Expenditure

Total expenditure from ordinary activities, other than finance costs, increased by 3.3% due to an increase in bulk charges (1.2%) and operating expenses (5.4%). Major factors contributing to increased operating expenses include payments of environmental contributions, asset write-offs associated with the Altona Treatment Plant upgrade, and increased depreciation charges.

Finance costs increased by 18.9% over the past year due to increased borrowing to fund our investment in infrastructure assets. Our borrowing portfolio carries a weighted average interest cost of 5.78% at June 2006, compared to 5.77% at June 2005.