Transurban Group Annual Report 2004

FY2004 Annual Report · Transurban Group
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annual report
2004

an increasing 

Night trafﬁ c on CityLink’s gateway

ﬂ ow of distributions

increasing returns

Transurban Group paid a total distribution to investors of 25.5 cents per security in 
2003-04, fulﬁ lling its commitment to deliver increasing returns from the company’s  
cornerstone asset, CityLink.

6%

traffic

10%

revenue

27 5%
.

distributions

strategy 

s opportunity  
t
n
e
t
n
o
c

structure 

report 

operating assets 

3

5

7

9

15

developing assets 

prospects 

partnerships 

governance 

ﬁ nancials 

19

21

25

29

39

annual report 2004

1

Electronic tolling unlocks further opportunity
for companies like Transurban.

Architectural sound wall on CityLink

opportunity

The growing number of retail investors on the Transurban
Group’s register reﬂ ects the company’s appeal as an 
inﬂ ation protected investment, which has produced 
strong distributable cash ﬂ ows as well as growth.  

Electronic tolling therefore unlocks further opportunity 
for companies like Transurban. It makes many projects 
possible in cities all over the world—projects that could 
not go ahead with manual tolling. 

Australia has a long history of toll roads. Over many 
decades they have maintained trafﬁ c and revenue 
growth through successive economic cycles. 

The success of CityLink, Transurban’s 22 kilometre toll 
road in Melbourne, demonstrates that full electronic toll 
roads can deliver better service—such as time savings—
than manual toll roads where drivers have to stop to pay.

The electronic tolling system and customer service on
CityLink are the keys to its success. The road has 
multiple on and off ramps in inner suburbs where land 
is in short supply. There would not have been enough 
room for toll plazas and manual tolling would have 
slowed the trafﬁ c, making the project very inefﬁ cient.

Continuing economic 
growth generates 
the need for major 
infrastructure.

Governments are 
increasingly turning to 
the private sector to 
ﬁ nance, develop and 
manage new road 
infrastructure.

A number of critical factors provide the basis for carefully 
planned growth of the company: 

g  expanding opportunities as governments turn to the 
private sector to help meet community and business 
demands for new roads and infrastructure;

g  the expertise in full electronic tolling and customer 
service that Transurban developed on CityLink;

g  Transurban’s ability to maximise returns through 
continuous improvement and innovation; and

g  the appeal to governments of Transurban’s 
partnership approach to its relationships
with communities.

This last point is increasingly signiﬁ cant as governments 
recognise the importance of the owner/operator to the
success of a full electronic toll road.

Transurban takes a ‘whole of life’ approach to projects,
working in partnership with governments and 
communities to earn the best returns for investors and 
the best outcomes for the people who use its roads. 

This approach recognises that equity investors are 
responsible for operating the road, tolling system and 
customer service for 30 years or more. For that reason, 
Transurban believes it is important for equity investors to 
be involved from the outset. This will ensure they have a 
role in allocating and managing project risks even before 
the road opens. 

On some projects, the bank and contractor bid for and
develop the project, and the equity investor is only involved
much later, when they are exposed to risks that have 
been negotiated by others. 

annual report 2004

3

 
Transurban will pursue the most promising
new development projects.

A CityLink on-ramp and overpass from below

With a Group market 
capitalisation approaching
$3.3 billion, Transurban is
a major investor in
toll roads in Australia.

 The company is now 
leveraging its considerable 
expertise to create new 
growth opportunities
in Australia and overseas.

strategy

The Transurban Group’s strategy for investors is 
straightforward: Deliver increasing distributions from our 
operating assets and pursue the most promising new 
development projects with our strong focus on
risk management and a ‘whole of life’ approach.

The strong performance of our cornerstone asset, 
Melbourne’s CityLink, has underpinned rising 
distributions to security holders in recent years.
Now, Transurban has a developing asset in Sydney—
Westlink M7—which is on track to deliver even
more value.

Transurban’s policy is to steadily increase distributions 
half yearly in line with distributable cash ﬂ ow generated 
by the business.

The strategy for growth in Australia will closely follow
the CityLink model.  The company will look to build,
own and operate future toll roads. These projects
will be delivered on a value accretive basis.  

Our approach overseas will differ slightly, as Transurban
plans to capitalise on its tolling expertise. If successful 
in an overseas tolling project, Transurban will charge 
an upfront licence fee for its central tolling system, plus 
ongoing licence, consulting and management fees.

If equity is required for an overseas project, it is expected 
to be raised primarily in the market in which the project 
is located, with Transurban earning a management fee.

annual report 2004

5

Transurban’s capital structure is designed to
maximise after-tax returns to our security holders.

A section of CityLink’s sound tube

structure

triple stapled securities 

tax deferred distributions

Transurban is capitalised through a triple stapled security, 
which is designed to maximise after-tax returns to 
security holders.

Stapled securities are made up of securities in two
(or more) separate entities, and they cannot be
traded separately. 

Transurban’s triple stapled securities comprise shares 
in Transurban Holdings Limited, units in Transurban 
Holding Trust and shares in Transurban Infrastructure 
Developments Limited.  Security holders have an equal 
number of units in each.

Some of the other beneﬁ ts of the triple staple
structure include:

g  providing ﬂ exibility to raise debt and equity for 
pursuing future projects and investments; and

g  allowing the different risk proﬁ les of mature and new 
assets to be held in different vehicles—which creates 
the option of listing those vehicles separately if 
shareholder returns are maximised.

proﬁ t, loss and cash ﬂ ow

Infrastructure projects require a huge amount of capital 
to develop. This capital is depreciated evenly over time, 
while revenue is lower at the start and grows over time. 
For this reason, developers like Transurban expect to 
report accounting losses in a project’s early years. 

In accounting terms, Transurban expects to record a 
proﬁ t in 2008-2009. Until then, non cash items such as 
depreciation will mean we report a loss each year.

Investors should remember that it is not the level of 
accounting proﬁ t that impacts distributions, but the level 
of free cash ﬂ ow. The greater the cash ﬂ ow, the greater 
the distributions.

Transurban expects to be able to pay 100 per cent tax 
deferred distributions until the end of 2005. This would 
be extended if Transurban’s argument that Concession 
Fees payable to the State of Victoria are tax deductible 
is accepted by the Federal Court.

Tax deferred means that the distribution is not assessable
for income tax, but each security holder’s cost base for
capital gains tax purposes will be reduced by the amount
of the distribution received. 

This beneﬁ t is derived from Transurban’s Trust structure 
and relates to the accounting losses the company
has recorded.

From 2006, distributions are expected to be partially
tax deferred.

Triple staple security 

Transurban
Holdings
Limited
(‘THL’)

Transurban
Holding
Trust
(‘THT’)

Transurban
Intrastructure
Developments
Limited
(‘TIDL’)

Transurban
(WSO)
Pty Ltd

Transurban
CARS Trust
(‘TCT’)

CityLink
Melbourne
Limited

CityLink
Trust

Transurban
Infrastructure
Management
Limited
(‘TIDL’)

Melbourne
CityLink Project

The responsible entity
for Transurban Holding
Trust & Transurban
CARS Trust

Transurban
WSO Trust
(‘TWT’)

CityLink
Extension
Pty Ltd

Exhibition Street
Extension Project

WSO Co.
Pty Ltd

WestLink
Motorway
Partnership

annual report 2004

7

Transurban investors can look forward to steadily 
increasing distributions and carefully planned growth.

CityLink gateway in close up

report

Operating costs continued to come under scrutiny. 
Greater efﬁ ciencies in the processing of video images 
of vehicle licence plates will save about $250,000 
a year. Programs to move customers to low cost 
communication channels such as the internet saved 
about $130,000 in 2003-04.  A switch to a new call 
centre contractor will produce signiﬁ cant savings while 
increasing service levels.

A number of new projects currently under way will 
further increase revenue and cut costs. One of the most 
signiﬁ cant will see the installation of additional cameras 
to capture images of rear number plates as well as the 
front ones we now process. 

Distributions were 
underpinned by a strong 
performance from our 
cornerstone asset, CityLink.

Dual numberplate images will allow us to automate 
the bulk of the video imaging currently used to charge 
customers who do not have an e-TAG® device installed 
in their vehicle. This will substantially cut labour costs.

The dual camera program will also allow us to design 
better and cheaper products for occasional users of
the road, which we believe will attract more customers. 
We will be able to reduce the number of ‘lazy tags’ 
currently used by drivers who only travel on CityLink a 
few times a year. The new program will quickly recover 
its $9.1 million capital cost and add real value for 
security holders.

Transurban has a continuous improvement program in 
place to further enhance service, increase revenue and 
reduce costs.

chairman and managing 
director’s overview

laurence g cox
chairman

kim edwards
managing director

Transurban has made a commitment to investors that it 
will deliver a growing stream of distributions.  In 2003-04
we delivered on that commitment with a distribution of
25.5 cents per stapled security, an increase of 27.5 per
cent on the previous year. The total distributed to 
security holders for 2003-04 is $134.7 million, up from 
$103 million.

The distributions were underpinned by a strong 
performance by Transurban’s cornerstone asset, 
CityLink in Melbourne. Trafﬁ c on CityLink increased
6 per cent over the year and revenue grew by
10.1 per cent. Under Transurban’s agreement with the 
Government of Victoria, tolls on CityLink will increase 
each year by 4.5 per cent or the inﬂ ation rate, whichever 
is higher, until 2015 and by the inﬂ ation rate thereafter.

cutting costs, increasing revenue

Over the year, CityLink introduced a series of measures 
designed to lift revenue and cut costs. 

ACCESS, a new video tolling product introduced in July 
2003, has been very successful, attracting about 34,000 
new account customers and generating over $1.5 million 
in revenue. Changes to revenue related processes at 
CityLink generated an additional $700,000.

annual report 2004

9

the promise of Westlink M7

hills motorway

CityLink has already proven its value to investors. 
Revenue from Westlink M7, the new toll road in Sydney 
in which Transurban holds a 40 per cent stake, will begin 
ﬂ owing in 2006. Construction is progressing well and the 
road will beneﬁ t from the rapid industrial and residential 
development occurring in the Greater Western Sydney 
region in recent years. Businesses are relocating to the 
corridor and new housing sub-divisions are springing up 
at a rapid rate. Freight logistic facilities are already open 
for business adjacent to the M7. Westlink will become a 
very signiﬁ cant asset for Transurban. 

development of the joint venture

The New South Wales government has foreshadowed 
that Sydney’s six existing manual toll roads will move to 
electronic tolling in coming years. Transurban identiﬁ ed 
an opportunity to assist in this transition. In December 
2003, Transurban and Macquarie Infrastructure Group 
(MIG) agreed to set up a tolling joint venture and 
consider joint participation in future bids in Australia 
(excluding the Mitcham-Frankston bid). The tolling joint 
venture would offer full electronic tolling and customer 
management services to Sydney’s toll roads. Details of 
the joint venture are still being negotiated.

On 19 April 2004 Transurban purchased an 8.1 per 
cent share in Hills Motorway, which owns and operates 
the M2 in Sydney.  This cost $96 million at $6.40 per 
security. This road will connect to the M7.  Securing a 
stake in Hills allows us to work with its management to 
extract the beneﬁ t of synergies between the two roads.

mitcham-frankston project

In Melbourne, Transurban leads Mitcham-Frankston 
Motorway (MFM), one of two consortia bidding to 
develop and operate the new Mitcham-Frankston project,
a 40 kilometre toll road including tunnels in the east of 
the city.  As this report goes to press, Transurban is 
awaiting a government decision on the project. 

With our consortium partners, we consulted widely in
the Mitcham-Frankston corridor and have responded 
to local needs and concerns. We have set new 
standards in urban design. In preparing our proposal to 
the Victorian Government, our number one priority was 
ensuring that the project will be value accretive for our 
security holders. 

10

annual report 2004

Construction of Westlink M7 is well under way

stockholm outcome

key ﬁ nancial results

report

Transurban made an accounting loss before tax of 
$61.5 million, compared to a loss of $83.6 million in the 
previous year. The loss reﬂ ects depreciation of the major 
investment in CityLink—a non cash item. Proﬁ t before 
non cash items was $128.3 million, up from $97.3 
million. This ﬁ gure is a more realistic measure of the 
company’s capacity to pay distributions.

Revenue was $467.7 million, made up of $254.5 million 
from tolling (net of GST), $3.5 million from outdoor 
advertising, $180.5 million from interest and $29.2 
million in other revenue. The $467.7 million ﬁ gure was
up from $410.9 million the year before. It should be
noted that the ﬁ gure was enhanced by revenue 
generated by Transurban’s development activities 
totalling $25.5 million.

In Sweden, Transurban was part of a consortium that 
tendered to develop and manage a congestion charging 
system in which motorists will pay tolls to travel into 
Stockholm’s city centre. The tender required no equity 
investment by Transurban. Our role in the consortium 
was as a business and operations adviser and supplier 
of the central toll collection system. While the bid was 
unsuccessful, the consortium is currently appealing the 
outcome of the tender.

infrastructure bonds

There was good news on negotiations with the Federal 
Government’s Development Allowance Authority 
(DAA). The authority has agreed to extend the term of 
Infrastructure Bonds used in the ﬁ nancing of CityLink 
from December 2004 to April 2007. Infrastructure Bonds 
are a Commonwealth initiative to assist key infrastructure 
projects. Essentially they allow Transurban to transfer tax 
beneﬁ ts it cannot use effectively to investors, and in turn 
the company receives lower interest costs. The beneﬁ t 
to Transurban’s security holders of the extension agreed 
with the DAA will be to generate interest cost savings of 
approximately $116 million and fees of $6.5 million within 
the next three years.

concession fee tax deductions

The Federal Court ruled that Transurban is not entitled 
to taxation deductions for CityLink Concession Fees it is 
obliged to pay to the State of Victoria. The ruling does 
not affect the amount of distributions the company pays 
to investors. However, it does affect the tax treatment of 
the distributions in investor hands. 

On the basis of the court ruling, Transurban anticipates it 
will be able to pay distributions 100 per cent tax deferred 
until the end of 2005. From 2006, they are expected 
to be partially tax deferred. Transurban lawyers say the 
Concession Fees should be deductible as an ongoing 
cost of earning CityLink income. The company is 
appealing the ruling.  A Full Bench of the Federal Court 
began hearing the appeal in August 2004.

annual report 2004

11

The CityLink ‘sound tube’

Operating costs were $77.1 million, compared to
$69.3 million. This reﬂ ects higher volumes of usage.
Net efﬁ ciency gains of $1.7 million were achieved,
after allowing for some non recurrent costs. These costs 
included:

g  $400,000 to launch the ACCESS video tolling product;

g  $300,000 in the switch to a new call centre; and

g  $300,000 associated with the recall of e-TAG® 

devices following higher than expected battery failures. 

For more detail, turn to the Directors’ Report in the 
Transurban Group Financial Report on pages 41 to 42.

transurban people

Transurban is now a major employer with over 400 
employees. The company has established a reputation 
as a good employer, and we have built up highly skilled 
teams in new business development, bid management, 
tolling technology development and operations and 
customer service.  While most employees work in 
Melbourne, we have a highly professional team in 
Sydney and representation in Brisbane, London and 
New York.

Transurban is a pioneer in what is still a young industry. 
This, combined with the growth of the company, means 
employees are constantly asked to meet new challenges 
and adapt to new circumstances. The success of the 
company is built on their hard work and enthusiasm and 
we thank them for it.

Transurban aims to be an employer of choice

Our success is built on
the hard work and 
enthusiasm of
our people.

12

annual report 2004

Transurban has built up a number of highly skilled teams

report

the future

Our people are at the forefront of an emerging new 
paradigm in infrastructure development. This paradigm is 
built around the importance of the long term involvement 
of an operator. It recognises the converging interests of 
governments, communities, equity investors in toll roads 
and the customers who use them. 

In the past, many projects have been primarily focused 
on the design and construction phase. There are major 
risks in this phase and they have to be managed—as 
they were on CityLink. But there has been too little 
focus placed on the operational phase, which extends 
for the majority of most concession periods. There has 
been little recognition that over the life of a concession 
the way a road is managed will have to change to 
accommodate new technologies (such as electronic 
tolling) and to meet changing community needs and 
expectations.

Increasingly, investors, governments and banks are all 
recognising that a focused, robust owner and operator 
with a long term view is important to all stakeholders. 
The emerging paradigm shift is towards a ‘whole of life’ 
approach to toll road assets. 

That is the Transurban approach. And that is why 
our investors can look forward to steadily increasing 
distributions and carefully planned growth.

Laurence G Cox AO 
Chairman 

Kimberley Edwards
Managing Director

annual report 2004

13

Our projects enhance surrounding communities

Transurban’s approach to managing its cornerstone asset, 
CityLink, is one of the key reasons for its success.

Reﬂ ections in the ornamental pool under the CityLink gateway

operating assets

citylink

CityLink had its most successful year so far in 2003-04, 
with toll and fee revenue reaching $254.5 million (net of 
GST)—a 10.1 per cent increase over the previous year. 
Average daily trafﬁ c was up 6 per cent.

Transurban’s approach to managing its cornerstone 
asset is one of the key reasons for this success. 

The company has set itself apart from other toll road 
owner-operators by consistently seeking new ways to 
increase trafﬁ c and cut costs to generate stronger
cash ﬂ ows, while maintaining a high standard of service. 
This strategy means Transurban can deliver increasing 
returns to investors.

raising revenue 

A number of programs across the business have helped 
CityLink achieve a record increase in revenue in 2003-04.

Last year’s annual report described a new video tolling 
product designed to attract new customers and expand 
the choices for existing CityLink users. This product, 
ACCESS, was launched in July 2003, and has been a 
resounding success. 

optimising the cost structure

One of the biggest costs for any business with a large 
customer base is the provision of a call centre. 

During the year, CityLink contracted a new call centre, 
SalesForce, a company with a strong track record in 
customer service. The move will result in signiﬁ cant 
savings for the business—while also improving
service levels. 

Improvements in the processing of images of vehicle 
number plates used for tolling will save CityLink about 
$250,000 a year.

The company encourages customers to conduct their 
transactions with CityLink via the internet or other 
electronic ‘channels’ such as kiosks in retail outlets. 
These are quick and easy for customers to use, and
less expensive for the business to manage. 

In 2003-04, the continuing shift to these low cost 
channels saved CityLink about $130,000. Sales of 
CityLink Passes on the internet jumped from 6 per cent 
to 9 per cent of all sales, while account top-ups online 
increased from 3 per cent to 5 per cent.

serving customers

Since the launch, about 34,000 new accounts have
been established, generating over $1.5 million in toll and 
fee revenue for the year. Moreover, the new product has 
saved CityLink from issuing e-TAGs to many customers 
who would not travel often. The tags are an expensive 
way to serve infrequent users of CityLink.

CityLink has developed a long term strategy to ensure 
the business maintains a competitive advantage in tolling 
customer service well into the future. The strategy looks 
ahead 10 years to think about how the marketplace will 
change, what our customers will need, and how we can 
deliver it. 

More favourable trip patterns and improvements in 
revenue related processes earned $700,000 more in 
2003-04. Further opportunities have been identiﬁ ed. 

A cornerstone of the plan is to deliver superior service 
through an initiative called ‘Customer 1st’. It is designed 
to secure the position of CityLink (and other tolling 
services we may offer in the future) as attractive to 
new and existing customers and encourage current 
customers to increase their use of the road.

annual report 2004

15

Sydney’s Harbour Bridge and Harbour Tunnel, plus all 
Queensland toll roads.

improving infrastructure 

CityLink has made a number of changes to the road 
and its systems to improve the driving experience for 
customers, increase safety and enhance
overall operations.

Some of these improvements include:

CityLink’s ‘Customer 1st’ brings new levels of excellence
to our customer service operations

g  updating the communications network that is the 

backbone of our tolling system;

Already, the approach is having a positive impact on 
CityLink’s day to day operations and its decisions on 
future business activities. It has also further focused 
employees on the vital role customer service plays in our 
company’s success.

Some innovative programs created through ‘Customer 
1st’ include: 

g  CityLink Customer Charter—a set of promises to 
customers, and a list of performance targets the 
company is committed to meeting in customer 
service, road performance and community 
involvement (to be launched in September 2004);

g  CityLink Report Card—an annual public document 
showing how the company measured up on the 
performance targets in the Customer Charter
(ﬁ rst report scheduled for February 2005);

g  CityLink Customer Ombudsman—the appointment 
of an independent ombudsman (the ﬁ rst for an 
Australian toll road) to review and make a binding 
decision on the rare customer issues that could not 
be resolved through standard, internal processes
(to be launched in September 2004); and

g  Bright Spark—an internal program that draws on the 
feedback of experienced staff to make immediate, 
measurable improvements to customer service 
(launched April 2004).

In August 2003, interstate roaming for CityLink’s e-TAG 
customers was expanded to include all New South 
Wales toll roads. Customers already had access to 

g  installing special barriers at the entrances to the 

tunnels to warn drivers of overheight trucks that they 
pose a safety hazard; 

g  using ramp metering at the Gibdon Street interchange 
of the Southern Link to control the ﬂ ow of trafﬁ c onto 
the freeway; 

g  posting better speed advisory signs on the road; and

g  optimising the operation of the tunnels to improve

air quality.

Melbourne’s major road system

Hume
Freeway

Tullamarine
Freeway

Hume
Highway

Melbourne
Airport

Western
Ring Road

TULLAMARINE

Under construction

Planned projects

CityLink Tollways

Untolled Freeways

Hume
Freeway Extn

Metro. Ring
Road Extn

Metropolitan Ring Road

Calder
Freeway

Western
Highway

SUNSHINE

Deer Park
Bypass

Essendon
Airport

CityLink
CityLink
CiCCitit
yLininn
ityLink
(Western Link)
(Western Link)
(Weess
st rnrn
stern Link)

ESSENDON

PRESTON

Eastern
Freeway

BULLEEN

FOOTSCRAY

Port of Melbourne

CARLTON

 CBD

CityLink
CityLink
CityLink
(Southern Link)
(Southern Link)
(Southern Link)

BOX HILL

West Gate
Freeway

LAVERTON

WILLIAMSTOWN

ST KILDA

Princes
Freeway

Princes
Highway

BURWOOD

Monash
Freeway

CHADSTONE

16

annual report 2004

operating assets

CityLink engineers also liaised with VicRoads—
the Victorian Government’s public road authority—as it 
rolled out improvements to the Bolte Bridge to Lorimer 
Street and Montague Street sections of the
Westgate Freeway. 

This VicRoads project, which began in mid 2004, will 
increase trafﬁ c lanes in both directions and improve 
merging. The changes on this key section of road should 
help alleviate the peak hour congestion many CityLink 
customers experienced travelling to or from the
city’s west.

citylink – making melbourne work better

CityLink is a 22 kilometre motorway in Melbourne, Victoria, which was Australia’s ﬁ rst fully electronic 
toll road. It is divided into two sections—the Western and Southern Links—which connect the 
Tullamarine, Monash and Westgate freeways. The road includes two tunnels, a major bridge over the 
Yarra River, an elevated roadway and an architecturally designed ‘gateway’ feature on the approach
to the city.

full electronic tolling

With full electronic tolling, motorists do not have to stop at boom gates or toll booths to pay by cash. 
On CityLink, they are tolled electronically, and must have one of the following: 

g  CityLink account—Motorists with an account receive an e-TAG, a small electronic device they place 
on the vehicle’s windscreen. When they travel on CityLink, an overhead tolling system scans the 
e-TAG and deducts the appropriate toll from the account.

g  ACCESS account—Customers with this account do not need an e-TAG, since CityLink also 

uses video equipment on the road to recognise a vehicle’s number plate and allocate the toll to a 
customer’s account. There is a fee associated with matching a vehicle’s details to the customer’s 
account on each trip.

g  CityLink pass—This pass allows travel on a particular section of the road or during a set period

of time. It can be purchased either before or after travel. In either situation, the vehicle’s number 
plate is captured during travel by CityLink’s roadside equipment.

image processing & enforcement

When motorists travel on CityLink without an e-TAG device, their number plate is captured by 
CityLink’s roadside equipment. This image is then processed by CityLink, and either used to settle
a customer’s account or passed on to the Victorian government agency that handles enforcement.
This agency administers ﬁ nes to people who have not made arrangements to travel on the road.

interstate roaming

CityLink customers with an e-TAG device are covered for travel on all tollways in Australia since the 
company has agreements with all the operators of these roads.

annual report 2004

17

Westlink M7 is on track to deliver
substantial returns to investors.

Reinforcing for concrete pavement on Westlink M7

developing assets

westlink M7

Transurban’s ﬁ rst New South Wales project—the $2.23 
billion Westlink M7 in Western Sydney—is on track to 
become another valuable asset delivering substantial 
returns to investors.

Construction of the 40 kilometre motorway is 
progressing well, and the strong industrial and residential 
growth in the region is exceeding early forecasts.

Due to open in 2006, Westlink M7 will link Sydney’s 
M5, M4 and M2 and traverse Australia’s fastest growing 
economic region. It will become the major transport link 
for the 1.8 million people who live in the Greater Western 
Sydney Region, bypassing up to 56 sets of trafﬁ c lights 
and saving more than an hour on some journeys.

Transurban is a 40 per cent equity partner in this project, 
with rights to a further 10 per cent, and holds the 
electronic tolling and customer service contracts.
Our equity partners are Macquarie Infrastructure Group 
(40 per cent), Leighton Holdings (10 per cent) and 
Abigroup Limited (10 per cent).

growth in the region

Transurban targeted this project due to the enormous 
growth predicted in the Greater Western Sydney Region 
over the next 15 years. Westlink M7 will signiﬁ cantly 
contribute to this growth by linking available industrial 
land to the port and airport and stimulating rapid 
residential development.  As the long-term operator of 
the road, Transurban and its investors have a substantial 
stake in this growth. 

Western Sydney is the third largest economy in Australia, 
and the home of more than 72,000 businesses. 
Approximately 90 per cent of the new industrial land 
in Sydney that is earmarked for development is in the 
Westlink M7 corridor.

In May this year, the New South Wales Government 
announced an additional 100 hectares of land at the 
intersection of Westlink M7 and the M4 would be 
rezoned for employment purposes, expected to create 
more than 5,000 new jobs.  The Government also 
announced the development of a link road from Westlink 
M7 to Erskine Park Employment area, a new 500 
hectare industrial estate expected to create more than 
6,000 jobs.

According to the Greater Western Sydney Economic 
Development Board, Westlink M7 will generate 24,000 
new jobs and an additional $3 billion in economic output 
in the ﬁ rst three years it is open.  

Details are also expected this year on two large land 
releases at Bringelly and Marsden Park just to the south 
and north of Westlink M7.  According to the New South 
Wales Government, these two areas alone could house 
up to 400,000 people over the next 10 to 15 years.

construction progress 
Westlink M7 is the biggest urban infrastructure project 
in Australia.  The 40 kilometre motorway includes 17 
interchanges, 38 overpasses and underpasses, 144 
bridges and a 40 kilometre path for pedestrians and 
cyclists. Construction risks for the Abigroup-Leighton 
Joint Venture are considered low, given there are no 
tunnels or difﬁ cult geotechnical issues. 

Since major construction began in July last year more 
than seven million cubic metres of earth have been 
moved.  Most of the earthworks and design work are 
now complete, paving has started and many of the 
bridges are under construction.

Westlink M7 will be Sydney’s ﬁ rst fully electronic toll road 
with distance based tolling. Work is well underway on 
the tolling and customer service system, with a range of 
payment options for motorists currently being ﬁ nalised.

annual report 2004

19

We carefully consider projects that ﬁ t strict
investment criteria and add value for security holders.

CityLink’s Bolte Bridge and towers from below

prospects

tolling 

Transurban’s cornerstone asset, CityLink, is widely 
regarded as the most efﬁ cient full electronic toll road in 
the world. This has earned the company an international 
reputation for leadership in tolling and customer service. 

international opportunities

In March 2004 Transurban joined a consortium headed 
by Fluor Corporation that has submitted a proposal 
to the Virginia Department of Transportation in the 
US for the provision of Bus Rapid Transit (BRT) / High 
Occupancy Toll (HOT) lanes for the I-95 Motorway.

Transurban is now leveraging that expertise to pursue 
projects in Australia and overseas that ﬁ t our strict 
investment criteria and add value for shareholders.

This proposal is only at concept stage. If it develops, 
Transurban plans to take on the tolling system design 
and operations role.

In February 2004 Transurban announced it had joined 
the Combitech AB consortium bidding to supply, install 
and operate a system for collecting ‘environmental taxes’
in Stockholm, Sweden. This is similar to congestion 
charging schemes in cities like London. It was the 
company’s ﬁ rst tender outside Australia. 

The price and contractual terms bid by the Combitech 
AB consortium would have enabled Transurban to 
achieve a suitable proﬁ t margin while containing its risk 
exposure to the project. The proposal was not selected, 
but the consortium is currently appealing the outcome of 
the tender.

If successful in an overseas tolling project, Transurban 
will charge an upfront licence fee for its central tolling 
system (known as GATe), plus ongoing consulting and 
management fees.

If equity is required for an overseas project, it is expected 
to be raised primarily in the market in which the project 
is located, with Transurban earning a management fee.

There is no shortage of opportunities. Internationally, 
governments are increasingly turning to advanced tolling 
technology to manage congestion and generally improve 
transport networks in and around major cities. 

Transurban’s approach to these projects involves 
partnering with established, local players that can beneﬁ t 
from our expertise and also offer us the greatest chance 
of success in any bid.  

joint venture with MIG

In Australia, Transurban and Macquarie Infrastructure 
Group (MIG) agreed in December 2003 to cooperate on 
establishing, developing and implementing a Tolling Joint 
Venture which would offer fully electronic tolling and 
customer management services to Sydney toll roads. 
Transurban and MIG already have a joint investment in 
Sydney’s Westlink M7.

The Joint Venture will seek tolling contracts with existing 
and new Sydney toll roads using Transurban’s tolling and 
customer service technology and expertise, licensed on 
commercial terms. 

This will create the opportunity to deliver Sydney road 
users an efﬁ cient and seamless tolling solution and
bring signiﬁ cant beneﬁ ts to freight and logistics 
companies in particular.

Development of the joint venture is progressing.

annual report 2004

21

Global demand for automated tolling is growing rapidly

development

Across the world, many countries are facing a land 
transport crisis. Trafﬁ c is growing at a rate that 
signiﬁ cantly exceeds most planners’ forecasts.
In Australia, the national forecast is that passenger 
kilometres will rise 30 per cent in urban areas by 2020. 
Unless we signiﬁ cantly increase investment in transport 
solutions, congestion could be costing Australia as 
much as $30 billion a year in lost productivity by 2015.

These predictions are placing governments under 
increasing pressure. However, ﬁ scal priorities mean they 
are unwilling or unable to borrow the kind of money 
required to tackle the backlog of critical road projects.

As a result, governments are turning to the private 
sector to develop and operate new roads. As a pioneer 
in full electronic tolling, Transurban is uniquely placed 
to capitalise on the opportunities emerging along the 
eastern seaboard of Australia. However, the company 
will continue to apply strict investment criteria in 
assessing each new opportunity. 

mitcham-frankston project

Transurban is a major equity partner in the Mitcham-
Frankston Motorway (MFM) consortium, which is bidding 
to build, own and operate the newest toll road
in Melbourne, Victoria.

MFM is one of two groups bidding for the Mitcham-
Frankston project. The consortium consists of Transurban
Infrastructure Developments Ltd, Leighton Contractors 
Pty Ltd, Abigroup Ltd and Deutsche Bank AG.

The 40 kilometre road is described by the Victorian 
Government as an integrated transport project that must 
deliver signiﬁ cant economic, social and environmental 
beneﬁ ts to the 1.4 million people in the southern and 
eastern regions of Melbourne. 

Transurban believes the project will also deliver 
substantial returns to investors if the MFM consortium is 
successful and risks are managed. Minimising investor 
risk is a key consideration.

