Annual Report 2010
Murray Irrigation Limited
M
MURRAY IRRIGATION LIMITED 2010 ANNUAL REPORT
Menindee
Lakes
MURRAY IRRIGATION LIMITED
Menindee
Weir 32
Murray Irrigation Limited
(ABN 23 067 197 933) is a company limited by shares,
incorporated and domiciled in Australia. Its registered office and
Darling River
principal place of business is:
443 Charlotte Street, PO Box 528
Deniliquin NSW 2710
Telephone: (03) 5898 3300, Facsimile: (03) 5898 3301
www.murrayirrigation.com.au
BOARD OF DIRECTORS
Stewart Ellis, Chairman
Kelvin Baxter
Mark Robertson, Deputy Chairman
Michael Hughes
Michael Humphris
Tony Read
Tim McKindlay
Noel Graham
Wentworth
Mildura
Murrum
Hay
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NEW SOUTH WALES
Bill
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Jerilderie
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iv
Swan
Hill
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ab
Wakool
Deniliquin
Barham
Finley
Berrigan
Mathoura
Tocumwal
Moama
Echuca
Shepparton
Mulwala
GENERAL MANAGER
Anthony Couroupis
COMPANY SECRETARIES
FURTHER INFORMATION
ENGINEERING CONSULTANTS
For further information
KBR
186 Greenhill Road
about Murray Irrigation go
Parkside SA 5063
to the company’s website at
Anthony Couroupis
Geoff Cutter
Matthew Watts
www.murrayirrigation.com.au.
SOLICITORS
Information on the website includes:
Norton Rose Australia
Grosvenor Place
AUDITORS
225 George Street
Johnsons MME
Sydney NSW 2000
520 Swift Street
Albury NSW 2640
TAXATION ADVISORS
Ernst & Young
BANKERS
•
Annual Reports
•
Compliance Reports
•
Company Policies
•
Media Releases
•
Talking Water
•
Water Resource Updates
680 George Street
Commonwealth Bank
of Australia
241 Cressy Street
Deniliquin NSW 2710
Sydney NSW 2000
ANNUAL GENERAL MEETING
Will be held at 3.00pm on
Wednesday 17 November 2010,
at the Deniliquin RSL Club,
72 End Street, Deniliquin
NSW 2710.
Wagga Wagga
S.A
Murray Darling Basin
N.S.W.
Murray Irrigation
SYDNEY
Albury
CANBERRA
VIC.
Hume Reservoir
MELBOURNE
Dartmouth
Reservoir
ISBN 978-0-9802998-6-1
Copyright 2009
Design and production – Paula McKindlay Graphic Design; Printing – Specialty Press Albury
Murray Irrigation is recognised as a leader of
the irrigation sector in Australia.
CONTENTS
Year in Review.............................................................................2
Chairman’s Report ......................................................................4
General Manager’s Report...........................................................6
Company Profile .........................................................................8
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Chapter 1: Water Availability, Usage and Efficiency ..............12
Chapter 2: Customers .........................................................16
Chapter 3: Infrastructure .....................................................20
Chapter 4: Financial Performance........................................24
Chapter 5: Ancillary Activities ..............................................28
Chapter 6: People and Governance.....................................32
Directors’ Report and Financial Statements 2009/10
Directors’ Report .................................................................36
Financial Statements ...........................................................45
Directors’ Declaration..........................................................71
Auditor’s Independence Declaration....................................71
Independent Audit Report...................................................72
Accuracy and Independence.........................Inside back cover
YEAR IN REVIEW
•
The Department of Water and
Energy (DWE) announce Murray
Irrigation’s allocations as: Class A
(Town Water Supply) 50 percent;
Class B (High Security) 0 percent;
Class C (General Security) 0
percent. The announcement is
based on the reduced number of
water entitlements.
Murray Irrigation’s Board of
Directors removes the 10 percent
loss factor on annual transfers into
Murray Irrigation for the 2009/10
year.
•
DWE temporarily suspends access
to carryover to provide sufficient
water for river operations to
supply critical human needs.
Murray Irrigation’s Board of
Directors agrees to provide a 2ML
stock and domestic allocation to
all landholdings within Murray
Irrigation’s area of operations for
the 2009/10 season.
SEPTEMBER 2009
JULY 2009
•
•
•
•
Murray Irrigation’s water exchange
reopens on 20 July.
•
Class B (High Security) allocations
increase to 20 percent.
•
Murray Irrigation receives ten
eligible nominations to fill three
Shareholder-Director vacancies.
A postal ballot is held to determine
new directors.
Channel filling begins on 22 July at
the Mulwala Canal Offtake.
AUGUST 2009
Murray Irrigation’s Class B (High
Security) allocations increase to
eight percent.
•
•
The NSW Office of Water (NOW)
is established within the new
NSW Department of Environment,
Climate Change and Water.
•
Modernisation Project Stakeholder
meetings are held across Murray
Irrigation’s area of operations.
•
•
Filling of the Wakool Canal starts
4 August.
•
Nominations are sought to fill
three Shareholder-Director
vacancies on the Murray Irrigation
Board of Directors.
Murray Irrigation’s Board of
Directors approves a stock and
domestic deemed (assumed)
usage credit provision for unused
stock and domestic pipe outlets
for the 2009/10 season.
•
2
•
Murray Irrigation representatives
meet with Federal Minister for
Water Senator Penny Wong.
Murray Irrigation’s Class B (High
Security) allocations increase to
50 percent.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
•
Murray Irrigation’s Board of
Directors announce a two percent
water efficiency allocation after its
September board meeting.
•
A Memorandum of Understanding
between the NSW Government
and the Commonwealth ends the
NSW Governments embargo on
the transfer of water entitlements
to the Commonwealth. This
means the Offer of Water
Entitlements for Sale by Murray
Irrigation can proceed between
Murray Irrigation and the
Commonwealth.
OCTOBER 2009
•
Murray Irrigation announces a one
percent Class C (General Security)
allocation. Class B (High Security)
also increases to 97 percent.
•
Murray Irrigation applies to the
Commonwealth Government to
be a delivery partner to deliver
on-farm irrigation efficiency
funding to individual farmers.
The Commonwealth Government
announces $300M is available to
fund projects in the southern
Murray-Darling Basin over four
years.
•
Murray Irrigation customers can
arrange for early repayment of
Snowy Borrow.
•
•
•
Murray Irrigation announces a five
percent Class C (General Security)
allocation.
Murray Irrigation’s Board of
Directors announces a further two
percent water efficiency allocation,
increasing the efficiency allocation
to four percent.
Murray Irrigation’s Board of
Directors endorses the
development of a Murray
Irrigation Offer to Sell, Round
Two, water purchasing initiative.
•
Murray Irrigation announces a
nine percent Class C (General
Security) allocation.
•
Stewart Ellis, Noel Graham and
Tim McKindlay are announced as
the successful candidates of the
Director Election after a Postal
Ballot is conducted.
NOVEMBER 2009
•
Murray Irrigation announces a 10
percent Class C (General Security)
allocation.
•
Applications are called for Offer to
Sell, Round Two.
•
Murray Irrigation’s annual general
meeting is held at the Deniliquin
RSL on 19 November.
•
•
•
Director Malcolm Holm wishes the
new Board success into the future
as he completes his four-year
term.
MDBA releases a discussion paper
on Sustainable Diversion Limits
within the Murray-Darling Basin
Plan.
The Independent Pricing and
Regulatory Tribunal (IPART) hold a
bulk water determination hearing
in Griffith.
•
•
Offer to Sell I settlement with
individual participants is
completed.
•
Applications are processed for
Murray Irrigation water
entitlement holders to participate
in Offer to Sell 2.
•
Government announces Capital
Gains Tax relief to be broadened
to include transactions in
preparation for transformation.
APRIL 2010
•
Murray Irrigation announces
increases Class C (General
Security) allocation to 27 percent.
The Department of the
Environment, Water, Heritage and
the Arts (DEWHA) do not agree to
Murray Irrigation’s request for a
Sub-System Retirement package.
•
Murray Irrigation secures an
agreement from DEWHA to make
an offer to water entitlement
holders for a proposed Sub-System
Retirement. The proposal features
43GL of Murray Irrigation water
entitlements and retirement from
irrigation of over 100km of Murray
Irrigation channels.
•
Murray Irrigation’s Offer to Sell 2 is
rejected by the Commonwealth,
again, on the basis of price.
JANUARY 2010
•
Murray Irrigation’s new Finley
office is open for business.
•
Murray Irrigation’s Board of
Directors agrees to amend the
Company’s Entitlements Contract,
Transfer Rules Policy and Charges
Policy.
•
Class C (General Security) water
entitlements allocations increases
to 13 percent.
•
Both the Mulwala and Wakool
Offtakes close as part of the end of
season arrangements.
•
Murray Irrigation announces they
do not support Liberal Leader
Tony Abbott’s policy to hold a
2013 Referendum on a Federal
takeover of the management of
the Murray-Darling Basin.
•
Murray Irrigation announces its
participation in the National
Irrigation Corporations Water
Entitlements Register (NICWER).
•
Shadow Minister for Water Senator
Barnaby Joyce visits Murray
Irrigation and its area of
operations.
MAY 2010
FEBRUARY 2010
•
Murray Irrigation announces an
increase in Class C (General
Security) allocation to 19 percent.
JUNE 2010
•
Over 60GL was sold through
Murray Irrigation’s water exchange
over the 2009/10 season, totalling
a value of around $9M.
•
Murray Irrigation’s negotiations
with DEWHA fail to reach an
outcome regarding Sub-System
Retirement.
•
Murray Irrigation reports a
successful end of season channel
draining program, as 11GL was
delivered as off-allocation as part
of this draining program. Total onfarm usage is over 160GL.
•
Murray Irrigation submits 140
projects to participate in the OnFarm Irrigation Efficiency Program.
•
Murray Irrigation undertakes $1M
winter works program.
MARCH 2010
•
Murray Irrigation announces an
increase in Class C (General
Security) allocation to 20 percent.
•
Exceptional Circumstances
assistance is extended in the
Riverina until 30 March 2011.
•
Murray Irrigation announces
increases in Class C (General
Security) allocation to 22 percent.
•
Stormwater escapes flow in the
local area for the first time in years
after stormy weather.
•
Murray Irrigation is successful
as a delivery partner for the
Commonwealth Government’s OnFarm Irrigation Efficiency Program.
DECEMBER 2009
•
The Commonwealth Government
announces $270M in water
purchasing tenders in the southern
Basin, for the first half of 2010.
•
Murray Irrigation announces an
additional one percent water
efficiency allocation, bringing the
total for 2009/10 to seven percent.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
3
CHAIRMAN’S REPORT
The past year has been both
challenging and rewarding for Murray
Irrigation and its customers.
Murray Irrigation continues to campaign
as a voice for rural Australia and improve
strategies in water availability to help
battle the ongoing drought.
This year we welcomed new directors
Noel Graham and Tim McKindlay who
were the successful candidates after a
Postal Ballot was conducted. I was also
re-elected as a director of Murray
Irrigation. I am grateful for the
confidence shown in me by Murray
Irrigation shareholders, and look
forward to continuing to work with my
fellow Directors for the betterment of
our communities and businesses.
Former directors Malcolm Holm, Leigh
Chappell and Gordon Ball all
concluded their respective terms on
the Board. I would personally like to
recognise my fellow directors for their
hard work and dedication during their
time with Murray Irrigation and wish
them every success in the future.
Murray Irrigation’s 2014 Strategic Plan
was unveiled in June and was wellreceived by staff, customers and
4
external stakeholders. The Strategic
Plan was launched at a number of
venues across Murray Irrigation’s area
of operations including its customer
meetings. I am confident Murray
Irrigation will move forward in the
right direction towards 2014.
In March this year Murray Irrigation
was announced as a successful delivery
partner for the Commonwealth
Government’s On-Farm Irrigation
Efficiency Program. Murray Irrigation
was acknowledged to be eligible to
receive over $32M to fund
approximately 140 irrigation projects
in the local area.
Murray Irrigation also reported a
successful end of season channel
draining program, as 11GL was
delivered as off-allocation as part of
this draining program. Total on-farm
usage is over 160GL, a great result for
customers and the water distribution
team.
The 2010 Annual Report also highlights
the impact of two significant Board
decisions taken during 2010, being the
sale of Murray Irrigation’s share of
AWMA Pty Ltd, and the recognition of
the historic cost of the company’s
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
Conveyance and Supplementary
Water Access Licences in its Financial
Statements. Both decisions have been
taken after consideration of a range of
issues, and a decision made with the
clear intent of protecting and
enhancing the long term value of
Murray Irrigation to its shareholder
customers.
Despite another year of concerted
effort, the matter of our outstanding
taxation liability remains just that –
outstanding. I am confident that this
year shall see the end of this matter.
The moral high ground is all ours in
this matter – we just have to convince
the new Commonwealth Government
to share this view, and waive the debt.
An outcome we have been seeking for
what is now far too long.
Although the outlook remained
positive for the 2009/10 season,
Murray Irrigation faced many
challenges along the way.
In April, Murray Irrigation secured an
agreement with the then Department
of the Environment, Water, Heritage
and the Arts (DEWHA) to make an
offer to water entitlement holders for a
proposed Sub-System Retirement.
The past year has been both challenging and rewarding for
Murray Irrigation and its customers.
The proposal featured 43GL of
Murray Irrigation water entitlements
and retirement from irrigation of
over 100km of Murray Irrigation
channels. These negotiations failed
and by June, Murray Irrigation and
DEWHA could not reach a
satisfactory outcome, leaving many
family farm businesses in limbo and
questioning the future of irrigation.
The Murray-Darling Basin Authority
was expected to release their Basin
Plan in late July; however this
document became a ‘political tool’
and was subsequently withheld until
after the Federal Election. It is now
set for release on 8 October. The
Basin Plan will set out sustainable
diversion limits on the volume of
water that can be extracted from the
NSW Murray. It is very important that
this Basin Plan create a balance
between using available water
resources for social and economic
purposes, as well as the environment.
If communities in the Murray-Darling
Basin have more water taken away,
then there will be no future in rural
Australia. No water, no future.
Murray Irrigation continues to
remain politically active with the
aim of influencing the final Basin
Plan. A Cotton Catchment
Communities CRC Report released
in August 2010 outlined that a 10,
25 or even 50 percent reduction in
water availability would potentially
have devastating effects on all
Australian families through
increasing costs, loss of jobs, loss of
economic activity, family farms
being forced to close, people
leaving rural areas.
running of the company on a daily
basis. I thank you all for your
involvement and support over the
past year.
Murray Irrigation has played an active
role in increasing communication by
keeping customers and stakeholders
up to date with the latest
information, issues, meetings and
announcements through its weekly
newsletter Talking Water, its current
website and by direct mail.
I hope this year’s season continues
to improve and I hope your crops
are high; your water flowing and
irrigation requirements are met,
now and into the future.
Recognition must also be made to
the absolute necessity of ensuring
water entitlements in our local area
for the nation’s food and fibre
farmers. Murray Irrigation will
continue to campaign to support
the Water4Food program initiated
by the Riverina and Murray Regional
Organisation of Councils
(RAMROC).
I also wish to thank Murray Irrigation
customers for their continued loyalty
and input into the business.
Stewart Ellis
Chairman
1 October 2010
I wish to take this opportunity to
thank my fellow directors for their
continued commitment to realising
the vision and mission of Murray
Irrigation and its direction into the
future.
I want to thank Anthony Couroupis
and his dedicated management
team; and all the staff at Murray
Irrigation who contribute to the
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
5
GENERAL MANAGER’S REPORT
The past twelve months has again
posed an array of challenges to Murray
Irrigation and I am pleased to report
that its responses and achievements
were overwhelmingly positive.
Water availability was again limited
when compared to historic levels,
with a 27 percent general security
allocation achieved by years’ end.
Whilst this allocation was welcome, it
came relatively late in the season, and
thus limited customers’ opportunities
to put it to good use on-farm. The
upside of this limited opportunity is
that we head into next season with a
record volume of on-farm carryover
that has set us up well for a good
season.
An obvious highlight for the year was
the development and release of the
Murray Irrigation 2014 Strategic Plan.
This Strategic Plan paves a pathway for
Murray Irrigation to respond to the
many challenges that lay ahead,
particularly over the next four years,
but also beyond. A key component in
the Plan’s development was the
Murray-Darling Basin Plan and its
Sustainable Diversion Limit. The Basin
Plan and its limit on water extractions
shall define future water availability –
6
the Strategic Plan defines the nature of
Murray Irrigation’s response to this
enormous challenge.
I commend the 2014 Strategic Plan
to all Murray Irrigation shareholder
customers and staff alike as a blueprint
for the future of this business.
The other highlights of particular note
were the attainment by Murray
Irrigation of a total water delivery
efficiency of 81 percent, which remains
an unmatched achievement by an
Australian earthen gravity irrigation
distribution system. In taking
advantage of the delivery efficiencies
generated by this performance,
Murray Irrigation was able to deliver
over 90GL of its own water savings to
customers, valued at $17M in their
hands. This value alone well exceeds
the total amount recovered from
customers in 2010 for access to and
use of Murray Irrigation’s water
management infrastructure.
