordance with AASB 119 Employee Benefits, we apply high quality bond rates to discount postemployment obligations.

No asset and liability matching strategies have been adopted by the plan.

2022-23 Financial Report

129

i. Funding arrangements

3.3 Other commitments payable

The Equipsuper Contribution and Funding Policy provides for a review of the financial position of the plan each 6 months, as at 30 June and 31 December, with Yarra Valley Water’s contribution rate comprising a long-term contribution rate and an adjustment to meet the financial objective of a funding ratio of 105%.

Payments for licenses where substantially all the risks and benefits remain with the licensor are charged as expenses in the period in which they are incurred.

The target funding ratio reflects the proportion of salary related benefits and the allocation to ‘growth’ assets for the plan. The funding ratio is the ratio of assets to accrued liabilities, being the greater of vested benefits and the present value of past membership benefits. Where the funding ratio is greater than 100%, the financing objective is to achieve the target funding ratio over 5 years. Where the funding ratio is less than 100% the primary financing objective is to achieve 100% over 3 years and the target funding ratio over 5 years. In the most recent review of the financial position as at 31 December 2022, the actuary recommended continuing our contribution rate of nil. The next review of the plan’s financial position and our contribution rate is due at 30 June 2023. This review will occur post 30 June once the required information becomes available.

2023 $’000

2022 $’000

Not later than one year

109

Later than one year and not later than 5 years

149

Greater than 5 years

402

420

Total (GST inclusive)

660

578

Contractual commitments are disclosed in note 4.6 and environmental contributions in note 8.2.

3.4 Remuneration of auditors 2023 $’000

2022 $’000

We continue to contribute salary sacrifice contributions and at the required rates for accumulation members.

Financial statements - Victorian Auditor-General’s Office

235

223

j. Expected contributions

Internal audit - Deloitte Touche Tohmatsu

188

Internal audit - Pitcher Partners

278

423

501

Employer contributions for the financial year ending 30 June 2023 are expected to be nil.

k. Maturity profile of defined benefit obligations The weighted average duration of the defined benefit obligation as at 30 June 2023 is 6 years (2022: 7 years). $’000 29 June 2024

1,942

29 June 2025

2,020

29 June 2026

1,892

30 June 2027

1,930

29 June 2028

2,137

Following 5 years

9,978

Total

Disclosure only includes auditors involved in the audit of financial statements or financial controls. Our internal auditors changed from Pitcher Partners to Deloitte Touche Tohmatsu in the 2023 financial year.

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 4 Key assets available to support output delivery Introduction

Structure

We control infrastructure and other assets that are used to fulfil our objectives and carry out our activities. They represent the key resources that have been entrusted to us to be utilised for delivery of those outputs.

4.1 Total infrastructure, property, plant and equipment: carrying amount 4.2 Reconciliation of movements in carrying values of infrastructure, property, plant and equipment 4.3 Intangible assets 4.4 Net gain/loss on disposal of non-current physical assets 4.5 Non-financial physical assets classified as held for sale 4.6 Contractual commitments payable.

4.1 Total infrastructure, property, plant and equipment: carrying amount Gross carrying amount

Accumulated depreciation

Net carrying amount

2023 $’000

2022 $’000

2023 $’000

2022 $’000

2023 $’000

2022 $’000

Infrastructure

4,771,711

4,536,230

4,771,711

4,536,230

Land

648,371

638,591

648,371

638,591

Buildings

34,039

33,757

(3,115)

(1,602)

30,924

32,155

Plant and equipment

57,142

56,647

(32,301)

(28,446)

24,841

28,201

Leasehold improvements

(10)

(7)

Right of use asset

(42)

(21)

222,256

225,591

222,256

225,591

5,733,653

5,490,933

(35,468)

(30,076)

5,698,185

5,460,857

At fair value

At cost Capital works in progress Total

2022-23 Financial Report

131

4.2 Reconciliation of movements in carrying values of infrastructure, property, plant and equipment Leasehold improvements $’000

Right of use assets $’000

Capital works in progress $’000

Total $’000

Infrastructure $’000

Land $’000

Buildings $’000

Plant and equipment $’000

4,282,800

544,236

33,553

24,661

326,988

5,212,311

Additions 1

315,207

Transfers

403,664

1,912

204

10,329

(416,146)

(424)

(1,310)

(1,734)

Depreciation

(90,130)

(1,602)

(5,479)

(3)

(18)

(97,232)

Impairment (write-down) / write-back of assets to recoverable amount

1,676

(458)

1,218

Revaluation increase / (decrease) recognised in equity

(59,680)

90,767

31,087

4,536,230

638,591

32,155

28,201

225,591

5,460,857

Additions 1

386,878

Transfers

375,475

9,780

282

4,650

17 (390,204)

(418)

(1,076)

(1,494)

Depreciation

(94,159)

(1,513)

(6,934)

(3)

(21)

(102,630)

Impairment write-down of assets to recoverable amount

(9)

Revaluation decrease recognised in equity

(45,417)

Carrying amount at 30 June 2023

4,771,711

648,371

30,924

24,841

222,256

5,698,185

Balance at 1 July 2021

Write off / disposal of assets

Carrying amount at 30 June 2022

Write off / disposal of assets

1. Additions include transfers from work in progress in note 4.3

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 Initial recognition Infrastructure, property, plant and equipment are measured initially at cost and subsequently revalued at fair value less accumulated depreciation and impairment losses, where applicable. Where an asset is acquired for no or nominal cost, the cost is its fair value at the date of acquisition. The cost of constructed non-financial physical assets includes the cost of all materials used in construction, direct labour on the project and appropriate proportion of variable and fixed overheads. We have a capitalisation threshold of greater than $100 exclusive of GST and the asset must be used for more than one reporting period.

Subsequent measurement Infrastructure, property, plant and equipment are subsequently measured at fair value less accumulated depreciation and impairment. Fair value is determined with regard to the asset’s highest and best use (considering legal or physical restrictions imposed on the asset, public announcements or commitments made in relation to the intended use of the asset) and is summarised by asset category. Refer note 7.4 for fair value disclosures.

debit in the asset revaluation surplus up to the value of the previous decrement. Any excess is recognised as an expense. Revaluation increases and revaluation decreases relating to individual assets within a class of infrastructure, property, plant and equipment are offset against one another within that class but are not offset in respect of assets in different classes. Assumptions in respect of revaluations can be found in note 7.4.

Depreciation The depreciable amount of all non-current physical assets, excluding freehold land and Crown land, is depreciated on a straight-line basis over their useful lives, commencing from the time the asset is held ready for use. Typical estimated useful lives for the different asset classes for current and prior years are included in the table below: Class of fixed asset Buildings

Useful life 5 to 100 years

Revaluations

Infrastructure assets:

In accordance with FRD 103 Non-Financial Physical Assets, in measuring the fair values of non-financial assets, we engage independent valuers for scheduled valuations every 5 years or earlier if interim indices suggest there has been a material movement. Scheduled valuations occurred in June 2021 for land and buildings, refer note 7.4.1. Between scheduled valuations we apply VGV market indices to estimate fair value and make an adjustment if values have moved more than 10%. Infrastructure assets are measured at fair value every year.

• Water meters

10 to 15 years

• Odour control facilities

10 to 30 years

• Water tanks, reservoirs and sewer treatment plants

3 to 100 years

• Pumping and pressure reducing stations and flow control facilities

10 to 100 years

Revaluations are performed with sufficient regularity so that the carrying amounts do not differ materially from those that would be determined using fair values at the end of the reporting period. Revaluation increments are credited directly to equity in the asset revaluation surplus, except where a revaluation decrement for that class of asset was previously recognised as an expense. The increment is recognised as revenue up to the value of the previous expense. Any excess is recognised in the assets’ revaluation surplus. Revaluation decrements are recognised immediately as an expense, except where a revaluation increment for that class of asset was previously recognised in the asset revaluation reserve. The decrement is recognised as a

• Water and sewer mains

100 years

• Other (including smaller assets within infrastructure assets above)

1 to 100 years

Plant and equipment

2 to 25 years

The cost of a leasehold improvement and right of use asset is capitalised and depreciated over the shorter of the estimated remaining term of the lease or their estimated useful lives. The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at each balance sheet date. There have been no material changes to asset category useful lives as at 30 June 2023.

2022-23 Financial Report

Impairment of non-financial assets Infrastructure, property, plant and equipment and intangible assets with finite useful lives are assessed annually for indications of impairment. Whenever there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Physical, economic and environmental factors are taken into consideration in assessing useful lives of assets, such as asset condition and obsolescence, technology changes, capital planning and renewals, and climate related risks. Where an asset’s carrying value exceeds its recoverable amount, an impairment loss is recognised in net profit in

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the statement of comprehensive income for the excess amount, except to the extent that the write-down reverses an asset revaluation reserve amount applicable to that asset. The recoverable amount of assets held primarily to generate net cash inflows is measured at the higher of the present value of future cash flows expected to be obtained from the asset and fair value less costs to sell. Other than the impairment write-downs already recognised within this note in the financial statements, there are no other material indicators of impairment at the time these financial statements were authorised for issue.

4.3 Intangible assets Intangible assets represent identifiable non-monetary assets without physical substance. Intangible assets acquired are initially recognised at cost.

LGCs $’000

Intangible works in progress $’000

Total $’000

41,860

46,170

184,986

12,847

Transfers

13,876

(13,921)

Surrender of assets

(84)

Impairment write-down of assets to recoverable amount

(547)

Amortisation expense

(17,898)

96,917

37,838

44,549

179,304

Additions 1

18,608

Transfers

15,259

(15,306)

Surrender of assets

(5)

Impairment write-down of assets to recoverable amount

(3,636)

Amortisation expense

(17,954)

96,917

35,143

44,215

176,317

Water entitlements $’000

Software $’000

96,917

Additions 1

Balance at 1 July 2021

Carrying amount at 30 June 2022

Carrying amount at 30 June 2023

1. Additions include transfers to work in progress in note 4.2

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Notes to the financial statements for the year ended 30 June 2023 Water entitlements

Software

Bulk entitlements are issued by the Minister for Water and registered in the Victorian Water Register. In accordance with AASB 138 Intangible Assets and FRD 109 - Intangible assets water entitlements are recognised at cost where cost can be reliability measured and recognised as an intangible asset on the balance sheet. Bulk entitlements have an indefinite useful life and are tested annually for impairment. The recoverable value of water entitlements is calculated as the fair value less cost to sell. Fair value is determined by valuing the water shares on the Victorian Water Register.

Costs incurred for the development of software code that enhances or modifies, or creates additional capability to, existing on-premise systems and meets the definition of and recognition criteria for an intangible asset are recognised as intangible software assets.

