annual
report
2009
t
r
a
n
s
u
r
b
a
n
a
n
n
u
a
l
r
e
p
o
r
t
2
0
0
9
contents
02 peRfoRmance highlights
04 ouR WoRld
06 chaiRman’s RepoRt
08 ceo’s RepoRt
10 highlights fRom ouR poRtfolio
12 hoW We do business
14 business fRameWoRk
16 coRpoRate goveRnance
financial statements
23
tRansuRban holdings limited
and contRolled entities
148 tRansuRban holding tRust
and contRolled entities
228 tRansuRban inteRnational limited
and contRolled entities
Omar FrOm GlenwOOd GOeS
tO FairField City Park FOr
annual Family PiCniC
meliSSa FrOm CeCil HillS meetS
Her SiSter at Parklea marketS
tO SHOP FOr barGainS
time Saved: 32 minuteS
Who we are
We are a values-based,
value-driven toll road
owner-operator with assets
and projects in australia
and North america. We have:
>interests in six australian toll
roads and two Us toll roads
(one under development)
> three customer tolling
brands in australia, and
around five million account
and non-account customers
globally, and
>Corporate headquarters in
melbourne, australia.
YouR feedback
Your comments and queries will help
us improve the materials we prepare
for investors, so please contact us
if you have feedback or want more
information:
Via post
Public Affairs
Transurban Group
Locked Bag 28
South Melbourne Victoria 3205
Via email
corporate@transurban.com
about this
report
RepoRting peRiod
As Transurban is listed on the
Australian Securities Exchange,
our report reflects the standard
Financial Year in Australia. This report
covers the period from 1 July 2008
to 30 June 2009.
auditoR
The financial statements are audited
by PricewaterhouseCoopers.
RepoRt pRoduction
The report was printed by the BlueStar
Print Group. All BlueStar facilities
have Forest Stewardship Council
(FSC) Chain of Custody certification,
document quality management
systems and Environmental
Management Systems (EMS).
The cover and editorial pages are
printed on Monza Recycled which
contains 55% recycled fibre (25% post
consumer and 30% pre consumer)
and FSC Certified pulp. This ensures
that all virgin pulp is derived from
well-managed forests and controlled
sources. It is manufactured by an
ISO 14001 certified mill.
The financial pages are printed on
Sappi Royal Web Recycled Silk. It
features 50% post consumer recycled
pulp. Sappi Fine Paper Europe is
certified under ISO 9001, ISO 14001
and EMAS (Eco Management and
Audit system). All virgin fibre used in
Sappi Fine Paper Europe products
originates from well managed forests
and controlled sources.
Cert no. SGS-COC-003898
i
p
r
e
c
n
c
t
.
c
o
m
.
a
u
anny iS SSSavinG tiMe
truck driver danny iS SavinG tiMe
iverieS
and dieSeL fueL for hiS daiLy deLiverieS
iverie
Liverie
L
Ly de
for hiS daiLy de
for hi
for hi
y froM bauLkhaM
the robertS faMiLy froM bauLkhaM
y fro
y fro
hiLLS take a thredbo hoLiday: 48 SetS
of traffic LiGhtS avoided
Lucrecia and Gavin keep fit by cycLinG
and runninG on the M7 Shared path
1 Transurban annual reporT 2009
ouR
pERFoRmAnCE
11.5% 5.4%
EBITDA
Underlying
ProPortional
eBitda (earnings
Before interest,
tax, dePreciation
and amortisation)
was $583.4 million.*
FREE CASH
Underlying
free cash flow
was $283.2 million,
up 5.4%.#
7.6%
Toll REvEnuE
ProPortional
toll revenUe
was $778.7 million,
UP 7.6%. statutory toll
revenue was $678.3
million, up 7.9% on
the previous year.*
2 Transurban annual reporT 2009
some highlights for the year…
> Traffic across the Transurban portfolio
was resilient.
> statutory toll revenue was $678.3 million,
up 7.9% on the previous year.
> proportional toll revenue was $778.7 million,
up 7.6%.*
> underlying proportional ebITDa (earnings
before Interest, Tax, Depreciation and
amortisation) was $583.4 million, up 11.5%.*
> underlying free cash flow was $283.2 million,
up 5.4%.#
> $980 million of debt was refinanced,
including $465 million on the M2 in May
and $515 million of non-recourse debt on
the eastern Distributor after year end.
>$26.6 million in cost reductions was achieved,
exceeding the targeted savings.
> We were included for the third straight year
in the Dow Jones sustainability Indexes
World list of high-performing companies
and were again listed as a member company
of the FTse4Good Index.
* The Group’s proportional result more clearly reflects the
underlying business performance. In addition, the exclusion of
certain items permits a more appropriate and meaningful analysis
of the Group’s underlying performance on a comparative basis.
The Group acknowledges that this presentation differs from the
statutory accounting format.
# Free cash flow is calculated as cash flow from operations from
100% owned subsidiaries plus dividends received from less than
100% owned subsidiaries and equity accounted investments less
the estimated annualised maintenance capital expenditure for
100% owned subsidiaries for the remaining concession life.
3 Transurban annual reporT 2009
ouR
WoRlD
Transurban’s sTronG
perForMance In FY09
Was seT aGaInsT a
Global backDrop oF
rIsInG uneMploYMenT,
sloWInG econoMIes
anD a challenGInG
creDIT envIronMenT.
Such a difficult economic environment
highlighted the resilience of our roads
portfolio, which has proven to be one
of the strongest across the globe.
We have measured our assets’
performance against a number
of global peers and the result is
compelling – see graph on the
facing page.
Traffic grew on most and revenue was
up on all roads in our portfolio.
The strength of our core portfolio
also helped Transurban’s smooth
passage through a challenging credit
environment.
Successful refinancing of the
debt on two of our major assets,
the Hills M2 and the M1 Eastern
Distributor in Sydney, demonstrated
that high-quality toll road assets
remain attractive to lenders.
PUBlic Private PartnershiPs
The Public Private Partnerships (PPPs)
model for the funding and delivery of
infrastructure projects was the subject
of debate in our key markets this year.
This debate was framed by the broader
recognition among key stakeholders
in the public and private sector
alike, that there is an urgent need
for infrastructure solutions to road
congestion problems in our cities.
In Australia, the Federal Government
has set up an advisory body,
Infrastructure Australia, which has
identified a number of priority projects
across the country.
The debate about PPPs in the US
remains focused on the role the private
sector should play in infrastructure
financing and operation, in the context
of the pending reauthorisation of
the Federal Surface Transportation
program and the inadequate levels of
public sector funding for infrastructure
investment.
In both markets we believe the private
sector is well placed to address critical
transportation needs and deliver value
and innovation. This is particularly
true of Transurban’s owner-operator
model, which best aligns the interests
of multiple stakeholder groups across
the public and private sector.
climate change
Climate change continues to be a key
focus for both government and the
private sector.
In the US and Australia, the Federal
governments are still considering
their approach to climate change
and we will continue to monitor any
developments regarding these policy
discussions.
Meanwhile, we have a range of asset-
specific climate change initiatives
under way, including analysis of the
possible physical impacts of climate
change on our infrastructure.
4 Transurban annual reporT 2009
a
TRAFFIC on TRAnSuRBAn RoADS vERSuS gloBAl pEERS
URBAN ROADS
NON-URBAN ROADS
TRANSURBAN ROADS
SYDNEY M7
WARNOW TUNNEL
SYDNEY M5
EUROSCUT NORTE LITORAL
SYDNEY M2
SYDNEY M4
CITYLINK (NORMALISED)
A4–AE PORTO/AMERANTE
98.2% OF
TRANSURBAN
TOLL REVENUE
SYDNEY M1
A10-AE BUCELAS/CARREGADO/IC3
A12-AE SETUBAL/MONTIJO
A5– AE DA COSTA DO ESTORIL
M4–M6
A13–AE ALEMEIRIM/MARATECA
EUROSCUT ALGARVE
407 ETR
CHICAGO SKYWAY
A2–AE DO SUL
CITYLINK (ACTUAL)
APRR
A9-CREL
DULLES GREENWAY
A3-AE PORTO/VALENCA
OCANA-LA RODA
A6– AE MARATECA/CAIA
INDIANA TOLL ROAD
A1–AE DO NORTE
AUTEMA
M6 TOLL
A14– AE FIGUEIRA DA FOZ/COIMBRA (NORTE)
POCAHONTAS 895
AUSOL II
AUSOL 1
RADIAL4
1.8% OF
TRANSURBAN
TOLL REVENUE
-20
-15
-10
-5
0
5
% perForMance
GroWTh
a
5 tranSurban annuaL report 2009
CityLink normalised for construction works
associated with the CityLink M1 upgrade.
Average daily traffic data shown for the year
to 30 June 2009 versus prior year.
MIG, Cintra, Brisa and Transurban roads with
publically available full year comparative data
have been selected.
CHAIRmAn’S
REpoRT
Transurban boarD (FroM leFT) lindsay maxsted,
neil chatfield, Jeremy davis, chris lynch, david ryan,
geoff cosgriff, BoB edgar and rodney slater.
ForMer boarD MeMbers
sUsan oliver and chris renwick
“collectively, oUr assets are
among the Best Performing
toll roads gloBally.”
david ryan ao, chairman
6 Transurban annual reporT 2009
In The Face oF a volaTIle Global econoMY anD
challenGes In our secTor, Transurban has
eMerGeD as a sTronG perForMer In FY09.
Our assets continue to excel, with all seven recording revenue growth. Four of those roads
generated double digit percentage increases in proportional EBITDA.
Collectively, our assets are among the best performing toll roads globally.
Alongside this strong performance, we have further enhanced our business by exceeding our
targets for cost reductions. This is something everyone in the business has worked hard to
achieve and ensures we are relentless in creating value for our security holders.
Such uncertain times have highlighted our proven track record as a toll road owner-operator
and the resilience of our prime assets.
revenUe, eBitda, cash flow UP
FY09 saw toll revenue and EBITDA up on all assets, along with free cash from operations.
On a proportional basis, adjusted to reflect the contribution of individual assets in proportion
to Transurban’s equity ownership, our results were:
Toll revenue was $778.7 million, a 7.6 per cent increase over the previous year
Underlying proportional EBITDA was 11.5 per cent higher at $583.4 million, and
Underlying free cash from operations was $283.2 million, an increase of 5.4 per cent.
>
>
>
Our statutory reporting results also showed positive growth and you will find them outlined in
the financial section of this report.
Traffic was robust across our Australian portfolio, with four of our six roads recording growth.
Construction works impacted actual traffic on our largest asset CityLink; however traffic
continued to grow on a normalised basis.
refinancing
We successfully refinanced $980 million in non-recourse debt for the Hills M2 and Eastern
Distributor in May 2009 and July 2009, respectively.
The refinancing demonstrates strong bank support for our assets, with new lenders providing
funds and foreign banks willing to lend to Transurban. Our refinancing activities in recent
months have shown there is clear lender appetite for exposure to high-quality toll road assets.
Progress on ProJects
Our focus is on creating value for security holders through a disciplined approach to how
we grow our business. In our markets, our projects are progressing well. In Australia, heavy
construction on Transurban’s Southern Link section of the M1 upgrade is finished, with the
entire project opening in stages before its expected completion in 2010. We expect to see
traffic increase on CityLink through FY10, with the project’s full benefit starting in FY11.
The Capital Beltway HOT lanes project in the US is 18 months into a five-year build.
The tolling and traffic management systems are also under development.
oUr PeoPle
This year, our Board changed significantly, with two directors, Susan Oliver and Chris
Renwick, stepping down just before the end of FY09. I thank them for their contributions over
the years. The Board welcomed Neil Chatfield, who joined the Board in February this year, and
Rodney Slater, who, in June 2009, became our first US-based board member. Dr Bob Edgar,
our most recent appointment, joined the Board just after year end.
Thank you also to the management team and the employees of Transurban for your crucial role
in our success this year. We are fortunate to have such a dedicated and talented group of people.
I would also like to acknowledge our government partners and other stakeholders.
Transurban is built on the strength of these long-term relationships.
Transurban has a suite of great assets and is a business committed to excellence. We have the
foundations that allow us to look for growth opportunities – within and outside our business –
to sustain Transurban long term. We value your support and look forward to the year ahead.
David Ryan AO, Chairman
7 Transurban annual reporT 2009
CEo’S
REpoRT
The 2009 FInancIal Year has been an IMporTanT
Year oF consolIDaTIon For Transurban aFTer
IMpleMenTInG soMe subsTanTIal chanGes
To The busIness ToWarDs The enD oF The
2008 FInancIal Year.
In the past 12 months we have done a lot of hard work to ensure we consolidate our
position as a strong, stable business. We are proud of the achievements of our people,
particularly in the current economic climate.
Our results – with revenue up on all assets, underlying free cash up 5.4 per cent and
underlying proportional EBITDA growth of 11.5 per cent – demonstrate that we have a
solid business, and our focus is well placed on how we can make it even better.
savings
In FY09 we continued to reduce costs across the business.
In June 2008 we announced a cost reduction program to take $20 million out of the
ongoing cost structure by the end of FY09. We upgraded that figure to $21.4 million at
last year’s results. In the past year we have achieved cost reductions of $26.6 million
on a proportional basis, which included a 5.9 per cent reduction in operating costs,
an 8.5 per cent reduction in business development costs and a 10.5 per cent reduction
in corporate costs.
chris lynch, ceo
This is about excellence – only incurring costs where we think we can add value.
oPPortUnities
We have the opportunity, also, to enhance the value of our already-strong asset portfolio.
The Monash-CityLink-West Gate (M1) Upgrade in Melbourne is a prime example, with
traffic expected to increase by 7 per cent within five years of completion. Construction is
progressing well.
We are also negotiating with the New South Wales (NSW) Government on widening the
Hills M2 and are in early talks on similar works to the M5 motorway in Sydney.
Our approach to unlocking further growth opportunities across our portfolio is
rigorous. We have strict investment criteria we apply to any potential opportunity.
Those opportunities have to make sense for everyone involved – governments,
communities and our security holders.
safety
This year, and since joining Transurban in April 2008, it has been my personal priority
to further build on our commitment to providing a safe workplace for our employees –
and safe roads for our customers.
We have been recognised with a national safety award for our work in Australia on the
CityLink tunnels and received a NSW Police Services award for an emergency field
exercise on Hills M2.
But safety is really about everything from routine road inspections to ensuring our
business minimises the rate of lost-time injuries in the office. Every bit counts – and
I am confident that we are well on the way to promoting a more safety-conscious culture.
a team effort
At year end companies like ours primarily talk about performance – and results are
clearly crucial for investors. But this is also a time to reflect on factors that are harder to
quantify but just as important to success – and that is always our people. I want to thank
our employees for their contributions and commitment to making our business a better
and stronger one.
I also want to congratulate them on their service to the community. Our employees’
response to the Victorian bushfires was outstanding on a number of levels. The
generosity of spirit has been great to observe and be part of.
We look forward to continuing our journey, striving each day to better serve our security
holders and the communities in which we operate.
8 Transurban annual reporT 2009
Chris Lynch, Chief Executive Officer
“in the Past 12 months we have
done a lot of hard work to ensUre
we consolidate oUr Position as a
strong, staBle BUsiness”
chris lynch, ceo
– FY09 distributions declared 22 cents
– Underlying free cash 5.4%
POTENTIAL FUTURE TRANSACTIONS
NEGOTIATED TRANSACTIONS
ASSET ENHANCEMENTS
GROWING TOLLS AND TRAFFIC COST REDUCTION PROGRAM
TODAY’S FREE CASH
– Achieved annualised cost savings target
– Underlying EBITDA 11.5%
– Proportional FY09 toll revenue 7.6%
– Hills M2 and M5 widening negotiations
– M1 upgrade – CityLink
– Capital Beltway construction
POTENTIAL
FUTURE TRANSACTIONS
NEGOTIATED TRANSACTIONS
ASSET ENHANCEMENTS
GROWING TOLLS AND TRAFFIC
COST REDUCTION PROGRAM
TODAY’S FREE CASH
KEY vAluE DRIvERS
The key drivers of Transurban
security holder value are:
9 Transurban annual reporT 2009
today’s free cash
Our existing portfolio of toll road
assets is generating solid cash
returns. This is the foundation of
our business.
growing tolls and traffic/
cost redUction Program
We have mandated toll increases
on our toll roads, most of which are
in heavily populated urban areas
where traffic continues to grow. We
are continuing to drive costs out of
the business to maximise returns to
security holders. The targeted cost
reductions we announced in June 2008
have exceeded expectations.
asset enhancements
Upgrades to our existing roads will
deliver more value to investors and
to the community. We are currently
enhancing CityLink in Melbourne, with
plans to upgrade Hills M2 and the M5
in Sydney.
negotiated transactions
Negotiated transactions in the US
are another building block of security
holder value. In Virginia, we have one
project in construction and another in
exclusive negotiation.
Potential fUtUre transactions
We will continue to look for further
opportunities in the US and Australia
that fit our strict investment criteria.
HIgHlIgHTS FRom
ouR poRTFolIo
TRAFFIC AnD REvEnuE gRoWTH In FY09
traffic
revenUe
eBitda
Melbourne
citylink
sYDneY
hills m2
eastern distriBUtor m1
m4 motorway
westlink m7
m5 motorway
vIrGInIa, us
Pocahontas 895
(2.7%)
6.8%*
12.2%
1.0%
(0.6%)
0.6%
4.5%
1.6%
3.5%
6.9%
20.0%
9.2%
1.3%
4.8%
10.5%
21.9%
14.6%
1.1%
(11.6%)
0.6%
(1.3%)
* Normalised to include contribution from revenue protection provision
associated with the upgrade project. Toll revenue increase without
normalising was 3.6%.
10 Transurban annual reporT 2009
>
>
>
>
>
>
>
>
>
sydney
hIlls M2
Traffic volume for the year was
34.0 million trips, and toll revenue
was $124.9 million, up 3.5 per cent.
Truck tolls were increased at both M2
toll points on 1 April 2009 and again
after year end on 1 July 2009. The
increases are part of a phased strategy
to gradually bring truck tolls into line
with the M2 Project Deed’s allowance
for a truck toll three times the price of
a car. The toll paid by trucks had been
two and half times the car toll.
Hills M2 raised the toll for cars from
$4.40 to $4.95 on 1 July 2009 at the
main toll plaza only. It was the first
increase in more than two and a
half years.
Transurban is continuing negotiations
with the New South Wales (NSW)
Government and the state’s Roads and
Traffic Authority (RTA) on our proposal
to upgrade the M2 to three lanes on
the majority of the road.
Electronic tag and video accounts
grew by about 8 per cent at Roam
Express, a Transurban business and
the preferred tolling and customer
service provider for Hills M2.
easTern DIsTrIbuTor (M1)
Traffic volume for the year was
17.3 million trips, and toll revenue
was $78.8 million.
Toll price increases for cars in
April 2008 and for trucks in October
2008 contributed to the increase in
revenue this year even though traffic
declined slightly.
The Eastern Distributor’s tolling
system was upgraded to make its
mixed cash and electronic tolling more
efficient. On the road, new vehicle
detection equipment and violation
cameras were installed. Vehicle
classification and image processing
software was also upgraded. The road
remained open during the transition to
the new system.
Several revenue recovery initiatives
were implemented during the year,
including outsourcing enforcement
notice processes and payment to
Roam Express.
>
>
M4 MoTorWaY
Traffic volume for the year was
40.8 million trips, and toll revenue
was $106.2 million.
Preparations have begun for handing
back the M4 to the NSW Government
when the concession ends in
February 2010.
>
>
>
WesTlInk M7
Traffic volume for the year was
43.7 million trips, and toll revenue
was $160.2 million.
There was consistent traffic growth
on both weekends and weekdays,
with the strongest increases on the
southern section of the M7.
Roam electronic tag and video
accounts increased by more than
10 per cent over the previous year.
Roam, the tolling and customer
service provider for Westlink M7,
is owned by Transurban.
>
>
M5 MoTorWaY
Traffic volume for the year was
43.0 million trips, and toll revenue
was $157.0 million.
From 1 July 2008, the M5 began
accepting casual user passes from
Roam, Roam Express and the RTA.
The additional payment option makes
it easier for visitors to Sydney or
infrequent customers to use the road.
Cash continues to be accepted on
the M5.
>
>
>
>
virginia, Us
pocahonTas 895
Traffic volume for the year was
5.3 million trips, and toll revenue
was A$18.5 million/US$13.8 million.
Revenue increased slightly despite
the decline in traffic due to a toll price
increase at the main toll plaza in
January 2009.
A priority for Pocahontas 895 in
FY09 was improving systems for
the safety of customers, staff and
vendors. This included installing
weather monitoring systems on the
main bridge span, roadside cameras
in high-use areas of the road, and
security systems in the toll and
office facilities.
Construction started on the Airport
Connector in late 2008 and is running
on schedule, with completion expected
in 2011. Transurban will manage
and operate the new road, which
will provide a direct link between
Pocahontas 895 and Richmond
International Airport.
>
>
>
>
>
melBoUrne
cITYlInk
Traffic volume for the year was
241.1 million transactions, and toll
revenue was $368.4 million.
Construction associated with the
M1 Upgrade was the primary reason
for the lower traffic. Adjusted for
the impact of construction, our
FY09 transactions were up 0.4%.
Revenue continues to grow due to
factors such as quarterly toll price
increases in line with our concession
and improved revenue recovery due
to improvements in the capture and
processing of vehicle information.
The M1 Upgrade – a joint project of
the Victorian Government, Transurban
and other partners – will have a staged
opening, with the entire project due
for completion by the end of 2010.
The project is expected to lift traffic on
CityLink by 7 per cent within five years
of completion.
CityLink replaced its Central
Computer Control System, which is
critical technology that facilitates the
daily running of the road and tunnels.
The upgrade ensures CityLink’s
systems continue to evolve in line
with the needs of future operations.
11 Transurban annual reporT 2009
oUr aPProach to sUstainaBility
At Transurban sustainability is not an
add-on, or a program run alongside
traditional business operations. It is
a business outcome. A sustainable
company manages all dimensions of
its business well – covering economic,
social and environmental aspects.
Our business management framework
shows sustainability as one of the
key drivers of the Group’s corporate
reputation and total security
holder return.
We now have a structure in place
to reflect this – our business-
wide Sustainability Framework.
The framework, approved by the
Transurban Board in January 2009,
gives our management and employees
a clear articulation of:
>
>
>
>
The definition of sustainability
for Transurban
The business case for sustainability
at Transurban
Our sustainability aspirations, and
Our fundamental business-wide
sustainability commitments.
The framework also determines
our annual sustainability priorities,
and it is the foundation for specific
sustainability action plans developed
by teams across our business. Each
of these teams is responsible for
delivering its own plan, which helps
to embed a culture of sustainability
within Transurban.
If we maximise the opportunities and
manage the risks from our economic,
environmental and social activities,
we will create long-term value for our
security holders.
More information will be provided
in Transurban’s 2009 Sustainability
Report, which will be published on
www.transurban.com.
HoW WE Do
BuSInESS
oUr aPProach to management
Last year, Transurban adopted a
new management framework that
underpins everything we do.
Known internally as ‘the wheel’,
its segments represent our areas
of focus:
>
>
>
>
>
>
>
– being
– we always look for
– we aim to provide the
– this needs to be embedded
Safety
in everything we do, from our
workplaces to our roads.
people
best environment to encourage our
employees to thrive.
excellence
opportunities to improve – and then
deliver on outcomes.
financial discipline
accountable for every dollar we spend
has helped drive a solid performance
across our suite of assets.
Growth
our existing portfolio and using strict
criteria to weigh up new opportunities.
relationships
– as a long-term owner
operator, relationships lie at the core
of our success.
environment
excellence is a critical part of being
a sustainable business.
– we are extracting value from
– environmental
Our values – honesty, integrity,
humility and accountability – are
at the heart of the wheel.
Together, our values and how we
perform in all segments of the wheel
will be reflected in our corporate
reputation and the sustainability of our
business and, ultimately, the returns
we generate for investors.
FY09 is the first full year we can
report on our progress under this
new structure. On page 15, we
highlight some of the key activities
and events within each segment of
the framework.
12 Transurban annual reporT 2009
“we’re measUring oUr Performance
against the BUsiness framework
BecaUse sUccess in these areas is
crUcial to creating valUe for investors.”
chris lynch, ceo
13 Transurban annual reporT 2009
E R E P U TATION AND SUSTAIN
A
BILIT
Y
BuSInESS
FRAmEWoRK
T
A
R
O
P
R
O
C
C
O
B I L IT Y
A
A I N
R
P
O
R
ATE REPUTATION A N D S U S T
14 Transurban annual reporT 2009
>
>
>
growth
Completed 18 months of a five-year
build on the Capital Beltway HOT
lanes, scheduled to open in 2013
Finished heavy construction on
Southern Link section of M1 Upgrade,
which will positively impact our cash
flows after its expected completion in
late 2010
Continued negotiations with
government on the Hills M2 Upgrade
in Sydney and on the I-95/395 HOT
lanes in Virginia, US
>
>
>
relationshiPs
Helped raise over $1 million for
Melbourne children’s hospital through
our CityLink co-sponsored Run for the
Kids event
Made submissions to Federal
Government for development of
Infrastructure Australia blueprint
Hosted international industry group
IBTTA’s first Asia Pacific tolling
summit in Sydney
>
>
environment
Developed sustainable purchasing
policy to encourage suppliers,
contractors and joint venture partners
to pursue sustainable business
practices
Completed an audit of waste and its
management on our majority-owned
roads in Australia—CityLink, Hills M2
and the Eastern Distributor—so we
can develop strategies for reducing
waste and increasing recycling efforts
For more details on these
achievements, see our
online 2009 Annual Report
at www.transurban.com.
BuSInESS
FRAmEWoRK
>
>
>
safety
Won Australian Federal Government’s
National Safer Communities Award
for CityLink tunnel safety project in
Melbourne
Passed one million hours without
a lost-time incident in construction
of Capital Beltway HOT lanes in
Washington, DC area
Earned Police Services award for Hills
M2 emergency field exercise in Sydney
>
>
PeoPle
Appointed new leadership team and
completed restructure of the business
Scored 81% in our employee opinion
survey’s employee engagement
measure, which quantifies
commitment and active contribution to
the company
>
>
excellence
Upgraded roadside camera
technology or made improvements
in back office processes on our
majority-owned assets in Australia,
which allowed us to capture additional
revenue on those roads
Recognised for achievements in
finance, sustainability and Public
Private Partnerships with a range of
awards
>
>
financial disciPline
Achieved $26.6 million in cost
reductions, which exceeded
our targeted savings of $21.4 million
Refinanced $980 million* of
non-recourse debt on two of our
assets, the Hills M2 and Eastern
Distributor in Sydney, ahead of
schedule and in a difficult credit
environment
* The refinancing of $515 million on the
Eastern Distributor was completed just
after year end.
15 Transurban annual reporT 2009
CoRpoRATE
govERnAnCE
tranSurban iS coMMitted to
MaintaininG a hiGh Standard of
corporate Governance.
This statement outlines the key
aspects of the Transurban Group’s
corporate governance framework and
main governance practices for the
reporting period by reference to the
ASX Corporate Governance Council’s
Corporate Governance Principles and
Recommendations (ASX Principles and
Recommendations).
The Transurban Group believes that
throughout the reporting period it
complied with the ASX Principles and
Recommendations.
This statement applies to all entities
comprising the Transurban Group as
described in the Directors’ Report.
The term ‘Board’ refers to the Board
of each relevant entity unless
otherwise stated.
Materials relating to the Transurban
Group’s corporate governance
practices, including the charters and
policies referred to in this statement,
can be found in the “Corporate
Governance” section of the Transurban
website.
principLe 1:
Lay SoLid foundationS for
ManaGeMent and overSiGht
board reSponSibiLitieS
(recoMMendation 1.1)
The Board Charter sets out the
responsibilities and accountabilities
of the Board, the extent to which the
Board has delegated certain aspects
of its responsibilities to executive
management, and the arrangements
by which the Board operates to
discharge its duties.
The Board is accountable to security
holders for the performance of the
Transurban Group, and its main
responsibilities include:
reviewing and ratifying the Transurban
Group’s business strategies and
monitoring their implementation;
appointing and evaluating the
performance of the CEO, ratifying the
appointment of executives reporting
to the CEO and reviewing the CEO’s
evaluation of their performance;
succession planning for the CEO and
for executives reporting to the CEO;
the financial integrity of the
Transurban Group through reviewing
and approving financial reports,
overseeing systems of internal control
and financial reporting, establishing
and reviewing financial performance
objectives, and approving operating
and capital budgets and treasury
policies;
approving distribution payments and
capital management activities;
reviewing and ratifying systems of risk
management and legal compliance,
and approving policies relating to
corporate governance, occupational
health and safety, and environmental
impacts and performance; and
evaluating the performance of each
individual director and of the Board
collectively.
>
>
>
>
>
>
>
The day to day management of the
Transurban Group is the responsibility
of executive management, subject
to specific delegations of authority
approved by the Board. Any
expenditures or actions in excess
of these delegated authorities are
approved by the Board.
16 Transurban annual reporT 2009
perforMance of Senior executiveS
(recoMMendation 1.2)
New senior executives are provided
with an induction program to allow
them to participate fully and actively in
management decision-making at the
earliest opportunity.
Each year, Key Performance Indicators
(KPIs) are set for senior executives,
against which their performance is
measured. KPIs relate to both the
performance of Transurban and
the performance of the executive
individually. Performance reviews
for senior executives were carried
out during the reporting period for
the 2008 financial year and further
information regarding KPIs and
performance payments can be found
in the Remuneration Report contained
in the Directors’ Report. Performance
reviews for the 2009 financial year
were conducted in July 2009.
principLe 2: Structure
the board to add vaLue
The Board is structured so that its
membership provides the mix of
qualifications, skills and experience
to enable it to effectively discharge
its responsibilities, and that its size
facilitates effective discussion and
efficient decision-making.
Transurban Holdings Limited (THL)
and Transurban Infrastructure
Management Limited (TIML) as
responsible entity of Transurban
Holding Trust (THT) have common
directors and Board meetings of THL
and TIML are held concurrently. As
at the date of this Annual Report,
the Board comprised the following
directors:
director
board membership
David Ryan
Chairman, Non-executive,
Independent
Neil Chatfield
Non-executive, Independent
Geoff Cosgriff
Non-executive, Independent
Jeremy Davis
Non-executive, Independent
Bob Edgar
Non-executive, Independent
Chris Lynch
CEO, Executive
Lindsay Maxsted Non-executive, Independent
Rodney Slater
Non-executive, Independent
The composition of the Board altered
during the reporting period. Neil
Chatfield was appointed to the Board
on 18 February 2009. Susan Oliver
and Chris Renwick retired from, and
Rodney Slater was appointed to, the
Board on 22 June 2009. Subsequent
to the reporting period, Bob Edgar
was appointed to the Board. These
changes were significant steps in the
Board renewal process announced
at Transurban’s 2008 Annual General
Meeting.
As at the date of this Annual Report,
the Board of Transurban International
Limited (TIL) comprised the following
directors:
director
board membership
David Ryan
Chairman,
Non-executive, Independent
Jennifer Eve Non-executive, Independent
James Keyes Non-executive, Independent
Chris Lynch
CEO, Executive
Each Board member’s skills,
experience, relevant expertise and
period in office are set out in the
Directors’ Report. The number of
meetings held by each Board during
the reporting period and the number
of meetings attended by each director
are also set out in the Directors’
Report.
directorS’ independence
and confLictS of intereSt
(recoMMendation 2.1)
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 considers that all of its
non-executive directors are currently
independent directors.
The Board regularly determines
which directors are considered to be
independent directors in 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/her
relationship with security holders,
suppliers and competitors, and tenure
as a director, would materially affect
their ability to exercise unfettered
and independent judgement in the
interests of the entity’s security
holders.
17 Transurban annual reporT 2009
In considering potential conflicts
of interest, the Board looks at
a director’s business and other
relationships and assesses the
materiality of those relationships for
both the Transurban Group and the
director. While the Board believes
it is inappropriate to determine
materiality solely on the basis of
arbitrary dollar, profit or turnover
percentage tests, when assessing
materiality for the Transurban Group,
thresholds suggested in accounting
standards are used. Consequently,
interests equal to more than 5% of
revenue, equity or profit are potentially
material. However, the Board seeks
to determine whether a 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 Transurban Group
and, in that assessment, interests of a
lesser value might also be relevant.
Transurban Group entities follow
protocols so that every director
knows of any individual director’s
conflicts of interest or potential
conflicts of interest in a particular
matter to be considered by the Board.
These protocols are consistent
with obligations imposed by the
Corporations Act and the ASX Listing
Rules. They require each director to
disclose any contracts, offices held,
interests in transactions, and other
directorships held, to signal any
potential conflict.
If any director considers a potential
conflict of interest could exist or may
arise involving any member of the
Board, a sub-committee is established
to assess the matter. The sub-
committee excludes the potentially
conflicted director and will consider
the matter and make a determination
on whether or not the director has a
conflict of interest. The determination
is then conveyed to the affected
director. If the sub-committee decides
there is no conflict, the sub-committee
is required to report its actions and
recommendations to the Board
after each sub-committee meeting.
If a conflict is deemed to exist, the
sub-committee will report its actions
and recommendations to the Board
excluding the conflicted director.
Independent external professional
advice relating to their roles and
responsibilities is available to directors
at the relevant entity’s expense. Before
seeking such advice, directors are
required to consult with, and obtain
the approval of, the Chairman. The
director must consult a suitably
qualified adviser in the relevant field
and inform the Chairman of the fee
payable for the advice. A copy of the
advice must be provided to the relevant
Board.
roLeS of the chairMan and the ceo
(recoMMendationS 2.2 and 2.3)
The Chairman is responsible for
leading the Board, facilitating the
proper briefing of all directors on
all matters relevant to their role and
responsibilities, facilitating effective
discussion of matters considered
by the Board, and managing the
Board’s relationship with executive
management.
The CEO is responsible to the Board
for implementation of strategies and
policies determined by the Board.
The roles of Chairman and CEO are
exercised by separate individuals
and the Chairman is an independent
director.
board coMMitteeS
The Board currently has four standing
committees to assist it in carrying
out its responsibilities and to allow
detailed consideration of complex
issues: the Audit and Risk Committee,
the Sustainability Committee, the
Nomination Committee, and the
Remuneration Committee (together,
the Committees). During the reporting
period the Audit Committee and the
Risk Committee were combined into a
single Audit and Risk Committee.
Special purpose committees are
established where necessary to deal
with specific projects.
Each Committee operates under a
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.
CoRpoRATE
govERnAnCE
Minutes of Committee meetings
are circulated with the papers for
the following Board meeting. At
that Board meeting, the Chair of
each Committee will highlight key
issues under consideration by the
Committee, and the directors may
request additional information on
the Committee’s activities.
The Board periodically reviews the
appropriateness of the existing
Committee structure, as well as the
membership and the charter of each
Committee. A review was undertaken
during the reporting period. It was as
a result of this review that the Audit
Committee and the Risk Committee
were combined into a single Audit
and Risk Committee. Changes to the
composition of the Board during the
reporting period also necessitated
changes to the membership of
each Committee.
Further information on each
Committee is set out below and
elsewhere in this statement. Additional
details in relation to the members
of each Committee, as well as the
number of meetings held by each
Committee during the reporting period
and each member’s attendance at
those meetings, are set out in the
Directors’ Report.
noMination coMMittee
(recoMMendation 2.4)
The primary responsibility of
the Nomination Committee is to
provide advice to the Board on the
appointment of new directors.
In discharging this responsibility, the
Nomination Committee:
>
>
>
>
makes recommendations on the size
and composition of the Board and on
transparent and formal procedures for
identifying and screening candidates
for appointment to the Board, and
implements these identification and
screening procedures when required;
develops and oversees an induction
and education program for new
directors;
makes recommendations regarding
succession plans for the Board; and
establishes processes for the review
of the performance of individual
directors and the Board as a whole.
Non-executive directors must be able
to meet the Board’s expectations
concerning time commitment The
Nomination Committee therefore
reviews the commitments of non-
executive directors, including before
their appointment to the Board.
Directors are required to consult
with the Chairman before accepting
appointment as a director of any entity
outside the Transurban Group.
perforMance aSSeSSMent
(recoMMendation 2.5)
The Board acknowledges the
importance of the regular review of
the performance of the Board, the
Committees and individual directors
against appropriate measures.
During the reporting period, a formal
assessment of the performance
of the Board, the Committees and
individual directors was undertaken.
The assessment was facilitated by
an external consultant and involved
interviews and a comprehensive
questionnaire. The external consultant
prepared a formal report which
was presented to, and discussed
by, the Board. The actions agreed
by the Board in response to the
recommendations made in the
consultant’s report have been
documented and completion of these
items is monitored by the Board.
The external consultant also met
with the Chairman to discuss the
peer assessment of each director’s
performance and the Chairman then
met with each director to discuss the
same. The external consultant’s review
also included an assessment of the
Chairman’s performance. A nominated
director then met with the Chairman
to discuss the peer assessment of
his performance.
committee
audit and risk committee*
Sustainability committee
nomination committee
remuneration committee
Members as at the
Lindsay Maxsted (Chair)
David Ryan (Chair)
David Ryan (Chair)
Geoff Cosgriff (Chair)
date of the annual
report**
Neil Chatfield
Jeremy Davis
David Ryan
Bob Edgar
Lindsay Maxsted
Rodney Slater
Jeremy Davis
David Ryan
Neil Chatfield
Geoff Cosgriff
Jeremy Davis
Bob Edgar
Lindsay Maxsted
Rodney Slater
The members are all
non-executive, independent
directors.
The members are all
non-executive, independent
directors.
The members are all
non-executive, independent
directors.
The members are all
non-executive, independent
directors.
further information
See the Audit and Risk
Committee Charter.
See the Sustainability
Committee Charter.
See the Nomination
Committee Charter.
See the Remuneration
Committee Charter.
* The Audit Committee and the Risk Committee were combined during the reporting period to form a single Audit and Risk Committee.
** Susan Oliver was Chair of the Risk Committee and a member of the Audit Committee, the Sustainability Committee and the Nomination Committee until her
retirement on 22 June 2009. Chris Renwick was Chair of the Sustainability Committee and a member of the Risk Committee and the Nomination Committee
until his retirement on 22 June 2009. Bob Edgar joined the Sustainability Committee subsequent to the reporting period.
18 Transurban annual reporT 2009
It is the Board’s intention to conduct a
formal assessment of the performance
of the Board, the Committees and
individual directors each year. This will
be supplemented by self-assessments
undertaken by individual Committees,
the results of which are reported to the
Board. During the reporting period, the
Risk Committee and the Sustainability
Committee each undertook such a
self-assessment by reference to the
objectives and responsibilities set
out in its charter. Shortly after the
reporting period, the Remuneration
Committee also undertook such a
self-assessment.
Formal letters of appointment are
issued to new directors. An induction
program has also been put in place
to allow new directors to participate
fully and actively in Board decision-
making at the earliest opportunity.
The program is designed to enable
new directors to gain an understanding
of the Transurban Group’s financial,
strategic, operational and risk
management position, the rights,
duties and responsibilities of directors
and the role and responsibilities of
senior executives.
Directors also have access to
continuing education to update and
enhance their skills and knowledge.
principLe 3: proMote ethicaL
and reSponSibLe deciSion-
MakinG
code of conduct
(recoMMendation 3.1)
Transurban has a Code of Conduct
to nurture the values underpinning
its corporate culture. It sets out
Transurban’s expectations in relation
to business practices, behaviour
towards fellow employees, customers,
suppliers and other business partners,
ethical practices and the recognition
of stakeholder interests. 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
regulations and Transurban policies.
It also encourages employees who
become aware of unethical behaviours
to report these to senior management.
19 Transurban annual reporT 2009
Compliance with the code is
a condition of employment by
Transurban. A copy of the code is
provided to new employees and is
discussed as part of their induction
training. New employees are also
required to complete online training
in relation to the code.
WhiStLebLoWer poLicy
In keeping with the spirit of the
Code of Conduct, Transurban has
developed a Whistleblower Policy
to encourage directors, senior
executives, employees, contractors
and suppliers who have witnessed, or
know about, any misconduct to report
it without fear of reprisal. The policy
sets out, at a high level, the way in
which Transurban will respond to and
investigate reports of misconduct.
The policy is provided to new
employees and is discussed as part
of their induction training. This is
supplemented by subsequent
face-to-face training on the policy.
deaLinG in SecuritieS
recoMMendation 3.2)
Transurban has a Dealing in
Securities Policy which establishes a
procedure for dealings by directors,
senior executives, employees,
contractors and their related parties
(“Employees”) in Transurban securities
and in securities of other entities
with whom Transurban may have
business dealings.
The policy prohibits Employees from
dealing in securities at any time if they
are in possession of price-sensitive
information. Dealing is also not
permitted during designated “Closed
Periods” except with prior approval in
circumstances of financial hardship.
Employees may generally deal in
securities during “Open Periods”
if prior approval for the proposed
transaction is obtained in accordance
with procedure set out the policy. For
the purposes of the policy, dealing
includes hedging.
The policy prohibits Employees from
dealing in securities on a short-term
basis (except in circumstances of
financial hardship). Employees who
have rights to securities under a long
term incentive plan may not hedge
against those rights until they have
vested. Employees are also prohibited
from entering into margin lending
arrangements using Transurban
securities as security.
principLe 4: SafeGuard
inteGrity in financiaL
reportinG
audit and riSk coMMittee
(recoMMendationS 4.1, 4.2 and 4.3)
The Audit and Risk Committee is
structured so that it consists only of
non-executive, independent directors,
is chaired by an independent chair
(who is not chair of the Board) and
has at least three members. All
members are financially literate,
have appropriate financial expertise
and an appropriate understanding of
the industry in which the Transurban
Group operates.
The purpose of the Audit and Risk
Committee, as set out in its charter,
is to assist the Board in overseeing
the integrity of financial reporting, the
effectiveness of systems of financial
risk management and internal
control, and the internal and external
audit functions. The responsibilities
of the Committee to fulfil this
purpose include:
reviewing the statutory financial
reports of the Transurban Group
and management’s representations
in relation to them and advising the
Board whether to adopt the reports;
assessing the Transurban Group’s
accounting, financial and internal
control systems and, if necessary,
making recommendations for
improvement;
reviewing the objectives, competence
and resourcing of the internal audit
function, including determining
whether the internal audit function
should be an internal or external
function;
reviewing, overseeing the
implementation and monitoring the
progress of, the internal audit plan
and work program;
making recommendations to
the Board for the appointment,
remuneration and replacement of the
external auditor, and in relation to the
terms of the auditor’s engagement;
and
agreeing the overall scope of the
external audit, reviewing external
audit plans and progress reports, and
monitoring the effectiveness of the
external auditor.
>
>
>
>
>
>
The CEO, the CFO, the internal auditor
and the external auditor must attend
Committee meetings if requested.
Other members of management and
advisers may also be invited to attend
meetings.
CoRpoRATE
govERnAnCE
The Committee has unrestricted
access to management and rights
to seek explanations and additional
information from management. It also
has unrestricted access to the internal
auditor and the external auditor. The
Committee meets with the external
auditor without management present
on a regular basis.
externaL auditor independence
The Transurban Group’s policy is
to appoint an external auditor who
is suitably qualified and whose
independence in unequivocal.
PricewaterhouseCoopers was
initially appointed as the Transurban
Group’s external auditor in 1996
and subsequently re-appointed in
December 2001. The appointment
of the external auditor has been
approved by security holders as
required by the Corporations Act.
PricewaterhouseCoopers is required to
rotate audit engagement partners on
listed entities at least every five years.
A new audit engagement partner
was introduced for the financial year
beginning 1 July 2007.
The Board has approved an External
Auditor Independence Policy which is
intended to maintain the independence
of the external auditor by regulating
the provision of non-audit services by
the external auditor.
Under the policy, certain non-audit
services are not permitted to be
provided by the external auditor. It
is intended that the external auditor
only provide a permissible non-audit
service where there is a compelling
reason for it to do so. The provision
of permissible non-audit services
must be pre-approved by either the
Audit and Risk Committee, the Chair
of the Committee, or the CFO (where
the proposed fee for the service does
not exceed $5,000). The CFO provides
a verbal report to the Committee at
each meeting describing any non-
audit services approved by the CFO or
the Chair of the Committee since the
last meeting.
Details of the fees paid to the external
auditor during the reporting period,
including a breakdown of fees paid for
non-audit services, are set out in the
Directors’ Report.
20 Transurban annual reporT 2009
principLe 5: Make tiMeLy and
baLanced diScLoSure
continuouS diScLoSure
(recoMMendation 5.1)
Transurban’s Continuous Disclosure
Policy and Procedure sets out its
practice in relation to continuous
disclosure.
principLe 6: reSpect the riGhtS
of SharehoLderS
coMMunicationS
(recoMMendation 6.1)
Transurban’s Security Holder
Communication Policy is designed to
promote effective communication with
security holders.
The policy outlines the range of
communication tools used to
give security holders and other
stakeholders ready access to
information about Transurban.
These tools include the Transurban
website, meetings and briefings and
written materials. Security holders
are encouraged to elect to receive
information in electronic format.
Transurban uses its website to
complement the official release of
information to the ASX. As noted
above, all ASX announcements and
related information (for example,
information provided to analysts
or the media during briefings or
presentations) are promptly posted
on the website. The annual and half
year results are also published on
the website.
Transurban regards its Annual General
Meeting as an important opportunity
for engaging and communicating with
security holders. Security holders are
encouraged to attend and participate
in the Annual General Meeting, which
is typically held in October each year.
The full text of the notice of meeting
and explanatory material is published
on the Transurban website.
The policy establishes a best practice
procedure for compliance with
Transurban’s continuous disclosure
obligations, provides guidance
for the identification of material
information and requires the reporting
of such information to the Company
Secretary for review. The policy also
ensures that Transurban and its
personnel are aware of the penalties
for a contravention of Transurban’s
continuous disclosure obligations.
The Company Secretary has primary
responsibility for the effective
operation of the policy and for all
communications with the ASX in
relation to continuous disclosure
issues. Under the policy, personnel
must immediately notify the Company
Secretary as soon as they become
aware of information that should be
considered for release to the ASX.
The Company Secretary reviews
that information, determines (after
appropriate consultation) whether
disclosure is required and, if so,
co-ordinates the actual form of the
disclosure, its approval and prompt
release. Under the policy, all ASX
releases are required to be cleared
by either the Board (or a Board
sub-committee) or the CEO (or in
the CEO’s absence, the CFO or a
designated director).
All information disclosed to the
ASX is promptly posted on the
Transurban website. All material
used in presentations to investors
and analysts is released to the ASX
immediately prior to the making of
those presentations.
The Board considers potential
disclosure issues at each of its
meetings. Particular attention is
given to emerging and changing
circumstances with a view
to determining whether any
disclosures are required in respect
of those matters.
principLe 7: recoGniSe and
ManaGe riSk
riSk overSiGht and ManaGeMent
and internaL controL
(recoMMendationS 7.1 and 7.2)
Transurban views effective risk
management as central to achieving
its objectives.
The Board is responsible for reviewing
Transurban’s policies on risk oversight
and management and satisfying itself
that management has developed and
implemented a sound system of risk
management and internal control.
Transurban has a Risk Management
Policy that sets out its commitment to
risk management and identifies the
associated roles and responsibilities
of the Board, management and
employees in the oversight and
management of risk. The policy
is supplemented by an enterprise
wide risk management framework
(compliant with the Australian / New
Zealand Standard (AS/NZ 4360:2004)
that seeks to embed risk management
processes into Transurban’s business
activities and functions.
Within the framework, each business
unit is required to formally profile
its risk environment by creating and
maintaining a register of identified
risks, a risk treatment plan and a risk
management plan which are stored
in a risk management information
system. The outcomes of risk profiles
and progress in the management
of risks are regularly reported to
executive management. Executive
management has also established a
strategic risk register which it reviews
on a quarterly basis.
The purpose of the Audit and
Risk Committee, as set out in its
charter, is to assist the Board in
overseeing Transurban’s risk profile
and policy and the effectiveness of
its risk management framework
and supporting systems. During
the reporting period, material and
strategic risks, and the status of risk
treatment plans, were considered
in detail by the Risk Committee
(before it was combined with the
Audit Committee). Management
also reported to the Committee and
to the Board as to the effectiveness
of Transurban’s management of
material business risks. Transurban’s
internal auditors also reviewed the
effectiveness of the risk management
framework. Further development
of the reporting and control self-
assessment process is underway as
part of Transurban’s commitment to
continuous improvement.
ceo and cfo certificationS
(recoMMendation 7.3)
The CEO and the CFO have
provided certifications to the Board
in connection with the financial
statements for the Transurban Group
and the individual entities comprising
the Transurban Group for the year
ended 30 June 2009. The certifications
state that the declaration provided in
accordance with section 295A of the
Corporations Act as to the integrity of
the financial statements is founded on
a sound system of risk management
and internal control and that system
is operating effectively in all material
respects in relation to financial
reporting risks.
principLe 8: reMunerate fairLy
and reSponSibLy
reMuneration coMMittee
(recoMMendation 8.1)
The primary responsibility of the
Remuneration Committee is to
provide advice to the Board on
remuneration of directors, senior
executives and employees and to make
recommendations in relation to the
Transurban Group’s remuneration
policies and practices.
In making recommendations, the
Committee will take into account
all factors it deems necessary and
may consult external remuneration
consultants. The objective of any
remuneration policy is to motivate
directors, senior executives and
employees to pursue the long-term
value and success of the Transurban
Group within an appropriate control
framework and maintain the clear
relationship between performance
and remuneration.
reMuneration
(recoMMendation 8.2)
The remuneration of non-executive
directors consists entirely of directors’
fees and Committee fees. Non-
executive directors are not eligible
to receive any performance based
compensation. In 2008, following
security holder approval at the 2008
Annual General Meeting, non-
executive directors based in Australia
were invited to sacrifice fees to acquire
Transurban stapled securities. This
arrangement was suspended in May
2009 following legislative changes
announced in the 2009 Federal Budget.
Further details of the remuneration
paid to each non-executive director
during the reporting period are set out
in the Remuneration Report contained
in the Directors’ Report.
The remuneration and incentive
package for the CEO and key
management personnel is also
disclosed in the Remuneration Report
contained in the Directors’ Report.
The remuneration mix of the CEO and
each of his executive management
team members comprises fixed
remuneration, short term cash
incentives and equity based incentives.
21 Transurban annual reporT 2009
This page was left blank intentionally.
22 Transurban annual reporT 2009
22 Transurban annual reporT 2009
TRN003 Fins. Draft 1 Date. 26.08.09
Time. 16.00
/ Account Director. Sophie MacKinnell
/ Designer. TG / Typesetter. TS
Transurban Holdings Limited and
Controlled Entities ABN 86 098 143 429
(including Transurban International Limited and
Transurban Holding Trust)
Financial statements
for the year ended 30 June 2009
23 TRANSURBAN ANNUAL REPORT 2009
23 Transurban annual reporT 2009
Transurban Holdings Limited ABN 86 098 143 429
Financial statements - 30 June 2009
Contents
Directors' report
Auditor's Independence Declaration
Financial report
Directors' declaration
Independent auditor's report to the members
Page
25
53
54
145
146
24 TRANSURBAN ANNUAL REPORT 2009
24 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
Directors' report
The directors of Transurban Holdings Limited, Transurban International Limited and Transurban Infrastructure
Management Limited, as Responsible Entity for Transurban Holding Trust, present their report on the Transurban Group
for the year ended 30 June 2009.
Group accounts
The Transurban Group financial statements have been prepared as an aggregation of the financial statements of
Transurban Holdings Limited and controlled entities (THL), Transurban International Limited and controlled entities (TIL)
and Transurban Holding Trust and controlled entities (THT) as if all entities operate together. They are therefore treated
as a combined entity (and referred to as "the Group"), 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, TIL and THT
are stapled together and comprise one share in THL, one share in TIL and one unit in THT (Stapled Security). None of the
components of the Stapled Security can be traded separately.
Directors
With the exception of the changes noted below, the following persons were directors of Transurban Holdings Limited,
Transurban Infrastructure Management Limited and Transurban International Limited during the whole of the financial year
and up to the date of this report.
Transurban
Holdings Limited
Transurban
Infrastructure
Management
Limited
Transurban
International
Limited
Non-executive Directors
David J Ryan AO
Neil G Chatfield (Appointed 18 February 2009)
Geoffrey O Cosgriff
Jeremy G A Davis AM
Robert J Edgar (Appointed 21 July 2009)
Lindsay P Maxsted
Susan M Oliver (Retired 22 June 2009)
Christopher J S Renwick AM (Retired 22 June 2009)
Rodney E Slater (Appointed 22 June 2009)
Jennifer Eve
James Keyes
Executive Director
Christopher J Lynch
Results
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
The consolidated net loss for the year for the Group was $16,134,000 (2008: $105,346,000), an improvement of 84.7 per
cent. The net loss attributable to ordinary equity holders of the Group for the year was $24,575,000 (2008: $109,686,000),
an improvement of 77.6 per cent.
25 TRANSURBAN ANNUAL REPORT 2009
25 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Principal activities
The principal activities of the Group during the financial year were the ownership, development and operation of toll roads.
Distributions
Distributions paid to the ordinary equity holders of the Group during the financial year were as follows:
Distributions proposed
Final distribution payable and recognised as a liability: 11.0 cents (2008: 29.0 cents)
per fully paid Stapled Security payable 28 August 2009
Distributions paid during the year
Final distribution for 2008 financial year of 29.0 cents (2007: 27.5 cents) per fully
paid Stapled Security paid 29 August 2008
Interim distribution for 2009 financial year of 11.0 cents (2008: 28.0 cents) per fully
paid Stapled Security paid 27 February 2009
Total distributions paid
Distributions paid in cash or satisfied by the issue of Stapled Securities under the
distribution reinvestment plan during the years ended 30 June 2009 and 30 June
2008
Paid in cash
Executive loans - repayments
Satisfied by issue of Stapled Securities
Funds available (from)/for future distribution reinvestment plans
30 June
2009
$'000
30 June
2008
$'000
141,095
141,095
319,076
319,076
319,076
294,744
140,041
459,117
303,297
598,041
172,161
551
286,422
(17)
459,117
396,858
1,535
199,615
33
598,041
Review of operations
Total toll revenue increased by 7.9 per cent to $678.3 million on a statutory reporting basis. This reflects continued
revenue growth across all of the Group’s assets throughout the year.
Key operational highlights for the year were as follows:
CityLink (Melbourne)
Traffic volume for the year ended 30 June 2009 was 241.1 million transactions. This represented a decrease of
2.7 per cent on the prior year, reflecting the impact of heavy construction on the M1 upgrade through the year.
Toll revenue increased to $368.4 million, an increase of 6.8 per cent on the prior year, this was largely driven by
quarterly toll price increases.
Construction on the M1 upgrade continued throughout the year. The project is scheduled for completion in
2010.
Transurban’s investment in CityLink is 100 per cent.
Hills M2 (Sydney)
Traffic volume for the year ended 30 June 2009 was 34.0 million transactions, an increase of 1.0 per cent on the
prior year. Toll revenue increased by 3.5 per cent to $124.9 million driven by truck toll price increases in
October 2008 and April 2009.
Transurban’s investment in Hills M2 is 100 per cent.
26 TRANSURBAN ANNUAL REPORT 2009
26 Transurban annual reporT 2009
Review of operations (continued)
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
M1 Eastern Distributor (Sydney) – Airport Motorway Group
Traffic volume for the year ended 30 June 2009 was 17.3 million transactions, a decrease of 0.6 per cent on the
prior year. The increase in toll revenue was due to a truck toll price increase in October 2008 and the full year
effect of a car toll price increase in April 2008.
Transurban's investment in the M1 Eastern Distributor is 75.1 per cent.
M4 (Sydney) – Statewide Roads Group
Traffic volume for the year ended 30 June 2009 was 40.8 million transactions, an increase of 0.6 per cent on the
prior year. Toll revenue for the year was $106.2 million, an increase of 20.0 per cent on the prior year. The
increase in toll revenue was due to a toll price increase for cars and motorcycles in August 2008 and the full
year effect of a truck toll increase in May 2008.
The concession to toll the M4 Motorway ends on 15 February 2010. The end of concession handover to the
NSW Government is on track.
Transurban’s investment in the M4 is 50.61 per cent.
M5 (Sydney) – Interlink Roads Pty Limited
Traffic volume for the year ended 30 June 2009 was 43.0 million transactions, an increase of 1.6 per cent on the
prior year. Toll revenue for the year was $157.0 million, an increase of 1.3 per cent on the prior year.
Transurban’s investment in the M5 is 50.0 per cent and is accounted for as an associate.
Westlink M7 (Sydney)
Traffic volume for the year ended 30 June 2009 was 43.7 million transactions, an increase of 4.5 per cent on the
prior year. Toll revenue for the year was $160.2 million, an increase of 9.2 per cent.
On 14 August 2008, Transurban exercised its pre-emptive right under the Westlink Equity Participants Deed to
acquire an additional 2.5 per cent of the Westlink M7 for a consideration of $38.0 million.
Transurban’s investment in the M7 is now 50.0 per cent and is accounted for as an associate.
Pocahontas 895 (Virginia USA)
Traffic volumes for the year ended 30 June 2009 were 5.3 million transactions, a decrease of 11.6 per cent on
the prior year. Toll revenue increased by 0.6 per cent to US$13.8 million (A $18.5 million, an increase of 20.1
per cent) driven by a toll price increase in January 2009.
Construction on the Richmond Airport Connector commenced in the current financial year and is expected to be
completed in 2011.
Transurban’s investment in Pocahontas 895 is 75.0 per cent, held through Transurban DRIVe (our co-
investment vehicle in North America). Transurban DRIVe is accounted for as an associate.
Capital Beltway Express (Virginia USA)
Construction on the Capital Beltway (I-495) High Occupancy Toll (HOT) lane project started in July 2008.
Transurban and its construction partner Fluor are developing the HOT lanes under a 75 year concession
agreement with the Commonwealth of Virginia. The HOT lanes are scheduled to open in late 2012.
Transurban’s investment in Capital Beltway Express is held through Transurban DRIVe. Transurban DRIVe
holds 90.0 per cent equity in the project, and Transurban holds 75.0 per cent of Transurban DRIVe. Transurban
DRIVe is accounted for as an associate.
Significant changes in the state of affairs
There were no significant changes to the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
On 8 July 2009, the M1 Eastern Distributor debt of $515 million, due to mature in November 2009, was refinanced. The
new debt facility has been provided by six banks: Australia and New Zealand Banking Group, Bank of Tokyo Mitsubishi
UFJ, Calyon Australia, Commonwealth Bank, Mizuho Corporate Bank, Ltd. Sydney Branch and Westpac Banking
Corporation. The facility has a 3 year tranche (approximately 38% of the total facility), a 5 year tranche (approximately
50%) and a 7 year tranche (approximately 12%).
27 TRANSURBAN ANNUAL REPORT 2009
27 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Matters subsequent to the end of the financial year (continued)
At the date of this report the directors are not aware of any other circumstances that have arisen since 30 June 2009 that
have significantly affected, or may significantly affect, the Group's operations in future financial years, the results of those
operations in future financial years, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
Likely developments in the operations of the Group and the expected results of operations have not been included in these
financial statements because the directors believe it would be likely to result in unreasonable prejudice to the Group.
Environmental regulation
The Group is subject to environmental regulations under Australian Commonwealth and State laws and certain applicable
laws in the USA. The Group maintains a comprehensive environmental management plan to monitor the performance of
its motorways, and any external parties responsible for operating any of the Group’s motorways, and takes remedial steps
where necessary.
There were no significant breaches reported during the financial year on the Group’s controlled assets.
Information on directors
David J Ryan AO, BBus, FCPA, FAICD. Chairman & Independent non-executive director.
David was appointed to the Board on 29 April 2003. He has a background in commercial banking, investment banking
and operational business management. He has held senior executive management positions in investment banking and
industry, as well as being the Chairman or a non-executive director of a number of listed public companies.
David is a non-executive director of Lend Lease Corporation Limited and non-executive Chairman of Tooth & Co Limited
and ABC Learning Centres Limited (administrators appointed) (receivers and managers appointed).
At Transurban, David is Chairman of the Board, Chairman of the Nomination Committee, Chairman of the Sustainability
Committee, a member of the Audit and Risk Committee and a member of the Remuneration Committee.
David holds interests in 60,945 Stapled Securities.
Christopher J Lynch B Comm, MBA, FCPA, FAICD. Chief Executive Officer.
Chris joined Transurban as CEO Elect in February 2008 and was appointed to the Board on 18 February 2008. He
became CEO in April 2008.
Chris came to Transurban from one of the world’s largest resources and mining companies, BHP Billiton. He held a series
of senior appointments there, including 5 years as Chief Financial Officer. His last position at BHP Billiton was Executive
Director and Group President - Carbon Steel Materials. Prior to his time at BHP Billiton the bulk of Chris’ career was with
Alcoa Inc where he was Vice President and Chief Information Officer (1999-2000), CFO Europe (1997-1999), Managing
Director of KAAL Australia Limited (1996-1997), and before that in a series of financial leadership roles.
Chris has experience in senior leadership roles in global corporations operating across multiple markets and the
development and operation of major projects with large up-front capital requirements.
Chris is also a Commissioner of the Australian Football League, and a former director of BHP Billiton Limited (January
2006 – June 2007), BHP Billiton Plc (January 2006 – June 2007), Samancor Limited (January 2006 – June 2007), and
Samarco Limited (January 2006 – June 2007).
Chris holds interests in 233,041 Stapled Securities.
Independent non-executive director.
Neil G Chatfield M.Bus, FCPA, FAICD.
Neil joined the Board on 18 February 2009. Neil is an established executive and non-executive director with experience
across a range of industries. He is currently the Independent Chairman of Virgin Blue Holdings Limited and a non-
executive director of Seek Limited, Whitehaven Coal Limited, and Grange Resources Limited.
Neil was most recently an Executive Director and the Chief Financial Officer of Toll Holdings Limited, Australia’s largest
transport and logistics company, a position he held for over 10 years.
Neil is a member of the Audit and Risk Committee and a member of the Nomination Committee.
Neil does not hold any Stapled Securities.
28 TRANSURBAN ANNUAL REPORT 2009
28 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Information on directors (continued)
Independent non-executive director.
Geoffrey O Cosgriff BAppSc, Company Director Diploma, FIE(Aust), FAICD.
Geoff was appointed to the Board on 19 December 2000. He has extensive experience in the information technology
industry and was the Managing Director of MITS Limited for 10 years. He has also held executive management roles with
Melbourne and Metropolitan Board of Works, Melbourne Water Corporation and Logica Australia Pty Ltd. He is a Council
Member for Leadership Victoria and is actively engaged in a number of executive coaching and mentoring assignments.
Geoff is a non-executive director of UXC Limited and a director of Infocos Pty Limited. He was formerly a director of
Logica Australia Pty Ltd (until June 2008).
Geoff is Chairman of the Remuneration Committee and a member of the Nomination Committee.
Geoff holds interests in 126,012 Stapled Securities.
Jeremy G A Davis AM BEc, MBA, MA, FAICD Independent non-executive director.
Jeremy was appointed to the Board on 16 December 1997 and is a Professor Emeritus of the University of New South
Wales after retiring from the Australian Graduate School of Management. He was a management consultant with the
Boston Consulting Group for 10 years and is a former Director of the Australian Stock Exchange Limited.
Jeremy is currently a non-executive director of Singapore Power and SP AusNet.
Jeremy is a member of the Audit and Risk Committee, a member of the Remuneration Committee and a member of the
Nomination Committee.
Jeremy holds interests in 125,005 Stapled Securities.
Robert J Edgar BEc (Hons), PhD Independent non-executive director.
Bob was appointed to the Board on 21 July 2009. He recently retired from the ANZ Banking Group where he was Deputy
Chief Executive Officer. In a 25 year career at ANZ, he also held the positions of Chief Operating Officer, Managing
Director, Institutional Financial Services and Chief Economist.
Bob is currently a director of Nufarm Ltd. He is also Chairman of the Prince Henry’s Institute of Medical Research.
Bob is a member of the Nomination Committee and a member of the Sustainability Committee.
Bob holds interests in 7,709 Stapled Securities.
Lindsay P Maxsted Dip Bus, FCA. Independent non-executive director.
Lindsay joined the Board on 1 March 2008 following his retirement as CEO of KPMG Australia. He became a partner at
KPMG in 1984 and was appointed CEO in 2001. He is currently non-executive Chairman of VicRacing Pty Ltd, Managing
Director of Align Capital Pty Ltd and Honorary Treasurer of Baker IDI Heart and Diabetes Institute. He is also a non-
executive director of Westpac Banking Corporation and a non-executive director of St George Bank Limited.
Lindsay is Chairman of the Audit and Risk Committee, a member of the Nomination Committee and a member of the
Sustainability Committee.
Lindsay does not hold any Stapled Securities.
Rodney E Slater J.D., BS Independent non-executive director.
Rodney joined the Board on 22 June 2009 as its first US-based member. He is currently a partner in the public policy
practice group of Washington DC firm Patton Boggs, where he has led its transportation practice since 2001. He served
as US Secretary of Transportation from 1997 until the end of the Clinton Administration in January 2001, and was also the
head of the Federal Highway Administration between 1993 and 1996.
In the US, Rodney's current directorships include Kansas City Southern (railroads), Southern Development
Bancorporation, Delta Airlines Inc, ICx Technologies Inc, and Parsons Brinckerhoff. He also served on Transurban's US
Advisory Board until November 2008.
Rodney is a member of the Nomination Committee and a member of the Sustainability Committee.
Rodney does not hold any Stapled Securities.
29 TRANSURBAN ANNUAL REPORT 2009
29 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Information on directors (continued)
Susan M Oliver B.Prop. & Const, FAICD.
Susan was appointed to the Board on 25 June 1996 and retired from the Board on 22 June 2009. Her experience covers
private and public sector senior management roles, strategic and technology consulting and business development.
Independent non-executive director (Retired 22 June 2009)
Susan is a former Senior Manager of Anderson Consulting and a former Managing Director of the Australian Commission
for the Future Limited. She is currently an executive director and owner of wwite Pty Limited, and a non-executive director
of Programmed Maintenance Services Limited. She was formerly a non-executive director of Just Group Limited and a
non-executive director and Chairperson of the Remuneration Committee of MBF Australia Limited.
Until her retirement from the Board, Susan was Chairman of the Risk Committee, a member of the Audit Committee and a
member of the Sustainability Committee and a member of the Nomination Committee.
Susan held interests in 54,522 Stapled Securities at the time of her retirement from the Board.
Christopher J S Renwick AM BA, LLB, FAIM, FAIE, FTSE.
Chris joined the Board on 26 July 2005 and retired from the Board on 22 June 2009. He has over 35 years' experience
covering mining, operational business management and law. He is non-executive Chairman of Coal and Allied Industries
Limited, and a non-executive director of DownerEDI and Sims Group Limited.
Independent non-executive director (Retired 22 June 2009)
Until his retirement from the Board, Chris was Chairman of the Sustainability Committee, a member of the Risk Committee
and a member of the Nomination Committee.
Chris held interests in 41,552 Stapled Securities at the time of his retirement from the Board.
Jennifer Eve BA, LLB (Hons), LLM in Corporate Law Independent non-executive director.
Jennifer joined the Transurban International Limited Board on 18 September 2006. She is an associate and member of
the Funds and Investment Services Team within the Corporate and Commercial Practice Group at Appleby. She practices
in the area of company and commercial law, specialising in the formation and administration of investment vehicles
including segregated account companies, mutual funds, hedge funds, partnerships and closed-ended funds. Jennifer also
has experience involving debt restructuring and intergroup restructuring. Jennifer is also a local team member of the
Segregated Accounts Portfolio Team and the Global Islamic Finance Team.
Jennifer was educated in Bermuda, Canada and the United Kingdom. She holds three degrees including a Masters in
Corporate Law. She is a member of the Bar of England and Wales (non-practicing) and Bermuda.
Jennifer holds no stapled securities.
James Keyes MA. (Hons) Independent non-executive director.
James joined the Transurban International Limited Board on 18 September 2006. He is Managing Director of
Renaissance Capital. He is responsible for the Bermuda office, which he established for Renaissance in 2008. He was
previously a partner at offshore law firm Appleby. He practised as a lawyer for over 15 years, specialising in mutual funds,
corporate finance and securities.
James attended Oxford University in England and graduated as a Rhodes Scholar. He is a member of the Bermuda
International Business Association’s committee on collective investment schemes.
James holds no stapled securities.
30 TRANSURBAN ANNUAL REPORT 2009
30 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Company secretary
Elizabeth Mildwater BEc, LLB (Hons), MA, GAICD
Elizabeth was appointed Company Secretary on 20 May 2008. Before joining Transurban she was Company Secretary of
SP AusNet for three years. She has over 15 years of legal, company secretarial and other relevant experience, including
significant in-house legal and company secretarial experience in the electricity transmission and project development
areas. Prior to her in-house work, she was a solicitor with Australian law firms Blake Dawson Waldron and Freehills.
Brett Burns BCom, LLB
Brett is General Counsel, Australia for the Transurban Group. Brett is responsible for all Australian legal matters and also
provides support to the North American business and Company Secretariat. Brett has worked with the Transurban Group
for the past seven years, initially as an external legal adviser and then joining the Transurban Group in 2003.
Juliet Evans
Juliet Evans is a Corporate Administrator on the Funds and Investment Services team at Appleby Corporate Services.
She holds the ICSA Certificate in Offshore Business Administration and has six years of experience in the corporate
administration field. Juliet is Company Secretary of Transurban International Limited.
Meetings of directors
The number of meetings of the board of directors of Transurban Holdings Limited, Transurban International Limited and
Transurban Infrastructure Management Limited held during the year ended 30 June 2009, and the number of meetings
attended by each director are listed below.
Meetings of the board of directors of Transurban Holdings Limited and Transurban Infrastructure Management Limited
were held jointly.
Board of
Directors
Transurban
Holdings Limited
Board of
Directors
Transurban
Infrastructure
Management
Limited
Attended Held# Attended Held# Attended Held#
Board of
Directors
Transurban
International
Limited
David J Ryan
Christopher J Lynch
Neil G Chatfield
Geoffrey O Cosgriff
Jeremy G A Davis
Lindsay P Maxsted
Susan M Oliver (Retired 22 June 2009)
Christopher J S Renwick AM (Retired 22 June 2009)
Rodney E Slater (Appointed 22 June 2009)
Jennifer Eve
James Keyes
12
12
2
12
12
11
11
10
1
*
*
12
12
2
12
12
12
11
11
1
*
*
12
12
2
12
12
11
11
10
1
*
*
12
12
2
12
12
12
11
11
1
*
*
4
4
*
*
*
*
*
*
*
3
4
4
4
*
*
*
*
*
*
*
4
4
Robert J Edgar was appointed to the Board on 21 July 2009.
# = Number of meetings held during the time the director held office
* = Not a member of the relevant Board
31 TRANSURBAN ANNUAL REPORT 2009
31 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Meetings of directors (continued)
The number of meetings of each board committee of Transurban Holdings Limited, Transurban Infrastructure Management
Limited and Transurban International Limited held during the year ended 30 June 2009, and the number of meetings
attended by each director are set out in the following table.
Name
Audit
Committee
(1)(2)
Remuneration
Committee(3)
Nomination
Committee(4)
Risk Committee
(1)(5)
Sustainability
Committee(6)
Attended Held# Attended Held# Attended Held# Attended Held# Attended Held#
David J Ryan
Christopher J Lynch
Neil G Chatfield
Geoffrey O Cosgriff
Jeremy G A Davis
Lindsay P Maxsted
Susan M Oliver (Retired 22 June
2009)
Christopher J S Renwick AM (Retired
22 June 2009)
Rodney E Slater (Appointed 22 June
2009)
Jennifer Eve
James Keyes
4
4
1
3
4
4
4
1
*
*
*
4
*
*
*
4
4
1
*
*
*
*
5
5
1
5
5
3
1
3
*
*
*
5
*
*
5
5
*
*
*
*
*
*
Robert J Edgar was appointed to the Board on 21 July 2009.
4
4
1
4
4
4
4
4
*
*
*
4
*
*
4
4
4
4
4
*
*
*
3
4
1
4
1
3
4
2
*
*
*
*
*
*
4
*
1
4
4
*
*
*
*
3
*
*
*
3
3
3
*
*
*
*
*
*
*
*
3
3
3
*
*
*
# = Number of meetings held during the time the director held office and was a member of the committee during the year
* = Not a member of the relevant committee
(1) - Effective 23 June 2009, the Audit Committee and the Risk Committee were combined to form the Audit and Risk
Committee. Refer to the Corporate Governance Statement for further information.
(2) - Geoffrey Cosgriff, Christopher Renwick, Chris Lynch and Neil Chatfield were not members of the Audit Committee but
attended meetings during the year. Susan Oliver became a member of the Audit Committee on 17 February 2009. Neil
Chatfield became a member of the new Audit and Risk Committee on 23 June 2009.