Murray Irrigation’s financial
performance was similarly strong,
with a loss from irrigation activities
recorded of almost $3M. This
performance also includes the return
to customers a rebate valued at almost
$5M. Delivery Entitlements
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
terminations continued at apace
through 2010, with almost $9M of
income generated from this item
alone. The significant reserve of
Termination Fees the company has
now accumulated, shall be essential in
assisting Murray Irrigation as it
responds to ‘a future with less water’,
arising from Basin Plan implementation
in 2014.
The primary driver for these
terminations was the continued
recovery of water for environmental
uses as the Commonwealth
Government remained in the water
market. Over 150GL of Murray
Irrigation water entitlements were
acquired during the year, bringing
total government ownership to 17
percent of Murray Irrigation’s original
general security water access licence
volume.
2010 also brought to an end the NSW
Government’s investment in this now
privatised irrigation businesses, as the
Asset Renewal Program drew to a close.
This Program saw the investment of
$100M of NSW Government funds
over 15 years in Murray Irrigation’s
infrastructure. It is this investment that
is to a large degree responsible for
The past twelve months has again posed an array
of challenges to Murray Irrigation and I am pleased to
report that its responses and achievements were
overwhelmingly positive.
delivering Murray Irrigation’s
capability for the efficient operation
of Murray Irrigation’s water
management infrastructure.
The NSW Government is to be
commended again for its vision
of privatisation and investment.
Governments’ investments in
the Murray Land and Water
Management Plans also effectively
concluded in 2010. The Plans have
been responsible for the investment
of $106M of government funds in
priority natural resource
management projects over the past
15 years. This investment has been
leveraged by a further landholder
investment of $544M over the same
period ($544M is made up of $44M
cash and $500M in kind). This
investment is a credit to the Plans’
participants – Murray Irrigation’s
customers.
Murray Irrigation’s increasing focus
on its people was expressed most
clearly through its 2014 Strategic
Plan that highlights the roles of both
Murray Irrigation’s staff and
customers.
Despite continued difficulties,
arising from on-going limited water
availability and cost containment
measures, Murray Irrigation staff
again ‘delivered’ for all its
customers’ benefit. I congratulate
all staff on their respective
achievements for the year, both
individually and collectively.
I intend entrenching into Murray
Irrigation a culture of success,
efficiency and customer focus in
everything we do.
Whilst water availability significantly
improved compared to recent
seasons, 2010 shall still be regarded
by Murray Irrigation’s customers as
a tough one. While many things are
in short supply (cash flow and water
spring to mind), resilience is about
in spades. It is this resilience that
place both Murray Irrigation and its’
customers well to harvest the
numerous opportunities that shall
arise as the seasons turn in our
favour.
rewarding, year for all. My personal
thanks also go to the Executive
Management Team and all Murray
Irrigation employees for their
dedication and respective
contribution to Murray Irrigation’s
performance over the past year.
Anthony Couroupis
General Manager
1 October 2010
Customer engagement was a
continued priority for 2010 and I
wish to acknowledge the roles that
Southern Riverina Irrigators’ and the
Landholder Associations played in
that. I very much look forward to
working with each of these groups,
both collectively and individually, to
working collaboratively to achieve
better things for both Murray
Irrigation and its customers.
My personal thanks again go to the
Board of Directors and particularly
its Chairman, Stewart Ellis, for their
guidance, support and
encouragement through what has
again been a difficult, yet
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
7
COMPANY PROFILE
Murray Irrigation is
Australia’s largest
private irrigation
company, formed in
1995 as an unlisted
public company.
Murray Irrigation is based in southern
NSW, and its shareholders are the
irrigator-customers who own the
landholdings to whom the company
supplies water. This represents over
1,200 family farm businesses who own
2,400 landholdings within our area of
operations, covering 748,000 hectares.
Our vision is to be a leader in the
delivery of irrigation water and water
related products and services.
Our mission is to meet the needs of
customers by delivering high quality
irrigation water and water-related
products and services through
developing an organisational culture
of efficiency, innovation and customer
service.
COMPANY STRUCTURE
Board of Directors
Murray Irrigation presently has eight
Directors - six shareholder Directors
and two non-shareholder Directors.
The Board of Directors develops and
oversees the implementation of the
company’s strategic direction.
Shareholder Directors are elected
for a four-year term. Non-shareholder
Directors are nominated by the
Shareholder Directors according to
their specialist expertise, and their
appointment is endorsed by
shareholders.
8
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
ORGANISATIONAL STRUCTURE
There are four divisions of the
company:
Water Management – This division
delivers water for irrigation to
landholdings within the area of
operations and the townships of
Berrigan, Finley, Wakool and Bunnaloo
during the irrigation season. This is in
addition to deliveries used to assist
with the operation of the River Murray
system, redirecting flows around the
Barmah-Millewa Choke.
The Water Management division also
carries out maintenance works on the
irrigation and drainage systems and
associated infrastructure, including
programmed works, maintenance and
minor construction work.
Additional responsibilities in this
division include the operation and
maintenance of the company’s
groundwater pumping scheme the
Wakool Tullakool Sub Surface Drainage
Scheme (WTSSDS), monitoring and
ensuring compliance with the
company’s various policies and licence
compliance.
Policy and Stakeholders - This division
co-ordinates customer and stakeholder
engagement in Murray Irrigation
activities, and is actively involved in
state and national water policy
development, in addition to informing
the development of company policy.
This division also develops and
implements Commonwealth natural
resource management initiatives in
conjunction with stakeholders.
OUR VISION
To be a leader in the delivery of
irrigation water and water related
products and services.
OUR MISSION
To meet the needs of our customers
by delivering high quality irrigation
water and water-related products
and services through developing an
organisational culture of efficiency,
innovation and customer service.
OUR VALUES
Infrastructure Services - This
division is responsible for the
lifecycle management of the
company’s irrigation and drainage
assets. This includes 2,954km of
supply channels, 1,425km of
stormwater escapes and more than
20,000 structures, with a replacement value of more than $804M.
Activities include development of
construction standards, preparation
of designs for asset refurbishment,
modernisation planning, sub-system
retirement and construction
supervision.
Corporate Services - This division
incorporates the departments of
Finance, Resources, Administration,
and MILCast. It is responsible for
overseeing the company’s finances,
investments, and property, human
resource activities, informing and
implementing its corporate
governance framework, the
company’s registers, and other
administrative aspects of the
business such as fleet management,
stores, contract management,
reception, records, information
technology and the Water Exchange.
WATER SUPPLY
Our water supply comes from the
Murray River at Mulwala where our
main supply channel, the Mulwala
Canal, begins.
Our irrigation season generally runs
from August to May inclusive.
Murray Irrigation customers own
water entitlements, when the
company has a water allocation,
water entitlements provide
customers with a share of the water
set aside for consumptive use in the
NSW Murray Valley. Allocations
represent a percentage share of the
available water. Twice each month
during the irrigation season, the
State Government agency reviews
how much water is available. They
consider any flows into the storages
and river during the past month and
likely inflows in coming months.
This determines the allocation.
Water is delivered to a Murray
Irrigation landholding according to
orders placed via the company’s
telephone water ordering system.
There is a lead time of up to five
days for water orders; based on
travel time from storage to offtakes.
TEMPORARY (ANNUAL) WATER
TRADING
Our customers are actively involved
in water trading. Murray Irrigation
operates its Water Exchange for
temporary water trade. The volume
and price of water sold is publicly
available on our website
www.murrayirrigation.com.au.
Customers trade water which has
been allocated to an allocation
account. Water can be traded onto
and from the company’s licence at
any time during the irrigation
season; however, different costs and
restrictions apply to interstate and
intrastate trades.
CUSTOMERS –
Our success is based on meeting
the needs of our customers.
INNOVATION –
We will implement continuous
improvement in service delivery.
INTEGRITY –
We will be honest, trustworthy
and consistent.
PERFORMANCE –
We will deliver long-term cost
effectiveness.
SAFETY –
We will provide a safe workplace
for our employees and customers.
TEAMWORK –
We will achieve more by working
together.
COMMUNITY AND ENVIRONMENT –
We will play a role of responsibility
in our local economy and to the
environment.
9
MURRAY IRRIGATION LIMITED
AT A GLANCE
Chairman ..........................................Stewart Ellis
General Manager...............................Anthony Couroupis
Corporate structure............................Established 1995
Unlisted public company
Formerly Government owned
Head Office ........................................Deniliquin
Regional Offices .................................Finley & Wakool
Water Access Licences ........................NSW Murray Regulated River
1,111,957 units NSW Murray
General Security (67 percent of
total NSW General Security)
300,000 units of conveyance
121,704 units supplementary
water
Landholdings supplied ......................2,389
Staff...................................................100
Area of operation ...............................748,000ha
PERMANENT WATER
ENTITLEMENTS TRADING
Murray Irrigation water entitlements
represent a share of the company’s
general security water access
licence. The company has an
Entitlements Contract with all
entitlements holders describing the
nature of the entitlements,
conditions of supply, and the rights
and responsibilities of the company
and entitlements holders in relation
to the delivery of water. These water
entitlements can be owned
independently of land, therefore can
be sold to other irrigators or to nonirrigators.
We maintain a water entitlements
trading register of buyers and sellers
for permanent sales of water
entitlements. This is a service to our
customers, and is available at
www.murrayirrigation.com.au.
Regional population ..........................33,000
Infrastructure replacement value ........Over $800M
Gross value agriculture
production .........................................$400M (farm gate)
Supply system ....................................2,954km gravity-fed earthen
channels
Five year average water use
on farm .............................................291GL (30GL - 985GL)
Delivery efficiency ..............................> 80 percent
Drainage catchment ..........................249,000ha
Drainage system ................................1,425km gravity-fed earthen
channels
Sub-surface drainage catchment ........25,000ha
Sub-surface drainage system ..............115km pipes, 54 pumps, 2,100ha
evaporation basins
Supply points ....................................3,718 dethridge wheels
1,417 pipe outlets (90 percent
stock and domestic) includes
approximately 200 metered pipes
Accredited escapes ............................Capacity 3,430ML/day (5 escapes)
Figures are current as at date of publication
RESPONDING TO CHANGE
Significant change has arisen to the
structure of Murray Irrigation and
the relationship with its irrigator
customers as a result of the Water
Act 2007 (Cth) and the involvement
of the Australian Competition and
Consumer Commission (ACCC) in
setting rules for the trade of water
entitlements and water charges,
including charges for access to our
infrastructure. Many of these
changes have been implemented,
including the introduction of
delivery entitlements and
amendments to the company’s
Constitution.
INFORMATION SERVICES
We provide a range of information
services to assist customers to keep
up to date with issues affecting
water resource availability and
deliveries, as well as longer term
issues affecting the irrigation
industry.
Information services that we provide
include:
Talking Water - A weekly newsletter
titled Talking Water is issued each
Tuesday by email or facsimile.
Talking Water includes company
announcements including changes
to company policies, charges,
resource availability and operational
issues. Water allocation
announcements are also made
through Talking Water on the first
and fifteenth of each month during
the irrigation season.
capacity to prosper and thrive
through variable climatic conditions.
We strive to operate the most
efficient, accountable and
responsive irrigation company
possible, maximising the water
available for productive use. Food
and livestock are the focus of
regional production including rice,
wheat and other cereals, canola,
maize, tomatoes, fibre, potatoes,
onions, dairy, lambs and cattle.
Website - Murray Irrigation’s website
is the central point for information
about the company. The website
also provides the point of access for
customer water account details
including water usage, orders
placed, transfer history and Murray
Irrigation’s Water Exchange.
Murray Irrigation has a strong link
with the communities within its area
of operations and endeavours to
support them, including providing
annual school grants to the 24
primary schools and three high
schools in the region and supporting
learn-to-swim programs each year.
Radio Segment - Weekly radio
segment on 2QN in the “On the
Land” program.
Customer Meetings - The company
holds “as needed”/ demand based
meetings with customers to provide
updates on a range of issues. Dates
of these meetings are published in
Talking Water preceding the
meetings.
ENVIRONMENTAL STEWARDSHIP
Murray Irrigation is committed to
its stewardship of this important
part of the Murray-Darling Basin.
impact on the local and regional
environment.
Murray Irrigation operates a gravityfed channel system which uses little
to no energy to operate. Murray
Irrigation has a partnership with
Pacific Hydro for a green power
generator on the Mulwala Canal, at
The Drop. When water is available
there can be flows of 6,000ML a day
flow through the Mulwala Canal
and the plant can produce around
2.5 megawatts of green power,
which is sold into the national
electricity grid – this is enough to
power 1,500 homes.
CONTACT DETAILS
Murray Irrigation Limited
443 Charlotte Street
PO Box 528
DENILIQUIN NSW 2710
T. 03 5898 3300
F. 03 5898 3301
www.murrayirrigation.com.au
We aim to ensure water use is
sustainable and have implemented
various policies to ensure customers’
on-farm water use minimises the
Annual Report - Murray Irrigation’s
Annual Report includes the
company’s annual accounts and
details the overall performance of
the company.
Customer Information Kit –
Murray Irrigation has developed a
Customer Information Kit which has
detailed information about the
company for its customers. Copies
of the Kit are available from all
Murray Irrigation offices and web
site, www.murrayirrigation.com.au.
COMMUNITIES
Irrigated agriculture is the
foundation of the social and
economic wellbeing of our towns
and businesses, which has a regional
population of 33,000. Water is a
significant part of the region’s
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
11
CHAPTER 1
WATER AVAILABILITY,
USAGE AND EFFICIENCY
We will seek every additional water supply opportunity, create
strong commercial incentives for water demand, and maximise
both the volume of water available to our customers and the
efficiency of every megalitre we source and deliver.
OVERVIEW
Over the past year the Water
Management division has faced a
number of challenges which have
impacted on our core function to deliver water to our customers.
Policy, farm management decisions
and the prolonged drought have
all impacted on our operational
efficiency.
Striving to do ‘more with less’
whilst continuing to improve
delivery efficiencies and minimising
costs remains a significant and
fundamental challenge. With this
in mind, the Water Management
division achieved its goals for
2009/10 water season.
The key achievement for the
2009/10 season was a significant
improvement to on-farm delivery
efficiency targets. This contributed
to Murray Irrigation’s ability to
announce in excess of $17 million
worth of water efficiency
allocations.
WATER EFFICIENCY
ALLOCATIONS
WATER AVAILABLE FOR
IRRIGATION
On 17 September 2009, Murray
Irrigation announced its first ever
Water Efficiency Allocation.
Throughout the course of the
season, Murray Irrigation
announced a total of 91,299ML
(equivalent to 8 percent of Water
Entitlements) in additional water
availability over and above the
‘normal’ water allocations
announced by the NSW Office of
Water. An assessment of the annual
water market in the weeks following
these announcements resulted in
this water being valued by Murray
Irrigation in excess of $17 million.
This compares very favourably with
Murray Irrigation’s revenue from
irrigation $15 million (includes
government charges).
Murray Irrigation’s water availability
on-farm for the 2009/10 season was
approximately 441,000ML.
The 2009/10 season again resulted
in a significant net volume
(16,127ML) of water being traded
outside of Murray Irrigation’s area
of operations. This is the third
consecutive year where there has
been a net trade of water outside
of Murray Irrigation’s area of
operations.
In addition, customers also elected
to repay 13,389ML of the Snowy
Borrow advances to allocations
made during the 2004/05 and
2005/06 seasons. This was made
possible after Murray Irrigation
negotiated an early borrow
repayment provision with the NSW
Office of Water.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
13
CHAPTER 1
WATER AVAILABILITY, USAGE AND EFFICIENCY
TOTAL VOLUME OF WATER
MURRAY-DARLING BASIN PLAN
Deliveries on-farm totalled
161,473ML for the 2009/10 season.
This included 11,020ML being
delivered as off allocation water in
May 2010 as part of Murray
Irrigation’s end of season channel
draining operations.
The Murray-Darling Basin Plan
is a document which is yet to be
released (at time of printing)
which will outline the enforceable
sustainable diversion limits on
the volumes of surface and
groundwater that can be taken
from the Murray-Darling Basin
including the NSW Murray River.
Murray Irrigation’s modified end of
season channel draining operations
was assessed as being highly
successful with more water being
delivered to customers as off
allocation and significantly less water
being released from non credited
escapes compared to last season.
The total volume of water carried
over by Murray Irrigation from the
2009/10 to 2010/11 season is
358,931ML (company plus on-farm
water). This is substantially more
than the 124,680ML carried over
from last season.
ASSISTING RIVER FLOWS
Murray Irrigation has continued to
assist Murray Valley river operations
with the delivery of water using
Murray Irrigation’s channel supply
infrastructure to deliver water out
accredited escapes back into local
waterways.
Both the Wakool Town and Niemur
Syphon escapes were extensively
used again this season to assist
the NSW State Water Corporation
with the operation of the Wakool/
Yallakool and Colligen/Niemur/
Creek River systems.
