Goulburn-Murray Water’s 2016-17 annual report shows the company recorded a $90million loss before tax — the biggest deficit in more than 10 years.
Greater depreciation and reduced revenues were the major factors for the figure, with depreciation and amortisation costs increasing from $69million in 2015-16 to $102million in the past financial year.
G-MW’s chief financial officer Geoff Cutter said the large increase in depreciation was due to an asset revaluation.
‘‘All water entities are required to undertake an asset revaluation every five years in accordance with government directions,’’ Mr Cutter said.
‘‘G-MW undertook a five-year asset revaluation as at June 30, 2016.
‘‘This significantly increased the value of G-MW’s infrastructure assets such as dams and the extensive gravity irrigation system by $500million.
‘‘Consequently, this caused depreciation to increase by $33million in 2016-17.’’
Mr Cutter said the huge depreciation figure would not ‘‘fully reflect’’ the company’s future financial requirements.
‘‘G-MW’s large depreciation figure reflects past investments, and does not reflect fully the future financial requirements.
‘‘Many statutory corporations with large asset bases (such as hospitals) also show depreciation which is not fully covered by current revenue levels,’’ he said.
When it comes to revenue, the 2016-17 total was $211296000, down from $259603000, with funding revenue for the Connections project falling from $106.1million to $68.9million in the space of a year, which Mr Cutter put down to a lack of non-capital funding.
‘‘Of the government contributions received for the Connections project, only $67.6million was recognised as non-capital funding in 2016-17, with the remainder accounted as unearned revenue.’’
Another reason for a decline in revenue was due to 2016 rainfall figures across the district the authority covers.
‘‘The 2016 rainfall and resulting filling of storages was a key factor in water deliveries being lower than the prior year by more than 20 per cent,’’ the report said.
‘‘As a result, variable revenue from gravity irrigation and regulated river systems was lower by more than $5million.
‘‘The dairy industry commodity price reduction announced in April 2016 continued to affect a significant number of G-MW customers, with consequential impact to an increased trade debtor balance and reduced cash receipts.
‘‘G-MW has the ability to recover such debt, so provisioning for bad debt is very low.’’
However, it is not all bad news for the authority, as borrowings of $108million declined slightly on the previous year.
Staff numbers have fallen slightly since last year to 747 full-time equivalent people, including Connections staff.