(3) - Lindsay Maxsted, Susan Oliver, Christopher Renwick, Chris Lynch and Neil Chatfield were not members of the
Remuneration Committee but attended meetings during the year. Chris Lynch was excluded from discussions involving
his remuneration during meetings of the Remuneration Committee which he attended.
(4) - Chris Lynch was not a member of the Nomination Committee but attended meetings during the year. Neil Chatfield
and Rodney Slater became members of the Nomination Committee on 23 June 2009.
(5) - David Ryan, Jeremy Davis, Chris Lynch and Neil Chatfield were not members of the Risk Committee but attended
meetings during the year. Lindsay Maxsted became a member of the Risk Committee on 17 February 2009. Neil
Chatfield became a member of the new Audit and Risk Committee on 23 June 2009.
(6) - Chris Lynch was not a member of the Sustainability Committee but attended meetings during the year. David Ryan
was appointed Chair of the Sustainability Committee and Rodney Slater became a member of the Sustainability
Committee on 23 June 2009.
32 TRANSURBAN ANNUAL REPORT 2009
32 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report
The Remuneration Report is presented under the following sections:
A
B
C
D
E
F
G
H
Introduction
Board oversight of remuneration
Group performance and the link to remuneration
Overview of Transurban's executive remuneration arrangements
CEO and Senior Executive arrangements for the year ended 30 June 2009
Contractual arrangements of Executive Directors and Senior Executives
Non-Executive Director (NED) remuneration
Director and Key Management Personnel remuneration and other disclosures
Introduction
A
The Directors of the Transurban Group present the Remuneration Report prepared in accordance with the requirements of
the Corporations Act 2001 and its Regulations. The information has been audited as required by section 308(3C) of the
Corporations Act 2001.
For the purposes of this report, Key Management Personnel of the Transurban Group are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Transurban Group directly or
indirectly. They include all Directors of the Group (executive and non-executive) and members of the Executive
Committee reporting to the CEO who have authority and responsibility for planning, directing and controlling the activities
of the Group. The combined group of these executives (which also includes the five highest paid executives) of the Group
are referred to as Senior Executives in this report.
B
Board oversight of remuneration
Remuneration Committee
The Board Remuneration Committee of the Transurban Group is responsible for making recommendations to the Board on
director and senior executive remuneration policy and structure.
The Remuneration Committee assesses the appropriateness of the nature and quantum of remuneration of executives on
a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum
stakeholder benefit from the attraction and retention of a high performing director and executive team.
Review of remuneration strategy
The Group reviewed its remuneration strategy during the year and reaffirmed value creation as the key measure of the
reward framework.
As a result of the review, the Board removed the Business Generation Incentive Plan from the framework. Performance
measures in Executive incentive schemes were also reviewed with a focus on maximising shareholder value in the short
and long term. Appropriate measures and targets have been implemented which maintain emphasis on earnings growth,
shareholder return and other key goals over the next three years.
Through these challenging external market conditions, attracting and retaining highly skilled people remains a fundamental
goal of the Group. To this end, Transurban recognises that removing key people of calibre from their existing reward
arrangements in other companies may be required. The Group also recognises the need to retain and reward those
employees with responsibility to oversee future growth opportunities. The remuneration strategy has sufficient flexibility to
accommodate these needs where appropriate.
C
Group performance and the link to remuneration
Each element of the Remuneration framework is linked to the Group’s financial performance. Changes to fixed pay are
determined by an employee’s performance and by the Group’s capacity to pay. Short Term Incentives (STIs) also require
individual performance but are heavily determined by the Group’s EBITDA results. Long Term Incentives (LTIs) are
determined through the use of dual performance measures, EBITDA and Total Shareholder Return (TSR). Performance
hurdles for both STIs and LTIs are reviewed and determined annually so as to clearly identify expected improvements to
the Group’s performance.
33 TRANSURBAN ANNUAL REPORT 2009
33 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
D
Overview of Transurban's Executive Remuneration arrangements
Remuneration strategy and objectives
Transurban’s remuneration objective is to attract, retain, motivate and reward employees who are critical to the continued
growth and success of the Group.
The Group’s reward framework is designed to reward executives with a level and mix of remuneration commensurate with
their position and responsibilities within the Group. The key objectives are to:
•
•
•
•
•
Offer competitive remuneration benchmarked against the external market;
Provide strong and transparent linkages between individual and Group performance and rewards;
Reward executives for Group and individual performance against targets set by reference to appropriate
benchmarks;
Align the interests of executives with those of security holders by aligning incentives with increased security
holder value; and
Encourage executive security holdings.
Executive remuneration structure
The following table illustrates the structure of Transurban’s executive remuneration arrangements:
Remuneration Items
Plans
Conditions
Variable or ‘at risk’ remuneration
Long term incentive
Short term incentive cash
awards
Total fixed remuneration
Benefits
Base salary
Performance
Awards Plan (PAP)
Relative TSR
hurdle (50%)
Proportional
EBITDA hurdle
(50%)
Executive Equity
Plan (EEP)
3 year time-restricted equity
EBITDA target
(50%)
Individual KPIs
(50%)
Set with reference to role, market and
experience
* Proportional EBITDA is earnings before net finance costs (revenues and expense), tax, depreciation and amortisation. It includes
EBITDA from CityLink (100%), Hills M2 (100%), M1 Eastern Distributor (75.1%), M4 (50.61%), M5 (50%), M7 (50%) and DRIVe (75%
including Pocahontas).
Total fixed remuneration
Total fixed remuneration is represented by Total Employment Cost (TEC), comprising cash, superannuation, and
prescribed benefits including death and disability insurance, salary continuance insurance and car parking.
Variable or ‘at risk’ remuneration
Variable remuneration is the link between remuneration and performance. As executives progress in seniority, the
proportion of remuneration which is dependent on the performance of the Group increases.
34 TRANSURBAN ANNUAL REPORT 2009
34 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
Short term incentives
Short term incentives (STI) comprise cash awards tied to individual and group performance indicators. Performance
measures for short term incentives are based around company and individual performance. Performance measures for
short term incentives are heavily oriented towards financial performance. Other non-financial performance metrics are also
included to ensure a broader performance outcome. Group and individual performance measures are set annually and
may vary from year to year to allow the Group to establish the most appropriate measures based on business
circumstances at the time of setting these measures.
Long term incentives
Long term incentives (LTI) comprise both a Performance Awards Plan (PAP) and an Executive Equity Plan (EEP). The
Performance Awards Plan is designed to encourage sustainability of performance in the medium to longer term and is
assessed over a period of three years. The plan provides equity-based remuneration which vests subject to Transurban
Group’s earnings and relative total security holder return performance.
The EEP is designed to encourage executive retention and security holding of this group of employees. Eighty per cent of
an executive's LTI allocation is granted in the PAP with the remaining twenty per cent granted in EEP. Details of the LTI
are provided on page (cid:22)(cid:26).
Hedging of equity awards
The Group prohibits executives from entering into arrangements to protect the value of unvested equity awards. This
includes entering into derivative contracts to hedge their exposure to options or securities granted as part of their
remuneration package.
E
CEO and Senior Executive arrangements for the year ended 30 June 2009
Determining remuneration levels
The remuneration of the Chief Executive Officer (CEO) and executives is established by the Board, based on the
recommendation of the Remuneration Committee. Transurban also undertakes an annual remuneration review to
determine the total remuneration positioning against the market.
Remuneration mix
The CEO’s remuneration mix comprises 34% fixed remuneration as a proportion of total remuneration, 33% on target short
term cash incentives, and 33% equity based incentives. The Executive Committee’s remuneration mix comprises 50%
fixed remuneration as a proportion of total remuneration, 25% on target short term cash incentives, and 25% equity based
incentives. The composition of remuneration is illustrated in the diagram below.
35 TRANSURBAN ANNUAL REPORT 2009
35 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
Total Fixed Remuneration
Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and
fringe benefits such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient
without creating additional cost for the Group.
There are no guaranteed base pay increases in any executive’s contract of employment. An executive’s TEC is reviewed
annually by the Remuneration Committee against market data for comparable roles and taking account of internal
relativities. The process consists of a review of Group and individual performance, relevant comparative remuneration
externally and internally and, where appropriate, independent external advice on policies and practices.
In the 2010 financial year, the Group anticipates restraint in fixed remuneration increases. A freeze in fixed pay has been
implemented for financial year 2010 for the CEO, Executive Committee and other senior managers. Any increases for the
broader workforce will be targeted to improving internal equity, rewarding high performers and to facilitate succession
planning.
2009 Short term incentive structure
The Remuneration Committee considers that a robust performance management system is essential in ensuring a strong
link between remuneration and performance. As a result the short term incentive (STI) structure is based on a
transparency and accountability model, with a reward mechanism based on goal setting and the employee’s line of sight to
business performance. The STI comprises cash awards that are received subject to the attainment of clearly defined
Group and individual hurdles.
STI payments are made to executives for the achievement of financial and non-financial targets set at the beginning of
each financial year, subject to Board discretion. A target STI amount is specified for each executive, expressed as a
percentage of the executive’s TEC. The CEO has an annual STI target of 100% of TEC. The target STI payment for senior
executives is 50% of TEC.
Actual STI payments to each executive depend on the extent to which specific targets set at the beginning of the financial
year are met. The measures represent key drivers for the success of the business and shared values for the key
management personnel.
For the 2009 financial year, the measures comprise:
Performance measure
Proportion of STI award hurdle applies to
Performance target
Group performance
50% of each individual’s target STI award
Individual performance key
performance indicators (KPIs)
50% of each individual’s target STI award
Proportional EBITDA target which is established by
the Board at the commencement of each year
based on the Group’s budget.
KPIs are established at the beginning of each year
with the CEO for his executive team and the Board
for the CEO.
On an annual basis, after consideration of performance against targets, the CEO recommends to the Remuneration
Committee the STI amount (if any) to be paid to each executive. The committee then recommends the amount to the
board for approval. The STI awards are usually paid in August/September following Transurban’s annual performance
review process. For each component of the award, 50% of the target amount vests at threshold performance relative to
budget, 100% of target vests for achievement of target performance and an additional 50% above target can be earned for
a predetermined level of outperformance.
The Executive Committee shared five individual Key Performance Indicators (KPI) being Cost Management plus the
establishment and implementation of improvement plans in the areas of Sustainability, Risk Management, People
Management and Safety. These KPIs comprised 25% of the available STI reward. Improvement in the management of
these business activities was identified as critical to the future success of the Group following a period of acquisition in
prior years. The Board determined that the Executive Committee either met or exceeded each of the shared KPIs. Cost
savings have been achieved beyond the expected targets. There has been significant improvement in the other four KPI’s
evidenced by the Board in new or updated policies, procedures and reporting frameworks. A safety and risk management
culture has been embedded and control effectiveness measures put in place. People related performance planning and
review processes have been fully complied with and the Group’s sustainability agenda has been clarified and deployed.
36 TRANSURBAN ANNUAL REPORT 2009
36 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
Individual KPIs, representing the remaining 25% of the reward, were unique to an Executive’s area of accountability. The
Board reviewed the achievement of these KPIs in determining the Executive’s STI reward for 2009. Overall the Board
consider that the Executive Committee have performed well against the targets set for the year.
2009 Long term incentive structure
Long term incentive (LTI) grants may be awarded annually to executives based on performance to provide an incentive for
future performance and in order to align remuneration with the creation of security holder wealth.
For the 2009 financial year, the CEO and CFO received an LTI allocation of 100% of TEC and senior executives received
an LTI of 50% of TEC. Eighty per cent of the LTI allocation was granted in the Performance Awards Plan with the
remaining twenty per cent (or a minimum value of $100,000 whichever was the greater) granted in the Executive Equity
Plan.
2009 Performance Awards Plan
The Performance Awards Plan (PAP) is a modified version of the 2008 Performance Rights Plan (PRP). Under the PAP
eligible executives, including those outside Australia, receive a grant of Performance Awards which entitles participants to
receive securities at no cost subject to the achievement of performance conditions. The Board has discretion as to the
form of the award at the end of the performance period and may grant cash payments of equivalent value. No dividends or
distributions on securities are payable to participants prior to vesting.
Awards were first made under the PAP on 1 November 2008. The tables on pages (cid:23)(cid:26) and (cid:23)(cid:27) provide details of rights
granted and the value of rights granted, exercised and lapsed during the year.
Dual performance measures (an earnings measure and relative total security holder return) apply to Performance Awards.
The use of dual measures balances the need to improve the underlying performance of the business over the long term as
well as achieve appropriate returns relative to the market.
These measures are as follows:
1. A Proportional EBITDA hurdle applies to 50% of the Performance Award. Proportional EBITDA is earnings before net
finance costs (revenues and expense), tax, depreciation and amortisation. It includes EBITDA from CityLink (100%), Hills
M2 (100%), M1 Eastern Distributor (75.1%), M4 (50.61%), M5 (50%), M7 (50%) and DRIVe (75% including Pocahontas).
As this plan is a long term plan, the proportional EBITDA measure will be adjusted to include or exclude the relevant
EBITDA from acquisitions and divestments that may occur after the Base Year. In addition, any gain or loss arising from
the investment in ConnectEast will be excluded.
This operational measure was chosen to reflect Transurban’s underlying business goal of sustainable growth in earnings
of existing operations in order to improve security holder value.
2. A relative Total Security holder Return (TSR) hurdle applies to 50% of the Performance Award. From 1 November 2008,
Transurban’s comparator group for the TSR measure is the S&P/ASX 100 constituents at the date of grant. This peer
group reflects the Group’s competitors for security holder capital and talent.
TSR measures total return on investment of a security, taking into account both capital appreciation and distributed
income. It assumes a notional reinvestment of distributions paid on the security (on a pre-tax basis) in additional
securities, at the market price on the day before the securities begin trading ex the relevant distribution. The Group's
performance against the hurdle is determined according to Transurban Group’s ranking against the TSR growth of the
peer group over the three year performance period. A volume weighted average price of securities for the one week up to
and including the testing date is used to calculate TSRs.
Relative TSR was selected as a performance hurdle as it ensures an alignment between comparative security holder
return and reward for executives.
37 TRANSURBAN ANNUAL REPORT 2009
37 Transurban annual reporT 2009
Remuneration report (continued)
The vesting schedule and performance hurdles for the Performance Awards are as follows:
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Performance measure
Proportion of
Performance
Award hurdle
applies to
Proportional EBITDA
50%
TSR
50%
Performance target
% of award vesting
5% compound proportional EBITDA
annual growth over the three year
performance period from the Base
Year*
9% compound proportional EBITDA
annual growth
50% of the proportional EBITDA award
100% of the proportional EBITDA award
Between 5-9% proportional EBITDA
growth
Straight line vesting between 50-100%
of the proportional EBITDA award
TSR is ranked at or below the 50th
percentile of the comparator group
constructed in the Base Year**, tested
at the end of each of the three year
performance period
0% of the TSR award
TSR is ranked above the 50th percentile
of the comparator group
50% of the TSR award
TSR is ranked at or above the 75th
percentile
100% of the TSR award
TSR is ranked above the 50th percentile
but below the 75th percentile
Straight line vesting between 50-100%
of the TSR award
* For the 2009 grant this is the 2008 financial year full year actual proportional EBITDA.
** For the 2009 grant this is the TSR comparator group constructed at the date of grant.
The EBITDA target has been reviewed and adjusted to reflect the new ‘proportional EBITDA’ measure which is ring fenced
to current operations.
Performance Awards were granted on 1 November 2008 with a three year vesting period. The awards are tested at the
end of each year. If the performance measures are satisfied for the year, one third of the awards are preserved until the
end of the three year period. At the end of the three years a cumulative test of the performance measures is applied to
any unvested awards.
No retesting is available after the three year performance period. In the event of a change of control of the Group,
automatic vesting of awards occurs.
2009 Executive Equity Plan
Equity awards are granted under the Executive Equity Plan (EEP) based on executives’ performance and are designed to
encourage retention of executives while focusing on business excellence. The EEP also aligns with Transurban’s
remuneration philosophy of encouraging executive security holding.
Individuals who are high performers and in business critical roles are nominated for awards for their past contribution and
expected future performance. Board approval is required to grant EEP awards to nominated executives.
Under the EEP, eligible executives receive a grant of stapled securities in the Transurban Group (”securities”) at no cost
that are subject to disposal restrictions for three years from the grant date. Participants are entitled to distributions paid on
their Securities during the restriction period. If the executive ceases employment with Transurban during the restriction
period, their Securities will be forfeited unless the Board decides otherwise.
Awards were first made under the EEP on 1 November 2008. The tables on pages (cid:23)(cid:26) and (cid:23)(cid:27) provide details of awards.
38 TRANSURBAN ANNUAL REPORT 2009
38 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
Executives outside Australia
In light of US taxation implications, the overseas plan has been adapted to mirror the security awards under EEP with a
grant of Performance Rights. Eligible executives based outside Australia receive a grant of Performance Rights at no cost
which entitles participants to receive Securities which vest at the end of the vesting period of three years. Cash in lieu of
distributions on the Securities is payable to participants during the vesting period. If the executive ceases employment
with Transurban prior to the vesting date, their unvested Performance Rights will be forfeited.
All Employee Plans
The Group operated three broad employee-based security plans, the ShareLink Investment Tax Exempt Plan, the
ShareLink Investment Tax Deferred Plan and the ShareLink Incentive Plan. These plans were offered to the Group’s
permanent employees, including executives.
ShareLink Investment Tax Exempt Plan (ITEP)
The ITEP provided employees the opportunity to invest, on a tax-exempt basis, up to $1,000 per annum, of which half is
contributed by the Group. This plan was suspended in May 2009 following changes to taxation announced in the Federal
budget. The Group intends to reactivate this plan with required modifications once the proposed legislation has been
enacted.
ShareLink Investment Tax Deferred Plan (ITDP)
The Investment Tax Deferred Plan provided employees the opportunity to purchase securities, on a tax-deferred basis
using pre-tax salary. There is no cap on the amount of salary an employee may elect to contribute and the company
provided a matching contribution on a dollar-for-dollar basis to a maximum of $3,000 per annum. This plan was
suspended in May 2009 following changes to taxation announced in the Federal budget. The Group also intends to
reactivate this plan with required modifications once the proposed legislation has been enacted.
ShareLink Incentive Plan (IP)
In 2009 an allocation of 100 securities at no cost was made to each of the 453 eligible employees in recognition of the
Group’s prior year performance.
Legacy plans
Transurban has a number of schemes which no longer operate as open plans but under which some Key Management
Personnel have outstanding entitlements. No grants were made in the 2009 financial year under any of the legacy plans.
Refer to page (cid:23)(cid:27) for details of the legacy plans.
F
Contractual arrangements of executive directors and senior executives
Remuneration for the Chief Executive Officer (CEO) and key management personnel are formalised in service
agreements. Each of these agreements provides for access to performance related STI payments and other benefits as
described above. Although not specified in agreements, executives may be nominated to participate in executive long term
incentive plans (or equivalent cash plans for those executives located outside Australia).
Other key details of the agreements relating to remuneration are provided below:
Chief Executive Officer
The Chief Executive Officer (CEO) is employed under an ongoing contract. The current employment contract commenced
on 4 February 2008.
Under the terms of the present contract:
•
•
•
The CEO received fixed remuneration of $2,080,000 per annum, which is reviewed prior to 30 June each year;
A short term incentive payment of $2,800,000 will be made in September 2009. For subsequent years, the STI
target will be 100 per cent of annual TEC. The payment will be the greater of actual performance based on the
achievement of business or individual KPIs or 50 per cent of annual TEC;
An award under the Executive Equity Plan to the value of $416,000 was made on 1 November 2008;
39 TRANSURBAN ANNUAL REPORT 2009
39 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
•
An allocation of Performance Awards to the value of $1,664,000 was granted on 1 November 2008. The
Performance Awards will be subject to performance conditions and will vest three years from grant date;
•
•
The CEO’s Performance Awards allocation is derived by using an option valuation methodology. A modified
Black Scholes with Monte Carlo simulations was adopted for the FY09 allocation. The number of Performance
Awards will be derived by dividing the CEO’s remuneration value by this valuation;
The CEO has a contractual entitlement to post-employment vesting of Long Term Incentives.
The CEO’s termination provisions are as follows:
•
•
•
The CEO may resign from his position and thus terminate this contract by giving six months’ written notice. Upon
termination, the CEO is entitled to retain any unvested LTIs, which will vest in accordance with the performance
conditions under the Performance Awards Plan (PAP) as at the time of the allocation.
The Group may terminate this employment agreement by providing twelve months’ written notice or providing
payment in lieu of the notice period (based on the fixed component of the CEO’s remuneration). Upon termination
on notice by the Group, the CEO is entitled to retain any unvested LTIs, which will vest in accordance with the
performance conditions under the Performance Awards Plan (PAP) as at the time of the allocation.
The Group may terminate the contract at any time without notice if serious misconduct has occurred. Where
termination with cause occurs the CEO is only entitled to that portion of remuneration that is fixed, and only up to
the date of termination. Upon termination with cause any unvested LTIs will immediately be forfeited.
Other key management personnel
All other key management personnel have ongoing contracts. Total Employment Cost (TEC) for these executives is
reviewed annually by the Remuneration Committee and approved by the Board.
Executive termination provisions are as follows:
•
•
•
The executive may terminate their contract by giving three months’ written notice.
The Group may terminate the executive's employment agreement by providing six months’ written notice or
providing payment in lieu of the notice period (based on the fixed component of the executive's remuneration).
Upon termination on notice by the Group, any LTIs that have vested will be released. LTIs that have not yet
vested will be forfeited.
The Group may terminate the contract at any time without notice if serious misconduct has occurred. Where
termination with cause occurs the executive is only entitled to that portion of remuneration that is fixed, and only
up to the date of termination. Upon termination with cause, any unvested LTIs will immediately be forfeited.
In addition to the above terms and conditions, the Key Management Personnel service agreements include the following:
Ken Daley
•
•
A contracted bonus equal to $1,000,000 to be paid on 30 June 2010, subject to meeting performance conditions
in relation to Transurban’s North American business established at the commencement of the arrangement in
June 2007. The performance conditions underlying the bonus are tracking on target.
Access to any unvested long-term incentives (pro-rated based on time served) subject to stipulated performance
criteria.
Michael Kulper
•
A bonus arrangement for the completion of the I-95 project which expired without payment on 30 June 2009.
Tom Honan
•
•
A sign-on award equal to $1,000,000 received on commencement. Tom Honan received this award 75% in cash
and 25% in Transurban equity purchased on market using a 5 day volume weighted average price of $5.3028.
For the 2009 year only, Tom Honan’s Performance Incentive will equal 100% of TEC as a guaranteed payment,
subject to remaining an employee when Performance Incentives are awarded. In subsequent years Tom Honan’s
target will be 50% of TEC payable at the discretion of the Group.
40 TRANSURBAN ANNUAL REPORT 2009
40 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
•
In November 2008 Tom Honan received an allocation of Long Term Incentives to the value of $1,000,000. In
subsequent years the target value will be 50% of TEC.
The Group determined that the arrangements above were necessary to attract Tom Honan from his existing position.
G
Non-executive director (NED) remuneration
Policy
The Board seeks to set aggregate remuneration at a level that provides the Transurban Group with the ability to attract
and retain directors of the highest calibre, whilst incurring a cost that is acceptable to security holders.
The amount of aggregate remuneration sought to be approved by security holders and the fee structure is reviewed
annually. The board considers advice from external consultants as well as the fees paid to NEDs of comparable
companies when undertaking the annual review process.
The constitution and the ASX listing rules specify that the aggregate remuneration of NEDs shall be determined from time
to time by a general meeting. The latest determination was at the annual general meeting (AGM) held on 29 October 2007
when security holders approved an aggregate remuneration of $2.1 million per year. The Board is not seeking to increase
the aggregate remuneration at the 2009 AGM.
The remuneration of NEDs consists of director’s fees and committee fees. NEDs are not eligible to receive any
performance based compensation.
Non-executive director fee structure
Each non-executive director of THL receives a base fee of up to $140,000 for being a director of the Group, apart from the
Chairman who receives a fee of up to three times this amount. An additional fee is also paid for each board committee on
which a NED sits (ranging from $10,000 to $30,000 for participation in or chairing a sub-committee), apart from the
Chairman who does not receive additional fees for chairing or participating in board committees. The payment of additional
fees for serving on a committee recognises the additional time commitment required by NEDs who serve on one or more
sub committees.
The constitutions of the entities comprising the Transurban Group provide that the total remuneration paid in a year to non-
executive directors may not exceed $2.1 million in total for the Group.
In September 2005, the Board resolved to discontinue previously provided retirement benefits for NEDs with effect from 30
September 2005, such that future directors were not entitled to this benefit. The value of benefits accrued up to this date
attracts interest at the statutory fringe benefits rate. The accrued `frozen’ retirement benefits plus interest will be paid to
directors upon their retirement.
The remuneration of NEDs for the period ending 30 June 2009 and 30 June 2008 is detailed in the tables on pages (cid:23)(cid:22) and
(cid:23)(cid:23) of this report.
Equity participation
The Group encourages NEDs to hold Transurban Securities. Under the ShareLink Investment Tax Deferred Plan,
approved by security holders at the AGM held on 27 October 2008, NEDs were able to sacrifice a portion of their director
fees to acquire Transurban securities through a tax-deferred arrangement. The maximum contribution is capped at 50% of
pre-tax NED fees and the company does not provide a matching contribution for NEDs. Transurban equities are
purchased on behalf of the participating NEDs and employees based on a pre-determined timeframe and frequency.
This arrangement is in line with the Group’s overall remuneration philosophy and market practice and aligns NEDs with
security holder interests.
This plan was suspended in May 2009 following the budget changes to taxation arrangements on shareplans, resulting in
no Security purchases over the 2009 financial year. The Group intends to reactivate this plan with required modifications
once the proposed legislation has been enacted.
41 TRANSURBAN ANNUAL REPORT 2009
41 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
H
Director and key management personnel remuneration and other disclosures
Details of the remuneration of directors, key management personnel (as defined in AASB 124 Related Party Disclosures)
and specified executives of the Group are set out on page (cid:23)(cid:22).
Key management personnel
For the purposes of this report, key management personnel of the Transurban Group are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Transurban Group, directly or
indirectly. They include all Directors of the parent (executive and non-executive) and members of the Executive
Committee reporting to the CEO who have authority and responsibility for planning, directing and controlling the activities
of the Group.
The Key Management Personnel of the Group are the Directors as per page (cid:21)(cid:24) and the following executives:
•
•
•
•
•
•
•
•
•
B Bourke - Chief Operating Officer
D Cardiff - Group General Manager, Human Resources
K Daley - President, International Development
M Fletcher - Group General Manager, Public Affairs
A Head - Group General Manager, Strategy and Corporate Development
S Hogg - Treasurer
T Honan - Chief Financial Officer (commenced 15 October 2008)
M Kulper - President Transurban North America
E Mildwater - Chief Legal Counsel and Company Secretary
42 TRANSURBAN ANNUAL REPORT 2009
42 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
Remuneration table
Remuneration of key management personnel, who included the five highest paid executives of the Company and the
Group:
2009
Short-term employee benefits
Post-employment benefits
Long-
term
benefits
Term-
ination
Benefits
Share-based payments
Value of
equities
acquired in
lieu of cash
salary/fees Cash Bonus
$
$
Non-
Monetary
benefits
$
Cash
salary and
fees
$
Super-
annuation
$
Retirement
benefits (3)
$
Long
service
leave
$
Executive
Loan Plan (a)
$
PRP/PAP
(b)
$
$
EEP (c)
$
Total
$
385,306
51,035
165,131
158,760
-
174,399
166,367
119,293
4,098
47,030
47,030
1,318,449
1,980,839
635,976
344,033
658,635
274,381
368,033
355,355
690,950
1,235,047
322,142
8,183,840
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34,694
4,593
14,869
24,000
-
15,696
14,973
56,778
-
-
-
-
-
14,192
23,642
-
-
26,554
-
-
-
-
165,603
64,388
2,800,000
36,881
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
250,000
-
-
250,000
329,800
314,500
383,400
163,600
204,500
170,000
1,750,000
630,022
217,000
6,962,822
7,845
-
97,354
6,301
-
-
-
-
-
148,381
100,241
57,042
94,694
28,319
33,042
31,900
36,226
110,949
28,911
786,927
-
-
-
-
-
-
-
-
-
64,388
15,913
16,198
46,917
15,327
16,419
-
-
72,102
-
182,876
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
420,000
55,628
194,192
206,402
-
190,095
207,894
176,071
4,098
47,030
47,030
1,548,440
404,265
75,093
5,397,078
88,498
20,303
-
1,679
12,850
-
-
-
-
123,330
217,564
82,038
181,986
47,003
62,254
19,436
194,358
244,528
24,295
1,477,727
18,051
18,051
18,051
18,051
18,051
14,440
36,103
22,575
18,051
1,413,888
852,165
1,481,037
554,661
715,149
591,131
2,957,637
2,315,223
610,399
256,517 18,436,808
Name
Non-
executive
directors
D Ryan
N Chatfield
G Cosgriff
J Davis
R Edgar
L Maxsted
S Oliver(1)
C Renwick
R Slater
J Eve
J Keyes
Sub-total
non-
executive
directors
Executive
directors
C Lynch
Other key
management
personnel
B Bourke
D Cardiff
K Daley
M Fletcher
A Head
S Hogg
T Honan(2)
M Kulper
E Mildwater
Total
(a) The amounts disclosed as remuneration is that part of the value of the Executive Loan Plan benefit which is attributable to the current
year portion of the vesting period.
(b) The amounts disclosed as remuneration is that part of the value of the Performance Rights Plan benefit and Performance Awards Plan
benefit which is attributable to the current year portion of the vesting period.
(c) The amounts disclosed as remuneration is that part of the value of the Executive Equity Plan benefit which is attributable to the current
year portion of the vesting period.
(1) Susan Oliver retired on 22 June 2009 and received payment of $405,134 in retirement benefits.
(2) Tom Honan elected to receive part of his sign-on award in Transurban securities which were purchased on market.
(3) Retirement benefits were frozen for all participating non-executive directors at their current levels up to 30 September 2005. Interest
accrues on director entitlement balances at 7.05 per cent per annum.
43 TRANSURBAN ANNUAL REPORT 2009
43 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
2008
Short-term employee benefits
Post-employment benefits
Long-
term
benefits
Termination
Benefits
Share-based payments
Value of
equities
acquired in
lieu of cash
salaries/fees Cash bonus
$
$
Non-
monetary
benefits
$
Cash
salary and
fees
$
Super-
annuation
$
Retirement
benefits #
$
Long
service
leave
$
Executive
Loan Plan (a)
$
Performan
ce Rights
Plan (b)
$
$
Total
$
385,484
165,208
166,070
49,715
165,208
110,047
10,000
10,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34,694
14,869
20,000
4,474
14,869
70,000
-
-
-
14,192
23,642
-
27,160
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
420,178
194,269
209,712
54,189
207,237
180,047
10,000
10,000
821,020
1,289,868
1,000,000
-
2,000,000
9,218,000
3,763
-
15,000
100,000
-
-
-
86,233
-
5,249,395
-
529,631
-
191,405
3,839,783
16,664,532
689,552
633,182
270,889
454,420
478,842
236,090
409,910
6,345,505
-
750,000
-
-
-
-
-
1,750,000
702,000
557,300
250,000
1,416,200
2,616,927
-
586,000
17,346,427
9,020
8,480
-
-
-
-
9,020
30,283
61,953
51,627
50,433
100,000
38,700
6,470
96,190
679,279
-
-
-
-
-
-
-
64,994
17,231
28,478
15,977
29,482
22,401
-
(8,124)
191,678
571,891
-
-
-
-
643,191
495,580
6,960,057
133,138
119,075
28,835
(124,921)
(142,201)
49,386
93,202
686,145
104,776
97,292
28,737
42,641
41,668
8,217
82,323
597,059
2,289,561
2,245,434
644,871
1,917,822
3,056,337
943,354
1,764,101
34,651,427
Name
Non-executive
directors
D Ryan
G Cosgriff
J Davis
L Maxsted
S Oliver
C Renwick
J Eve
J Keyes
Executive
directors
C Lynch(1)(3)
K Edwards(4)
Other key
management
personnel
C Brant(7)
B Bourke(1)
D Cardiff
K Daley
M Kulper
G Mann(5)
P O'Shea(6)
Total
(a) The amounts disclosed as remuneration is that part of the value of the Executive Loan Plan benefit which is attributable to the current
year portion of the vesting period.
(b) The amounts disclosed as remuneration is that part of the value of the Performance Rights Plan benefit which is attributable to the
current year portion of the vesting period.
(1) Chris Lynch and Brendan Bourke elected to receive part of their fixed remuneration in Transurban securities which were purchased on
market.
(2) Retirement benefits were frozen for all participating non-executive directors at their current levels up to 30 September 2005. Interest
accrues on director entitlement balances at 7.05 per cent per annum.
(3) Chris Lynch joined the Group on 4 February 2008 as CEO elect and subsequently became CEO on April 5.
(4) Kim Edwards was the Managing Director from 1 July 2007 until his retirement on 4 April 2008. Kim Edwards' cash bonus comprised a
short term incentive payment of $1,000,000, a Strategic Milestone Incentive Plan bonus of $5,000,000 and a Business Generation Plan
Incentive of $3,218,000. Kim Edwards' termination payment included the following contractual and statutory payments: $2,470,000 being
1.3 times of fixed remuneration, $2,139,194 being all statutory leave entitlements and notice in lieu of unexpired portion of his employment
contract (from 5 April 2008 to 21 February 2009), and $640,200 being cash payment in lieu of the expiration of long term incentives.
(5) Gary Mann was the Group General Manager Development from 1 July 2007 until his resignation on 23 November 2007. Gary Mann's
termination payment included a statutory payment of $43,191 and a termination payment of $600,000.
(6) Paul O’Shea was the Group General Manager Legal and Risk Management during the year ended 30 June 2008 and departed the
Group on 14 July 2008. Paul O’Shea’s termination payment totalled $495,580.
(7) Chris Brant was the Chief Finance Officer during the year ended 30 June 2008 and departed the Group on 29 August 2008. Mr Brant’s
termination payment totalled $571,891.
44 TRANSURBAN ANNUAL REPORT 2009
44 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Executive Directors
C Lynch
Other key management personnel
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
S Hogg
T Honan
E Mildwater
Fixed remuneration
At risk -STI
At risk - LTI
2009
2008
2009
2008
2009
2008
34%
50%
50%
50%
50%
50%
50%
60%
50%
50%
34%
50%
60%
50%
50%
-
-
-
-
-
33%
25%
25%
25%
25%
25%
25%
20%
25%
25%
33%
25%
20%
25%
25%
-
-
-
-
-
33%
25%
25%
25%
25%
25%
25%
20%
25%
25%
33%
25%
20%
25%
25%
-
-
-
-
-
STI payments for 2008 and 2009 financial years
For the 2008 financial year, 100% of the STI as previously accrued in that period vested to executives and was paid in the
2009 financial year.
For each STI payment to the Key Management Personnel listed in the tables below, the percentage of the available STI
that will be paid and the percentage that will be forfeited because the person did not meet his or her performance criteria,
are set out below. No part of the STI is payable in future years.
Target STI
Paid
%
Forfeited
%
Executive directors
C Lynch
Other key management personnel
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
S Hogg
T Honan
E Mildwater
135
90
157
102
102
102
102
106
100
109
-
10
-
-
-
-
-
-
-
-
45 TRANSURBAN ANNUAL REPORT 2009
45 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
Equity instruments
Value of equity instruments granted, exercised and lapsed
Long term incentive awards to KMP:
(A)
Remuneration
%
(B)
Value at
grant date
$
(C)
Value at
exercise date
$
(D)
Value at
lapse date
$
C Lynch
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
S Hogg
T Honan
E Mildwater
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Loan Plan 2006
Executive Loan Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Loan Plan 2006
Executive Loan Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Cash Plan 2006
Executive Cash Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Cash Plan 2006
Executive Cash Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Loan Plan 2006
Executive Cash Plan 2007
Performance Rights Plan 2009
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Loan Plan 2006
Executive Loan Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Performance Awards Plan 2009
Executive Equity Plan 2009
Performance Awards Plan 2009
Executive Equity Plan 2009
Performance Awards Plan 2009
Executive Equity Plan 2009
80
20
30
40
50
40
10
20
20
30
40
10
30
30
50
40
10
20
30
50
40
10
10
10
20
40
10
15
20
20
40
10
20
20
40
10
40
10
1,830,884
340,093
142,500
220,000
325,000
323,485
81,753
40,000
44,000
96,000
176,048
81,753
103,950
126,000
275,000
254,167
81,753
36,080
135,000
268,725
550,422
102,241
14,850
20,550
39,000
132,036
81,753
22,950
30,825
70,724
176,048
81,753
88,024
65,399
880,232
163,507
110,030
81,753
-
-
-
-
-
-
-
12,742
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,396
-
-
-
-
401
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
A = The percentage of the value of remuneration, based on TEC.
B = The value at grant date calculated in accordance with AASB 2 Share-based Payment.
C= The value at exercise date that were granted as part of remuneration and were exercised/matured during the year.
D = The value at lapse date that were granted as part of remuneration and that lapsed during the year.
46 TRANSURBAN ANNUAL REPORT 2009
46 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
The terms and conditions of each grant of Performance Awards in the 2009 financial year are:
Performance Criteria
Grant date
Vesting date
Expiry date
TSR
EBITDA
1 Nov 2008
1 Nov 2008
1 Nov 2011
1 Nov 2011
1 Nov 2011
1 Nov 2011
Fair value of rights
at grant date
$3.30
$4.27
Spot price at grant
date
$5.22
$5.22
The terms and conditions of each grant of units under the Executive Equity Plan are:
Grant date
1 Nov 2008
Vesting date
1 Nov 2011
Expiry date
1 Nov 2011
Grant price
$5.22
Value per unit at grant date
$4.27
Performance of Transurban Group
As outlined in the LTI sections of this report, the reward delivered under the long-term incentive component of executive
remuneration is dependent on either TSR performance or EBITDA growth.
The table below summarises the actual and prospective relative TSR performance over the Performance Period to date in
respect of unvested long term incentives. The data is indicative of results as if tested on 30 June 2009.
Long term incentive plan
Executive Loan Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Company TSR as at
30 June 2009
Indicative percentile
rank
Indicative number of
securities/rights
vesting
(27)%
(40)%
(17)%
63%
69%
39%
1,109,182
302,056
-
The table below illustrates the Company’s annual compound growth in EBITDA for Rights granted under the Performance
Rights Plan, with a 10% and 15% hurdle of annual compound growth, and the Performance Award Plan, with a 5% and 9%
hurdle of annual compound growth:
Long term Incentive plan
Performance Rights Plan 2008
Performance US Cash Rights Plan 2008
Performance Awards Plan 2009
Company Compound
growth as at 30 June
2009
7%
(2)%
8%
Indicative Number of
Rights Vesting
-
-
670,036
47 TRANSURBAN ANNUAL REPORT 2009
47 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Performance Awards Plan
Executive Equity Plan
483,721
85,465
46,512
67,151
145,422
34,884
46,512
23,256
232,558
29,070
79,647
19,146
19,146
19,146
23,944
19,146
19,146
15,316
85,474
19,146
Remuneration report (continued)
Equity instrument compensation
Number of awards granted in 2009:
Executive directors
C Lynch
Other key management personnel
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
S Hogg
T Honan
E Mildwater
No awards vested during the period.
Legacy Plans
Business Generation Incentive Plan
Transurban Group has previously offered a cash bonus under the Business Generation Incentive Plan (BGIP) to certain
executives for generating new business. The bonuses were paid from a bonus pool determined by the risk adjusted net
present value (NPV) of a project or business venture. The BGIP was intended to reward executives for successful
business generation activities, based on the increase in security holder value derived from new business.
BGIP payments were determined and awarded by the Board, on the recommendation of the Remuneration Committee and
the CEO.
After a review of the Group’s STI arrangements in the 2009 financial year, the Board opted to discontinue the BGIP from
the 2009 financial year onwards and will capture future outperformance through the standard STI plan.
No BGIP payments were made in the 2009 financial year.
2008 Performance Rights Plan
The Performance Rights Plan (PRP) enabled eligible executives to receive a grant of Performance Rights that entitled
participants to receive stapled securities in Transurban (Securities) at no cost at the end of a three year performance
period, subject to the achievement of performance conditions. No dividends or distributions on Securities were payable to
participants prior to vesting. The Plan had two performance measures, EBITDA and relative TSR against the S&P/ASX
100 Industrials, each applied to 50% of the PRP award.
50% of the EBITDA award vests for achievement of 10% compound EBITDA annual growth over the three year
performance period from the Base Year, 100% of the EBITDA award vested for achievement of 15% compound EBITDA
annual growth, and there was straight line vesting between the two annual compound growth targets. None of the TSR
award vests for a TSR ranking at or below the 50th percentile of the comparator group constructed in the Base Year,
tested at the end of the three year performance period. 50% of the TSR award vests for a TSR ranking above the 50th
percentile of the comparator group. 100% of the TSR award vests for a TSR ranking at or above the 75th percentile and
there was straight line vesting between the two TSR targets. No retesting is available under the plan.
48 TRANSURBAN ANNUAL REPORT 2009
48 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
Post-employment vesting under the Performance Awards Plan was introduced for executives that departed as a result of
Transurban’s restructure in the previous year. For departing executives, existing awards of Performance Rights were
extinguished and a new offer of Performance Awards under the PAP was made with the same measures and vesting
period based on a pro-rated entitlement for time served.
Awards were last made under the PRP in November 2007 and the PRP was discontinued in the 2009 financial year
following the introduction of the Performance Awards Plan.
The terms and conditions of each grant of Performance Rights under the legacy Performance Rights Plan are:
Performance Criteria
Grant date
Vesting date
Expiry date
TSR
EBITDA
1 Nov 2007
1 Nov 2007
1 Nov 2010
1 Nov 2010
1 Nov 2010
1 Nov 2010
Fair value of rights
at grant date
$3.50
$5.96
Spot price at grant
date
$7.29
$7.29
Number of Performance rights granted under the Performance Rights Plan 2008:
Performance Rights Plan
Other key management personnel
B Bourke
D Cardiff
A Head
92,857
27,428
14,857
No performance rights vested during the period.
2006 and 2007 Executive Loan Plan
The Executive Loan Plan (ELP) was discontinued as of the 2007 financial year. The ELP rewarded the improvements in
the price of Transurban’s stapled securities over a three year period with relative Total Security holder Return (TSR)
against the S&P/ASX 100 Industrials as a performance measure. Executives based outside Australia were eligible to
participate in a cash based plan similarly structured to the ELP.
Executives that participated in the ELP were provided with an interest free loan to assist them to acquire securities at
market price. The term of the loan is three years and there is only one testing date. The securities are held by the
executive but will only vest in the executive in accordance with the terms of the Plan. Expiry occurs three years plus 60
days from the date of commencement of the Plan, unless the rules of the Plan otherwise provide. Holding locks are
applied to the securities to ensure that they can only be dealt with in accordance with the terms of the Plan. The acquired
securities cannot be transferred or sold while the loan is outstanding.
The ELP was last offered in the 2007 financial year. The 2006 awards (including those under the cash plan) met the TSR
hurdle and vested, however, due to the decrease in Transurban’s security price the majority of participants received
minimal to no value. Of the one remaining grant, Transurban anticipates that the 2007 awards (including the cash award)
are likely to vest in November 2009 but participants are likely to receive minimal value based on the current security price.
The terms and conditions of each grant of units under the legacy Executive Loan Plan are:
Grant date
1 Nov 2005
1 Nov 2006
Vesting date
1 Nov 2008
1 Nov 2009
Expiry date
31 Dec 2008
31 Dec 2009
Grant price
$6.47
$7.28
Value per unit at grant date
$1.35
$1.37
Date payable
1 Nov 2008
1 Nov 2009
49 TRANSURBAN ANNUAL REPORT 2009
49 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
Number/value of securities vested under the 2006 Loan plan during the year:
Loan Plan
(Securities)
Cash Plan
($)
Other key management personnel
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
90,005
25,148
-
-
9,706
15,001
-
-
-
-
-
-
There were no securities granted under the legacy Executive Loan Plan to KMP’s during the year.
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.
Transurban has arranged to pay a premium for a Directors and Officers Liability insurance policy to indemnify directors
and officers in accordance with the terms and conditions of the policy.
This policy is subject to a confidentiality clause which prohibits disclosure of the nature of the liability covered, the name of
the Insurer, the Limit of Liability and the Premium paid for this policy.
50 TRANSURBAN ANNUAL REPORT 2009
50 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Non-audit services
The Group has an "External Auditor Independence" policy which is intended to support the independence of the external
auditor by regulating the provision of services by the external auditor. The external auditor will not be engaged to perform
any service that may impair or be perceived to impair the external auditor's judgement or independence. The external
auditor will only provide a permissible non-audit service where there is a compelling reason for it to do so, and the aim is
for the external auditor not to provide non-audit services at all. All non-audit services must be pre-approved by the Chief
Financial Officer (services less than $5000) or the Chair of the Audit and Risk Committee (in all other cases).
The board of directors has considered the position and, in accordance with advice received from the Audit and Risk
Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-
audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
•
the Audit and Risk Committee reviews the non-audit services to ensure they do not impact the impartiality and
objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a
management or a decision making capacity for the Group, acting as advocate for the Group or jointly sharing
economic risk and rewards.
•
During the year the following fees were paid or payable for audit and non-audit services provided by the auditor of the
parent entity, its related practices and non-related audit firms:
Amounts received or due and receivable by PricewaterhouseCoopers
Audit and Other Assurance Services
Audit and review of financial reports
Other assurance services
Other assurance services
Total audit and other assurance services
Taxation services
Tax compliance services
Tax consulting services
Indirect taxation services
Total taxation services
Total remuneration for PricewaterhouseCoopers
Consolidated
30 June
2009
$
30 June
2008
$
1,200,000
1,239,354
25,792
1,225,792
159,827
1,399,181
-
-
617,063
617,063
236,430
1,371,817
1,518,667
3,126,914
1,842,855
4,526,095
The indirect tax services relate to a project initiated in prior year in which PricewaterhouseCoopers have proprietary
intellectual property.
Amounts received or due and receivable by other audit firms
Audit and review of financial report
Other assurance services
Taxation services
Total remuneration for other audit firms
Total auditors remuneration
94,380
867,888
178,950
1,141,218
82,505
718,614
631,806
1,432,925
2,984,073
5,959,020
The audit fee relates to the amount due to Ernst & Young who are the auditors of the M4. Other assurance and tax fees
are for other services Ernst and Young were engaged for throughout the Group.
51 TRANSURBAN ANNUAL REPORT 2009
51 Transurban annual reporT 2009
Transurban Holdings Limited
Directors' report
30 June 2009
(continued)
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page (cid:24)(cid:22).
Rounding of amounts
The company is of a kind referred to in Class Order 98/100, 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, or in certain cases, to the nearest dollar.
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 directors.
David J Ryan
Director
Christopher J Lynch
Director
Melbourne
26 August 2009
52 TRANSURBAN ANNUAL REPORT 2009
52 Transurban annual reporT 2009
53 Transurban annual reporT 2009
Transurban Holdings Limited ABN 86 098 143 429
Annual financial report - 30 June 2009
Contents
Financial report
Income statements
Balance sheets
Statements of changes in equity
Cash flow statements
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members
Page
55
56
57
59
60
145
146
This financial report covers the Transurban Group which consists of Transurban Holdings Limited, Transurban Holding
Trust and Transurban International Limited and their controlled entities as described in Note 1 to the Financial Statements.
The financial report is presented in the Australian currency.
The equity securities of the parent entities are stapled and cannot be traded separately. Entities within the group are
domiciled and incorporated in Australia, the United States of America or Bermuda. Transurban Holdings Limited's
registered office and principal place of business is:
Level 3
505 Little Collins Street
Melbourne Victoria 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
The financial report was authorised for issue by the directors on 26 August 2009. The Group has the power to amend and
reissue the financial report.
54 TRANSURBAN ANNUAL REPORT 2009
54 Transurban annual reporT 2009
Transurban Holdings Limited
Income statements
For the year ended 30 June 2009
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Notes
Revenue from continuing operations
Toll, fee and other road revenue
Other revenue
Other income
Operational costs
Corporate costs
Business Development
Concession Fees
Construction costs
Depreciation and amortisation expense
Finance costs
Share of net profits (losses) of associates and
joint venture partnership accounted for using
the equity method
Loss before income tax
Income tax benefit
Loss from continuing operations
Profit from discontinued operations
Loss for the year
Profit (loss) is attributable to:
Ordinary equity holders of the stapled
group
Minority interest
Loss per security from continuing
operations attributable to the ordinary
equity holders of the stapled group:
Basic loss per stapled security
Diluted loss per stapled security
Loss per security attributable to the
ordinary equity holders of the stapled
group:
Basic loss per stapled security
Diluted loss per stapled security
3
3
4
5
5
6
7
42
42
42
42
738,981
390,572
1,129,553
681,862
382,681
1,064,543
-
28,089
28,089
-
27,318
27,318
2,705
3,621
-
73,024
(177,578)
(69,005)
(40,970)
(4,829)
(62,193)
(340,939)
(456,920)
(32,193)
(52,369)
36,235
(16,134)
-
(16,134)
(179,866)
(111,661)
(58,030)
(6,868)
(39,655)
(336,228)
(482,515)
(24,249)
(170,908)
46,900
(124,008)
18,662
(105,346)
-
(40,722)
-
-
-
-
(80,574)
-
(93,207)
29,239
(63,968)
-
(63,968)
-
(48,469)
(73)
-
-
-
(112,102)
-
(60,302)
34,776
(25,526)
-
(25,526)
(24,575)
8,441
(16,134)
(109,686)
4,340
(105,346)
(63,968)
-
(63,968)
(25,526)
-
(25,526)
Cents
Cents
(1.9)
(1.9)
Cents
(1.9)
(1.9)
(11.8)
(11.8)
Cents
(10.1)
(10.1)
The above income statements should be read in conjunction with the accompanying notes.
55 TRANSURBAN ANNUAL REPORT 2009
55 Transurban annual reporT 2009
Transurban Holdings Limited
Balance sheets
As at 30 June 2009
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Notes
8
9
10
11
12
14
13
15
16
17
18
19
14
20
21
22
14
24
25
23
199,805
210,441
410,246
336,545
216,838
553,383
8
266,803
266,811
8,647
390,474
399,121
-
1,688
264,221
13,429
664,159
633,272
63,535
-
116,456
514,671
7,862,347
9,854,440
691,169
558,224
167,829
-
96,225
505,737
8,102,543
10,123,415
-
-
-
1,383,142
-
365,457
-
2,012,820
-
-
-
1,383,142
-
313,133
-
1,709,704
10,264,686
10,676,798
2,279,631
2,108,825
185,105
746,000
3,336
61,596
262,411
149,452
1,407,900
3,296,372
105,221
1,445,014
139,617
29,426
5,015,650
195,029
480,600
9,855
35,073
416,871
250,307
1,387,735
3,263,212
247,718
1,562,994
153,989
91,689
5,319,602
75,119
-
-
-
283
143,759
219,161
1,470,608
-
2,633
-
-
1,473,241
82,840
-
9,855
-
453
34,304
127,452
1,405,107
-
14
-
-
1,405,121
6,423,550
6,707,337
1,692,402
1,532,573
3,841,136
3,969,461
587,229
576,252
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Receivables
Investments accounted for using the equity
method
Held-to-maturity investments
Derivative financial instruments
Other financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Current tax liabilities
Provisions
Non-interest bearing liabilities
Total current liabilities
Non-current liabilities
Borrowings
Derivative financial instruments
Deferred tax liabilities
Provisions
Non-interest bearing liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained profits (accumulated losses)
Minority interest - Transurban International
Limited
Minority interest - other
26
27(a)
27(b)
28
29
7,106,243
8,363
(3,602,054)
6,846,992
95,242
(3,296,526)
413,878
1,017
172,334
116,479
212,105
86,086
237,667
-
-
339,812
138
236,302
-
-
Total equity
3,841,136
3,969,461
587,229
576,252
The above balance sheets should be read in conjunction with the accompanying notes.
56 TRANSURBAN ANNUAL REPORT 2009
56 Transurban annual reporT 2009
Consolidated
Balance at 1 July 2007
Adjustment on adoption of:
AASB-I 12
Restated balance 1 July 2007
(Loss) profit for the year
Changes in the fair value of cash flow hedges,
net of tax
Exchange differences on translation of foreign
operation
Total recognised income and expense for
the year
Contributions of equity, net of transaction costs
Treasury securities
Distribution reinvestment plan
Distributions provided for or paid
Acquisition of additional interest in Airport
Motorway Group
Distributions provided for or paid to minority
interests in subsidiaries
Changes in value of share-based payment
reserve
Balance at 30 June 2008
Balance at 1 July 2008
(Loss) profit for the year
Changes in the fair value of cash flow hedges,
net of tax
Exchange differences on translation of foreign
operation
Total recognised income and expense for
the year
Contributions of equity, net of transaction costs
Treasury securities
Distribution reinvestment plan
Distributions provided for or paid
Distributions provided for or paid to minority
interests in subsidiaries
Change in value of share-based payment
reserve
Transurban Holdings Limited
Statements of changes in equity
For the year ended 30 June 2009
Attributable to members of
Transurban Holdings Limited
Contributed
equity
$'000
Reserves
$'000
Retained
earnings
$'000
Minority
interest
$'000
Notes
Total
$'000
48
27
27
26
26
26
27
27
29
27
27
27
26
26
26
27
29
27
6,078,487
(18,830)
(2,436,011)
307,326 3,930,972
-
6,078,487
-
(18,830)
(128,456)
(2,564,467)
(11,769)
(140,225)
295,557 3,790,747
-
-
-
-
-
(109,686)
4,340
(105,346)
113,606
2,679
-
-
(13,164)
100,442
3,692
6,371
116,285
(109,686)
(5,132)
1,467
561,292
7,598
199,615
-
-
-
-
-
-
-
-
(622,373)
95,189
368
-
-
656,481
7,966
199,615
(622,373)
-
-
(5,127)
-
-
-
(37,551)
(42,678)
(24,678)
(24,678)
-
768,505
2,914
(2,213)
-
(622,373)
-
33,328
2,914
177,247
6,846,992
95,242
(3,296,526)
323,753 3,969,461
6,846,992
-
95,242
-
(3,296,526)
(24,575)
323,753 3,969,461
(16,134)
8,441
-
-
-
8,468
5,895
244,888
-
-
(84,982)
(390)
-
-
(43,925)
(128,907)
29,402
29,012
(85,372)
(24,575)
(6,082)
(116,029)
-
-
-
-
-
-
-
-
(280,953)
1,411
488
41,530
-
9,879
6,383
286,418
(280,953)
-
(32,516)
(32,516)
-
259,251
(1,507)
(1,507)
-
(280,953)
-
10,913
(1,507)
(12,296)
Balance at 30 June 2009
7,106,243
8,363
(3,602,054)
328,584 3,841,136
57 TRANSURBAN ANNUAL REPORT 2009
57 Transurban annual reporT 2009
Transurban Holdings Limited
Statements of changes in equity
For the year ended 30 June 2009
(continued)
Parent
Ordinary
shares
$'000
Reserves
$'000
Retained
earnings
$'000
Total
$'000
Notes
Balance at 1 July 2007
Loss for the year
Total recognised income and expense for the year
Contributions of equity, net of transaction costs
Treasury securities
Distribution reinvestment plan
Changes in value of share-based payments
Balance at 30 June 2008
Balance at 1 July 2008
(Loss) for the year
Total recognised income and expense for the year
Contributions of equity, net of transaction costs
Distribution reinvestment plan
Treasury securities
Change in value of share-based payments reserve
167,094
-
-
162,147
893
9,678
-
172,718
69
-
-
-
-
-
69
69
261,828
(25,526)
(25,526)
428,991
(25,526)
(25,526)
-
-
-
-
-
162,147
893
9,678
69
172,787
339,812
138
236,302
576,252
339,812
-
-
2,430
70,746
890
-
74,066
138
-
-
-
-
-
879
879
236,302
(63,968)
(63,968)
576,252
(63,968)
(63,968)
-
-
-
-
-
2,430
70,746
890
879
74,945
26
26
26
27
26
26
26
27
Balance at 30 June 2009
413,878
1,017
172,334
587,229
The above statements of changes in equity should be read in conjunction with the accompanying notes.
58 TRANSURBAN ANNUAL REPORT 2009
58 Transurban annual reporT 2009
Transurban Holdings Limited
Cash flow statements
For the year ended 30 June 2009
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Notes
822,172
(346,973)
23,456
212,240
(354,056)
(36,812)
320,027
-
(50,477)
(73,027)
(14,024)
(32,510)
(30,444)
-
(22,633)
16,570
(29,176)
-
-
(148,307)
-
28,020
17,500
(338,508)
9,994
(117)
3,426
113,316
622,448
(7,586)
(540,600)
-
-
(1,300)
-
(172,161)
97
(32,871)
(5,354)
778,848
(315,027)
45,282
255,052
(391,223)
(19,819)
353,113
(13,180)
(43,278)
(69,030)
(28,259)
(311,174)
-
(46,500)
(39,259)
52,004
-
4,795
962
(404,152)
161,430
41,483
-
(694,158)
658,800
(1,814)
7,967
127,752
1,226,640
(1,325)
(1,312,212)
-
-
(73,471)
110,777
(396,858)
-
(25,468)
320,788
3,417
(6,032)
-
2,427
(11,522)
(361)
(12,071)
-
-
-
-
-
-
-
(22,633)
16,570
(29,176)
-
-
-
-
-
-
(35,239)
2,469
(39)
831
-
-
-
-
486,291
(418,330)
(391,717)
359,166
-
-
-
38,671
302
(10,604(cid:12)
-
2,569
(16,328(cid:12)
-
(24,061(cid:12)
-
-
-
-
-
-
-
(39,259(cid:12)
52,004
-
4,795
962
-
-
-
-
18,502
162,724
(448(cid:12)
891
-
-
-
-
639,411
(402,754)
(618,845)
233,139
-
-
-
14,118
40
30
(23,835)
(20,257)
(8,639)
8,559
1,852,487
1,876,737
8,647
411
(3,993)
8
8
8
1,829,063
(1,629,258)
199,805
1,852,487
(1,515,942)
336,545
-
8
-
8
88
-
8,647
-
8,647
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Other revenue
Interest received
Interest paid
Income taxes paid
Net cash inflow (outflow) from operating activities
Cash flows from investing activities
Payment for purchase of subsidiaries, net of cash
acquired
Payments for property, plant and equipment
Payments for intangibles
Payments for maintenance of intangibles
Payments for investment in associates
Payments for acquisition of term loan notes
Payments for acquisition of minority interest in subsidiary
Payments for available-for-sale financial assets
Proceeds from disposal of available-for-sale asset
Payments for derivative financial instruments
Proceeds from disposal of derivative financial instrument
Cash advances
Payment for M1 upgrade
Proceeds from sale of subsidiaries (net of cash
disposed)
Dividends received from associate
Proceeds from share buyback from associate
Net cash (outflow) inflow from investing activities
Cash flows from financing activities
Proceeds from issues of stapled securities
Payments for costs of issuing stapled securities
(Payments for) proceeds from sale of treasury securities
Increase in infrastructure facility cash reserve
Proceeds from borrowings
Payments for establishing borrowing facilities
Repayment of borrowings
Loans from related parties
Repayment of loans to related parties
Loans to related parties
Repayment of loans from related parties
Distributions paid to Group's security holders
Distributions received on forfeited treasury securities
Distributions paid to minority interests in subsidiaries
Net cash (outflow) inflow from financing activities
Net (decrease) increase in cash at bank and
infrastructure facility cash reserve
Cash at bank and infrastructure facility cash reserve at
the beginning of the financial year
Effects of exchange rate changes on cash and cash
equivalents
Cash at bank and infrastructure facility cash reserve at
the end of the financial year
Less infrastructure facility cash reserve
Cash and cash equivalents at end of year
The above cash flow statements should be read in conjunction with the accompanying notes.
59 TRANSURBAN ANNUAL REPORT 2009
59 Transurban annual reporT 2009
Contents of the notes to the financial statements
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
Summary of significant accounting policies
Segment information
Revenue
Other income
Expenses
Income tax benefit
Prior period discontinued operation
Current assets - Cash and cash equivalents
Current assets - Trade and other receivables
Non-current assets - Receivables
Non-current assets - Investments accounted for using the equity method
Non-current assets - Held-to-maturity investments
Non-current assets - Other financial assets
Derivative financial instruments
Non-current assets - Property, plant and equipment
Non-current assets - Deferred tax assets
Non-current assets - Intangible assets
Current liabilities - Trade and other payables
Current liabilities - Borrowings
Current liabilities - Provisions
Current liabilities - Non-interest bearing liabilities
Non-current liabilities - Borrowings
Non-current liabilities - Non-interest bearing liabilities
Non-current liabilities - Deferred tax liabilities
Non-current liabilities - Provisions
Contributed equity
Reserves and retained profits/(accumulated losses)
Minority interest - Transurban International Limited
Minority interest - other
Distributions
Key management personnel disclosures
Remuneration of auditors
Contingencies
Commitments
Related party transactions
Subsidiaries
Deed of cross guarantee
Investments in associates and joint venture
Events occurring after the reporting period
Reconciliation of profit after income tax to net cash inflow from operating activities
Non-cash investing and financing activities
Loss per stapled security
Share-based payments
Intra-group Guarantees
Net tangible asset backing
Critical accounting estimates and judgements
Financial risk management
Initial application of AASB Interpretation 12
Page
61
75
76
76
77
78
81
83
83
85
86
87
87
88
89
90
91
93
93
94
95
96
99
101
102
102
105
107
107
108
109
115
116
117
118
121
123
125
129
129
129
130
131
135
136
136
137
142
60 TRANSURBAN ANNUAL REPORT 2009
60 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated.
The combined financial report includes separate financial statements for Transurban Holdings Limited (THL) as an
individual entity and for the Group.
The Transurban Group financial statements have been prepared as an aggregation of the financial statements of
Transurban Holdings Limited and controlled entities (THL), Transurban Holding Trust and controlled entities (THT), and
Transurban International Limited and controlled entities (TIL) as if all entities operate together. They are therefore treated
as a combined entity (hereon referred to as "the Group"), notwithstanding that none of the entities controls any of the
others. The principals of consolidation have been applied in order to present the aggregated financial statements on a
combined basis. THL has been deemed the parent of the Group.
The financial statements have been aggregated in recognition of the fact that the securities issued by THL, THT and TIL
are stapled together and comprise one share in THL, one unit in THT and one share in TIL (Stapled Security). None of the
components of the Stapled Security can be traded separately.
(a) Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the
Corporations Act 2001.
Where necessary, comparatives have been reclassified for consistency with current year disclosures.
Compliance with IFRS
Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS).
Compliance with AIFRS ensures that the financial report of Transurban Holdings Limited complies with International
Financial Reporting Standards (IFRS).
Initial application of AASB Interpretation 12 - Service Concession Arrangements
AASB Interpretation 12 Service Concession Arrangements (AASB-I 12) is applicable for the Group's annual reporting
period beginning 1 July 2008 and has been adopted for the first time for the year ended 30 June 2009. AASB-I 12
provides guidance on the accounting by operators of public-to-private service concession arrangements under which
private sector entities participate in the development, financing, operation and maintenance of infrastructure for the
provision of public services. A substantial portion of the Group's assets are used within the framework of concession
arrangements granted by public sector entities. The application of AASB-I 12 has led to a change in the Group's policies
of accounting for the classification, recognition and measurement of service concession arrangements, the construction of
assets under service concession arrangements and maintenance obligations under the arrangements.
The new policies have been applied retrospectively and, where relevant, in accordance with the transitional provisions,
comparative information in relation to the 2008 financial year has been restated accordingly. The Group's revised policies
are set out in note 1 (e), (q) and (x).
Details and quantification of the impact of the change in accounting policies are set out in note 48.
Initial application of AASB Interpretation 129 - Service Concession Arrangements: Disclosures
In addition to the adoption of AASB-I 12, the Group has adopted AASB Interpretation 129 Service Concession
Arrangements: Disclosures (AASB-I 129) for the first time for the year ended 30 June 2009. AASB-I 129 contains specific
guidance on the disclosures required for a Service Concession Arrangement.
Details as required under AASB-I 129 can be found in Note 17.
Early adoption of standards
The Group has not elected to adopt any new accounting standard early.
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of
other financial assets and liabilities (including derivative financial instruments).
61 TRANSURBAN ANNUAL REPORT 2009
61 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(a) Basis of preparation (continued)
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to
the financial statements, are disclosed in note 46.
(b) Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate the aggregation of the assets and liabilities of Transurban Holdings
Limited (“parent entity”) and controlled entities, Transurban Holding Trust and controlled entities, and Transurban
International Limited and controlled entities, for the year ended 30 June 2009 and the results of all controlled entities for
the year then ended as if all entities operate together. They are therefore treated as a combined entity (hereon referred to
as "the Group"), notwithstanding that none of the entities controls any of the others.
Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the
financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The
existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing
whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated
from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to note 1(h)).
The aggregated financial statements 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 financial
statements except as otherwise indicated.
The financial statements have been aggregated in recognition of the fact that the securities issued by the parent entities
are stapled into parcels. A Stapled Security comprises one share in THL, one share in TIL and one unit in THT. None of
the components of the Stapled Security are able to be traded separately.
Minority interests in the results and equity of subsidiaries are shown separately in the consolidated income statement and
balance sheet respectively.
Investments in subsidiaries are accounted for at cost in the individual financial statements of Transurban Holdings Limited.
Associates and joint ventures
Associates are all entities over which the Group has significant influence but not control. Interests in joint ventures are
where the Group jointly controls an entity with another party (refer to note 38).
Investments in associates are accounted for in the parent entity financial statements using the cost method and in the
consolidated financial statements using the equity method of accounting, after being initially recognised at cost.
The Group’s share of its associates’ and joint ventures' post-acquisition profits or losses is recognised in the income
statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-
acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates
and joint ventures are recognised in the parent entity’s income statement, while in the consolidated financial statements
they reduce the carrying amount of the investment.
When the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or joint
venture, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associate or joint venture.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest
in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the
policies adopted by the Group.
62 TRANSURBAN ANNUAL REPORT 2009
62 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(b) Principles of consolidation (continued)
Application of UIG 1013 Pre-date of Transition Stapling Arrangements and AASB Interpretation 1002 Post-date of
Transition Stapling Arrangements
For the purpose of UIG 1013 and AASB Interpretation 1002, THL has been identified as the parent entity in relation to the
pre-date of transition stapling with THT and the post-date of transition stapling with TIL. In accordance with UIG 1013 the
results and equity of THL and THT have been combined in the financial statements. AASB Interpretation 1002 however
requires the results and equity, not directly owned by THL, of TIL to be treated and disclosed as minority interest, and is
disclosed in note 28.
(c) Segment reporting
A business segment is identified for a group of assets and operations engaged in providing products or services that are
subject to risks and returns that are different to those of other business segments. A geographical segment is identified
when products or services are provided within a particular economic environment subject to risks and returns that are
different from those of segments operating in other economic environments.
(d) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (functional currency). The consolidated financial statements are
presented in Australian dollars, which is Transurban Holdings Limited’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the income statements, except when they are deferred in equity as qualifying cash flow hedges and qualifying net
investment hedges or are attributable to part of the net investment in a foreign operation.
Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
Translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are
recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary assets such as
equities classified as available-for-sale financial assets are included in the fair value reserve in equity.
Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency as
follows:
•
•
•
assets and liabilities for each balance sheets presented are translated at the closing rate at the date of that balance
sheets
income and expenses for each income statements are translated at average exchange rates (unless this is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the transactions), and
all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of such investments, are taken to shareholders' equity.
When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of
such exchange differences are recognised in the income statements, as part of the gain or loss on sale where applicable.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
foreign entities and translated at the closing rate.
(e) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net
of returns, rebates and amounts collected on behalf of third parties.
63 TRANSURBAN ANNUAL REPORT 2009
63 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(e) Revenue recognition (continued)
Revenue is recognised for the major business activities as follows:
(i) Toll and fee revenue
Toll charges and related fees are recognised when the charge is incurred by the user.
(ii) Business development fees
Business development fees are recognised when receivable and to the extent of costs incurred, and that it is
probable the costs will be recovered.
(iii) Interest income
Interest income is recognised on a time proportionate basis using the effective interest rate method.
(iv) Prepaid toll revenue
Prepaid toll receipts are recognised as an unearned income and held on deposit until the charge is incurred by the
user.
(v) Construction revenue
The intangible asset model, as defined in AASB-I 12, applies to service concession arrangements where the
operator is granted a right to toll users of the road or where the concession grantor has not provided a contractual
guarantee in respect of the amount receivable for constructing and operating the asset. Under the intangible asset
model, during the construction phase, the Group records an intangible asset representing the right to charge users of
the public service and recognised revenue from the construction of the infrastructure (in accordance with AASB 111).
Income and expenses associated with construction contracts are recognised in accordance with the percentage of
completion method in AASB 111.
Operating revenue of the infrastructure is recognised as toll and fee revenue described above.
On the adoption of AASB-I 12, the Group has not recognised any margin on past construction services as such
margin could not be reliably measured.
(vi) Dividends and distributions
Dividends are recognised as revenue when the right to receive payment is established.
(f)
Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
Deferred income tax is provided in full, using the liability method, on all temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred
income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred
income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date
and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is
settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax
bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in
equity.
64 TRANSURBAN ANNUAL REPORT 2009
64 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(f)
Income tax (continued)
Tax consolidation legislation
The Transurban Group has adopted the tax consolidation legislation for Transurban Holdings Limited and its wholly-owned
Australian entities as of 1 July 2005.
All entities within the tax consolidated group continue to account for their own current and deferred tax amounts. These
tax amounts are measured as if each entity in the tax consolidation group is a separate tax payer within the tax
consolidated group.
In addition to its own current and deferred tax amounts, Transurban Holdings Limited also recognises the current tax
liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the Group. Details about the tax funding agreement are disclosed in note 6.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are
recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.
(g) Leases
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are
classified as operating leases (note 34). Payments made under operating leases (net of any incentives received from the
lessor) are charged to the income statements on a straight-line basis over the period of the lease.
Lease incentives are recognised as a reduction of the rental expense over the lease term on a straight line basis.
(h) Business combinations
The purchase method of accounting is used to account for all business combinations, excluding business combinations
involving entities or businesses under common control, regardless of whether equity instruments or other assets are
acquired. Cost is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or
assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in
an acquisition, the fair value of the instruments is their published market price as at the date of exchange unless, in rare
circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair
value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs
arising on the issue of equity instruments are recognised directly in equity and internal costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost
of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill (refer
to note 1(q)).
If the cost of acquisition is less than the Group's share of the fair value of the identifiable net assets of the
subsidiary acquired, the difference is recognised directly in the income statements, but only after a reassessment of the
identification and measurement of the net assets acquired.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate
at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
(i)
Impairment of assets
At each reporting date, the Group assesses whether there is any indication that an asset, including goodwill, may be
impaired. Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the
carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and 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 impairment occurs.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset,
unless the asset's value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate
cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable
amount is determined for the cash-generating unit to which the asset belongs.
65 TRANSURBAN ANNUAL REPORT 2009
65 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(i)
Impairment of assets (continued)
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset.
(j) Cash and cash equivalents
For cash flow statements presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call
with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank
overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheets.
Refer note 1(t) for details of infrastructure facility cash reserve assets.
(k) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less allowance for impairment. Trade receivables are due for settlement no more than 30 days from
revenue recognition.
Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written
off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used
when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms
of the receivables. The amount of the impairment allowance is the difference between the asset’s carrying amount and the
present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-
term receivables are not discounted if the effect of discounting is immaterial. The amount of the allowance is recognised
in the income statement.
(l) Non-current assets (or disposal groups) held-for-sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. They are measured at the lower of their carrying amount
and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits and
financial assets that are carried at fair value, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less
costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal
group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously
recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are
classified as held-for-sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held-
for-sale continue to be recognised.
Non-current assets classified as held-for-sale and the assets of a disposal group classified as held-for-sale are presented
separately from the other assets in the balance sheets. The liabilities of a disposal group classified as held-for-sale are
presented separately from other liabilities in the balance sheets.
A discontinued operation is a component of the entity that has been disposed of or is classified as held-for-sale and that
represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to
dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The
results of discontinued operations are presented separately on the face of the income statements.
(m) Investments and other financial assets
Classification
The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans
and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the
purpose for which the investments were acquired. Management determines the classification of its investments at initial
recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date.