The new road will join the Eastern Freeway at Park Road 
in Donvale and effectively extend the freeway connection 
from the city to Ringwood via two tunnels under the 
Mullum Mullum Creek. It will then turn south, crossing 
Burwood Highway, Monash Freeway and the Princes 
Highway before joining the Mornington Peninsula 
Freeway at Carrum Downs.

project objectives

In order to deliver fully on the Government’s broad 
objectives for the project, Transurban and its partners in 
MFM looked beyond the road itself to develop a strategy 
for the Mitcham-Frankston corridor as a whole. 

The corridor strategy was developed as a result of 
extensive stakeholder consultation and thorough 
reviews of state and local government policies in an 
effort to better understand the context of the project 
in the region. This approach enables better planning 
to mitigate against future problems and capitalise on 
future opportunities. It promotes accountability, genuine 
partnerships with the community and goodwill among 
customers for the long term. 

As this report went to press, Transurban was waiting for 
the Victorian Government’s decision on the
preferred tenderer.

new south wales opportunities

Transurban is also considering several emerging 
development opportunities along Australia’s eastern 
seaboard in New South Wales and Queensland.

In New South Wales, the State Government has 
announced its preferred option for the M4 East 
Motorway in Sydney, which will link the M4 at Strathﬁ eld 
and the City West Link. The preferred option includes a
5 kilometre tunnel. The Government is expected 
to release an Environmental Impact Statement for 
community consultation towards the end of the year. 

If approved, construction on this project is expected to 
start in 2007, allowing the tunnel to open to trafﬁ c by late 
2009 or early 2010.

22

annual report 2004

prospects

generating signiﬁ cant funding pressures and government 
authorities are considering funding mechanisms and 
private sector involvement.

The Queensland Government is investigating options 
for duplicating the Gateway Bridge across the 
Brisbane River and upgrading the Gateway Motorway 
approaches. The Government is expected to decide 
the preferred ﬁ nancing and delivery model for the 20 
kilometre project by late 2004.   

Brisbane City Council is also conducting an 
Environmental Impact Statement and business case
for a 4.7 kilometre North South Bypass Tunnel under
the Brisbane River. The Council is targeting tunnel 
opening by 2008.

The Council has also released a plan to build four 
additional tunnels to relieve growing congestion in
the inner urban area of Brisbane.

The Federal Government has also announced its 
preferred option for a link between the F3 and the
M2 connecting the Central Coast Region and the 
Sydney motorway network. This is an important link for 
freight and commuters.  The preferred option is a single 
8 kilometre tunnel under Pennant Hills Road,
which would save motorists up to 15 minutes of travel 
time by allowing them to avoid 22 sets of trafﬁ c lights. 
The New South Wales Roads and Trafﬁ c Authority is 
currently reﬁ ning the preferred option into a concept 
proposal that will be subject to an Environmental
Impact Statement next year.

potential queensland projects

Transurban established a Brisbane ofﬁ ce in March 
to capitalise on potential toll road projects being 
considered by the Queensland Government and 
Brisbane City Council.

South East Queensland is experiencing enormous 
growth in population and freight. This growth is

MARSDEN
PARK

QUAKERS
HILL

HORNSBY

CASTLE HILL

F3-M2

Pacific
Highway

Under construction

Planned projects

Westlink M7 Tollway

Tolled Freeways

Untolled Freeways

MT.DRUITT

To  Penrith

ERSKINE
PARK

Westlink
M7

ROOTY
HILL

Great Western
Highway

BLACKTOWN

M4

EASTERN
CREEK

HORSLEY
PARK

FAIRFIELD

CECIL
PARK

CECIL HILLS

Hoxton Park
Airport

BANKSTOWN

LIVERPOOL

Bankstown Airport

M5

HOXTON
PARK

BRINGELLY

Sydney’s developing toll road network

EPPING

M2

Lane Cove
Tunnel

RYDE

CHATSWOOD

PARRAMATTA

NORTH 
SYDNEY

Sydney Harbour
Bridge & Tunnel

M4 East

ENFIELD

LEICHHARDT

M5 East

CBD

Cross City
Tunnel

BONDI JUNCTION

Eastern
Distributor

Sydney Airport

Port Botany

annual report 2004

23

We aim to set a new benchmark for sustainability
and social responsibility in our sector.

Filters inside CityLink’s water recycling plant

partnerships

corporate social 
responsibility

Transurban believes a comprehensive Corporate Social
Responsibility (CSR) program is integral to delivering 
strong results for communities, investors and 
governments.

As a company that provides infrastructure and services
traditionally delivered by the public sector, Transurban 
faces heightened public expectation over how we
should operate. Our impact on the community and the
environment will always come under the microscope. 
Our challenge is to integrate robust ﬁ nancial performance
with environmental and social responsibilities.

Transurban’s aim is to set a new benchmark for 
sustainability and social responsibility in the
infrastructure sector.

good corporate citizen

Our CSR program will help build Transurban’s business 
over time by creating shareholder value through:

g  operational efﬁ ciency and risk reduction;

g  aligning and attracting employees to our culture;

g  reinforcing our licence to operate with governments 

and community;

g  building our reputation and brands; and 

g  supporting innovation and our ability to enter

new markets.

In 2003 the Australian Stock Exchange (ASX) released 
its 10 Principles of Good Corporate Governance and 
Best Practice Recommendations. The ASX notes there 
is growing acceptance that organisations can create 
value by better managing natural, human, social and 
other forms of capital.  Increasingly, the performance of 
companies is being scrutinised from this perspective.

The Transurban Board believes CSR is good for our 
business, and our programs over the next few years 
will ensure the company can capitalise on the market’s 
increasing awareness of sustainability issues.

building capacity

In 2003-04, Transurban created a CSR Committee 
chaired by a non-executive director of the Board and 
including a range of senior company representatives. 
Two respected industry-speciﬁ c external advisers 
provide independent, critical expertise and advice as 
members of the Committee.

The Committee is working to develop an internal culture 
that supports the development and implementation 
of our CSR philosophy as well as integration of CSR 
principles into all levels of the business to ensure those 
principles are reﬂ ected in our decisions and actions. 
Transurban employees have established their own ‘good 
company group’ and are setting internal and external 
objectives that are well supported by the company.

audits

This year Transurban commissioned two comprehensive 
audits—an environmental and a community audit
to inform the implementation of a CSR program.
These audits will help us understand our impacts and 
assist in devising strategies to mitigate them. 

Once we roll out the CSR program, we will report
our outcomes in line with the Global Reporting
Initiative guidelines. 

The Transurban Board 
believes CSR is good for 
our business.

annual report 2004

25

Transurban has 
commissioned a
 report to identify our
 environmental impacts
 or ‘footprint’.

csr committee

Chaired by Board Member Susan Oliver (left),
the CSR Committee beneﬁ ts from the 
experience of external advisors Jan Cochrane-
Harry (centre) and Chris Ryan (right).

CityLink staff working on one of our community partnerships

protecting the environment 

The environmental audit will detail Transurban’s 
environmental impacts or ‘footprint’. A report will include 
an inventory of existing environmental management 
mechanisms and initiatives that will be rated against 
industry best practice and regulatory body guidelines.

It will provide analysis of environmental risks in the 
Transurban domain that will help set priorities for 
preventative and remedial action.

The report will also outline environmental opportunities 
for Transurban to assist with innovation and the potential 
for investment in R&D or technology transfer. 

While the audit signiﬁ es the incorporation of 
environmental best practice into our guidelines
and systems, Transurban has already demonstrated its 
commitment to the environment with its water recycling 
plant in Melbourne. In 2003, the plant saved 202 
million litres of clean water by recycling the hundreds of 
thousands of litres of water that drain naturally each day 
around CityLink’s Burnley and Domain Tunnels.

We also participate in smaller, but equally important 
projects. These include a partnership with Greening 
Australia and local schools that involves our staff in 
education and revegetation.

26

annual report 2004

partnerships

partners in the community

the path ahead

Transurban’s partnership with the community is the 
cornerstone of its CSR program. Customers, local 
residents, schools, environment groups, government, 
regulatory bodies, industry groups and employees all 
play signiﬁ cant roles in our operations.

The community audit will report on our impacts on the 
community and how best to inﬂ uence these impacts.  
It will look at world best practice in stakeholder 
communications and how we can better listen and
learn from those that interact with Transurban.

Some of our community partnerships over the past
year include:

g CityLink School Support Program;

g Transurban Excellence in Engineering Scholarships;

g 2003 Melbourne International Festival for the Arts; and

g Western Sydney Industry Awards.

Over the next year we will work towards integrating 
CSR principles into all levels of the company using 
methodologies that can be externally veriﬁ ed and 
publicly reported.

Our community audit will 
help us listen and learn
from those who interact
with Transurban.

CityLink’s water recycling facility in Melbourne

annual report 2004

27

Transurban is committed to
high standards of corporate governance.

Wall at the base of CityLink’s tunnel ventilation stack

governance

Transurban is committed to high standards of 
corporate governance. In 2003-04, a review of the 
Group’s corporate governance framework was 
undertaken in the light of the ‘Principles and Best 
Practice Recommendations’ published by the Corporate 
Governance Council of the Australian Stock Exchange 
in March 2003. The review found that the framework 
was substantially compliant with the recommendations. 
Based on the ﬁ ndings of the review, a number of 
changes have been made to the framework and these 
are identiﬁ ed in this statement.

This corporate governance statement is formulated on a 
collective basis and applies to all entities comprising the 
Transurban Group as described in the Directors’ Report. 
The ‘Board’ is a reference to the Board of each relevant 
entity unless otherwise stated.

The relationship between the Board and management is 
critical to the achievement of the Group’s objectives.
The directors are responsible to the security holders for 
the performance of the Group and their key tasks are
to enhance the interests of the security holders and 
other key stakeholders and to ensure the Group is
properly managed.

Day to day management of the Group’s affairs and the
implementation of strategic and policy decisions made by
the Board have been formally delegated to the Managing 
Director and senior executives. These delegations are 
reviewed regularly.

The Group’s main corporate governance practices are 
described in the following paragraphs. Unless otherwise 
stated, these practices were in operation for the
entire year.

During the year material relating to the corporate 
governance practices of the Group was progressively 
published in the corporate governance of the Group’s 
website at www.transurban.com.au. The material 
presently available comprises: summaries of the Board 
Charter (ﬁ rst published in April 2004) and the Nomination 
and Remuneration Committee Charter (February 
2004), the Audit Committee Charter (September 2003), 
Remuneration Policy (April 2004), Code of Conduct 

laurence g cox

kim edwards

geoff r phillips

david ryan

susan m oliver

professor
jeremy g a davis

geoff o cosgriff

peter c byers

annual report 2004

29

(March 2004), Securities Trading Policy (February 2004),
Continuous Disclosure Policy (February 2004), 
Shareholder Communication Strategy (February 2004), 
Risk Management Framework (February 2004) and the 
Corporate Social Responsibility Program.

board of directors

The Board operates in accordance with the broad 
principles set out in its charter which was approved in 
January 2004 and was made available in summary form 
on the Group’s website in April 2004. The charter covers 
the following matters:

board responsibilities

To ensure the efﬁ cient undertaking of its overall 
responsibilities, the Board has delegated certain aspects 
of them (in particular, those relating to day to day operations 
of the entity) to the executive management of the entity.

The following responsibilities have been retained by
the Board: 

g   reviewing and ratifying the entity’s business strategies 

and monitoring their implementation;

g  appointing and removing the Managing Director,  
regularly evaluating his or her performance and 
determining his or her remuneration;

g  appointing and removing the Company Secretary
and regularly evaluating his or her performance;

g  ratifying the appointment of executives reporting

to the Managing Director, reviewing the Managing 
Director’s assessment of the performance of such
executives and determining their remuneration based 
on the Managing Director’s recommendations;

g  developing and approving succession plans for the 
Managing Director and reviewing and approving 
succession plans for those executives reporting to him;

g  reviewing the entity’s ﬁ nancial reports and certifying 

that they comply with Australian Accounting 
Standards and present a true and fair view of the 
affairs of the entity;

g  ensuring the ﬁ nancial integrity of the entity through:

 — overseeing the entity’s systems of internal control
   and ﬁ nancial reporting;

  — establishing and reviewing ﬁ nancial

   performance objectives; and

  — approving operating and capital budgets.

g  approving distribution payments;

g  approving capital management activities, including 

the issue and redemption of equity and the increase 
or reduction in borrowings;

g  approving signiﬁ cant changes to the Group’s 

organisation structure;

g  reviewing and ratifying systems of risk management 

and legal compliance;

g  ensuring that the entity complies with all disclosure 

requirements;

g  approving changes to the authorities delegated to 

management;

g  assessing the performance of each individual director 

and of the Board collectively;

g  selecting nominees for election as directors;

g  providing strong leadership of the entity on a 

continuing basis; and

g  fostering a culture of compliance with the highest 
legal, ethical and environmental standards and 
business practices.

board composition

The maximum and minimum number of directors is set 
by the entity’s constitution at 12 and three, respectively.

The Board seeks to ensure that its membership provides
the mix of qualiﬁ cations, skills and experience to effectively
fulﬁ l its responsibilities and that its size facilitates effective
discussion and efﬁ cient decision making.

board members

Details of the members of the Board, their experience, 
expertise, qualiﬁ cations, term of ofﬁ ce and independence 
are set out in the Directors’ Report under the heading 
‘Information on Directors’ (refer to page 45).

30

annual report 2004

directors’ independence

It is the Board’s policy that a majority of directors should 
be independent directors and the Chairman should be 
an independent director. The Board regularly determines 
which directors are considered to be independent 
directors in the light of their interests as disclosed to 
the Board. In making this determination, the Board 
considers whether a director’s security holding in
the entity, his or her relationship with security holders, 
suppliers and competitors and tenure as a director 
would materially affect the director’s ability to exercise 
unfettered and independent judgement in the interests
of the entity’s security holders.

In considering whether a director’s business or other 
relationships give rise to any conﬂ ict, the Board believes 
it is inappropriate to solely apply arbitrary dollar, proﬁ t or 
turnover percentage tests to deﬁ ne the material impact 
of those business or other interests. Instead, the Board 
seeks to determine whether the director is generally free 
of any interest and any business or other relationship 
which could materially interfere with the director’s ability 
to act in the best interests of the Group.

With regards to these factors, the Board has determined 
that all non-executive directors—including Mr Cox—are 
independent directors.

Mr Cox is an executive director of Macquarie Bank 
Limited (‘MBL’). Until 19 December 2003, when it gave 
notice that it had ceased to be a substantial holder, MBL 
held 10.73 per cent of the Group’s stapled securities. 
Based on the last notice of substantial shareholding ﬁ led 
by MBL, this holding comprised:

g  9.80 per cent held by subsidiaries of MBL in their 
capacities as the responsible entities of the trusts, 
which comprise Macquarie Infrastructure Group 
(‘MIG’) and the custodians of the assets of MIG;

g  0.54 per cent held by the investment management 
subsidiaries of MBL on behalf of investment funds 
managed by the subsidiaries; and

g  0.39 per cent held by directors of MBL who have a 

relevant interest in securities of the Transurban Group.

Although MBL was technically required to notify its 
substantial holding, it is noted that the interests of MBL’s 

governance

subsidiaries in the Group’s stapled securities (which 
trigger the technical requirement) must be held for 
the beneﬁ t of parties other than MBL (i.e. the security 
holders of MIG and the ultimate beneﬁ ciaries of the 
investment funds). Moreover, the MBL group held
only a nominal interest in MIG stapled securities.

Hence it is considered that Mr Cox’s relationship with 
MBL does not have a material effect on his ability to 
exercise unfettered and independent judgement in the 
interests of the Group’s security holders.

Over the past three years, the Group has paid MBL the 
following amounts:

2001-02 
$mill. 

2002-03 
$mill. 

2003-04
$ mill.

Advisory fees 

6.82 

Underwriting fees  Nil 

Interest 

1.57 

0.37 

7.21 

3.85 

Nil

Nil

Nil

MBL has advised that each of these amounts represents 
less than 1 per cent of the total receipts of MBL in 
the relevant category in each period. This factor has 
been taken into account in forming the view that these 
payments would not materially effect Mr Cox’s ability to 
exercise unfettered and independent judgement in the 
interests of the Group’s security holders.

roles of the chairman
and the managing director

The Chairman is responsible for leading the Board, 
ensuring all directors are properly briefed in all matters 
relevant to their role and responsibilities, facilitating 
effective discussion of matters considered by the Board 
and managing the Board’s relationship with the entity’s 
executive management.

The Managing Director is the Chief Executive Ofﬁ cer 
of the entity and is responsible to the Board for 
implementation of strategies and policies determined
by the Board.

The roles of Chairman and Managing Director are 
undertaken by separate people.

annual report 2004

31

 
 
commitment

The Boards of the entities comprising the Group held 
a total of 34 meetings during the year. Some of these 
meetings were held concurrently. The number of 
meetings held by the Boards of each individual entity 
and by Board committees is disclosed in the Directors’ 
Report (refer to page 47). In addition, a corporate 
strategy workshop was held.

The number of meetings of the Boards and of Board 
committees attended by each director is disclosed in
the Directors’ Report (refer to page 47).

The commitments of non-executive directors are 
reviewed by the Nomination and Remuneration 
Committee prior to their appointment and annually 
thereafter to ensure that non-executive directors are 
able to meet the Board’s expectations concerning time 
commitment. Directors are required to consult with the 
Chairman prior to accepting appointment as a director
of a non-Group entity.

conﬂ icts of interest

The Group entities have developed protocols to ensure 
that any ‘interests’ of a director in a particular matter to be
considered by the Board are known by each director. 
These protocols are consistent with obligations imposed
by the Corporations Act and the ASX Listing Rules, 
and they require each director to disclose any contracts, 
ofﬁ ces held, interests in transactions and other 
directorships held, to signal any potential conﬂ ict. 
Procedures have been adopted to ensure that where 
the possibility arises, information is not provided to the 
director and the director does not participate in or vote 
at the meeting where the matter is considered.
Further information on this matter is set out in the
Board Charter summary.

Charter, Mr Cox and Mr Byers declared their interest in 
these dealings and took no part in the decisions made 
in relation to them or in the discussions preceding 
the decisions. No information was provided to those 
directors in relation to those dealings in which they had 
declared an interest.

independent external advice

Independent external professional advice in relation to 
their roles and responsibilities is available to directors at
the relevant entity’s expense. Prior to seeking such advice, 
directors are required to consult with, and obtain the 
approval of, the Chairman. The director must consult a 
suitably qualiﬁ ed adviser in the relevant ﬁ eld and inform 
the Chairman of the fee payable for the advice.

A copy of the advice obtained must be provided to the 
relevant Board.

performance assessment

Each year, the following performance reviews are 
undertaken:

g  a review of the performance of the Board against 

the requirements of the Board Charter and any other 
objectives arising from previous performance reviews;

g  a review of the performance of each Committee 

against the requirements of its Charter and of the 
continuing need for the Committee; 

g  a review by the Chairman with each director of the 

individual performance of the director; and

g  a review of the performance of the Chairman by a 
non-executive director nominated by the Board.

These reviews were last undertaken in July 2003. 
The next reviews are scheduled to be completed by 
November 2004.

Entities connected with Mr L G Cox and Mr P C Byers 
had business dealings with Group entities during the
year, as described in note 25 to the Group ﬁ nancial 
statements. In addition, the Group entered into 
contractual arrangements with entities connected with 
Mr Cox in relation to a potential joint venture to provide 
fully electronic tolling in customer management services 
to Sydney toll roads and to the joint pursuit of future toll 
road projects in Australia. In accordance with the Board 

induction and training

New directors are provided with an induction program to
familiarise them with all aspects of the business and each
Group entity’s operations, and they are kept informed of
other programs available to them. The Board has given the
Nomination and Remuneration Committee responsibility for
recommending training and further education it considers
necessary to enable the Board to meet its responsibilities. 

32

annual report 2004

governance

certiﬁ cation of ﬁ nancial reports
and risk management systems

The Managing Director and the Chief Financial Ofﬁ cer 
have provided the following certiﬁ cations to the Board 
in connection with the approval by the Board of the 
ﬁ nancial reports for the Group and the individual entities 
comprising the Group for the year ended 30 June 2004:

g  the ﬁ nancial reports are complete and present a true 
and fair view, in all material respects, of the ﬁ nancial 
condition and operational results of the entity and 
the Group and are in accordance with relevant 
accounting standards; 

g  the above statement is founded on sound systems of 
risk management and internal compliance and control 
which shape the policies of the Board; and

g  the systems of risk management and internal 

compliance and control are operating efﬁ ciently and 
effectively in all material respects.

board committees

At least once each year the Board reviews the 
appropriateness of the existing committee structure.
For those committees considered necessary, it also 
reviews the membership and the Committee Charter.

Minutes of committee meetings are recorded by the 
Company Secretary and circulated with the papers for 
the next Board meeting. At that Board meeting, the 
Chairman of the committee highlights key issues under 
consideration by the committee.

audit committee

The Audit Committee consists of the following non-
executive directors:

P C Byers (Chairman)
L G Cox
J G A Davis

Details of the qualiﬁ cations of these directors and of their 
attendance at meetings of the Committee are set out in 
the Directors’ Report (refer to page 10).

The Board has established the following committees of 
directors to assist it in carrying out its responsibilities and 
to allow detailed consideration of complex issues:

All members of the Audit Committee have appropriate 
ﬁ nancial expertise and an appropriate understanding of 
the industry in which the Group operates.

g  Audit Committee;

g  Risk Management and Compliance Committee;

g  Nomination and Remuneration Committee; and

g  Mitcham-Frankston Freeway Project Committee.

The Board has also established a committee consisting 
of directors and external representatives to advise it on 
matters relating to Corporate Social Responsibility.

Each Committee operates under a Committee Charter 
approved by the Board, which sets out the authority, 
membership and responsibilities of the committee, 
together with any relevant administrative arrangements 
and any other matters considered appropriate by the 
Board. The Audit Committee Charter and summaries of 
the charters of the Risk Management and Compliance 
Committee and of the Nomination and Remuneration 
Committee are available on the Group’s website.

The Managing Director, other members of the 
management team and representatives of the external 
and internal auditor attend meetings of the Committee
by invitation. The external auditor meets with the 
Committee without management present on a
regular basis.

The duties and responsibilities of the Audit Committee 
are set out in its Charter, which was made available on 
the Group’s website in September 2003. The primary 
responsibility of the Committee is to oversee the entity’s 
ﬁ nancial reporting process on behalf of the Board and to 
recommend to the Board appropriate actions to ensure 
high quality ﬁ nancial reporting, sound practices to 
manage risks and ethical behaviour.

In discharging this responsibility, the Committee:

g  assesses the accounting, ﬁ nancial and internal control 
systems used by the entity and recommends to the 
Board changes considered appropriate on the basis 
of such assessments;

annual report 2004

33

g  reviews the statutory ﬁ nancial reports of the entity 
and management’s representations in relation to 
them, and provides advice for consideration by the 
Board on adopting the statutory ﬁ nancial reports;

nomination and remuneration committee

The Nomination and Remuneration Committee consists 
of the following non-executive directors:

g  makes recommendations to the Board for the 
appointment, remuneration and removal of the 
external auditor and agrees the terms of the
auditor’s engagement;

g  reviews all non-audit services provided by the

external auditor;

g  reviews the objectives, competence and resourcing 
of the internal audit function (including determining 
whether the internal audit function should be provided 
by an internal or external party); and

g  ensures an appropriate program of internal audit 

activity is conducted each ﬁ nancial year. 

risk management and compliance committee

The Risk Management and Compliance Committee 
consists of the following directors:

S M Oliver (Chairman)
G O Cosgriff
D J Ryan
G R Phillips (executive director)

Details of the qualiﬁ cations of these directors and their 
attendance at Committee meetings are set out in the 
Directors’ Report (refer to page 10).

The duties and responsibilities of the Risk Management 
and Compliance Committee are set out in its Charter, a 
summary of which was made available on the Group’s 
website in February 2004. The primary responsibility of 
the Committee is to assist the Board to:

L G Cox (Chairman)
G O Cosgriff
J G A Davis

Details of the qualiﬁ cations of these directors and their 
attendance at Committee meetings are set out in the 
Directors’ Report (refer to page 10).

The duties and responsibilities of the Nomination and 
Remuneration Committee are set out in its Charter, 
which was made available on the Group’s website 
in February 2004. The primary responsibilities of the 
Committee are to provide advice to the Board on the 
appointment of new directors, the measurement of 
Board performance and the remuneration of directors 
and senior executives.

In discharging this responsibility, the Committee:

g  makes recommendations on the size and composition 
of the Board and on procedures for identifying and 
screening candidates for appointment to the Board; 

g  implements these identiﬁ cation and screening 

procedures when required;

g  reviews at least annually the time commitments of 

non-executive directors to help in assessing whether 
candidates for appointment as directors can meet 
them given their other commitments;

g  develops and oversees an orientation and education 

program for new directors;

g  makes recommendations regarding succession plans 

for the Board;

g  understand the nature of the risks to which the entity 

g  recommends processes for the review of the 

is exposed;

g  prioritise those risks for management;

g  mitigate those risks to an acceptable level; and

g  communicate its performance in managing risk to 

interested stakeholders.

performance of individual directors and the Board as 
a whole; and

g  makes recommendations on the remuneration 
policies and practices to be introduced and 
maintained by the entity for the beneﬁ t of directors 
and employees. To assist in making these 
recommendations, the Committee consults as 
necessary with external remuneration consultants.

34

annual report 2004

governance

The remuneration of non-executive directors consists 
entirely of directors’ fees, committee fees and (subject 
to eligibility) retirement beneﬁ ts. Directors appointed 
after 25 March 2003 are not eligible for retirement 
beneﬁ ts but receive an additional director’s fee. 

external auditors

The policy of the Group is to appoint external auditors 
who are suitably qualiﬁ ed and whose independence
is unequivocal.

A summary of the Group’s remuneration policies was 
made available on the Group’s website in April 2004. 
Further information on the remuneration of directors and 
executives is set out in note 25 to the Group ﬁ nancial 
statements (refer to page 46).

mitcham-frankston freeway project committee

The Mitcham-Frankston Freeway Project Committee 
consists of all directors except Mr L G Cox.

Details of the attendance of these directors at 
Committee meetings are set out in the Directors’ Report 
(refer to page 10).

An entity connected with Mr L G Cox is a member of the
ConnectEast consortium. That consortium was a 
respondent during the year to a Request for Proposals 
(‘RFP’) issued by the Southern and Eastern Integrated 
Transport Authority (‘SEITA’)—an Authority of the State 
of Victoria—for the Mitcham-Frankston Freeway project. 
Group entities are members of the Mitcham-Frankston 
Motorway consortium, which submitted a response to the
RFP in competition with ConnectEast. Under information 
protocols agreed with SEITA, the Group
was required to:

g  establish a committee of the Board, of which Mr Cox 
was not a member, to consider all matters relating to 
the response to the RFP; and

g  ensure that no information relating to the response to 

the RFP was provided to Mr Cox.

Compliance with these requirements is subject to audit 
by a probity auditor appointed by SEITA.

The performance of the external auditors is reviewed 
annually by the Audit Committee, which is responsible for
making recommendations to the Board on the 
appointment, remuneration and removal of the external 
auditors.

PricewaterhouseCoopers was initially appointed as the
Group’s external auditor in 1996 and was subsequently
re-appointed in December 2001. The appointment of the 
external auditors has been approved by security holders 
as required by the Corporations Act. It is the policy of 
PricewaterhouseCoopers to rotate audit engagement 
partners on listed entities at least every ﬁ ve years.
In accordance with that policy, a new audit engagement 
partner was introduced for the year ended 30 June 2003.

Details of the fees paid to the external auditors, 
including a break down of fees paid for non-audit 
services, are set out in note 26 to the Group ﬁ nancial 
statements (refer to page 61). 

All non-audit services provided by the external auditors 
are subject to review by the Audit Committee. It is the 
policy of external auditors to provide an annual
declaration of their independence to the Audit Committee.
The Board has considered the non-audit services 
provided by the external auditors and is satisﬁ ed they are
compatible with the general standard of the independence
of auditors.

The external auditors attend the Annual General Meeting 
and are available to answer questions raised by security 
holders on the conduct of the audit and the preparation 
and content of the audit report.

annual report 2004

35

risk assessment and 
management

The Board—assisted by the Risk Management and 
Compliance Committee—is responsible for ensuring 
the Group has an effective framework for managing 
the risks to which the Group is exposed and that the 
elements of the framework are operating efﬁ ciently.

A summary of the Group’s Risk Management 
Framework was made available on the Group’s website 
in February 2004. The framework is based on the 
recommendations of the Australian/New Zealand 
Standard for Risk Management AS/NZS 4360:1999 and 
is subject to regular review by the internal auditor and an 
independent external auditor.

Day to day management of the Group’s risk 
management and compliance systems is handled by 
the Risk Management and Compliance Working Group, 
which consists of senior executives and is chaired by 
the Group’s General Counsel. Key responsibilities of the 
Working Group are:

g  ensuring the Group’s risk management and 

compliance systems are comprehensive and efﬁ cient 
(i.e. eliminating gaps and overlaps between the 
various sub-systems);

g  monitoring the activities of specialised risk 

management and compliance working groups such as
the Information Security Governance Sub Committee 
and the Tunnel Integrity Sub Committee; and

g  promoting a culture of risk awareness across

the Group.

The Working Group provides quarterly reports to the 
Risk Management and Compliance Committee.

All major proposals submitted to the Board for decision 
include a comprehensive risk assessment and a 
description of the strategies proposed for mitigating the 
identiﬁ ed risks.

Information of the Group’s compliance with the 
environmental regulation to which it is subject is set out 
in the Directors’ Report (refer to page 7).

code of conduct

In March 2004 the Board approved a revised Code of 
Conduct (‘the Code’) for all directors and employees.

The purpose of the Code is to nurture the values 
underpinning the corporate culture which has played an 
important role in the success achieved by the Group to 
date and the establishment of its reputation.

The Code is discussed with each new employee as part 
of his or her induction training and ‘refresher’ training is 
provided on a regular basis.

In summary, the Code requires that all employees act 
with integrity, fairness and respect for others and in 
compliance with the letter and spirit of all relevant laws 
and Group policies. The Code is available on the Group’s 
website.

The Code speciﬁ es the procedures directors and 
employees must follow when dealing in securities issued 
by the Group and securities of entities with whom the 
Group has an existing or potential business relationship. 
Dealing in Transurban stapled securities is only permitted 
during the thirty day periods following the release of the 
annual and half year results to the ASX and following 
the Annual General Meeting. Dealing in CARS is not 
presently subject to this restriction.

Transactions proposed to be undertaken in Transurban 
stapled securities, CARS and in the securities of other 
entities speciﬁ ed from time to time under the policy 
must be notiﬁ ed to the Company Secretary in advance. 
A summary of the Group’s securities trading policy is 
available on the Group’s website.

The Code requires employees who become aware of 
unethical behaviour or breaches of the securities trading 
policy to report these to senior management. The Code 
provides protection for employees who report such 
occurrences.

The directors are satisﬁ ed that during the year ended 
30 June 2004, the Group has complied with the 
requirements of the Code, including the securities 
trading policy. 

36

annual report 2004

continuous disclosure 
and shareholder 
communication

In February 2004 the Board approved revised policies on 
information disclosure, covering:

g  continuous disclosure of any information concerning 
the Group that a reasonable person would expect 
to have a material effect on the price of Transurban 
stapled securities or CARS; and

g  arrangements to promote communication with 

security holders. 

A summary of this policy is available on the Group’s 
website.

The Deputy Managing Director has been nominated as 
the person with primary responsibility for operation of the 
Continuous Disclosure Policy and for all communication 
with the ASX in relation to the continuous disclosure 
obligations of Group entities.