Murray Irrigation is continuing to
negotiate with State Water
Corporation and the NSW Office of
Water to have each of these escapes
recognised as fully accredited
escapes on a permanent basis.
14
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
Murray Irrigation has continued to
campaign to ensure a balance is
achieved to ensure water is available
for social and economic purposes,
as well as the environment.
Murray Irrigation is concerned that
removal of water from agriculture
may have devastating effects on the
local community.
Including loss of jobs and loss of
economic activity, family farms
forced to close, people leaving rural
areas. Murray Irrigation had worked
with National Irrigators’ Council,
NSW Irrigators’ Council and
Southern Riverina Irrigators’ to
influence government policy prior
to the 2010 Commonwealth
election and the release of the draft
Basin Plan.
CUSTOMER COMPLIANCE
Throughout the 2009/10 season,
Murray Irrigation has continued to
refine its relatively new Compliance
Policy.
The implementation of the
Compliance Policy continues to be
used to assist with ensuring equity
between entitlement holders.
During the 2009/10 season a total
of 17 incidents were investigated.
SUPERVISORY CONTROL AND
DATA ACQUISITION (SCADA)
A major upgrade of the SCADA
backbone continued with works
being completed during the
2009/10 season.
The expansion of Murray Irrigation’s
remote control capabilities has been
identified as a key component of
Murray Irrigation’s 2014 Strategic
Plan.
Following the completion of
works by the SCADA Team, the
Distribution Team was able start
trialling the remote control of the
Billabong Channel for much of
season. In addition, a very short trial
of remote control operations of the
Deniboota Canal was conducted
late in the season.
It is currently intended that the
regulators for both the Billabong
Channel and Deniboota Main Canal
will be operated by remote control
during the 2010/11 season. In
addition, it is also intended to start
trialling the remote control
operation of regulators in the top
sections of the main canals within
the Wakool area.
OUR INFRASTRUCTURE
Murray Irrigation’s maintenance
program is largely focused on the
continual maintenance of the
supply and drainage networks. As a
result, maintenance expenditure is
benchmarked as a percentage of
the $355 million replacement value
of Murray Irrigation’s channels.
As part of Murray Irrigation’s
drought cost reductions, many staff
within the Works Team were initially
engaged on government funded
works which primarily included the
regulator mechanisation program.
By February 2010, following
increases in water availablility,
Works staff were redirected from
government funded works to
channel maintenance works to
enable the successful delivery of the
2010 Autumn Irrigation Program.
A key component of the success
related to the strategic channel
maintenance program (primarily
desilting/deweeding) which was
completed during autumn.
Despite these improvements, there
remains a backlog. Many of Murray
Irrigation’s supply channels remain
in poor condition. In response to
this, and the large amount of water
to be carried over from the 2009/10
to 2010/11 season, Murray
Irrigation has again completed a
significant winter works channel
maintenance program.
SUBSURFACE DRAINAGE
Groundwater levels within the
influence of the Wakool Tullakool
Sub Surface Drainage Scheme
(WTSSDS) have remained at about
4.2m below surface level. As result,
a record low volume of saline
groundwater (approx. 15ML) was
pumped to the WTSSDS evaporation
basins this season. This compares
with 4,213ML, 2,885ML and 220ML
pumped for the 2006/07 to
2008/09 seasons respectively.
MURRAY IRRIGATION LICENCE
REVIEWS
Murray Irrigation is continuing to
work with the NSW Office of Water
on the development of its new
Water Management Licences under
the Water Management Act 2000
(NSW). The new licences essentially
replace Murray Irrigation’s previous
Irrigation Corporation Water
Management Works Licence that
was developed in 1995 at the time
of Murray Irrigation’s privatisation
under the Water Act 1912 (NSW).
MANAGING STORMWATER
Murray Irrigation’s storm water
escape system was effectively not
utilised until a heavy rainfall event in
March 2010. Prior to this, the
stormwater escape system had not
been utilised for an extended period
of time due to the prolonged
drought.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
15
CHAPTER 2
CUSTOMERS
We will understand and
meet our customers’ needs
OVERVIEW
During 2009/10 many of Murray
Irrigation’s customers become ‘more
involved’ with the running of the
company. A number of customer
meetings were held in Murray
Irrigation’s area of operations to
communicate to customers a range
of different issues and strategies for
the company. Customers also had
opportunities to learn more about
Murray Irrigation’s activities by
participating in customer meetings
and workshops held across its area
of operations.
Murray Irrigation’s seeks to provide
customers a voice and a platform to
express any concerns, comments
and ideas to help Murray Irrigation
improve its operations and move
forward.
The 2014 Murray Irrigation Strategic
Plan established Customers as a key
strategic goal area. Previously
customers were captured under the
broader area of policy and
community relations.
BECOMING A MURRAY
IRRIGATION CUSTOMER
When you purchase a landholding
(with a minimum of four delivery
entitlements and five shares) in
Murray Irrigation’s area of operations
you become a shareholder customer
of the company. You will have a
landholding account. As a
shareholder you can vote at the
annual general meeting held in
November each year.
Company shares can be traded
between shareholders when water
entitlements and delivery
entitlements are sold, but the
company does not distribute
dividends on shares.
Every shareholder has one vote for
each landholding in respect to
which that shareholder is recorded
as a registered proprietor in Murray
Irrigation’s Share Register.
CUSTOMER INFORMATION KIT
A Customer Information Kit is
available to all new and existing
Murray Irrigation customers. It
outlines all of Murray Irrigation’s
operations such as becoming a
Murray Irrigation customer,
accessing water, ordering water,
trading Murray Irrigation
entitlements, Murray Irrigation
policies and products, temporary
water trading and other information
services. To obtain a copy of Murray
Irrigation’s Customer Information
Kit contact your local Murray
Irrigation office. The Customer
Information Kit was developed with
the financial assistance from the
NSW Department of Industry &
Investment as part of Murray
Irrigation’s dairy strategy.
COMMUNICATION
The main form of communication
between Murray Irrigation, its
customers and its stakeholders is
Talking Water. By producing this
newsletter Murray Irrigation aims
to provide essential information
about the company and the water
industry to its customers.Talking
Water is delivered either via
facsimile or email to around 2,400
customers. In 2009/10 Murray
Irrigation produced 102 editions
of Talking Water.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
17
CHAPTER 2
CUSTOMERS
The table below shows the number
of editions of Talking Water
produced over the last five years.
In December 2009 Murray Irrigation
also started production of a
monthly Chairman’s Report,
distributed to Talking Water
recipients. This report provides a
regular update on the breadth of
strategic issues the company is
involved with as well as timely
information about issues being
considered by the Board of
Directors. In 2009/10 seven
Chairman’s reports were produced.
WEBSITE
Murray Irrigation’s website
(www.murrayirrigation.com.au)
contains the most up-to-date
information regarding the company
for customers and stakeholders. It is
the central point of information for
customers to easily access media
releases, water updates, allocation
announcements, Chairman’s
Reports, Talking Water, Murray
Irrigation’s policies, positions vacant
and much more. Murray Irrigation’s
website is a complete resource tool
for customers to have at their
fingertips.
Additional newsletters and media
releases may be distributed to
customers for urgent information,
which may include water quality
warnings, major political
announcements and changes to
water availability, including access
to off allocation or water
restrictions.
HOW WE ARE PERFORMING
2005/06
2006/07
2007/08
2008/09
2009/10
Scheduled Talking Water
65
51
50
51
52
Additional Talking Water
28
24
20
40
43
–
–
–
–
7
Chairman’s report
Number of Talking Water recipients – 2,400
18
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
‘ON THE LAND’ RADIO
PROGRAM
Over the past twelve months
Murray Irrigation’s General Manager
Anthony Couroupis has undertaken
a weekly radio broadcast on 1521
2QN to discuss water news and
issues. This is another opportunity
for customers to keep up-to-date
with the latest local and national
events occurring which may affect
Murray Irrigation and its customers.
The weekly radio program starts at
6.45am each Tuesday.
LOOKING AHEAD
The 2010/11 year will herald
Murray Irrigation seeking increased
input and feedback from its
customers to assist the Company’s
decision making so that services
align with our customers’ needs.
This will involve the Company
seeking responses from customers
about their water use intentions,
demand for access to Murray
Irrigation’s infrastructure and also
satisfaction with our services and
communication.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
19
CHAPTER 3
INFRASTRUCTURE
We will provide infrastructure that meets
our service delivery requirements.
OVERVIEW
The past year has set many
challenges for Infrastructure Service
division of Murray Irrigation. The
Commonwealth Government has
heavily influenced our decision
making efforts largely in response
to Private Irrigation Infrastructure
Operators Program (PIIOP) funding
and sub-system retirement proposals.
Our major initiatives have included
developing policies for reconfiguration and decommissioning of
redundant or under-utilised assets,
introducing a metering
implementation plan, reducing
existing irrigated areas through
agreement with customers, all while
improving the level of our service.
The 2014 Murray Irrigation
Strategic Plan has set out an
ambitious program of change to
deliver a strong viable business that
meets customers’ service needs at
the lowest cost.
Infrastructure Services, as well as
delivering on the 2014 Strategic
Plan objectives, will maintain focus
on its core mission to optimally
plan and manage future asset
expenditures ensuring quality of
service delivery.
The two business areas of
Infrastructure Services which deliver
on this mission are Infrastructure
Strategy and Program Delivery.
The achievements of 2009/2010
are:
•
Modernisation plan completed,
submitted and approved
INFRASTRUCTURE STRATEGY
•
Future Metering Strategy
completed
•
Sub System Retirement
assessment method developed
and implemented
•
Pilot Sub System Retirement
program submitted to the
Commonwealth Government
•
Private Irrigation Infrastructure
Operators Program funding
submission completed
•
Reviving the Asset Management
System
•
Restructure of Infrastructure
Services completed
Murray Irrigation operates and
maintains supply and drainage
assets worth $458 million (over
$800 million at replacement) over
a large geographic area. The major
task of Infrastructure Services is to
ensure assets can deliver the
required service and when assets
can no longer deliver the service,
that the best solution is ready to be
implemented. The development
of the asset system (incorporating:
asset data, costs, spatial data and
asset condition) will ensure that
medium and long term capital
programs are developed and
options analysed to deliver the
best solution to customers of
Murray Irrigation.
Infrastructure Strategy is
undertaking two main tasks: 1) to
fully understand existing assets; and
2) to determine the medium term
future requirements for these assets
given customers service level
requirements.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
21
CHAPTER 3
INFRASTRUCTURE
METERING
Over the past twelve months,
Infrastructure Services has
developed a metering strategy
and is part way through the
development of an implementation
plan of which the objectives are:
1. Deliver improved on-farm
efficiency through ‘High Flow’
Irrigation;
2. Deliver improved service choice
and order time flexibility; and
3. Minimise total costs through
reducing metering points and
reducing operation and
maintenance costs;
4. Avoid investment redundancy
through system retirements and
reconfiguration;
5. Achieve compliant metering
within Murray Irrigation by
2020.
The Metering Strategy
Implementation is due for
completion late 2010 with rollout of
compliant meters to occur from
2011 through to 2020. Funding and
treatment of the meter ‘undermeasurement’ are critical issues to
be addressed by the plan and other
funding opportunities will be
pursued by the company.
CAPITAL WORKS PROGRAM
The installation of Mechanical gates
at regulators continued in 2009/10
replacing the timber drop bar
regulators.
The 2010 contract for 150 gates was
again awarded to AWMA for the
manufacture and installation. Gate
manufacture was completed in
November 2009 and 60 percent of
22
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
gate installation was completed in
2009/10 (delayed due to Autumn
Irrigation Program) with the
remaining installation to be
completed in 2010/11.
The company does not intend to
upgrade the remaining 140
regulators (located at the ends of
the system) at this stage due to the
risk of redundant investments.
Warragoon Stage II was completed
in January 2010. It is a large large
stormwater escape which completes
the original surface drainage
program for the West Berriquin
District and the Mokangar Basin.
Stage II provides drainage relief for
landholdings extending over an
area of 2,000ha.
PIIOP2
Infrastructure Services is finalising
plans for the development of a
more detailed application to the
Commonwealth Government for
funding under the Private Irrigation
Infrastructure Operators Program
round 2 (PIIOP2), targeting a
submission early 2011.
PIIOP2 is a ‘Water for the Future’
initiative of the Commonwealth
Government to assist irrigation
system adjustment to reduced
future water availability. The plan
will include the following initiatives:
Retirement, Reconfiguration, On
Farm Irrigation Efficiency, Channel
Lining, Remote Control and
Metering.
The unsuccessful round 1
application feedback from the
Commonwealth Government means
that projects will be developed
individually and then combined for
the final business case submission.
PROGRAM DELIVERY
FUNDING
Our core mission is to optimally
manage future asset expenditures
ensuring quality of asset produced
and service delivery.
Government grants still formed a
significant component of capital
expenditure over the past year
totalling $5M. The influence of
external funding has now concluded
with completion of the Asset
Renewal Program (i.e. a 15 year
NSW funding program for asset
renewal). The asset maintenance
renewal reserve of $44 million and
annual income will now form the
primary source of funds for capital
projects.
Infrastructure Services has
continued to deliver large capital
projects over the 2009/10 financial
year including both Asset Renewal
Plan projects and Land and Water
Management Plan projects. The
annual expenditures are reducing
and are likely to remain subdued
until plans for reconfiguration and
retirement are resolved.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
23
CHAPTER 4
FINANCIAL PERFORMANCE
We will deliver cost effective services that
maintain the company’s viability.
OVERVIEW
INCOME
CAPITAL EXPENDITURE
Overall Murray Irrigation traded
within budget. Murray Irrigation’s
financial performance showed
increases in water allocations had
increased our income higher than
the ‘drought budget’ adopted at the
start of the season. This was mainly
as a result of increased water
availability than budgeted and driven
by improvement in storage volume
in the Menindee Lakes. There were
also high levels of customer sales of
Water Entitlements, generating
Termination Fees. These fees are
designed to assist the company
rationalise the channel network
in future.
Whilst the water allocation
remained well below average, it was
above budget expectation.
Whilst the majority of infrastructure
works were completed to budget,
one of the large regular
mechanisation replacement
programs was partially completed
by June, and some plant
replacement was postponed.
The costs of employment, materials
and supplies were contained at
below the level of improved
income. Capital expenditure
(channel infrastructure and
replacements for plant, motor
vehicles and the new Finley office),
were also within budget. As a net
result, the company remained in
financial control despite another
low allocation year.
2009/10 was the final year of the
Deed of Agreement with the New
South Wales Government providing
for government contributions
towards the infrastructure assets
transferred to the company at its
formation in 1995. The last of the
‘dowry payments’ was received in
June 2010.
Likewise, the long-running Land
and Water Management Plan
program funding also ended during
2009/10.
ASSETS
The company has been reducing its
plant, equipment and vehicle
holdings and costs, rationalised its
occupancy costs in Finley, maximised
its financial investment returns, and
improved its management of
receivables.
The company continued to offer a
discount for on-time payment of
accounts, which was taken up by
over 70 percent of customers.
Interest rate increases during the
year provided a higher than
budgeted income.
OPERATING EXPENDITURE
LIABILITIES
The two largest unplanned factors
for the year were the interest
expense on the long-standing tax
dispute, and the depreciation of
infrastructure assets that had not all
been commissioned as capitalised in
prior years.
The company continued its
advocacy for a waiver on the longstanding taxation debt, and in the
meantime records the liability as a
provision under the principle of
conservatism.
Despite another ‘drought-affected’
year, the company maintained its
costs below its income.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
25
CHAPTER 4
FINANCIAL PERFORMANCE
KEY INCOME SOURCES:
4%
5%
5%
27%
6%
5%
10%
12%
1%
24%
Water Charges 27%
Government Charge recovery 12%
Termination Fees 24%
LWMP user contributions 1%
NSW Gov (Deed) 10%
LWMP Gov 5%
Investment interest 6%
AMRR interest 5%
MILCast 4%
Miscellaneous income 5%
KEY EXPENDITURE ITEMS:
13%
25%
20%
22%
5%
15%
26
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
Depreciation 26%
Salaries, Wages and related 22%
Water Licence (Gov) charges 15%
Tax interest expense 5%
Materials and Contract payments 20%
Other Expenses 13%
KEY PERFORMANCE INDICATORS
Key Performance Indicator
2009/10 Target
2009/10 Actual
Working Capital (Current Assets / Current Liabilities)
≥1
0.831
Operating result (Operating Income less Operating
Expenditure) after tax and any abnormal items
≥ Break even
$677K2
Asset Replenishment (Capital Expenditure / Depreciation)
≥1
0.333
Variable Costs / Total Costs
10%
12%
Notes
1
$77 million of investments normally included in Current Assets have longer-term maturity dates.
The ratio would otherwise be 3.74
2
Excludes Termination Fee income, which is placed in a Reserve and not used for operational expenditure
3
Includes a higher than normal write-down through depreciation of assets
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
27
CHAPTER 5
ANCILLARY ACTIVITIES
We will achieve appropriate returns on our
investments in ancillary activities.