We contributed $100m towards the cost of the Goulburn-Murray Water Connections Project. In exchange for this contribution, we were entitled to a one-ninth share of the progressive water savings generated by Stage 1 of the Connections Project on an ongoing basis (temporarily provided in the form of Provisional Bulk Entitlements). Stage 1 was completed in October 2020. In exchange for access to the 3 Melbourne metropolitan water retailers’ Bulk Entitlements from the Melbourne water supply system, 4 regional urban water businesses (Barwon Water, South Gippsland Water, the former Western Water and Westernport Water) made contributions of $9.3m to the retailers, with our share being $3.1m. The investment is therefore recognised at its net value ($100m less $3.1m). Our Provisional Bulk Entitlements were revoked on 20 June 2023. On 1 July 2022, Yarra Valley Water was issued Enduring Bulk Entitlements which entitle it to 30.5 GL of water shares, made up of a mix of high reliability (19.3GL) and low reliability (11.2GL) water shares from trading zones 1A Goulburn, 1B Goulburn, 6 Murray and 7 Murray. Yarra Valley Water intends to hold these water entitlements for water supply security purposes. The Enduring Bulk Entitlements were issued as a result of our participation in the Connections Project and the revocation of the Provisional Bulk Entitlements. The Provisional Bulk Entitlements cost at 30 June 2022 (which is the $100m less $3.1m) has been recognised as the Enduring Bulk Entitlement cost at 30 June 2023. Yarra Valley Water has bulk entitlements to the Victorian Desalination Project and Greater Yarra System Thomson River Pool. The cost of these entitlements cannot be reliably measured and therefore are not recorded on the balance sheet as an intangible asset.

Software as-a-Service (SaaS) arrangements are service contracts providing us the right to access the cloud provider’s application software over the contract period. As such we do not receive a software intangible asset at the contract commencement date. A right to receive future access to the supplier’s software does not, at the contract commencement date, give the customer the power to obtain the future economic benefits flowing from the software itself and to restrict others’ access to those benefits. We have made the following key judgements that may have the most significant effect on the amounts recognised in the financial statements: • Determination of whether configuration and customisation services are distinct from the SaaS access Implementation costs including costs to configure or customise the cloud provider’s application software are recognised as operating expenses as the costs do not meet the recognition criteria under AASB 138 Intangible Assets. Where the SaaS arrangement supplier provides both configuration and customisation services, judgement has been applied to determine whether each of these services are distinct or not from the underlying use of the SaaS application software. Distinct configuration and customisation costs are expensed as incurred as the software is configured or customised (i.e. upfront). Non-distinct configuration and customisation costs are expensed over the SaaS contract term. Non-distinct customisation activities significantly enhance or modify a SaaS cloud-based application. Judgement has been applied in determining whether the degree of customisation and modification of the SaaS cloud-based application is significant or not. Configuration and customisation activities undertaken in implementing SaaS arrangements which are considered not to be distinct from the access to the SaaS application software over the contract term are recognised as prepayments and recognised over the contract term.

2022-23 Financial Report

• Capitalisation of configuration and customisation costs in SaaS arrangements In implementing SaaS arrangements, we have developed software code that either enhances, modifies or creates additional capability to the existing owned software. This software is used to connect with the SaaS arrangement cloud-based application. Judgement has been applied in determining whether the changes to the owned software meets the definition of and recognition criteria for an intangible asset in accordance with AASB 138 Intangible Assets. An internally generated intangible asset arising from a development project is recognised only if all the following are demonstrated: • The technical feasibility of completing the intangible asset so that it will be available for use or sale. • The intention to complete the intangible asset and use or sell it. • The ability to use or sell the intangible asset. • How the intangible asset will generate probable future economic benefits. • The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset. • The ability to measure reliably the expenditure attributable to the intangible asset during its development. Costs incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefits will flow to us.

Large-scale generation certificates (LGCs) Large-scale generation certificates (LGCs) are megawatt hours (MWh) of net electricity generated by a renewable energy generation system. We generate LGCs from our ReWaste facility at Wollert and solar carpark and we purchase LGCs at a set price under the arrangement with Zero Emissions Water (ZEW), refer note 5.2. LGCs are recognised as intangible assets at cost as per FRD 109 - Intangible assets, and are not subject to amortisation, as they have an indefinite life. LGCs can be surrendered to meet our energy targets. We use our LGCs in 2 ways: • Mandatory use of renewable energy under the Large-scale Renewable Energy Target. • Voluntary surrender of LGCs to meet emissions reduction targets.

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Amortisation Intangible assets with finite useful lives are amortised on a straight-line basis over the asset’s useful life. Amortisation begins when the asset is available for use. That is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least annually, at the end of each annual reporting period. Intangible assets with indefinite useful lives are not amortised. There has been no change to useful lives during the current financial year. Class of fixed asset Software

Useful life 4 to 10 years

LGCs and water entitlements

indefinite

Impairment Intangible assets that have an indefinite useful life and intangible assets not yet available for use are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Intangible assets with finite useful lives are tested for impairment whenever an indication of impairment is identified.

4.4 Net gain/loss on disposal of noncurrent physical assets Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in net profit in the statement of comprehensive income. When significant revalued assets are sold, amounts included in the asset revaluation surplus relating to that asset are transferred to retained earnings. 2023 $’000

2022 $’000

Gain / (loss) on sale of infrastructure, property, plant and equipment

1,761

(2,991)

Total

1,761

(2,991)

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 4.5 Non-financial physical assets classified as held for sale Assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell, as their carrying amount will be recovered principally through a sale transaction, rather than through continuing use. To be classified as being held for sale, we must consider that the sale is highly probable, that the asset is available for immediate sale in its present condition and the sale is expected to be completed within 12 months from the date of classification as an asset held for sale. Assets are not depreciated or amortised while they are classified as held for sale. Assets classified as held for sale are classified as current assets. Following the land swap with Banyule City Council in the 2022 financial year, we settled the sale of land at Ivanhoe with Development Victoria in July 2022. Over the 2 year period, we recognised a net expense of $2.1m, associated with the land swap and sale, refer notes 2.2 and 3.1. The transaction will result in a positive community outcome including larger parkland in a better location for local residents, to be developed in the future and at least 10% affordable housing being proposed by Development Victoria in its future development.

5 O ther assets and liabilities Introduction This section sets out any other assets and liabilities that arose from our controlled operations.

Structure 5.1 Receivables 5.1.1 Ageing analysis and impairment of contractual receivables 5.1.2 Reconciliation of the expected credit loss allowance 5.2 Other financial assets and liabilities 5.3 Other non-financial assets 5.4 Payables 5.4.1 Ageing analysis of contractual payables 5.5 Contract liabilities 5.6 Other provisions

5.1 Receivables

4.6 Contractual commitments payable Significant contractual expenditure arising from contracts are disclosed at their nominal value and inclusive of goods and services tax. Our commitments include growth works and mains renewals for both water and sewer. Total expenditure contracted for at balance date but not provided for in the financial statements:

Note

2023 $’000

2022 $’000

87,262

106,392

82,675

68,394

5,438

5,549

(10,052)

(9,657)

3,005

3,132

168,345

173,852

Contractual receivables Trade receivables debtors Contract assets accrued revenue

2023 $’000

2022 $’000

Not later than one year

275,490

209,796

Less: allowance for expected credit losses

Later than one year and not later than 5 years

206,093

321,049

Statutory receivables

Greater than 5 years

Total (GST inclusive)

481,644

530,893

2.1

Other receivables

GST receivables Fringe benefits tax receivables Total

5.1.2

2022-23 Financial Report

Contractual receivables related to goods and services provided to customers, are classified as financial instruments and categorised as ‘loans and receivables.’ They are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial measurement they are measured at amortised cost using the effective interest method, less any expected credit losses.

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revenue are all recognised as income when the service has been provided. An accrual is recognised to account for water and sewage services not billed at the end of the period. This is calculated using the volume of water purchased from Melbourne Water to the end of the period less the estimated non-revenue water. Statutory receivables, such as amounts owing from the Victorian Government, goods and services tax (GST) input tax credit recoverable and fringe benefits receivables, are recognised and measured similarly to contractual receivables (except for credit losses) but are not classified as financial instruments because they do not arise from a contract.

Accrued revenue is recognised for water usage and sewage disposal as well as other works and services that have been rendered to balance date but not yet invoiced. Water usage charges, sewage disposal charges, trade waste charges, recycled water charges and water trading

5.1.1 Ageing analysis and impairment of contractual receivables

2023

Not Aged $’000

Expected credit loss rate

1 to 21 days 1 $’000

22 to 60 days $’000

61 to 89 90 to 180 days days $’000 $’000

Over 180 days $’000

3.43%

8.51%

15.92%

29.63%

38.16%

Total $’000

Trade debtors Not past due

48,865

Past due

16,721

3,749

5,669

12,258

38,397

Allowance for expected credit losses

(1,674)

(1,423)

(597)

(1,680)

(4,678)

(10,052)

Net trade receivables - debtors

47,191

15,298

3,152

3,989

7,580

77,210

Accrued revenue

82,675

Other receivables

8,460

Total receivables

91,135

47,191

15,298

3,152

3,989

7,580

168,345

1. The 1 to 21 days category includes customers who have renegotiated arrangements and payment terms as a consequence of needing extra support.

2022

Not Aged $’000

Expected credit loss rate

1 to 21 days 1 $’000

22 to 60 days $’000

61 to 90 days $’000

91 to 180 days $’000

Over 180 days $’000

2.83%

5.03%

11.67%

25.65%

31.61%

Total $’000

Trade debtors Not past due

58,558

Past due

21,875

4,447

6,990

14,522

47,834

Allowance for expected credit losses

(1,655)

(1,100)

(519)

(1,793)

(4,590)

(9,657)

Net trade receivables - debtors

56,903

20,775

3,928

5,197

9,932

96,735

Accrued revenue

68,394

Other receivables

8,723

Total receivables

77,117

56,903

20,775

3,928

5,197

9,932

173,852

1. The 1 to 21 days category includes customers who have renegotiated arrangements and payment terms as a consequence of needing extra support.

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Notes to the financial statements for the year ended 30 June 2023 All contractual receivables are recognised at the amount’s receivable less any provision for impairment of receivables. Credit is generally allowed for a period of 20 days. The collectability of debt is assessed each accounting period for usage and other charges. Bad debts are written off when determined uncollectable, in accordance with delegation authorities and recognised in operating expenses, note 3.1. Loans and receivables are measured at amortised cost using the effective interest rate method less any impairment.

5.1.2 Reconciliation of the expected credit loss allowance The expected credit loss allowance is calculated based on debtor days and we then apply an expected default rate based on historical expected credit losses and forward looking estimates. When estimating the expected credit loss we incorporate assumptions which consider: • Specific management actions on how we respond to overdue accounts. • Our observations of customer behaviours on payment times. • Interest rates. • Inflation rates. • Asset prices in equity and property markets. • Unemployment levels. The volatility brought about by COVID-19, refer note 1.2 and our amended collection practices is likely to continue. Should macroeconomic assumption change in the future, it could have a material impact on our allowance for doubtful debts in subsequent years. Credit risk is disclosed in note 7.2.3.3.