The Group publishes information on its website as soon 
as it is disclosed to the ASX. All material used in brieﬁ ng 
analysts on the Group’s operations is released to the 
ASX and placed on the Group’s website. 

governance

international ﬁ nancial 
reporting standards 
(‘IFRS’)

The Australian Accounting Standards Board (‘AASB’) 
is adopting IFRS for application to reporting periods 
beginning on or after 1 January 2005. The AASB will
issue AASB equivalents to IFRS and the Urgent 
Issues Group will issue abstracts corresponding to 
interpretations originated by the International Financial 
Reporting Interpretations Committee or the former 
Standing Interpretations Committee. The adoption of 
Australian equivalents to IFRS will be ﬁ rst reﬂ ected in the 
Group’s ﬁ nancial statements for the half year ending 31 
December 2005 and for the year ending 30 June 2006.

Entities complying with Australian equivalents to IFRS for 
the ﬁ rst time will be required to restate their comparative 
ﬁ nancial statements to amounts reﬂ ecting the application 
of IFRS to that comparative period. Most adjustments 
required on transition will be made retrospectively 
against opening retained earnings as at 1 July 2004.

In October 2003 the Group established an IFRS 
transition project team led by the Chief Financial Ofﬁ cer. 
The project team has prepared a plan to manage the 
transition to IFRS. This plan was presented to the Audit 
Committee together with the results of an initial scoping 
review of the expected impact on the Group of adopting  
IFRS. The project plan is currently on schedule.

The project team has started a detailed analysis of IFRS 
and the Group’s accounting policies to determine the 
effects on the opening balance sheet to be prepared 
on the transition date to IFRS and required accounting 
policy changes. The project team has identiﬁ ed a 
number of accounting policy choices. These are being 
analysed to determine the most appropriate policy for 
the Group on transition to IFRS. 

Note 1(aa) to the Group ﬁ nancial statements (refer to 
page 25) sets out the major changes expected to require 
amendments to the Group’s current accounting policies 
or to require an election.

annual report 2004

37

Detail of the cantilevered beam at CityLink’s gateway

ﬁnancials

The Transurban Group Financial Report consisting of the aggregate Financial Statements of 
Transurban Holdings Limited and Controlled Entities (ABN 86 098 143 429) and  
Transurban Holding Trust and Controlled Entities (ABN 30 169 362 255) and  
Transurban Infrastructure Developments Limited and Controlled Entities (ABN 96 098 143 410)

for the year ended 30 june 2004

Statement of Financial Performance 

s Directors’ Report 
t
n
e
t
n
o
c

Statement of Financial Position 

Statement of Cash Flows 

Notes to the Financial Statements 

Directors’ Declaration 

Independent Audit Report to the Members 

40

53

54

55

56

102

103

This ﬁnancial report covers the Transurban group 

which consists of Transurban Holdings Limited, 

Transurban Holding Trust and Transurban Infrastructure 

Developments Limited and their controlled entities as 

described in Note 1 to the Financial Statements.

The equity securities of the parent entities are stapled 

and cannot be traded separately.

All entities within the group are domiciled in Australia.  
Its registered ofﬁce and principal place of business is:

Level 43 Rialto South Tower

525 Collins Street

Melbourne VIC 3000 

Through the use of the internet, we have ensured 

that our corporate reporting is timely, complete, and 

available globally. All releases to the ASX and the media, 
ﬁnancial reports and other information are available on 

our website: www.transurban.com.au

annual report 2004

39

directors’ report

The directors of Transurban Infrastructure 

Developments Limited, Transurban Infrastructure 

Management Limited as Responsible Entity for 

Transurban Holding Trust and Transurban Holdings 

Limited present their report on the Transurban Group 

Accounts for the year ended 30 June 2004. 

Group accounts

notwithstanding that none of the entities controls  
any of the others. 

The ﬁnancial statements have been aggregated in 

recognition of the fact that the securities issued by 

THL, THT and TIDL are stapled into parcels (“Stapled 

Securities”), comprising one share in THL, one share in 

TIDL and one unit in THT. None of the components of 

the Stapled Security can be traded separately. 

These Group Accounts have been prepared as an 

aggregation of the ﬁnancial statements of Transurban 

Directors 

Holdings Limited and controlled entities (“THL”), 

Transurban Holding Trust and controlled entities 

(“THT”), and Transurban Infrastructure Developments 

Limited and controlled entities (“TIDL”) as if all entities 

operate together. They are therefore treated as a 

combined entity (“the combined entity” or “Group”), 

The following persons were directors of Transurban 

Infrastructure Developments Limited, Transurban 

Holdings Limited and Transurban Infrastructure 

Management Limited during the whole of the ﬁnancial 

year and up to the date of this report:

Transurban 
Infrastructure 
Developments Limited 

Transurban 
Holdings 
Limited 

Transurban
Infrastructure
Management Limited

Non-executive directors 

Laurence G Cox 

Peter C Byers 

Geoffrey O Cosgriff 

Jeremy G A Davis 

Susan M Oliver 

David J Ryan 

Executive Directors 

Kimberley Edwards 

Geoffrey R Phillips 

Principal activities 

During the year the principal continuing activities of the 

group were:

✓ 

✓ 

✓ 

✓ 

✓ 

✓ 

✓ 

✓ 

✓ 

✓ 

✓ 

✓ 

✓ 

✓ 

✓ 

✓ 

✓

✓

✓

✓

✓

✓

-

✓

(d) Identiﬁcation and development of infrastructure 

projects in accordance with the investment 

strategies of Transurban Holdings Limited and 

Transurban Holding Trust;

(a) Operation of the Melbourne CityLink (“CityLink”);

(e) Participation in the direction of the entities 

(b) Tendering for participation in other toll roads;

(c) Development of electronic tolling and other intelligent 

transport systems for implementation in both the 

domestic and international markets;

responsible for the development of Westlink M7 
Motorway project; and

(f)  Provision of the tolling and customer management 

system for the Westlink M7 Motorway project.

40

annual report 2004

 
 
 
 
 
 
 
 
 
 
directors’ report

Results

The result of operations for the ﬁnancial year ended 

30 June 2004 was an operating loss of $61.5 million 

(2003: $83.6 million).

Distributions

ﬁnancials

Transaction volume for the year ended 30 June 

2004 was 218.2 million transactions, representing 

a 6.04 per cent increase on the prior year. Trafﬁc 

growth was stronger in the second six months with 

6.7 per cent being achieved, compared to 5.4 per 

cent in the ﬁrst six months. Growth in usage by the 

light commercial vehicle class was well above the 

Distributions paid to members during the ﬁnancial year 

average at 8.4 per cent. 

2004 
$’000 

2003

$’000

The growth in transaction volumes combined with 

toll escalation resulted in toll and fee revenue (net of 

GST) of $254.5 million, an increase of 10.1 per cent 

over the previous year.

(b) CityLink customer service

51,847  15,300

product contributed to strong growth in customer 

The introduction of the video-based “Access” 

were as follows:

Stapled Securities

Final distribution for 2003 ﬁnancial  
year of 10.0 cents (2002 – 3.0 cents)  

per fully Stapled Security  

paid 8 October 2003 

Interim distribution for 2004 ﬁnancial  
year of 12.0 cents (2003 – 10.0 cents)  

per fully paid Stapled Security  

paid 26 March 2004 

62,823 

51,163

Total distributions paid  

114,670  66,463

Distributions paid in cash or satisﬁed 
by the issue of Stapled Securities 

under the distribution reinvestment 

plan during the years ended 30 June 

2004 and 2003 were as follows:

Paid in cash 

Satisﬁed by issue of  
Stapled Securities 

60,525  34,054

114,670  66,463

In addition to the above distributions, the directors  
have resolved since the end of the ﬁnancial year to  

pay a ﬁnal distribution of $71.9 million (13.5 cents  

per Stapled Security) on 8 October 2004. The record 

date for eligibility to receive the distribution is  

accounts, particularly in the second half of the year. 

At 30 June 2004, there were 671,255 accounts 

(including 32,835 Access accounts), with 943,898 

e-TAGs linked to e-TAG accounts. These totals 

represent rises of 10 per cent and 7 per cent 

respectively, over the previous year. 

A continued focus on customer service has resulted 

in the introduction of two major programmes during 

the year. Work has been undertaken to develop 

efﬁcient processes for the identiﬁcation and change-

over of e-TAGs approaching the end of their useful 

require change over.

Customer Services has also introduced a philosophy 

of “Customer 1st” across the business. This initiative 

will become integrated in to the daily operations at 

CityLink, improving the customer experience and 

increasing revenue to the business.

Initiatives to deliver long-term cost reductions during 

54,145  32,409

life. This will be of major beneﬁt over the next 2 to 

3 years as a progressively larger number of e-TAGs 

24 September 2004.

the year included: 

Review of operations

(a) CityLink trafﬁc

  Renegotiation of the call centre services contract 

achieving annual savings of $1.0 million from 

June 2004.

annual report 2004

41

 
 
 
 
 
 
directors’ report

  Transition of transactional banking arrangements 

delivering cost reduction of $0.3 million per year 

from August 2004.

  Operational improvements in the Image 

Processing area due to enhanced image quality 

and improved system performance resulting in a 

16 per cent increase in productivity ($0.3 million) 

per annum during FY04. 

The result of these cost initiatives is a decrease in 

costs per transaction (excluding non-recurring costs) 

of 2.0 per cent over the prior year. Non-recurring 

costs comprised costs for the launch of the Access 

product ($0.4 million) and recall of e-TAGs ($1.0 

million) following the battery failures detected in 

August 2003.

Customer Services will continue the focus on 

operational improvements to mitigate the cost 

impacts of increases in volume and CPI while 

maintaining or enhancing service standards.

At the date of this report, the majority of bulk 

earthworks are complete and drainage works 

and bridge construction are well underway. 

Concrete paving has commenced and the control 

centre building is due for completion in early 

2005. Progress has been very good due to the 

predominantly dry weather conditions experienced 

through the year. 

In addition to being an equity participant in 

the project, Transurban has contracts for the 

development and implementation of the electronic 

tolling system (GATe) and the tolling and customer 

management (TCM) system for the project.

(e) Business development

During the year Transurban Infrastructure 

Developments Limited has continued to pursue new 

business development opportunities in both the 

domestic and international markets. Opportunities 

pursued during the period include:

(c) Infrastructure group operations

(i)  Mitcham Frankston Freeway (“MFF”) Project

A ﬁnal settlement of $6.0 million was reached with 

the Transﬁeld Obayashi Joint Venture (“TOJV”) in 

October 2003 in relation to a number of outstanding 

construction defects. The settlement will provide 

funding for ongoing defect rectiﬁcation works on the 

CityLink. During the period, $1.7 million was incurred 

in relation to such rectiﬁcation works. 

A request for Proposals (“RFP”) for the MFF Project 

was issued by the State in October 2003.

The MFF is a 40 kilometre road which will include 

a 1.5 kilometre tunnel. The road is to be developed 

as a privately ﬁnanced toll road and will meet the 

transport needs of 1.4 million people in the southern 

and eastern suburbs of Melbourne when it is 

CityLink has continued to upgrade its automated 

completed in 2008.

systems for the management of trafﬁc, tunnel 

ventilation and groundwater. Optimisation of the 

ventilation system in the tunnels has signiﬁcantly 

improved air quality. Recycling of water drained from 

the tunnels continues to achieve the 95 per cent 

reuse target. 

(d) Westlink M7

The Mitcham – Frankston Motorway consortium 

in which Transurban is a participant with Leighton 

Contractors Pty Limited, Abigroup Limited and 

Deutsche Bank AG submitted a response to the RFP 

in April 2004. A decision on the preferred bidder for 

the MFF Project is expected later in 2004.

The Westlink M7 Project, in which the Transurban 

Group has a 40 per cent interest, is progressing 

ahead of schedule and is well on target to achieve 

completion in 2006. 

(ii) Hills Motorway Group Acquisition

During the year Transurban purchased an 8.1 per 

cent interest in the Hills Motorway Group (“HLY”) 

from Abigroup Limited, at a price of $6.40 per 

42

annual report 2004

directors’ report

ﬁnancials

security. The purchase consideration of $96 million 

In December 2003, Transurban entered into an 

has been funded from existing facilities. 

agreement with Macquarie Infrastructure Group 

Distributions anticipated to be received on the 

(“MIG”) and Macquarie Bank under which:

HLY securities will offset the costs of servicing 

  Transurban and MIG will cooperate to establish, 

the acquisition and the purchase will not impact 

develop and implement a joint venture which 

Transurban’s ability to fulﬁl its objective of delivering 

will offer fully electronic tolling and customer 

steady growth in distributions. 

management services to Sydney toll roads; and

(iii) Stockholm Congestion Charging Project 

  The parties will cooperate to jointly pursue, bid, 

A proposal to provide the installation and operation 

of a congestion charging system proposed for the 

central area of Stockholm was submitted to the 

acquire, develop and manage future toll road 

projects in Australia (excluding the MFF Project). 
The agreement is for ﬁve years. 

Swedish National Road Authority (Vagverket) by the 

(vi) I95 Virginia USA proposal

Combitech AB consortium in which Transurban is a 

participant in March 2004. Other participants in the 

consortium include Kapsch TrafﬁcCom AB and Atos 

Origin AB.

Transurban has joined a consortium headed by 

Fluor Corporation that has submitted a proposal 

to the Virginia Department of Transportation for 

the provision of Bus Rapid Transit (“BRT”) / High 

Transurban’s role in the project was to provide 

Occupancy Toll (“HOT”) lanes for the I95 Motorway 

business and systems advice as well as being the 

in Virginia.

central system provider.

This proposal is only at concept stage but should 

On 9 July 2004, Vagverket advised the Combitech AB 

it develop it is intended that Transurban would 

consortium that its proposal had not been accepted. 

undertake the design and operation of the tolling 

Vagverket cited price and contractual terms as the 

system.

reason for not achieving preferred status.

(iv) Extension of term of Infrastructure  

borrowing facilities

(f) Income tax

Transurban has advice from Senior Counsel that the 

concession fees paid to the State of Victoria under the 

On 18 February 2004, a settlement of the matters 

CityLink Concession Deed are immediately deductible 

in dispute in relation to the extension of the term 

expenditure. The Group Accounts have been prepared 

of the Group’s infrastructure borrowing facilities 

on this basis for the year ended 30 June 2004 and all 

(“the Facilities”) was reached with the Development 

prior years.

Allowance Authority and the Australian Taxation 

Ofﬁce. The settlement will allow Transurban to 

extend the term of the Facilities to April 2007, 

generating additional savings in interest costs of 

approximately $50.0 million per year over the period 

from October 2004 to April 2007.

Transurban received management fees of $6.5 

million from Macquarie Bank (“MBL”), the provider of 

the Facilities in relation to the extension of their term.

(v) Transurban, Macquarie Infrastructure Group and 

Macquarie Bank Joint Agreement

The Australian Taxation Ofﬁce (“ATO”) and Transurban 

have been unable to agree on the treatment to be 

applied to concession fees and as a consequence, 

the ATO issued an assessment in respect of CityLink 

Melbourne’s income tax return for the year ended 30 

June 1998.

Transurban appealed against the ATO’s decision to 
disallow its objection to the assessment. The appeal 
was heard before Mr Justice Merkel in the Federal 
Court on 3 October 2002. On 2 February 2004, 
Mr Justice Merkel dismissed Transurban’s appeal. 

annual report 2004

43

directors’ report

Transurban has lodged a Notice of Appeal against the 
dismissal. The appeal was heard by a Full Court of the 
Federal Court on 17 and 18 August 2004. The Court 
reserved its judgement in the matter.

Signiﬁcant changes in the state of affairs

(a) Acquisition of 8.1 per cent interest in Hills 

Motorway Group

Until a deﬁnitive resolution of this matter has been 
achieved, Transurban intends to continue preparing 
the Group ﬁnancial statements on the basis that the 
concession fees are deductible. If the ﬁnding of Mr 
Justice Merkel is ﬁnally conﬁrmed, certain items in the 
Group ﬁnancial statements will require amendment. 
These amendments are quantiﬁed in the following table, 
assuming that the amendments were applicable for the 
year ended 30 June 2004:

Item 

Statement of Financial 
Performance

Current  Amended 

Basis 

$000 

Basis

$000

  •  Concession Note 

36,985 

78,170 

Valuation Adjustment 
(Expense)/Beneﬁt

Statement of Financial 
Performance

  •  Non-interest bearing 
non-current liabilities

207,681 

166,496 

  • Accumulated losses 

(404,841) 

(363,656)

Carried forward tax loss 
at 30 June 2004 ($million)

938.1 

142.0 

As a result of the reduction in the carried forward tax 
loss, the date at which distributions would cease to 
be 100 per cent tax deferred would be advanced from 
2014 to the end of 2005.

The tax effect will be partially offset by an increase in 
the value of the distributions received. This increase will 
occur because the threshold return for commencement 
of redemption of Concession Notes is calculated on an 
after tax basis.

  Refer to Item (e)(ii) of Review of Operations.

(b) Mitcham Frankston Freeway Project
  Refer to Item (e)(i) of Review of Operations.

(c) Extension of Infrastructure Borrowing 

Facilities

  Refer to Item (e)(iv) of Review of Operations.

Matters subsequent to the end of  
the ﬁnancial year

With the exception of the decision by Vagverket on the 
Stockholm Congestion Charging Project (see Review of 
Operations Item (e)(iii) above), at the date of this report, 
the directors are not aware of any circumstances that 
have arisen since 30 June 2004 that have signiﬁcantly 
affected or may signiﬁcantly affect the operations, and 
results of those operations or the state of affairs, of the 
combined entity in ﬁnancial years subsequent to  
30 June 2004. 

Likely developments and expected 
results of operations

Information on likely developments in the operations of 
the Group and the expected results of operations have 
not been included in this report because the directors 
believe it would be likely to result in unreasonable 
prejudice to the Group.

Environmental regulation

CityLink Melbourne Limited is subject to regulation by 
the Victorian Environmental Protection Authority (“EPA”) 
in respect of:

  discharges from the tunnel ventilation system; and

  groundwater quality in the aquifers surrounding the 

tunnels

Under this regulation, Transurban is required to monitor 
the emissions of carbon monoxide, oxides of nitrogen 
and particulate matter from the exhaust stacks and 
ambient air quality in the vicinity of the stacks.

44

annual report 2004

 
 
 
directors’ report

ﬁnancials

This monitoring is undertaken by several specialist 
organisations under the supervision of the CityLink 
operator, Translink Operations Pty Ltd. The monitoring 
organisations are certiﬁed by the National Association 
of Testing Authorities.

Current monitoring veriﬁes that emission levels are 
well below the maximum levels speciﬁed in the 
licence issued by the EPA and that there has been an 
improvement in ambient air quality since the tunnels 
opened.

Monitoring of groundwater quality veriﬁes that the 
requirements of the EPA are being met.

Information on directors

Laurence G Cox AO, B Com, FCPA, FSIA – Non 
Executive Chairman

Mr Laurie Cox has had many years’ experience in 
Australian and international ﬁnancial markets. He was 
the Chairman of the Australian Stock Exchange Limited 
from 1989 to 1994. Prior to joining Transurban, Mr Cox 
was Executive Chairman of the Potter Warburg Group 
of Companies and a Director of S G Warburg Securities 
of London. He is a director of Macquarie Bank Limited 
and Smorgon Steel Group Ltd and Chairman of The 
Murdoch Children’s Research Institute and SMS 
Management and Technology Ltd. 

Date of initial appointment: 13 February 1996.

Special Responsibilities: Group Chairman, Chairman 
of Nomination and Remuneration Committee, Member 
of Audit Committee and Member of Risk Management 
and Compliance Committee.

Independence status: independent.

Kimberley Edwards BE, MAdmin (Bus),  
FIE (Aust), MAICD – Managing Director

Mr Kim Edwards joined Transurban when it was 
originally bidding for the CityLink project. He brought 
international engineering, business and project 
management experience that added a new dimension 
to the bid. Over the past 25 years, Mr Edwards has held 

senior management positions on major commercial and 

infrastructure projects in Australia, the United Kingdom 

and the Middle East. More recently, as Managing 

Director of Transurban, he oversaw the expansion 

of the company into the Sydney market through the 

company’s successful bid for the Westlink M7 project. 

In recent years Mr Edwards has led the development 

of the Group into other toll road opportunities and 

the deployment of its electronic tolling technology in 

Australia and overseas.

Date of initial appointment: 29 October 1996.

Special Responsibilities: Group Managing Director.

Peter C Byers B Com (Hons) –  
Non Executive Director

Mr Peter Byers is a director of Airport Motorway 

Management Ltd, Hills Motorway Management Ltd, Hills 

Motorway Ltd, Foundation Capital Ltd and a director 

of the responsible entity for Hills Motorway Trust. He is 

an alternate director for Hancock Victorian Plantations 

Holdings Ltd. He was formerly business manager 

and deputy principal of the University of Tasmania, 

a director of Adelaide Airport Ltd and the Blair Athol 

Group and a founding director and chairman of the 

Investment Committee of the Superannuation Scheme 

for Australian Universities. 

Date of initial appointment: 2 January 1996.

Special Responsibilities: Chairman of Audit Committee.

Independence status: independent.

Geoffrey O Cosgriff BAppSc, Company Director 
Diploma, FIE(Aust), FAICD –  
Non Executive Director

Mr Geoff Cosgriff is Executive Director for LogicaCMG 

Pty Ltd, the Australian subsidiary of the UK- listed 
company LogicaCMG. In December 2000, Logica 
Pty Ltd, acquired MITS Limited of which Mr Cosgriff 
was the founding Managing Director. Over the period 
from its formation in 1990, MITS grew to 600 staff and 
nearly $100 million in sales of information technology 
solutions. He is also a non-executive director of UXC 
Limited, Skilltech Consulting Services and a Council 
Member for Leadership Victoria. Previously Mr Cosgriff 

annual report 2004

45

directors’ report

held executive management roles with Melbourne & 
Metropolitan Board of Works and has had extensive 
experience in the information technology industry.

Committee.

Independence status: independent.

Date of initial appointment: 19 December 2000.

Special Responsibilities: Member of Risk Management 
and Compliance Committee and Member of 
Nomination and Remuneration Committee.

Independence status: independent.

Jeremy G A Davis BEc, MBA, MA, FAICD –  
Non Executive Director

Professor Jeremy Davis holds the AMP Chair of 
Management in the Australian Graduate School of 
Management at the University of Sydney. His academic 
interests are in the ﬁelds of corporate strategy and 
negotiation. He is a Fellow of the Australian Institute 
of Company Directors. Professor Davis is a former 
chairman of Capral Aluminium Ltd, former vice-
president and director of the Boston Consulting Group, 
and a former director of the Australian Stock Exchange, 
AIDC Ltd and Nucleus Ltd.

Date of initial appointment: 16 December 1997.

Special Responsibilities: Member of Audit Committee 
and Member of Nomination and Remuneration 
Committee.

Independence status: independent.

Susan M Oliver BP&C, MAICD –  
Non Executive Director

Ms Susan Oliver is a director of MBF Group, 
Programmed Maintenance Services Ltd, Methodist 
Ladies College Ltd, The Smith Family Ltd, The 
Australian Business Foundation Ltd and wwITe Pty Ltd. 
Ms Oliver was formerly a Senior Manager of Andersen 
Consulting. She has held board positions with the 
Victorian Institute of Marine Sciences, Interact Events 
Limited, FHA Design Pty Ltd and The Swish Group Ltd. 
Ms Oliver was also Managing Director of the Australian 
Commission for the Future Ltd. 

Date of initial appointment: 25 June 1996.

Special Responsibilities: Chairperson of Risk 
Management and Compliance Committee and 
Chairperson of Corporate Social Responsibility 

Geoffrey R Phillips BE (Chem), MBA, MAICD –
Executive Director

Mr Geoffrey Phillips joined Transurban in 1996 
as Executive General Manager, Finance and was 
subsequently appointed Finance Director. Prior to 
joining Transurban, he worked for the Potter Warburg 
Group for 6 years as director in both the Corporate 
Finance and Fixed Interest Divisions. He is currently  
a director of Yarra Valley Water Limited.

Date of initial appointment: 28 August 1998.

Special Responsibilities: Deputy Managing Director, 
Chief Financial Ofﬁcer and Member of Risk 
Management and Compliance Committee.

David J Ryan AO, B.Bus, FCPA, FAICD –  
Non Executive Director

Mr David Ryan is Chairman of Residual Assco Limited, 
DJL Limited, Tooth & Co Limited and Industrial Equity 
Limited. He is also a director of ABC Learning Centres 
Limited, Virgin Blue Holdings Limited and a member 
of the Advisory Board of the Caliburn Partnership. 
Mr Ryan’s experience covers commercial banking, 
investment banking and operational business 
management in the transportation services sector.  
From 1992 to 2002, Mr Ryan held various senior 
positions in the Adelaide Steamship Group and from 
1997 to 2002 he was the foundation Managing Director 
of Adsteam Marine Limited.

Date of initial appointment: 29 April 2003.

Special Responsibilities: Member of Risk Management 
and Compliance Committee.

Independence status: independent.

Meetings of directors

The number of meetings of the board of directors 
of Transurban Infrastructure Developments Limited, 

Transurban Holdings Limited and Transurban 

Infrastructure Management Limited held during the year 

ended 30 June 2004, and the numbers of meetings 

attended by each director were:

46

annual report 2004

directors’ report

Name 

Board of Directors 
Transurban Infrastructure 
Developments Limited 

ﬁnancials

Board of Directors 

Board of Directors
Transurban Holdings  Transurban Infrastructure
Management Limited

Limited 

L G Cox  

P C Byers 

G O Cosgriff  

J G A Davis  

S M Oliver 

D J Ryan 

K Edwards  

G R Phillips  

A 

 12 (1) 

13 

14 

14 

13 

13 

14 

14 

B 

 14 

14 

14 

14 

14 

14 

14 

14 

A 

7 

8 

8 

8 

8 

8 

8 

8 

B 

8 

8 

8 

8 

8 

8 

8 

8 

A 

10 

11 

12 

12 

11 

12 

x 

11 

B

12

12

12

12

12

12

x

12

A=  Number of meetings attended

B=  Number of meetings held during the time the director held ofﬁce

X=  Not a director of the relevant company 

(1)  Mr Cox was granted leave of absence from two meetings in April and May 2004 due to illness. 

In addition to the meeting of the full board listed above, a number of meetings of directors were held duing the 

period for administrative purposes.

The number of meetings of each board committee of Transurban Infrastructure Developments Limited, Transurban 

Holdings Limited and Transurban Infrastructure Management Limited held during the year ended 30 June 2004, and 

the numbers of meetings attended by each director are set out in the following table. All meetings were held jointly.

Name 

L G Cox 

P C Byers 

G O Cosgriff  

J G A Davis  

S M Oliver 

D J Ryan 

K Edwards (1) 

G R Phillips (1) 

Audit 
committee 

Mitcham- 
Frankston Freeway 
committee 

Nomination & 
remuneration 
committee 

Risk 
management & 
compliance 

A 

 3 (2) 

4 

x 

4 

x 

x 

x 

x 

B 

4 

4 

x 

4 

x 

x 

x 

x 

A 

x 

11 

9 

11 

11 

11 

10 

11 

B 

x 

11 

11 

11 

11 

11 

11 

11 

A 

2 

x 

1 

2 

x 

x 

x 

x 

B 

2 

x 

2 

2 

x 

x 

x 

x 

A 

x 

x 

3 

x 

3 

3 

x 

3 

B

x

x

3

x

3

3

x

3

A=  Number of meetings attended

B=  Number of meetings held during the time the director held ofﬁce

X=  Not a member of the relevant committee 

(1)  Messrs Edwards and Phillips are not members of the Audit and Nomination & Remuneration Committees but have been in attendance at all  

of these meetings.

(2)  Mr Cox was granted leave of absence from one meeting in May 2004, due to illness.

annual report 2004

47

 
 
 
 
 
 
 
 
 
 
 
 
 
 
directors’ report

Directors’ interests

As at the date of this Directors’ Report, the directors of the Group have disclosed relevant interests in Stapled 

Securities, options over Stapled Securities and Convertible Adjusting Rate Securities (“CARS”) as follows:

Name 

L G Cox 

P C Byers 

J G A Davis 

S M Oliver 

G O Cosgriff 

D J Ryan 

K Edwards 

G R Phillips 

Number of 
Stapled Securities 

Options over 
Stapled Securities 

775,000 

50,000 

50,000 

60,993 

24,910 

21,043 

61,000 

- 

- 

- 

- 

- 

- 

- 

1,500,000 

500,000 

Number 
of CARS

1,000

-

-

-

121

-

-

-

Remuneration report

Principles used to determine the nature and 

amount of remuneration

Non-executive directors

The remuneration of non- executive directors consists 
of director’s fees, committee fees and (subject to 
eligibility) retirement beneﬁts. The constitution of each of 
the entities comprising the Group provides that the total 
remuneration paid in a year to non-executive directors 
by the entity may not exceed $950,000. Subject to 
this limit, remuneration structure and amounts for 
non-executive directors are recommended by the 
Nomination & Remuneration Committee of the Board 
with assistance from external remuneration consultants. 
Liability for the Superannuation Guarantee Contribution 
is met from gross remuneration.

In 1997, the Board implemented a policy to provide 
retirement allowances to non-executive directors. 
The policy provides for an entitlement to a lump sum 
payment (not exceeding the maximum allowable under 
the Corporations Act 2001) if the non-executive director 
has completed a minimum of three years service. 
The lump sum is equivalent to the total emoluments 
received during the Relevant Period. The Relevant 
Period is one-third of the director’s total period of 
service or three years (both calculated to the day of 

retirement), whichever is the lesser. This policy was 
reviewed in April 2003 and it was resolved to continue 
the policy for directors appointed prior to 29 April 2003, 
but not to extend the policy to appointments made 
after that date. Non–executive directors not entitled to 
retirement beneﬁts receive an additional director’s fee.

Executive directors and executives

The key objectives of the Group’s policy for executive 
remuneration are:

  To secure employees with the skills and experience 

necessary to meet business objectives; 

  To motivate employees to the highest levels of 

performance; and

  To align employee incentives with increased 

shareholder value.

The policy seeks to support the Group’s objective  
to be perceived as “the employer of choice” by:

  Offering remuneration levels which are attractive 

relative to those offered by comparable employers; and

  Providing strong, transparent linkages between 
individual and group performance and rewards.

In consultation with external remuneration consultants, 
the Group has structured its executive remuneration 
to reward both growth and the delivery of improved 
returns.

48

annual report 2004

 
 
 
directors’ report

Executives are remunerated through a combination of 
base salary, short-term incentives (“STI”) in the form of 
cash bonuses and long-term incentives (“LTI”) provided 
via either the Executive Option Plan (“EOP”) or the 
Executive Long-term Incentive Plan (“ELTIP”). 

The proportion of each component of an executive’s 
total remuneration is established by reference 
to remuneration survey data for comparable 
companies. The remuneration of the Managing 
Director is established by the Board, based on the 
recommendation of the Nomination & Remuneration 
Committee. The remuneration of senior executives 
reporting to the Managing Director is established by  
the Nomination and Remuneration Committee, based 
on the recommendation of the Managing Director.

The components of Executive remuneration are 
described below:

Base pay

Base pay is structured as a Total Employment Cost 
(TEC). This provides a mix of cash, superannuation 
and prescribed beneﬁts. An executive’s pay is reviewed 
annually against market rates for comparable roles, 
however changes to an executive’s pay are ultimately 
determined based on their performance and perceived 
value to Transurban. There are no guaranteed base 
pay increases ﬁxed in any executive’s contract of 
employment.

Short-term incentives

On an annual basis, the Group makes available 
Short-term Incentive (“STI”) payments to executives for 
the achievement of Group and individual performance. 
STI amounts are expressed as a percentage of TEC, 
but are also subject to further adjustment using 
Economic Value Added (“EVA”) methodology for the 
variance between a target EVA and the EVA actually 
achieved. The purpose of the EVA adjustment is 
to ensure that STI payments reﬂect management’s 
performance in adding security holder value.

