1Foundations for the future

annual report 201011

Our Owners Onstream is owned by three Corporations:

Tasmanian Water and Sewerage Corporation (Northern Region) Pty Limited trading as: Ben Lomond Water

Tasmanian Water and Sewerage Corporation (North-Western Region) Pty Limited trading as: Cradle Mountain Water

Tasmanian Water and Sewerage Corporation (Southern Region) Pty Limited trading as: Southern Water

Foundations for the future

annual report 20102011

Our bOard The Onstream Board comprises the Common Chairman of the Tasmanian Water and Sewerage Corporations, the three Regional Corporation CEOs and two additional directors.

Chairman Mr Miles Hampton (From January 2011) Mr Geoff Willis (Until December 2010)

Directors Ms Jane Bennett Mr Barry Cash, CEO Ben Lomond Water Mr Andrew Kneebone, CEO Cradle Mountain Water Ms Sarah Merridew (from March 2011) Mr Mike Paine, CEO Southern Water

Acting CEO Mrs Carolyn Pillans

Creating and delivering valued services to our clients sustainablyOur PurPOse

Our Valuesenterprisingenablingapproachableprofessional

1 Enabling the success of our clients through the delivery of professional, efficient and effective services2 To encourage learning, growth, leadership and wellbeing of our people3 To meet the economic, social and environmental returns expected by our owners and the community 4 To strive to be the best in all areas of our business 5 To be future focussed

Creating and delivering valued services to our clients sustainably

Our PrinciPles

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highlights fOr the year

1 Achieved savings of $5.4 million for the Tasmanian Water and Sewerage Corporations through the efficient delivery of services in IT, procurement, finance, payroll, HR, corporate secretariat and communications.

2 Implemented a new customer information and billing system to streamline and automate water account billing for the three Regional Corporations, on time, on budget and on scope.

3 Reduced the cost of delivering our services to the Regional Corporations and reported a net profit after tax of $162,000 for the 2010-11 financial year as planned.

4 Implemented Voice over Internet Protocol (VoIP) telephony for Southern Water, BenLomond Water and Onstream to deliver cost-effective communications features while achieving significant annual savings of over $50,000.

5 Implemented the Basware automated invoice capture and processing system to improve efficiency within accounts payable and provide better service to suppliers.

6 Conducted a tender process for the purchase of up to 180,000 water meters valued at $13.9 million.

7 Coordinated a submission to the House of Assembly Select Committee into the Tasmanian Water and Sewerage Corporations on behalf of all four Corporations in December 2010.

8 Attended the Legislative Councils Government Business Scrutiny Committee hearing in December 2010 along with representatives from the three Regional Corporations.

9 Implemented four new Enterprise Agreements through the payroll system and amalgamated eight pay-cycles into one fortnightly pay-cycle.

10 Coordinated statewide communications activities for the Regional Corporations including Agfest 2011, the Waterworks newsletter, Water Metering Project and statewide stakeholder engagement initiatives.

5highlights fOr the year

1 Achieved savings of $5.4 million for the Tasmanian Water and Sewerage Corporations through the efficient delivery of services in IT, procurement, finance, payroll, HR, corporate secretariat and communications.

2 Implemented a new customer information and billing system to streamline and automate water account billing for the three Regional Corporations, on time, on budget and on scope.

3 Reduced the cost of delivering our services to the Regional Corporations and reported a net profit after tax of $162,000 for the 2010-11 financial year as planned.

4 Implemented Voice over Internet Protocol (VoIP) telephony for Southern Water, BenLomond Water and Onstream to deliver cost-effective communications features while achieving significant annual savings of over $50,000.

5 Implemented the Basware automated invoice capture and processing system to improve efficiency within accounts payable and provide better service to suppliers.

6 Conducted a tender process for the purchase of up to 180,000 water meters valued at $13.9 million.

7 Coordinated a submission to the House of Assembly Select Committee into the Tasmanian Water and Sewerage Corporations on behalf of all four Corporations in December 2010.

8 Attended the Legislative Councils Government Business Scrutiny Committee hearing in December 2010 along with representatives from the three Regional Corporations.

9 Implemented four new Enterprise Agreements through the payroll system and amalgamated eight pay-cycles into one fortnightly pay-cycle.

10 Coordinated statewide communications activities for the Regional Corporations including Agfest 2011, the Waterworks newsletter, Water Metering Project and statewide stakeholder engagement initiatives.

6Chairmans report

THE SECOND yEAR of operations for Onstream marked an important turning point for the organisation with a major re-focus towards the provision of services to the three Regional Corporations. During the year we also saw the culmination of 18 months work with the implementation of the much anticipated billing system.

Onstream has continued to deliver greater efficiencies through the innovation and automation of systems as well as providing additional services to the Regional Corporations. It is pleasing that all this has been achieved with greater cost savings, and also delivering a budgeted surplus at 30 June 2011.

Safety remains an important focus and no lost time incidents (LTIs) were reported for the year;however, it was disappointing to note that one medically treated incident (MTI) was recorded.

Onstreams most significant undertaking was the development of a new billing system that will become fully operational in 2011-12.

During the year, Onstream, along with the Regional Corporations, appeared before two Parliamentary Committees inquiring into the Corporations. In December 2010, we attended the Legislative Councils Government Business Scrutiny Committee while in March 2011 we were required to appear before the House of Assembly Select Committee as part of its Review. While both Committees examined the governance and operations of the Corporations, the impact of future pricing for consumers and the end of the 5% price cap on 1 July 2012 was a major focus.

Some representations to the Parliamentary Review called for the abolition of Onstream. The Boards of the Regional Corporations and Onstream are committed to shared services activities across key areas recognising the benefits in driving efficiency and continuous improvement; however, they would prefer to see the prescriptive nature of the legislation removed enabling them to make commercial decisions about optimal delivery of common functions.

The State Government amended the Interim Price Order to allow for the commencement of pricing transition from 1 July 2011. This required Onstream to manage a significant system re-design project to ensure that the Regional Corporations can deliver on the transition.

In December 2010, we farewelled our inaugural Chair, Mr Geoff Willis. Geoff played a key role inthe establishment of Onstream within the new industry structure, overseeing its formation in 2008 and ensuring that the Corporations were well organised to commence operations from 1 July 2009.

On 8 July 2011 we also farewelled Onstreams founding Chief Executive Officer, Dr Christine Mucha. Christines contribution to the Tasmanian water industry over the last 14 years (including the last two years as Onstreams CEO) ensured that the transition to the new structure was achieved with firm foundations. Much of this was attributable to the strong business she had overseen previously as CEO of Hobart Water.

We were also grateful to Mrs Carolyn Pillans, the Corporate Secretary for the four Corporations, for accepting the position of Acting Chief Executive Officer in Dr Muchas absence.

My appointment as Chairman created a vacancy for a new Onstream director and we were pleased to welcome Sarah Merridew to the Board in March 2011.

Finally, I would like to thank the Executive Management Team and staff of Onstream. The Board acknowledges that the workload in most areas has been well beyond the norm and we have asked a great deal from each and every staff member throughout the year. It is thanks to their professionalism and commitment that Onstream has delivered a very commendable result for the Regional Corporations.

MILES HAMPTON Chairman

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8Ceo report: Foundations for the future

THIS yEAR, Onstream continued to build upon the strong foundation established during our first year of full operations.

Our primary goals in 2010-11 were to deliver efficiencies, automation and innovation. While our team continued to provide the corporate services on which our clients rely, we focussed on building better systems and closer working relationships for the future.

custOmer infOrmatiOn and billing systemAs most stakeholders appreciate, we did not inherit a customer information and billing system nor did the transition timeframe allow us to build one before 1 July 2009. Therefore a significant challenge this year was to develop a solution to enable water bills to be accuratelyand efficiently generated on behalf of the Regional Corporations and their customers.

We passed a significant milestone in February 2011 when we implemented the new customer information and billing system, Gentrack Velocity. Under a cross-corporation steering committee, many staff from both Onstream and the Regional Corporations worked

collaboratively during the year to make this a reality while issuing and resolving the backlog of billing matters. Achieved on time, on scope and under budget, our new customer information and billing system is a major step toward delivering a sound foundation and developing the operational capabilities we need in future.

select and gOVernment business scrutiny cOmmitteesAnother major development during the year was the House of Assembly Select Committee review into the four Water and Sewerage Corporations. The committees Terms of Reference were numerous, but primarily included assessing the formal structural and governance arrangements of our industry, the Corporations operations and performance to date, future water pricing and the removal of the State Governments subsidy of water and sewerage price increases.