Note Opening balance 1 July

2023 $’000

2022 $’000

(9,657)

(8,417)

Write-offs recognised as an expense

9.7

3,138

3,260

Net provision movements including bad debts recovered

3.1

(3,533)

(4,500)

(10,052)

(9,657)

Closing balance 30 June

5.2 Other financial assets and liabilities Yarra Valley Water is one of 12 water corporation members of Zero Emissions Water Limited (ZEW), a public company limited by guarantee. ZEW’s substantial objective is to acquire electricity, contracts for difference and other derivative products in relation to electricity, and/or green products from an energy and emissions reduction facility in Victoria and in turn supply these products to its members. This vehicle provides the opportunity for water corporation members to collaboratively promote energy and emission reduction initiatives in Victoria and to reduce emissions. On 30 October 2018, a Members’ Agreement was entered into between the water corporations and ZEW in order to regulate their rights and obligations as members of ZEW and as participants in the project. The Members’ Agreement establishes the operating activities of ZEW and the decision making responsibilities of ZEW directors. Under the Members’ Agreement, Yarra Valley Water’s liability as a member is limited to $10 in the event of a winding up. On 30 October 2018, ZEW entered into an 11-year Power Purchasing Agreement (PPA) with a solar farm energy generator, whereby ZEW will act as a central intermediary between the energy generator and the water corporations. The PPA contains a Contract for Difference (CfD) payment mechanism in respect of electricity generated by the facility and the sale and supply of large-scale generation certificates (LGCs) from the facility. Yarra Valley Water has an obligation to purchase its percentage of energy allocation under the Members’ Agreement, via the CfD derivative. As required by Australian accounting standards, Yarra Valley Water has assessed the nature of its relationship with ZEW, and has concluded that it does not have control, joint control or significant influence over ZEW. Yarra Valley Water will account for its investment in ZEW as a financial instrument within the scope of AASB 9 Financial Instruments. ZEW is a related party of Yarra Valley Water due to our membership in ZEW. The Members’ Agreement specifies that ZEW may call on us to make a loan available to ZEW amounting to $124,726.37. The loan, if requested by ZEW, would meet the definition of a financial asset as it gives rise to a contractual right for us to receive cash from ZEW at the end of the loan term. At 30 June 2023, ZEW had requested and received a loan payment of $11,000. As this loan is concessional it has been treated as an investment in ZEW and measured at cost.

2022-23 Financial Report

On 22 January 2021, the conditions precedent in the PPA was completed and the CfD derivative was recognised as a financial liability measured at its fair value. Subsequent changes in the derivative’s fair value have been recognised in profit and loss, refer note 2.2. Refer to note 7.4.2 for more information about the judgements and assumptions used in measuring fair value determination of the derivative financial instrument. The PPA includes minimum performance requirements. These were not met in the 2022 calendar year due to ongoing outages of the synchronous condenser. As a result members became entitled to damages in the form of cash and entitled to purchase additional LGCs, which were received in February 2023, refer notes 2.2 and 4.3. The financial impact of the Members’ Agreement with ZEW has resulted in increased revenue and expenses, and the recognition of a derivative financial instrument and LGCs as intangible assets.

Note Investment in ZEW (asset) Derivative financial instrument (liability)

7.4.2

2023 $’000

2022 $’000

(610)

(513)

5.3 Other non-financial assets Other non-financial assets are predominantly made up of prepayments which represent payments in advance of receipt of goods or services or where part of the expenditure is made in one accounting period covering a term extending beyond that period. This includes insurances, IT subscriptions and maintenance agreements, SaaS arrangements, refer note 4.3 and various other subscriptions. Where assets are not wholly expended in the 12 months they have been treated as non-current.

139

5.4 Payables 2023 $’000

2022 $’000

14,361

18,615

106,608

75,300

1,340

1,115

122,309

95,030

Security deposits

7,899

6,690

Total non-current

7,899

6,690

130,208

101,720

Current Contractual payables Trade payables Accruals Security deposits Total current Non-current

Total

Payables and accruals Trade payables and accruals are recognised for future amounts to be paid in respect of goods and services received. The amounts are unsecured and are usually paid between 14 to 30 days from the date the invoice is received. Contractual payables are classified as financial instruments and categorised as financial liabilities at amortised cost. Trade payables and accruals represent liabilities for goods and services provided to us prior to the end of the financial year that are unpaid and arise when we become obligated to make future payments in respect of the purchase of those goods and services. Security deposits predominately relate to capital works.

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Notes to the financial statements for the year ended 30 June 2023 5.4.1 Ageing analysis of contractual payables

Not Aged $’000

Less than 1 month $’000

1 to 3 months $’000

3 to 12 months $’000

Over 12 months $’000

Total $’000

14,360

14,361

106,608

1,340

7,899

9,239

107,948

14,360

7,899

130,208

18,463

152

18,615

75,300

1,115

6,690

7,805

76,415

18,463

152

6,690

101,720

Note

2023 $’000

2022 $’000

4,892

3,262

2.1

23,593

21,306

2.1 & 2.2

45,015

45,228

600

475

74,100

70,271

Developer contributions

100

225

Total non-current

100

225

74,200

70,496

2023 $’000

2022 $’000

Balance at 1 July

70,496

60,414

Revenue recognised during the reporting period

(45,008)

(44,033)

Increase in contract liabilities

48,712

54,115

Closing balance at 30 June

74,200

70,496

2023 Trade payables Accruals Security deposits Total 2022 Trade payables Accruals Security deposits Total

5.5 Contract liabilities

Current Grant income Customers paid in advance Unearned DCA, NCC, recoverable works and licence income Developer contributions Total current Non-current

Total

2022-23 Financial Report

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Government grants

5.6 Other provisions

Government grants are recognised once reasonable assurance has been reached that we will comply with the conditions attached to them and that the grants will be received. Government grants of a revenue nature are recognised as deferred income until earned. Government grants related to assets are recognised in the balance sheet by deducting the grant in arriving at the carrying amount of the asset, thereby incurring a reduced depreciation charge.

Provisions are recognised when we have a present legal or constructive obligation because of past events, for which it is probable that an outflow of economic benefits will result, and that outflow can be reliably measured.

Customers paid in advance Customers paid in advance represents payments received from customers in advance of the provision of goods or services or any legal or constructive obligation required to be performed by us to settle the terms of receipt of income. Predominately these relate to water and sewerage services. We will recognise these advance payments once we have performed the performance obligations associated with the payments.

Unearned DCA, NCC, recoverable works and licence income Unearned income represents developer contributed assets and payments received for new customer contributions, application fees and lease and licence income where performance obligations associated with the payment are outstanding.

Developer contributions Unearned developer contributions represent amounts received from developers for the reimbursement of costs that will be incurred by us when we construct assets to service new urban growth. These payments will be recognised as revenue at the point in time that we have completed the performance obligations agreed with the developer.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. The recognition of provisions requires significant estimates and assumptions such as requirements of the relevant legal and regulatory frameworks, timing, cost estimation, legal disputes and climate related risks. These uncertainties may result in future actual expenditure differing from the amounts currently provided. Provisions are periodically reviewed and updated based on the facts and circumstances available at the time. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows, using a discount rate that reflects the time value of money and the risks specific to the provision. When some or all of the economic benefits required to settle a provision are expected to be received from a third party, the receivable is recognised if it is virtually certain that economic benefits will be received, and their amount can be measured reliably. Our provisions are related to compulsory land and easement purchases, environmental remediation obligations and potential insurance and contract claims. There are risks around these provisions which could have a significant impact on the expenditure required to meet these obligations.

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Notes to the financial statements for the year ended 30 June 2023 6 Financing our operations Introduction

Structure

This section provides information on the sources of finance used during operations, along with interest expenses (the cost of borrowings and other information related to financing activities).

6.1 Interest bearing liabilities

This section includes disclosures of balances that are financial instruments (such as borrowings, lease liabilities and cash balances).

6.3 Cash flow information and balances

6.1.1 Maturities of financial liabilities 6.1.2 Finance costs 6.2 Leases 6.3.1 Reconciliation of net result for the period to cash flow from operating activities.

Financing arrangements are impacted by market activities, with impacts in our cost of debt and the level of borrowing we need, refer note 7.2.

6.1 Interest bearing liabilities Carrying amount

Net fair value

2023 $’000

2022 $’000

2023 $’000

2022 $’000

429,500

394,728

430,184

398,703

429,519

394,751

430,203

398,726

3,080,000

2,973,000

2,883,992

2,815,153

Total non-current

3,080,009

2,973,010

2,884,001

2,815,163

Total

3,509,528

3,367,761

3,314,204

3,213,889

Borrowings and lease liabilities are classified as financial instruments. All interest-bearing borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. The measurement basis subsequent to initial recognition is based on the classification of interest-bearing liabilities as financial liabilities at ‘amortised cost.’ Amortised cost is measured using the effective interest rate method. This classification is determined at initial recognition.

Interest on borrowings is payable semi-annually and is accrued over the period it becomes due. Accrued interest is recorded as part of accruals.

Current Borrowings Lease liabilities Total current Non-current Borrowings Lease liabilities

The fair value of the interest-bearing financial liabilities is determined by discounting the expected future cash flows at current interest rates. Borrowings are classified as current or non-current based on the maturity dates of the loan arrangements, irrespective of whether there is intention to roll the borrowings into a new arrangement.

2022-23 Financial Report

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6.1.1 Maturities of financial liabilities The following table allocates financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows. Weighted average effective interest rate %

Less than 12 months $’000

1 to 3 years $’000

3 to 5 years $’000

Over 5 years $’000

Total $’000

Fixed interest rate

3.08

340,000

700,000

1,680,000

3,420,000

Floating interest rate

4.31

89,500

429,519

700,003

700,004

1,680,002

3,509,528

2023 Borrowings

Leases Total 2022 Borrowings Fixed interest rate

2.93

304,100

650,000

660,000

1,653,000

3,267,100

Floating interest rate

1.02

90,628

10,000

100,628

394,751

660,003

1,653,004

3,367,761

Leases Total

6.1.2 Finance costs 2023 $’000

2022 $’000

101,458

92,056

41,733

40,821

Other

(11)

Total

143,183

132,877

Interest on borrowings Financial accommodation levy Interest on leases

Finance costs are recognised as expenses in the period in which they are incurred. All qualifying assets (being assets that necessarily take a substantial period of time to get ready for their intended use or sale) are measured at fair value. Therefore, any finance costs directly attributable to the acquisition, construction or production of these qualifying assets are not required to be capitalised and will continue to be expensed in the period in which they are incurred. The financial accommodation levy is paid into the consolidated fund in accordance with section 40N of the Financial Management Act 1994 in respect of financial accommodation provided to us by the Victorian Government.

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 6.2 Leases Yarra Valley Water has a small number of concessionary leases with other government departments. These leases enable us to access an asset at less than its fair value principally to enable us to further our objectives. We measure right-of-use assets from concessionary leases at cost. We have leased carparking for a term of 5 years with ability to enter hold over. We anticipate this lease will extend beyond the 5 year term. We make an annual contribution of less than $2,000 per annum for this space. There are restrictions on the area’s use due to water assets that sit below the surface. Use of the carpark is restricted to Yarra Valley Water. We also have a lease for a sewer flow control facility within government parkland. This lease runs for 21 years (expiring in 2027), and the annual payments are nil unless demanded at a rate of $1 per annum.

The lease liability is initially measured at the present value of the lease payments unpaid at the commencement date, discounted using the interest rate implicit in the lease if that rate is readily determinable or our incremental borrowing rate. Right-of-use-assets are depreciated over the estimated lease term, which is determined by considering all the facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment.

6.3 Cash flow information and balances Cash and cash equivalents include cash at bank and cash on hand with original maturities of 3 months or less, and bank overdrafts.