OVERVIEW
Investments in existing and
prospective ancillary activities
provide Murray Irrigation a net
benefit to its core business. These
ancillary activities do not always
offer a quanifiable financial return,
rather they are an investment to
the company. In 2009/10 Murray
Irrigation has participated in a
number of activities including
selling its 50 percent share of
Automated Water Management
Australia Pty Ltd (AWMA),
becoming a Commonwealth OnFarm Irrigation Efficiency Program
Delivery Partner, and a sale
coordinator for the ‘Offer to Sell’
initiative. Murray Irrigation is also a
partner in the National Irrigation
Corporations Water Entitlement
Register (NICWER) and continues to
promote its pre-cast concrete
business unit MILCast, based in
Finley.
Activity
Nature of Interest
Automated Water Management Australia
50 percent shareholding until
(AWMA) Pty Ltd
30 June 2010
MILCast
Trading name owner (business unit
of Murray Irrigation)
Riverbank Holdings Pty Ltd
100 percent shareholding
(Murray WaterBank)
National Irrigation Corporations Water
Partner
Entitlement Register (NICWER)
‘The Drop’ Hydropower
Lease to Pacific Hydropower
Wakool-Tullakool Sub-System Drainage
Contract with Cheetham Salt Limited
System (WTSSDS) salt harvest
Water for the Future
Partner
On-Farm Efficiency Program (C’th)
Delivery partner
Offer-to-Sell (Cth)
Sale co-ordinator
Wetland Watering (Private Property)
Partner
Murray Irrigation Water Exchange
Provider
The company operates, has invested
in, or has in interest in the following
activities:
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
29
CHAPTER 5
ANCILLARY ACTIVITIES
KEY WATER EXCHANGE RESULTS:
2005/06
2006/07
2007/08
2008/09
2009/10
Murray Irrigation Class C (General Security)
Allocation
56%
0%
0%
9%
27%
Murray Irrigation Water
Efficiency Allocation
0%
0%
0%
0%
7%
Number of Sales
1,258
1,403
902
1,833
1,137
Total Volume traded (ML)
95,068
58,936
11,537
54,921
61,168
Total Value of Sales
$4.2M
$12.3M
$7.8M
$16.4M
$9.1M
Average price/ML
$44.59
$370.73
$680.04
$298.20
$148.24
Lowest price/ML
$34
$70
$200
$255
$63
Highest price/ML
$140
$800
$1,100
$600
$500
93,474*
47,127
-12,623
-53,539
-16,121
MURRAY IRRIGATION WATER EXCHANGE
MURRAY IRRIGATION AREA TRADE
Net temporary trade into MIL area (ML)
*Excludes transfer from Snowy Hydro Ltd
30
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
The nature of a ‘return’ is not
always in financial terms, such as a
dividend, and a return can include
services useful for Murray Irrigation
customers. An example of the latter
was the role the company played in
co-ordinating the interests of many
customers seeking to sell water
entitlements to the Commonwealth
(‘Offer to Sell’). Whilst the company
levied a small administrative fee to
cover the legal conveyancing and
related transfer costs (cost
recovery), the performance of this
ancillary activity to put together a
‘bulk sale’ achieved a price for those
customers above market price at
that time.
The Performance Indicator
measures for these activities had not
been reviewed in 2009/10, but
from 2010/11 will comprise:
Operating Result (Operating
Income less Operating Expenditure)
after tax for each financial or
business activity
Murray Irrigation’s cost compared
with alternative external providers.
AWMA PTY LTD
Whilst a cash dividend has not
occurred through the Murray
Irrigation part-ownership of AWMA,
the company has received returns in
kind. A savings “return” has been
estimated to be in the order of 25
percent to 30 percent lower cost on
the contract values than Murray
Irrigation would have achieved from
any other provider. After the initial
payment for Murray Irrigation
equity, the remaining balance
payable on the Convertible Note is
reflected in the Balance Sheet by a
Non-Current Asset (Receivable).
MILCAST
Murray Irrigation’s pre-cast concrete
product business MILCast faced a
very difficult trading year. With the
end of government-funded
infrastructure programs and a late
start to the irrigation season, sales
reduced to historically low levels.
ON-FARM EFFICIENCY PARTNER
In the implementation of its ‘OnFarm Irrigation Efficiency’ Program,
the Commonwealth sought delivery
partners with experience of farm
improvement projects. Murray
Irrigation was successful on behalf
of many interested customers to be
appointed as a delivery partner for
up to $32 million in on-farm
projects to be managed over the
coming two years. Stage two
applications were completed for
143 individual projects. Murray
Irrigation is awaiting approval for
individual projects. (At the time of
printing).
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
31
32
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
We will provide high quality leadership and
governance and meet the needs of our shareholders
and employees.
OVERVIEW
Key change elements have been
occurring through the year for both
the Board and for all employees. The
full year of 2009/10 involved half the
Board being new to the company
directorship, and came at the key
timing of developing a new Strategic
Plan for the company. Goals and
targets have been set out to 2014.
All employees have been
increasingly focused on service and
performance levels, resulting in
financial control and the ability to
provide the seven percent efficiency
allocations determined by the Board
during the year.
BOARD OF DIRECTORS
Constitution
At the Annual General Meeting held
on 19 November 2009, the
meeting approved the Board’s
recommendations of changes to the
Company’s Constitution. The main
changes involved removing the
commercial or customer-related
matters that correctly reside within
the Entitlements Contracts and
company policies, leaving the
Constitution to be primarily about
shareholding and governance.
2014 Strategic Plan
The Board approved its 2014
Strategic Plan to set the direction
for the company at its April 2010
meeting. The Plan was communicated widely through customer,
stakeholder and employee meetings,
as well as published in summary on
the company website. The Board
has initiated a reporting regime to
review progress quarterly, and revise
its Plan annually before the budgetsetting process.
operational and more strategy and
policy-focussed. This involved
restructuring its committees into
three key areas:
Service and Infrastructure - Includes
all customer service elements,
regulatory and compliance, and all
asset and infrastructure planning
Finance, Audit and Risk Management
- Includes all custodial oversight of
financial, audit, resourcing,
budgets, capital expenditure and
risk management
Remuneration - Includes ensuring
the compensation and reward
systems support the company’s
goals for service, performance, and
labour market competitiveness
Committee Structure
The Board made changes to the
scope of its focus, to be less
Murray Irrigation Board of Directors:
Back row, from left: Michael Humphris, Noel Graham, Tim McKindlay, Michael Hughes, Kelvin Baxter.
Front row, from left: Mark Robertson (Deputy Chairman), Stewart Ellis (Chairman), Tony Read.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
33
CHAPTER 6
PEOPLE AND GOVERNANCE
Key Performance
Indicator
2009/10 Target
2009/10 Actual
Variance
GL delivered /Full-time Equivalent
labour
22,700 (20GL/99.7 FTE =
0.2GL/FTE)
161GL/106.8 FTE = 1.5GL/FTE
+1.3GL/FTE
Operational income/ Full-time
Equivalent labour
$11.4M/99.7FTE=$115K/FTE
$11.9M/106.8FTE = $111K/FTE
-4K/FTE
Training expenditure / Total labour
employment cost
2%
0.7%
-1.3%
Unplanned staff turnover
0%
3%
-3%
Absenteeism (sick leave)
1% (220 days for 99.7FTE)
6.6% (1,576 days)
-5.6%
Lost Time Injuries
0%
4
-4
Plant utilization
100%
67%4
-33%
POLICIES
During the year, the Board reviewed
or initiated the following Policies:
•
Allocation announcement dates
tied to the NSW Office of Water
and State Office of Water;
•
Continued focus on ‘Talking
Water’ as the main
communication method;
•
Board Corporate Governance
manual
•
Charges Policy
•
Compliance Policy
•
Delegation of Authority
instrument
•
Introduction of a ‘Chairman’s
Report’ each month;
•
Financial Instruments
Investment Policy
•
•
Fraud Policy
Change of radio
communications from Chairman
to General Manager;
•
Motor Vehicle Policy
•
•
Plant Replacement Policy
Continuing to provide a
comprehensive Annual Report
to shareholders.
•
Remuneration Policy
•
Transfer Rules Policy
CHARGES POLICY REVIEW
The Board has been conducting a
review of the Charges Policy during
the year. Consultation with
customers occurred during June/July
2010 to seek feedback on several
options being considered.
Communications of Board decisions
34
The Board revised its
communication methods to include:
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
EMPLOYEES
As part of its 2014 Strategic Plan,
the Board is seeking renewed
direction for employees and their
work. These include productivity
measures and annual improvements,
such as a five percent productivity
improvement each year. To assist
and monitor achievement, new ‘Key
Performance Indicators’ relating to
employees have been set.
During the year, the Finley
operation were consolidated to the
one site. The new office is now the
base for Finley operations of water
distribution, works, and the MILCast
business unit.
Other key issues included:
Years
25 years
Malcolm Sneddon
Michael Malone
20 years
Gary Reid
Enterprise Bargaining Agreement
A new three-year Agreement was
registered in November 2009. Whilst
all employees are currently employed
on individual employment contracts,
this Agreement sets base conditions
that comply with the new Fair Work
Act (Cth) and National Employment
Standards that came into full effect
from 1 January 2010.
Name
John Steyger
15 years
Glenn McCalman
Lyn Short
Bernard Thompson
Jenny McLeod
John Fagan
Management Forum
To enhance leadership
development, communication
through the company, and
improved problem-solving for
better service, a monthly
Management Forum was initiated.
The membership comprises all
employees who have either a
leadership role or a key company
function.
Organisation Structure
The final implementation phases of
the organisation structure changes
introduced in 2008/09 were
completed during the year. As a
consequence of this and the
completion of the LWMP program
funding, the company bade farewell
to seven employees.
Long Service
During the year, the following
employees were recognised for
service:
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
35
DIRECTORS’ REPORT AND
FINANCIAL STATEMENTS 2009/10
CONTENTS
Directors’ report...........................................................................................38
Statement of comprehensive income ...........................................................45
Balance sheet ...............................................................................................46
Statement of changes in equity ....................................................................47
Cash flow statement.....................................................................................48
Notes to the financial statements
1. Summary of Significant Accounting Policies .....................................49
2. Revenue ..........................................................................................52
3. Expenses...........................................................................................53
4. Income tax ......................................................................................54
Current Assets
5. Cash and Cash Equivalents ..............................................................55
6. Trade and Other Receivables ............................................................55
7. Inventories .......................................................................................56
8. Other ..............................................................................................56
Non-Current Assets
9. Available for Sale Financial Assets .....................................................56
10. Other Financial Assets.......................................................................57
11. Property Plant and Equipment .........................................................58
12. Deferred Tax Assets ..........................................................................59
13. Intangible Assets ..............................................................................59
Current Liabilities
14. Trade and Other Payables ................................................................60
15. Current Tax Liabilities ......................................................................60
16. Provisions ........................................................................................60
17. Other ..............................................................................................60
Non-Current Liabilities
18. Deferred Tax Liabilities .....................................................................61
19. Provisions ........................................................................................61
Equity
20. Contributed Equity ..........................................................................61
21. Reserves and Retained Profits ...........................................................62
22. Related Parties .................................................................................63
23. Remuneration of Auditors ................................................................64
24. Commitments .................................................................................64
25. Segment Information .......................................................................65
26. Reconciliation of Operating Profit to Net Cash Inflows
from Operations ...............................................................................65
27. Non-Cash Financing and Investing Activities ....................................65
28. Land & Water Management Plans ...................................................66
29. Financial Risk Management ..............................................................67
30. Credit Standby Arrangements ..........................................................69
31. Subsidiary ........................................................................................70
32. Prior Period Adjustment ...................................................................70
Directors’ declaration ...................................................................................71
Auditor’s independence declaration .............................................................71
Independent audit report to the members ...................................................72
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
37
DIRECTORS’ REPORT
Your Directors present their report
together with the accounts of the
company for the financial year 1 July
2009 to 30 June 2010 and the
Auditor’s report thereon.
•
S.G. Ellis
•
N.G. Graham (appointed as a
director effective 19 November
2009)
•
M.J. Holm (concluded as a
director effective 19 November
2009)
•
M.L Hughes
•
M. Humphris
•
T.W. McKindlay (appointed as a
director effective 19 November
2009)
•
A.L Read
•
D.M Robertson
DIRECTORS
The following people were Directors
of the company during the 2009/10
financial year and up to the date of
this report:
•
G.G. Ball (concluded as a
director effective 19 November
2009)
•
K.S. Baxter
•
L. Chappell (concluded as a
director effective 19 November
2009)
Mr Stewart Ellis
Chairman
MAICD
Mr Stewart Ellis is from the Wakool
district and has been a shareholder
Director since 1995. He was reelected to the Board in 2009 and was
first elected Chairman in December
2005. He represents Murray Irrigation
as Chairman of the Snowy Hydro
Consultative Committee, delegate to
the NSW Irrigators’ Council, and
delegate to and Chairman of the
National Irrigators’ Council. Mr Ellis
is also a Member of the Australian
Institute of Company Directors.
38
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
Directors’ qualifications and
experience are as follow:
Mr Mark Robertson
Deputy Chairman
Mr Mark Robertson is from the East
Berriquin District and has been a
shareholder Director since April
2009. He has been a Director on
the Ricegrowers Limited (trading as
SunRice) Board of Directors since
1996 and the Deputy Chair since
2001, and also holds director
portfolios on international
subsidiaries in Papua New Guinea,
the Solomon Islands and the United
States of America.
Mr Kelvin Baxter
Mr Michael Hughes
Mr Tim McKindlay
MAICD
GAICD
Mr Kelvin Baxter is from the East
Berriquin district and has been a
shareholder Director since 1995. Mr
Baxter was re-elected to the Board
in 2007. He represents Murray
Irrigation as a member of the Hume
to Yarrawonga Waterway Advisory
Group.
Mr Michael Hughes is from
Denimein District and has been a
shareholder Director since April
2009. He is a member of the
Denimein Land Water Management
Plan Working Group, member of
the Denimein Landholders’
Association, and on the Board of
the Victorian Irrigated Cropping
Council.
Mr Tim McKindlay is from the
Deniboota district and was has
been a shareholder Director since
November 2009. Tim and his
family operate a mixed cropping
and livestock operation, and has
been involved in the Deniboota
Landholders’ Association, Southern
Riverina Irrigators’, State Water
Corporation Murray-Lower Darling
Customer Service Committee and
the Barmah-Millewa Consultation
Reference Group.
Mr Noel Graham FAICD
Mr Michael Humphris
Mr Anthony Read
Mr Noel Graham is from the
Deniboota district and has been a
shareholder Director since November
2009. Noel has been a Director of
Ricegrowers Limited (trading as
Sunrice) since 2001, and also holds
director portfolios on international
subsidiaries in Papua New Guinea,
the Solomon Islands and has
previously been Chairman of the Rice
Marketing Board for the State of
NSW and Chairman of the Cadell
Land and Water Management Plan
Working Group.
FCA, FSIA, MAICD
ME, MBA, FASCE, FIEAust, CPEng
Mr Michael Humphris is a Nonshareholder Director who was
appointed to the Board in
December 2007. He is an
Accountant and
Consultant/Specialist Advisor with
BDO Kendalls. He holds nonexecutive board positions and sits
on various professional and
educational committees.
Mr Anthony Read is a Nonshareholder Director who was
appointed to the Board in
December 2005. He is a Principal
Engineer and Manager Agribusiness
with Kellogg Brown and Root Pty
Ltd. He is a director of several
companies involved in the growing,
processing and marketing of
almonds and pistachios.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
39
DIRECTORS’ REPORT
COMMITTEES & CORPORATE
GOVERNANCE
The Board reviewed its Committee
structure during the year, reducing
its structure from five Committees
to three.
FINANCE, AUDIT AND RISK
MANAGEMENT COMMITTEE
Michael Humphris (Chair), Kelvin
Baxter, Noel Graham and Mark
Robertson. Stewart Ellis ex-officio.
Responsible for accounting and
reporting practices, risk
management, and related issues
including audits, financial
information and accounting
controls, management of
investments, the company’s
ancillary activities, share register,
statutory reporting, administration
agreements with government and
identifying risks to the company. A
representative from the auditor may
attend meetings of this committee
from time to time by invitation.
SERVICE AND INFRASTRUCTURE
COMMITTEE
Kelvin Baxter (Chair), Michael
Hughes, Tim McKindlay, Tony Read.
Stewart Ellis ex-officio.
The Service and Infrastructure
Committee reviews and advises on
matters relating to water availability,
usage and efficiency; customers and
key stakeholders; and infrastructure
maintenance, refurbishment and
construction. Activities include
reviewing asset management
controls and policies, assessment of
funding priorities, costs and
performance, asset management
strategies, and review of
government infrastructure funding
and operational agreements,
monitoring of environmental
compliance and policy, and policies
relating to customer interaction and
communication.
40
REMUNERATION COMMITTEE
Stewart Ellis (Chair), Mark
Robertson, Kelvin Baxter, Michael
Humphris.