We subsequently appeared before the committee at a public hearing in March 2011 to discuss matters within the Terms of Reference and our combined submission. Together with our first scheduled appearance

Foundations for the future

at the Legislative Council Government Business Scrutiny Committee, we were pleased to have the opportunity to present a strongly-credentialed case in support of our achievements to date and the benefits that shared services can deliver to the Tasmanian Water and Sewerage Corporations.

The Select Committee released an interim report in April 2011 which concentrated only on the potential impact of removal of the State Governments price subsidy. The final report is expected in April 2012 and any action will then depend on the State Government.

It is clear from the debate at both committees, and in the wider public domain, that the concept of shared or common services is yet to be fully embraced. While we know that this is but one challenge ahead of us, Onstream remains committed to creating and providing reliable, robust and useful services for the Regional Corporations into the future.

On behalf of the Executive Team, I warmly thank our staff for their determination and commitment during the year. Despite the

air of considerable uncertainty around us, our staff continued to implement priority projects and deliver our full range of services to the Regional Corporations, reduce our overall cost structure, and improve processes for the benefit of all our owner Corporations.

We are proud to say that we have built a firm foundation on which to capture statewide benefits, improve operational excellence and ultimately assist the Regional Corporations to deliver efficient water and sewerage services to the Tasmanian community.

CAROLyN PILLANS Acting Chief Executive Officer

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exeCutive management team

Chief Executive Officer Dr Christine Mucha (On leave until 8 July 2011)

Carolyn Pillans (Acting from March 2011)

Corporate Secretary / Carolyn Pillans Executive Manager, Governance (until May 2011)

Robert Noga (from May 2011)

Chief Information Officer Andrew Beswick

Executive Manager, Communications Tiziana Botti, (until January 2011) & Stakeholder Engagement Currently on secondment to Southern Water

Executive Manager, Strategy & Maria Buttery Service Innovation (from November 2010)

Incorporating Communications & Stakeholder Engagement (from January 2011)

Executive Manager, Human Resources Lynn Hallam

Chief Financial Officer Conrad Lennon (until December 2010)

Matthew Pigden (from December 2010)

Executive Manager, Revenue Services Marissa Walters

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our perFormanCe

financial OutcOmesWe reported a net profit after tax of $162,000 for the 2010-11 financial year compared with $67,000 for the 2009-10 year. This is a healthy result given that it encompasses an overall reduction of $209,000 in the base service fees charged to the Regional Corporations from the previous year. The higher net profit after tax has predominantly been driven by increased optional services taken up by the Regional Corporations in conjunction with efficiency measures undertaken to minimise costs but maintain existing service levels.

mOre efficient cOst baseBy year end we achieved an overall lower cost base, compared to both the original budget and the mid-year revised budget. As would be expected, sustainable improvements were achieved by the ongoing introduction of automated and electronic systems, but savings are now also starting to be realised from other initiatives across all four Corporations. Aprime example of this is the move from eight fortnightly pay cycles to one as a result of the new Enterprise Agreements negotiated this year.

Our commitment to further reducing our cost structures will continue as we aim to meet a cost base of CPI -6.0% (excluding depreciation, amortisation and interest) in 2011-12.

imPrOVing Our serVice standardsDuring the course of 2010-11, we set about further clarifying the nature and standards of services to be provided to the Regional Corporations to ensure our business priorities perfectly align. As a result, our second years Service Level and Performance Agreements now reflect clearer service standards, performance measures, mutual obligations and reporting requirements.

billing serVicesWhile the accuracy and timing of water and sewerage accounts was understandably the subject of public comment at times during the year, we were operating using a temporary electronic system, cobbled together with a range of manual processes and incomplete data emanating from a range of sources.

While our customer information and billing system project team was building, implementing and testing our new system, our Revenue Services team issued 581,343 quarterly fixed charge invoices, at an accuracy rate of 97.1% using our interim arrangements.

Accounts for water consumption, new subdivisions and properties that changed ownership after July 2009 were part of a separate project. Over 113,000 invoices were issued statewide for these. While delays were experienced with volumetric bills due to our limited systems, few were inaccurate.

We commenced using some processes in our new customer information and billing system in February 2011. However, along with the Regional Corporations, we are very much looking forward to celebrating the successful commencement of the full functionality of Gentrack Velocity from 1 July 2011.

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our serviCes

From July 2010, the processing of water and sewerage accounts was moved from the Finance Department to the newly formed Revenue Services Department. This ensured that the coordination of account processing received more specialised attention and resources, and could work closely with the customer information and billing system project team.

new custOmer infOrmatiOn and billing systemThe Interim Price Order issued by the State Treasurer, required the Regional Corporations to charge customers in the same way as they had been charged in the past. Therefore, as the provider of billing services, we were required to apply hundreds of different tariffs to around 190,000 customers statewide. This limited our ability to introduce efficiencies particularly with our heavy reliance on manual processes.

In our first year, to address this, we established Service Level Agreements with councils to provide billing services on our behalf. In our second year, an external provider was engaged

to provide a temporary system and assist with data migration, while we designed and built our new system.

The phased implementation of the new customer information and billing system Gentrack Velocity from February 2011 was an important milestone and the culmination of many months of work. With a capital cost of $3.5 million, including internal costs, the system now provides the Regional Corporations with a crucial foundation for timely and accurate billing and much improved customer service for many years to come. The final implementation phase addressing integration with our other systems will be completed in October 2011.

The new customer information and billing system enables automated account processing, making billing services faster, cheaper and more accurate. It is built for two-part pricing, will interface with smart water metering technology and supports the move to the new, equitable pricing structures being introduced by the Regional Corporations starting in July 2011.

achieVements at a glance

Implemented the Regional Corporations new customer information and billing system, Gentrack Velocity, in February 2011

Processed 581,343 fixed charge billing invoices, and 113,096 volumetric billing invoices and over 12,000 other invoices for the Regional Corporations

revenue services provided to the three regional Corporations

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provision of information technology and solutions (it&s) to all four Corporations

achieVements at a glance

Coordinated IT strategy development for all Corporations

Directed the project to deliver the new customer information and billing system

Implemented the Aquarius water information management and reporting system and Integrated Risk and Incident Management System across the industry

Implemented Voice over Internet Protocol (VoIP) telephony for Southern Water, Ben Lomond Water and Onstream, with Cradle Mountain Water to be implemented early in the new financial year

Completed an integrated information technology (IT) and communications fit-out of the new Southern Water office at Moonah

Coordinated the redevelopment and hosting of four web and intranet sites for the Water and Sewerage Corporations using a common web content management system

Achieved a cumulative service level compliance of 99.8% for the IT Service Centre for the year, resolving over 10,000 incidents and requests

Developed and tested our statewide Information Technology Recovery Plan and site

luke mitchell-cOllins systems administrator

luke has been a member of the rotaract club of central coast since late 2007, holding the position of President in 2010-11.

he now represents the three tasmanian rotaract clubs as a district representative. in november 2010 he travelled to cambodia and thailand to help local children in their recovery from, and prevention of, child exploitation.

luke says that rotaract is a great way to make new friends and socialise, while giving back to the community both locally and internationally.

the Onstream team comprises people from across tasmania with wide and varied backgrounds. featured within these pages are a few of the people who have helped shape the Onstream community over the last two years. we are all proud to be playing our role in laying the foundations for the future of tasmanias water industry.

we invite you to meet some of our talented people who make up our community by exploring some of their personal interests and achievements.

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our serviCes

caPturing statewide it benefitsThe Chief Information Officer (CIO) continued to oversee and coordinate the ongoing development and use of IT and information systems through the industry-based IT Steering Committee, and several IT special interest groups. The CIO also chaired the information management special interest group to coordinate an industry approach to information management.

Our CIO focussed almost exclusively on the customer information and billing system project for most of the year as Project Director, with a dedicated Project Manager and Project Implementation Team comprising staff from all four Corporations. The implementation of the new system was overseen by a Project Steering Committee consisting of the four Corporations CEOs.

it PrOcurement saVingsOn behalf of the four Corporations, the IT & S Department liaised with major suppliers

to ensure supply, support and licensing arrangements; high level client liaison and strategic advice; liaison with Information Communication Technology (ICT) industry groups and with Government regarding ICT policy developments. This year, this extended to the introduction of VoIP in three Corporations, with the fourth to occur shortly to attain expected savings of over $50,000 per annum.

enhanced it serVice and suPPOrtThe IT & S Department continued to support the integration and enhancement of existing information systems and the development of new IT systems for the four Corporations. Some10,000 incidents and requests were managed through the Service Centre across a range of matters from equipping and connecting new and existing staff, upgrading systems and technologies, developing new solutions and applications and managing integration over a number of information systems.