In 2022 we leased space as part of a capital project with a non-government entity, at market rental. The lease was extended in 2023 for a further one year term. The value of right-of-use-assets is measured at cost which is determined as follows: • The amount of the initial measurement of lease liability. • Any lease payments made at or before the commencement date, less any lease incentives received. • Any initial direct costs. • Restoration costs.

2023 $’000

2022 $’000

Cash at bank

6,021

4,089

Cash on hand

6,022

4,090

Total

2022-23 Financial Report

145

6.3.1 Reconciliation of net result for the period to cash flow from operating activities 2023 $’000

2022 $’000

93,227

77,495

4.2 & 4.3

120,584

115,130

5.1.2

3,533

4,500

3.2.3.2

354

2.2, 3.1, 4.4 & 4.5

(1,222)

3,322

4.4

(539)

(148)

4.2 & 4.3

424

457

Impairment write-back

2.2

(1,990)

Impairment write-down

3.1

3,645

1,005

Developer contributed assets and other authority works

2.1

(77,426)

(48,239)

2.2 & 5.2

(47)

Initial recognition of lease liability

6.2

Change in accounting policy - SaaS

4.3

(1,101)

(1,551)

(1,195)

127

881

(Increase) / decrease in trade receivables

1,847

(15,410)

Decrease in accrued interest

(815)

(249)

Increase / (decrease) in provisions

2,728

(3,542)

Increase in contract liabilities

3,704

10,082

(26)

Decrease in net deferred tax liabilities

(21,150)

(987)

Increase / (decrease) in payables

30,124

(20,532)

Net cash inflow from operating activities

157,364

119,797

Note Net profit after tax Adjustments for non-cash items Depreciation / amortisation Bad debts and expected credit allowance Defined benefit superannuation plan expense Net (gain) / loss on land swap and sale Net gain on disposal of non-current physical assets Write-off of assets

Fair value gain on derivative financial instrument

Changes in operating assets and liabilities Increase in other current assets Decrease in GST receivables

Increase / (decrease) in derivative financial instruments

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 7

Risks, contingencies and valuation judgement

Introduction We are exposed to risk from our activities and outside factors. It’s also often necessary to make judgements and estimates associated with recognising and measuring items in the financial statements. This section sets out financial instrument specific information (including exposures to financial risks) as well as those items that are contingent in nature or require a higher level of judgement to be applied, which relate mainly to fair value determination.

Structure 7.1 Financial instrument specific disclosures 7.2 Financial risk management objectives and policies 7.2.1 Capital risk management 7.2.2 Climate related risk 7.2.3 Financial risks 7.3 Contingent assets and liabilities 7.4 Fair value 7.4.1 Fair value – Determination of non-financial physical assets 7.4.2 Fair value – Financial assets and liabilities 7.4.3 Fair Value – Reconciliation of changes in level 3 items 7.4.4 Fair Value – Valuation techniques and significant unobservable inputs in level 3 items.

7.1 Financial instrument specific disclosures Introduction Financial instruments arise out of contractual agreements that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity meeting the definition of assets and liabilities under AASB 9 Financial Instruments. Due to the nature of our activities, certain financial assets and financial liabilities arise under statute rather than a contract (for example taxes, fines and penalties). Statutory assets and liabilities do not meet the definition of financial instruments in AASB 9 Financial Instruments.

Categories of financial instruments Financial assets at amortised cost Financial assets at amortised cost are assets with fixed and determinable payments that are not quoted on an active market. These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial measurement, they are measured at amortised cost using the effective interest method less any impairment. We recognise the following as financial assets at amortised cost: • Cash and deposits – refer note 6.3 • Receivables (excluding statutory receivables) – refer note 5.1 • Investment in Zero Emissions Water (ZEW) – refer note 5.2. Financial liabilities at amortised cost are initially recognised on the date they are originated. They are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial instruments are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in the statement of comprehensive income over the period of the interest-bearing liability, using the effective interest rate method. We recognise the following as financial liabilities at amortised cost: • Payables (excluding statutory payables) – refer note 5.4 • Contract liabilities – refer note 5.5 • Lease liabilities – refer note 6.2 • Borrowings – refer note 6.1.

2022-23 Financial Report

Financial assets and liabilities at fair value through profit or loss Financial assets and liabilities measured at fair value through profit or loss are categorised at fair value through profit or loss at trade date, or if they are classified as held for trading or designated as such upon initial recognition. Derivative financial instruments are classified as held for trading financial assets and liabilities, refer note 5.2. They are initially recognised at fair value on the date on which all contractual obligations under the Conditions Precedent are met and on subsequent measurement. Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. Any gains or losses arising from changes in fair value of derivatives after initial recognition are recognised in the statement of comprehensive income, refer note 2.2.

7.2 Financial risk management objectives and policies 7.2.1 Capital risk management We control our capital structure in order to provide the Victorian Government with adequate returns and to ensure operations can be funded as a going concern. Our capital structure consists of net debt (borrowings as detailed in table below and offset by cash and bank balances - refer note 6.3) and equity (comprising contributed equity, asset revaluation surplus and retained earnings detailed in notes 9.1 to 9.3). The only externally imposed capital requirements are that: • Financial accommodation does not exceed the approval limits set by the Treasurer of Victoria pursuant to the Borrowing and Investment Powers Act 1987. • We are required to borrow exclusively with the Treasury Corporation of Victoria. These external capital requirements are incorporated into the management of capital through the Board approved Corporate Plan. We effectively manage our capital by assessing financial risks and adjusting capital structure in response to changes in these risks and the market. These responses include the management of debt levels. There have been no changes to the strategy adopted to control capital during the year. The gearing ratios for the years ended 30 June 2023 and 30 June 2022 were as follows:

147

2023 $’000

2022 $’000

429,500

394,728

Borrowings - non-current

3,080,000

2,973,000

Total borrowings

3,509,500

3,367,728

Leases - current

Leases - non-current

Total leases

Total borrowings and leases

3,509,528

3,367,761

Total assets

6,071,481

5,856,035

Gearing ratio

58%

Borrowings - current

7.2.2 Climate related risk Climate change is a risk to Yarra Valley Water. Climate change risk includes physical and transition risks. Physical risks can cause direct damage to assets or property or supply chains as a result of rising global temperatures and subsequent extreme weather shocks and trends. Transition risks arise from the transition to the low-carbon economy and include financial/market risks, technology risks, and policy/legal risks. Climate change impacts our services and the communities we serve. We need to work with our community to manage our resilience to climate change. Extreme weather events such as storms, high winds, floods, extreme heat and drought, rising sea levels, reduced rainfall and increasing average temperatures are already affecting our infrastructure, natural environment and water supplies. Changes in global climate conditions are predicted to likely intensify and increase in frequency. Previous experience has shown that extreme weather events can increase costs of operation however physical risks arising from fires and floods are to some extent subject to risk transfer through insurance programmes. Should the frequency and severity of these events increase as a result of climate change, insurance coverage may reduce or maybe more costly or challenging to procure. Changes in legislation, government policy and market / customer expectations as we transition to the lowcarbon economy, could result in increased costs of operation or reputational challenges. We have a Climate Resilience Plan, which is available on our website. We have identified 35 actions in 9 focus areas. These actions address adaptation to climate

148

Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 change e.g. through better understanding of climate change risks, emergency management and also actions that enhance community and environment resilience to climate change. The plan also includes actions to mitigate climate change through our work to go beyond zero carbon. Reducing our carbon footprint and generating all our own energy needs from renewables will also make us more resilient to transition risks, as we are transitioning to the low-carbon economy.

rate by 325 basis points (3.25%) since July 2022. However, we minimised the interest rate exposure by effectively re-balancing our portfolio between short term and long-term loans taking advantage of shortterm low rates in consultation with TCV.

Interest rate sensitivity analysis

2023 $’000

2022 $’000

We have considered climate-related risks in the preparation of the 2022-23 financial statements, in particular the impact on the valuation of our infrastructure assets. We continue to mature our approach to climate change risk assessment including through the development of a tool and guidelines to conduct asset risk assessments as part of our Asset Management Framework.

+ 100 basis points

(1,614)

(817)

- 100 basis points

1,614

817

7.2.3 Financial risks The main risks we’re exposed to through financial instruments are interest rate risk, liquidity risk, credit risk and price risk. These risks continue to impact us as we recover from the COVID-19 pandemic and experience market volatility, refer note 1.2. The Board reviews and approves policies for managing these risks.

7.2.3.1 Interest rate risk Interest rate risk is the risk to earnings or capital from movements in interest rates. We’re exposed to interest rate risk through borrowing activities and changes in the market in comparison to the assumptions of the Essential Services Commission’s regulatory pricing determination in relation to the underlying cost of debt. Interest rate exposures are also recognised in terms of the change in the market value of the debt portfolio which arise as a consequence of changes in market interest rates. We effectively manage interest rate risk by maintaining the debt portfolio within the strategic targets and policy bands that have been approved by the Board. Strategic and tactical debt portfolio options are assessed in consultation with the Treasury Corporation of Victoria (TCV), with borrowing decisions based on future borrowing requirements, treasury management policy compliance and the TCV’s market interest rate outlook. Refer section 6.1.1 for maturity analysis of contractual financial liabilities. Our interest rate risk has increased as a result of the Reserve Bank of Australia’s decision to increase the cash

7.2.3.2 Liquidity risk Liquidity risk is the risk of not being able to meet the specific financial commitments including short-term working capital needs and financing new and maturing loans as they are required. We manage liquidity risk by actively maintaining efficient banking practices, regularly monitoring forecast and actual cash flows and ensuring adequate borrowing facilities are maintained. Approval is received from the Treasurer of Victoria for new borrowings, borrowings to refinance maturing and non-maturing loans and temporary purpose borrowing facilities. The new approved accommodation borrowing limit was $261.9 million for the period ended 30 June 2023.

Financing arrangements We had access to a total of $120.13 million (2022: $133.37 million) of unused borrowings approved by the Treasurer of Victoria as at 30 June 2023.

7.2.3.3 Credit risk Credit risk is the risk that a counterparty or customer will fail to meet contractual obligations. For us credit risk arises mainly from outstanding customer receivables as we’re legally obliged to service all customers in our district without regard to their credit quality, refer note 5.1.2. While we have in place extensive debt collection strategies to minimise customer credit risk and recover outstanding receivables, we have taken into account the need for a compassionate approach due to the impact of cost of living pressures including inflation and interest rate rises on our customers. Our changed collection practices and macroeconomic factors have increased our level of credit risk.

2022-23 Financial Report

The credit risk attributable to our deposits with TCV and other financial institutions is considered to be very low due to the minor amounts involved and the contractual arrangements in place for counterparties. Our other credit risk arises from in-the-money receipts due from the Contract for Difference derivative under the Zero Emissions Water Power Purchasing Agreement (PPA), refer note 5.2. The maximum exposure to credit risk at the reporting date is the carrying amount of items in the balance sheet. For receivables, the maximum exposure is the gross amount of receivables before allowing for the expected credit loss allowance. Our maximum exposure to credit risk relating to the derivative financial instrument at reporting date is the sum of the nominal values of all forecasted net cash receipts where the floating price due by the proponent exceeds the fixed price payable by us over the remaining PPA term.

Contingent assets and contingent liabilities are not recognised in the balance sheet, but are disclosed by way of a note and, if quantifiable, are measured at nominal value. Contingent assets and contingent liabilities are presented inclusive of goods and services tax receivable or payable, respectively.