66 TRANSURBAN ANNUAL REPORT 2009
66 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(m) Investments and other financial assets (continued)
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held-for-trading. A financial asset is classified
in this category if acquired principally for the purpose of selling in the short-term. Derivatives are classified as held-
for-trading unless they are designated as hedges. Assets in this category are classified as current assets.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. They arise when the Group provides money, goods or services directly to a debtor with no
intention of selling the receivable. They are included in current assets, except for those with maturities greater than
12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in
trade and other receivables (notes 9 and 10) in the balance sheets.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturities that the Group's management has the positive intention and ability to hold to maturity. If the Group were
to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted
and reclassified as available-for-sale. Held-to-maturity financial assets are included in non-current assets, except for
those with maturities less than 12 months from the reporting date, which are classified as current assets.
(iv) Available-for-sale financial assets
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are
either designated in this category or not classified in any of the other categories. They are included in non-current
assets unless management intends to dispose of the investment within 12 months of the reporting date.
Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date - the date on which the Group commits to
purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets
not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially
recognised at fair value and transaction costs are expensed in the income statements. Financial assets are derecognised
when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are
included in the income statements as gains and losses from investment securities.
Subsequent measurement
Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.
Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair
value. Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss'
category are presented in the income statements within other income or other expenses in the period in which they arise.
Dividend income from financial assets at fair value through profit and loss is recognised in the income statements as part
of revenue from continuing operations when the Group's right to receive payments is established.
Impairment
The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial
assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the
fair value of a security below its cost is considered as an indicator that the securities are impaired. If any such evidence
exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost
and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is
removed from equity and recognised in the income statements. Impairment losses recognised in the income statements
on equity instruments classified as available-for-sale are not reversed through the income statements.
(n) Derivatives and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group
designates certain derivatives as either:
•
hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges)
67 TRANSURBAN ANNUAL REPORT 2009
67 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(n) Derivatives and hedging activities (continued)
•
•
hedges of the cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow
hedges), or
hedges of a net investment in a foreign operation (net investment hedges).
At the inception of the hedging transaction the Group documents the relationship between hedging instruments and
hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The
Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that
are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or
cash flows of hedged items.
The fair values of various derivative financial instruments used for hedging purposes are disclosed in note 14. Movements
in the hedging reserve in shareholders' equity are shown in note 27. The full fair value of a hedging derivative is classified
as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified
as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives
are classified as a current asset or liability. The treatment of derivatives is as follows:
(i) Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the
income statements, together with any changes in the fair value of the hedged asset or liability that are attributable to
the hedged risk. The gain or loss relating to the effective portion of interest rate swaps and cross currency swaps
hedging fixed rate borrowings is recognised in the income statements within finance costs, together with changes in
the fair value of the hedged fixed rate borrowings attributable to interest rate risk. The gain or loss relating to the
ineffective portion is recognised in the income statements within other income or other expenses.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged
item for which the effective interest method is used is amortised to profit or loss over the period to maturity using a
recalculated effective interest rate.
(ii) Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised
immediately in the income statements within other income or other expense.
Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item affects
profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings
is recognised in the income statement within ‘finance costs’.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the
forecast transaction is ultimately recognised in the income statements. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income
statements.
(iii) Net investment hedges
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges.
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity. The
gain or loss relating to the ineffective portion is recognised immediately in the income statements within other income
or other expenses.
Gains and losses accumulated in equity are included in the income statements when the foreign operation is partially
disposed of or sold.
(iv) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative
instrument that does not qualify for hedge accounting are recognised immediately in the income statements and are
included in other income or other expenses.
68 TRANSURBAN ANNUAL REPORT 2009
68 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(o) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used
for financial assets held by the Group is the current bid price; the appropriate quoted market price for financial liabilities is
the current ask price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on
market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used
for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine
fair value for the remaining financial instruments. The fair values of interest rate and cross currency swaps are calculated
as the present value of the estimated future cash flows. The fair value of forward exchange contracts is determined using
forward exchange market rates at the balance sheet date.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair
values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by
discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar
financial instruments.
(p) Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on
qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Costs incurred on
development projects (including computer software and hardware) are recognised as an asset when it is probable that the
project will, after considering its commercial and technical feasibility, be completed and generate future economic benefits
and its costs can be reliably measured. The expenditure capitalised comprises all directly attributable costs, including
costs of materials, services, direct labour and an appropriate proportion of overheads.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are charged to the income statements during the reporting period in
which they are incurred.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the
income statement. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in
respect of those assets to retained earnings.
Depreciation
Depreciation is calculated on a straight line basis so as to write off the net cost of items of plant and equipment over their
expected useful lives. Estimates of remaining useful lives will be made annually for all assets. The expected useful lives
are 3 – 15 years.
Impairment
Fixed assets are assessed for impairment in line with the policy stated in note 1(i).
(q)
Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable
assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included
in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. Goodwill is not
amortised. Instead, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances
indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to the relevant cash-generating units for the purpose of impairment testing.
69 TRANSURBAN ANNUAL REPORT 2009
69 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(q)
Intangible assets (continued)
Development costs
Costs incurred on development projects are recognised as intangible assets when it is probable that the project will be a
success considering its commercial and technical feasibility and its costs can be measured reliably. The expenditure
capitalised comprises all directly attributable costs, including costs of materials, services and direct labour. Other
development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised development
costs are recorded as intangible assets and amortised from the point at which the asset is ready for use on a straight-line
basis over its useful life.
Following the initial recognition of the development expenditure, the asset is carried at cost less any accumulated
amortisation and accumulated impairment losses.
Amortisation is based on the useful life of the development costs. Useful lives are assessed on an annual basis and
adjustments, where applicable, are made on a prospective basis.
The carrying value of development costs is reviewed for impairment when an indicator of impairment arises.
Concession Assets
Concession Assets represent the Group's rights to operate roads under Service Concession Arrangements. Concession
Assets constructed by the Group are recorded at the fair value of consideration received or receivable for the construction
services delivered. Concession Assets acquired by the Group are recorded at the fair value of the assets at the date of
acquisition. All Concession Assets are classified as intangible assets and are amortised over the term of the right to
operate the asset on a straight line basis. Refer to note 17 for details of concession agreements dates.
In previous periods, some of the Group's expenditure on Concession Assets was classified as Property, Plant and
Equipment and depreciated over the useful life of the assets. On initial adoption of AASB-I 12, the Group used the
carrying amounts of Concession Assets previously held as Property, Plant and Equipment as the carrying amounts of
Intangible Assets as allowed by the transitional provisions of AASB-I 12. Refer to note 48 for impact of application of
AASB-I 12.
(r) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which
are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
(s) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured
at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is
recognised in the income statements over the period of the borrowings using the effective interest method. Fees paid on
the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent
there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a
prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the balance sheets when the obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to
another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in
other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting date.
(t)
Infrastructure loan facilities
The consolidated entity has Infrastructure Loan facilities. Under the terms of these facilities, the consolidated entity must
provide cash (infrastructure facility cash reserve) equal to the utilised amounts of the facilities. The principal of this
infrastructure facility cash reserve has been set-off against the outstanding principal amount of the infrastructure borrowing
facilities so that no asset or liability in respect of those facilities has been recorded in the balance sheet of the consolidated
entity.
70 TRANSURBAN ANNUAL REPORT 2009
70 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(u) Concession fees
CityLink
The Group has non-interest bearing long term debt, represented by Concession Notes, payable to the State of Victoria.
The State has assigned the right to receive all current and future Concession Notes issued back to the Group. The Group
has exercised its right to offset the Concession Notes payable and receivable. Refer note 23.
M1 Eastern Distributor
The Group has non-interest bearing long term debt, represented by Concession Notes, payable to the Roads and Traffic
Authority of NSW as required under the terms of the Eastern Distributor Project Deed.
(v) Promissory notes
Non-interest bearing long term debt represented by Promissory Notes payable to the State of New South Wales in respect
of the M2 Motorway has been included in the financial statements at the present value of expected future repayments. As
the timing and profile of these repayments is largely determined by the available equity cashflows of the underlying asset,
the present value of the expected future repayments is determined using a discount rate, which recognises their
subordinated nature. In the event that there is a change in the expected timing and profile of the repayments, the impact
is recognised in the income statement.
(w) 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 specifically identifiable borrowing costs are capitalised into the
cost of the asset. Borrowing costs include interest on short-term and long term borrowings.
Costs incurred in connection with the arrangement of borrowings are deferred and amortised over the effective period of
the funding.
(x) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the
present obligation at the reporting date. The discount rate used to determine the present value reflects current market
assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the
passage of time is recognised as a finance cost.
Provision for maintenance
As part of its obligations under public service contracts, the Group assumes responsibility for the maintenance and repair
of installations of the publicly-owned roads it operates. A provision for maintenance has been raised where the Group has
a present legal or constructive obligation to maintain and replace components of the underlying physical assets operated
by the Group as a result of past events. The Group's obligations under the respective concession deeds arise as a
consequence of use of the road during the operating phase. The provision is measured at the present value of
management's best estimate of the expenditure required to settle the present obligation at the reporting date. Provisions
giving rise to a cash outflow after more than one year are discounted if the impact is material. The increase in the
provision due to the passage of time is recognised as a finance cost.
In previous reporting periods, major works on the underlying physical assets operated by the Group were capitalised
where it was probable that future economic benefits will flow to the Group and amortised over their useful lives. The
carrying amounts of replaced parts were derecognised and any other repairs and maintenance costs were charged to the
income statement in the reporting period in which they were incurred.
71 TRANSURBAN ANNUAL REPORT 2009
71 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(y) Employee benefits
Wages, salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits, are recognised in other payables in respect of
employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are
settled. An expense for non-accumulating sick leave is recognised when the leave is taken and measured at the rates
paid or payable.
Liabilities for annual leave are recognised in the provision for employee benefits in respect of employees' services up to
the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. The provision is
classified as a current liability.
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 and is measured as per above. The liability for long service leave expected to be settled
more than 12 months from the reporting date is recognised in the provision for employee benefits and measured as the
present value of expected future payments to be made in respect of services provided by employees up to the reporting
date. Consideration is given to expected future wages and salary levels, experience of employee departures 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.
Equity-based compensation benefits
Equity-based compensation benefits have been provided to employees via the Transurban Group Executive Rights Plan
and Executive Loan Plan. Information relating to these plans is set out in section D of the remuneration report.
The fair value of units granted under the plans are recognised as an employee benefit expense with a corresponding
increase in equity. The fair value is measured at grant date and recognised over the period during which the employees
become unconditionally entitled to the units.
The fair value of units granted under cash settled share-based compensation plans is recognised as an expense over the
vesting period with a corresponding increase in liabilities. The fair value of the liability is remeasured at each reporting
date with any changes in fair value recognised in the income statement for the period.
The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into
account the exercise price, the term, the impact of dilution, the security price at grant date and expected price volatility of
the underlying security, the expected dividend yield and the risk free interest rate for the term of the plan.
The fair value granted is adjusted to reflect the market vesting conditions, but excludes the impact of any non-market
vesting conditions (for example, profitability and growth targets). Non-market vesting conditions are included in
assumptions about the number of units that are expected to become exercisable. At each reporting date, the Group
revises its estimate of the number of units that are expected to become exercisable. The employee benefit expense
recognised each reporting period takes into account the most recent estimate. The impact of the revision to original
estimates, if any, is recognised in the income statement with a corresponding adjustment to equity.
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 income statement.
Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee
accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is
demonstrably committed to either terminating the employment of current employees according to a detailed formal plan
without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary
redundancy. Benefits falling due more than 12 months after reporting date are discounted to present value.
72 TRANSURBAN ANNUAL REPORT 2009
72 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(z) Contributed equity
Stapled securities and ordinary shares and units are classified as equity.
Incremental costs directly attributable to the issue of new stapled securities or options are shown in equity as a reduction,
net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the
acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.
If the entity reacquires its own equity instruments, for example as the result of a share buy-back, those instruments are
deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the
consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in
equity.
(aa) Distributions
Provision is made for the amount of any distribution declared, being appropriately authorised and no longer at the
discretion of the entity, on or before the end of the financial year but not distributed at balance date.
(ab) Earnings per stapled security
Basic earnings per stapled security
Basic earnings per stapled security is calculated by dividing the profit (loss) attributable to members of the stapled security
excluding any minority interest and costs of servicing equity other than distributions, by the weighted average number of
securities outstanding during the financial year.
Diluted earnings per stapled security
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all
dilutive potential ordinary shares.
(ac) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
(ad) Rounding of amounts
The company is of a kind referred to in Class Order 98/100, 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, or in certain cases, the nearest dollar.
(ae) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2009
reporting periods. The Group's and the parent entity's assessment of the impact of these new standards and
interpretations is set out below.
(i) AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from
AASB 8 (effective from 1 January 2009)
AASB 8 will result in a change in the approach to segment reporting, as it requires adopting a ‘management
approach’ to reporting on financial performance. The information being reported will be based on what the key
decision makers use internally for evaluating segment performance and deciding how to allocate resources to
operating segments. The Group will adopt AASB 8 from 1 July 2009. This standard will primarily result in changes
to disclosures only.
73 TRANSURBAN ANNUAL REPORT 2009
73 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(ae) New accounting standards and interpretations (continued)
(ii) Revised AASB 123 Borrowing Costs and AASB 2007-6 Amendments to Australian Accounting Standards arising
from AASB 123 (effective from 1 January 2009)
The revised AASB 123 has removed the option to expense all borrowing costs and, when adopted, will require the
capitalisation of all borrowing costs directly attributable to the acquisition, construction or production of a qualifying
asset. There will be no impact on the financial report of the Group, as the Group already capitalises borrowing costs
relating to qualifying assets.
(iii) Revised AASB 101 Presentation of Financial Statements and AASB 2007-8 Amendments to Australian
Accounting Standards arising from AASB 101 (effective from 1 January 2009)
The September 2007 revised AASB 101 requires the presentation of a statement of comprehensive income and
makes changes to the statement of changes in equity, but will not affect any of the amounts recognised in the
financial statements. If an entity has made a prior year adjustment or has reclassified items in the financial
statements, it will need to disclose a third balance sheet (statement of financial position), this one being as at the
beginning of the comparative period. The Group will apply the revised standard from 1 July 2009. This will result in
changes to disclosure only.
(iv) Revised AASB 3 Business Combinations, AASB 127 Consolidated and Separate Financial Statements and
AASB 2008-3 Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127 (effective 1 July
2009)
The revised AASB 3 continues to apply the acquisition method to business combinations, but with some significant
changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date,
with contingent payments classified as debt subsequently remeasured through the income statement. There is a
choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair
value or at the non-controlling interest’s proportionate share of acquiree’s net assets. All acquisition-related costs
must be expensed. This is different to the Group’s current policy which is set out in note 1(h) above.
The revised AASB 127 requires the effects of all transactions with non-controlling interests to be recorded in equity if
there is no change in control and those transactions will no longer result in goodwill or gains and losses, see note 1
(b). The standard also specifies the accounting when control is lost. Any remaining interest in the entity is
remeasured to fair value, and a gain or loss is recognised in profit or loss. This is consistent with the Group’s current
accounting policy if significant influence is not retained.
The Group will apply the revised standards prospectively to all business combinations and transactions with non-
controlling interests from 1 July 2009.
(v) AASB 2008-7 Amendments to Australian Accounting Standards - Cost of an Investment in a Subsidiary, Jointly
Controlled Entity or Associate (effective 1 July 2009)
In July 2008, the AASB approved amendments to AASB 1 First-time Adoption of International Financial Reporting
Standards and AABS 127 Consolidated and Separate Financial Statements. The Group will apply the revised rules
prospectively from 1 July 2009. After that date, all dividends received from investments in subsidiaries, jointly
controlled entities or associates will be recognised as revenue, even if they are paid out of pre-acquisition profits, but
the investments may need to be tested for impairment as a result of the dividend payments. Under the entity’s
current policy, these dividends are deducted from the cost of investment. Furthermore, if a new intermediate parent
entity was created in the event of an internal reorganisation, investments in subsidiaries will be measured at the
carrying amount of the net assets of the subsidiary rather than the subsidiary’s fair value.
(vi) AASB 2008-8 Amendment to IAS 39 Amendment to Australian Accounting Standards - Eligible Hedged Items
(effective 1 July 2009)
AASB 2008-8 amends AASB 139 Financial Instruments: Recognition and Measurement and must be applied
retrospectively in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
The amendment makes two main changes. It prohibits designating inflation as a hedgeable component of a fixed
rate debt. It also prohibits including time value in one-sided hedged risk when designating options as hedges. The
Group will apply the amended standard from 1 July 2009. It is not expected to have an impact on the Group’s
financial statements.
74 TRANSURBAN ANNUAL REPORT 2009
74 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(ae) New accounting standards and interpretations (continued)
(vii) AASB Interpretation 17 Distribution of Non-cash Assets to Owners and AASB 2008-13 Amendments to
Australian Accounting Standards arising from AASB Interpretation 17 (effective 1 July 2009)
AASB-I 17 applies to situations where an entity pays dividends by distributing non-cash assets to its shareholders.
These distributions will need to be measured at fair value and the entity will need to recognise the difference
between the fair value and the carrying amount of the distributed assets in the income statement on distribution.
This is different to the Group’s current policy which is to measure distributions of non-cash assets at their carrying
amounts. The interpretation further clarifies when a liability for the dividend must be recognised and that it is also
measured at fair value. The Group will apply the interpretation prospectively from 1 July 2009.
(viii) AASB 2009-2 Amendments to Australian Accounting Standards - Improving Disclosures about Financial
Instruments (effective for annual periods beginning on or after 1 January 2009)
AASB 2009-2 results in amendments to AASB 7. It requires fair value measurement disclosures to be classified into
a new three-level hierarchy and additional disclosures for items whose fair value is determined by valuation
techniques rather than observable market values. The AASB also clarified and enhanced the existing requirements
for the disclosure of liquidity risk of derivatives. The Group is currently assessing the impact of the disclosure
requirements. The amendment will not affect any of the amounts recognised in the financial statements.
2 Segment information
(a) Description of segments
Business segments
The Group's primary business segment for the year ending 30 June 2009 was the ownership, development and operation
of toll roads.
The secondary reporting segment of the Group is by geographical region. The regions are as follows:
Segment
Asset
Victoria
New South Wales
USA
- CityLink
- Hills M2 Motorway
- 75.1 per cent interest in the M1 Eastern Distributor
- 50.61 per cent interest in the M4 Motorway
- Equity investments in the M5 Motorway (50 per cent) and Westlink M7 (50 per cent)
- 75 per cent interest in Transurban DRIVe
Geographical segment information is provided in the table below and reflects the Transurban Group's activities in relation
to geographically unique locations.
(b) Secondary reporting format - geographical segments
Segment revenues from
sales to external customers
30 June
2009
$'000
30 June
2008
$'000
Segment assets
30 June
2009
$'000
30 June
2008
$'000
Acquisitions of property,
plant and equipment,
intangibles and other non-
current segment assets
30 June
30 June
2008
2009
$'000
$'000
Victoria - Australia
New South Wales - Australia
USA
Discontinued operation
402,344
336,582
29,834
-
768,760
375,886
305,954
43,370
2,822
728,032
4,227,128
5,812,342
225,216
-
10,264,686
4,407,124
6,065,765
203,909
-
10,676,798
104,065
16,658
251
-
120,974
80,953
5,842
5,151
-
91,946
75 TRANSURBAN ANNUAL REPORT 2009
75 Transurban annual reporT 2009
3 Revenue
From continuing operations
Toll revenue
Fee revenue
Other
Toll, fee and other road revenue
Interest
Construction revenue
Business development fees
Finance fee
Dividends
Other revenue
From discontinued operations (note 7)
Toll revenue
Interest revenue
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
678,263
44,100
16,618
738,981
292,205
62,193
29,779
3,345
3,050
390,572
626,235
36,749
18,878
681,862
283,525
39,655
43,348
10,530
5,623
382,681
-
-
-
-
24,685
-
354
-
3,050
28,089
-
-
-
-
21,546
-
149
-
5,623
27,318
1,129,553
1,064,543
28,089
27,318
-
-
-
2,822
322
3,144
-
-
-
-
-
-
It should be noted that construction revenue is offset by an equal expense. This presentation is a requirement of AASB-I
12 Service Concession Arrangements, and does not have a net effect on the income statement for the Transurban Group.
4 Other income
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Net gain on sale of available-for-sale financial assets
Net foreign exchange gains (loss in 2008)
Investment income from tax consolidated entities
-
2,705
-
2,705
3,621
-
-
3,621
-
-
-
-
3,621
-
69,403
73,024
76 TRANSURBAN ANNUAL REPORT 2009
76 Transurban annual reporT 2009
5 Expenses
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Profit before income tax includes the following
specific expenses:
Provision for impairment on trade receivables
recognised during the year
Rental expenses relating to operating leases
Employee benefit expense
Defined contribution superannuation expense
Share based payment expense
Net foreign exchange losses (Consolidated gain in
2009)
Fair value losses on derivatives / available for sale
securities
Maintenance provision
Concession fees (operational cost) are attributable to:
Hills M2 Motorway
M1 Eastern Distributor
M4 Motorway
1,610
7,977
86,064
6,008
1,994
-
25,433
18,637
1,193
1,003
2,633
4,829
1,560
9,853
114,368
6,472
1,440
1,507
36,414
20,349
1,158
3,076
2,634
6,868
Finance costs
Interest and finance charges paid/payable
Interest rate hedging charges paid/payable
404,831
24,161
432,190
8,671
Non-cash interest discount unwinding:
Unwinding of M1 upgrade payable
Unwinding of discount on maintenance provision
Movement in concession/promissory notes
Depreciation and amortisation expense
Operational cost
Corporate cost
23,446
10,750
(6,268)
456,920
327,167
13,772
340,939
36,093
8,687
(3,126)
482,515
327,341
8,887
336,228
-
-
1,948
212
-
10,560
25,433
-
-
-
-
-
78,227
2,347
-
-
-
80,574
-
-
-
-
-
488
74
-
8,479
36,414
-
-
-
-
-
108,009
4,093
-
-
-
112,102
-
-
-
77 TRANSURBAN ANNUAL REPORT 2009
77 Transurban annual reporT 2009
5 Expenses (continued)
Movement in concession notes/promissory notes
Year ending 30 June 2009
Recognised in finance costs:
Unwinding of discount of notes on issue from prior periods
Remeasurement of notes due to change in payment profile
Year ending 30 June 2008
Recognised in finance costs:
Unwinding of discount of notes on issue from prior periods
Remeasurement of notes due to change in payment profile
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
Hills M2
Motorway
$'000
M1 Eastern
Distributor
$'000
Total
$'000
1,557
(4,811)
(3,254)
1,799
(4,813)
(3,014)
3,356
(9,624)
(6,268)
Hills M2
Motorway
$'000
M1 Eastern
Distributor
$'000
Total
$'000
1,402
(1,299)
103
2,044
(5,273)
(3,229)
3,446
(6,572)
(3,126)
There is no discount applied or remeasurement of notes for the M4 Motorway due to the short-term nature of its payment
profile.
6 Income tax benefit
(a)
Income tax benefit
Current tax
Deferred tax
Under (over) provided in prior years
Income tax expense is attributable to:
Profit from continuing operations
Profit from discontinued operations
Aggregate income tax benefit
Deferred income tax (benefit) expense included in
income tax benefit comprises:
(Increase) in deferred tax assets (note 16)
(Decrease) increase in deferred tax liabilities (note 24)
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
63,737
(95,646)
(4,326)
(36,235)
(36,235)
-
(36,235)
98,899
(144,298)
2,338
(43,061)
(46,900)
3,839
(43,061)
(28,614)
2,472
(3,097)
(29,239)
(29,239)
-
(29,239)
-
(38,950)
4,174
(34,776)
(34,776)
-
(34,776)
(46,338)
(49,308)
(95,646)
(116,009)
(28,289)
(144,298)
(147)
2,619
2,472
(31,241)
(7,709)
(38,950)
78 TRANSURBAN ANNUAL REPORT 2009
78 Transurban annual reporT 2009
6 Income tax benefit (continued)
(b) Numerical reconciliation of income tax benefit
to prima facie tax payable
Loss from continuing operations before income tax
benefit
Profit (loss) from discontinuing operations before
income tax
Tax at the Australian tax rate of 30% (2008 - 30%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Trust income not subject to tax
Accounting depreciation on non tax depreciable
assets
Infrastructure bond non-deductible interest
Equity accounted results
Assessable dividend from subsidiaries
Benefits from subsidiaries in the tax consolidated
group
Sundry items
Under (over) provision in prior years
Prior year tax losses written off
Income tax benefit
(c) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the
reporting period and not recognised in net profit or loss
but directly debited or credited to equity
Net deferred tax - debited (credited) directly to
equity (notes 16 and 24)
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
(52,369)
(170,908)
(93,207)
(60,302)
-
(52,369)
(15,711)
22,500
(148,408)
(44,522)
-
(93,207)
(27,962)
-
(60,302)
(18,091)
(75,551)
(65,163)
1,798
42,755
10,363
1,345
-
3,092
(31,909)
(4,326)
-
(36,235)
1,828
41,286
7,851
3,490
-
2,818
(52,412)
2,338
7,013
(43,061)
-
-
-
-
-
-
1,820
(26,142)
(3,097)
-
(29,239)
-
-
-
-
-
(20,821)
(38)
(38,950)
4,174
-
(34,776)
(29,952)
(29,952)
40,086
40,086
-
-
-
-
(d) Tax consolidation legislation
The Transurban Group elected to implement tax consolidation legislation for Transurban Holdings Limited and its wholly
owned Australian entities with effect from 1 July 2005. The accounting policy in relation to this legislation is set out in note
1(f).
The entities in the Transurban Holdings Limited tax consolidated group entered into a tax sharing agreement (TSA)
effective from 29 April 2009. The TSA, in the opinion of the directors, limits the joint and several liability of the wholly-
owned entities in the case of a default by the head entity, Transurban Holdings Limited (THL).
The entities in the Transurban Holdings Limited tax consolidated group have also entered into a tax funding agreement
(TFA) effective from 1 July 2008. Under the TFA the wholly-owned entities fully compensate THL for any current tax
payable assumed and are compensated by THL for any current tax receivable and deferred tax assets relating to tax
losses. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities
financial statements.
The amount receivable/payable under the TFA are calculated as soon as practicable after the end of the financial year for
each wholly-owned entity. THL communicates the funding amount to each wholly-owned entity along with the method of
calculation and any other information deemed necessary.
79 TRANSURBAN ANNUAL REPORT 2009
79 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
6 Income tax benefit (continued)
(e) Numerical reconciliation of income tax expense for discontinued operation
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Profit from discontinuing operations before income tax
expense (note 7)
Tax at the Australian tax rate of 30% (2008 - 30%)
Tax effect of amounts which are not deductible
(taxable):
Non-assessable income
Other
-
-
-
-
-
22,500
6,750
(3,353)
441
3,838
-
-
-
-
-
-
-
-
-
-
80 TRANSURBAN ANNUAL REPORT 2009
80 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
7 Prior period discontinued operation
On 11 September 2007 T895 US Holdings Inc and its controlled entities, the owner of the Pocahontas Parkway
("Pocahontas"), was sold to Transurban DRIVe Holdings LLC (DRIVe). DRIVe is a vehicle in which Transurban has an
equity interest and is accounted for by the Transurban Group using the equity method of accounting. The results and net
assets of Pocahontas have therefore been disclosed as a discontinued operation.
Financial information relating to the discontinued operation for the period to the date of disposal is set out below.
(a) Financial performance and cash flow information for discontinued operation
The financial performance and cash flow information presented are for the period 1 July 2007 to 10 September 2007.
Consolidated
30 June
2008
$'000
Parent entity
30 June
2008
$'000
Revenue (note 3)
Other income
Depreciation
Finance costs
Other expenses
Loss before income tax
Income tax benefit
Profit after income tax of discontinued operation
Gain on sale of the division before income tax
Income tax expense
Gain on sale of the division after income tax
Profit from discontinued operation
Net cash inflow (outflow) from operating activities
Net cash (outflow) from investing activities
Net cash inflow from financing activities
Net increase in cash generated by the division
3,144
-
-
(5,422)
(828)
(3,106)
1,211
(1,895)
25,606
(5,049)
20,557
18,662
1,150
(178)
2,705
3,677
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
81 TRANSURBAN ANNUAL REPORT 2009
81 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
7 Prior period discontinued operation (continued)
(b) Carrying amounts of assets and liabilities of discontinued operation
The carrying amounts of assets and liabilities as at the date of sale (10 September 2007) were:
Cash
Trade receivables
Property, plant and equipment
Intangible assets
Deferred tax assets
Total assets
Other creditors
Borrowings
Financial derivatives
Deferred tax liabilities
Total liabilities
Net assets
(c) Details of the sale of the discontinued operation
Consideration received
Carrying amount of net assets sold
Cumulative translation differences
Gain on sale
Income tax expense
Profit after income tax
Unrealised profit after tax on equity accounted
ownership
Realised profit on sale after income tax
Consolidated
10 September
2007
$'000
Parent entity
10 September
2007
$'000
44,324
36,991
1,392
596,096
1,391
680,194
(9,706)
(564,945)
(4,595)
(10,032)
(589,278)
90,916
-
-
-
-
-
-
-
-
-
-
-
-
Consolidated
30 June
2008
$'000
Parent entity
30 June
2008
$'000
205,754
(90,916)
(12,415)
102,423
(20,202)
82,221
(61,664)
20,557
-
-
-
-
-
-
-
-
82 TRANSURBAN ANNUAL REPORT 2009
82 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
8 Current assets - Cash and cash equivalents
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Cash at bank and in hand
199,805
199,805
336,545
336,545
8
8
8,647
8,647
(a) Reconciliation to cash at the end of the year
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Balance as above
Infrastructure facility cash reserve
Balances per statement of cash flows
199,805
1,629,258
1,829,063
336,545
1,515,942
1,852,487
8
-
8
8,647
-
8,647
All cash balances are interest bearing. The Group's and parent entity's exposure to interest rate risk is disclosed in note
47.
(b) Funds not for general use
The amount shown in Cash at Bank includes $128.2 million not available for general use at 30 June 2009 (2008: $84.0
million). This comprises amounts required to be held under maintenance and funding reserves, and prepaid tolls.
9 Current assets - Trade and other receivables
Trade receivables
Provision for impairment of receivables (note 9(a))
Related party receivable
Other receivables
Infrastructure bond interest receivable
Current tax receivables
Prepayments
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
29,739
(3,972)
25,767
8,822
38,458
129,969
-
7,425
210,441
23,919
(3,018)
20,901
28,604
39,663
119,457
-
8,213
216,838
-
-
-
257,439
8,875
-
430
59
266,803
-
-
-
390,211
202
-
-
61
390,474
83 TRANSURBAN ANNUAL REPORT 2009
83 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
9 Current assets - Trade and other receivables (continued)
(a) Provision for impaired trade and other receivables
As at 30 June 2009 current trade receivables of the Group with a nominal value of $3,972,000 (2008: $3,018,000) were
considered impaired and accordingly the Group held a provision for impairment of $3,972,000 (2008: $3,018,000). As at
30 June 2009, trade receivables of $3,421,000 (2008: $5,789,000) were past due but not impaired.
There were no impaired trade receivables for the parent in 2008 or 2009. The ageing of these receivables is as follows:
Consolidated
For the year ended 30 June 2009
Trade and other receivables
Current (not past due)
less than 30 days overdue
more than 30 but less than 60 days overdue
more than 60 but less than 90 days overdue
more than 90 days overdue
Consolidated
For the year ended 30 June 2008
Trade and other receivables
Current (not past due)
less than 30 days overdue
more than 30 but less than 60 days overdue
more than 60 but less than 90 days overdue
more than 90 days overdue
Not impaired
$'000
Amount
considered
impaired
$'000
Provision for
impairment
$'000
22,346
2,507
596
93
225
25,767
887
1,067
1,221
202
595
3,972
887
1,067
1,221
202
595
3,972
Not impaired
$'000
Amount
considered
impaired
$'000
Provision for
impairment
$'000
15,111
4,005
1,362
206
216
20,900
1,205
1,102
194
30
487
3,018
1,205
1,102
194
30
487
3,018
The other classes within trade and other receivables do not contain impaired assets and are not past due. Based on the
credit history of these other classes, it is expected that these amounts will be received when due. The Group does not hold
any collateral in relation to these receivables.
Movements in the provision for impairment of receivables was as follows:
Consolidated
30 June
2009
$'000
30 June
2008
$'000
At 1 July
Provision for impairment recognised during the year
Receivables written off during the year as uncollectible
3,018
1,610
(656)
3,972
2,171
1,560
(713)
3,018
Amounts charged to the provision are generally written off when there is no expectation of recovering additional cash.
When customers travel on a road without a prior arrangement in place, they are issued with an invoice. If this invoice is
outstanding for a period of time they are sent to government enforcement authority and are issued an external fine. These
authorities use the full extent of the law to recover the amounts and then pass on the amount collected back to the Group
on a gross basis. This is recognised in ‘other revenue’.
84 TRANSURBAN ANNUAL REPORT 2009
84 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
9 Current assets - Trade and other receivables (continued)
(b) Other receivables
These amounts generally arise from transactions outside the usual operating activities of the Group.
(c) Foreign exchange and interest rate risk
Information about the Group’s and the parent entity’s exposure to foreign currency risk and interest rate risk in relation to
trade and other receivables is provided in note 47.
(d)
Infrastructure bond interest receivable
Infrastructure bond interest receivable represents accrued interest on an infrastructure facility cash reserve account held
with debt infrastructure bond lenders.
(e) Fair value and credit risk
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value. Note
47 details further information on the risk management policy of the Group and the credit quality of the Group’s trade
receivables.
10 Non-current assets - Receivables
Related party receivable
Prepayments
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
-
-
-
-
1,688
1,688
264,221
-
264,221
13,429
-
13,429
(a)
Impaired receivables and receivables past due
None of the non-current receivables are impaired or past due but not impaired.
(b) Fair values
The carrying values approximate the fair value of non-current receivables.
(c) Risk exposure
Information about the Group's and the parent entity's exposure to credit risk, foreign exchange and interest rate risk is
provided in note 47.
85 TRANSURBAN ANNUAL REPORT 2009
85 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
11 Non-current assets - Investments accounted for using the equity method
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Westlink Motorway (note 38)
Interlink Roads Pty Limited (M5 Motorway) (note 38)
Transurban DRIVe Holdings LLC (note 38)
-
467,956
196,203
664,159
-
516,972
174,197
691,169
-
-
-
-
-
-
-
-
Westlink Motorway
Transurban owns a 50% interest in the Westlink Consortium which holds the concession to design, construct, finance and
operate the Westlink M7 Toll Road in Sydney for a period of 34 years.
The M7 is a fully electronically tolled motorway with distance-based tolling charges. Tolls are escalated or deescalated
quarterly by quarterly CPI.
Transurban also holds the right to provide tolling and customer management services to the Westlink M7.
M5 Motorway
Transurban holds a 50% ownership in the M5 Motorway in Sydney. Tolls are collected on the M5 in both directions, with
four toll collection points. The concession for the M5 Motorway extends to August 2023 when all concession assets will be
returned to the NSW State Government.
The M5 has two tolling categories, cars and similar vehicles and all other vehicles (for example, trucks and buses). Toll
increases for the M5 are based on CPI in $0.50 increments. The M5 is a participant in the NSW State Government
Cashback Scheme. Motorists with ETC accounts and driving privately registered vehicles on the M5 are able to claim the
full amount of tolls paid (excluding GST) from the NSW State Government.
Transurban DRIVe Holdings LLC
Transurban owns 75% of Transurban DRIVe Holdings LLC (DRIVe). DRIVe owns 100% of Pocahontas 895 and 90% of
Capital Beltway Express, both in Virginia, USA. Pocahontas 895 is a 99 year concession with tolls escalated according to
a prescribed schedule until 2016, and the greater of CPI, real GDP or 2.8 per cent thereafter. Capital Beltway Express is
currently in construction phase and is scheduled to open in late 2012, and will have a 75 year concession period.
86 TRANSURBAN ANNUAL REPORT 2009
86 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
12 Non-current assets - Held-to-maturity investments
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Term Loan Notes
633,272
633,272
558,224
558,224
-
-
-
-
Term Loan Notes represent Transurban's debt funding contribution to the Westlink Motorway Partnership. The fixed
maturity date of the TLN's is the earlier of 34 years and the termination of the "Agreement to Lease" between the Roads
and Traffic Authority of New South Wales and Westlink Motorway Limited.
The interest rate charged on these notes is 11.93 per cent and any unpaid interest capitalises into additional notes.
During the year ended 30 June 2009 the Group acquired new notes totalling $30.4 million, and capitalised interest of $44.6
million (2008: $26.2 million).
(a)
Impairment and risk exposure
None of the held-to-maturity investments are either past due or impaired. All held-to-maturity investments are
denominated in Australian currency. As a result, there is no exposure to foreign currency risk. There is also no exposure
to price risk as the investments will be held to maturity.
13 Non-current assets - Other financial assets
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Shares in subsidiaries (note 36)
-
-
-
-
1,383,142
1,383,142
1,383,142
1,383,142
The shares in subsidiaries are carried at cost.
87 TRANSURBAN ANNUAL REPORT 2009
87 Transurban annual reporT 2009
14 Derivative financial instruments
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Non-current assets
Interest rate swap contracts - cash flow hedges
Cross-currency interest rate swap contracts - cash flow
hedges
36,253
27,282
63,535
149,672
18,157
167,829
Total derivative financial instrument assets
63,535
167,829
Current liabilities
Equity swap
Interest rate swap contracts - cash flow hedges
Non-current liabilities
Interest rate swap contracts - cash flow hedges
Cross currency interest rate swap contracts - cash flow
hedges
Forward exchange contracts - cash flow hedges
-
3,336
3,336
71,545
10,937
22,739
105,221
9,855
-
9,855
-
196,116
51,602
247,718
Total derivative financial instrument liabilities
108,557
257,573
Total net derivative financial instrument liabilities
(45,022)
(89,744)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,855
-
9,855
-
-
-
-
9,855
(9,855)
(a)
Instruments used by the Group
The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to
fluctuations in interest and foreign exchange rates in accordance with the Group’s financial risk management policies
(refer to note 47).
The instruments used by the Group are as follows:
(i)
Interest rate swap contracts - cash flow hedges
The Group uses interest rate swap contracts for hedging purposes to convert variable rate borrowings to fixed. Variable
rate borrowings of the Group currently bear an average variable interest rate of 4.1 per cent (2008: 8.4 per cent). It is
policy to protect part or all of the loans from exposure to increasing interest rates. Accordingly, the Group has entered into
interest rate swap contracts under which it receives interest at variable rates and pays interest at fixed rates.
Interest rate swap contracts currently in place cover approximately 91 per cent (2008: 80 per cent) of long term variable
debt excluding working capital facilities. The average all-in rate after hedging on the hedged portion of the Group's variable
rate borrowings is 6.6 per cent (2008: 6.6 per cent).
(ii) Forward exchange contracts - cash flow hedges
The Transurban Group raised fixed U.S. Dollar debt through a U.S. Private Placement in November 2006. This placement
was structured to be capital accretive for five years. In order to protect against exchange rate movements, the Group has
entered into forward exchange contracts.
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly
in equity.
88 TRANSURBAN ANNUAL REPORT 2009
88 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
14 Derivative financial instruments (continued)
(iii) Equity swap arrangement
In the prior year, the Group had an exposure to an equity swap arrangement with a counterparty whereby the Group was
exposed to movements in the fair value of the underlying securities without having any rights to those securities. Under the
agreement, the return on the underlying security was exchanged for a return based on a reference interest rate. During
the year ended 30 June 2009, the equity swap was closed out and the exposure to the underlying security was converted
into a physical holding and subsequently sold.
As at 30 June 2008, the Group had equity swaps in place with a notional principal amount of $55.0 million maturing within
one year.
(iv) Cross-currency interest rate swap contracts - cash flow hedges
The Group has made several U.S. Private Placements raising fixed rate debt. It is the policy of the Group to protect
foreign currency facilities from exposure to unfavourable exchange rate movements. Accordingly, the Group has entered
into cross-currency interest rate swap contracts under which it is obliged to receive foreign currency interest at fixed rates
and pay AUD interest at floating rates.
(b) Risk exposures
Information about the Group’s and the parent entity’s exposure to credit risk, foreign exchange and interest rate risk is
provided in note 47.
15 Non-current assets - Property, plant and equipment
Consolidated
At 1 July 2007
Cost
Accumulated depreciation
Net book amount
Year 30 June 2008
Opening net book amount
Additions
Transfer from intangible assets
Depreciation charge
Closing net book amount
At 30 June 2008
Cost
Accumulated depreciation
Net book amount
Year 30 June 2009
Opening net book amount
Additions
Depreciation charge
Closing net book amount
At 30 June 2009
Cost
Accumulated depreciation
Net book amount
Equipment, fittings and
operating systems
$'000
Total
$'000
153,526
(86,666)
66,860
66,860
43,280
18,978
(32,893)
96,225
153,526
(86,666)
66,860
66,860
43,280
18,978
(32,893)
96,225
217,095
(120,870)
96,225
217,095
(120,870)
96,225
96,225
47,947
(27,716)
116,456
96,225
47,947
(27,716)
116,456
254,675
(138,219)
116,456
254,675
(138,219)
116,456
The parent entity does not have any Property Plant and equipment.
During the year, fully written down property, plant and equipment with a cost of $10,367,000 were disposed.
89 TRANSURBAN ANNUAL REPORT 2009
89 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
16 Non-current assets - Deferred tax assets
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
The balance comprises temporary differences
attributable to:
Amounts recognised in profit or loss
Accrued expenses
Provisions
Current and prior year losses
Investments
Unearned income
Fixed assets
Other
Amounts recognised directly in equity
Cash flow hedges
1,579
74,738
363,381
15,698
17,526
5,655
6,983
485,560
5,541
68,898
310,000
19,969
17,183
3,931
5,900
431,422
24
85
362,177
-
3,171
-
-
365,457
-
136
310,000
-
-
-
2,997
313,133
29,111
29,111
74,315
74,315
-
-
-
-
Total deferred tax assets
514,671
505,737
365,457
313,133
Movements:
Opening balance at 1 July
Credited/(charged) to the income statement (note 6)
Credited/(charged) to equity
Tax losses utilised
Foreign exchange movements
Transfer from tax group subsidiaries
Transfer from deferred tax liability(note 24)
Closing balance at 30 June
Deferred tax assets to be recovered after more than 12
months
505,738
46,338
(45,204)
(419)
2,608
-
5,610
514,671
385,458
116,009
25,670
(22,057)
(230)
-
888
505,738
313,133
147
-
-
-
52,177
-
365,457
222,937
31,241
-
(10,448)
-
69,403
-
313,133
514,671
514,671
505,738
505,738
365,457
365,457
313,133
313,133
90 TRANSURBAN ANNUAL REPORT 2009
90 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
17 Non-current assets - Intangible assets
Consolidated
Goodwill
$'000
CityLink
$'000
Hills M2
Motorway
$'000
M1 Eastern
Distributor M4 Motorway
$'000
$'000
Assets under
construction
$'000
Other
$'000
Total
$'000
At 1 July 2007
Cost
Accumulated amortisation
Net book amount
Year ended 30 June 2008
Opening net book amount
Additions
Transferred to property, plant
and equipment
Disposals
Amortisation charge
Closing net book amount
At 30 June 2008
Cost
Accumulated amortisation
Net book amount
Year ended 30 June 2009
Opening net book amount
Additions
Amortisation charge
Closing net book amount
At 30 June 2009
Cost
Accumulated amortisation
Net book amount
260,288
-
260,288
4,438,477
(907,068)
3,531,409
2,516,005
(258,645)
2,257,360
2,153,841
(15,470)
2,138,371
178,788
(15,327)
163,461
10,238
-
10,238
54,383
(19,874)
34,509
9,612,020
(1,216,384)
8,395,636
260,288
-
-
-
-
260,288
3,531,409
542
2,257,360
1,861
2,138,371
21
-
-
(124,703)
3,407,248
-
-
(64,753)
2,194,468
-
-
(52,741)
2,085,651
163,461
-
-
-
(61,138)
102,323
260,288
-
260,288
4,439,019
(1,031,771)
3,407,248
2,517,866
(323,398)
2,194,468
2,153,862
(68,211)
2,085,651
178,788
(76,465)
102,323
10,238
42,327
-
-
-
52,565
52,565
-
52,565
260,288
-
-
260,288
3,407,248
-
(135,744)
3,271,504
2,194,468
-
(64,737)
2,129,731
2,085,651
-
(51,341)
2,034,310
102,323
-
(61,401)
40,922
52,565
73,027
-
125,592
260,288
-
260,288
4,439,019
(1,167,515)
3,271,504
2,517,866
(388,135)
2,129,731
2,153,862
(119,552)
2,034,310
178,788
(137,866)
40,922
125,592
-
125,592
34,509
3,917
(18,978)
(19,448)
-
-
-
-
-
-
-
-
-
-
-
-
8,395,636
48,668
(18,978)
(19,448)
(303,335)
8,102,543
9,602,388
(1,499,845)
8,102,543
8,102,543
73,027
(313,223)
7,862,347
9,675,415
(1,813,068)
7,862,347
Description of intangible assets
Goodwill
The balance in goodwill relates to the Group's Sydney Network and has arisen from the acquisition of Hills Motorway
Group, Tollaust Pty Limited and the Sydney Roads Group.
Concession assets
The CityLink, Hills M2, Eastern Distributor and M4 Motorway Service Concession Arrangements have been accounted for
in accordance with AASB-I 12 and therefore the concession assets have been classified as Intangible Assets.
CityLink concession asset
Transurban holds the Concession for Melbourne’s CityLink tollway which grants the Group the right to design, build,
operate and maintain CityLink for the Concession period ending on 14 January 2034 (being 34 years following completion
of construction). Transurban has the right to collect tolls from CityLink for the duration of the Concession Arrangement and
maintains the tollway to ensure continuous availability for public use. Tolls are escalated in accordance with the maximum
allowable increases in the Concession Deed, being a quarterly escalation at the greater of quarterly CPI or 1.1065%
(equivalent to an annual escalation rate of 4.5%) for the first 15 years then quarterly by CPI, but no greater than annual
CPI plus 2.5%. At the end of the Concession period, all Concession Assets are to be returned to the Victorian State
Government.
During the year ended 30 June 2007, Transurban signed an agreement with the State of Victoria and VicRoads to jointly
fund upgrades and improvements to 75 kilometres of the Monash – CityLink – West Gate Freeway Corridor (M1 Upgrade).
On initial recognition of the agreement an intangible asset was recognised and represents future economic benefits arising
from increased toll revenue and as a result of the increased traffic flow from the upgrades. Transurban is also contributing
to the construction of the upgrade and an intangible asset is recognised equal to that contribution. Revenue and expenses
have been recognised in the period on exchanging construction services for an intangible asset.
91 TRANSURBAN ANNUAL REPORT 2009
91 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
17 Non-current assets - Intangible assets (continued)
Hills M2 concession asset
Through the acquisition of the Hills Motorway Group in 2005, Transurban acquired the concession for the Hills M2
Motorway in Sydney, allowing Transurban the right to toll the Motorway until 2042. The Concession Deed also requires
Transurban to maintain the M2 Motorway.
Toll increases for the M2 Motorway are based on a maximum toll increase as defined in the Concession Deed, being a
quarterly escalation at the greater of quarterly CPI or 1%, subject to integer rounding. At the end of the concession period,
all concession assets will be returned to the NSW State Government.
M1 Eastern Distributor concession asset
As a result of the acquisition of the Sydney Roads Group, Transurban holds an investment of 75.1% in the M1 Eastern
Distributor (ED) tollway in Sydney via the concessionaire Airport Motorway Group. The ED opened in 1999 and the Airport
Motorway Group holds the legal right to operate and toll the ED until 24 July 2048.
Toll increases for the ED are based on a maximum toll increase as defined in the Concession Deed, being a quarterly
escalation at the greater of a weighted sum of quarterly AWE and quarterly CPI or 1% subject to integer rounding. At the
end of the concession period, all concession assets will be returned to the NSW State Government.
M4 Concession asset
Resulting from the acquisition of Sydney Roads Group, Transurban holds an investment of 50.61% in the M4 Motorway in
Sydney via the concessionaire Statewide Roads. The M4 Motorway opened in 1992 and Statewide Roads holds the legal
right to operate the M4 until 15 February 2010.
The M4 has two vehicle tolling categories, cars and similar vehicles and all other vehicles (for example, trucks and buses).
Toll increases for the M4 are based on quarterly CPI subject to integer rounding. The toll cannot be lowered as a result of
deflation. However, until inflation counteracts the deflation the toll cannot be increased. The M4 is a participant in the
NSW State Government Cashback Scheme. Motorists with ETC accounts and driving privately registered vehicles on the
M4 are able to claim the full amount of tolls paid from the NSW State Government. At the end of the concession period, all
M4 concession assets will be returned to the NSW Government.
Assets under construction
The Group is currently undertaking an upgrade of CityLink, scheduled for completion in 2010; and development works on
the Hills M2 Motorway. These will be transferred to the respective intangible assets upon completion.
Other
Other relates to capitalised development costs that were an internally generated intangible asset and represented costs
incurred on development projects including materials, services and direct labour.
Impairment testing of goodwill and other intangible assets
Impairment testing
The Group tests whether goodwill and other intangible assets have suffered any impairments, in accordance with the
accounting policy stated in note1(i). The recoverable amount of assets and cash-generating units have been determined
based on the greater of value-in-use and fair value less cost to sell calculations. These calculations require the use of
assumptions regarding traffic flows, discount rates, growth rates and other factors affecting operating activities of cash-
generating units.
Key assumptions used for fair value less cost to sell calculations
The Group makes assumptions in calculating the fair value less cost to sell of its cash generating units. These include
assumptions around expected traffic flows and forecast operational costs. In performing the calculations the Group has
applied a discount rate of 8.8 per cent (2008: 8.0 per cent), representing the implied discount rate applicable to the risk
profile of the Group's assets, to discount the forecast future attributable cash flows. In determining future cash flows, the
Group has also applied rates of growth to underlying operating assumptions to reflect the expected performance of the
assets beyond the budget period in accordance with the respective concessions. The operating costs have been
escalated in line with a combination of Consumer Price Index (CPI) and Average Weekly Earnings (AWE) forecasts. A
long term CPI rate of 2.5 per cent (2008: 2.5 per cent) and AWE of 4.0 per cent (2008: 4.0 per cent) have been used.
92 TRANSURBAN ANNUAL REPORT 2009
92 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
18 Current liabilities - Trade and other payables
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
90,877
94,228
185,105
108,423
86,606
195,029
75,119
-
75,119
82,840
-
82,840
Trade payables and accruals
Infrastructure bond interest payable
(a) Risk exposure
Information about the Group's and the parent entity's exposure to foreign exchange risk is provided in note 47.
19 Current liabilities - Borrowings
Infrastructure facilities
Less: Infrastructure facility cash reserve
Working capital facilities
Secured loan - Statewide Roads
Term debt
Capital Markets Debt
Total current borrowings
(a) Security and fair value disclosures
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
537,551
(537,551)
80,000
500
515,500
150,000
746,000
-
-
19,000
21,600
440,000
-
480,600
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Information about the security relating to each of the secured liabilities and the fair value of each of the borrowings is
provided in note 22.
(b)
Infrastructure facilities
Hills M2 Motorway
$537.6 million (2008: $512.5 million) facility certified by the Development Allowance Authority to qualify for concessional
tax treatment under Income Tax Legislation. The bonds are secured by an infrastructure facility cash reserve equal to the
amount of the loan which is set off against the loan facility, the principal of the refinancing bonds will be repaid from the
infrastructure facility cash reserve in December 2009. This facility was classified as a non-current liability in the prior year.
The facility was fully drawn as at 30 June 2009.
(c) Working capital facilities
The current working capital facility comprises of banking facilities of $195.0 million, maturing in June 2010. $80.0 million
of this facility was utilised at 30 June 2009. These facilities are secured by a first ranking charge over the cash flows of the
Transurban Group.
(d) Secured loan – Statewide Roads
The $0.5 million bank facility matures in November 2009. The loan is secured by registered mortgages over all the assets
of Statewide Roads (M4) Pty Limited and SWR Properties Pty Limited.
93 TRANSURBAN ANNUAL REPORT 2009
93 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
19 Current liabilities - Borrowings (continued)
(e) Term debt
The term debt of $515.5 million was due to mature in November 2009. This was refinanced in July 2009 (post balance
date). The facility is fully secured against the respective rights of Airport Motorway Ltd and Airport Motorway Trust in the
M1 Motorway and their assets. The interest rate applicable to the term debt is 3.97 per cent (2008: 8.4 per cent). 75 per
cent of the borrowings are hedged to an all-in rate after hedging of 6.22 per cent.
The prior year term debt facility of $440.0 million was refinanced in May 2009 using the funds raised via a Syndicated
Bank facility (refer to note 22).
(f) Capital Markets Debt
The capital markets debt is a $150.0 million non-credit wrapped fixed rate Medium Term Note raised in December 2004,
maturing in December 2009. This facility is secured by a first ranking charge over the cash flows of the Group.
20 Current liabilities - Provisions
Employee entitlements
Maintenance provision
Restructuring and onerous lease provision
Distribution to security holders
Distributions to minority interests in subsidiaries
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
20,542
65,639
4,584
141,153
30,493
262,411
22,916
35,602
9,110
318,398
30,845
416,871
283
-
-
-
-
283
453
-
-
-
-
453
(a) Employee entitlements
The provision for employee entitlements includes a provision for annual leave, bonuses and the current portion of long
service leave.
(b) Maintenance provision
A maintenance provision is recognised for the present value of the Group's obligations to maintain the tolling assets as
required under the Service Concession Arrangements.
(c) Restructuring and onerous lease provision
A restructuring provision is recognised when the main features of the restructuring are planned and there is a
demonstrable commitment and valid expectation that the restructuring plan will be implemented.
(d) Distribution to security holders and minority interests
These distributions are provided for once approved by the board and are announced to equity holders.
94 TRANSURBAN ANNUAL REPORT 2009
94 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
20 Current liabilities - Provisions (continued)
(e) Movements in provisions
Consolidated - 2009
Carrying amount at start of year
Provision recognised
Amounts paid/utilised during the year
Movements in foreign exchange rates
DRP carry forward
Long term incentive loan repayment
Transfer (to)/from non-current
Carrying amount at end of year
Maintenance
provision
$'000
Restructuring
and onerous
lease provision
$'000
Distribution to
security
holders
$'000
Distributions to
minority interests
in subsidiaries
$'000
35,602
4,276
(14,024)
-
-
-
39,785
65,639
9,110
4,165
(7,690)
(1,001)
-
-
-
4,584
318,398
281,136
(459,117)
-
(26)
762
-
141,153
30,845
14,691
(15,043)
-
-
-
-
30,493
21 Current liabilities - Non-interest bearing liabilities
Prepaid tolls
Unearned income
M1 Upgrade liability
Advances from related parties
Other
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
53,462
20,815
61,795
12,800
580
149,452
48,582
35,851
135,257
30,037
580
250,307
-
-
-
143,759
-
143,759
-
-
-
34,304
-
34,304
Details of the information on the M1 Upgrade are set out in note 23.
95 TRANSURBAN ANNUAL REPORT 2009
95 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
22 Non-current liabilities - Borrowings
Infrastructure Facilities
Less: Infrastructure facility cash reserve (note 8)
Working Capital Facilities
U.S. Private Placement
Term debt
Capital Markets Debt
Secured Loans - Statewide Roads
Syndicated facility
Loans from related parties
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
1,091,707
(1,091,707)
14,821
1,338,102
457,739
887,080
-
598,630
-
3,296,372
1,515,942
(1,515,942)
-
1,113,825
515,500
1,035,140
502
598,245
-
3,263,212
-
-
-
-
-
-
-
-
1,470,608
1,470,608
-
-
-
-
-
-
-
-
1,405,107
1,405,107
Set-off of assets and liabilities
A legal right of set-off exists in respect of the specific cash deposits of $1,621.3 million (2008: $1,515.9 million)
representing collateralisation of the Hills Motorway (current) and M1 Airport Motorway (non-current) Infrastructure
Facilities.
Fair value
The carrying value of financial assets and liabilities brought to account at balance date approximates fair value.
Risk exposures
Information about the Group's and parent entity's exposure to financial risk is provided in note 47.
Financing Arrangements and Credit Facilities
Credit facilities are provided as part of the overall debt funding structure of the Transurban Group. Each facility is
described below:
(a)
Infrastructure facilities
M1 Airport Motorway
$1,091.7 million (2008: $1,003.4 million) facility certified by the Development Allowance Authority to qualify for
concessional tax treatment under Income Tax Legislation. The bonds are secured by an infrastructure facility cash
reserve equal to the amount of the loan which is set off against the loan facility, the principal of the refinancing bonds will
be repaid from the infrastructure facility cash reserve on August 2011. The facility was fully drawn down as at 30 June
2009.
Hills M2 Motorway
The Hills facility of $512.5 million in the prior year has been classified as current as at 30 June 2009.
(b) Working Capital Facilities
The Group has the following non-current facilities in place:
•
•
$170.0 million facility which is for a term of 3 years, maturing February 2011. At 30 June 2009, the facility was
undrawn.
$150.0 million facility which is for a term of 3 years, maturing February 2011. At 30 June 2009, $14.8 million of
the facility was drawn-down.
These facilities are secured by a first ranking charge over the cash flows of the Transurban Group.
96 TRANSURBAN ANNUAL REPORT 2009
96 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
22 Non-current liabilities - Borrowings (continued)
(c) U.S. Private Placement
The composition of the three US Private Placements is outlined below:
Fixed Interest Rate
Dec 04 - Tranche A
Dec 04 - Tranche B
Dec 04 - Tranche C
Aug 05 - Tranche A
Aug 05 - Tranche B
Aug 05 - Tranche C
Nov 06 - Tranche A
Nov 06 - Tranche B
Nov 06 - Tranche C
Nov 06 - Tranche D
Floating Interest Rate
Dec 04 - Tranche D
Total US Private Placement
Deferred borrowing costs
Total
Rate
5.02%
5.17%
5.47%
5.04%
5.19%
5.35%
5.71%
5.86%
5.95%
6.06%
4.04%
USD
$'000
AUD
$'000
Maturity
100,000
38,900
108,600
98,000
125,500
156,500
49,499
157,126
140,102
58,048
1,032,275
Dec 2014
Dec 2016
Dec 2019
Aug 2015
Aug 2017
Aug 2020
Nov 2016
Nov 2018
Nov 2021
Nov 2026
Dec 2019
123,244
47,942
133,843
120,779
154,671
192,877
61,004
193,648
172,666
71,541
1,272,215
72,000
72,000
1,344,215
(6,113)
1,338,102
These facilities are secured by a first ranking charge over the cash flows of the Group.
Hedge of net investment in foreign entity
Transurban’s investment in Transurban DRIVe LLC acts as a natural hedge against exposure to foreign currency
movements in a portion of USD debt (US$121 million) raised in the November 2006 US Private Placement. Exchange
differences arising on the revaluation of the USD debt are recognised in profit or loss in the separate financial report of
Transurban Finance Company. In the consolidated financial report, such exchange differences are recognised initially in a
separate component of equity and will be recognised in the profit or loss on disposal of the net foreign investment.
As at 30 June 2009, the Group has deferred $8.0 million in gains (2008: $40.6 million).
(d) Term debt
The facility comprises non-recourse Syndicated Bank debt entered into by the Hills Motorway Trust and Hills Motorway
Management Limited of $465 million (less capitalised borrowing costs of $7.3 million), with terms of three years ($290.5
million) and five years ($174.5 million). This facility refinanced the term debt that was due to mature in June 2009 (refer
note 19).
This facility is secured against the respective rights of Hills Motorway Ltd and Hills Motorway Trust in the Hills M2
Motorway and their assets.
The prior year balance represents the Airport Motorway Trust Term Debt, which has been reclassified in the current year
as a current borrowing. This was re-financed in July 2009. Refer note 19.
(e) Capital Markets Debt
The Capital Markets Debt comprises credit wrapped floating bonds issued by Transurban Finance Company with terms of
10 years ($300 million) and 12 years ($300 million) from November 2005. An additional $300 million was raised in
September 2006 through the issuance of non-credit wrapped fixed ($200 million) and floating ($100 million) rate bonds
with terms of 5 years.
These facilities are secured by a first ranking charge over the cash flows of the Group.
97 TRANSURBAN ANNUAL REPORT 2009
97 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
22 Non-current liabilities - Borrowings (continued)
(f)
Syndicated facility
This facility comprises syndicated bank debt issued by Transurban Finance Company Pty Limited, with terms of five years
($375.0 million), seven years ($125.0 million) and ten years ($100.0 million) with applicable interest rates ranging between
3.3 and 3.7 per cent. This facility is fully hedged with all-in rates after hedging ranging from 7.2 to 7.3 per cent.
This facility is secured by a first ranking charge over the cash flows of the Group.
(g) Covenants
The Group's debt has the following Interest Coverage Ratio ("ICR") covenants:
•
•
CityLink - ICR greater than 1.1 times
Group - ICR greater than 1.25 times
In addition, the Group has a market capitalisation clause where gearing must not exceed 60%. Based on the balance
sheet at 30 June 2009, the Group's Security price would need to close below $2.12 per Security for 20 consecutive
business days to trigger this clause.
In addition, the non-recourse debt at M1 Eastern Distributor and Hills M2 Motorway has the following covenants:
•
•
M1 Eastern Distributor - ICR greater than 1.05 times (1.2 times with new facility from July 2009)
Hills M2 Motorway - ICR greater than 1.2 times
98 TRANSURBAN ANNUAL REPORT 2009
98 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
23 Non-current liabilities - Non-interest bearing liabilities
Concession notes - M1 Eastern Distributor
Promissory notes - Hills M2 Motorway
Lease incentive
Unearned income
Land Transport Notes
M1 Upgrade liability
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
14,577
10,613
3,726
-
510
-
29,426
16,619
12,973
4,308
5,912
479
51,398
91,689
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Concession Notes - M1 Eastern Distributor
The Eastern Distributor Project Deed between Airport Motorway Limited, Airport Motorway Trust and the Roads and Traffic
Authority ('RTA') provides for annual concession fees of $15.0 million during the construction phase and for the first 24
years after construction completion of the Eastern Distributor ('ED'). Until a certain threshold return is achieved, payments
of concession fees due under the ED Project Deed will be satisfied by means of the issue of non-interest bearing
Concession Notes.
Concession Notes have been included in the financial statements as non-interest bearing liabilities at the present value of
expected future repayments. As the timing and profile of these repayments is largely determined by the available equity
cash flows of the M1 Motorway, 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 2009 is $180.0 million (2008: $165.0 million). The Net Present
Value at 30 June 2009 of the redemption payments relating to these Concession Notes is $14.6 million (2008: $16.6
million).
The indicative timing of these redemption payments is set out in the following table.
Concession Note Redemption
Estimated Concession Note payments
later than 15 years
Concession Note liability at the end of the year
Reconciliation of the movement in the M1
Concession Note liability
Concession Note liability at the start of the year
Discount of Concession Notes on issue at the
beginning of the period
Revaluation of notes due to change in payment
profile
Notes issued during the year
Discount of notes issued during the year
Concession Note liability at the end of the year
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
180,000
180,000
165,000
165,000
16,619
1,799
(4,813)
15,000
(14,028)
14,577
18,628
2,046
(5,273)
15,000
(13,782)
16,619
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
99 TRANSURBAN ANNUAL REPORT 2009
99 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
23 Non-current liabilities - Non-interest bearing liabilities (continued)
Promissory Notes - M2 Motorway
The Hills Motorway Trust has entered into leases with the Roads and Traffic Authority of New South Wales ('RTA'). Annual
lease liabilities under these leases total $7.0 million, indexed annually to the Consumer Price index over the estimated
period that the M2 Motorway will be used. Until such time as a threshold return is achieved, payments under these leases
can be made at any time at the discretion of the Responsible Entity of the Trust, by means of the issue of non-interest
bearing Promissory notes to the RTA.
Promissory Notes have been included in the Financial statements as non-interest bearing liabilities at the present value of
expected future repayments. As the timing and profile of these repayments is largely determined by the available equity
cash flows of the M2 Motorway, the present value of the expected future repayments is determined using a discount rate of
12 per cent which recognised their subordinated nature.
The face value of Promissory Notes on issue at 30 June 2009 is $106.2 million (2008: $96.6 million). The Net Present
Value at 30 June 2009 of the redemption payments relating to these Promissory Notes is $10.6 million (2008: $13.0
million).
The indicative timing of these redemption payments is set out in the following table.
Promissory Note Redemption
Estimated Concession Note payments
later than 15 years
Concession Note liability at the end of the year
Reconciliation of the movement in the M2
Promissory Note Liability
Promissory Notes liability at the start of the
year
Discount of Promissory Notes on issue at the
beginning of the year
Revaluation of notes due to change in payment
profile
Promissory Notes issued during the year
Discount of Promissory Notes issued during
the year
Promissory Note liability at the end of the year
Land Transport Notes
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
106,234
106,234
96,563
96,563
12,973
1,557
(4,811)
9,671
(8,777)
10,613
11,645
1,402
(1,299)
9,438
(8,213)
12,973
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Land Transport Notes are carried at a present value of $0.5 million and will be repaid no later than 30 days prior to the last
day of the CityLink concession period.
M1 Upgrade liability
Transurban reached an agreement with the State of Victoria and VicRoads to jointly fund upgrades and improvements to
75 kilometres of the West Gate – CityLink (Southern Link) – Monash Freeway corridor. To fund the upgrade Transurban
agreed to pay the State $614.3 million over three years in satisfaction of its current and future obligations to repay
concession notes issued to the State.
The agreement effectively represents the termination of any future obligation to the State of Victoria by the Group by
assigning the right to receive future concession payments made by CityLink Melbourne to Transurban Holding Trust. On a
Group basis, the impact of concession notes on the balance sheet and income statement is nil, as the Group has a right of
offset.
100 TRANSURBAN ANNUAL REPORT 2009
100 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
23 Non-current liabilities - Non-interest bearing liabilities (continued)
As such, the impact of time value of money on the obligation to pay the state the $614.3 million over 3 years is the only
ongoing expense recognised in the Group consolidation within the income statements. On initial recognition of this
obligation a payable of $505.9 million was recognised which represented the present value of Transurban's obligation. The
discount on this obligation has partially unwound over the period and the present value of the obligation at 30 June 2009 is
$61.8 million (2008: $186.7 million). The unwinding of the present value is presented as a 'Finance Cost'.
An intangible asset representing the future economic benefits arising from increased toll revenue as a result of increased
traffic flows from the upgrades has been recognised (refer note 17).
24 Non-current liabilities - Deferred tax liabilities
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
The balance comprises temporary differences
attributable to:
Amount recognised in profit or loss
Interest receivable
Unrealised gain
Fixed assets/intangibles
Prepayments
Concession Fees and Promissory Notes
Other
Amount recognised directly in equity
Cash flow hedges
43,257
312
1,035,643
5,705
318,914
1,038
1,404,869
36,753
2,783
1,078,886
11,306
317,922
43
1,447,693
40,145
40,145
115,301
115,301
2,633
-
-
-
-
-
2,633
-
-
Total deferred tax liabilities
1,445,014
1,562,994
2,633
Movements:
Opening balance at 1 July
Charged/(credited) to the income statement (note 6)
Charged/(credited) to equity (notes 26 and 27)
Transfer from deferred tax asset(note 16)
Foreign exchange movements
Closing balance at 30 June
1,562,994
(49,308)
(75,156)
5,610
874
1,445,014
1,524,639
(28,289)
65,756
888
-
1,562,994
Deferred tax liabilities to be settled after more than 12
months
1,445,014
1,445,014
1,562,994
1,562,994
14
2,619
-
-
-
2,633
2,633
2,633
14
-
-
-
-
-
14
-
-
14
7,723
(7,709)
-
-
-
14
14
14
101 TRANSURBAN ANNUAL REPORT 2009
101 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
25 Non-current liabilities - Provisions
Employee benefits
Maintenance provision
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
1,764
137,853
139,617
1,462
152,527
153,989
-
-
-
-
-
-
(a) Employee benefits
Employee benefits relate to the provision for long service leave.
(b) Maintenance provision
A maintenance provision is recognised for the present value of the Group's obligations to maintain the tolling assets as
required under the Service Concession Arrangements.
(c) Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Maintenance
provision
$'000
152,527
14,361
10,750
(39,785)
137,853
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
(b)
-
7,106,243
7,106,243
-
6,846,992
6,846,992
413,878
-
413,878
339,812
-
339,812
Number
'000
Number
'000
Number
'000
Number
'000
-
1,281,363
1,281,363
-
1,218,263
1,218,263
1,281,363
-
1,281,363
1,218,263
-
1,218,263
Consolidated - 2009
Carrying amount at start of year
Provision recognised
Unwinding of discount
Transfer (to)/from current
Carrying amount at end of year
26 Contributed equity
(a) Share capital
Fully paid ordinary shares
Fully paid stapled securities
Fully paid ordinary shares
Fully paid stapled securities
(b) Ordinary shares
The number of stapled securities on issue is 1,282,682,606 (2008: 1,220,261,671). The difference of 1,319,606 (2008:
1,998,671) relates to treasury securities held by the Group.
102 TRANSURBAN ANNUAL REPORT 2009
102 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
26 Contributed equity (continued)
(c) Movements in ordinary share capital:
Date
Details
Notes
1 July 2007
27 Aug 2007
19 Sep 2007
25 Sep 2007
4 Oct 2007
29 Nov 2007
5 Dec 2007
7 Jan 2008
27 Feb 2008
11 Mar 2008
9 Apr 2008
16 Apr 2008
1 May 2008
25 Jun 2008
26 Jun 2008
30 June 2008
Opening balance
Distribution Reinvestment
Plan
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Distribution Reinvestment
Plan
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Equity placement
Less:
Transaction costs arising on
issue of securities
Amounts attributable to
Transurban International
Limited
Balance
(e)
(f)
(f)
(f)
(f)
(f)
(f)
(e)
(f)
(f)
(f)
(f)
(f)
(h)
(j)
Consolidated
Parent entity
Number of
securities
'000
Issue
price
$'000
Issue
price
$'000
1,068,375
6,078,487
167,094
11,408 $7.7000
139 $7.0500
44 $7.2800
49 $7.3200
272 $6.9000
30 $6.9100
32 $6.6800
17,058 $6.5500
27 $6.1400
95 $6.7300
44 $6.2400
62 $6.6700
628 $4.0000
120,000 $5.4900
87,885 $0.3400
980 $0.3400
328 $0.3400
362 $0.3400
1,879 $0.3400
207 $0.3400
214 $0.3400
111,730 $0.3400
163 $0.3400
636 $0.3400
271 $0.3400
413 $0.3400
2,513 $0.9900
658,800 $1.3600
-
(2,319)
(95,557)
6,846,992
1,218,263
3,879
47
15
17
93
10
11
5,800
9
32
15
21
621
162,721
-
(573)
-
339,812
103 TRANSURBAN ANNUAL REPORT 2009
103 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
26 Contributed equity (continued)
(c) Movements in ordinary share capital: (continued)
Date
Details
Notes
Consolidated
Parent entity
Number of
securities
'000
Issue
price
$'000
Issue
price
$'000
1 July 2008
9 Jul 2008
19 Aug 2008
19 Aug 2008
21 Aug 2008
31 Aug 2008
31 Aug 2008
11 Sep 2008
11 Sep 2008
11 Sep 2008
26 Sep 2008
9 Oct 2008
23 Oct 2008
7 Nov 2008
13 Nov 2008
14 Nov 2008
14 Nov 2008
17 Nov 2008
18 Nov 2008
19 Nov 2008
20 Nov 2008
30 Nov 2008
8 Dec 2008
8 Dec 2008
23 Dec 2008
24 Dec 2008
30 Dec 2008
31 Dec 2008
7 Jan 2009
22 Jan 2009
27 Feb 2009
11 Mar 2009
30 June 2009
Opening balance
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Distribution reinvestment plan
Distribution reinvestment plan
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Share purchase plan
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Vested treasury units
Vested treasury units
Vested treasury units
Vested treasury units
Vested treasury units
Acquisition of treasury units
Vested treasury units
Disposal of treasury securities
Vested treasury units
Vested treasury units
Vested treasury units
Transfer from share-based
payment reserve - 2005
treasury unit plan
Vested treasury units
Disposal of treasury securities
Distribution reinvestment plan
Disposal of treasury securities
Less: Transaction costs
arising on issue of
securities
Less: Amounts attributable
to Transurban International
Limited
Balance
(f)
(f)
(f)
(f)
(e)
(e)
(f)
(f)
(f)
(i)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(e)
(f)
(j)
1,218,263
6,846,992
11 $4.4700
8 $5.5420
33 $5.5780
12 $5.4590
36,555 $4.6600
14,451 $4.7700
29 $5.1870
12 $5.1870
68 $5.1870
1,830 $5.4600
11 $5.7500
23 $5.4200
25 $5.4730
56 $5.7391
93 $5.7340
102 $5.0433
91 $5.0433
9 $5.0433
39 $5.0433
19 $5.0433
(443) $5.2764
287 $4.6274
3 $4.6274
90 $5.0433
18 $5.0433
27 $5.0433
35 $5.0433
10 $5.0550
9,585 $4.9185
11 $4.0400
49 $1.1040
45 $1.3690
183 $1.3780
66 $1.3480
170,347 $1.1510
68,931 $1.1782
152 $1.2810
61 $1.2810
355 $1.2810
9,994 $1.3490
62 $1.4200
125 $1.3390
137 $1.3520
323 $1.1476
533 $1.4160
514 $1.2457
461 $1.2457
45 $1.2457
198 $1.2457
98 $1.2457
(2,336) $1.3033
1,327 $1.1430
13 $1.1430
454 $1.2457
92 $1.2457
138 $1.2457
3,021
178 $1.2457
48 $1.2486
47,136 $1.2149
44 $0.9979
339,812
12
11
45
16
42,076
17,026
38
15
88
2,469
15
31
34
80
132
127
114
11
49
24
(577)
328
3
112
23
34
59
44
12
11,643
11
(117)
(39)
1,281,363
(43,426)
7,106,243
413,878
(d) 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. On a show of hands every holder of Stapled Securities present
at a meeting in person or by proxy, is entitled to one vote.