Cumulative serviCe level ComplianCe

Jul85%

90%

95%

100%

AugSep

OctNov

DecJan

FebMar

AprMay

Jun

Cumulative Service Level Compliance

Onstreamactual

Onstreamtarget to be less than

Industryaverage

3.4

3.6

3.8

4.0

4.2

4.4

4.6

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ensuring sOund gOVernance and cOrPOrate OVersightThe Corporate Secretary for the four Water and Sewerage Corporations is based in Onstream and manages the Secretariat. During the year, the Secretariat continued to build on the governance practices for all four Corporations to ensure strong and effective oversight. One key project was to more closely align the Directors Selection Committee with our local government owners by appointing the Board Chairman as its Chair and implementing a Charter for the committee.

The Corporate Secretary worked closely with the Directors Selection Committee to provide advice and guidance to Statewide Owners Representatives during the selection and appointment of the new Board Chairman of the four Corporations and the subsequent recruitment of three new directors to the respective Boards of the four Corporations.

bOard serVicesAs part of its Board Services role in 2010-11, the Secretariat facilitated 128 meetings for all Corporations.

secretariat and governance services for all Corporations

majOr achieVements

Facilitated processes to select and appoint the new Board Chairman in conjunction with the Selection Committee and Statewide Owners Representatives

Facilitated the processes to select and appoint three new directors to the Corporations Boards

Facilitated and supported 128 Board, committee and related meetings for the year

Coordinated the combined submission to the House of Assembly Select Committee on behalf of the Boards of the four Corporations

Managed the evaluation of all Boards committees for the first time

Commenced the internal audit program for all four Corporations

Annual General Meetings 4

Statewide Owners Representatives meetings 7

Board meetings (including circulating resolutions) 71

AAR and SHREP Committee meetings 31

Formal meetings of independent directors without management present 1

Strategic Workshops for all four Corporations 1

Directors Selection Committee meetings 6

Parliamentary Review Committee meetings 7

TOTAl 128

internal auditDuring the year, the Secretariat coordinated a tender for internal audit services. The Audit and Risk Committee subsequently appointed Deloitte. Now in the first year of a three-year, risk-based strategy, internal audits were conducted in the areas of risk management, billing, payroll, capital expenditure and purchase cards. Internal audit also undertook other specific reviews on behalf of the Regional Corporations.

our serviCes

streamlined human resOurce and PayrOll serVicesAs part of the focus on improving efficiency through automation, the department rolled-out the HR administration service, Chris21, to Cradle Mountain Water and Southern Water. Chris21 assists with HR data capture and management; system management; processing and record management and reporting.

Rather than being processed manually, the new Employee Self Service Kiosk allows staff to personally maintain leave record balances

human resources & payroll services provided to all Corporations

majOr achieVements

Provided policy advice and guidance to Board and Committee Chairmen, and to the Regional Corporations Human Resource Managers on request

Implemented the changeover to new pay structures and employment conditions under the four Water and Sewerage Corporations Enterprise Agreements

Completed the transition from eight fortnightly pay-cycles to one for all Corporations

Expanded the Employee Self Service Kiosk to Cradle Mountain Water and Southern Water

Processed 22,000 payslips over 347 pay runs, produced over 900 End of year Payment Summaries and made payments to 120 individual superannuation funds on behalf of all four Tasmanian Water and Sewerage Corporations

and history, training records and conditions, allowances and payroll deduction details.

In 2009-10, Payroll Services processed pays, terms and conditions under 29 Enterprise Agreements, three Awards and two Long Service Leave Acts then existing in the Corporations. In 2010-11 the department implemented the changes negotiated by the Corporations under four new Enterprise Agreements resulting in simplified pay structures and employment conditions, and subsequently reduced fortnightly pay-cycles from eight to one.

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streamlining business and cOmmercial serVicesDuring the year the Chief Financial Officer (CFO) role was restructured to provide greater depth to the Regional Corporations financial management. The Onstream CFO continues to support the Regional Corporations through the centralised administration and management of the Navision Financial Management System; a consistent approach to policy development; advice regarding Treasury issues; application and interpretation of accounting standards and statutory reporting requirements for all Corporations.

In addition, on behalf of all Corporations, Onstreams CFO was the primary liaison with all government departments and agencies including Treasury, Tascorp, the Auditor-General and the Australian Taxation Office.

majOr achieVements

Achieved new procurement savings of $1.5 million on contracts and agreements negotiated this year

Implemented an automated invoice capture and processing system to improve efficiency within accounts payable and provide better service to suppliers

Reported a net profit after tax of $162,000 as planned for the 2010-11 financial year

Managed the tendering and contracting processes for the Statewide Water Metering Project

Processed 57,849 creditor invoices with a total value of $167.5 million

Financial services to all four Corporations

This year the department delivered the automated and centralised accounts payable processing project. The new Basware system will achieve greater efficiency by streamlining the accounts payable operations for all four Corporations, allowing faster and more secure processing internally, and importantly, accurate and timely payments to suppliers.

deliVering Value and qualityOur Procurement Services team facilitated arrangements on behalf of the Regional Corporations to ensure sustainable supply, competitive prices and appropriate quality.

Major achievements included new contracts for the procurement of up to 180,000 new water meters and supply of electricity services for the three Regional Corporations, with estimated savings of $774,000 for the next year.

our serviCes

achieVing OPeratiOnal excellenceIn the first half of 2011, the department commenced a process re-engineering project as part of a pilot Operational Excellence program. Once completed, re-engineering opportunities will be assessed for other services to further drive the achievement of efficiencies, enhance services to the Regional Corporations and lower our cost structures.

We initiated a study of benchmarking options which will be progressed further during 2011-12. Together with our current Key Performance Indicators (KPIs), benchmarking will form the basis for continuous improvement and innovation across the business.

Later in the year, a Laboratory Service Review commenced with the Regional Corporations to explore the possibility of industry-wide improvements. A steering committee was formed and a procurement solution agreed.

strategy and service innovation

majOr achieVements

Commenced our pilot Operational Excellence Program

Facilitated the FutureTas Project in conjunction with the Tasmanian Spatial Data Exchange (tsdx)

Conducted performance workshops with the Regional Corporations to review the base service and price offering along with associated Service Level and Performance Agreements to align with expectations

Reviewed laboratory services and developed a plan to improve these services across the Regional Corporations

deliVering innOVatiOnThe tsdx platform was further advanced with key stakeholders during the year. We also led the development of the FutureTas forecasting tool project to assist planners to accurately predict future investment needs in the wider community. We are pleased to be working closely with the Tasmanian Planning Commission; Department of Economic Development; Department of Infrastructure, Energy and Resources; Launceston City Council; Northern Tasmanian Development and Southern Water on FutureTas.

ecOlOgical fOOtPrint mOnitOringIn line with our Corporate Plan commitments, we undertook the Green Biz Check assessment to monitor our environmental performance. Through this process, we earned bronze certification status with an initial score of 71%. The results now form the basis of our action plans and regular monitoring.

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majOr achieVements

Provided professional assistance and advice to the Regional Corporations to communicate industry issues

Assisted the Regional Corporations with major initiatives, such as the Water Metering Project

Coordinated statewide tradeshows and sponsorship activities for the Regional Corporations

engaging with cOrPOratiOn stakehOldersWe continued to assist the Regional Corporations communicate their industry priorities by providing professional communications advice and facilitating a range of related initiatives.

To reinforce the coordinated statewide strategies and whole-of-industry initiatives being implemented by the Regional Corporations, and to promote the value of water to our communities, the department published the stakeholder newsletter, Waterworks, and arranged a series of

Communications and stakeholder engagement services provided to all Corporations

angela beyer Project manager, customer information and billing system

angela beyer caught the travel bug as a 16 year old following her first overseas trip to japan.

after joining the royal australian navy she travelled extensively throughout asia and has subsequently travelled to europe, africa, north and south america a total of 35 countries.

highlights include staying in a buddhist monastery in the mountains of japan, kayaking with whales in the queen charlotte islands in northern canada, the night bazaar in marrakesh, morocco, and exploring the amazon jungle in Peru.

angela loves exploring and discovering natural beauty, experiencing the culture and food of exotic places and meeting people; however, it is always nice to come home to the most beautiful place on earth tasmania.

community leader briefings in July 2010 by the Regional Corporation CEOs and Board Chairman. The department also facilitated statewide tradeshows on behalf of the Regional Corporations for events such as Agfest.

We have worked closely with the three Regional Corporations to coordinate the appointment of an advertising agency to deploy marketing communications activities. Asmuch of our work this year has focussed on the Water Metering Project, we now have two staff seconded to Southern Waters project team for the duration of the installation process.