The Remuneration Committee
considers conditions of employment
and remuneration of all staff, in
particular senior management and
directors, including annual
remuneration and bonuses or other
incentives.
DISPUTES PANEL AND DISPUTES
COMMITTEE
A Disputes Committee is provided
for under the Constitution, and is
not a Board Committee. At the
Annual General Meeting held 19
November 2009, Directors elected
to the Disputes Panel were Kelvin
Baxter, Noel Graham, Michael
Hughes, Timothy McKindlay and
Mark Robertson. Shareholders
elected to the panel were Neil Bull,
Warren Lang, Mark Martin, Peter
Redfearn, Roger Reynoldson and
Adam Wettenhall.
The Disputes Committee did not
meet during the report period.
CONDUCT AND CONFLICT OF
INTEREST
Murray Irrigation’s Board of
Directors operates according to a
code of conduct adopted from the
Australian Institute of Company
Directors based on acting honestly,
in good faith and in the best
interests of the company.
Directors are asked to resign from
executive positions on district or
regional landholder associations
upon being elected, to prevent
possible conflicts of interest
between these groups and the need
for Directors to act in the interests
of the company as a whole.
A code of conduct relating to water
trading exists, which prevents not
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
only Directors but also any
employee, from acting on or using
information prior to it being
available to members. Directors
must not receive commission for
water transactions and must notify
the Chairman of any permanent or
annual transfers carried out.
DIRECTORS AS CUSTOMERS
Murray Irrigation Directors Kelvin
Baxter, Stewart Ellis, Noel Graham,
Michael Hughes, Tim McKindlay, and
Mark Robertson are customers of the
company, enjoying the same terms
and conditions as those applying to
all Murray Irrigation customers in
receipt of similar services. It is a
Board Governance Policy consistent
with the Corporations Act 2001 that
Directors declare their interest as
customers when information which
may affect water pricing or delivery
is discussed and decided upon by
the Board. The Directors will either
absent themselves during such
discussion, and subsequent voting
on resolutions, or warrant that they
will not buy or sell water
entitlements prior to such
information becoming publicly
available. It is also the Board’s policy
to disclose Water and Delivery
Entitlements in the Annual Report.
As at 30 June 2010, the following
Directors held the water
entitlements, direct shareholding,
and indirect shareholding listed
against their name:
Indirect
Water
Delivery
Direct
Shareholding Shareholding entitlements entitlements
MEMBER DIRECTORS
K.S. Baxter
Nil
7,133
5,985
5,985
1,000
Nil
830
830
N.G. Graham
Nil
1,229
1,021
1,021
M.L. Hughes
Nil
1,282
1,543
1,543
T.W. McKindlay
809
2,111
1,677
2,424
D.M. Robertson
Nil
4,957
4,116
4,116
S.G. Ellis
NON-MEMBER DIRECTORS – M.
Humphris and A. Read hold no Murray Irrigation
shares, water entitlements or delivery entitlements.
DIRECTOR’S INTERESTS
The relevant interests of the
Directors in the share capital, water
entitlements, and delivery
entitlements of the company, as at
30 June 2010, are as above.
TRAINING AND PROFESSIONAL
ADVICE
Directors have the right in
connection with their duties and
responsibilities as Directors to seek
independent professional advice at
the Company’s expense. Prior
written approval of the Chairman is
required, which will not be
unreasonably withheld.
COMPANY SECRETARY
The Secretaries of the company at
the end of the reporting period,
together with their qualifications
and experience, are set out below:
G.R. Cutter,
Company Secretary
B.Ec., MBA, FCPA
Mr Cutter joined the company in
June 2009, and has over 27 years in
executive management in industries
as diverse as multinational
telecommunications, local
government, and hospitals. He has
performed the role of Chief
Financial Officer and the functions
of Company Secretary for several
Boards of Management, and is a
Non-Executive Director of an
unrelated not-for-profit
organisation. Mr Cutter was
appointed Company Secretary in
November 2009.
A. Couroupis,
Assistant Company Secretary
B.Ec. (Hons), Grad. Dip. CSP
Mr Couroupis joined Murray
Irrigation in 2008 as General
Manager, performing the role of
Company Secretary between
December 2008 and November
2009. He holds a Graduate
Diploma in Company Secretarial
Practice and is a member of
Chartered Secretaries Australia.
Previous experience includes
General Manager of the NSW
Murray Catchment Management
Authority and General Manager and
Company Secretary of Western
Murray Irrigation.
April 2009. He holds a Certificate
in Governance Practice and
Administration, is a certificated
member of Chartered Secretaries
Australia, and is working towards
a Graduate Diploma of Applied
Corporate Governance. Previous
experience includes 12 years in the
Information Technology field, and
more recently the role of
Administration Manager for Murray
Irrigation.
OFFICERS
Those persons who were officers of
the company during the financial
year to 30 June are:
D.J. Clarke
A. Couroupis
G. Cutter
J.M. McLeod
N.J. Ritchie
M.K. Watts
M.K. Watts,
Assistant Company Secretary
B. App. Sci., MCTS, CSA (Cert)
Mr Watts joined the company in
2003 and has performed the role of
Assistant Company Secretary since
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
41
DIRECTORS’ REPORT
Directors Meeting Attendance
Director
Board
Finance,
Audit & Risk
Management
Infrastructure
Service and
(replaced by Infrastructure
Service and
Infrastructure)
Policy and
Environment Remuneration
Resources
Stakeholders
and Water
(replaced by
(replaced by
(replaced by
Remuneration)
Service and
Service and
Infrastructure) Infrastructure)
Attended Maximum Attended Maximum Attended Maximum Attended Maximum Attended Maximum Attended Maximum Attended Maximum Attended Maximum
G.G Ball
K.S Baxter
L Chappell
4
4
-
-
1
1
-
-
-
-
1
1
-
-
2
2
11
12
4
4
1
1
2
2
-
-
-
-
2
2
-
-
4
4
-
-
-
-
-
-
1
1
1
1
-
-
-
-
12
12
2**
4**
-
-
1*
2*
1
1
-
-
2
2
2
2
N.G Graham
8
8
3
3
-
-
-
-
-
-
-
-
-
-
-
-
M.J Holm
4
4
-
-
1
1
-
-
1
1
-
-
-
-
-
-
M.L Hughes
11
12
-
-
-
-
2
2
0
1
1
1
-
-
-
-
M. Humphris
10
12
3
4
-
-
-
-
-
-
-
2
2
0
2
S.G Ellis
T.W. McKindlay
8
8
-
-
-
-
2
2
-
-
-
-
-
-
-
-
A.L Read
12
12
-
-
1
1
2
2
-
-
1
1
-
-
-
-
D.M Robertson
12
12
4
4
-
-
-
-
-
-
-
2
2
2
2
*ex officio
** ex officio from March 2010
$’000s
2010
2009
MEETINGS OF DIRECTORS
The above table sets out the number
of meetings of the Directors held
during the financial year to 30 June
2010, including meetings of
committees, and the number of
meetings attended by Directors.
PRINCIPAL ACTIVITY
The principal activity of Murray
Irrigation during the period consisted
of the supply of water to landholders
within an area from the Murray River
to the Billabong Creek extending
150 kilometres to the west and 100
kilometres to the east of Deniliquin.
REVIEW OF OPERATIONS AND
RESULTS FROM THOSE
OPERATIONS
A total of 161,473ML of water was
supplied for the year 1 July 2009 to
30 June 2010. This is almost
100,000ML higher than 2009/10
but remains well below the five year
average of just under 300,000ML.
42
Revenue from
irrigation
29,305 30,808
Employee benefits (7,092) (7,772)
Materials and
contracts
(6,412) (4,101)
Depreciation and
amortisation
(8,089) (7,510)
Bulk Water supply (4,797) (4,684)
Interest on
Tax Liabilities
Other
Profit (Loss) from
irrigation revenue
Other revenue
Profit (Loss)
before tax
Income Tax
Expense
Net Profit (Loss)
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
(1,465) (8,688)
(4,289) (1,234)
------------- ------------(2,840) (3,181)
8,258 10,610
------------- ------------5,418
7,429
(2,214) (1,826)
------------- ------------3,204
5,603
======= ========
REVENUE FROM
CONTRIBUTED ASSETS
Under the Corporations Act 2001
(Cth), compliance with accounting
standards is mandatory.
Accounting Standard AASB 1004
requires that infrastructure works,
when constructed, to the extent to
which their cost has been met from
Government funding, be treated
as revenue of the company even
though the receipt of the funding
is not revenue of the company.
Your Directors are concerned that
this accounting treatment may
be misleading and are of the view
that neither the receipt of the
government funding nor the value
of the works constructed should be
recognised as revenue. Accordingly,
the Directors feel obliged to express
their view that the receipt of both
the Land and Water Management
Plan drainage works and the
Infrastructure Program funding
should not be recognised as
revenue by way of contributed
assets of Murray Irrigation.
The company has obtained
advice over many years in respect
to the application of the Income
Tax Law to the Land and Water
Management Plans and the
Infrastructure Program in order to
form this view. The company will
continue to pursue these matters
to achieve an equitable outcome
for the company.
DIVIDENDS
The company is a not-for-profit
organisation and no operating
surplus may be paid or transferred
by way of a distribution of profit to
members.
ENVIRONMENTAL REGULATION
Murray Irrigation is subject to NSW
environmental legislation in relation
to water and land use. The
company holds an Environmental
Protection Licence issued by the
NSW Department of Environment,
Climate Change and Water. This
licence requires discharges to
waterways to be below specified
levels of contaminants. There have
been no breaches of the licence
during the reporting period.
CHANGES IN THE
STATE OF AFFAIRS
On 1 July 2009 Murray Irrigation
removed the transmission loss
component from water entitlements
and delivery entitlements, involving
the cancellation, by number, of
approximately 17 percent of water
entitlements and delivery
entitlements. Following this change
every customer at any point in time
would receive at least the same
volume of annual allocation, and
have access to at least the same
capacity to carryover as prior. The
Directors endorsed this approach to
prevent unfair and unworkable
commercial outcomes from
complying with the Water Market
Rules 2009 (Cth), which were
passed into law on 23 June 2009.
In the opinion of the Directors,
there were no significant changes in
the state of affairs of the company
not otherwise disclosed in this
report and financial statements.
MATTERS SUBSEQUENT TO THE
END OF THE FINANCIAL PERIOD
During the reporting period the
company undertook a thorough
review of its charges policy and
structure, with customer
consultation meetings conducted
in the week of 28 June 2010. The
Directors will be determining the
final charges model in the second
quarter of 2009/10. This may bring
about significant change in the
method by which the company
collects revenue from its customers;
whilst still collecting the same
budgeted revenue requirement as
under the existing model.
On 27 July 2010 Murray
Irrigation gave a court enforceable
undertaking to the Australian
Competition and Consumer
Commission (ACCC) pursuant to
s.163 of the Water Act 2007 (Cth).
Details of the undertaking are
available in the ACCC’s register of
court enforceable undertakings.
Changed regulation in the form of
the Murray-Darling Basin Plan, and
Water Charge (Infrastructure) Rules
(Cth), are expected during
2010/11. Both of these pieces of
legislation will have impacts on the
company, either through regulating
water availability or the way in
which the company collects
revenue. These impacts are
expected to become material from
around 2012 or later.
As this report goes to print the NSW
Murray general security allocation
for the 2010/11 season remains at
36 percent. Customers carried
forward a significant balance into
2010/11, and the company is in
a strong position to deliver this
carried-over water. The water
availability situation at the start
of the 2010/11 year is the best
position the company has
experienced at the start of a
water year since 2005/06.
There has been no other item,
transaction or event of a material
and unusual nature likely, in the
opinion of the Directors, to affect
significantly the operations of the
company, the results of those
operations or the state of affairs
of the company in subsequent
financial years.
LIKELY DEVELOPMENTS
AND EXPECTED RESULTS
OF OPERATIONS
The company’s results are
influenced by the level of its
operating costs, the amounts
required to be set aside in reserves,
and income derived from the sale
of water and other sources. The
unpredictability of the available
water resource and government
regulatory changes, mean it is not
possible to accurately predict the
results of operations. However,
Directors will endeavour to protect
the viability of the business in all
circumstances.
Further information on likely
developments in the company’s
operations and the expected results
of operations have not been
included in this report, as in the
opinion of the Directors, this may
prejudice the interests of the
company.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
43
DIRECTORS’ REPORT
INDEMNIFICATION AND
INSURANCE OF OFFICERS
During the financial year the
company paid a premium
indemnifying officers of the
company. A condition of the
contract is that the nature of the
liability indemnified and the
premium payable not be disclosed.
PROCEEDINGS ON BEHALF
OF THE COMPANY
No person has applied to the
Court under section 237 of the
Corporations Act 2001 (Cth) for
leave to bring proceedings on
behalf of the company, or to
intervene in any proceedings to
which the company is a party, for
the purpose of taking responsibility
on behalf of the company for all or
part of those proceedings.
No proceedings have been brought
or intervened in on behalf of the
company with leave of the court
under Section 237 of the
Corporations Act 2001.
ROUNDING OF AMOUNTS TO
THE NEAREST THOUSAND
DOLLARS
The company is of a kind referred
to in Class Order 98/0100, issued
by the Australian Securities &
Investment Commission, relating
to the rounding of amounts in the
Directors’ report, which have been
rounded off in accordance with that
Class order to the nearest thousand
dollars.
LEAD AUDITOR’S INDEPENDENCE
DECLARATION
The lead Auditor’s Independence
Declaration is set out on page 71
and forms part of the director’s
report.
AUDITOR
Directors have reviewed the nature
of the company’s water rights and
concluded that the Conveyance
Water Access Licence and
Supplementary Water Access
Licence are assets of the company.
These assets should have been
brought to account at the time the
company was vested with these
rights at the time of privatisation in
1995. The assets have been brought
to account at cost, being estimated
fair value in 1995. This adjustment
has had the effect of increasing
both Intangible Assets and
Contributed Equity by $98 million.
This report is made pursuant to a
resolution of the Directors.
Johnson’s MME continue in office in
accordance with section 327 of the
Corporations Act 2001.
S.G. Ellis
Chairman
1 October 2010
44
INTANGIBLE ASSETS
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
D.M. Robertson
Deputy Chairman
1 October 2010
STATEMENT OF COMPREHENSIVE INCOME
for the period ended 30 June 2010
Notes
Revenue from Irrigation Undertaking
Employee Benefits Expenses
Materials and Contracts Expenses
Depreciation and Amortisation Expenses
Bulk Water Supply Expenses
Interest on Tax Liabilities
Other Expenses
2
3a
3b
3c
Profit/(Loss) from Irrigation Undertaking Before Income Tax
2
Profit/(Loss) Before Income Tax
Income Tax (Expense)/Credit
4
Other Comprehensive Income
Total Comprehensive Income for the Year
11 month
period
2010
$’000
2009
$’000
29,305
-7,093
-6,412
-8,089
-4,797
-1,465
-4,289
30,808
-7,772
-4,101
-7,510
-4,684
-8,688
-1,234
––––––––––––––––––––––––––
––––––––––––––––––––––––
––––––––––––––––––––––––––
––––––––––––––––––––––––
-2,840
Other Revenue
Profit/(Loss) for the Year
12 month
period
8,258
5,418
-2,214
––––––––––––––––––––––––––
3,204
––––––––––––––––––––––––––
0
==========================
3,204
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
-3,181
10,610
7,429
-1,826
––––––––––––––––––––––––
5,603
––––––––––––––––––––––––
0
========================
5,603
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
45
BALANCE SHEET
as at 30 June 2010
ASSETS
Current Assets
Cash and Cash Equivalents
Trade and Other Receivables
Inventories
Other Current Assets
Notes
2010
$’000
2009
$’000
2008
$’000
5
6
7
8
17,910
9,500
1,064
0
7,254
13,405
1,471
101
52,938
23,944
1,480
122
Total Current Assets
Non-Current Assets
Available for Sale Financial Assets
Other Financial Assets
Property, Plant and Equipment
Deferred Tax Assets
Intangible Assets
9
10
11
12
13
––––––––––––––––––––––
28,474
––––––––––––––––––––––––
22,231
––––––––––––––––––––––––––
77,381
2,480
261,743
2,322
98,271
77,486
2,586
266,209
3,250
98,271
17,601
1,501
263,544
2,748
98,271
––––––––––––––––––––––
––––––––––––––––––––––––––
78,484
Total Non-Current Assets
––––––––––––––––––––––
442,197
––––––––––––––––––––––––
TOTAL ASSETS
470,671
––––––––––––––––––––––––
––––––––––––––––––––––––––
––––––––––––––––––––––
447,802
––––––––––––––––––––––––
470,033
––––––––––––––––––––––––––
––––––––––––––––––––––––––
462,149
3,400
14,550
1,503
5,416
4,869
14,016
2,052
7,949
10,096
8,821
2,051
6,204
LIABILITIES
Current Liabilities
Trade and Other Payables
Current Tax Liabilities
Provisions
Other
14
15
16
17
Total Current Liabilities
Non-Current Liabilities
Deferred Tax Liabilities
Provisions
18
19
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained Profits/(Accumulated Losses)
TOTAL EQUITY
20
21(a)
21(b)
––––––––––––––––––––––
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
383,665
––––––––––––––––––––––
24,869
––––––––––––––––––––––––
28,886
––––––––––––––––––––––––––
40,208
276
38,908
125
37,119
80
––––––––––––––––––––––
––––––––––––––––––––––––
––––––––––––––––––––––––––
27,172
––––––––––––––––––––––
40,484
––––––––––––––––––––––––
––––––––––––––––––––––––––
––––––––––––––––––––––
39,033
65,353
––––––––––––––––––––––––
67,919
––––––––––––––––––––––––––
64,371
––––––––––––––––––––––
––––––––––––––––––––––––
––––––––––––––––––––––––––
37,199
=================
405,318
=================
402,114
==================
284,723
165,716
-45,121
284,723
159,304
-41,913
284,723
152,111
-39,056
––––––––––––––––––––––
=================
405,318
The above balance sheet should be read in conjunction with the accompanying notes.