104 TRANSURBAN ANNUAL REPORT 2009
104 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
26 Contributed equity (continued)
(e) 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 to be issued under the plan at a 2.5 per cent discount to market price for the 30 June 2009
distribution.
(f) Treasury securities
Stapled securities were issued to executives under Share Based Payment plans. The securities are held by the executive
but will only vest in the executive in accordance with the terms of the plans. The acquired securities cannot be transferred
or sold prior to vesting date. On forfeit, the securities are sold on market.
(g) Capital risk management
The Group is subject to a gearing ratio covenant imposed by Senior Secured lenders. The Group monitors capital on the
basis of the gearing ratio to ensure compliance with the covenant. There have been no breaches of the covenant. For
further information refer to note 22.
The Group’s and the parent entity’s objectives when managing capital are to safeguard their ability to continue as a going
concern, so that they can continue to provide returns to security holders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amounts of distributions paid to security
holders, return capital to security holders, issue new securities or sell assets to reduce debt.
(h) Equity placement
Transurban raised $658.8 million via an equity placement of 120 million securities to the Canadian Pension Plan
Investment Board.
(i)
Share placement plan
Transurban raised $10.0 million via a share purchase plan, issuing 1.8 million stapled securities to eligible security
holders.
(j) Minority interest - Transurban International Limited
THL has been identified as the parent entity of the post-date of transition stapling arrangement of THL, THT and TIL.
AASB Interpretation 1002 requires the equity of TIL to be classified as a minority interest.
27 Reserves and retained profits/(accumulated losses)
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
16,877
5,505
(8,892)
(5,127)
8,363
101,859
7,012
(8,502)
(5,127)
95,242
-
1,017
-
-
1,017
-
138
-
-
138
(a) Reserves
Hedging reserve - cash flow hedges
Share-based payments reserve
Foreign currency translation reserve
Transactions with minority interest reserve
105 TRANSURBAN ANNUAL REPORT 2009
105 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
27 Reserves and retained profits/(accumulated losses) (continued)
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Movements:
Hedging reserve - cash flow hedges
Balance 1 July
Revaluation - gross (note 14)
Deferred tax (notes 16 and 24)
Transfer to net profit
Transfer to net profit attributable to minority interest
Movement in associate's reserve
Movement in associate's reserve attributable to
minority interest
Balance 30 June
Share-based payments reserve
Balance 1 July
Employee share plan expense
Employee distribution
Transfer to equity (vested loan)
Balance 30 June
Foreign currency translation reserve
Balance 1 July
Currency translation differences arising during the
year
Currency translation differences arising during the
year attributable to minority interest
Balance 30 June
Transactions with minority interest reserve
Balance 1 July
Acquisition of additional interest in Airport Motorway
Group
Balance 30 June
101,859
(125,385)
29,952
8,964
1,487
(42,438)
42,438
16,877
7,012
1,854
(70)
(3,291)
5,505
(11,747)
152,349
(40,086)
1,343
-
(13,164)
13,164
101,859
4,098
1,612
1,302
-
7,012
(8,502)
(11,181)
29,012
(29,402)
(8,892)
(5,127)
-
(5,127)
6,371
(3,692)
(8,502)
-
(5,127)
(5,127)
-
-
-
-
-
-
-
-
138
950
-
(71)
1,017
-
-
-
-
-
-
-
-
-
-
-
-
-
-
69
69
-
-
138
-
-
-
-
-
-
(b) Retained profits/accumulated losses
Movements in retained profits (accumulated losses) were as follows:
Balance at 1 July
Loss attributable to ordinary equity holders
Distributions to ordinary equity holders
Balance 30 June
(3,296,526)
(24,575)
(280,953)
(3,602,054)
(2,564,467)
(109,686)
(622,373)
(3,296,526)
236,302
(63,968)
-
172,334
261,828
(25,526)
-
236,302
(c) Nature and purpose of reserves
(i) Cash flow reserve - cash flow hedges
The cash flow reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised
directly in equity, as described in note 1(n). Amounts are recognised in profit and loss when the associated hedged
transaction affects profit and loss.
(ii) Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of long-term incentives issued but not exercised.
106 TRANSURBAN ANNUAL REPORT 2009
106 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
27 Reserves and retained profits/(accumulated losses) (continued)
(iii) Foreign currency translation reserve
Exchange differences arising on translation of foreign controlled entities are taken to the foreign currency translation
reserve, as described in note 1(d).
(iv) Transactions with minority interest reserve
The transactions with minority interests reserve was created as a result of the acquisition of an additional 3.75 per cent of
the Airport Motorway Group during the prior year as the Group uses the economic entity approach to transactions with
minority interests.
28 Minority interest - Transurban International Limited
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Minority interest - Transurban International Limited
116,479
116,479
86,086
86,086
-
-
Transurban International Limited and application of AASB Interpretation 1002 Post-date of Transition Stapling
Arrangements
THL has been identified as the parent entity of the post-date of transition stapling arrangement of THL, THT and TIL.
AASB Interpretation 1002 requires the equity of TIL to be classified as a minority interest. At 30 June 2009, TIL's equity
comprises contributed equity of $139.0 million (2008: $95.6 million) and negative reserves of $22.5 million (2008: $9.5
million), totalling $116.5 million (2008: $86.1 million).
29 Minority interest - other
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Minority interest - other
Minority interest in Airport Motorway Group
Opening balance
Acquisition of minority interest
Distributions
Profit / (loss)
Movement in reserves
Closing balance
212,105
212,105
237,667
237,667
225,324
-
(14,690)
(1,409)
(1,487)
207,738
273,748
(37,551)
(14,648)
3,775
-
225,324
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
On 14 September 2007, Transurban acquired an additional 3.75 per cent interest in the Airport Motorway Group (AMG),
the owner of the concession for the M1 Eastern Distributor in Sydney, for cash consideration of $46.5 million. The carrying
value of the 3.75 per cent minority interest acquired was $37.6 million. In addition, the transaction included the receipt of
debentures by Transurban to the value of $4.2 million, and costs of $0.4 million.
Minority interest in Statewide Roads Limited
Opening balance
Profit / (loss)
Dividends paid
Closing balance
12,332
6,159
(15,454)
3,037
21,809
553
(10,030)
12,332
-
-
-
-
-
-
-
-
107 TRANSURBAN ANNUAL REPORT 2009
107 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
11
3,691
(2,372)
1,330
-
7,733
(7,722)
11
-
-
-
-
-
-
-
-
29 Minority interest - other (continued)
Minority interest in Devome Pty Limited
Opening balance
Profit / (loss)
Dividends paid
Closing balance
30 Distributions
(a) Distributions proposed
Final distribution payable and recognised as a liability:
11.0 cents (2008: 29.0 cents) per fully paid stapled security payable 28 August 2009
Distributions paid during the year
Final distribution for 2008 financial year of 29.0 cents (2007: 27.5 cents) per fully paid
Stapled Security paid 29 August 2008
Interim distribution for 2009 financial year of 11.0 cents (2008: 28.0 cents) per fully paid
Stapled Security paid 27 February 2009
Distributions paid in cash or satisfied by the issue of Stapled Securities under the
distribution reinvestment plan during the years ended 30 June 2009 and 30 June 2008
Paid in cash
Executive loans - repayments
Satisfied by issue of Stapled Securities
Funds available for future distribution reinvestment plans
Total dividends provided for or paid
Consolidated
30 June
2009
$'000
30 June
2008
$'000
141,095
141,095
319,076
319,076
319,076
294,744
140,041
459,117
303,297
598,041
172,161
551
286,422
(17)
459,117
396,858
1,535
199,615
33
598,041
Franking credits
Balance at 1 July
Tax paid (refunded)
Franked dividends received
Franked dividends paid
108 TRANSURBAN ANNUAL REPORT 2009
108 Transurban annual reporT 2009
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
113,261
22,448
16,387
(8,204)
143,892
71,707
21,147
23,717
(3,310)
113,261
63,223
(2,233)
24,793
-
85,783
30,378
12,440
20,405
-
63,223
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
31 Key management personnel disclosures
(a) Directors
The following persons were directors of THL, TIML and/or TIL, as noted below, during the financial year and/or up until the
date of this report:
Executive directors
(i)
Christopher J Lynch (THL, TIML and TIL)
(ii) Non-executive directors
David J Ryan (Chairman of THL, TIML and TIL)
Neil G Chatfield (appointed 18 February 2009) (THL and TIML)
Geoffrey O Cosgriff (THL and TIML)
Jeremy GA Davis (THL and TIML)
Robert J Edgar (appointed 21 July 2009) (THL and TIML)
Lindsay Maxsted (appointed 1 March 2008) (THL and TIML)
Susan M Oliver (retired 22 June 2009) (THL and TIML)
Christopher JS Renwick AM (retired 22 June 2009) (THL and TIML)
Rodney Slater (appointed 22 June 2009) (THL and TIML)
Jennifer Eve (TIL)
James Keyes (TIL)
(b) Other key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of the
Group, directly or indirectly, during the financial year:
Name
B Bourke
D Cardiff
K Daley
M Fletcher
A Head
S Hogg
T Honan
M Kulper
E Mildwater
Position
Chief Operating Officer
Group General Manager Human Resources
Executive Vice President International Development
Group General Manager Public Affairs
Group General Manager Strategy and Corporate Development
Treasurer
Chief Financial Officer
President Transurban North America
Chief Legal Counsel and Company Secretary
(c) Key management personnel compensation
The remuneration amounts below represent the entire amounts paid by the Transurban Group. The full amounts have
been disclosed as a reasonable basis of apportionment is not available to reflect the parent portion.
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
Consolidated
Parent entity
30 June
2009
$
30 June
2008
$
30 June
2009
$
30 June
2008
$
15,545,045
851,313
182,876
-
1,857,574
18,436,808
25,472,215
744,273
191,678
6,960,057
1,283,204
34,651,427
15,545,045
851,313
182,876
-
1,857,574
18,436,808
25,472,215
744,273
191,678
6,960,057
1,283,204
34,651,427
Detailed remuneration disclosures are made in the directors’ report. The relevant information can be found in sections A-
H of the remuneration report in the directors report.
109 TRANSURBAN ANNUAL REPORT 2009
109 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
31 Key management personnel disclosures (continued)
(d) Equity instrument disclosures relating to key management personnel
Share-based payments
(i)
Details of long-term incentives provided as remuneration and securities issued, together with terms and conditions of the
long term incentives, can be found in sections E-H of the remuneration report in the directors report.
(ii) Performance Awards Plan
2009
Balance at
start of the
year
Name
Directors of the Group
-
D J Ryan
-
N G Chatfield
-
G O Cosgriff
-
J G A Davis
-
R J Edgar
-
L P Maxsted
-
S M Oliver
-
C J S Renwick
-
J Eve
-
J Keyes
C J Lynch
-
Other key management personnel of the Group
-
B Bourke
-
D Cardiff
-
K Daley
-
M Fletcher
-
A Head
-
S Hogg
-
T Honan
-
M Kulper
-
E Mildwater
Granted
during the
year as
remuneration
Matured and
paid during
the year
Other
changes
during the
year
Balance at
end of the
year
Matured and
payable at
the end of
the year
-
-
-
-
-
-
-
-
-
-
483,721
85,465
46,512
67,151
34,884
46,512
23,256
232,558
145,422
29,070
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
483,721
85,465
46,512
67,151
34,884
46,512
23,256
232,558
145,422
29,070
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
As the Performance Awards Plan was introduced in November 2008, there is no comparative data.
110 TRANSURBAN ANNUAL REPORT 2009
110 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
31 Key management personnel disclosures (continued)
(iii) Executive Loan Plan
The number of securities held under the executive loan plan during the financial year by each director of Transurban
Holdings Limited and other key management personnel of the Group, including their personally related parties, are set out
over the page.
2009
Balance at
start of the
year
Granted
during the
year as
remuneration
Exercised
during the
year
Other
changes
during the
year
Balance at
end of the
year
Vested and
exercisable
at the end of
the year
Directors of the Group
C J Lynch
-
Other key management personnel of the Group
262,000
B Bourke
63,500
D Cardiff
174,000
K Daley
15,000
M Fletcher
-
A Head
-
T Honan
-
S Hogg
190,000
M Kulper
-
E Mildwater
2008
Directors of the Group
K Edwards
Balance at
start of the
year
722,500
Other key management personnel of the Group
262,000
B Bourke
293,000
C Brant
63,500
D Cardiff
174,000
K Daley
190,000
M Kulper
272,500
G Mann
205,000
P O'Shea
-
-
-
-
-
-
-
-
-
-
-
-
-
(90,005)
(25,148)
(74,000)
-
-
-
-
(90,000)
-
(11,995)
(3,352)
-
-
-
-
-
-
-
160,000
35,000
100,000
15,000
-
-
-
100,000
-
-
-
-
-
-
-
-
-
-
-
Granted
during the
year as
remuneration
Exercised
during the
year
Other
changes
during the
year
Balance at
end of the
year
Vested and
exercisable
at the end of
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(722,500)
-
-
-
-
-
-
(272,500)
-
262,000
293,000
63,500
174,000
190,000
-
205,000
-
-
-
-
-
-
-
-
111 TRANSURBAN ANNUAL REPORT 2009
111 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
31 Key management personnel disclosures (continued)
(iv) Stapled security holdings
The number of Transurban Group Stapled Securities held during the financial year by each director of Transurban
Holdings Limited and other key management personnel of the Group, including their personally-related parties, are set out
below.
Stapled Securities
2009
Directors of the Group
D J Ryan
N G Chatfield
G O Cosgriff
J G A Davis
R J Edgar
L P Maxsted
S M Oliver
C J S Renwick
R Slater
J Eve
J Keyes
C J Lynch
Other key management personnel of the Group
B Bourke
D Cardiff
K Daley
M Fletcher
A Head
S Hogg
T Honan
M Kulper
E Mildwater
2008
Directors of the Group
D J Ryan
G O Cosgriff
J G A Davis
K Edwards
L Maxsted
S M Oliver
C J S Renwick
J Eve
J Keyes
C J Lynch
Other key management personnel of the Group
C Brant
B Bourke
P O'Shea
G Mann
D Cardiff
K Daley
M Kulper
112 TRANSURBAN ANNUAL REPORT 2009
112 Transurban annual reporT 2009
Balance at
start of the
year
Received during
the year via the
Executive
Equity Plan
Other changes
during the year
Balance at end
of the year
57,300
-
116,036
125,005
5,376
-
50,518
21,552
-
-
-
152,800
699,661
167,633
365,332
15,121
51,701
-
-
80,000
4,700
-
-
-
-
-
-
-
-
-
-
-
79,647
19,146
19,146
19,146
19,146
19,146
15,316
85,474
23,944
19,146
3,645
-
9,976
-
2,333
-
4,004
20,000
-
-
-
594
(98,656)
(28,302)
100
(776)
(24,605)
7,465
-
-
794
60,945
-
126,012
125,005
7,709
-
54,522
41,552
-
-
-
233,041
620,151
158,477
384,578
33,491
46,242
22,781
85,474
103,944
24,640
Balance at
start of the
year
Received during
the year via the
Executive Loan
Plan
Other changes
during the year
Balance at end
of the year
24,091
48,611
55,592
2,033,500
-
41,831
21,552
-
-
-
296,392
671,328
442,489
272,707
167,443
365,332
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,209
67,425
69,413
(2,033,500)
-
8,687
-
-
-
152,800
1,575
28,333
81,799
(272,707)
190
-
80,000
57,300
116,036
125,005
-
-
50,518
21,552
-
-
152,800
297,967
699,661
524,288
-
167,633
365,332
80,000
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
31 Key management personnel disclosures (continued)
(v) Executive Equity Plan (EEP)
2009
Balance at
start of the
year
Name
Directors of Transurban Holdings Limited
-
C J Lynch
Other key management personnel of the Group
-
B Bourke
-
D Cardiff
-
K Daley
-
M Fletcher
-
A Head
-
S Hogg
-
T Honan
-
M Kulper
-
E Mildwater
Granted
during the
year as
remuneration
Exercised
during the
year
Other
changes
during the
year
Balance at
end of the
year
Matured and
payable at
the end of
the year
79,647
19,146
19,146
19,146
19,146
19,146
15,316
85,474
23,944
19,146
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
79,647
19,146
19,146
19,146
19,146
19,146
15,316
85,474
23,944
19,146
-
-
-
-
-
-
-
-
-
-
As the Executive Equity Plan was introduced in November 2008, there is no comparative data.
(vi) Performance Rights Plan
2009
Name
Balance at
start of the
year
Granted
during the
year as
remuneration
Matured and
paid during
the year
Other
changes
during the
year
Balance at
end of the
year
Matured and
payable at
the end of
the year
Other key management personnel of the Group
92,857
B Bourke
27,428
D Cardiff
78,571
K Daley
11,142
M Fletcher
14,857
A Head
-
S Hogg
-
T Honan
76,778
M Kulper
-
E Mildwater
2008
Balance at
start of the
year
Name
Directors of Transurban Holdings Limited
K Edwards
285,714
Other key management personnel of the Group
100,000
C Brant
92,857
B Bourke
78,571
P O'Shea
27,428
D Cardiff
78,571
K Daley
76,778
M Kulper
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
92,857
27,428
78,571
11,142
14,857
-
-
76,778
-
-
-
-
-
-
-
-
-
-
Granted
during the
year as
remuneration
Matured and
paid during
the year
Other
changes
during the
year
Balance at
end of the
year
Matured and
payable at
the end of
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(285,714)
-
-
-
-
-
-
-
100,000
92,857
78,571
27,428
78,571
76,778
-
-
-
-
-
-
-
113 TRANSURBAN ANNUAL REPORT 2009
113 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
31 Key management personnel disclosures (continued)
(e) Other transactions with directors and key management personnel
Until 30 June 2008, Geoffrey Cosgriff was a director of LogicaCMG Pty Limited, who provide Information Technology skills
required to support Transurban’s tolling systems. Transurban has also outsourced its Information Technology
Infrastructure support to LogicaCMG. In accordance with our standard procurement agreements, Mr Cosgriff did not
participate in any procurement decisions involving LogicaCMG.
Lindsay Maxsted was the Chief Executive Officer of KPMG Australia before his appointment as a director of the Group,
and a company in which he is a principal has a consulting agreement with that firm until 28 February 2010. Lindsay
Maxsted is also a non-executive director of Westpac Banking Corporation. Westpac provide transactional banking and
loan facilities to Transurban. These facilities are on normal commercial terms.
Rodney Slater is a Partner in the public policy practice group of Patton Boggs. Transurban used Patton Boggs during the
year for various lobbying activities. Mr Slater is also a director of Parsons Brinckerhoff. Transurban used Parsons
Brinckerhoff for engineering consulting activities.
Jennifer Eve an Associate of Appleby. During the year Transurban utilised Appleby for various Legal Services.
Aggregate amounts of each of the above types of other transactions with key management personnel of the Group:
Amount recognised as expenses
LogicaCMG Pty Limited
KPMG
Appleby
Patton Boggs
Parsons Brinckerhoff
Consolidated
Parent entity
30 June
2009
$
30 June
2008
$
30 June
2009
$
30 June
2008
$
9,687,564
418,874
122,266
429,534
107,157
10,765,395
4,395,063
639,447
128,714
316,424
155,704
5,635,352
-
-
-
-
-
-
-
-
-
-
-
-
All of the above amounts represent payments on normal commercial terms made in relation to the provision of goods and
services.
114 TRANSURBAN ANNUAL REPORT 2009
114 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
32 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
Consolidated
Parent entity
30 June
2009
$
30 June
2008
$
30 June
2009
$
30 June
2008
$
(a) Amounts received or due and receivable by
PricewaterhouseCoopers
Audit and Other Assurance Services
Audit and review of financial reports
Other assurance services
Other assurance services
Total audit and other assurance services
Taxation services
Tax compliance services
Tax consulting services
Indirect taxation services
Total taxation services
1,200,000
1,239,354
25,792
1,225,792
159,827
1,399,181
-
-
617,063
617,063
236,430
1,371,817
1,518,667
3,126,914
Total remuneration of PricewaterhouseCoopers
1,842,855
4,526,095
-
-
-
-
-
-
-
-
152,000
-
152,000
-
-
-
-
152,000
The indirect tax services relate to a project initiated in the prior year in which PricewaterhouseCoopers have proprietary
intellectual property.
(b) Amounts received or due and receivable by
other audit firms
Audit and review of financial report
Other assurance services
Taxation services
Total remuneration for other audit firms
94,380
867,888
178,950
1,141,218
82,505
718,614
631,806
1,432,925
Total auditors remuneration
2,984,073
5,959,020
-
-
-
-
-
-
50,050
25,885
75,935
227,935
The audit fee relates to the amount due to Ernst & Young who are the auditors of the M4. Other assurance and tax fees
are for other services Ernst and Young were engaged for throughout the Group.
The parent entity's audit fee for the current year has been borne by a related party, Transurban Limited.
115 TRANSURBAN ANNUAL REPORT 2009
115 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
33 Contingencies
(a) Contingent liabilities
The parent entity and Group had contingent liabilities at 30 June 2009 in respect of:
Equity guarantee
Transurban DRIVe Holdings LLC (DRIVe), a related party of the Transurban Group, holds a concession agreement with
The Commonwealth of Virginia to construct and operate High Occupancy Toll (HOT) lanes on the Capital Beltway (Capital
Beltway project), a ring road that runs around Washington DC. The project is currently in the construction phase.
Construction is expected to take five years and the tolling concession will operate for 75 years.
On 20 December 2007 (and as amended on 12 June 2008) the Transurban Group, through the entities in the triple staple,
being Transurban Holdings Limited, Transurban International Limited and Transurban Infrastructure Management Limited
(as responsible entity of the Transurban Holding Trust), entered into an agreement with Capital Beltway Express LLC
(Capital Beltway Express), a subsidiary of DRIVe, the Virginia Department of Transportation, Goldman Sachs Capital
Markets L.P., Depfa Bank plc and Wells Fargo Bank N.A. to provide an Equity Funding Guarantee (the Guarantee) over all
of DRIVe’s equity obligations associated with funding the equity contributions to the Capital Beltway project.
The Transurban Group owns 75% of the equity of DRIVe and recognises this investment in the consolidated financial
statements using the equity method of accounting. DRIVe holds 90% of the equity in Capital Beltway Express and, from
time to time, is required to make equity contributions to Capital Beltway Express to fund the equity component of the
Capital Beltway project costs. The total equity contribution DRIVe is obliged to make to Capital Beltway Express is
US$313,825,757, of which US$108,498,260 had been paid at balance sheet date.
In accordance with the DRIVe Holdings LLC Agreement, should a DRIVe member default on any capital calls, the
Transurban Group has the right to acquire their share of DRIVe at a 50% discount to its fair value. As such in the instance
of the Guarantee being called, the Transurban Group may exercise its right to the interest in DRIVe at a discounted value.
(b) Contingent assets
Wurundjeri Way
CityLink Melbourne Limited (CML) sought compensation from the State of Victoria, claiming that Wurundjeri Way
(Docklands) had a Material Adverse Effect on the toll revenue earning capacity by CML. On 8 April 2009 the Arbitrators
released their decision that the construction of Wurundjeri Way and associated works did not result in a material adverse
effect on CML. As at 30 June 2009, there is no longer a contingent asset.
DRIVe capital sum
As a part of the establishment of Transurban DRIVe, DRIVe Holdings LLC agreed to make a "capital sum" compensation
payment to Transurban for contributing to DRIVe the right to negotiate the Capital Beltway and I-95.
The fee is payable to Transurban if the pre-financing/pre-tax net present value of Capital Beltway or I-95 is positive as at
financial close, when calculated three years after the completion of construction. Receipt of the capital sum is contingent
on the projects achieving positive net present value at the strike date, and as such this amount has not been recognised
on the balance sheet. Due to uncertainty associated with the amount and timing of the potential receipt, it is not practical
to quantify the potential amount.
116 TRANSURBAN ANNUAL REPORT 2009
116 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
34 Commitments
(a) Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Property, plant and equipment
Payable:
Within one year
Later than one year but not later than five years
Later than five years
Operating commitments
Payable:
Within one year
Later than one year but not later than five years
Later than five years
Intangible assets
Payable:
Within one year
(b) Lease commitments
Commitments in relation to leases contracted for at the
reporting date but not recognised as liabilities, payable:
Within one year
Later than one year but not later than five years
Later than five years
7,801
52
4
7,857
30,357
36,825
956
68,138
29,251
8,977
-
38,228
32,529
47,699
8,401
88,629
29,350
29,350
79,053
79,053
-
-
-
-
-
-
-
-
-
-
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
3,862
16,449
8,910
29,221
4,481
14,131
12,424
31,036
-
-
-
-
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Sub-lease payments
Future minimum lease payments expected to be
received in relation to non-cancellable sub-leases of
operating leases
1,947
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
117 TRANSURBAN ANNUAL REPORT 2009
117 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
34 Commitments (continued)
Promissory Notes
The Responsible Entity, on behalf of the Hills Motorway Trust, has entered into leases with the Roads and Traffic Authority
of New South Wales (RTA). Annual lease liabilities under these leases total $7.0 million indexed annually to the
Consumer Price Index over the estimated period that the M2 Motorway will be used. Until such time as a threshold return
is achieved, payments under these leases can be made at the discretion of the Responsible Entity, by means of the issue
of non-interest bearing promissory notes to the RTA. For further information refer to note 23.
Concession Notes
The Eastern Distributor Project Deed between Airport Motorway Limited, Airport Motorway Trust and the RTA provides for
annual concession fees of $15 million during the construction phase and for the first 24 years after the construction
completion date of the Eastern Distributor.
Other operating leases
The Group leases various offices under non-cancellable operating leases expiring within one to eleven years. The leases
have varying terms, escalating clauses and renewal rights. On renewal, the terms of the leases are negotiated.
35 Related party transactions
(a) Parent entity
The ultimate parent entity of the Group is deemed to be Transurban Holdings Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in note 36.
(c) Key management personnel
Disclosure relating to key management personnel are set out in note 31.
118 TRANSURBAN ANNUAL REPORT 2009
118 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
35 Related party transactions (continued)
(d) Transactions with related parties
The following transactions occurred with related parties:
Tax consolidation
Current tax payable assumed from wholly-owned tax
consolidation entities
Tax losses assumed from wholly-owned tax
consolidated entities
Revenue from services
Operating electronic tolling system for another
related party
Business development fees
Consolidated
Parent entity
30 June
2009
$
30 June
2008
$
30 June
2009
$
30 June
2008
$
-
-
-
-
-
10,447,656
52,177,102
69,402,645
7,815,312
29,778,726
37,594,038
6,483,469
43,346,638
49,830,107
-
353,864
353,864
-
148,670
148,670
Interest earned
Term Loan Notes
72,862,036
66,861,277
Losses from associates and joint venture partnerships
(32,192,886)
(24,249,322)
-
-
-
-
119 TRANSURBAN ANNUAL REPORT 2009
119 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
35 Related party transactions (continued)
(e) Loans to/from related parties
Term loan notes
Beginning of the year
Interest capitalised
Acquisition of additional interest in Westlink M7
Loans repaid
Loans to Transurban DRIVe Holdings LLC
Beginning of the year
Loans advanced
Foreign exchange movements
Loans repaid
Loans from Transurban DRIVe Holdings LLC
Beginning of the year
Loans advanced
Foreign exchange movements
Loans repaid
Consolidated
Parent entity
30 June
2009
$
30 June
2008
$
30 June
2009
$
30 June
2008
$
558,223,463
44,604,379
30,444,225
-
633,272,067
557,731,127
26,243,864
-
(25,751,528)
558,223,463
28,946,510
5,583,207
6,156,549
(29,717,570)
10,968,696
-
40,361,773
(2,736,122)
(8,679,141)
28,946,510
(30,037,362)
(207,893)
(6,156,549)
23,601,919
(12,799,885)
(3,643,105)
(34,673,963)
2,736,122
5,543,584
(30,037,362)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
No provision for doubtful debts have been raised in relation to any outstanding balances, and no expense has been
recognised in respect of bad or doubtful debts from related parties.
Amounts payable/receivable from director related
parties
Current assets - other related parties
Non-current assets - other related parties
Current liabilities - other related parties
Non-current liabilities - other related parties
(f) Term loan notes
-
-
-
-
-
-
-
-
257,439,101
264,220,859
143,759,222
1,470,608,410
390,211,158
13,429,364
34,304,284
1,405,107,187
The Term Loan Notes (TLN) earn interest at a fixed rate of 11.93 per cent until the earlier of 34 years and the termination
of the Agreement to Lease between the RTA and Westlink Motorway Limited.
Any unpaid interest is capitalised and deemed to subscribe for further loan notes with an aggregate principal amount equal
to that unpaid interest.
The TLN are classified as a held-to-maturity receivable. It is not classified as an investment for equity accounting
purposes, and therefore has not been affected by equity accounting losses from the associate.
120 TRANSURBAN ANNUAL REPORT 2009
120 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
36 Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1(b):
Name of entity
incorporation Class of shares
Equity holding
Country of
2009
%
2008
%
The CityLink Trust
CityLink Melbourne Limited
City Link Extension Pty Ltd
Transurban Infrastructure Management Ltd
Transurban Collateral Security Pty Ltd
Transurban Finance Trust
Transurban Finance Company Pty Ltd
Transurban Nominees Pty Ltd
Transurban Nominees 2 Pty Ltd
Transurban WSO Pty Ltd
Transurban AL Trust
Transurban CARS Trust
Transurban WSO Trust
Roam Tolling Pty Ltd (formerly Transurban
Infrastructure Developments WSO Pty Ltd)
Transurban Retail Pty Ltd (formerly
Transurban MF 1 Pty Ltd)
Transurban (USA) Holdings No.1 Pty Ltd
(formerly Transurban MF 2 Pty Ltd)
Transurban Asset Management Pty Ltd
Transurban Operations Pty Ltd (formerly
Roam Operations Pty Ltd)
Transurban (USA) Holdings No.2 Pty Ltd
(formerly Transurban MF Holdings Pty Ltd)
Transurban Investments Pty Ltd
The Hills Motorway Ltd
Hills Motorway Management Ltd
Hills Motorway Construction Company Pty
Ltd
Hills Motorway Underwriting No.1 Pty Ltd
Transurban (USA) Holdings No. 3 Pty Ltd
(formally Hills Motorway Underwriting No.2
Pty Ltd)
Hills Motorway Trust
Abigroup Westlink Partner Holding No.4
Pty Ltd
Abigroup Westlink Partner No.4 Pty Ltd
Abigroup WSO Holding No.4 Pty Ltd
Abigroup Westlink Partner Holding No.2
Pty Limited
Abigroup Westlink Partner No.2 Pty
Limited
LMI Westlink Partner Holding No.4 Pty Ltd
LMI Westlink Partner No.4 Pty Ltd
LMI WSO Holding No.4 Pty Ltd
LMI Westlink Partner Holding No. 2 Pty
Limited
LMI Westlink Partner No.2 Pty Limited
Tollaust Pty Ltd
Transurban (USA) Inc
Transurban (USA) Holdings Inc
Transurban (USA) Development Inc.
Transurban (895) General Partnership
121 TRANSURBAN ANNUAL REPORT 2009
121 Transurban annual reporT 2009
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Australia
Ordinary
Australia
Ordinary
Australia
Australia
Ordinary
Ordinary
Australia
Ordinary
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Australia
Ordinary
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
USA
USA
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
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
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
100
100
100
100
100
100
100
100
100
100
100
-
-
100
100
100
100
100
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
36 Subsidiaries (continued)
Name of entity
incorporation Class of shares
Equity holding
Country of
2009
%
2008
%
T (895) Finance Trust
Transurban International Holdings Limited
Transurban DRIVe Management LLC
Sydney Roads Limited
Sydney Roads Trust
Sydney Roads Management Limited
Eastern Distributor Funding Trust
Airport Motorway Trust
Airport Motorway Holdings Pty Ltd
Airport Motorway Limited
Airport Motorway Construction Company
Pty Ltd
M5 Holdings Funding Trust
M5 Holdings Pty Ltd
M4 Holdings No. 1 Pty Ltd
Devome Pty Ltd
Statewide Roads Limited
SWR Services Pty Ltd
SWR Engineers Pty Ltd
Statewide Roads (M4) Pty Ltd
SWR Operations Pty Ltd
SWR Properties Pty Ltd
Statewide Roads (M2) Pty Ltd
SWR Constructors Pty Ltd
Lodavas Pty Ltd
Lodco Pty Ltd
Davjan Pty Ltd
ISI Nominees Pty Ltd
Focufu Pty Ltd
LH Nominees Pty Ltd
Millba Pty Ltd
AJL Nominees Pty Ltd
Australia
Bermuda
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
75.10
75.10
75.10
75.10
100
100
100
75
50.61
50.61
50.61
50.61
50.61
50.61
50.61
50.61
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
75.10
75.10
75.10
75.10
100
100
100
75
50.61
50.61
50.61
50.61
50.61
50.61
50.61
50.61
100
100
100
100
100
100
100
100
122 TRANSURBAN ANNUAL REPORT 2009
122 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
37 Deed of cross guarantee
During 2009, Transurban Holdings Limited, Transurban Limited, Tollaust Pty Limited, Roam Tolling Pty Limited, Sydney
Roads Limited, Sydney Roads Management Limited and M5 Holdings Pty Limited became parties to a deed of cross
guarantee under which each company guarantees the debts of the others. By entering into the deed, the wholly-owned
entities have been relieved from the requirement to prepare a financial report and directors’ report under Class Order
98/1418 (as amended) issued by the Australian Securities and Investments Commission.
(a) Consolidated income statement and a summary of movements in consolidated retained profits
The above companies represent a ‘Closed Group' for the purposes of the Class Order, and as there are no other parties to
the Deed of Cross Guarantee that are controlled by Transurban Holdings Limited, they also represent the ‘Extended
Closed Group'.
Set out below is a consolidated income statement and a summary of movements in consolidated retained profits for the
year ended 30 June 2009 of the Closed Group consisting of Transurban Holdings Limited, Transurban Limited, Tollaust
Pty Limited, Roam Tolling Pty Limited, Sydney Roads Limited, Sydney Roads Management Limited and M5 Holdings Pty
Limited.
Income statement
Revenue from continuing operations
Operating expenses
Depreciation and amortisation expense
Finance costs
Loss before income tax
Income tax benefit
Loss for the year
Summary of movements in consolidated retained profits
(Accumulated losses) at the beginning of the financial year
(Loss) for the year
(Accumulated losses) at the end of the financial year
30 June
2009
$'000
152,073
(125,890)
(14,330)
(97,022)
(85,169)
51,852
(33,317)
(168,963)
(33,317)
(202,280)
123 TRANSURBAN ANNUAL REPORT 2009
123 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
37 Deed of cross guarantee (continued)
(b) Balance sheets
Set out below is a consolidated balance sheet as at 30 June 2009 of the Closed Group consisting of Transurban Holdings
Limited, Transurban Limited, Tollaust Pty Limited, Roam Tolling Pty Limited, Sydney Roads Limited, Sydney Roads
Management Limited and M5 Holdings Pty Limited.
30 June
2009
$'000
36,971
378,017
414,988
1,286,015
96,416
375,432
1,757,863
2,172,851
1,176,558
14,282
1,190,840
618,439
149,533
1,424
769,396
1,960,236
212,615
413,878
1,017
(202,280)
212,615
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Other financial assets
Property, plant and equipment
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non-current liabilities
Payables
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits
Total equity
124 TRANSURBAN ANNUAL REPORT 2009
124 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
38 Investments in associates and joint venture
Westlink M7 Motorway
(a) Carrying amounts
Name of company
WSO Company Pty Limited
Westlink Motorway Limited
WSO Finance Pty Limited
Westlink Motorway Partnership
Ownership
interest
30
June
2009
%
50.0
50.0
50.0
50.0
30
June
2008
%
47.5
47.5
47.5
47.5
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
-
-
-
-
-
-
-
-
-
-
-
-
On 28 August 2008, Transurban completed its acquisition of an additional 2.5 per cent of the Westlink M7, for
consideration of $38.0 million. The acquisition comprised term loan notes of $30.4 million and an increase in its equity
investment of $7.6 million.
Each of the above is a member of the Westlink Motorway Group, established to invest in, construct and operate the
Westlink M7 toll road in Sydney. All were incorporated in Australia.
WSO Company Pty Limited is the operator of the Westlink M7 toll road.
Westlink Motorway Limited is the nominee manager of the Westlink Motorway Partnership.
WSO Finance Pty Limited is the financier of the Westlink M7 toll road.
Westlink Motorway Partnership was responsible for the construction of the Westlink M7 Motorway in Sydney. The M7
opened for operation on 16 December 2005.
-
-
-
-
-
-
-
-
-
-
-
Consolidated
30 June
2009
$'000
30 June
2008
$'000
-
(7,556)
7,556
-
(7,556)
-
(7,556)
148,246
131,020
279,266
82,110
66,136
148,246
(b) Movements in carrying amounts
Carrying amount at the beginning of the financial year
Share of losses after income tax
Additional investment acquired
Carrying amount at the end of the financial year
(c) Share of losses
Loss before income tax
Income tax expense
(d) Losses not recognised
Balance at 1 July
Unrecognised losses for the year
Closing balance
125 TRANSURBAN ANNUAL REPORT 2009
125 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
38 Investments in associates and joint venture (continued)
(e) Summarised financial information of associates
2009
Westlink Motorway Group
2008
Westlink Motorway Group
Ownership
Interest
%
50.0
47.5
Group's share of:
Assets
$'000
Liabilities
$'000
Revenues
$'000
Profit (loss)
$'000
949,641
949,641
(1,297,264)
(1,297,264)
171,628
171,628
(138,576)
(138,576)
996,228
996,228
(1,178,447)
(1,178,447)
195,137
195,137
(66,136)
(66,136)
(f) Share of associates' expenditure commitments
As at the reporting date, there are no expenditure commitments.
(g) Contingent liabilities of associates
As at the reporting date there are no contingent liabilities.
M5 Motorway
(a) Carrying amounts
Name of company
Interlink Roads Pty Ltd
Ownership
interest
30
June
2009
%
30
June
2008
%
50
50
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
467,956
467,956
516,972
516,972
-
-
-
-
Consolidated
30 June
2009
$'000
30 June
2008
$'000
516,972
(3,496)
(28,020)
(17,500)
467,956
562,537
(4,082)
(41,483)
-
516,972
(b) Movements in carrying amounts
Carrying amount at the beginning of the financial year
Share of loss after income tax
Dividends received/receivable
Share buy-back
Carrying amount at the end of the financial year
126 TRANSURBAN ANNUAL REPORT 2009
126 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
38 Investments in associates and joint venture (continued)
(c) Share of associates’ profits or losses
Profit before income tax
Income tax expense
Profit after income tax
10,864
(14,360)
(3,496)
10,032
(14,114)
(4,082)
(d) Summarised financial information of associates
The Group’s share of the results of its principal associates and its aggregated assets and liabilities are as follows:
2009
Interlink Roads Pty Ltd
2008
Interlink Roads Pty Ltd
Ownership
Interest
%
50
50
Group's share of:
Assets
$'000
Liabilities
$'000
Revenues
$'000
Profit (loss)
$'000
778,687
(310,731)
85,341
(3,496)
835,387
(318,415)
83,447
(4,082)
(e) Share of associates' expenditure commitments
Capital commitments
Lease commitments
(f) Contingent liabilities of associates
Share of contingent liabilities incurred jointly with other investors
Consolidated
30 June
2009
$'000
30 June
2008
$'000
-
21
21
28
261
22
283
28
127 TRANSURBAN ANNUAL REPORT 2009
127 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
38 Investments in associates and joint venture (continued)
Transurban DRIVe Holdings LLC
(a) Carrying amounts
Name of company
Ownership
interest
30
June
2009
%
30
June
2008
%
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Transurban DRIVe Holdings LLC
75
75
196,203
174,197
-
-
(b) Movements in carrying amounts
Carrying amount at the beginning of the financial year
Investment in associate
Share of losses after income tax
Movement in exchange rates
Movement in reserves
Carrying amount at the end of the financial year
(c) Share of associates’ profits or losses
Loss before income tax
Income tax benefit
Profit after income tax
Consolidated
30 June
2009
$'000
30 June
2008
$'000
174,197
24,809
(21,141)
60,776
(42,438)
196,203
-
229,321
(18,720)
(23,234)
(13,170)
174,197
(34,692)
13,551
(21,141)
(30,279)
11,559
(18,720)
(d) Summarised financial information of associates
The Group’s share of the results of its principal associates and its aggregated assets (including goodwill) and liabilities are
as follows:
Ownership
Interest
%
Assets
$'000
Liabilities
$'000
Revenues
$'000
Profit (loss)
$'000
Group's share of:
2009
Transurban DRIVe Holdings LLC
2008
Transurban DRIVe Holdings LLC
75
75
2,017,520
(1,821,317)
1,214,776
(1,040,579)
14,550
10,606
(21,141)
(18,720)
128 TRANSURBAN ANNUAL REPORT 2009
128 Transurban annual reporT 2009
38 Investments in associates and joint venture (continued)
(e) Share of associates' expenditure commitments
Capital commitments
Operating commitments
39 Events occurring after the reporting period
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
Consolidated
30 June
2009
$'000
30 June
2008
$'000
860,591
154,827
757,904
118,000
On 15 July 2009, Transurban announced that Airport Motorway Trust had completed the re-financing of $515 million of
non-recourse project debt for the M1 Eastern Distributor Motorway.
The new debt facility has been provided by six banks, and comprises three, five and seven year tranches.
40 Reconciliation of profit after income tax to net cash inflow from operating activities
Operating loss after income tax
Depreciation and amortisation
Tax benefits from subsidiaries
Non-cash share-based payments expense
Non-cash finance costs
Share of loss of associate and joint venture partnership
Write off of intangible assets
Maintenance provision
Fair value losses on derivatives/available for sale
securities
Change in operating assets and liabilities
Increase (decrease) in concession note liability
(Decrease) increase in promissory note liability
Increase (decrease) in creditors
(Increase) decrease in debtors
(Decrease) increase in provisions
Increase (decrease) in deferred taxes
Increase (decrease) in income taxes payable
Loans to/from related parties
Net cash inflow (outflow) from operating activities
41 Non-cash investing and financing activities
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
(16,134)
340,939
-
1,994
77,781
32,193
-
18,637
(105,346)
336,228
-
1,040
77,626
24,249
14,584
13,772
(63,968)
-
-
-
-
-
-
-
(25,526)
-
(69,403)
-
-
-
-
-
25,433
36,414
-
-
(2,042)
(2,360)
(43,061)
(36,317)
(6,598)
(96,961)
26,523
-
320,027
(2,009)
1,328
17,460
13,444
17,493
(180,198)
30,588
56,440
353,113
-
-
(7,720)
16,716
(172)
(8,250)
(430)
51,753
(12,071)
-
-
75,969
40,567
30
(46,891)
-
1,193
(24,061)
Consolidated
Parent entity
30 June
2009
$'000
30 June
2008
$'000
30 June
2009
$'000
30 June
2008
$'000
Distributions satisfied by the issue of stapled securities
under the distribution reinvestment plan
286,414
286,414
199,615
199,615
70,745
70,745
9,679
9,679
129 TRANSURBAN ANNUAL REPORT 2009
129 Transurban annual reporT 2009
42 Loss per stapled security
(a) Basic loss per security
Loss from continuing operations attributable to the ordinary equity holders
Profit from discontinued operation
Total basic loss per share attributable to the ordinary equity holders of the company
(b) Diluted loss per security
Loss from continuing operations attributable to the ordinary equity holders
Profit from discontinued operation
Total diluted loss per security attributable to the ordinary equity holders of the company
(c) Reconciliations of loss used in calculating loss per security
Basic and diluted loss per security
Loss from continuing operations
Loss from continuing operations
Profit from continuing operations attributable to minority interests
Loss from continuing operations attributable to ordinary equity holders used in
calculating basic and diluted earnings per security
Profit from discontinued operation
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
Consolidated
30 June
2009
Cents
30 June
2008
Cents
(1.9)
-
(1.9)
(1.9)
-
(1.9)
(11.8)
1.7
(10.1)
(11.8)
1.7
(10.1)
Consolidated
30 June
2009
$'000
30 June
2008
$'000
(16,134)
(8,441)
(24,575)
-
(24,575)
(124,008)
(4,340)
(128,348)
18,662
(109,686)
130 TRANSURBAN ANNUAL REPORT 2009
130 Transurban annual reporT 2009
42 Loss per stapled security (continued)
(d) Weighted average number of securities used as the denominator
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
Consolidated
30 June
2009
Number
30 June
2008
Number
Weighted average number of securities used as the denominator in calculating basic
loss per security
Adjustments for calculation of diluted loss per security:
Performance rights
Weighted average number of ordinary securities and potential ordinary securities used
as the denominator in calculating diluted loss per security
1,267,502,187
1,088,861,291
1,297,389
452,071
1,268,799,576
1,089,313,362
43 Share-based payments
(a) 2008 Performance rights plan
The Performance Rights Plan (PRP) enabled eligible executives to receive a grant of Performance Rights that entitled
participants to receive stapled securities in Transurban (Securities) at no cost at the end of a three year performance
period, subject to the achievement of performance conditions. No dividends or distributions on Securities were payable to
participants prior to vesting. The Plan had two performance measures, EBITDA and relative TSR against the S&P/ASX
100 Industrials, each applied to 50% of the PRP award.
Awards were last made under the PRP in November 2007 and the PRP was discontinued in the 2009 financial year.
Australian Based Plan
Performance criteria
TSR
EBITDA
Overseas Based Plan
Performance criteria
TSR
EBITDA
Grant date
Vesting
Date
Fair value
of rights
at grant
date
Spot price
at grant
date
1 Nov 2007
1 Nov 2007
1 Nov 2010 $
1 Nov 2010 $
3.50 $
5.96 $
7.29
7.29
Grant date
Vesting
date
Fair value
of rights
at grant
date
Spot price
at grant
date
Fair value
of rights
at
reporting
date
1 Nov 2007
1 Nov 2007
1 Nov 2010 $
1 Nov 2010 $
3.50 $
5.96 $
7.29 $
7.29 $
2.78
3.86
(b)
2009 Performance Awards Plan
The Performance Awards Plan (PAP) is a modified version of the 2008 Performance Rights Plan (PRP). Under the PAP,
eligible executives including those outside Australia, receive a grant of Performance Awards which entitles participants to
receive securities at no cost subject to the achievement of performance conditions. The Board has discretion as to the
form of the award at the end of the performance period and may grant cash payments of equivalent value. No dividends or
distributions on securities are payable to participants prior to vesting.
Dual performance measures (an earnings measure and relative total security holder return) apply to Performance Awards.
The use of dual measures balances the need to both improve the underlying performance of the business over the long
term as well as appropriate returns relative to the market.
131 TRANSURBAN ANNUAL REPORT 2009
131 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
43 Share-based payments (continued)
Performance Awards were granted on 1 November 2008 with a three year vesting period. The awards are tested at the
end of each year. If the performance measures are satisfied for the year, one third of the awards are preserved until the
end of the three year period. At the end of the three years a cumulative test of the performance measures is applied to
any unvested awards.
Performance criteria
Grant
Date
Expiry
date
Fair
value at
grant
date
Balance at
start of
the year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
Forfeited
during the
year
Number
Balance at
end of the
year
Number
Consolidated and parent entity - 2009
TSR
1 Nov
2008
1 Nov
2008
EBITDA
Total
1 Nov 2011
$3.30
1 Nov 2011
$4.27
-
-
-
672,685
672,685
1,345,370
-
-
-
(15,541)
657,144
(15,541)
(31,082)
657,144
1,314,288
Weighted average grant price
$3.79
$3.79
$3.79
As the Performance Awards Plan was introduced in November 2008, there is no comparative data.
Fair value of options granted
The assessed fair value at grant date of the rights granted during the year ended 30 June 2009 was $3.30. The fair value
at grant date was independently determined using a Black-Scholes option pricing model that takes into account the term of
the right, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and
the risk free interest rate for the term of the option.
(c) 2009 Executive Equity Plan
Equity awards are granted under the Executive Equity Plan (EEP) based on executives’ performance and are designed to
encourage retention of executives while focusing on business excellence. The EEP also aligns with Transurban’s
remuneration philosophy of encouraging executive security holding.
Individuals who are high performers and in business critical roles are nominated for awards for their past contribution and
expected future performance. Board approval is required to grant EEP awards to nominated executives.
Under the EEP, eligible executives receive a grant of stapled securities in the Transurban Group (”securities”) at no cost
that are subject to disposal restrictions for three years from the grant date. Participants are entitled to distributions paid on
their Securities during the restriction period. If the executive ceases employment with Transurban during the restriction
period, their Securities will be forfeited unless the Board decides otherwise.
Grant Date
Expiry date
Fair
value at
grant
date
Balance at
start of the
year
Number
Granted
during the
year
Number
Vested
during the
year
Number
Forfeited
during the
year
Number
Balance at
end of the
year
Number
Matured
and
payable at
end of the
year
Number
Consolidated and parent entity - 2009
1 Nov 2008
1 Nov 2011
$4.27
-
632,886
(722)
(20,472)
611,692
-
Weighted average grant price
$4.27
$4.27
$4.27
$4.27
As the Performance Awards Plan was introduced in November 2008, there is no comparative data.
132 TRANSURBAN ANNUAL REPORT 2009
132 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
43 Share-based payments (continued)
(d) Executive Loan Plan
The Executive Loan Plan (ELP) was discontinued as of the 2007 financial year. The ELP rewarded the improvements in
the price of Transurban’s stapled securities over a three year period with relative Total Security holder Return (TSR)
against the S&P/ASX 100 Industrials as a performance measure. Executives based outside Australia were eligible to
participate in a cash based plan similarly structured to the ELP.
Executives that participated in the ELP were provided with an interest free loan to assist them to acquire securities at
market price. The term of the loan is three years and there is only one testing date. The securities are held by the
executive but will only vest in the executive in accordance with the terms of the Plan. Expiry occurs three years plus 60
days from the date of commencement of the Plan, unless the rules of the Plan otherwise provide. Holding locks are
applied to the securities to ensure that they can only be dealt with in accordance with the terms of the Plan. The acquired
securities cannot be transferred or sold while the loan is outstanding.
Set out below are securities granted under the plan.
Australian Based Plan
2009
Grant Date
Expiry date
Grant
price
Balance at
start of
the year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
Forfeited
during the
year
Number
Balance at
end of the
year
Number
Consolidated and parent
1 Nov 2005
1 Nov 2006
Total
1 Nov 2008
1 Nov 2009
$6.47
$7.28
814,200
1,175,000
1,989,200
-
-
-
(696,831)
-
(696,831)
(117,369)
(277,654)
(395,023)
-
897,346
897,346
Weighted average exercise price
$6.95
$6.47
$7.04
$7.28
133 TRANSURBAN ANNUAL REPORT 2009
133 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
43 Share-based payments (continued)
Overseas Based Plan
2009
Grant Date
Expiry date
Grant
price
Balance at
start of
the year
Number
Granted
during the
year
Number
Matured
during the
year
Number
Forfeited
during the
year
Number
Balance at
end of the
year
Number
Consolidated and parent
1 Nov 2005
1 Nov 2006
Total
Weighted average grant price
1 Nov 2008
1 Nov 2009
$6.47
$7.28
189,700
300,000
489,700
$6.97
-
-
-
(189,700)
-
(189,700)
-
(30,000)
(30,000)
-
270,000
270,000
$6.47
$7.28
$7.28
Australian Based Plan
2008
Grant Date
Expiry date
Grant
price
Balance at
start of the
year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
Forfeited
during the
year
Number
Balance at
end of the
year
Number
Consolidated and parent
1 Nov 2005
1 Nov 2006
Total
Weighted average grant price
1 Nov 2008
1 Nov 2009
$6.47
$7.28
1,350,200
1,933,500
3,283,700
$6.95
-
-
-
-
-
-
814,200
(536,000)
(758,500) 1,175,000
(1,294,500) 1,989,200
$6.95
$6.95
Overseas Based Plan
2008
Grant Date
Expiry date
Grant
price
Balance at
start of the
year
Number
Granted
during the
year
Number
Forfeited
during the
year
Number
Balance at
end of the
year
Number
Consolidated and parent
1 Nov 2005
1 Nov 2006
Total
Weighted average grant price
1 Nov 2008
1 Nov 2009
$6.47
$7.28
189,700
300,000
489,700
$6.97
-
-
-
-
-
-
189,700
300,000
489,700
$6.97
Matured
and
payable at
end of the
year
Number
-
-
-
134 TRANSURBAN ANNUAL REPORT 2009
134 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
43 Share-based payments (continued)
(e) Employee security scheme
The Transurban Employee Security Ownership Plan (the Plan) provides employees with an opportunity to be a part owner
of Transurban and partner in its continued success.
All Australian based permanent employees are eligible to participate in either the Investment Tax Exempt Plan or the
Investment Tax Deferred Plan. Under the plans, Transurban provides participants with a matching component toward the
acquisition of the stapled securities. For the period 1 July 2008 to 30 June 2009, the cost of company matches was
$33,292 (2008: $61,875) for the Investment Tax Exempt Plan and $207,417 (2008: $452,250) for the Investment Tax
Deferred Plan. These plans were suspended in May 2009 following changes to taxation announced in the Federal budget.
The Group intends to reactivate the plans with required modifications once the proposed legislation has been
implemented.
The third element under the Plan is the Incentive Plan. Subject to Board approval and the performance of the company,
eligible employees may receive a certain number of Transurban securities at no cost to them.
In February 2009, each participant was allocated 100 stapled securities at a value of $4.84 per security. Stapled securities
provided under the Plan were acquired on the open market.
2009
Number
2008
Number
Shares purchased on the market under the plan and provided to participating employees
45,300
50,500
(f) Performance Rights Plan ('PRP')
Under the PRP, Executives will be granted performance rights to acquire, at no cost to them, an allocated number of
stapled securities, subject to the achievement of performance conditions at the end of a three year vesting period. Two
performance measures will be utilised, one linked to Total Shareholder Return (TSR) over a three year vesting period and
the second, an operational performance measure over the same period. The Plan has been structured so that rewards are
only obtained if there are materially improved security holder returns and operational performance results over the three
year vesting period. The performance hurdles attached to the performance rights have been set to ensure that both
executives and stapled security holders generally benefit from the allocation of stapled securities to executives under the
Plan.
There is only one testing date. The right to Stapled Securities cannot be transferred, exercised or otherwise dealt with
during the vesting period.
No performance rights were issued under this plan in the current year as it was approved by the Board of Directors for
implementation in November of 2007.
Refer to section E of the remuneration report on pages (cid:23)(cid:26)(cid:17)
(g) Expenses arising from shared-based payments
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit
expense was $1.6 million (2008: $1.4 million).
44 Intra-group Guarantees
As at 30 June 2009, the Transurban Group comprises Transurban Holdings Limited, Transurban Holding Trust and
Transurban International Limited, traded and quoted on the ASX as one triple stapled security.
Under the stapling arrangement, each entity directly and/or indirectly supports each entity and its controlled entities within
the group on a continual basis.
135 TRANSURBAN ANNUAL REPORT 2009
135 Transurban annual reporT 2009
45 Net tangible asset backing
Net tangible asset backing per stapled security *
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
Consolidated
30 June
2009
$
30 June
2008
$
2.79
2.79
3.04
3.04
(*) - Net tangible assets used as the basis for this calculation include the relative concessions and permits relating to the
operational assets of the Group. Assets of this type are characterised as intangibles under AIFRS.
46 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under
the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities within the next financial year are disclosed below.
Income taxes
(i)
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement
is required in determining the worldwide provision for income taxes. There are many transactions and calculations
undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group
recognises liabilities for anticipated tax audit issues based on whether additional taxes will be due. Where the final tax
outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current
and deferred tax provisions in the period in which such determination is made.
The Group has recognised deferred tax assets relating to carried forward tax losses to the extent there are sufficient
taxable temporary differences relating to the same taxation authority against which the unused tax losses can be utilised.
However, the utilisation of tax losses also depends on the ability of the Group to satisfy certain tests at the time the losses
are recouped. Management has internal models forecasting future taxable profits and has therefore recognised deferred
tax assets in relation to tax losses.
(ii) Useful lives of plant and equipment
The Group determines the estimated useful lives and related depreciation for its plant and equipment. This estimate is
based on expected useful lives of technology. It could change significantly as a result of technical innovations. The Group
will increase the depreciation charge where useful lives are less than previously estimated lives, or will write-off or write-
down technically obsolete or non-strategic assets.
The Group depreciates the assets associated with the various toll road infrastructure over the life of the respective
concession arrangements.
(iii) Estimated impairment of intangible assets and cash generating units
The Group tests whether goodwill, other intangible assets and cash generating units have suffered any impairment, in
accordance with the accounting policy stated in note1(i). The recoverable amount of each cash generating unit has been
determined based on the greater of value-in-use and fair value less costs to sell calculations. These calculations require
the use of assumptions regarding traffic flows, discount rates, growth rates and other factors affecting operating activities
of the cash generating units.
(iv) Valuation of Promissory Notes and Concession Notes
The Group holds non-interest bearing long term debt, represented by promissory notes and concession notes, that are
included in the financial statements at the present value of expected future payments. The calculations to discount these
notes to their present value are based on the estimated timing and profile of the repayments. Assumptions are made in
determining the timing and profile, based on expected available equity cash flows of the Group's cash generating units.
A discount rate is used to value the promissory notes and concession notes to their present value, which is determined
through reference to other facilities in the market with similar characteristics.
136 TRANSURBAN ANNUAL REPORT 2009
136 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
46 Critical accounting estimates and judgements (continued)
Fair value of derivatives and other financial instruments
(v)
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques.
The Group uses its judgement to select a variety of methods and makes assumptions that are mainly based on market
conditions existing at each balance sheet date.
(vi) Provision for future major maintenance expenditure
The Group records a provision for its present obligation to maintain the Motorways held under Concession Deeds. The
provision is included in the financial statements at the present value of expected future payments. The calculations to
discount these amounts to their present value are based on the estimated timing and profile of expenditure occurring on
the roads.
A discount rate is used to value the maintenance expenditure provision at its present value, which is determined through
reference to the nature of the provision and the risks associated with the expenditure.
47 Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and
price risk), credit risk and liquidity risk. The financial risk management function is carried out centrally by the Transurban
Group Treasury team (Treasury) under policies approved by the Board. Treasury work closely with the Group’s operating
units to actively identify and monitor all financial risks, and put hedging in place where appropriate. The Board are
informed on a regular basis of any material exposures to financial risks.
The Group’s hedging strategies are detailed below, and include the use of derivative financial instruments. The Group’s
policies allow derivative transactions to be undertaken only for the purpose of reducing risk, and do not permit speculative
trading. Treasury continuously monitor risk exposures over time through review of cashflows, price movements, market
analysis and ongoing communication within the Group. When measuring financial risk, Treasury consider positive and
negative exposures, existing hedges and the ability to offset exposures where possible.
Foreign exchange risk
(a) Market risk
(i)
The Group operates internationally and is exposed to foreign exchange risk when future commercial transactions and
recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency.
Foreign currency exposures are viewed as either investment exposures or operating exposures. Exposures from
investment in foreign assets are generally managed using foreign currency debt. All known material operating exposures
out to 12 months are hedged, using hedging instruments, offsetting exposures or drawing on foreign currency funds.
The Group's and parent entity's exposure to foreign currency risk at the reporting date, denominated in the currency in
which the risk arises, was as follows:
30 June 2009 30 June 2008
USD
$'000
USD
$'000
18
198,144
-
(1,047,417)
933,406
96
197,836
(3,520)
(1,009,405)
933,406
60
198,144
(246,311)
125
197,836
(233,608)
Consolidated
Cash and cash equivalents
Net Investment in foreign operation
Trade and other payables
Borrowings
Cross-currency interest rate swaps
Parent
Trade and other receivables
Receivables
Payables
Exposure to other foreign exchange movements is not material.
137 TRANSURBAN ANNUAL REPORT 2009
137 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
47 Financial risk management (continued)
Group sensitivity
Based on the financial instruments held at end of the period, had the Australian dollar strengthened by 10 cents against
the U.S. dollar with all other variables held constant, the Group’s post-tax profit for the year would have been $2,000 lower
(2008: $226,000 lower). Had the Australian dollar weakened by 10 cents against the U.S. dollar with all other variables
held constant, the Group's post-tax profit for the year would have been $2,000 higher (2008: $277,000 higher), as a result
of foreign exchange gains/losses on translation of US dollar denominated financial instruments as detailed in the above
table.
The Group’s post-tax profit is less sensitive to movements in the Australian dollar/US dollar exchange rate in the current
year due to a reduction in US dollar denominated trade creditors.
Had the Australian dollar strengthened by 10 cents against the U.S. dollar with all other variables held constant, the
Group's equity would have been $34,160,000 lower (2008: $25,729,000 lower). Had the Australian dollar weakened by 10
cents against the U.S. dollar with all other variables held constant, the Group's equity would have been $50,961,000 higher
(2008: $37,543,000 higher). The Group revalue’s its U.S. dollar borrowings each period using market spot rates and,
where a qualifying hedge is in place, defers these movements in equity. The volatility in equity is caused mainly by fair
value movements of the cross currency interest rate swaps, which are affected by changes in forward Australian
dollar/U.S. dollar foreign exchange rates.
Parent entity sensitivity
Based on the financial instruments held at end of the period, had the Australian dollar strengthened/weakened by 10 cents
against the U.S. dollar with all other variables held constant, the Parent’s post-tax profit for the year would have been
$4,554,000 higher (2008: $2,357,000 higher) or $5,834,000 lower (2008: $2,880,000 lower), as a result of foreign
exchange gains/losses on translation of US dollar denominated financial instruments as detailed in the above table.
Equity would have been unchanged had the Australian dollar moved against the U.S. dollar.
(ii) Price risk
The Group and the parent have had exposure to securities price risk during the period. Securities price risk arises from
investments held by the Group and classified on the balance sheet as available-for-sale. No such investments are held at
30 June 2009. Neither the Group nor the parent entity is exposed to commodity price risk.
138 TRANSURBAN ANNUAL REPORT 2009
138 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
47 Financial risk management (continued)
(iii) Cash flow interest rate risk
The Group’s main exposure to interest rate risk arises from long-term borrowings. Treasury manages interest rate risk by
entering into fixed rate debt facilities or using interest rate swaps to convert floating rate debt. Generally, the Group raises
long term borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Group
borrowed at fixed rates directly. The Group’s policy is to hedge interest rate exposure at a minimum in compliance with the
covenant requirements of funding facilities and up to 100%. Covenant requirements vary by debt facility, and require a
minimum of between 50% and 80% of interest rate exposure to be hedged. At 30 June 2009 91% of the Group’s interest
rate exposure on variable rate borrowings was hedged.
As at the reporting date, the Group had the following variable rate borrowings and interest rate swap contracts
outstanding:
30 June 2009
30 June 2008
Weighted
average
interest rate
%
Balance
$'000
Weighted
average
interest rate
%
%2.8
%4.1
%3.3
%2.0
%0.9
(199,805)
2,447,821
(2,223,604)
24,412
(8)
14,821
14,813
%7.2
%8.4
%8.0
%7.1
%8.1
Balance
$'000
(336,546)
2,368,600
(1,862,804)
169,250
(8,647)
12,099
3,452
Consolidated Group
Cash and cash equivalents
Floating Rate Borrowings
Interest rate swaps (notional principal amount)
Net exposure to cash flow interest rate risk
Parent
Cash and cash equivalents
Floating Rate Borrowings
Net exposure to cash flow interest rate risk
An analysis by maturities is provided in (c) below.
Group sensitivity
At 30 June 2009, if interest rates had changed by +/-100 basis points from the year-end rates with all other variables held
constant, post-tax profit for the year would have been $244,000 lower/higher (2008: $1,693,000 lower/higher). Profit is less
sensitive to movements in interest rates in 2009 than 2008, due mainly to additional interest rate hedge contracts being
entered into in the current period.
Parent entity sensitivity
At 30 June 2009, if interest rates had changed by +/-100 basis points from the year-end rates with all other variables held
constant, post-tax profit for the year would have been $148,000 lower/higher (2008: $35,000 lower/higher). Profit is more
sensitive to movements in interest rates in 2009 than 2008, due mainly to a decrease in the amount of cash and cash
equivalents held by the parent entity in the current period.
(b) Credit risk
The Group has no significant concentrations of credit risk from Operating Activities, and has policies in place to ensure
that transactions are made with commercial customers with an appropriate credit history. However as an owner and
operator of large infrastructure assets, the Group is exposed to credit risk with its financial counterparties through
undertaking financial transactions intrinsic to its business. These include funds held on deposit, cash investments and the
market value of derivative transactions.
Treasury assesses the credit strength of potential financial counterparties using objective ratings provided by multiple
independent rating agencies. Board approved limit allocation rules ensure higher limits are granted to higher rated
counterparties. The Group also seeks to mitigate its total credit exposure to counterparties by only dealing with credit
worthy counterparties, limiting the exposure to any one counterparty, minimising the size of the exposure where possible
through netting offsetting exposures, diversifying exposures across counterparties, closely monitoring changes in total
credit exposures and changes in credit status, and taking mitigating action when necessary.
The Group’s investment in the Westlink Motorway (WM7) is through Term Loan Notes (see note 12 for details). The return
on these Notes is ultimately dependent on the performance of WM7. The Group continually monitors the performance and
expected cashflows of WM7.
139 TRANSURBAN ANNUAL REPORT 2009
139 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
47 Financial risk management (continued)
(c) Liquidity risk
The Group maintains sufficient cash and undrawn facilities to maintain short term flexibility and enable the Group to meet
financial commitments in a timely manner. Treasury assesses liquidity over the short term (up to 12 months) and medium
term (1 – 5 years) by maintaining accurate forecasts of operating expenses, committed capital expenditure and payments
to security holders. Long term liquidity requirements are reviewed as part of the annual strategic planning process.
Short term liquidity is managed by maintaining a strategic liquidity reserve. This reserve is based on the Group’s forecast
annual operating costs and certain risk exposure scenarios as maintained by the Group’s strategic risk register, and is
maintained as cash and undrawn facilities. The reserve is maintained on a rolling 12 month basis. Medium term liquidity
forecasting is maintained on a rolling 5 year horizon.
Financing arrangements
The Group and the parent entity had access to the following undrawn borrowing facilities at the reporting date:
Floating rate
- Expiring within one year
- Expiring beyond one year
Consolidated
Parent entity
2009
$'000
2008
$'000
2009
$'000
2008
$'000
111,156
305,179
416,335
96,000
531,759
627,759
111,156
305,179
416,335
85,000
531,759
616,759
The facilities are committed for the term of the facility and cannot be withdrawn by the bank without notice.
Maturities of financial liabilities
The tables below analyse the Group’s and the parent entity’s financial liabilities, net and gross settled derivative financial
instruments into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity
date. The amounts disclosed in the table are the contractual undiscounted cash flows. For interest rate swaps the cash
flows have been estimated using forward interest rates applicable at the reporting date.
Group - At 30 June 2009
1 year or less Over 1 to 2
years
Over 2 to 3
years
Over 3 to 4
years
Over 4 to 5
years
Over 5 years
Total
contractual
cash flows
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Carrying
Amount
(assets)/
liabilities
$'000
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total non-derivatives
Derivatives
432,675
700,139
213,784
1,346,598
-
106,984
55,611
162,595
-
494,279
275,601
769,880
-
463,516
83,830
547,346
-
242,587
86,038
328,625
288,726
958,108
1,916,986
3,163,820
721,401
2,965,613
2,631,850
6,318,864
458,375
2,425,520
1,616,102
4,499,997
Net settled (interest rate swaps)
Net settled (cross-currency interest
rate swaps)
Total derivatives
57,105
1,173
58,278
37,142
4,040
41,182
(2,228)
(9,899)
(9,664)
(24,751)
47,705
(38,628)
44,355
42,127
20,698
10,799
18,626
8,962
(104,995)
(129,746)
(16,103)
31,602
(6,395)
(45,023)
140 TRANSURBAN ANNUAL REPORT 2009
140 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
47 Financial risk management (continued)
Group - At 30 June 2008
1 year or less
Over 1 to 2
years
Over 2 to 3
years
Over 3 to 4
years
Over 4 to 5
years
Over 5 years
Total
contractual
cash flows
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Carrying
Amount
(assets)/
liabilities
$'000
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total non-derivatives
Derivatives
721,888
681,791
57,863
1,461,542
61,800
674,579
209,354
945,733
-
114,535
51,014
165,549
-
214,672
268,712
483,384
-
480,042
74,363
554,405
263,342
967,685
1,913,113
3,144,140
1,047,030
3,133,304
2,574,419
6,754,753
815,059
2,368,600
1,391,825
4,575,484
Net settled (interest rate swaps)
Net settled (cross-currency interest
rate swaps)
Total derivatives
(48,102)
(41,904)
(29,567)
(20,387)
(14,101)
(44,204)
(198,265)
(167,829)
37,918
(10,184)
35,769
(6,135)
32,966
3,399
30,485
10,098
31,838
17,737
90,615
46,411
259,591
61,326
247,718
79,889
Parent - At 30 June 2009 1 year or less Over 1 to 2
years
Over 2 to 3
years
Over 3 to 4
years
Over 4 to 5
years
Over 5 years
Total
contractual
cash flows
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Carrying
Amount
(assets)/
liabilities
$'000
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total non-derivatives
218,878
631
94,626
314,135
-
738
94,626
95,364
-
837
94,626
95,463
-
907
94,626
95,533
-
942
94,626
95,568
-
15,831
1,550,413
1,566,244
218,878
19,886
2,023,543
2,262,307
218,878
14,821
1,455,787
1,689,486
Parent - At 30 June 2008
1 year or less
Over 1 to 2
years
Over 2 to 3
years
Over 3 to 4
years
Over 4 to 5
years
Over 5 years
Total
contractual
cash flows
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Carrying
Amount
(assets)/
liabilities
$'000
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total non-derivatives
136,713
1,025
82,265
220,003
-
1,020
118,455
119,475
-
1,010
80,098
81,108
-
1,011
80,098
81,109
-
999
80,098
81,097
-
13,080
1,417,347
1,430,427
136,713
18,145
1,858,361
2,013,219
136,713
12,099
1,373,439
1,522,251
(d) Fair value estimation
Refer to note 1 for the Group’s policy on Fair Value estimation.
141 TRANSURBAN ANNUAL REPORT 2009
141 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
48 Initial application of AASB Interpretation 12
AASB Interpretation 12 Service Concession Arrangements(AASB-I 12) is applicable for the Group’s annual reporting
period beginning 1 July 2008. AASB-I 12 provides guidance on the accounting by operators for public-to-private service
concession arrangements under which private sector entities participate in the development, financing, operation and
maintenance of infrastructure for the provision of public services. The application of AASB-I 12 has led to a change in the
Group’s policies of accounting for the recognition and measurement of service concession arrangements and
maintenance obligations under the arrangements. AASB-I 12 has been applied retrospectively and comparative
information in relation to the 2008 financial year has been restated accordingly.
On the adoption of AASB-I 12, the Group has not recognised any margin on past construction services as such margin
could not be reliably measured.
