Financial highlights 2006-07

  • Revenue below budget due to continuing water restrictions and demand management.
  • Operating expenses below budget due to productivity gains and low depreciation expenses.
  • Capital expenditure just above budget.
  • Increasing debt.
  • Increased sales of surplus property reduced new borrowings.

Total income*
($1,692 million)
Total income* ($1,692 million)

Total expenses*
($1,332 million)
Total expenses* ($1,332 million)
Total capital
expenditure
($648 million)
Total capital expenditure ($648 million)


   Profit before tax*
Profit before tax*
   Total debt
Total debt
   Capital expenditure
Capital expenditure

Summary balance sheet ($ million)
  2005-06 2006-07
Total assets 10,819 12,296
Total borrowings 2,875 3,276
Other liabilities 1,460 1,780
Net assets 6,484 7,240
Represented by:    
Asset revaluation and other reserves 1,793 2,312
Contributed equity 3,108 3,108
Retained earnings 1,583 1,820
Total shareholders' funds 6,484 7,240
Capital expenditure 520 648

 

Profit and loss* 2005-06 2006-07
Income from continuing operations 1,540 1,692
Total expenses excluding interest expense 1,112 1,152
Profit before interest and tax 428 540
Interest expense 171 180
Profit before tax 257 360
Taxation expense 135 103
Profit after tax 122 257
Dividends payable 193 140
Return on shareholder funds' percentage 1.9 3.6

* Excludes superannuation adjustment

Financial performance summary

In 2006-07, Sydney Water achieved a profit before tax (excluding superannuation adjustments) of $360 million on total revenues of $1,692 million - an increase of $152 million on the previous year. This increase was largely due to developer charges in the form of contributed assets in the Lane Cove Tunnel, the M7 and the Cross City Tunnel.

Net profit after tax was $257 million, more than double the figure for the previous year.

Total expenses for the year were $1,332 million, an increase of 3.8 per cent over 2005-06. The increase includes substantially higher interest costs and costs related to activities to manage water demand. Underlying operating costs rose less than the consumer price index due to the success of efficiency and productivity improvements.

In its financial statements, Sydney Water is required to reflect changes in its liability for future superannuation payments to its staff. These changes are related to changes in investment markets and other factors.

In 2006-07, actuarial gains on superannuation liability amounted to $112 million before taxation and the taxation impact of these gains was $34 million. Including these amounts, net profit after tax for the year was $336 million. The NSW Government accepted a dividend of $140 million for 2006-07, a reduction of $53 million compared to 2005-06. This agreed reduction reflected the substantial capital investment program facing Sydney Water.

Total assets at the end of 2006-07 were $12,296 million, an increase of $1,477 million over the year. Total shareholders' equity also increased during the year to $7,240 million and the after tax profit represented a 3.5 per cent return on equity.

Sydney Water invested $648 million in 2006-07 on new capital infrastructure and borrowed $420 million to help finance these new assets. Total debt outstanding at the end of the year increased to $3,276 million. The need to borrow for new capital investment was reduced in 2006-07 by the sale of surplus property and other assets, which provided cash proceeds of $65 million during the year.

Overall, Sydney Water achieved a strong financial result in 2006-07, despite lower than expected revenues from water sales due to continuing restrictions, recycled water programs and water saving initiatives in homes and businesses. While the financial return on assets and dividend distributions did not meet normal commercial standards, Sydney Water's financial position and performance did improve during the year.