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our people

We worked on two main priorities with our staff this year.

health and safetyOur first priority focus was our no harm philosophy. We have three major occupational health and safety risk exposures: extensive travel; keyboard work; and manual handling. To positively address these, we increased our videoconference meetings, performed more ergonomic assessments, refreshed relevant training, trained new contact officers and actively promoted our no harm message within each department.

While we had no lost time injuries, unfortunately we had one medically treated injury which is being actively managed. We also increased our incident reporting and all investigations met required close-out times.

a culture Of serVice and PerfOrmanceFollowing our first annual staff survey, this year we worked towards further improving our workplace engagement. Accordingly, we have more proactively discussed our Corporate Plan with our staff and are developing better tools to report our

majOr achieVements

Chaired several statewide Special Interest Groups and forums designed to capture and share statewide benefits including information management, knowledge management, risk management and human resources

Introduced a performance management system to the Executive team and commenced implementation for all staff

Fostered a no harm safety philosophy across the organisation

Successfully negotiated a three year Onstream Enterprise Agreement

Developed Mytime management software across the organisation to track time and resource allocation

Reported no lost time incidents and only one medically treated incident for the year

Bettered our internal sick leave goal

carOlyn Pillans acting chief executive Officer

carolyns family has always volunteered; from big fundraisers for various causes to school holiday meals-on-wheels; even sitting in the blood bank as a child while her grandmother donated!

more recently, her daughter spent time as a volunteer in east africa and continues that work with the Oaktree foundation and the edmund rice network in both tasmania and Victoria.carolyns husband also gives up an afternoon each week for the st johns ambulance.

the ceO sleep-out was a natural thing for carolyn to do. to keep it in the family, carolyns mother volunteered to join in!20

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performance internally. To ensure that resources are available and allocated appropriately, the Mytime management software was developed in-house to enable identification of workloads and opportunities for better resource coordination.

training and PrOfessiOnal deVelOPmentTo support the growth and development of our people, training and professional opportunities were provided. During the year, we assisted a number of staff to enhance their professional and academic qualifications and offered a range of training courses to develop skills and expertise.

A significant amount of training focussed on the implementation of the new customer information and billing system.

wOrkPlace giVingOur staff embraced an array of charities over the course of the year with funds being raised for the following causes:

Jeans for Genes DayDaffodil DayRed Ruby DayDiabetes Tasmania Pink Ribbon DayMovemberQueensland Flood Appeal

Jul85%

90%

95%

100%

AugSep

OctNov

DecJan

FebMar

AprMay

Jun

Cumulative Service Level Compliance

Onstreamactual

Onstreamtarget to be less than

Industryaverage

3.4

3.6

3.8

4.0

4.2

4.4

4.6

maintaining strOng gOVernance This year we focussed on embedding a risk management culture and robust processes, andenhancing our ethical decision making under our corporate governance framework and Corporate Plan. Importantly, we also conducted training and risk assessments for fraud and corruption, professional indemnity, managing conflicts of interest and provided extra training for our incident management system users.

In conjunction with our external suppliers and Regional Corporations, we also extensively tested our Information Technology Recovery Plan. While the outcomes were highly successful, the learnings identified form part of our continuous improvement plans.

legislatiVe disclOsuresRequests received under the Right to Information Act 2009 (Tas) in 2010-11: Nil

Disclosures received under the Public Interest Disclosures Act 2002 (Tas) in 2010-11: Nil

diVersity statistics as at 30june 2011(Excludes casuals and temporary staff)

BOARD COMPOSITION: 4.0 Males 2.0 Females

SENIOR MANAGEMENT COMPOSITION (FTES): 3.0 Males 4.0 Females

TOTAL WORKFORCE COMPOSITION (FTES): 24.4 Males 43.6 Females

Christchurch Earthquake AppealRSPCALive Below the LineThe Biggest Morning TeaThe Samaritans PurseCEO Sleepout

siCk leave days per employee

our Future

The Regional Water and Sewerage Corporations are our major clients and therefore, our major focus. It is our entire teams intention to ensure agreed deliverables are met continually and reliably, and that our services match their strategic aims and objectives.

While awaiting the outcome of the Select Committees Review, we will continue to deliver on our 2011-12 Corporate Plan commitments, respond to any regulatory or structural change and ensure seamless service continuity.

In a nutshell, in 2011-12, we intend to:

Deliveraccurateandtimelybillingservices

Identifyanddeliverfurthercostsavingsthrough efficiencies, automation and innovation

Developnewproductsandservicesasneeded

Continuallyprovidereliableservicesduringany change to our industry or structure.

Although it is subject to spirited debate at times, our current legislation invites us to offer the benefits available from shared services to other parties. We would welcome closer links with the Regional Corporations owner councils to explore ways in which our learnings and experiences, products and services may provide tangible benefits for them into the future.

Above all, we welcome the opportunity to build on our firm foundation: to capture statewide benefits, improve operational excellence and ultimately assist the Regional Corporations to deliver efficient water and sewerage services to the Tasmanian community.

diane free accounts receivable coordinator

diane began playing indoor bias bowls socially around 30 years ago and has played competitively for the last 10 years with the berriedale bowls club.

she won her first state championship in the ladies fours in 2006 and went on to represent the state in her first australian championships in terrigal, new south wales.

after winning the state ladies Pairs championships in deloraine recently, diane secured selection in the tasmanian team to compete in the 42nd national bias bowls championships held at shellharbour, new south wales in august.

competing in the mixed Pairs, diane celebrated her biggest highlight when she and her partner john edmondson won the gold medal after winning 7 games from 9 played after soundly beating new south wales in their final game. she was also part of the victorious tasmanian team which won the jack gore trophy by just two points beating Victoria for only the second time in 40 years.

diane says she enjoys the competitiveness and relaxation of indoor bias bowls as well as meeting new people.

22

23

Corporate governanCe

fOrmal gOVernance arrangementsEnabled under the Water and Sewerage Corporations Act 2008 (Tas) (WSCA) and incorporated under the Corporations Act 2001 (Cth), the Tasmanian Water and Sewerage Corporation (Common Services) Pty Limited trades as Onstream.

We are owned in equal shares by the Regional Corporations: Ben Lomond Water, Cradle Mountain Water and Southern Water.

Onstream was created, amongst other things, to provide services to assist the three Regional Corporations to fulfil their principal objectives. The WSCA also clearly stipulates that we are to:

Operatewithgoodcommercialpractices

Maximisesustainablereturnstoowners

Beavailabletoprovideservicestothirdparties, including councils, on a commercial basis.

The WSCA also mandates other specific governance features, including the composition of the Board; rights and responsibilities of our owner Corporations; and the sections of the Corporations Act that are formally displaced and therefore, do not apply to us. In most other ways, the Boards powers, obligations, rights and responsibilities are similar to those of other privately-owned, large proprietary limited companies.

Our corporate governance framework aligns with the ASXs Corporate Governance Principles and Recommendations with 2010 Amendments, 2nd edition (ASX Principles). Afull description of our compliance is available on our website, www.onstream.com.au.

During the year, we continued to build on our governance practices to ensure strong and effective oversight. This year our Board Committees were evaluated for the first time, in line with the Board Charter. This culminated in the recognition that Onstreams Safety, Human Resources, Environment and Public Health Committee (SHREP) had met its goals and its ongoing responsibilities could revert to the full Board.

bOard rOle and structureUnder our Constitution, the Boards role is to manage the business of the Corporation in all matters, unless they are the specific responsibility of our owners. The Board has determined which matters it will manage exclusively, with the remainder delegated to theCEO. A summary of this information is available in the Governance section of our website.

The WSCA prescribes the composition of the Boards of all four Tasmanian Water and Sewerage Corporations. While all Onstreams directors are non-executive, none are consideredindependent due to their appointment as either directors or CEOs of the Regional Corporations which both own and haveextensive commercial relationships withus.

directOrs backgrOund, terms and meeting attendances

miles Hampton B.Ec (Hons), FCPA, FCIS, FAICD (Appointed director 11 August 2009 Term 1 and Chairman 1 January 2011)

Miles was appointed to the Onstream Board in August 2009, having been appointed as an inaugural director of Ben Lomond Water, Cradle Mountain Water and Southern Water in November 2008. Miles was appointed Chairman of the four Tasmanian Water and Sewerage Corporations from 1 January 2011.

Miles was Managing Director of ASX-listed agribusiness Roberts Limited for 20 years. He is currently a director of MyState Limited, Australian Pharmaceutical Industries Ltd, ForestryTasmania and the Van Diemens Land Company, and is Chairman of the UTAS Foundation. He was Chairman of Hobart Water from 2005-2009 and has been a director of ASX-listed companies Ruralco Holdings Limited, HMA Limited, Gibsons Limited and Wentworth Holdings Limited.