The following adjustments were made as at 1 July 2007 and 30 June 2008:
(a) At the date of initial adoption: 1 July 2007
Balance Sheet
ASSETS
Property, plant and equipment
Intangible assets
Deferred tax asset
Investments accounted for using the equity
method
Other assets
Total assets
LIABILITIES
Provisions (current)
Provisions (non-current)
Deferred tax liabilities
Other Liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Accumulated losses
Minority interest
Reserves
Total equity
Notes
1 July 2007
Adjustment
1 July 2007
(Restated)
$'000
$'000
$'000
(i)
(i)
(ii)
(iii)
(iv)
(iv)
(v)
(vi)
(vii)
5,539,153
2,923,344
327,293
567,682
1,922,137
11,279,609
344,201
1,752
1,524,639
5,478,045
7,348,637
3,930,972
6,078,487
(2,436,011)
307,326
(18,830)
3,930,972
(5,472,293)
5,472,292
58,165
(4,509)
2
53,657
33,476
160,406
-
-
193,882
(140,225)
-
(128,456)
(11,769)
-
(140,225)
66,860
8,395,636
385,458
563,173
1,922,139
11,333,266
377,677
162,158
1,524,639
5,478,045
7,542,519
3,790,747
6,078,487
(2,564,467)
295,557
(18,830)
3,790,747
142 TRANSURBAN ANNUAL REPORT 2009
142 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
Initial application of AASB Interpretation 12 (continued)
(b) At 30 June 2008
Balance Sheet
ASSETS
Property, plant and equipment
Intangible assets
Deferred tax asset
Investments accounted for using the equity
method
Other assets
Total assets
LIABILITIES
Provisions (current)
Provisions (non-current)
Deferred tax liabilities
Other Liabilities
Total Liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Accumulated losses
Minority interest
Reserves
Total equity
Notes
30 June 2008
Adjustment
30 June 2008
(Restated)
$'000
$'000
$'000
(i)
(i)
(ii)
(iii)
(iv)
(iv)
(v)
(vi)
(vii)
(viii)
5,393,589
2,768,168
449,307
697,925
1,281,119
10,590,108
381,269
1,462
1,559,304
4,573,482
6,515,517
6,515,517
4,074,591
6,846,992
(3,201,149)
333,501
95,247
4,074,591
(5,297,364)
5,334,375
56,431
(6,756)
4
86,690
35,602
152,527
3,690
1
191,820
191,820
(105,130)
-
(95,377)
(9,748)
(5)
(105,130)
96,225
8,102,543
505,738
691,169
1,281,123
10,676,798
416,871
153,989
1,562,994
4,573,483
6,707,337
6,707,337
3,969,461
6,846,992
(3,296,526)
323,753
95,242
3,969,461
Notes
30 June 2008
Adjustment
30 June 2008
(Restated)
$'000
$'000
$'000
Income statement (extract)
Revenue from continuing operations
Operational costs
Construction costs
Depreciation and amortisation expense
Finance costs
Share of net profits of associates and joint
venture partnership accounted for using the
equity method
Other income statement
Income tax expense
Net profit / (loss) for the year
(ix)
(iv)
(ix)
(i)
(iv)
(iii)
(vi)
1,024,888
(166,094)
-
(401,497)
(473,828)
(22,008)
(154,276)
52,367
(140,448)
39,655
(13,772)
(39,655)
65,269
(8,687)
(2,241)
-
(5,467)
35,102
1,064,543
(179,866)
(39,655)
(336,228)
(482,515)
(24,249)
(154,276)
46,900
(105,346)
Basic and diluted earning per security from continuing operations attributable to ordinary equity holders
changed from (14.8) cents to (11.8) cents per security. Basic and diluted earning per security attributable to
ordinary equity holders changed from (13.1) cents to (10.1) cents per security.
143 TRANSURBAN ANNUAL REPORT 2009
143 Transurban annual reporT 2009
Transurban Holdings Limited
Notes to the financial statements
30 June 2009
(continued)
Initial application of AASB Interpretation 12 (continued)
(i)
(ii)
(iii)
(iv)
(v)
Tolling concession arrangements that grant the Group the right to operate a toll road have been reclassified
as Intangible Assets, from Property, Plant and Equipment. As allowed by the transitional provisions of
AASB-I 12, the assets were transferred at the carrying amount of the tolling assets at the date of initial
application of AASB-I 12 (1 July 2007). From 1 July 2007, the tolling assets are amortised on a straight line
basis over the life of the concession deed.
Adjustments have been made to reflect revised amortisation and depreciation charges as a result of the
change in rates on certain assets.
The recording of a provision for maintenance expenditure has given rise to a deferred tax asset. Deductions
will be taken for maintenance expenditure when incurred or, where the expenditure incurred is considered
capital for tax, over an applicable period as allowed under tax legislation.
Adjustments to Opening Retained Earnings (1 July 2007) for the application of AASB-I 12 and subsequent
Income Statement adjustments in relation to equity accounted investments have been revised to reflect the
Group’s adjusted equity accounted result.
On adoption of AASB-I 12, a provision for the present value of the Group’s obligations to maintain the tolling
assets as required under the Service Concession Arrangement was raised. The provision is increased over
the period of use of the assets. An increase to the provision due to use of the asset is charged to
Maintenance Expense at a discounted amount. The unwinding of the present value discounting on the
provision is charged as a finance cost. Any expenditure incurred in the year ended 30 June 2008 that was
previously capitalised to the cost of the asset is reversed against the asset and the provision utilised. In
certain situations, major maintenance expenditure has been expensed in full when incurred. These amounts
have been adjusted in the Income Statement (Operational costs), against the provision for maintenance.
A revision to deferred tax liabilities has been created due to a change in the carrying value of concession
assets for accounting purposes. Under AASB-I 12 the Group now amortises all concession assets on a
straight line basis over the life of the concession deed. This treatment results in an extended useful life for
many concession assets. The reduction in accounting depreciation/amortisation over the comparative
periods has given rise to a deferred tax liability adjustment.
(vi)
Adjustments to accumulated losses and the income statement include:
•
•
•
•
•
•
•
Initial recognition of maintenance provision.
Revision to depreciation/amortisation charges due to extended useful life of many concession
assets.
Increase in provision for maintenance resulting from continued use of the assets.
Increase in provision for maintenance due to unwinding of the discount applied to the provision
through finance costs.
Reversal of maintenance expenditure previously expensed in full to the income statement in the
year it was incurred. This has been reversed against the provision.
Change in share of net profits of associates accounted for using the equity method due to
associate entities also adopting AASB-I 12 effective 1 July 2007.
Tax effect movements in carrying value of assets for accounting purposes and movements in
provision balances.
(vii)
(viii)
(ix)
Adjustments to profit attributable to minority interests and equity of minority interests have been made to
reflect the application of AASB-I 12. The adjustments are consistent with the adjustments required by
assets that have shareholders outside the Transurban Group.
Other equity represents adjustments to the foreign currency translation reserve as a result of the application
of AASB-I 12 to the Group’s investment in DRIVe.
Where the Group is engaged to provide design and construction services for a new asset, the service is
accounted for as a construction contract. The Group has recognised revenue earned for the construction
and corresponding contract costs incurred.
144 TRANSURBAN ANNUAL REPORT 2009
144 Transurban annual reporT 2009
In the directors' opinion:
Transurban Holdings Limited
Directors' declaration
30 June 2009
(a)
(b)
(c)
the financial statements and notes set out on pages(cid:3)(cid:24)(cid:23) to 1(cid:23)(cid:23) are in accordance with the Corporations Act 2001,
including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and
giving a true and fair view of the company’s and Group's financial position as at 30 June 2009 and of
their performance for the financial year ended on that date; and
(ii)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become
due and payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed
Group identified in note 37 will be able to meet any obligations or liabilities to which they are, or may become,
subject by virtue of the deed of cross guarantee described in note 37.
The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by
section 295A of the Corporations Act 2001.
This declaration is made in accordance with separate resolutions of the directors of Transurban Holdings Limited,
Transurban Infrastructure Management Limited and Transurban International Limited.
David J Ryan
Director
Christopher J Lynch
Director
Melbourne
26 August 2009
145 TRANSURBAN ANNUAL REPORT 2009
145 Transurban annual reporT 2009
Independent auditor’s report to the members of
Transurban Holdings Limited
Report on the financial report
PricewaterhouseCoopers
ABN 52 780 433 757
Freshwater Place
2 Southbank Boulevard
SOUTHBANK VIC 3006
GPO Box 1331
MELBOURNE VIC 3001
DX 77
Telephone 61 3 8603 1000
Facsimile 61 3 8603 1999
We have audited the accompanying financial report of Transurban Holdings Limited (the company),
which comprises the balance sheet as at 30 June 2009, the income statement, statement of
changes in equity and cash flow statement for the year ended on that date, a summary of
significant accounting policies, other explanatory notes and the directors’ declaration for both
Transurban Holdings Limited and the Transurban Holdings Limited Group (the Group). The Group
comprises the aggregation of Transurban Holdings Limited (THL), Transurban Holdings Trust
(THT) and Transurban International Limited (TIL) and their controlled entities at the year's end or
from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation and fair presentation of the
financial report in accordance with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing
and maintaining internal controls relevant to the preparation and fair presentation of the financial
report that is free from material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the
circumstances. In Note 1, the directors also state, in accordance with Accounting Standard
AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to
International Financial Reporting Standards ensures that the financial report, comprising the
consolidated financial statements and notes, complies with International Financial Reporting
Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. These Auditing Standards require that
we comply with relevant ethical requirements relating to audit engagements and plan and perform
the audit to obtain reasonable assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether due
to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the financial report in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report.
Our procedures include reading the other information in the Annual Report to determine whether it
contains any material inconsistencies with the financial report.
Our audit did not involve an analysis of the prudence of business decisions made by directors or
management.
Liability limited by a scheme approved under Professional Standards Legislation
146 Transurban annual reporT 2009
Independent auditor’s report to the members of
Transurban Holdings Limited (continued)
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
Auditor’s opinion
In our opinion:
(a)
the financial report of Transurban Holdings Limited is in accordance with the Corporations
Act 2001, including:
(i)
(ii)
giving a true and fair view of the company’s and the Group’s financial position as at
30 June 2009 and of their performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001; and
(b)
the financial report and notes also comply with International Financial Reporting Standards
as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 33 to 50 of the directors’ report for
the year ended 30 June 2009. The directors of the company are responsible for the preparation
and presentation of the Remuneration Report in accordance with section 300A of the Corporations
Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our
audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the Remuneration Report of Transurban Holdings Limited for the year ended 30
June 2009, complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
John Yeoman
Partner
147 Transurban annual reporT 2009
Melbourne
26 August 2009
Transurban Holding Trust and
Controlled Entities
ARSN 098 807 419
Financial statements
for the year ended 30 June 2009
148 TRANSURBAN ANNUAL REPORT 2009
148 Transurban annual reporT 2009
Transurban Holding Trust ARSN 098 807 419
Financial statements - 30 June 2009
Contents
Directors' repor(cid:87)
Auditor's Independence Declaration
Financial report
Directors' declaration
Independent auditor's report to the members
Page
150
154
155
225
226
149 TRANSURBAN ANNUAL REPORT 2009
149 Transurban annual reporT 2009
Transurban Holding Trust
Directors' report
30 June 2009
Directors' report
The directors of Transurban Infrastructure Management Limited ("the Company"), the responsible entity of Transurban
Holding Trust, present their report on the consolidated entity consisting of Transurban Holding Trust (“the Trust”) and the
entities it controlled (collectively “the Group”), for the year ended 30 June 2009.
Transurban Holding Trust forms part of the Transurban Group. The securities of the entities comprising the Transurban
Group are stapled. A Stapled Security comprises one share in Transurban Holdings Limited, one share in Transurban
International Limited and one unit in Transurban Holding Trust. None of the components of the Stapled Security can be
traded separately.
Responsible Entity
Transurban Holding 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 Holding Trust and is responsible for performing all functions that are required under the Corporations Act 2001
of a Responsible Entity.
Directors
With the exception of the changes noted below, the following persons were directors of Transurban Infrastructure
Management Limited during the whole of the financial year and up to the date of this report:
Non-executive Directors
David J Ryan AO
Neil Chatfield (Appointed 18 February 2009)
Geoffrey O Cosgriff
Jeremy G A Davis AM
Robert J Edgar (Appointed 21 July 2009)
Lindsay Maxsted
Susan M Oliver (Retired 22 June 2009)
Christopher J S Renwick AM (Retired 22 June 2009)
Rodney Slater (Appointed 22 June 2009)
Executive Director
Christopher J Lynch
Results
The consolidated net profit for the Group was $263,753,000 (2008: profit of $238,844,000).
Principal Activities and Operations
During the year the principal activities of the consolidated entity consisted of holding 100 per cent of the units in the
CityLink Trust, the Transurban Finance Trust, the Hills Motorway Trust, the Sydney Roads Trust, the T (895) Finance Trust
and the Transurban CARS Trust. The Transurban CARS Trust holds the Transurban Group’s investment in Westlink M7
Motorway in Sydney.
150 TRANSURBAN ANNUAL REPORT 2009
150 Transurban annual reporT 2009
Distributions
Distributions paid to members during the financial year were as follows:
Distributions proposed
Final distribution payable and recognised as a liability: 11.0 cents (2008: 29.0 cents)
per fully paid Stapled Security payable 28 August 2009
Distributions paid during the year
Final distribution for 2008 financial year of 29.0 cents (2007: 27.5 cents) per fully paid
Stapled Security paid 29 August 2008
Interim distribution for 2009 financial year of 11.0 cents (2008: 28.0 cents) per fully
paid Stapled Security paid 27 February 2009
Total distributions paid
Distributions paid in cash or satisfied by the issue of Stapled Securities under the
distribution reinvestment plan during the years ended 30 June 2009 and 30 June
2008
Paid in cash
Executive loans - repayments
Satisfied by issue of Stapled Securities
Funds available for future distribution reinvestment plans
Transurban Holding Trust
Directors' report
30 June 2009
(continued)
2009
$'000
2008
$'000
141,095
141,095
319,076
319,076
319,076
294,744
140,041
459,117
303,297
598,041
172,161
551
286,422
(17)
459,117
396,858
1,535
199,615
33
598,041
Review of operations
Total revenue for the Group decreased by 0.88% to $624.5 million. The profit for the year was $263.8 million.
On 14 August 2008, the Group exercised its pre-emptive right under the Westlink Equity Participants Deed to acquire an
additional 2.5 per cent of the Westlink M7 for consideration of $38.0 million. The Group's investment in Westlink M7 is
now 50.0 per cent, and is accounted for as an associate.
On 4 May 2008, the Group announced that it has completed the re-financing of $465 million of non-recourse project debt
for the Hills M2 Motorway. The facility has been provided by five banks, and comprises a three and five year tranche.
Matters subsequent to the end of the financial year
On 8 July 2009, the M1 Eastern Distributor debt of $515 million, due to mature in November 2009, was refinanced. The
new debt facility has been provided by six banks: Australia and New Zealand Banking Group, Bank of Tokyo Mitsubishi
UFJ, Calyon Australia, Commonwealth Bank, Mizuho Corporate Bank, Ltd. Sydney Branch and Westpac Banking
Corporation. The facility has a three year tranche (approximately 38 per cent of the total facility), a five year tranche
(approximately 50 per cent) and a seven year tranche (approximately 12 per cent).
As at the date of this report the directors are not aware of any other circumstances that have arisen since 30 June 2009
that have significantly affected, or may significantly affect, the Group's operations in future financial years, the results of
those operations in future financial years, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
Information on likely developments in the operations of the Trust and the expected results of operations have not been
included in this report because the directors of the responsible entity believe it would be likely to result in unreasonable
prejudice to the Trust.
151 TRANSURBAN ANNUAL REPORT 2009
151 Transurban annual reporT 2009
Transurban Holding Trust
Directors' report
30 June 2009
(continued)
Environmental regulation
The Group is subject to environmental regulations under Australian Commonwealth and State laws and certain applicable
laws in the USA. The Group maintains a comprehensive environmental management plan to monitor the performance of
the Motorways, and any external parties responsible for operating any of the Group’s Motorways, and takes remedial steps
where necessary.
There were no significant breaches reported during the financial year on the Group’s controlled assets.
Insurance and Indemnification
The Trust indemnifies all past and present Directors and Secretaries of the Company, including at this time the Directors
named in this report and the Secretary or Secretaries, against every liability incurred by them in their respective capacities
unless:
•
•
•
the liability is owed to the Company or to a related body corporate;
the liability did not arise out of the conduct of good faith; or
the liability is for a pecuniary penalty order or a compensation order under the Corporations Act 2001.
The Company also indemnifies each person who is or has been an officer of the Company against liability for costs or
expenses incurred by the person in his or her capacity as an officer of the Company 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.
The Auditors of the Company are in no way indemnified out of the assets of the Company.
Fees paid to and interest held in the Trust by the Responsible Entity or its Associates
Fees paid to the Responsible Entity out of Trust property during the year are disclosed in note 31 to the financial
statements.
No fees were paid to the directors of the Responsible Entity during the year out of Trust property.
Interests in the Trust issued during the financial year
Balance at 1 July
Units issued during the year
Balance at 30 June
Value of Assets
Consolidated
Parent
2009
Number
'000
2008
Number
'000
2009
Number
'000
2008
Number
'000
1,218,263
63,100
1,281,363
1,068,374
149,889
1,218,263
1,218,263
63,100
1,281,363
1,068,374
149,889
1,218,263
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Value of Trust assets at 30 June
9,544,100
9,681,422
7,236,738
6,984,059
The value of the Trust's assets is derived using the basis of accounting set out in Note 1 to the financial statements.
Units under option
There are 3.20 million units of Transurban Holding Trust under share based payment schemes. 1.98 million units were
granted in the current year. No units were issued on the exercise of the relevant schemes.
152 TRANSURBAN ANNUAL REPORT 2009
152 Transurban annual reporT 2009
Directors' Interests
The directors of the Responsible Entity have disclosed relevant interests in Stapled Securities issued by the Transurban
Group as follows:
Transurban Holding Trust
Directors' report
30 June 2009
(continued)
Non-executive directors
D J Ryan
N G Chatfield (appointed 19 February 2009)
G O Cosgriff
J G A Davis
R J Edgar (appointed 21 July 2009)
L P Maxsted
S M Oliver (retired 22 June 2009)
C J S Renwick AM (retired 22 June 2009)
R Slater (appointed 22 June 2009)
Executive directors
C J Lynch
Auditor's independence declaration
Number of
Stapled Securities
60,945
-
126,012
125,005
7,709
-
54,522
41,552
-
233,041
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page (cid:20)(cid:24)(cid:23).
Rounding of amounts
The trust is of a kind referred to in Class Order 98/100, 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, or in certain cases, to the nearest dollar.
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 directors.
David J Ryan
Chairman
Christopher J Lynch
Director
Melbourne
26 August 2009
153 TRANSURBAN ANNUAL REPORT 2009
153 Transurban annual reporT 2009
154 Transurban annual reporT 2009
Transurban Holding Trust ARSN 098 807 419
Financial statements - 30 June 2009
Contents
Financial report
Income statements
Balance sheets
Statements of changes in equity
Cash flow statements
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members
Page
156
157
158
160
161
225
226
This financial report covers both the separate financial statements of Transurban Holding Trust as an individual entity and
the consolidated financial statements for the consolidated entity consisting of Transurban Holding Trust and its
subsidiaries. The financial report is presented in the Australian currency.
Transurban Holding Trust is a Trust registered and domiciled in Australia. Its registered office and principal place of
business is:
Transurban Holding Trust
Level 3, 505 Little Collins Street
Melbourne VIC 3000
The financial report was authorised for issue by the directors on 26 August 2009. The company has the power to amend
and reissue the financial report.
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
155 TRANSURBAN ANNUAL REPORT 2009
155 Transurban annual reporT 2009
Transurban Holding Trust
Income statements
For the year ended 30 June 2009
Consolidated
Parent
Notes
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Revenue from continuing operations
Other income
Administration costs
Promissory notes
Depreciation and amortisation expense
Finance costs
Share of net loss of associates and joint
venture partnership accounted for using the
equity method
Profit before income tax
Income tax expense
Profit for the year
Profit is attributable to:
Equity holders of Transurban Holding Trust
Minority interest
4
5
6
7
624,478
630,036
373,701
236,516
55,638
(3,522)
(1,193)
(95,203)
(307,808)
(7,556)
264,834
(1,081)
263,753
49,102
(14,900)
(1,158)
(83,942)
(338,105)
-
241,033
(2,189)
238,844
250,830
12,923
263,753
223,374
15,470
238,844
Cents
Cents
55,287
(1,227)
-
(15,394)
(120,289)
49,102
(12,303)
-
(3,925)
(134,852)
-
292,078
-
292,078
292,078
-
292,078
-
134,538
-
134,538
134,538
-
134,538
Earnings per unit for profit attributable to
the ordinary unit holders:
Basic earnings per share
Diluted earnings per share
39
39
19.8
19.8
20.5
20.5
The above income statements should be read in conjunction with the accompanying notes.
156 TRANSURBAN ANNUAL REPORT 2009
156 Transurban annual reporT 2009
Transurban Holding Trust
Balance sheets
As at 30 June 2009
Consolidated
Parent
Notes
2009
$'000
2008
$'000
2009
$'000
2008
$'000
8
9
10
11
12
10
13
14
15
16
17
10
18
19
20
10
22
21
23
24
24
25
28,418
208,518
-
236,936
5,864,912
633,272
9,134
-
1,204
2,798,642
9,307,164
45,882
195,994
2,917
244,793
5,963,892
558,223
20,669
-
-
2,893,845
9,436,629
492
818,463
-
818,955
1,911,690
-
-
4,140,285
-
365,808
6,417,783
1,308
210,344
-
211,652
2,250,920
-
-
4,140,285
-
381,202
6,772,407
9,544,100
9,681,422
7,236,738
6,984,059
109,978
515,500
3,336
2,585
171,645
79,080
882,124
3,607,312
8,184
1,140
10,613
3,627,249
245,702
458,150
-
1,350
349,241
169,978
1,224,421
3,491,193
-
795
64,371
3,556,359
7,388
-
-
-
141,152
61,811
210,351
258,111
-
-
-
318,397
135,311
711,819
1,862,515
-
-
-
1,862,515
1,250,728
-
-
51,398
1,302,126
4,509,373
4,780,780
2,072,866
2,013,945
5,034,727
4,900,642
5,163,872
4,970,114
6,692,365
(330)
(1,701,315)
6,507,180
17,392
(1,671,191)
6,692,365
4,323
(1,532,816)
6,507,180
6,874
(1,543,940)
4,990,720
4,853,381
5,163,872
4,970,114
44,007
47,261
-
-
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Total current assets
Non-current assets
Receivables
Held-to-maturity investments
Derivative financial instruments
Other financial assets
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Current tax liabilities
Provisions
Non-interest bearing liabilities
Total current liabilities
Non-current liabilities
Borrowings
Derivative financial instruments
Deferred tax liabilities
Non-interest bearing liabilities
Total non-current liabilities
Total liabilities
Net assets
UNIT HOLDERS' FUNDS
Issued units
Reserves
Accumulated losses
Capital and reserves attributable to equity
holder of Transurban Holding Trust
Minority interest
Total unitholders' funds
5,034,727
4,900,642
5,163,872
4,970,114
The above balance sheets should be read in conjunction with the accompanying notes.
157 TRANSURBAN ANNUAL REPORT 2009
157 Transurban annual reporT 2009
Consolidated
Transurban Holding Trust
Statements of changes in equity
For the year ended 30 June 2009
Attributable to members of
Transurban Holding Trust
Contributed
equity
$'000
Reserves
$'000
Accumulated
losses
$'000
Minority
interest
$'000
Notes
Total
$'000
Balance at 1 July 2007
5,911,399
9,186
(1,272,192)
53,867
4,702,26(cid:19)
Changes in the fair value of cash flow hedges, net tax
Profit for year
Total recognised income and expense for the year
Contributions of equity, net of transaction costs
Treasury securities
Distributions reinvestment plan
Change in value of share-based payment reserve
Distributions provided for or paid
Acquisition of additional interest in AMG
Distributions paid to minority interest
24
23
23
24
24
24
25
25
Balance at 30 June 2008
Balance at 1 July 2008
-
-
-
5,361
-
-
223,374
-
15,470
5,361
238,844
5,361
223,374
15,470
244,205
399,138
6,707
189,936
-
-
-
-
595,781
-
-
-
2,845
-
-
-
2,845
-
-
-
-
(622,373)
-
-
(622,373)
-
-
-
-
-
(7,427)
(14,649)
(22,076)
399,138
6,707
189,936
2,845
(622,373)
(7,427)
(14,649)
(45,823)
6,507,180
17,392 (1,671,191)
47,261 4,900,642
6,507,180
17,392
(1,671,191)
47,261 4,900,642
Changes in the fair value of cash flow hedges, net tax
Profit for year
24
Total recognised income and expense for the year
-
-
-
(15,171)
-
-
250,830
(1,487)
12,923
(16,658)
263,753
(15,171)
250,830
11,436
247,095
Contributions of equity, net of transaction costs
Treasury securities
Distribution reinvestment plan
Change in value of share-based payment reserve
Distributions provided for or paid
Distributions paid to minority interest
23
23
23
24
25
6,049
4,993
174,143
-
-
-
185,185
-
-
-
(2,551)
-
-
(2,551)
-
-
-
-
(280,954)
-
(280,954)
-
-
-
-
-
(14,690)
(14,690)
6,049
4,993
174,143
(2,551)
(280,954)
(14,690)
(113,010)
Balance at 30 June 2009
6,692,365
(330)
(1,701,315)
44,007
5,034,727
158 TRANSURBAN ANNUAL REPORT 2009
158 Transurban annual reporT 2009
Parent
Transurban Holding Trust
Statements of changes in equity
For the year ended 30 June 2009
(continued)
Contributed
equity
$'000
Reserves
$'000
(Accumulated
losses)
$'000
Notes
Total
$'000
Balance at 1 July 2007
5,911,399
4,029
(1,056,105)
4,859,323
Changes in the fair value of share based payments
Profit for year
Total recognised income and expense for the year
Contributions of equity, net of transaction costs
Treasury securities
Distribution reinvestment plan
Distributions provided for or paid
Balance at 30 June 2008
Balance at 1 July 2008
Profit for year
Total recognised income and expense for the year
Contributions of equity, net of transaction costs
Distribution reinvestment plan
Treasury securities
Change in value of share-based payment reserve
Distributions provided for or paid
24
23
23
23
24
23
23
23
24
24
-
-
-
2,845
-
2,845
-
134,538
2,845
134,538
134,538
137,383
399,138
6,707
189,936
-
595,781
-
-
-
-
-
-
-
-
(622,373)
(622,373)
399,138
6,707
189,936
(622,373(cid:12)
(26,592(cid:12)
6,507,180
6,874
(1,543,940)
4,970,114
6,507,180
6,874
(1,543,940)
4,970,114
-
-
-
-
292,078
292,078
292,078
292,078
6,038
174,143
5,004
-
-
185,185
-
-
-
(2,551)
-
(2,551)
-
-
-
-
(280,954)
(280,954)
6,038
174,143
5,004
(2,551)
(280,954)
(98,320)
Balance at 30 June 2009
6,692,365
4,323
(1,532,816) 5,163,872
The above statements of changes in equity should be read in conjunction with the accompanying notes.
159 TRANSURBAN ANNUAL REPORT 2009
159 Transurban annual reporT 2009
Transurban Holding Trust
Cash flow statements
For the year ended 30 June 2009
Consolidated
Parent
Notes
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers (inclusive of GST)
Interest received
Interest paid
Taxes paid
Net cash (outflow) from operating activities
37
Cash flows from investing activities
Payment for investment in associate
Payment for acquisition of term loan notes
Payment for M1 Upgrade
Distributions received
Net cash (outflow) inflow from investing
activities
Cash flows from financing activities
Loans to related parties
Repayment of loans from related parties
Loans from related parties
Repayment of loans to related parties
Proceeds from issues of units
Unit issue transaction costs
Payments for establishing borrowing facilities
Proceeds from borrowings
Repayment of borrowings
Proceeds from sale of treasury units
Distributions paid
Distributions received on forfeited treasury
securities
Distributions paid to minority interests in
subsidiaries
Net cash inflow from financing activities
109,441
(2,343)
28,222
(235,947)
(708)
(101,335)
(7,556)
(30,444)
(148,307)
-
118,300
(29,187)
53,862
(233,256)
(43)
(90,324)
-
-
(404,152)
-
408
(4,015)
1,942
(52,391)
-
(54,056)
-
(21,293)
3,924
(60,511)
-
(77,880)
-
-
(148,307)
145,570
-
-
(404,152)
93,724
(186,307)
(404,152)
(2,737)
(310,428)
(1,471,814)
1,534,445
1,739,054
(1,350,584)
6,076
(35)
(7,586)
465,000
(459,000)
2,042
(172,161)
(1,042,934)
1,240,712
1,292,627
(1,050,685)
400,550
(1,968)
(1,325)
-
(150,000)
6,712
(396,858)
97
-
(15,356)
270,178
(25,468)
271,363
(98,039)
428,433
751,267
(861,703)
6,076
(35)
-
-
-
2,042
(172,161)
97
-
55,977
(757,835)
745,208
1,158,768
(948,504)
400,550
(1,968)
(293)
-
-
6,712
(396,858)
-
-
205,780
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at the beginning of
the financial year
Cash and cash equivalents at end of year
8
(17,464)
(223,113)
(816)
(182,528)
45,882
28,418
268,995
45,882
1,308
492
183,836
1,308
The above cash flow statements should be read in conjunction with the accompanying notes.
160 TRANSURBAN ANNUAL REPORT 2009
160 Transurban annual reporT 2009
Contents of the notes to the financial statements
Transurban Holding Trust
Notes to the financial statements
30 June 2009
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
Summary of significant accounting policies
Trust formation and termination
Segment information
Revenue
Other income
Expenses
Income tax expense
Current assets - Cash and cash equivalents
Current assets - Trade and other receivables
Derivative financial instruments
Non-current assets - Receivables
Non-current assets - Held-to-maturity investments
Non-current assets - Other financial assets
Non-current assets - Deferred tax assets
Non-current assets - Intangible assets
Current liabilities - Trade and other payables
Current liabilities - Borrowings
Current liabilities - Provisions
Current liabilities - Non-interest bearing liabilities
Non-current liabilities - Borrowings
Non current liabilities - Non-interest bearing liabilities
Non-current liabilities - Deferred tax liabilities
Issued units
Reserves and retained profits/(accumulated losses)
Minority interest
Distributions
Key management personnel disclosures
Remuneration of auditors
Contingencies
Commitments
Related party transactions
Initial application of AASB Interpretation 12
Subsidiaries
Investments in associates
Economic dependency
Events occurring after the balance sheet date
Reconciliation of profit/(loss) after income tax to net cash inflow from operating activities
Non-cash investing and financing activities
Earnings per unit
Intra-group guarantees
Critical accounting estimates and judgements
Financial risk management
Page
162
170
170
171
171
171
172
172
173
174
175
176
176
177
178
180
181
182
182
183
184
185
185
188
189
189
190
209
209
209
209
213
215
216
217
217
218
218
219
219
219
220
161 TRANSURBAN ANNUAL REPORT 2009
161 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated.
The financial report includes separate financial statements for Transurban Holding Trust as an individual entity and for the
consolidated entity consisting of Transurban Holding Trust and its subsidiaries.
(a) Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the
Corporations Act 2001.
Where necessary, comparatives have been reclassified for consistency with current year disclosures.
Compliance with IFRS
Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS).
Compliance with AIFRS ensures that the financial report of Transurban Holding Trust complies with International Financial
Reporting Standards (IFRS).
Initial application of AASB Interpretation 12 - Service Concession Arrangements
AASB Interpretation 12 Service Concession Arrangements (AASB-I 12) is applicable for the Group's annual reporting
period beginning 1 July 2008 and has been adopted for the first time for the year ended 30 June 2009. AASB-I 12
provides guidance on the accounting by operators of public-to-private service concession arrangements under which
private sector entities participate in the development, financing, operation and maintenance of infrastructure for the
provision of public services. A substantial portion of the Group's assets are used within the framework of concession
arrangements granted by public sector entities. The application of AASB-I 12 has led to a change in the Group's policies
of accounting for the classification, recognition and measurement of concession assets.
The new policies have been applied retrospectively and, where relevant in accordance with the transitional provisions,
comparative information in relation to the 2008 financial year has been restated accordingly. The Group's revised policies
are set out in note 1 (n).
Initial application of AASB Interpretation 129 - Service Concession Arrangements: Disclosures
In addition to the adoption of AASB Interpretation 12 (AASB-I 12), the Group has adopted AASB Interpretation 129 Service
Concession Arrangements: Disclosures (AASB-I 129) for the first time for the year ended 30 June 2009. AASB-I 129
contains specific guidance on the disclosures required for a Service Concession Arrangement.
Details as required under AASB-I 129 can be found in Note 15.
Early adoption of standards
The company has not elected to adopt any new accounting standards early.
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of
financial assets and liabilities (including derivative instruments).
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to
the financial statements, are disclosed in note 41.
(b) Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of subsidiaries of Transurban Holding Trust
("the Trust" or "parent entity") as at 30 June 2009 and the results of all subsidiaries for the year then ended. Transurban
Holding Trust and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.
162 TRANSURBAN ANNUAL REPORT 2009
162 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(b) Principles of consolidation (continued)
Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the
financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The
existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing
whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated
from the date that control ceases.
Minority interests in the results and equity of subsidiaries are shown separately in the consolidated income statement and
balance sheet respectively.
Investments in subsidiaries are accounted for at cost in the individual financial statements of Transurban Holding Trust.
Associates and joint ventures
Associates are all entities over which the Group has significant influence but not control. Interests in joint ventures are
where the Group jointly controls an entity with another party (refer to note 34).
Investments in associates are accounted for in the parent entity financial statements using the cost method and in the
consolidated financial statements using the equity method of accounting, after initially being recognised at cost. Similarly,
the interest in the joint venture partnership is accounted for using the equity method.
The Group’s share of its associates’ and joint ventures’ post-acquisition profits or losses is recognised in the income
statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-
acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates
and joint ventures are recognised in the parent entity’s income statement, while in the consolidated financial statements
they reduce the carrying amount of the investment.
When the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate including
any other unsecured long-term receivables, the Trust does not recognise further losses, unless it has incurred obligations
or made payments on behalf of the associate or joint venture.
Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by
the Group.
(c) Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to
risks and returns that are different to those of other business segments. A geographical segment is identified when
products or services are provided within a particular economic environment subject to risks and returns that are different
from those of segments operating in other economic environments.
(d) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net
of returns, rebates and amounts collected on behalf of third parties.
Revenue is recognised in the major business activities as follows:
(i) Rental revenue
Rental revenue is recognised as earned in accordance with the lease contract.
(ii) Interest income
Interest income is recognised on a time proportionate basis using the effective interest method.
(iii) Distribution Revenue
Distribution revenue is recognised when the Trust’s right to receive payment is established.
163 TRANSURBAN ANNUAL REPORT 2009
163 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(e)
Income tax
Income tax is brought to account in the financial statements to the extent it relates to companies in the Group. Pursuant to
the provisions of the Income Tax Legislation, Trusts are not liable to income tax provided that its taxable income (including
assessable realised capital gains) is fully distributed to unit holders.
(f) Leases
Leases in which a significant portion of the risk and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to
the income statement on a straight line basis over the period of the lease.
(g) Business combinations
The purchase method of accounting is used to account for all business combinations, excluding business combinations
involving entities or businesses under common control, regardless of whether equity instruments or other assets are
acquired. Cost is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or
assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in
an acquisition, the fair value of the instruments is their published market price as at the date of exchange unless, in rare
circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair
value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs
arising on the issue of equity instruments are recognised directly in equity and internal costs are expenses as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost
of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the
cost of acquisition is less than the Group's share of the fair value of the identifiable net assets of the subsidiary acquired,
the difference is recognised directly in the income statement, but only after a reassessment of the identification and
measurement of the net assets acquired.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate
at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
(h)
Impairment of assets
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an
indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of
an asset exceeds its recoverable amount the asset is considered impaired and 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
impairment occurs.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset,
unless the asset's value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate
cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable
amount is determined for the cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset.
(i) Cash and cash equivalents
For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call
with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are
readily convertible to known amounts of and which are subject to an insignificant risk of changes in value, and bank
overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
164 TRANSURBAN ANNUAL REPORT 2009
164 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(j)
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less allowance for impairment. Trade receivables are due for settlement no more than 30 days from the
date of revenue recognition.
Collectibility of trade debtors is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by
reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when
there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of
receivables. The amount of the allowance is the difference between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables
are not discounted if the effect of discounting is immaterial. The amount of the allowance is recognised in the income
statement.
(k)
Investments and other financial assets
Classification
The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans
and receivables, and held-to-maturity investments. The classification depends on the purpose for which the investments
were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this
designation at each reporting date.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in
this category if acquired principally for the purpose of selling in the short-term. Derivatives are classified as held for
trading unless they are designated as hedges. Assets in this category are classified as current assets.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of
selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after
the reporting date which are classified as non-current assets. Loans and receivables are included in trade and other
receivables in the balance sheet (note 9) and (note 11).
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities
that the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than
an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as
available-for-sale. Held-to-maturity financial assets are included in non-current assets, except for those with maturities less
than 12 months from the reporting date, which are classified as current assets.
(l) Derivatives and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group
designates certain derivatives as either:
•
•
hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges), or
hedges of the cash flow of recognised assets and liabilities and highly probable forecast transactions (cash flow
hedges).
At the inception of the hedging transaction, the Group documents the relationship between hedging instruments and
hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The
Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that
are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or
cash flows of hedged items.
165 TRANSURBAN ANNUAL REPORT 2009
165 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(l) Derivatives and hedging activities (continued)
The fair values of various derivative financial instruments used for hedging purposes are disclosed in note 10. Movements
in the hedging reserve in shareholders' equity are shown in note 24. The full fair value of a hedging derivative is classified
as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified
as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives
are classified as a current asset or liability.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are reported in the income
statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged
risk. The gain or loss relating to the effective portion of interest rate swaps and cross currency swaps hedging fixed rate
borrowings is recognised in the income statement within finance costs together with changes in the fair value of the
hedged fixed rate borrowings attributable to interest rate risk. The gain or loss relating to the ineffective portion is
recognised in the income statement within other income and other expenses.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedge item for
which the effective interest method is used is amortised to profit or loss over the period to maturity using a recalculated
effective interest rate.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately
in the income statement within other income or other expense.
Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item will affect profit
or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is
recognised in the income statement within ‘finance costs’.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the
forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected
to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.
Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument
that does not qualify for the hedge accounting are recognised immediately in the income statement and are included in
other income or other expenses.
(m) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used
for financial assets held by the Group is the current bid price; the appropriate quoted market price for financial liabilities is
the current ask price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on
market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used
for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine
fair value for the remaining financial instruments. The fair value of interest rate swaps and cross currency swaps are
calculated as the present value of the estimated future cash flows. The fair value of forward exchange contracts is
determined using forward exchange market rates at the balance sheet date.
The carrying value less impairment allowance of trade receivables and payables are assumed to approximate their fair
values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by
discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar
financial instruments.
166 TRANSURBAN ANNUAL REPORT 2009
166 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(n)
Intangible assets
Concession Assets
Concession assets represent the Group's right to operate roads under Service Concession Arrangements. Concession
assets constructed by the Group are recorded at the fair value of consideration received or receivable for the construction
services delivered. Concession assets acquired by the Group are recorded at the fair value of the assets at the date of
acquisition. All Concession assets are classified as intangible assets and are amortised over the term of the right to
operate the asset on a straight line basis.
In previous periods, some of the Group's expenditure on Concession assets was classified as Property, Plant and
Equipment and depreciated over the useful life of the assets. On initial adoption of AASB-I 12, the Group used the
carrying amounts of Property, Plant and Equipment as the carrying amounts of Intangible Assets as allowed by the
transitional provisions of AASB-I 12.
(o) Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial
year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
(p) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is
probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the
present obligation at the reporting date. The discount rate used to determine the present value reflects current market
assessments of the time value of money and the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
(q) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured
at amortised cost. Any differences between the proceeds (net of transaction costs) and the redemption amount is
recognised in the income statement over the period of the borrowings using an effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting date.
(r) Concession notes
The Group recognises an intangible representing Concession Notes assigned from the State of Victoria as part of the
Tulla-Calder transaction and the M1 Upgrade transaction. As the timing and profile of these amounts is largely determined
by the available equity cash flows of the underlying asset, the present value of the expected future cashflows is
determined using a discount rate of 9.7 per cent (2008: 9.7 per cent) which recognises their subordinated nature.
(s) Promissory notes
Non-interest bearing long term debt represented by Promissory Notes payable to the State of New South Wales in respect
of the M2 Motorway has been included in the financial statements at the present value of expected future repayments. As
the timing and profile of these repayments is largely determined by the available equity cashflows of the underlying asset,
the present value of the expected future repayments is determined using a discount rate, which recognises their
subordinated nature. In the event that there is a change in the expected timing and profile of the repayments, the impact is
recognised in the income statement.
The discount rate applied to the M2 Motorway Promissory Notes is 12.0 per cent (2008: 12.0 per cent). Refer to note 21.
167 TRANSURBAN ANNUAL REPORT 2009
167 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(t) 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 specifically identifiable borrowing costs are capitalised into the
cost of the asset. Borrowing costs include interest on short-term and long term borrowings.
Costs incurred in connection with the arrangement of borrowings are deferred and amortised over the effective period of
the funding.
(u) Contributed equity
Units in the trust are classified as equity.
Incremental costs directly attributable to the issue of new units or options are shown in equity as a reduction, net of tax,
from the proceeds. Incremental costs directly attributable to the issue of new units or options for the acquisition of a
business are not included in the cost of the acquisition as part of the purchase consideration.
If the entity reacquires its own equity instruments, for example as the result of a security buy-back, those instruments are
deducted from equity and the associated securities are cancelled. No gain or loss is recognised in the profit or loss and
the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in
equity.
(v) Distributions
Provision is made for the amount of any distribution declared, being appropriately authorised and no longer at the
discretion of the entity, on or before the end of the financial year but not distributed at balance date.
(w) Earnings per Unit
Basic earnings per unit
Basic earnings per unit is determined by dividing the profit after income tax attributable to unitholders by the weighted
average number of units outstanding during the year.
Diluted earnings per unit
Diluted earnings per unit adjusts the figures used in the determination of basic earnings per share by taking into account
the weighted average number of units assumed to have been issued for no consideration in relation to dilutive potential
units.
(x) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
(y) Rounding of amounts
The trust is of a kind referred to in Class order 98/100, 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, or in certain cases, the nearest dollar.
(z) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2009
reporting periods. The Group’s and the parent entity’s assessment of the impact of these new standards and
interpretations is set out below.
168 TRANSURBAN ANNUAL REPORT 2009
168 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(z) New accounting standards and interpretations (continued)
(i) AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from
AASB 8 (effective from 1 January 2009)
AASB 8 will result in a change in the approach to segment reporting, as it requires adoption a ‘management
approach’ to reporting on financial performance. The information being reported will be based on what the key
decision makers use internally for evaluating segment performance and deciding how to allocate resources to
operating segments. The Group will adopt AASB 8 from 1 July 2009. This standard will primarily result in changes to
disclosures only.
(ii) Revised AASB 123 Borrowing Costs and AASB 2007-6 Amendments to Australian Accounting Standards arising
from AASB 123 (effective from 1 January 2009)
The revised AASB 123 has removed the option to expense all borrowing costs and, when adopted, will require the
capitalisation of all borrowing costs directly attributable to the acquisition, construction or production of a qualifying
asset. There will be no impact on the financial report of the Group, as the Group already capitalises borrowing costs
relating to qualifying assets.
(iii)Revised AASB 101 Presentation of Financial Statements and AASB 2007-8 Amendments to Australian
Accounting Standards arising from AASB 101 (effective 1 January 2009)
The September 2007 revised AASB 101 requires the presentation of a statement of comprehensive income and
makes changes to the statement of changes in equity, but will not affect any of the amounts recognised in the
financial statements. If an entity has made a prior year adjustment or has reclassified items in the financial
statements, it will need to disclose a third balance sheet (statement of financial position), this one being as at the
beginning of the comparative period. The Group will apply the revised standard from 1 July 2009. This will result in
disclosure changes only.
(iv) Revised AASB 3 Business Combinations AASB 127 Consolidated and Separate Financial Statements and AASB
2008-3 Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127 (effective 1 July 2009)
The revised AASB 3 continues to apply the acquisition method to business combinations, but with some significant
changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date,
with contingent payments classified as debt subsequently remeasured through the income statement. There is a
choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either as fair
value or at the non-controlling interest’s proportionate share of acquiree’s net assets. All acquisition-related costs
must be expensed. This is different to the Group’s current policy which is set out in note 1(g) above.
The revised AASB 127 requires the effects of all transactions with non-controlling interests to be recorded in equity if
there is no change in control and those transactions will no longer result in goodwill or gains and losses. The
standard also specifies the accounting when control is lost. Any remaining interest in the entity is remeasured to fair
value, and a gain or loss is recognised in profit or loss. This is consistent with the Group’s current accounting policy if
significant influence is not retained.
The Group will apply the revised standards prospectively to all business combinations and transactions with non-
controlling interests from 1 July 2009.
(v)AASB 2008-7 Amendments to Australian Accounting Standards - Cost of an Investment in a Subsidiary, Jointly
Controlled Entity or Associate (effective 1 July 2009)
In July 2008, the AASB approved amendments to AASB 1 First-time Adoption of International Financial Reporting
Standards and AABS 127 Consolidated and Separate Financial Statements. The Group will apply the revised rules
prospectively from 1 July 2009. After that date, all dividends received from investments in subsidiaries, jointly
controlled entities or associates will be recognised as revenue, even if they are paid out of pre-acquisition profits, but
the investments may need to be tested for impairment as a result of the dividend payments. Under the entity’s
current policy, these dividends are deducted from the cost of investment. Furthermore, if a new intermediate parent
entity was created in the event of an internal reorganisation investments in subsidiaries will be measured at the
carrying amount of the net assets of the subsidiary rather than the subsidiary’s fair value.
(vi)AASB 2008-8 Amendment to IAS 39 Amendment to Australian Accounting Standards - Eligible Hedged Items
(effective 1 July 2009)
169 TRANSURBAN ANNUAL REPORT 2009
169 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(z) New accounting standards and interpretations (continued)
AASB 2008-8 amends AASB 139 Financial Instruments: Recognition and Measurement and must be applied
retrospectively in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
The amendment makes two main changes. It prohibits designating inflation as a hedgeable component of a fixed
rate debt. It also prohibits including time value in one-sided hedged risk when designating options as hedges. The
Group will apply the amended standard from 1 July 2009. It is not expected to have an impact on the Group’s
financial statements.
(vii)AASB Interpretation 17 Distribution of Non-cash Assets to Owners and AASB 2008-13 Amendments to Australian
Accounting Standards arising from AASB Interpretation 17 (effective 1 July 2009)
AASB-I 17 applies to situations where an entity pays dividends by distributing non-cash assets to its shareholders.
These distributions will need to be measured at fair value and the entity will need to recognise the difference
between the fair value and the carrying amount of the distributed assets in the income statement on distribution.
This is different to the Group’s current policy which is to measure distributions of non-cash assets at their carrying
amounts. The interpretation further clarifies when a liability for the dividend must be recognised and that it is also
measured at fair value. The Group will apply the interpretation prospectively from 1 July 2009.
(viii)AASB 2009-2 Amendments to Australian Accounting Standards - Improving Disclosures about Financial
Instruments (effective for annual periods beginning on or after 1 January 2009)
AASB 2009-2 results in amendments to AASB 7. It requires fair value measurement disclosures to be classified into
a new three-level hierarchy and additional disclosures for items whose fair value is determined by valuation
techniques rather than observable market values. The AASB also clarified and enhanced the existing requirements
for the disclosure of liquidity risk of derivatives. The Group is currently assessing the impact of the disclosure
requirements. The amendment will not affect any of the amounts recognised in the financial statements.
2 Trust formation and termination
The Transurban Holding Trust was established on 15 November 2001. The Trust was due to terminate on 20 December
2081 unless terminated earlier. However, amendments made to the Trust Deed have extended the Trust to perpetuity.
The Trust was registered as a managed investment scheme by the Australian Securities and Investments Commission on
28 November 2001.
3 Segment information
Business segments
The Trust’s principle business segment for the period ending 30 June 2009 was the leasing of assets and the provision of
funding to the Transurban Group or associates of the Transurban Group. All revenues and expenses are directly
attributable to this principle segment. The management structure and internal reporting of the Trust are based on the
principle business segment.
Geographical segments
Assets of the Transurban Group which the Trust has funded are located in two separate states of Australia.
(a) Secondary reporting format - geographical segments
Segment revenues
2008
2009
$'000
$'000
Segment assets
2009
$'000
2008
$'000
304,839
319,639
624,478
318,341
311,695
630,036
5,777,988
3,766,112
9,544,100
5,955,331
3,726,091
9,681,422
Victoria
New South Wales
170 TRANSURBAN ANNUAL REPORT 2009
170 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
215,772
406,209
621,981
211,272
413,546
624,818
-
2,118
379
2,497
-
5,070
148
5,218
-
81,998
81,998
291,192
145
366
291,703
-
98,254
98,254
136,864
1,254
144
138,262
624,478
630,036
373,701
236,516
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
5,306
19,524
30,808
55,638
-
19,185
29,917
49,102
4,955
19,524
30,808
55,287
-
19,185
29,917
49,102
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
265,516
22,100
23,446
297,946
3,963
36,093
92,567
4,276
23,446
100,573
(1,814)
36,093
4 Revenue
From continuing operations
Rental income
Interest income from related parties
Other revenue
Distributions from subsidiaries
Interest
Other
5 Other income
Foreign exchange gains (net) (2008: loss)
Concession notes
Remeasurement of concession notes
6 Expenses
Profit before income tax includes the following
specific expenses:
Finance costs
Interest and finance charges paid/payable
Interest rate hedging charges paid/payable
Remeasurement of M1 Upgrade payable
Movement in promissory note payable
Recognised in finance costs:
Remeasurement of notes on issue from prior period
Remeasurement of notes due to change in payment profile
Total finance costs
1,557
(4,811)
307,808
1,402
(1,299)
338,105
-
-
120,289
-
-
134,852
Foreign exchange gains and losses
Net foreign exchange losses (2009: gain)
Total foreign exchange losses
-
-
11,108
11,108
-
-
10,948
10,948
171 TRANSURBAN ANNUAL REPORT 2009
171 Transurban annual reporT 2009
7 Income tax expense
(a)
Income tax expense
Current tax
Deferred tax
Under/(Over) provided in prior years
Deferred income tax (revenue) expense included in
income tax expense comprises:
Decrease (increase) in deferred tax assets (note 14)
(Decrease) increase in deferred tax liabilities (note 22)
(b) Numerical reconciliation of income tax expense
to prima facie tax payable
Profit from continuing operations before income tax
expense
Tax at the Australian tax rate of 30% (2008 - 30%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Trust income not subject to tax
Under (over) provision in prior periods
Income tax expense
8 Current assets - Cash and cash equivalents
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
2,444
(1,278)
(85)
1,081
(1,623)
345
(1,278)
2,377
(924)
736
2,189
(1,720)
796
(924)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
264,834
79,450
241,033
64,813
292,078
53,812
134,538
40,361
(78,284)
1,166
(85)
1,081
(63,360)
1,453
(53,812)
-
(40,361)
-
736
2,189
-
-
-
-
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Cash at bank and in hand
Balance per statement of cash flows
28,418
28,418
45,882
45,882
492
492
1,308
1,308
All cash balances are interest bearing (refer to note 42).
172 TRANSURBAN ANNUAL REPORT 2009
172 Transurban annual reporT 2009
9 Current assets - Trade and other receivables
Trade receivables
Loans to related parties
Other receivables from related parties
Prepayments
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
-
112,927
94,774
817
208,518
4
93,826
101,046
1,118
195,994
-
483,949
334,514
-
818,463
-
14,632
195,712
-
210,344
No class within trade and other receivables contain impaired or past due assets. Based on the credit history, it is expected
these amounts will be received when due. The Group does not hold any collateral in relation to these receivables.
(a) Trade receivables
Trade receivables represents Goods and Services Tax receivable from the Australian Tax Office. There is no allowance for
doubtful debts.
(b) Loans to related parties
Loans to related parties predominantly represent interest and finance charges on funds loaned from Transurban Finance
Company. There is no allowance for doubtful debts as the counterparties are related parties.
(c) Other receivables
These amounts generally arise from transactions outside the usual operating activities of the Group. The Parent Entity
balance for 2009 and 2008 is principally comprised of distributions receivable from its subsidiaries and accrued interest
from a related party.
(d) Foreign exchange and interest rate risk
Information about the Group's and the parent entity's exposure to foreign currency risk and interest rate risk in relation to
receivables is provided in note 42.
(e) Fair value and credit risk
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value. For
more information on the risk management policy of the Group refer to note 43.
173 TRANSURBAN ANNUAL REPORT 2009
173 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
-
9,134
9,134
3,336
8,184
11,520
2,917
20,669
23,586
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10 Derivative financial instruments
Current assets
Interest rate swap contracts - cash flow hedges(a)(i))
Non-current assets
Interest rate swap contracts - cash flow hedges ((a)(i))
Total derivative financial instrument assets
Current liabilities
Interest rate swap contracts - cash flow hedges (a)
Non-current liabilities
Interest rate swap contracts - cash flow hedges (a)
Total derivative financial instrument liabilities
(a)
Instruments used by the Group
The Group is party to derivative financial instruments in the normal course of business. Financial instruments include
interest rate swap contracts entered into to hedge exposure in accordance with the financial risk management policies
(refer to note 42).
(i)
Interest rate swap contracts - cash flow hedges
Variable rate borrowings of the Group currently bear an average variable interest rate of 8.40 per cent (2008: 8.39 per
cent). It is policy to protect part of the loans from exposure to increasing interest rates. Accordingly, the Group 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.
Swaps taken out by the Group cover approximately 87 per cent (2008: 60 per cent) of long term variable debt excluding
working capital facilities. After hedging, the Group's variable rate borrowings bear an average fixed rate of 6.90 per cent
(2008: 6.28 per cent).
The contracts require settlement of net interest receivable or payable. The settlement dates coincide with the dates on
which interest is payable on the underlying debt. The contracts are settled on a net basis.
The gain or loss from remeasuring the hedging instruments at fair value is deferred in equity in the hedging reserve, to the
extent that the hedge is effective, and reclassified into profit and loss when the hedged interest expense is recognised.
The ineffective portion is recognised in income immediately. There was no ineffectiveness recognised in the current or
prior period.
(b) Risk exposures
Information about the Group’s and the parent entity’s exposure to credit risk, foreign exchange and interest rate risk is
provided in note 42.
174 TRANSURBAN ANNUAL REPORT 2009
174 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
121,093
257,017
3,746,831
1,739,971
5,864,912
110,630
217,148
4,853,988
782,126
5,963,892
121,093
257,017
555,637
977,943
1,911,690
110,630
217,148
1,407,629
515,513
2,250,920
11 Non-current assets - Receivables
Tullarmarine/Calder Freeway upgrade
M1 Upgrade
Advances to related parties
Other related party loans
Tullamarine/Calder Freeway upgrade
On 27 January 2005, the Transurban Group reached agreement with the State of Victoria and Vic Roads to use CityLink
Concession Notes to fund an upgrade of the Tullamarine/Calder Freeway interchange.
Under the agreement, Transurban paid $151.0 million to Vic Roads to fund the M1 Upgrade. In exchange, the State
assigned to Transurban $305.3 million of Concession Notes issued by CityLink to the State under the provisions of the
Melbourne CityLink Concession Deed.
The receivable classified as “Tullamarine/Calder Freeway upgrade” recognises the discounted value of Concession Notes
reassigned from the State to the Trust.
M1 Upgrade
The Transurban Group reached agreement with the State of Victoria and Vic Roads to jointly fund upgrades and
improvements to 75 kilometres of the Westgate-CityLink (Southern Link)-Monash corridor.
Under the agreement, the State assigned to Transurban all remaining and future Concession Note liabilities incurred under
the provisions of the Melbourne CityLink Concession Deed in exchange for payments totalling $614 million. These
liabilities have a face value of $2.9 billion.
The receivable classified as “M1 Upgrade” recognises the discounted value of Concession Notes reassigned from the
State to the Trust. The liability to the state is recognised in note 19 and 21.
(c)
Impaired receivables and receivables past due
None of the non-current receivables are impaired or past due but not impaired.
(d) Fair values
The carrying values of non-current receivables approximate the fair values.
(e) Risk exposure
Information about the Group’s and the parent entity’s exposure to credit risk, foreign exchange and interest rate risk is
provided in note 42.
-
-
175 TRANSURBAN ANNUAL REPORT 2009
175 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
12 Non-current assets - Held-to-maturity investments
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Investment in Term Loan Notes
633,272
633,272
558,223
558,223
-
-
-
-
Investment in Term Loan Notes (“TLN”)
Term Loan Notes represent Transurban’s debt funding contribution to the Westlink Motorway Partnership. The fixed
maturity date of the TLN's is the earlier of 34 years and the termination of the “Agreement to Lease” between the Roads
and Traffic Authority of New South Wales and Westlink Motorway Limited.
The interest rate charged on these notes is 11.93 per cent and any unpaid interest capitalises into additional notes.
During the year ended 30 June 2009 the Group acquired new notes totalling $30.4 million, and capitalised interest of $44.6
million (2008: $26.2 million).
(a)
Impairment and risk exposure
None of the held-to-maturity investments are either past due or impaired.
All held-to-maturity investments are denominated in Australian currency. As a result, there is no exposure to foreign
currency risk. There is also no exposure to price risk as the investments will be held to maturity.
13 Non-current assets - Other financial assets
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
-
-
-
-
4,140,285
4,140,285
4,140,285
4,140,285
Units in controlled entities
Non-traded investments
The investment in controlled entities represents 100 per cent of the ordinary units of The CityLink Trust, The Hills
Motorway Trust, and The Sydney Roads Trust. These trusts are registered in Australia.
176 TRANSURBAN ANNUAL REPORT 2009
176 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
14 Non-current assets - Deferred tax assets
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
The balance comprises temporary differences
attributable to:
Amounts recognised in profit or loss
Tax losses
Movements:
Opening balance at 1 July
Credited/(charged) to the income statement (note 7)
Losses utilised
Closing balance at 30 June
Deferred tax assets to be recovered within 12 months
Deferred tax assets to be recovered after more than 12
months
1,204
1,204
-
1,623
(419)
1,204
-
1,204
1,204
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
177 TRANSURBAN ANNUAL REPORT 2009
177 Transurban annual reporT 2009
15 Non-current assets - Intangible assets
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
Consolidated
At 1 July 2007
Cost
Accumulated amortisation
Net book amount
Year ended 30 June 2008
Opening net book amount
Amortisation charge
Closing net book amount
At 30 June 2008
Cost
Accumulated amortisation
Net book amount
Year ended 30 June 2009
Opening net book amount
Amortisation charge
Closing net book amount
At 30 June 2009
Cost
Accumulated amortisation
Net book amount
CityLink
$'000
Hills M2
Motorway
$'000
Total
$'000
1,207,442
(146,356)
1,061,086
2,092,571
(175,870)
1,916,701
3,300,013
(322,226)
2,977,787
1,061,086
(29,457)
1,031,629
1,916,701
(54,485)
1,862,216
2,977,787
(83,942)
2,893,845
1,207,442
(175,813)
1,031,629
2,116,141
(253,925)
1,862,216
3,323,583
(429,738)
2,893,845
1,031,629
(40,718)
990,911
1,862,216
(54,485)
1,807,731
2,893,845
(95,203)
2,798,642
1,207,442
(216,531)
990,911
2,116,141
(308,410)
1,807,731
3,323,583
(524,941)
2,798,642
178 TRANSURBAN ANNUAL REPORT 2009
178 Transurban annual reporT 2009
15 Non-current assets - Intangible assets (continued)
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
Parent
At 1 July 2007
Cost
Net book amount
Year ended 30 June 2008
Opening net book amount
Amortisation charge
Closing net book amount
At 30 June 2008
Cost
Accumulated amortisation
Net book amount
Year ended 30 June 2009
Opening net book amount
Amortisation charge
Closing net book amount
At 30 June 2009
Cost
Accumulated amortisation
Net book amount
CityLink Concession Asset
CityLink
$'000
Total
$'000
385,127
385,127
385,127
385,127
385,127
(3,925)
381,202
385,127
(3,925)
381,202
385,127
(3,925)
381,202
385,127
(3,925)
381,202
381,202
(15,394)
365,808
381,202
(15,394)
365,808
385,127
(19,319)
365,808
385,127
(19,319)
365,808
Transurban holds the Concession for Melbourne’s CityLink tollway which grants the Group the right to design, build,
operate and maintain CityLink for the Concession period, ending 14 January 2034, being 34 years following completion of
construction. The tollway was opened progressively from 15 August 1999 to 17 June 2001. Transurban has the right to
collect tolls from CityLink for the duration of the Concession Arrangement and maintains the tollway to ensure continuous
availability for public use. Tolls are escalated in accordance with the maximum allowable increases in the Concession
Deed, being a quarterly escalation at the greater of quarterly CPI or 1.1065% (equivalent to an annual escalation rate of
4.5%) for the first 15 years then quarterly by CPI, but no greater than annual CPI plus 2.5%. At the end of the Concession
period, all Concession Assets are to be returned to the State Government.
During the year ended 30 June 2007, Transurban signed an agreement with the State of Victoria and VicRoads to jointly
fund upgrades and improvements to 75 kilometres of the Monash – CityLink – West Gate Freeway Corridor. On initial
recognition of the agreement an intangible asset was recognised and represents future economic benefits arising from
increased toll revenue and as a result of the increased traffic flow from the upgrades. Transurban is also contributing to the
construction of the upgrade and an intangible asset is recognised equal to that contribution. Revenue and expenses have
been recognised in the period on exchanging construction services for an intangible asset.
Hills M2 Concession Asset
Through the acquisition of the Hills Motorway Group in 2005, Transurban acquired the concession for the Hills M2
Motorway in Sydney, allowing Transurban the right to toll the Motorway until 2042. The Concession Deed also requires
Transurban to maintain the M2 Motorway.
Toll increases for the M2 Motorway are based on a maximum toll increase as defined in the Concession Deed, being a
quarterly escalation at the greater of quarterly CPI or 1%, subject to integer rounding. At the end of the concession period,
all concession assets will be returned to the State Government.
179 TRANSURBAN ANNUAL REPORT 2009
179 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
15 Non-current assets - Intangible assets (continued)
Impairment testing of intangible assets
The Group tests whether goodwill and other intangible assets have suffered any impairments, in accordance with the
accounting policy stated in note1(h). The recoverable amount of assets and cash-generating units have been determined
based on the greater of value-in-use and fair value less cost to sell calculations. These calculations require the use of
assumptions regarding traffic flows, discount rates, growth rates and other factors affecting operating activities of cash-
generating units.
Key assumptions used for fair value less cost to sell calculations
The Group makes assumptions in calculating the fair value less cost to sell of its cash generating units. These include
assumptions around expected traffic flows and forecast operational costs. In performing the calculations the Group has
applied a discount rate of 8.8 per cent (2008: 8.0 per cent), representing the implied discount rate applicable to the risk
profile of the Group's assets, to discount the forecast future attributable cash flows. In determining future cash flows, the
Group has also applied rates of growth to underlying operating assumptions to reflect the expected performance of the
assets beyond the budget period in accordance with the respective concessions. The operating costs have been
escalated in line with a combination of Consumer Price Index (CPI) and Average Weekly Earnings (AWE) forecasts. A
long term CPI rate of 2.5 per cent (2008: 2.5 per cent) and AWE of 4.0 per cent (2008: 4.0 per cent) have been used.
16 Current liabilities - Trade and other payables
Trade payables
Related party payables
Other payables
Other payables
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
345
94,819
14,814
109,978
59
233,200
12,443
245,702
-
-
7,388
7,388
44
257,923
144
258,111
Other payables represents accruals for operating expenses and interest on the Trust’s borrowings.
(a) Risk exposure
Information about the Group's and Parent entity's exposure to financial risk is provided in note 42.
180 TRANSURBAN ANNUAL REPORT 2009
180 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
515,500
-
515,500
439,150
19,000
458,150
-
-
-
-
-
-
17 Current liabilities - Borrowings
Term Debt
Working Capital Facilities
Total current borrowings
(a) Security and fair value disclosures
Information about the terms and conditions of major borrowings, details of the security relating to each of the secured
liabilities and the fair value of each of the borrowings is provided below or in note 20.
(b) Risk exposures
Details of the Group's exposure to risks arising from current and non-current borrowings are set out in note 42.
(c) Term Debt & Working Capital Facilities
The term debt facility of $515.5 million was due to mature in November 2009. This was refinanced in July 2009 (post
balance date). The facility is fully secured against the respective rights of Airport Motorway Ltd and Airport Motorway Trust
in the M1 Motorway and their assets. The interest rate applicable to the term debt is 3.54 per cent (2008: 8.4 per cent).
75 per cent of the borrowings are hedged to an all-in rate after hedging of 6.22 per cent.
The prior year term debt facility of $440.0 million was refinanced in May 2009 using the funds raised via a Syndicated bank
facility (refer to note 20 for details on the new facility).
181 TRANSURBAN ANNUAL REPORT 2009
181 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
18 Current liabilities - Provisions
Distribution to security holders
Provision for distribution to minority interests in
subsidiaries
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
141,152
318,397
141,152
318,397
30,493
171,645
30,844
349,241
-
141,152
-
318,397
The provision recognised in June 2008 was paid to security holders on 29 August 2008. The final 2009 distribution is
payable on 28 August 2009.
Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Distribution to
security
holders
$'000
Provision for
distribution to
minority
interests in
subsidiaries
$'000
Total
$'000
318,397
(459,117)
281,136
762
(26)
141,152
318,397
(459,117)
281,136
762
(26)
141,152
30,844
14,692
(15,043)
-
-
30,493
349,241
(444,425)
266,093
762
(26)
171,645
-
-
-
-
-
-
318,397
(459,117)
281,136
762
(26)
141,152
Consolidated - 2009
Current
Carrying amount at start of year
Distribution paid
Provision recognised
Long term incentive
Distribution reinvestment plan
Carrying amount at end of year
Parent - 2009
Current
Carrying amount at start of year
Distribution Paid
Provision recognised
Long term incentive
Distribution reinvestment plan
Carrying amount at end of year
19 Current liabilities - Non-interest bearing liabilities
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
17,269
16
61,795
79,080
34,667
54
135,257
169,978
-
16
61,795
61,811
-
54
135,257
135,311
Unearned income (related parties)
Unearned income (other)
M1 Upgrade (a)
(a) Refer to note 11 for details.
182 TRANSURBAN ANNUAL REPORT 2009
182 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
457,739
-
3,149,573
3,607,312
-
515,500
2,975,693
3,491,193
-
-
1,862,515
1,862,515
-
-
1,250,728
1,250,728
20 Non-current liabilities - Borrowings
Hills M2 Syndicated facility
Airport Motorway Trust Term Debt
Loans from related parties
(a) Loans from related parties
The Group receives funding from a related party, Transurban Finance Company Pty Ltd, which is used to finance its
activities.
(b) Risk exposures
Information about the Group's and parent entity’s exposure to financial risk is provided in note 42.
(c) Hills M2 Syndicated facility
The facility comprises non-recourse Syndicated Bank debt entered into by the Hills Motorway Trust and Hills Motorway
Management Limited of $465 million (less capitalised borrowing costs of $7.3 million), with terms of three years ($290.5
million) and five years ($174.5 million). This facility refinanced the term debt and working capital facility that were due to
mature in June 2009 (refer note 17).
This facility is secured against the respective rights of Hills Motorway Ltd and Hills Motorway Trust in the Hills M2
Motorway and their assets.
(d) Airport Motorway Trust Term Debt
Refer to note 17 for information regarding the Airport Motorway Trust term debt.
(e) Covenants
The Transurban Group's debt has the following Interest Coverage Ration ("ICR") covenants:
•
•
CityLink - ICR greater than 1.1 times
Group - ICR greater than 1.25 times
In addition, the Group has a market capitalisation clause where gearing must not exceed 60%. Based on the balance
sheet at 30 June 2009, the Group's Security price would need to close below $2.12 per Security for 20 consecutive
business days to trigger this clause.
In addition, the non-recourse debt at M1 Eastern Distributor and Hills M2 Motorway has the following covenants:
•
•
M1 Eastern Distributor - ICR greater than 1.05 times (1.2 times with new facility from July 2009)
Hills M2 Motorway - ICR greater than 1.2 times
(f) Fair value
The carrying values approximate the fair values of financial assets and liabilities brought to account at balance date.
183 TRANSURBAN ANNUAL REPORT 2009
183 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
21 Non current liabilities - Non-interest bearing liabilities
Promissory notes
M1 Upgrade
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
10,613
-
10,613
12,973
51,398
64,371
-
-
-
-
51,398
51,398
The Hills Motorway Trust has entered into leases with the Roads and Traffic Authority of New South Wales (“RTA”).
Annual lease liabilities under these leases total $7.0 million, indexed annually to the Consumer Price Index over the
estimated period that the M2 Motorway will be used. Until such time as a threshold return is achieved, payments under
these leases can be made at any time at the discretion of the Responsible Entity of the Trust, by means of the issue of
non-interest bearing promissory notes to the RTA.
Promissory Notes have been included in the Financial Report as non-interest bearing liabilities at the present value of
expected future repayments. As the timing and profile of these repayments is largely determined by the available equity
cash flows of the M2 Motorway, the present value of the expected future repayments is determined using a discount rate of
12 per cent (2008: 12 per cent) which recognises their subordinated nature.
The face value of promissory Notes on issue at 30 June 2009 is $106.2 million (2008: $96.6 million). The Net Present
Value at 30 June 2008 of the redemption payments relating to these Promissory Notes is $10.6 million (2008: $11.6
million).
The indicative timing of these redemption payments is set out in the following table.
Promissory note redemption
Estimated Promissory Note payments
Later than 5 years but not later than 10 years
Later than 10 years but not later than 15 years
Concession Note liability at the end of the year
Reconciliation of the movement in the Promissory Note
liability
Promissory Notes liability at the start of the year
Discount of Promissory Notes on issue at the beginning of
the year
Revaluation of notes due to change in payment profile
Promissory Notes issued during the year
Discount of Promissory Notes issued during the year
Promissory Note liability at the end of the year
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
-
106,234
106,234
-
96,563
96,563
12,973
11,645
1,557
(4,811)
9,671
(8,777)
10,613
1,402
(1,299)
9,438
(8,213)
12,973
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
184 TRANSURBAN ANNUAL REPORT 2009
184 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
22 Non-current liabilities - Deferred tax liabilities
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
The balance comprises temporary differences
attributable to:
Receivables
Total deferred tax liabilities
Movements:
Opening balance at 1 July
Charged/(credited) to the income statement (note 7)
Closing balance at 30 June
Deferred tax liabilities to be settled within 12 months
Deferred tax liabilities to be settled after more than 12
months
1,140
1,140
795
345
1,140
-
1,140
1,140
795
795
-
795
795
-
795
795
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23 Issued units
The issued units of the Trust are a component of a parcel of stapled securities, each parcel comprising one share in
Transurban Holdings Limited, one unit in Transurban Holding Trust and one share in Transurban International Limited.
The individual securities comprising a parcel of stapled securities cannot be traded separately.
