Financial performance

Financial performance

Financial performance summary

Our financial performance for the year was strong with a year-end profit before tax of $99.2 million which was

$29.8 million higher than budget.

Revenue was $54.8 million higher than budget predominantly due to:

  • strong water sales due to warm and dry weather conditions throughout the year
  • significant contributed assets arising from mains extensions contributions, infrastructure assets gifted to us from developers and capital contributions to us for work we perform, as a result of increased development activities across the state
  • profit on sale of surplus assets

Total expenses were $25 million higher than budget predominately due to:

  • production and treatment costs for higher than average water production due to warm and dry weather conditions throughout the year
  • transition costs in relation to the new Adelaide Service Delivery contracts for production and treatment and field services
  • site decommissioning and site remediation and restoration costs, provision for bushfire preparedness works, and retirement of replaced mains.

These increased expenses were offset by:

  • reductions in interest and debt management costs due to a focus on debt management strategies to mitigate interest rate risk and minimise interest expense, including debt refinancing at favourable market interest rates
  • reductions in electricity expenses through volume-managed purchases from the wholesale energy market and reductions in electricity price
  • reductions in operational taxes and external fees and charges.

Contributions to government

As a significant revenue contributor to the South Australian government, for the broader benefit of the people of South Australia, an amount of $275.4 million was paid in 2020-21. This saw $72.9 million of business operating expenditure contributed to other government agencies and/or councils. Within interest expense, $94.6 million was paid to the South Australian Financing Authority as guarantee fees and margins. An income tax equivalent of $25.7 million and a dividend of $82.1 million were also paid.

Contributions to government

2020-21 actuals $’000

External fees and charges

54,013

Contract services provided

1,253

Operational taxes and tax equivalents

17,656

Total contained within operating expenses

72,922

As a percentage of total operating expenses

12.1%

  

Interest expense – guarantee fees

90,388

South Australian Government Financing Authority margin fees

4,221

Additional interest paid to owner

94,609

  

Income tax equivalents

25,733

Dividends at 100% of profit after tax

82,093

Total amounts paid to government

275,357

Capital expenditure

This year, we spent $479.4 million on capital expenditure, with $25.6 million spent on information technology and

$453.9 million on infrastructure.

Information technology investments continue to focus on improving outcomes for our customers and the business as well as the safety of our people, including:

  • improved service channels and customer digital experience
  • increased technology security and reliability (including cyber security)
  • increased business efficiency and employee experience
  • innovative technologies such as smart maintenance, underwater robotics and virtual reality.

We continue to focus on improving our water and wastewater infrastructure assets and invest in major infrastructure projects, all of which have a positive impact on our customers and/or the state. In 2020-21 these included:

  • Zero Cost Energy Future, with $130.3 million spent, taking the total project spend to $352.9 million of the $368.2 million project
  • Happy Valley Health Compliance Upgrade Project, with $11.4 million spent towards the $21.4 million project
  • Angle Vale Wastewater Network Augmentation Project, with $10.5 million spent towards the $12.7 million project.

Capital expenditure has been prudent with efficient expenditure through the year. It was contained within the Essential Services Commission of South Australia’s allowable expenditure and/or state budget approvals.

Consultants

The following is a summary of external consultants engaged, and the nature and cost of the work undertaken.

Consultant

Amount ($)

Description/purpose

Less than $10,000

  

Bakjac Consulting Pty Ltd

278

Advice towards strategies and implementation of performance improvement processes.

Deloitte Touche Tohmatsu

3,000

Research paper and advice on specific accounting treatment.

VUCA

3,000

Independent review of the SA Water Board processes.

KPMG

4,959

Independent review of the major framework partnership.

Core Environmental

6,060

Independent environment advice regarding external projects.

ISC Consulting Group

6,200

Advice on State Emergency Management Council strategic action.

Between $10,000 and $50,000

  

Red Wagon Workplace Solutions

11,268

Human resources advice.

Safearth

13,570

Independent assessment of the high voltage transformer switchboard at Bolivar Wastewater Treatment Plant.

KPMG

25,875

Review and advice on discounted cash flow model used for statutory reporting asset valuation purposes.

TonyMac Consulting Pty Ltd

31,997

Advice on the preparation of analysis and framework for enterprise agreement negotiations.

Ernst & Young

35,000

General accounting advice.

Baringa Partners LLP

48,000

Quarterly energy market report and energy market sensitivities analysis.

Greater than $50,000

  

Ernst & Young

175,000

Review of asset creation lifecycle process with business implementation recommendations.

PricewaterhouseCoopers

250,000

Review current payroll business practices.

Total

614,207

 

See also tenders.sa.gov.au/tenders/index.do for a list of all external consultancies, including nature of work and value. See also the Consolidated Financial Report of the Department of Treasury and Finance at treasury.sa.gov.au for total value of consultancy contracts across the SA Public Sector.