As Tasmanian Water and Sewerage CorporationsChairman, Miles is also a Commissioner of the Tasmanian Planning Commission and a member of the Tasmanian Infrastructure Advisory Council.

24

Corporate governanCe

Geoff Willis B.Comm, MBA, CPA, MAICD, CAIE (Director and Chairman from 9 December 2008 to 31 December 2010)

Geoff was Chairman of the four Tasmanian Water and Sewerage Corporations from incorporation to 31 December 2010. He has a commercial and industrial background and had undertaken a number of senior leadership roles during the past decade.

Jane Bennett (Appointed 11 August 2009 Term 1)

Jane was Managing Director of Ashgrove Cheese. She has made major contributions to the agricultural sector through the Tasmanian Rural Industry Training Board and the Tasmanian Farmers and Graziers Association. Jane is a member of the Brand Tasmania Council and has received a number of awards and scholarships, including being awarded the 2010 Telstra Business Woman of the year and ABC Radios Australian Rural Woman of the year in 1997.

In May 2011, Jane was appointed as a director of Ben Lomond Water. She is now also a director of Tasmanian Ports Corporation and the Australian Broadcasting Corporation.

Barry CasH B.Eng (Civil), Grad. Dip. Management, FAICD, MIE (Aust), CPEng (Appointed 12 January 2009)

Barry was appointed CEO of Ben Lomond Water in December 2008 and is the former CEO of Esk Water. He has an engineering and general management background and has been involved in the Tasmanian water industry for over 30 years.

Barry is a director of Onstream as part of his responsibilities as a Regional Corporation CEO.

andreW kneeBone MBA, MAICD (Appointed 4 June 2010)

Andrew was appointed as CEO of Cradle Mountain Water on 4 June 2010 having acted in the role for six months. Andrew moved to Tasmania after spending the previous 12 years in the Victorian water industry where he held a

range of senior and executive level positions in the areas of Regulation, Organisation Development, Finance, Governance and Corporate Services. He formally held the roles of General Manager, Finance and Corporate Services at Central Highlands Water and General Manager, Corporate Services at Westernport Water.

Andrew is a director of Onstream as part of his responsibilities as a Regional Corporation CEO.

saraH merrideW B.Ec, FCA, FAICD (Appointed 10 March 2011 Term 1)

Sarah is a Chartered Accountant and director of MyState Limited and Tasmanian Railway Pty Ltd. She is Honorary Treasurer of the Royal Flying Doctor Service (Tasmanian Section) Inc. and is actively involved with other community organisations.

Sarah has been a director of Ben Lomond Water since its incorporation in November 2008. In March 2011, she was also appointed as a director of Cradle Mountain Water and Southern Water. She is now the Chairman of the four Tasmanian Water and Sewerage Corporations Audit and Risk Committees.

Sarah was formerly a director of Tasmanian Public Finance Corporation, Tasmanian Perpetual Trustees and a partner of Deloitte Touche Tohmatsu, including a period as Managing Partner for Tasmania.

mike paine B.Eng (Civil), Grad. Dip. Eng (Municipal Management), FIE (Aust), RPEQ, MAICD (Appointed 16 February 2009)

Mike was appointed CEO of Southern Water in January 2010, after 11 months as CEO of Cradle Mountain Water. Mike came to Tasmania following a career in the Victorian and Queensland water industries. He is the former General Manager, Customer Services of Barwon Water and former CEO of Westernport Regional Water Authority.

Mike is a director of Onstream as part of his responsibilities as a Regional Corporation CEO.

taBle 1 direCtors meetinG attendanCes

Board Meetings (13 held)

AAR Committee (4 held)

SHREP Committee1 (3 held)

Parliamentary Review Committee*2 (7 held)

Strategic Workshop (1 held)

DirectorAt

tend

ed

Eligib

le

Atte

nded

Eligib

le

Atte

nded

Eligib

le

Atte

nded

Eligib

le

Atte

nded

Eligib

le

Geoff Willis3 (retired 31.12.10)

8 8 2 2 1 1

Miles Hampton 4 13 13 3 2 2 2 1 1

Jane Bennett 13 13 4 4 0 1

Barry Cash 11 12 3 3 1 1

Andrew Kneebone 12 12 3 3 1 1

Sarah Merridew5 (appointed 10.3.11)

2 3 2 2 0 0

Mike Paine 12 12 3 3 1 1

1 SHREP was chaired by Brain Bayley, an independent director of the Regional Corporations.2 The Tasmanian Water and Sewerage Corporations Parliamentary Review Committee includes three directors representing the interests of the four

Corporations. It is chaired by Dr Dan Norton.3 Board Chair to 31.12.10.4 AAR Chair to 10.3.11; Board Chairman from 1.1.11.5 AAR Chair from 10.3.11.

brett chatwin revenue services Officer, revenue services

brett chatwin has always had a passion for the outdoors bushwalking, mountain climbing, camping, fishing and exploring but rarely took a camera.

the desire to capture and appreciate fond memories of his outdoor experiences led to a passion for photography; in particular, waterfalls, sunrises, sunsets, wildlife and landscapes and success in winning a photography competition.

brett says he is still searching for that one picture of a lifetime, but the thing he enjoys most is sharing images of this beautiful state we call home.

25

26

Corporate governanCe

Board Committees

While the Board had one temporary and two permanent committees at the start of the year, the SHREP was reviewed and subsequently wound up during the year. Reports from the Committee Chairs are below.

ParliamentaryReviewCommittee

The Parliamentary Review Committee (PRC) is an ad hoc committee formed in November 2010, with three members representing the interests of the four Corporations. Members of the PRC are Dr Dan Norton (Chairman), Mr Grant Atkins and Mr Rob Woolley (until 30 April 2011).

The PRC oversaw the preparation of the combined submission to the House of Assembly Select Committee on behalf of the four Boards. It will reconvene when the final report of the Select Committee is released.

AuditandRiskCommittee

The purpose of the Audit and Risk Committee is to assist the Board to fulfil its responsibilities in relation to:

OverseeingtheintegrityoftheCorporations financial accounting and reporting practices

MonitoringthattheCorporationadoptsappropriate risk management strategies

Monitoringcompliancewithalllegalandstatutory obligations.

In particular, the committee reports to the Board and provides advice and recommendations in order to facilitate its decision-making in the following areas:

Ensuringthequalityandaccuracyofpublished financial reports so they present a true and fair view of the Corporations financial position

EnsuringtheCorporationadopts,maintainsand applies appropriate accounting policies and procedures

EnsuringtheCorporationestablishesand maintains effective internal control systems

nick balcOmbe acting business development manager

nick began playing guitar 10 years ago with friends around the campfire.

to date, he has written more than 30 songs and now performs regularly for audiences in tasmania including performances in hobarts popular live music venue, the republic bar, interstate and even los angeles.

nick, who recently released his first album on itunes, says music is a great way to escape work pressures, relax and unwind.

26

27

Overseeingandappraisingtheexternalaudit function

Directingtheinternalauditfunction

EnsuringtheCorporationmaintainseffective risk management systems

EnsuringtheCorporationmaintainsaneffective compliance program.

During 2010-11, the AARs major focus was the continued evolution of an effective risk management system and establishing the internal audit function. Based in Onstream, the function is overseen by the Internal Audit Manager for all Corporations. During the year, an outsourced provider was contracted to deliver the audits.

The risk-based internal audit strategy and plan were reviewed and endorsed by the AAR early in the year and are now underway.

The AAR Committee met on four occasions in 2010-11. The composition of the AAR was refreshed during the year and membership and meeting attendances are included in Table 1.

Safety,HumanResources,Environmentand public health Committee

The Safety, Human Resources, Environment and Public Health Committee (SHREP) was chaired by Mr Brian Bayley, a director of the Regional Water and Sewerage Corporations. Throughout the year it met on three occasions.

The committees purpose was to assist the Board fulfil its responsibility to:

Establishandmaintainhighworkplacesafety standards

Manage,engageanddevelopourstaff.

While the committee continued its focus on workplace safety and establishing a culture of No Harm across the Corporation, increasingly it worked on understanding inherent risks throughout its focus areas of safety and human resources.

Key initiatives flowing from the committees activities include:

Safety:

Increased emphasis on reporting and prompt elimination of hazards

Review of the Safety Management Plan.

HumanResources:

Ongoing development of contemporary policies

Implementation of a performance management system

Development of succession plans for key positions

Continued development of a healthy workplace culture including overseeing implementation of action plans flowing from last years employee engagement survey.

The membership of SHREP during its operations is outlined in Table 1.