Contingent assets We enter into agreements with land developers whereby assets are delivered and then transferred to us at no cost. These assets are brought to account as revenue, refer note 2.1, and capitalised. Where developers are in the process of building assets or are yet to commence the build of assets that will be gifted to us in the future, these assets are recognised as contingent assets as we have signed an agreement with the developer in respect of those assets. 2023 $’000

2022 $’000

Water supply assets under construction

23,624

23,348

Water supply assets committed to

11,705

15,625

Sewerage supply assets under construction

61,049

56,725

Sewerage supply assets committed to

13,645

14,200

7.2.3.4 Price risk We use the Contract for Difference derivative financial instrument to manage energy related commodities purchased in the normal course of business, and therefore entered into the PPA to minimise a portion of our price risk. Our sensitivity to price risk in respect of the derivative is set out in note 7.4.2. We are also exposed to market risks that impact the prices we pay. This risk has increased as a result of COVID-19, refer note 1.2 and macroeconomic factors that have led to increased prices due to labour shortages, supply chain delays, increased interest rates and inflationary pressures. We manage this risk where possible in contract negotiations.

7.3 Contingent assets and liabilities Contingent assets and contingent liabilities are not recognised in the balance sheet but are disclosed and, if quantifiable, are measured at nominal value. Contingent assets are possible assets that arise from past events, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within our control. Contingent liabilities are: • Possible obligations that arise from past events, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within our control. • Present obligations that arise from past events but are not recognised because: • It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation • The amount of the obligations cannot be measured with sufficient reliability.

149

In September 2022, the Victorian Government awarded us $11.9 million in funding from Round 2 of the Energy Innovation Fund to build a permanent renewable hydrogen facility at our Aurora Sewage Treatment Plant site. The funding is conditional upon the demonstrated success from our pilot project to test the reliability and performance of the technology which produces the renewable hydrogen. We’re unaware of any other material contingent assets.

150

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Notes to the financial statements for the year ended 30 June 2023 Contingent liabilities

7.4 Fair value

Contingent on the completion of the contingent assets transferred from developers, we have a liability to reimburse developers for additional works constructed at our request.

Fair value determination requires judgement and the use of assumptions. This section discloses the most significant assumptions used in determining fair values. Changes to assumptions could have a material impact on our results and financial position.

2023 $’000

2022 $’000

Water supply assets

15,338

11,394

Sewerage supply assets

21,497

21,520

Payment of reimbursements will occur upon request by the developer following the issuing of the certificate of completion as agreed in accordance with the conditions of the agreement between us and the developer. We’re unaware of any other material contingent liabilities.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, and based on the lowest level inputs that are significant to the fair value measurement as a whole: • Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities. • Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. • Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

2022-23 Financial Report

151

7.4.1 Fair value – Determination of non-financial physical assets Our land, buildings, plant and equipment and infrastructure are stated at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and impairment losses. This note explains the judgements and estimates made in determining the fair values of non-financial assets. In accordance with AASB 13 Fair Value Measurement, our non-financial assets have been categorised into the 3 levels of the fair value hierarchy depending on the degree to which inputs into the fair value measurements are observable, and the significance of the inputs to the fair value measurement.

Level 1 $’000

Level 2 $’000

Level 3 $’000

Fair value as at 30 June $’000

Infrastructure

4,536,230

Land (specialised)

272,345

Land (non-specialised)

366,246

Buildings (market approach)

2,104

Buildings (depreciated replacement cost)

30,051

Plant and equipment

28,201

Right of use assets (market)

Right of use assets (concession)

Leasehold improvements

Carrying amount at 30 June 2022

368,371

4,866,895

5,235,266

Infrastructure

4,771,711

Land (specialised)

282,125

Land (non-specialised)

366,246

Buildings (market approach)

2,007

Buildings (depreciated replacement cost)

28,917

Plant and equipment

24,841

Right of use assets (market)

Right of use assets (concession)

Leasehold improvements

Carrying amount at 30 June 2023

368,272

5,107,657

5,475,929

152

Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 Infrastructure KPMG has independently provided the 30 June 2023 valuation of infrastructure assets, using a discounted cash flow methodology to determine the fair value of infrastructure. This involved discounting the forecast stream of cash flows of the entire business to both debt and equity investors at a weighted average cost of capital (WACC), which represents an estimate of a hypothetical market participant’s discount rate. The valuation model: • Calculates forecast cash flows to debt and equity investors over a 10-year forecast period. Cash flows to debt and equity investors are those cash flows available after all operating expenses (including taxes) have been paid and necessary investments in working and fixed capital have been made. Free Cash Flows to the Firm (FCFF) have been calculated utilising management’s forecast cash flow statements. Cash Flows from Operations (CFO) have been used, with interest payments added back, less the tax shield on those interest payments to arrive at an adjusted unlevered CFO. Cash Flows from Investing (CFI) have been used as they incorporate capex. The adjusted CFO less the CFI represents the forecast yearly FCFF. • Calculates a terminal value at the end of the forecast period based on the forecast RAB in the termination year and an exit RAB multiple that includes the Taxation Amortisation Benefit (TAB) having regard to the level of cash flows and profitability derived at the end of the forecast period, the business’ role in the water supply chain and complexity of operations, typical market participant assumptions for opportunities to outperform regulatory benchmarks, and comparable company and transaction multiples over time. Any TAB (applicable to any step-up in tax cost base) available to subsequent market participants has been implicitly included through the selection of the terminal value exit multiple. • Arrives at an enterprise valuation by discounting the cash flows to the valuation date using the selected high ($4.35 billion) and low ($5.19 billion) WACC estimates and adopts a mid-point ($4.77 billion). • Deducts non-infrastructure related assets and liabilities to derive the implied water infrastructure asset valuation.

The impact of COVID-19, supply chain disruptions, inflationary pressures, interest rate increases and the impact of global issues such as the Russia/Ukraine conflict, refer note 1.2, has been considered in the valuation but it should be noted, that there is uncertainty due to these macroeconomic and global issues. Uncertainty from climate change can also impact this valuation. Infrastructure assets are classified as level 3. There is no active market which has a significant impact on the fair value.

Land – specialised / non-specialised and Crown The Victorian Valuer-General’s Office independently determined the fair value of our land on 30 June 2021. In undertaking the valuation of land, the Victorian ValuerGeneral’s Office adopted the market based direct comparison approach, whereby the properties were valued by analysing comparable land sales allowing for shape, size, topography, location and other relevant factors. The market that the assets were valued in was impacted by the uncertainty caused by COVID-19, refer note 1.2. The value assessed at the valuation date may therefore change over a relatively short period. Where applicable, specialised land is adjusted for the community service obligation (CSO) to reflect the specialised nature of the land being valued. As adjustments to CSO are considered as significant unobservable inputs, specialised land would be classified as level 3 assets. To the extent that non-specialised land does not contain significant, unobservable adjustments, the assets are classified as level 2 under the market approach. At 30 June 2023, the fair value of land was checked against indices provided by the Victorian ValuerGeneral’s Office to determine any material or exceptionally material movements. Whilst it is recognised that COVID-19 has increased the uncertainty around land valuation estimates, we believe the ValuerGeneral’s Office indices continue to provide the most appropriate measure. In accordance with FRD 103 Non-financial physical assets no revaluation of our land was required. If land was measured at historical cost, the carrying amount would be $95 million (2022: $85 million).

2022-23 Financial Report

Buildings – specialised / non-specialised The Victorian Valuer-General’s Office independently determined our building values by using market value or depreciated replacement cost method at 30 June 2021. The depreciated replacement cost method is based on the replacement of buildings to a ‘modern equivalent’ standard after applying an appropriate depreciation rate, useful life and adjusting for condition. As depreciation adjustments are considered as significant, unobservable inputs in nature, buildings are classified as level 3 fair value. The market that the assets were valued in was impacted by the uncertainty caused by COVID-19, refer note 1.2. The value assessed at the valuation date may therefore change over a relatively short time period. To the extent that non-specialised buildings do not contain significant, unobservable adjustments, these assets are classified as level 2 under the market approach. As at 30 June 2023, buildings were checked against indices provided by the Victorian Valuer-General’s Office to determine any material or exceptionally material movements. Whilst it is recognised that COVID-19 has increased the uncertainty around building valuation estimates, refer note 1.2, we believe the Valuer-General’s Office indices continue to provide the most appropriate measure. In accordance with FRD 103 - Non-financial physical assets no revaluation of our buildings was required but we expect a revaluation will be required next year as we view it as unlikely that building rates will reduce. If buildings were measured at historical cost, the carrying amount would be $41 million (2022: $41 million).

Plant and equipment Plant and equipment are held at carrying value (depreciated cost) which approximates fair value. Unless there is market evidence that current replacement costs are significantly different from the original acquisition cost, it is considered unlikely that depreciated cost will be materially different from the existing carrying value. As at 30 June 2023 no material movements have occurred other than as disclosed in note 4.2.

153

7.4.2 Fair value – Financial assets and liabilities The fair value of derivative instruments, refer note 5.2, is based on the discounted cash flow technique. The selection of variables requires significant judgement and assumptions in estimating the fair value of derivatives. In the absence of an active market, the fair value of our Contract of Difference derivative is valued using unobservable inputs such as future wholesale electricity prices provided by the Department of Energy, Environment and Climate Action, an independent advisor and comparable risk free rates of zero coupon government bonds obtained from the Reserve Bank of Australia. The assumptions underpinning the estimate of future wholesale electricity prices included factors influencing supply and demand fluctuations, and the economic impact of COVID-19, refer note 1.2. In addition, assumptions are applied to forecast the renewable energy generation volumes over the life of the derivative instrument. To the extent that the significant inputs are unobservable, we have categorised these derivatives as level 3 within the fair value hierarchy. The valuation adopted by us in the preparation of the 2022 financial statements for the derivative instrument was based on information provided to us at the time however subsequent to the signing of our financial statements as part of another government audit it was determined that the key assumptions around electricity prices should be revised downwards. The revised valuation reduced the gain to $47,000 before tax, down from the gain we had recognised of $1,120,000 before tax. The 2023 financial statements have been presented with the revised valuation for 2022 adopted. At 30 June 2023 the value of the derivative liability has been calculated by adopting the derivative value at 30 June 2022 adjusted for payments and receipts related to electricity price differences under the Contract for Difference (CfD) during the 2023 financial year.