Long-term incentives

Two forms of Long-term Incentives (“LTI”) are currently 
in operation, the Executive Option Plan (“EOP”) and 

ﬁnancials

the Executive Long-term Incentive Plan (“ELTIP”). The 
EOP provides Executives with equity-based rewards, 
where as the ELTIP provides cash-based rewards. Both 
plans utilise Total Shareholder Return as the basis for 
determining payment. The EOP was introduced with a 
ﬁve year term in 2001. Following a review of the EOP 
in 2003, it was decided to make no further issues of 
options under the EOP and to introduce the ELTIP 
to provide long-term incentives beyond the period 
covered by the EOP. No options were granted under 
the EOP during this ﬁnancial year. Details regarding the 
EOP are available in the note 25 of the Group ﬁnancial 
statements.

Business generation incentive plan

The Group also has in place a Business Generation 
Incentive Plan (“BGIP”) in which executives may 
participate depending upon their level of involvement  
in generating new business. The BGIP (based on  
the risk adjusted value [RAV] of a project/business 
venture) has been designed to link incentive/variable  
pay rewards to the increase in value derived from 
generating new business. BGIP payments are 
determined and awarded by the Board, on the 
recommendation of the Managing Director.

Employee security ownership plan

Executives may elect to participate in the Employee 
Security Ownership Plan on the same basis as that 
offered to all permanent employees. Executive Directors 
do not currently participate in the Plan.

Employee insurance

In addition to their TEC, executives are covered by the 
Group’s salary insurance and death and disablement 
plan on the same basis as that offered to all permanent 
employees.

Details of remuneration

Details of the nature and amount of each element of the 
emoluments of each director of the Transurban Group 
and each of the 5 ofﬁcers of the Group receiving the 
highest emoluments for the year ended 30 June 2004 
are set out in the following tables.

annual report 2004

49

directors’ report

Directors of the Transurban Group

Primary 

Post-employment 

Equity

Name 

Cash 
salary 
& fees 
$ 

L G Cox 

250,043 

P C Byers 

96,347 

J G A Davis 

89,997 

S M Oliver 

95,429 

G O Cosgriff 

86,253 

D J Ryan 

100,935 

Cash 
bonus 

Long 
Non- 
term  monetary 
beneﬁts 
$ 

  incentive 
$ 

$ 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

K Edwards 

1,013,000  550,000  204,528 

G R Phillips 

463,998  225,000 

- 

7,300 

7,300 

Super-  Retirement  Options (1) 
beneﬁts 

annuation 

Total 

$ 

$ 

22,504 

157,393 

8,671 

12,020 

8,589 

7,763 

9,084 

87,000 

11,002 

47,705 

37,767 

44,186 

105,774 

- 

- 

- 

$ 

- 

- 

- 

- 

- 

- 

$

429,940

152,723

139,784

148,204

199,790

110,019

184,503  2,046,331

61,501 

768,801

Total 

2,196,002  775,000  204,528 

14,600 

166,633 

392,825 

246,004  3,995,592

Other executives of the Transurban Group

Primary 

Post-employment 

Name 

Cash 
salary 
& fees 
$ 

Cash 
bonus 

$ 

Long 
Non- 
term  monetary 
beneﬁts 
$ 

incentive 
$ 

B Bourke 

332,057 

150,000 

38,499 

15,942 

K Daley 

218,851 

100,000 

40,906 

18,532 

P O’Shea 

193,851 

130,000 

31,281 

9,778 

K Reynolds 

261,469 

90,000 

30,078 

18,434 

F Browne 

348,530 

- 

- 

18,585 

Super- 
annuation 

$ 

42,943 

91,149 

91,149 

23,531 

31,470 

Equity
Options (1) 

Total 

$ 

$

43,664 

623,105

37,264 

31,940 

31,940 

506,702

487,999

455,452

47,798 

446,383

Total 

1,354,758 

470,000 

140,764 

81,271 

280,242 

192,606 

2,519,641

(1)  No options were granted during the year over Transurban Group Stapled Securities. Option remuneration relates to options granted to 

Executive Directors and Executives in prior ﬁnancial years. The amounts disclosed as remuneration in the current year is that part of the value 
of the options which is attributable to the current year portion of the vesting period. 

To calculate remuneration from options, the options were valued as at grant date using a Black-Scholes derived option valuation model taking 
into consideration the exercise price, the term of the option, the market price of Transurban Group Stapled Securities on the date of granting 
the option, the expected price volatility of Transurban Group Stapled Securities, expected future distributions and the risk free rate of interest 
over the term of the options. 

50

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
directors’ report

Stapled Securities under option

ﬁnancials

Unissued stapled securities of the Transurban Group under option at the date of this report are as follows. No 

options were issued during the year.

Date 
options granted 

26 April 2001 

23 October 2001 

1 February 2002 

9 April 2002 

20 May 2002 

Expiry date 

30 April 2006 

31 October 2006 

30 April 2007 

30 April 2007 

30 April 2007 

Issue price of  
Stapled Securities 

Number  
under option

$3.817 

$4.404 

$4.280 

$4.030 

$4.220 

1,654,300

2,000,000

400,000

300,000

950,000

Options have no voting or distribution entitlements and have no rights to participate in any other issues of the Group.

Shares issued on the exercise of options

The following Stapled Securities were issued during the year ended 30 June 2004 on the exercise of options 

granted under the Transurban Group’s Employee Option Plan. No further securities have been issued since that 

date. No amounts are unpaid on any of the securities.

Date options granted 

Issue price of securities 

Number of securities issued

26 April 2001 

$3.817 

95,700

Indemniﬁcation and insurance

The ofﬁcers of the Group are indemniﬁed against liability incurred by the person in their capacity as an ofﬁcer 

unless the liability arises out of conduct on the part of the ofﬁcer which involves a lack of good faith. The Group also 

indemniﬁes each person who is or has been an ofﬁcer against liability for costs or expenses incurred by the person 

in his or her capacity as an ofﬁcer in defending civil or criminal proceedings in which judgment is given in favour 

of the person or the person is acquitted or in connection with an application in which the Court grants relief to the 

person under the Corporations Act 2001.

Pursuant to this indemniﬁcation, the individual entities of the Group have paid premiums for an insurance policy 

for the beneﬁt of directors, secretaries and executive ofﬁcers and related bodies corporate of the Group, in the 

case of the Trusts within the Group the ofﬁcers are indemniﬁed out of the assets of the Trusts. In accordance with 

common practice, the insurance policies prohibit disclosure of the nature of the liability covered and the amount of 

the premium.

annual report 2004

51

 
directors’ report

Rounding off

The Group is of a kind referred to in Class Order 98/0100, issued by the Australian Securities & Investment 

Commission, relating to the ‘rounding off’ of amounts in the Directors’ Report. Amounts in the Directors’ Report 

have been rounded off in accordance with that Class Order to the nearest thousand dollars.

Auditor

PricewaterhouseCoopers continues in ofﬁce in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of the directors.

Jeremy G A Davis 
Director 

Melbourne, 25 August 2004

Kimberley Edwards
Managing Director 

52

annual report 2004

 
 
 
 
 
statements of ﬁnancial performance 
for the year ended 30 June 2004

Revenue from ordinary activities 

Expenses from ordinary activities: 

 Operational costs 

 Administration 

 Business Development 

 Corporate and Community Relations 

 Concession Fees 

 Net valuation adjustment on Concession Notes 

Depreciation and amortisation expenses 

Borrowing costs expense 

Loss from ordinary activities before income tax 

Income tax on operating loss 

Loss from ordinary activities after income tax 

Basic earnings per Stapled Security 

Diluted earnings per Stapled Security 

ﬁnancials

Notes 

2004 
$’000 

2003
$’000

3 

467,666 

410,868

(67,899) 

(18,504) 

(9,172) 

(2,454) 

(95,600) 

58,615 

(152,400) 

(241,742) 

(61,490) 

- 

(59,242)

(16,354)

(10,045)

(2,577)

(95,600)

62,896

(148,233)

(225,291)

(83,578)

-

(61,490) 

(83,578)

Cents 

(11.7) 

(4.1) 

Cents

(16.3)

(16.1)

4 

4 

5 

35 

35 

The above statements of ﬁnancial performance should be read in conjunction with the accompanying notes.

annual report 2004

53

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
statements of ﬁnancial position 
as at 30 June 2004

Current assets 

Cash assets 

Receivables 

Other  

Total current assets 

Non-current assets 

Property, plant and equipment 

Intangible assets 

Financial assets 

Investments accounted for using the equity method 

Other  

Total non-current assets 

Total assets 

Current liabilities 

Payables 

Interest bearing liabilities 

Non-Interest bearing liabilities 

Provisions 

Total current liabilities 

Non-current liabilities 

Interest bearing liabilities 

Non-Interest bearing liabilities 

Provisions 

Total Non-Current Liabilities 

Total liabilities 

Net assets 

Equity 

Contributed equity 

Accumulated losses 

Total equity 

Notes 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

2004 
$’000 

207,452 

25,757 

6,914 

2003
$’000

172,277

24,926

2,605

240,123 

199,808

3,604,281 

3,728,251

8,752 

486,419 

6,236 

29,920 

9,252

392,000

5,888

19,573

4,135,608 

4,154,964

4,375,731 

4,354,772

79,422 

8,000 

25,585 

5,570 

118,577 

54,471

8,000

28,049

5,072

95,592

2,210,248 

2,131,897

207,681 

173,846

2,036 

974

2,419,965 

2,306,717

2,538,542 

2,402,309

1,837,189 

1,952,463

2,242,030 

(404,841) 

2,181,144

(228,681)

1,837,189 

1,952,463

The above statements of ﬁnancial position should be read in conjunction with the accompanying notes.

54

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
statements of cash ﬂows 
for the year ended 30 June 2004

Cash ﬂows from operating activities 

Receipts from customers (inclusive of GST) 

Payments to suppliers (inclusive of GST) 

Interest received 

Other revenue 

Borrowing costs 

ﬁnancials

Notes 

2004 
$’000 

2003
$’000

309,806 

(146,034) 

173,553 

15,687 

260,718

(113,291)

154,384

20,788

(214,768) 

(227,306)

Net cash inﬂows from operating activities 

33 

138,244 

95,293

Cash ﬂows from investing activities 

Payments for property, plant and equipment 

Payments for project development 

Payments for investments 

Payment for single purpose 

Investment in CPLN’s 

Proceeds from sale of assets 

Loans to related parties 

Repayment of loans by related parties 

(22,602) 

(5,334) 

(96,347) 

(3,150) 

- 

6 

(2,801) 

909 

(19,261)

-

(7,514)

(3,700)

(392,000)

-

-

-

Net cash (outﬂows) from investing activities 

(129,319) 

(422,475)

Cash ﬂows from ﬁnancing activities 

Proceeds from issue of CARS 

Proceeds from issue of stapled securities – options 

Repayment of borrowings 

Proceeds from borrowings 

Payment of interest rate swap termination 

Payment of premium on mezzanine debt termination 

Distributions paid 

23 

Net cash inﬂows from ﬁnancing activities 

Net increase in cash at bank and cash collateral 

- 

365 

430,000

-

- 

(2,958,872)

80,000 

3,040,000

- 

- 

(54,145) 

26,220 

35,145 

(90,573)

(20,750)

(32,409)

367,396

40,214

Cash at bank and cash collateral at the beginning of the ﬁnancial year 

1,421,277 

1,381,063

Effects of exchange rate changes on cash 

30 

-

Cash at bank and cash collateral at the end of the ﬁnancial year 

1,456,452 

1,421,277

Less cash collateral 

Cash at bank at the end of the ﬁnancial year 

Financing arrangements and credit facilities 

Non cash ﬁnancing activities 

6 

18 

34 

The above statements of cash ﬂows should be read in conjunction with the accompanying notes.

(1,249,000) 

(1,249,000)

207,452 

172,277

annual report 2004

55

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

1. Summary of signiﬁcant  

accounting policies

components of the Stapled Security are able to be 

traded separately. 

This general purpose ﬁnancial report has been 

prepared in accordance with Accounting Standards, 

other authoritative pronouncements of the Australian 

Accounting Standards Board, Urgent Issues Group 

Consensus Views and the Corporations Act 2001.

Where necessary, comparatives have been reclassiﬁed 

for consistency with current year disclosures. In the 

current year, amounts previously categorised under the 

two main headings of Administration and Operational 

costs have been split to more accurately reﬂect  

the nature of the Group’s operations.

Prior year comparative information has been amended 

in a consistent manner.

Unless otherwise stated, the accounting policies 

adopted are consistent with those of the previous year.

a)  Principles of aggregation

The Group Financial Report consists of the aggregated 

ﬁnancial statements of the combined entity comprising 

Transurban Holdings Limited and controlled entities, 

Transurban Holding Trust and controlled entities and 

Transurban Infrastructure Developments Limited and 

controlled entities, notwithstanding that none of the 

entities controls the others. The aggregated accounts 

incorporate an elimination of inter-entity transactions 

and balances and other adjustments necessary to 

present the ﬁnancial statements on a combined basis. 

The accounting policies adopted in preparing the 

ﬁnancial statements have been consistently applied by 

the individual entities comprising the Group Accounts 

except as otherwise indicated.

Where control of an entity is obtained during a ﬁnancial 

year, its results are included in the combined statement 

of ﬁnancial performance from the date on which control 
commences. Where control of an entity ceases during  
a ﬁnancial year its results are included for that part of 

the year during which control existed.

Investments in associates are accounted for in the 

combined ﬁnancial statements using the equity method. 

Under this method, the combined entity’s share of post 

acquisition proﬁts or losses of associates is recognised 

in the combined statement of ﬁnancial performance, 

and its share of post acquisition movements in reserves 

is recognised in combined reserves. The cumulative 

post acquisition movements are adjusted against the 

cost of the investment. Associates are those entities 

over which the combined entity exercises signiﬁcant 

inﬂuence, but not control.

b)  Historical cost convention

The ﬁnancial statements are prepared on the basis 

of the historical cost convention and, except where 

stated, do not take into account current valuations of 

non-current assets. Cost is based on the fair values of 

the consideration given in exchange for assets. The fair 

value of cash consideration with deferred settlement 

terms is determined by discounting any amounts 

payable in the future to their present value as at the date 

of acquisition. Present values are calculated using rates 

applicable to similar borrowing arrangements of the 

Group. The Group has not adopted a policy of revaluing 

its non-current assets on a regular basis. 

c)  Income tax

The ﬁnancial statements have been aggregated in 

recognition of the fact that the securities issued by the 

parent entities were stapled into parcels during the year 
ended 30 June 2004. A Stapled Security comprises 

one share in Transurban Holdings Limited, one share 

in Transurban Infrastructure Developments Limited 

and one unit in Transurban Holding Trust. None of the 

Income tax is brought to account in respect of the 

Group, which has adopted the liability method of tax 

effect accounting. Income tax expense is calculated 
on the operating proﬁt of the Group, adjusted for 

permanent differences between taxable and accounting 

income. The tax effect of timing differences which arise 

from items being brought to account in different periods 

56

annual report 2004

notes to the ﬁnancial statements 
for the year ended 30 June 2004

ﬁnancials

for income tax and accounting purposes is carried 

The impact on the income tax expense for the year is 

forward in the balance sheet as a future income tax 

disclosed in note 5.

beneﬁt or a deferred tax liability. However, the future 

tax beneﬁt relating to timing differences and tax losses 

is not carried forward as an asset unless the beneﬁt is 

virtually certain of realisation. 

The tax losses are shown in aggregate for the Group. 

However, the losses remain with the legal entities and 

cannot be transferred between entities comprising the 

Stapled Security.

Tax consolidation legislation

The Transurban Group has completed an analysis of the 

tax consolidation legislation and its applicability to the 

Group. In reaching a decision on the extent to which it 

would adopt the provisions of the legislation, the Group 

considered the following:

d)  Foreign currency translation

Foreign currency transactions are initially translated into 

Australian currency at the rate of exchange at the date 

of the transaction. At balance date, amounts payable 

and receivable in foreign currencies are translated to 

Australian currency at rates of exchange current at the 

date. Resulting exchange differences are recognised in 

determining the proﬁt or loss for the year.

e)  Acquisition of assets

The purchase method of accounting is used for all 

acquisitions of assets. Cost is measured as the fair 

value of the assets given up, shares issued or liabilities 

undertaken at the date of acquisition plus incidental 

costs directly attributable to the acquisition. 

  the ability of entities comprising the stapled security 

to consolidate; 

f)  Revenue recognition

  the effect of the legislation on each entity’s carry-

forward loss position; and

Toll charges and related fees are recognised when the 

charge is incurred by the user.

  transitional concessions available to entities electing 

g)  Receivables 

to consolidate at 1 July 2004.

Based on its analysis, the Group has elected to 

implement tax consolidation legislation for Transurban 

Infrastructure Developments Limited and its wholly 

owned entities with effect from 1 July 2003. The 

Australian Tax Ofﬁce has not yet been notiﬁed of this 

decision. 

As a consequence, Transurban Infrastructure 

Developments Limited, as the head entity in the tax 

consolidated group recognises events and transactions 

Collectibility of trade debtors is reviewed on an ongoing 

basis. Debts which are known to be uncollectible are 

written off. A provision for doubtful debts is raised when 

reasonable doubt as to collection exists.

h)  Recoverable amount of non-current assets

The recoverable amount of an asset is the net  
amount expected to be recovered through the cash 

inﬂows and outﬂows arising from its continued use and 

subsequent disposal.

of its wholly owned entities as if those transactions were 

Where the carrying amount of a non-current asset is 

its own.

The remaining entities, comprising Transurban Holdings 
Limited and the Transurban Holding Trust have elected 

not to participate in the tax consolidation legislation.

greater than its recoverable amount, the asset is written 

down to its recoverable amount. The decrement in 

the carrying amount is recognised as an expense in 
net proﬁt or loss in the reporting period in which the 

recoverable amount write-down occurs.

annual report 2004

57

 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

In assessing recoverable amounts of non-current 

l)  Intangible assets

assets, the relevant cash ﬂows have been discounted to 

their present value, except where speciﬁcally stated.

The excess of the cost over the identiﬁable net  
assets acquired is brought to account as goodwill  

i)  Amortisation and depreciation  

and amortised on a straight line basis over the period 

of ﬁxed assets

CityLink ﬁxed assets

Amounts classiﬁed as CityLink ﬁxed assets are 

during which the beneﬁts are expected to arise. This 

period is presently estimated to be 20 years.

m) Trade and other creditors

amortised over the estimated term of the right granted 

Trade and other creditors represent liabilities for goods 

to operate CityLink (32 years), or the estimated useful 
lives of the assets, whichever is less. Amortisation by 

and services provided to the combined entity prior to 
the end of the ﬁnancial year and which are unpaid. The 

the combined entity commenced on 18 December 2001 

amounts are unsecured and are usually paid within 45 

and is calculated on a straight line basis. The period of 

days of recognition.

amortisation will be assessed annually.

Other plant and equipment

n)  Interest bearing liabilities

Loans are carried at their principal amounts which 

Depreciation is calculated on a straight line basis so as 

represent the present value of future cash ﬂows 

to write off the net cost of items of plant and equipment 

associated with servicing the debt. Interest is accrued 

over their expected useful lives. Estimates of remaining 

over the period it becomes due and is recorded as part 

useful lives will be made on a regular basis for all assets.

of other creditors.

The expected useful lives are as follows:

o)  Infrastructure loan facilities

  Plant and Equipment 

3 – 15 years

The Group has two Infrastructure Loan facilities. Under 

j)  Leased non-current assets

Leases of plant and equipment where the combined 

entity assumes all the risks and beneﬁts of ownership 

are classiﬁed as ﬁnance leases. Other leases are 

classiﬁed as operating leases.

Other operating lease payments are charged to the 

statement of ﬁnancial performance in the periods in 

which they are incurred, as this represents the pattern 

of beneﬁts derived from the leased assets.

k)  Non-current assets constructed by the 

combined entity

the terms of these facilities, cash collateral equal to the 

utilised amounts of the facilities must be provided. This 

cash collateral has been set-off against the outstanding 

infrastructure borrowing facilities so that no asset or 

liability in respect of those facilities has been recorded 

in the balance sheet of the entity.

p)  Concession notes

Non-interest bearing long-term debt represented by  
the Concession Notes has been included in the  

ﬁnancial statements at the present value of the 

expected future repayments. As the timing and proﬁle  

of these repayments is largely determined by the 

available equity cash ﬂows of CityLink, the present  

The cost of non-current assets constructed by the 

combined entity includes the cost of all materials used 

value of the expected future repayments is determined 
using a discount rate which recognises their 

in construction, direct labour on the project and an 

subordinated nature.

appropriate proportion of directly attributable variable 

and ﬁxed overheads.

58

annual report 2004

 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

ﬁnancials

q)  Employee entitlements

as share capital. The amounts disclosed for 

(i)  Wages, salaries and annual leave

Liabilities for wages and salaries, including non-

monetary beneﬁts and annual leave expected to 

be settled within 12 months of the reporting date 

remuneration of directors and executives in note 25 

include the assessed fair value of options at the date 

they were granted.

(iv) Share-based compensation beneﬁts

are recognised in other creditors in respect of 

Share based compensation beneﬁts are provided 

employees’ services up to the reporting date and 

to employees via the Transurban Group Long-term 

are measured at the amounts expected to be paid 

Incentive Plan. Information relating to this plan is set 

when the liabilities are settled. An expense for non-

out in note 25.

accumulating sick leave is recognised when the 

leave is taken and measured at the rates paid or 

payable. 

(ii) Long service leave

The liability for long service leave expected to be 

settled within 12 months of the reporting date is 

recognised in the provision for employee beneﬁts 

Units are allocated to reporting periods on a pro-

rata basis from the grant date to the maturity date. 

Units allocated to a particular reporting period are 

valued on the reporting date and an employee 

beneﬁt expense and an employee beneﬁt liability are 

recognised at the amount of the valuation for each 

unit allocated.

and is measured in accordance with (i) above. The 

liability for long service leave expected to be settled 

more than 12 months from the reporting date is 

On each reporting date, the units allocated to prior 
periods are revalued and the liability is adjusted  
to the new valuation. The movement in the liability  

recognised in the provision for employee beneﬁts 

is recognised as an employee beneﬁts expense.  

and measured as the present value of expected 

This revaluation occurs until all the units are 

future payments to be made in respect of services 

exercised or lapse.

provided by employees up to the reporting date. 

Consideration is given to expected future wages 

and salary levels and periods of service. Expected 

future payments are discounted using market yields 

at the reporting date on national government bonds 

with terms to maturity and currency that match, 

as closely as possible, the estimated future cash 

outﬂows.

(iii) Equity-based compensation beneﬁts

Equity based compensation beneﬁts are provided 

to employees via the Transurban Group Executive 

Option Plan. Information relating to this scheme is 

set out in note 25. 

No accounting entries are made in relation to the 

Option Plan until options are exercised, at which 

time the amounts receivable from employees are 

recognised in the statement of ﬁnancial position 

On the exercise date where a cash bonus is paid, 

any difference between the cash payment and the 
liability in relation to those units is recognised as  
an adjustment to employee beneﬁts expense in  

that period.

(v) Superannuation

Superannuation is contributed to plans as nominated 

by the employee. The contribution is not less than 

the statutory minimum. The superannuation plans 

are all accumulation funds. 

The cost of current and deferred employee 

compensation and contributions to employee 

superannuation plans were charged to the 
statements of ﬁnancial performance.

annual report 2004

59

notes to the ﬁnancial statements 
for the year ended 30 June 2004

r) Distributions

Provision is made for the amount of any distribution 

to cash on hand and are subject to an insigniﬁcant risk 

of changes in value, net of outstanding bank overdrafts.

declared, determined or publicly recommended by the 

w) Project development

directors on or before the end of the ﬁnancial year but 

not distributed at balance date. 

s)  Joint venture entity

The interest in a joint venture partnership is accounted 

Costs incurred in developing proposals for speciﬁc 

projects are charged to the Statement of Financial 

Performance in the period in which they are incurred 

except where:

for using the equity method. Under this method, the 

(i)  the outcome of the proposal has been determined 

share of the proﬁts or losses of the partnership is 
recognised in the statement of ﬁnancial performance, 

and the outcome will result in the acquisition of an 
asset; or

and the share of movements in reserves is recognised 

in reserves in the statement of ﬁnancial position. Details 

relating to the partnership are set out in note 32.

(ii)  the outcome of the proposal has not been 

determined but it is considered reasonably probable 

that the outcome, when determined, will result in the 

t)  Maintenance and repairs

acquisition of an asset. 

The cost of maintenance is charged as expenses as 
incurred, except where they relate to the replacement  
of a component of an asset, in which case the costs are 

capitalised and depreciated in accordance with note 1i. 

Other routine operating maintenance, repair and minor 

renewal costs are also charged as expenses  

as incurred.

u)  Borrowing costs

Borrowing costs are recognised as expenses in the 

period in which they are incurred, except to the extent 

to which they relate to the construction of qualifying 

assets in which case borrowing costs are capitalised 

into the cost of the asset. Borrowing costs include 

interest on short-term, long-term borrowings and 

amortisation of deferred borrowing costs.

Costs meeting these criteria are capitalised.

x)  Financial instruments

Financial instruments, in the form of interest rate swap 

contracts, are used to manage ﬁnancial risk.

Gains and losses on interest rate swaps used as 

hedges are accounted for on the same basis as 

the interest payments they are hedging. Realised 

hedge gains and losses are brought to account in the 

statement of ﬁnancial performance when the gains and 

losses arising on the related physical exposures are 

recognised. 

Unrealised gains and losses on interest rate swaps 

not effectively hedging an underlying exposure are 

recognised in the statement of ﬁnancial performance.

Costs incurred in connection with the arrangement 

of borrowings are deferred and amortised over the 

y)  Earnings per stapled security

effective period of the funding.

(i)  Basic earnings per stapled security

v)  Cash 

For the purposes of the statement of cash ﬂows, 

cash includes cash deposits held at call with ﬁnancial 

institutions and other highly liquid investments with 

short periods to maturity which are readily convertible 

Basic earnings per stapled security is determined 

by dividing the proﬁt after income tax attributable 

to shareholders by the weighted average number of 

stapled securities outstanding during the ﬁnancial 

period.

60

annual report 2004

notes to the ﬁnancial statements 
for the year ended 30 June 2004

ﬁnancials

(ii) Diluted earnings per stapled security

to IFRS which was presented to the audit committee 

Diluted earnings per stapled security adjusts the 

ﬁgures used in the determination of basic earnings 

per stapled security by taking into account the 
weighted average number of stapled securities 
assumed to have been issued for no consideration 

in relation to dilutive potential securities.

z)  Rounding of amounts

The combined entity is of a kind referred to in Class 
Order 98/0100 issued by the Australian Securities and 

Investments Commission, relating to the ‘rounding 

off’ of amounts in the ﬁnancial report. Amounts in the 

ﬁnancial report are rounded off to the nearest thousand 

dollars in accordance with that Class Order.

aa)  International ﬁnancial reporting  

 standards (IFRS)

The Australian Accounting Standards Board (AASB) is 

adopting International Financial Reporting Standards 

(“IFRS”) for application to reporting periods beginning 

on or after 1 January 2005. The AASB will issue 

along with the results of an initial scoping review of the 

expected impact of the adoption of IFRS on the Group. 

The project plan is currently on schedule. The project 

team has commenced a detailed analysis of IFRS and 

the Group’s accounting policies to determine the effects 

on the opening balance sheet to be prepared on the 

date of transition to IFRS and future accounting policy 

differences. The project team has identiﬁed a number of 

accounting policy choices which are still being analysed 

by management to determine the most appropriate 
accounting policy for the Group on transition to IFRS.

The major matters identiﬁed to date that are expected 

to require changes to the Group’s existing accounting 

policies or allow for an election by the Group are set out 

below. The major differences identiﬁed to date should 

not be regarded as a complete list of possible changes 

in accounting policies that will result from the transition 

to IFRS as not all standards or elections possible under 

some standards have been analysed as yet. For these 

reasons it is not yet possible to quantify the impact of 

the transition to IFRS.

Australian equivalents to IFRS, and the Urgent Issues 

(i)  Income tax

Group will issue abstracts corresponding to IASB 

interpretations originated by the International Financial 

Reporting Interpretations Committee or the former 

Standing Interpretations Committee. The adoption of 

Australian equivalents to IFRS will be ﬁrst reﬂected in 
the combined entity’s ﬁnancial statements for the  
half year ending 31 December 2005 and the year 

ending 30 June 2006.

Under AASB 112 Income Taxes, deferred tax 

balances are determined using the balance sheet 

method which calculates temporary differences 

based on the carrying amounts of an entity’s 

assets and liabilities in the statement of ﬁnancial 

position and their associated tax bases. In addition, 

current and deferred taxes attributable to amounts 

recognised directly in equity are also recognised 

Entities complying with Australian equivalents to 

directly in equity.

IFRS for the ﬁrst time will be required to restate their 

comparative ﬁnancial statements to amounts reﬂecting 

the application of IFRS to that comparative period. Most 

adjustments required on transition to IFRS will be made, 

retrospectively, against opening retained earnings as at 

1 July 2004.

The Group established an IFRS transition project team 

This will result in a change to the current  
accounting policy, under which deferred tax 

balances are determined using the income 

statement method, items are only tax-effected if 

they are included in the determination of pre-tax 

accounting proﬁt or loss and/or taxable income  

or loss and current and deferred taxes cannot  

led by the Finance Director in October 2003. The 

be recognised directly in equity. 

project team prepared a plan to manage the transition 

annual report 2004

61

notes to the ﬁnancial statements 
for the year ended 30 June 2004

The Group has presently recognised deferred tax 

Measurement there may be major impacts as a 

balances but due to the existence of unrecognised 

result of:

tax losses these offset future tax liabilities. On the 

adoption of AASB 112, the Group may recognise 

deferred tax assets, liabilities and tax losses to the 

extent it is probable they will be available for use the 

Group. The impact on the transition balance sheet is 

still being analysed and due to the present dispute 

with the ATO in regard to the deductibility of CityLink 

Concession Fees, the Group is unable to presently 

estimate the expected impact on the transition 
balance sheet or opening retained earnings.

(ii) Intangible assets – goodwill

  Financial assets held by the combined entity 

being subject to classiﬁcation as either held for 

trading, held-to-maturity, available for sale or loans 

receivable and, depending upon classiﬁcation, 

measured at fair value or amortised cost.

The most signiﬁcant change identiﬁed to date 

is investments in listed equity securities will be 

carried at fair value and may be classiﬁed as 

available for sale or designated as Fair Value 

through proﬁt and loss. The Group presently 

holds an investment in Hills Motorway and is 

The Group has recognised goodwill which is 

presently considering the policy options of 

presently being amortised over a 20 year period. 

classifying the investment as available for sale 

Under AASB 3: Business Combinations, goodwill 

with changes in fair value being recognised 

cannot be amortised and instead is allocated to 

directly in equity or designating the investment 

cash generating units and subject to impairment 

as fair value through proﬁt and loss. The change 

testing on each reporting date. This change in 

in accounting policy to carry listed equity 

policy may impact on the future volatility of earnings, 

investments at fair value is expected to increase 

however, there is not expected to be any impact on 

assets and retained earnings in the transition 

Group retained earnings on transition to IFRS.

balance sheet, and may lead to greater volatility 

(iii) Equity-based compensation beneﬁts

Under AASB 2 Share-based Payment, equity-based 

compensation to employees will be recognised as an 

expense in respect of the services received.

This will result in a change to the current accounting 

policy, under which no expense is recognised for 
equity-based compensation. This is not expected  
to impact on the transition balance sheet or  

opening retained earnings as the present Group 

share- based long-term incentive plan is already 

recognised in the ﬁnancial report and options  

issued to executives fall outside the dates for  

which retrospective adjustment is mandated.

(iv) Financial instruments

Under the Australian equivalent to AASB 

139 Financial Instruments: Recognition and 

in future reporting periods.