28

the onstream team

29

Financial Report20102011

onstreamTasmanian WaTer and seWerage CorporaTion (Common serviCes) pTy LimiTed

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed30

direCTors reporT

The directors of Tasmanian Water and sewerage Corporation (Common services) pty Limited (the Corporation), trading as onstream, present the financial report of the Corporation for the financial year ended 30June 2011. in order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

Legislative authorityonstream was formed on 9 december 2008 under the Corporations Act 2001 and pursuant to the Water and Sewerage Corporations Act 2008. it is governed by the Constitution for the Tasmanian Water and sewerage Corporation (Common services) pty Limited, which is approved by the Tasmanian parliament.

as specified in the Constitution, the primary purposes of the Corporation are:

Toassisttheregionalwaterandseweragecorporations to fulfil their principal objectives

Tobeasuccessfulbusiness,andtothisend:

- To operate its activities in accordance with good commercial practice

- To maximise sustainable returns to its members

- To be available to provide services to third parties, including Councils, on a commercial basis.

principal activitiesThe principal activity of onstream during the course of the financial period was providing various services to its three owner corporations including secretariat, information technology, payroll, accounts payable, billing and revenue receipting.

review of operationsa major milestone was passed with the implementation of phase 1 of the new Customer information system (Cis), gentrack velocity in February 2011. many staff from across onstream and the three owner corporations

worked collaboratively to make this a reality. The culmination of this was a major step on the road to delivering a sound foundation for the future and also in demonstrating the capabilities that have been moulded in a very short period of time.

The Corporation reported a profit after income tax equivalents expense of $162,000 for the year ended 30June 2011 (2009-10: $67,000).

a more detailed review of the Corporations operations during the year is contained elsewhere in the annual report.

environmental regulationsonstreams operations are subject to various environmental regulations under both Commonwealth and state legislation. The Board has the responsibility to monitor compliance with environmental regulations. The directors are not aware of any significant breaches during the year covered by the report.

dividendsno dividends were declared or paid during the 2010-11 financial year (2009-10: nil).

subsequent eventsThere have been no matters or circumstances that have arisen since the end of the financial year that have significantly affected, or may significantly affect the Corporation, its operations, results of operations or state of affairs in future financial years.

Likely Future developmentsin 2010 the Tasmanian House of assembly established a select Committee to inquire into and report upon the three Tasmanian water and sewerage corporations and the common services corporation onstream. The final report of the select Committee is scheduled to be released in april 2012. The recommendations from this report may have an impact on the future operations of the Corporation.

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed 31

information on other likely future developments in the operations of the Corporation is included elsewhere in the annual report.

remuneration reportThis remuneration report, which forms part of the directors report, sets out information about the remuneration of the Corporations directors and its senior executives for the financial year ended 30 June 2011. The prescribed details for each person covered by this report are detailed below under the following headings:

Directorandseniorexecutivedetails

Remunerationpolicy

Relationshipbetweentheremunerationpolicyandthe Corporation performance

Remunerationofdirectorsandseniorexecutives

Keytermsofemploymentcontracts.

Director anD Senior executive DetailSThe following persons acted as directors of the Corporation during or since the end of the financial year:

MrMilesHampton(Non-executivedirectorto31/12/2010, Chairman from 1/1/2011)

MrGeoffWillis(Chairmanretired31/12/2010)

MsJaneBennett

MrBarryCash

MrAndrewKneebone

MsSarahMerridew(appointed15/3/2011)

MrMikePaine.

other details regarding directors and their attendance at board meetings and relevant committee meetings are provided elsewhere within the annual report.

The term senior executive is used in this remuneration report to refer to the following persons:

DrChristineMucha(ChiefExecutiveOfficerresigned 8/7/2011)

MsCarolynPillans(CorporateSecretaryto11/5/2011,ActingChiefExecutiveOfficerappointed11/5/2011)

MrAndrewBeswick(ChiefInformationOfficer)

MsTizianaBotti(ExecutiveManagerCommunications and stakeholder engagement)

MsMariaButtery(ExecutiveManagerStrategyandServiceInnovationappointed15/11/2010)

MrCameronCrawford(ExecutiveManagerStrategyandServiceInnovationleavewithoutpayfrom24/6/2010)

MsLynnHallam(ExecutiveManagerHumanresources)

MrConradLennon(ChiefFinancialOfficerresigned16/12/2010)

MrRobertNoga(CorporateSecretaryappointed18/5/2011)

MrMatthewPigden(ChiefFinancialOfficerappointed 20/12/2010)

MsMarissaWalters(ExecutiveManagerRevenueServicesappointed26/7/2010,onmaternityleavefrom 2/3/2011).

except as noted, the named persons held their current position for the whole of the financial year and since the end of the financial year.

remuneration Policy

senior executives remunerationThe Board oversees the Corporations remuneration policies and practices relating to the Ceo and other senior executives. The Board has approved a remuneration framework developed in conjunction with independent remuneration specialists, mercer, and benchmarked nationally. The framework applies to senior executives, line managers and specific professional or expert positions and the Ceo is obliged to work within its parameters.

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed32

direCTors reporT

The remuneration of senior executives is based on Total employment Cost (TeC) to the Corporation. Components of remuneration can include cash and non-cash alternatives as well as any fringe benefits tax incurred. no equity-based components are offered as part of any remuneration.

an at risk element, in addition to Total employment Cost, has been introduced for senior executives with a maximum possible amount determined by the Board. The performance of the senior executives is measured against criteria agreed annually in advance.

non-executive directors remunerationUnder the Water and Sewerage Corporations Act (2008) (WsCa), the state wide owners representative group (org) is responsible for determining the remuneration and allowances for non-executive directors. The org is appointed by the owners of the regional Corporations and consists of three people from each region appointed by special majority. The org makes its determination of remuneration based on the recommendation of the selection Committee, as described in WsCa.

non-executive directors are remunerated by way of fixed fees and superannuation payments as required by legislation. no other termination or retirement benefits are accrued or paid to directors.

directors are also entitled to reimbursement of expenses incurred while attending to Corporation business.

independent directors remuneration is increased annually by Cpi provided that an independent review is not requested by the selection Committee, org or the Board as a whole.

relationShiP between the remuneration Policy anD the comPany PerformanceThe Corporations remuneration policy has been designed to align the objectives of senior executives with business objectives by providing both a fixed remuneration component and a performance based component.

Both a senior executive incentive program and a performance management system are in place to ensure rewards for performance are based on key performance areas affecting the Corporations financial and other results.

Keyperformanceindicators(KPIs)aresetannually.TheKPIsincludeassessmentatboththeCorporationlevelandtheindividuallevel.TheKPIstargetareastheBoardconsiders are most important for the Corporation to achieve its business objectives and performance targets. They cover financial and non-financial, as well as short andlong-term,goals.ThelevelsetforeachKPIisbasedon budgeted figures for the Corporation and relevant industry standards and includes a measure of stretch to encourage greater benefit for the Corporation.

PerformanceinrelationtotheKPIsisassessedannually,with incentives and/or performance based incentives being awarded depending on the number and deemed difficultyoftheKPIsactuallyachieved.IndeterminingwhetherornotafinancialKPIhasbeenachieved,the Corporation bases its assessment on externally auditedfigures.WheretheKPIinvolvescomparisonofthe Corporation, or a division within the Corporation, ofnon-financialKPIs,independentreportsmaybeobtained where appropriate. in time the Board may determine that performance conditions should include a comparison with external factors to the Corporation.

Whilst all incentives are linked to pre-determined performance criteria, the Board has ultimate discretion in approving payment of these.