46
––––––––––––––––––––––––
––––––––––––––––––––––––
=================
402,114
397,778
––––––––––––––––––––––––––
==================
397,778
STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 2010
Notes
Balance at 1 August 2008
Prior period adjustment
32
Contributed
Equity
$'000
Reserves
$'000
Retained
Earnings
$'000
Total
$'000
186,452
152,111
-39,056
299,507
98,271
284,723
Total comprehensive income
Gain on sale of available for sale assets recognised
directly in equity in prior periods
Income tax on items recognised directly to equity
Transfers to reserves
Transfers from reserves
Balance at 30 June 2009
284,723
98,271
152,111
-39,056
397,778
5,603
5,603
8,520
-1,327
-1,809
542
-8,520
1,327
-1,809
542
0
0
159,304
-41,913
402,114
3,204
3,204
6,555
-6,555
0
-143
143
0
165,716
-45,121
405,318
Total comprehensive income
Transfers to reserves
Transfers from reserves
Balance at 30 June 2010
284,723
The above statement of changes in equity should be read in conjunction with the accompanying notes.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
47
CASH FLOW STATEMENT
for the period ended 30 June 2010
Notes
12 month
period
11 month
period
2010
$’000
2009
$’000
7,352
26,849
-25,121
19,738
28,438
-35,597
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Government
Water and Other Income
Payments to Suppliers and Employees
26
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sale of Financial Assets
Proceeds from Sale of Property, Plant and Equipment
Payment for Property, Plant and Equipment
Payment for non-current financial assets
Add Cash at the Beginning of the Financial Year
––––––––––––––––––––––––
400
1,217
-3,961
-557
0
751
-2,215
-60,405
––––––––––––––––––––––––––
5
12,579
3,631
-25
––––––––––––––––––––––––
16,185
-2,901
––––––––––––––––––––––––
10,656
-45,684
––––––––––––––––––––––––––
7,254
The above cash flow statement should be read in conjunction with the accompanying notes.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
13,557
––––––––––––––––––––––––––
NET INCREASE/(DECREASE) IN CASH HELD
48
––––––––––––––––––––––––––
––––––––––––––––––––––––––
Net Cash Inflow/(Outflow) from Investing Activities
CASH AT THE END OF THE FINANCIAL YEAR
––––––––––––––––––––––––
9,080
4,502
-25
Interest Received on Investments
Loan Costs Paid
Net Cash Inflow/(Outflow) from Operating Activities
––––––––––––––––––––––––––
==========================
17,910
––––––––––––––––––––––––
-61,869
––––––––––––––––––––––––
52,938
========================
7,254
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 June 2010
1
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies
adopted in the preparation of the
financial report are set out below.
These policies have been
consistently applied to all the years
presented, unless otherwise stated.
(a) Basis of Preparation
This general purpose financial
report has been prepared in
accordance with Australian
Accounting Standards, other
authoritative pronouncements
of the Australian Accounting
Standards Board, Australian
Accounting Interpretations and the
Corporations Act 2001 (Cth).
Because the company’s principal
purpose is to provide cost effective
services to its shareholders, rather
than to generate profits, the
Directors have determined that the
company is a not-for-profit entity as
defined in the Accounting Standards.
Accordingly the company has
applied the Accounting Standards as
they apply to not-for-profit entities.
These financial statements have
been prepared under the historical
cost convention.
(b) Income Tax
The income tax expense or revenue
for the period is the tax payable on
the current period’s taxable income
based on the national income tax
rate adjusted by changes in deferred
tax assets and liabilities attributable
to temporary differences between
the tax bases of assets and liabilities
and their carrying amounts in the
financial statements, and to unused
tax losses.
Deferred tax assets and liabilities are
recognised for temporary
differences at the tax rates expected
to apply when the assets are
recovered or liabilities are settled,
based on those tax rates which are
currently 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.
An exception is made for certain
temporary differences arising from
the initial recognition of an asset or
a liability. No deferred tax asset or
liability is recognised 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.
Deferred tax assets and liabilities
are offset when there is a legally
enforceable right to offset current
tax assets and liabilities. Current tax
assets and tax liabilities are offset
where the entity has a legally
enforceable right to offset and
intends either to settle on a net
basis, or to realise the asset and
settle the liability simultaneously.
Current and deferred tax balances
attributable to amounts recognised
directly in equity are also
recognised directly in equity.
(c) Revenue Recognition
Revenue is recognised for the major
business activities as follows:
(i) Water Sales
Revenue from the sale of water is
recognised when the water is
delivered to customers. Fixed water
charges, asset levy charges and
other fixed charges are recognised
on a pro-rata basis throughout the
year.
(ii) Recognition of Revenue Arising
from Contributed Assets
The company was incorporated
on 23 February 1995 by the NSW
State Government (the State) as a
vehicle to privatise the irrigation
undertaking known as Murray
Irrigation Area and Districts, an arm
of the then NSW Department of
Land and Water Conservation
(DLWC). The irrigation
infrastructure was transferred from
the DLWC to the company on 23
February 1995. The ownership of
the company was transferred from
the State to individual irrigators on
3 March 1995.
The State agreed that as part of
the privatisation process it would
bear the cost of refurbishing the
irrigation infrastructure assets to a
value of $82.5M (indexed for
inflation, balance remaining $0
[2009: $5.2M] due to completion
of the Deed) in order to make good
past deterioration of the
infrastructure. The mechanism by
which this was effected was a
Funding Deed under which the
State is to provide the funds to the
company over 15 years as
reimbursement for the cost of works
carried out in accordance with
works programs approved by the
State. Assets constructed are
contributed to the company to
control and manage.
The company is also the
implementing authority in respect
of a number of Land and Water
Management Plans. Expenditure
on these plans is reimbursed to the
company by the NSW State
Government, the Commonwealth
Government, irrigators and shires.
Some of these funds are expended
on the construction of drainage
assets which are contributed to the
company to control and manage.
The accounts have been prepared
so as to recognise the value of
contributed assets as income as the
cost of the approved works
programs is incurred by the
company. This is because the
Corporations Act 2001 (Cth) requires
the Directors to prepare financial
statements that comply with the
relevant accounting standards.
The effect of Accounting Standard
AASB118: Revenue, is to require the
company to recognise the
contributed assets when and only
when it is probable that future
economic benefits embodied in the
asset will eventuate and the asset
possesses a cost or other value that
can be measured reliably. Under
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
49
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 June 2010
AASB118, an asset must have the
essential ingredient of being under
the control of the company and this
happens when the particular work
has been completed. The nature of
the assets and the fact that the
assets cannot be physically
detached from the infrastructure
already owned by the company
means that the economic substance
of the transaction is that the
company gains control of these
assets at the time of construction.
Therefore they are brought to
account as revenue at this time in
accordance with the requirements
of Australian Accounting Standard
AASB118.
(iii) Interest Income
Interest income is recognised as it
accrues.
(iv) Revenue from the Sale of Assets
Plant & Equipment ......8 to 10 years
(g) Doubtful Debts
Office Equipment ........3 to 14 years
A provision for doubtful debts is
raised against water debtors
accounts where the collection of the
debt may not be received within
the following 12 months.
(h) Inventories
Raw materials and stores are stated
at the lower of weighted average
cost and net realisable value.
(i) Available for Sale Financial
Assets
Available for sale financial assets are
brought to account at fair value.
Distributions are recognised in the
income statement when receivable.
(j) Investment Accounted for
using the Equity Method
Termination fees are charged and
recognised at the time permanent
water transfers occur and associated
delivery entitlements are cancelled.
The company’s investment in
associates is accounted for using the
equity method as the company does
not have control of the operations of
the entity. The investment is initially
recorded at the cost of acquisition
and adjusted thereafter for post
acquisition changes in the
company’s share of the net assets of
the entity.
(d) Cash and Cash Equivalents
(k) Acquisition of Assets
For cash flow statement
presentation purposes, cash and
cash equivalents includes cash on
hand, deposits held at call with
financial institutions, other shortterm highly liquid investments with
original maturities of six months or
less that are readily convertible to
known amounts of cash and which
are subject to an insignificant risk of
changes in value.
The cost method of accounting is
used for all acquisitions of assets.
Cost is determined as the fair value
of the assets given up or liabilities
undertaken at the date of
acquisition plus costs incidental to
the acquisition.
Revenue from the sale of fixed
assets is recognised when risks and
rewards have been passed to the
buyer.
(v) Termination Fees
(e) Trade and Other Receivables
Trade receivables are recognised at
fair value. Water accounts are
raised quarterly and are due for
settlement in 30 days. Other
debtors are due for settlement in no
more than 30 days.
(f) Interest on Water Debtors
Accounts
Interest is charged on water debtors
accounts which are overdue and
50
outside of the normal credit
arrangements.
(l) Property, Plant and Equipment
All property, plant and equipment
is stated at historical cost less
depreciation. Historical cost includes
expenditure that is directly
attributable to the acquisition of
the items.
Estimates of remaining useful lives
are made on a regular basis for all
assets, with annual reassessments
for major items. The expected
useful lives are as follows:
Water
Infrastructure...........10 to 100 years
Leased Assets...........40 to 100 years
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
Buildings and Cottages .......40 years
Motor Vehicles...............4 to 5 years
(m) Leased Non-Current Assets
Certain assets comprising shire road
bridges and culverts, have been
leased by the company from public
and local authorities for a period of
99 years. The company is obliged
to maintain these assets during the
period of the leases. These assets, in
view of the long term nature of the
leasing arrangements and the future
economic benefits that are likely to
eventuate, are included in
noncurrent assets, on the basis of
control. (Note 11).
(n) Non-Current Assets
Constructed by the Company
The cost of non-current assets
constructed by the company
includes the cost of all materials
used in construction, direct labour
on the project, and an appropriate
proportion of variable and fixed
overhead.
(o) Intangible Assets
Water licences are brought to
account at cost. This policy has
changed this year.
Refer Note 32.
(p) Impairment of Assets
Assets are reviewed for impairment
whenever events or changes in
circumstances indicate that the
carrying amount may not be
recoverable. An impairment loss is
recognised for the amount by
which the asset’s carrying amount
exceeds its recoverable amount.
The recoverable amount is the
higher of an asset’s fair value less
costs to sell and value in use.
As the company is a not-for-profit
entity and the future economic
benefits of the company’s assets is
not primarily dependent on their
ability to generate cash flows, value
in use is taken to be depreciated
replacement cost provided that the
company would, if deprived of the
asset, replace it.
Accordingly, the company’s noncurrent assets are carried at
amounts significantly in excess of
the values that would be applied if
the company were a ‘for profit’
entity in accordance with the
Accounting Standards had it
applied the impairment rules of a
‘for profit’ entity.
(q) Maintenance and Repairs
Maintenance, repair costs and
minor renewals are charged as
expenses occur.
(r) Trade and Other Payables
These amounts represent liabilities
for goods and services provided to
the company up to the reporting
date which are unpaid. The
amounts are unsecured and are
usually paid within 28 days of
recognition.
(s) Goods and Services Tax (GST)
Revenues, expenses and assets are
recognised net of the amount of
associated GST, unless the GST
incurred is not recoverable from the
taxation authority. In this case it is
recognised as part of the cost of
acquisition of the asset or as part of
the expense.
Receivables and payables are stated
inclusive of the amount of GST
receivable or payable. The net
amount of GST recoverable from, or
payable to, the taxation authority is
included with other receivables or
payables in the balance sheet.
Cash flows are presented on a gross
basis. The GST components of
cash flows arising from investing
or financing activities which are
recoverable from, or payable to the
taxation authority, are presented as
operating cash flows.
(t) Employee Entitlements
Wages, salaries, annual leave and
sick leave
Liabilities for wages and salaries and
annual leave are recognised and are
measured as the amount unpaid at
the reporting date at expected pay
rates in respect of employees’
services up to that date including
oncosts.
Long Service Leave
The liability for long service leave
is recognised and measured as the
present value of expected future
payments to be made in respect of
services provided by employees up
to the reporting date. Consideration
is given to experience of employee
departures and periods of service.
Expected future payments are
discounted using market yields at
the reporting date on national
government bonds with terms to
maturity and currency that match,
as closely as possible, the estimated
future cash outflows.
Superannuation
The company contributes in
accordance with the Government
Superannuation Levy. There are no
liabilities for superannuation.
Sick Leave
Employees are entitled to ten
days sick leave per annum on a
cumulative basis. No liability is
brought to account as the expected
future payments are unlikely to
exceed the sick leave entitlements
(u) Reserves
(i) Contributed Assets
Revenue arising from Government
Agencies and Landowners in the
form of contributed assets, less the
amount of any loss on disposal of
Water Infrastructure Assets is
transferred to the Contributed
Assets Reserve. The purpose of this
reserve is to report the company’s
equity resulting from Government
and Landowner asset contributions
separately from profits of the
company’s irrigation undertaking.
(ii) Supply Variation
The purpose of this reserve is to
report the amounts set aside to
provide the company with
adequate funds to financially
withstand periods of extended low
volume water supply to Members.
Income arising from the Supply
Variation Levy is transferred to the
Supply Variation Reserve Fund. Refer
Note 5 (i).
The 1995 Business Plan provides
that if in any year, less than 1.0
million megalitres are sold, the
difference between actual sales and
1.0 million megalitres at the water
usage price is to be withdrawn from
the Supply Variation Reserve and
together with the levy for that year
be made available for general usage.
(iii) Water Reserve
The purpose of this reserve is to set
aside funds for future investment in
water related products.
(v) Land and Water Management
Plans
As stated in Note 1(c)(ii) the
company is the implementing
authority in respect of a number of
Land and Water Management Plans.
Amounts outstanding from both
Government and Irrigators are
brought to account as receivables.
The net unexpended amount of
cash and receivables are held on
behalf of the Plans and are therefore
brought to account as a liability,
Funds Held as Implementing
Authority. Refer Note 17.
(w)Accounting Policy in Respect
to Financial Instruments
Murray Irrigation Limited’s
accounting policies for financial
instruments are detailed in Note
29(a).
(x) Rounding of Amounts
The company is of a kind referred to
in Class Order 98/0100, issued
by the Australian Securities &
Investments Commission, relating
to the “rounding off” of amounts in
the financial report. Amounts in the
financial report have been rounded
off in accordance with that Class
Order to the nearest thousand
dollars.
(y) Comparatives
Where necessary, comparatives have
been reclassified and repositioned
for consistency with current year
disclosures.