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 7.4.3 Fair Value – Reconciliation of changes in level 3 items Infrastructure, property, plant & equipment assets

Infrastructure $’000

Land $’000

Buildings $’000

Plant and equipment $’000

Right of Use $’000

Leasehold improvements $’000

Total $’000

Balance at 1 July 2021

4,282,800

242,934

31,359

24,661

4,581,827

Acquisitions / transfers

403,664

197

10,329

414,190

Write-off / disposal of assets

(424)

(1,310)

(1,734)

(90,130)

(1,505)

(5,479)

(2)

(3)

(97,119)

121

(59,680)

29,290

(30,390)

4,536,230

272,345

30,051

28,201

4,866,895

Acquisitions / transfers

375,475

9,780

282

4,650

390,187

Write-off / disposal of assets

(418)

(1,076)

(1,494)

Depreciation

(94,159)

(1,416)

(6,934)

(2)

(3)

(102,514)

Revaluation gain / (loss) recognised in other comprehensive income

(45,417)

Carrying amount at 30 June 2023

4,771,711

282,125

28,917

24,841

5,107,657

2023 $’000

2022 $’000

Balance at 1 July

(513)

(586)

Net cash settlements (received) / paid

(97)

(610)

(513)

Depreciation Impairment write-back of assets to recoverable amount Revaluation gain / (loss) recognised in other comprehensive income Carrying amount at 30 June 2022

Derivative liabilities

Gain on fair value of derivative financial instruments Carrying amount at 30 June

2022-23 Financial Report

155

7.4.4 Fair Value – Valuation techniques and significant unobservable inputs in level 3 items

Land (specialised)

Infrastructure

Plant and equipment

Buildings

Financial derivative instruments

Valuation technique

Significant unobservable inputs

Range (average)

Market approach

Community service obligation (CSO) adjustment

10% to 60% (21%)

Weighted average cost of capital (WACC)

5% to 5.4% (5.2%)

If the WACC had changed by +/- 0.25% from the year end valuation, the impact to the valuation would have been a decrease of $177.1 million and an increase of $121.2 million

Terminal value exit RAB multiple (inclusive of inflation)

1.15x to 1.25x (1.20x)

If the terminal value exit rate RAB had changed by +/- 0.05x from the year end valuation, the impact to the valuation would have been an increase / (decrease) of $301.9 million

Original useful life

1 to 100 years (59 years)

A significant increase or decrease in the estimated useful life of infrastructure would result in a significantly higher or lower fair value

Original useful life

2 to 25 years (10 years)

A significant increase or decrease in the useful life impacts the fair value of plant and equipment

Cost per unit

$100 to $2.1 million ($13,805)

A significant increase or decrease in cost per unit impacts the fair value of plant and equipment

Cost per square metre

$110 to $4,875 ($4,104)

A significant increase or decrease in cost per square metre impacts the fair value of buildings

Useful life (remaining)

4 to 30 years (25 years)

A significant increase or decrease in useful life impacts the fair value of buildings

Wholesale electricity price forecasts

$13.16 to $60.09 / MWh ($29.69)

An increase/ (decrease) in the wholesale electricity price forecasts of 10% would result in an increase/ (decrease) to fair value by $0.1 million

Discount rate - risk free rates of zero coupon government bonds

3.9520% - 4.3678% (4.0534%)

An increase/ (decrease) in the discount rate of 1% would result in an increase/ (decrease) to fair value by $0.03 million

Credit value adjustment - Australian Corporate Bond Spreads and Yields

176.80 - 262.33 (223.58)

An increase/ (decrease) in the credit value adjustment of 1% would result in an increase/ (decrease) to fair value by $0.03 million

Income approach using a discounted cash flow model

Depreciated cost (deemed fair value)

Depreciated replacement cost approach

Discounted cash flow method

$100 to $28,987,000 ($449,402)

Sensitivity of the input to fair value A significant increase or decrease in the community service obligation adjustment would result in a higher or lower land valuation

156

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Notes to the financial statements for the year ended 30 June 2023 8 Statutory obligations Introduction

8.1 Income tax

This section includes disclosures in relation to our statutory obligations.

We’re subject to the National Tax Equivalent Regime (NTER), which is administered by the Australian Taxation Office (ATO). The income tax expense for the period is the expected tax payable on the current period’s taxable income. This is based on the national corporate income tax rate of 30%, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Structure 8.1 Income tax 8.2 Environmental contributions 8.3 Goods and services tax (GST)

The income tax expense for the financial year differs from the amount calculated on the net result. The differences are reconciled as follows: 2023 $’000

2022 $’000

47,868

36,885

Temporary differences

(8,013)

(3,520)

Income tax expense reported in the statement of comprehensive income

39,855

33,365

13,133

(2,642)

Net result before income tax expense

133,082

110,860

Tax at the Australian tax rate of 30%

39,925

33,258

(24)

(375)

Assessable income / (deduction)

(52)

476

Income tax on profit before tax

39,855

33,365

8,755

(4,085)

Income tax Statement of comprehensive income Current income tax expense payable Deferred income tax expense

Statement of changes in equity Income tax reported in equity

Tax reconciliation

Deductible expenses Non-deductible depreciation

Income tax payable Current tax (receivable) / payable

2022-23 Financial Report

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantially enacted. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. No deferred tax asset or liability is recognised

157

in relation to these temporary differences if they arose in a transaction that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

2023 $’000

2022 $’000

Provisions

13,694

12,840

Buildings future deductible amounts

1,636

1,544

15,368

14,421

15,590

947

(1,169)

15,368

14,421

(357,104)

(364,171)

403

400

Revaluation of infrastructure to fair value

(114,613)

(128,238)

Revaluation of land to fair value

(93,206)

Revaluation of buildings to fair value

(794)

Defined benefit superannuation asset

(4,498)

(4,006)

(569,812)

(590,015)

(592,170)

Credited to comprehensive income

7,070

4,797

Credited to other comprehensive income

13,133

(2,642)

Closing balance at 30 June

(569,812)

(590,015)

Net deferred tax liabilities

(554,444)

(575,594)

Deferred tax assets Amounts recognised in the statement of comprehensive income

Contract liability Total

Movements Opening balance 1 July Credited to comprehensive income Closing balance at 30 June

Deferred tax liabilities Amounts recognised in the statement of comprehensive income Property, plant and equipment Defined benefit superannuation asset Amounts recognised directly in equity

Total

Movements Opening balance 1 July

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 8.2 Environmental contributions A 2004 amendment to the Water Industry Act 1994 (the Act) provided for environmental contributions to be paid by Victoria’s water supply authorities to government for the purposes of funding initiatives that promote the sustainable management of water or address adverse water-related environmental impacts. The responsible Minister may make an Order for up to 4 years that specifies the details relating to the obligation to pay environmental contributions. The fifth tranche of the environmental contribution imposes a statutory obligation to pay an environmental contribution to the Department of Energy, Environment and Climate Action of $47.43 million each year for the period 1 July 2020 to 30 June 2024. These contributions will be recognised as an expense during the reporting period in which they are incurred.

Environmental contribution commitments at balance date not provided for in the financial statements are as follows: 2023 $’000

2022 $’000

47,430

94,860

Payable Not later than one year Later than one year but not later than 5 years Total

8.3 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 ATO. In these circumstances, GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST. The net amount of GST receivable from or payable to the ATO is included in the balance sheet as part of receivables or payables, refer notes 5.1 and 5.4. Cash flows are presented in the cash flow statement on a gross basis except for the GST component of investing and financing activities which are disclosed as operating cash flows.

2022-23 Financial Report

159

9 Other disclosures

9.1 Contributed equity

Introduction

Additions to net assets which have been designated as contributions by owners are recognised as contributed equity. Other transfers that are in the nature of contributions or distributions (capital repatriation) have been recognised in contributed equity.

This section includes additional material disclosure required by accounting standards or otherwise, for the understanding of this financial report.

2023 $’000

2022 $’000

Opening balance at 1 July

384,602

420,967

Transfer of equity

29,860

Less capital repatriation

(36,365)

Closing balance 30 June

414,462

384,602

Structure 9.1 Contributed equity 9.2 Retained Earnings 9.3 Asset revaluation surplus 9.4 Responsible persons 9.4.1 Remuneration of responsible persons

9.5 Remuneration of executive officers 9.6 Related party 9.6.1 Transactions with government-related entities 9.6.2 Transactions with key management personnel and other related parties 9.6.3 Key management personnel 9.7 Ex-gratia expenditure 9.8 Economic dependency 9.9 Events subsequent to balance sheet date 9.10 Australian accounting standards issued that are not yet effective

1. During the year, the Department of Transport and Planning in accordance with FRD 119 - Transfers through contributed capital transferred to us water and sewer assets related to the North East Link roads project. These assets have been recognised in our infrastructure asset value.

The Treasurer advised us on 29 June 2023 of a capital repatriation of $36.4 million. Under FRD 119 - Transfers through contributed capital, para 4.2 (d) this transfer is deemed to occur on the effective date, which means it should be recognised on 31 July 2023 when the capital repatriation is due and payable. The transaction will therefore be recognised in the 2023-24 financial statements. No accrual is required in the balance sheet as at 30 June 2023. Refer note 7.2.1 Capital Risk Management for an overview of our capital structure.

9.2 Retained Earnings 2023 $’000

2022 $’000

543,369

500,677

15,663

93,227

77,495

Defined benefit superannuation plan actuarial gain 1

1,641

824

Net deferred tax assets recognised through retained earnings 1

(492)

(247)

Dividends paid / payable

(41,387)

(35,380)

Closing balance at 30 June

612,021

543,369

Note Opening balance at 1 July Sale of land classified as held for sale

4.5

Net profit after tax

1. Defined benefit superannuation plan actuarial gain net of tax effect $1,149,000 (2022: $577,000), refer note 3.2.3.2.

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Notes to the financial statements for the year ended 30 June 2023 Dividend An obligation to pay a final dividend only arises after a formal determination is made by the Treasurer following consultation between the Board, the relevant portfolio Minister and the Treasurer. At 30 June 2023 we had received a final determination from the Treasurer for the payment of an interim dividend for the 2023 financial year. The dividend is not payable until 31 July 2023 and in accordance with FRD 3 - Accounting for dividends has been accrued as payable at 30 June 2023.

9.3 Asset revaluation surplus The asset revaluation surplus is used to record changes in the carrying amount of fixed assets arising on revaluation. Any revaluation increment is credited to the asset revaluation surplus. A decrement would be debited to the surplus to the extent of the balance of prior increments. Any further decrements would be taken to the statement of comprehensive income.

Note Balance at 1 July 2021 Revaluation, net of tax effect

4.2

Balance at 30 June 2022

Infrastructure $’000

Land $’000

Buildings $’000

Total $’000

341,000

405,380

1,976

748,356

(41,776)

70,868

29,092

299,224

476,248

1,976

777,448

Sale of land classified as held for sale

4.5

(15,663)

Revaluation, net of tax effect

4.2

(31,792)

267,432

460,585

1,976

729,993

Balance at 30 June 2023

2022-23 Financial Report

161

9.4 Responsible persons

9.5 Remuneration of executive officers

The relevant Minister and Yarra Valley Water directors are deemed to be responsible persons by Ministerial Direction pursuant to the provisions of the Financial Management Act 1994.

The number of executive officers, other than the Minister and accountable officer, and their total remuneration during the period are shown in the table below. Total annualised employee equivalents provide a measure of full time equivalent executive officers over the reporting period.