  The Group enters into interest rate swaps to 

hedge the Group’s exposure to interest rate 

movements. Presently the fair value of the 

hedges are not recognised in the ﬁnancial 

statements. Under AASB 139, the fair value of 

the hedges will be recognised on the balance 

sheet at each reporting date and the change in 

fair value during the reporting period reﬂected 

directly in equity to the extent hedging criteria is 

met, or in proﬁt and loss if the hedging criteria is 

not met. The Group is presently evaluating the 

effectiveness of the hedges.

The change in policy is not expected to have a 

signiﬁcant impact on the transition balance sheet, 

but will lead to greater volatility in the reported 

balance sheet and if the hedging criteria are not 

met, in the reported proﬁt and loss.

62

annual report 2004

 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

ﬁnancials

(v) Accounting for associates 

(vi) Business Combinations

Under AASB 128 Investments in Associates, a 

Under AASB 3: Business Combinations, the Group 

long-term loan to an associate can be considered 

can elect to either restate or grandfather acquisition 

as part of the investment. This is a change in 

accounting from previous business combinations 

present accounting policy where only the equity 

where AASB 3 may have resulted in different 

component of the investment is included in equity 

acquisition accounting. In particular, the Group 

accounting and long-term loans are a separate class 

restructure in December 2001 would have required 

of asset subject to recoverable amount testing. This 

different acquisition accounting under AASB 3 

may effect the Group’s investment in the Westlink 

than that required by current Australian Accounting 

project which is presently equity accounted. The 

Standards. The Group has elected to grandfather 

investment is substantially represented by a long-

all previous business combinations and there will 

term loan rather than an equity investment. If the 

be no impact on the transition balance sheet or 

Westlink project incurs accounting losses from the 

opening retained earnings from restating business 

commencement of operations greater than the 

combinations, subject to other standards. 

Group’s equity investment, the receivable balance 

may be reduced to the extent of the Group’s 

remaining share of accounting losses. This may 

occur despite the recoverable amount of the long-

term loan not being impaired due to the expected 

cashﬂow from the Westlink project. This change in 

policy is not expected to impact on the transition 

balance sheet or opening retained earnings as 

Westlink has not yet commenced operations, but 

may lead to greater volatility in earnings in future 

reporting periods. 

2. Segment information

The Combined Entity’s primary business segment for 

the period ending 30 June 2004 was the operation of 

the Melbourne CityLink toll road. The acquisition of 

a 40 per cent interest in the Westlink M7 project has 

not resulted in a change to the primary segment of 

the Group. The Westlink M7 project is presently non-

operational and is scheduled for completion in 2007.

Geographical segment information is provided in 

the table below and reﬂects the Transurban Group’s 

activities in relation to geographically unique locations.

 Segment Revenues 
2004 
$’000 

$’000 

2003 

 Segment Assets 

2004 
$’000 

2003 

$’000 

 Segment Liabilities
2004 
$’000 

$’000

2003

Victoria 

431,033 

390,606 

3,960,431 

3,907,325  2,091,096 

1,965,796

New South Wales 

36,633 

20,262 

415,300 

447,447 

447,446 

436,513

467,666 

410,868 

4,375,731 

4,354,772  2,538,542  2,402,309

annual report 2004

63

 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

3. Revenue

Revenue from operating activities

Toll revenue 

Fee revenue 

  Advertising revenue 

  Equity commitment fee 

Revenue from outside operating activities 

Interest 

  Proceeds from sale of non-current assets 

  Equity investment distributions 

Foreign exchange gains (net) (note 4) 

  Other 

  Revenue from ordinary activities 

2004 
$’000 

2003
$’000

248,097 

223,162

6,361 

3,451 

- 

257,909 

7,923

3,378

10,500

244,963

180,480 

162,564

6 

1,044 

59 

28,168 

209,757 

467,666 

-

-

-

3,341

165,905

410,868

64

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ﬁnancials

2004 
$’000 

2003
$’000

notes to the ﬁnancial statements 
for the year ended 30 June 2004

4. Operating loss from ordinary activities

Net gains and expenses 

Loss from ordinary activities before income tax expense  

includes the following speciﬁc net gains and expenses: 

  Net gains 

  Net gain on disposal of property, plant and equipment 

  Net foreign exchange gains recognised in the proﬁt from  

ordinary activities for the year (as either revenue or expense) 

6 

59 

-

-

Expenses 

Losses from ordinary activities before income tax  
expense includes the following speciﬁc expenses: 

  Depreciation and amortisation 

 CityLink 

 Other ﬁxed assets 

  Amortisation  

 Goodwill 

Total depreciation/amortisation 

141,200 

10,700 

142,603

5,130

500 

500

152,400 

148,233

  Bad and doubtful debts – trade debtors 

635 

1,057

  Borrowing costs 

Interest and ﬁnance charges paid/payable 

Interest rate hedging charges paid/payable 

Total borrowing costs 

230,650 

11,092 

241,742 

210,033

15,258

225,291

  Rental expenses relating to operating leases 

2,284 

1,700

annual report 2004

65

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

5. Income tax 

Tax consolidation legislation

The Transurban Group has elected to implement tax consolidation legislation for Transurban Infrastructure 

Developments Limited and its wholly owned entities with effect from 1 July 2003. The Australian Tax Ofﬁce has not 

yet been notiﬁed of this decision. The accounting policy on implementation of the legislation is set out in note 1(c).

The impact on the income tax expense for the year is disclosed in the tax reconciliation below.

Transurban Holdings Limited and the Transurban Holding Trust have elected not to adopt the tax  
consolidation legislation.

a)  The income tax expense for the ﬁnancial year differs from the  

amount calculated on the loss. The differences are reconciled as follows: 

Loss from ordinary activities before income tax expense 

Income tax calculated at 30% (2003-30%) 

Tax effect of permanent differences: 

2004 
$’000 

2003
$’000

(61,490) 

(18,447) 

(83,578)

(25,073)

Infrastructure borrowing facility interest not deductible 

26,439 

26,288

  Non-deductible depreciation and amortisation 

  Other 

Income tax adjusted for permanent differences 

  Beneﬁt of (tax losses of prior year recouped)/tax losses not recognised 

Income tax expense 

b)  Transurban Holding Trust 

Tax losses at beginning of year 

Tax (income) for the year 

Tax losses at end of year 

  Transurban Holdings Limited 

Tax losses at beginning of year 

Tax (income)/losses for the year 

Tax losses at end of year 

  Transurban Infrastructure Developments Limited 

Tax losses at beginning of year 

Tax (income) for the year 

Tax losses at end of year 

150 

170 

8,312 

(8,312) 

- 

138,337 

(45,054) 

93,283 

845,986 

(6,486) 

839,500 

249 

5,089 

5,338 

-

-

1,215

(1,215)

-

173,861

(35,524)

138,337

771,288

74,698

845,986

1,625

(1,376)

249

66

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

ﬁnancials

Potential future income tax beneﬁts at 30 June 2004 

Transurban has advice from Senior Counsel that 

for tax losses not brought to account for the combined 

the concession fees are immediately deductible 

entity are $281.4 million (2003: $295.4 million). These 

expenditure. The Group ﬁnancial statements have been 

future income tax beneﬁts are not being brought 

prepared on this basis for the year ended 30 June 2004 

to account as an asset as they do not meet the 

and all prior years. Deductions in respect of concession 

requirements described in note 1c. The gross tax losses 

fees account for $796.1 million of the combined entity’s 

in relation to the Trust are $93.3 million as at 30 June 

carried forward loss of $938.1 million at 30 June 2004.

2004 (2003: $138.3 million). These losses can not be 

used directly by the Trust for the reason outlined in note 

1c, but may be available for the beneﬁt of unit holders  

in the future.

The Australian Taxation Ofﬁce (“ATO”) and Transurban 

have been unable to agree on the treatment to be 

applied to concession fees and as a consequence 

the ATO issued an assessment in respect of CityLink 

The beneﬁt of tax losses will only be realised by each 

Melbourne’s income tax return for the year ended 30 

individual entity if:

June 1998.

(i)  the entity derives future assessable income of a 

nature and of an amount sufﬁcient to enable the 

beneﬁt from the deductions for the losses to be 

realised; and

(ii)  the entity continues to comply with the conditions 

for deductibility imposed by tax legislation; and,

(iii) no changes in tax legislation adversely affect the 
entity in realising the beneﬁt from the deductions  
for the losses.

Transurban appealed against the ATO’s decision to 

disallow its objection to the assessment. The appeal 

was heard before Mr Justice Merkel in the Federal 

Court on 3 October 2002. On 2 February 2004, 

Mr Justice Merkel dismissed Transurban’s appeal. 

Transurban has lodged a Notice of Appeal against the 

dismissal. The appeal was heard by a Full Court of the 

Federal Court on 17 and 18 August 2004. The Court 

reserved its judgement in the matter.

Until a deﬁnitive resolution of this matter has been 

The above tax position is based on the tax treatment 

achieved, Transurban intends to continue preparing 

proposed in tax ruling requests relating to borrowing 

the Group ﬁnancial statements on the basis that the 

costs and interentity transactions. However, the 
Australian Taxation Ofﬁce (“ATO”) has not given  
its opinion in relation to all of these requests.

concession fees are deductible. If the ﬁnding of Mr 

Justice Merkel is ﬁnally conﬁrmed, certain items in the 

Group ﬁnancial statements will require amendment.

annual report 2004

67

notes to the ﬁnancial statements 
for the year ended 30 June 2004

6. Current assets – cash assets

  Cash at bank 

The above ﬁgures are reconciled to cash at the end of the ﬁnancial  
period as shown in the statement of cash ﬂows as follows: 

  Cash at bank – as above 

  Cash collateral, Infrastructure Loan Facility (note 1o) 

  Cash collateral, Infrastructure Note Facility (note 1o) 

The amount shown in Cash at Bank includes $36.2 million comprising the amount 
required under the CityLink Concession Deed to be held in the maintenance reserve 

account and the amount held in the CARS funding reserve. These amounts were not 

available for general use at 30 June 2004 (2003: $36.1 million). 

2004 
$’000 

2003
$’000

207,452 

207,452 

172,277

172,277

207,452 

795,000 

454,000 

172,277

795,000

454,000

1,456,452 

1,421,277

7. Current assets – receivables

Trade debtors 

Less: provision for doubtful debts 

  Other debtors 

Other debtors generally arise from transactions outside the usual operating activities. 
The balance includes a distribution of $2.6 million from the investment in Hills 
Motorway Group Limited (refer note 11).

8. Current assets – other

  Prepayments 

  Debtors from related parties 

11,508 

(755) 

10,753 

15,004 

25,757 

8,755

(706)

8,049

16,877

24,926

3,627 

3,287 

6,914 

2,605

-

2,605

68

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

9. Non-current assets – property, plant and equipment

a)  CityLink ﬁxed assets 

  CityLink at cost 

Less: Accumulated depreciation 

Equipment and ﬁttings 

  Equipment and ﬁttings at cost 

Less: Accumulated depreciation 

ﬁnancials

2004 
$’000 

2003
$’000

3,910,616 

3,910,607

(359,160) 

(217,959)

3,551,456 

3,692,648

80,116 

(27,291) 

52,825 

52,224

(16,621)

35,603

  Total property, plant and equipment 

3,604,281 

3,728,251

Non-current assets pledged as security

Refer to note 18 for information on non-current assets pledged as security by the Group.

b) Reconciliations

Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of 

the current ﬁnancial year is set out below: 

CityLink 

$’000 

Equipment  
and ﬁttings
$’000 

Total

$’000

2004  

  Carrying amount at 1 July 2003 

3,692,648 

35,603 

3,728,251

  Additions 

8 

27,922 

27,930

  Depreciation/amortisation expense charged to statement  

of ﬁnancial performance 

(141,200) 

(10,700) 

(151,900)

  Carrying amount at 30 June 2004 

3,551,456 

52,825 

3,604,281

2003  

  Carrying amount at 1 July 2002 

  Additions 

  Disposals 

Transfers between asset classes 

  Depreciation/amortisation expense charged to statement  

of ﬁnancial performance 

  Carrying amount at 30 June 2003 

3,828,159 

2,141 

- 

4,951 

(142,603) 

3,692,648 

27,931 

17,761 

(8) 

(4,951) 

3,856,090

19,902

(8)

-

(5,130) 

35,603 

(147,733)

3,728,251

annual report 2004

69

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

10. Non-current assets – intangible assets

  Goodwill 

Less: Accumulated amortisation 

11. Non-current assets – other ﬁnancial assets

Investments traded on organised markets 

  Shares in other corporations 

Other ﬁnancial assets 

Investment in Construction Phase Loan Notes 

2004 
$’000 

2003
$’000

10,000 

(1,248) 

8,752 

10,000

(748)

9,252

94,419 

-

392,000 

486,419 

392,000

392,000

During the year Transurban Holding Trust acquired an 8.1 per cent interest in the Hills 
Motorway Group. The market value of the investment at 30 June 2004 is $111.0 million. 

Investment in Construction Phase Loan Notes (“CPLN”)

The CPLN represent Transurban’s funding contribution to the Westlink Motorway 
Partnership. The CPLN earn interest at the ﬁxed rate of 6.27 per cent for the period 

from the ﬁnancial close of the Westlink M7 project (“the Project”) to the date of 

completion of the Project, or 3.5 years which ever is the lesser, at which time they 

convert to Term Loan Notes. 

12. Investments accounted for using the equity method

Interest in joint venture partnership (note 32) 

  Shares in associates (note 31) 

13. Non-current assets – other

  Debtor from related party 

  Prepayments 

  Project development 

  Deferred borrowing costs 

6,236 

- 

6,236 

5,128 

2,913 

9,139 

12,740 

29,920 

5,888

-

5,888

-

4,813

1,626

13,134

19,573

70

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

14. Current liabilities – payables

Trade creditors 

  CARS coupon payment 

  Other creditors 

ﬁnancials

2004 
$’000 

7,355 

15,009 

57,058 

79,422 

2003

$’000

1,823

6,350

46,298

54,471

CARS coupon payment represents the interest payment due to holders of Convertible 
Adjusting Rate Securities (“CARS”). The distribution on these securities of 7 per cent 

for the period 1 January 2004 to 30 June 2004 totalling $15.0 million has been 

charged to the statement of ﬁnancial performance as a borrowing cost due to the 

CARS being classiﬁed as a liability. This coupon was paid to CARS holders on 

31 July 2004. 

Other creditors

Other creditors represents accruals for operating expenses and interest on the 
Group’s borrowings.

15. Current liabilities – interest bearing liabilities

  Secured 

  Bank loan 

This loan facility was fully utilised at 30 June 2004.

16. Current liabilities – non-interest bearing liabilities 

  Prepaid tolls 

  Unearned income 

  Release from Single Purpose 

17. Current liabilities – provisions

  Employee entitlements 

8,000 

8,000 

8,000

8,000

20,121 

2,314 

3,150 

25,585 

18,044

6,855

3,150

28,049

5,570 

5,570 

5,072

5,072

annual report 2004

71

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

18. Non-current liabilities – interest bearing liabilities 

  Secured 

Infrastructure Loan facility 

Less: Cash collateral (note 1o) 

Infrastructure Note facility 

Less: Cash collateral (1o) 

Land Transport Notes 

  Project Debt – Tranche B 

  Capital Markets Debt 

  Convertible Adjusting Rate Securities 

  Subordinated Debt Facility 

Set-off of assets and liabilities

2004 
$’000 

2003

$’000

795,000 

795,000

(795,000) 

(795,000)

454,000 

454,000

(454,000) 

(454,000)

248 

510,000 

1,897

510,000

1,190,000 

1,190,000

430,000 

430,000

80,000 

-

2,210,248 

2,131,897

A legal right of set-off exists in respect of the speciﬁc cash deposits of $795 million, representing collateralisation of 

liabilities under the Infrastructure Loan facility and $454 million, representing collateralisation of liabilities under the 

Infrastructure Note facility.

Financing arrangements and credit facilities

Credit facilities are provided as part of the overall debt funding structure of the Transurban Group.

Details of each facility are as follows:

a) Infrastructure loan facility

$795 million facility certiﬁed by the Development Allowance Authority to qualify for concessional tax treatment under 

Division 16L of the Income Tax Legislation. The loan is secured by cash collateral equal to the amount of the loan 

which is set-off against the loan liability. The principal of the Infrastructure Loan facility will be repaid from the cash 

collateral on 15 April 2007. The facility was fully drawn as at 30 June 2004.

b) Infrastructure note facility

$454 million facility certiﬁed by the Development Allowance Authority to qualify for concessional tax treatment 

under the Income Tax Legislation. The loan is secured by cash collateral equal to the amount of the loan which is 

set-off against the loan liability. The principal of the infrastructure note facility will be repaid from the cash collateral 

on 15 April 2007. The facility was fully drawn as at 30 June 2004.

c)  Land transport notes

The class A land Transport Notes were repaid on 30 June 2004. The class B Land Transport Notes are carried at a 

present value of $0.2 million and will be repaid no later than 30 days prior to the last day of the concession period. 

72

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

d)  Tranche B bank debt

ﬁnancials

$510 million facility which is for a term of 5 years from 28 June 2002. The facility was fully utilised at 30 June 2004. 

The facility is secured by a ﬁrst ranking charge over the cash ﬂows of the Melbourne CityLink Project.

e)  Capital markets debt

Comprises bonds issued by Transurban Finance Company with terms of 3, 5, and 7 years from 8 August 2002. The 

facilities are secured by a ﬁrst ranking charge over the cash ﬂows of the Melbourne CityLink Project. 

Maturing 
2005 
‘000 

Maturing 
2007 
‘000 

Maturing 
2009
‘000 

Total

‘000

175,000

260,000

435,000

665,000

90,000

755,000

Fixed interest rate 

Credit wrapped 

Non-credit wrapped 

Floating interest rate 

Credit wrapped (1) 

Non-credit wrapped 

Total capital markets debt 

175,000 

260,000 

435,000 

65,000 

90,000 

155,000 

590,000 

- 

- 

- 

- 

- 

- 

240,000 

360,000 

- 

240,000 

240,000 

- 

360,000 

360,000 

1,190,000

(1) The Group has the option to cancel the 5 year and 7 year maturity after 3 years.

f)  Convertible adjusting rate securities

$430 million raised via the issue of 4.3 million securities. Semi annual interest is paid at a ﬁxed rate of 7 per cent 

per annum until the ﬁrst re-set date on 14 April 2007. These securities are generally convertible into Transurban 

Securities at a discount of 2.5 per cent and rank ahead of Transurban Stapled Securities on a winding up of 

Transurban in conjunction with a winding up of Transurban CARS Trust. 

Transurban Holding Trust acts as guarantor for Transurban CARS Trust in relation to the interest payments to 

holders of CARS. The term of this guarantee is until the ﬁrst reset date, 14 April 2007, at which time the guarantee 

may or may not be extended. 

g)  Subordinated debt facility

$80 million facility which is for a term of six months from 26 June 2004. The facility was fully utilised at 30 June 

2004. The facility can be rolled at the option of the Group upon expiry.

h)  Cash advance facility

$50 million facility which is for a term of 3 years from 28 June 2002. The facility was unused at 30 June 2004.

annual report 2004

73

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

  Loans 

Total facilities 

  Used at balance date 

  Unused at balance date 

19. Non-current liabilities – non-interest bearing liabilities

  Release from Single Purpose 

  Concession Notes 

2004 
$’000 

3,087,000 

3,037,000 

50,000 

- 

207,681 

207,681 

2003

$’000

3,087,000

2,957,000

130,000

3,150

170,696

173,846

CityLink Melbourne Limited issues Concession Notes annually in satisfaction of its obligations to pay Concession 

Fees to the State of Victoria (“the State”) equal to $95.6 million. The notes are due for redemption at the end of 

the Concession Period, but may be presented earlier where a Notional Initial Equity Investor has achieved a real 

after tax internal rate of return on its equity investment in the Project equal to 10 per cent per annum. Once the 

threshold rate of return is achieved, subsequent Concession Note redemption payments are limited to not more 

than 30 per cent of the distributable cash ﬂow for the previous year. Based on forecast cash ﬂows which assume 

that concession fees are deductible as incurred, the ﬁrst Concession Note payment is presently expected to occur 

in the 2012 ﬁnancial year.

Concession Notes have been included in the Financial Report as non interest bearing liabilities at the present value 

of the expected future repayments. As the timing and proﬁle of these repayments is largely determined by the 
available equity cash ﬂows of CityLink, the present value of the expected future repayments is determined using  
a discount rate of 12 per cent which recognises their subordinated nature.

The face value of Concession Notes on issue at 30 June 2004 is $796.1 million (2003: $700.5 million). The Net 

Present Value at 30 June 2004 of the redemption payments relating to these Concession Notes is $207.7 million 

(2003: $170.7 million). The indicative timing of these redemption payments is set out in the following table.

Concession note redemption 

Estimated concession note payments  

  Within ﬁve years 

Later than 5 years but not later than 10 years 

Later than 10 years but not later than 15 years 

Later than 15 years but not later than 20 years 

- 

155,152 

525,903 

114,999 

796,054 

-

104,212

463,717

132,524

700,453

74

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Reconciliation

Reconciliation of movement in the Concession Note liability. 

  Concession Note liability at the start of the year 

  Concession Notes issued during the year 

  Valuation adjustments for the year: 

  Charge/(credit) for Concession Notes on issue at beginning of year 

  Credit for Concession Notes issued during the year 

  Concession Note liability at the end of the year 

20. Non-current liabilities – provisions

  Employee entitlements 

21. Contributed equity

ﬁnancials

2004 
$’000 

170,696 

95,600 

20,483 

(79,098) 

207,681 

2,036 

2,036 

2003

$’000

137,992

95,600

16,559

(79,455)

170,696

974

974

2004 
Number 
‘000 

2003 
Number
‘000 

2004 

2003

$’000 

$’000

a)  Stapled Securities fully paid 

532,630 

518,473 

2,242,030  2,181,144

532,630 

518,473 

2,242,030  2,181,144

b) 

Date 

 Details 

Notes 

1 July 2003  Opening Balance 

  8 October 2003 

Distribution reinvestment plan issue 

 26 February 2004 

Exercise of April 2001 options 

  26 March 2004 

Distribution reinvestment plan issue 

d 

f 

d 

30 June 2004  Closing Balance 

Number of 

shares 
‘000 

518,473 

Issue 

price 

$’000

- 

2,181,144

4,957 

$4.1241 

20,443

96 

$3.8170 

367

9,104 

$4.4020 

40,076

532,630 

2,242,030

annual report 2004

75

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

c)  Stapled Securities

Stapled Securities entitle the holder to participate in distributions and the winding up of the Transurban Group in 

proportion to the number of and amounts paid on the securities held. In the event that Transurban and Transurban 

CARS Trust are wound up simultaneously, then holders of Transurban CARS securities would rank ahead of 

Transurban Group Stapled Security holders.

On a show of hands every holder of Stapled Securities present at a meeting in person or by proxy, is entitled to  
one vote. 

d)  Distribution reinvestment plan

The Transurban Group has established a distribution reinvestment plan under which holders of Stapled Securities 

may elect to have all or part of their distribution entitlements satisﬁed by the issue of new Stapled Securities rather 

than by cash. Securities are issued under the plan at a 2.5 per cent discount to the market price

e)  Employee share scheme

Information relating to the employee share scheme, including details of share issued under the plan, are set out in 

note 25.

f)  Options

Information relating to the Transurban Group Executive Option Plan, including details of options issued, exercised, 

and lapsed during the ﬁnancial year and options outstanding at the end of the ﬁnancial year are set out in note 25.

22. Accumulated losses

Accumulated losses at the beginning of the year 

Net losses incurred during the year 

Trust distributions to security holders 

Accumulated losses at the end of year 

2004 
$’000 

(228,681) 

(61,490) 

(114,670) 

(404,841) 

2003

$’000

(78,640)

(83,578)

(66,463)

(228,681)

76

annual report 2004

 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

ﬁnancials

2004 
$’000 

2003

$’000

23. Distributions

  Stapled Securities 

Final distribution for 2003 ﬁnancial year of 10.0 cents  

(2002 – 3.0 cents) per fully paid Stapled Security paid 8 October 2003 

51,847 

Interim distribution for 2004 ﬁnancial year of 12.0 cents  
(2003 – 10.0 cents) per fully paid Stapled Security paid 26 March 2004 

  Total distributions paid  

62,823 

114,670 

Distributions paid in cash or satisﬁed by the issue of Stapled Securities under the 
distribution reinvestment plan during the years ended 30 June 2004 and 2003. 

  Paid in cash 

  Satisﬁed by issue of Stapled Securities 

54,145 

60,525 

114,670 

15,300

51,163

66,463

32,409

34,054

66,463

In addition to the above distributions, since year end the directors have recommended the payment of a ﬁnal 

distribution of 13.5 cents per fully paid stapled security. The aggregate amount of the proposed distribution expected 

to be paid on 8 October 2004, not recognised as a liability at year end, is $71.9 million (2003: $51.8 million).

24. Financial instruments 

The combined entity is party to ﬁnancial instruments with off-balance sheet risks in the normal course of business in 

order to hedge exposure to interest rate ﬂuctuations. These instruments are not included in assets or liabilities.

Interest rate swap contracts

It is Transurban Group policy to protect ﬂoating rate facilities from exposure to increasing interest rates. Accordingly, 

the combined entity has entered into interest rate swap contracts under which it is obliged to receive interest 

at variable rates and to pay interest at ﬁxed rates. The contracts are settled on a net basis and the net amount 

receivable or payable at the reporting date is included in other debtors or other creditors.

Swaps currently in place cover approximately 86 per cent (2003: 92 per cent) of the ﬂoating rate loan principal 

outstanding.

At 30 June 2004, the notional principal amounts and periods of expiry of the interest rate swap contracts are  
as follows:

4 – 5 years 

annual report 2004

2004 
$’000 

1,160,000 

1,160,000 

2003

$’000

1,160,000

1,160,000

77

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Interest rate risk

The combined entity’s exposure to interest rate risk and the effective weighted average interest rate by maturity 

periods is set out in the following tables. 

2004 

Floating 

Fixed interest maturing in: 

  interest rate  or less  and 5 years 
$’000 

1 year  between 1  more than  Non interest 
bearing 
$’000 

5 years 
$’000 

$’000 

$’000 

Note 

Total
$’000

Financial assets 

Cash 

Debtors 

Other 

Debtors from related party 

7,13 

8,13 

8 

Construction phase loan notes  11 

6 

207,452 

- 

- 

- 

- 

Total ﬁnancial assets 

207,452 

Weighted average interest rate 

5.05% 

Financial liabilities 

Creditors 

Prepaid tolls  

Release from single purpose 

Land transport notes 

Concession notes 

Bank loan 

Tranche B debt 

Capital markets debt 

Subordinated debt facility 

Infrastructure loan facility 

Cash collateral 

CARS 

Interest rate swaps 

Total ﬁnancial liabilities 

14 

16 

16 

18 

19 

15 

18 

18 

18 

18 

18 

18 

24 

- 

- 

- 

- 

- 

8,000 

510,000 

755,000 

80,000 

- 

- 

- 

(1,160,000) 

193,000 

Weighted average interest rate 

5.97% 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

392,000 

392,000 

6.27% 

- 

- 

- 

- 

- 

- 

- 

435,000 

- 

1,249,000 

(1,249,000) 

430,000 

1,160,000 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

207,452

30,885 

30,885

6,540 

3,287 

6,540

3,287

- 

392,000

40,712 

640,164

79,422 

79,422

20,121 

20,121

3,150 

3,150

248 

- 

248

- 

- 

- 

- 

- 

- 

- 

- 

- 

207,681 

207,681

- 

- 

8,000

510,000

-  1,190,000

- 

80,000

-  1,249,000

- (1,249,000)

- 

- 

430,000

-

2,025,000 

248 

310,374  2,528,622

3.76% 

- 

Net ﬁnancial assets/(liabilities) 

14,452 

- 

(1,633,000) 

(248) 

(269,662) (1,888,458)

78

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

2003 

ﬁnancials

Fixed interest maturing in: 

Floating  1 year 

  interest rate  or less  and 5 years 
$’000 

$’000  $’000 

Note 

between 1  more than  Non interest 
bearing 
5 years 
$’000 
$’000 

Total
$’000

Financial assets 

Cash 

Debtors 

Other 

6 

7 

8,13 

Construction phase loan notes 

11 

172,277 

- 

- 

- 

Total ﬁnancial assets 

172,277 

Weighted average interest rate 

4.47% 

Financial liabilities 

Creditors 

Prepaid tolls  

14 

16 

Release from single purpose  16,19 

Land transport notes 

Concession notes 

Bank loan 

Tranche B debt 

Capital markets debt 

Infrastructure loan facility 

Cash collateral 

CARS 

18 

19 

15 

18 

18 

18 

18 

18 

- 

- 

- 

- 

- 

8,000 

510,000 

755,000 

- 

- 

- 

Interest rate swaps 

24 

(1,160,000) 

Total ﬁnancial liabilities 

113,000 

Weighted average interest rate 

4.98% 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

392,000 

392,000 

6.27% 

- 

- 

- 

1,897 

- 

- 

- 

435,000 

1,249,000 

(1,249,000) 

430,000 

1,160,000 

2,026,897 

4.04% 

- 

172,277

24,926 

24,926

20,552 

20,552

- 

392,000

45,478 

609,755

54,471 

54,471

18,044 

18,044

6,300 

- 

6,300

1,897

170,696 

170,696

- 

- 

8,000

510,000

-  1,190,000

-  1,249,000

- (1,249,000)

- 

- 

430,000

-

249,511  2,389,408

- 

- 

- 

- 

- 

-

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

-

Net ﬁnancial assets/(liabilities)  

59,277 

- 

(1,634,897) 

- 

(204,033) (1,779,653)

annual report 2004

79

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Reconciliation of net ﬁnancial liabilities to net assets 

Net ﬁnancial liabilities as above 

(1,888,458) 

(1,779,653)

Notes 

2004 
$’000 

2003
$’000

Non-ﬁnancial assets and liabilities 

Property, plant and equipment 

Other assets 

Other liabilities 

Net assets per balance sheet 

Credit risk

9 

3,604,281 

3,728,251

10,11,12,13 

16,17,20 

131,286 

(9,920) 

16,766

(12,901)

1,837,189 

1,952,463

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The credit 

risk on ﬁnancial assets is the carrying amount net of any provisions for doubtful debts.

Net fair values of ﬁnancial assets and liabilities 

The carrying amount and net market value of ﬁnancial assets and liabilities brought to account at balance date are 

the same.

The aggregate net fair value of interest rate swaps not recognised in the balance sheet (refer note 1x) held at 30 

June 2004 is a liability of $0.3 million (2003: $61.6 million).

As these contracts are hedging anticipated future interest payments, any unrealised gains and losses on the 

contracts, together with the cost of the contracts, are deferred and will be recognised in the measurement of the 

underlying transaction.

The valuation of interest rate swaps reﬂects the estimated amounts which the entity expects to pay or receive to 

terminate the contracts or replace the contracts at their current market rates as at 30 June 2004.

80

annual report 2004

 
 
 
 
 
 
 
 
 
ﬁnancials

notes to the ﬁnancial statements 
for the year ended 30 June 2004

25. Director and executive disclosures

Directors

The following persons were directors of entities within the Transurban Group during the ﬁnancial year: 

  Chairman – non-executive 

Laurence G Cox

  Non-executive directors 
  Peter C Byers 
  Geoffrey O Cosgriff 
Jeremy GA Davis 

  Susan M Oliver 
  David J Ryan

  Executive directors 
  Kimberley Edwards 
  Geoffrey R Phillips

Speciﬁed executives 

The following persons were the 10 executives with the greatest authority for the strategic direction and management 

of the Group (“speciﬁed executives”) during the ﬁnancial year. All executives are employees of Transurban 

Infrastructure Developments Limited, except Brendan Bourke, who is an employee of CityLink Melbourne Limited.