Consolidated
2009
$'000
2008
$'000
6,692,365
6,692,365
6,507,180
6,507,180
Consolidated
2009
Number
'000
2008
Number
'000
1,281,363
1,281,363
1,218,263
1,218,263
(a) Share capital
Ordinary units fully paid
Share capital
Ordinary units fully paid
185 TRANSURBAN ANNUAL REPORT 2009
185 Transurban annual reporT 2009
23 Issued units (continued)
(b) Movements in issued units
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Date
1 July 2007
27 Aug 2007
19 Sep 2007
25 Sep 2007
4 Oct 2007
29 Nov 2007
5 Dec 2007
7 Jan 2008
27 Feb 2008
11 Mar 2008
9 Apr 2008
16 Apr 2008
1 May 2008
25 Jun 2008
29 June 2008
30 June 2008
1 July 2008
9 Jul 2008
19 Aug 2008
19 Aug 2008
21 Aug 2008
31 Aug 2008
31 Aug 2008
11 Sep 2008
11 Sep 2008
11 Sep 2008
26 Sep 2008
9 Oct 2008
23 Oct 2008
7 Nov 2008
13 Nov 2008
14 Nov 2008
14 Nov 2008
17 Nov 2008
18 Nov 2008
19 Nov 2008
20 Nov 2008
30 Nov 2008
8 Dec 2008
8 Dec 2008
23 Dec 2008
24 Dec 2008
30 Dec 2008
31 Dec 2008
7 Jan 2009
22 Jan 2009
22 Feb 2009
11 Mar 2009
30 June 2009
Details
Notes
Opening balance
Distribution Reinvestment Plan
Disposal of treasury Securities
Disposal of treasury Securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Distribution Reinvestment Plan
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Equity placement
Less: Transaction costs arising on issue of securities
Balance
Opening balance
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Distribution Reinvestment Plan
Distribution Reinvestment Plan
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Share Purchase Plan
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Vested treasury units
Vested treasury units
Vested treasury units
Vested treasury units
Vested treasury units
Acquisition of treasury units
Vested treasury units
Disposal of treasury units
Vested treasury units
Vested treasury units
Vested treasury units
Transfer from share-based payment reserve - 2005
Vested treasury units
Disposal of treasury securities
Distribution Reinvestment Plan
Disposal of treasury securities
Less: Transaction costs arising on issue of securities
Balance
(d)
(e)
(e)
(e)
(e)
(e)
(e)
(d)
(e)
(e)
(e)
(e)
(e)
(g)
(e)
(e)
(e)
(e)
(d)
(d)
(e)
(e)
(e)
(f)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(e)
(d)
(e)
Number of
units
'000
1,068,374
Issue
price
11,408 $7.3638
138 $6.7100
44 $6.9400
50 $6.9830
273 $6.5560
30 $6.5710
32 $6.3410
17,058 $6.2100
27 $5.8010
95 $6.3860
44 $5.8960
62 $6.3270
628 $2.4330
120,000 $3.3379
1,218,263
1,218,263
11 $2.7180
8 $3.3700
33 $3.3910
12 $3.3190
36,555 $2.8333
14,451 $2.9002
29 $3.1540
12 $3.1540
68 $3.1540
1,830 $3.3200
11 $3.4960
23 $3.2950
25 $3.3280
56 $3.4894
93 $3.4860
102 $3.0663
91 $3.0663
9 $3.0663
39 $3.0663
19 $3.0663
(443) $3.2081
287 $2.8135
3 $2.8135
90 $3.0663
18 $3.0663
27 $3.0663
35 $3.0663
10 $3.0734
9,585 $2.9904
11 $2.4563
1,281,363
$'000
5,911,399
84,006
932
310
346
1,786
197
203
105,930
154
604
256
392
1,527
400,550
(1,412)
6,507,180
6,507,180
30
27
112
40
103,572
41,911
92
38
215
6,076
38
76
83
196
324
313
279
28
120
58
(1,421)
807
9
276
55
83
2,960
108
29
28,659
27
(35)
6,692,365
186 TRANSURBAN ANNUAL REPORT 2009
186 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
23 Issued units (continued)
All units issued form part of the Transurban Group stapled securities issued. The amounts above represent the value
apportioned to Transurban Holding Trust, with the remaining value apportioned to Transurban Holdings Limited and
Transurban International Limited.
(c) Trust Units
Units entitle the holder to participate in distributions and the winding up of Transurban Holding Trust in proportion to the
number of and amounts paid on the units held.
On a show of hands every holder of units 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 to be issued under the plan at a 2.5 per cent discount to the market price for the 30 June 2009 distribution.
(e) Treasury Units
Stapled Securities (including units in the Trust) were issued to executives under Share Based Payment Plans. The
stapled securities are held by the executive but will only vest in the executive in accordance with the terms of the plans.
The acquired securities cannot be transferred or sold while the loan is outstanding. On forfeit the securities are sold on
market.
(f) Share purchase plan
Transurban raised $6.1 million via a share purchase plan, issuing 1.8 million stapled securities to eligible security holders.
(g) Equity Placement
Transurban raised $658.8 million via an equity placement of 120 million securities to the Canadian Pension Plan
Investment Board on 29 June 2008. Of this $400.6 million was attributed to the Trust, with the remaining value
apportioned to Transurban Holdings Limited and Transurban International Limited.
(h) Capital risk management
The Group is subject to a gearing ratio covenant imposed by Senior Secured lenders. The Group monitors capital on the
basis of the gearing ratio to ensure compliance with the covenant. There have been no breaches of the covenant. For
further information refer to note 20.
The Group’s and the parent entity’s objectives when managing capital are to safeguard their ability to continue as a going
concern, so that they can continue to provide returns to security holders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amounts of distributions paid to security
holders, return capital to security holders, issue new securities or sell assets to reduce debt.
187 TRANSURBAN ANNUAL REPORT 2009
187 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
24 Reserves and retained profits/(accumulated losses)
(a) Reserves
Hedging reserve - cash flow hedges
Share-based payments reserve
Movements:
Hedging reserve - cash flow hedges
Balance 1 July
Revaluation - gross
Transfer to net profit
Transfer to net profit attributable to minority interest
Balance 30 June
Share-based payments reserve
Balance 1 July
Employee share plan expense
Employee distribution
Transfer to equity (vested loan)
Balance 30 June
(b) Accumulated losses
Movements in accumulated losses were as follows:
Balance 1 July
Net profit/(loss) for the year
Distributions
Balance 30 June
(c) Nature and purpose of reserves
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
(4,653)
4,323
(330)
10,518
6,874
17,392
-
4,323
4,323
-
6,874
6,874
10,518
(25,622)
8,963
1,488
(4,653)
6,874
738
(70)
(3,219)
4,323
5,157
4,018
1,343
-
10,518
4,029
1,543
1,302
-
6,874
-
-
-
-
-
6,874
478
(70)
(2,959)
4,323
-
-
-
-
-
4,029
1,543
1,302
-
6,874
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
(1,671,191)
250,830
(280,954)
(1,701,315)
(1,272,192)
223,374
(622,373)
(1,671,191)
(1,543,940)
292,078
(280,954)
(1,532,816)
(1,056,105)
134,538
(622,373)
(1,543,940)
(i) Cash flow reserve - cash flow hedges
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised
directly in equity, as described in note 1(l). Amounts are recognised in profit and loss when the associated hedged
transaction affects profit and loss.
(ii) Share-based payments reserve
The share-based payments reserve is used to recognise the value of benefits issued but not exercised.
188 TRANSURBAN ANNUAL REPORT 2009
188 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
25 Minority interest
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Minority interest
44,007
44,007
47,261
47,261
Minority interests in Airport Motorway Trust
Balance at 1 July
Acquisition of subsidiary
Movement in reserves
Profit for the year
Distribution paid/provided
Balance at 30 June
47,261
-
(1,487)
12,923
(14,690)
44,007
53,867
(7,427)
-
15,470
(14,649)
47,261
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
On 14 September 2007, the Transurban Group acquired an additional 3.75 per cent interest in the Airport Motorway Group
("AMG"), the owner of the concession for the M1 Eastern Distributor in Sydney, for cash consideration of $46.5 million. As
part of the acquisition, Transurban Holding Trust paid $11.6 million, of which $7.4 million was paid to acquire an additional
3.75 per cent of Airport Motorway Trust, and $4.2 million was paid for the receipt of debentures.
The Transurban Group acquired a 71.35 per cent interest in AMG, as part of its takeover of Sydney Roads Group in April
2007. As at 30 June 2009, Transurban holds a 75.1 per cent interest in AMG.
26 Distributions
Distributions proposed
Final distribution payable and recognised as a liability: 11.0 cents (2008: 29.0 cents)
per fully paid Stapled Security payable 28 August 2009
Parent
2009
$'000
2008
$'000
141,095
141,095
319,076
319,076
Distributions paid during the year
Final distribution for 2008 financial year of 29.0 cents (2007: 27.5 cents) per fully paid
Stapled Security paid 29 August 2008
Interim distribution for 2009 financial year of 11.0 cents (2008: 28.0 cents) per fully
paid Stapled Security paid 27 February 2009
Total distributions paid
319,076
294,744
140,041
459,117
303,297
598,041
(cid:39)(cid:76)(cid:86)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) paid in cash or satisfied by the issue of shares under the d(cid:76)(cid:86)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
reinvestment plan during the years ended 30 June 2009 and 2008 were as follows:
Paid in cash
Executive loans - repayments
Satisfied by issue of Stapled Securities (a)
Distributions waiting to be applied to future DRP
172,161
551
286,422
(17)
459,117
396,858
1,535
199,615
33
598,041
(a) The value of stapled securities represents the total value of securities issued, however, this value is apportioned
between Transurban Holding Trust ($174 million), Transurban Holdings Limited ($70 million) and Transurban
International Limited ($42 million).
189 TRANSURBAN ANNUAL REPORT 2009
189 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures
(a) Directors
With the exception of the changes noted below, the following persons were directors of Transurban Infrastructure
Management Limited, the responsible entity of the Trust during the financial year:
(i)
Executive directors
Christopher J Lynch
(ii) Non-executive directors
David J Ryan
Neil G Chatfield (appointed 18 February 2009)
Geoffrey O Cosgriff
Jeremy GA Davis
Robert J Edgar (appointed 21 July 2009)
Lindsay P Maxsted
Susan M Oliver (retired 22 June 2009)
Christopher J S Renwick (retired 22 June 2009)
Rodney Slater (appointed 22 June 2009)
(b) Other key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of the
Group, directly or indirectly, during the financial year:
Name
B Bourke
D Cardiff
K Daley
M Fletcher
A Head
S Hogg
T Honan
M Kulper
E Mildwater
Position
Chief Operating Officer
Group General Manager Human Resources
President International Development
Group General Manager Public Affairs
Group General Manager Strategy & Corporate Development
Treasurer (acting Chief Financial Officer until 14 October 2008)
Chief Financial Officer (from 1(cid:24) October 2008)
President Transurban North America
Chief Legal Counsel & Company Secretary
(c) Remuneration report
The Remuneration Report is presented under the following sections:
A
B
C
D
E
F
G
H
Introduction
Board oversight of remuneration
Group performance and the link to remuneration
Overview of Transurban's executive remuneration arrangements
CEO and Senior Executive arrangements for the year ended 30 June 2009
Contractual arrangements of Executive Directors and Senior Executives
Non-Executive Director (NED) remuneration
Director and Key Management Personnel remuneration and other disclosures
Introduction
A
The Directors of the Transurban Infrastructure Management Limited present the Remuneration Report prepared in
accordance with the requirements of the Corporations Act 2001 and its Regulations. The information has been audited as
required by section 308(3C) of the Corporations Act 2001.
For the purposes of this report, Key Management Personnel of the Transurban Group are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Transurban Group directly or
indirectly. They include all Directors (executive and non-executive) and members of the Executive Committee reporting to
the CEO who have authority and responsibility for planning, directing and controlling the activities of the Group. The
combined group of these executives (which also represents the five highest paid executives) of the Group are referred to
as Senior Executives in this report.
190 TRANSURBAN ANNUAL REPORT 2009
190 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
B
Board oversight of remuneration
Remuneration Committee
The Board Remuneration Committee of the Transurban Group is responsible for making recommendations to the Board on
director and senior executive remuneration policy and structure.
The Remuneration Committee assesses the appropriateness of the nature and quantum of remuneration of executives on
a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum
stakeholder benefit from the attraction and retention of a high performing director and executive team.
Review of remuneration strategy
The Group reviewed its remuneration strategy during the year and reaffirmed value creation as the key measure of the
reward framework.
As a result of the review, the Board removed the Business Generation Incentive Plan from the framework. Performance
measures in Executive incentive schemes were also reviewed with a focus on maximising shareholder value in the short
and long term. Appropriate measures and targets have been implemented which maintain emphasis on earnings growth,
shareholder return and other key goals over the next three years.
Through these challenging external market conditions, attracting and retaining highly skilled people remains a fundamental
goal of the Group. To this end, Transurban recognises that extracting key people of calibre from their existing reward
arrangements in other companies may be required. The Group also recognises the need to retain and reward those
employees with responsibility to oversee future growth opportunities. The remuneration strategy has sufficient flexibility to
accommodate these needs where appropriate.
C
Group performance and the link to remuneration
Each element of the Remuneration framework is linked to the Group’s financial performance. Changes to fixed pay are
determined by an employee’s performance and by the Group’s capacity to pay. Short Term Incentives (STIs) also require
individual performance but are heavily determined by the Group’s EBITDA results. Long Term Incentives (LTIs) are
determined through the use of dual performance measures, EBITDA and Total Shareholder Return (TSR). Performance
hurdles for both STIs and LTIs are reviewed and determined annually so as to clearly identify expected improvements to
the Group’s performance.
D
Overview of Transurban's executive remuneration arrangements
Remuneration strategy and objectives
Transurban’s remuneration objective is to attract, retain, motivate and reward employees who are critical to the continued
growth and success of the Group.
The Group’s reward framework is designed to reward executives with a level and mix of remuneration commensurate with
their position and responsibilities within the Group. The key objectives are to:
•
•
•
•
•
Offer competitive remuneration benchmarked against the external market;
Provide strong and transparent linkages between individual and Group performance and rewards;
Reward executives for Group, business unit and individual performance against targets set by reference to
appropriate benchmarks;
Align the interests of executives with those of security holders by aligning incentives with increased security holder
value; and
Encourage executive security holdings.
191 TRANSURBAN ANNUAL REPORT 2009
191 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
Executive remuneration structure
The following table illustrates the structure of Transurban’s executive remuneration arrangements:
Remuneration Items
Plans
Conditions
Variable or ‘at risk’ remuneration
Long term incentive
Short term incentive cash
awards
Total fixed remuneration
Benefits
Base salary
Performance
Awards Plan (PAP)
Relative TSR
hurdle (50%)
Proportional
EBITDA hurdle
(50%)
Executive Equity
Plan (EEP)
3 year time-restricted equity
EBITDA target
(50%)
Individual KPIs
(50%)
Set with reference to role, market and
experience
* Proportional EBITDA is earnings before net finance costs (revenues and expense), tax, depreciation and amortisation. It includes
EBITDA from CityLink (100%), Hills M2 (100%), M1 Eastern Distributor (75.1%), M4 (50.61%), M5 (50%), M7 (50%) and DRIVe (75%
including Pocahontas).
Total fixed remuneration
Total fixed remuneration is represented by Total Employment Cost (TEC), comprising cash, superannuation, and
prescribed benefits including death and disability insurance, salary continuance insurance and car parking.
Variable or ‘at risk’ remuneration
Variable remuneration is the link between remuneration and performance. As executives progress in seniority, the
proportion of remuneration which is dependent on the performance of the Group increases.
Short term incentives
Short term incentives (STI) comprise cash awards tied to individual and group performance indicators. Performance
measures for short term incentives are based around company and individual performance. Performance measures for
short term incentives are heavily oriented towards financial performance. Other non-financial performance metrics are also
included to ensure a broader performance outcome. Group and individual performance measures are set annually and
may vary from year to year to allow the Group to establish the most appropriate measures based on business
circumstances at the time of setting these measures.
Long term incentives
Long term incentives (LTI) comprise both a Performance Awards Plan (PAP) and Executive Equity Plan (EEP). The
Performance Awards Plan is designed to encourage sustainability of performance in the medium to longer term and is
assessed over a period of three years. The plan provides equity-based remuneration which vests subject to Transurban
Group’s earnings and relative total security holder return performance.
The EEP is designed to encourage executive retention and security holding of this group of employees. Eighty per cent of
an executive’s LTI allocation is granted in the PAP with the remaining twenty per cent granted in the EEP. Details of the
LTI are provided on page (cid:20)(cid:28)(cid:23).
Hedging of equity awards
The Group prohibits executives from entering into arrangements to protect the value of unvested equity awards. This
includes entering into derivative contracts to hedge their exposure to options or securities granted as part of their
remuneration package.
192 TRANSURBAN ANNUAL REPORT 2009
192 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
E
CEO and Senior Executive arrangements for the year ended 30 June 2009
Determining remuneration levels
The remuneration of the Chief Executive Officer (CEO) and executives is established by the Board, based on the
recommendation of the Remuneration Committee. Transurban also undertakes an annual remuneration review to
determine the total remuneration positioning against the market.
Remuneration mix
The CEO’s remuneration mix comprises 34% fixed remuneration as a proportion of total remuneration, 33% on target short
term cash incentives, and 33% equity based incentives. The Executive Committee’s remuneration mix comprises 50%
fixed remuneration as a proportion of total remuneration, 25% on target short term cash incentives, and 25% equity based
incentives. The composition of remuneration is illustrated in the diagram below.
Total Fixed Remuneration
Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and
fringe benefits such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient
without creating additional cost for the Group.
There are no guaranteed base pay increases in any executive’s contract of employment. An executive’s TEC is reviewed
annually by the Remuneration Committee against market data for comparable roles and taking account of internal
relativities. The process consists of a review of Group and individual performance, relevant comparative remuneration
externally and internally and, where appropriate, independent external advice on policies and practices.
In the 2010 financial year, the Group anticipates restraint in fixed remuneration increases. A freeze in fixed pay has been
implemented for financial year 2010 for the CEO, Executive Committee and other senior managers. Any increases for the
broader workforce will be targeted to improving internal equity, rewarding high performers and to facilitate succession
planning.
2009 Short term incentive structure
The Remuneration Committee considers that a robust performance management system is essential in ensuring a strong
link between remuneration and performance. As a result the short term incentive (STI) structure is based on a
transparency and accountability model, with a reward mechanism based on goal setting and the employee’s line of sight to
business performance. The STI comprises cash awards that are received subject to the attainment of clearly defined
Group and individual hurdles.
STI payments are made to executives for the achievement of financial and non-financial targets set at the beginning of
each financial year, subject to Board discretion. A target STI amount is specified for each executive, expressed as a
percentage of the executive’s TEC. The CEO has an annual STI target of 100% of TEC. The target STI payment for senior
executives is 50% of TEC.
193 TRANSURBAN ANNUAL REPORT 2009
193 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
Actual STI payments to each executive depend on the extent to which specific targets set at the beginning of the financial
year are met. The measures represent key drivers for the success of the business and shared values for the key
management personnel.
For the 2009 financial year, the measures comprise:
Performance measure
Proportion of STI award hurdle applies to
Performance target
Group performance
50% of each individual’s target STI award
Individual performance key
performance indicators (KPIs)
50% of each individual’s target STI award
Proportional EBITDA target which is established by
the Board at the commencement of each year
based on the Group’s budget.
KPIs are established at the beginning of each year
with the CEO for his executive team and the Board
for the CEO.
On an annual basis, after consideration of performance against targets, the CEO recommends to the Remuneration
Committee the STI amount (if any) to be paid to each executive. The committee then recommends the amount to the
Board for approval. The STI awards are usually paid in August/September following Transurban’s annual performance
review process. For each component of the award, 50% of the target amount vests at threshold performance relative to
budget, 100% of target vests for achievement of target performance and an additional 50% above target can be earned for
a predetermined level of outperformance.
The Executive Committee shared five individual Key Performance Indicators (KPI) being Cost Minimisation plus the
establishment and implementation of improvement plans in the areas of Sustainability, Risk Management, People
Management and Safety. These KPIs comprised 25% of the available STI reward. Improvement in the management of
these business activities was identified as critical to the future success of the Group following a period of acquisition in
prior years. The Board determined that the Executive Committee either met or exceeded each of the shared KPIs. Cost
savings have been achieved beyond the expected targets. There has been significant improvement in the other four KPIs
evidenced by the Board in new or updated policies, procedures and reporting frameworks. A safety and risk management
culture has been embedded and control effectiveness measures put in place. People related performance planning and
review processes have been fully complied with and the Group’s sustainability agenda has been clarified and deployed.
Individual KPIs, representing the remaining 25% of the reward, were unique to an Executive’s area of accountability. The
Board reviewed the achievement of these KPIs in determining the Executive’s STI reward for 2009. Overall the Board
consider that the Executive Committee have performed well against the targets set for the year.
2009 Long term incentive structure
Long term incentive (LTI) grants may be awarded annually to executives based on performance to provide an incentive for
future performance and in order to align remuneration with the creation of security holder wealth.
For the 2009 financial year, the CEO and CFO received an LTI allocation of 100% of TEC and senior executives received
an LTI of 50% of TEC. Eighty per cent of the LTI allocation was granted in the Performance Awards Plan with the
remaining twenty per cent (or a minimum value of $100,000 whichever was the greater) granted in the Executive Equity
Plan.
2009 Performance Awards Plan
The Performance Awards Plan (PAP) is a modified version of the 2008 Performance Rights Plan (PRP). Under the PAP
eligible executives, including those outside Australia, receive a grant of Performance Awards which entitles participants to
receive securities at no cost subject to the achievement of performance conditions. The Board has discretion as to the
form of the award at the end of the performance period and may grant cash payments of equivalent value. No dividends or
distributions on securities are payable to participants prior to vesting.
Awards were first made under the PAP on 1 November 2008. The table on page (cid:21)(cid:19)(cid:24) provides details of rights granted and
the value of rights granted, exercised and lapsed during the year.
Dual performance measures (an earnings measure and relative total security holder return) apply to Performance Awards.
The use of dual measures balances the need to improve the underlying performance of the business over the long term as
well as achieve appropriate returns relative to the market.
194 TRANSURBAN ANNUAL REPORT 2009
194 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
These measures are as follows:
1. A Proportional EBITDA hurdle applies to 50% of the Performance Award. Proportional EBITDA is earnings before net
finance costs (revenues and expense), tax, depreciation and amortisation. It includes EBITDA from CityLink (100%), Hills
M2 (100%), M1 Eastern Distributor (75.1%), M4 (50.61%), M5 (50%), M7 (50%) and DRIVe (75% including Pocahontas).
As this plan is a long term plan, the proportional EBITDA measure will be adjusted to include or exclude the relevant
EBITDA from acquisitions and divestments that may occur after the Base Year. In addition, any gain or loss arising from
the investment in ConnectEast will be excluded.
This operational measure was chosen to reflect Transurban’s underlying business goal of sustainable growth in earnings
of existing operations in order to improve security holder value.
2. A relative Total Security holder Return (TSR) hurdle applies to 50% of the Performance Award. From 1 November 2008,
Transurban’s comparator group for the TSR measure is the S&P/ASX 100 constituents at the date of grant. This peer
group reflects the Group’s competitors for security holder capital and talent.
TSR measures total return on investment of a security, taking into account both capital appreciation and distributed
income. It assumes a notional reinvestment of distributions paid on the security (on a pre-tax basis) in additional
securities, at the market price on the day before the securities begin trading ex the relevant distribution. The Group's
performance against the hurdle is determined according to Transurban Group’s ranking against the TSR growth of the
peer group over the three year performance period. A volume weighted average price of securities for the one week up to
and including the testing date is used to calculate TSRs.
Relative TSR was selected as a performance hurdle as it ensures an alignment between comparative security holder
return and reward for executives.
The vesting schedule and performance hurdles for the Performance Awards are as follows:
Performance measure
Proportion of
Performance
Award hurdle
applies to
Proportional EBITDA
50%
TSR
50%
Performance target
% of award vesting
5% compound proportional EBITDA
annual growth over the three year
performance period from the Base
Year*
9% compound proportional EBITDA
annual growth
50% of the proportional EBITDA award
100% of the proportional EBITDA award
Between 5-9% proportional EBITDA
growth
Straight line vesting between 50-100%
of the proportional EBITDA award
TSR is ranked at or below the 50th
percentile of the comparator group
constructed in the Base Year**, tested
at the end of each of the three year
performance period
0% of the TSR award
TSR is ranked above the 50th percentile
of the comparator group
50% of the TSR award
TSR is ranked at or above the 75th
percentile
100% of the TSR award
TSR is ranked above the 50th percentile
but below the 75th percentile
Straight line vesting between 50-100%
of the TSR award
* For the 2009 grant this is the 2008 financial year full year actual proportional EBITDA.
** For the 2009 grant this is the TSR comparator group constructed at the date of grant.
The EBITDA target has been reviewed and adjusted to reflect the new ‘proportional EBITDA’ measure which is ring fenced
to current operations.
195 TRANSURBAN ANNUAL REPORT 2009
195 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
Performance Awards were granted on 1 November 2008 with a three year vesting period. The awards are tested at the
end of each year. If the performance measures are satisfied for the year, one third of the awards are preserved until the
end of the three year period. At the end of the three years a cumulative test of the performance measures is applied to
any unvested awards.
No retesting is available after the three year performance period. In the event of a change of control of the Group,
automatic vesting of awards occurs.
2009 Executive Equity Plan
Equity awards are granted under the Executive Equity Plan (EEP) based on executives’ performance and are designed to
encourage retention of executives while focusing on business excellence. The EEP also aligns with Transurban’s
remuneration philosophy of encouraging executive security holding.
Individuals who are high performers and in business critical roles are nominated for awards for their past contribution and
expected future performance. Board approval is required to grant EEP awards to nominated executives.
Under the EEP, eligible executives receive a grant of stapled securities in the Transurban Group (”securities”) at no cost
that are subject to disposal restrictions for three years from the grant date. Participants are entitled to distributions paid on
their Securities during the restriction period. If the executive ceases employment with Transurban during the restriction
period, their Securities will be forfeited unless the Board decides otherwise.
Awards were first made under the EEP on 1 November 2008. The table on page (cid:21)(cid:19)(cid:24) provides details of awards.
Executives outside Australia
In light of US taxation implications, the overseas plan has been adapted to mirror the security awards under EEP with a
grant of Performance Rights. Eligible executives based outside Australia receive a grant of Performance Rights at no cost
which entitles participants to receive Securities which vest at the end of the vesting period of three years. Cash in lieu of
distributions on the Securities is payable to participants during the vesting period. If the executive ceases employment
with Transurban prior to the vesting date, their unvested Performance Rights will be forfeited.
All Employee Plans
The Group operated three broad employee-based security plans, the ShareLink Investment Tax Exempt Plan, the
ShareLink Investment Tax Deferred Plan and the ShareLink Incentive Plan. These plans were offered to the Group’s
permanent employees, including executives.
ShareLink Investment Tax Exempt Plan (ITEP)
The ITEP provided employees the opportunity to invest, on a tax-exempt basis, up to $1,000 per annum, of which half is
contributed by the Group. This plan was suspended in May 2009 following changes to taxation announced in the Federal
budget. The Group intends to reactivate this plan with required modifications once the proposed legislation has been
enacted.
ShareLink Investment Tax Deferred Plan (ITDP)
The Investment Tax Deferred Plan provided employees the opportunity to purchase securities, on a tax-deferred basis
using pre-tax salary. There is no cap on the amount of salary an employee may elect to contribute and the company
provided a matching contribution on a dollar-for-dollar basis to a maximum of $3,000 per annum. This plan was
suspended in May 2009 following changes to taxation announced in the Federal budget. The Group also intends to
reactivate this plan with required modifications once the proposed legislation has been enacted.
ShareLink Incentive Plan (IP)
In 2009 an allocation of 100 securities at no cost was made to each of the 453 eligible employees in recognition of the
Group’s prior year performance.
Legacy plans
Transurban has a number of schemes which no longer operate as open plans but under which some Key Management
Personnel have outstanding entitlements. No grants were made in the 2009 financial year under any of the legacy plans.
Refer to page (cid:21)(cid:19)(cid:24) for details of the legacy plans.
196 TRANSURBAN ANNUAL REPORT 2009
196 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
F
Contractual arrangements of executive directors and senior executives
Remuneration for the Chief Executive Officer (CEO) and key management personnel are formalised in service
agreements. Each of these agreements provides for access to performance related STI payments and other benefits as
described above. Although not specified in agreements, executives may be nominated to participate in executive long term
incentive plans (or equivalent cash plans for those executives located outside Australia).
Other key details of the agreements relating to remuneration are provided below:
Chief Executive Officer
The Chief Executive Officer (CEO) is employed under a rolling contract. The current employment contract commenced on
4 February 2008.
Under the terms of the present contract:
•
•
•
•
•
•
The CEO received fixed remuneration of $2,080,000 per annum, which is reviewed prior to 30 June each year;
A short term incentive payment of $2,800,000 will be made in September 2009. For subsequent years, the STI target
will be 100 per cent of annual TEC. The payment will be the greater of actual performance based on the
achievement of business or individual KPIs or 50 per cent of annual TEC;
An award under the Executive Equity Plan to the value of $416,000 was made on 1 November 2008;
An allocation of Performance Awards to the value of $1,664,000 was granted on 1 November 2008. The
Performance Awards will be subject to performance conditions and will vest three years from grant date;
The CEO’s Performance Awards allocation is derived by using an option valuation methodology. A modified Black
Scholes with Monte Carlo simulations was adopted for the FY09 allocation. The number of Performance Awards will
be derived by dividing the CEO’s remuneration value by this valuation;
The CEO has a contractual entitlement to post-employment vesting of Long Term Incentives.
The CEO’s termination provisions are as follows:
•
•
•
The CEO may resign from his position and thus terminate this contract by giving six months’ written notice. Upon
termination, the CEO is entitled to retain any unvested LTIs, which will vest in accordance with the performance
conditions under the Performance Awards Plan (PAP) as at the time of the allocation.
The Group may terminate this employment agreement by providing twelve months’ written notice or providing
payment in lieu of the notice period (based on the fixed component of the CEO’s remuneration). Upon termination on
notice by the Group, the CEO is entitled to retain any unvested LTIs, which will vest in accordance with the
performance conditions under the Performance Awards Plan (PAP) as at the time of the allocation.
The Group may terminate the contract at any time without notice if serious misconduct has occurred. Where
termination with cause occurs the CEO is only entitled to that portion of remuneration that is fixed, and only up to the
date of termination. Upon termination with cause any unvested LTIs will immediately be forfeited.
Other key management personnel
All other key management personnel have ongoing contracts. Total Employment Cost (TEC) for these executives is
reviewed annually by the Remuneration Committee and approved by the Board.
Executive termination provisions are as follows:
•
•
The executive may terminate their contract by giving three months’ written notice.
The Group may terminate the executive's employment agreement by providing six months’ written notice or providing
payment in lieu of the notice period (based on the fixed component of the executive's remuneration). Upon
termination on notice by the Group, any LTIs that have vested will be released. LTIs that have not yet vested will be
forfeited.
197 TRANSURBAN ANNUAL REPORT 2009
197 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
•
The Group may terminate the contract at any time without notice if serious misconduct has occurred. Where
termination with cause occurs the executive is only entitled to that portion of remuneration that is fixed, and only up to
the date of termination. Upon termination with cause, any unvested LTIs will immediately be forfeited.
In addition to the above terms and conditions, the KMP service agreements include the following:
Ken Daley
•
•
A contracted bonus equal to $1,000,000 to be paid on 30 June 2010, subject to meeting performance conditions in
relation to Transurban’s North American business established at the commencement of the arrangement in June
2007. The performance conditions underlying the bonus are tracking on target.
Access to any unvested long-term incentives (pro-rated based on time served) subject to stipulated performance
criteria.
Michael Kulper
•
A bonus arrangement for the completion of the I-95 project which expired without payment on 30 June 2009.
Tom Honan
•
•
•
A sign-on award equal to $1,000,000 received on commencement. Tom Honan received this award 75% in cash and
25% in Transurban equity purchased on market using a 5 day volume weighted average price of $5.3028.
For the 2009 year only, Tom Honan’s Performance Incentive will equal 100% of TEC as a guaranteed payment,
subject to remaining an employee when Performance Incentives are awarded. In subsequent years Tom Honan’s
target will be 50% of TEC payable at the discretion of the Group.
In November 2008 Tom Honan received an allocation of Long Term Incentives to the value of $1,000,000. In
subsequent years the target value will be 50% of TEC.
The Group determined that the arrangements above were necessary to attract Tom Honan from his existing position.
G
Non-executive director (NED) remuneration
Policy
The Board seeks to set aggregate remuneration at a level that provides the Transurban Group with the ability to attract
and retain directors of the highest calibre, whilst incurring a cost that is acceptable to security holders.
The amount of aggregate remuneration sought to be approved by security holders and the fee structure is reviewed
annually. The board considers advice from external consultants as well as the fees paid to NEDs of comparable
companies when undertaking the annual review process.
The constitution and the ASX listing rules specify that the aggregate remuneration of NEDs shall be determined from time
to time by a general meeting. The latest determination was at the annual general meeting (AGM) held on 29 October 2007
when security holders approved an aggregate remuneration of $2,100,000 per year. The Board is not seeking to increase
the aggregate remuneration at the 2009 AGM.
The remuneration of NEDs consists of director’s fees and committee fees. NEDs are not eligible to receive any
performance based compensation.
Non-executive director fee structure
Each non-executive director of THL receives a base fee of up to $140,000 for being a director of the Group, apart from the
Chairman who receives a fee of up to three times this amount. An additional fee is also paid for each board committee on
which a NED sits (ranging from $10,000 to $30,000 for participation in or chairing a sub-committee), apart from the
Chairman who does not receive additional fees for chairing or participating in board committees. The payment of additional
fees for serving on a committee recognises the additional time commitment required by NEDs who serve on one or more
sub committees.
The constitutions of the entities comprising the Transurban Group provide that the total remuneration paid in a year to non-
executive directors may not exceed $2.1 million in total for the Group.
198 TRANSURBAN ANNUAL REPORT 2009
198 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
In September 2005, the Board resolved to discontinue previously provided retirement benefits for NEDs with effect from 30
September 2005, such that future directors were not entitled to this benefit. The value of benefits accrued up to this date
attracts interest at the statutory fringe benefits rate. The accrued `frozen’ retirement benefits plus interest will be paid to
directors upon their retirement.
The remuneration of NEDs for the period ending 30 June 2009 and 30 June 2008 is detailed in tables on page (cid:21)(cid:19)(cid:19) of this
report.
Equity participation
The Group encourages NEDs to hold Transurban Securities. Under the ShareLink Investment Tax Deferred Plan,
approved by security holders at the AGM held on 27 October 2008, NEDs were able to sacrifice a portion of their director
fees to acquire Transurban securities through a tax-deferred arrangement. The maximum contribution is capped at 50% of
pre-tax NED fees and the company does not provide a matching contribution for NEDs. Transurban equities are
purchased on behalf of the participating NEDs and employees based on a pre-determined timeframe and frequency.
This arrangement is in line with the Group’s overall remuneration philosophy and market practice and aligns NEDs with
security holder interests.
This plan was suspended in May 2009 following the budget changes to taxation arrangements on shareplans, resulting in
no Security purchases over the 2009 financial year. The Group intends to reactivate this plan with required modifications
once the proposed legislation has been enacted.
H
Director and key management personnel remuneration and other disclosures
Details of the remuneration of directors, key management personnel (as defined in AASB 124 Related Party Disclosures)
and specified executives of the Group are set out in this note.
Key management personnel
For the purposes of this report, key management personnel (KMP) of the Transurban Group are defined as those persons
having authority and responsibility for planning, directing and controlling the major activities of the Transurban Group,
directly or indirectly. They include all Directors of the parent (executive and non-executive) and members of the Executive
Committee reporting to the CEO who have authority and responsibility for planning, directing and controlling the activities
of the Group.
The key management personnel of the Group are the Directors as per page (cid:20)(cid:24)(cid:19) and the following executives:
•
•
•
•
•
•
•
•
•
B Bourke - Chief Operating Officer
D Cardiff - Group General Manager, Human Resources
K Daley - President, International Development
M Fletcher - Group General Manager, Public Affairs
A Head - Group General Manager, Strategy and Corporate Development
S Hogg - Treasurer(cid:3)(cid:11)(cid:36)(cid:70)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:3)(cid:88)(cid:81)(cid:87)(cid:76)(cid:79)(cid:3)(cid:20)(cid:23)(cid:3)(cid:50)(cid:70)(cid:87)(cid:82)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:27)(cid:12)
T Honan - Chief Financial Officer (appointed 15 October 2008)
M Kulper - President Transurban North America
E Mildwater - Chief Legal Counsel and Company Secretary
199 TRANSURBAN ANNUAL REPORT 2009
199 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
Remuneration table
Remuneration of key management personnel, who included the five highest paid executives of the Company and the
Group.
The remuneration amounts below represent the entire amounts paid by the Transurban Group. The full amounts have
been disclosed as a reasonable basis of apportionment is not available to reflect the Trust's portion.
2009
Short-term employee benefits
Post-employment
benefits
Long-
term
benefits
Term-
ination
Benefits
Share-based payments
Value of
equities
acquired in
lieu of cash
salary/fees Cash Bonus
$
$
Cash
salary and
fees
$
Non-
Monetary
benefits
$
Super-
annuation
$
Retire-
ment
benefits (3)
$
Long
service
leave
$
Executive
Loan Plan (a) PRP/PAP (b)
$
$
$
EEP
$
Total
$
Name
Non-executive
directors
D Ryan
N Chatfield
G Cosgriff
J Davis
R Edgar
L Maxsted
S Oliver(1)
C Renwick
R Slater
Sub-total non-
executive
directors
Executive
directors
C Lynch
Other key
management
personnel
B Bourke
D Cardiff
K Daley
M Fletcher
A Head
S Hogg
T Honan(2)
M Kulper
E Mildwater
Total key
management
personnel
compensation
385,306
51,035
165,131
158,760
-
174,399
166,367
119,293
4,098
1,224,389
1,980,839
635,976
344,033
658,635
274,381
368,033
355,355
690,950
1,235,047
322,142
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34,694
4,593
14,869
24,000
-
15,696
14,973
56,778
-
-
-
14,192
23,642
-
-
26,554
-
-
165,603
64,388
-
-
-
-
-
-
-
-
-
-
-
2,800,000
36,881
100,000
-
-
-
-
-
-
250,000
-
-
329,800
314,500
383,400
163,600
204,500
170,000
1,750,000
630,022
217,000
7,845
-
97,354
6,301
-
-
-
-
-
100,241
57,042
94,694
28,319
33,042
31,900
36,226
110,949
28,911
-
-
-
-
-
-
-
-
-
-
-
15,913
16,198
46,917
15,327
16,419
-
-
72,102
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
420,000
55,628
194,192
206,402
-
190,095
207,894
176,071
4,098
1,454,380
404,265
75,093
5,397,078
88,498
20,303
-
1,679
12,850
-
-
-
-
217,564
82,038
181,986
47,003
62,254
19,436
194,358
244,528
24,295
18,051
18,051
18,051
18,051
18,051
14,440
36,103
22,575
18,051
1,413,888
852,165
1,481,037
554,661
715,149
591,131
2,957,637
2,315,223
610,399
123,330
1,477,727
256,517 18,342,748
8,089,780
250,000
6,962,822
148,381
786,927
64,388
182,876
(a) The amounts disclosed as remuneration is that part of the value of the Executive Loan Plan benefit which is attributable to the current
year portion of the vesting period.
(b) The amounts disclosed as remuneration is that part of the value of the Performance Rights Plan benefit and Performance Awards Plan
benefit which is attributable to the current year portion of the vesting period.
(c) The amounts disclosed as remuneration is that part of the value of the Executive Equity Plan benefit which is attributable to the current
year portion of the vesting period.
(1) Susan Oliver retired on 22 June 2009 and received payment of $405,134 in retirement benefits.
(2) Tom Honan elected to receive a part of his sign-on award in Transurban securities which were purchased on market.
(3) Retirement benefits were frozen for all participating non-executive directors a their current levels up to September 2005. Interest
accrues on director entitlement balances at 7.05 per cent per annum.
200 TRANSURBAN ANNUAL REPORT 2009
200 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
2008
Short-term employee benefits
Post-employment benefits
Long-
term
benefits
Termination
Benefits
Share-based payments
Value of
equities
acquired in
lieu of cash
salaries/fees Cash bonus
$
$
Non-
monetary
benefits
$
Cash
salary and
fees
$
Super-
annuation
$
Retirement
benefits #
$
Long
service
leave
$
Executive
Loan Plan (a)
$
Performan
ce Rights
Plan (b)
$
$
Total
$
385,484
165,208
166,070
49,715
165,208
110,047
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34,694
14,869
20,000
4,474
14,869
70,000
-
14,192
23,642
-
27,160
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
420,178
194,269
209,712
54,189
207,237
180,047
821,020
1,289,868
1,000,000
-
2,000,000
9,218,000
3,763
-
15,000
100,000
-
-
-
86,233
-
5,249,395
-
529,631
-
191,405
3,839,783
16,664,532
689,552
633,182
270,889
454,420
478,842
236,090
409,910
6,325,505
-
750,000
-
-
-
-
-
1,750,000
702,000
557,300
250,000
1,416,200
2,616,927
-
586,000
17,346,427
9,020
8,480
-
-
-
-
9,020
30,283
61,953
51,627
50,433
100,000
38,700
6,470
96,190
679,279
-
-
-
-
-
-
-
64,994
17,231
28,478
15,977
29,482
22,401
-
(8,124)
191,678
571,891
-
-
-
-
643,191
495,580
6,960,057
133,138
119,075
28,835
(124,921)
(142,201)
49,386
93,202
686,145
104,776
97,292
28,737
42,641
41,668
8,217
82,323
597,059
2,289,561
2,245,434
644,871
1,917,822
3,056,337
943,354
1,764,101
34,631,427
Name
Non-executive
directors
D Ryan
G Cosgriff
J Davis
L Maxsted
S Oliver
C Renwick
Executive
directors
C Lynch(1)(3)
K Edwards(4)
Other key
management
personnel
C Brant(7)
B Bourke(1)
D Cardiff
K Daley
M Kulper
G Mann(5)
P O'Shea(6)
Total
(a) The amounts disclosed as remuneration is that part of the value of the Executive Loan Plan benefit which is attributable to the current
year portion of the vesting period.
(b) The amounts disclosed as remuneration is that part of the value of the Performance Rights Plan benefit which is attributable to the
current year portion of the vesting period.
(1) Chris Lynch and Brendan Bourke elected to receive part of their fixed remuneration in Transurban securities which were purchased on
market.
(2) Retirement benefits were frozen for all participating non-executive directors at their current levels up to 30 September 2005. Interest
accrues on director entitlement balances at 7.05 per cent per annum.
(3) Chris Lynch joined the Group on 4 February 2008 as CEO elect and subsequently became CEO on April 5.
(4) Kim Edwards was the Managing Director from 1 July 2007 until his retirement on 4 April 2008. Kim Edwards' cash bonus comprised a
short term incentive payment of $1,000,000, a Strategic Milestone Incentive Plan bonus of $5,000,000 and a Business Generation Plan
Incentive of $3,218,000. Kim Edwards' termination payment included the following contractual and statutory payments: $2,470,000 being
1.3 times of fixed remuneration, $2,139,194 being all statutory leave entitlements and notice in lieu of unexpired portion of his employment
contract (from 5 April 2008 to 21 February 2009), and $640,200 being cash payment in lieu of the expiration of long term incentives.
(5) Gary Mann was the Group General Manager Development from 1 July 2007 until his resignation on 23 November 2007. Gary Mann's
termination payment included a statutory payment of $43,191 and a termination payment of $600,000.
(6) Paul O’Shea was the Group General Manager Legal and Risk Management from the beginning of the reporting period until his
departure on 14 July 2008. Paul O’Shea’s termination payment totalled $495,580.
(7) Chris Brant was the Chief Finance Officer during the year ended 30 June 2008. Chris Brant’s termination payment totalled $571,891.
201 TRANSURBAN ANNUAL REPORT 2009
201 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Executive Directors
C Lynch
Other key management personnel
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
S Hogg
T Honan
E Mildwater
Fixed remuneration
At risk -STI
At risk - LTI
2009
2008
2009
2008
2009
2008
34%
50%
50%
50%
50%
50%
50%
60%
50%
50%
34%
50%
60%
50%
50%
-
-
-
-
-
33%
25%
25%
25%
25%
25%
25%
20%
25%
25%
33%
25%
20%
25%
25%
-
-
-
-
-
33%
25%
25%
25%
25%
25%
25%
20%
25%
25%
33%
25%
20%
25%
25%
-
-
-
-
-
STI payments for 2008 and 2009 financial years
For the 2008 financial year, 100% of the STI as previously accrued in that period vested to executives and was paid in the
2009 financial year.
For each STI payment to the key management personnel listed in the tables below, the percentage of the available STI
that will be paid and the percentage that will be forfeited because the person did not meet his or her performance criteria,
are set out below. No part of the STI is payable in future years.
Target STI
Paid
%
Forfeited
%
Executive directors
C Lynch
Other key management personnel
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
S Hogg
T Honan
E Mildwater
135
90
157
102
102
102
102
106
100
109
-
10
-
-
-
-
-
-
-
-
202 TRANSURBAN ANNUAL REPORT 2009
202 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
Equity instruments
Value of equity instruments granted, exercised and lapsed
(A)
Remuneration
%
(B)
Value at
grant date
$
(C)
Value at
exercise date
$
(D)
Value at
lapse date
%
C Lynch
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
S Hogg
T Honan
E Mildwater
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Loan Plan 2006
Executive Loan Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Loan Plan 2006
Executive Loan Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Cash Plan 2007
Executive Cash Plan 2008
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Cash Plan 2007
Executive Cash Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Loan Plan 2006
Executive Cash Plan 2007
Performance Rights Plan 2009
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Loan Plan 2006
Executive Loan Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Performance Awards Plan 2009
Executive Equity Plan 2009
Performance Awards Plan 2009
Executive Equity Plan 2009
Performance Awards Plan 2009
Executive Equity Plan 2009
80
20
30
40
50
40
10
20
20
30
40
10
30
30
50
40
10
20
30
50
40
10
10
10
20
40
10
15
20
20
40
10
20
20
40
10
40
10
1,830,884
340,093
142,500
220,000
325,000
323,485
81,753
40,000
44,000
96,000
176,048
81,753
103,950
126,000
275,000
254,167
81,753
36,080
135,000
268,725
550,422
102,241
14,850
20,550
39,000
132,036
81,753
22,950
30,825
70,724
176,048
81,753
88,024
65,399
880,232
163,507
110,030
81,753
-
-
-
-
-
-
-
12,742
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,396
-
-
-
-
401
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
A = The percentage of the value of remuneration, based on the value at grant date set out in column B.
B = The value at grant date calculated in accordance with AASB 2 Share-based Payment.
C= The value at exercise date that were granted as part of remuneration and were exercised/matured during the year.
D = The value at lapse date that were granted as part of remuneration and that lapsed during the year.
The terms and conditions of each grant of Performance Awards in the 2009 financial year are:
Performance Criteria
Grant date
Vesting date
Expiry date
TSR
EBITDA
1 Nov 2008
1 Nov 2008
1 Nov 2011
1 Nov 2011
1 Nov 2011
1 Nov 2011
Fair value of rights
at grant date
$3.30
$4.27
Spot price at grant
date
$5.22
$5.22
203 TRANSURBAN ANNUAL REPORT 2009
203 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
The terms and conditions of each grant of units under the Executive Equity Plan are:
Grant date
1 Nov 2008
Vesting date
1 Nov 2011
Expiry date
1 Nov 2011
Grant price
$5.22
Value per unit at grant date
$4.27
Performance of Transurban Group
As outlined in the LTI sections of this report, the reward delivered under the long-term incentive component of executive
remuneration is dependent on either TSR performance or EBITDA Growth.
The table below summarises the actual and prospective relative TSR performance over the Performance Period to date in
respect of unvested long term incentives. The data is indicative of results as if tested on 30 June 2009.
Long term Incentive plan
Executive Loan Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Company TSR as at
30 June 2009
indicative percentile
Rank
Indicative Number of
securities/rights
vesting
(27)%
(40)%
(17)%
63%
69%
39%
1,109,182
302,056
-
The table below illustrates the Company’s annual compound growth in EBITDA for Rights granted under the Performance
Rights Plan, with a 10% and 15% hurdle of annual compound growth, and the Performance Award Plan, with a 5% and 9%
hurdle of annual compound growth:
Long term Incentive plan
Performance Rights Plan 2008
Performance US Cash Rights Plan 2008
Performance Awards Plan 2009
Company Compound
growth as at 30 June
2009
7%
(2)%
8%
Indicative Number of
Rights Vesting
-
-
670,036
204 TRANSURBAN ANNUAL REPORT 2009
204 Transurban annual reporT 2009
27 Key management personnel disclosures (continued)
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
Equity instrument compensation
Number of awards granted in 2009:
Executive directors
C Lynch
Other key management personnel
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
S Hogg
T Honan
E Mildwater
No awards vested during the period.
Legacy Plans
Business Generation Incentive Plan
Performance Awards Plan
Executive Equity Plan
483,721
85,465
46,512
67,151
145,422
34,884
46,512
23,256
232,558
29,070
79,647
19,146
19,146
19,146
23,944
19,146
19,146
15,316
85,474
19,146
Transurban Group has previously offered a cash bonus under the Business Generation Incentive Plan (BGIP) to certain
executives for generating new business. The bonuses were paid from a bonus pool determined by the risk adjusted net
present value (NPV) of a project or business venture. The BGIP was intended to reward executives for successful
business generation activities, based on the increase in security holder value derived from new business.
BGIP payments were determined and awarded by the Board, on the recommendation of the Remuneration Committee and
the CEO.
After a review of the Group’s STI arrangements in the 2009 financial year, the Board has opted to discontinue the BGIP
from the 2009 financial year onwards and will be capturing future outperformance through the standard STI plan.
No BGIP payments were made in the 2009 financial year.
2008 Performance Rights Plan
The Performance Rights Plan (PRP) enabled eligible executives to receive a grant of Performance Rights that entitled
participants to receive stapled securities in Transurban (Securities) at no cost at the end of a three year performance
period, subject to the achievement of performance conditions. No dividends or distributions on securities were payable to
participants prior to vesting. The Plan had two performance measures, EBITDA and relative TSR against the S&P/ASX
100 Industrials, each applied to 50% of the PRP award.
50% of the EBITDA award vests for achievement of 10% compound EBITDA annual growth over the three year
performance period from the Base Year, 100% of the EBITDA award vested for achievement of 15% compound EBITDA
annual growth, and there was straight line vesting between the two annual compound growth targets. None of the TSR
award vests for a TSR ranking at or below the 50th percentile of the comparator group constructed in the Base Year,
tested at the end of the three year performance period. 50% of the TSR award vests for a TSR ranking above the 50th
percentile of the comparator group. 100% of the TSR award vests for a TSR ranking at or above the 75th percentile and
there was straight line vesting between the two TSR targets. No retesting is available under the plan.
205 TRANSURBAN ANNUAL REPORT 2009
205 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
Post-employment vesting under the Performance Awards Plan was introduced for executives that departed as a result of
Transurban’s restructure in the previous year. For departing executives, existing awards of Performance Rights were
extinguished and a new offer of Performance Awards under the PAP was made with the same measures and vesting
period based on a pro-rated entitlement for time served.
Awards were last made under the PRP in November 2007 and the PRP was discontinued in the 2009 financial year.
The terms and conditions of each grant of Performance Rights under the legacy Performance Rights Plan are:
Performance Criteria
Grant date
Vesting date
Expiry date
TSR
EBITDA
1 Nov 2007
1 Nov 2007
1 Nov 2010
1 Nov 2010
1 Nov 2010
1 Nov 2010
Fair value of rights
at grant date
$3.50
$5.96
Spot price at grant
date
$7.29
$7.29
Number of Performance rights granted under the legacy Performance Rights Plan 2008:
Performance Rights Plan
Other key management personnel
B Bourke
D Cardiff
A Head
92,857
27,428
14,857
No performance rights vested during the period.
2006 and 2007 Executive Loan Plan
The Executive Loan Plan (ELP) was discontinued as of the 2007 financial year. The ELP rewarded the improvements in
the price of Transurban’s stapled securities over a three year period with relative Total Security holder Return (TSR)
against the S&P/ASX 100 Industrials as a performance measure. Executives based outside Australia were eligible to
participate in a cash based plan similarly structured to the ELP.
Executives that participated in the ELP were provided with an interest free loan to assist them to acquire securities at
market price. The term of the loan is three years and there is only one testing date. The securities are held by the
executive but will only vest in the executive in accordance with the terms of the Plan. Expiry occurs three years plus 60
days from the date of commencement of the Plan, unless the rules of the Plan otherwise provide. Holding locks are
applied to the securities to ensure that they can only be dealt with in accordance with the terms of the Plan. The acquired
securities cannot be transferred or sold while the loan is outstanding.
The ELP was last offered in the 2007 financial year. The 2006 awards (including those under the cash plan) met the TSR
hurdle and vested, however, due to the decrease in Transurban’s security price the majority of participants received
minimal to no value. Of the one remaining grant, Transurban anticipates that the 2007 awards (including the cash award)
are likely to vest in November 2009 but participants are likely to receive minimal value based on the current security price.
The terms and conditions of each grant of units under the legacy Executive Loan Plan are:
Grant date
1 Nov 2005
1 Nov 2006
Vesting date
1 Nov 2008
1 Nov 2009
Expiry date
31 Dec 2008
31 Dec 2009
Grant price
$6.47
$7.28
Value per unit at grant date
$1.35
$1.37
Date payable
1 Nov 2008
1 Nov 2009
206 TRANSURBAN ANNUAL REPORT 2009
206 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
Number/value of securities vested under the 2006 Loan plan during the year:
Loan Plan
(Securities)
Cash Plan
($)
Other key management personnel
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
90,005
25,148
-
-
9,706
15,001
-
-
-
-
-
-
There were no securities granted under the legacy Executive Loan Plan to KMP’s during the year.
Stapled security holdings
Details of stapled securities provided to each director of Transurban Holding Trust and other key management personnel
of the group are set out below.
2009
Non-executive directors
D J Ryan
N G Chatfield
G O Cosgriff
J G A Davis
R J Edgar
L P Maxsted
S M Oliver
C J S Renwick
R E Slater
Executive directors
C Lynch
Other key management personnel
B Bourke
D Cardiff
K Daley
M Fletcher
A Head
S Hogg
T Honan
M Kulper
E Mildwater
Received
during the
year on
exercise of
options
Balance at
start of the
year
Received via
the Executive
Equity Plan
Other
changes
during the
year
Balance at
end of the
year
57,300
-
116,036
125,005
5,376
-
50,518
21,552
-
152,800
699,661
167,633
365,332
15,121
51,701
-
-
80,000
4,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,645
-
9,976
-
2,333
-
4,004
20,000
-
60,945
-
126,012
125,005
7,709
-
54,522
41,552
-
79,647
594
233,041
19,146
19,146
19,146
19,146
19,146
15,316
85,474
23,944
19,146
(98,656)
(28,302)
100
(776)
(24,605)
7,465
-
-
794
620,151
158,477
384,578
33,491
46,242
22,781
85,474
103,944
24,640
207 TRANSURBAN ANNUAL REPORT 2009
207 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
27 Key management personnel disclosures (continued)
2008
Received
during the
year on
exercise of
options
Received
during the
year via the
Executive
Loan Plan
Balance at
start of the
year
Other
changes
during the
year
Balance at
end of the
year
Non-executive directors
D J Ryan
G O Cosgriff
J G A Davis
S M Oliver
C J S Renwick
Executive directors
K Edwards
C Lynch
Other key management personnel
C Brant
B Bourke
P O'Shea
G Mann
D Cardiff
K Daley
M Kulper
24,091
48,611
55,592
41,831
21,552
2,033,500
-
296,392
671,328
442,489
272,707
167,443
365,332
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,209
67,425
69,413
8,687
-
57,300
116,036
125,005
50,518
21,552
(2,033,500)
-
-
-
1,575
28,333
81,799
(272,707)
190
-
80,000
297,967
699,661
524,288
-
167,633
365,332
80,000
208 TRANSURBAN ANNUAL REPORT 2009
208 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
28 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
Consolidated
Parent
2009
$
2008
$
2009
$
2008
$
Amounts received or due and receivable by
PricewaterhouseCoopers
Audit and Other Assurance Services
Audit and review of financial reports
Total remuneration for audit services
-
-
128,250
128,250
-
-
128,250
128,250
The audit fee for the year has been borne by a related party, Transurban Limited.
29 Contingencies
Contingent liabilities
There are no contingent liabilities at 30 June 2009.
30 Commitments
Promissory Notes
The Responsible Entity, on behalf of the Hills Motorway Trust, has entered into leases with the Roads and Traffic Authority
of New South Wales (“RTA”). Annual lease liabilities under these leases total $7.0 million indexed annually to the
Consumer Price Index over the estimated period that the Hills M2 Motorway will be used. Until such time as a threshold
return is achieved, payments under these leases can be made at the discretion of the Responsible Entity, by means of the
issue of non-interest bearing promissory notes to the RTA. Refer to note 21(cid:17)
31 Related party transactions
(a) Parent entities
The parent entity within the Group is the Transurban Holding Trust. The Transurban Holding Trust Group is part of the
stapled Transurban group, which has deemed the ultimate parent entity to be Transurban Holdings Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in note 33.
(c) Key management personnel
Disclosure relating to key management personnel are set out in note 27.
(d) Other related parties
All of the directors of Transurban Infrastructure Management Limited are also directors of Transurban Holdings Limited.
Mr Ryan and Mr Lynch are directors of Transurban International Limited. The following services are provided by the Trust
to these consolidated entities:
-
Financial support through interest bearing and non-interest bearing loans; and/or
209 TRANSURBAN ANNUAL REPORT 2009
209 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
31 Related party transactions (continued)
-
The rental of land.
Financial support is received from Transurban Finance Company in the form of an interest bearing loan. The Trust pays
interest and related finance charges for such loan.
Transurban Infrastructure Management Limited is the Responsible Entity of Transurban Holding Trust, CityLink Trust and
CARS Trust and receives Responsible Entity and Management Fees.
Aggregate amounts of each of the above types of other transactions with directors of Transurban Infrastructure
Management Limited:
Consolidated
Parent
2009
$
2008
$
2009
$
2008
$
Amounts recognised as revenue
Rental income
Interest income
215,771,599
333,309,349
549,080,948
211,271,599
342,319,336
553,590,935
-
81,960,025
81,960,025
-
98,216,091
98,216,091
Amounts recognised as expenses
Interest and other related charges paid
Responsible Entity fees
202,455,835
2,504,646
204,960,481
222,258,506
2,422,736
224,681,242
-
1,225,998
1,225,998
-
1,182,423
1,182,423
Aggregate amounts of assets at balance date relating to the above types of transactions with directors of the Group:
Current receivables
Non-current receivables
112,929,683
1,739,970,118
1,852,899,801
93,829,453
782,126,113
875,955,566
483,948,436
977,942,593
1,461,891,029
14,632,858
515,513,176
530,146,034
Aggregate amounts payable at balance date relating to the above types of transactions with directors of the Group:
Current payables
Unearned income
94,819,471
17,268,888
112,088,359
233,201,211
34,666,667
267,867,878
-
-
-
257,923,066
-
257,923,066
210 TRANSURBAN ANNUAL REPORT 2009
210 Transurban annual reporT 2009
31 Related party transactions (continued)
Interest and finance charges
Joint venture partnership
Distributions
Subsidiaries - revenue
(e) Loan to/from related parties
Loans from subsidiaries
Beginning of the year
Loans advanced
Loan repayments made
Amortisation of debt fees
Foreign exchange movements
End of year
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Parent
2009
$
2008
$
2009
$
2008
$
72,826,036
72,826,036
66,861,277
66,861,277
-
-
-
-
-
-
-
-
291,191,562
291,191,562
136,863,930
136,863,930
Consolidated
2008
$
2009
$
2009
$
Parent
2008
$
-
-
-
-
-
-
-
-
-
-
-
-
1,250,727,945
524,203,153
-
962,568
86,620,948
1,862,514,614
1,163,159,128
1,144,053,878
(1,030,277,240)
-
(26,207,821)
1,250,727,945
Loan to associate
Beginning of the year
Acquisition of additional interest in Westlink M7
Loan repayment received
Interest capitalised
End of year
558,223,462
30,444,226
-
44,604,379
633,272,067
557,731,127
-
(25,751,528)
26,243,863
558,223,462
-
-
-
-
-
-
-
-
-
-
Loans to other related parties
Beginning of the year
Loans advanced
Loans repayments received
Foreign exchange movements
End of year
Loans from other related parties
Beginning of the year
Loans advanced
Loans repayments made
Amortisation of debt fees
Foreign exchange movements
End of year
4,853,988,303
914,455,334
(1,979,435,619)
(42,176,925)
3,746,831,093
4,668,460,874
896,083,213
(674,540,969)
(36,014,815)
4,853,988,303
1,407,628,671
597,813,530
(1,407,628,792)
(42,176,369)
555,637,040
1,344,486,349
456,009,468
(356,852,331)
(36,014,815)
1,407,628,671
2,974,843,048
113,042,973
(31,867,609)
(327,906)
86,620,958
3,142,311,464
2,866,023,030
1,300,107,247
(1,165,143,401)
-
(26,143,828)
2,974,843,048
-
-
-
-
-
-
-
-
-
-
-
-
No provision for doubtful debts have been raised in relation to any outstanding balances, and no expense has been
recognised in respect of bad or doubtful debts from related parties.
211 TRANSURBAN ANNUAL REPORT 2009
211 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
31 Related party transactions (continued)
(f) Loan to associate
The “loan to associate” is via Term Loan Notes (“TLN”). The TLN represent the Group’s funding contribution to the
Westlink Motorway Partnership and earn interest at a fixed rate of 11.93 per cent until the earlier of 34 years and the
termination of the “Agreement to Lease” between the Roads and Traffic Authority of New South Wales and Westlink
Motorway Limited.
Any unpaid interest is capitalised and deemed to subscribe for further loan notes with an aggregate principal amount equal
to that unpaid interest.
The TLN have not been affected by equity accounting losses from the associate.
(g) Terms and conditions
All transactions were made on normal terms and conditions and at market rates.
212 TRANSURBAN ANNUAL REPORT 2009
212 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
32 Initial application of AASB Interpretation 12
AASB Interpretation 12 Service Concession Arrangements(AASB-I 12) is applicable for the Group’s annual reporting
period beginning 1 July 2008. AASB-I 12 provides guidance on the accounting by operators for public-to-private service
concession arrangements under which private sector entities participate in the development, financing, operation and
maintenance of infrastructure for the provision of public services. The application of AASB-I 12 has led to a change in the
Group’s policies of accounting for the recognition and measurement of concession assets and maintenance obligations
under the arrangements. AASB-I 12 has been applied retrospectively and comparative information in relation to the 2008
financial year have been restated accordingly.
On adoption of AASB-I 12 the Group has not recognised margin on past construction services as such margin could not
be reliably measured.
The following adjustments made as at 1 July 2007 and 30 June 2008:
(a) At the date of initial adoption: 1 July 2007
Consolidated
Notes
1 July 2007 Adjustment
1 July 2007
(Restated)
$'000
$'000
$'000
(i)
(i)
(ii)
2,592,660
385,127
6,752,008
9,729,795
(2,592,660)
2,592,660
-
-
-
2,977,787
6,752,008
9,729,795
5,027,535
5,027,535
4,702,260
5,911,399
(1,272,192)
53,867
9,186
4,702,260
-
-
-
-
-
-
-
-
5,027,535
5,027,535
4,702,260
5,911,399
(1,272,192)
53,867
9,186
4,702,260
Balance Sheet
ASSETS
Property, plant and equipment
Intangible assets
Other assets
Total assets
Other Liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Accumulated losses
Minority interest
Reserves
Total equity
213 TRANSURBAN ANNUAL REPORT 2009
213 Transurban annual reporT 2009
Initial application of AASB Interpretation 12 (continued)
(b) At 30 June 2008
Balance Sheet
ASSETS
Property, plant and equipment
Intangible assets
Other assets
(cid:3)
Total assets
LIABILITIES
Other Liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Accumulated losses
Minority interest
Reserves
Total equity
Income statement (extract)
Depreciation and amortisation expense
Other income statement
Net profit / (loss) for the year
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
Consolidated
Notes
30 June
2008
Adjustment
30 June
2008
(Restated)
$'000
$'000
$'000
(i)
(i)
2,487,652
381,202
6,787,577
(2,487,652)
2,512,643
-
-
2,893,845
6,787,577
9,656,431
24,991
9,681,422
4,780,780
4,780,780
-
-
4,780,780
4,780,780
4,875,651
24,991
4,900,642
(ii)
6,507,180
(1,696,182)
47,261
17,392
4,875,651
-
24,991
-
-
24,991
6,507,180
(1,671,191)
47,261
17,392
4,900,642
Consolidated
Notes
30 June
2008
Adjustment
30 June
2008
(Restated)
$'000
$'000
$'000
(i)
(108,933)
322,786
213,853
24,991
-
24,991
(83,942)
322,786
238,844
Basic and diluted earnings per unit attributable to ordinary unit holders changed from 18.2 cents to 20.2
cents per unit.
(i)
Tolling concession arrangements that grant the Group the right to operate a toll road have been reclassified
as Intangible Assets, from Property, Plant and Equipment. As allowed by the transitional provisions of
AASB-I 12, the assets were transferred at the carrying amount of the tolling assets at the date of initial
application of AASB-I 12 (1 July 2007). From 1 July 2007, the tolling assets are amortised on a straight line
basis over the life of the concession deed.
Adjustments have been made to reflect revised amortisation and depreciation charges as a result of the
change in rates on certain assets.
(ii)
Adjustments to accumulated losses and the income statement include:
•
Revision to depreciation/amortisation charges due to extended useful life of many concession assets.
214 TRANSURBAN ANNUAL REPORT 2009
214 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
33 Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1(b):
Name of entity
Country of
incorporation Class of shares
The CityLink Trust
Transurban Finance Trust
Transurban AL Trust
Transurban CARS Trust
Transurban WSO Trust
Hills Motorway Trust
T (895) Finance Trust
Abigroup Westlink Partner Holding No.4 Pty Ltd
Abigroup Westlink Partner No.4 Pty Ltd
LMI Westlink Partner Holding No.4 Pty Ltd
LMI Westlink Partner No.4 Pty Ltd
Abigroup Westlink Partner Holding No.2 Pty Ltd
Abigroup Westlink Partner No.2 Pty Limited
LMI Westlink Partner Holding No.2 Pty Limited ^
LMI Westlink Partner No.2 Pty Limited ^
Sydney Roads Trust
Eastern Distributor Funding Trust
Airport Motorway Trust
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
*
^
The proportion of ownership interest is equal to the proportion of voting power held.
Acquired on 1 September 2008
Equity holding *
2008
2009
%
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
75.10
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
100
100
75.10
215 TRANSURBAN ANNUAL REPORT 2009
215 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
34 Investments in associates
(a) Carrying amounts
Name of company
Principal
activity
Westlink Motorway Limited
WSO Finance Pty Limited
Westlink Motorway Partnership
Ownership
interest
2009
%
2008
%
50.0
50.0
50.0
47.5
47.5
47.5
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
-
-
-
-
-
-
-
-
-
On 28 August 2008, Transurban completed its acquisition of an additional 2.5 per cent of the Westlink M7, for
consideration of $38.0 million. The acquisition comprised term loan notes of $30.4 million and an increase in its equity
investment of $7.6 million.
Each of the above is a member of the Westlink Motorway Group, established to invest in, construct and operate the
Westlink M7 toll road in Sydney. All were incorporated in Australia.
Westlink Motorway Limited is the nominee manager of the Westlink Motorway Partnership and is carried at $90.
WSO Finance Pty Limited is the financier of the Westlink M7 toll road and is carried at $90.
Westlink Motorway Partnership was responsible for the construction of the Westlink M7 Motorway in Sydney. The M7
opened for operation on 16 December 2005.
-
-
-
-
-
-
-
-
-
Consolidated
2009
$'000
2008
$'000
-
(7,556)
7,556
-
7,556
7,556
35,997
74,239
110,236
16,595
19,402
35,997
(b) Movements in carrying amounts
Carrying amount at the beginning of the financial year
Share of losses after income tax
Additional investment acquired
Carrying amount at the end of the financial year
(c) Share of losses
Loss before income tax
(d) Losses not recognised
Balance at 1 July
Unrecognised losses for the year
Balance at 30 June
216 TRANSURBAN ANNUAL REPORT 2009
216 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
34 Investments in associates (continued)
(e) Summarised financial information of associates
2009
Westlink Motorway
Westlink Motorway
Ownership
Interest
%
50.0
47.5
Group's share of:
Assets
$'000
Liabilities
$'000
Revenues
$'000
Profit
$'000
749,261
749,261
822,340
822,340
(870,467)
(870,467)
858,270
858,270
46,435
46,435
123,495
123,495
(81,795)
(81,795)
(19,402)
(19,402)
(f) Share of associates' expenditure commitments
As at the reporting date, there are no expenditure commitments.
(g) Contingent liabilities of associates
As at reporting date, there are no contingent liabilities.
35 Economic dependency
The consolidated entity is reliant on distributions from the CityLink Trust and the Hills Motorway Trust and interest on Term
Loan Notes and on continuing funding by entities within the Transurban Group for its ongoing viability.
36 Events occurring after the balance sheet date
On 15 July 2009, Transurban announced that Airport Motorway Trust had completed the re-financing of $515 million of
non-recourse project debt for the M1 Eastern Distributor Motorway.
The new debt facility has been provided by six banks, and comprises three, five and seven year tranches.
217 TRANSURBAN ANNUAL REPORT 2009
217 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
37 Reconciliation of profit/(loss) after income tax to net cash inflow from operating activities
Profit/(loss) for the year
Depreciation and amortisation
Share of loss of associates and joint venture
partnership
Capitalised TLN interest
Non-cash concession notes income
Distribution income
Non cash finance costs
Change in operating assets and liabilities
(Increase) in receivables & prepayments
(Increase) / decrease in operating related party
balances
Increase in deferred taxes
Increase in current tax payable
Increase (decrease) in payables
(Decrease) in unearned income
(Decrease) increase in Promissory Note liability
Net cash (outflow) inflow from operating activities
38 Non-cash investing and financing activities
Distributions satisfied by the issue of units under the
distribution reinvestment plan
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
263,753
95,203
7,556
(44,604)
(50,332)
-
67,031
238,844
83,942
-
(26,244)
(49,102)
-
67,674
292,078
15,394
-
-
(50,332)
(291,192)
55,210
134,538
3,925
-
-
(49,102)
(93,724)
60,808
305
1,626
-
-
(423,484)
(859)
1,235
2,657
(17,436)
(2,360)
(101,335)
(404,772)
795
1,350
(1,060)
(4,705)
1,328
(90,324)
(82,376)
-
-
7,200
(38)
-
(54,056)
(128,268)
-
-
(18)
(6,039)
-
(77,880)
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
174,142
174,142
189,963
189,963
174,142
174,142
189,936
189,936
218 TRANSURBAN ANNUAL REPORT 2009
218 Transurban annual reporT 2009
39 Earnings per unit
Basic earnings per unit attributable to ordinary unit holders
Diluted earnings per unit attributable to ordinary unit holders
Basic earnings per share
Profit from continuing operations
Profit from continuing operations attributable to minority interests
Profit from continuing operations attributable to the ordinary equity holders of the
company used in calculating basic earnings per share
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
Consolidated
2009
Cents
19.8
19.8
2008
Cents
20.5
20.5
Consolidated
2009
$'000
2008
$'000
263,753
(12,923)
238,844
(15,470)
250,830
223,374
Consolidated
2009
Number
2008
Number
Weighted average number of units used in calculating basic and diluted earnings per
unit
Adjustments for calculation of diluted earnings per unit:
Performance rights
Weighted average number of ordinary shares and potential ordinary shares used as
the denominator in calculating diluted earnings per share
1,267,502,187
1,088,861,291
1,297,389
452,071
1,268,799,576
1,089,313,362
(a)
Information concerning the classification of units
(i) Stapled securities
Stapled Securities, and therefore units, are fully paid and have been recognised in the determination of basic earnings per
unit.
40 Intra-group guarantees
As at 30 June 2009, the Transurban Group comprises Transurban Holdings Limited, Transurban Holding Trust and
Transurban International Limited, traded and quoted on the ASX as one triple stapled security.
Under the stapling arrangement, each entity directly and/or indirectly supports each other and its controlled entities within
the group on a continual basis.
41 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under
the circumstances.
Valuation of Promissory notes and Concession Notes Receivable
(i)
The Trust holds non-interest bearing long term debt represented by promissory notes and a long term receivable that
offsets a concession notes liability held in CityLink Melbourne, that are included in the financial statements at the present
value of expected future repayments. The calculations to discount these notes to their present value are based on the
timing and profile of the repayments. Assumptions are made in determining the timing and profile, based on expected
available equity cash flows of the Trust’s cash generating units.
A discount rate is used to value the promissory notes and concession notes receivable to their present value, which is
determined through reference to other facilities in the market with similar characteristics.
219 TRANSURBAN ANNUAL REPORT 2009
219 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
41 Critical accounting estimates and judgements (continued)
Fair value of derivatives and other financial instruments
(ii)
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques.
The Group uses its judgement to select a variety of methods and makes assumptions that are mainly based on market
conditions existing at each balance date.
(iii)
Impairment of Assets
The Group tests whether its assets have suffered any impairment when an event occurs that indicates that this may be the
case. The recoverable amount of any cash generating units have been determined based on the greater of value-in-use
and fair value less cost to sell calculations. These calculations require the use of assumptions regarding traffic flows,
discount rates, growth rates and other factors affecting operating activities.
42 Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk),
credit risk and liquidity risk. The financial risk management function is carried out centrally by the Transurban Group
Treasury team (Treasury) under policies approved by the Board. Treasury work closely with the Group’s operating units to
actively identify and monitor all financial risks, and put hedging in place where appropriate. The Board are informed on a
regular basis of any material exposures to financial risks.