The responsible persons of Yarra Valley Water at any time during the financial year ended 30 June 2023 were:

Remuneration comprises employee benefits in all forms of consideration paid, payable or provided by the us, or on behalf of the us in exchange for services rendered, and is disclosed in the following categories:

Hon Harriet Shing MP

Minister for Water

Sue Therese O’Connor

Chair of the Board

Robert Clive Skinner

Deputy Chair of the Board

Patrick John McCafferty

Managing Director

Victor John Perton

Director

Helen Lynette Thornton

Director

Karen Milward

Director

Victoria Fay Marles

Director

Ian David Hamm

Director

Ari Daniel Suss

Director

Kate Deborah Vinot

Director

• Short-term employee benefits include amounts such as wages, salaries, annual leave or sick leave that are usually paid or payable on a regular basis, as well as allowances • Post-employment benefits include pensions and other retirement benefits paid or payable on a discrete basis when employment has ceased • Other long-term benefits include long service leave, other long service benefit or deferred compensation • Termination benefits include termination of employment payments, such as severance packages

2023 $’000

2022 $’000

2,274

1,905

Post-employment benefits

181

183

Other long-term employment benefits

2,516

2,140

Total number

Total annualised employee equivalent (AEE) 2 & 3

9.4.1 Remuneration of responsible persons The Minister’s remuneration and allowance are set by the Parliamentary Salaries and Superannuation Act 1968 and is reported within the State’s Annual Financial Report. Other relevant interests are declared in the Register of Members’ Interest which each member of the Parliament completes.

Total amount ($’000)

The number of responsible persons from Yarra Valley Water whose remuneration was within the specified bands were as follows: 2023 No.

2022 No.

$10,000 to $19,999

$40,000 to $49,999

$50,000 to $59,999

$100,000 to $109,999

$460,000 to $469,999

$510,000 to $519,999

1,073

1,000

Total number Total amount ($'000)

Short-term employee benefits1

1. In 2022-23 as a result of the Victorian Public Sector Commissions Public Entity Work Value Assessments, executive salaries were adjusted to reflect independently recommended market positioning. 2. AEE is based on the time fraction worked over the reporting period. 3. Includes executive officers, acting executive officers and those who ceased employment during the year.

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 9.6 Related party Related parties include: • All key management personnel and their close family members, and personal business interests (controlled entities, joint ventures and entities they have significant influence over). • All cabinet ministers and their close family members. • All department and public-sector entities that are controlled and consolidated into the whole of state consolidated financial statements. All related party transactions have been entered into on an arm’s length basis.

9.6.1 Transactions with government-related entities 9.6.1.1 Significant transactions with governmentrelated entities During the year, we had the following governmentrelated entity transactions. The activities are further described in the second table.

2022-23 Financial Report

163

2023 $’000

2022 $’000

3,219

3,483

347

408

Department of Energy, Environment and Climate Action (DEECA) Revenue recognised

Administration fees Grant funding

Expenses recognised

Environmental contributions

47,430

Cash amounts collected and paid during the year

Parks Victoria levy

74,987

72,965

Payables at 30 June

Parks Victoria levy

2,102

2,008

Revenue recognised

Administration fees

5,618

5,432

Expenses recognised

Bulk water and sewerage wholesaler charges

500,240

508,989

Cash amounts collected and paid during the year

Drainage levy

97,626

92,361

Payables at 30 June

Drainage levy

12,448

11,926

170

206

2,716

2,574

Melbourne Water (MW)

Information statements Bulk water and sewerage wholesaler charges Treasury Corporation Victoria (TCV) Expenses recognised

Interest on borrowings

101,458

92,056

Payables at 30 June

Aggregate Borrowings

3,509,500

3,367,728

Interest on borrowings

24,488

25,461

Financial accommodation levy

41,733

40,821

Income tax equivalent

39,855

33,365

Dividends

23,063

35,380

36,365

Financial accommodation levy

10,499

10,341

Dividends

18,324

Income tax equivalent

8,755

Income tax equivalent

4,085

Concessions

51,841

53,048

Utility relief grants

3,349

3,377

Concessions and utility relief

5,031

5,227

Payroll tax

5,252

4,563

Cash amounts received during the year Concessions

1,241

1,287

Receivables at 30 June

Concessions

407

323

Payables at 30 June

Payroll tax

390

354

Department of Treasury and Finance (DTF) Expenses recognised

Cash amounts paid during the year

Capital repatriation Payables at 30 June

Receivables at 30 June

Department of Families, Fairness and Housing (DFFH) Cash amounts paid during the year

Water concession for life support haemodialysis machines Receivables at 30 June State Revenue Office (SRO) Expenses recognised

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 Main activity

Note

Brief description

Administration fees

2.1

We charge DEECA and MW for the services we provide in billing and collecting parks and drainage fees respectively on their behalf and on charge costs incurred regarding supplementary council valuations

Parks Victoria levy

Under a normal commercial agency arrangement, we bill and collect charges related to Parks Victoria services on behalf of the Minister for Water

Drainage levy

Under a normal commercial agency arrangement, we bill and collect drainage rates and charges on behalf of MW

Grant funding

We receive funding from government bodies to support various activities

Bulk water and sewerage wholesaler charges

3.1

Information statements

We transact solely with MW for the purchase of drinking water and disposal of sewage We pay a fee to MW for drainage information included in information statements we issue to 3rd parties

Interest on borrowings and financial accommodation levy (FAL)

6.1

We pay interest and FAL on our borrowings from TCV

Income tax equivalent

8.1

Income tax equivalents are remitted to the Victorian Government, via DTF

Environmental contributions

8.2

Environmental contribution paid to DEECA

Payroll tax

Payments to the SRO for employment related taxes

Concessions

Customers who hold a Pension Concession Card, a Gold Repatriation Health Care Card for All Conditions or a Health Care Card are entitled to pay a concessionary amount instead of the full balance outstanding on their accounts. When a customer pays this lesser amount, the difference is billed to and paid by DFFH. Not-for-profit organisations that use land for the community’s benefit to provide outdoor sporting, cultural or recreational activities for a charitable purpose are eligible for a rebate. When a customer receives a rebate and pays this lesser amount, the difference is billed to and paid by the SRO.

Utility relief grants

The Utility Relief Grant scheme provides assistance for residential customers unable to pay their utility accounts due to a temporary financial crisis. Customers need to demonstrate that unexpected hardship has left them seriously short of money so that they cannot pay their utility account without assistance.

Water concession for life support haemodialysis machines

The Victorian Government provides a rebate for customers required to use a dialysis/life support machine at home, to compensate for water use and sewage disposal charges relating to its use. The rebate amount is determined by DFFH based on the estimated annual water usage of a dialysis machine (168kL). This rebate is in addition to any other pension or concession entitlements

Capital repatriation

9.1

Capital repatriation remitted to the Victorian Government, via DTF

Dividends

9.2

Dividends remitted to the Victorian Government, via DTF

2022-23 Financial Report

9.6.1.2 Other Victorian Government related parties Water and sewerage services were provided to wholly owned Victorian Government entities for properties within our district under normal commercial terms and conditions. Given the breadth and depth of our activities, we transact with the Victorian public sector in a manner consistent with other members of the public e.g. stamp duty and other government fees and charges. Procurement processes occur on terms and conditions consistent with the Victorian Government Procurement Board requirements. All other transactions with Victorian Government related parties were made on normal commercial terms and conditions and have not been considered material for disclosure.

9.6.2 T ransactions with key management personnel and other related parties 9.6.2.1 Zero Emissions Water Zero Emissions Water (ZEW) is a related party of Yarra Valley Water, refer note 5.2. Below is a summary of the transaction and holdings with ZEW related to the Power Purchase Agreement.

Note

2023 $’000

2022 $’000

Receipts from ZEW

2.2

150

Payments to ZEW

4.3

127

Investment in ZEW

9.6.2.2 Thriving Communities Partnership During the year we continued to support the Thriving Communities Partnership (TCP), a cross-sector collaboration with the goal that everybody has fair access to the modern essential services they need to thrive in contemporary Australia. Our Managing Director Pat McCafferty is Chair of TCP and we have supported TCP with their set up, administration and One Stop One Story Hub project.

9.6.2.3 Water Aid During the year we continued to support Water Aid, a charity that enables the world’s poorest people to gain access to clean water, decent toilets and good hygiene, allowing them to unlock their potential. Our Managing Director Pat McCafferty is a director of Water Aid. We support Water Aid’s fundraising activities by attending their annual ball and volunteering our time.

9.6.2.4 Mullum Mullum Indigenous Gathering Place During the year we supported Mullum Mullum Indigenous Gathering Place (MMIGP) which provides a culturally safe and inclusive space for Aboriginal and

165

Torres Strait Islanders to come together to feel connected and empowered. Our Director Karen Milward is the Chairperson of MMIGP. We have supported MMIGP by providing them office space at our Mitcham site whilst they undergo a rebuild of their site in Croydon.

9.6.2.5 Treasury Corporation of Victoria (TCV) Our Director Helen Thornton is the Deputy Chair of TCV. We have disclosed within note 9.6.1 transactions with TCV.

9.6.2.6 Other transactions with key management personnel and other related parties All other key management personnel and other related party transactions have been considered immaterial for disclosure. In this context, transactions are only disclosed when they are considered necessary to draw attention to the possibility that the existence of related parties may have affected our balance sheet and statement of comprehensive income, and by transactions and outstanding balances, including commitment, with such parties.

9.6.3 Key management personnel Key management personnel are people with authority and responsibility for planning, directing and controlling the activities of Yarra Valley Water, directly or indirectly, comprising independent directors and the Managing Director. Key management personnel (as defined in AASB 124 Related Party Disclosures) includes the Portfolio Minister and all directors listed under responsible persons in note 9.4 who have the authority and responsibility for planning, directing and controlling our activities directly or indirectly, during the financial year. The compensation detailed below excludes the salaries and benefits the Portfolio Minister receives. The Minister’s remuneration and allowances are set by the Parliamentary Salaries and Superannuation Act 1968 and reported within the state’s annual financial report. 2023 $’000

2022 $’000

Short-term employee benefits

963

900

Post-employment benefits

Other long-term employment benefits

1,073

1,000

Total number

Total annualised employee equivalent (AEE) 1

Total amount ($’000)

1. AEE is based on the time fraction worked over the reporting period.

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Yarra Valley Water Annual Report 2022-23

Notes to the financial statements for the year ended 30 June 2023 9.7 Ex-gratia expenditure Ex-gratia expenses are voluntary payments of money or other non-monetary benefit (for example a write-off) that is not made either to acquire goods, services or other benefits for Yarra Valley Water or to meet a legal liability, or to settle or resolve a possible legal liability of or claim against us. COVID-19 has impacted our response to customer debt, refer notes 1.2 and 7.2.3.3. 2023 $’000

2022 $’000

Hardship write-offs for customers in the Arrange and Save Program

2,696

2,925

COVID-19 related credit, rebate or relief outside of hardship program

Write-offs for disconnected customer accounts greater than 180 days

2,944

3,092

Bankruptcies and liquidations

Minimum account write-offs

176

166

Family violence bill adjustment

5,901

6,277

Total

All ex-gratia expenses (except hardship write-offs for customers in the Arrange and Save Program and COVID-19 and family violence related credits, rebate or relief) above form part of bad and doubtful debts expense, refer note 3.1.

9.8 Economic dependency Our normal trading activities are significantly dependent on the provision of finance from the Treasury Corporation of Victoria.

9.9 Events subsequent to balance sheet date In July 2023 we transferred 3,330 ML of our Greater Yarra System - Thomson River Pool entitlement to Gippsland Water. We paid a capital repatriation of $36.4 million and an interim dividend of $18.3 million on 31 July 2023. Except as provided above, no other matters or circumstance has arisen that, in the opinion of the directors, has significantly affected or may significantly affect our operations, the results of those operations, or the state of affairs in future financial years.