(z) Accounting Period
During the prior year the company
changed its year end from 31 July to
30 June. Accordingly comparative
figures are for the 11 month period
ended 30 June 2009.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
51
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 June 2010
2
REVENUE
Notes
12 month
period
11 month
period
2010
$’000
2009
$’000
14,760
143
8,952
15,158
60
8,518
1,505
2,451
1,924
1,862
288
251
0
84
Revenue from Irrigation Undertaking
Income from Water Sales
Supply Variation Levy
Termination Fees
Precast External Sales
Interest on Funds of Irrigation Undertaking
Net gain on disposal of property plant and equipment
Gain on disposal of available for sale financial assets in current year
Gain on disposal of available for sale financial assets
previously recognised direct in equity
Other Income
Revenue from Irrigation Undertaking
Other Revenue
––––––––––––––––––––––––––
0
1,206
––––––––––––––––––––––––––
29,305
––––––––––––––––––––––––
30,808
Interest – Supply Variation, Asset Maintenance and Renewal Funds
1,946
1,606
Land and Water Management Plans Contributed Assets
2,468
2,278
Infrastructure – Contributed Assets
––––––––––––––––––––––––––
––––––––––––––––––––––––
==========================
========================
3,844
––––––––––––––––––––––––––
8,258
Total Revenue
52
––––––––––––––––––––––––
1,809
1,142
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
37,563
6,726
––––––––––––––––––––––––
10,610
41,418
3
EXPENSES
Profit before income tax includes the following specific expenses:
Notes
(a) Depreciation and amortisation:
Depreciation:
Buildings
Plant and Equipment
Infrastructure
Total Depreciation
Amortisation Leased Assets
Total depreciation and amortisation
(b) Interest on tax liabilities:
Amounts charged on prior year tax liabilities
(c) Other expenses:
Borrowing Costs
Write off of obsolete assets (i)
Doubtful Debts
Share of AWMA result (note 10b)
Other
12 month
period
11 month
period
2010
$’000
2009
$’000
42
1,598
5,647
47
1,732
4,973
––––––––––––––––––––––––––
7,287
––––––––––––––––––––––––––
802
––––––––––––––––––––––––––
8,089
––––––––––––––––––––––––––
1,465
25
3,253
48
263
700
––––––––––––––––––––––––––
––––––––––––––––––––––––––
4,289
––––––––––––––––––––––––
6,752
––––––––––––––––––––––––
758
––––––––––––––––––––––––
7,510
––––––––––––––––––––––––
8,688
25
544
-132
61
736
––––––––––––––––––––––––
––––––––––––––––––––––––
1,234
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
53
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 June 2010
4
INCOME TAX
(a) Income tax expense
Current tax
Deferred tax (i)
Aggregate income tax expense
(i) Deferred income tax expense included in income tax
expense comprises:
Decrease/(increase) in deferred tax assets (note 12)
(Decrease)/increase in deferred tax liabilities (note 18)
Notes
12 month
period
11 month
period
2010
$’000
2009
$’000
-14
2,228
539
1,287
––––––––––––––––––––––––––
==========================
2,214
928
1,300
––––––––––––––––––––––––––
––––––––––––––––––––––––
========================
1,826
-502
1,789
––––––––––––––––––––––––
==========================
========================
––––––––––––––––––––––––––
––––––––––––––––––––––––
2,228
1,287
(b) Numerical reconciliation of income tax expense to
prima facies tax payable
The aggregate amount of income tax attributable to the financial year
differs from the amount calculated on the operating profit and
extraordinary item.
The differences are reconciled as follows:
Net profit/(loss) before income tax
Income tax (expense)/credit calculated @ 30% (2009:30%)
Tax effect of permanent differences
Non deductible depreciation, amortisation and loss on disposal
Under/(over) provision in prior year
Income tax (expense)/credit attributable to operating profit
54
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
5,418
1,626
976
––––––––––––––––––––––––––
-388
==========================
2,214
7,429
2,229
432
––––––––––––––––––––––––
-835
========================
1,826
5
CURRENT ASSETS – CASH AND CASH EQUIVALENTS
2010
$’000
==========================
Cash at bank and on hand
17,910
Restrictions are imposed on access to certain of the above funds as follows:
Supply Variation Reserve Fund – Restricted (Note (i) below)
Asset maintenance and renewals – Restricted (Note (ii) below)
Unrestricted Funds
0
6,918
10,992
––––––––––––––––––––––––––
==========================
17,910
2009
$’000
========================
7,254
0
4,902
2,352
––––––––––––––––––––––––
========================
7,254
(i) Under Rule 15.2 of the Constitution, the Supply Variation Reserve Fund was
established to provide the company with adequate funds to financially withstand
periods of extended low volume water supply to members. The Supply Variation
Reserve funds have been fully drawn down in 2010.
(ii) Under Rule 15.2 of the Constitution, the Asset Management and Renewal Fund
was established to cover capital expenditure for refurbishment, replacement and
long term maintenance of the company's water infrastructure assets. The amount
set aside is calculated after considering the advice of independent external
consulting engineers. The amount so set aside totals $40,371,000 (2009
$38,425,000) comprising cash $6,917,900 (2009 $4,902,000), Floating Rate
Notes $15,120,000 (2009 $20,120,000) and Fixed Rate Notes $18,333,100
(2009: $13,403,000) (Notes 5 and 9).
6
CURRENT ASSETS – TRADE AND OTHER RECEIVABLES
Water Debtors (including Land and Water Management Plans)
Less provision for Doubtful Debts
8,071
-505
––––––––––––––––––––––––––
––––––––––––––––––––––––––
7,566
Government Agencies
- Asset Maintenance and Renewal
- Other
0
370
––––––––––––––––––––––––
––––––––––––––––––––––––
7,528
3,647
295
––––––––––––––––––––––––––
––––––––––––––––––––––––
––––––––––––––––––––––––––
––––––––––––––––––––––––
––––––––––––––––––––––––––
370
Other Debtors
7,985
-457
1,564
==========================
9,500
––––––––––––––––––––––––
3,942
1,935
========================
13,405
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
55
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 June 2010
7
CURRENT ASSETS – INVENTORIES
2010
$’000
Raw Materials and Stores
8
CURRENT ASSETS – OTHER
Prepayments
9
2009
$’000
==========================
========================
==========================
========================
1,064
0
1,471
101
NON-CURRENT ASSETS – AVAILABLE FOR SALE FINANCIAL ASSETS
Floating Rate Notes
48,211
48,226
Fixed Rate Notes
29,170
29,260
Commonwealth Indexed Bonds
––––––––––––––––––––––––––
0
==========================
––––––––––––––––––––––––
0
77,381
========================
0
33,453
0
33,523
77,486
(a) Restrictions
Restrictions are imposed on access to certain of the above funds as follows:
Supply Variation Reserve Fund – Restricted (See Note 5(i) )
Asset maintenance and renewals – Restricted (See Note (5ii) )
––––––––––––––––––––––––––
==========================
33,453
56
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
––––––––––––––––––––––––
========================
33,523
10 NON-CURRENT ASSETS – OTHER FINANCIAL ASSETS
Receivables (a)
Shares in associates (b)
2010
$’000
2009
$’000
2,480
0
1,546
1,040
––––––––––––––––––––––––––
==========================
2,480
(a) Receivables
Receivable from Associate AWMA Pty Ltd
Receivable from Subsidiary Riverbank Holdings Pty Ltd
777
1,703
––––––––––––––––––––––––––
==========================
2,480
Ownership Interest %
2010
2009
AWMA Pty Ltd
0
50
––––––––––––––––––––––––
========================
2,586
400
1,146
––––––––––––––––––––––––
========================
1,546
MIL Carrying Amount $’000
2010
2009
0
1,040
(b) Shares in associates
Consolidated $’000
2010
2009
Carrying amount at the beginning of the financial year
1,040
1,101
Share of profits after income tax
-263
-61
Sale of investment
-777
0
0
1,040
Carrying amount at the end of the financial year
(i) Carrying amounts
Period
Assets
MIL’s share of:
Liabilities
Revenues
Profit
2010 (12 month period)
0
0
0
-263
2009 (11 month period)
2,937
1,897
7,414
-61
(ii) Movements in carrying amounts of investments in Associates
(iii) Summarised financial information of Associates
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
57
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 June 2010
2010
$’000
2009
$’000
11 NON-CURRENT ASSETS – PROPERTY PLANT AND EQUIPMENT
Freehold land
- At Cost
Water Infrastructure
Less Accumulated Depreciation
- At Cost
––––––––––––––––––––––––
––––––––––––––––––––––––––
––––––––––––––––––––––––
1,968
259,155
50,248
––––––––––––––––––––––––––
- At Cost (Note 1(m))
––––––––––––––––––––––––––
––––––––––––––––––––––––
- At Cost
––––––––––––––––––––––––––
- At Cost
––––––––––––––––––––––––––
- At cost
––––––––––––––––––––––––––
- At Cost
––––––––––––––––––––––––––
4,077
49,876
9,893
––––––––––––––––––––––––––
2,147
562
––––––––––––––––––––––––––
1,585
Plant and Equipment
Less Accumulated depreciation
9,421
5,919
––––––––––––––––––––––––––
3,502
Office Equipment
Less Accumulated depreciation
1,553
1,323
––––––––––––––––––––––––––
230
Motor Vehicles
Less Accumulated depreciation
3,182
1,691
––––––––––––––––––––––––––
––––––––––––––––––––––––––
1,491
Total Non-Current Assets
58
251,572
45,324
––––––––––––––––––––––––
39,983
Buildings and Cottages
Less Accumulated depreciation
2,026
208,907
Construction-in-Progress
Leased Assets
Less Accumulated Amortisation
––––––––––––––––––––––––––
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
==========================
261,743
206,248
11,196
48,649
9,128
––––––––––––––––––––––––
––––––––––––––––––––––––
39,521
1,949
639
––––––––––––––––––––––––
––––––––––––––––––––––––
1,310
8,421
5,979
––––––––––––––––––––––––
––––––––––––––––––––––––
2,442
2,086
1,737
––––––––––––––––––––––––
––––––––––––––––––––––––
349
5,449
2,332
––––––––––––––––––––––––
––––––––––––––––––––––––
3,117
========================
266,209
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant & equipment at the beginning and end of the
current financial year are set out below:
Land
Water Infrastructure
Construction in Progress
Leased Assets
Buildings
Plant & Equipment
Office Equipment
Motor Vehicles
Carrying
amount at
1 July 09
$’000
Carrying
amount
30 June 10
$’000
Additions
$’000
Disposals
$’000
Transfers
$’000
Depreciation
$’000
2,026
206,248
11,196
39,521
1,310
2,442
349
3,117
0
4,403
0
1,318
523
1,119
80
438
-58
-3,216
0
-54
-206
-528
0
-196
0
7,119
-7,119
0
0
1,227
0
-1,227
0
-5,647
0
-802
-42
-758
-199
-641
1,968
208,907
4,077
39,983
1,585
3,502
230
1,491
266,209
7,881
-4,258
0
-8,089
261,743
2010
$’000
2009
$’000
1,625
534
156
7
2,385
653
142
70
12 NON-CURRENT ASSETS – DEFERRED TAX ASSETS
The balance comprises temporary differences attributable to:
Amounts recognised in profit and loss
Land and Water Management Plans
Employee benefits
Doubtful debts
Other temporary differences
––––––––––––––––––––––––––
==========================
––––––––––––––––––––––––
2,322
========================
2010
$’000
2009
$’000
2008
$’000
86,960
11,311
86,960
11,311
86,960
11,311
3,250
13 NON-CURRENT ASSETS - INTANGIBLE ASSETS
Conveyance Water Access Licence at cost (b)
Supplementary Water Access Licence at cost (c)
––––––––––––––––––––––
=================
98,271
––––––––––––––––––––––––
=================
98,271
––––––––––––––––––––––––––
==================
98,271
(a) Prior period adjustment has been made to recognise the company’s
water access licence assets. Refer note 32.
(b) The company has a sworn valuation for the Conveyance Water Access
Licence as at 19 July 2010 of $2,050 per Unit Share.
(c) The company has a draft valuation for the Supplementary Water Access
Licence as at 24 August 2010 of $100 per Unit Share.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
59
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 June 2010
2010
$’000
2009
$’000
14 CURRENT LIABILITIES – TRADE AND OTHER PAYABLES
Trade Creditors
Other Creditors
––––––––––––––––––––––––––
3,234
166
==========================
========================
==========================
========================
==========================
========================
––––––––––––––––––––––––––
––––––––––––––––––––––––
3,400
15 CURRENT LIABILITIES – CURRENT TAX LIABILITIES
Provision for Income Tax
––––––––––––––––––––––––
4,531
338
14,550
4,869
14,016
There continues to be significant uncertainty in respect to the company's taxation
liability associated with grants for environmental works. As reported in prior years
there has been an ongoing dispute between the company and the Australian Taxation
Office regarding the taxation treatment of grants received for environmental works.
The company has obtained advice over many years in respect to the application of the
Income Tax law to the Land and Water Management Plans and the Asset Renewal
program in order to form its view. A resolution of the dispute between the company
and the Australian Taxation Office was affected by the change of government in late
2007. The company has been forced to re-commence its formal appeal process, which
remained current at 30 June 2010. The company has recorded the principal and
interest accrued, which may be payable depending on the resolution of the appeal
process.
The company maintains its intent to have the total liability waived.
16 CURRENT LIABILITIES – PROVISIONS
Employee Entitlements (Note 1(s))
1,503
2,052
17 CURRENT LIABILITIES – OTHER
Land and Water Management Plans - Funds held as Implementing Authority
(Notes 1(v) and 28(ii))
5,416
==========================
5,416
60
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
7,949
========================
7,949
2010
$’000
2009
$’000
211
68
43
261
0
0
39,625
243
45
44
230
30
1,094
37,222
18 NON-CURRENT LIABILITIES – DEFERRED TAX LIABILITIES
The balance comprises temporary differences attributable to:
Amounts recognised in profit and loss
Consumable stores
Diesel fuel rebate
Mulwala Canal usage fee
Accrued interest
Prepayments
Government debtors
Capital allowances and depreciation
––––––––––––––––––––––––––
19 NON-CURRENT LIABILITIES – PROVISIONS
Employee Entitlements (Note 1(s))
––––––––––––––––––––––––
==========================
========================
==========================
========================
40,208
276
38,908
125
20 CONTRIBUTED EQUITY
2010
Share Capital
Ordinary Shares
Shares 000’s
2009
2008
===========================================================================================
1,447
1,447
1,447
2010
$’000
2009
2008
============================================================================================================
284,723
284,723
284,723
The contributed equity has changed from the previous reported amount. See note 32.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
61
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 June 2010
2010
$’000
2009
$’000
145,716
139,304
21 RESERVES AND RETAINED PROFITS
(a) Reserves:
Contributed Assets
Supply Variation
Water Reserve
Movements:
0
––––––––––––––––––––––––––
20,000
==========================
0
––––––––––––––––––––––––
20,000
165,716
========================
139,304
130,844
159,304
Contributed Assets – (Note 1(u)(i))
Balance – 1 July 2009
Transfer from Retained Profits
Balance – 30 June 2010
Supply Variation – (Note 1(u)(ii))
Balance – 1 July 2009
Transfer from Retained Profits
Transfer to Retained Profits
Balance – 30 June 2010
Water Reserve – (Note 1(u)(iii))
Balance – 1 July 2009
Transfer to Retained Profits
Balance – 30 June 2010
Available for Sale Investments Revaluation Reserve
––––––––––––––––––––––––––
6,412
==========================
145,716
0
143
––––––––––––––––––––––––––
-143
==========================
0
20,000
––––––––––––––––––––––––––
0
==========================
20,000
Balance – 1 July 2009
0
Annual Revaluation
0
Transfer to Income Statement
Balance – 30 June 2010
––––––––––––––––––––––––––
0
==========================
0
––––––––––––––––––––––––
8,460
========================
139,304
0
60
––––––––––––––––––––––––
-60
========================
0
20,000
––––––––––––––––––––––––
0
========================
20,000
1,267
0
––––––––––––––––––––––––
-1,267
========================
0
(b) Retained Profits (Accumulated Losses)
Balance – 1 July 2009
Net Profit/(Loss)
Transfer to Water Reserve
Transfer to Contributed Assets
Transfer to Supply Variation Reserve
Transfer from Supply Variation Reserve
Balance – 30 June 2010
(c) Nature and Purpose of Reserves
Refer Note 1(u).
62
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
-41,913
-39,056
3,204
5,603
0
0
-6,412
-8,460
-143
-60
––––––––––––––––––––––––––
143
==========================
-45,121
––––––––––––––––––––––––
60
========================
-41,913
22 RELATED PARTIES
(a) Key Management Personnel
(i) Directors
The following persons were directors of Murray Irrigation Limited for the whole year ended 30 June 2010:
KS Baxter, SG Ellis, ML Hughes, M Humphris, AL Read and DM Robertson.
GG Ball, L Chappell and MJ Holm were directors until 19 November 2009.
NG Graham and TW McKindlay were appointed as directors on 19 November 2009 and continue in office at the
date of this report.
(ii) Other Key Management
The following persons also had authority and responsibility for planning, directing and controlling the activities of
the company, directly or indirectly, during the financial year:
DJ Clarke, A Couroupis, GR Cutter, JM McLeod, NJ Ritchie, MK Watts
(b) Key Management personnel compensation
PostEmployment
Short-Term
Directors
Gross salary (1)
Cash Bonus
$’000
$’000
Total 2009
$’000
$’000
0
10
20
40
Non-Monetary(2) Superannuation(3)
$’000
$’000
A.M. Anthony
G.G. Ball
Total 2010
19
1
K.S. Baxter
23
2
25
28
L. Chappell
12
1
13
33
S.G. Ellis
72
4
93
120
N.G. Graham
14
1
15
0
M.J. Holm
11
1
12
32
M.L. Hughes
28
2
30
4
M. Humphris
37
3
40
44
1
1
12
17
V.C. Meyer
T.W. McKindlay
10
1
11
0
A.L. Read
37
3
40
43
D.M. Robertson
24
2
26
4
887
1,215
1,213
1,585
Other Key Management
Total
(1)
887
0
0
1,174
0
17
Includes redundancy payments
(2)
22
Value of motor vehicle per company policy
(3)
Excludes terminated employees
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
63
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 June 2010
22 RELATED PARTIES (continued)
(c) Key management personnel equity
The aggregate number of shares in the company held at balance date by key
management personnel were:
2010
––––––––––––––––––––––––––
––––––––––––––––––––––––
––––––––––––––––––––––––––
––––––––––––––––––––––––
––––––––––––––––––––––––––
––––––––––––––––––––––––
$’000
Ordinary Shares Held
(d) Other transactions with key management personnel
2009
––––––––––––––––––––––––––
21,752
$’000
––––––––––––––––––––––––
22,651
During the period the Company sold water for cropping and other activities to a
number of Directors and other key management personnel or their related entities
on commercial terms and conditions no more favourable than those which it is
reasonable to expect would have been adopted if dealing with them at arm's
length in the same circumstances. The value of these transactions totalled
$286,400 (2009: $308,300).