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed 33

2011 Financial Year 2010 Financial Year

Short-term benefits

Post-employment benefits Short-term benefits

Post-employment benefits

Salary, fees and leave Bonus

Super-annuation Total

Salary, fees and leave Bonus

Super-annuation

Total

$ $ $ $ $ $ $ $

NoN-execuTive DirecTorS Mr Miles Hampton1 chairman (appointed 1/1/11)

Mr Geoff Willis chairman (retired 31/12/10)

Ms Jane Bennett

Mr Barry cash2

Mr Andrew Kneebone2

Ms Sarah Merridew (appointed 15/3/11)

Mr Mike Paine2

26,616

18,063

19,403

-

-

4,520

-

-

-

-

-

-

-

-

2,395

1,626

1,746

-

-

407

-

29,011

19,689

21,149

-

-

4,927

-

15,000

54,188

17,769

-

-

-

-

-

-

-

-

-

-

-

1,350

4,877

1,599

-

-

-

-

16,350

59,065

19,368

-

-

-

-

68,602 - 6,174 74,776 86,957 - 7,826 94,783

NoTeS1 Miles Hampton was as a non-executive director to 31/12/2010. Mr Hampton was appointed chairman on 1/1/2011.2 under the WScA, directors who are also regional corporation ceos do not receive additional remuneration in their role as

an onstream director.

remuneration of DirectorS anD Senior executiveSThe following table of benefits and payments details the components of remuneration for each person that acted as a director of the Corporation during or since the end of the financial year:

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed34

direCTors reporT

Senior executive remuneration 2011 Financial Year 2010 Financial YearBase Total Base Total

$10,000 - $19,999 1 1 - -$50,000 - $59,999 1 - - -$60,000 - $69,999 2 2 - -$70,000 - $79,999 - 1 - -$80,000 - $89,999 1 1 - -

$100,000 - $109,999 - - 2 -$110,000 - $119,999 - - 1 2$120,000 - $129,999 2 - 1 1$130,000 - $139,999 - - - 1$140,000 - $149,999 2 1 2 -$150,000 - $159,999 - - - 2$160,000 - $169,999 - 1 - -$170,000 - $179,999 - 2 - -$200,000 - $209,999 - - 1 -$210,000 - $219,999 1 - - -$220,000 - $229,999 - - - 1$250,000 - $259,999 - 1 - -

10 10 7 7

- Base remuneration represents gross salary.

- Total remuneration includes base salary, superannuation and where applicable bonuses and/or termination benefits. The at risk component is limited to 10% of the Tec for senior executives and 15% of the Tec for the ceo.

The following table discloses the remuneration details in bands, for each person that acted as a senior executive of the Corporation during or since the end of the financial year:

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed 35

Key termS of emPloyment contractS

senior executive staffThe employment terms and conditions of senior executives are formalised in individual employment agreements.

Consistent with legislated requirements, senior executives receive a superannuation guarantee contribution, which is currently 9%, or alternatively, where they are members of a defined benefits fund, accrue superannuation benefits in accordance with the rules of the fund.senior executives do not receive any other retirement benefits. However, some individuals have chosen to sacrifice part of their salary to increase payments towards superannuation. Upon retirement, eligible senior executives are paid employee benefit entitlements accrued to the date of retirement.

Terms of employment require the senior executive or the Corporation to provide a minimum notice period prior to termination of contract, subject to conditions of the Fair Work Act (2009), where applicable. The length of notice varies between individual employment agreements, however, is generally between 3 to 6 months. Under certain circumstances senior executives may be paid a redundancy, the level of which is dependent on individual contractual arrangements and length of contract served. Termination payments are not payable on resignation or under circumstances of unsatisfactory performance.

independent directorsappointment conditions for independent directors are specified in both WsCa and formal letters of appointment. These include:

Maximum3yearterm

Eithertheindependentdirector,theCorporationor the org may terminate the relationship on 3 months notice or immediately in certain situations

TheCorporationistoensurethatithasappropriatedirectors and officers liability insurance.

Further information about the remuneration of directors and senior executives is set out in note 17 to the Financial statements.

Corporate governanceCorporate governance is the system by which the activities of the Corporation are controlled and coordinated in order for it to achieve its desired outcomes.

The Board of directors is responsible for the overall corporate governance of the Corporation.

The Board performs this role by:

AppointingandmonitoringtheperformanceoftheChief executive officer

Clearlyidentifyingandenunciatingthestrategicdirection for the Corporation

IdentifyingandaddressingtheprincipalrisksfortheCorporation

MonitoringtheconductandperformanceoftheCorporation through an integrated framework of controls

EnsuringthatalloftheCorporationsbusinessisconducted in an honest, open and ethical manner

Ensuringthatadequatesuccessionplanningisundertaken.

management has reported to the Board as to the effectiveness of internal control and risk management systems, and provided its declaration in accordance with relevantpartsofs.295AoftheCorporations Act 2001.

audit and risk CommitteeThe Corporation has an audit and risk Committee (aar), which comprises three directors and is chaired by director, sarah merridew. The Committee has a documented charter, approved by the Board. Under its charter, the Committees responsibilities include consideration and monitoring of matters relating to financial integrity, external reporting, legislative compliance, risk management, internal and external audit functions.

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed36

direCTors reporT

sHrep CommitteeThe role of the safety, Human resources, environment and public Health Committee (sHrep) during the financial year was to assist the Board fulfil its responsibilities relating to workplace safety, human resources management and development, employee remuneration and performance management, environmental management and compliance, and public health performance and compliance.

The sHrep Committee annual review recognised that the committees initial purpose had now been met. Consequently, sHrep was wound up in march 2011 and responsibility for safety and people-related matters taken over by the Board.

indemnification of directors and officersduring the financial year, the Corporation paid a premium for an insurance policy covering the liability of all current (and recently past) directors and officers of the Corporation.

The Corporation has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the Corporation against a liability incurred as such by an officer or auditor.

proceedings on Behalf of the Corporationno person has applied for leave of the Court to bring proceedings on behalf of the Corporation or intervene in any proceedings to which the Corporation is a party for the purpose of taking responsibility on behalf of the Corporation for all or any part of those proceedings.

The Corporation was not a party to any such proceedings during the year.

auditors independence declarationThe auditors independence declaration is included on page 38.

rounding off of amountsThe Corporation is of a kind referred to in asiC Class order 98/100 dated 10 July 1998 and in accordance with that Class order, amounts in the financial report and directors report have been rounded off to the nearest thousand dollars, unless otherwise stated.

This directors report is signed in accordance with a resolution of directors made pursuant to s.298(2) of the Corporations Act 2001.

on behalf of the directors.

miles Hampton sarah merridew

Chairman director

11 august 2011

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed 37

FinanCiaL sTaTemenTs

noTe ConTenTs page

auditors independence declaration 38

directors declaration 39

independent audit report 40

statement of Comprehensive income 42

statement of Financial position 43

statement of Cash Flows 44

StatementofChangesinEquity 45

1 general information 46

2 application of new and revised accounting standards 46

3 summary of significant accounting policies 47

4 Revenue 53

5 Expenses 53

6 Incometaxequivalents 54

7 Dividends 57

8 Currentassets 57

9 Property,plantandequipment 57

10 Intangibleassets 58

11 Currentandnon-currentliabilities 59

12 members equity 60

13 superannuation and defined benefit plans 61

14 Commitments for expenditure 67

15 Contingentassets/liabilities 68

16 remuneration of auditors 68

17 Compensation of key management personnel 68

18 related party disclosures 69

19 notes to the statement cash flow 71

20 Financial instruments 71

21 Controlling entities 76

20 subsequent events 76

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed42

statement of Comprehensive income For THe F inanCiaL year ended 30 JUne 2011

2011 2010Notes $000 $000

Continuing OperationsSales revenue 4 16,050 15,095other income from operating Activities 4 104 25Depreciation and Amortisation expenses 5 (931) (691)employee and related expenses 5 (7,064) (6,069)Administration expenses 5 (7,527) (8,028)Net Profit before Net Financing Costs 632 332

Finance income 4 47 25Finance expenses 5 (447) (326)Net Financing Costs (400) (301)

Net Profit before Income Tax Equivalents Expense 232 31income Tax equivalents (expense) Benefit 6.1 (70) 36

Net Profit after Income Tax Equivalents Expense 162 67

Other Comprehensive IncomeActuarial Loss on Defined Benefit Plan 13.1,13.2 (104) (13)income tax relating to components of other comprehensive income 6.2 31 4Total Comprehensive Income for the Period 89 58

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

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed 43

statement of Financial position as aT F inanCiaL year ended 30 JUne 2011

2011 2010Notes $000 $000

Current Assets cash and cash equivalents 8.1 1,599 1,921 receivables 8.2 864 3,340 current Tax Asset 6.3 - 21 Prepayments 640 832Total Current Assets 3,103 6,114

Non-current Assets Property, Plant & equipment 9 2,345 2,446 intangibles 10 4,371 1,680 Deferred Tax Assets 6.4 441 364Total Non-current Assets 7,157 4,490

Total Assets 10,260 10,604

Current Liabilities

Borrowings 11.1 2,500 2,000 employee Benefits 11.2 1,122 995 Payables 11.3 1,796 2,473 unearned income 11.4 50 65 current Tax Liability 6.3 12 -Total Current Liabilities 5,480 5,533

Non-current Liabilities Borrowings 11.1 4,000 4,500 employee Benefits 11.2 473 278 unearned income 11.4 160 235Total Non-current Liabilities 4,633 5,013

Total Liabilities 10,113 10,546

Net Assets 147 58

Equity retained Profits 12.1 147 58 contributed capital 12.2 - -Total Equity 147 58

The above statement of financial position should be read in conjunction with the accompanying notes.