The Group’s hedging strategies are detailed below, and include the use of derivative financial instruments. The Group’s
policies allow derivative transactions to be undertaken only for the purpose of reducing risk, and do not permit speculative
trading. Treasury continuously monitor risk exposures over time through review of cashflows, price movements, market
analysis and ongoing communication within the Group. When measuring financial risk, Treasury consider positive and
negative exposures, existing hedges and the ability to offset exposures where possible.
(a) Market risk
Foreign exchange risk
(i)
The Group operates internationally and is exposed to foreign exchange risk when future commercial transactions and
recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency.
Foreign currency exposures are viewed as either investment exposures or operating exposures. Exposures from
investment in foreign assets are generally managed using foreign currency debt. All known material operating exposures
out to 12 months are hedged, using hedging instruments, offsetting exposures or drawing on foreign currency funds.
The Group's exposure to foreign currency risk at the reporting date was as follows:
Receivables
Payables
Net exposure
The above table is presented in the currency in which the exposure exists.
30 June
2009
USD
$'000
30 June
2008
USD
$'000
310,023
(233,255)
76,768
320,016
(254,969)
65,047
220 TRANSURBAN ANNUAL REPORT 2009
220 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
42 Financial risk management (continued)
The carrying amounts of the parent entity’s financial assets and liabilities are denominated in Australian dollars except as
set out below:
Receivables
Trade payables
Net exposure
Group sensitivity
30 June
2009
USD
$'000
30 June
2008
USD
$'000
310,023
(233,255)
76,768
293,228
(228,869)
64,359
Based on the financial instruments held at end of the period, had the Australian dollar strengthened/weakened by 10 cents
against the U.S. dollar with all other variables held constant, the Group’s post-tax profit for the year would have been
$10,381,000 lower (2008: $6,359,000 lower) or $13,299,000 higher (2008: $7,834,000 higher), as a result of foreign
exchange gains/losses on translation of US dollar denominated financial instruments as detailed in the above table.
Equity is not impacted by movements in foreign exchange. The Group’s exposure to other foreign exchange movements
is not material.
Parent entity sensitivity
Based on the financial instruments held at end of the period, had the Australian dollar strengthened/weakened by 10 cents
against the U.S. dollar with all other variables held constant, the parent’s post-tax profit for the year would have been
$10,381,000 lower (2008: $6,292,000 lower) or $13,299,000 higher (2008: $7,751,000 higher), as a result of foreign
exchange gains/losses on translation of US dollar denominated financial instruments as detailed in the above table.
Equity is not impacted by movements in foreign exchange. The Parent entity’s exposure to other foreign exchange
movements is not material.
(ii) Cash flow interest rate risk
The Group’s main exposure to interest rate risk arises from long-term borrowings. Treasury manages interest rate risk by
entering into fixed rate debt facilities or using interest rate swaps to convert floating rate debt. Generally, the Group raises
long term borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Group
borrowed at fixed rates directly. The Group’s policy is to hedge interest rate exposure at a minimum in compliance with the
covenant requirements of funding facilities and up to 100%. At 30 June 2009 79 per cent of the Group’s interest rate
exposure on variable rate borrowings was hedged.
221 TRANSURBAN ANNUAL REPORT 2009
221 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
42 Financial risk management (continued)
As at the reporting date, the Group had the following variable rate borrowings and interest rate swap contracts
outstanding:
30 June 2009
30 June 2008
Weighted
average
interest rate
%
Balance
$'000
Weighted
average
interest rate
%
Balance
$'000
2.9
4.7
3.4
2.8
3.1
(28,418)
1,075,321
(851,625)
195,278
(492)
94,821
94,329
7.1
8.4
8.0
7.1
8.4
(45,882)
1,222,321
(738,625)
437,814
(1,308)
247,821
246,513
Cash and cash equivalents
Floating Rate Borrowings
Interest rate swaps (notional principal amount)
Net exposure to cash flow interest rate risk
Parent
Cash and cash equivalents
Floating Rate Borrowings
Net exposure to cash flow interest rate risk
An analysis by maturities is provided in (c) below.
Group sensitivity
The Group’s main interest rate risk arises from cash equivalents and loans and other receivables with variable interest
rates. At 30 June 2009, if interest rates had changed by +/-100 basis points from the year-end rates with all other
variables held constant, post-tax profit for the year would have been $1,953,000 lower/higher (2008: $4,378,000
lower/higher).
Parent entity sensitivity
The parent entity's main interest rate risk arises from cash equivalents and loans and other receivables with variable
interest rates. At 30 June 2009, if interest rates had changed by +/-100 basis points from the year-end rates with all other
variables held constant, post-tax profit for the year would have been $943,000 lower/higher (2008: $2,465,000
lower/higher).
(b) Credit risk
The Group has no significant concentrations of credit risk from Operating Activities, and has policies in place to ensure
that transactions are made with commercial customers with an appropriate credit history. However as an owner and
operator of large infrastructure assets, the Group is exposed to credit risk with its financial counterparties through
undertaking financial transactions intrinsic to its business. These include funds held on deposit, cash investments and the
market value of derivative transactions.
Treasury assesses the credit strength of potential financial counterparties using objective ratings provided by multiple
independent rating agencies. Board approved limit allocation rules ensure higher limits are granted to higher rated
counterparties. The Group also seeks to mitigate its total credit exposure to counterparties by only dealing with credit
worthy counterparties, limiting the exposure to any one counterparty, minimising the size of the exposure where possible
through netting offsetting exposures, diversifying exposures across counterparties, closely monitoring changes in total
credit exposures and changes in credit status, and taking mitigating action when necessary.
The Group’s investment in the Westlink Motorway (WM7) is through Term Loan Notes (see note 12 for details) The return
on these Notes is ultimately dependent on the performance of the Motorway. The Group continually monitors the
performance and expected cash flows of the Motorway.
222 TRANSURBAN ANNUAL REPORT 2009
222 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
42 Financial risk management (continued)
(c) Liquidity risk
The Group maintains sufficient cash and undrawn facilities to maintain short term flexibility and enable the Group to meet
financial commitments in a timely manner. Treasury assesses liquidity over the short term (up to 12 months) and medium
term (1 – 5 years) by maintaining accurate forecasts of operating expenses, committed capital expenditure and payments
to security holders. Long term liquidity requirements are reviewed as part of the annual strategic planning process.
Short term liquidity is managed by maintaining a strategic liquidity reserve. This reserve is based on the Group’s forecast
annual operating costs and certain risk exposure scenarios as maintained by the Group’s strategic risk register, and is
maintained as cash and undrawn facilities. The reserve is maintained on a rolling 12 month basis. Medium term liquidity
forecasting is maintained on a rolling 5 year horizon.
Financing arrangements
The Group and the parent entity had access to the following undrawn borrowing facilities at the reporting date:
Floating rate
Expiring within one year
Expiring beyond one year
Consolidated
Parent entity
2009
$'000
2008
$'000
2009
$'000
2008
$'000
110,846
302,552
413,398
96,000
531,759
627,759
-
-
-
85,000
531,759
616,759
The facilities are committed for the term of the facility and cannot be withdrawn by the bank without notice.
Maturities of financial liabilities
The tables below analyse the Group’s and the parent entity’s financial liabilities, net settled derivative financial instruments
into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows. For interest rate swaps the cash flows have
been estimated using forward interest rates applicable at the reporting date.
Group - At 30 June 2009
1 year or
less
Over 1 to
2 years
Over 2 to
3 years
Over 3 to
4 years
Over 4 to
5 years
Over 5
years
Total
contractual
cash flows
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Carrying
Amount
(assets)/
liabilities
$'000
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total non-derivatives
Derivatives
Net settled (interest rate swaps)
Total derivatives
343,418
647,096
349,934
1,340,448
-
41,311
190,184
231,495
-
319,299
490,184
809,483
-
11,627
545,684
557,311
-
186,537
146,309
332,846
106,234
-
2,397,212
2,503,446
449,652
1,205,870
4,119,507
5,775,029
354,031
1,075,321
3,047,491
4,476,843
12,216
12,216
1,876
1,876
(6,075)
(6,075)
(2,600)
(2,600)
(2,397)
(2,397)
-
-
3,020
3,020
2,386
2,386
223 TRANSURBAN ANNUAL REPORT 2009
223 Transurban annual reporT 2009
Transurban Holding Trust
Notes to the financial statements
30 June 2009
(continued)
42 Financial risk management (continued)
Group - At 30 June 2008
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total non-derivatives
Derivatives
Net settled (interest rate swaps)
Total derivatives
1 year or
less
Over 1 to
2 years
Over 2 to
3 years
Over 3 to
4 years
Over 4 to
5 years
Over 5
years
Total
contractual
cash flows
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Carrying
Amount
(assets)/
liabilities
$'000
743,243
561,134
178,024
1,482,401
61,800
578,938
328,024
968,762
-
20,397
168,274
188,671
-
120,422
368,274
488,696
-
12,034
530,274
542,308
96,563
159,296
2,144,734
2,400,593
901,606
1,452,221
3,717,604
6,071,431
794,571
1,222,322
2,727,022
4,743,915
(10,321)
(10,321)
(9,004)
(9,004)
(3,213)
(3,213)
-
-
-
-
-
-
(22,538)
(22,538)
(23,586)
(23,586)
Parent - At 30 June 2009
1 year or
less
Over 1 to
2 years
Over 2 to
3 years
Over 3 to
4 years
Over 4 to
5 years
Over 5
years
Total
contractual
cash flows
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Carrying
Amount
(assets)/
liabilities
$'000
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total non-derivatives
210,335
84,550
162,988
457,873
-
15,640
112,058
127,698
-
-
375,868
375,868
-
-
372,411
372,411
-
-
76,873
76,873
-
-
1,259,540
1,259,540
210,335
100,190
2,359,738
2,670,263
210,335
94,821
1,767,694
2,072,850
Parent - At 30 June 2008
1 year or
less
Over 1 to
2 years
Over 2 to
3 years
Over 3 to
4 years
Over 4 to
5 years
Over 5
years
Total
contractual
cash flows
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Carrying
Amount
(assets)/
liabilities
$'000
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total non-derivatives
(d) Fair value estimation
724,808
9,371
74,337
808,516
61,800
9,320
122,158
193,278
-
9,230
71,229
80,459
-
109,242
335,039
444,281
-
989
331,581
332,570
-
13,090
590,561
603,651
786,608
151,242
1,524,905
2,462,755
763,163
112,147
1,138,581
2,013,891
Refer to note 1 for the Group's policy on fair value estimation.
224 TRANSURBAN ANNUAL REPORT 2009
224 Transurban annual reporT 2009
In the directors’ opinion:
Transurban Holding Trust
Directors' declaration
30 June 2009
(a)
the financial statements and notes set out on pages(cid:3)(cid:20)(cid:24)(cid:24) to (cid:21)(cid:21)(cid:23) are in accordance with the Corporations Act 2001,
including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
giving a true and fair view of the Trust’s and consolidated entity's financial position as at 30 June 2009
and of their performance for the financial year ended on that date; and
(ii)
(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; and
The directors have been given the declarations by the chief executive officer and chief finance officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
David J Ryan
Director
Christopher J Lynch
Director
Melbourne
26 August 2009
225 TRANSURBAN ANNUAL REPORT 2009
225 Transurban annual reporT 2009
226 TRANSURBAN ANNUAL REPORT 2009
226 Transurban annual reporT 2009
227 TRANSURBAN ANNUAL REPORT 2009
227 Transurban annual reporT 2009
Transurban International Limited and
Controlled Entities
ARBN 121 746 825
Financial statements
for the year ended 30 June 2009
228 TRANSURBAN ANNUAL REPORT 2009
228 Transurban annual reporT 2009
Transurban International Limited ARBN 121 746 825
Financial statements - 30 June 2009
Contents
Directors' report
Auditor's Independence Declaration
Financial report
Directors' declaration
Independent auditor's report to the members
Page
230
252
253
299
300
229 TRANSURBAN ANNUAL REPORT 2009
229 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
Directors' report
The directors of Transurban International Limited present their report on the consolidated entity (and referred to as "the
Group") consisting of Transurban International Limited (TIL) and the entities it controlled at the end of, or during, the year
ended 30 June 2009.
Directors
With the exception of the changes noted below, the following persons were directors of Transurban International Limited
during the whole of the financial year and up to the date of this report.
Non-executive Directors
David J Ryan AO
Jennifer Eve
James Keyes
Executive Director
Christopher J Lynch
Principal activities
During the year the Group’s principal activity was providing management services to, and acting as the holding entity of,
the Transurban Group's investment in Transurban DRIVe Holdings LLC (DRIVe), an unlisted co-investment vehicle which
invests in existing and new toll roads and similar or related opportunities in North America. TIL currently holds a 75 per
cent interest in DRIVe.
Dividends
No dividends were declared or paid during the financial year.
Results
The consolidated net loss for the year ended for the Group was $39,701,000 (2008: $37,088,000).
Review of Operations
Key operational highlights for the Group's assets during the period were as follows:
Pocahontas 895 (Virginia USA)
Traffic volumes for the year ended 30 June 2009 were 5.3 million transactions, a decrease of 11.6 per cent on the prior
year. Toll revenue increased by 0.6 per cent to US$13.8 million (A $18.5 million, an increase of 20.1 per cent) driven by
a toll price increase in January 2009.
Construction on the Richmond Airport Connector commenced in the current financial year and is expected to be
completed in 2011.
Transurban’s investment in Pocahontas 895 is 75.0 per cent, held through Transurban DRIVe (our co-investment
vehicle in North America). Transurban DRIVe is accounted for as an associate.
Capital Beltway Express (Virginia USA)
Construction on the Capital Beltway (I-495) High Occupancy Toll (HOT) lane project started in July 2008. Transurban
and its construction partner Fluor are developing the HOT lanes under an 80 year concession agreement with the
Commonwealth of Virginia. The HOT lanes are scheduled to open in 2013.
Transurban’s investment in Capital Beltway Express is held through Transurban DRIVe. Transurban DRIVe holds 90.0
per cent equity in the project, and Transurban holds 75.0 per cent of Transurban DRIVe. Transurban DRIVe is
accounted for as an associate.
Significant changes in the state of affairs
There were no significant changes to the state of affairs of the consolidated entity during the financial year.
230 TRANSURBAN ANNUAL REPORT 2009
230 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Matters subsequent to the end of the financial year
At the date of this report the directors are not aware of any circumstances that have arisen since 30 June 2009 that have
significantly affected or may significantly affect the Group's operations in future financial years, the results of those
operations in future financial years, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
Likely developments in the operations of the Group and the expected results of operations have not been included in these
financial statements because the directors believe it would be likely to result in unreasonable prejudice to the Group.
Information on directors
David J Ryan AO, BBus, FCPA, FAICD. Chairman & Independent non-executive director
David was appointed to the Board on 29 April 2003. He has a background in commercial banking, investment banking
and operational business management. He has held senior executive management positions in investment banking and
industry, as well as being the Chairman or a non-executive director of a number of listed public companies.
David is a non executive director of Lend Lease Corporation Limited and non-executive Chairman of Tooth & Co Limited
and ABC Learning Centres Limited (administrators appointed) (receivers and managers appointed).
At Transurban, David is Chairman of the Board, Chairman of the Nomination Committee, Chairman of the Sustainability
Committee, a member of the Audit and Risk Committee and a member of the Remuneration Committee.
David holds interests in 60,945 Securities.
Christopher J Lynch B Comm, MBA, FCPA, FAICD Chief Executive Officer
Chris joined Transurban as CEO Elect in February 2008 and was appointed to the Board on 18 February 2008. He
became CEO in April 2008.
Chris came to Transurban from one of the world’s largest resources and mining companies, BHP Billiton. He held a series
of senior appointments there, including 5 years as Chief Financial Officer. His last position at BHP Billiton was Executive
Director and Group President Carbon Steel Materials. Prior to his time at BHP Billiton the bulk of Chris’ career was with
Alcoa Inc where he was Vice President and Chief Information Officer (1999 2000), CFO Europe (1997 1999), Managing
Director of KAAL Australia Limited (1996 1997), and before that a series of financial leadership roles.
Chris has experience in senior leadership roles in global corporations operating across multiple markets and the
development and operation of major projects with large up front capital requirements.
Chris is also a Commissioner of the Australian Football League, and a former director of BHP Billiton Limited (January
2006 – June 2007), BHP Billiton Plc (January 2006 – June 2007), Samancor Limited (January 2006 – June 2007), and
Samarco Limited (January 2006 – June 2007).
Chris holds interests in 233,041 Securities.
Jennifer Eve BA, LLB (Hons), LLM in Corporate Law Independent non-executive director
Jennifer joined the Transurban International Limited Board on 18 September 2006. She is an associate and member of
the Funds and Investment Services Team within the Corporate and Commercial Practice Group at Appleby. She practices
in the area of company and commercial law, specialising in the formation and administration of investment vehicles
including segregated account companies, mutual funds, hedge funds, partnerships and closed-ended funds. Jennifer also
has experience involving debt restructuring and intergroup restructuring. Jennifer is also a local team member of the
Segregated Accounts Portfolio Team and the Global Islamic Finance Team.
Jennifer was educated in Bermuda, Canada and the United Kingdom. She holds three degrees including a Masters in
Corporate Law. She is a member of the Bar of England and Wales (non-practicing) and Bermuda.
James Keyes MA. (Hons) Independent non-executive director
James joined the Transurban International Limited Board on 18 September 2006. He is Managing Director of
Renaissance Capital. He is responsible for the Bermuda office, which he established for Renaissance in 2008. He was
previously a partner at offshore law firm Appleby. He practised as a lawyer for over 15 years, specialising in mutual funds,
corporate finance and securities.
James attended Oxford University in England and graduated as a Rhodes Scholar. He is a member of the Bermuda
International Business Association’s committee on collective investment schemes.
231 TRANSURBAN ANNUAL REPORT 2009
231 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Company secretary
Elizabeth Mildwater BEc, LLB (Hons), MA, GAICD
Elizabeth was appointed Company Secretary on 20 May 2008. Before joining Transurban she was Company Secretary of
SP AusNet for three years. She has over 15 years of legal, company secretarial and other relevant experience, including
significant in-house legal and company secretarial experience in the electricity transmission and project development
areas. Prior to her in-house work, she was a solicitor with Australian law firms Blake Dawson Waldron and Freehills.
Brett Burns BCom, LLB
Brett is General Counsel, Australia for the Transurban Group. Brett is responsible for all Australian legal matters and also
provides support to the North American business and Company Secretariat. Brett has worked with the Transurban Group
for the past seven years, initially as an external legal adviser and then joining the Transurban Group in 2003.
Juliet Evans
Juliet Evans is a Corporate Administrator on the Funds and Investment Services team at Appleby Corporate Services.
She holds the ICSA Certificate in Offshore Business Administration and has six years of experience in the corporate
administration field. Juliet is Company Secretary of Transurban International Limited.
Meetings of directors
The numbers of meetings of the board of directors of Transurban International Limited held during the year ended 30 June
2009, and the numbers of meetings attended by each director are listed below:
David J Ryan
James Keyes
Jennifer Eve
Christopher J Lynch
Attended Held#
4
4
3
4
4
4
4
4
# = Number of meetings held during the time the director held office
The number of meetings of each board committee of Transurban Holdings Limited, Transurban International Limited and
Transurban Infrastructure Management Limited as Responsible Entity of Transurban Holding Trust, held during the year
ended 30 June 2009, and the number of meetings attended by each director are set out in the following table:
Name
Audit Committee
(1)(2)
Sustainability
Nomination
Committee(6)
Committee(4)
Attended Held# Attended Held# Attended Held# Attended Held# Attended Held#
Remuneration
Committee(3)
Risk Committee
(1)(5)
David J Ryan
James Keyes
Jennifer Eve
Christopher J Lynch
4
*
*
4
4
*
*
*
5
*
*
5
5
*
*
*
4
*
*
4
4
*
*
*
3
*
*
4
*
*
*
*
*
*
*
3
*
*
*
*
# = Number of meetings held during the time the director held office or was a member of the committee during the year
* = Not a member of the relevant committee
(1)Effective 23 June 2009, the Audit Committee and the Risk Committee were combined to form the Audit and Risk
Committee. Refer to the Corporate Governance Statement for further information.
(2)Chris Lynch was not a member of the Audit Committee but attended meetings during the year.
(3)Chris Lynch was not a member of the Remuneration Committee but attended meetings during the year. Chris Lynch
was excluded from discussions involving his remuneration during meetings of the Remuneration Committee which he
attended.
(4)Chris Lynch was not a member of the Nomination Committee but attended meetings during the year.
(5)Chris Lynch was not a member of the Risk Committee but attended meetings during the year.
(6)Chris Lynch was not a member of the Sustainability Committee but attended meetings during the year.
232 TRANSURBAN ANNUAL REPORT 2009
232 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report
The Remuneration Report is presented under the following sections:
A
B
C
D
E
F
G
H
Introduction
Board oversight of remuneration
Group performance and the link to remuneration
Overview of Transurban's executive remuneration arrangements
CEO and Senior Executive arrangements for the year ended 30 June 2009
Contractual arrangements of Executive Directors and Senior Executives
Non-Executive Director (NED) remuneration
Director and Key Management Personnel remuneration and other disclosures
Introduction
A
The Directors of Transurban International Limited present the Remuneration Report prepared in accordance with the
requirements of the Corporations Act 2001 and its Regulations. The information has been audited as required by section
308(3C) of the Corporations Act 2001.
For the purposes of this report, Key Management Personnel of Transurban International Limited are defined as those
persons having authority and responsibility for planning, directing and controlling the major activities of the Transurban
Group directly or indirectly. They include all Directors of the parent (executive and non-executive) and members of the
Executive Committee reporting to the CEO who have authority and responsibility for planning, directing and controlling the
activities of the Group. The combined group of these executives (which also represents the five highest paid executives) of
the Group are referred to as Senior Executives in this report.
B
Board oversight of remuneration
Remuneration Committee
The Board Remuneration Committee of the Transurban Group is responsible for making recommendations to the Board on
director and senior executive remuneration policy and structure.
The Remuneration Committee assesses the appropriateness of the nature and quantum of remuneration of executives on
a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum
stakeholder benefit from the attraction and retention of a high performing director and executive team.
Review of remuneration strategy
The Group reviewed its remuneration strategy during the year and reaffirmed value creation as the key measure of the
reward framework.
As a result of the review, the Board removed the Business Generation Incentive Plan from the framework. Performance
measures in Executive incentive schemes were also reviewed with a focus on maximising shareholder value in the short
and long term. Appropriate measures and targets have been implemented which maintain emphasis on earnings growth,
shareholder return and other key goals over the next three years.
Through these challenging external market conditions, attracting and retaining highly skilled people remains a fundamental
goal of the Group. To this end, Transurban recognises that removing key people of calibre from their existing reward
arrangements in other companies may be required. The Group also recognises the need to retain and reward those
employees with responsibility to oversee future growth opportunities. The remuneration strategy has sufficient flexibility to
accommodate these needs where appropriate.
C
Group performance and the link to remuneration
Each element of the Remuneration framework is linked to the Group’s financial performance. Changes to fixed pay are
determined by an employee’s performance and by the Group’s capacity to pay. Short Term Incentives (STIs) also require
individual performance but are heavily determined by the Group’s EBITDA results. Long Term Incentives (LTIs) are
determined through the use of dual performance measures, EBITDA and Total Shareholder Return (TSR). Performance
hurdles for both STIs and LTIs are reviewed and determined annually so as to clearly identify expected improvements to
the Group’s performance.
233 TRANSURBAN ANNUAL REPORT 2009
233 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
D
Overview of Transurban's executive remuneration arrangements
Remuneration strategy and objectives
Transurban’s remuneration objective is to attract, retain, motivate and reward employees who are critical to the continued
growth and success of the Group.
The Group’s reward framework is designed to reward executives with a level and mix of remuneration commensurate with
their position and responsibilities within the Group. The key objectives are to:
•
•
•
•
•
Offer competitive remuneration benchmarked against the external market;
Provide strong and transparent linkages between individual and Group performance and rewards;
Reward executives for Group and individual performance against targets set by reference to appropriate
benchmarks;
Align the interests of executives with those of security holders by aligning incentives with increased security
holder value; and
Encourage executive security holdings.
Executive remuneration structure
The following table illustrates the structure of Transurban’s executive remuneration arrangements:
Remuneration items
Plans
Conditions
Variable or ‘at risk’ remuneration
Long term incentive
Short term incentive cash
awards
Total fixed remuneration
Benefits
Base salary
Performance
Awards Plan (PAP)
Relative TSR
hurdle (50%)
Proportional
EBITDA hurdle
(50%)
Executive Equity
Plan (EEP)
3 year time-restricted equity
EBITDA target
(50%)
Individual KPIs
(50%)
Set with reference to role, market and
experience
* Proportional EBITDA is earnings before net finance costs (revenues and expense), tax, depreciation and amortisation. It includes
EBITDA from CityLink (100%), Hills M2 (100%), M1 Eastern Distributor (75.1%), M4 (50.61%), M5 (50%), M7 (50%) and DRIVe (75%
including Pocahontas).
Total fixed remuneration
Total fixed remuneration is represented by Total Employment Cost (TEC), comprising cash, superannuation, and
prescribed benefits including death and disability insurance, salary continuance insurance and car parking.
Variable or ‘at risk’ remuneration
Variable remuneration is the link between remuneration and performance. As executives progress in seniority, the
proportion of remuneration which is dependent on the performance of the Group increases.
Short term incentives
Short term incentives (STI) comprise cash awards tied to individual and group performance indicators. Performance
measures for short term incentives are based around company and individual performance. Performance measures for
short term incentives are heavily oriented towards financial performance. Other non-financial performance metrics are
also included to ensure a broader performance outcome. Group and individual performance measures are set annually
and may vary from year to year to allow the Group to establish the most appropriate measures based on business
circumstances at the time of setting these measures.
234 TRANSURBAN ANNUAL REPORT 2009
234 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
Long term incentives
Long term incentives (LTI) comprise both a Performance Awards Plan (PAP) and Executive Equity Plan (EEP). The
Performance Awards Plan is designed to encourage sustainability of performance in the medium to longer term and is
assessed over a period of three years. The plan provides equity-based remuneration which vests subject to Transurban
Group’s earnings and relative total security holder return performance.
The EEP is designed to encourage executive retention and security holding of this group of employees. Eighty per cent of
an executive's LTI allocation is granted in the PAP with the remaining twenty per cent in the EEP. Details of the LTI are
provided on page (cid:21)(cid:22)(cid:26) below.
Hedging of equity awards
The Group prohibits executives from entering into arrangements to protect the value of unvested equity awards. This
includes entering into derivative contracts to hedge their exposure to options or securities granted as part of their
remuneration package.
E
CEO and Senior Executive arrangements for the year ended 30 June 2009
Determining remuneration levels
The remuneration of the Chief Executive Officer (CEO) and executives is established by the Board, based on the
recommendation of the Remuneration Committee. Transurban also undertakes an annual remuneration review to
determine the total remuneration positioning against the market.
Remuneration mix
The CEO’s remuneration mix comprises 34% fixed remuneration as a proportion of total remuneration, 33% on target short
term cash incentives, and 33% equity based incentives. The Executive Committee’s remuneration mix comprises 50%
fixed remuneration as a proportion of total remuneration, 25% on target short term cash incentives, and 25% equity based
incentives. The composition of remuneration is illustrated in the diagram below.
Total Fixed Remuneration
Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and
fringe benefits such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient
without creating additional cost for the Group.
There are no guaranteed base pay increases in any executive’s contract of employment. An executive’s TEC is reviewed
annually by the Remuneration Committee against market data for comparable roles and taking account of internal
relativities. The process consists of a review of Group and individual performance, relevant comparative remuneration
externally and internally and, where appropriate, independent external advice on policies and practices.
235 TRANSURBAN ANNUAL REPORT 2009
235 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
In the 2010 financial year, the Group anticipates restraint in fixed remuneration increases. A freeze in fixed pay has been
implemented for financial year 2010 for the CEO, Executive Committee and other senior managers. Any increases in the
broader workforce will be targeted to improving internal equity, rewarding high performers and to facilitate succession
planning.
2009 Short term incentive structure
The Remuneration Committee considers that a robust performance management system is essential in ensuring a strong
link between remuneration and performance. As a result the short term incentive (STI) structure is based on a
transparency and accountability model, with a reward mechanism based on goal setting and the employee’s line of sight to
business performance. The STI comprises cash awards that are received subject to the attainment of clearly defined
Group and individual hurdles.
STI payments are made to executives for the achievement of financial and non-financial targets set at the beginning of
each financial year, subject to Board discretion. A target STI amount is specified for each executive, expressed as a
percentage of the executive’s TEC. The CEO has an annual STI target of 100% of TEC. The target STI payment for senior
executives is 50% of TEC.
Actual STI payments to each executive depend on the extent to which specific targets set at the beginning of the financial
year are met. The measures represent key drivers for the success of the business and shared values for the key
management personnel.
For the 2009 financial year, the measures comprise:
Performance measure
Proportion of STI award hurdle applies to
Performance target
Group performance
50% of each individual’s target STI award
Individual performance key
performance indicators (KPIs)
50% of each individual’s target STI award
Proportional EBITDA target which is established by
the Board at the commencement of each year
based on the Group’s budget.
KPIs are established at the beginning of each year
with the CEO for his executive team and the Board
for the CEO.
On an annual basis, after consideration of performance against targets, the CEO recommends to the Remuneration
Committee the STI amount (if any) to be paid to each executive. The committee then recommends the amount to the
Board for approval. The STI awards are usually paid in August/September following Transurban’s annual performance
review process. For each component of the award, 50% of the target amount vests at threshold performance relative to
budget, 100% of target vests for achievement of target performance and an additional 50% above target can be earned for
a predetermined level of outperformance.
The Executive Committee shared five individual Key Performance Indicators (KPI) being Cost Management plus the
establishment and implementation of improvement plans in the areas of Sustainability, Risk Management, People
Management and Safety. These KPIs comprised 25% of the available STI reward. Improvement in the management of
these business activities was identified as critical to the future success of the Group following a period of acquisition in
prior years. The Board determined that the Executive Committee either met or exceeded each of the shared KPIs. Cost
savings have been achieved beyond the expected targets. There has been significant improvement in the other four KPI’s
evidenced by the Board in new or updated policies, procedures and reporting frameworks. A safety and risk management
culture has been embedded and control effectiveness measures put in place. People related performance planning and
review processes have been fully complied with and the Group’s sustainability agenda has been clarified and deployed.
Individual KPIs, representing the remaining 25% of the reward, were unique to an Executive’s area of accountability. The
Board reviewed the achievement of these KPIs in determining the Executive’s STI reward for 2009. Overall the Board
consider that the Executive Committee have performed well against the targets set for the year.
236 TRANSURBAN ANNUAL REPORT 2009
236 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
2009 Long term incentive structure
Long term incentive (LTI) grants may be awarded annually to executives based on performance to provide an incentive for
future performance and in order to align remuneration with the creation of security holder wealth.
For the 2009 financial year, the CEO and CFO received an LTI allocation of 100% of TEC and senior executives received
an LTI of 50% of TEC. Eighty per cent of the LTI allocation was granted in the Performance Awards Plan with the
remaining twenty per cent (or a minimum value of $100,000 whichever was the greater) granted in the Executive Equity
Plan.
2009 Performance Awards Plan
The Performance Awards Plan (PAP) is a modified version of the 2008 Performance Rights Plan (PRP). Under the PAP
eligible executives, including those outside Australia, receive a grant of Performance Awards which entitles participants to
receive securities at no cost subject to the achievement of performance conditions. The Board has discretion as to the
form of the award at the end of the performance period and may grant cash payments of equivalent value. No dividends or
distributions on securities are payable to participants prior to vesting.
Awards were first made under the PAP on 1 November 2008. The table on page (cid:21)(cid:23)(cid:27) provides details of rights granted and
the value of rights granted, exercised and lapsed during the year.
Dual performance measures (an earnings measure and relative total security holder return) apply to Performance Awards.
The use of dual measures balances the need to improve the underlying performance of the business over the long term as
well as achieve appropriate returns relative to the market.
These measures are as follows:
1. A Proportional EBITDA hurdle applies to 50% of the Performance Award. Proportional EBITDA is earnings before net
finance costs (revenues and expense), tax, depreciation and amortisation. It includes EBITDA from CityLink (100%), Hills
M2 (100%), M1 Eastern Distributor (75.1%), M4 (50.61%), M5 (50%), M7 (50%) and DRIVe (75% including Pocahontas).
As this plan is a long term plan, the proportional EBITDA measure will be adjusted to include or exclude the relevant
EBITDA from acquisitions and divestments that may occur after the Base Year. In addition, any gain or loss arising from
the investment in ConnectEast will be excluded.
This operational measure was chosen to reflect Transurban’s underlying business goal of sustainable growth in earnings
of existing operations in order to improve security holder value.
2. A relative Total Security holder Return (TSR) hurdle applies to 50% of the Performance Award. From 1 November 2008,
Transurban’s comparator group for the TSR measure is the S&P/ASX 100 constituents at the date of grant. This peer
group reflects the Group’s competitors for security holder capital and talent.
TSR measures total return on investment of a security, taking into account both capital appreciation and distributed
income. It assumes a notional reinvestment of distributions paid on the security (on a pre-tax basis) in additional
securities, at the market price on the day before the securities begin trading ex the relevant distribution. The Group's
performance against the hurdle is determined according to Transurban Group’s ranking against the TSR growth of the
peer group over the three year performance period. A volume weighted average price of securities for the one week up to
and including the testing date is used to calculate TSRs.
Relative TSR was selected as a performance hurdle as it ensures an alignment between comparative security holder
return and reward for executives.
237 TRANSURBAN ANNUAL REPORT 2009
237 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
The vesting schedule and performance hurdles for the Performance Awards are as follows:
Performance measure
Proportion of
Performance
Award hurdle
applies to
Proportional EBITDA
50%
TSR
50%
Performance target
% of award vesting
5% compound proportional EBITDA
annual growth over the three year
performance period from the Base
Year*
9% compound proportional EBITDA
annual growth
50% of the proportional EBITDA award
100% of the proportional EBITDA award
Between 5-9% proportional EBITDA
growth
Straight line vesting between 50-100%
of the proportional EBITDA award
TSR is ranked at or below the 50th
percentile of the comparator group
constructed in the Base Year**, tested
at the end of each of the three year
performance period
0% of the TSR award
TSR is ranked above the 50th percentile
of the comparator group
50% of the TSR award
TSR is ranked at or above the 75th
percentile
100% of the TSR award
TSR is ranked above the 50th percentile
but below the 75th percentile
Straight line vesting between 50-100%
of the TSR award
* For the 2009 grant this is the 2008 financial year full year actual proportional EBITDA.
** For the 2009 grant this is the TSR comparator group constructed at the date of grant.
The EBITDA target has been reviewed and adjusted to reflect the new ‘proportional EBITDA’ measure which is ring fenced
to current operations.
Performance Awards were granted on 1 November 2008 with a three year vesting period. The awards are tested at the
end of each year. If the performance measures are satisfied for the year, one third of the awards are preserved until the
end of the three year period. At the end of the three years a cumulative test of the performance measures is applied to
any unvested awards.
No retesting is available after the three year performance period. In the event of a change of control of the Group,
automatic vesting of awards occurs.
2009 Executive Equity Plan
Equity awards are granted under the Executive Equity Plan (EEP) based on executives’ performance and are designed to
encourage retention of executives while focusing on business excellence. The EEP also aligns with Transurban’s
remuneration philosophy of encouraging executive security holding.
Individuals who are high performers and in business critical roles are nominated for awards for their past contribution and
expected future performance. Board approval is required to grant EEP awards to nominated executives.
Under the EEP, eligible executives receive a grant of stapled securities in the Transurban Group (”securities”) at no cost
that are subject to disposal restrictions for three years from the grant date. Participants are entitled to distributions paid on
their Securities during the restriction period. If the executive ceases employment with Transurban during the restriction
period, their Securities will be forfeited unless the Board decides otherwise.
Awards were first made under the EEP on 1 November 2008. The table on page (cid:21)(cid:23)(cid:27) provides details of awards.
238 TRANSURBAN ANNUAL REPORT 2009
238 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
Executives outside Australia
In light of US taxation implications, the overseas plan has been adapted to mirror the security awards under EEP with a
grant of Performance Rights. Eligible executives based outside Australia receive a grant of Performance Rights at no cost
which entitles participants to receive Securities which vest at the end of the vesting period of three years. Cash in lieu of
distributions on the Securities is payable to participants during the vesting period. If the executive ceases employment
with Transurban prior to the vesting date, their unvested Performance Rights will be forfeited.
All Employee Plans
The Group operated three broad employee-based security plans, the ShareLink Investment Tax Exempt Plan, the
ShareLink Investment Tax Deferred Plan and the ShareLink Incentive Plan. These plans were offered to the Group’s
permanent employees, including executives.
ShareLink Investment Tax Exempt Plan (ITEP)
The ITEP provided employees the opportunity to invest, on a tax-exempt basis, up to $1,000 per annum, of which half is
contributed by the Group. This plan was suspended in May 2009 following changes to taxation announced in the Federal
budget. The Group intends to reactivate this plan with required modifications once the proposed legislation has been
enacted.
ShareLink Investment Tax Deferred Plan (ITDP)
The Investment Tax Deferred Plan provided employees the opportunity to purchase securities, on a tax-deferred basis
using pre-tax salary. There is no cap on the amount of salary an employee may elect to contribute and the company
provided a matching contribution on a dollar-for-dollar basis to a maximum of $3,000 per annum. This plan was
suspended in May 2009 following changes to taxation announced in the Federal budget. The Group also intends to
reactivate this plan with required modifications once the proposed legislation has been enacted.
ShareLink Incentive Plan (IP)
In 2009 an allocation of 100 securities at no cost was made to each of the 453 eligible employees in recognition of the
Group’s prior year performance.
Legacy plans
Transurban has a number of schemes which no longer operate as open plans but under which some Key Management
Personnel have outstanding entitlements. No grants were made in the 2009 financial year under any of the legacy plans.
Refer to page (cid:21)(cid:23)(cid:27) for details of the legacy plans.
F
Contractual arrangements of executive directors and senior executives
Remuneration for the Chief Executive Officer (CEO) and key management personnel are formalised in service
agreements. Each of these agreements provides for access to performance related STI payments and other benefits as
described above. Although not specified in agreements, executives may be nominated to participate in executive long term
incentive plans (or equivalent cash plans for those executives located outside Australia).
Other key details of the agreements relating to remuneration are provided below:
Chief Executive Officer
The Chief Executive Officer (CEO) is employed under an ongoing contract. The current employment contract commenced
on 4 February 2008.
Under the terms of the present contract:
•
•
•
The CEO received fixed remuneration of $2,080,000 per annum, which is reviewed prior to 30 June each year;
A short term incentive payment of $2,800,000 will be made in September 2009. For subsequent years, the STI
target will be 100 per cent of annual TEC. The payment will be the greater of actual performance based on the
achievement of business or individual KPIs or 50 per cent of annual TEC;
An award under the Executive Equity Plan to the value of $416,000 was made on 1 November 2008;
239 TRANSURBAN ANNUAL REPORT 2009
239 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
•
•
•
An allocation of Performance Awards to the value of $1,664,000 was granted on 1 November 2008. The
Performance Awards will be subject to performance conditions and will vest three years from grant date;
The CEO’s Performance Awards allocation is derived by using an option valuation methodology. A modified
Black Scholes with Monte Carlo simulations was adopted for the 2009 financial year allocation. The number of
Performance Awards will be derived by dividing the CEO’s remuneration value by this valuation;
The CEO has a contractual entitlement to post-employment vesting of Long Term Incentives.
The CEO’s termination provisions are as follows:
•
•
•
The CEO may resign from his position and thus terminate this contract by giving six months’ written notice. Upon
termination, the CEO is entitled to retain any unvested LTIs, which will vest in accordance with the performance
conditions under the Performance Awards Plan (PAP) as at the time of the allocation.
The Group may terminate this employment agreement by providing twelve months’ written notice or providing
payment in lieu of the notice period (based on the fixed component of the CEO’s remuneration). Upon termination
on notice by the Group, the CEO is entitled to retain any unvested LTIs, which will vest in accordance with the
performance conditions under the Performance Awards Plan (PAP) as at the time of the allocation.
The Group may terminate the contract at any time without notice if serious misconduct has occurred. Where
termination with cause occurs the CEO is only entitled to that portion of remuneration that is fixed, and only up to
the date of termination. Upon termination with cause any unvested LTIs will immediately be forfeited.
Other key management personnel
All other key management personnel have rolling contracts. Total Employment Cost (TEC) for these executives is
reviewed annually by the Remuneration Committee and approved by the Board.
Executive termination provisions are as follows:
•
•
•
The executive may terminate their contract by giving three months’ written notice.
The Group may terminate the executive's employment agreement by providing six months’ written notice or
providing payment in lieu of the notice period (based on the fixed component of the executive's remuneration).
Upon termination on notice by the Group, any LTIs that have vested will be released. LTIs that have not yet
vested will be forfeited.
The Group may terminate the contract at any time without notice if serious misconduct has occurred. Where
termination with cause occurs the executive is only entitled to that portion of remuneration that is fixed, and only
up to the date of termination. Upon termination with cause, any unvested LTIs will immediately be forfeited.
In addition to the above terms and conditions, the Key Management Personnel service agreements include the following:
Ken Daley
•
•
A contracted bonus equal to $1,000,000 to be paid on 30 June 2010, subject to meeting performance conditions
in relation to Transurban’s North American business established at the commencement of the arrangement in
June 2007. The performance conditions underlying the bonus are tracking on target.
Access to any unvested long-term incentives (pro-rated based on time served) subject to stipulated performance
criteria.
Michael Kulper
•
A bonus arrangement for the completion of the I-95 project which expired without payment on 30 June 2009.
Tom Honan
•
A sign-on award equal to $1,000,000 received on commencement. Tom Honan received this award 75% in cash
and 25% in Transurban equity purchased on market using a 5 day volume weighted average price of $5.3028(cid:17)
240 TRANSURBAN ANNUAL REPORT 2009
240 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
•
•
For the 2009 year only, Tom Honan’s Performance Incentive will equal 100% of TEC as a guaranteed payment,
subject to remaining an employee when Performance Incentives are awarded. In subsequent years Tom Honan’s
target will be 50% of TEC payable at the discretion of the Group.
In November 2008 Tom Honan received an allocation of Long Term Incentives to the value of $1,000,000. In
subsequent years the target value will be 50% of TEC.
The Group determined that the arrangements above were necessary to attract Tom Honan from his existing position.
G
Non-executive director (NED) remuneration
Policy
The Board seeks to set aggregate remuneration at a level that provides the Transurban Group with the ability to attract
and retain directors of the highest calibre, whilst incurring a cost that is acceptable to security holders.
The amount of aggregate remuneration sought to be approved by security holders and the fee structure is reviewed
annually. The board considers advice from external consultants as well as the fees paid to NEDs of comparable
companies when undertaking the annual review process.
The constitution and the ASX listing rules specify that the aggregate remuneration of NEDs shall be determined from time
to time by a general meeting. The latest determination was at the annual general meeting (AGM) held on 29 October 2007
when security holders approved an aggregate remuneration of $2,100,000 per year. The Board is not seeking to increase
the aggregate remuneration at the 2009 AGM.
The remuneration of NEDs consists of director’s fees and committee fees. NEDs are not eligible to receive any
performance based compensation.
Non-executive director fee structure
Each non-executive director of TIL receives a base fee of up to $140,000 for being a director of the Group, apart from the
Chairman who receives a fee of up to three times this amount. An additional fee is also paid for each board committee on
which a NED sits (ranging from $10,000 to $30,000 for participation in or chairing a sub-committee), apart from the
Chairman who does not receive additional fees for chairing or participating in board committees. The payment of additional
fees for serving on a committee recognises the additional time commitment required by NEDs who serve on one or more
sub committees.
The constitutions of the entities comprising the Transurban Group provide that the total remuneration paid in a year to non-
executive directors may not exceed $2.1 million in total for the Group.
In September 2005, the Board resolved to discontinue previously provided retirement benefits for NEDs with effect from 30
September 2005, such that future directors were not entitled to this benefit. The value of benefits accrued up to this date
attracts interest at the statutory fringe benefits rate. The accrued `frozen’ retirement benefits plus interest will be paid to
directors upon their retirement.
The remuneration of NEDs for the period ending 30 June 2009 and 30 June 2008 is detailed in the tables on page (cid:21)(cid:23)(cid:22) of
this report.
Equity participation
The Group encourages NEDs to hold Transurban Securities. Under the ShareLink Investment Tax Deferred Plan,
approved by security holders at the AGM held on 27 October 2008, NEDs were able to sacrifice a portion of their director
fees to acquire Transurban securities through a tax-deferred arrangement. The maximum contribution is capped at 50% of
pre-tax NED fees and the company does not provide a matching contribution for NEDs. Transurban equities are
purchased on behalf of the participating NEDs and employees based on a pre-determined timeframe and frequency.
This arrangement is in line with the Group’s overall remuneration philosophy and market practice and aligns NEDs with
security holder interests.
This plan was suspended in May 2009 following the budget changes to taxation arrangements on shareplans, resulting in
no Security purchases over the 2009 financial year. The Group intends to reactivate this plan with required modifications
once the proposed legislation has been enacted.
241 TRANSURBAN ANNUAL REPORT 2009
241 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
H
Director and key management personnel remuneration and other disclosures
Details of the remuneration of directors, key management personnel (as defined in AASB 124 Related Party Disclosures)
and specified executives of the Group are set out in note 21.
Key management personnel
For the purposes of this report, Key Management Personnel of the Transurban Group are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Transurban Group, directly or
indirectly. They include all Directors of the parent (executive and non-executive) and members of the Executive
Committee reporting to the CEO who have authority and responsibility for planning, directing and controlling the activities
of the Group.
The Key Management Personnel of the Group are the Directors as per page (cid:21)(cid:22)(cid:19) and the following executives:
•
•
•
•
•
•
•
•
•
B Bourke - Chief Operating Officer
D Cardiff - Group General Manager, Human Resources
K Daley - President, International Development
M Fletcher - Group General Manager, Public Affairs
A Head - Group General Manager, Strategy and Corporate Development
S Hogg - Treasurer
T Honan - Chief (cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79) Officer (appointed 15 October 2008)
M Kulper - President Transurban North America
E Mildwater - Chief Legal Counsel and Company Secretary
242 TRANSURBAN ANNUAL REPORT 2009
242 Transurban annual reporT 2009
Remuneration report (continued)
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration table
Remuneration of key management personnel, who included the five highest paid executives of the Company and the
Group:
The remuneration amounts below represent the entire amounts paid by the Transurban Group. The full amounts have(cid:3)been
disclosed as a reasonable basis of apportionment is not available to reflect the Transurban International Limited's portion.
2009
Short-term employee benefits
Post-employment
benefits
Long-
term
benefits
Term-
ination
Benefits
Share-based payments
Value of
equities
acquired in
lieu of cash
salary/fees Cash Bonus
$
$
Non-
Monetary
benefits
$
Cash
salary and
fees
$
Super-
annuation
$
Retirement
benefits
$
Long
service
leave
$
Executive
Loan Plan (a) PRP/PAP (b) EEP (c)
$
$
$
$
Total
$
385,306
47,030
47,030
479,366
1,980,839
635,976
344,033
658,635
274,381
368,033
355,355
690,950
1,235,047
322,142
-
-
-
-
-
-
-
-
-
-
-
-
-
34,694
-
-
34,694
2,800,000
36,881
100,000
-
-
-
-
-
-
250,000
-
-
329,800
314,500
383,400
163,600
204,500
170,000
1,750,000
630,022
217,000
7,845
-
97,354
6,301
-
-
-
-
-
100,241
57,042
94,694
28,319
33,042
31,900
36,226
110,949
28,911
7,344,757
250,000
6,962,822
148,381
656,018
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,913
16,198
46,917
15,327
16,419
-
-
72,102
-
182,876
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
420,000
47,030
47,030
514,060
404,265
75,093
5,397,078
88,498
20,303
-
1,679
12,850
-
-
-
-
217,564
82,038
181,986
47,003
62,254
19,436
194,358
244,528
24,295
18,051
18,051
18,051
18,051
18,051
14,440
36,103
22,575
18,051
1,413,888
852,165
1,481,037
554,661
715,149
591,131
2,957,637
2,315,223
610,399
123,330
1,477,727
256,517 17,402,428
Name
Non-executive
directors
D Ryan
J Eve
J Keyes
Sub-total non-
executive
directors
Executive
directors
C Lynch
Other key
management
personnel
B Bourke
D Cardiff
K Daley
M Fletcher
A Head
S Hogg
T Honan(1)
M Kulper
E Mildwater
Total key
management
personnel
compensation
(a) The amounts disclosed as remuneration is that part of the value of the Executive Loan Plan benefit which is attributable to the current
year portion of the vesting period.
(b) The amounts disclosed as remuneration is that part of the value of the Performance Rights Plan benefit and Performance Award Plan
benefit which is attributable to the current year portion of the vesting period.
(c) The amounts disclosed as remuneration is that part of the value of the Executive Equity Plan benefit which is attributable to the current
year portion of the vesting period.
(1) Tom Honan elected to receive part of his sign-on award in Transurban securities which were purchased on market.
243 TRANSURBAN ANNUAL REPORT 2009
243 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
2008
Short-term employee benefits
Post-employment benefits
Long-
term
benefits
Termination
Benefits
Share-based payments
Value of
equities
acquired in
lieu of cash
salaries/fees Cash bonus
$
$
Non-
monetary
benefits
$
Cash
salary and
fees
$
Super-
annuation
$
Retirement
benefits
$
Long
service
leave
$
Executive
Loan Plan (a)
$
Performan
ce Rights
Plan (b)
$
$
Total
$
385,484
10,000
10,000
-
-
-
-
-
-
-
-
-
34,694
-
-
821,020
1,289,868
1,000,000
-
2,000,000
9,218,000
3,763
-
15,000
100,000
689,552
633,182
270,889
454,420
478,842
236,090
409,910
5,689,257
-
750,000
-
-
-
-
-
1,750,000
702,000
557,300
250,000
1,416,200
2,616,927
-
586,000
17,346,427
9,020
8,480
-
-
-
-
9,020
30,283
61,953
51,627
50,433
100,000
38,700
6,470
96,190
555,067
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
420,178
10,000
10,000
-
86,233
-
5,249,395
-
529,631
-
191,405
3,839,783
16,664,532
17,231
28,478
15,977
29,482
22,401
-
(8,124)
191,678
571,891
-
-
-
-
643,191
495,580
6,960,057
133,138
119,075
28,835
(124,921)
(142,201)
49,386
93,202
686,145
104,776
97,292
28,737
42,641
41,668
8,217
82,323
597,059
2,289,561
2,245,434
644,871
1,917,822
3,056,337
943,354
1,764,101
33,805,973
Name
Non-executive
directors
D Ryan
J Eve
J Keyes
Executive
directors
C Lynch(1)(2)
K Edwards(3)
Other key
management
personnel
C Brant(6)
B Bourke(1)
D Cardiff
K Daley
M Kulper
G Mann(4)
P O'Shea(5)
Total
(a) The amounts disclosed as remuneration is that part of the value of the Executive Loan Plan benefit which is attributable to the current
year portion of the vesting period.
(b) The amounts disclosed as remuneration is that part of the value of the Performance Rights Plan benefit which is attributable to the
current year portion of the vesting period.
(1) Chris Lynch and Brendan Bourke elected to receive part of their fixed remuneration in Transurban securities which were purchased on
market.
(2) Chris Lynch joined the Group on 4 February 2008 as CEO elect and subsequently became CEO on April 5.
(3) Kim Edwards was the Managing Director from 1 July 2007 until his retirement on 4 April 2008. Kim Edwards' cash bonus comprised a
short term incentive payment of $1,000,000, a Strategic Milestone Incentive Plan bonus of $5,000,000 and a Business Generation Plan
Incentive of $3,218,000. Kim Edwards' termination payment included the following contractual and statutory payments: $2,470,000 being
1.3 times of fixed remuneration, $2,139,194 being all statutory leave entitlements and notice in lieu of unexpired portion of his employment
contract (from 5 April 2008 to 21 February 2009), and $640,200 being cash payment in lieu of the expiration of long term incentives.
(4) Gary Mann was the Group General Manager Development from 1 July 2007 until his resignation on 23 November 2007. Gary Mann's
termination payment included a statutory payment of $43,191 and a termination payment of $600,000.
(5) Paul O’Shea was the Group General Manager Legal and Risk Management during the year ended 30 June 2008. Paul O’Shea’s
termination payment totalled $495,580.
(6) Chris Brant was the Chief Finance Officer during the year ended 30 June 2008. Chris Brant’s termination payment totalled $571,891.
244 TRANSURBAN ANNUAL REPORT 2009
244 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Executive Directors
C Lynch
Other key management personnel
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
S Hogg
T Honan
E Mildwater
Fixed remuneration
At risk -STI
At risk - LTI
2009
2008
2009
2008
2009
2008
34%
50%
50%
50%
50%
50%
50%
60%
50%
50%
34%
50%
60%
50%
50%
-
-
-
-
-
33%
25%
25%
25%
25%
25%
25%
20%
25%
25%
33%
25%
20%
25%
25%
-
-
-
-
-
33%
25%
25%
25%
25%
25%
25%
20%
25%
25%
33%
25%
20%
25%
25%
-
-
-
-
-
STI payments for 2008 and 2009 financial years
For the 2008 financial year, 100% of the STI as previously accrued in that period vested to executives and was paid in the
2009 financial year.
For each STI payment to the key management personnel listed in the tables below, the percentage of the available STI
that will be paid and the percentage that will be forfeited because the person did not meet his or her performance criteria,
are set out below. No part of the STI is payable in future years.
Target STI
Paid
%
Forfeited
%
Executive directors
C Lynch
Other key management personnel
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
S Hogg
T Honan
E Mildwater
135
90
157
102
102
102
102
106
100
109
-
10
-
-
-
-
-
-
-
-
245 TRANSURBAN ANNUAL REPORT 2009
245 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
Equity instruments
Value of equity instruments granted, exercised and lapsed
(A)
Remuneration
%
(B)
Value at
grant date
$
(C)
Value at
exercise date
$
(D)
Value at
lapse date
%
C Lynch
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
S Hogg
T Honan
E Mildwater
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Loan Plan 2006
Executive Loan Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Loan Plan 2006
Executive Loan Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Cash Plan 2006
Executive Cash Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Cash Plan 2006
Executive Cash Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Loan Plan 2006
Executive Cash Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Executive Loan Plan 2006
Executive Loan Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Executive Equity Plan 2009
Performance Awards Plan 2009
Executive Equity Plan 2009
Performance Awards Plan 2009
Executive Equity Plan 2009
Performance Awards Plan 2009
Executive Equity Plan 2009
80
20
30
40
50
40
10
20
20
30
40
10
30
30
50
40
10
20
30
50
40
10
10
10
20
40
10
15
20
20
40
10
20
20
40
10
40
10
-
12,742
-
-
2(cid:15)396
401
1,830,884
340,093
142,500
220,000
325,000
323,485
81,753
40,000
44,000
96,000
176,048
81,753
103,950
126,000
275,000
254,167
81,753
36,080
135,000
268,725
550,422
102,241
14,850
20,550
39,000
132,036
81,753
22,950
30,825
70,724
176,048
81,753
88,024
65,399
880,232
163,507
110,030
81,753
A = The percentage of the value of remuneration, based on the value at grant date set out in column B.
B = The value at grant date calculated in accordance with AASB 2 Share-based Payment.
C= The value at exercise date that were granted as part of remuneration and were exercised/matured during the year.
D = The value at lapse date that were granted as part of remuneration and that lapsed during the year.
246 TRANSURBAN ANNUAL REPORT 2009
246 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
The terms and conditions of each grant of Performance Awards in the 2009 financial year are:
Performance Criteria
Grant date
Vesting date
Expiry date
TSR
EBITDA
1 Nov 2008
1 Nov 2008
1 Nov 2011
1 Nov 2011
1 Nov 2011
1 Nov 2011
Fair value of rights
at grant date
$3.30
$4.27
Spot price at grant
date
$5.22
$5.22
The terms and conditions of each grant of units under the Executive Equity Plan are:
Grant date
1 Nov 2008
Vesting date
1 Nov 2011
Expiry date
1 Nov 2011
Grant price
$5.22
Value per unit at grant date
$4.27
Performance of Transurban Group
As outlined in the LTI sections of this report, the reward delivered under the long-term incentive component of executive
remuneration is dependent on either TSR performance or EBITDA Growth.
The table below summarises the actual and prospective relative TSR performance over the Performance Period to date in
respect of unvested long term incentives. The data is indicative of results as if tested on 30 June 2009.
Long term Incentive plan
Executive Loan Plan 2007
Performance Rights Plan 2008
Performance Awards Plan 2009
Company TSR as at
30 June 2009
Indicative percentile
Rank
Indicative Number of
securities/rights
vesting
(27)%
(40)%
(17)%
63%
69%
39%
1,109,182
302,056
-
The table below illustrates the Company’s annual compound growth in EBITDA for Rights granted under the Performance
Rights Plan, with a 10% and 15% hurdle of annual compound growth, and the Performance Award Plan, with a 5% and 9%
hurdle of annual compound growth:
Long term Incentive plan
Performance Rights Plan 2008
Performance US Cash Rights Plan 2008
Performance Awards Plan 2009
Company Compound
growth as at 30 June
2009
7%
(2)%
8%
Indicative Number of
Rights Vesting(1)
-
-
670,036
247 TRANSURBAN ANNUAL REPORT 2009
247 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Performance Awards Plan
Executive Equity Plan
483,721
85,465
46,512
67,151
145,422
34,884
46,512
23,256
232,558
29,070
79,647
19,146
19,146
19,146
23,944
19,146
19,146
15,316
85,474
19,146
Remuneration report (continued)
Equity instrument compensation
Number of awards granted in 2009:
Executive directors
C Lynch
Other key management personnel
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
S Hogg
T Honan
E Mildwater
No awards vested during the period.
Legacy Plans
Business Generation Incentive Plan
Transurban Group has previously offered a cash bonus under the Business Generation Incentive Plan (BGIP) to certain
executives for generating new business. The bonuses were paid from a bonus pool determined by the risk adjusted net
present value (NPV) of a project or business venture. The BGIP was intended to reward executives for successful
business generation activities, based on the increase in security holder value derived from new business.
BGIP payments were determined and awarded by the Board, on the recommendation of the Remuneration Committee and
the CEO.
After a review of the Group’s STI arrangements in the 2009 financial year, the Board has opted to discontinue the BGIP
from the 2009 financial year onwards and will be capturing future outperformance through the standard STI plan.
No BGIP payments were made in the 2009 financial year.
2008 Performance Rights Plan
The Performance Rights Plan (PRP) enabled eligible executives to receive a grant of Performance Rights that entitled
participants to receive stapled securities in Transurban (Securities) at no cost at the end of a three year performance
period, subject to the achievement of performance conditions. No dividends or distributions on Securities were payable to
participants prior to vesting. The Plan had two performance measures, EBITDA and relative TSR against the S&P/ASX
100 Industrials, each applied to 50% of the PRP award.
50% of the EBITDA award vests for achievement of 10% compound EBITDA annual growth over the three year
performance period from the Base Year, 100% of the EBITDA award vested for achievement of 15% compound EBITDA
annual growth, and there was straight line vesting between the two annual compound growth targets. None of the TSR
award vests for a TSR ranking at or below the 50th percentile of the comparator group constructed in the Base Year,
tested at the end of the three year performance period. 50% of the TSR award vests for a TSR ranking above the 50th
percentile of the comparator group. 100% of the TSR award vests for a TSR ranking at or above the 75th percentile and
there was straight line vesting between the two TSR targets. No retesting is available under the plan.
248 TRANSURBAN ANNUAL REPORT 2009
248 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
Post-employment vesting under the Performance Awards Plan was introduced for executives that departed as a result of
Transurban’s restructure in the previous year. For departing executives, existing awards of Performance Rights were
extinguished and a new offer of Performance Awards under the PAP was made with the same measures and vesting
period based on a pro-rated entitlement for time served.
Awards were last made under the PRP in November 2007 and the PRP was discontinued in the 2009 financial year
following the introduction of the Performance Awards Plan.
The terms and conditions of each grant of Performance Rights under the legacy Performance Rights Plan are:
Performance Criteria
Grant date
Vesting date
Expiry date
TSR
EBITDA
Number of Performance rights granted under the legacy Performance Rights Plan 2008:
1 Nov 2010
1 Nov 2010
1 Nov 2010
1 Nov 2010
1 Nov 2007
1 Nov 2007
Fair value of rights
at grant date
$3.50
$5.96
Spot price at grant
date
$7.29
$7.29
Other key management personnel
B Bourke
D Cardiff
A Head
No performance rights vested during the period.
2006 and 2007 Executive Loan Plan
Performance Rights Plan
92,857
27,428
14,857
The Executive Loan Plan (ELP) was discontinued as of the 2007 financial year. The ELP rewarded the improvements in
the price of Transurban’s stapled securities over a three year period with relative Total Security holder Return (TSR)
against the S&P/ASX 100 Industrials as a performance measure. Executives based outside Australia were eligible to
participate in a cash based plan similarly structured to the ELP.
Executives that participated in the ELP were provided with an interest free loan to assist them to acquire securities at
market price. The term of the loan is three years and there is only one testing date. The securities are held by the
executive but will only vest in the executive in accordance with the terms of the Plan. Expiry occurs three years plus 60
days from the date of commencement of the Plan, unless the rules of the Plan otherwise provide. Holding locks are
applied to the securities to ensure that they can only be dealt with in accordance with the terms of the Plan. The acquired
securities cannot be transferred or sold while the loan is outstanding.
The ELP was last offered in the 2007 financial year. The 2006 awards (including those under the cash plan) met the TSR
hurdle and vested, however, due to the decrease in Transurban’s security price the majority of participants received
minimal to no value. Of the one remaining grant, Transurban anticipates that the 2007 awards (including the cash award)
are likely to vest in November 2009 but participants are likely to receive minimal value based on the current security price.
The terms and conditions of each grant of units under the legacy Executive Loan Plan are:
Grant date
1 Nov 2005
1 Nov 2006
Vesting date
1 Nov 2008
1 Nov 2009
Expiry date
31 Dec 2008
31 Dec 2009
Grant price
$6.47
$7.28
Value per unit at grant date
$1.35
$1.37
Date payable
1 Nov 2008
1 Nov 2009
249 TRANSURBAN ANNUAL REPORT 2009
249 Transurban annual reporT 2009
Transurban International Limited
Directors' report
30 June 2009
(continued)
Remuneration report (continued)
Number/value of securities vested under the 2006 Loan plan during the year:
Loan Plan
(Securities)
Cash Plan
($)
Other key management personnel
B Bourke
D Cardiff
K Daley
M Kulper
M Fletcher
A Head
90,005
25,148
-
-
9,706
15,001
-
-
-
-
-
-
There were no securities granted under the legacy Executive Loan Plan to KMP’s during the year.
Indemnification and Insurance
The Company indemnifies all past and present Directors and Secretaries of the Company, including at this time the
Directors named in this report and the Secretary or Secretaries, against every liability incurred by them in their respective
capacities unless:
•
•
•
The liability is owed to the Company or to a related body corporate;
The liability did not arise out of the conduct of good faith; or
The liability is for a pecuniary penalty order or a compensation order under the Corporations Act 2001.
The Company also indemnifies each person who is or has been an officer of the Company against liability for costs or
expenses incurred by the person in his or her capacity as an officer of the Company 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.
The Auditors of the Company are in no way indemnified out of the assets of the Company.
Non-audit services
The Group has an "External Auditor Independence" policy which is intended to support the independence of the external
auditor by regulating the provision of services by the external auditor. The external auditor will not be engaged to perform
any service that may impair or be perceived to impair the external auditor's judgement or independence. The external
auditor will only provide a permissible non-audit service where there is a compelling reason for it to do so, and the aim is
for the external auditor not to provide non-audit services at all. All non-audit services must be pre-approved by the Cheif
Financial Officer (services less than $5000) or the Chair of the Audit and Risk Committee (in all other cases).
The board of directors has considered the position and, in accordance with advice received from the Audit and Risk
Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-
audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
•
the Audit and Risk Committee reviews the non-audit services to ensure they do not impact the impartiality and
objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants , including reviewing or auditing the auditor’s own work, acting in a
management or a decision making capacity for the combined entity, acting as advocate for the combined entity
or jointly sharing economic risk and rewards.
•
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
250 TRANSURBAN ANNUAL REPORT 2009
250 Transurban annual reporT 2009
Non-audit services (continued)
Audit and Other Assurance Services
Audit and review of financial reports
Total remuneration for PricewaterhouseCoopers
Transurban International Limited
Directors' report
30 June 2009
(continued)
Consolidated
2009
$
2008
$
50,000
50,000
128,250
128,250
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page (cid:21)(cid:24)(cid:21).
Rounding of amounts
The company is of a kind referred to in Class Order 98/100, 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, or in certain cases, to the nearest dollar.
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 directors.
David J Ryan
Director
Christopher J Lynch
Director
Melbourne
26 August 2009
251 TRANSURBAN ANNUAL REPORT 2009
251 Transurban annual reporT 2009
252 Transurban annual reporT 2009
Transurban International Limited ARBN 121 746 825
Financial statements - 30 June 2009
Contents
Financial report
Income statements
Balance sheets
Statements of changes in equity
Cash flow statements
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members
Page
254
255
256
258
259
299
300
This financial report covers both the separate financial statements of Transurban International Limited as an individual
entity and the consolidated financial statements for the consolidated entity consisting of Transurban International Limited
and its subsidiaries. The financial report is presented in the Australian currency.
Transurban International Limited is domiciled and incorporated in Bermuda. Its registered office and principal place of
business is:
Transurban International Limited
22 Victoria Street
Hamilton
Bermuda
The financial report was authorised for issue by the directors on 2(cid:25) August 2009. The company has the power to amend
and reissue the financial report.
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
253 TRANSURBAN ANNUAL REPORT 2009
253 Transurban annual reporT 2009
Transurban International Limited
Income statements
For the year ended 30 June 2009
Consolidated
Parent
Notes
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Revenue from continuing operations
Other income
Expenses from ordinary activities
Administration costs
Business Development
Depreciation and amortisation expense
Finance costs
Share of net loss of associates and joint
venture partnership accounted for using the
equity method
Loss before income tax
Income tax (expense) benefit
Loss for the year
3
4
5
6
28,686
42,947
19,981
(7,392)
(37,373)
(3,380)
(13,590)
(24,950)
(38,018)
(1,683)
(39,701)
-
(8,119)
(42,388)
(738)
(15,788)
(18,721)
(42,807)
5,719
(37,088)
359
-
(697)
-
-
-
-
(338)
-
(338)
132
-
(557)
-
-
(5)
-
(430)
-
(430)
Earnings per share for loss from continuing
operations attributable to the ordinary
equity holders of the company:
Basic earnings per share
Diluted earnings per share
Cents
Cents
30
30
(3.1)
(3.1)
(3.4)
(3.4)
The above income statements should be read in conjunction with the accompanying notes.
254 TRANSURBAN ANNUAL REPORT 2009
254 Transurban annual reporT 2009
Transurban International Limited
Balance sheets
As at 30 June 2009
Consolidated
Parent
Notes
2009
$'000
2008
$'000
2009
$'000
2008
$'000
7
8
9
10
11
12
13
14
15
16
17
18
19
19
400
21,914
22,314
1,000
54,461
55,461
14
156,874
156,888
14
95,823
95,837
269,315
-
918
7,726
277,959
250,441
-
3,117
9,845
263,403
-
1
-
-
1
-
1
-
-
1
300,273
318,864
156,889
95,838
257,047
-
6,045
5,349
268,441
1,309
95
1,404
266,307
1,614
7,456
1,666
277,043
2,229
24
2,253
269,845
279,296
-
-
-
-
-
-
-
-
-
852
-
-
-
852
-
-
-
852
30,428
39,568
156,889
94,986
138,983
(31,568)
(76,987)
95,554
(18,700)
(37,286)
138,983
18,872
(966)
95,554
60
(628)
30,428
39,568
156,889
94,986
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Investments accounted for using the equity
method
Other financial assets
Property, plant and equipment
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Non-interest bearing liabilities
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
The above balance sheets should be read in conjunction with the accompanying notes.
255 TRANSURBAN ANNUAL REPORT 2009
255 Transurban annual reporT 2009
Transurban International Limited
Statements of changes in equity
For the year ended 30 June 2009
Attributable to members of
Transurban International Limited
Contributed
equity
$'000
Reserves
$'000
Accumulated
losses
$'000
Notes
Total
$'000
Consolidated
Balance at 1 July 2007
Adjustment on adoption of:
AASB-I 12
Restated total equity at the beginning of the financial year
Changes in the fair value of cash flow hedges, net of tax
Exchange differences on translation of foreign operation
(Loss) for year
Total recognised income and expense for the year
Contributions of equity, net of transaction costs
Treasury securities
Acquisition of Minority Interests reserves
Balance at 30 June 2008
Balance at 1 July 2008
Changes in the fair value of cash flow hedges, net of tax
Exchange differences on translation of foreign operation
(Loss) for year
Total recognised income and expense for the year
Contributions of equity, net of transaction costs
Distribution Reinvestment Plan
Treasury securities
Changes in fair value of share based payment reserve
19
19
18
18
19
19
19
18
18
18
19
-
-
-
-
-
-
-
8
(5)
3
(198)
-
(198)
(190)
(5)
(195)
(13,164)
3,686
-
-
-
(37,088)
(13,164)
3,686
(37,088)
(9,478)
(37,088)
(46,566)
95,189
365
-
95,554
-
-
(9,225)
(18,700)
-
-
-
(37,286)
95,189
365
(9,225)
39,568
95,554
(18,700)
(37,286)
39,568
-
-
-
-
(42,438)
29,405
-
-
-
(39,701)
(42,438)
29,405
(39,701)
(13,033)
(39,701)
(52,734)
1,411
41,528
488
2
-
-
-
165
-
-
-
-
1,411
41,528
488
167
Balance at 30 June 2009
138,983
(31,568)
(76,987)
30,428
256 TRANSURBAN ANNUAL REPORT 2009
256 Transurban annual reporT 2009
Parent
Balance at 1 July 2007
Exchange differences on translation of foreign operation
(Loss) for year
Total recognised income and expense for the year
Contributions of equity, net of transaction costs
Treasury securities
Balance at 30 June 2008
Balance at 1 July 2008
Exchange differences on translation of foreign operation
(Loss) for year
Total recognised income and expense for the year
Contributions of equity, net of transaction costs
Distribution Reinvestment Plan
Treasury securities
Changes in fair value of share based payment reserve
Transurban International Limited
Statements of changes in equity
For the year ended 30 June 2009
(continued)
Contributed
equity
$'000
Reserves
$'000
(Accumulated
losses)
$'000
Notes
Total
$'000
19
18
18
19
18
18
18
19
-
-
-
-
95,189
365
95,554
95,554
-
-
8
52
-
52
-
-
60
(198)
-
(430)
(430)
-
-
(628)
(190)
52
(430)
(378)
95,189
365
94,986
60
18,647
-
(628)
-
(338)
94,986
18,647
(338)
-
18,647
(338)
18,309
1,411
41,528
488
2
-
-
-
165
-
-
-
-
1,411
41,528
488
167
Balance at 30 June 2009
138,983
18,872
(966)
156,889
The above statements of changes in equity should be read in conjunction with the accompanying notes.
257 TRANSURBAN ANNUAL REPORT 2009
257 Transurban annual reporT 2009
Transurban International Limited
Cash flow statements
For the year ended 30 June 2009
Consolidated
Notes
2009
$'000
2008
$'000
Parent
2009
$'000
2008
$'000
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest paid
Income taxes paid
Net cash (outflow) inflow from operating activities
29
Cash flows from investing activities
Cash acquired on acquisition of subsidiaries
Payment for investments in associates
Payments for property, plant and equipment
Net cash (outflow) from investing activities
Cash flows from financing activities
Loans to related parties
Repayment of loans from related parties
Loans from related parties
Repayment of loans to related parties
Proceeds from issue of stapled securities
Proceeds from sale of treasury securities
Share issue transactions costs
Net cash inflow (outflow) from financing activities
19,653
(29,717)
13
(65)
(3,430)
(13,546)
44,867
(28,054)
155
(313)
(297)
16,358
-
(24,954)
(1,181)
(26,135)
1,731
(310,953)
(3,130)
(312,352)
435
(461)
(1)
-
-
(27)
-
-
-
-
-
(893)
1
(4)
-
(896)
-
-
-
-
(61,779)
152,419
150,238
(203,370)
1,110
827
(39)
39,406
(34,032)
-
265,702
(30,337)
95,526
365
(264)
296,960
(71,932)
71,291
253
(1,603)
1,110
827
(39)
(93)
(95,263)
-
511
-
95,526
365
(264)
875
Net (decrease) increase in cash and cash equivalents
(275)
966
(120)
(21)
Cash and cash equivalents at the beginning of the
financial year
Effects of exchange rate changes on cash and cash
equivalents
Cash and cash equivalents at end of year
7
1,000
(325)
400
19
15
1,000
14
120
14
19
16
14
The above cash flow statements should be read in conjunction with the accompanying notes.