Aggregate amounts payable or receivable from directors and other key
management personnel or their related entities as at balance date:
Water Accounts Receivable
Accounts Payable
(e) Loans to key management personnel
––––––––––––––––––––––––––
106
Nil
––––––––––––––––––––––––
79
Nil
There are no loans to directors or other key management personnel.
23 REMUNERATION OF AUDITORS
During the year the auditor earned the following
remuneration:
Audit of the financial report
Other assurance services
Total audit and other assurance services
Taxations services
Total remuneration
––––––––––––––––––––––––––
––––––––––––––––––––––––
––––––––––––––––––––––––––
––––––––––––––––––––––––
32
26
58
94
==========================
152
31
39
70
84
========================
154
24 COMMITMENTS
a. Capital Commitments
- not later than 12 months
- later than 12 months but not later than 5 years
- greater than 5 years
962
0
0
––––––––––––––––––––––––––
==========================
962
b. Operating Commitments
- not later than 12 months
- later than 12 months but not later than 5 years
- greater than 5 years
845
160
0
––––––––––––––––––––––––––
==========================
1,005
Note: These balances are GST inclusive.
64
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
2,892
704
0
––––––––––––––––––––––––
========================
3,596
2,133
762
0
––––––––––––––––––––––––
========================
2,895
25 SEGMENT INFORMATION
The company is involved primarily in the supply and drainage of irrigation water to
shareholdercustomers within the Southern Riverina area of New South Wales, Australia.
26 RECONCILIATION OF OPERATING PROFIT TO
NET CASH INFLOWS FROM OPERATIONS
2010
$’000
2009
$’000
Profit for the year
Depreciation and amortisation
Increase/(decrease) in provision for doubtful debts
(Gain)/loss on disposal of non-current assets
(Gain)/loss on disposal of infrastructure
(Gain)/loss on sale of investments
(Increase)/decrease in value of investments
Contributed assets
3,204
8,089
48
-288
3,253
0
263
-3,844
5,603
7,510
-147
-251
544
-1893
61
-9,004
Changes in operating assets and liabilities:
(Increase)/decrease in receivables
(Increase)/decrease in inventories
(Increase)/decrease in prepayments
(Increase)/decrease in deferred tax asset
Increase/(decrease) in payables
Increase/(decrease) in current tax liabilities
Increase/(decrease) in provisions
Increase/(decrease) in other liabilities
Increase/(decrease) in deferred tax liabilities
3,962
407
101
928
-1,469
534
-398
-2,533
1,300
10,686
9
21
-502
-5,227
5,195
46
1,745
1,789
Net Cash Inflow/(Outflow) from Operating Activities
27 NON-CASH FINANCING AND INVESTING ACTIVITIES
Contributed assets from Government
––––––––––––––––––––––––––
––––––––––––––––––––––––
==========================
========================
==========================
========================
13,557
3,844
16,185
9,004
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
65
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 June 2010
28 LAND & WATER MANAGEMENT PLANS
i) Details of income and expenditure on the land & Water
$’000
Berriquin
Cadell
Denimein
Wakool
Total
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
59
3,606
30
412
29
331
30
269
148
4,618
0
37
0
0
0
108
0
0
0
145
606
1,722
72
253
8
103
77
283
763
2,361
665
5,365
102
665
37
542
107
552
911
7,124
2,469
1,923
0
21
0
334
0
0
2,469
2,278
505
1,361
149
732
181
464
140
544
975
3,101
2,974
3,284
149
753
181
798
140
544
3,444
5,379
-2,309
2,081
-47
-88
-144
-256
-33
8
-2,533
1,745
Income
Government Agencies
Contribution from
Working Group
Irrigator Contribution
Expenditure
Capital Works
Expenses Incurred (a)
Net Funds
Accumulated/
(Expended)
(a) Includes Farm Rebates, Monitoring, Education & Administration
ii) Details of the Land and Water Management Plans Funds Held as Implementing Authority are as follows:
$’000
Berriquin
Cadell
Denimein
Wakool
Total
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
5,302
3,221
1,746
1,834
264
520
637
629
7,949
6,204
Accumulated/(Expended) -2,309
2,081
-47
-88
-144
-256
-33
8
-2,533
1,745
5,302
1,699
1,746
120
264
604
637
5,416
7,949
Opening Balance –
1 july 2009 (Note 17)
Add Net Funds
Closing Balance 30 June 2010 (Note 17)
66
2,993
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
29 FINANCIAL RISK MANAGEMENT
The company’s activities expose it to credit risk, liquidity risk and interest rate risk. The company’s overall risk
management program focuses on the key risk of unpredictability in financial markets and seeks to minimise potential
adverse affects on its financial performance. The company monitors these risks through monthly board meetings where
management reports are presented and analysed.
(a) Terms, conditions and accounting policies
Murray Irrigation Limited’s accounting policies for financial instruments, including the terms and conditions of each class
of financial asset, financial liability and equity instrument, both recognised and unrecognised at balance date, are as
follows:
Recognised Financial
Instrument
Note
Accounting Policies
Terms and Conditions as at 30 June 2010
Financial Assets
Receivables
- Water Debtors
6
Water debtors are carried at nominal
amounts due less any provision for doubtful
debts.
Water debtors are invoiced four times per year:
30 September, 31 December, 31 March and 30
June, with full payment due one month after
receipt of each invoice. Interest is calculated at
the rate stipulated in the New South Wales
Water Management Act 2000 and accumulates
on the outstanding balance.
- Government Debtors
6
Government debtors are carried at nominal
amounts.
Government debtors reimburse Murray
Irrigation for expenditure on asset
maintenance and renewal, or Land and Water
Management Plan contracts. Amounts are due
on 30 day terms and are interest free.
Investments
- Available-for-Sale
Financial Assets
9
These investments are stated at fair value.
Interest is recognised in the Financial
Statements when earned.
These investments have maturity dates ranging
from 2011 to 2015 with fixed and floating
interest rates.
- Shares in Associates
10
Investments in associates are valued using
the equity method. Dividends are recognised
when received or receivable.
Dividend payments from equity investments in
associates are determined by the performance
of the associate.
14
Liabilities are recognised for amounts to be
paid in the future for goods and services
received, whether or not billed to Murray
Irrigation.
Liabilities are normally settled on 28 day terms.
Financial Liabilities
Trade Creditors
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
67
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 June 2010
29 FINANCIAL RISK MANAGEMENT (continued)
(b) Financial Instrument composition
Murray Irrigation Limited’s financial assets and liabilities at the balance date are as follows:
FIXED INTEREST MATURING IN:
2010
Floating
Interest
Rate
1 Year
or Less
Over 1 to
5 Years
$000
$000
$000
9,154
More
than
5 Years
$000
Non
Interest
Bearing
Total
Carrying
Amount
Balance
Sheet
Weighted
Average
Effective
Interest
Rate
$000
$000
%
8,753
3
17,910
5.41%
598
6,968
7,566
9.00%
0
0
N/A
1,933
1,933
N/A
77,381
5.85%
2,480
5.50%
Financial Assets
Cash and Cash Equivalents
Water Debtors
Government Debtors
Other Debtors
Other available-for-sale assets
Other Financial Assets
48,211
29,170
2,480
59,845
9,351
29,170
0
8,904
107,270
3,400
3,400
3,400
3,400
5,504
103,870
Non
Interest
Bearing
Total
Carrying
Amount
Balance
Sheet
Financial Liabilities
Trade and Other Payables
Net Financial Assets
59,845
9,351
29,170
0
N/A
* Refer comments at Note 29(a)
FIXED INTEREST MATURING IN:
2009
Floating
Interest
Rate
1 Year
or Less
Over 1 to
5 Years
$000
$000
$000
1,813
More
than
5 Years
$000
Weighted
Average
Effective
Interest
Rate
$000
$000
%
5,438
3
7,254
3.57%
1,345
Financial Assets
Cash and Cash Equivalents
Water Debtors
6,640
7,985
9.00%
Government Debtors
3,942
3,942
N/A
Other Debtors
1,935
1,935
N/A
Other available-for-sale assets
Other Financial Assets
48,226
29,260
400
50,439
6,783
29,260
0
77,486
4.57%
2,186
2,586
N/A
14,706
101,188
4,869
4,869
4,869
4,869
9,837
96,319
Financial Liabilities
Trade and Other Payables
Net Financial Assets
50,439
* Refer comments at Note 29(a)
68
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
6,783
29,260
0
N/A
(c) Net Fair Values
The aggregate net fair values of financial assets and financial liabilities, both recognised and unrecognised, at the
balance date approximates the carrying value in the balance sheet.
(d) Credit Risk Exposure
Credit risk is the risk of financial loss to the company if a party to a financial instrument fails to meet its contractual
obligations. Credit risk arises from cash and cash equivalents and deposits with banks as well as other credit exposures
including outstanding receivables and long term investments in floating and fixed rate securities. The maximum
exposure to credit risk at balance date is the carrying amount of financial assets as summarised in note 29(b) above.
To manage its short term credit risk the company invests surplus funds in term deposits to maximise its return while
reducing the potential effect of the short term unpredictability of financial markets. These investments are made with
reputable Australian banks and are considered low risk.
In respect of accounts receivable the balances are managed and monitored in accordance with a credit management
policy. In respect of water debtors the company has security over the debt in accordance with the Water Management
Act 2000.
The company also has long term investments in the form of floating and fixed rate securities. Floating and fixed rate
notes are held with reputable Australian banks.
(e) Liquidity risk
Liquidity risk is the risk that the company will encounter difficulty in meeting obligations associated with financial
liabilities. The maximum exposure to liquidity risk at balance date is the carrying amount of financial liabilities as
summarised in note 29(b) above. To manage the company’s liquidity risk the management and the board monitors
cash flow requirements on a monthly basis to maintain sufficient cash to pay its debts as and when they fall due.
(f) Interest rate risk
Interest rate risk is the risk that a movement in interest rates will impact the value of investments or the interest earning
capacity of the company. An analysis of the effect on profit and equity of a 1% change in interest rates is set out below:
+1%
Cash and cash equivalents
Receivables
Other available for sale assets
-1%
Profit
$’000
Equity
$’000
Profit
$’000
Equity
$’000
179
179
-179
-179
6
6
-6
-6
774
774
-774
-774
30 CREDIT STANDBY ARRANGEMENTS
Unrestricted access was available at balance date to the
following lines of credit:
Bill acceptance facility
Used at balance date
2010
$’000
2009
$’000
7,000
7,000
––––––––––––––––––––––––––
0
==========================
7,000
––––––––––––––––––––––––
0
========================
7,000
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
69
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 June 2010
31 SUBSIDIARY
The company has the following subsidiary:
Name of subsidiary
Country of incorporation
Class of share
Australia
Ordinary
Riverbank Holdings Pty Ltd
Equity holding %
2010
2009
100
100
The company's investment in its subsidiary is in the form of twelve $1 shares and the loan of $1,703,000 (note 10a). In
accordance with Australian Accounting Standard AASB 1031: Materiality consolidated accounts have not been prepared
as such accounts would not be materially different to this set of financial statements.
32 PRIOR PERIOD ADJUSTMENT
At the time of privatisation in 1995 the company was vested with rights to conveyance water (to enable it to deliver
water to its irrigator customers) and supplementary water. Since that time these rights have been consolidated into the
company’s conveyance and supplementary licences. However at the time of privatisation the company did not bring
these water rights to account. The directors have reviewed the nature of the company’s water rights and have
concluded that they are assets of the company that should have been brought to account as an intangible asset as at
the date of privatisation. In order to disclose a more complete view of its assets the company has made a prior period
adjustment in order to bring the water licences to account. Comparative figures for prior years have also been adjusted
to recognise these assets. The assets have been brought to account at cost being estimated fair value as at 1995. This
adjustment has had the effect of increasing both intangible assets (see note 13) and contributed equity by $98 million.
70
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
DIRECTORS’ DECLARATION
The Directors declare that the financial statements and notes set out on pages 45 to 70:
(a) comply with Accounting Standards, the Corporations Act 2001 as amended and other mandatory professional
reporting requirements; and
(b) give a true and fair view of the company’s financial position as at 30 June 2010 and of its performance, as
represented by the results of its operations and its cash flows, for the financial period ended on that date.
In the Directors’ opinion:
(a) the financial statements and notes are in accordance with the Corporations Act 2001 as amended; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable.
This declaration is made in accordance with a resolution of the Directors.
S.G. Ellis
Director
D.M. Robertson
Deputy Chairman
Deniliquin
1 October 2010
Deniliquin
1 October 2010
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor of the audit of Murray Irrigation Limited for the 12 month period ended 30 June 2010, I declare that,
to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements in relation to the audit;
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
Hugh McKenzie-McHarg
Partner
Johnsons MME
Albury
1 October 2010
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
71
INDEPENDENT AUDIT REPORT
to the members of Murray Irrigation Iimited
REPORT ON THE
FINANCIAL REPORT
We have audited the financial report
of Murray Irrigation Limited, which
comprises the balance sheet at
30 June 2010, and the statement of
comprehensive income, statement
of changes in equity and cash flow
statement for the period ended on
that date, a summary of accounting
policies, other explanatory notes
and the Directors’ declaration.
Directors’ Responsibility for the
Financial Report
The Directors of Murray Irrigation
Limited are responsible for the
preparation and fair presentation of
the financial report in accordance
with Australian Accounting Standards
(including the Australian Accounting
Interpretations) and the Corporations
Act 2001 (Cth). This responsibility
includes designing, implementing
and maintaining internal controls
relevant to the preparation and fair
presentation of a financial report that
is free from material misstatement,
whether due to fraud or error;
selecting and applying appropriate
accounting policies; and making
accounting estimates that are
reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an
opinion on the financial report based
on our audit. We conducted our
audit in accordance with Australian
Auditing Standards. These Auditing
Standards require that we comply
with relevant ethical requirements
relating to audit engagements and
plan and perform the audit to obtain
reasonable assurance whether the
financial report is free from material
misstatement. An audit involves
performing procedures to obtain
audit evidence about the amounts
and disclosures in the financial
report. The procedures selected
72
depend on the auditor’s judgment,
including the assessment of the risks
of material misstatement of the
financial report, whether due to
fraud or error. In making those risk
assessments, the auditor considers
internal controls relevant to the
entity’s preparation and fair
presentation of the financial report 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
entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting
estimates made by the Directors, as
well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence
we have obtained is sufficient and
appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit we have
complied with the independence
requirements of the Corporations
Act 2001.
AUDITOR’S OPINION
In our opinion the financial report
of Murray Irrigation Limited is in
accordance with the Corporations
Act 2001, including:
a) giving a true and fair view of
Murray Irrigation Limited’s
financial position as at 30 June
2010 and of its performance for
the period ended on that date;
and
b) complying with Australian
Accounting Standards (including
Australian Accounting
Interpretations) and complying
with the Corporations
Regulations.
MURRAY IRRIGATION LIMITED ANNUAL REPORT 2010
Inherent Uncertainty
Regarding Taxation
Without qualification to the
opinion expressed above attention
is drawn to the following matter.
As disclosed at note 15 there has
been an ongoing dispute between
the company and the Australian
Taxation Office regarding the
taxation treatment of grants
received for environmental works.
The company has accrued the full
principle and interest on tax payable
on these amounts in accordance
with the records of the Australian
Taxation Office. However the
company is continuing to seek to
have this liability waived.
Johnsons MME
Chartered Accountants
Hugh McKenzie-McHarg
Partner
Albury
1 October 2010
ACCURACY AND INDEPENDENCE
Our financial processes and the
information in the annual financial
statements to shareholders on
pages 45 to 70 has been audited by
Johnsons MME. The expenditure of
government Asset Renewal Program
funding on capital works is audited
for physical and financial validity by
Sinclair Knight Merz (SKM) on
behalf of the NSW Government.
As part of our annual licensing
requirements we prepare an annual
Compliance Report. This is
submitted and formally scrutinised
by Department of Environment
Climate Change and Water
(DECCW), Murray Darling Basin
Authority (MDBA) and NSW Office
of Water (NOW).
These external audits help to
improve the quality of our systems
and the information we include in
this report. The external audits
Murray Irrigation is subject to,
are outlined in the table below.
External Audits of Murray Irrigation
Area
Auditor
Date of Audits
Government funded Asset
Renewal Program expenditure
Sinclair Knight Merz (SKM)
2 monthly
asset renewal audit
NSW Irrigation Corporation Water
Management Works Licence
NSW Environment Protection Licence
NOW and DECCW
Annual
Financial accounts
Johnsons MME
Annual
Business Plan
Johnsons MME
Annual
Murray Irrigation Limited
M