Culture score Increase in constructive styles over 2014-15 baseline Increase in constructive styles over 2015-16 result Increase in constructive styles over 2016-17 result Increase in constructive styles over 2017-18 result Increase in constructive styles over 2018-19 result Employee engagement score Improvement over 2014-15 baseline Improvement over 2015-16 result Improvement over 2016-17 result Improvement over 2017-18 result Improvement over 2018-19 result One business Our goal is that we care for our assets, delivering safe and reliable network services transforming our business and reducing our costs. We aim for zero harm to our people, customers and the public. We aim to sustain present network service performance. Just to keep costs at current levels in nominal terms requires us to find efficiencies. We also need to invest in improving our business. Zero harm Performance measure 2015-16 2016-17 2017-18 2018-19 2019-20 Number of Life Safe observations ≥ 1,500 ≥ 1,550 ≥ 1,600 ≥ 1,650 ≥ 1,700 Percent Life Safe participation ≥ 20% ≥ 21% ≥ 22% ≥ 23% ≥ 24% Number of significant incidents ≤ 9 ≤ 8 ≤ 8 ≤ 7 ≤ 7 Number of reportable incidents ≤ 14 ≤ 12 ≤ 12 ≤ 10 ≤ 10 Percent leadership zero harm interactions 100% 100% 100% 100% 100%
Sustained cost reduction Performance measure 2015-16 2016-17 2017-18 2018-19 2019-20 Operating expenditure ($m)* $138.9 $140.1 $137.1 $133.1 $130.5 Capital expenditure ($m) $175.4 $177.3 $181.3 $168.9 $174.1 * Operating expenditure was $176m in 2013-14 for the predecessor businesses Sustainable shareholder outcomes Our goal is to deliver sustainable shareholder outcomes. We aim to provide an appropriate return on assets and equity, dividends to shareholders and a robust balance sheet while maintaining our corporate reputation. Performance measure 2015-16 2016-17 2017-18 2018-19 2019-20 Operating profit after tax ($million) 79.6 88.4 65.2 57.2 64.2 Return on assets 6.2% 6.3% 4.9% 4.5% 4.6% Return on equity 8.4% 9.5% 6.7% 5.6% 5.9% Returns to Government ($million) 179.9 123.7 129.1 100.3 94.0 Gearing ratio 66.2% 66.3% 65.8% 64.8% 63.2%
Depth of capability The depth of capability required to deliver the strategic objectives is not maintained. Reduced ability to deliver the TasNetworks strategic objectives. Longer-term flow-on impact to maintain a safe and reliable network. Workforce planning to identify emerging capability gaps and implement attraction, retention and development strategies to respond. Knowledge transfer between transmission and distribution business expertise following integration. Enterprise Agreement The Enterprise Agreement negotiations do not deliver outcomes that support the future direction of TasNetworks. Limiting the effectiveness of the transformation program. Reduction in quality of network services for customers. Impact on staff morale and productivity Enterprise Agreement strategy – aligned to the strategic direction of TasNetworks. Enterprise Agreement project team, with experienced personnel forming the negotiation team. Comprehensive communications strategy for stakeholders. 2017 distribution determination 2017 distribution determination does not deliver revenue allowances that reflect the proposal and support stakeholder expectations. Reduced ability to deliver sustainable outcomes to shareholders and maximise value for customers. 2017 distribution determination project – strategy, governance, people and processes. Comprehensive customer consultation to understand the customer value drivers and expectations. Stakeholder education and management strategy. Debt management strategy. Sustainable and predictable pricing Distribution tariff strategy does not deliver sustainable and predictable pricing frameworks to customers. Inability to deliver the lowest sustainable prices to customers. Customer consultation as part of the 2017 distribution determination. Increasing information and education for customers. Stakeholder education and management strategy. Transformation costs Major transformation projects significantly exceed the agreed budget. Negative reputational impacts. Reduced profitability. Comprehensive project governance and management for transformation projects. Organisational engagement and change management programs. Widespread disruption to power supply Widespread disruption to the supply potentially leading to a system black condition or long-term rotational load shedding. Fatality or permanent impairment to an employee or member of the public. Material damage to customer assets. Loss of confidence in network operations and sustained reputational damage. Asset planning, strategy and maintenance. Network design (e.g. incorporation of storm protection). Strength of existing network control operations (including network operation and control system and supervisory control and data acquisition infrastructure). Emergency management, disaster recovery and contingency planning (including operational level scenario planning and testing). Continual engagement with stakeholders.