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed44

statement of Cash Flows For THe F inanCiaL year ended 30 JUne 2011

2011 2010Notes $000 $000

Cash Flows from Operating Activities receipts from customers 17,863 14,838 Payments to Suppliers and employees (14,244) (13,044) interest received 47 25 interest Paid (438) (162) Government Guarantee Fees Paid (51) (34) income Tax equivalents Paid (83) (71)Net Cash from Operating Activities 19.1 3,094 1,552

Cash Flows from Investing Activities Payments for Property, Plant & equipment (3,488) (3,798) Proceeds from Sale of Property, Plant & equipment 72 51Net Cash used in Investing Activities (3,416) (3,747)

Cash Flows from Financing Activities Proceeds from Borrowings 2,000 7,000 repayment of Borrowings (2,000) (4,000)Net Cash from Financing Activities - 3,000

Net (Decrease) Increase in Cash and Cash Equivalents (322) 805

Cash and Cash Equivalents at the Beginning of the Year 1,921 1,116

Cash and Cash Equivalents at the End of the Year 19.2 1,599 1,921

The above statement of cash flows should be read in conjunction with the accompanying notes.

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed 45

statement of Changes in equity For THe F inanCiaL year ended 30 JUne 2011

retained Profits

contributed capital

Total equity

Notes $000 $000 $000Balance as at 1 July 2009 - - -Net Profit after income Tax equivalents expense 12.1 67 - 67other comprehensive income (9) - (9)

Balance as at 30 June 2010 58 - 58

Net Profit after income Tax equivalents expense 12.1 162 - 162other comprehensive income (73) - (73)

Balance as at 30 June 2011 147 - 147

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

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed46

notes To THe F inanCiaL sTaTemenTs For THe F inanCiaL year ended 30 JUne 2011

1 General InformationTasmanian Water and Sewerage corporation (common Services) Pty Limited (the corporation), trading as onstream, is a propriety limited company incorporated in Australia. The address of the corporations registered office is Level 13, 110 collins Street, Hobart TAS 7000.

onstream is owned by the Tasmanian Water and Sewerage corporation (Southern region) Pty Limited trading as Southern Water, the Tasmanian Water and Sewerage corporation (Northern region) Pty Limited trading as Ben Lomond Water and the Tasmanian Water and Sewerage corporation (North-Western region) Pty Limited trading as cradle Mountain Water. each owner holds one share in onstream with each share attracting equal voting rights.

The principal activities of the corporation are the provision of various professional services including: secretariat, information technology, payroll, accounts payable, billing and revenue receipting.

2 Application of new and revised accounting standards

2.1 StandardS and InterpretatIonS affectIng amountS reported In the current perIod (and/or prIor perIodS)

The following new and revised Standards and interpretations have been adopted in the current period and have affected the amounts reported in these financial statements. Details of other Standards and interpretations adopted in these financial statements which have had no effect on the amounts reported are set out in section 2.2.

Standards affecting presentation and disclosure

STANDArD/iNTerPreTATioN iMPAcT

Amendments to AASB 107 Statement of cash Flows

The amendments (part of AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual improvements Process) specify that only expenditure that results in a recognised asset in the statement of financial position is eligible for classification as cash from investing activities. consequently, cash flows in respect of development costs that do not meet the criteria in AASB 138 intangible Assets for capitalisation as part of an internally generated intangible asset (and, therefore, recognised in the profit and loss as incurred) have been reclassified from investing to operating activities in the statement of cash flows.

2.2 new and revISed StandardS and InterpretatIonS whIch have had no effect on fInancIal StatementSThe following new and revised Standards and interpretations, that have become effective for the current reporting period, have not had any significant impact on the amounts reported in this financial report.

STANDArD/iNTerPreTATioN AFFecTeD STANDArDS

AASB 2009-8 Amendments to Australian Accounting Standards - Group cash - settled Share-based Payment Transactions [AASB 2]

AASB 2009-9 Amendments to Australian Accounting Standards - Additional exemptions for First Time Adopters [AASB 1]

AASB 2009-10 Amendments to Australian Accounting Standards - classification of rights issues [AASB 132]

AASB 2010-1 Amendments to Australian Accounting Standards - Limited exemption from comparative AASB 7 Disclosures for First-time Adopters [AASB 1 and 7]

AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual improvements Project [AASB 3,7,121,128,131,132 and 139]

interpretation 19 extinguishing Financial Liabilities with equity instruments [AASB 2,3,101,108,132 and 139]

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed 47

notes To THe F inanCiaL sTaTemenTs For THe F inanCiaL year ended 30 JUne 2011

2.3 StandardS and InterpretatIonS In ISSue not yet adoptedAt the date of authorisation of the financial statements, the Standards and interpretations listed below were in issue but not yet effective.

STANDArD/iNTerPreTATioN eFFecTive For ANNuAL rePorTiNG PerioDS BeGiNNiNG oN or AFTer

exPecTeD To Be iNiTiALLY APPLieD iN THe FiNANciAL YeAr eNDiNG

AASB 9 Financial instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)

1 January 2013 30 June 2014

AASB 124 related Party Disclosures (revised December 2009), AASB 2009-12 Amendments to Australian Accounting Standards

1 January 2011 30 June 2012

AASB 2009-14 Amendments to Australian interpretation Prepayments of a Minimum Funding requirement

1 January 2011 30 June 2012

AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to Australian Accounting Standards arising from reduced Disclosure requirements

1 July 2013 30 June 2014

AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual improvements Project

1 January 2011 30 June 2012

AASB 2010-5 Amendments to Australian Accounting Standards 1 January 2011 30 June 2012

AASB 2010-6 Amendments to Australian Accounting Standards Disclosures on Transfers of Financial Assets

1 July 2011 30 June 2012

AASB 2010-8 Amendments to Australian Accounting Standards Deferred Tax: recovery of underlying Assets

1 January 2012 30 June 2013

AASB 2010-9 Amendments to Australian Accounting Standards - Severe Hyperinflation and removal of Fixed Dates for First Time Adopters

1 July 2011 30 June 2012

AASB 2010-10 Further Amendments to Australian Accounting Standards - removal of Fixed Dates for First Time Adopters

1 January 2013 30 June 2014

AASB 1054 Australian Additional Disclosures 1 July 2011 30 June 2012

The adoption of the various Australian Accounting Standards and interpretations in issue but not yet effective are not expected to materially impact the corporations accounting policies. The corporation does not intend to adopt any of these pronouncements before their effective dates.

3 Summary of Significant Accounting Policies

3.1 Statement of complIanceThis financial report is a general-purpose financial report, prepared in accordance with the corporations Act 2001 (cth), relevant Australian Accounting Standards of the Australian Accounting Standards Board (AASB) and other laws where applicable. The financial report also complies with international Financial reporting Standards (iFrS) and interpretations adopted by the international Accounting Standards Board.

The financial report was approved by the Board of Directors on 11 August 2011.

3.2 BaSIS of preparatIonThe financial report is prepared on the basis of historical cost, except for certain non-current assets and financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Historical cost is generally based on the fair values of the consideration given in exchange for the assets. All figures unless indicated otherwise are reported in Australian dollars.

Tasmanian WaTer and seWerage CorporaT ion (Common serv iCes) pTy L imiTed48

notes To THe F inanCiaL sTaTemenTs For THe F inanCiaL year ended 30 JUne 2011

The corporation is of a kind referred to in ASic class order 98/100, dated 10 July 1998, and in accordance with that class order amounts in the financial report are rounded off to the nearest thousand dollars ($000), unless otherwise stated.

The following significant accounting policies have been adopted in the preparation and presentation of the financial report:

3.3 SIgnIfIcant accountIng judgementS, eStImateS and aSSumptIonSin the application of AASB standards management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.

defined benefit superannuation fund obligationsvarious actuarial assumptions are utilised in the determination of the corporations defined benefit superannuation fund obligations. These assumptions are discussed in Notes 3.13 and 13.

3.4 revenue recognItIonrevenue is measured at the fair value of the consideration received or receivable.

Service Incomeconsulting income from provision of services including secretariat, information technology, payroll, accounts payable, communications, public relations, billing and revenue receipting is recognised on the basis of work completed and with regard to the contractual agreements that exist with the client.

Interest Incomeinterest income is recognised as it accrues, taking into account the effective yield on the financial asset.

Sale of non-current assetsThe net gain (loss) on non-current asset sales is included as income at the date the control of the asset passes to the buyer, usually at the point an unconditional written contract is signed and the significant risk and rewards of ownership have been transferred to the buyer. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of the disposal and the net proceeds on disposal.

grantsGrants are recognised when received or when the corporation obtains control over the assets comprising the contributions. Go