Name 

Position

Brendan Bourke 

CEO, CityLink Melbourne Limited

Ken Daley 

Paul O’Shea 

Ken Reynolds 

Executive General Manager

General Counsel

General Manager, Major Projects 

Francis Browne 

General Manager, Global and Business Development

Lisa Hunt 

Vic Delosa 

Joanne Barber 

Mike Roberts 

Cesare Tizi 

General Manager, New South Wales

General Manager, Victoria

General Manager, Human Resources

General Manager, Corporate Relations

Chief Information Ofﬁcer

annual report 2004

81

 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Remuneration of directors and executives

  To align employee incentives with increased 

Principles used to determine the nature and 

shareholder value.

amount of remuneration.

Non-executive directors

The policy seeks to support the Group’s objective  
to be perceived as “the employer of choice” by:

  Offering remuneration levels which are attractive 

The remuneration of non-executive directors consists of 

relative to those offered by comparable employers; 

director’s fees, committee fees and (subject to eligibility) 

and

retirement beneﬁts. The constitution of each of the 

entities comprising the Group provides that the total 

remuneration paid in a year to non-executive directors 
by the entity may not exceed $950,000. Subject to 

  Providing strong, transparent linkages between 

individual and group performance and rewards.

In consultation with external remuneration consultants, 

this limit, remuneration structure and amounts for 

the Group has structured its executive remuneration to 

non-executive directors are recommended by the 

reward both growth and the delivery of improved returns.

Nomination & Remuneration Committee of the Board 

with assistance from external remuneration consultants. 

Liability for the Superannuation Guarantee Contribution 

is met from gross remuneration.

Executives are remunerated through a combination of 

base salary, short-term incentives (“STI”) in the form of 

cash bonuses and long-term incentives (“LTI”) provided 

via either the Executive Option Plan (“EOP”) or the 

In 1997, the Board implemented a policy to provide 

Executive Long-term Incentive Plan (“ELTIP”). 

retirement allowances to non-executive directors. 

The policy provides for an entitlement to a lump sum 

payment (not exceeding the maximum allowable under 

the Corporations Act 2001) if the non-executive director 

has completed a minimum of three years service. 

The lump sum is equivalent to the total emoluments 

received during the Relevant Period. The Relevant 

Period is one-third of the director’s total period of 

service or three years (both calculated to the day of 

retirement), whichever is the lesser. This policy was 

reviewed in April 2003 and it was resolved to  continue 

the policy for directors appointed prior to 29 April 2003, 

but not to extend the policy to appointments made 

after that date. Non–executive directors not entitled to 

The proportion of each component of an 

executive’s total remuneration is established by  

reference to remuneration survey data for comparable 

companies. The remuneration of the Managing 

Director is established by the Board, based on the 

recommendation of the Nomination & Remuneration 

Committee. The remuneration of senior executives 
reporting to the Managing Director is established by  
the Nomination and Remuneration Committee, based 

on the recommendation of the Managing Director.

The components of executive remuneration are 

described below:

retirement beneﬁts receive an additional director’s fee.

Base pay

Executives

The key objectives of the Group’s policy for executive 

remuneration are:

  To secure employees with the skills and experience 

necessary to meet business objectives; 

Base pay is structured as a Total Employment Cost 

(TEC). This provides a mix of cash, superannuation 

guarantee contributions and prescribed beneﬁts. An 

executive’s pay is  reviewed annually against market 

rates for comparable roles, however changes to an  
executive’s pay are ultimately determined based on their 

performance and perceived value to Transurban. There 

  To motivate employees to the highest levels of 

are no guaranteed base pay increases ﬁxed in any 

performance; and

executive’s contract of employment.

82

annual report 2004

notes to the ﬁnancial statements 
for the year ended 30 June 2004

ﬁnancials

Short-term incentives

Business generation incentive plan

On an annual basis, Transurban makes available Short-

The Group also has in place a Business Generation 

term Incentive (“STI”) payments to executives for the 

Incentive Plan (“BGIP”) in which executives may 

achievement of the Group and individual performance. 

participate depending upon their level of involvement in 

STI amounts are expressed as a percentage of TEC, but 

generating new business. The BGIP (based on the risk 

are also subject to further adjustment using Economic 

adjusted value [RAV] of a project/business venture)  

Value Added (“EVA”) methodology for the variance 

has been designed to link incentive/variable pay 

between a target EVA and the EVA actually achieved. 

rewards to the increase in value derived from generating 

The purpose of the EVA adjustment is to ensure that STI 

new business. BGIP payments are determined and 

payments reﬂect management’s performance in adding 

awarded by the Board, on the recommendation of the 

security holder value.

Long-term incentives

Managing Director.

Employee security ownership plan

Two forms of Long-term Incentives (“LTI”) are currently 

Executives may elect to participate in the Employee 

in operation, the Executive Option Plan (“EOP”) and 

Security Ownership Plan on the same basis as that 

the Executive Long-term Incentive Plan (“ELTIP”). The 

offered to all permanent employees. Executive Directors 

EOP provides Executives with equity-based rewards, 

do not currently participate in the Plan.

where as the ELTIP provides cash-based rewards. Both 

plans utilise Total Shareholder Return as the basis for 

determining payment. The EOP was introduced with a 

ﬁve year term in 2001. Following a review of the EOP 

in 2003, it was decided to make no further issues of 

options under the EOP and to introduce the ELTIP to 

provide long-term incentives beyond the period covered 

by the EOP. No options were granted under the EOP 

during this ﬁnancial year. 

Employee insurance

In addition to their TEC, executives are covered by the 

Group’s salary insurance and death and disablement 

plan on the same basis as that offered to all permanent 

employees.

annual report 2004

83

notes to the ﬁnancial statements 
for the year ended 30 June 2004

Details of remuneration

Details of the remuneration of each director of the Transurban Group and each of the ten speciﬁed executives of the 

Group, including their personally related entities, are set out in the following tables:

Directors of the Transurban Group

Primary 

Post-employment 

Equity

2004

Name 

Cash 
salary 
& fees 
$ 

Cash 
bonus 

Long 
Non- 
term  monetary 
beneﬁts 
$ 

  incentive 
$ 

$ 

L G Cox 

250,043 

P C Byers 

96,347 

J G A Davis 

89,997 

S M Oliver 

95,429 

G O Cosgriff 

86,253 

D J Ryan 

100,935 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

K Edwards 

1,013,000  550,000  204,528 

G R Phillips 

463,998  225,000 

- 

7,300 

7,300 

Super-  Retirement  Options (1) 
beneﬁts 

annuation 

Total 

$ 

$ 

22,504 

157,393 

8,671 

12,020 

8,589 

7,763 

9,084 

87,000 

11,002 

47,705 

37,767 

44,186 

105,774 

- 

- 

- 

$ 

- 

- 

- 

- 

- 

- 

$

429,940

152,723

139,784

148,204

199,790

110,019

184,503  2,046,331

61,501 

768,801

Total 

2,196,002  775,000  204,528 

14,600 

166,633 

392,825 

246,004  3,995,592

(1)  No options were granted during the year over Transurban Group Stapled Securities. Option remuneration relates to options granted to 

Executive Directors and Executives in prior ﬁnancial years.

The amounts disclosed as remuneration in the current year is that part of the value of the options which is attributable to the current year 
portion of the vesting period.

To calculate remuneration from options, the options were valued as at grant date using a Black-Scholes derived option valuation model taking 
into consideration the exercise price, the term of the option, the market price of Transurban Group Stapled Securities on the date of granting 
the option, the expected price volatility of Transurban Group Stapled Securities, expected future distributions and the risk free rate of interest 
over the term of the options.

Total remuneration of directors of for the year ended 30 June 2003 is set out below. Information on individual 

directors is not shown as this is the ﬁrst ﬁnancial report prepared since the issue of AASB 1046 Director and 

Executive Disclosures by Disclosing Entities.

2003

Name 

Cash 
salary 
& fees 
$ 

Primary 

Cash  Long-term 
bonus 

Non- 

incentive  monetary  annuation 
beneﬁts 
$ 

$ 

$ 

$ 

Post-employment 
Super-  Retirement  Options (1) 
beneﬁts 

Equity

Total 

$ 

$ 

$

Total 

1,932,079  965,000 

- 

14,600 

151,516 

378,141 

245,332  3,686,668

84

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Speciﬁed executives of the group

ﬁnancials

2004 

Name 

Cash 
salary 
& fees 
$ 

Primary 

Post-employment 

Cash  Long-term 
bonus 

Non- 
incentive  monetary 
beneﬁts
$ 

$ 

$ 

B Bourke 

332,057 

150,000 

38,499 

15,942 

K Daley 

218,851 

100,000 

40,906 

18,532 

P O’Shea 

193,851 

130,000 

31,281 

9,778 

K Reynolds 

261,469 

90,000 

30,078 

18,434 

F Browne 

348,530 

- 

- 

18,585 

L Hunt 

V Delosa 

J Barber 

261,379 

100,000 

30,078 

15,110 

261,379 

90,000 

- 

18,527 

203,246 

100,000 

24,062 

18,520 

M Roberts 

229,270 

100,000 

229,270 

- 

- 

- 

18,821 

12,187 

C Tizi 

Total 

Super- 
annuation 

$ 

42,943 

91,149 

91,149 

23,531 

31,470 

23,621 

23,621 

36,754 

20,730 

20,730 

Equity
Options (1) 

Total 

$ 

$

43,664 

623,105

37,264 

31,940 

31,940 

47,798 

11,774 

506,702

487,999

455,452

446,383

441,962

29,435 

422,962

26,617 

409,199

29,435 

398,256

31,940 

294,127

2,539,302 

860,000 

194,904 

164,436 

405,698 

321,807 

4,486,147

Total remuneration of speciﬁed executives for the year ended 30 June 2003 is set out below. Information on 

individual speciﬁed executives is not shown as this is the ﬁrst ﬁnancial report prepared since the issue of AASB 

1046 Director and Executive Disclosures by Disclosing Entities. In some cases, different individuals are included 

than those speciﬁed in the year ended 30 June 2004.

2003 

Name 

Cash 
salary 
& fees 

$ 

Total 

1,357,416 

988,500 

Primary 

Post-employment 

Cash  Long-term 
bonus 

Non- 
incentive  monetary 
beneﬁts

Super- 
annuation 

Equity
Options (1) 

Total 

$ 

$ 

- 

$ 

$ 

$ 

$

36,500 

118,791 

192,080 

2,693,287

annual report 2004

85

 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Service agreements

Speciﬁed executives

Remuneration and other terms of employment for 

The major provisions contained in Employment 

executive directors and speciﬁed executives are 

Agreements for speciﬁed executives are the same 

formalised in Employment Agreements. These 

for all speciﬁed executives except for the base salary 

Agreements provide for base pay and any speciﬁed 

component. These provisions are:

beneﬁts, the availability of short-term incentives and 

termination entitlements. Long-term incentives and 

business generation incentive plan payments are 

offered (when appropriate and eligible) by the Board. 

  Term of agreement – permanent

  Termination – 3 months notice

Executive directors

K Edwards, Managing Director

  Term of Agreement – permanent

  Termination – 3 months notice

  Eligible to participate in the Transurban Group’s 

Employee Share Ownership Plan and Executive 

Long-term Incentive Plan

  Total Employment Cost is reviewed annually by the 

Nomination and Remuneration Committee

Below are the Total Employment Costs, including 

  Base salary, including superannuation, for the  

year ended 30 June 2004 of $1,100,000 to be 

superannuation for speciﬁed executives for the year 
ended 30 June 2004. 

reviewed annually by the remuneration committee 

and the Board.

Speciﬁed executive 

Amount

G R Phillips, Deputy Managing Director

  Term of Agreement – permanent

  Base salary, including superannuation, for the year 

ended 30 June 2004 of $475,000, to be reviewed 

annually by the remuneration committee.

  Termination – 3 months notice

B Bourke 

K Daley 

P O’Shea 

K Reynolds 

F Browne 

L Hunt 

V Delosa 

J Barber 

M Roberts 

C Tizi 

$375,000

$310,000

$285,000

$285,000

$380,000

$285,000

$285,000

$240,000

$250,000

$250,000

Share-based compensation – options

The terms and conditions of each grant of options affecting remuneration in this or future reporting periods are  
as follows:

Grant date 

Expiry date  Exercise 
price 

Value per 
option at
  grant date

Date exercisable

26 April 2001 

30 April 2006 

$3.817 

$0.425 

One-third after 28/04/03, 26/04/04, 26/04/05

 23 October 2001  31 October 2006 

$4.404 

$0.491 

One-third after 28/04/03, 26/04/04, 26/04/05

 1 February 2002 

30 April 2007  

$4.280 

$0.477 

One-third after 01/02/04, 01/02/05, 01/02/06

9 April 2002 

30 April 2007 

$4.030 

$0.449 

One-third after 20/05/04, 20/05/05, 20/05/06

20 May 2002 

30 April 2007 

$4.220 

$0.470 

One-third after 20/05/04, 20/05/05, 20/05/06

86

annual report 2004

 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

ﬁnancials

Options are issued at no cost to the Option holder 

exercised, each option is converted into one stapled 

and vest in three equal tranches on the second, third 

security, comprising one ordinary share in Transurban 

and fourth anniversaries of their issue. The Exercise 

Infrastructure Developments Limited, one ordinary 

of the options is subject to an Exercise Condition. The 

Exercise Condition involves a comparison between 

Total Shareholder Return (“TSR”) of the Transurban 

Group’s Stapled Securities over the two years prior to 

a vesting date of options and the TSR of each of the 

other companies in the S&P/ASX 200 Industrials as at 

the end of the relevant Exercise Condition Test Period 

which have been in the S&P/ASX 200 Industrials for the 
full term of the Exercise Condition Test Period (“Test 

Companies”) measured over the same period.

TSR measures the total return on investment of a 

security. It takes into account both capital appreciation 

and distribution income. The Transurban Group and 

each of the Test Companies will be ranked according 

to their respective TSRs over the Exercise Condition 

Test Period. The ranking determines the extent to which 

vested options may be exercised. If the Group’s TSR 

exceeds the 65th percentile of the ranking, 100% of 

the vested options may be exercised. If Transurban 

Group’s TSR is below the 25th percentile of the ranking, 

none of the vested options may be exercised. If the 

TSR falls between these percentiles, the percentage of 

vested options that may be exercised will be calculated 

according to a formula. 

The exercise price of options is the 5 day variable 

weighted average price of the Group’s stapled 

securities prior to granting the options. When 

share in Transurban Holdings Limited and one unit in 
Transurban Holding Trust. Options can be exercised  
at any time after vesting. 

Share-based compensation – Executive long-

term incentive (“ELTI”) plan 

As advised at the 2003 Annual General Meeting the 

Board has decided to provide long-term incentives in 

the period after the options currently on issue under the 

Executive Option Plan have fully vested by way of cash 

bonuses linked to the growth in the stapled security 

price and total shareholder return.

Under the new long-term incentive plan, participants 

will be allocated “ELTI units”. Each ELTI unit will entitle 

the holder to a cash payment on the maturity date, 

which will be approximately two years after the date 

of allocation. The cash payment per unit will be equal 

to the increase in the stapled security price over the 

period between the date of allocation and the maturity 

date, subject to adjustment if Transurban’s ranking in 

the Total Shareholder Returns (“TSRs”) of the ASX 200 

Industrials over the two years prior to maturity is below 

the 70th percentile. If Transurban’s TSR ranking is 
below the 40th percentile, no payment will be made.  
For TSR rankings between the 40th and 70th 

percentiles, the adjustment factor will reduce from  

100 per cent to zero.

The terms and conditions of each grant of long-term incentive plan units affecting remuneration in this or future 

reporting periods are as follows:

  Grant date 

Expiry date  Grant price 

Value per unit 
at grant date 

Value per unit at 
reporting date

Date payable

 30 Sept 2003 

30 Sept 2005 

$4.23 

$0.46 

$0.64 

30 Nov 2005

annual report 2004

87

 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Name 

Directors of the Transurban Group

K Edwards 

G Phillips 

Speciﬁed executives of the Transurban Group

B.Bourke 

K Daley 

P O’Shea 

K Reynolds 

F Browne 

L Hunt 

V Delosa 

J Barber 

M Roberts 

C Tizi   

Number of ELTIs 
granted during the year 

Number of ELTIs
paid during the year

850,000 

- 

160,000 

170,000 

130,000 

125,000 

- 

125,000 

- 

100,000 

- 

110,000 

-

-

-

-

-

-

-

-

-

-

-

-

Equity instrument disclosures relating to directors and executives

Options provided as remuneration

Details of options over stapled securities provided as remuneration to each director of the Transurban Group and 

each of the ten speciﬁed executives of the Group are set out below. 

Name 

Directors of the Transurban Group

K Edwards 

G R Phillips 

Speciﬁed executives of the Transurban Group

B Bourke 

K Daley 

P O’Shea 

K Reynolds 

F Browne 

L Hunt 

V Delosa 

J Barber 

M Roberts 

C Tizi   

88

Number of options 
granted during the year 

Number of options  

vested during the year

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

500,000

166,667

116,667

116,667

100,000

100,000

133,333

33,333

83,333

83,333

83,333

100,000

annual report 2004

 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Shares provided on exercise of remuneration options

ﬁnancials

Details of stapled securities provided as a result of the exercise of remuneration options to each director of the 

Transurban Group and each of the ten speciﬁed executives of the Group are set out below.

  Name 

Date of exercise of options 

Number of stapled securities issued on  

exercise of options during the year

Speciﬁed executives of the Transurban Group

P O’Shea 

26 February 2004 

95,700

The amounts paid per stapled security by each director and executive on the exercise of options at the date of 

exercise were as follows:

Exercise date 

26 February 2004 

Amount paid per stapled security

$3.817

No amounts are unpaid on any securities issued on the exercise of options.

Option holdings

The number of options over stapled securities held during the ﬁnancial year by each director of the Transurban 
Group and each of the ten speciﬁed exectutives of the Group, including their personally-related entities, are set  
out below.

Name 

Balance at  Granted during  Exercised 
the start of 
the year 

the year as 
remuneration 

the year 

during  changes 

Other  Balance at  Vested and 

Vested and
at the end  exercisable  unexercisable
at the end
of the year

at the end 
  of the year 

during  of the year 

the year 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

95,700 

- 

- 

- 

- 

- 

- 

- 

Directors of the Transurban Group

K Edwards 

1,500,000 

G R Phillips 

500,000 

- 

- 

Speciﬁed executives of the Transurban Group

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

B Bourke 

350,000 

K Daley 

350,000 

P O’Shea 

300,000 

K Reynolds 

300,000 

F Browne 

400,000 

L Hunt 

100,000 

V Delosa 

250,000 

J Barber 

250,000 

M Roberts 

250,000 

C Tizi 

300,000 

annual report 2004

1,500,000 

894,657 

500,000 

298,219 

105,343

35,114

350,000 

208,753 

350,000 

208,753 

204,300 

83,231 

300,000 

178,931 

400,000 

100,000 

250,000 

89,867 

20,900 

52,250 

250,000 

149,110 

250,000 

52,250 

300,000 

178,931 

24,580

24,580

21,069

21,069

37,300

12,433

31,083

17,557

31,083

21,069

89

 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Share holdings

The number of Transurban Group Stapled Securities and Covertible Adjusting Rate Securities (“CARS”) held during 

the ﬁnancial year by each director of the Transurban Group and each of the ten speciﬁed executives of the Group, 

including their personally-related entities, are set out below.

Stapled Securities

Name 

Balance at the 
start of the year 

Received during the 
year on the exercise 
of options

Other changes 
during the year 

Balance at the
end of the year

Directors of the Transurban Group

L G Cox 

P C Byers 

G O Cosgriff 

J G A Davis 

S M Oliver 

D J Ryan 

K Edwards 

G R Phillips 

775,000 

50,000 

17,360 

40,000 

59,375 

20,000 

61,000 

- 

Speciﬁed executives of the Transurban Group

B Bourke 

K Daley 

P O’Shea 

K Reynolds 

F Browne 

L Hunt 

V Delosa 

J Barber 

M Roberts 

C Tizi 

2,862 

11,033 

75,000 

10,378 

2,949 

1,621 

1,621 

2,949 

2,949 

2,862 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

95,700 

- 

- 

- 

- 

- 

- 

- 

- 

- 

7,550 

10,000 

1,618 

1,043 

- 

- 

2,631 

3,503 

8,355 

332 

2,854 

343 

2,854 

2,854 

2,854 

150 

775,000

50,000

24,910

50,000

60,993

21,043

61,000

-

5,493

14,536

179,055

10,710

5,803

1,964

4,475

5,803

5,803

3,012

90

annual report 2004

 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

ﬁnancials

CARS

Name 

Balance at the 
start of the year 

Received during the 
year on the exercise 
of options

Other changes 
during the year 

Balance at the
end of the year

Directors of the Transurban Group

L G Cox 

P C Byers 

G O Cosgriff 

J G A Davis 

S M Oliver 

D J Ryan 

K Edwards 

G R Phillips 

4,000 

- 

121 

150 

- 

300 

348 

- 

Speciﬁed executives of the Transurban Group

B Bourke 

K Daley 

P O’Shea 

K Reynolds 

F Browne 

L Hunt 

V Delosa 

J Barber 

M Roberts 

C Tizi 

2,000 

750 

400 

205 

- 

200 

- 

50 

100 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

(3,000) 

- 

- 

(150) 

- 

(300) 

(348) 

- 

(1,600) 

- 

- 

- 

- 

- 

- 

- 

- 

- 

1,000

-

121

-

-

-

-

-

400

750

400

205

-

200

-

50

100

-

Other transactions with directors and speciﬁed executives

Mr Cox is a director of Macquarie Corporate Finance Ltd (a wholly owned subsidiary of Macquarie Bank Ltd), which 

during the year ended 30 June 2004 provided ﬁnancial advice pursuant to speciﬁc mandates. The Group is entitled 

to receive management fees of $6.5 million from Macquarie Bank in relation to the extension of the term of the 

Infrastructure Borrowing Facilities provided by Macquarie Bank.

Macquarie Bank Ltd was involved in the ﬁnancial arrangements concerning the Land Transport Notes. Mr. Cox holds 

$51,155 of Class B Land Transport Notes. 

Mr Byers is a director of Hills Motorway Limited, in which Transurban Holding Trust has a 8.1 per cent interest,  
refer note 7 and 11.

annual report 2004

91

 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Aggregate amounts of each of the above types of other transactions with directors of the Transurban Group:

Amounts recognised as revenue

  Management fees 

  Distribution from Hills Motorway Group 

Amounts recognised as expenses

  Consulting fees 

  Reimbursement of out of pocket expenses 

  Underwriting services 

Interest 

Amounts recognised as loans – liability

Loans provided and repaid 

All of the above amounts represent payments on normal commercial terms made in 
relation to the provision of goods and services.

Aggregate amounts payable to or receivable from director related entities of the 
Transurban Group at balance date relating to the above types of transactions.

Current liabilities – Macquarie Bank Limited 

Current assets – Hills Motorway Group 

Current assets – Macquarie Bank Limited 

Non-current assets – Macquarie Bank Limited 

2004 
$’000 

6,523 

1,044 

7,567 

- 

- 

- 

- 

- 

- 

- 

2,625 

1,395 

5,128 

9,148 

2003
$’000

-

-

-

372

21

7,208

3,849

11,450

250,000

5

-

-

-

5

92

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

26. Remuneration of auditors

ﬁnancials

During the year the following services were paid to the auditor of the Transurban Group and its related practices:

Assurance services

1.  Audit services 

  Audit and review of ﬁnancial reports and other audit work  

under the Corporations Act 2001. 

  Total remuneration for audit services 

2.  Other assurance services 

  Due diligence 

  Compliance plan audit 

  Other assurance services 

  Total remuneration for other assurance services 

Taxation services 

Tax compliance services, including review of income tax returns 

  Total remuneration for taxation services 

2004 
$’000 

2003
$’000

297 

297 

168 

21 

20 

209 

200 

200 

315

315

242

76

51

369

242

242

It is the Group’s policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit duties 

where PricewaterhouseCoopers’ expertise and experience with the Group are important. These assignments are 

principally tax advice and ﬁnancial due diligence. It is the Group’s policy to seek competitive tenders for all major 

consulting projects. 

27. Contingent liabilities

(a) Transurban Holding Trust acts as guarantor for Transurban CARS Trust in relation to the interest payments to 

holders of Convertible Adjusting Rate Securities (“CARS”). This guarantee is in place until the ﬁrst reset date (14 

April 2007) at which time the guarantee may or may not be extended. The distributions are semi-annual distributions 

ﬁxed until the ﬁrst reset date at 7 per cent per annum on an amount of $430 million. 

(b) In May 2003, VicRoads submitted an invoice to CityLink Melbourne Limited for costs of approximately 
$5 million for rectiﬁcation works associated with the Swan Street Bridge. CityLink Melbourne Limited does 

not believe that it has any liability to VicRoads to pay those costs. In June 2003, VicRoads and the Minister for 

Transport (“the plaintiffs”) ﬁled a writ in the Supreme Court of Victoria, claiming certain damage was sustained by 

the Swan Street Bridge. The plaintiffs claim that this damage was due to tunnelling, roadworks and associated 
infrastructure works on and in the vicinity of the Swan Street Bridge, arising from the Melbourne CityLink project. 

The entities forming the Transﬁeld-Obayashi joint venture are also defendants. The writ has not been served and 

therefore no litigation has been instituted. CityLink Melbourne Limited is facilitating discussions between the parties.

annual report 2004

93

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

(c) The Transurban Group has established a bank guarantee of $5 million in favour of a controlled entity in a form 

prescribed by ASIC to accommodate the net tangible asset conditions of the controlled entity’s Australian Financial 

Services Licence. The controlled entity is unable to act as a Responsible Entity for certain Transurban Group 

entities if the bank guarantee conditions are not satisﬁed.

28. Commitments for expenditure 

Lease commitments 

Commitments for minimum payments in relation to non-cancellable operating  
lease contracted for at the reporting date but not recognised as liabilities payable:   

  Within one year 

Later than one year but not later than 5 years 

Later than 5 years 

Concession fees

2004 
$’000 

2003
$’000

1,905 

8,488 

10,393 

1,577

2,433

-

4,010

The Melbourne CityLink Concession Deed between the Transurban Group and the State of Victoria provides for 

annual concession fees of $95.6 million during the construction phase and for the ﬁrst 25 years of the operations 

phase, $45.2 million for years 26 to 34 of the operations phase and $1 million thereafter if the concession 

continues beyond year 34. Until a certain threshold return is achieved, payments of concession fees due under the 

Concession Deed will be satisﬁed by means of the issue of non-interest bearing Concession Notes to the State. 

Refer to note 19 for details.

Option over further interest in Westlink M7 Motorway Project

Wholly owned entities of the Group have separately granted put options to wholly owned entities of the Leighton 

group and of Abigroup. Each put option relates to 25 per cent of the interest in the Westlink M7 project held by the 

grantee entity and is exercisable at the completion of the project at a price of $24.5 million.

Wholly owned entities of the Group have been separately granted call options by wholly owned entities of the 

Leighton group and of Abigroup. Each call option relates to 25 per cent of the interest in the Westlink M7 project 

held by the grantor entity and is exercisable at completion of the project at a price of $24.5 million.

94

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
ﬁnancials

2004 
$’000 

2003
$’000

5,570 

2,036 

7,606 

5,072

971

6,043

2004 
Number 

2003
Number

407 

407 

349

349

notes to the ﬁnancial statements 
for the year ended 30 June 2004

29. Employee entitlements 

Employee beneﬁt and related on-costs liabilities 

  Current (note 17) 

  Non-current (note 20) 

Employee numbers 

  Average number of employees during the ﬁnancial year 

a)  Transurban Group Executive Option Plan

Refer to note 25 for details of the Transurban Group Executive Option plan.

Set out below are summaries of options granted under the plan.

Grant date 

Expiry date 

Exercise 

Balance 
price  at start of 
the year 

Issued  Exercised 
during 
during 
the year 
the year 

Lapsed  Balance
during  at end of
the year

the year 

2004

26 April 2001 

April 2006 

$3.817 

2,100,000 

23 October 2001  October 2006 

$4.404 

2,000,000 

1 February 2002 

April 2007 

$4.280 

400,000 

9 April 2002 

April 2007 

$4.030 

300,000 

20 May 2002 

April 2007 

$4.220 

1,550,000 

Total 

2003

6,350,000 

26 April 2001 

April 2006 

$3.817 

2,350,000 

23 October 2001  October 2006 

$4.404 

2,000,000 

1 February 2002 

April 2007 

$4.280 

400,000 

9 April 2002 

April 2007 

$4.030 

300,000 

20 May 2002 

April 2007 

$4.220 

1,650,000 

Total 

6,700,000 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

95,700 

-  2,004,300

- 

- 

- 

- 

-  2,000,000

- 

- 

400,000

300,000

50,000  1,500,000

95,700 

50,000  6,204,300

- 

- 

- 

- 

- 

- 

250,000 

2,100,000

-  2,000,000

- 

- 

400,000

300,000

100,000  1,550,000

350,000  6,350,000

annual report 2004

95

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Options exercised during the ﬁnancial year and number of stapled securities issued to employees on the exercise  

of options. 

Excercise date 

26 February 2004 

Fair value of stapled securities 
at issue date 

$4.465 

2004 
Number 

95,700 

95,700 

2003

Number

-

-

The fair value of stapled securities issued on the exercise of options is the week weighted average price at which 

the Transurban Group’s stapled securities were traded on the Australian Stock Exchange during the week prior to 

the exercise of the options.

Options vested at the reporting date 

Aggregate proceeds received from employees on the  
exercise of options and recognised as issued capital 

Fair value of securities issued to employees on the  
exercise of options as at their issue date 

b)  Employee share scheme

2004 
Number 

2003
Number

2,100,000 

1,307,900

2004 
$ 

365,287 

2004 
$’000 

2003
$

-

2003
$’000

427 

-

The Transurban Employee Security Ownership Plan (“the Plan”) was introduced in March 2002. The scheme offers 

employees the opportunity to participate in the success of the Transurban Group by investing in securities of the 

Group.

All current full-time and permanent part-time (excluding directors) and ﬁxed term staff on contracts greater than  
12 months are eligible to participate. Offers under the scheme are at the discretion of the Transurban Group, taking 

into account the Group’s success and market performance.

Stapled Securities issued under the scheme may only be sold once the employee has ceased employment with the 

Group. In all other aspects the Stapled Securities rank equally with other fully-paid securities on issue. 

In December 2003, each participant was issued 120 stapled securities (2003 – 120 stapled securities) at a value of 

$4.44 per stapled security (2003 – $4.25).

Prior to 1 July 2003, Stapled Securities provided under the plan were issued to employees for no cash 
consideration. 

For the year commencing 1 July 2003, Stapled Securities provided under the plan were purchased on the open 

market.

96

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

ﬁnancials

Stapled securities purchased on market under the plan and provided  
to participating employees on 27 February 2004 (1) 

(1)  The prior year number represents the number of securities issued under the plan to participating employees.

c)  Employee Long-term Incentive (“ELTI”) Plan  

Refer to note 25 for details of the Transurban ELTI Plan.