9.10 Australian accounting standards issued that are not yet effective The Australian Accounting Standards Board has issued a list of amending standards. In general, these amending standards include editorial and reference changes that are expected to have insignificant impacts on our financials. Of these we note AASB 2020-1 classification of liabilities as current or non-current, will alter the definition of a current liability by removing the need for a right to defer settlement of a liability to be unconditional. Instead it will be sufficient for us to have the right to defer at the end of the reporting period. This amendment will come into effect for us on 1 July 2024 (AASB 2022-6) and is expected to increase our noncurrent borrowings and reduce our current borrowings by the same amount. There are no other standards yet to come into effect that are expected to have a material impact on the entity in the current or future reporting periods or on foreseeable future transactions.

2022-23 Financial Report

Statutory Certification We certify that the attached financial statements of Yarra Valley Water Corporation have been prepared in accordance with Direction 5.2 of the Standing Directions of the Assistant Treasurer issued pursuant to the Financial Management Act 1994, applicable Financial Reporting Directions, Australian Accounting Standards including Interpretations, and other mandatory professional reporting requirements. In our opinion, the information set out in the statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and accompanying notes presents fairly the financial transactions during the year ended 30 June 2023 and financial position of Yarra Valley Water at 30 June 2023. At the time of signing, we are not aware of any circumstance which would render any particulars included in the financial statements to be misleading or inaccurate. We authorise the attached financial statements for issue dated at Melbourne on 28 August 2023.

Sue T O’Connor Chair

Patrick J McCafferty Managing Director

Natalie Foeng Chief Financial Officer

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Yarra Valley Water Annual Report 2022-23

Auditor General’s Report

Independent Auditor’s Report To the Board of the Yarra Valley Water Corporation Opinion

I have audited the financial report of the Yarra Valley Water Corporation (the corporation) which comprises the: • • • • • •

balance sheet as at 30 June 2023 statement of comprehensive income for the year then ended statement of changes in equity for the year then ended cash flow statement for the year then ended notes to the financial statements, including significant accounting policies statutory certification.

In my opinion, the financial report presents fairly, in all material respects, the financial position of the corporation as at 30 June 2023 and its financial performance and cash flows for the year then ended in accordance with the financial reporting requirements of Part 7 of the Financial Management Act 1994 and applicable Australian Accounting Standards. Basis for Opinion

I have conducted my audit in accordance with the Audit Act 1994 which incorporates the Australian Auditing Standards. I further describe my responsibilities under that Act and those standards in the Auditor’s Responsibilities for the Audit of the Financial Report section of my report. My independence is established by the Constitution Act 1975. My staff and I are independent of the corporation in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to my audit of the financial report in Victoria. My staff and I have also fulfilled our other ethical responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Other Information

The Board is responsible for the "Other Information" included in the corporation’s Annual Report for the year ended 30 June 2023. The Other Information in the Annual Report does not include the financial report, the performance report and my auditor’s reports thereon. My opinion on the financial report does not cover the Other Information included in the Annual Report. Accordingly, I do not express any form of assurance conclusion thereon. In connection with my audit of the financial report, my responsibility is to read the Other Information when it becomes available and, in doing so, consider whether the Other Information is materially inconsistent with the financial report, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a materially misstatement of this Other Information, I am required to report that fact. I have nothing to report in this regard.

Key audit matters

Key audit matters are those matters that, in my professional judgement, were of most significance in my audit of the financial report of the current period. These matters were addressed in the context of my audit of the financial report as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters.

2022-23 Financial Report

Key audit matter Revenues from service and usage charges Note 2.1 – Revenue from contracts with customers Revenue from service and usage charges: $960 million I considered this to be a key audit matter because:

• revenue is financially significant • the corporation’s IT billing system and business rules are complex, and inputs to the system are derived from multiple sources

• external service providers conduct meter readings of customer water consumption data

• there is a high degree of estimation uncertainty in the revenue accrual for unbilled water and sewerage services at year end

• the applicable accounting standard AASB 15

How I addressed the matter

My key procedures included: • testing the operating effectiveness of key controls in the billing system and billing process • assessing management's model, key assumptions, and inputs for estimating accrued revenue at 30 June 2023 • performing substantive analytical procedures by developing an expectation of usage and service charges revenue for the period based on water volumes, number of serviced properties and approved prices, compared against the revenue recorded by the corporation • assessing the adequacy of revenue recognition and measurement policies • assessing the adequacy of financial statement disclosures against AASB 15 Revenue from Contracts with Customers.

Revenue from Contracts with Customers requires detailed and complex financial report disclosures. The fair value estimate of infrastructure assets Note 4.1 – Total Infrastructure, property, plant and equipment Fair value of infrastructure assets: $4.772 billion My key procedures included: I considered this to be a key audit matter because: • obtaining an understanding of the approach to

• infrastructure assets are financially significant • the fair value estimate is derived from an incomebased valuation approach that uses a discounted cashflow (DCF) model

• management engage an external valuation expert

•

to prepare the fair value estimate

• the DCF model is highly complex and involves significant judgements and assumptions

• small changes in key assumptions used in the DCF model can materially affect the fair value

• the DCF model's forecast period is long, and includes a terminal value, which increases the difficulty in accurately estimating the fair value

• the accounting standard AASB 13 Fair Value Measurement (AASB 13) requires extensive financial report disclosures.

•

estimating the fair value of infrastructure assessing the competence, objectivity and capability of management's expert engaged to assist with the valuation process engaging a subject matter expert to assist us in obtaining sufficient appropriate audit evidence, including: o the appropriateness of using an income-based valuation approach o the identification and assessment of the reasonableness of any changes to the DCF model and/or assumptions o the reasonableness and consistency of all the assumptions used in the DCF model o the reasonableness of all inputs used in the DCF model, with specific reference to underlying data and supporting documentation o the DCF model’s computational accuracy evaluating our subject matter expert's work and concluding the work was adequate for the purposes of our audit assessing the completeness and adequacy of the financial report disclosures against the requirements of AASB 13, including the significant observable and unobservable inputs utilised in the model and the sensitivity analysis.

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Board’s responsibilities for the financial report

The Board of the corporation is responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards and the Financial Management Act 1994, and for such internal control as the Board determines is necessary to enable the preparation and fair presentation of a financial report that is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Board is responsible for assessing the corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is inappropriate to do so.

Auditor’s responsibilities for the audit of the financial report

As required by the Audit Act 1994, my responsibility is to express an opinion on the financial report based on the audit. My objectives for the audit are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also: •

•

• •

•

identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the corporation’s internal control evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board conclude on the appropriateness of the Board’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the corporation’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the corporation to cease to continue as a going concern. evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

2022-23 Financial Report

Auditor’s responsibilities for the audit of the financial report (continued)

I communicate with the Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. From the matters communicated with the Board, I determine those matters that were of most significance in the audit of the financial report of the current period and are therefore key audit matters. I describe these matters in the auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in the auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

MELBOURNE 5 September 2023

Paul Martin as delegate for the Auditor-General of Victoria

171

172

Yarra Valley Water Annual Report 2022-23

Disclosure Index

174

Yarra Valley Water Annual Report 2022-23

Yarra Valley Water’s 2022-23 Annual Report is prepared in accordance with all relevant Victorian legislation and pronouncements. This index has been prepared to facilitate identification of Yarra Valley Water’s compliance with statutory disclosure requirements. Legislation

Disclosure requirement

Page

Report of operations and additional information Charter and purpose FRD 22

Manner of establishment and the relevant Ministers

9 & 161

FRD 22

Purpose, functions, powers and duties

4-39

FRD 22

Key initiatives and projects

16-35

FRD 22

Nature and range of services provided

4-5 & 12-14

Management and structure FRD 22

Organisational structure

Financial and other information FRD 10

Disclosure index

174-175

FRD 12

Disclosure of major contracts

FRD 15

Executive Officer disclosures

FRD 22

Five-year summary of financial results

38-39

FRD 22

Employment and conduct principles

33-35 & 56-60

FRD 22

Occupational health and safety policy

34 & 59

FRD 22

Summary of the financial results for the year

36-39

FRD 22

Significant changes in financial position during the year

110-111

FRD 22

Major changes or factors affecting performance

18-35

FRD 22

Subsequent events

110-111

FRD 22

Application and operation of Freedom of Information Act 1982

FRD 22

Compliance with building and maintenance provisions of Building Act 1993

63-64

FRD 22

Statement on National Competition Policy (Competitive Neutrality Policy)

FRD 22

Application and operation of the Public Interest Disclosure Act 2012

FRD 22

Details of consultancies over $10,000

FRD 22

Details of consultancies under $10,000

FRD 22

Disclosure of government advertising expenditure

FRD 22

Disclosure of ICT expenditure

FRD 22

Statement of availability of other information

FRD 22

Operational and budgetary objectives and performance against objectives

36-39 & 100-104

FRD 22

Environmental performance

80-97 & 102-103

FRD 22

Workforce inclusion policy

33-34 & 56-59

FRD 22 & FRD 29

Workforce data

FRD 22

Disclosure of emergency procurement

FRD 24

Reporting of office based environmental impacts

71 & 87-98

Disclosure Index

Legislation

Disclosure requirement

Page

FRD 25

Local Jobs First

64-65

FRD 27

Performance reporting

100-104

Social Procurement Social procurement disclosure Framework

175

27, 62 & 77

Ministerial reporting directions MRD 01

Climate change

80-99

MRD 02

Customer and community outcomes

73-76

MRD 03

Water for Aboriginal cultural, spiritual and economic values

77-79

MRD 04

Recognising recreational values

66-67

MRD 05

Resilient and liveable cities and towns

66-73

MRD 06

Leadership and culture

56-60

MRD 07

Performance and financial sustainability

100-103

MRD 08

Compliance

84-86

Compliance attestation and declaration SD 5.1.4

Attestation for compliance with Ministerial standing direction

SD 5.2.3

Declaration in report of operations

104

Financial Statements Declaration SD 5.2.2

Declaration in financial statements

167

Other requirements under Standing Directions 5.2 SD 5.2.1(a)

Compliance with Australian Accounting Standards and other authoritative pronouncements

167

SD 5.2.1(a)

Compliance with Ministerial directions

167

Other disclosures as required by FRDs in notes to the financial statements FRD 03

Accounting for dividends

110 & 160

FRD 07

Early adoption of authoritative accounting pronouncements

116-117

FRD 11

Disclosure of ex gratia expenses

166

FRD 17

Wage inflation and discount rates for employee benefits

128

FRD 21

Disclosures of responsible persons, executive officers in the financial report

161-162

FRD 100

Financial reporting directions – framework

entire report

FRD 112

Defined benefit superannuation obligations

125-129

FRD 114

Financial instruments

146-147

FRD 119

Transfers through contributed capital

159

FRD 120

Accounting and reporting pronouncements

166-167

Legislation Water Act 1989 Water Industry Act 1994 Freedom of Information Act 1982 Building Act 1993 Public Interest Disclosure Act 2012

Local Jobs First Act 2003 Financial Management Act 1994 Public Administration Act 2004 Environment Protection Act 1970 (Vic)

United Nations Global Compact The Communication on Progress (COP) reporting have changed. Our 2022-23 COP will be published on the United Nations Global Compact website https://unglobalcompact.org.

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