258 TRANSURBAN ANNUAL REPORT 2009
258 Transurban annual reporT 2009
Contents of the notes to the financial statements
Transurban International Limited
Notes to the financial statements
30 June 2009
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
Summary of significant accounting policies
Segment information
Revenue
Other income
Expenses
Income tax expense
Current assets - Cash and cash equivalents
Current assets - Trade and other receivables
Non-current assets - Investments accounted for using the equity method
Non-current assets - Other financial assets
Non-current assets - Property, plant and equipment
Non-current assets - Deferred tax assets
Current liabilities - Trade and other payables
Current liabilities - Provisions
Current liabilities - Non-interest bearing liabilities
Non-current liabilities - Deferred tax liabilities
Non-current liabilities - Provisions
Contributed equity
Reserves and retained profits/(accumulated losses)
Dividends
Key management personnel disclosures
Remuneration of auditors
Contingencies
Related party transactions
Business combination
Subsidiaries
Investments in associates
Events occurring after the balance sheet date
Reconciliation of profit after income tax to net cash inflow from operating activities
Earnings per stapled security
Share-based payments
Intra-group guarantees
Critical accounting estimates and judgements
Financial risk management
Initial Application of AASB Interpretation 12
Page
260
270
270
270
271
271
272
272
273
273
273
274
274
275
275
276
276
276
279
280
280
285
285
286
287
287
288
289
289
290
291
296
296
296
298
259 TRANSURBAN ANNUAL REPORT 2009
259 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated.
The combined financial report includes separate financial statements for Transurban International Limited (TIL) as an
individual entity and the Group consisting of Transurban International Limited and its subsidiaries.
(a) Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the
Corporations Act 2001.
Where necessary, comparatives have been reclassified for consistency with current year disclosures.
Compliance with IFRS
Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS).
Compliance with AIFRS ensures that the financial report of Transurban International Limited complies with International
Financial Reporting Standards (IFRS).
Early adoption of standards
The Group has not elected to adopt any new accounting standards early.
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of
other financial assets and liabilities.
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to
the financial statements, are disclosed in note 33.
(b) Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Transurban International
Limited (company or parent entity) as at 30 June 2009 and the results of all subsidiaries for the year then ended.
Transurban International Limited and its subsidiaries together are referred to in this financial report as the Group or the
consolidated entity.
Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the
financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The
existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing
whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated
from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to note 1(g)).
The consolidated financial statements 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 financial
statements except as otherwise indicated.
Investments in subsidiaries are accounted for at cost in the individual financial statements of Transurban International
Limited.
Associates
Associates are all entities over which the Group has significant influence but not control. Investments in associates are
accounted for in the parent entity financial statements using the cost method and in the consolidated financial statements
using the equity method of accounting, after initially being recognised at cost.
260 TRANSURBAN ANNUAL REPORT 2009
260 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(b) Principles of consolidation (continued)
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its share
of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment. Dividends receivable from associates are recognised in the
parent entity’s income statement, while in the consolidated financial statements they reduce the carrying amount of the
investment.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other
unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made
payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest
in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the
policies adopted by the Group.
(c) Segment reporting
A business segment is identified for a group of assets and operations engaged in providing products or services that are
subject to risks and returns that are different to those of other business segments. A geographical segment is identified
when products or services are provided within a particular economic environment subject to risks and returns that are
different from those of segments operating in other economic environments.
(d) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each other the Group's entities are measured using the currency of the
primary economic environment in which the entity operates (functional currency). The consolidated financial statements
are presented in Australian dollars, which is Transurban Holdings Limited’s (the ultimate parent of the Transurban Group)
functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment
hedges or are attributable to part of the net investment in a foreign operation.
Translation differences on financial assets and liabilities carried at fair value are reported as part of the fair value gain or
loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through
profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary
financial assets such as equities classified as available-for-sale financial assets are included in the fair value reserve in
equity.
261 TRANSURBAN ANNUAL REPORT 2009
261 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(d) Foreign currency translation (continued)
Group companies
The results and financial position of all Group entities (none of which has the currency of a hyperinflationary economy) that
have a functional currency different from the presentation currency are translated into the presentation currency as follows:
•
•
•
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance
sheet;
income and expenses for each income statement are translated at average exchange rates (unless this is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the transactions); and
all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of such investments, are taken to shareholders’ equity.
When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of
such exchange differences are recognised in the income statement, as part of the gain or loss on sale where applicable.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
foreign entities and translated at the closing rate.
(e) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net
of returns, rebates and amounts collected on behalf of third parties.
Revenue is recognised in the major business activities as follows:
(i) Business development fees
Business development fees are recognised when receivable and to the extent of costs incurred, and it is probable
the costs will be recovered.
(ii) Interest income
Interest income is recognised on a time proportionate basis using the effective interest rate method.
(iii) Dividends
Dividends are recognised as revenue when the right to receive payment is established.
(f)
Income tax
Transurban International Limited is domiciled in Bermuda. There is no Bermuda income or profits tax, withholding tax,
capital gains tax, capital transfer tax, estate duty or inheritance tax payable by TIL under Bermudan tax legislation.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income
tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is
determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are
expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax
bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
262 TRANSURBAN ANNUAL REPORT 2009
262 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(f)
Income tax (continued)
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in
equity.
(g) Business combinations
The purchase method of accounting is used to account for all business combinations, excluding business combinations
involving entities or businesses under common control, regardless of whether equity instruments or other assets are
acquired. Cost is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or
assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in
an acquisition, the fair value of the instruments is their published market price as at the date of exchange unless, in rare
circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair
value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs
arising on the issue of equity instruments are recognised directly in equity and internal costs expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost
of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill.
the cost of acquisition is less than the Group's share of the fair value of the identifiable net assets of the subsidiary
acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification
and measurement of the net assets acquired.
If
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate
at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
(h)
Impairment of assets
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an
indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of
an asset exceeds its recoverable amount the asset is considered impaired and 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
impairment occurs.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset,
unless the asset's value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate
cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable
amount is determined for the cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset.
(i) Cash and cash equivalents
For cash flow presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial
institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
(j)
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less allowance for impairment. Trade receivables are due for settlement no more than 30 days from the
date of revenue recognition.
263 TRANSURBAN ANNUAL REPORT 2009
263 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(j)
Trade receivables (continued)
Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written
off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used
when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms
of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the
trade receivable is impaired. The amount of the impairment allowance is the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows
relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of the
allowance is recognised in the income statement.
(k)
Investments and other financial assets
Classification
The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans
and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the
purpose for which the investments were acquired. Management determines the classification of its investments at initial
recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in
this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading
unless they are designated as hedges. Assets in this category are classified as current assets.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of
selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after
the reporting date which are classified as non-current assets. Loans and receivables are included in trade and other
receivables (note 8) in the balance sheet.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities
that the Group's management has the positive intention and ability to hold to maturity. If the Group were to sell other than
an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as
available-for-sale. Held-to-maturity financial assets are included in non-current assets, except for those with maturities
less than 12 months from the reporting date, which are classified as current assets.
Available-for-sale financial assets
Available-for-sale financial assets comprising principally marketable equity securities, are non-derivatives that are either
designated in this category or not classified in any of the other categories. They are included in non-current assets unless
management intends to dispose of the investment within 12 months of the reporting date.
Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date - the date on which the Group commits
to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets
not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially
recognised at fair value and transaction costs are expensed in the income statement. Financial assets are derecognised
when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are
included in the income statement as gains and losses from investment securities.
Subsequent measurement
Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.
264 TRANSURBAN ANNUAL REPORT 2009
264 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(k)
Investments and other financial assets (continued)
Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair
value. Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss'
category are presented in the income statement within other income or other expenses in the period in which they arise.
Dividend income from financial assets at fair value through profit and loss is recognised in the income statement as part of
revenue from continuing operations when the Group's right to receive payments is established.
Impairment
The Group assessed at each balance date whether there is objective evidence that a financial asset or group of financial
assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the
fair value of a security below its cost is considered an indicator that the securities are impaired. If any such evidence
exists for available-for-sale, the cumulative loss - measured as the difference between the acquisition cost and the current
fair value, less any impairment loss on that financial asset previously recognised in the profit or loss - is removed from
equity and recognised in the income statement. Impairment losses recognised in the income statement on equity
instruments classified as available-for-sale are not reversed through the income statement.
(l)
Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used
for financial assets held by the Group is the current bid price; appropriate quoted market price for financial liabilities is for
the current ask price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on
market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used
for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine
fair value for the remaining financial instruments. The fair value of interest rate swaps and cross currency swaps is
calculated as the present value of the estimated future cash flows. The fair value of forward exchange contracts is
determined using forward exchange market rates at the balance sheet date.
The carrying value less impairment allowance of trade receivables and payables are assumed to approximate their fair
values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by
discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar
financial instruments.
(m) Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on
qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance
are charged to the income statement during the reporting period in which they are incurred.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the
income statement. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in
respect of those assets to retained earnings.
Depreciation
Depreciation is calculated on a straight line basis so as to write-off the net costs of items of plant and equipment over their
expected useful lives. Estimates of remaining useful lives will be made annually for all assets. The expected useful lives
are 3 - 15 years.
Impairment
Fixed assets are assessed for impairment in line with the policy stated in note 1(h).
265 TRANSURBAN ANNUAL REPORT 2009
265 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(n) Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial
year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
(o) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured
at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is
recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on
the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are
recognised as prepayments and amortised on a straight-line basis over the term of the facility.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to
another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in
other income or other expenses.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting date.
(p) 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 specifically identifiable borrowing costs are capitalised into the
cost of the asset. Borrowing costs include interest on short-term and long term borrowings.
Costs incurred in connection with the arrangement of borrowings are deferred and amortised over the effective period of
the funding.
(q) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the
present obligation at the reporting date. The discount rate used to determine the present value reflects current market
assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the
passage of time is recognised as a finance cost.
(r) Employee benefits
Wages, salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits are recognised in other payables in respect of
employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are
settled. An expense for non-accumulating sick leave is recognised when the leave is taken and measured at the rates
paid or payable.
Liabilities for annual leave are recognised in the provision for employee benefits in respect of employees' services up to
the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. The provision is
classified as a current liability.
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 and 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 recognised in the provision for employee benefits and measured
as the present value of expected future payments to be made in respect of services provided by employees up to the
reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures 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.
266 TRANSURBAN ANNUAL REPORT 2009
266 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(r) Employee benefits (continued)
Equity-based compensation benefits
Equity-based compensation benefits have been provided to employees via the Transurban Group Executive Option Plan.
Information relating to these plans is set out in section D of the remuneration report.
The fair value of units granted under the plans are recognised as an employee benefit expense with a corresponding
increase in equity. The fair value is measured at grant date and recognised over the period during which the employees
become unconditionally entitled to the units.
The fair value of units granted under cash settled share-based compensation plans is recognised as an expense over the
vesting period with a corresponding increase in liabilities. The fair value of the liability is remeasured at each reporting
date with any changes in fair value recognised in the income statement for the period.
The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into
account the exercise price, the term, the impact of dilution, the security price at grant date and expected price volatility of
the underlying security, the expected dividend yield and the risk free interest rate for the term of the plan.
The fair value granted is adjusted to reflect the market vesting conditions, but excludes the impact of any non-market
vesting conditions (for example, profitability and growth targets). Non-market vesting conditions are included in
assumptions about the number of units that are expected to become exercisable. At each reporting date, the Group
revises its estimate of the number of units that are expected to become exercisable. The employee benefit expense
recognised each reporting period takes into account the most recent estimate. The impact of the revision to original
estimates, if any, is recognised in the income statement with a corresponding adjustment to equity.
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 income statement.
Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee
accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is
demonstrably committed to either terminating the employment of current employees according to a detailed formal plan
without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary
redundancy. Benefits falling due more than 12 months after reporting date are discounted to present value.
Business Generation Incentive Plan
The Group recognises a liability for bonuses as part of a Business Generation Incentive Plan. The Plan provides for cash
bonuses to be paid from a bonus pool determined by the risk adjusted net present value of a project or business venture.
The Plan is intended to reward executives for successful business generation activities, based on the increase in security
holder value derived from new business.
(s) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a reduction from the
proceeds. Incremental costs directly attributable to the issue of new share or options for the acquisition of a business are
not included in the cost of the acquisition as part of the purchase consideration.
If the entity reacquires its own equity instruments, for example as the result of a share buy-back, those instruments are
deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the
consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in
equity.
(t) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion
of the entity, on or before the end of the financial year but not distributed at balance date.
267 TRANSURBAN ANNUAL REPORT 2009
267 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(u) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to members of the share excluding any minority
interest and costs of servicing equity other than distributions, by the weighted average number of shares outstanding
during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all
dilutive potential ordinary shares.
(v) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
(w) Rounding of amounts
The company is of a kind referred to in Class order 98/100, 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, or in certain cases, the nearest dollar.
(x) Working capital deficiency
As at 30 June 2009 the Group has a working capital deficiency represented by net current liabilities of $246.13 million
(2008: $221.56 million). This working capital deficiency reflects a number of specific factors primarily related to an
intercompany loan payable with another entity within the Transurban Group. The directors have considered the position
and believe it is unlikely that the loan will be called upon.
(y) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2009
reporting periods. The Group’s and the parent entity’s assessment of the impact of these new standards and
interpretations is set out below.
(i) AASB 2008-8 Amendment to IAS 39 Financial Instruments: Recognition and Measurement (effective 1 July 2009)
AASB 2008-8 amends AASB 139 Financial Instruments: Recognition and Measurement and must be applied
retrospectively in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
The amendment makes two significant changes. It prohibits designating inflation as a hedgeable component of a
fixed rate debt. It also prohibits including time value in one-sided hedged risk when designating options as hedges.
The Group will apply the amended standard from 1 July 2009. It is not expected to have a material impact on the
Group’s financial statements.
(ii) Revised AASB 3 Business Combinations, AASB 127 Consolidated and Separate Financial Statements and
AASB 2008-3 Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127 (effective 1 July
2009)
The revised AASB 3 continues to apply the acquisition method to business combinations, but with some significant
changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date,
with contingent payments classified as debt subsequently remeasured through the income statement. There is a
choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquire either as fair
value or at the non-controlling interest’s proportionate share of acquiree’s net assets. All acquisition-related costs
must be expensed. This is different to the Group’s current policy which is set out in note 1(g) above.
268 TRANSURBAN ANNUAL REPORT 2009
268 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(y) New accounting standards and interpretations (continued)
The revised AASB 127 requires the effects of all transactions with non-controlling interests to be recorded in equity if
there is no change in control and those transactions will no longer result in goodwill or gains and losses. The
standard also specifies the accounting when control is lost. Any remaining interest in the entity is remeasured to fair
value, and a gain or loss is recognised in profit or loss. This is consistent with the Group’s current accounting policy
if significant influence is not retained.
The Group will apply the revised standards prospectively to all business combinations and transactions with non-
controlling interests from 1 July 2009.
(iii) AASB 2008-7 Amendments to Australian Accounting Standards – Cost of an Investment in a Subsidiary, Jointly
Controlled Entity or Associate (effective 1 July 2009)
In July 2008, the AASB approved amendments to AASB 1 First time Adoption of International Financial Reporting
Standards and AASB 127 Consolidated and Separate Financial Statements. The Group will apply the revised rules
prospectively from 1 July 2009. After that date, all dividends received from investments in subsidiaries, jointly
controlled entities or associates will be recognised as revenue, even if they are paid out of pre-acquisition profits, but
the investments may need to be tested for impairment as a result of the dividend payments. Under the entity’s
current policy, these dividends are deducted from the cost of investment. Furthermore, if a new intermediate parent
entity was created in the event of an internal reorganisation, investments in subsidiaries will be measured at the
carrying amount of the net assets of the subsidiary rather than the subsidiary’s fair value.
(iv) Revised AASB 101 Presentation of Financial Statements and AASB 2007-8 Amendments to Australian
Accounting Standards arising from AASB 101 (effective 1 January 2009)
The September 2007 revised AASB 101 requires the presentation of a statement of comprehensive income and
makes changes to the statement of changes in equity, but will not affect any of the amounts recognised in the
financial statements. If an entity has made a prior year adjustment or has reclassified items in the financial
statements, it will need to disclose a third balance sheet (statement of financial position), this one being as at the
beginning of the comparative period. The Group will apply the revised standard from 1 July 2009.
(v)AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from
AASB 8
AASB 8 will result in a significant change in the approach to segment reporting, as it requires adoption of a
'management approach' to reporting on financial performance. The information being reported will be based on what
the key decision makers use internally for evaluating segment performance and deciding how to allocate resources
to operating segments. The Group will adopt AASB 8 from 1 July 2009, and will only result in disclosure changes.
(vi) Revised AASB 123 Borrowing Costs and AASB 2007-6 Amendments to Australian Accounting Standards arising
from AASB 123 (effective from 1 January 2009)
The revised AASB 123 has removed the option to expense all borrowing costs and, when adopted, will require the
capitalisation of all borrowing costs directly attributable to the acquisition, construction or production of a qualifying
asset. There will be no impact on the financial report of the Group, as the Group already capitalises borrowing costs
relating to qualifying assets.
(vii)AASB Interpretation 17 Distribution of Non-cash Assets to Owners and AASB 2008-13 Amendments to
Australian Accounting Standards arising from AASB Interpretation 17 (effective 1 July 2009)
AASB-I 17 applies to situations where an entity pays dividends by distributing non-cash assets to its shareholders.
These distributions will need to be measured at fair value and the entity will need to recognise the difference
between the fair value and the carrying amount of the distributed assets in the income statement on distribution.
This is different to the Group’s current policy which is to measure distributions of non-cash assets at their carrying
amounts. The interpretation further clarifies when a liability for the dividend must be recognised and that it is also
measured at fair value. The Group will apply the interpretation prospectively from 1 July 2009.
269 TRANSURBAN ANNUAL REPORT 2009
269 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
1 Summary of significant accounting policies (continued)
(y) New accounting standards and interpretations (continued)
(viii) AASB 2009-2 Amendments to Australian Accounting Standards - Improving Disclosures about Financial
Instruments (effective 1 January 2009)
AASB 2009-2 results in amendments to AASB 7. It requires fair value measurement disclosures to be classified
into a new three-level hierarchy and additional disclosures for items whose fair value is determined by valuation
techniques rather than observable market values. The AASB also clarified and enhanced the existing requirements
for the disclosure of liquidity risk of derivatives. The Group is currently assessing the impact of the disclosure
requirements. The amendment will not affect any of the amounts recognised in the financial statements.
2 Segment information
Description of segments
The Group's only business segment for the year ending 30 June 2009 was an investment in, and providing management
services to, Transurban DRIVe, and the investigation of possible investment opportunities in the toll road sector in North
America.
3 Revenue
From continuing operations
Interest
Business development fees
4 Other income
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
12
28,674
28,686
152
42,795
42,947
-
359
359
1
131
132
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Foreign exchange gains (net) (2008: loss)
19,981
19,981
-
-
-
-
-
-
270 TRANSURBAN ANNUAL REPORT 2009
270 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
5 Expenses
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Loss before income tax includes the following
specific expenses:
Employee benefits expense
Rental expense
Finance costs
15,334
1,955
15,507
1,316
Interest and finance charges paid/payable
13,590
15,788
-
-
-
Foreign exchange losses (net gain in 2009 - see note 4)
Net foreign exchange losses
-
7,011
275
6 Income tax expense
(a)
Income tax expense
Current tax
Deferred tax
Under/(Over) provided in prior years
Deferred income tax (revenue) expense included in
income tax expense comprises:
Decrease (increase) in deferred tax assets (note 12)
(Decrease) increase in deferred tax liabilities (note 16)
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
(3,758)
2,722
2,719
1,683
4,179
(1,457)
2,722
1,852
(7,571)
-
(5,719)
(9,800)
2,229
(7,571)
-
-
-
-
-
-
-
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
-
-
5
50
-
-
-
-
-
-
-
(b) Numerical reconciliation of income tax expense
to prima facie tax payable
Profit from continuing operations before income tax
expense
Tax at the Australian tax rate of 30% (2008 - 30%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Tax differential
Equity accounted results
Income not subject to tax
Initial recognition of unbooked deferred tax assets
Sundry items
Under/(over) provision in prior years
Income tax expense
(38,018)
(11,405)
(42,807)
(12,294)
(3,088)
9,731
1,110
-
2,616
2,719
1,683
(2,452)
6,654
4,202
(2,095)
266
-
(5,719)
(338)
(101)
-
-
101
-
-
-
-
(430)
(129)
-
-
129
-
-
-
-
271 TRANSURBAN ANNUAL REPORT 2009
271 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
7 Current assets - Cash and cash equivalents
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Cash at bank and in hand
Balance per statement of cash flows
400
400
1,000
1,000
14
14
14
14
8 Current assets - Trade and other receivables
Trade receivables
Loans to related parties
Other receivables
Current tax receivable
Prepayments
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
43
7,125
13,885
804
57
21,914
5,296
45,838
3,268
-
59
54,461
14
156,737
76
-
47
156,874
12
95,628
130
-
53
95,823
No class within trade and other receivables contain impaired or passed due assets. Based on the credit history, it is
expected that these amounts will be received when due. The company does not hold any collateral in relation to these
receivables.
(a)
Interest rate risk
Information about the Group's exposure to interest rate risk in relation to trade and other receivables is provided in note
34.
(b) Fair value and credit risk
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.
Refer to note 34 for more information on the risk management policies of the Group.
272 TRANSURBAN ANNUAL REPORT 2009
272 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
9 Non-current assets - Investments accounted for using the equity method
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Investment - DRIVe Holdings (note 27)
269,315
269,315
250,441
250,441
-
-
10 Non-current assets - Other financial assets
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Shares in subsidiaries (note 26)
-
-
-
-
1
1
-
-
1
1
11 Non-current assets - Property, plant and equipment
Fixtures and
fittings
$'000
-
-
-
-
3,970
(115)
(738)
3,117
3,970
(853)
3,117
3,117
1,181
(3,380)
918
4,786
(3,868)
918
Consolidated
At 1 July 2007
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2008
Opening net book amount
Additions
Subsidiary sold
Depreciation charge
Closing net book amount
At 30 June 2008
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2009
Opening net book amount
Additions
Depreciation charge
Closing net book amount
At 30 June 2009
Cost
Accumulated depreciation
Net book amount
273 TRANSURBAN ANNUAL REPORT 2009
273 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
12 Non-current assets - Deferred tax assets
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
The balance comprises temporary differences
attributable to:
Accrued expenses
Provisions
Unearned income
Sundry items
Total deferred tax assets
Movements:
Opening balance at 1 July
Credited/(charged) to the income statement (note 6)
Foreign exchange movements
Closing balance at 30 June
Deferred tax assets to be recovered after more than 12
months
Closing balance at 30 June
132
1,278
6,176
140
7,726
9,845
(4,179)
2,060
7,726
7,726
7,726
917
4,211
2,032
2,685
9,845
-
9,800
45
9,845
9,845
9,845
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13 Current liabilities - Trade and other payables
Trade payables and accruals
Loans from related parties
Notes
24
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
3,291
253,756
257,047
4,701
261,606
266,307
-
-
-
95
757
852
Loans from related parties are at call and non-interest bearing.
(a) Risk exposure
Information about the Group's and the parent entity's exposure to foreign exchange risk is provided in note 34.
274 TRANSURBAN ANNUAL REPORT 2009
274 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
14 Current liabilities - Provisions
Employee benefits
Onerous contracts
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
3,065
2,980
6,045
7,456
-
7,456
-
-
-
The provision for employee entitlements includes provision for annual leave, bonuses and the current portion of long
service leave provision.
(a) Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Consolidated - 2009
Current
Carrying amount at start of year
- provision recognised
- amounts paid during the year
- movements in foreign exchange rates
Carrying amount at end of year
Onerous
contracts
$'000
-
4,165
(184)
(1,001)
2,980
15 Current liabilities - Non-interest bearing liabilities
Unearned income
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
5,349
5,349
1,666
1,666
-
-
-
-
-
-
-
275 TRANSURBAN ANNUAL REPORT 2009
275 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
16 Non-current liabilities - Deferred tax liabilities
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
The balance comprises temporary differences
attributable to:
Unrealised gain
Fixed assets
Accruals
Total deferred tax liabilities
Movements:
Opening balance at 1 July
Charged/(credited) to the income statement (note 6)
Foreign exchange movements
Closing balance at 30 June
Deferred tax liabilities to be settled after more than 12
months
17 Non-current liabilities - Provisions
-
917
392
1,309
2,229
(1,457)
537
1,309
1,309
1,309
2
2,227
-
2,229
-
2,229
-
2,229
2,229
2,229
-
-
-
-
-
-
-
-
-
-
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Employee benefits - long service leave
95
95
24
24
-
-
The provision for employee entitlements is the non-current portion of the long service leave provision.
-
-
-
-
-
-
-
-
-
-
-
-
18 Contributed equity
(a) Share capital
Ordinary shares
Fully paid stapled securities
Share capital
Ordinary shares
Fully paid stapled securities
276 TRANSURBAN ANNUAL REPORT 2009
276 Transurban annual reporT 2009
2009
$'000
2008
$'000
138,983
138,983
95,554
95,554
Number
'000
Number
'000
1,281,363
1,281,363
1,218,263
1,218,263
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
Number of
securities
'000
Notes
(e)
(d)
(d)
(d)
(d)
(d)
(d)
(e)
(d)
(d)
(d)
(d)
(d)
(h)
(d)
(d)
(d)
(d)
(e)
(e)
(d)
(d)
(d)
(f)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(e)
(d)
1,068,375
11,408
138
44
50
273
30
31
17,058
27
95
44
62
628
120,000
1,218,263
1,218,263
11
8
33
12
36,555
14,451
29
12
68
1,830
11
23
25
56
93
102
91
9
39
19
(443)
287
3
90
18
27
35
10
9,585
11
1,281,363
Issue
price
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$0.58
$0.80
$0.65
$0.80
$0.81
$0.79
$0.68
$0.69
$0.75
$0.75
$0.75
$0.79
$0.83
$0.79
$0.79
$0.83
$0.83
$0.73
$0.73
$0.73
$0.73
$0.73
$0.77
$0.67
$0.67
$0.73
$0.73
$0.73
$0.73
$0.73
$0.71
$0.59
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
365
95,526
(337)
95,554
95,554
7
7
27
10
24,700
9,995
22
9
51
1,450
9
18
20
47
77
75
67
6
29
14
(339)
192
2
66
13
20
2
24
7
6,835
6
(39)
138,983
18 Contributed equity (continued)
(b) Movements in ordinary share capital:
Date
1 July 2007
27 Aug 2007
19 Sep 2007
25 Sep 2007
4 Oct 2007
29 Nov 2007
5 Dec 2007
7 Jan 2008
27 Feb 2008
11 Mar 2008
9 Apr 2008
16 Apr 2008
1 May 2008
25 Jun 2008
26 June 2008
30 June 2008
1 July 2008
9 Jul 2008
19 Aug 2008
19 Aug 2008
21 Aug 2008
31 Aug 2008
31 Aug 2008
11 Sep 2008
11 Sep 2008
11 Sep 2008
26 Sep 2008
9 Oct 2008
23 Oct 2008
7 Nov 2008
13 Nov 2008
14 Nov 2008
14 Nov 2008
17 Nov 2008
18 Nov 2008
19 Nov 2008
20 Nov 2008
30 Nov 2008
8 Dec 2008
8 Dec 2008
23 Dec 2008
24 Dec 2008
30 Dec 2008
31 Dec 2008
7 Jan 2009
22 Jan 2009
27 Feb 2009
11 Mar 2009
30 June 2009
Details
Opening balance
Distribution Reinvestment Plan
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Distribution Reinvestment Plan
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Equity Placement
Less: Transaction costs arising on issue of securities
Balance
Opening balance
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Distribution Reinvestment Plan
Distribution Reinvestment Plan
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Share Purchase Plan
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Disposal of treasury securities
Vested treasury units
Vested treasury units
Vested treasury units
Vested treasury units
Vested treasury units
Acquisition of treasury units
Vested treasury units
Disposal of treasury units
Vested treasury units
Vested treasury units
Vested treasury units
Transfer from share-based payments reserve - 2005
Vested treasury units
Disposal of treasury securities
Distribution Reinvestment Plan
Disposal of treasury securities
Less: Transaction costs arising on issue of securities
Balance
277 TRANSURBAN ANNUAL REPORT 2009
277 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
18 Contributed equity (continued)
All shares issued were a component of Stapled Securities issued by the Transurban Group. Prior to June 2008, a nil value
was assigned to Transurban International Limited, with the value being apportioned between Transurban Holdings Limited
and Transurban Holding Trust.
(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. 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) Treasury securities
Stapled securities were issued to Transurban Group executives under the Share-based Payment plans. The securities are
held by the executive but will only vest in the executive in accordance with the terms of the plans. The acquired securities
cannot be transferred or sold while the loan is outstanding. On forfeit, the securities are sold on market.
(e) 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.
(f) Share purchase plan
TIL raised $1.5 million via a share purchase plan, issuing 1.8 million stapled securities to eligible security holders.
(g) Capital risk management
The Group is subject to a gearing ratio covenant imposed by Senior Secured lenders. The Group monitors capital on the
basis of the gearing ratio to ensure compliance with the covenant.
The Group’s and the parent entity’s objectives when managing capital are to safeguard their ability to continue as a going
concern, so that they can continue to provide returns to security holders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amounts of distributions paid to security
holders, return capital to security holders, issue new securities or sell assets to reduce debt.
(h) Equity Placement
TIL raised $95.5 million via an equity placement of 120 million securities to the Canadian Pension Plan Investment Board.
278 TRANSURBAN ANNUAL REPORT 2009
278 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
19 Reserves and retained profits/(accumulated losses)
(a) Reserves
Hedging reserve - cash flow hedges
Share-based payments reserve
Foreign currency translation reserve
Transactions with minority interest reserve
Movements:
Hedging reserve - cash flow hedges
Balance 1 July
Movement in associate's reserve
Balance 30 June
Share-based payments reserve
Balance 1 July
Employee share plan expense
Balance 30 June
Foreign currency translation reserve
Balance 1 July
Currency translation differences arising during the year
Balance 30 June
Transactions with minority interest reserve
Balance 1 July
Acquisition of commonly controlled entities
Balance 30 June
(b) Accumulated losses
Movements in retained profits were as follows:
Opening retained earnings
Net (loss) for the year
Balance 30 June
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
(55,602)
165
33,094
(9,225)
(31,568)
(13,164)
-
3,689
(9,225)
(18,700)
-
165
18,707
-
18,872
(13,164)
(42,438)
(55,602)
-
(13,164)
(13,164)
-
165
165
3,689
29,405
33,094
(9,225)
-
(9,225)
-
-
-
3
3,686
3,689
-
(9,225)
(9,225)
-
-
-
-
165
165
60
18,647
18,707
-
-
-
-
-
60
-
60
-
-
-
-
-
-
8
52
60
-
-
-
(37,286)
(39,701)
(76,987)
(198)
(37,088)
(37,286)
(628)
(338)
(966)
(198)
(430)
(628)
279 TRANSURBAN ANNUAL REPORT 2009
279 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
19 Reserves and retained profits/(accumulated losses) (continued)
(c) Nature and purpose of reserves
(i) Hedging reserve - cash flow hedges
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised
directly in equity, as described in note 1. Amounts are recognised in profit and loss when the associated hedged
transaction affects profit and loss.
(ii) Share-based payments reserve
The share-based payments reserve is used to recognise the value of long-term incentives issued but not exercised.
(iii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation
reserve, as described in note 1(d). The reserve is recognised in profit and loss when the net investment is disposed of.
(iv) Transactions with minority interest reserve
The transactions with minority interest reserve arose as a result of the acquisition of Transurban (USA) Holdings Inc. and
its subsidiaries Transurban (USA) Inc. and Transurban (USA) Operations Inc. from a commonly controlled Transurban
Group entity (Transurban Limited).
20 Dividends
No dividends were paid or declared during the year.
21 Key management personnel disclosures
(a) Directors
The following persons were directors of Transurban International Limited during the financial year:
(i)
Chairman - non-executive
David J Ryan
(ii) Executive directors
Christopher Lynch
(iii) Non-executive directors
Jennifer Eve
James Keyes
(b) Other key management personnel
T Honan
B Bourke
D Cardiff
K Daley
M Kulper
S Hogg
M Fletcher
A Head
E Mildwater
Chief Financ(cid:76)(cid:68)(cid:79) Officer (from 1(cid:24) October 2008)
Chief Operating Officer
Group General Manager Human Resources
President International Development
President Transurban North America
Treasurer (acting Chief Financial Officer until 14 October 2008)
Group General Manager Public Affairs
Group General Manager Strategy & Corporate Development
Chief Legal Counsel and Company Secretary
The remuneration amounts below represent the entire amounts paid by the Transurban Group. The full amounts have
been disclosed as a reasonable basis of apportionment is not available to reflect the Group's portion.
280 TRANSURBAN ANNUAL REPORT 2009
280 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
21 Key management personnel disclosures (continued)
(c) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
Consolidated
Parent
2009
$
2008
$
2009
$
2008
$
14,705,962
656,016
182,876
-
1,857,574
17,402,428
24,815,967
746,745
-
6,960,057
1,283,204
33,805,973
14,705,962
656,016
182,876
-
1,857,574
17,402,428
24,815,967
746,745
-
6,960,057
1,283,204
33,805,973
Detailed remuneration disclosures are made in the Directors’ Report. The relevant information(cid:3)(cid:70)(cid:68)(cid:81)(cid:3)(cid:69)(cid:72)(cid:3)(cid:73)(cid:82)(cid:88)(cid:81)(cid:71)(cid:3)(cid:76)(cid:81)
sections A-D of the remuneration report on pages (cid:21)(cid:22)(cid:22) to 2(cid:24)(cid:19).
(d) Equity instrument disclosures relating to key management personnel
Share-based payments
(i)
Details of executive long term incentives, together with terms and conditions, can be found in section D of the
remuneration report in the Director's Report. The non-executive directors do not receive any share-based payments.
(ii) Performance Awards Plan (PAP)
2009
Balance at
start of the
year
Name
Directors of Transurban International Limited
C Lynch
-
Other key management personnel of the Group
-
B Bourke
-
D Cardiff
-
K Daley
-
A Head
-
S Hogg
-
T Honan
-
M Kulper
-
E Mildwater
Granted
during the
year as
remuneration
Matured and
paid during
the year
Other
changes
during the
year
Balance at
end of the
year
Matured and
payable at
the end of
the year
483,721
85,465
46,512
67,151
46,512
23,256
232,558
145,422
29,070
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
483,721
85,465
46,512
67,151
46,512
23,256
232,558
145,422
29,070
-
-
-
-
-
-
-
-
-
As the Performance Awards Plan was introduced in November 2008, there is no comparative data.
281 TRANSURBAN ANNUAL REPORT 2009
281 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
21 Key management personnel disclosures (continued)
(iii) Executive Loan Plan
The number of securities held during the financial year by each director of Transurban International Limited and other key
management personnel of the Company, including their personally related parties, are set out below.
2009
Name
Balance at
start of the
year
Granted
during the
year as
remuneration
Exercised
during the
year
Other
changes
during the
year
Balance at
end of the
year
Vested and
exercisable
at the end of
the year
Directors of Transurban International Limited
C Lynch
-
Other key management personnel of the Group
262,000
B Bourke
63,500
D Cardiff
174,000
K Daley
15,000
M Fletcher
-
A Head
-
S Hogg
190,000
M Kulper
-
T Honan
-
E Mildwater
-
-
-
-
-
-
-
-
-
-
-
-
-
(90,005)
(25,148)
(74,000)
-
-
-
(90,000)
-
-
(11,995)
(3,352)
-
-
-
-
-
-
-
160,000
35,000
100,000
15,000
-
-
100,000
-
-
-
-
-
-
-
-
-
-
-
-
2008
Name
Balance at
start of the
year
Granted
during the
year as
remuneration
Exercised
during the
year
Other
changes
during the
year
Balance at
end of the
year
Vested and
exercisable
at the end of
the year
Directors of Transurban International Limited
K Edwards
722,500
Other key management personnel of the Group
262,000
B Bourke
293,000
C Brant
63,500
D Cardiff
174,000
K Daley
190,000
M Kulper
272,500
G Mann
205,000
P O'Shea
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(722,500)
-
-
-
-
-
-
(272,500)
-
262,000
293,000
63,500
174,000
190,000
-
205,000
-
-
-
-
-
-
-
-
282 TRANSURBAN ANNUAL REPORT 2009
282 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
21 Key management personnel disclosures (continued)
(iv) Stapled security holdings
The number of Transurban Group Stapled Securities and Convertible Adjusting Rate Securities (“CARS”) held during the
financial year by each director of Transurban International Limited and other key management personnel, including their
personally-related parties, are set out below.
Stapled Securities
2009
Name
Balance at
start of the
year
Received during
the year via the
Performance
Rights Plan
Received during
the year via the
Executive Equity
Plan
Other changes
during the year
Balance at end
of the year
Directors of Transurban International Limited
D J Ryan
J Eve
J Keyes
C Lynch
57,300
-
-
152,800
Other key management personnel of the Group
B Bourke
D Cardiff
K Daley
M Fletcher
A Head
S Hogg
T Honan
M Kulper
E Mildwater
699,661
167,633
365,332
15,121
51,701
-
-
80,000
4,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
79,647
19,146
19,146
19,146
19,146
19,146
15,316
85,474
23,944
19,146
3,645
-
-
594
(98,656)
(28,302)
100
(776)
(24,605)
7,465
-
-
794
60,945
-
-
233,041
620,151
158,477
384,578
33,491
46,242
22,781
85,474
103,944
24,640
2008
Name
Balance at
start of the
year
Received during
the year via the
Performance
Rights Plan
Received during
the year via the
Executive Loan
Plan
Other changes
during the year
Balance at end
of the year
Directors of Transurban International Limited
D J Ryan
K Edwards
C Lynch
24,091
2,033,500
-
Other key management personnel of the Group
C Brant
B Bourke
D Cardiff
K Daley
M Kulper
G Mann
P O'Shea
296,392
671,328
167,443
365,332
-
272,707
442,489
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,209
(2,033,500)
152,800
-
28,333
190
-
80,000
(272,707)
81,799
57,300
-
152,800
296,392
699,661
167,633
365,332
80,000
-
524,288
283 TRANSURBAN ANNUAL REPORT 2009
283 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
21 Key management personnel disclosures (continued)
(v) Executive Equity Plan (EEP)
2009
Balance at
start of the
year
Name
Directors of Transurban International Limited
C J Lynch
-
Other key management personnel of the Group
-
B Bourke
-
D Cardiff
-
K Daley
-
M Fletcher
-
A Head
-
S Hogg
-
T Honan
-
M Kulper
-
E Mildwater
Granted
during the
year as
remuneration
Matured and
paid during
the year
Other
changes
during the
year
Balance at
end of the
year
Matured and
payable at
the end of
the year
79,647
19,146
19,146
19,146
19,146
19,146
15,316
85,474
23,944
19,146
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
79,647
19,146
19,146
19,146
19,146
19,146
15,316
85,474
23,944
19,146
-
-
-
-
-
-
-
-
-
-
As the Executive Equity Plan was introduced in November 2008, there is no comparative data.
(vi) Performance Rights Plan
2009
Name
Balance at
start of the
year
Granted
during the
year as
remuneration
Exercised
during the
year
Other
changes
during the
year
Balance at
end of the
year
Vested and
exercisable
at the end of
the year
Directors of Transurban International Limited
C Lynch
-
Other key management personnel of the Group
92,857
B Bourke
27,248
D Cardiff
78,571
K Daley
11,142
M Fletcher
14,857
A Head
-
S Hogg
-
T Honan
76,778
M Kulper
-
E Mildwater
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
92,857
27,248
78,571
11,142
14,857
-
-
76,778
-
-
-
-
-
-
-
-
-
-
-
2008
Name
Balance at
start of the
year
Granted
during the
year as
remuneration
Matured and
paid during
the year
Other
changes
during the
year
Balance at
end of the
year
Matured and
payable at
the end of
the year
Directors of Transurban International Limited
-
K Edwards
C Lynch
-
Other key management personnel of the Group
C Brant
B Bourke
D Cardiff
K Daley
M Kulper
P O'Shea
-
-
-
-
-
-
285,714
-
100,000
92,857
27,248
78,571
76,778
78,571
-
-
-
-
-
-
-
-
(285,714)
-
-
-
-
-
-
-
-
-
100,000
92,857
27,248
78,571
76,778
78,571
-
-
-
-
-
-
-
-
284 TRANSURBAN ANNUAL REPORT 2009
284 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
22 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
Consolidated
Parent
2009
$
2008
$
2009
$
2008
$
Amounts received or due and receivable by
PricewaterhouseCoopers
Audit and Other Assurance Services
Audit and review of financial reports
Total remuneration for PricewaterhouseCoopers
50,000
50,000
128,250
128,250
-
-
128,250
128,250
23 Contingencies
(a) Contingent liabilities
As at the date of this report, there are no contingent liabilities.
285 TRANSURBAN ANNUAL REPORT 2009
285 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
24 Related party transactions
(a) Parent entities
The ultimate parent entity of Transurban International Limited is Transurban Holdings Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in note 26.
(c) Key management personnel
Disclosure relating to key management personnel are set out in note 21.
(d) Transactions with related parties
The following transactions occurred with related parties:
Consolidated
Parent
2009
$
2008
$
2009
$
2008
$
Loans to key management personnel disclosed in
Business development fees
Management fees
28,259,082
413,752
28,672,834
42,641,668
152,873
42,794,541
-
358,994
358,994
-
130,780
130,780
(e) Loans to/from related parties
Loans to related parties
Beginning of the period
Loans advanced
Repayment of loans
Acquisition of subsidiaries
Foreign exchange movements
Loans from related parties
Beginning of the period
Loans advanced
Loan repayments
Acquisition of subsidiaries
Unsecured loans
Foreign exchange movements
(f) Other related parties
45,837,702
124,163,519
(153,620,008)
-
(9,256,554)
7,124,659
2
56,602,176
(24,507,318)
16,004,799
(2,261,957)
45,837,702
95,627,701
481,331,578
(411,037,354)
-
(9,185,358)
156,736,567
2
95,632,599
(7,436)
-
2,536
95,627,701
261,605,671
620,371,574
(622,571,235)
-
-
(5,650,309)
253,755,701
223,148
466,961,204
(251,986,687)
46,967,613
(559,607)
-
261,605,671
757,063
-
(757,063)
-
-
-
-
223,148
1,719,486
(1,185,571)
-
-
-
757,063
Mr Lynch and Mr Ryan are directors of Transurban Holdings Limited and Transurban Infrastructure Management Limited.
Related party transactions have occurred with these Transurban Group entities and their wholly-owned subsidiaries.
Ms Eve is an Associate of Appleby (Legal from within B(cid:72)rmuda). During the year Transurban International Limited utilised
Appleby for various legal services to the amount of $90,991 (2008: $112,325).
286 TRANSURBAN ANNUAL REPORT 2009
286 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
25 Business combination
Prior period
(a) Summary of acquisition
On 10 September 2007 the Company acquired 100 per cent of the issued capital of Transurban (USA) Holdings Inc. and
its subsidiaries Transurban (USA) Inc. and Transurban (USA) Operations Inc.
The acquired entities contributed $8.7 million of net loss to the Group for the period 10 September 2007 to 30 June 2008.
If the acquisition had occurred on 1 July 2007, consolidated revenue and consolidated losses for the year ended 30 June
2008 would have been $38.1 million and $9.1 million respectively.
Details of the fair value of the assets and liabilities acquired and goodwill are as follows:
Purchase consideration
Cash paid
Total purchase consideration
Fair value of net identifiable assets (liabilities) acquired
Goodwill
(b) Assets and liabilities acquired
The assets and liabilities arising from the acquisition are as follows:
Cash
Other receivables
Plant and equipment
Trade and other payables
Provisions
Net assets
26 Subsidiaries
$'000
-
-
(9,225)
-
Acquiree’s
carrying
amount
$'000
Fair value
$'000
1,613
19,443
744
(29,647)
(1,378)
(9,225)
1,613
19,443
744
(29,647)
(1,378)
(9,225)
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1(b):
Name of entity
Country of
incorporation Class of shares
Transurban International Holdings LLC
Transurban (USA) Holdings Inc
Transurban (USA) Inc
Transurban DRIVe Management
Transurban (USA) Operations
Bermuda
USA
USA
USA
USA
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
*
The proportion of ownership interest is equal to the proportion of voting power held.
Equity holding *
2008
2009
%
%
100
100
100
100
100
100
100
100
100
100
287 TRANSURBAN ANNUAL REPORT 2009
287 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
27 Investments in associates
Transurban DRIVe
(a) Carrying amounts
Name of company
Ownership interest
2008
%
2009
%
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Transurban DRIVe Holdings LLC Consulting
75
75
269,315
269,315
250,441
250,441
-
-
-
-
(b) Movements in carrying amounts
Carrying amount at the beginning of the financial year
Investment in associate
Share of profits (losses) after income tax
Movements in exchange rates
Movements in reserves
Carrying amount at the end of the financial year
(c) Share of associates’ profits or losses
Loss before income tax
Income tax (expense) benefit
Loss after income tax
Consolidated
2009
$'000
2008
$'000
250,441
24,809
(24,950)
61,453
(42,438)
269,315
-
305,565
(18,721)
(23,233)
(13,170)
250,441
(39,010)
14,060
(24,950)
(30,141)
11,420
(18,721)
(d) Summarised financial information of associates
The Group’s share of the results of its principal associates and its aggregated assets (including goodwill) and liabilities are
as follows:
Ownership
Interest
%
Assets
$'000
Liabilities
$'000
Revenues
$'000
Profit
$'000
Group's share of:
2009
Transurban DRIVe Holdings LLC
2008
Transurban DRIVe Holdings LLC
75
75
2,014,388
2,014,388
(1,745,073)
(1,745,073)
14,550
14,550
(24,950)
(24,950)
1,214,776
1,214,776
(964,110)
(964,110)
10,606
10,606
(18,721)
(18,721)
288 TRANSURBAN ANNUAL REPORT 2009
288 Transurban annual reporT 2009
27 Investments in associates (continued)
(e) Share of expenditure commitments
Capital commitments
Operating commitments
(f) Contingent liabilities of associates
As at the reporting date there are no contingent liabilities
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
Consolidated
2009
$'000
2008
$'000
860,591
154,827
1,015,418
757,904
118,000
875,904
28 Events occurring after the balance sheet date
There are no unusual matters or circumstances that have arisen since the end of the financial year that have significantly
affected or may significantly affect the operations of the entity, the results of those operations or the state of affairs of the
entity in subsequent financial years.
29 Reconciliation of profit after income tax to net cash inflow from operating activities
Consolidated
Parent
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Loss for the year
Depreciation and amortisation
Share of losses of associates
Non cash business development costs
Change in operating assets and liabilities
Decrease (Increase) in prepayments
(Increase) in trade and other receivables
Non cash related party loans
(Decrease) Increase in trade payables and accruals
(Decrease) increase in provisions
Increase in unearned income
Decrease (Increase) in deferred taxes
(Decrease) in current tax payable/receivable
Net cash (outflow) inflow from operating activities
(39,701)
3,380
24,950
-
2
(5,364)
3,473
(1,410)
(1,340)
3,683
1,199
(2,418)
(13,546)
(37,088)
738
18,721
13,524
(45)
(8,564)
21,227
4,701
7,480
1,666
(7,616)
1,614
16,358
(338)
-
-
-
(6)
(52)
274
95
-
-
-
-
(27)
(430)
-
-
-
38
(143)
(456)
95
-
-
-
-
(896)
289 TRANSURBAN ANNUAL REPORT 2009
289 Transurban annual reporT 2009
30 Earnings per stapled security
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
Consolidated
2009
Cents
2008
Cents
(a) Basic earnings per share
Loss from continuing operations attributable to the ordinary equity holders of the
company
(3.1)
(3.4)
(b) Diluted earnings per share
Loss from continuing operations attributable to the ordinary equity holders of the
company
Profit from continuing operations
(c) Weighted average number of shares used as the denominator
(3.1)
(3.4)
Consolidated
2009
$'000
2008
$'000
(39,701)
(37,088)
Consolidated
2009
Number
2008
Number
Weighted average number of ordinary shares used as the denominator in
calculating basic and diluted earnings per share
Adjustments for calculation of diluted earnings per share:
Performance rights
Weighted average number of ordinary shares and potential ordinary shares used as
the denominator in calculating diluted earnings per share
1,267,502,187
1,088,861,291
1,297,389
452,071
1,268,799,576
1,089,313,362
290 TRANSURBAN ANNUAL REPORT 2009
290 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
31 Share-based payments
The Transurban Group operates the following share based compensation plans:
(a) Performance Rights Plan (“PRP”)
The Performance Rights Plan (PRP) enabled eligible executives to receive a grant of Performance Rights that entitled
participants to receive stapled securities in Transurban (Securities) at no cost at the end of a three year performance
period, subject to the achievement of performance conditions. No dividends or distributions on Securities were payable to
participants prior to vesting. The Plan had two performance measures, EBITDA and relative TSR against the S&P/ASX
100 Industrials, each applied to 50% of the PRP award.
Awards were last made under the PRP in November 2007 and the PRP was discontinued in the 2009 financial year.
Australian based Plan
Performance Criteria
TSR
EBITDA
Overseas Based Plan
Performance Criteria
TSR
EBITDA
Grant date
Vesting
date
Fair value
of rights at
grant date
Spot price
at grant
date
1 Nov 2007
1 Nov 2007
1 Nov 2010 $
1 Nov 2010 $
3.50 $
5.96 $
7.29
7.29
Grant date
Vesting
date
Fair value at
rights at
grant date
Spot price
at grant
date
Fair value
of rights at
reporting
date
1 Nov 2007
1 Nov 2007
1 Nov 2010 $
1 Nov 2010 $
3.50 $
5.96 $
7.29 $
7.29 $
2.78
3.86
(b)
2009 Executive Equity Plan
Equity awards are granted under the Executive Equity Plan (EEP) based on executives’ performance and are designed to
encourage retention of executives while focusing on business excellence. The EEP also aligns with Transurban’s
remuneration philosophy of encouraging executive security holding.
Individuals who are high performers and in business critical roles are nominated for awards for their past contribution and
expected future performance. Board approval is required to grant EEP awards to nominated executives.
Under the EEP, eligible executives receive a grant of stapled securities in the Transurban Group (”securities”) at no cost
that are subject to disposal restrictions for three years from the grant date. Participants are entitled to distributions paid on
their Securities during the restriction period. If the executive ceases employment with Transurban during the restriction
period, their Securities will be forfeited unless the Board decides otherwise.
Grant Date
Expiry
date
Exercise
price
Balance at
start of
the year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
Forfeited
during the
year
Number
Balance at
end of the
year
Number
Consolidated and parent - 2009
1 Nov 2008
Total
1 Nov
2011
$4.27
-
-
632,886
632,886
(722)
(722)
(20,472)
(20,472)
611,692
611,692
291 TRANSURBAN ANNUAL REPORT 2009
291 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
31 Share-based payments (continued)
(c) Performance Awards Plan
The Performance Awards Plan (PAP) is a modified version of the 2008 Performance Rights Plan (PRP). Under the PAP,
eligible executives including those outside Australia, receive a grant of Performance Awards which entitles participants to
receive securities at no cost subject to the achievement of performance conditions. The Board has discretion as to the
form of the award at the end of the performance period and may grant cash payments of equivalent value. No dividends or
distributions on securities are payable to participants prior to vesting.
Dual performance measures (an earnings measure and relative total security holder return) apply to Performance Awards.
The use of dual measures balances the need to both improve the underlying performance of the business over the long
term as well as appropriate returns relative to the market.
Performance Awards were granted on 1 November 2008 with a three year vesting period. The awards are tested at the
end of each year. If the performance measures are satisfied for the year, one third of the awards are preserved until the
end of the three year period. At the end of the three years a cumulative test of the performance measures is applied to
any unvested awards.
Set out below are the awards granted under the plan.
Grant date
Expiry date
Fair
value at
grant
date
Balance at
start of the
year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
Forfeited
during the
year
Number
Balance at
end of the
year
Number
Consolidated and parent - 2009
1 Nov 2008
Total
1 Nov 2011
$3.79
-
-
1,345,369
-
-
-
(31,083)
(31,083)
1,314,286
1,314,286
Fair value at grant date for TSR performance criteria: $3.30; EBITDA performance criteria: $4.27.
292 TRANSURBAN ANNUAL REPORT 2009
292 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
31 Share-based payments (continued)
(d) Executive Loan Plan
The Executive Loan Plan (ELP) was discontinued as of the 2007 financial year. The ELP rewarded the improvements in
the price of Transurban’s stapled securities over a three year period with relative Total Security holder Return (TSR)
against the S&P/ASX 100 Industrials as a performance measure. Executives based outside Australia were eligible to
participate in a cash based plan similarly structured to the ELP.
Executives that participated in the ELP were provided with an interest free loan to assist them to acquire securities at
market price. The term of the loan is three years and there is only one testing date. The securities are held by the
executive but will only vest in the executive in accordance with the terms of the Plan. Expiry occurs three years plus 60
days from the date of commencement of the Plan, unless the rules of the Plan otherwise provide. Holding locks are
applied to the securities to ensure that they can only be dealt with in accordance with the terms of the Plan. The acquired
securities cannot be transferred or sold while the loan is outstanding.
Set out below are securities granted under the plan.
Australian Based Plan
Grant Date
Expiry date
Consolidated and parent - 2009
1 Nov 2005
1 Nov 2006
Total
1 Nov 2008
1 Nov 2009
Grant
price
$6.47
$7.28
Balance at
start of the
year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
Forfeited
during the
year
Number
Balance at
end of the
year
Number
814,200
1,175,000
1,989,200
-
-
-
(696,831)
-
(696,831)
(117,369)
(277,654)
(395,023)
-
897,346
897,346
Weighted average grant price
$6.95
$6.47
$7.04
$7.28
293 TRANSURBAN ANNUAL REPORT 2009
293 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
31 Share-based payments (continued)
Overseas Based Plan
2009
Grant Date
Expiry date
Grant
price
Balance at
start of the
year
Number
Granted
during the
year
Number
Matured
during the
year
Number
Forfeited
during the
year
Number
Balance at
end of the
year
Number
Matured
and
payable at
end of the
year
Number
1 Nov 2005
1 Nov 2006
Total
1 Nov 2008
1 Nov 2009
$6.47
$7.28
189,700
300,000
489,700
-
-
-
(189,700)
-
(189,700)
-
(30,000)
-
-
270,000
270,000
-
-
-
Weighted average grant price
$6.97
$6.47
$-
$7.28
Australian Based Plan
2008
Grant Date
1 Nov 2005
1 Nov 2006
Total
Grant
Expiry date
price
Grant
price
Balance at
start of
the year
Number
Granted
during the
year
Number
Forfeited
during the
year
Number
Balance at
end of the
year
Number
1 Nov
2008
1 Nov
2009
$6.47
1,350,200
$7.28
1,933,500
3,283,700
-
-
-
(536,000)
814,200
(758,500) 1,175,000
(1,294,500) 1,989,200
Weighted average exercise price
$6.95
$6.95
$6.95
Overseas Based Plan
2008
Grant Date
1 Nov 2005
1 Nov 2006
Total
Expiry date
Grant
price
Balance at
start of
the year
Number
Granted
during the
year
Number
Forfeited
during the
year
Number
Balance at
end of the
year
Number
1 Nov 2008
1 Nov 2009
$6.47
$7.28
189,700
300,000
489,700
-
-
-
-
-
-
189,700
300,000
489,700
$6.97
Weighted average exercise price
$6.97
(e) Employee security scheme
The Transurban Employee Security Ownership Plan (“the Plan”) provides employees with an opportunity to be a part
owner of Transurban and partner in its continued success.
294 TRANSURBAN ANNUAL REPORT 2009
294 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
31 Share-based payments (continued)
All Australian based permanent employees are eligible to participate in either the Investment Tax Exempt Plan or the
Investment Tax Deferred Plan. Under the plans, Transurban provides participants with a matching component toward the
acquisition of the stapled securities. For the period 1 July 2008 to 30 June 2009, the cost of company matches was
$33,292 (2008: $61,875) for the Investment Tax Exempt Plan and $207,417 (2008: $452,250) for the Investment Tax
Deferred Plan. These plans were suspended in May 2009 following changes to taxation announced in the Federal budget.
The Group intends to reactivate the plans with required modifications once the proposed legislation has been
implemented.
The third element under the Plan is the Incentive Plan. Subject to Board approval and the performance of the company,
eligible employees may receive a certain number of Transurban securities at no cost to them.
In February 2009, each participant was allocated 100 stapled securities at a value of $4.84 per security. Stapled securities
provided under the Plan were acquired on the open market.
2009
Number
2008
Number
Shares purchased on the market under the plan and provided to participating employees
45,300
50,500
(f) Performance Rights Plan ('PRP')
Under the new PRP, Executives will be granted performance rights to acquire, at no cost to them, an allocated number of
stapled securities, subject to the achievement of performance conditions at the end of a three year vesting period. Two
performance measures will be utilised, one linked to Total Shareholder Return (TSR) over a three year vesting period and
the second, an operational performance measure over the same period. The Plan has been structured so that rewards
are only obtained if there are materially improved security holder returns and operational performance results over the
three year vesting period. The performance hurdles attached to the performance rights have been set to ensure that both
executives and stapled security holders generally benefit from the allocation of stapled securities to executives under the
Plan
There is only one testing date. The right to Stapled Securities cannot be transferred, exercised or otherwise dealt with
during the vesting period.
No performance rights were issued under this plan in the current year as it was approved by the Board of Directors for
implementation in November of 2007.
Refer to section D of the remuneration report for details.
(g) Expenses arising from shared-based payments
Total expenses arising from share-based payment transaction recognised during the period as part of employee benefit
expense was $1.6 million (2008: $1.4 million).
295 TRANSURBAN ANNUAL REPORT 2009
295 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
32 Intra-group guarantees
As at 30 June 2009, the Transurban Group comprises Transurban Holdings Limited, Transurban Holding Trust and
Transurban International Limited, traded and quoted on the ASX as one triple stapled security.
Under the stapling arrangement, each entity directly and/or indirectly supports each other and its controlled entities within
the group on a continual basis.
33 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under
the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year.
The Group is subject to income taxes. Significant judgment is required in determining the provision for income taxes.
There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax
determination is uncertain. The entity recognises liabilities for anticipated tax audit issues based on estimates of whether
additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially
recorded, such differences will impact current and deferred tax provisions in the period in which such determination is
made.
34 Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk), credit risk, liquidity risk
and cash flow interest rate risk. The Group’s overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses
different methods to measure different types of risks to which it is exposed. These methods include sensitivity analysis in
the case of interest rate risk and cash flow forecasting for foreign exchange risks.
Risk management is carried out by the Finance Group under policies approved by the Board of Directors. The Finance
Group identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Board
are informed on a regular basis of any material exposures to financial risks.
(a) Market risk
Foreign exchange risk
(i)
The Group operates internationally and is exposed primarily to foreign exchange risk arising from currency exposures to
the AUD Dollar. Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities
are denominated in a currency that is not the entity’s functional currency. The risk is measured using cash flow
forecasting.
The Group’s exposure to foreign currency risk at the reporting date was as follows:
Cash and cash equivalents
Trade and other receivables
Receivables
Payables
Provisions
30 June
2009
AUD
$'000
30 June
2008
AUD
$'000
13
-
1,228
(2,226)
(4,049)
13
888
5,025
(55,624)
1,000
The above table is presented in the currency in which the exposure exists. The AUD exposure exists in the USD functional
currency entities.
296 TRANSURBAN ANNUAL REPORT 2009
296 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
34 Financial risk management (continued)
The parent entity's exposure to foreign currency risk at the reporting date was as follows:
Cash and cash equivalents
Receivables
Payables
30 June
2009
AUD
$'000
30 June
2008
AUD
$'000
13
-
-
13
449
(809)
The above table is presented in the currency in which the exposure exists. The AUD exposure exists in the USD functional
currency entities.
Group sensitivity
Based on the financial instruments held at end of the period, had the U.S. dollar strengthened/weakened by 10 cents
against the Australian dollar with all other variables held constant, the Group’s post-tax profit for the year would have been
$187,000 higher (2008: $2,511,000 higher) or $220,000 lower (2008: $3,046,000 higher), as a result of foreign exchange
gains/losses on translation of Australian dollar denominated financial instruments as detailed in the above table.
Parent entity sensitivity
Based on the financial instruments held at end of the period, had the U.S. dollar strengthened/weakened by 10 cents
against the Australian dollar with all other variables held constant, the Group’s post-tax profit for the year would have been
$1,000 lower (2008: $25,000 higher) or $1,000 lower (2008: $25,000 higher), as a result of foreign exchange gains/losses
on translation of Australian dollar denominated financial instruments as detailed in the above table.
(ii) Cash flow and fair value interest rate risk
The Group's interest rate risk arises from long-term intercompany borrowings and funds on deposit. The parent entity's
only interest rate risk arises from funds on deposit.
As at the reporting date, the Group had the following variable rate borrowings and interest rate swap contracts
outstanding:
30 June 2009
30 June 2008
Weighted
average
interest rate
%
-%
-%
Weighted
average
interest rate
%
Balance
$'000
(400)
-
(400)
1.3%
3.6%
Balance
$'000
(1,000)
51,693
50,693
Cash and cash equivalents
Floating Rate Borrowings
Net exposure to cash flow interest rate risk
Group sensitivity
At 30 June 2009, if interest rates had changed by +/-100 basis points from the year-end rates with all other variables held
constant, post-tax profit for the year would have been $2,000 higher/lower (2008: $309,000 lower/higher).
Parent entity sensitivity
At 30 June 2009, if interest rates had changed by +/-100 basis points from the year-end rates with all other variables held
constant, post-tax profit for the year would have been unchanged (2008: unchanged).
(b) Credit risk
The Group has no significant concentrations of credit risk from Operating Activities. The Group has policies in place to
ensure that transactions are made with commercial customers with an appropriate credit history. The Group continually
monitors the credit ratings and credit exposure of each counterparty. The Group does not obtain any security in the form of
guarantees, deeds of undertaking or letters of credit which can be called upon if the counterparty is in default under the
terms of the agreement.
297 TRANSURBAN ANNUAL REPORT 2009
297 Transurban annual reporT 2009
Transurban International Limited
Notes to the financial statements
30 June 2009
(continued)
34 Financial risk management (continued)
(c) Liquidity risk
The Company maintains sufficient cash to maintain short-term flexibility and enable the Company to meet financial
commitments in a timely manner.
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on the remaining period at
the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted
cash flows.
Group - At 30 June 2009
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total non-derivatives
Group - At 30 June 2008
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total non-derivatives
1 year or
less
Over 1 to
2 years
Over 2 to
3 years
Over 3 to
4 years
Over 4 to
5 years
Over 5
years
Total
contractual
cash flows
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Carrying
Amount
(assets)/
liabilities
$'000
3,291
-
268,728
272,019
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 year or
less
Over 1 to
2 years
Over 2 to
3 years
Over 3 to
4 years
Over 4 to
5 years
Over 5
years
21,848
-
258,977
280,825
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,291
-
268,728
272,019
3,291
-
253,756
257,047
Total
contractual
cash flows
Carrying
Amount
(assets)/
liabilities
21,848
-
258,977
280,825
21,848
-
244,549
266,397
There is no liquidity risk exposure to the Group or parent entity in the current or prior periods other than as shown above.
(d) Fair value estimation
Refer to note 1 for the Group’s policy on Fair Value estimation.
35 Initial Application of AASB Interpretation 12
AASB Interpretation 12 Service Concession Arrangements(cid:3)(AASB-I 12) is applicable for the Group’s annual reporting
period beginning 1 July 2008. AASB-I 12 provides guidance on the accounting by operators for public-to-private service
concession arrangements under which private sector entities participate in the development, financing, operation and
maintenance of infrastructure for the provision of public services. The application of AASB-I 12 has led to a change in the
Group’s policies of accounting for the classification of concession assets and maintenance obligations under the
arrangements. AASB-I 12 has been applied retrospectively and comparative information in relation to the 2008 financial
year and year ended 30 June 2009 have been restated accordingly.
AASB-1 12 has the following impacts in respect of the Group's equity accounted results of Transurban DRIVe (which holds
the Group's investment in the Pocahontas Parkway):
30 June 2008
A decrease in the Group's investment in Transurban DRIVe of $1.827 million and a corresponding increase in the equity
accounted losses from Transurban DRIVe of $1.833 million. The translation of the result from US dollars to Australian
dollars resulted in a foreign currency adjustment to reserves of $0.006 million.
There was no impact on earnings per share as a result of this change.
298 TRANSURBAN ANNUAL REPORT 2009
298 Transurban annual reporT 2009
In the directors’ opinion:
Transurban International Limited
Directors' declaration
30 June 2009
(a)
the financial statements and notes set out on pages 2(cid:24)(cid:22) to (cid:21)(cid:28)(cid:27) are in accordance with the Corporations Act 2001,
including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
giving a true and fair view of the company’s and consolidated entity's financial position as at 30 June
2009 and of their performance for the financial year ended on that date; and
(ii)
(b)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable.
The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by
section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
David J Ryan
Director
Christopher J Lynch
Director
Melbourne
26 August 2009
299 TRANSURBAN ANNUAL REPORT 2009
299 Transurban annual reporT 2009
PricewaterhouseCoopers
ABN 52 780 433 757
Freshwater Place
2 Southbank Boulevard
SOUTHBANK VIC 3006
GPO Box 1331
MELBOURNE VIC 3001
DX 77
Telephone 61 3 8603 1000
Facsimile 61 3 8603 1999
Independent auditor’s report to the members of
Transurban International Limited
Report on the financial report
We have audited the accompanying financial report of Transurban International Limited (the
company), which comprises the balance sheet as at 30 June 2009, the income statement,
statement of changes in equity and cash flow statement for the year ended on that date, a
summary of significant accounting policies, other explanatory notes and the directors’ declaration
for both Transurban International Limited and the Transurban International Limited Group (the
consolidated entity). The consolidated entity comprises the company and the entities it controlled at
the year's end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation and fair presentation of the
financial report in accordance with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing
and maintaining internal controls relevant to the preparation and fair presentation of the financial
report that is free from material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the
circumstances. In Note 1, the directors also state, in accordance with Accounting Standard
AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to
International Financial Reporting Standards ensures that the financial report, comprising the
consolidated financial statements and notes, complies with International Financial Reporting
Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. These Auditing Standards require that
we comply with relevant ethical requirements relating to audit engagements and plan and perform
the audit to obtain reasonable assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether due
to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the financial report in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report.
Our procedures include reading the other information in the Annual Report to determine whether it
contains any material inconsistencies with the financial report.
Our audit did not involve an analysis of the prudence of business decisions made by directors or
management.
Liability limited by a scheme approved under Professional Standards Legislation
300 Transurban annual reporT 2009
Independent auditor’s report to the members of
Transurban International Limited (continued)
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
Auditor’s opinion
In our opinion:
(a)
the financial report of Transurban International Limited is in accordance with the
Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the company’s and consolidated entity’s financial
position as at 30 June 2009 and of their performance for the year ended on that
date; and
complying with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001; and
(b)
the consolidated financial statements and notes also comply with International Financial
Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 233 to 250 of the directors’ report for
the year ended 30 June 2009. The directors of the company are responsible for the preparation
and presentation of the Remuneration Report in accordance with section 300A of the Corporations
Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our
audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the Remuneration Report of Transurban International Limited for the year ended 30
June 2009, complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
John Yeoman
Partner
301 Transurban annual reporT 2009
Melbourne
26 August 2009
Transurban Group
Security holder information as at 26 August 2009
(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 International Limited and one unit in Transurban Holding Trust, was 70,938.
2. The voting rights are one vote per stapled security.
3. At 26 August 2009 the percentage of the total holdings held by or on behalf of the 20 largest holders of these securities
was 77.43 per cent.
4. The distribution of holders was as follows:
Number of holders
Number of stapled
securities held
26,408
33,725
7,091
3,518
196
70,938
10,850,998
83,943,968
50,532,525
72,924,528
%
0.85
6.54
3.94
5.69
1,064,430,587
82.98
1,282,682,606
100
Number of stapled
securities held
199,731,951
171,991,345
156,771,153
%
15.57
13.41
12.22
Security grouping
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Total
5.
Substantial security holders as at 26 August 2009 were as follows:
Name
CAPITAL PARTNERS PTY LTD
CANADIAN PENSION PLAN INVESTMENT BOARD
ONTARIO TEACHERS’ PENSION PLAN BOARD
There were 6,283 holders holding less than a marketable parcel of stapled securities.
Total stapled securities: 1,282,682,606.
Transurban annual reporT 2009
(b) Twenty largest holders of stapled securities
Name
Transurban Group
Number of
stapled
securities held
% of issued
stapled
securities
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
QUEENSLAND INVESTMENT CORPORATION
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD
ANZ NOMINEES LIMITED
AMP LIFE LIMITED
CITICORP NOMINEES PTY LIMITED
COGENT NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
CREDIT SUISSE SECURITIES (EUROPE) LTD
ANZ NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
CS THIRD NOMINEES PTY LTD
DJERRIWARRH INVESTMENTS LIMITED
Total
520,957,946
267,493,413
81,201,635
25,142,681
12,996,425
9,556,216
9,203,147
9,064,468
8,324,301
7,246,053
6,709,247
6,326,607
4,720,494
4,301,530
4,160,000
3,445,578
3,256,214
3,244,595
2,984,976
2,842,450
993,177,976
40.61
20.85
6.33
1.96
1.01
0.75
0.72
0.71
0.65
0.56
0.52
0.49
0.37
0.34
0.32
0.27
0.25
0.25
0.23
0.22
77.43
Transurban annual reporT 2009
contents
02 peRfoRmance highlights
04 ouR WoRld
06 chaiRman’s RepoRt
08 ceo’s RepoRt
10 highlights fRom ouR poRtfolio
12 hoW We do business
14 business fRameWoRk
16 coRpoRate goveRnance
financial statements
23
tRansuRban holdings limited
and contRolled entities
148 tRansuRban holding tRust
and contRolled entities
228 tRansuRban inteRnational limited
and contRolled entities
Omar FrOm GlenwOOd GOeS
tO FairField City Park FOr
annual Family PiCniC
meliSSa FrOm CeCil HillS meetS
Her SiSter at Parklea marketS
tO SHOP FOr barGainS
time Saved: 32 minuteS
Who we are
We are a values-based,
value-driven toll road
owner-operator with assets
and projects in australia
and North america. We have:
>interests in six australian toll
roads and two Us toll roads
(one under development)
> three customer tolling
brands in australia, and
around five million account
and non-account customers
globally, and
>Corporate headquarters in
melbourne, australia.
YouR feedback
Your comments and queries will help
us improve the materials we prepare
for investors, so please contact us
if you have feedback or want more
information:
Via post
Public Affairs
Transurban Group
Locked Bag 28
South Melbourne Victoria 3205
Via email
corporate@transurban.com
about this
report
RepoRting peRiod
As Transurban is listed on the
Australian Securities Exchange,
our report reflects the standard
Financial Year in Australia. This report
covers the period from 1 July 2008
to 30 June 2009.
auditoR
The financial statements are audited
by PricewaterhouseCoopers.
RepoRt pRoduction
The report was printed by the BlueStar
Print Group. All BlueStar facilities
have Forest Stewardship Council
(FSC) Chain of Custody certification,
document quality management
systems and Environmental
Management Systems (EMS).
The cover and editorial pages are
printed on Monza Recycled which
contains 55% recycled fibre (25% post
consumer and 30% pre consumer)
and FSC Certified pulp. This ensures
that all virgin pulp is derived from
well-managed forests and controlled
sources. It is manufactured by an
ISO 14001 certified mill.
The financial pages are printed on
Sappi Royal Web Recycled Silk. It
features 50% post consumer recycled
pulp. Sappi Fine Paper Europe is
certified under ISO 9001, ISO 14001
and EMAS (Eco Management and
Audit system). All virgin fibre used in
Sappi Fine Paper Europe products
originates from well managed forests
and controlled sources.
Cert no. SGS-COC-003898
i
p
r
e
c
n
c
t
.
c
o
m
.
a
u
annual
report
2009
t
r
a
n
s
u
r
b
a
n
a
n
n
u
a
l
r
e
p
o
r
t
2
0
0
9