2004 
$’000 

2003
$’000

40,440 

34,560

The terms and conditions of each grant of long-term incentive plan units affecting remuneration in this or future 

reporting periods are as follows:

Grant date 

Expiry date 

Grant price 

Value per unit 
at grant date 

Value per unit 
at reporting date

Date payable

30 Sept 2003 

30 Sept 2005 

$4.23 

$0.46 

$0.64 

30 Nov 2005

30. Investment in controlled entities

Name of entity 

The CityLink Trust 

CityLink Melbourne Limited 

City Link Extension Pty Ltd 

Country of  Class of 
incorporation  security 

Equity 
holding 

Equity 

Date
holding  acquired

  2004 (%)  2003 (%)

Australia  Ordinary 

Australia  Ordinary 

Australia  Ordinary 

Transurban Infrastructure Management Limited 

Australia  Ordinary 

Transurban Collateral Security Pty Ltd 

Australia  Ordinary 

Transurban Finance Trust  

Australia  Ordinary 

Transurban Finance Company Pty Ltd 

Australia  Ordinary 

Transurban Nominees Pty Ltd 

Transurban Nominees 2 Pty Ltd 

Transurban WSO Pty Ltd 

Transurban AL Trust 

Transurban CARS Trust 

Transurban WSO Trust 

Australia  Ordinary 

Australia  Ordinary 

Australia  Ordinary 

Australia  Ordinary 

Australia  Ordinary 

Australia  Ordinary 

Transurban Infrastructure Developments WSO Pty Ltd  Australia  Ordinary 

Transurban MF 1 Pty Ltd 

Transurban MF 2 Pty Ltd 

Australia  Ordinary 

Australia  Ordinary 

Transurban Asset Management Pty Ltd 

Australia  Ordinary 

Transurban Operations Pty Ltd 

Australia  Ordinary 

Acquisition of controlled entities

All new controlled entities were acquired for a book value of $12 each.

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

100 

- 

- 

- 

- 

01/03/04

01/03/04

16/10/03

01/03/04

annual report 2004

97

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

31. Investment in associates

Investments in associates are accounted for in the combined ﬁnancial statements using the equity method of 

accounting. Information relating to the associates is set out below.

Combined entity

Name of company 

WSO Company Pty Limited 

Westlink Motorway Limited 

WSO Finance Company 

Ownership interest 
2003 

2004 
% 

carrying amount
2003

2004 
$’000 

% 

40 

40 

40 

40 

40 

40 

$’000

-

-

-

- 

- 

- 

WSO Company, Westlink Motorway Limited and WSO Finance Company are presently non-operational and are 

carried at cost of $80 each. WSO Company will be the operator of Westlink M7 Motorway which is presently 

under construction and is due for completion in 2007. Westlink Motorway Limited is the nominee manager of the 

Westlink Motorway Partnership and WSO Finance Company will arrange debt facilities for the Westlink Motorway 

Project. The associates are not expected to have an impact on the combined entity’s equity accounted proﬁts until 

operations commence.

Summary of performance and ﬁnancial position of associates 

  Aggregate net proﬁts of associates after tax 

  Assets 

Liabilities 

32. Interest in joint ventures

2004 
$’000 

- 

108,501 

108,501 

2003
$’000

-

147,339

147,339

Combined entity

Westlink Motorway Partnership 

40 

Ownership interest 
2003 

2004 
% 

% 

40 

carrying amount
2003

2004 
$’000 

$’000

6,236 

5,888

The combined entity has a 40% interest in the Westlink Motorway Partnership, the principal activity of which is the 

construction of the Westlink M7 Motorway in Sydney. The M7 is presently in the construction phase and is due for 

completion 2007. The partnership is unlikely to have an impact on the combined entity’s equity accounted proﬁts 

until operations commence. 

98

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Share of partnership assets and liabilities 

Current assets 

Non-current assets 

Total Assets 

Current liabilities 

Non-current liabilities 

Total Liabilities 

Net Assets 

Share of Proﬁts 

Share of partnership commitments 

Capital commitments 

ﬁnancials

2004 
$’000 

2003
$’000

2,932 

355,834 

358,766 

31,306 

327,460 

358,766 

- 

- 

1,741

235,059

236,800

-

236,800

236,800

-

-

327,484 

564,266

33. Reconciliation of operating loss after income tax to net cash ﬂow  

  from operating activities 

Operating loss after income tax 

Depreciation and amortisation 

Deferred borrowing costs 

Change in operating assets and liabilities 

Increase in Concession Note liability 

Increase in creditors 

(Increase) in debtors 

Increase in provisions 

(Decrease)/increase in unearned income 

Net cash inﬂow from operating activities 

(61,490) 

152,400 

394 

36,985 

17,831 

(4,895) 

1,560 

(4,541) 

(83,578)

148,233

(13,134)

32,704

6,745

(997)

2,693

2,627

138,244 

95,293

annual report 2004

99

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

34. Non-cash ﬁnancing and investing activities

Pre-acquisition portion of distribution receivable from  

Hills Motorway Group Ltd offsetting the cash purchase price 

1,581 

-

2004 
$’000 

2003
$’000

Distributions satisﬁed by the issue of stapled securities  

under the distribution reinvestment plan  

35. Earnings per stapled security

Basic earnings per Stapled Security 

Diluted earnings per Stapled Security 

60,525 

62,106 

34,054

34,054

2004 
(11.7 cents) 

2003

(16.3 cents)

(4.1 cents) 

(8.2 cents)

Weighted average number of Stapled Securities used as the  
denominator in calculating basic earnings per Stapled Security 

524,512,875 

512,976,259

Weighted average number of Stapled Securities and potential Stapled Securities  
used as the denominator in calculating diluted earnings per Stapled Security 

985,000,351 

970,462,464

Reconciliation of earnings used in calculating earnings per stapled security

Net loss 

Interest savings on CARS 

Earnings used in calculating diluted earnings per Stapled Security 

2004 
$’000 

(61,490) 

21,128 

(40,362) 

2003
$’000

(83,578)

4,445

(79,133)

100

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ﬁnancials

notes to the ﬁnancial statements 
for the year ended 30 June 2004

Information concerning the classiﬁcation of securities

(a) Stapled Securities

All Stapled Securities are fully paid. They carry the right to participate in distributions and have been included in the 

determination of basic and diluted earnings per stapled security.

(b) Options

Options granted to executives under the Transurban Executive Option Plan are considered to be potential stapled 

securities and have been included in the determination of diluted earnings per stapled security. The options have 

not been included in the determination of basic earnings per stapled security.

(c) Convertible Adjusting Rate Securities (“CARS”)

CARS on issue are convertible to stapled securities at a maximum conversion ratio of 105, at the ﬁrst reset date 14 

April 2007. CARS are considered to be potential stapled securities and have been included in the determination of 

diluted earnings per stapled security at their maximum conversion ratio. This ratio will be applicable if the volume 

weighted average price of stapled securities during the period over which the price for the purpose of conversion of 

CARS is determined is less than $0.98. The directors consider conversion of this basis to be a highly unlikely event. 

The CARS have not been included in the calculation of basic earnings per stapled security.

annual report 2004

101

directors’ declaration

The directors declare that the ﬁnancial statements and notes set out on pages 53 to 101.

a) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional 

reporting requirements; and

b) give a true and fair view of the combined entity’s ﬁnancial position as at 30 June 2004 and of their performance, 

as represented by the results of their operations and its cash ﬂows, for the year ended on that date.

In the directors’ opinion

a) the ﬁnancial statements and notes are in accordance with the Corporations Act 2001; and

b) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become 

due and payable.

This declaration is made in accordance with separate resolutions of the directors of Transurban Infrastructure 

Developments Limited, Transurban Infrastructure Management Limited and Transurban Holdings Limited.

Jeremy G A Davis 
Director 

Kimberley Edwards
Managing Director 

Melbourne, 25 August 2004

102

annual report 2004

 
 
 
 
 
 
independant audit report to the members

ﬁnancials

annual report 2004

103

shareholder information

The security holder information set out below was applicable as at 31 August 2004

(a) Distribution of Stapled Securities

1.  The number of holders of Stapled Securities, which comprise one share in Transurban Holdings Limited, 

one share in Transurban Infrastructure Developments Limited and one unit in Transurban Holding Trust, was 

26,258.

2. The voting rights are one vote per Stapled Security.

3.  At 31 August 2004 the percentage of the total holdings held by or on behalf of the twenty largest holders of 

these securities was 66.51 per cent.

4. The distribution of holders was as follows:

Share Grouping 

Number of Holders 

Stapled Securities 
Held 

1 - 

1,000 

1,001 - 

5,000 

5,001 - 

10,000 

10,001 -  100,000 

100,001 -  and over 

Total 

4,689 

15,711 

3,708 

2,003 

147 

26,258 

3,187,058 

42,015,938 

27,409,057 

42,926,618 

416,903,531 

532,442,202 

 There were 212 holders of less than a marketable parcel of ordinary shares.

 5.  Substantial Shareholder’s as at 31 August 2004 are as follows:

Name 

 Commonwealth Bank of Australia Limited 

 Ontario Teacher’s Pension Plan Board 

 Schroder Investment Management Australia Limited 

 Investors Mutual Limited 

Number of Stapled 
Securities 

102,635,578 

48,153,103 

28,079,322 

27,336,730 

%

0.60

7.89

5.15

8.06

78.30

100.00

% of 
Total

19.28

9.04

5.27

5.13

104

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(b) Twenty Largest Holders of Stapled Securities

Westpac Custodian Nominees Limited 

National Nominees Limted 

JP Morgan Nominees Australia Limited 

Citicorp Nominees Pty Limited 

Citicorp Nominees Pty Limited 

RBC Global Services Australia Nominees Pty Limited 

Citicorp Nominees Pty Limited 

Citicorp Nominees Pty Limited 

ANZ Nominees Limited 

Queensland Investment Corporation 

Citicorp Nominees Pty Limited 

Citicorp Nominees Pty Limited 

Cogent Nominees Pty Ltd 

AMP Life Limited 

RBC Global Services Australia Nominees Pty Limited 

Cogent Nominees Pty Ltd 

UBS Private Clients Australia Nominees Pty Limited 

Australia Foundation Investment Company Limited 

Citicorp Nominees Pty Limited 

ANZ Nominees Limited 

Total   

ﬁnancials

Number of Stapled 
Securities Held 

% of issued 
Stapled Securities

88,192,077 

51,652,696 

33,377,585 

25,897,894 

21,196,303 

19,372,044 

14,480,269 

13,189,166 

12,111,230 

10,506,217 

9,123,404 

8,867,671 

8,579,154 

7,461,510 

7,338,379 

4,956,957 

4,881,456 

4,593,898 

4,295,386 

4,123,171 

16.56

9.70

6.27

4.86

3.98

3.64

2.72

2.48

2.27

1.97

1.71

1.67

1.61

1.40

1.38

0.93

0.92

0.86

0.81

0.77

354,196,467 

66.51

annual report 2004

105

 
 
 
 
 
 
 
 
ﬁnancials

Transurban CARS Trust and Controlled Entity
(ABN 81 656 633 158)

for the year ended 30 june 2004

Statement of Financial Performance 

s Directors’ Report 
t
n
e
t
n
o
c

Statement of Financial Position 

Statement of Cash Flows 

Notes to the Financial Statements 

Directors’ Declaration 

Independent Audit Report to the members 

108

112

113

114

115

133

134

This ﬁnancial report covers both Transurban CARS 

Trust as an individual entity and the consolidated entity 

consisting of Transurban CARS trust and its controlled 

entity.

Transurban CARS Trust is a Trust formed and domiciled 

in Australia. Its registered ofﬁce and principal place of 

business is:

Transurban CARS Trust

Level 43 Rialto South Tower

525 Collins Street

Melbourne VIC 3000

Through the use of the internet, we have ensured 

that our corporate reporting is timely, complete, and 

available globally. All releases to the ASX and the media, 

ﬁnancial reports and other information are available on 

our website: www.transurban.com.au

annual report 2004

directors’ report

The directors of Transurban Infrastructure Management 

Limited, the Responsible Entity of Transurban CARS 

Trust, present their report on the consolidated entity 

consisting of Transurban CARS Trust (“the Trust”), and 

the entity it controlled at the end of, and during, the year 

ended 30 June 2004.

Responsible entity

Transurban CARS Trust is registered as a managed 

investment scheme under Chapter 5C of the 

Corporations Act 2001 and as a result, requires 

a Responsible Entity. Transurban Infrastructure 

Management Limited is the Responsible Entity 

of Transurban CARS Trust and is responsible for 

performing all functions that are required under  

the Corporations Act 2001. 

Directors

Infrastructure Management Limited during the whole  
of the ﬁnancial year and up to the date of this report:

Non-executive directors 

Executive director

Geoffrey R Phillips 

Laurence G Cox 

Peter C Byers 

Geoffrey O Cosgriff 

Jeremy G A Davis 

Susan M Oliver 

David J Ryan

Principal activities and operations

During the year, the Trust continued to hold the 

investment in the Westlink Motorway Partnership which  

it made in February 2003. The Trust holds a 40% interest 

in the partnership which was formed to undertake the 

Westlink M7 Motorway Project in Sydney NSW. 

There were no signiﬁcant changes in the nature of the 

The following persons were directors of Transurban 

Trust’s activities during the year.

Distributions
Distributions paid to CARS holders during the ﬁnancial year were as follows: 

Convertible Adjusting Rate Securities 

Distribution payment for the period 14 April 2003 to  
30 June 2003 of 7 per cent paid on 31 July 2003 

Distribution payment for the half year ended  
31 December 2003 of 7 per cent paid on 31 January 2004 

2004
$’000

6,350

  15,174

  21,524

A further distribution for the half year ended 30 June 2004 of $15.0 million was paid on 31 July 2004.

Review of operations

The investment policy of the Trust continues to be that detailed in the prospectus and in accordance with the 

provisions of the governing documents of the Trust.

Results

A summary of the consolidated revenue and overall result is set out below:  Consolidated 

Parent

Revenue from ordinary activities 

Net loss from ordinary activities 

2004 
$’000 
26,259 

2003 

$’000 

9,762 

2004 
$’000 
26,259 

2003

$’000

9,762

(8,085) 

(12,644) 

(8,085) 

(12,644)

108

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
directors’ report

ﬁnancials

a)  Construction Phase Loan Notes (“CPLN”)

During the period, Transurban CARS Trust (“TCT”) 

Likely developments and expected 
results of operations

received distributions from its wholly owned entity, 

Information on likely developments in the operations 

Transurban WSO Trust (“TWT”). The distributions are 

of the consolidated entity and the expected results 

funded from interest received by TWT from the CPLN’s 

of operations have not been included in this report 

which it acquired to fund Transurban’s contribution to 

because the directors believe it would be likely to result 

the Westlink Motorway Partnership. The CPLN’s are 

in unreasonable prejudice to the consolidated entity.

subordinated loan notes which pay interest at the rate 

of 6.27 per cent per annum. 

Environmental regulation

The income received by way of distribution from TWT 

is the principal source of cash to fund distributions 

payable by TCT on the Convertible Adjusting Rate 

Securities (“CARS”) issued by TCT.

b)  Convertible Adjusting Rate Securities  

(“CARS”)

During the period, TCT paid distributions to CARS 
holders at the ﬁxed rate of 7 per cent per annum.  
The distributions which are paid twice annually  

No signiﬁcant environmental regulations apply.

Insurance and indemniﬁcation of ofﬁcers

No insurance premiums are paid for out of the assets 

of the Trust in regards to insurance cover provided to 

the Responsible Entity or any of its agents. So long as 

the ofﬁcers of the Responsible Entity act in accordance 

with the Trust Constitution and the Act, they remain fully 

indemniﬁed out of the assets of the Trust against any 

losses incurred while acting on behalf of the Trust. The 

with payment dates of 31 July and 31 January 

auditor of the Trust is in no way indemniﬁed out of the 

respectively,  were 100 per cent tax deferred  

assets of the Trust. 

Fees paid to and interest held in the 
Trust by the Responsible Entity or its 
Associates

Fees paid to the responsible entity and its associates 

out of Trust property during the year are disclosed in 

Note 21.

No fees were paid out of Trust property to the directors 

of the Responsible Entity during the year.

The number of securities held by the Responsible Entity 

or its associates as at the end of the ﬁnancial year are 

disclosed in Note 19 of the ﬁnancial statements.

for the year ended 30 June 2004.

Signiﬁcant changes in the state of affairs

In the opinion of the Directors there were no signiﬁcant 

changes in the state of affairs of the consolidated entity 

that occurred during the ﬁnancial year.

Matters subsequent to the end of the 
ﬁnancial period

At the date of this report the directors are not aware of 

any circumstances that have arisen since 30 June 2004 

that has signiﬁcantly affected, or may signiﬁcantly affect:

(a) the consolidated entity’s operations in future 

ﬁnancial years, or

(b) the results of those operations in future ﬁnancial 

years, or

(c) the consolidated entity’s state of affairs in future 

ﬁnancial years.

annual report 2004

109

 
 
Interests in the trust issued during the ﬁnancial year

CARS on issue at the beginning of the year 

Consolidated 

Parent 

2004 
4,300,000 

2003 

- 

2004 
4,300,000 

2003

-

CARS issued during the year 

- 

4,300,000 

- 

4,300,000

CARS on issue at 30 June 2004 

4,300,000 

4,300,000 

4,300,000 

4,300,000

Ordinary units on issue at the beginning of the year 

Ordinary units issued during the year 

Ordinary units on issue at the end of the year 

12 

- 

12 

- 

12 

12 

12 

- 

12 

-

12

12

Units 

Units 

Units 

Units

Value of assets

Value of Trust assets at 30 June  

445,813 

441,316 

445,813 

441,316

The value of the Trust’s assets is derived using the basis of accounting set out in Note 1 to the ﬁnancial statements. 

Consolidated 

2004 
$’000 

2003 

$’000 

Parent

2004 
$’000 

2003

$’000

Directors’ interests

Security Holdings

As at the date of this Directors’ Report, the directors of the Responsible Entity have disclosed relevant interests in 

Stapled Securities, options over Stapled Securities and Convertible Adjusting Rate Securities (“CARS”) issued by 

the Transurban Group as follows:

Name 

L G Cox 

P C Byers 

J G A Davis 

S M Oliver 

G R Phillips 

G O Cosgriff 

D J Ryan 

Number of 
CARS 

Number of Transurban 
Stapled Securities 

Options issued
over Transurban
Stapled Securities

1,000 

- 

- 

- 

- 

121 

- 

775,000 

50,000 

50,000 

60,993 

- 

24,910 

21,043 

-

-

-

-

500,000

-

-

110

annual report 2004

 
  
 
 
  
 
 
  
 
 
 
  
 
 
  
 
 
 
 
 
 
 
directors’ report

Rounding of amounts

ﬁnancials

The Trust is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments 

Commission, relating to the “rounding off” of amounts in the directors’ report. Amounts in the directors’ report have 

been rounded off in accordance with that Class Order to the nearest thousand dollars, unless otherwise indicated.

Auditor

PricewaterhouseCoopers continues in ofﬁce in accordance with the Corporations Act 2001.

This report is made in accordance with a resolution of the directors of Transurban Infrastructure Management Limited. 

Jeremy G A Davis 
Director 

Melbourne, 25 August 2004

Geoffrey O Cosgriff
Director   

annual report 2004

111

 
 
 
 
 
statements of ﬁnancial performance 
for the year ended 30 June 2004

Notes 

Consolidated 

2004 
$’000 

2003 

$’000 

Parent

2004 
$’000 

2003

$’000

Revenue from ordinary activities 

4 

26,259 

9,762 

26,259 

9,762

Expenses from ordinary activities: 
  Administration 

(2,483) 

(667) 

(2,483) 

(667)

  Borrowing costs 

5 

(31,861) 

(21,739) 

(31,861) 

(21,739)

Net loss from ordinary activities 

(8,085) 

(12,644) 

(8,085) 

(12,644)

Basic earnings per ordinary unit 

Diluted earnings per ordinary unit 

Dollars 

Dollars 

27 

27 

(673,750) 

(1,053,666)

(673,750) 

(1,053,666)

The above statements of ﬁnancial performance should be read in conjunction with the accompanying notes.

112

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
statements of ﬁnancial position 
as at 30 June 2004

Current assets 

Cash assets 

Receivables 

Total current assets 

Non-current assets 

Financial assets 

Other 

Total non-current assets 

Total assets 

Current liabilities 

Payables 

Non-interest bearing liabilities 

Total current liabilities 

Non-current liabilities  

Interest bearing liabilities 

Total non-current liabilities 

Total liabilities 

ﬁnancials

Notes 

Consolidated 

2004 
$’000 

2003 

$’000 

Parent

2004 
$’000 

2003

$’000

7 

8 

10 

11 

12 

13 

40,707 

35,239 

40,707 

35,239

366 

943 

366 

943

41,073 

36,182 

41,073 

36,182

392,000 

392,000 

392,000 

392,000

12,740 

13,134 

12,740 

13,134

404,740 

405,134 

404,740 

405,134

445,813 

441,316 

445,813 

441,316

15,026 

2,420 

17,446 

6,513 

15,026 

6,513

- 

2,420 

-

6,513 

17,446 

6,513

14 

449,096 

447,447 

449,096 

447,447

449,096 

447,447 

449,096 

447,447

466,542 

453,960 

466,542 

453,960

Net assets 

(20,729) 

(12,644) 

(20,729) 

(12,644)

Unitholders’ funds 

Accumulated losses 

15 

(20,729) 

(12,644) 

(20,729) 

(12,644)

Total unitholders’ funds 

(20,729) 

(12,644) 

(20,729) 

(12,644)

The above statements of ﬁnancial position should be read in conjunction with the accompanying notes.

annual report 2004

113

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
statements of cash ﬂows 
for the year ended 30 June 2004

Cash ﬂows from operating activities

Receipts from customers (inclusive of GST) 

Payments to suppliers (inclusive of GST) 

Interest received 

Distributions received 

Borrowing costs 

Net cash inﬂows/(outﬂows) from 
operating activities 

Cash ﬂows from investing activities

Payment for purchase of controlled entity, 
net of cash required 

Loans to related parties 

Net cash outﬂows from investing activities 

Cash ﬂows from ﬁnancing activities

Proceeds from issue of CARS 

Loans from related parties 

Notes 

2004 
$’000 

2003 

$’000 

2004 
$’000 

2003

$’000

838 

(431) 

26,221 

- 

(542) 

9,658 

838 

(431) 

1,575 

- 

- 

24,646 

-

(542)

500

9,158

(21,528) 

(20,268) 

(21,528) 

(20,268)

25 

5,100 

(11,152) 

5,100 

(11,152)

- 

- 

- 

- 

(392,000) 

(392,000) 

-  (392,000)

- 

-

-  (392,000)

- 

430,000 

-  430,000

368 

157,968 

368 

157,968

Repayment of loans to related parties 

- 

(149,577) 

- 

(149,577)

Net cash inﬂows from ﬁnancing activities 

368 

438,391 

368 

438,391

Net increase in cash held 

5,468 

35,239 

5,468 

35,239

Cash at the beginning of the ﬁnancial period 

35,239 

- 

35,239 

-

Cash at the end of the ﬁnancial period 

7 

40,707 

35,239 

40,707 

35,239

The above statements of cash ﬂows should be read in conjunction with the accompanying notes.

114

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

ﬁnancials

1. Summary of signiﬁcant  
  accounting policies

ceases during a ﬁnancial year its results are included for 

that part of the year during which control existed.

This ﬁnancial report covers Transurban CARS Trust and 

b)  Historical cost convention

its controlled entity.

The responsible entity of Transurban CARS Trust is 
Transurban Infrastructure Management Limited.  
The responsible entity’s registered ofﬁce is Level 43, 

525 Collins Street, Melbourne VIC 3000.

Transurban CARS Trust (the “Trust”) was constituted 
on 20 December 2002. The Trust will terminate on 20 

December 2082 unless terminated earlier in accordance 

with the provisions of the Trust Constitution.

The ﬁnancial statements are prepared on the basis 

of the historical cost convention and, except where 

stated, do not take into account current valuations of 

non-current assets. Cost is based on the fair values of 

the consideration given in exchange for assets. The fair 

value of cash consideration with deferred settlement 

terms is determined by discounting any amounts 

payable in the future to their present value as at the 

date of acquisition. Present values are calculated using 

rates applicable to similar borrowing arrangements of 

This general purpose ﬁnancial report has been 

the consolidated entity. 

prepared in accordance with the requirements of 

the Trust Constitution, Accounting Standards and 

other authoritative pronouncements of the Australian 

Accounting Standards Board, Urgent Issues Group 
Consensus Views, and the Corporations Act 2001 
in Australia. 

It is prepared in accordance with the historical cost 

convention, except for certain assets which, as noted, 
are at valuation. The accounting policies adopted  
are consistent with those of the previous year. 

Comparative information is reclassiﬁed where 

appropriate to enhance comparability.

a)  Principles of consolidation

The consolidated ﬁnancial statements incorporate 

the assets and liabilities of all entities controlled by 

Transurban CARS Trust (“trust” or “parent entity”) as at 

30 June 2004 and the results of all controlled entities for 

the period then ended. Transurban CARS Trust and its 

controlled entity together are referred to in this ﬁnancial 

report as the consolidated entity. The effects of all 

transactions between entities in the consolidated entity 

are eliminated in full. 

The entity has not adopted a policy of revaluing its non-

current assets on a regular basis.

c) Income tax

Income tax has not been brought to account in the 

ﬁnancial statements of the Trust as under the terms 

of the Constitution and pursuant to the provisions of 

the Income Tax Legislation, the Trust is not liable to 

income tax provided that its taxable income (including 

assessable realised capital gains) is fully distributed to 

unit holders. 

d) Recoverable amount of non-current assets 

The recoverable amount of an asset is the net amount 

expected to be recovered through the net cash inﬂows 

and outﬂows arising from its continued use and 

subsequent disposal. 

Where the carrying amount of a non-current asset is 

greater than its recoverable amount, the asset is written 

down to its recoverable amount. Where net cash inﬂows 

are derived from a group of assets working together, 

the recoverable amount is applied to the relevant group 

Where control of an entity is obtained during the ﬁnancial 

period, its results are included in the consolidated 

statement of ﬁnancial performance from the date on 

of assets. The decrement in the carrying amount is 

recognised as an expense in net proﬁt or loss in the 

reporting period in which the recoverable amount  

which control commences. Where control of an entity 

write-down occurs.

annual report 2004

115

notes to the ﬁnancial statements 
for the year ended 30 June 2004

In assessing recoverable amounts of non-current 

i) Joint venture entity

assets, the relevant cash ﬂows have been discounted to 

their present value, except where speciﬁcally stated.

e) Investments

Interests in listed and unlisted securities, other than 

controlled entities and associates in the consolidated 

ﬁnancial statements, are brought to account at cost and 

distribution income is recognised in the statement of 

The interest in the joint venture partnership is accounted 

for using the equity method. Under this method, the 

share of the proﬁts or losses of the partnership is 

recognised in the statement of ﬁnancial performance, 

and the share of movements in reserves is recognised 

in reserves in the statement of ﬁnancial position. Details 

relating to the partnership are set out in note 23.

ﬁnancial performance when receivable.

j) Borrowing costs

The interest in the joint venture partnership is accounted 
for as set out in Note 1(i).

f) Trade and other creditors

Trade and other creditors represent liabilities for goods 

and services provided to the consolidated entity prior 

to the end of the ﬁnancial period and which are unpaid. 

The amounts are unsecured and are usually paid within 

45 days of recognition.

g) Interest bearing liabilities 

On issue of CARS, the fair value of the liability 

component, being the obligation to make future 

payments of principal and interest to security holders, 

is calculated using a market interest rate for an 

Borrowing costs are recognised as expenses in the 

period in which they are incurred, except to the extent 

to which they relate to the construction of a qualifying 

asset in which case borrowing costs are capitalised into 

the cost of the asset. Borrowing costs include interest 

on short term, long term borrowings and amortisation 

of deferred borrowing costs.

Cost incurred in connection with the arrangement 

of borrowings are deferred and amortised over the 

effective period of funding.

k) Cash

For the purpose of the statement of cash ﬂows, cash 

includes cash on hand.

equivalent non-convertible security. The residual 

l) Earnings per unit

amount, representing the fair value of the conversion 

option, is included in equity as other equity securities 

with no recognition of any change in the value of the 

option in subsequent periods. The liability is included 

in borrowings and carried on an amortised cost basis 

with interest on the securities recognised as borrowing 

costs on an effective yield basis until the liability is 

(i)  Basic earnings per unit

Basic earnings per unit is determined by dividing  
the net result from ordinary activities by the  

weighted average number of units outstanding 

during the period.

extinguished on conversion or maturity of the securities.

(ii) Diluted earnings per unit

h) Distributions

Provision is made for the amount of any distribution 

declared, determined or publicly recommended by the 
directors on or before the end of the ﬁnancial period but 

not distributed at balance date.

Diluted earnings per unit adjusts the ﬁgures used in 

the determination of basic earnings per unit to take 

into account the weighted average number of units 

assumed to have been issued for no consideration 
in relation to dilutive potential units.

116

annual report 2004

notes to the ﬁnancial statements 
for the year ended 30 June 2004

m) Rounding of amounts

The Trust is of a kind referred to in Class Order 

98/0100, issued by the Australian Securities and 

Investments Commission, relating to the “rounding 

off” of amounts in the ﬁnancial report. Amounts in the 

ﬁnancial report have been rounded off in accordance 

with that Class Order to the nearest thousand dollars.

o)  International Financial Reporting  
  Standards (“IFRS”)

The Australian Accounting Standards Board (AASB) 

is adopting IFRS for application to reporting periods 

beginning on or after 1 January 2005. The AASB will 

issue Australian equivalents to IFRS, and the Urgent 

Issues Group will issue abstracts corresponding to 

IASB interpretations originated by the International 

Financial Reporting Interpretations Committee or 

the former Standing Interpretations Committee. The 

adoption of Australian equivalents to IFRS will be 

ﬁrst reﬂected in the consolidated entity’s ﬁnancial 

ﬁnancials

opening balance sheet to be prepared on the date 

of transition to IFRS and future accounting policy 

differences. The project team has identiﬁed a number of 

accounting policy choices which are still being analysed 

by management to determine the most appropriate 

accounting policy for the Transurban Group on 

transition to IFRS.

The major matters identiﬁed to date that are expected 

to require changes to the Transurban Group’s existing 

accounting policies, or allow for an election by the 

Transurban Group are set out below. The major 

differences identiﬁed to date should not be regarded 

as a complete list of possible changes in accounting 

policies that will result from the transition to IFRS, as 

not all standards or elections possible under some 

standards have been analysed as yet. For these 

reasons it is not yet possible to quantify the impact of 

the transition to IFRS.

(i)  Financial instruments

statements for the half year ending 31 December 2005 

Under AASB 139 Financial Instruments: Recognition 

and the year ending 30 June 2006.

and Measurement there may be major impacts as a 

Entities complying with Australian equivalents to 

result of:

IFRS for the ﬁrst time will be required to restate their 

  ﬁnancial assets held by the consolidated entity 

comparative ﬁnancial statements to amounts reﬂecting 

being subject to classiﬁcation as either held for 

the application of IFRS to that comparative period. Most 

trading, held-to-maturity, available for sale or loans 

adjustments required on transition to IFRS will be made, 

receivable and, depending upon classiﬁcation, 

retrospectively, against opening retained earnings as at 

measured at fair value or amortised cost.

1 July 2004.

The Transurban Group established an IFRS transition 

project team led by the Finance Director in October 

2003. The project team prepared a plan to manage 

the transition to IFRS which was presented to the audit 

committee along with the results of an initial scoping 

review of the expected impact of the adoption of IFRS 

on the Transurban Group. The project plan is currently 

on schedule. The project team has commenced a 

detailed analysis of IFRS and the Transurban Group’s 
accounting policies to determine the effects on the 

(ii) Accounting for Associates 

Under AASB 128 Investments in Associates, a long 

term loan to an associate can be considered as 

part of the investment. This is a change in present 

accounting policy where only the equity component 

of the investment is included in equity accounting 

and long term loans are a separate class of asset 

subject to recoverable amount testing. This may 

effect the Trust’s investment in the Westlink 
project which is presently equity accounted. 

annual report 2004

117

 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

The investment is substantially represented by a 

long term loan rather than an equity investment. 

If the Westlink project incurs accounting losses 

from the commencement of operations greater 

than the Trust’s equity investment, the receivable 

balance may be reduced to the extent of the Trust’s 

remaining share of accounting losses. This may 

occur despite the recoverable amount of the long 

term loan not being impaired due to the expected 

cashﬂow from the Westlink project. This change in 

2. Trust formation and termination 

The Trust was established on 20 December 2002 

through the issue of 12 ordinary units at $1 per unit  

to Transurban Holding Trust (“THT”). The term of  

the Trust ends on 20 December 2082 unless  

terminated earlier in accordance with the provisions  

of the Trust Constitution.

3. Segment information

policy is not expected to impact on the transition 
balance sheet or opening retained earnings as 

The Trust’s sole business segment for the period ending 
30 June 2004 was investing in the Westlink Motorway 

Westlink has not yet commenced operations, but 

Partnership. All revenues and expenses are directly 

may lead to greater volatility in earnings in future 

attributable to this sole purpose. Internal ﬁnancial 

reporting periods. 

reporting is based on this sole business segment.

Consolidated 

2004 
$’000 

2003 

$’000 

Parent 

2004 
$’000 

2003

$’000

4. Revenue

Revenue from operating activities 

Interest 

Trust distributions 

26,259 

9,762 

1,613 

- 

- 

24,646 

  Revenue from ordinary activities 

26,259 

9,762 

26,259 

604

9,158

9,762

5. Loss from ordinary activities

Expenses 

Borrowing costs 

 Interest and ﬁnance charges paid/payable 

(31,467) 

(21,739) 

(31,467) 

(21,739)

 Capitalised underwriting fees expensed 

(394) 

- 

(394) 

-

(31,861) 

(21,739) 

(31,861) 

(21,739)

6. Income tax 

Tax losses at beginning of period 

Tax losses/(income) for the period 

Tax losses at end of period 

13,204 

- 

13,204 

-

10,324 

13,204 

10,324 

13,204

23,528 

13,204 

23,528 

13,204

118

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

ﬁnancials

Potential future income tax beneﬁts at 30 June 2004 for tax losses not brought to account for the consolidated 
entity are $23.5 million. These losses cannot be used directly by the consolidated entity for the reason outlined in 
Note 1(c), but may be available for the beneﬁt of unit holders in the future.

These beneﬁts of tax losses will only be realised for the beneﬁt of security holders in the consolidated entity if:

(i)  the consolidated entity derives future assessable income of a nature and of an amount sufﬁcient to enable the 

beneﬁt from the deductions for the losses to be realised; and

(ii)  the consolidated entity continues to comply with the conditions for deductibility imposed by tax legislation; and

(iii) no changes in tax legislation adversely affect the ability of the entity to realise the beneﬁt from the deductions for 

the losses.

7. Current assets – cash assets

  Cash at bank 

Consolidated 

2004 
$’000 

2003 

$’000 

Parent

2004 
$’000 

2003

$’000

40,707 

35,239 

40,707 

35,239

40,707 

35,239 

40,707 

35,239

Included in the above amount is $28.2 million (2003: $26.1 million) 
which is held in a reserve account to fund future CARS distributions, 
and was not available for general use at 30 June 2004.

8. Current assets – receivables

  Sundry debtors 

9. Non-current assets – investments accounted for 
using the equity method 

Interest in Westlink Motorway Partnership 

The investment in the partnership is carried at cost of $80 (2003: $80). 
Refer Note 23 for details.

10. Non-current assets – other ﬁnancial assets

  Non traded investments 

  Units in controlled entity 

366 

366 

943 

943 

366 

366 

943

943

- 

- 

- 

- 

- 

- 

-

-

- 

- 

392,000  392,000

  Construction phase loan notes 

392,000  392,000 

- 

-

392,000  392,000 

392,000  392,000

annual report 2004

119

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Investment in controlled entity

The investment in controlled entity represents 100% ownership of the issued ordinary units of The Transurban WSO 

Trust (registered in Australia).

Investment in Construction Phase Loan Notes (“CPLN”)

The CPLN represent Transurban’s funding contribution to the Westlink Motorway Partnership. The CPLN earn 

interest at the ﬁxed rate of 6.27 per cent for the period from the ﬁnancial close of the Westlink M7 project (“the 
Project”) to the date of completion of the Project, or 3.5 years, which ever is the lesser, at which time they convert  
to Term Loan Notes. 

11. Non-current assets – other

  Deferred Borrowing Costs 

12. Current liabilities – payables

Trade creditors 

  CARS coupon payment 

  Other creditors 

Consolidated 

2004 
$’000 

2003 

$’000 

Parent 

2004 
$’000 

2003

$’000

12,740 

13,134 

12,740 

13,134

12,740 

13,134 

12,740 

13,134

5 

23 

5 

23

15,009 

6,350 

15,009 

6,350

12 

140 

12 

140

15,026 

6,513 

15,026 

6,513

CARS coupon payment represents the interest payment due to holders of Convertible Adjusting Rate Securities 

(“CARS”). The distribution on these securities of 7 per cent for the period 1 January 2004 to 30 June 2004 totalling 

$15.0 million has been charged to the statement of ﬁnancial performance as a borrowing cost because the CARS 

are classiﬁed as a liability. This coupon was paid to CARS holders on 31 July 2004. 

13. Current liabilities – non-interest bearing liabilities

Loans from related parties 

Consolidated 

Parent 

2004 
$’000 

2,420 

2,420 

2003 

$’000 

- 

- 

2004 
$’000 

2,420 

2,420 

2003

$’000

-

-

14. Non-current liabilities - interest bearing liabilities 

Loan from related parties 

19,096 

17,447 

19,096 

17,447

  Convertible Adjusting Rate Securities 

430,000  430,000 

430,000  430,000

449,096  447,447 

449,096  447,447

120

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ﬁnancials

notes to the ﬁnancial statements 
for the year ended 30 June 2004

Financing arrangements and credit facilities

Convertible Adjusting Rate Securities (“CARS”)

Transurban CARS Trust issued 4.3 million convertible securities for $430 million on 14 April 2003. Semi-annual 

interest is paid at a ﬁxed rate of 7 per cent per annum until the ﬁrst reset date on 14 April 2007. On a reset date, 

certain terms of the CARS may be reset and Holders will be given the option of:

(i)  taking no action and therefore, be bound by the new terms from the reset date; or 

(ii)  submitting an Exchange Notice. 

Additionally, the term of the Guarantee may also be extended on terms and conditions determined by Transurban 

Holding Trust (“THT”) in its absolute discretion. The interest payments are guaranteed by THT until the ﬁrst reset date.

Following the submission of an Exchange Notice, Transurban will elect to either:

  convert the CARS into Transurban Securities;

  arrange the acquisition of CARS by a third party and deliver to the Holder the cash proceeds and, to the extent 

there is a shortfall, Transurban Securities; or

  a combination of both.

It is the present intention of Transurban that Exchange will be satisﬁed by conversion into Transurban Securities. 

These securities will rank ahead of Transurban Stapled Securities on the winding up of Transurban, in conjunction 

with the winding up of the Transurban CARS Trust. 

Other loans

The loan from Transurban Holding Trust does not have any ﬁxed date for repayment and bears interest at  
7.05% pa (2003 – 7.05%).

Consolidated 

2004 
$’000 

2003 

$’000 

Parent

2004 
$’000 

2003

$’000

15. Accumulated losses

  Accumulated losses at the beginning of the ﬁnancial year 

(12,644) 

- 

(12,644) 

-

  Net loss from ordinary activities after tax 

(8,085) 

(12,644) 

(8,085) 

(12,644)

  Available for distribution 

  Dividends provided for or paid 

(20,729) 

(12,644) 

(20,729) 

(12,644)

- 

- 

- 

-

  Accumulated losses carried forward 

(20,729) 

(12,644) 

(20,729) 

(12,644)

annual report 2004

121

 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

16. Unitholders’ funds 

Consolidated 

Parent

2004  2004 
Units  $’000 

2003 

2003 

$’000  $’000 

2004  2004 
Units  $’000 

2003 

2003

Units  $’000

Units fully paid 

12 

- 

12 

- 

12 

- 

12 

-

The Trust has issued 12 ordinary units at $1 each. Each unit represents a right to an individual unit in the Trust and 

does not extend to a right to the underlying assets of the scheme. There are no separate classes of units and each 

unit has the same rights attaching to it as all other units of the Trust. There were no movements in the number of 

units during the ﬁnancial year.

17. Distributions

Convertible Adjusting Rate Securities 

  Distribution payment for the period 14 April 2003 to  
30 June 2003 of 7 per cent paid on 31 July 2003 

  Distribution payment for the half year ended  

31 December 2003 of 7 per cent paid on 31 January 2004 

2004

$’000

6,350

  15,174

  21,524

The coupon payment for the half year ended 30 June 2004 of $15.0 million was paid on 31 July 2004.

18. Remuneration of auditors

During the year the following services were paid to the auditor, PricewaterhouseCoopers Australian Firm:

Consolidated 

2004 
$ 

2003 
$ 

Parent

2004 
$ 

2003
$

Audit Services 

  Audit or review of ﬁnancial reports  

13,800 

11,300 

13,800 

11,300

Taxation Services 

  GST Advice 

19,000 

- 

19,000 

-

32,800 

11,300 

32,800 

11,300

122

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ﬁnancials

notes to the ﬁnancial statements 
for the year ended 30 June 2004

19. Director disclosures

Directors

The following persons were directors of Transurban Infrastructure Management Limited during the ﬁnancial year:

  Chairman – non-executive

Laurence G Cox

  Non-executive directors
  Peter C Byers

  Geoffrey O Cosgriff
Jeremy GA Davis

  Susan M Oliver

  David J Ryan

  Executive director
  Geoffrey R Phillips

Remuneration of directors

Details of remuneration

Details of the remuneration of each director of Transurban Infrastructure Management Limited, including their 

personally related entities, are set out in the following tables. The Options granted relate to the Transurban Group 

as a whole. There is no apportionment between Group entities. As a reasonable basis of apportionment is not 

available, the full amount has been disclosed. 

Directors of Transurban Infrastructure Management Limited

2004

Name 

L G Cox 

P C Byers 

Cash 
salary 
& fees 
$ 

55,009 

21,196 

J G A Davis 

19,799 

S M Oliver 

20,994 

G O Cosgriff 

18,976 

D J Ryan 

18,168 

G R Phillips 

- 

Total 

154,142 

Primary 

Post-employment 

Equity

Cash 
bonus 

Long 
Non- 
term  monetary 
beneﬁts 
$ 

  incentive 
$ 

$ 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Super-  Retirement 
beneﬁts 

annuation 

Options 

Total 

$ 

4,951 

1,908 

2,644 

1,889 

1,708 

1,635 

- 

$ 

34,626 

10,495 

8,309 

9,721 

23,270 

- 

- 

$ 

- 

- 

- 

- 

- 

- 

$

94,586

33,599

30,752

32,604

43,954

19,803

61,501 

61,501

14,735 

86,421 

61,501 

316,799

Total remuneration of directors of Transurban Infrastructure Management Limited for the year ended 30 June 2003 

is set out below. Information on individual directors is not shown as this is the ﬁrst ﬁnancial report prepared since 
the issue of AASB 1046 Director and Executive Disclosures by Disclosing Entities.

annual report 2004

123

 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

2003

Name 

Cash 
salary 
& fees 
$ 

Primary 

Post-employment 

Equity

Cash 
bonus 

Long 
Non- 
term  monetary 
beneﬁts 
$ 

  incentive 
$ 

$ 

Super-  Retirement 
beneﬁts 

annuation 

Options 

Total 

$ 

$ 

$ 

$

Total 

130,984 

- 

- 

- 

11,789 

83,191 

61,333 

287,297

Share-based compensation – options

The terms and conditions of each grant of options affecting remuneration in this or future reporting periods are  
as follows: 

Grant date 

Expiry date  Exercise 
price 

Value per 
option at
  grant date

Date exercisable

26 April 2001 

30 April 2006 

$3.817 

$0.425  One-third after 28/04/03, 26/04/04, 26/04/05

 23 October 2001  31 October 2006 

$4.404 

$0.491  One-third after 28/04/03, 26/04/04, 26/04/05

 1 February 2002 

30 April 2007  

$4.280 

$0.477 

One-third after 01/02/04, 01/02/05, 01/02/06

9 April 2002 

30 April 2007 

$4.030 

$0.449  One-third after 20/05/04, 20/05/05, 20/05/06

20 May 2002 

30 April 2007 

$4.220 

$0.470  One-third after 20/05/04, 20/05/05, 20/05/06

Options are issued at no cost to the Option holder and vest in three equal tranches on the second, third and fourth 

anniversaries of their issue. The Exercise of the options is subject to an Exercise Condition. The Exercise Condition 

involves a comparison between Total Shareholder Return (“TSR”) of The Transurban Group’s Stapled Securities 

over the two years prior to a vesting date of options, and the TSR of each of the other companies in the S&P/ASX 

200 Industrials as at the end of the relevant Exercise Condition Test Period which have been in the S&P/ASX 200 

Industrials for the full term of the Exercise Condition Test Period (“Test Companies”) measured over the same period.

TSR measures the total return on investment of a security. It takes into account both capital appreciation and 

distribution income. The Transurban Group and each of the Test Companies will be ranked according to their 

respective TSRs over the Exercise Condition Test Period. The ranking determines the extent to which vested options 

may be exercised. If the Group’s TSR exceeds the 65th percentile of the ranking, 100% of the vested options may be 

exercised. If Transurban Group’s TSR is below the 25th percentile of the ranking, none of the vested options may be 

exercised. If the TSR falls between these percentiles, the percentage of vested options that may be exercised will be 

calculated according to a formula. 

The exercise price of options was the 5 day variable weighted average price of the Group’s stapled securities 

prior to granting the options. When exercised, each option is converted into one stapled security, comprising one 

ordinary share in Transurban Infrastructure Developments Limited, one ordinary share in Transurban Holdings 

Limited and one unit in Transurban Holding Trust. Options can be exercised at any time after vesting.

124

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Equity instrument disclosures relating to directors

Options provided as remuneration

ﬁnancials

Details of options over Transurban Group stapled securities provided as remuneration to each director of 

Transurban Infrastructure Management Limited are set out below.

Name 

Number of options 
granted during the year 

Number of options  

vested during the year

Directors of Transurban Infrastructure Management Limited

G R Phillips 

Option holdings

- 

166,667

The number of options over Transurban Group stapled securities during the ﬁnancial year held by each director of 

Transurban Infrastructure Management Limited, including their personally-related entities, are set out below.

Name 

Balance at  Granted during  Exercised 
the start of 
the year 

the year as 
remuneration 

the year 

Other 
during  changes 

during  of the year 

Balance  Vested and 

Vested and
at the end  exercisable  unexercisable
at the end
of the year

at the end 
  of the year 

Directors of Transurban Infrastructure Developments Limited

the year 

G R Phillips 

500,000 

- 

- 

- 

500,000 

298,219 

35,114

Share holdings

The number of Transurban Group Stapled Securities and Covertible Adjusting Rate Securities (“CARS”) held during 

the ﬁnancial year by each director of Transurban Infrastructure Management Limited, including their personally-

related entities, are set out below.

Stapled Securities

Name 

Balance at the 
start of the year 

Received during the 
year on the exercise 
of options

Other changes 
during the year 

Balance at the
end of the year

Directors of Transurban Infrastructure Management Limited

L G Cox 

P C Byers 

G O Cosgriff 

J G A Davis 

S M Oliver 

D J Ryan 

G R Phillips 

annual report 2004

775,000 

50,000 

17,360 

40,000 

59,375 

20,000 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

7,550 

10,000 

1,618 

1,043 

- 

775,000

50,000

24,910

50,000

60,993

21,043

-

125

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

CARS

Name 

Balance at the 
start of the year 

Received during the 
year on the exercise 
of options

Other changes 
during the year 

Balance at the
end of the year

Directors of Transurban Infrastructure Management Limited

L G Cox 

P C Byers 

G O Cosgriff 

J G A Davis 

S M Oliver 

D J Ryan 

G R Phillips 

4,000 

- 

121 

150 

- 

300 

- 

- 

- 

- 

- 

- 

- 

- 

(3,000) 

- 

- 

(150) 

- 

(300) 

- 

1,000

-

121

-

-

-

-

Company directors and their director-related entities received normal distributions on these securities. All 

transactions relating to securities were on the same basis as similar transactions with other security holders.

Other transactions with directors and director-related entities

Fees have been paid to Transurban Infrastructure Management Limited in its capacity as Responsible Entity of the 

Transurban CARS Trust.

The Responsible Entity is also the Responsible Entity for the Transurban Holding Trust which provides ﬁnancial 

assistance and acts as guarantor to the consolidated entity.

Aggregate amounts of each of the above types of other transactions with directors of the consolidated entity and 

their director related entities:

Amounts recognised as expense 

  Underwriting services 

  Guarantee fee 

Interest 

Consolidated 

2004 
$’000 

2003 

$’000 

Parent

2004 
$’000 

2003

$’000

- 

- 

7,208 

8,000 

- 

- 

7,208

8,000

1,281 

6,118 

1,281 

6,118

  Responsible Entity Fee 

2,200 

Aggregate amounts payable to director-related entities at balance date: 

  Non-interest bearing current liability 

2,420 

- 

- 

2,200 

2,420 

-

-

Interest bearing non-current liability 

19,096  267,448 

19,096  267,448

126

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ﬁnancials

notes to the ﬁnancial statements 
for the year ended 30 June 2004

20. Contingent liabilities

As at the reporting date there are no contingent liabilities.

21. Related parties

Responsible entity’s fees

Transurban Infrastructure Management Limited (“TIML”) is the Responsible Entity of the Trust and is entitled to 
receive a fee calculated at the rate of up to 2 per cent per annum of the Gross Asset Value of the Trust. This fee  
is payable per quarter and because the Trust was established on 14 April 2003, no fee was charged for the period 

ended 30 June 2003. For the 2004 ﬁnancial year, the responsibility entity fee paid by the Trust was calculated  

at a rate of 0.5 per cent of the value of the Trust’s assets at 30 June 2004. 

2004 
$’000 
Responsible entity 

2003
$’000
Responsible entity

Fees for the year paid by the Trust 

Fees earned by the responsible entity in respect of its role as  

responsible entity of other entities within the Transurban Group 

Management fees earned by the responsible entity which are  
reimbursed in accordance with the Constitution 

Aggregate amounts payable to the responsible entity at reporting date 

2,200 

4,187 

8,577 

7,839 

-

1,032

18,363

1,257

Wholly-owned group

The wholly-owned group consists of The Transurban CARS Trust and its wholly-owned controlled entity, The 

Transurban WSO Trust. Details of this controlled entity are set out in Note 22.

Transactions between Transurban CARS Trust and the other entity in the wholly-owned group during the years 

ended 30 June 2003 and 30 June 2004 consisted of:

(a) Loans from Transurban WSO Trust

(b) Distribution paid to Transurban CARS Trust

Consolidated 

2004 
$’000 

2003 

$’000 

Parent

2004 
$’000 

2003

$’000

Aggregate amounts included in the determination of proﬁt from 
ordinary activities before income tax that resulted from 

transactions with entities in the wholly owned group:

Distribution revenue 

- 

- 

24,646 

9,158

Aggregate amounts receivable from other related parties at 
balance date: 

Non-current receivable 

392,000  392,000 

- 

-

annual report 2004

127

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

Other related parties

Aggregate amounts included in the determination of proﬁt from ordinary activities before related income tax that 

resulted from transactions with each class of other related parties:

CPLN’s interest revenue 

Controlling entities

Consolidated 

2004 
$’000 

2003 

$’000 

Parent

2004 
$’000 

2003

$’000

24,646 

9,158 

- 

-

The ultimate parent entity is Transurban Holding Trust which owns 100% of the issued ordinary units of Transurban 

CARS Trust.

Ownership interests in related parties

Transurban CARS Trust, through its wholly owned subsidiary Transurban WSO Trust, has a 40% interest in the joint 

venture partnership Westlink Motorway. Details of this interest is set out in Note 23.

22. Investments in controlled entity

Name of entity 

Country of 
incorporation 

Class of 
security 

Transurban WSO Trust 

Australia 

Ordinary 

Equity 
holding 

2004 

100% 

Equity
holding

2003

100%

23. Interest in joint venture

Westlink Motorway Partnership 

Ownership interest 

Combined entity

2004 
% 

40 

2003 

% 

40 

carrying amount
2003

2004 
$’000 

$’000

6,236 

5,888

128

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

ﬁnancials

The consolidated entity has a 40% interest in the Westlink Motorway Partnership. The principal activity of the 

partnership is the construction of the Westlink M7 Motorway in Sydney. The M7 is presently in the construction 

phase and is due for completion in 2007. The partnership is unlikely to have any impact on the consolidated entity’s 

equity accounted proﬁts until construction is completed and the operations commence. 

Information relating to the joint venture partnership, presented in accordance with the accounting policy described 

in Note 1(i), is set out below:

Share of partnership assets and liabilities 

Consolidated 

2004 
$’000 

2003 

$’000 

Parent

2004 
$’000 

2003

$’000

Current assets 

Non-current assets 

Total assets 

Current liabilities 

Non-current liabilities 

Total liabilities 

Net Assets 

Share of Proﬁts 

2,932 

1,741 

355,834  235,059 

358,766  236,800 

31,306 

- 

327,460  236,800 

358,766  236,800 

- 

- 

- 

- 

Share of partnership commitments 

Capital commitments 

327,484  564,266 

Contingent liabilities relating to the joint venture

As at the reporting date there are no contingent liabilities.

- 

- 

- 

- 

- 

- 

- 

- 

- 

-

-

-

-

-

-

-

-

-

annual report 2004

129

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

24. Financial instruments disclosure

Credit risk

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.

Interest rate risk

The consolidated entity’s exposure to interest rate risk and the effective weighted average interest rate by maturity 

periods is set out in the following table.

2004 

Fixed interest maturing in: 

Floating  1 year  Between 1  More than  Non Interest 
bearing 
$’000 

  interest rate  or less  and 5 years 
$’000 

5 years 
$’000 

$’000  $’000 

Note 

Total
$’000

Financial assets 

Cash 

Sundry debtors 

7 

8 

Construction Phase Loan Notes  10 

Total ﬁnancial assets 

40,707 

142 

- 

40,849 

Weighted average interest rate 

5.08% 

Financial liabilities 

Creditors 

CARS 

Loan from related parties 

Total ﬁnancial liabilities 

12 

14 

13 

- 

- 

19,096 

19,096 

Weighted average interest rate 

7.05% 

Net ﬁnancial assets/(liabilities)  

21,753 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

392,000 

392,000 

6.27% 

- 

430,000 

- 

430,000 

7.00% 

(38,000) 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

40,707

223 

365

-  392,000

223  433,072

- 

-

15,026 

15,026

-  430,000

2,420 

21,516

17,446  466,542

(17,223) 

(33,470)

130

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

2003 

ﬁnancials

Fixed interest maturing in: 

Floating  1 year  Between 1  More than  Non Interest 
bearing 
$’000 

  interest rate  or less  and 5 years 
$’000 

5 years 
$’000 

$’000 

$’000 

Note 

Total
$’000

Financial assets 

Cash 

Sundry debtors 

7 

8 

Construction Phase Loan Notes  10 

Total ﬁnancial assets 

35,239 

105 

- 

35,344 

Weighted average interest rate 

4.45% 

Financial liabilities 

Creditors 

CARS 

Loan from related parties 

Total ﬁnancial liabilities 

12 

14 

13 

- 

- 

17,447 

17,447 

Weighted average interest rate 

7.05% 

Net ﬁnancial assets/(liabilities)  

17,897 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

392,000 

392,000 

6.27% 

- 

430,000 

- 

430,000 

7.00% 

(38,000) 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

35,239

838 

943

-  392,000

838  428,182

- 

-

6,513 

6,513

-  430,000

- 

17,447

6,513  453,960

(5,675) 

(25,778)

Net fair values of ﬁnancial assets and liabilities 

The carrying amount and net market value of ﬁnancial assets and liabilities brought to account at balance date  
are the same.

annual report 2004

131

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
notes to the ﬁnancial statements 
for the year ended 30 June 2004

25. Reconciliation of proﬁt/(loss) from ordinary activities to net cash inﬂow/outﬂow 
from operating activities

Net loss from ordinary activities 

Deferred borrowing costs 

Change in operating assets and liabilities 

   Increase in creditors 

   (Increase) decrease in debtors 

Consolidated 

2004 
$’000 

2003 

$’000 

Parent

2004 
$’000 

2003

$’000

(8,085) 

(12,644) 

(8,085) 

(12,644)

394 

(13,134) 

394 

(13,134)

8,513 

6,513 

577 

(943) 

8,513 

577 

6,513

(943)

   Increase in loans from related parties 

3,701 

9,056 

3,701 

9,056

Net cash inﬂow/(outﬂow) from operating activities 

5,100 

(11,152) 

5,100 

(11,152)

26. Economic dependency

Transurban CARS Trust is reliant on the receipt of distributions from Transurban WSO Trust for its ongoing viability. 

Transurban CARS Trust also has a $28.2 million reserve account to fund future Convertible Adjusting Rate 

Securities (“CARS”) distributions and is not available for general use. In addition to this, Transurban Holding Trust 

(Parent entity) acts as Guarantor for Transurban CARS Trust in relation to the interest payments to holders of CARS 

until 14 April 2007.

27. Earnings per unit 

Net tangible asset backing per ordinary unit 

Basic earnings per unit 

Diluted earnings per unit 

Weighted average number of units used as the denominator  
in calculating basic earnings per unit 

Weighted average number of unit and potential units used used 
as the denominator in calculating diluted earnings per unit 

2004 
$’000 

Consolidated 
2003

$’000

($1,727,417) 

($1,053,644)

($673,750) 

($1,053,666)

($673,750) 

($1,053,666)

12 

12 

12

12

132

annual report 2004

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
directors’ declaration

ﬁnancials

The directors of Transurban Infrastructure Management Limited, the Responsible Entity for Transurban CARS Trust, 

declare that the ﬁnancial statements and notes set out on pages 115 to 132:

(a) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional 

reporting requirements; and

(b) give a true and fair view of the Trust and consolidated entity’s ﬁnancial position as at 30 June 2004 and of their 

performance, as represented by the results of their operations and their cash ﬂows, for the ﬁnancial year ended 

on that date. 

In the directors’ opinion:

(a) the ﬁnancial statements and notes are in accordance with the Corporations Act 2001; and 

(b) there are reasonable grounds to believe that the Trust will be able to pay its debts as and when they become 

due and payable.

This declaration is made in accordance with a resolution of the directors of Transurban Infrastructure  
Management Limited. 

Jeremy G A Davis 
Director 

Melbourne, 25 August 2004

Geoffrey O Cosgriff
Director   

annual report 2004

133

 
 
 
 
 
independant audit report to the members

134

annual report 2004

ﬁnancials

shareholder information 
The security holder information set out below was applicable as at 31 August 2004.

(a) Distribution of Convertible Adjusting Rate Securities (“CARS”)

1.  The number of holders of Convertible Adjusting Rate Securities, which are preference units in Transurban 

CARS Trust (“TCT”), was 6,928.

2. The voting rights are one vote per security.

3.  At 31 August 2004 the percentage of the total holdings held by or on behalf of the twenty largest holders of 

these securities was 62.68 per cent.

4. The distribution of holders was as follows:

Share Grouping 

Number of Holders 

Stapled Securities 
Held 

1 - 

1,000 

1,001 - 

5,000 

5,001 -  10,000 

10,001 -  100,000 

100,001 -  and over 

Total 

6,757 

134 

11 

20 

6 

6,928 

1,181,376 

262,995 

78,870 

681,261 

2,095,498 

4,300,000 

There were 48 holders of less than a marketable parcel of preference units.

5.  Substantial Holder’s as at 31 August 2004 are as follows:

Name 

Number of Stapled 
Securities 

Credit Suisse First Boston Australia (Holdings) Limited 

455,244 

%

27.47

6.12

1.83

15.84

48.74

100.00

% of 
Total

10.59

annual report 2004

135

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(b) Twenty Largest Holders of Convertible Adjusting Rate Securities (CARS)

Number of Convertible 
Securities Held 

% of issued 
Convertible Securities

Westpac Custodian Nominees Limited 

RBC Global Services Australia Nominees Pty Limited 

JP Morgan Nominees Australia Limited 

National Nominees Limited 

ANZ Nominees Limited 

RBC Global Services Australia Limited 

UBS Private Clients Australia Nominees Pty Limited 

Elise Nominees Pty Limited 

Hastings Funds Management Limited 

Perpetual Trustee Company Limited 

Australian Foundation Investment Company Limited 

JB were Capital Markets Limited 

Brispot Nominees Pty Limited 

Tower Trust Limited 

Sandhurst Trustees Limited 

Cambooya Pty LImited 

Fortis Clearing Nominees Pty Limited 

Permanent Trustee Australia Limited 

Cogent Nominees Pty Limited 

Permanent Trustee Australia Limited 

Total   

765,419 

442,036 

296,903 

224,697 

220,607 

145,836 

84,821 

75,400 

60,000 

55,069 

52,700 

49,971 

47,364 

41,004 

26,751 

25,900 

22,724 

22,030 

18,781 

17,673 

17.80

10.28

6.90

5.23

5.13

3.39

1.97

1.75

1.40

1.28

1.23

1.16

1.10

0.95

0.62

0.60

0.53

0.51

0.44

0.41

2,695,686 

62.68

136

annual report 2004

 
 
 
 
 
 
 
 
enquiries and information

enquiries about your stapled securities
The Stapled Securities Register is maintained by Computershare Investor Services Pty Limited.
If you have a question about your Transurban Securities, transfer of securities or distributions, please contact:

computershare investor services pty limited.
Yarra Falls, 52 Johnston Street, 
Abbotsford Victoria 3067 
GPO Box 242 
Melbourne Victoria 3001

(within Australia) 1300 850 505 
(outside Australia) +613 9415 4000
Facsimile +613 9473 2555

enquiries about transurban
Contact Transurban’s Investor Relations: 
Manager, Investor Relations 
Telephone +613 9612 6999 
Facsimile +613 9649 7380 
Email via our website: www.transurban.com.au 

Or write to:
Manager, Investor Relations, Transurban Group
Level 43 Rialto South Tower
525 Collins Street,
Melbourne Victoria 3000

stock exchange listing
The Stapled Securities are listed on the Australian Stock Exchange under the name Transurban Group and under the code ‘TCL’.

Transurban CARS Trust: the securities are listed on the Australian Stock Exchange under the name Transurban CARS Trust and 
under the code ‘TCS’.

The securities participate in the Clearing House Electronic Subregister System (‘CHESS’).

removal from annual report mailing list
Security Holders can nominate not to receive an Annual Report by written notice to the Stapled Securities Register. Security holders 
will continue to receive all other shareholder information, including Notice of Annual General Meeting and proxy form.

tax ﬁ le number (‘TFN’) information
While it is not compulsory for security holders to provide a TFN, the Company is obliged to deduct tax from distributions or 
dividends to holders resident in Australia who have not supplied such information. If you have not already supplied your TFN,
you may do so by writing to the Stapled Securities Register.

change of address or name
A security holder should notify the Register immediately, in writing, if there is any change in his or her registered address or name.

transurban group
Transurban Holdings Limited
ABN 86 098 143 429

Transurban Holding Trust
ABN 30 169 362 255

Transurban Infrastructure Developments 
Limited
ABN 96 098 143 410

Transurban Infrastructure Management Limited
ABN 27 098 147 678 (as responsible entity of the
Transurban CARS Trust ARSN 103 090 928)

Registered Ofﬁ ce
Level 43 Rialto South Tower
525 Collins Street
Melbourne Victoria 3000
Telephone +613 9612 6999
Facsimile +613 9649 7380
www.transurban.com.au

directors
Laurence G Cox, Chairman
Kim Edwards, Managing Director
Peter C Byers
Geoffrey O Cosgriff
Jeremy G A Davis
Susan M Oliver
Geoffrey R Phillips
David J Ryan

company secretaries
Geoffrey R Phillips
Paul O’Shea

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auditors
PricewaterhouseCoopers
333 Collins Street
Melbourne Victoria 3000
Telephone +613 8603 1000
Facsimile +613 8603 1999

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
www.transurban.com.au